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Regulatory Matters
 12 Months Ended
Dec. 31, 2014
Regulatory Matters [Abstract]  
Regulatory Matters

(11.) REGULATORY MATTERS

General

The supervision and regulation of financial and bank holding companies and their subsidiaries is intended primarily for the protection of depositors, the deposit insurance funds regulated by the FDIC and the banking system as a whole, and not for the protection of shareholders or creditors of bank holding companies. The various bank regulatory agencies have broad enforcement power over financial holding companies and banks, including the power to impose substantial fines, operational restrictions and other penalties for violations of laws and regulations and for safety and soundness considerations.

Capital

Banks and financial holding companies are subject to various regulatory capital requirements administered by state and federal 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 impact on the Company's consolidated financial statements. 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 about components, risk weighting 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 Total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to average assets (all as defined in the regulations). These minimum amounts and ratios are included in the table below.

The Company's and the Bank's Tier 1 capital consists of shareholders' equity excluding unrealized gains and losses on securities available for sale (except for unrealized losses which have been determined to be other than temporary and recognized as expense in the consolidated statements of income), goodwill and other intangible assets and disallowed portions of deferred tax assets. Tier 1 capital for the Company includes, subject to limitation, $17.3 million of preferred stock. The Company and the Bank's total capital are comprised of Tier 1 capital for each entity plus a permissible portion of the allowance for loan losses.

The Tier 1 and total risk-based capital ratios are calculated by dividing the respective capital amounts by risk-weighted assets. Risk-weighted assets are calculated based on regulatory requirements and include total assets, excluding goodwill and other intangible assets and disallowed portions of deferred tax assets, allocated by risk weight category and certain off-balance-sheet items (primarily loan commitments). The leverage ratio is calculated by dividing Tier 1 capital by adjusted quarterly average total assets, which exclude goodwill and other intangible assets and disallowed portions of deferred tax assets.

The Company's and the Bank's actual and required regulatory capital ratios were as follows as of December 31 (in thousands):

 
              For Capital          
      Actual     Adequacy Purposes     Well Capitalized  
      Amount Ratio     Amount Ratio     Amount Ratio  
2014                          
Tier 1 leverage: Company $ 219,904 7.35 % $ 119,722 4.00 % $ 149,653 5.00 %
  Bank   215,672 7.21     119,671 4.00     149,588 5.00  
Tier 1 capital: Company   219,904 10.47     83,985 4.00     125,977 6.00  
  Bank   215,672 10.28     83,889 4.00     125,834 6.00  
Total risk-based capital: Company   246,166 11.72     167,970 8.00     209,962 10.00  
  Bank   241,905 11.53     167,779 8.00     209,723 10.00  
 
2013                          
Tier 1 leverage: Company $ 215,024 7.63 % $ 112,660 4.00 % $ 140,825 5.00 %
  Bank   204,336 7.27     112,498 4.00     140,622 5.00  
Tier 1 capital: Company   215,024 10.82     79,459 4.00     119,188 6.00  
  Bank   204,336 10.31     79,291 4.00     118,937 6.00  
Total risk-based capital: Company   239,878 12.08     158,918 8.00     198,647 10.00  
  Bank   229,139 11.56     158,583 8.00     198,228 10.00  

 

As of December 31, 2014, the Company and Bank were considered "well capitalized" under all regulatory capital guidelines. Such determination has been made based on the Tier 1 leverage, Tier 1 capital and total risk-based capital ratios.

Federal Reserve Requirements

The Bank was not required to maintain a reserve balance at the FRB of New York as of December 31, 2014. The reserve requirement was $1.0 million as of December 31, 2013.

Dividend Restrictions

In the ordinary course of business, the Company is dependent upon dividends from the Bank to provide funds for the payment of dividends to shareholders and to provide for other cash requirements. Banking regulations may limit the amount of dividends that may be paid. Approval by regulatory authorities is required if the effect of dividends declared would cause the regulatory capital of the Bank to fall below specified minimum levels. Approval is also required if dividends declared exceed the net profits for that year combined with the retained net profits for the preceding two years.