Quarterly report pursuant to Section 13 or 15(d)

SHAREHOLDERS' EQUITY

v3.19.1
SHAREHOLDERS' EQUITY
 3 Months Ended
Mar. 31, 2019
SHAREHOLDERS' EQUITY [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 12 – SHAREHOLDERS' EQUITY

Regulatory Capital

The Company and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and 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 about components, risk weightings, and other factors, and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements.

The prompt corrective action regulations provide five categories, including well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If a bank is only adequately capitalized, regulatory approval is required to, among other things, accept, renew or roll-over brokered deposits. If a bank is undercapitalized, capital distributions and growth and expansion are limited, and plans for capital restoration are required.

In July 2013, the Board of Governors of the Federal Reserve Board and the FDIC approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks (commonly known as Basel III). Under the final rules, minimum requirements increased for both the quantity and quality of capital held by the Company and the Bank. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio (CET1 ratio) of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which effectively resulted in a minimum CET1 ratio of 7.0%.  Basel III raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% (which, with the capital conservation buffer, effectively resulted in a minimum Tier 1 capital ratio of 8.5%), which effectively resulted in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer), and requires a minimum leverage ratio of 4.0%. Basel III also made changes to risk weights for certain assets and off-balance-sheet exposures.

At March 31, 2019 and December 31, 2018, actual capital levels and minimum required levels were (dollars in thousands):

               
Minimum
Capital
    
Minimum Capital
Adequacy With
    
To Be Well
Capitalized Under
Prompt Corrective
  
   
Actual
    
Adequacy
    
Capital Buffer
    
Action Regulations
  
   
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
  
March 31, 2019
                                                
CET1 capital (to risk weighted assets)
                                                
Consolidated
  
$
198,458
      
12.6
%
  
$
71,173
      
4.5
%
  
$
110,713
      
7.0
%
    
N/A
      
N/A
  
Bank
    
231,907
      
14.7
      
71,167
      
4.5
      
110,705
      
7.0
    
$
102,797
      
6.5
%
Tier 1 capital (to risk weighted assets)
                                                                
Consolidated
    
238,458
      
15.1
      
94,897
      
6.0
      
134,437
      
8.5
      
N/A
      
N/A
  
Bank
    
231,907
      
14.7
      
94,890
      
6.0
      
134,427
      
8.5
      
126,520
      
8.0
  
Total capital (to risk weighted assets)
                                                                
Consolidated
    
255,350
      
16.1
      
126,529
      
8.0
      
166,070
      
10.5
      
N/A
      
N/A
  
Bank
    
248,799
      
15.7
      
126,520
      
8.0
      
166,057
      
10.5
      
158,149
      
10.0
  
Tier 1 capital (to average assets)
                                                                
Consolidated
    
238,458
      
12.2
      
78,026
      
4.0
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
    
231,907
      
11.9
      
77,962
      
4.0
      
N/A
      
N/A
      
97,453
      
5.0
  
                                                                 
December 31, 2018
                                                                
CET1 capital (to risk weighted assets)
                                                                
Consolidated
  
$
193,131
      
12.0
%
  
$
72,381
      
4.5
%
  
$
102,540
      
6.4
%
    
N/A
      
N/A
  
Bank
    
226,531
      
14.1
      
72,371
      
4.5
      
102,526
      
6.4
    
$
104,536
      
6.5
%
Tier 1 capital (to risk weighted assets)
                                                                
Consolidated
    
233,131
      
14.5
      
96,508
      
6.0
      
126,667
      
7.9
      
N/A
      
N/A
  
Bank
    
226,531
      
14.1
      
96,495
      
6.0
      
126,649
      
7.9
      
128,660
      
8.0
  
Total capital (to risk weighted assets)
                                                                
Consolidated
    
250,007
      
15.5
      
128,678
      
8.0
      
158,837
      
9.9
      
N/A
      
N/A
  
Bank
    
243,407
      
15.1
      
128,660
      
8.0
      
158,814
      
9.9
      
160,825
      
10.0
  
Tier 1 capital (to average assets)
                                                                
Consolidated
    
233,131
      
12.1
      
76,963
      
4.0
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
    
226,531
      
11.8
      
76,902
      
4.0
      
N/A
      
N/A
      
96,128
      
5.0
  

Approximately $40.0 million of trust preferred securities outstanding at March 31, 2019 and December 31, 2018, respectively, qualified as Tier 1 capital. Refer to our 2018 Form 10-K for more information on the trust preferred securities.

The Bank was categorized as "well capitalized" at March 31, 2019 and December 31, 2018.