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Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2015
Regulatory Capital Requirements Abstract  
Regulatory Capital Requirements Under Banking Regulations Text Block

NOTE 18 — REGULATORY CAPITAL REQUIREMENTS

Regulatory Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and Puerto Rico banking 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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Pursuant to the Dodd-Frank Act, federal banking regulators have adopted new capital rules that became effective January 1, 2015 for the Company and the Bank (subject to certain phase-in periods through January 1, 2019) and that replaced their general risk-based capital rules, advanced approaches rule, market risk rule, and leverage rules. Among other matters, the new capital rules: (i) introduce a new capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to prior regulations. The new capital rules prescribe a new standardized approach for risk weightings that expand the risk-weighting categories from the current four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the assets, and resulting in higher risk weights for a variety of asset classes.

Pursuant to the new capital rules, the minimum capital ratios requirements as of January 1, 2015 are as follows:

4.5% CET1 to risk-weighted assets;

6.0% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets;

8.0% Total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets; and

4.0% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known

as the “leverage ratio”).

As of December 31, 2015 and 2014, the Company and the Bank met all capital adequacy requirements to which they are subject. As of December 31, 2015 and 2014, the Bank is “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” an institution must maintain minimum CET1 risk-based, Tier 1 risk-based, total risk-based, and Tier 1 leverage ratios as set forth in the tables presented below.

The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2015 and 2014 are as follows:

Minimum CapitalMinimum to be Well
Actual RequirementCapitalized
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Company Ratios
As of December 31, 2015
Total capital to risk-weighted assets$846,74817.29%$391,7238.00%$489,65410.00%
Tier 1 capital to risk-weighted assets$782,91215.99%$293,7926.00%$391,7238.00%
Common equity tier 1 capital to risk-weighted assets$594,48212.14%$220,3444.50%$318,2756.50%
Tier 1 capital to average total assets$782,91211.18%$280,0094.00%$350,0115.00%
As of December 31, 2014
Total capital to risk-weighted assets$851,43717.57%$387,7728.00%$484,71510.00%
Tier 1 capital to risk-weighted assets$776,52516.02%$193,8864.00%$290,8296.00%
Tier 1 capital to average total assets$776,52510.61%$292,7384.00%$365,9225.00%

Minimum CapitalMinimum to be Well
Actual RequirementCapitalized
Amount Ratio Amount Ratio Amount Ratio
(Dollars in thousands)
Bank Ratios
As of December 31, 2015
Total capital to risk-weighted assets$815,45816.70%$390,6888.00%$488,36010.00%
Tier 1 capital to risk-weighted assets$751,88615.40%$293,0166.00%$390,6888.00%
Common equity tier 1 capital to risk-weighted assets$751,88615.40%$219,7624.50%$317,4346.50%
Tier 1 capital to average total assets$751,88610.80%$278,3994.00%$347,9995.00%
As of December 31, 2014
Total capital to risk-weighted assets$820,88416.99%$386,4448.00%$483,05510.00%
Tier 1 capital to risk-weighted assets$746,17715.45%$193,2224.00%$289,8336.00%
Tier 1 capital to average total assets$746,17710.26%$290,8794.00%$363,5995.00%