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CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS | 12 Months Ended
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Dec. 31, 2018
Capital Requirements and Restrictions On Retained Earnings [Abstract] |
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS | NOTE 16 – CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS The Company became a financial holding company effective May 30, 2012 and is now required to be well capitalized under the applicable regulatory guidelines. The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet certain heightened minimum capital requirements can initiate certain mandatory, and possibly discretionary actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors. The capital adequacy requirements were heightened by the Basel III Rules, which went into effect on January 1, 2015 with a phase-in period for certain aspects of the rule through 2019. Under the Basel III rules, the Company must hold a capital conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from 0.000% for 2015 to 2.50% by 2019. The capital conservation buffer for 2018 and 2017 is 1.875% and 1.25%, respectively. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. The quantitative measures established by regulation to ensure capital adequacy that were in effect on December 31, 2018 and 2017, require the Company and the Bank to maintain minimum capital amounts and ratios (set forth in the following table) of Total, Tier I and Common Equity Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulation), and of Tier I capital (as defined in the regulation) to average assets (as defined). Management believes, as of the years ended December 31, 2018 and 2017, that the Company and the Bank met all capital adequacy requirements to which they are subject. As of December 31, 2018, the most recent notification from the federal regulators categorized the Company and the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and the Bank must maintain minimum Total risk-based capital ratios, Tier I risk-based capital ratios and Tier I leverage capital ratios as set forth in the table. There have been no conditions or events since that notification that management believes have changed the Company and the Bank’s category.
|  |  |  |  |  |  |  |  | Minimum Required to
|  |  |  |  | Minimum Required |  | For Capital Adequacy |  | Be Well Capitalized
|  |  | For Capital |  | Purposes Plus Capital |  | Under Prompt Corrective
| Actual |  | Adequacy Purposes |  | Conservation Buffer |  | Action Regulations
(dollars in thousands) | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio |  | Amount |  | Ratio
As of December 31, 2018: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital (to Risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $601,379 |  | 14.20% |  | $338,690 |  | 8.00% |  | $418,070 |  | N/A |  | N/A |  | N/A
Bank | $583,206 |  | 13.80% |  | $338,098 |  | 8.00% |  | $417,340 |  | 9.875% |  | $422,623 |  | 10.00%
Tier I Capital (to Risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $552,836 |  | 13.06% |  | $254,017 |  | 6.00% |  | $333,398 |  | N/A |  | N/A |  | N/A
Bank | $534,664 |  | 12.65% |  | $253,574 |  | 6.00% |  | $332,815 |  | 7.875% |  | $338,098 |  | 8.00%
Common Equity Tier 1 (CET1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $522,836 |  | 12.35% |  | $190,513 |  | 4.50% |  | $269,893 |  | N/A |  | N/A |  | N/A
Bank | $534,664 |  | 12.65% |  | $190,180 |  | 4.50% |  | $269,422 |  | 6.375% |  | $274,705 |  | 6.50%
Tier I Capital (to Average Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $552,836 |  | 11.44% |  | $193,305 |  | 4.00% |  | $193,305 |  | N/A |  | N/A |  | N/A
Bank | $534,664 |  | 11.06% |  | $193,312 |  | 4.00% |  | $193,312 |  | 4.00% |  | $241,639 |  | 5.00%
As of December 31, 2017: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Total Capital (to Risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $541,475 |  | 13.26% |  | $326,782 |  | 8.00% |  | $377,842 |  | N/A |  | N/A |  | N/A
Bank | $525,482 |  | 12.89% |  | $326,140 |  | 8.00% |  | $377,099 |  | 9.250% |  | $407,675 |  | 10.00%
Tier I Capital (to Risk |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Weighted Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $494,265 |  | 12.10% |  | $245,087 |  | 6.00% |  | $296,147 |  | N/A |  | N/A |  | N/A
Bank | $478,272 |  | 11.73% |  | $244,605 |  | 6.00% |  | $295,564 |  | 7.250% |  | $326,140 |  | 8.00%
Common Equity Tier 1 (CET1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $464,265 |  | 11.37% |  | $183,815 |  | 4.50% |  | $234,875 |  | N/A |  | N/A |  | N/A
Bank | $478,272 |  | 11.73% |  | $183,454 |  | 4.50% |  | $234,413 |  | 5.750% |  | $264,988 |  | 6.50%
Tier I Capital (to Average Assets) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consolidated | $494,265 |  | 10.76% |  | $183,793 |  | 4.00% |  | $183,793 |  | N/A |  | N/A |  | N/A
Bank | $478,272 |  | 10.44% |  | $183,187 |  | 4.00% |  | $183,187 |  | 4.00% |  | $228,984 |  | 5.00%
The Bank is required to obtain the approval of the Indiana Department of Financial Institutions for the payment of any dividend if the total amount of all dividends declared by the Bank during the calendar year, including the proposed dividend, would exceed the sum of the retained net income for the year-to-date combined with the retained net income for the previous two years. Indiana law defines “retained net income” to mean the net income of a specified period, calculated under the consolidated report of income instructions, less the total amount of all dividends declared for the specified period. As of December 31, 2018, approximately $96.1 million was available to be paid as dividends to the Company by the Bank. The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and a financial institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized. As described above, the Bank exceeded its minimum capital requirements under applicable guidelines as of December 31, 2018. Notwithstanding the availability of funds for dividends however, the FDIC may prohibit the payment of any dividends by the Bank if the FDIC determines such payment would constitute an unsafe or unsound practice.

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