Annual report pursuant to Section 13 and 15(d)

SHAREHOLDERS' EQUITY

v3.19.3.a.u2
SHAREHOLDERS' EQUITY
 12 Months Ended
Dec. 31, 2019
SHAREHOLDERS' EQUITY [Abstract]  
SHAREHOLDERS' EQUITY
NOTE 17 – 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 rules implementing the Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (commonly known as Basel III). The rules include a 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 results in a minimum CET1 ratio of 7.0%. The minimum ratio of Tier 1 capital to risk-weighted assets is 6.0% (which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5%), which effectively results 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%.

Actual capital levels (dollars in thousands) and minimum required levels were as follows at year-end:

   
Actual
    
Minimum
Capital
Adequacy
    
Minimum Capital
Adequacy With
Capital Buffer
    
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
  
   
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
    
Amount
    
Ratio
  
December 31, 2019
                                                
CET1 capital (to risk weighted assets)
                                                
Consolidated
  
$
215,925
      
13.5
%
  
$
72,187
      
4.5
%
  
$
112,290
      
7.0
%
    
N/A
      
N/A
  
Bank
    
228,761
      
14.3
      
72,182
      
4.5
      
112,284
      
7.0
    
$
104,263
      
6.5
%
Tier 1 capital (to risk weighted assets)
                                                                
Consolidated
    
235,925
      
14.7
      
96,249
      
6.0
      
136,353
      
8.5
      
N/A
      
N/A
  
Bank
    
228,761
      
14.3
      
96,243
      
6.0
      
136,344
      
8.5
      
128,324
      
8.0
  
Total capital (to risk weighted assets)
                                                                
Consolidated
    
253,125
      
15.8
      
128,332
      
8.0
      
168,436
      
10.5
      
N/A
      
N/A
  
Bank
    
245,961
      
15.3
      
128,324
      
8.0
      
168,425
      
10.5
      
160,405
      
10.0
  
Tier 1 capital (to average assets)
                                                                
Consolidated
    
235,925
      
11.5
      
82,130
      
4.0
      
N/A
      
N/A
      
N/A
      
N/A
  
Bank
    
228,761
      
11.2
      
82,070
      
4.0
      
N/A
      
N/A
      
102,587
      
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 $20.0 million and $40.0 million of trust preferred securities outstanding at December 31, 2019 and 2018, respectively, qualified as Tier 1 capital.
 
The Bank was categorized as “well capitalized” at December 31, 2019 and 2018.