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Capital Requirements
 9 Months Ended
Sep. 30, 2016
Banking and Thrift [Abstract]  
Capital Requirements

Note 7. Capital Requirements

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 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 their 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-weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective January 1, 2015, with full compliance of all the requirements being phased in over a multi-year schedule, and becoming fully phased in by January 1, 2019. As part of the new requirements, the common equity Tier 1 capital ratio is calculated and utilized in the assessment of capital for all institutions. The final rules also established a “capital conservation buffer” above the new regulatory minimum capital requirements. The capital conservation buffer is being phased-in over four years beginning on January 1, 2016.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the following table) of total (as defined in the regulations), Tier 1 (as defined), and common equity Tier 1 capital (as defined) to risk-weighted assets (as defined), and of Tier 1 capital to average assets. Management believes, as of September 30, 2016 and December 31, 2015, that the Bank met all capital adequacy requirements to which it is subject.

As of September 30, 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 Bank must maintain minimum risk-based capital and leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

A comparison of the capital of the Bank at September 30, 2016 and December 31, 2015 with the minimum regulatory guidelines were as follows (dollars in thousands):

 

                 Minimum  
                 To Be Well  
                 Capitalized Under  
           Minimum Capital     Prompt Corrective  
     Actual     Requirement     Action Provisions  
     Amount      Ratio     Amount      Ratio     Amount      Ratio  

September 30, 2016:

                

Total Capital (to Risk-Weighted Assets)

    $ 65,759         13.90 %    $ 37,843         8.00 %    $ 47,304         10.00 % 

Tier 1 Capital (to Risk-Weighted Assets)

    $ 60,149         12.72 %    $ 28,382         6.00 %    $ 37,843         8.00 % 

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

    $ 60,149         12.72 %    $ 21,287         4.50 %    $ 30,747         6.50 % 

Tier 1 Capital (to Average Assets)

    $ 60,149         8.48 %    $ 28,357         4.00 %    $ 35,446         5.00 % 

December 31, 2015:

                

Total Capital (to Risk-Weighted Assets)

    $ 61,513         13.86 %    $ 35,497         8.00 %    $ 44,372         10.00 % 

Tier 1 Capital (to Risk-Weighted Assets)

    $ 55,989         12.62 %    $ 26,623         6.00 %    $ 35,497         8.00 % 

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

    $ 55,989         12.62 %    $ 19,967         4.50 %    $ 28,842         6.50 % 

Tier 1 Capital (to Average Assets)

    $ 55,989         8.12 %    $ 27,571         4.00 %    $ 34,464         5.00 %