REGULATORY CAPITAL

12 Months Ended

Dec. 31, 2018

Regulatory Capital [Abstract]

REGULATORY CAPITAL

15.  REGULATORY CAPITAL

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, 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.  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 and the Bank’s financial statements and results of operations.  The final rules implementing Basel Committee on Banking Supervision’s capital guidelines for U.S. banks (Basel III rules) became effective for the Company on January 1, 2015 with full compliance with all of the requirements being phased in over a multi-year schedule, and fully phased in by January 1, 2019. The Company has chosen to exclude net unrealized gain or loss on available for sale securities in computing regulatory capital.  Management believes that as of December 31, 2018, the Company and Bank meet all capital adequacy requirements to which they were subject at that date.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2018 and 2017, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the institution’s category.

To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, common equity Tier 1 and Tier I leverage ratios as set forth in the table.

The Bank’s actual capital amounts and ratios are presented in the following table:

						To Be Well										For Capital
						Capitalized Under					For Capital					Adequacy Purposes
						Prompt Corrective					Adequacy					Including Capital
	Actual					Action Provisions					Purposes					Conservation Buffer (A)
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2018:
Total capital
(to risk-weighted assets)	$	543,008		14.59	%	$	372,186		10.00	%	$	297,749		8.00	%	$	367,533		9.875	%
Tier I capital
(to risk-weighted assets)		504,504		13.56			297,749		8.00			223,311		6.00			293,096		7.875
Common equity tier I
(to risk-weighted assets)		504,502		13.56			241,921		6.50			167,484		4.50			237,268		6.375
Tier I capital
(to average assets)		504,504		11.32			222,912		5.00			178,330		4.00			178,330		4.000
As of December 31, 2017:
Total capital
(to risk-weighted assets)	$	485,252		14.34	%	$	338,327		10.00	%	$	270,662		8.00	%		312,953		9.250	%
Tier I capital
(to risk-weighted assets)		448,812		13.27			270,662		8.00			202,996		6.00			245,287		7.250
Common equity tier I
(to risk-weighted assets)		448,810		13.27			219,913		6.50			152,247		4.50			194,538		5.750
Tier I capital
(to average assets)		448,812		10.61			211,523		5.00			169,219		4.00			169,219		4.000

The Company’s actual capital amounts and ratios are presented in the following table:

						To Be Well							For Capital
						Capitalized Under		For Capital					Adequacy Purposes
						Prompt Corrective		Adequacy					Including Capital
	Actual					Action Provisions		Purposes					Conservation Buffer (A)
(Dollars in thousands)	Amount		Ratio			Amount	Ratio	Amount		Ratio			Amount		Ratio
As of December 31, 2018:
Total capital
(to risk-weighted assets)	$	559,937		15.03	%	N/A	N/A	$	298,047		8.00	%	$	367,902		9.875	%
Tier I capital
(to risk-weighted assets)		438,240		11.76		N/A	N/A		223,535		6.00			293,390		7.875
Common equity tier I
(to risk-weighted assets)		438,238		11.76		N/A	N/A		167,652		4.50			237,506		6.375
Tier I capital
(to average assets)		438,240		9.82		N/A	N/A		178,473		4.00			178,473		4.000
As of December 31, 2017:
Total capital
(to risk-weighted assets)	$	502,334		14.84	%	N/A	N/A	$	270,866		8.00	%		313,189		9.250	%
Tier I capital
(to risk-weighted assets)		382,870		11.31		N/A	N/A		203,149		6.00			245,472		7.250
Common equity tier I
(to risk-weighted assets)		382,868		11.31		N/A	N/A		152,362		4.50			194,685		5.750
Tier I capital
(to average assets)		382,870		9.04		N/A	N/A		169,318		4.00			169,318		4.000

(A) As fully phased in on January 1, 2019, the Basel Rules require the Company and the Bank to maintain a 2.5% “capital conservation buffer” on top of the minimum risk-weighted asset ratios.   The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of (i) Common Equity Tier 1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and increased by 0.625% on each subsequent January 1, until it reached 2.5% on January 1, 2019.