Note 18 - Regulatory Matters

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

18 . Regulatory Matters

The Company and

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

U.S. banking regulators adopted final rules related to standards on bank capital adequacy and liquidity (commonly referred to “

Basel III”) that were effective for the Company beginning on

January 1, 2015,

subject to a phase-in period for certain provisions extending through

January 1, 2019.

To ensure capital adequacy

,

the Company and its subsidiary bank are required to maintain minimum capital amounts and risk-based capital ratios (set forth in the tables below) as well as a capital conservation buffer in excess of the required minimum. The capital conservation buffer is being phasing in from

0.0%

in

2015

to

2.50%

by

2019.

For

2017,

the capital conservation buffer is

1.25%.

The Company and the Bank met the minimum capital ratios and a fully phased-in capital conservation buffer under the new rules at year-end

2017

.

As of

December 31,

2017,

the most recent notification from the FDIC 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 Common Equity Tier

1

Risk-based, Tier

1

Risk-based, Total Risk-based, and Tier

1

Leverage ratios as set forth in the tables below. There are

no

conditions or events since that notification that management believes have changed the institutions’ category.

The

regulatory capital amounts and ratios of the consolidated Company and its subsidiary bank are presented in the following tables for the dates indicated. The minimums presented below are before the capital conservation buffer which was

1.25%

and

0.625%

at

December 31, 2017

and

2016,

respectively.

											To Be Well-Capitalized
						For Capital					Under Prompt Corrective
(Dollars in thousands)	Actual					Adequacy Purposes					Action Provisions
December 31, 201 7	Amount		Ratio			Amount		Ratio			Amount		Ratio
Common Equity Tier 1 Risk-based Capital 1
Consolidated	$	196,919		16.56	%	$	53,500		4.50	%		N/A		N/A
United Bank*		165,488		14.05			53,004		4.50		$	76,561		6.50	%
Tier 1 Risk-based Capital 1
Consolidated	$	229,419		19.30	%	$	71,334		6.00	%		N/A		N/A
United Bank*		165,488		14.05			70,671		6.00		$	94,229		8.00	%
Total Risk-based Capital 1
Consolidated	$	239,234		20.12	%	$	95,112		8.00	%		N/A		N/A
United Bank*		175,271		14.88			94,229		8.00		$	117,786		10.00	%
Tier 1 Leverage Capital 2
Consolidated	$	229,419		13.75	%	$	66,763		4.00	%		N/A		N/A
United Bank*		165,488		10.13			65,365		4.00		$	81,706		5.00	%

											To Be Well-Capitalized
						For Capital					Under Prompt Corrective
(Dollars in thousands)	Actual					Adequacy Purposes					Action Provisions
December 31, 201 6	Amount		Ratio			Amount		Ratio			Amount		Ratio
Common Equity Tier 1 Risk-based Capital 1
Consolidated	$	187,474		16.43	%	$	51,349		4.50	%		N/A		N/A
Farmers Bank & Capital Trust Company*		64,016		16.53			17,425		4.50		$	25,170		6.50	%
United Bank & Trust Company*		58,180		15.54			16,848		4.50			24,337		6.50
First Citizens Bank*		28,324		13.56			9,401		4.50			13,580		6.50
Citizens Bank of Northern Kentucky, Inc.*		24,661		15.24			7,280		4.50			10,516		6.50
Tier 1 Risk-based Capital 1
Consolidated	$	219,974		19.28	%	$	68,466		6.00	%		N/A		N/A
Farmers Bank & Capital Trust Company*		64,016		16.53			23,234		6.00		$	30,978		8.00	%
United Bank & Trust Company*		58,180		15.54			22,465		6.00			29,953		8.00
First Citizens Bank*		28,324		13.56			12,535		6.00			16,714		8.00
Citizens Bank of Northern Kentucky, Inc.*		24,661		15.24			9,707		6.00			12,942		8.00
Total Risk-based Capital 1
Consolidated	$	229,318		20.10	%	$	91,288		8.00	%		N/A		N/A
Farmers Bank & Capital Trust Company*		66,720		17.23			30,978		8.00		$	38,723		10.00	%
United Bank & Trust Company*		61,680		16.47			29,953		8.00			37,441		10.00
First Citizens Bank*		29,590		14.16			16,714		8.00			20,892		10.00
Citizens Bank of Northern Kentucky, Inc.*		26,534		16.40			12,942		8.00			16,178		10.00
Tier 1 Leverage Capital 2
Consolidated	$	219,974		13.20	%	$	66,656		4.00	%		N/A		N/A
Farmers Bank & Capital Trust Company*		64,016		9.80			26,121		4.00		$	32,651		5.00	%
United Bank & Trust Company*		58,180		12.38			18,798		4.00			23,497		5.00
First Citizens Bank*		28,324		9.76			11,606		4.00			14,507		5.00
Citizens Bank of Northern Kentucky, Inc.*		24,661		10.68			9,234		4.00			11,543		5.00

1

Common Equity Tier

1

Risk-based, Tier

1

Risk-based, and Total Risk-based Capital ratios are computed by dividing a bank’s Common Equity Tier

1,

Tier

1,

or Total Capital, as defined by regulation, by a risk-weighted sum of the bank’s assets, with the risk weighting determined by general standards established by regulation.

2

Tier

1

Leverage ratio is computed by dividing a bank’s Tier

1

Capital by its total quarterly average assets, as defined by regulation.

*

In

February 2017,

the Company merged

United Bank & Trust Company, First Citizens Bank, Inc., and Citizens Bank of Northern Kentucky, Inc. into Farmers Bank & Capital Trust Company in Frankfort, KY, the name of which was immediately changed to United Bank & Capital Trust Company.

Payment of dividends by the

Bank is subject to certain regulatory restrictions as set forth in national and state banking laws and regulations. Generally, capital distributions are limited to undistributed net income for the current and prior

two

years, subject to the capital requirements as summarized above

.