XML 54 R24.htm IDEA: XBRL DOCUMENT v3.6.0.2
Note P - Regulatory Matters
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Regulatory Capital Requirements under Banking Regulations [Text Block]
Note
P
- Regulatory Matters
 
Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies.  Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by regulators.  Failure to meet capital requirements can initiate regulatory action.  The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company and the Bank on
January
1,
2015
with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by
January
1,
2019.
Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Company and the Bank. The rules include a new common equity tier
1
capital to risk-weighted assets ratio of
4.5%
and a capital conservation buffer of
2.5%
of risk-weighted assets. The capital conservation buffer began to phase in on
January
1,
2016
at
0.625%,
and will be phased in over a
four
-year period, increasing by the same amount on each subsequent
January
1,
until fully phased-in on
January
1,
2019.
Further, Basel III rules increased the minimum ratio of tier
1
capital to risk-weighted assets increased from
4.0%
to
6.0%
and all banks are now subject to a
4.0%
minimum leverage ratio. The required total risk-based capital ratio was unchanged. Failure to maintain the required common equity tier
1
capital conservation buffer will result in potential restrictions on a bank's ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees. In addition, the Federal Reserve Board requires financial holding companies to meet “well capitalized” standards with ratios applicable to banks under the prompt corrective action regulations. Bank holding companies meeting the requirements of the Federal Reserve Board’s Small Bank Holding Company Policy are exempt from compliance with the consolidated capital requirements, although their bank subsidiaries are still subject to the bank capital requirements.
 
Effective
May
15,
2015,
the Federal Reserve Board amended the Small Bank Holding Company Policy to increase from
$500
million to
$1
billion the asset threshold for a bank to qualify under the Policy. Pursuant to that Policy, at
December
31,
2016,
the Company was not subject to the consolidated capital requirements. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes that as of
December
31,
2016
and
2015,
the Bank met all capital adequacy requirements to which it was subject.
 
Prompt corrective action regulations provide
five
classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At year-end
2016
and
2015,
 the Bank met the capital requirements to be deemed well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.
 
At year-end, consolidated actual capital levels and minimum required levels for the Company and the Bank were:
 
   
Actual
    
Minimum Required
To Be Adequately
Capitalized Under
Prompt Corrective
Action Regulations
    
Minimum Required
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
  
   
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
  
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
                                                
Consolidated
  $
113,515
      
16.4
%
    
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
104,317
      
15.3
     $
54,631
      
8.0
%
   $
68,289
      
10.0
%
Common equity Tier 1 capital (to risk weighted assets)
                                                
Consolidated
   
97,316
      
14.0
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
96,946
      
14.2
      
30,730
      
4.5
      
44,388
      
6.5
  
Tier 1 capital (to risk weighted assets)
                                                
Consolidated
   
105,816
      
15.3
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
96,946
      
14.2
      
40,973
      
6.0
      
54,631
      
8.0
  
Tier 1 capital (to average assets)
                                                
Consolidated
   
105,816
      
11.2
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
96,946
      
10.4
      
37,168
      
4.0
      
46,461
      
5.0
  
 
   
Actual
    
Minimum Required
To Be Adequately
Capitalized Under
Prompt Corrective
Action Regulations
    
Minimum Required
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
  
   
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
  
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
                                                
Consolidated
  $
104,047
      
18.2
%
    
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
91,006
      
16.3
     $
44,799
      
8.0
%
   $
55,999
      
10.0
%
Common equity Tier 1 capital (to risk weighted assets)
                                                
Consolidated
   
88,899
      
15.6
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
84,686
      
15.1
      
25,199
      
4.5
      
36,399
      
6.5
  
Tier 1 capital (to risk weighted assets)
                                                
Consolidated
   
97,399
      
17.1
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
84,686
      
15.1
      
33,599
      
6.0
      
44,799
      
8.0
  
Tier 1 capital (to average assets)
                                                
Consolidated
   
97,399
      
12.2
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
   
84,686
      
10.8
      
31,280
      
4.0
      
39,100
      
5.0
  
 
Dividends paid by the subsidiaries are the primary source of funds available to Ohio Valley for payment of dividends to shareholders and for other working capital needs. The payment of dividends by the subsidiaries to Ohio Valley is subject to restrictions by regulatory authorities. These restrictions generally limit dividends to the current and prior
two
years retained earnings of the Bank and Loan Central, Inc., and
90%
of the prior year’s net income of OVBC Captive, Inc. At
January
1,
2017
approximately
$5,884
of the subsidiaries’ retained earnings were available for dividends under these guidelines. In addition to these restrictions, dividend payments cannot reduce regulatory capital levels below minimum regulatory guidelines. The amount of dividends payable by the Bank is also restricted if the Bank does not hold a capital conservation buffer. The Board of Governors of the Federal Reserve System also has a policy requiring Ohio Valley to provide notice to the FRB in advance of the payment of a dividend to Ohio Valley’s shareholders under certain circumstances, and the FRB
may
disapprove of such dividend payment if the FRB determines the payment would be an unsafe or unsound practice.