XML 29 R18.htm IDEA: XBRL DOCUMENT v3.19.2
Regulatory Capital Requirements
 6 Months Ended
Jun. 30, 2019
Banking and Thrift [Abstract]  
Regulatory Capital Requirements
9. Regulatory Capital Requirements

 

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can initiate regulatory action. Management believed that as of June 30, 2019, the Company and the Bank met all capital adequacy requirements to which they were subject at that time.

 

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. The Company and the Bank are subject to the Basel III Rule, which is applicable to all U.S. banks that are subject to minimum capital requirements, as well as to bank and savings and loan holding companies other than “small bank holding companies” (generally, non-public bank holding companies with consolidated assets of less than $3.0 billion).

 

The Basel III Rule includes a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.5%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, a minimum ratio of Total Capital to risk-weighted assets of 8.0%, and a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer, comprised of common equity Tier 1 capital, is also established above the regulatory minimum capital requirements. This capital conservation buffer was 1.875% for 2018, and increased to its final level of 2.5% on January 1, 2019. The capital conservation buffer increases the common equity Tier 1 capital ratio, and Tier 1 capital and total risk based capital ratios.

 

As of June 30, 2019 and December 31, 2018, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action then in effect. There are no conditions or events since that notification that management believes have changed the institution’s category.

 

The following is a comparison of the Company’s regulatory capital to minimum capital requirements at June 30, 2019 and December 31, 2018:

 

(Dollars in thousands)      For capital 
  Actual   adequacy purposes 
   Amount   Ratio   Amount   Ratio (1) 
As of June 30, 2019                    
Leverage  $102,471    10.49%  $39,070    4.0%
Common Equity Tier 1 Capital   81,471    13.00%   43,863    7.0%
Tier 1 Capital   102,471    16.35%   53,262    8.5%
Total Risk Based Capital   108,877    17.38%   65,794    10.5%
                     
As of December 31, 2018                    
Leverage  $99,150    10.34%  $38,373    4.0%
Common Equity Tier 1 Capital   78,150    13.12%   37,982    6.4%
Tier 1 Capital   99,150    16.64%   46,919    7.9%
Total Risk Based Capital   105,055    17.63%   58,835    9.9%

 

  (1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5% for June 30, 2019 and 1.875% for December 31, 2018

  

The following is a comparison of the Bank’s regulatory capital to minimum capital requirements at June 30, 2019 and December 31, 2018:

 

                   To be well-capitalized 
                   under prompt 
(Dollars in thousands)      For capital   corrective 
   Actual   adequacy purposes   action provisions 
   Amount   Ratio   Amount   Ratio(1)   Amount   Ratio 
As of June 30, 2019                              
Leverage  $99,943    10.27%  $38,944    4.0%  $48,681    5.0%
Common Equity Tier 1 Capital   99,943    15.98%   43,789    7.0%   40,661    6.5%
Tier 1 Capital   99,943    15.98%   53,172    8.5%   50,044    8.0%
Total Risk Based Capital   106,349    17.00%   65,683    10.5%   62,556    10.0%
                               
As of December 31, 2018                              
Leverage  $97,112    10.15%  $38,254    4.0%  $47,818    5.0%
Common Equity Tier 1 Capital   97,112    16.33%   37,922    6.4%   38,665    6.5%
Tier 1 Capital   97,112    16.33%   46,844    7.9%   47,588    8.0%
Total Risk Based Capital   103,017    17.32%   58,741    9.9%   59,485    10.0%

 

(1) The required ratios for capital adequacy purposes include a capital conservation buffer of 2.5% for June 30, 2019 and 1.875% for December 31, 2018.