Shareholders' Equity

9 Months Ended

Sep. 30, 2020

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Capital Requirements

Shareholders' Equity

2019 Stock Repurchase Program

The Corporation’s 2019 Stock Repurchase Program 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 2019 Stock Repurchase Program expired October 31, 2020.  As of September 30, 2020, 124,863 shares had been repurchased under the 2019 Stock Repurchase Program, totaling $4.3 million, at an average price of $34.61. All of the shares were repurchased prior to the suspension of the 2019 Stock Repurchase Program effective March 25, 2020.

Regulatory Capital Requirements

Capital levels at September 30, 2020 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 Provisions
	Amount	Ratio		Amount	Ratio		Amount	Ratio
September 30, 2020
Total Capital (to Risk-Weighted Assets):
Corporation	$527,140	13.09	%	$322,243	8.00	%	N/A	N/A
Bank	524,468	13.02		322,164	8.00		$402,705	10.00	%
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	492,683	12.23		241,682	6.00		N/A	N/A
Bank	490,011	12.17		241,623	6.00		322,164	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	470,684	11.69		181,262	4.50		N/A	N/A
Bank	490,011	12.17		181,217	4.50		261,758	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	492,683	8.77		224,714	4.00		N/A	N/A
Bank	490,011	8.73		224,625	4.00		280,782	5.00
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

(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, of 2.50% in order to avoid restrictions on capital distributions and discretionary bonuses. The Corporation’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at September 30, 2020 and 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 September 30, 2020 and December 31, 2019, $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 FRB’s capital adequacy guidelines.

In response to the recent disruptions in economic conditions caused by the COVID-19 pandemic and the uncertainty of its overall effects on the economy, the FDIC issued an interim final rule (“IFR”) on March 27, 2020 that delays the estimated impact on regulatory capital stemming from the adoption of Topic 326, often referred to as CECL. The amount of capital relief provided in the CECL IFR is an estimate of the approximate difference in ACL under the CECL accounting methodology relative to the previously used incurred loss accounting methodology for the first two years of the five-year

transition period. The cumulative difference at the end of the second year of the transition period will then be phased-in to regulatory capital over a three-year transition period beginning in 2022. As discussed in Note 2, the Corporation has elected this five-year phase-in option.