Shareholders' Equity

12 Months Ended

Dec. 31, 2019

2019 Stock Repurchase Program

On December 2, 2019, the Bancorp’s Board of Directors adopted a new Stock Repurchase Program. The Stock Repurchase Program, which replaces the Corporation’s 2006 stock repurchase plan, authorizes the repurchase of up to 850,000 shares, or approximately 5%, of the Corporation’s outstanding common stock. This authority may be exercised from time to time and in such amounts as market conditions warrant, and subject to regulatory considerations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions, and other corporate liquidity requirements and priorities. The Stock Repurchase Program expires on October 31, 2020 and may be modified, suspended, or discontinued at any time. As of December 31, 2019, no shares have been repurchased under the 2019 Stock Repurchase Program.

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 $257.1 million as of December 31, 2019.

Reserved Shares

As of December 31, 2019, a total of 1,696,991 common stock shares were reserved for issuance under the 2003 Stock Incentive Plan and the 2013 Stock Option and Incentive 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, 2019 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, 2019
Total Capital (to Risk-Weighted Assets):
Corporation		$494,603	12.94	%		$305,728	8.00	%	N/A		N/A
Bank	490,993		12.85		305,693		8.00			$382,116	10.00	%
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	467,296		12.23		229,296		6.00		N/A		N/A
Bank	463,686		12.13		229,270		6.00		305,693		8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	445,298		11.65		171,972		4.50		N/A		N/A
Bank	463,686		12.13		171,952		4.50		248,375		6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	467,296		9.04		206,682		4.00		N/A		N/A
Bank	463,686		8.98		206,596		4.00		258,245		5.00

December 31, 2018
Total Capital (to Risk-Weighted Assets):
Corporation	455,699		12.56		290,146		8.00		N/A		N/A
Bank	453,033		12.49		290,128		8.00		362,660		10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	428,338		11.81		217,609		6.00		N/A		N/A
Bank	425,672		11.74		217,596		6.00		290,128		8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	406,340		11.20		163,207		4.50		N/A		N/A
Bank	425,672		11.74		163,197		4.50		235,729		6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	428,338		8.89		192,690		4.00		N/A		N/A
Bank	425,672		8.84		192,652		4.00		240,815		5.00


(1)	Leverage ratio.

In addition to the minimum regulatory capital required for capital adequacy purposes outlined 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 1.875% on January 1, 2018. The capital conservation buffer increased another 0.625% on January 1, 2019, reaching the full requirement of 2.50%. The Corporation’s capital levels exceeded the minimum regulatory capital requirement plus the capital conversation buffer as of December 31, 2019.

The Bancorp owns the common stock of two capital trusts, which have issued trust preferred securities. In accordance with GAAP, the capital trusts are treated as unconsolidated subsidiaries. At both December 31, 2019 and 2018, $22.0 million in trust preferred securities were included in the Tier 1 Capital of the Corporation for regulatory capital reporting purposes pursuant to the Federal Reserve’s capital adequacy guidelines.