REGULATORY CAPITAL REQUIREMENTS

6 Months Ended

Jun. 30, 2019

Banking And Thrift [Abstract]

REGULATORY CAPITAL REQUIREMENTS

13. REGULATORY CAPITAL REQUIREMENTS

Home Savings is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Home Savings. The regulations require Home Savings to meet specific capital adequacy guidelines in keeping with the regulatory framework for prompt corrective action that involve quantitative measures of Home Savings’ assets, liabilities, and certain off balance sheet items as calculated under regulatory accounting practices. Home Savings’ capital classification is also subject to qualitative judgments by the regulators about components of capital, risk weightings, and other factors.

The Basel III Capital Rules establish a common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets)and a minimum Tier 1 capital to risk-based assets requirement (6% of risk-weighted assets), and assign a risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rules also require unrealized gains and losses on certain available-for-sale securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-in or opt-out is exercised. In connection with the adoption of the Basel III Capital Rules, Home Savings elected to opt-out of the requirement to include most components of accumulated other comprehensive income in Common Equity Tier 1.  The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital risk-based weighted assets in addition to the amount necessary to meeting its minimum risk-based capital requirements.

The capital conservation buffer requirement was fully phased in beginning January 1, 2019.  The capital conservation buffer is now 2.50%.  The capital conservation buffer for 2018 was 1.875%.

Quantitative measures established by regulation for capital adequacy require Home Savings to maintain minimum ratios of Tier 1 (or Core) capital (as defined in the regulations) to average total assets (as defined) and of total risk-based capital (as defined) to risk-weighted assets (as defined).  Home Savings’ Common Equity Tier 1 capital consists of common stock and related paid-in capital, net of treasury stock, and retained earnings. Common Equity Tier 1 for Home Savings is reduced by intangible assets, net of associated deferred tax liabilities and subject to transition provisions. Actual and regulatory required capital ratios for Home Savings, along with the dollar amount of capital implied by such ratios, are presented below.

	June 30, 2019
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements					Corrective Action
	Actual					Per Regulation					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	310,134		14.17	%	$	175,147		8.00	%	$	218,934		10.00	%
Tier 1 capital (to risk-weighted assets)		289,697		13.23	%		131,360		6.00	%		175,147		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		289,697		13.23	%		98,520		4.50	%		142,307		6.50	%
Tier 1 capital (to average assets)**		289,697		10.32	%		112,334		4.00	%		140,418		5.00	%

	December 31, 2018
											To Be Well Capitalized
						Minimum Capital					Under Prompt
						Requirements					Corrective Action
	Actual					Per Regulation					Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Total capital (to risk-weighted assets)	$	301,864		14.30	%	$	168,841		8.00	%	$	211,051		10.00	%
Tier 1 capital (to risk-weighted assets)		281,475		13.34	%		126,631		6.00	%		168,841		8.00	%
Common equity Tier 1 capital (to risk-weighted    assets)		281,475		13.34	%		94,973		4.50	%		137,183		6.50	%
Tier 1 capital (to average assets)**		281,475		10.11	%		111,318		4.00	%		139,147		5.00	%

** Tier 1 Leverage Capital Ratio

Management believes that as of June 30, 2019 and December 31, 2018, Home Savings met all capital adequacy requirements to which it was subject.  As of June 30, 2019 and December 31, 2018, Home Savings met the capital requirements to be deemed well capitalized. There are no known conditions that would change this classification subsequent to June 30, 2019.  

The components of Home Savings’ regulatory capital are as follows:

	June 30, 2019			December 31, 2018
Total shareholders' equity	$	295,306		$	281,006
Add (deduct)
Accumulated other comprehensive income		15,195			21,450
Intangible assets		(20,804	)		(20,981	)
Tier 1 Capital		289,697			281,475
Allowance for loan losses and allowance for unfunded lending commitments    limited to 1.25% of total risk-weighted assets		20,437			20,389
Total risk-based capital	$	310,134		$	301,864

** Tier 1 Leverage Capital Ratio