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Regulatory Capital Requirements
 12 Months Ended
Dec. 31, 2019
Regulatory Capital Requirements [Abstract]  
Regulatory Capital Requirements

Note 21—Regulatory Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by their respective 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. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Common Equity Tier 1 capital (“CET1”), Tier 1 capital and total capital to risk‑weighted assets and of Tier 1 capital to average consolidated assets, as defined in the regulations.


Note 21—Regulatory Capital Requirements (continued)

As of December 31, 2019, the most recent notification from the FDIC categorized the Bank as well‑capitalized under the framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The required regulatory capital ratios are set forth in the following tables along with the minimum capital amounts required for the Company and the Bank and the minimum capital amount required for the Bank to be considered to be well capitalized. The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2019 and 2018 are also presented.

 

 

 

Actual

 

 

Minimum Capital

Required

 

 

Required to be

Considered

Well Capitalized

 

2019

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

627,573

 

 

 

14.43

%

 

$

347,835

 

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

602,684

 

 

 

13.87

%

 

 

347,564

 

 

 

8.00

%

 

 

434,454

 

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

594,477

 

 

 

13.67

%

 

$

260,876

 

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

 

569,588

 

 

 

13.11

%

 

 

260,673

 

 

 

6.00

%

 

 

347,564

 

 

 

8.00

%

Common Equity Tier 1 (CET1) to risk weighted

   assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

537,539

 

 

 

12.36

%

 

$

195,657

 

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

569,588

 

 

 

13.11

%

 

 

195,504

 

 

 

4.50

%

 

 

282,395

 

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

594,477

 

 

 

11.39

%

 

$

208,771

 

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

569,588

 

 

 

10.92

%

 

 

208,647

 

 

 

4.00

%

 

 

260,809

 

 

 

5.00

%

 

 

 

Actual

 

 

Minimum Capital

Required

 

 

Required to be

Considered

Well Capitalized

 

2018

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

 

Amount

 

 

Ratio

 

Total capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

551,079

 

 

 

13.99

%

 

$

315,093

 

 

 

8.00

%

 

N/A

 

 

N/A

 

Bank

 

 

528,329

 

 

 

13.40

%

 

 

315,455

 

 

 

8.00

%

 

 

394,318

 

 

 

10.00

%

Tier 1 capital to risk weighted assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

523,808

 

 

 

13.30

%

 

$

236,320

 

 

 

6.00

%

 

N/A

 

 

N/A

 

Bank

 

 

501,058

 

 

 

12.71

%

 

 

236,591

 

 

 

6.00

%

 

 

315,455

 

 

 

8.00

%

Common Equity Tier 1 (CET1) to risk weighted

   assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

466,870

 

 

 

11.85

%

 

$

177,240

 

 

 

4.50

%

 

N/A

 

 

N/A

 

Bank

 

 

501,058

 

 

 

12.71

%

 

 

177,443

 

 

 

4.50

%

 

 

256,307

 

 

 

6.50

%

Tier 1 capital to average assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Company

 

$

523,808

 

 

 

11.05

%

 

$

189,587

 

 

 

4.00

%

 

N/A

 

 

N/A

 

Bank

 

 

501,058

 

 

 

10.56

%

 

 

189,797

 

 

 

4.00

%

 

 

237,246

 

 

 

5.00

%

The Company and Byline Bank must maintain a capital conservation buffer consisting of CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels in order to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses. The conservation buffers for the Company and Byline Bank exceed the minimum capital requirement at 6.43% and 5.87%, respectively, as of December 31, 2019.

Provisions of state and federal banking regulations may limit, by statute, the amount of dividends that may be paid to the Company by Byline Bank without prior approval of Byline Bank’s regulatory agencies. The Company is economically dependent on the cash dividends received from Byline Bank. These dividends represent the Company’s primary cash flow from operating activities used to service its obligations. For the years ended December 31, 2019 and 2018, the Company received $13.5 million and $2.9 million, respectively, in cash dividends from Byline Bank, primarily used to pay interest on the subordinated debentures issued in connection with trust preferred securities, dividends on the Company’s preferred stock, and other corporate expenses.