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Regulatory Matters
 12 Months Ended
Dec. 31, 2015
Banking and Thrift [Abstract]  
Regulatory Matters
Regulatory Matters

We are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a material effect on our consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and the Bank’s prompt corrective action classification are also subject to qualitative judgments by the regulators about components of capital, risk weightings and other factors.
 
Quantitative measures established by regulation to ensure capital adequacy require Bancorp and the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets and of Tier 1 capital to quarterly average assets.
 
Capital ratios are reviewed by Management on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs.  For all periods presented, the Bank’s ratios exceed the regulatory definition of “well capitalized” under the regulatory framework for prompt corrective action and Bancorp’s ratios exceed the required minimum ratios for capital adequacy purposes.

In July 2013, the Board of Governors of the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency, finalized regulatory capital rules known as “Basel III.” The rules became effective beginning January 2015, and will be phased-in and become fully implemented by January 2019. The guidelines, among other things, changed the minimum capital requirements of bank holding companies, by increasing the Tier 1 capital to risk-weighted assets ratio to 6%, and introducing a new requirement to maintain a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5%. By 2019, when fully phased in, the rules will require further increases to certain minimum capital requirements and a capital conservation buffer of an additional 2.5% of risk-weighted assets. Basel III permits certain banks such as us to exclude accumulated other comprehensive income or loss from regulatory capital through a one-time election in the first quarter of 2015. As it was consistent with our existing treatment, there were no changes to our capital ratios as a result of making this election. The changes that affected us most significantly include:
•
shifting off-balance sheet items with an original maturity of one year or less from 0% to 20% risk weight,
•
moving past due loan balances from 100% to 150% risk weight,
•
deducting deferred tax assets associated with NOLs and tax credits from common equity Tier 1 capital, and
•
subjecting deferred tax assets related to temporary timing differences that exceed certain thresholds to 250% risk-weighting, beginning in 2018.

We have modeled our ratios under fully phased-in Basel III rules and, based on present facts, we do not expect that we will be required to raise additional capital as a result of the fully phased-in rules.

To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and common equity Tier 1 ratios as set forth in the second table below. The most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action as of December 31, 2015. There are no conditions or events since that notification that Management believes have changed the Bank’s categories and we expect the Bank to remain well capitalized under the minimum requirements for capital adequacy in accordance with Basel III rules for prompt corrective action pursuant to Section 38 of the Federal Deposit Insurance Act on a fully phased-in basis.

The Bancorp’s and Bank's capital adequacy ratios as of December 31, 2015 and 2014 are presented in the following tables. Bancorp's Tier 1 capital includes the subordinated debentures, which are not included at the Bank level. We continued to deploy capital in 2015 accumulated from net income into lending and investing.
Capital Ratios for Bancorp
(dollars in thousands)
Actual Ratio
 
Ratio for Capital Adequacy Purposes
As of December 31, 2015
Amount

 
Ratio

 
Amount

 
Ratio

Total Capital (to risk-weighted assets)
$
227,269

 
13.37
%
 
≥ $
135,996

 
≥ 8.0
%
Tier 1 Capital (to risk-weighted assets)
$
211,521

 
12.44
%
 
≥ $
101,997

 
≥ 6.0
%
Tier 1 Capital (to average assets)
$
211,521

 
10.67
%
 
≥ $
79,296

 
≥ 4.0
%
Common Equity Tier 1 (to risk-weighted assets)
$
206,724

 
12.16
%
 
≥ $
76,498

 
≥ 4.5
%
 
 
 
 
 
 
 
 
As of December 31, 2014
 

 
 

 
 

 
 

Total Capital (to risk-weighted assets)
$
210,067

 
13.94
%
 
≥ $
120,580

 
≥ 8.0
%
Tier 1 Capital (to risk-weighted assets)
$
193,956

 
12.87
%
 
≥ $
60,290

 
≥ 4.0
%
Tier 1 Capital (to average assets)
$
193,956

 
10.62
%
 
≥ $
73,079

 
≥ 4.0
%
Capital Ratios for the Bank  (dollars in thousands)
Actual Ratio
 
Ratio for Capital Adequacy Purposes
 
Ratio to be Well Capitalized under Prompt Corrective Action Provisions
As of December 31, 2015
Amount

 
Ratio

 
Amount

 
Ratio

 
Amount

 
Ratio

Total Capital (to risk-weighted assets)
$
222,830

 
13.11
%
 
≥ $
135,968

 
≥ 8.0
%
 
≥ $
169,960

 
≥ 10.0
%
Tier 1 Capital (to risk-weighted assets)
$
207,082

 
12.18
%
 
≥ $
101,976

 
≥ 6.0
%
 
≥ $
135,968

 
≥ 8.0
%
Tier 1 Capital (to average assets)
$
207,082

 
10.45
%
 
≥ $
79,268

 
≥ 4.0
%
 
≥ $
99,085

 
≥ 5.0
%
Common Equity Tier 1 (to risk-weighted assets)
$
207,082

 
12.18
%
 
≥ $
76,482

 
≥ 4.5
%
 
≥ $
110,474

 
≥ 6.5
%
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2014
 

 
 

 
 

 
 

 
 

 
 

Total Capital (to risk-weighted assets)
$
206,465

 
13.70
%
 
≥ $
120,553

 
≥ 8.0
%
 
≥ $
150,692

 
≥ 10.0
%
Tier 1 Capital (to risk-weighted assets)
$
190,354

 
12.63
%
 
≥ $
60,277

 
≥ 4.0
%
 
≥ $
90,415

 
≥ 6.0
%
Tier 1 Capital (to average assets)
$
190,354

 
10.42
%
 
≥ $
73,064

 
≥ 4.0
%
 
≥ $
91,330

 
≥ 5.0
%