CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios were as follows:



	March 31, 2018		Regulatory Minimum to be "Well Capitalized"		December 31, 2017		Regulatory Minimum to be "Well Capitalized"
Company (consolidated)
Total capital to risk weighted assets	13.9	%	10.5	%	13.7	%	10.5	%
Common equity tier 1 capital to risk weighted assets	11.4		6.5		11.3		6.5
Tier 1 capital to risk weighted assets	12.3		8.0		12.2		8.0
Tier 1 capital to average assets	8.2		5.0		8.1		5.0

Bank
Total capital to risk weighted assets	13.7	%	10.5	%	13.7	%	10.5	%
Common equity tier 1 capital to risk weighted assets	12.9		6.5		12.9		6.5
Tier 1 capital to risk weighted assets	12.9		8.0		12.9		8.0
Tier 1 capital to average assets	8.6		5.0		8.6		5.0

At each date shown, the Company and the Bank met the conditions to be classified as “well capitalized” under the relevant regulatory framework. To be categorized as "well capitalized," an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

Effective January 1, 2015, the Company and the Bank became subject to the Basel III rule that requires the Company and the Bank to assess their Common equity tier 1 capital to risk weighted assets and the Company and the Bank each exceed the minimum to be "well capitalized." In addition, the final capital rules added a requirement to maintain a minimum conservation buffer, composed of common equity tier 1 capital, of 2.5% of risk-weighted assets, to be phased in over three years and applied to the common equity tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio and the Total risk-based capital ratio. Accordingly, banking organizations, on a fully phased in basis no later than January 1, 2019, must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5%.

The required minimum conservation buffer began to be phased in incrementally, starting at 0.625% on January 1, 2016 and increasing to 1.25% on January 1, 2017. The buffer increased to 1.875% on January 1, 2018 and will increase to 2.5% on January 1, 2019. The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At March 31, 2018, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered "well capitalized" for regulatory purposes. The capital levels of both the Company and the Bank at March 31, 2018 also exceeded the minimum capital requirements including the currently applicable capital conservation buffer of 1.875%.

Accumulated other comprehensive loss

Components of accumulated other comprehensive income is as follows:



(in thousands)	March 31, 2018			December 31, 2017
Other accumulated comprehensive income (loss), before tax:
Net unrealized loss on AFS securities	$	(13,443	)	$	(2,741	)
Net unrealized loss on effective cash flow hedging derivatives	(2,934		)	(3,588		)
Net unrealized loss on post-retirement plans	(905		)	(946		)

Income taxes related to items of accumulated other comprehensive loss:
Net unrealized loss on AFS securities	3,211			1,030
Net unrealized loss on effective cash flow hedging derivatives	698			1,338
Net unrealized loss on post-retirement plans	217			353
Accumulated other comprehensive loss	$	(13,156	)	$	(4,554	)

The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2018 and 2017:



(in thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended March 31, 2018
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	(10,702	)	$	2,550		$	(8,152	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on AFS securities	(10,702		)	2,550			(8,152		)

Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	654			(155		)	499
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	654			(155		)	499

Net unrealized loss on post-retirement plans:
Net unrealized loss arising during the period	41			(10		)	31
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on post-retirement plans	41			(10		)	31
Other comprehensive loss	$	(10,007	)	$	2,385		$	(7,622	)

Three Months Ended March 31, 2017
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	1,116		$	(348	)	$	768
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on AFS securities	1,116			(348		)	768

Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	(223		)	83			(140		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	(223		)	83			(140		)

Net unrealized loss on post-retirement plans:
Net unrealized loss arising during the period	57			(21		)	36
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on post-retirement plans	57			(21		)	36
Other comprehensive income (loss)	$	950		$	(286	)	$	664

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three months ended March 31, 2018 and 2017:



(in thousands)	Net unrealized holding gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized holding loss on pension plans			Total
Three Months Ended March 31, 2018
Balance at beginning of period	$	(1,713	)	$	(2,250	)	$	(591	)	$	(4,554	)
Other comprehensive gain/(loss) before reclassifications	(8,152		)	499			31			(7,622		)
Less: amounts reclassified from accumulated other comprehensive income for ASU 2018-02	(367		)	(485		)	(128		)	(980		)
Total other comprehensive loss	(8,519		)	14			(97		)	(8,602		)
Balance at end of period	$	(10,232	)	$	(2,236	)	$	(688	)	$	(13,156	)

Three Months Ended March 31, 2017
Balance at beginning of period	$	(2,125	)	$	(1,798	)	$	(403	)	$	(4,326	)
Other comprehensive gain/(loss) before reclassifications	768			(140		)	36			664
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive loss	768			(140		)	36			664
Balance at end of period	$	(1,357	)	$	(1,938	)	$	(367	)	$	(3,662	)

The Company did not have any reclassifications from any component of accumulated other comprehensive income (loss) for the three months ended March 31, 2018 and 2017.