NOTE 19 - CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS

The Company (consolidated) and Civista collectively, the (“Companies”) are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory-and possibly additional discretionary-actions by regulators that, if undertaken, could have a direct material effect on the Companies’ financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Companies must meet specific capital guidelines that involve quantitative measures of the Companies’ assets, liabilities, and certain off-balance-sheet items as calculated under U.S. GAAP, regulatory reporting requirements, and regulatory capital standards. The Companies’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulatory capital standards to ensure capital adequacy require the Companies to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital to risk-weighted assets, common equity Tier 1 capital to total risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of December 31, 2017, that the Companies met all capital adequacy requirements to which they were subject.

NOTE 19 - CAPITAL REQUIREMENTS AND RESTRICTION ON RETAINED EARNINGS (Continued)

As of December 31, 2017, and 2016, the most recent notification from the Federal Reserve Bank categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Companies must maintain minimum total risk-based capital, Tier 1 risk-based capital, common equity Tier 1 risk-based capital, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution’s category.

The Company’s and Civista’s actual capital levels and minimum required capital levels at December 31, 2017 and 2016 were as follows:

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Purposes
	Amount		Ratio			Amount		Ratio			Amount		Ratio
2017
Total Risk Based Capital
Consolidated	$	200,772		16.6	%	$	97,025		8.0	%	n/a		n/a
Civista		161,394		13.3			96,880		8.0		$	121,100		10.0	%
Tier I Risk Based Capital
Consolidated		187,638		15.5			72,769		6.0		n/a		n/a
Civista		147,473		12.2			72,660		6.0			96,880		8.0
CET1 Risk Based Capital
Consolidated		140,853		11.6			54,576		4.5		n/a		n/a
Civista		136,760		11.3			54,495		4.5			78,715		6.5
Leverage
Consolidated		187,638		12.7			59,089		4.0		n/a		n/a
Civista		147,473		10.0			59,031		4.0			73,788		5.0
2016
Total Risk Based Capital
Consolidated	$	155,145		14.2	%	$	87,436		8.0	%	n/a		n/a
Civista		145,270		13.3			87,334		8.0		$	109,168		10.0	%
Tier I Risk Based Capital
Consolidated		141,840		13.0			65,577		6.0		n/a		n/a
Civista		131,391		12.0			65,501		6.0			87,334		8.0
CET1 Risk Based Capital
Consolidated		93,463		8.6			49,183		4.5		n/a		n/a
Civista		120,465		11.0			49,126		4.5			70,959		6.5
Leverage
Consolidated		141,840		10.6			53,774		4.0		n/a		n/a
Civista		131,391		9.8			53,717		4.0			67,146		5.0

CBI’s primary source of funds for paying dividends to its shareholders and for operating expense is the cash accumulated from dividends received from Civista. Payment of dividends by Civista to CBI is subject to restrictions by Civista’s regulatory agencies. These restrictions generally limit dividends to the current and prior two years retained earnings as defined by the regulations. In addition, dividends may not reduce capital levels below minimum regulatory requirements. At December 31, 2017, Civista had $36,440 net profits available to pay dividends to CBI.