REGULATORY MATTERS

12 Months Ended

Dec. 31, 2017

REGULATORY MATTERS

REGULATORY MATTERS

NOTE 16 — REGULATORY MATTERS

The Corporation is subject to various regulatory capital requirements administered by the federal banking agencies.  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 Corporation’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The Corporation’s capital amounts and classification are also 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 Corporation to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets.  Management has determined that, as of December 31, 2017, the Corporation is well capitalized.

Effective January 1, 2015, the Corporation was subject to new capital requirements due to the Basel III regulation, including:

· A new minimum ratio of Common Equity Tier I Capital to risk-weighted assets of 4.5%;

· An increase in the minimum required amount of Additional Tier 1 Capital to 6% of risk-weighted assets;

· A continuation of the current minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and

· A minimum leverage ratio of Tier I Capital to total assets equal to 4% in all circumstances.

In order to be “well-capitalized” under the new guidelines, a depository institution must maintain a Common Equity Tier 1 Capital ratio of 6.5% or more; an Additional Tier 1 Capital ratio of 8% or more; a Total Capital ratio of 10% or more; and a leverage ratio of 5% or more.

The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2017 are as follows (dollars in thousands):

	Actual				Adequacy Purposes					Well-Capitalized
	Amount		Ratio		Amount			Ratio		Amount		Ratio
Total capital to risk weighted assets:
Consolidated	$	74,533	9.3%	>	$	64,190	>	8.0%	>	$	80,237	10.0%
mBank	$	93,598	11.7%	>	$	64,202	>	8.0%	>	$	80,252	10.0%
Tier 1 capital to risk weighted assets:
Consolidated	$	69,454	8.7%	>	$	48,142	>	6.0%	>	$	64,190	8.0%
mBank	$	88,560	11.0%	>	$	48,151	>	6.0%	>	$	64,202	8.0%
Common equity Tier 1 capital to risk weighted assets
Consolidated	$	69,454	8.7%	>	$	36,107	>	4.5%	>	$	52,154	6.5%
mBank	$	88,560	11.0%	>	$	36,113	>	4.5%	>	$	52,164	6.5%
Tier 1 capital to average assets:
Consolidated	$	69,454	7.1%	>	$	39,375	>	4.0%	>	$	49,219	5.0%
mBank	$	88,560	9.0%	>	$	39,279	>	4.0%	>	$	49,098	5.0%

The Corporation’s and the Bank’s actual capital and ratios compared to generally applicable regulatory requirements as of December 31, 2016 are as follows (dollars in thousands):

	Actual				Adequacy Purposes					Well-Capitalized
	Amount		Ratio		Amount			Ratio		Amount		Ratio
Total capital to risk weighted assets:
Consolidated	$	73,811	9.5%	>	$	62,503	>	8.0%	>	$	78,128	10.0%
mBank	$	92,521	11.9%	>	$	62,102	>	8.0%	>	$	77,627	10.0%
Tier 1 capital to risk weighted assets:
Consolidated	$	68,791	8.8%	>	$	46,877	>	6.0%	>	$	62,503	8.0%
mBank	$	87,542	11.3%	>	$	46,576	>	6.0%	>	$	62,102	8.0%
Common equity Tier 1 capital to risk weighted assets
Consolidated	$	68,791	8.8%	>	$	35,158	>	4.5%	>	$	50,783	6.5%
mBank	$	87,542	11.3%	>	$	34,932	>	4.5%	>	$	50,458	6.5%
Tier 1 capital to average assets:
Consolidated	$	68,791	7.3%	>	$	37,939	>	4.0%	>	$	47,242	5.0%
mBank	$	87,542	9.2%	>	$	37,889	>	4.0%	>	$	47,361	5.0%