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Regulatory Matters
 12 Months Ended
Dec. 31, 2019
Banking and Thrift [Abstract]  
Regulatory Matters
18.
REGULATORY MATTERS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the federal banking regulatory agencies. 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 Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain
off-balance-sheet
items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgment by the regulators about components, risk-weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
Effective January 1, 2015, the Company and the Bank became subject to a new regulatory capital measure called Common Equity Tier 1 (“CET1”) to risk-weighted assets which was implemented as a result of the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.
Basel III also introduces a new “capital conservation buffer,” composed entirely of CET1, on top of minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum requirement but below the capital conservation buffer will face constraints on dividends, equity repurchases and payment of discretionary bonuses based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at 0.625% was phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The Bank is now required to maintain this additional capital conservation buffer of 2.5% of CET1.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total capital, Tier 1 capital and CET1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that, as of December 31, 2019 and 2018, the Company and the Bank meet all capital adequacy requirements to which they are subject.
As of December 31, 2019 and 2018, the most recent notifications from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the minimum total risk-based, Tier 1 risk-based, CET1 risk-based, and Tier 1 leverage (tangible Tier 1 capital divided by average total assets) ratios as set forth in the table below must be maintained. There are no conditions or events since said notification that management believes have changed the Bank’s category.
As of December 31, 2019 and 2018, the Company had $25.0
 
million of trust-preferred securities, which were included in Tier 1 capital for regulatory purposes, respectively. The following table summarizes regulatory capital amounts and ratios for the Company and the Bank as of December 31, 2019 and 2018.
                                                         
 
Actual
   
For Capital
Adequacy Purposes
   
To Be Well
Capitalized under
Prompt Corrective
Action Provisions
 
 
Amount
 
  
Ratio
 
  
Amount
 
  
 
Ratio
 
  
Amount
 
  
 
Ratio
 
 
(Dollars in thousands)
 
                                                         
As of December 31, 2019:
 
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
 
 
 
Total Capital (to Risk-Weighted Assets)
   
     
     
   
   
     
   
   
 
Company
  $
1,391,771
     
16.01
 %   $
695,651
   
≥
    
8.00
 %    
   
   
N/A
 
Bank
  $
1,376,364
     
15.83
 %   $
695,471
   
≥
    
8.00
 %   $
869,339
   
≥
    
10.00
 %
Tier 1 Capital (to Risk-Weighted Assets)
   
     
     
   
   
     
   
   
 
Company
  $
1,314,152
     
15.11
 %   $
521,738
   
≥
    
6.00
 %    
   
   
N/A
 
Bank
  $
1,298,745
     
14.94
 %   $
521,604
   
≥
    
6.00
 %   $
695,471
   
≥
    
8.00
 %
Common equity Tier 1 capital ratio
   
     
     
   
   
     
   
   
 
Company
  $
1,289,152
     
14.83
 %   $
391,304
   
≥
    
4.50
 %    
   
   
N/A
 
Bank
  $
1,298,745
     
14.94
 %   $
391,203
   
≥
    
4.50
 %   $
565,070
   
≥
    
6.50
 %
Tier 1 Capital (to Average-Assets)
   
     
     
   
   
     
   
   
 
Company
  $
1,314,152
     
12.33
 %   $
426,497
   
≥
    
4.00
 %    
   
   
N/A
 
Bank
  $
1,298,745
     
12.19
 %   $
426,328
   
≥
    
4.00
 %   $
532,909
   
≥
    
5.00
 %
As of December 31, 2018:
 
 
 
  
 
 
  
 
 
  
 
 
 
  
 
 
  
 
 
 
Total Capital (to Risk-Weighted Assets)
   
     
     
   
   
     
   
   
 
Company
  $
   1,263,800
     
14.13
 %   $
   715,283
   
≥
    
8.00
 %    
   
   
N/A
 
Bank
  $
 1,253,219
     
14.03
 %   $
 714,601
   
≥
    
8.00
 %   $
   893,251
   
≥
    
10.00
 %
Tier 1 Capital (to Risk-Weighted Assets)
   
     
     
   
   
     
   
   
 
Company
  $
 1,191,228
     
13.32
 %   $
 536,462
   
≥
    
6.00
 %    
   
   
N/A
 
Bank
  $
 1,180,647
     
13.22
 %   $
 535,951
   
≥
    
6.00
 %   $
 714,601
   
≥
    
8.00
 %
Common equity Tier 1 capital ratio
   
     
     
   
   
     
   
   
 
Company
  $
 1,166,228
     
13.04
 %   $
 402,347
   
≥
    
4.50
 %    
   
   
N/A
 
Bank
  $
 1,180,647
     
13.22
 %   $
 401,963
   
≥
    
4.50
 %   $
 580,613
   
≥
    
6.50
 %
Tier 1 Capital (to Average-Assets)
   
     
     
   
   
     
   
   
 
Company
  $
 1,191,228
     
10.98
 %   $
 433,834
   
≥
    
4.00
 %    
   
   
N/A
 
Bank
  $
 1,180,647
     
10.90
 %   $
 433,403
   
≥
    
4.00
 %   $
 541,754
   
≥
    
5.00
 %
 
 
 
In addition, the California Financial Code limits the amount of dividends a bank can pay without obtaining prior approval from bank regulators. Under this law, the Bank could, as of December 31, 2019, declare and pay additional dividends of approximately $236.0 million.