Regulatory Matters

12 Months Ended

Dec. 31, 2020

Banking and Thrift, Interest [Abstract]

Regulatory Matters

Regulatory Matters

Applicable regulations require the Bank to maintain minimum levels of regulatory capital. Under the regulations in effect at December 31, 2020, the Bank was required to maintain a minimum ratio of Tier 1 capital to total average assets of 4.0%; a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 7.0%; a minimum ratio of Tier 1 capital to risk-weighted assets of 8.5%; and a minimum ratio of total (core and supplementary) capital to risk-weighted assets of 10.5%. These ratios include the impact of the required 2.50% capital conservation buffer. With its conversion to a bank holding company on January 31, 2018, the Company became subject to substantially similar consolidated capital requirements imposed by Federal Reserve Board (“FRB”) regulations.

Under the regulatory framework for prompt corrective action, Federal regulators are required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution. Such actions could have a direct material effect on the institution’s financial statements. The regulations establish a framework for the classification of banking institutions into five categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Generally, an institution is considered well-capitalized if it has a Tier 1 capital ratio of 5.0%; a common equity Tier 1 risk-based ratio of at least 6.5%; a Tier 1 risk-based ratio of at least 8.0%; and a total risk-based capital ratio of at least 10.0%. At December 31, 2020 and 2019, the Company and the Bank exceeded all regulatory capital requirements currently applicable.

The following is a summary of the Bank’s and the Company’s regulatory capital amounts and ratios as of December 31, 2020 and 2019 compared to the regulatory minimum capital adequacy requirements and the regulatory requirements for classification as a well-capitalized institution then in effect (dollars in thousands):

As of December 31, 2020	Actual				For capital adequacy purposes					To be well-capitalized under prompt corrective action
Bank:	Amount		Ratio		Amount		Ratio			Amount		Ratio
Tier 1 capital (to average assets)	$	942,122	8.48	%	$	444,648	4.00	%		$	555,810	5.00	%
Common equity Tier 1 (to risk-weighted assets)	942,122		12.11		544,625		7.00		(1)	505,724		6.50
Tier 1 capital (to risk-weighted assets)	942,122		12.11		661,331		8.50		(1)	622,429		8.00
Total capital (to risk-weighted assets)	1,004,480		12.91		816,938		10.50		(1)	778,036		10.00
Company:
Tier 1 capital (to average assets)	$	998,273	9.44	%	$	423,028	4.00	%		N/A		N/A
Common equity Tier 1 (to risk-weighted assets)	871,385		11.05		552,075		7.00		(1)	N/A		N/A
Tier 1 capital (to risk-weighted assets)	998,273		12.66		670,377		8.50		(1)	N/A		N/A
Total capital (to risk-weighted assets)	1,230,370		15.60		828,113		10.50		(1)	N/A		N/A

As of December 31, 2019	Actual				For capital adequacy purposes					To be well-capitalized under prompt corrective action
Bank:	Amount		Ratio		Amount		Ratio			Amount		Ratio
Tier 1 capital (to average assets)	$	779,108	10.03	%	$	310,798	4.00	%		$	388,498	5.00	%
Common equity Tier 1 (to risk-weighted assets)	779,108		12.98		420,106		7.00		(1)	390,099		6.50
Tier 1 capital (to risk-weighted assets)	779,108		12.98		510,129		8.50		(1)	480,121		8.00
Total capital (to risk-weighted assets)	797,339		13.29		630,159		10.50		(1)	600,152		10.00
Company:
Tier 1 capital (to average assets)	$	791,746	10.17	%	$	311,289	4.00	%		N/A		N/A
Common equity Tier 1 (to risk-weighted assets)	729,095		12.14		420,273		7.00		(1)	N/A		N/A
Tier 1 capital (to risk-weighted assets)	791,746		13.19		510,331		8.50		(1)	N/A		N/A
Total capital (to risk-weighted assets)	844,977		14.07		630,409		10.50		(1)	N/A		N/A

(1)    Includes the Capital Conservation Buffer of 2.50%.

The Bank satisfies the criteria to be well-capitalized under the Prompt Corrective Action Regulations.

On January 1, 2019, the full capital conservation buffer requirement, of 2.50%, became effective. Capital distributions and certain discretionary bonus payments are limited if the capital conservation buffer is not maintained. Applicable regulations also impose limitations upon capital distributions by the Company, such as dividends and payments to repurchase or otherwise acquire shares. The Company may not declare or pay cash dividends on or repurchase any of its shares of common stock if the effect thereof would cause stockholders’ equity to be reduced below applicable regulatory capital minimum requirements or if such declaration and payment would otherwise violate regulatory requirements.