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REGULATORY CAPITAL MATTERS
 12 Months Ended
Dec. 31, 2018
Banking and Thrift [Abstract]  
REGULATORY CAPITAL MATTERS
REGULATORY CAPITAL MATTERS
The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and 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. Management believes as of December 31, 2018, the Company and the Bank met all capital adequacy requirements to which they were then subject. With respect to the Bank, 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 only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and a capital restoration plan is required. At December 31, 2018, the most recent regulatory notification categorized the Bank as 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.
The following table presents the regulatory capital amounts and ratios for the Company and the Bank as of dates indicated:
 
 
 
 
Minimum Capital Requirements
 
Minimum Required to Be Well-Capitalized Under Prompt Corrective Action Provisions
($ in thousands)
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Banc of California, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
 
$
977,342

 
13.71
%
 
$
570,368

 
8.00
%
 
N/A

 
N/A

Tier 1 risk-based capital
 
910,528

 
12.77
%
 
427,776

 
6.00
%
 
N/A

 
N/A

Common equity tier 1 capital
 
679,400

 
9.53
%
 
320,832

 
4.50
%
 
N/A

 
N/A

Tier 1 leverage
 
910,528

 
8.95
%
 
407,145

 
4.00
%
 
N/A

 
N/A

Banc of California, NA
 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
 
$
1,120,122

 
15.71
%
 
$
570,382

 
8.00
%
 
$
712,977

 
10.00
%
Tier 1 risk-based capital
 
1,053,308

 
14.77
%
 
427,786

 
6.00
%
 
570,382

 
8.00
%
Common equity tier 1 capital
 
1,053,308

 
14.77
%
 
320,840

 
4.50
%
 
463,435

 
6.50
%
Tier 1 leverage
 
1,053,308

 
10.36
%
 
406,694

 
4.00
%
 
508,368

 
5.00
%
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Banc of California, Inc.
 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
 
$
1,002,200

 
14.56
%
 
$
550,499

 
8.00
%
 
N/A

 
N/A

Tier 1 risk-based capital
 
949,151

 
13.79
%
 
412,874

 
6.00
%
 
N/A

 
N/A

Common equity tier 1 capital
 
682,539

 
9.92
%
 
309,656

 
4.50
%
 
N/A

 
N/A

Tier 1 leverage
 
949,151

 
9.39
%
 
404,339

 
4.00
%
 
N/A

 
N/A

Banc of California, NA
 
 
 
 
 
 
 
 
 
 
 
 
Total risk-based capital
 
$
1,131,057

 
16.56
%
 
$
546,359

 
8.00
%
 
$
682,949

 
10.00
%
Tier 1 risk-based capital
 
1,078,008

 
15.78
%
 
409,769

 
6.00
%
 
546,359

 
8.00
%
Common equity tier 1 capital
 
1,078,008

 
15.78
%
 
307,327

 
4.50
%
 
443,917

 
6.50
%
Tier 1 leverage
 
1,078,008

 
10.67
%
 
404,060

 
4.00
%
 
505,074

 
5.00
%
In July 2013, the Federal banking regulators approved a final rule to implement the revised capital adequacy standards of the Basel Committee on Banking Supervision, commonly called Basel III, and to address relevant provisions of the Dodd-Frank Act. The final rule strengthens the definition of regulatory capital, increases risk-based capital requirements, makes selected changes to the calculation of risk-weighted assets, and adjusts the prompt corrective action thresholds. The Company and the Bank became subject to the new rule on January 1, 2015 and certain provisions of the new rule were phased in through 2019. The final provision related to this follows implements a new capital conservation buffer requirement for a banking organization to maintain a common equity capital ratio more than 2.5 percent above the minimum common equity Tier 1 capital, Tier 1 capital and total risk-based capital ratios in order to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The capital conservation buffer requirement was phased in, beginning on January 1, 2016 at 0.625 percent, with additional 0.625 percent increments annually, and became fully phased in at 2.50 percent on January 1, 2019. Inclusive of the fully phased-in capital conservation buffer, the common equity Tier 1 capital, Tier 1 risk-based capital and total risk-based capital ratio minimums are 7.0%, 8.5% and 10.5%, respectively. A banking organization with a buffer of less than the required amount is subject to increasingly stringent limitations on such distributions and payments as the buffer approaches zero. The new rule also generally prohibits a banking organization from making such distributions or payments during any quarter if its eligible retained income is negative and its capital conservation buffer ratio was 2.5 percent or less at the end of the previous quarter. The eligible retained income of a banking organization is defined as its net income for the four calendar quarters preceding the current calendar quarter, based on the organization’s quarterly regulatory reports, net of any distributions and associated tax effects not already reflected in net income.
Dividend Restrictions
The Company’s principal source of funds for dividend payments is dividends received from the Bank. Federal banking laws and regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, in the case of the Bank, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. At December 31, 2018, the Bank had $104.3 million available to pay dividends to the Company without prior OCC approval. However, any dividend granted by the Bank would be limited by the need to maintain its well capitalized status plus the capital buffer in order to avoid additional dividend restrictions. In addition to dividends on its preferred stock, the Company declared and paid dividends on its common stock of $0.13 per share for each of the quarters of 2018. The Bank paid dividends of $94.3 million to Banc of California, Inc. during the year ended December 31, 2018.