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Regulatory Matters
 12 Months Ended
Dec. 31, 2016
Banking and Thrift [Abstract]  
Regulatory Matters

Note 12 - Regulatory Matters

 

The Bank is subject to various regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 capital (as defined), and Common Equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 to adjusted total assets (as defined). Management believes that, as of December 31, 2016 and 2015, the Bank met all capital adequacy requirements to which it was subject. As of December 31, 2016, the most recent notification categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank’s status as well capitalized.

 

The Bank’s actual capital amounts and ratios are presented in the table below.

 

                            Minimum        
                            To Be "Well-        
                Minimum     Capitalized"     Well-Capitalized  
                For Capital     Under Prompt     With Buffer, Fully  
    Actual     Adequacy Purposes     Corrective Provisions     Phased in for 2019  
(Dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount     Ratio  
As of December 31, 2016                                          
Total Core Capital (to Risk-Weighted Assets)   $ 29,264       18.45 %     ³$12,689       ³8.0 %     ³$15,861       ³10.0 %     ³$16,654       ³10.5 %
Tier 1 Capital (to Risk-Weighted Assets)     28,274       17.83       ³9,516       ³6.0       ³12,689       ³8.0       ³13,482       ³8.5  
Tier 1 Common Equity (to Risk-Weighted Assets)     28,274       17.83       ³7,137       ³4.5       ³10,309       ³6.5       ³11,102       ³7.0  
Tier 1 Capital (to Assets)     28,274       10.70       ³10,572       ³4.0       ³13,214       ³5.0       ³13,214       ³5.0  
As of December 31, 2015:                                                                
Total Core Capital (to Risk-Weighted Assets)   $ 20,757       15.12 %     ³$10,980       ³8.0 %     ³$13,725       ³10.0 %                
Tier 1 Capital (to Risk-Weighted Assets)     19,946       14.53       ³8,235       ³6.0       ³10,980       ³8.0                  
Tier 1 Common Equity (to Risk-Weighted Assets)     19,946       14.53       ³6,176       ³4.5       ³8,921       ³6.5                  
Tier 1 Capital (to Assets)     19,946       7.85       ³10,167       ³4.0       ³12,709       ³5.0                  
                                                                 

 

The FRB has issued a policy guidance regarding the payment of dividends by bank holding companies.  In general, the FRB’s policies provide that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the holding company appears consistent with the organization’s capital needs, asset qualityand overall financial condition.  FRB guidance provides for prior regulatory review of capital distributions in certain circumstances such as where the company’s net income for the past four quarters, net of dividends previously paid over that period, is insufficient to fully fund the dividend or the company’s overall rate of earnings retention is inconsistent with the company’s capital needs and overall financial condition.  The ability of a holding company to pay dividends may be restricted if a subsidiary bank becomes undercapitalized.  These regulatory policies could affect the ability of FSB Bancorp to pay dividends or otherwise engage in capital distributions.