Regulatory Capital

6 Months Ended

Jun. 30, 2019

Note 14 – Regulatory Capital

Horizon and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. These capital requirements implement changes arising from the Dodd-Frank Wall Street Reform and Consumer Protection Act and the U.S. Basel Committee on Banking Supervision’s capital framework (known as “Basel III”). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which 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 actions, the Company and Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain

off-balance-sheet

items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Company and Bank are subject to minimum regulatory capital requirements as defined and calculated in accordance with the Basel

III-based

regulations. As allowed under Basel III rules, the Company made the decision to

opt-out

of including accumulated other comprehensive income in regulatory capital. The minimum regulatory capital requirements are set forth in the table below.

In addition, to be categorized as well capitalized, the Company and Bank must maintain Total risk-based, Tier I risk-based, common equity Tier I risk-based and Tier I leverage ratios as set forth in the table below. As of June 30, 2019 and December 31, 2018, the Company and Bank met all capital adequacy requirements to be considered well capitalized. There have been no conditions or events since the end of the second quarter of 2019 that management believes have changed the Bank’s classification as well capitalized. There is no threshold for well-capitalized status for bank holding companies.

Horizon and the Bank’s actual and required capital ratios as of June 30, 2019 and December 31, 2018 were as follows:


	Actual					Required for Capital 1 Adequacy Purposes					Required For Capital 1 Adequacy Purposes with Capital Buffer					Well Capitalized Under Prompt 1 Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
June 30, 2019
Total capital 1 (to risk-weighted assets)
Consolidated	$	519,613		13.23	%	$	314,113		8.00	%	$	412,273		10.50	%		N/A		N/A
Bank		480,366		12.23	%		314,242		8.00	%		412,443		10.50	%	$	392,802		10.00	%
Tier 1 capital 1 (to risk-weighted assets)
Consolidated		501,272		12.77	%		235,586		6.00	%		333,747		8.50	%		N/A		N/A
Bank		462,025		11.76	%		235,681		6.00	%		333,881		8.50	%		314,241		8.00	%
Common equity tier 1 capital 1 (to risk-weighted assets)
Consolidated		443,779		11.30	%		176,689		4.50	%		274,849		7.00	%		N/A		N/A
Bank		462,025		11.76	%		176,761		4.50	%		274,961		7.00	%		255,321		6.50	%
Tier 1 capital 1 (to average assets)
Consolidated		501,272		10.33	%		194,081		4.00	%		194,081		4.00	%		N/A		N/A
Bank		462,025		9.52	%		194,081		4.00	%		194,081		4.00	%		242,602		5.00	%
December 31, 2018
Total capital 1 (to risk-weighted assets)
Consolidated	$	427,616		13.39	%	$	255,419		8.00	%	$	315,283		9.875	%		N/A		N/A
Bank		396,755		12.43	%		255,419		8.00	%		315,283		9.875	%	$	319,274		10.00	%
Tier 1 capital 1 (to risk-weighted assets)
Consolidated		409,760		12.83	%		191,565		6.00	%		251,429		7.875	%		N/A		N/A
Bank		378,899		11.87	%		191,565		6.00	%		251,429		7.875	%		255,420		8.00	%
Common equity tier 1 capital 1 (to risk-weighted assets)
Consolidated		371,297		11.63	%		143,673		4.50	%		203,537		6.375	%		N/A		N/A
Bank		378,899		11.87	%		143,674		4.50	%		203,537		6.375	%		207,528		6.50	%
Tier 1 capital 1 (to average assets)
Consolidated		409,760		10.12	%		162,033		4.00	%		162,033		4.000	%		N/A		N/A
Bank		378,899		9.34	%		162,327		4.00	%		162,327		4.000	%		202,908		5.00	%

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

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+ Details