Note 15: Regulatory Matters

As of December 31, 2018, based on its call report computations, State Bank was classified as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, State Bank must maintain capital ratios as set forth in the table below. There are no conditions or events since December 31, 2018 that management believes have changed State Bank’s capital classification.

State Bank’s actual capital amounts and ratios are presented in the following table. Capital levels are presented for the State Bank only as the Company is exempt from quarterly reporting at the holding company level:

											To Be Well Capitalized Under Prompt
						Adequacy					Corrective Action
	Actual					Purposes					Procedures
($ in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2018
Tier I Capital to average assets	$	110,022		11.23	%	$	39,183		4.0	%	$	48,979		5.0	%
Tier I Common equity capital to risk-weighted assets		110,022		12.57	%		39,386		4.5	%		56,890		6.5	%

Tier I Capital to risk-weighted assets		110,022		12.57	%		52,514		6.0	%		70,019		8.0	%
Total Risk-based capital to risk-weighted assets		118,189		13.50	%		70,019		8.0	%		87,524		10.0	%

As of December 31, 2017
Tier I Capital to average assets	$	83,807		9.72	%	$	34,477		4.0	%	$	43,097		5.0	%
Tier I Common equity capital to risk-weighted assets		83,807		10.54	%		35,786		4.5	%		51,691		6.5	%

Tier I Capital to risk-weighted assets		83,807		10.54	%		47,715		6.0	%		63,620		8.0	%
Total Risk-based capital to risk-weighted assets		91,737		11.54	%		63,620		8.0	%		79,524		10.0	%

The above minimum capital requirements exclude the capital conservation buffer required to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers. The capital conservation buffer is phasing in from 0.0 percent for 2015 to 2.50 percent for 2019. The capital conservation buffer was 1.875 percent at December 31, 2018 and was fully phased in to 2.50 percent at January 1, 2019. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018, State Bank met all capital adequacy requirements to which they are subject.