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Regulatory Matters
 12 Months Ended
Dec. 31, 2016
Regulatory Matters

NOTE 18: REGULATORY MATTERS

The Company is subject to examination, regulation, and periodic reporting under the Bank Holding Company Act of 1956, as amended, which is administered by the FRB. The FRB has adopted capital adequacy guidelines for bank holding companies (on a consolidated basis) that are substantially similar to those of the FDIC for the Banks.

The following tables present the regulatory capital ratios for the Company at December 31, 2016 and 2015, in comparison with the minimum amounts and ratios required by the FRB for capital adequacy purposes:

 

    Risk-Based Capital        
At December 31, 2016   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount     Ratio  

Total capital

   $ 3,748,231       10.62 %    $ 3,748,231       10.62 %    $ 4,277,759       12.12 %    $ 3,748,231       8.00 % 

Minimum for capital adequacy purposes

     1,588,699       4.50       2,118,266       6.00       2,824,355       8.00       1,875,062       4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Excess

   $ 2,159,532       6.12 %    $ 1,629,965       4.62 %    $ 1,453,404       4.12 %    $ 1,873,169       4.00 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
    Risk-Based Capital        
At December 31, 2015   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount     Ratio  

Total capital

   $ 3,558,415       9.95 %    $ 3,644,872       10.19 %    $ 4,086,913       11.43 %    $ 3,644,872       7.77 % 

Minimum for capital adequacy purposes

     1,609,639       4.50       2,146,186       6.00       2,861,581       8.00       1,876,006       4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Excess

   $ 1,948,776       5.45 %    $ 1,498,686       4.19 %      1,225,332       3.43 %    $ 1,768,866       3.77 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

In accordance with Basel III, the inclusion of trust preferred securities as tier 1 capital—which was reduced from 100% in 2014 to 25% in 2015—was completely phased out in 2016.

In addition, Basel III calls for the phase-in of a capital conservation buffer over a five-year period beginning with 0.625% in 2016 and reaching 2.50% in 2019, when fully phased in. At December 31, 2016, our total risk-based capital ratio exceeded the minimum requirement for capital adequacy purposes by 412 basis points and the fully phased-in capital conservation buffer by 162 basis points.

The Banks are subject to regulation, examination, and supervision by the NYSDFS and the FDIC (the “Regulators”). The Banks are also governed by numerous federal and state laws and regulations, including the FDIC Improvement Act of 1991, which established five categories of capital adequacy ranging from “well capitalized” to “critically undercapitalized.” Such classifications are used by the FDIC to determine various matters, including prompt corrective action and each institution’s FDIC deposit insurance premium assessments. Capital amounts and classifications are also subject to the Regulators’ qualitative judgments about the components of capital and risk weightings, among other factors.

The quantitative measures established to ensure capital adequacy require that banks maintain minimum amounts and ratios of leverage capital to average assets and of common equity tier 1 capital, tier 1 capital, and total capital to risk-weighted assets (as such measures are defined in the regulations). At December 31, 2016, the Banks exceeded all the capital adequacy requirements to which they were subject.

As of December 31, 2016, the Company, the Community Bank, and the Commercial Bank are categorized as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as well capitalized, a bank must maintain a minimum common equity tier 1 risk-based capital ratio of 6.50%; a minimum tier 1 risk-based capital ratio of 8.00%; a minimum total risk-based capital ratio of 10.00%; and a minimum leverage capital ratio of 5.00%. In the opinion of management, no conditions or events have transpired since December 31, 2016 to change these capital adequacy classifications.

 

The following tables present the actual capital amounts and ratios for the Community Bank at December 31, 2016 and 2015 in comparison to the minimum amounts and ratios required for capital adequacy purposes.

 

    Risk-Based Capital        
At December 31, 2016   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount      Ratio  

Total capital

   $ 3,686,510       11.23 %    $ 3,686,510       11.23 %    $ 3,843,382       11.71 %    $ 3,686,510        8.45 % 

Minimum for capital adequacy purposes

     1,477,056       4.50       1,969,408       6.00       2,625,877       8.00       1,744,601        4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Excess

   $ 2,209,454       6.73 %    $ 1,717,102       5.23 %    $ 1,217,505       3.71 %    $ 1,941,909        4.45 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
    Risk-Based Capital        
At December 31, 2015   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount      Ratio  

Total capital

   $ 3,478,429       10.47 %    $ 3,478,429       10.47 %    $ 3,645,262       10.98 %    $ 3,478,429        8.05 % 

Minimum for capital adequacy purposes

     1,494,584       4.50       1,992,778       6.00       2,657,037       8.00       1,729,021        4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Excess

   $ 1,983,845       5.97 %    $ 1,485,651       4.47 %    $ 988,225       2.98 %    $ 1,749,408        4.05 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

The following tables present the actual capital amounts and ratios for the Commercial Bank at December 31, 2016 and 2015 in comparison to the minimum amounts and ratios required for capital adequacy purposes:

 

    Risk-Based Capital        
At December 31, 2016   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount      Ratio  

Total capital

   $ 370,707       14.14 %    $ 370,707       14.14 %    $ 397,259       15.15 %    $ 370,707        10.53 % 

Minimum for capital adequacy purposes

     117,973       4.50       157,297       6.00       209,729       8.00       140,813        4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Excess

   $ 252,734       9.64 %    $ 213,410       8.14 %    $ 187,530       7.15 %    $ 229,894        6.53 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  
    Risk-Based Capital        
At December 31, 2015   Common Equity
Tier 1		     Tier 1     Total     Leverage Capital  
(dollars in thousands)   Amount     Ratio     Amount     Ratio     Amount     Ratio     Amount      Ratio  

Total capital

   $ 384,221       13.43 %    $ 384,221       13.43 %    $ 400,058       13.98 %    $ 384,221        10.01 % 

Minimum for capital adequacy purposes

     128,732       4.50       171,642       6.00       228,857       8.00       153,507        4.00  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

Excess

   $ 255,489       8.93 %    $ 212,579       7.43 %    $ 171,201       5.98 %    $ 230,714        6.01 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

     

 

 

  

The Company and the Banks assign various loan and other assets to respective risk categories. In September 2016, management reclassified certain multi-family loans that had previously been assigned to the 50% risk-weight category to the 100% risk-weight category, based on a new interpretation of applicable regulatory guidance. The reclassification reduced the Company’s and Banks’ common equity tier 1 capital, tier 1 risk-weighted capital, and total risk-weighted capital ratios from the levels that were previously reported for the period ended December 31, 2015. For the Company, the common equity tier 1 capital, tier 1 risk-weighted capital, and total risk-weighted capital ratios were reduced by 54 basis points, 56 basis points, and 62 basis points, respectively; for the Community Bank, the capital ratios were reduced by 57 basis points, 57 basis points, and 59 basis points, respectively; and, for the Commercial Bank, the capital ratios were reduced by 72 basis points, 72 basis points, and 76 basis points, respectively, from the percentages previously reported. Notwithstanding the respective reductions, the Company and the Banks continued to be classified as “well-capitalized” institutions.