CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios were as follows:



	March 31, 2018		Regulatory Minimum to be Well Capitalized		December 31, 2017		Regulatory Minimum to be Well Capitalized
Company (consolidated)
Total capital to risk weighted assets	12.8	%	N/A		12.4	%	N/A
Common equity tier 1 capital to risk weighted assets	11.3		N/A		11.0		N/A
Tier 1 capital to risk weighted assets	11.5		N/A		11.2		N/A
Tier 1 capital to average assets	9.0		N/A		9.0		N/A

Bank
Total capital to risk weighted assets	12.0	%	8.0	%	11.2	%	8.0	%
Common equity tier 1 capital to risk weighted assets	11.1		4.5		10.3		4.5
Tier 1 capital to risk weighted assets	11.1		6.0		10.3		6.0
Tier 1 capital to average assets	8.7		4.0		8.3		4.0

At each date shown, the Bank met the conditions to be classified as “well capitalized” under the relevant regulatory framework. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

Effective January 1, 2015, the Company and the Bank became subject to the Basel III rule that requires the Company and the Bank to assess their Common equity Tier 1 capital to risk weighted assets. The Bank's Common equity Tier 1 capital to risk weighted assets exceeds the minimum to be well capitalized. In addition, the final capital rules added a requirement to maintain a minimum conservation buffer, composed of Common equity Tier 1 capital, of 2.5% of risk-weighted assets, to be phased in over three years and applied to the Common equity Tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio, and the Total risk-based capital ratio. Accordingly, banking organizations, on a fully phased in basis no later than January 1, 2019, must maintain a minimum Common equity Tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5%, and a minimum Total risk-based capital ratio of 10.5%.

The required minimum conservation buffer began to be phased in incrementally, starting at 0.625% on January 1, 2016, increased to 1.25% on January 1, 2017, increased to 1.875% on January 1, 2018 and will increase to 2.5% on January 1, 2019. The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At March 31, 2018, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and the Bank's regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes. The capital levels of both the Company and the Bank at March 31, 2018 also exceeded the minimum capital requirements including the currently applicable capital conservation buffer of 1.875%.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income is as follows:



(In thousands)	March 31, 2018			December 31, 2017
Other accumulated comprehensive income, before tax:
Net unrealized holding loss on AFS securities	$	(17,507	)	$	10,034
Net unrealized holding loss on pension plans	(3,048		)	(3,048		)

Income taxes related to items of accumulated other comprehensive income:
Net unrealized holding gain on AFS securities	4,325			(4,026		)
Net unrealized holding loss on pension plans	803			1,201
Accumulated other comprehensive (loss)/income	$	(15,427	)	$	4,161

The following table presents the components of other comprehensive income for the three months ended March 31, 2018 and 2017:



(In thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended March 31, 2018
Net unrealized holding (loss) on AFS securities:	x
Net unrealized (losses) arising during the period	$	(19,162	)	$	4,931		$	(14,231	)
Less: reclassification adjustment for losses realized in net income	—			—			—
Net unrealized holding (loss) on AFS securities	(19,162		)	4,931			(14,231		)
Other comprehensive (loss)	$	(19,162	)	$	4,931		$	(14,231	)
Less: reclassification related to adoption of ASU 2016-01	8,379			(2,126		)	6,253
Less: reclassification related to adoption of ASU 2018-02	—			(896		)	(896		)
Total change to accumulated other comprehensive (loss)	(27,541		)	7,953			(19,588		)

Three Months Ended March 31, 2017
Net unrealized holding gain on AFS securities:
Net unrealized gains arising during the period	$	3,137		$	(1,173	)	$	1,964
Less: reclassification adjustment for gains realized in net income	12,570			(4,713		)	7,857
Net unrealized holding (loss) on AFS securities	(9,433		)	3,540			(5,893		)

Net unrealized loss on cash flow hedging derivatives:
Net unrealized (loss) arising during the period	(449		)	180			(269		)
Less: reclassification adjustment for (losses) realized in net income	(7,022		)	2,768			(4,254		)
Net unrealized gain on cash flow hedging derivatives	6,573			(2,588		)	3,985
Other comprehensive (loss)	$	(2,860	)	$	952		$	(1,908	)

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three months ended March 31, 2018 and 2017:



(In thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Three Months Ended March 31, 2018
Balance at Beginning of Period	$	6,008		$	—		$	(1,847	)	$	4,161
Other comprehensive loss before reclassifications	(14,231		)	—			—			(14,231		)
Less: amounts reclassified from accumulated other comprehensive income (loss)	—			—			—			—
Total other comprehensive loss	(14,231		)	—			—			(14,231		)
Less: amounts reclassified from accumulated other comprehensive income (loss) related to adoption of ASU 2016-01 and ASU 2018-02	$	4,959		$	—		$	398		$	5,357
Balance at End of Period	$	(13,182	)	$	—		$	(2,245	)	$	(15,427	)

Three Months Ended March 31, 2017
Balance at Beginning of Period	$	15,541		$	(3,985	)	$	(1,790	)	$	9,766
Other comprehensive (loss) gain before reclassifications	1,964			(269		)	—			1,695
Less: amounts reclassified from accumulated other comprehensive income (loss)	7,857			(4,254		)	—			3,603
Total other comprehensive (loss) income	(5,893		)	3,985			—			(1,908		)
Balance at End of Period	$	9,648		$	—		$	(1,790	)	$	7,858

The following table presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three months ended March 31, 2018 and 2017:



						Affected Line Item in the
	Three Months Ended March 31,					Statement where Net Income
(In thousands)	2018		2017			is Presented
Realized gains on AFS securities:
	$	—	$	12,570		Non-interest income
	—		(4,713		)	Tax expense
	—		7,857			Net of tax

Realized (losses) on cash flow hedging derivatives:
	—		(393		)	Interest expense
	—		(6,629		)	Non-interest expense
	—		2,768			Tax benefit
	—		(4,254		)	Net of tax

Realized gains on pension plans:
	—		—			Non-interest income
	—		—			Tax expense
	—		—			Net of tax

Total reclassifications for the period	$	—	$	3,603		Net of tax