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Regulatory Capital Requirements
 6 Months Ended
Jun. 30, 2018
Regulatory Capital Requirements  
Regulatory Capital Requirements

 

10. Regulatory Capital Requirements

 

Federal and state laws and regulations limit the amount of dividends the Company may declare or pay. The Company depends primarily on dividends from FHB as the source of funds for the Company’s payment of dividends.

 

The Company and the Bank are subject to various regulatory capital requirements imposed by 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 and the Bank’s operating activities and financial condition. 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 its assets and certain off-balance-sheet items. The capital amounts and classifications 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 minimum amounts and ratios of Common Equity Tier 1 (“CET1”) capital, Tier 1 capital and total capital to risk-weighted assets, as well as a minimum leverage ratio.

 

The table below sets forth those ratios at June 30, 2018 and December 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Hawaiian, Inc.

 

First Hawaiian

 

Minimum

 

Well-

 

 

 

and the Bank

 

Bank

 

Capital

 

Capitalized

 

(dollars in thousands)

  

Amount

  

Ratio

 

Amount

  

Ratio

 

Ratio(1)

  

Ratio(1)

 

June 30, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk-weighted assets

 

$

1,646,093

 

12.19

%  

$

1,642,205

 

12.16

%  

4.50

%  

6.50

%

Tier 1 capital to risk-weighted assets

 

 

1,646,093

 

12.19

%  

 

1,642,205

 

12.16

%  

6.00

%  

8.00

%

Total capital to risk-weighted assets

 

 

1,787,294

 

13.23

%  

 

1,783,406

 

13.20

%  

8.00

%  

10.00

%

Tier 1 capital to average assets (leverage ratio)

 

 

1,646,093

 

8.61

%  

 

1,642,205

 

8.59

%  

4.00

%  

5.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity tier 1 capital to risk-weighted assets

 

$

1,633,442

 

12.45

%  

$

1,623,455

 

12.37

%  

4.50

%  

6.50

%

Tier 1 capital to risk-weighted assets

 

 

1,633,442

 

12.45

%  

 

1,623,455

 

12.37

%  

6.00

%  

8.00

%

Total capital to risk-weighted assets

 

 

1,771,295

 

13.50

%  

 

1,761,308

 

13.42

%  

8.00

%  

10.00

%

Tier 1 capital to average assets (leverage ratio)

 

 

1,633,442

 

8.52

%  

 

1,623,455

 

8.47

%  

4.00

%  

5.00

%

(1)

As defined by the regulations issued by the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (“FDIC”).

 

A new capital conservation buffer, comprised of CET1 capital, was established above the regulatory minimum capital requirements. This capital conservation buffer was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and will increase each subsequent year by an additional 0.625% until reaching its final level of 2.5% on January 1, 2019. As of June 30, 2018, under the bank regulatory capital guidelines, the Company and Bank were both classified as well-capitalized. Management is not aware of any conditions or events that have occurred since June 30, 2018, to change the capital adequacy category of the Company or the Bank.