Shareholders' Equity

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

Shareholders' Equity

Shareholders' Equity

Stock Repurchase Program

The Corporation’s Stock Repurchase Program adopted on November 10, 2021 (the “2021 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 2021 Repurchase Program expires on December 31, 2022 and may be modified, suspended, or discontinued at any time. As of December 31, 2021, no shares have been repurchased under the 2021 Repurchase Program.

The 2020 Repurchase Program expired on October 31, 2021 and no shares were repurchased under this 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 FRBB 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.  Dividends paid by the Bank to the Bancorp amounted to $45.7 million and $43.1 million, respectively, for the years ended December 31, 2021 and 2020.

Reserved Shares

As of December 31, 2021, a total of 1,487,365 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 FRBB and the FDIC, respectively.  Regulatory authorities can initiate certain mandatory actions if the 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, 2021 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, 2021
Total Capital (to Risk-Weighted Assets):
Corporation	$578,137	14.01	%	$330,105	8.00	%	N/A	N/A
Bank	565,087	13.70		330,025	8.00		$412,532	10.00	%
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	546,362	13.24		247,578	6.00		N/A	N/A
Bank	533,312	12.93		247,519	6.00		330,025	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	524,363	12.71		185,684	4.50		N/A	N/A
Bank	533,312	12.93		185,639	4.50		268,146	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	546,362	9.36		233,534	4.00		N/A	N/A
Bank	533,312	9.14		233,434	4.00		291,793	5.00
December 31, 2020
Total Capital (to Risk-Weighted Assets):
Corporation	539,496	13.51		319,532	8.00		N/A	N/A
Bank	534,288	13.38		319,503	8.00		399,379	10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	503,791	12.61		239,649	6.00		N/A	N/A
Bank	498,583	12.48		239,627	6.00		319,503	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	481,792	12.06		179,737	4.50		N/A	N/A
Bank	498,583	12.48		179,721	4.50		259,596	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	503,791	8.95		225,209	4.00		N/A	N/A
Bank	498,583	8.86		225,126	4.00		281,407	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 December 31, 2021 and 2020.

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, 2021 and 2020, $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 FRBB’s capital adequacy guidelines.

In accordance with regulatory capital rules, the Corporation elected an option to delay the estimated impact of ASC 326 on its regulatory capital over a two-year deferral and subsequent three-year transition period ending December 31, 2024. As a result, capital ratios and amounts as of December 31, 2021 and 2020 exclude the impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, which was effective January 1, 2020, adjusted for an approximation of the after-tax provision for credit losses attributable to ASC 326 relative to the incurred loss methodology during the deferral period. The cumulative difference at the end of the deferral period will be phased-in to regulatory capital over a three-year transition period beginning in 2022.