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Note 19 - Regulatory Matters
 12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Regulatory Capital Requirements under Banking Regulations [Text Block]
(
19
)        
REGULATORY MATTERS
 
The Bank is subject to various regulatory capital requirements administered by the OCC. 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 and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving 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 under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
 
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier
1
and common equity Tier
1
capital (as defined in the regulations) to risk-weighted assets (as defined), and Tier
1
capital (as defined) to average assets (as defined). The final rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (“Basel III rules”) became effective for the Bank on
January 1, 2015,
with full compliance with all of the requirements being phased in over a multi-year schedule through
2019.
Under the Basel III rules, the Bank must hold a conservation buffer above the adequately capitalized risk-based capital ratios. The capital conservation buffer is being phased in from
0.0%
for
2015
to
2.5%
by
2019.
The capital conservation buffer is
1.25%
for
2017
and
0.625%
for
2016.
Management believes that the Bank met all capital adequacy requirements to which it was subject as of
December 31, 2017
and
2016.
 
As of
December 31, 2017,
the most recent notification from the OCC 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 total risk-based, Tier
1
risk-based, common equity Tier
1
risk-based and Tier
1
leverage ratios as set forth in the table below. There are
no
conditions or events since that notification that management believes have changed the Bank’s category.
 
The Bank’s actual capital amounts and ratios are presented in the following table.
No
amounts were deducted from capital for interest-rate risk in either year.
 
 
 
Actual
 
Minimum

for Capital

Adequacy Purposes

with Capital
Conservation Buffer:
 

Minimum
to be Well

Capitalized under

Prompt Corrective

Action Provisions:
(Dollars in thousands)
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
 
$
75,704
 
 
 
14.49
%
 
$
48,314
 
 
 
9.25
%
 
$
52,231
 
 
 
10.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital (to risk weighted assets)
 
$
72,070
 
 
 
13.80
%
 
$
37,868
 
 
 
7.25
%
 
$
41,785
 
 
 
8.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital (to risk weighted assets)
 
$
72,070
 
 
 
13.80
%
 
$
30,033
 
 
 
5.75
%
 
$
33,950
 
 
 
6.50
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
 
$
72,070
 
 
 
9.67
%
 
$
29,812
 
 
 
4.00
%
 
$
37,266
 
 
 
5.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2016:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets)
 
$
71,832
 
 
 
14.98
%
 
$
41,354
 
 
 
8.625
%
 
$
47,946
 
 
 
10.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital (to risk weighted assets)
 
$
68,446
 
 
 
14.28
%
 
$
31,764
 
 
 
6.625
%
 
$
38,357
 
 
 
8.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital (to risk weighted assets)
 
$
68,446
 
 
 
14.28
%
 
$
24,572
 
 
 
5.125
%
 
$
31,165
 
 
 
6.50
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
 
$
68,446
 
 
 
9.30
%
 
$
29,447
 
 
 
4.000
%
 
$
36,809
 
 
 
5.00
%
 
On
September 20, 2017,
the Bank filed applications with the Indiana Department of Financial Institutions (“IDFI”) and the FDIC to convert from a federal savings association into an Indiana chartered commercial bank (the “Conversion”). The Conversion is subject to the approval of both the IDFI and FDIC and if approved, the IDFI will become the Bank’s primary regulator and the FDIC will become the Bank’s primary federal regulator.
 
Additionally, in connection with the Conversion, the Company filed an application with the Federal Reserve Bank of St. Louis to change from a savings and loan holding company to a financial holding company if the Conversion is approved by the Bank’s regulators. The Company has received the approval of the Federal Reserve Bank of St. Louis, subject to the Bank receiving the approval of the IDFI and FDIC.