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REGULATORY CAPITAL
 12 Months Ended
Sep. 30, 2018
Regulatory Capital Requirements [Abstract]  
REGULATORY CAPITAL

NOTE S - REGULATORY CAPITAL

 

The Company and Bank are required to maintain minimum amounts of capital to total “risk-weighted” assets, as defined by the banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

 

The federal banking agencies have substantially amended the regulatory risk-based capital rules applicable to the Bank. The amendments implemented the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The amended rules included new minimum risk-based capital and leverage ratios, which became effective in January 2017, with certain requirements to be phased in beginning in 2018. The rule includes a new common equity Tier 1 capital (“CET1”) to risk-weighted assets ratio of 4.5% of risk-weighted assets, which is in addition to the Tier 1 and Total risk-based capital requirements. The interim final rule also raises the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% and requires a minimum leverage ratio of 4.0%. The required minimum ratio of total capital to risk-weighted assets will remain 8.0%. The new risk-based capital requirements (except for the capital conservation buffer) became effective for the Company and the Bank on January 1, 2015.

 

The amended rules also established a “capital conservation buffer” of 2.5% beginning in January 2016 (phased in over four years at 0.625% per year) above the new regulatory minimum capital ratios, and would result in the following phased-in minimum ratios when fully implemented: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement phased in at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that could be utilized for such actions.

 

As of September 30, 2018, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the Bank’s category.

 

The following table sets forth the Company’s and the Bank’s actual and required capital levels under those measures:

 

                 To be well-
            capitalized under
        Required for capital   prompt corrective
  At September 30, 2018   adequacy purposes effective   action provisions
  Company  Bank   September 30, 2018   January 1, 2019   Bank
Tier 1 leverage ratio 8.55% 8.61%   ≥  4.00%   ≥  4.00%   ≥   5.00%
CET1 11.44% 11.53%   ≥  6.375% (1) ≥  7.00% (2) ≥   6.50%
Tier 1 risk-based capital ratio 11.44% 11.53%   ≥  7.875% (1) ≥  8.50% (2) ≥   8.00%
Total risk-based capital ratio 12.35% 12.44%   ≥  9.875% (1) ≥  10.50% (2) ≥  10.00%

 

(1) Includes 1.875% capital conservation buffer

(2) Includes 2.50% capital conservation buffer

                 

 

                 To be well-
            capitalized under
        Required for capital   prompt corrective
  At September 30, 2017   adequacy purposes effective   action provisions
  Company  Bank   September 30, 2017   January 1, 2019   Bank
Tier 1 leverage ratio 8.45% 8.41%   ≥  4.00%   ≥  4.00%   ≥   5.00%
CET1 11.80% 11.75%   ≥  5.75% (3) ≥  7.00% (4) ≥   6.50%
Tier 1 risk-based capital ratio 11.80% 11.75%   ≥  7.25% (3) ≥  8.50% (4) ≥   8.00%
Total risk-based capital ratio 12.62% 12.57%   ≥  9.25% (3) ≥  10.50% (4) ≥  10.00%

 

(3) Includes 1.25% capital conservation buffer

(4) Includes 2.50% capital conservation buffer