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Regulatory Matters
 12 Months Ended
Dec. 31, 2018
Banking and Thrift [Abstract]  
Regulatory Matters
    Regulatory Matters

Regulatory Capital Requirements:

The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgements by regulators. Failure to meet capital requirements can initiate regulatory action. The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company 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. Under 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 at the rate of 0.625 percent per year from 0.0 percent in 2015 to 2.50 percent on January 1, 2019. The capital conservation buffer for 2017 is 1.25 percent and for 2018 is 1.875 percent. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018, the Company and Bank meet all capital adequacy requirements to which they are subject.

Regulatory Capital Requirements (continued):

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year end 2018 and 2017, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank's category. Management currently believes, based on internal capital analysis and earnings projections, the Bank's capital position is adequate to meet current and future regulatory minimum capital requirements.
 
Regulatory Restrictions on Dividends:
 
Pursuant to Tennessee banking law, the Bank may not, without the prior consent of the Commissioner of the Tennessee Department of Financial Institutions (TDFI), pay any dividends to the Company in a calendar year in excess of the total of the Bank's retained net income for that year plus the retained net income for the preceding two years. During the year ended December 31, 2018, SmartBank paid no dividends to the Company. As of December 31, 2018, the Bank could pay approximately $33.4 million of additional dividends to the Company without prior approval of the Commissioner of the TDFI.
 
Regulatory Capital Levels:
 
Actual and required capital levels at December 31, 2018 and 2017 are presented below (dollars in thousands): 
are
 
 
Actual
 
Minimum for capital
adequacy purposes
 
Minimum to be well
capitalized under prompt
corrective action provisions (1)
 
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
December 31, 2018
 
 

 
 

 
 

 
 

 
 

 
 

SmartFinancial, Inc. (2)
 
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
SmartBank
 
 
 
 
 
 
 
 
 
 
 
 
Total Capital (to Risk-Weighted Assets)
 
$
243,774

 
12.74
%
 
$
153,017

 
8.00
%
 
$
191,271

 
10.00
%
Tier 1 Capital (to Risk-Weighted Assets)
 
235,499

 
12.31
%
 
114,763

 
6.00
%
 
153,017

 
8.00
%
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
 
235,499

 
12.31
%
 
86,072

 
4.50
%
 
124,326

 
6.50
%
Tier 1 Capital (to Average Assets)
 
235,499

 
11.17
%
 
84,300

 
4.00
%
 
105,375

 
5.00
%
(1) The prompt corrective action provisions are applicable at the Bank level only.
(2) Reporting regulations were revised during 2018 the capital ratios reported for SmartFinancial Inc. at December 31, 2017 were not required to be reported at December 31, 2018.
Regulatory Capital Levels (continued):
 
 
Actual
 
Minimum for capital
adequacy purposes
 
Minimum to be well
capitalized under prompt
corrective action provisions (1)
 
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
December 31, 2017
 
 

 
 

 
 

 
 

 
 

 
 

SmartFinancial, Inc.
 
 

 
 

 
 

 
 

 
 

 
 

Total Capital (to Risk-Weighted Assets)
 
$
163,683

 
10.98
%
 
$
119,257

 
8.00
%
 
 
 
 
Tier 1 Capital (to Risk-Weighted Assets)
 
157,823

 
10.59
%
 
89,442

 
6.00
%
 
 
 
 
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
 
157,823

 
10.59
%
 
67,082

 
4.50
%
 
 
 
 
Tier 1 Capital (to Average Assets)
 
157,823

 
10.78
%
 
58,562

 
4.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmartBank
 
 

 
 

 
 

 
 

 
 

 
 

Total Capital (to Risk-Weighted Assets)
 
$
168,148

 
11.29
%
 
$
119,111

 
8.00
%
 
$
148,889

 
10.00
%
Tier 1 Capital (to Risk-Weighted Assets)
 
162,288

 
10.90
%
 
89,333

 
6.00
%
 
119,111

 
8.00
%
Common Equity Tier 1 Capital (to Risk-Weighted Assets)
 
162,288

 
10.90
%
 
67,000

 
4.50
%
 
96,778

 
6.50
%
Tier 1 Capital (to Average Assets)
 
162,288

 
11.26
%
 
57,656

 
4.00
%
 
72,070

 
5.00
%

 (1) The prompt corrective action provisions are applicable at the Bank level only.