Note 20 - Dividend Restrictions and Regulatory Capital

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Restrictions on Dividends, Loans and Advances [Text Block]

Note 20 – Dividend Restrictions and Regulatory Capital

The approval of the Office of the Comptroller of the Currency is required if the total of all dividends declared by a national bank in any calendar year exceeds the bank's retained net income, as defined, for that year combined with its retained net income for the preceding two calendar years. Under this formula, the Bank can distribute as dividends to the Company, without the approval of the Office of the Comptroller of the Currency, up to $35,132,000 as of December 31, 2021. Dividends paid by the Bank to the Company are the only significant source of funding for dividends paid by the Company to its shareholders.

Federal bank regulators have issued substantially similar guidelines requiring banks and bank holding companies to maintain capital at certain levels. In addition, regulators may from time to time require that a banking organization maintain capital above the minimum levels because of its financial condition or actual or anticipated growth. Failure to meet minimum capital requirements can trigger certain mandatory and discretionary actions by regulators that could have a direct material effect on the Company's financial condition and results of operations.

The FRB and Office of the Comptroller of the Currency have adopted rules to implement the Basel III capital framework as outlined by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Basel III Capital Rules"). The Basel III Capital Rules require banks and bank holding companies to comply with certain minimum capital ratios, plus a "capital conservation buffer," as set forth in the table below. The capital conservation buffer requirement was phased in ratably over a four year period beginning on January 1, 2016, is designed to absorb losses during periods of economic stress and is applicable to all ratios except the leverage capital ratio. Institutions with a Common Equity Tier 1 ratio above the minimum (4.5%) but below the minimum plus the conservation buffer (7.0%) will face constraints on dividends, equity repurchases, and discretionary compensation paid to certain officers, based on the amount of the shortfall. The Bank must also comply with the capital requirements set forth in the "prompt corrective action" regulations pursuant to Section 38 of the Federal Deposit Insurance Act. The minimum capital ratios for the Bank to be considered "well capitalized" are set forth in the table below.

On September 17, 2019, the federal banking agencies jointly issued a final rule required by the Economic Growth, Regulatory Relief, and Consumer Protection Act that permits qualifying banks and bank holding companies that have less than $10 billion in consolidated assets to elect to be subject to a 9% leverage ratio (commonly referred to as the community bank leverage ratio or "CBLR"). Under the final rule, banks and bank holding companies that opt into the CBLR framework and maintain a CBLR of greater than 9% are not subject to other risk-based and leverage capital requirements under the Basel III Capital Rules and are deemed to have met the well capitalized ratio requirements under the "prompt corrective action" framework. In addition, a community bank that falls out of compliance with the framework has a two-quarter grace period to come back into full compliance, provided its leverage ratio remains above 8%, and will be deemed well-capitalized during the grace period. The CBLR framework was first available for banking organizations to use in their March 31, 2020 regulatory reports. The Company and the Bank do mot currently expect to opt into the CBLR framework.

Management believes that as of December 31, 2021, the Company and Bank meet all capital adequacy requirements to which they are subject. At year-end 2021 and 2020, the most recent regulatory notifications categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category.

Actual and required capital amounts (in thousands) and ratios are presented below at year-end. 

										To Be Well
										Capitalized Under
										Prompt Corrective
	Actual					Required for Capital Adequacy Purposes				Action Provisions
	Amount		Ratio			Amount		Ratio		Amount		Ratio
December 31, 2021
Common Equity Tier 1
Company	$	270,192		12.43	%	$	97,798		>7.00%		N/A		N/A
Bank		285,260		13.15			151,845		>7.00	$	140,999		>6.50%
Tier 1 Capital
Company		298,424		13.73			130,397		>8.50		N/A		N/A
Bank		285,260		13.15			184,383		>8.50		173,537		>8.00
Total Capital
Company		317,488		14.61			173,862		>10.50		N/A		N/A
Bank		304,324		14.03			277,767		>10.50		216,921		>10.00
Leverage Capital
Company		298,424		9.13			130,722		>4.00		N/A		N/A
Bank		285,260		8.76			130,264		>4.00		162,830		>5.00
December 31, 2020
Common Equity Tier 1
Company	$	244,318		12.36	%	$	88,967		>7.00%		N/A		N/A
Bank		252,748		12.86			137,530		>7.00	$	127,706		>6.50%
Tier 1 Capital
Company		272,448		13.78			118,623		>8.50		N/A		N/A
Bank		252,748		12.86			167,001		>8.50		157,177		>8.00
Total Capital
Company		300,155		15.18			158,164		>10.50		N/A		N/A
Bank		274,455		13.97			206,295		>10.50		196,471		>10.00
Leverage Capital
Company		272,448		9.48			114,902		>4.00		N/A		N/A
Bank		252,748		8.85			114,247		>4.00		142,809		>5.00

*Ratios include the conservation buffer.