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Regulatory Matters
 12 Months Ended
Dec. 31, 2018
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 as set forth in the tables below 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.
 
Management reviews capital ratios 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 to be considered a well capitalized bank holding company. In addition, 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, 2018. 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 for prompt corrective action purposes.

In July 2013, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency ("Agencies") finalized regulatory capital rules known as “Basel III.” Fully phased in on January 1, 2019, Basel III required Bancorp and the Bank to maintain (i) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 8.5%, and (ii) a minimum ratio of common equity Tier 1 capital to risk-weighted assets of at least 7.0%, both inclusive of a 2.50% “capital conservation buffer." The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and was phased in over a four-year period (increasing by 0.625% each subsequent January 1, until it reached 2.50% on January 1, 2019).

The Bancorp’s and Bank's capital adequacy ratios as of December 31, 2018 and 2017 are presented in the following tables. Bancorp's Tier 1 capital includes the subordinated debentures, which are not included at the Bank level.
Capital Ratios for Bancorp
(dollars in thousands)
Actual Ratio
 
Adequately Capitalized Threshold 1
 
Ratio to be a Well Capitalized Bank Holding Company
December 31, 2018
Amount

Ratio

 
Amount

Ratio

 
Amount

Ratio

Total Capital (to risk-weighted assets)
$
305,224

14.93
%
 
≥ $
201,943

≥ 9.875
%
 
≥ $
204,499

≥ 10.000
%
Tier 1 Capital (to risk-weighted assets)
$
288,445

14.10
%
 
≥ $
161,043

≥ 7.875
%
 
≥ $
163,599

≥ 8.000
%
Tier 1 Capital (to average assets)
$
288,445

11.54
%
 
≥ $
100,011

≥ 4.000
%
 
≥ $
125,013

≥ 5.000
%
Common Equity Tier 1 (to risk-weighted assets)
$
285,805

13.98
%
 
≥ $
130,368

≥ 6.375
%
 
≥ $
132,925

≥ 6.500
%
December 31, 2017
 

 

 
 

 

 
 

 

Total Capital (to risk-weighted assets)
$
287,435

14.91
%
 
≥ $
178,323

≥ 9.250
%
 
≥ $
192,782

≥ 10.000
%
Tier 1 Capital (to risk-weighted assets)
$
270,710

14.04
%
 
≥ $
139,767

≥ 7.250
%
 
≥ $
154,225

≥ 8.000
%
Tier 1 Capital (to average assets)
$
270,710

12.13
%
 
≥ $
89,285

≥ 4.000
%
 
≥ $
111,607

≥ 5.000
%
Common Equity Tier 1 (to risk-weighted assets)
$
265,119

13.75
%
 
≥ $
110,849

≥ 5.750
%
 
≥ $
125,308

≥ 6.500
%
1 The adequately capitalized threshold includes the capital conservation buffer effective for 2018 and 2017. These ratios are not reflected on a fully phased-in basis, which was effective January 1, 2019.
Capital Ratios for the Bank  (dollars in thousands)
Actual Ratio
 
Adequately Capitalized Threshold 1
 
Ratio to be Well Capitalized under Prompt Corrective Action Provisions
December 31, 2018
Amount

Ratio

 
Amount

Ratio

 
Amount

Ratio

Total Capital (to risk-weighted assets)
$
285,969

13.98
%
 
≥ $
201,927

≥ 9.875
%
 
≥ $
204,483

≥ 10.000
%
Tier 1 Capital (to risk-weighted assets)
$
269,191

13.16
%
 
≥ $
161,031

≥ 7.875
%
 
≥ $
163,587

≥ 8.000
%
Tier 1 Capital (to average assets)
$
269,191

10.77
%
 
≥ $
99,994

≥ 4.000
%
 
≥ $
124,992

≥ 5.000
%
Common Equity Tier 1 (to risk-weighted assets)
$
269,191

13.16
%
 
≥ $
130,358

≥ 6.375
%
 
≥ $
132,914

≥ 6.500
%
December 31, 2017
 

 

 
 

 

 
 

 

Total Capital (to risk-weighted assets)
$
283,885

14.73
%
 
≥ $
178,281

≥ 9.250
%
 
≥ $
192,737

≥ 10.000
%
Tier 1 Capital (to risk-weighted assets)
$
267,160

13.86
%
 
≥ $
139,734

≥ 7.250
%
 
≥ $
154,189

≥ 8.000
%
Tier 1 Capital (to average assets)
$
267,160

11.97
%
 
≥ $
89,275

≥ 4.000
%
 
≥ $
111,593

≥ 5.000
%
Common Equity Tier 1 (to risk-weighted assets)
$
267,160

13.86
%
 
≥ $
110,824

≥ 5.750
%
 
≥ $
125,279

≥ 6.500
%
1 The adequately capitalized threshold includes the capital conservation buffer effective for 2018 and 2017. These ratios are not reflected on a fully phased-in basis, which was effective January 1, 2019.