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Stockholders' Equity and Regulatory Requirements

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Stockholders' Equity and Regulatory Requirements

Note 16 - Stockholders’ Equity and Regulatory Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, 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. The final rules implementing the Basel Committee on Banking Supervisions’ capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2018, the Bank and the Parent Corporation meet all capital adequacy requirements to which they are subject.

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 adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is growth and expansion, and capital restoration plans are required. As of December 31, 2018 and 2017, the most recent regulatory notifications 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 is a summary of the Bank’s and the Parent Corporation’s actual capital amounts and ratios as of December 31, 2018 and 2017, compared to the FRB and FDIC minimum capital adequacy requirements and the FDIC requirements for classification as a well-capitalized institution.

										Minimum Capital Adequacy								For Classification Under Corrective Action Plan as Well Capitalized
		Amount				Ratio				Amount				Ratio				Amount				Ratio
The Bank										(dollars in thousands)
December 31, 2018
Leverage (Tier 1) capital		$	552,311				10.78%			$	204,973				4.00%			$	256,217				5.00%
Risk-Based Capital:
CET 1		$	552,311				11.37%			$	218,589				4.50%			$	315,740				6.50%
Tier 1			552,311				11.37%				291,452				6.00%				388,603				8.00%
Total			619,515				12.75%				388,603				8.00%				485,754				10.00%

December 31, 2017
Leverage (Tier 1) capital		$	468,899				9.84%			$	190,665				4.00%			$	238,332				5.00%
Risk-Based Capital:
CET 1		$	468,899				10.21%			$	206,721				4.50%			$	298,597				6.50%
Tier 1			468,899				10.21%				275,628				6.00%				367,504				8.00%
Total			500,647				10.90%				367,504				8.00%				459,379				10.00%

										Minimum Capital Adequacy								For Classification as Well Capitalized
		Amount				Ratio				Amount				Ratio				Amount		Ratio
The Company										(dollars in thousands)
December 31, 2018
Leverage (Tier 1) capital		$	478,876				9.34%			$	204,995				4.00%			N/A		N/A
Risk-Based Capital:
CET 1		$	473,721				9.75%			$	218,585				4.50%			N/A		N/A
Tier 1			478,876				9.86%				291,446				6.00%			N/A		N/A
Total			638,830				13.15%				388,595				8.00%			N/A		N/A

December 31, 2017
Leverage (Tier 1) capital		$	425,407				8.92%			$	190,728				4.00%			N/A		N/A
Risk-Based Capital:
CET 1		$	420,252				9.15%			$	206,742				4.50%			N/A		N/A
Tier 1			425,407				9.26%				275,656				6.00%			N/A		N/A
Total			507,155				11.04%				367,542				8.00%			N/A		N/A

The new Basel III rules require a “capital conservation buffer,” for both the Company and the Bank. On January 1, 2019, the Company and the Bank are required to maintain a 2.5% capital conservation buffer, above and beyond the capital levels otherwise required under applicable regulation. Under this guidance banking institutions with a CET1, Tier 1 Capital Ratio and Total Risk Based Capital Ratio above the minimum regulatory adequate capital ratios but below the capital conservation buffer will face constraints on their ability to pay dividends, repurchase equity and pay discretionary bonuses to executive officers, based on the amount of the shortfall.

As of December 31, 2018 both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the Tier 1 Ratio which was 1.99% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.88% above the minimum buffer ratio.