v3.8.0.1
Regulatory Matters
 12 Months Ended
Dec. 31, 2017
Regulatory Capital Requirements [Abstract]  
Regulatory Matters

NOTE 19: REGULATORY MATTERS

FFI and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on FFI and the Bank’s financial condition. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of FFI and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  In July, 2013, the federal bank regulatory agencies approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks.  The new rules became effective on January 1, 2015, with certain of the requirements phased-in over a multi-year schedule, and fully phased in by January 1, 2019.  The rules include a new common equity Tier 1 ("CET1") capital to risk-weighted assets ratio with minimums for capital adequacy and prompt corrective action purposes of 4.5% and 6.5%, respectively.  The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital.  FFI’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. 

Quantitative measures established by the regulators to ensure capital adequacy require FFI and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to assets (as defined). Management believes, as of December 31, 2017 that FFI and the Bank met all capital adequacy requirements.

The following table presents the regulatory standards for well-capitalized institutions and the capital ratios for FFI and the Bank as of:

 

 

  

Actual

 

 

For Capital
Adequacy Purposes

 

 

To Be Well-Capitalized
Under Prompt Corrective
Action Provisions

 

(dollars in thousands)

  

Amount

 

  

Ratio

 

 

Amount

 

  

Ratio

 

 

Amount

 

  

Ratio

 

FFI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

$

366,236

 

 

 

11.99

%

 

$

137,435

 

 

 

4.50

%

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

366,236

 

 

 

8.44

%

 

 

173,514

 

 

 

4.00

%

 

 

 

 

 

 

 

 

Tier 1 risk-based capital ratio

 

 

366,236

 

 

 

11.99

%

 

 

183,246

 

 

 

6.00

%

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

385,236

 

 

 

12.61

%

 

 

244,328

 

 

 

8.00

%

 

 

 

 

 

 

 

 

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

$

285,754

 

 

 

12.80

%

 

$

100,432

 

 

 

4.50

%

 

 

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

285,754

 

 

 

8.76

%

 

 

130,525

 

 

 

4.00

%

 

 

 

 

 

 

 

 

Tier 1 risk-based capital ratio

 

 

285,754

 

 

 

12.80

%

 

 

133,910

 

 

 

6.00

%

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

301,664

 

 

 

13.52

%

 

 

178,547

 

 

 

8.00

%

 

 

 

 

 

 

 

 

BANK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

$

398,709

 

 

 

13.07

%

 

$

137,290

 

 

 

4.50

%

 

$

198,308

 

 

 

6.50

%

Tier 1 leverage ratio

 

 

398,709

 

 

 

9.20

%

 

 

173,363

 

 

 

4.00

%

 

 

216,703

 

 

 

5.00

%

Tier 1 risk-based capital ratio

 

 

398,709

 

 

 

13.07

%

 

 

183,053

 

 

 

6.00

%

 

 

244,071

 

 

 

8.00

%

Total risk-based capital ratio

 

 

417,709

 

 

 

13.69

%

 

 

244,071

 

 

 

8.00

%

 

 

305,089

 

 

 

10.00

%

December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CET1 capital ratio

 

$

272,221

 

 

 

12.23

%

 

$

100,166

 

 

 

4.50

%

 

$

144,685

 

 

 

6.50

%

Tier 1 leverage ratio

 

 

272,221

 

 

 

8.36

%

 

 

130,305

 

 

 

4.00

%

 

 

162,881

 

 

 

5.00

%

Tier 1 risk-based capital ratio

 

 

272,221

 

 

 

12.23

%

 

 

133,555

 

 

 

6.00

%

 

 

178,074

 

 

 

8.00

%

Total risk-based capital ratio

 

 

288,131

 

 

 

12.94

%

 

 

178,074

 

 

 

8.00

%

 

 

222,592

 

 

 

10.00

%

As of each of the dates set forth in the above table, the Company (on a consolidated basis) exceeded the minimum required capital ratios applicable to it and FFB (on a stand-alone basis) qualified as a well-capitalized depository institution under the capital adequacy guidelines.  

As of December 31, 2017, the amount of capital at FFB in excess of amounts required to be Well Capitalized was $200 million for the CET-1 capital ratio, $182 million for the Tier 1 leverage ratio, $155 million for the Tier 1 risk-based capital ratio and $113 million for the Total risk-based capital ratio. No conditions or events have occurred since December 31, 2017 that we believe have changed FFI’s or FFB’s capital adequacy classifications from those set forth in the above table.

The “Basel III” rules adopted by the Federal Reserve Board and the FDIC (the “New Capital Rules”) introduced a capital conservation buffer which is an increment added to the minimum capital ratios.  If a banking organization does not hold a capital conservation buffer composed of common equity tier 1 capital above its minimum risk-based capital requirements, it will face constraints on dividends, equity repurchases and executive compensation based on the amount of the shortfall. The capital buffer is measured against risk weighted assets and is therefore not applicable to the tier 1 leverage ratio. The implementation of the capital conservation buffer began on January 1, 2016 at 0.625%, and will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019. The following table sets forth the minimum capital ratios plus the applicable increment of the capital conservation buffer as of the current year and when it is fully implemented in 2019:

 

 

2017

 

2019

CET-1 to risk-weighted assets

 

5.750

%

 

7.000

%

Tier 1 capital (i.e., CET-1 plus Additional Tier 1) to risk-weighted assets

 

7.250

%

 

8.500

%

Total capital (i.e., Tier 1 plus Tier 2) to risk-weighted assets

 

9.250

%

 

10.500

%