Shareholders' Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Shareholders' Equity

Shareholders’ Equity

2006 Stock Repurchase Plan

In December 2006, the Bancorp’s Board of Directors approved the 2006 Stock Repurchase Plan authorizing the repurchase of up to 400,000 shares, or approximately 3%, of the Corporation’s common stock in open market transactions.  This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations.  The repurchased shares would be held as treasury stock to be used for general corporate purposes.  As of December 31, 2014, a cumulative total of 185,400 shares have been repurchased, all of which were repurchased in 2007 at a total cost of $4.8 million.

Shareholder Rights Plan

In August 2006, the Bancorp’s Board of Directors adopted a shareholder rights plan, as set forth in the Shareholders Rights Agreement, dated August 17, 2006 (the “2006 Rights Agreement”).  Pursuant to the terms of the 2006 Rights Agreement, the Bancorp declared a dividend distribution of one common share purchase right (a “Right”) for each outstanding share of common stock to shareholders of record on August 31, 2006.  Such Rights also apply to new issuances of shares after that date.  Each Right entitles the registered holder to purchase from the Corporation one share of its common stock at a price of $100 per share, subject to adjustment.

The Rights are not exercisable or separable from the common stock until the earlier of 10 days after a person or group (an “Acquiring Person”) acquires beneficial ownership of 15% or more of the outstanding common shares or announces a tender offer to do so.  The Rights, which expire on August 31, 2016, may be redeemed by the Bancorp at any time prior to the acquisition by an Acquiring Person of beneficial ownership of 15% or more of the common stock at a price of $.01 per Right.  In the event that any party becomes an Acquiring Person, each holder of a Right, other than Rights owned by the Acquiring Person, will have the right to receive upon exercise that number of common shares having a market value of two times the purchase price of the Right.  In the event that, at any time after any party becomes an Acquiring Person, the Corporation is acquired in a merger or other business combination transaction or 50% or more of its assets or earning power are sold, each holder of a Right will have the right to purchase that number of shares of the acquiring company having a market value of two times the purchase price of the Right.

Dividends

The primary source of liquidity for the Bancorp is dividends received from the Bank.  The Bancorp and the Bank are regulated enterprises and their abilities to pay dividends are subject to regulatory review and restriction.  Certain regulatory and statutory restrictions exist regarding dividends, loans, and advances from the Bank to the Bancorp.  Generally, the Bank has the ability to pay dividends to the Bancorp subject to minimum regulatory capital requirements.  The FDIC and the FRB have the authority to use their enforcement powers to prohibit a bank or bank holding company, respectively, from paying dividends if, in their opinion, the payment of dividends would constitute an unsafe or unsound practice.  Under the most restrictive of these requirements, the Bank could have declared aggregate additional dividends of $172.9 million as of December 31, 2014.

Dividend Reinvestment

Under the Amended and Restated Dividend Reinvestment and Stock Purchase Plan, 607,500 shares of the Corporation’s common stock were originally reserved to be issued for dividends reinvested and cash payments to the plan.

Reserved Shares

As of December 31, 2014, a total of 2,671,274 common stock shares were reserved for issuance under the 1997 Plan, 2003 Plan, 2013 Plan, the Amended and Restated Dividend Reinvestment and Stock Purchase Plan, the 2006 Stock Repurchase Plan and the Nonqualified Deferred Compensation Plan.

Regulatory Capital Requirements

The Bancorp and the Bank are subject to various regulatory capital requirements administered by the FRB and the FDIC, respectively.  These requirements were established to more accurately assess the credit risk inherent in the assets and off‑balance sheet activities of financial institutions.  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 consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  The capital amounts and classification 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 Corporation to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and of Tier 1 capital to average assets (as defined in the regulations).  Management believes that, as of December 31, 2014, the Corporation meets all capital adequacy requirements to which it is subject.

Capital levels at December 31, 2014 exceeded the regulatory minimum levels to be considered well-capitalized. There are no conditions or events since that date that management believes have changed the Corporation and the Bank’s categorization.

The following table presents the Corporation’s and the Bank’s actual capital amounts and ratios, as well as the corresponding minimum and well capitalized regulatory amounts and ratios:

(Dollars in thousands)	Actual				For Capital Adequacy Purposes				To Be “Well Capitalized”
	Amount		Ratio		Amount		Ratio		Amount		Ratio
December 31, 2014
Total Capital (to Risk-Weighted Assets):
Corporation		$343,934	12.56	%		$219,149	8.00	%		$273,936	10.00	%
Bank	339,268		12.39		219,075		8.00		273,844		10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	315,575		11.52		109,574		4.00		164,361		6.00
Bank	310,909		11.35		109,537		4.00		164,306		6.00
Tier 1 Capital (to Average Assets): (1)
Corporation	315,575		9.14		138,090		4.00		172,612		5.00
Bank	310,909		9.01		137,964		4.00		172,454		5.00
December 31, 2013
Total Capital (to Risk-Weighted Assets):
Corporation	319,486		13.29		192,306		8.00		240,382		10.00
Bank	314,458		13.09		192,147		8.00		240,184		10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	291,292		12.12		96,153		4.00		144,229		6.00
Bank	286,264		11.92		96,074		4.00		144,111		6.00
Tier 1 Capital (to Average Assets): (1)
Corporation	291,292		9.41		123,785		4.00		154,732		5.00
Bank	286,264		9.26		123,633		4.00		154,541		5.00

(1) Leverage ratio