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Regulatory Capital
 3 Months Ended
Mar. 31, 2024
Regulatory Capital Requirements under Banking Regulations [Abstract]  
Regulatory Capital Regulatory Capital
Banks and bank holding companies are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio). As of March 31, 2024 and December 31, 2023, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.
As of December 31, 2023, the most recent notification from our primary regulator categorized the Bank, as well capitalized under the regulatory framework for prompt corrective action. At March 31, 2024, there were no conditions or events since that notification that management believes would change the Bank’s classification. To be categorized as well capitalized, the Bank must maintain minimum common equity Tier 1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are described below.
The minimum ratios for capital adequacy purposes are 7.00%, 8.50%, 10.50% and 4.00% for the common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively which include a capital conservation buffer of 2.50% respectively. To be categorized as well capitalized, a bank must maintain minimum ratios of 6.50%, 8.00%, 10.00% and 5.00% for its common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively.
Regulatory Capital and Ratios
Regulatory Minimum Ratio + CCB ( 1)
The CompanyThe Bank
(dollars in thousands)March 31, 2024December 31, 2023March 31, 2024December 31, 2023
Common equity$515,228 $511,135 $579,520 $570,100 
Goodwill(4)
(61,523)(63,266)(61,523)(63,266)
Core deposit intangible (3)
(34,235)(38,069)(34,235)(38,069)
DTAs that arise from net operating loss and tax credit carry forwards(5,858)(8,977)(4,326)(6,059)
AOCI losses
8,058 7,494 8,058 7,494 
Common Equity Tier 1 Capital421,670 408,317 487,494 470,200 
TRUPs29,237 29,158 — — 
Tier 1 Capital450,907 437,475 487,494 470,200 
Allowable reserve for credit losses and other Tier 2 adjustments58,428 58,586 58,428 58,586 
Subordinated notes43,322 43,139 — — 
Tier 2 Capital$552,657 $539,200 $545,922 $528,786 
Risk-Weighted Assets ("RWA")$4,729,930 $4,697,504 $4,723,872 $4,693,009 
Average Assets ("AA")$5,684,150 $5,649,116 $5,679,282 $5,644,930 
Common Tier 1 Capital to RWA7.00%8.91 %8.69 %10.32 %10.02 %
Tier 1 Capital to RWA8.50%9.53 %9.31 %10.32 %10.02 %
Tier 2 Capital to RWA10.50%11.68 %11.48 %11.56 %11.27 %
Tier 1 Capital to AA (Leverage) (2)
n/a7.93 %7.74 %8.58 %8.33 %
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(1)The regulatory minimum capital ratio ("Min. Ratio") + the capital conservation buffer ("CCB").
(2)Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined. The PCA well capitalized is defined as 5.00%.
(3)Core deposit intangible is net of deferred tax liability.
(4)Goodwill is net of deferred tax liability as of March 31, 2024.
Bank and holding company regulations impose certain restrictions on dividend payments by the Bank, as well as restricting extensions of credit and transfers of assets between the Bank and the Company.
At March 31, 2024, the Bank could pay dividends to the Company to the extent of its earnings so long as it maintained required capital ratios.