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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2023

CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

NOTE 6. CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:


	March 31, 2023
					Minimum Regulatory
	Actual				Capital Requirements
(in thousands, except ratios)	Amount		Ratio		Amount		Ratio
Company (consolidated)
Total capital to risk-weighted assets	$	427,290	13.65	%	$	250,436	8.00	%
Common equity tier 1 capital to risk-weighted assets		336,331	10.74			140,871	4.50
Tier 1 capital to risk-weighted assets		347,133	11.40			182,662	6.00
Tier 1 capital to average assets (leverage ratio)		347,133	9.33			148,896	4.00

Bank
Total capital to risk-weighted assets	$	419,780	13.50	%	$	248,747	8.00	%
Common equity tier 1 capital to risk-weighted assets		389,441	11.24			155,897	4.50
Tier 1 capital to risk-weighted assets		389,441	11.24			207,863	6.00
Tier 1 capital to average assets (leverage ratio)		389,441	10.57			147,326	4.00


	December 31, 2022
					Minimum Regulatory
	Actual				Capital Requirements
(in thousands, except ratios)	Amount		Ratio		Amount		Ratio
Company (consolidated)
Total capital to risk-weighted assets	$	416,900	13.50	%	$	247,041	8.00	%
Common equity tier 1 capital to risk-weighted assets		326,513	10.57			138,960	4.50
Tier 1 capital to risk-weighted assets		347,133	11.24			185,281	6.00
Tier 1 capital to average assets (leverage ratio)		347,133	9.21			150,772	4.00

Bank
Total capital to risk-weighted assets	$	410,053	13.29	%	$	246,812	8.00	%
Common equity tier 1 capital to risk-weighted assets		380,286	12.33			138,832	4.50
Tier 1 capital to risk-weighted assets		380,286	12.33			185,110	6.00
Tier 1 capital to average assets (leverage ratio)		380,286	10.10			150,655	4.00

In order to be classified as “well-capitalized” under the relevant regulatory framework, (i) the Company must, on a consolidated basis, maintain a total risk-based capital ratio of 10.00% or greater and a Tier 1 risk-based capital ratio of 6.00% or greater; and (ii) the Bank must maintain a total risk-based capital ratio of 10.00% or greater, a Tier 1 risk-based capital ratio of 8.00% or greater, a common equity Tier 1 capital ratio of 6.50% or greater, and a leverage ratio of 5.00% or greater. At each date shown in the tables above, the Company and the Bank met the conditions to be classified as “well-capitalized” under the relevant regulatory framework.

Accumulated other comprehensive (loss) income

Components of accumulated other comprehensive income is, as follows:


(in thousands)	March 31, 2023		December 31, 2022
Accumulated other comprehensive income, before tax:
Net unrealized loss on AFS securities	$	(65,826)	$	(71,832)
Net unrealized loss on hedging derivatives		(1,566)		(2,333)
Net unrealized loss on post-retirement plans		(1,675)		(1,691)

Income taxes related to items of accumulated other comprehensive income:
Net unrealized loss on AFS securities		15,180		16,586
Net unrealized loss on hedging derivatives		361		539
Net unrealized loss on post-retirement plans		375		391
Accumulated other comprehensive loss	$	(53,151)	$	(58,340)

The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2023 and 2022:


(in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2023
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	6,040	$	(1,414)	$	4,626
Less: reclassification adjustment for gains (losses) realized in net income		34		(8)		26
Net unrealized gain on AFS securities		6,006		(1,406)		4,600

Net unrealized loss on hedging derivatives:
Net unrealized gain arising during the period		767		(178)		589
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on cash flow hedging derivatives		767		(178)		589

Other comprehensive income (loss)	$	6,773	$	(1,584)	$	5,189

Three Months Ended March 31, 2022
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(28,835)	$	6,632	$	(22,203)
Less: reclassification adjustment for gains (losses) realized in net income		9		(2)		7
Net unrealized gain on AFS securities		(28,844)		6,634		(22,210)

Net unrealized loss on derivative hedgess:
Net unrealized loss arising during the period		(1,881)		433		(1,448)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized loss on cash flow derivative hedges		(1,881)		433		(1,448)

Other comprehensive (loss) income	$	(30,725)	$	7,067	$	(23,658)

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax impacts, for the three months ended March 31, 2023 and 2022:


	Net unrealized		Net gain (loss) on		Net unrealized
	gain (loss)		effective cash		loss
	on AFS		flow hedging		on pension
(in thousands)	Securities		derivatives		plans		Total
Three Months Ended March 31, 2023
Balance at beginning of period	$	(55,246)	$	(1,794)	$	(1,300)	$	(58,340)
Other comprehensive loss before reclassifications		4,626		589		—		5,215
Less: amounts reclassified from accumulated other comprehensive income		26		—		—		26
Total other comprehensive income		4,600		589		—		5,189
Balance at end of period	$	(50,646)	$	(1,205)	$	(1,300)	$	(53,151)

Three Months Ended March 31, 2022
Balance at beginning of period	$	1,985	$	870	$	(552)	$	2,303
Other comprehensive loss before reclassifications		(22,203)		(1,448)		—		(23,651)
Less: amounts reclassified from accumulated other comprehensive income		7		—		—		7
Total other comprehensive loss		(22,210)		(1,448)		—		(23,658)
Balance at end of period	$	(20,225)	$	(578)	$	(552)	$	(21,355)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income for three months ended March 31, 2023 and 2022:


					Affected Line Item where
(in thousands)	2023		2022		Net Income is Presented
Net realized gains on AFS securities:
Before tax⁽¹⁾	$	34	$	9	Non-interest income
Tax effect		(8)		(2)	Tax expense
Total reclassifications for the period	$	26	$	7

					Affected Line Item where
(in thousands)	2023		2022		Net Income is Presented
Net realized loss on hedging derivatives:
Before tax	$	—	$	—	Non-interest income
Tax effect		—		—	Tax expense
Total reclassifications for the period	$	—	$	—

(1)	Net realized gains before tax include $34 thousand realized gains for the three months ended March 31, 2023 and no gross realized losses. Net realized gains before tax include $9 thousand realized gains for the three months ended March 31, 2022 and no gross realized losses.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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