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, 2017, 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.

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 $209.8 million as of December 31, 2017.

Reserved Shares

As of December 31, 2017, a total of 1,989,991 common stock shares were reserved for issuance under the 2003 Stock Incentive Plan, the 2013 Stock Option and Incentive Plan and the Amended and Restated Dividend Reinvestment and Stock Purchase Plan.

Regulatory Capital Requirements

The Bancorp and the Bank are subject to various regulatory capital requirements administered by the FRB and the FDIC, respectively. Regulatory authorities can initiate certain mandatory actions if Bancorp or the Bank fail to meet minimum capital requirements, which could have a direct material effect on the Corporation’s financial statements. 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. These quantitative measures, to ensure capital adequacy, require minimum amounts and ratios.

Capital levels at December 31, 2017 exceeded the regulatory minimum levels to be considered “well capitalized.”

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 that were in effect during the respective periods:



(Dollars in thousands)	Actual				For Capital Adequacy Purposes				To Be “Well Capitalized” Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount	Ratio
December 31, 2017
Total Capital (to Risk-Weighted Assets):
Corporation		$416,038	12.45	%		$267,365	8.00	%	N/A	N/A
Bank	413,593		12.38		267,338		8.00		334,172	10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	389,289		11.65		200,524		6.00		N/A	N/A
Bank	386,844		11.58		200,503		6.00		267,338	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	367,291		10.99		150,383		4.50		N/A	N/A
Bank	386,844		11.58		150,378		4.50		217,212	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	389,289		8.79		177,089		4.00		N/A	N/A
Bank	386,844		8.74		177,048		4.00		221,310	5.00

December 31, 2016
Total Capital (to Risk-Weighted Assets):
Corporation	390,867		12.26		255,093		8.00		N/A	N/A
Bank	389,840		12.23		255,050		8.00		318,813	10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	364,655		11.44		191,320		6.00		N/A	N/A
Bank	363,628		11.41		191,288		6.00		255,050	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	342,656		10.75		143,490		4.50		N/A	N/A
Bank	363,628		11.41		143,466		4.50		207,228	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	364,655		8.67		168,271		4.00		N/A	N/A
Bank	363,628		8.65		168,207		4.00		210,259	5.00


(1)	Leverage ratio.

In addition to the minimum regulatory capital required for capital adequacy purposes included in the table above, the Corporation is required to maintain a minimum Capital Conservation Buffer, in the form of common equity, in order to avoid restrictions on capital distributions and discretionary bonuses. The required amount of the Capital Conservation Buffer was 0.625% on January 1, 2016 and 1.25% on January 1, 2017. The Capital Conservation Buffer will increase by 0.625% each year until it reaches 2.5% on January 1, 2019.