CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:



	September 30, 2019		Regulatory Minimum to be "Well Capitalized"		December 31, 2018		Regulatory Minimum to be "Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	14.01	%	N/A		14.23	%	N/A
Common equity tier 1 capital to risk-weighted assets	11.63		N/A		11.80		N/A
Tier 1 capital to risk-weighted assets	12.47		N/A		12.68		N/A
Tier 1 capital to average assets	8.65		N/A		8.53		N/A

Bank
Total capital to risk-weighted assets	13.45	%	10.00	%	13.82	%	10.00	%
Common equity tier 1 capital to risk-weighted assets	12.60		6.50		12.99		6.50
Tier 1 capital to risk-weighted assets	12.60		8.00		12.99		8.00
Tier 1 capital to average assets	8.74		5.00		8.74		5.00

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.

The Company and the Bank are 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." Effective January 1, 2019 all banking organizations 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 final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At September 30, 2019, 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.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income (loss) is, as follows:



(in thousands)	September 30, 2019			December 31, 2018
Other accumulated comprehensive income (loss), before tax:
Net unrealized gain (loss) on AFS securities	$	10,442		$	(11,304	)
Net unrealized loss on effective cash flow hedging derivatives	(5,306		)	(2,934		)
Net unrealized loss on post-retirement plans	(1,162		)	(1,162		)

Income taxes related to items of accumulated other comprehensive (income) loss:
Net unrealized (gain) loss on AFS securities	(2,440		)	2,641
Net unrealized loss on effective cash flow hedging derivatives	1,239			685
Net unrealized loss on post-retirement plans	272			272
Accumulated other comprehensive income (loss)	$	3,045		$	(11,802	)

The following table presents the components of other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:



(in thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	3,357		$	(784	)	$	2,573
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	3,200			(747		)	2,453

Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period	(370		)	85			(285		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on cash flow hedging derivatives	(370		)	85			(285		)

Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	2,830		$	(662	)	$	2,168

Three Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(5,850	)	$	1,291		$	(4,559	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(5,850		)	1,291			(4,559		)

Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	299			(81		)	218
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	299			(81		)	218

Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive loss	$	(5,551	)	$	1,210		$	(4,341	)



(in thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	21,903		$	(5,118	)	$	16,785
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	21,746			(5,081		)	16,665

Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	(2,372		)	554			(1,818		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	(2,372		)	554			(1,818		)

Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	19,374		$	(4,527	)	$	14,847

Nine Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(19,639	)	$	4,565		$	(15,074	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(19,639		)	4,565			(15,074		)

Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,179			(290		)	889
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	1,179			(290		)	889

Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	41			(10		)	31
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	41			(10		)	31
Other comprehensive loss	$	(18,419	)	$	4,265		$	(14,154	)

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2019 and 2018:



(in thousands)	Net unrealized (loss) gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized loss on pension plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	5,547		$	(3,782	)	$	(888	)	$	877
Other comprehensive gain (loss) before reclassifications	2,573			(285		)	—			2,288
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	2,453			(285		)	—			2,168
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045

Three Months Ended September 30, 2018
Balance at beginning of period	$	(12,595	)	$	(2,064	)	$	(688	)	$	(15,347	)
Other comprehensive (loss) gain before reclassifications	(4,559		)	218			—			(4,341		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(4,559		)	218			—			(4,341		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)

Nine Months Ended September 30, 2019
Balance at beginning of period	$	(8,665	)	$	(2,249	)	$	(888	)	$	(11,802	)
Other comprehensive gain (loss) before reclassifications	16,785			(1,818		)	—			14,967
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	16,665			(1,818		)	—			14,847
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045

Nine Months Ended September 30, 2018
Balance at beginning of period	$	(1,713	)	$	(2,250	)	$	(591	)	$	(4,554	)
Other comprehensive (loss) gain before reclassifications	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income for ASU 2018-02	(367		)	(485		)	(128		)	(980		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:



	Three Months Ended September 30,					Nine Months Ended September 30,					Affected Line Item where Net Income is Presented
(in thousands)	2019			2018		2019			2018		Affected Line Item where Net Income is Presented
Net realized gains on AFS securities:
Before tax⁽¹⁾	$	157		$	—	$	157		$	—	Non-interest income
Tax effect	(37		)	—		(37		)	—		Tax expense
Total reclassifications for the period	$	120		$	—	$	120		$	—	Net of tax

⁽¹⁾ Net realized gains before tax include gross realized gains $716 thousand and realized losses of $559 thousand.