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Regulatory Matters
 6 Months Ended
Jun. 30, 2019
Regulatory Matters [Abstract]  
Regulatory Matters
Note 6:
Regulatory Matters

The Company and Bank are subject to risk-based capital guidelines issued by the federal banking agencies.  These guidelines are used to evaluate capital adequacy and involve both quantitative and qualitative evaluations of the Company’s and Bank’s assets, liabilities, and certain off-balance-sheet items calculated under regulatory practices.  Failure to meet the minimum capital requirements can initiate certain mandatory or discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements.  Management believes, as of June 30, 2019, that the Company and Bank met all capital adequacy requirements to which they are subject and maintains capital conservation buffers that allow the Company and Bank to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to certain executive officers.
 
The Company’s and Bank’s actual capital amounts and ratios are presented in the following table (dollars in thousands):

  
 
Actual
  
Minimum
Capital Requirements
  
Minimum
To Be Well Capitalized
Under Prompt
Corrective Action
 
 
 
Amount
  
Ratio
  
Amount
  
Ratio
  
Amount
  
Ratio
 
 
                  
As of June 30, 2019
                  
Total capital to risk-weighted assets
                  
Company
 
$
104,778
   
17.16
%
 
$
48,838
   
8.00
%
  
N/A
   
N/A
 
Bank
 
$
104,609
   
17.16
%
 
$
48,755
   
8.00
%
 
$
60,944
   
10.00
%
Tier I capital to risk-weighted assets
                        
Company
 
$
97,145
   
15.91
%
 
$
36,629
   
6.00
%
  
N/A
   
N/A
 
Bank
 
$
96,988
   
15.91
%
 
$
36,566
   
6.00
%
 
$
48,755
   
8.00
%
CET I capital to risk-weighted assets
                        
Company
 
$
97,145
   
15.91
%
 
$
27,471
   
4.50
%
  
N/A
   
N/A
 
Bank
 
$
96,988
   
15.91
%
 
$
27,425
   
4.50
%
 
$
39,613
   
6.50
%
Tier I capital to average assets
                        
Company
 
$
97,145
   
12.34
%
 
$
31,481
   
4.00
%
  
N/A
   
N/A
 
Bank
 
$
96,988
   
12.35
%
 
$
31,407
   
4.00
%
 
$
39,258
   
5.00
%
 
                        
As of December 31, 2018
                        
Total capital to risk-weighted assets
                        
Company
 
$
92,693
   
15.86
%
 
$
46,751
   
8.00
%
  
N/A
   
N/A
 
Bank
 
$
93,704
   
16.03
%
 
$
46,751
   
8.00
%
 
$
58,439
   
10.00
%
Tier I capital to risk-weighted assets
                        
Company
 
$
85,382
   
14.61
%
 
$
35,063
   
6.00
%
  
N/A
   
N/A
 
Bank
 
$
86,393
   
14.78
%
 
$
35,063
   
6.00
%
 
$
46,751
   
8.00
%
CET I capital to risk-weighted assets
                        
Company
 
$
85,382
   
14.61
%
 
$
26,298
   
4.50
%
  
N/A
   
N/A
 
Bank
 
$
86,393
   
14.78
%
 
$
26,298
   
4.50
%
 
$
37,985
   
6.50
%
Tier I capital to average assets
                        
Company
 
$
85,382
   
11.13
%
 
$
30,684
   
4.00
%
  
N/A
   
N/A
 
Bank
 
$
86,393
   
11.26
%
 
$
30,684
   
4.00
%
 
$
38,355
   
5.00
%
 
In July 2013, the federal regulatory authorities issued a new capital rule based, in part, on revisions developed by the Basel Committee on Banking Supervision to the Basel capital framework (Basel III).  The Bank became subject to the new rule effective January 1, 2015.  Generally, the new rule implements higher minimum capital requirements, revises the definition of regulatory capital components and related calculations, adds a new common equity tier 1 capital ratio, implements a new capital conservation buffer, increases the risk weighting for past due loans and provides a transition period for several aspects of the new rule.  In addition, banks with less than $250 billion in assets were given a one-time opt-out election under Basel III Capital Rules to filter from regulatory capital certain accumulated other comprehensive income (AOCI) components.  The Bank made the opt-out election and excludes the AOCI components from the capital ratio computations.
 
The current (new) capital rule provides that, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements.  The buffer is measured relative to risk-weighted assets.
 
As fully phased in, a banking organization with a buffer greater than 2.5% would not be subject to additional limits on dividend payments or discretionary bonus payments; however, a banking organization with a buffer less than 2.5% would be subject to increasingly stringent limitations as the buffer approaches zero.  The new rule also prohibits a banking organization from making dividend payments or discretionary bonus payments if its eligible retained income is negative in that quarter and its capital conservation buffer ratio was less than 2.5% as the beginning of that quarter. Eligible net income is defined as net income for the four calendar quarters preceding the current calendar quarter, net of any distributions and associated tax effects not already reflected in net income.  A summary of payout restrictions based on the capital conservation buffer is as follows:
 
Capital Conservation Buffer
(as a % of risk-weighted assets)
 
Maximum Payout
(as a % of eligible retained income)
 
Greater than 2.5%
 
No payout limitations applies
 
≤2.5% and >1.875%
  
60
%
≤1.875% and >1.25%
  
40
%
≤1.25% and >0.625%
  
20
%
≤0.625%
  
0
%

The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval.  At June 30, 2019, approximately $42.7 million of retained earnings was available for dividend declaration from the Bank without prior regulatory approval.