Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined), or leverage ratio.

In July 2013, the federal bank regulatory agencies adopted final rules revising the agencies’ capital adequacy guidelines and prompt corrective action rules, designed to enhance such requirements and implement the revised standards of the Basel Committee on Banking Supervision, commonly referred to as Basel III. The July 2013 final rules generally implement higher minimum capital requirements, add a new common equity Tier 1 capital requirement, and establish criteria that instruments must meet to be considered common equity Tier 1 capital, additional Tier 1 capital or Tier 2 capital. The new minimum capital to risk-adjusted assets requirements include a common equity Tier 1 capital ratio of 4.5% (6.5% to be considered “well capitalized”) and a Tier 1 capital ratio of 6.0%, increased from 4.0% (and increased from 6.0% to 8.0% to be considered “well capitalized”); the total capital ratio remains at 8.0% under the new rules (10.0% to be considered “well capitalized”). Under the new rules, in order to avoid limitations on capital distributions (including dividend payments and certain discretionary bonus payments to executive officers), a banking organization must hold a capital conservation buffer comprised of common equity Tier 1 capital above its minimum risk-based capital requirements in an amount greater than 2.5% of total risk-weighted assets. The final rules permit institutions, other than certain large institutions, to elect to continue to treat most components of accumulated other comprehensive income as permitted under the current general risk-based capital rules, and not reflect these items in common equity Tier 1 calculations (such as unrealized gains and losses on available-for-sale securities, amounts recorded in accumulated other comprehensive income attributed to defined benefit retirement plans resulting from the initial and subsequent application of the relevant U.S. GAAP standards and accumulated net gains and losses on cash flow hedges related to items that are reported on the balance sheet at fair value.) The new minimum capital requirements were effective on January 1, 2015. The capital conservation buffer requirements phase in over a three-year period beginning January 1, 2016. The Corporation will continue to analyze the impact of the new rules as it grows and as the capital conservation buffer requirements are phased in.

The Corporation adopted the new Basel III regulatory capital rules during the first quarter of 2015 under the transition rules, primarily relating to regulatory deductions and adjustments impacting common equity tier 1 capital and tier 1 capital, to be phased in over a three-year period beginning January 1, 2015. Additionally under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital. Total risk-based capital at December 31, 2015 under Basel III was 13.35% for the Corporation and 12.09% for the Bank, well in excess of the regulatory minimum for well-capitalized status of 10%.

The Corporation's and Bank's actual and required capital ratios as of December 31, 2015 and December 31, 2014 were as follows. Ratios at December 31, 2015 are under BASEL III regulatory capital rules. Ratios at December 31, 2014 are under BASEL I regulatory capital rules.



(Dollars in thousands)	Actual				For Capital Adequacy Purposes				To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
At December 31, 2015
Total Capital (to Risk-Weighted Assets):
Corporation	$	334,757	13.35	%	$	200,613	8.00	%	$	250,766	10.00	%
Bank	300,527		12.09		198,816		8.00		248,521		10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	267,098		10.65		150,460		6.00		200,613		8.00
Bank	282,245		11.36		149,112		6.00		198,816		8.00
Tier 1 Common Capital (to Risk-Weighted Assets):
Corporation	267,098		10.65		112,845		4.50		162,998		6.50
Bank	282,245		11.36		111,834		4.50		161,538		6.50
Tier 1 Capital (to Average Assets):
Corporation	267,098		9.69		110,227		4.00		137,783		5.00
Bank	282,245		10.31		109,480		4.00		136,850		5.00
At December 31, 2014
Total Capital (to Risk-Weighted Assets):
Corporation	$	249,388	12.91	%	$	154,589	8.00	%	$	193,237	10.00	%
Bank	232,080		12.15		152,796		8.00	%	190,995		10.00	%
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	227,907		11.79		77,295		4.00	%	115,942		6.00	%
Bank	210,816		11.04		76,398		4.00	%	114,597		6.00	%
Tier 1 Capital (to Average Assets):
Corporation	227,907		10.55		86,371		4.00	%	107,964		5.00	%
Bank	210,816		9.80		86,005		4.00	%	107,506		5.00	%