Regulatory Matters

12 Months Ended

Dec. 31, 2019

Regulatory Matters [Abstract]

Regulatory Matters

NOTE H – REGULATORY MATTERS

Minimum Regulatory Capital Requirements. The Corporation and the Bank are subject to the Basel III regulatory capital requirements issued by the FRBNY and the Office of the Comptroller of the Currency. These requirements are intended to ensure that the Corporation and the Bank maintain minimum ratios of Tier 1 capital to average assets as well as Common Equity Tier 1 capital, Tier 1 capital and Total capital to risk weighted assets. Failure to meet the minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on the financial statements of the Corporation and Bank.

Basel III includes guidelines with respect to the components of regulatory capital and calculation of risk weighted assets for balance sheet assets and liabilities and off-balance-sheet positions. The Corporation and the Bank exclude accumulated other comprehensive income (loss) components from Tier 1 and Total regulatory capital.

Basel III sets forth prompt corrective action (“PCA”) requirements for all banks and establishes a capital conservation buffer. The Corporation and the Bank exceeded the Basel III minimum capital adequacy requirements, including the capital conservation buffer of 2.50% applicable to the Bank. The most recent regulatory notifications categorized the Bank as well capitalized under the PCA provisions and there are no conditions or events since that notification that management believes have changed that category. The Corporation’s and the Bank’s actual capital amounts and ratios under the Basel III rules at December 31, 2019 and 2018 are presented in the table below.

	2019
	Actual Capital				Minimum ‎Capital Adequacy ‎Requirement				Minimum To Be Well ‎Capitalized Under Prompt ‎Corrective Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 capital to average assets:
Consolidated	$	388,293	9.42	%	$	164,964	4.00	%		N/A	N/A
Bank		388,150	9.42			164,885	4.00		$	206,106	5.00	%
Common equity tier 1 capital to risk ‎  weighted assets:
Consolidated		388,293	14.93			117,048	4.50			N/A	N/A
Bank		388,150	14.93			117,001	4.50			169,002	6.50
Tier 1 capital to risk weighted assets:
Consolidated		388,293	14.93			156,064	6.00			N/A	N/A
Bank		388,150	14.93			156,002	6.00			208,003	8.00
Total capital to risk weighted assets:
Consolidated		417,757	16.06			208,085	8.00			N/A	N/A
Bank		417,614	16.06			208,003	8.00			260,003	10.00
	2018
Tier 1 capital to average assets:
Consolidated	$	397,036	9.40	%	$	169,015	4.00	%		N/A	N/A
Bank		399,237	9.45			168,916	4.00		$	211,145	5.00	%
Common equity tier 1 capital to risk ‎  weighted assets:
Consolidated		397,036	15.29			116,840	4.50			N/A	N/A
Bank		399,237	15.38			116,820	4.50			168,741	6.50
Tier 1 capital to risk weighted assets:
Consolidated		397,036	15.29			155,786	6.00			N/A	N/A
Bank		399,237	15.38			155,761	6.00			207,681	8.00
Total capital to risk weighted assets:
Consolidated		428,020	16.48			207,715	8.00			N/A	N/A
Bank		430,221	16.57			207,681	8.00			259,601	10.00

Other Matters. A source of funds for dividend payments to shareholders is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid by the Bank without prior approval of regulatory agencies. Under these regulations, the amount of dividends that the Bank may pay in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the minimum capital requirements described above. During 2020, the Bank could, without prior approval, declare dividends of approximately $15,305,000 plus any 2020 net profits retained to the date of the dividend declaration.

Regulation D of the Board of Governors of The Federal Reserve System requires banks to maintain reserves against certain deposit balances. The Bank’s average reserve requirement for 2019 was approximately $27,259,000.