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Note 13 - Regulatory Matters

9 Months Ended

Sep. 30, 2021

Regulatory Capital Requirements under Banking Regulations [Text Block]

13.

Regulatory Matters

The Company and the Banks are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Banks 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 Company's and the Banks' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believed the Company and the Banks met all capital adequacy requirements to which they were subject as of September 30, 2021.

The Company and the Banks’ capital amounts and ratios as of September 30, 2021 and December 31, 2020 are as follows (dollars in thousands):

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio

As of September 30, 2021:
Total capital (to risk- weighted assets):
Consolidated	$	204,524		15.3	%	$	140,431		10.50	%		N/A		N/A
Boone Bank & Trust		15,611		16.0			10,269		10.50			9,780		10.0	%
First National Bank		101,785		14.7			72,926		10.50			69,454		10.0
Iowa State Savings Bank		23,755		16.5			15,102		10.50			14,383		10.0
Reliance State Bank		26,824		14.4			19,581		10.50			18,648		10.0
State Bank & Trust		20,327		15.0			14,247		10.50			13,568		10.0
United Bank & Trust		11,873		15.7			7,926		10.50			7,549		10.0

Tier 1 capital (to risk- weighted assets):
Consolidated	$	187,806		14.0	%	$	113,682		8.50	%		N/A		N/A
Boone Bank & Trust		14,665		15.0			8,313		8.50			7,824		8.0	%
First National Bank		93,084		13.4			59,035		8.50			55,563		8.0
Iowa State Savings Bank		22,734		15.8			12,226		8.50			11,507		8.0
Reliance State Bank		24,491		13.1			15,851		8.50			14,919		8.0
State Bank & Trust		18,643		13.7			11,533		8.50			10,855		8.0
United Bank & Trust		10,927		14.5			6,417		8.50			6,039		8.0

Tier 1 capital (to average- assets):
Consolidated	$	187,806		9.2	%	$	81,851		4.00	%		N/A		N/A
Boone Bank & Trust		14,665		9.4			6,269		4.00			7,836		5.0	%
First National Bank		93,084		8.8			42,354		4.00			52,942		5.0
Iowa State Savings Bank		22,734		9.4			9,631		4.00			12,038		5.0
Reliance State Bank		24,491		9.1			10,731		4.00			13,413		5.0
State Bank & Trust		18,643		8.7			8,530		4.00			10,663		5.0
United Bank & Trust		10,927		9.1			4,799		4.00			5,999		5.0

Common equity tier 1 capital (to risk-weighted assets):
Consolidated	$	187,806		14.0	%	$	93,621		7.00	%		N/A		N/A
Boone Bank & Trust		14,665		15.0			6,846		7.00			6,357		6.5	%
First National Bank		93,084		13.4			48,617		7.00			45,145		6.5
Iowa State Savings Bank		22,734		15.8			10,068		7.00			9,349		6.5
Reliance State Bank		24,491		13.1			13,054		7.00			12,121		6.5
State Bank & Trust		18,643		13.7			9,498		7.00			8,819		6.5
United Bank & Trust		10,927		14.5			5,284		7.00			4,907		6.5

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

As of December 31, 2020:
Community Bank Leverage Ratio:
(Tier 1 capital to average assets for leverage ratio):

Boone Bank & Trust	$	13,967		9.2	%	$	12,170		8.0	%
First National Bank		86,071		8.6			80,393		8.0
Iowa State Savings Bank		21,610		9.4			18,321		8.0
Reliance State Bank		23,278		9.4			19,741		8.0
State Bank & Trust		16,564		8.5			15,657		8.0
United Bank & Trust		10,539		9.2			9,180		8.0

The Company and the Banks are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules include the implementation of a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. A banking organization with a capital conservation buffer of less than the required amount will be subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers. At September 30, 2021, the capital ratios for the Company and the Banks were sufficient to meet the conservation buffer.

The Banks elected to stop reporting their capital ratios under the Community Bank Leverage Ratio as of September 30, 2021.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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