Note 11 - Regulatory Restrictions

9 Months Ended

Sep. 30, 2020

Regulated Operations [Abstract]

Regulatory Restrictions

11. REGULATORY RESTRICTIONS

Dividends payable by QNB and the Bank are subject to various limitations imposed by statutes, regulations and policies adopted by bank regulatory agencies. Under Federal and Pennsylvania banking law, the Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. Under Federal Reserve regulations, the Bank is limited as to the amount it may lend affiliates, including QNB, unless such loans are collateralized by specific obligations.

Both the QNB and the Bank are subject to regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate actions by regulators that could have an effect on the financial statements. Under the framework for prompt corrective action, the Bank must meet capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items. The capital amounts and classification are also subject to qualitative judgments by the regulators. Management believes, as of September 30, 2020, that the Company and the Bank met capital adequacy requirements to which they were subject.

As of the most recent notification, the primary regulator of the Bank considered it to be “well capitalized” under the regulatory framework. There are no conditions or events since that notification that management believes have changed the classification. To be categorized as well capitalized, bank holding companies and insured depository institutions must maintain minimum ratios as set forth in the following table below.

The Company and the Bank’s actual capital amounts and ratios are presented as follows:

	Capital levels
	Actual					Adequately capitalized					Well capitalized
September 30, 2020	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	136,502		14.23	%	$	76,745		8.00	%	$	95,931		10.00	%
Bank		124,749		13.51			73,892	8.00				92,365	10.00
Tier I capital (to risk-weighted assets):
The Company		125,652		13.10			57,558	6.00				57,558	6.00
Bank		113,899		12.33			55,419	6.00				73,892	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		125,652		13.10			43,169	4.50			N/A		N/A
Bank		113,899		12.33			41,564	4.50				60,037	6.50
Tier I capital (to average assets):
The Company		125,652		8.90			56,459	4.00			N/A		N/A
Bank		113,899		8.14			55,947	4.00				69,933	5.00

	Capital levels
	Actual					Adequately capitalized					Well capitalized
As of December 31, 2019	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk-weighted assets):
The Company	$	130,412		13.82	%	$	75,498		8.00	%	$	94,373		10.00	%
Bank		118,389		12.93			73,270	8.00				91,587	10.00
Tier I capital (to risk-weighted assets):
The Company		120,452		12.76			56,624	6.00				56,624	6.00
Bank		108,429		11.84			54,952	6.00				73,270	8.00
Common equity tier 1 capital (to risk-weighted    assets):
The Company		120,452		12.76			42,468	4.50			N/A		N/A
Bank		108,429		11.84			41,241	4.50				59,532	6.50
Tier I capital (to average assets):
The Company		120,452		9.78			49,283	4.00			N/A		N/A
Bank		108,429		8.89			48,804	4.00				61,005	5.00