Regulatory Matters

12 Months Ended

Dec. 31, 2021

Banking Regulation, Total Capital [Abstract]

Regulatory Matters

REGULATORY MATTERS

The primary source of funds for our dividends paid to our shareholders is dividends received from our subsidiaries.  Dividends paid by the subsidiary bank are subject to restrictions by banking law and regulations and require approval by the Bank’s regulatory agency if dividends declared in any year exceed the bank’s current year's net income, as defined, plus its retained net profits of the two preceding years.  During 2022, the Bank will have $70.8 million plus net income for the interim periods through the date of declaration, available for dividends for distribution to us.  

Our subsidiary bank may be required to maintain reserve balances with the Federal Reserve Bank.  The required reserve balance was zero at December 31, 2021 and 2020.

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 December 31, 2021, 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 ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. We elected to this optional phase-in period upon adoption of the ASU effective January 1, 2020. 

The following tables present Summit's, as well as Summit Community's, actual and required minimum regulatory capital amounts and ratios as of December 31, 2021 and December 31, 2020. 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 December 31, 2021
CET1 (to risk weighted assets)
Summit	$	257,122	8.4	%	$	214,268	7.0	%	N/A	N/A
Summit Community	364,125		11.9	%	214,191		7.0	%	198,892	6.5	%
Tier I Capital (to risk weighted assets)
Summit	291,042		9.5	%	260,406		8.5	%	N/A	N/A
Summit Community	364,125		11.9	%	260,089		8.5	%	244,790	8.0	%
Total Capital (to risk weighted assets)
Summit	420,045		13.8	%	319,599		10.5	%	N/A	N/A
Summit Community	390,236		12.8	%	320,115		10.5	%	304,872	10.0	%
Tier I Capital (to average assets)
Summit	291,042		8.3	%	140,261		4.0	%	N/A	N/A
Summit Community	364,125		10.4	%	140,048		4.0	%	175,060	5.0	%
As of December 31, 2020
CET1 (to risk weighted assets)
Summit	233,768		9.3	%	N/A		N/A		N/A	N/A
Summit Community	279,540		11.1	%	176,286		7.0	%	163,695	6.5	%
Tier I Capital (to risk weighted assets)
Summit	252,768		10.0	%	N/A		N/A		N/A	N/A
Summit Community	279,540		11.1	%	214,062		8.5	%	201,470	8.0	%
Total Capital (to risk weighted assets)
Summit	305,309		12.1	%	N/A		N/A		N/A	N/A
Summit Community	302,716		12.0	%	264,877		10.5	%	252,263	10.0	%
Tier I Capital (to average assets)
Summit	252,768		8.6	%	N/A		N/A		N/A	N/A
Summit Community	279,540		9.5	%	117,701		4.0	%	147,126	5.0	%