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Regulatory Requirements and Restrictions
 12 Months Ended
Dec. 31, 2019
Regulatory Requirements and Restrictions  
Regulatory Requirements and Restrictions

NOTE 16: Regulatory Requirements and Restrictions

 

The Bank is 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 Corporation’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Federal banking regulations also impose regulatory capital requirements on bank holding companies. Under the small bank holding company policy statement of the Federal Reserve Board, which applies to certain bank holding companies with consolidated total assets of less than $3 billion, the Corporation is not subject to regulatory capital requirements.

 

As of December 31, 2019, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized under regulations applicable at December 31, 2019, the Bank was required to maintain minimum total risk-based, Tier 1 risk-based, CET1 risk-based and Tier 1 leverage ratios as set forth in the table below.

 

The Corporation’s and the Bank’s actual capital amounts and ratios as of December 31, 2019 and 2018 are presented in the following table along with regulatory requirements for the Bank and requirements that apply to bank holding companies that are subject to regulatory capital requirements for bank holding companies. The Corporation’s consolidated capital is determined under regulations that apply to bank holding companies that are not small bank holding companies.  Total risk-weighted assets at December 31, 2019 for the Corporation were $1.32 billion and for the Bank were $1.29 billion.  Total risk-weighted assets at December 31, 2018 for both the Corporation and the Bank were $1.20 billion. Management believes that, as of December 31, 2019, the Bank met all capital adequacy requirements to which it is subject.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Minimum To Be

 

 

 

 

 

 

 

 

 

 

 

 

 

Well Capitalized

 

 

 

 

 

 

 

 

 

 

 

 

 

Under Prompt

 

 

 

 

 

 

 

 

Minimum Capital

 

Corrective Action

 

 

 

Actual

 

Requirements

 

Provisions

 

(Dollars in thousands)

 

   Amount   

  

Ratio

  

Amount

  

Ratio

  

Amount

  

Ratio

  

As of December 31, 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

$

195,927

 

14.9

%

$

105,544

 

8.0

%

 

N/A

 

N/A

 

C&F Bank

 

 

181,369

 

14.0

 

 

103,307

 

8.0

 

$

129,134

 

10.0

%

Tier 1 Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

179,233

 

13.6

 

 

79,158

 

6.0

 

 

N/A

 

N/A

 

C&F Bank

 

 

165,021

 

12.8

 

 

77,480

 

6.0

 

 

103,307

 

8.0

 

Common Equity Tier 1 Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

154,233

 

11.7

 

 

59,369

 

4.5

 

 

N/A

 

N/A

 

C&F Bank

 

 

165,021

 

12.8

 

 

58,110

 

4.5

 

 

83,937

 

6.5

 

Tier 1 Capital (to Average Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

179,233

 

11.1

 

 

64,863

 

4.0

 

 

N/A

 

N/A

 

C&F Bank

 

 

165,021

 

10.3

 

 

64,201

 

4.0

 

 

80,251

 

5.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

$

183,781

 

15.3

%

$

96,274

 

8.0

%

 

N/A

 

N/A

 

C&F Bank

 

 

181,685

 

15.1

 

 

96,088

 

8.0

 

$

120,110

 

10.0

%

Tier 1 Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

168,504

 

14.0

 

 

72,205

 

6.0

 

 

N/A

 

N/A

 

C&F Bank

 

 

166,437

 

13.9

 

 

72,066

 

6.0

 

 

96,088

 

8.0

 

Common Equity Tier 1 Capital (to Risk-Weighted Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

143,590

 

11.9

 

 

54,154

 

4.5

 

 

N/A

 

N/A

 

C&F Bank

 

 

166,437

 

13.9

 

 

54,050

 

4.5

 

 

78,072

 

6.5

 

Tier 1 Capital (to Average Tangible Assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporation

 

 

168,504

 

11.3

 

 

59,759

 

4.0

 

 

N/A

 

N/A

 

C&F Bank

 

 

166,437

 

11.2

 

 

59,666

 

4.0

 

 

74,582

 

5.0

 

 

In addition to the regulatory risk-based capital amounts presented above, the Bank must maintain a capital conservation buffer of additional capital as required by the Basel III Final Rule.  The capital conservation buffer requirement was phased in from January 1, 2016 until January 1, 2019 in equal annual installments of 0.625 percent. Accordingly, at December 31, 2019, the Bank was required to maintain a capital conservation buffer of 2.5 percent and exceeded the total capital conservation buffer and the tier 1 capital conservation buffer by 355 and 428 basis points, respectively.  At December 31, 2018, the Bank was required to maintain a capital conservation buffer of 1.875 percent and exceeded the total capital conservation buffer and the tier 1 capital conservation buffer by 525 and 598 basis points, respectively.

 

Between 2003 and 2007, the Corporation’s statutory business trusts issued $25.00 million of aggregate trust preferred securities. Based on the Corporation’s Tier 1 capital levels, the entire $25.00 million of trust preferred securities was included in the Corporation’s Tier 1 capital as of December 31, 2019 and 2018.  

 

Federal and state banking regulations place certain restrictions on dividends paid and loans or advances made by C&F Bank to the Corporation. The total amount of dividends that may be paid at any date by C&F Bank is generally limited to the retained earnings of C&F Bank, while other measures of capital adequacy may also restrict the Bank’s ability to declare dividends.  Loans or advances are limited to 10 percent of C&F Bank’s capital stock and surplus on a secured basis.