Regulatory Matters

12 Months Ended

Dec. 31, 2020

Regulatory Matters

Regulatory Matters

Regulatory Matters

The Company and Bank 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 Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting, 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 Total capital, Tier 1 capital and CET1 (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined), referred to as the Leverage Ratio. Management believes, as of December 31, 2020 and 2019, that the Company and Bank met all capital adequacy requirements to which they are subject.

The actual capital amounts and ratios for the Company and Bank as of December 31, 2020 and 2019 are presented in the table below:

	Company				Bank				Minimum Required For Capital Adequacy Purposes		To Be Well Capitalized Under Prompt Corrective Action Regulations *
(dollars in thousands)	Actual Amount		Ratio		Actual Amount		Ratio
As of December 31, 2020
CET1 capital (to risk weighted assets)	$	1,137,896	13.49	%	$	1,244,028	14.90	%	7.000	%	6.5	%
Total capital (to risk weighted assets)	1,438,224		17.04	%	1,338,356		16.03	%	10.500	%	10.0	%
Tier 1 capital (to risk weighted assets)	1,137,896		13.49	%	1,244,028		14.90	%	8.500	%	8.0	%
Tier 1 capital (to average assets)	1,137,896		10.31	%	1,244,028		11.29	%	4.000	%	5.0	%
As of December 31, 2019
CET1 capital (to risk weighted assets)	$	1,082,516	12.87	%	$	1,225,486	14.64	%	7.000	%	6.5	%
Total capital (to risk weighted assets)	1,362,253		16.20	%	1,299,223		15.52	%	10.500	%	10.0	%
Tier 1 capital (to risk weighted assets)	1,082,516		12.87	%	1,225,486		14.64	%	8.500	%	8.0	%
Tier 1 capital (to average assets)	1,082,516		11.62	%	1,225,486		13.18	%	4.000	%	5.0	%

*    Applies to Bank only

Federal bank and holding company regulations, as well as Maryland law, impose certain restrictions on capital distributions, including dividend payments and share repurchases by the Bank, as well as restricting extensions of credit and transfers of assets between the Bank and the Company. At December 31, 2020, the Bank could pay dividends to the parent to the extent of its earnings so long as it maintained capital ratios above the required minimums and the capital conservation buffer. As a result the Company may be restricted in paying dividends.