Note 19 - Regulatory Matters

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Regulatory Capital Requirements under Banking Regulations [Text Block]

( 19 ) Regulatory Matters

Bancorp and the Bank are subject to various capital requirements prescribed by banking regulations and administered by state and federal banking agencies. The final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (Basel III rules) became effective on

January 1, 2015

with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by

January 1, 2019.

The minimum capital level requirements applicable to banks and bank holding companies subject to the rules are:

• a common equity tier 1 capital ratio of 4.5%,

• a tier 1 risk-based capital ratio of 6%

• a total risk-based capital ratio of 8%

• a tier 1 leverage ratio of 4%

Under these requirements, Bancorp and the Bank must meet minimum amounts and percentages of Tier

1

capital, common equity Tier

1

capital, and total capital to risk weighted assets, and Tier

1

capital to average assets. Risk weighted assets are determined by applying certain risk weightings prescribed by regulation to various categories of assets and off-balance sheet commitments. Capital and risk weighted assets

may

be further subject to qualitative judgments by regulators as to components, risk weighting and other factors. Failure to meet capital requirements can result in certain mandatory, and possibly discretionary, corrective actions prescribed by regulation or determined to be necessary by regulators, which could materially affect the unaudited consolidated financial statements.

The Basel III rules also established a capital conservation buffer

of

2.5%,

to be phased in over

three

years through

December 31, 2018,

above the regulatory minimum risk-based capital ratios. When fully phased in the buffer will result in the following minimum ratios:

• a common equity tier 1 risk-based capital ratio of 7.0%,

• a tier 1 risk-based capital ratio of 8.5%, and

• a total risk-based capital ratio of 10.5%.

The rules allowed banks and their holding companies with less than

$250

billion in assets a

one

-time opportunity to opt-out of a requirement to include unrealized gains and losses in accumulated other comprehensive income in their capital calculation. Bancorp opted out of this requirement.

As of

June 30, 2017,

Bancorp meets the requirements to be considered well capitalized under the rules, and is

not

subject to limitations due to the capital conservation buffer.

The following tables set forth consolidated Bancorp’s and the Bank’s risk based capital amounts and ratios as of

June 30, 2017

and

December 31, 2016.

(dollars in thousands)	Actual					Minimum for adequately capitalized					Minimum for well capitalized
June 30, 2017	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (1)
Consolidated	$	351,241		13.49	%	$	208,297		8.00	%	NA		NA
Bank		338,984		13.06			207,647		8.00		$	259,559		10.00
Common equity tier 1 risk-based capital
Consolidated		325,753		12.51			117,177		4.50		NA		NA
Bank		313,496		12.08			116,782		4.50			155,710		6.00
Tier 1 risk-based capital (1)
Consolidated		325,753		12.51			156,236		6.00		NA		NA
Bank		313,496		12.08			155,710		6.00			155,710		6.00
Leverage (2)
Consolidated		325,753		10.88			119,762		4.00		NA		NA
Bank		313,496		10.48			119,655		4.00			149,569		5.00

(dollars in thousands)	Actual					Minimum for adequately capitalized					Minimum for well capitalized
December 31, 2016	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total risk-based capital (1)
Consolidated	$	338,525		13.04	%	$	207,684		8.00	%	NA		NA
Bank		325,630		12.57			207,243		8.00		$	259,053		10.00
Common equity tier 1 risk-based capital
Consolidated		314,147		12.10			116,832		4.50		NA		NA
Bank		301,252		11.63			116,564		4.50			155,418		6.00
Tier 1 risk-based capital (1)
Consolidated		314,147		12.10			155,775		6.00		NA		NA
Bank		301,252		11.63			155,418		6.00			155,418		6.00
Leverage (2)
Consolidated		314,147		10.54			119,221		4.00		NA		NA
Bank		301,252		10.11			119,190		4.00			148,987		5.00

( 1 )	Ratio is computed in relation to risk-weighted assets.
( 2 )	Ratio is computed in relation to average assets.
NA	Not applicable. Regulatory framework does not define well capitalized for holding companies.