Regulatory Matters

12 Months Ended

Dec. 31, 2017

Regulatory Matters [Abstract]

Regulatory Matters

NOTE 17, Regulatory Matters

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can cause certain mandatory and possibly additional discretionary actions to be initiated by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank'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 their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total, Tier 1, and common equity tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets. The terms Tier 1 and common equity tier 1 capital, risk-weighted assets and average assets, as used in this note, are as defined in the applicable regulations. Management believes, as of December 31, 2017 and 2016, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

In July 2013, the Federal Reserve issued final rules to include technical changes to its market risk capital rules to align them with the Basel III regulatory capital framework and meet certain requirements of the Dodd-Frank Act. Effective January 1, 2015, the final rules require the Bank to comply with the following minimum capital ratios: (i) a new common equity Tier 1 capital (CET1) ratio of 4.5% of risk-weighted assets; (ii) a Tier 1 capital ratio of 6.0% of risk-weighted assets (increased from the prior requirement); (iii) a total capital ratio of 8.0% of risk-weighted assets (unchanged from the prior requirement); and (iv) a leverage ratio of 4.0% of total assets (unchanged from the prior requirement). The Basel III Final Rules establish a capital conservation buffer of 2.5%, which is added to the 4.5% CET1 to risk-weighted assets to increase the ratio to at least 7%. The Basel III Final Rules also establish risk weighting that applied to many classes of assets held by community banks, importantly including applying higher risk weightings to certain commercial real estate loans. The Basel III Final Rules became effective January 1, 2015 and the Basel III Final Rules capital conservation buffer will be phased in from 2015 to 2019.

When fully phased in, the Basel III Final Rules require banks to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% "capital conservation buffer" (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7%), (ii) a minimum ratio of Tier 1 captial to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of total (that is, Tier 1 plus Tier 2) capital to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total captial ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4%, calculated as the ratio of Tier 1 capital to balance sheet exposures plus certain off-balance sheet exposures (computed as the average for each quarter of the month-end ratios for the quarter).

As of December 31, 2017, the most recent notification from the Comptroller categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, an institution 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 tables. There are no conditions or events since the notification that management believes have changed the Bank's category. The Company's and the Bank's actual capital amounts and ratios as of December 31, 2017 and 2016 are also presented in the table.

	Capital					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
December 31, 2017:
Total Capital to Risk Weighted Assets:
Consolidated	$	106,029		12.28	%	$	69,055		8.00	%		N/A		N/A
Old Point National Bank		97,194		11.30	%		68,803		8.00	%	$	86,004		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,474		11.18	%		51,791		6.00	%		N/A		N/A
Old Point National Bank		87,639		10.19	%		51,602		6.00	%		68,803		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		96,474		11.18	%		38,843		4.50	%		N/A		N/A
Old Point National Bank		87,639		10.19	%		38,702		4.50	%		55,902		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		96,474		9.98	%		38,686		4.00	%		N/A		N/A
Old Point National Bank		87,639		9.09	%		38,575		4.00	%		48,218		5.00	%
December 31, 2016:
Total Capital to Risk Weighted Assets:
Consolidated	$	106,443		14.51	%	$	58,678		8.00	%		N/A		N/A
Old Point National Bank		98,237		13.47	%		58,350		8.00	%	$	72,938		10.00	%
Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		44,009		6.00	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		43,763		6.00	%		58,350		8.00	%
Common Equity Tier 1 Capital to Risk Weighted Assets:
Consolidated		98,198		13.39	%		33,007		4.50	%		N/A		N/A
Old Point National Bank		89,992		12.34	%		32,822		4.50	%		47,410		6.50	%
Tier 1 Capital to Average Assets:
Consolidated		98,198		10.68	%		36,768		4.00	%		N/A		N/A
Old Point National Bank		89,992		9.85	%		36,549		4.00	%		45,686		5.00	%

The approval of the Comptroller is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's net profits for that year combined with its retained net profits for the preceding two calendar years. Under this formula, the Bank and Trust can distribute as dividends to the Company in 2018, without approval of the Comptroller, $388 thousand (Trust only) plus an additional amount equal to the Bank's and Trust's retained net profits for 2018 up to the date of any dividend declaration.