Regulatory Matters

9 Months Ended

Sep. 30, 2020

Banking Regulation, Total Capital [Abstract]

Regulatory Matters

REGULATORY MATTERS

Our bank subsidiary, Summit Community Bank, Inc. (“Summit Community”), is subject to various regulatory capital requirements administered by the banking regulatory agencies. Under the capital adequacy guidelines and the regulatory framework for prompt corrective action, Summit Community must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.  Our bank subsidiary’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require Summit Community to maintain minimum amounts and ratios of Common Equity Tier 1("CET1"), Total capital and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined).  We believe, as of September 30, 2020, that our bank subsidiary met all capital adequacy requirements to which they were subject.

The most recent notifications from the banking regulatory agencies categorized Summit Community as well capitalized under the regulatory framework for prompt corrective action.  To be categorized as well capitalized, Summit Community must maintain minimum CET1, Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table below.

In December 2018, the federal bank regulatory agencies approved a final rule modifying their regulatory capital rules to provide an option to phase-in over a period of three years the day-one regulatory capital effects of the implementation of ASC 326. In March 2020, those agencies approved a final rule providing an option to delay the estimated impact on regulatory capital. We elected this optional phase-in period upon adoption of ASC 326 on January 1, 2020 and elected to delay the estimated impact. The initial impact of adoption as well as 25% of the quarterly increases in the allowance for credit losses subsequent to adoption (collectively the “transition adjustments”) will be delayed for two years. After two years, the cumulative amount of the transition adjustments will become fixed and will be phased out of the regulatory capital calculations evenly over a three year period, with 75% recognized in year three, 50% recognized in year four, and 25% recognized in year five. After five years, the temporary regulatory capital benefits will be fully reversed.

The following tables present Summit's, as well as Summit Community's, actual and required minimum regulatory capital amounts and ratios as of September 30, 2020 and December 31, 2019. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended.

	Actual				Minimum Required Capital - Basel III			Minimum Required To Be Well Capitalized
Dollars in thousands	Amount		Ratio		Amount	Ratio		Amount	Ratio
As of September 30, 2020
CET1 (to risk weighted assets)
Summit	$	231,568	9.9	%	N/A	N/A		N/A	N/A
Summit Community	276,361		11.8	%	163,943	7.0	%	152,233	6.5	%
Tier I Capital (to risk weighted assets)
Summit	250,568		10.7	%	N/A	N/A		N/A	N/A
Summit Community	276,361		11.8	%	199,074	8.5	%	187,363	8.0	%
Total Capital (to risk weighted assets)
Summit	301,774		12.9	%	N/A	N/A		N/A	N/A
Summit Community	297,567		12.7	%	246,020	10.5	%	234,305	10.0	%
Tier I Capital (to average assets)
Summit	250,568		8.7	%	N/A	N/A		N/A	N/A
Summit Community	276,361		9.6	%	115,150	4.0	%	143,938	5.0	%

	Actual			Minimum Required Capital - Basel III Fully Phased-in			Minimum Required To Be Well Capitalized
Dollars in thousands	Amount	Ratio		Amount	Ratio		Amount	Ratio
As of December 31, 2019
CET1 (to risk weighted assets)
Summit	224,679	11.1	%	N/A	N/A		N/A	N/A
Summit Community	244,045	12.1	%	141,183	7.0	%	131,099	6.5	%
Tier I Capital (to risk weighted assets)
Summit	243,679	12.1	%	N/A	N/A		N/A	N/A
Summit Community	244,045	12.1	%	171,437	8.5	%	161,352	8.0	%
Total Capital (to risk weighted assets)
Summit	256,753	12.7	%	N/A	N/A		N/A	N/A
Summit Community	257,119	12.7	%	212,579	10.5	%	202,456	10.0	%
Tier I Capital (to average assets)
Summit	243,679	10.5	%	N/A	N/A		N/A	N/A
Summit Community	244,045	10.6	%	92,092	4.0	%	115,116	5.0	%