Stockholders' Equity and Regulatory Requirements

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

Stockholders' Equity and Regulatory Requirements

Note 14 – Stockholders’ Equity and Regulatory Requirements

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 capital requirements can initiate regulatory action. The net unrealized gain or loss on available for sale securities is not included in computing regulatory capital. Management believes as of December 31, 2021, the Bank and the Parent Corporation meet all capital adequacy requirements to which they are subject.

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 an institution is classified as adequately capitalized or lower, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is growth and expansion, and capital restoration plans are required. As of December 31, 2021, and 2020, 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.

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CONNECTONE BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 – Stockholders’ Equity and Regulatory Requirements – (continued)

The following is a summary of the Bank’s and the Parent Corporation’s actual capital amounts and ratios as of December 31, 2021 and 2020, compared to the FRB and FDIC minimum capital adequacy requirements and the FDIC requirements for classification as a well-capitalized institution.

					Minimum Capital Adequacy				For Classification Under Corrective Action Plan as Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
The Bank					(dollars in thousands)
December 31, 2021
Leverage (Tier 1) capital	$	891,730		11.43%	$	312,166		4.00%	$	390,207		5.00%
Risk-Based Capital:
CET 1	$	891,730		11.96%	$	335,641		4.50%	$	484,815		6.50%
Tier 1		891,730		11.96%		447,522		6.00%		596,696		8.00%
Total		1,002,753		13.44%		596,696		8.00%		745,869		10.00%
December 31, 2020
Leverage (Tier 1) capital	$	776,430		10.64%	$	291,958		4.00%	$	364,947		5.00%
Risk-Based Capital:
CET 1	$	776,430		12.24%	$	285,473		4.50%	$	412,349		6.50%
Tier 1		776,430		12.24%		380,630		6.00%		507,507		8.00%
Total		887,906		14.00%		507,507		8.00%		634,384		10.00%

					Minimum Capital Adequacy				For Classification as Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount	Ratio
The Company					(dollars in thousands)
December 31, 2021
Leverage (Tier 1) capital	$	909,577		11.65%	$	312,194		4.00%	N/A	N/A
Risk-Based Capital:
CET 1	$	793,495		10.64%	$	335,648		4.50%	N/A	N/A
Tier 1		909,577		12.19%		447,531		6.00%	N/A	N/A
Total		1,138,350		15.26%		596,708		8.00%	N/A	N/A
December 31, 2020
Leverage (Tier 1) capital	$	694,895		9.51%	$	292,349		4.00%	N/A	N/A
Risk-Based Capital:
CET 1	$	689,740		10.79%	$	287,746		4.50%	N/A	N/A
Tier 1		694,895		10.87%		383,661		6.00%	N/A	N/A
Total		964,121		15.08%		511,548		8.00%	N/A	N/A

As of December 31, 2021, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the CET 1 Ratio which was 3.64% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.94% above the minimum buffer ratio.