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Capital Requirements and Regulatory Restrictions
 12 Months Ended
Dec. 31, 2019
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]  
Capital Requirements and Regulatory Restrictions

Note 2

Capital Requirements and Regulatory Restrictions

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s consolidated financial statements. Under capital adequacy guidelines, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulators to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I capital and common equity Tier I capital to risk-weighted assets, and of Tier I capital to average assets. Management believes that as of December 31, 2019 and 2018, the Company and the Bank met all capital adequacy requirements to which they are subject.

Effective July 2, 2013, the Federal Reserve Board approved final rules known as the “Basel III Capital Rules” that substantially revised the risk-based capital and leverage capital requirements applicable to bank holding companies and depository institutions, including the Company and the Bank. The Basel III Capital Rules implement aspects of the Basel III capital framework agreed upon by the Basel Committee and incorporate changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Among other things, the Basel III Capital Rules establish stricter capital requirements and calculation standards, as well as more restrictive risk weightings for certain loans and facilities. The Basel III Capital Rules were effective for the Company and the Bank on January 1, 2015, subject to a phase-in period that ended on December 31, 2019.

The Bank is also subject to the regulatory framework for prompt corrective action. As of December 31, 2019, the most recent notification from the regulatory agencies categorized the Bank as well-capitalized. To be categorized as well-capitalized, the Bank must maintain minimum total risk-based, common equity Tier I risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Company has traditionally paid a quarterly cash dividend to its shareholders. Subsidiary dividends can be a significant source of funds for payment of dividends by the Company to its shareholders. 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. Under the foregoing dividend restrictions and while maintaining its “well capitalized” status, at December 31, 2019, unappropriated retained earnings of $42,487,000 were available at the Bank for the declaration of dividends to the Company without prior approval from regulatory authorities. In addition to regulatory requirements and considerations, any payment of dividends in the future will depend on the Company’s earnings, financial condition and other factors considered relevant by the Company’s Board of Directors.

There were no restricted funds on deposit used to meet regulatory reserve requirements at December 31, 2019 and 2018.

The Company’s and the Bank’s actual and required capital amounts and ratios are as follows:

 

 

Actual

 

Capital

Requirements

 

Requirement to be

Well-Capitalized

(In thousands)

 

Amount Ratio

 

Amount Ratio

 

Amount Ratio

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

$

249,954

 

19.70

%

 

$

101,530

 

8.00

%

 

$

N/A

 

N/A

%

Cass Commercial Bank

 

 

154,011

 

19.32

 

 

 

63,778

 

8.00

 

 

 

79,722

 

10.00

 

Common Equity Tier I Capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

239,398

 

18.86

 

 

 

57,110

 

4.50

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

145,673

 

18.27

 

 

 

35,875

 

4.50

 

 

 

51,819

 

6.50

 

Tier I capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

239,398

 

18.86

 

 

 

76,147

 

6.00

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

145,673

 

18.27

 

 

 

47,833

 

6.00

 

 

 

63,778

 

8.00

 

Tier I capital (to average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

239,398

 

13.24

 

 

 

72,329

 

4.00

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

145,673

 

16.64

 

 

 

35,012

 

4.00

 

 

 

43,765

 

5.00

 

40

Table of Contents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

$

244,660

 

21.38

%

 

$

91,550

 

8.00

%

 

$

N/A

 

N/A

%

Cass Commercial Bank

 

 

137,894

 

18.31

 

 

 

60,257

 

8.00

 

 

 

75,321

 

10.00

 

Common Equity Tier I Capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

234,435

 

20.49

 

 

 

51,497

 

4.50

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

130,037

 

17.26

 

 

 

33,895

 

4.50

 

 

 

48,959

 

6.50

 

Tier I capital (to risk-weighted assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

234,435

 

20.49

 

 

 

68,662

 

6.00

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

130,037

 

17.26

 

 

 

45,193

 

6.00

 

 

 

60,257

 

8.00

 

Tier I capital (to average assets)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cass Information Systems, Inc.

 

 

234,435

 

13.89

 

 

 

67,500

 

4.00

 

 

 

N/A

 

N/A

 

Cass Commercial Bank

 

 

130,037

 

15.35

 

 

 

33,884

 

4.00

 

 

 

42,354

 

5.00