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CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
 12 Months Ended
Sep. 30, 2018
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS [Abstract]  
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
 
As U.S. banking organizations, the Company and the Bank are required to comply with the regulatory capital rules adopted by the Federal Reserve and the OCC (the "Basel III Capital Rules") that became effective on January 1, 2015, subject to phase-in periods for certain requirements and other provisions of the Basel III Capital Rules. Under the Basel III Capital Rules and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

The Basel III Capital Rules require the Company and the Bank to maintain minimum ratios (set forth in the table below) of total risk-based capital and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and a leverage ratio consisting of Tier 1 capital (as defined) to average assets (as defined).  At September 30, 2018, both the Bank and the Company exceeded federal regulatory minimum capital requirements to be classified as well-capitalized under the prompt corrective action requirements.  The Company and the Bank took the accumulated other comprehensive income (“AOCI”) opt-out election; under the rule, non-advanced approach banking organizations were given a one-time option to exclude certain AOCI components.  The table below includes certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies.  Management reviews these measures along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity.

 
Company
 
Bank
 
Minimum
Requirement For
Capital Adequacy
Purposes
 
Minimum Requirement
To Be Well Capitalized
Under Prompt
Corrective Action
Provisions
September 30, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage ratio
8.50
%
 
9.75
%
 
4.00
%
 
5.00
%
Common equity Tier 1 capital ratio
10.56

 
12.50

 
4.50

 
6.50

Tier 1 capital ratio
10.97

 
12.56

 
6.00

 
8.00

Total qualifying capital ratio
13.18

 
12.89

 
8.00

 
10.00

 
 
 
 
 
 
 
 
September 30, 2017
 

 
 

 
 

 
 

 
 
 
 
 
 
 
 
Tier 1 leverage ratio
7.64
%
 
9.64
%
 
4.00
%
 
5.00
%
Common equity Tier 1 capital ratio
13.97

 
18.22

 
4.50

 
6.50

Tier 1 capital ratio
14.46

 
18.22

 
6.00

 
8.00

Total qualifying capital ratio
18.41

 
18.59

 
8.00

 
10.00



The following table provides a reconciliation of the amounts included in the table above for the Company.
 
Standardized Approach (1)
September 30, 2018
 
(Dollars in Thousands)
 
 
Total stockholders' equity
$
747,726

Adjustments:
 

LESS: Goodwill, net of associated deferred tax liabilities
299,456

LESS: Certain other intangible assets
64,716

LESS: Net unrealized gains (losses) on available-for-sale securities
(33,114
)
LESS: Non-controlling interest
3,574

LESS: Unrealized currency gains (losses)
3

Common Equity Tier 1 (1)
413,091

Long-term debt and other instruments qualifying as Tier 1
13,661

Tier 1 minority interest not included in common equity tier 1 capital
2,118

Total Tier 1 capital
428,870

Allowance for loan and lease losses
13,185

Subordinated debentures (net of issuance costs)
73,491

Total qualifying capital
515,546


(1) The Basel III Capital Rules revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio.  Those changes became effective for the Company on January 1, 2015, and are being fully phased in through the end of 2021.  The capital ratios were determined using the Basel III Capital Rules that became effective on January 1, 2015.

Under the Basel III Capital Rules, since January 1, 2016, the Company and the Bank have been required to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively composed of Common Equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. On January 1, 2018, the Company and Bank were in compliance with the capital conservation buffer requirement. The capital conservation buffer was subject to a three year phase-in and will increase the three risk-based capital ratios by 0.625% for 2019, at which point the Common Equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.