Shareholders' Equity

12 Months Ended

Dec. 31, 2023

Equity [Abstract]

Shareholders' Equity

Shareholders' Equity

Stock Repurchase Program

On December 28, 2023, the Corporation announced that its Board of Directors adopted the 2024 Repurchase Program, which 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 numbers 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 2024 Repurchase Program commenced on January 1, 2024 and expires on December 31, 2024 and may be modified, suspended, or discontinued at any time.

The 2023 Repurchase Program expired on December 31, 2023. For the year ended December 31, 2023, the Corporation repurchased 200,000 shares at an average price of $43.70 and a total cost of $8.8 million, under its 2023 Repurchase Program. The total cost included $73 thousand of excise tax attributable to shares that were repurchased in 2023.

Dividends

The primary source of liquidity for the Bancorp is dividends received from the Bank.  The Bancorp and the Bank are regulated entities 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. Payment of dividends by a bank is also restricted pursuant to various state regulatory limitations. Dividends paid by the Bank to the Bancorp amounted to $38.8 million and $53.2 million, respectively, for the years ended December 31, 2023 and 2022.

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, 2023 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, 2023
Total Capital (to Risk-Weighted Assets):
Corporation	$611,220	11.58	%	$422,259	8.00	%	N/A	N/A
Bank	605,289	11.47		422,131	8.00		$527,663	10.00	%
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	572,960	10.86		316,694	6.00		N/A	N/A
Bank	567,029	10.75		316,598	6.00		422,131	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	550,964	10.44		237,521	4.50		N/A	N/A
Bank	567,029	10.75		237,449	4.50		342,981	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	572,960	7.80		293,837	4.00		N/A	N/A
Bank	567,029	7.72		293,742	4.00		367,177	5.00
December 31, 2022
Total Capital (to Risk-Weighted Assets):
Corporation	605,005	12.37		391,363	8.00		N/A	N/A
Bank	588,090	12.02		391,260	8.00		489,074	10.00
Tier 1 Capital (to Risk-Weighted Assets):
Corporation	571,794	11.69		293,522	6.00		N/A	N/A
Bank	554,879	11.35		293,445	6.00		391,260	8.00
Common Equity Tier 1 Capital (to Risk-Weighted Assets):
Corporation	549,798	11.24		220,142	4.50		N/A	N/A
Bank	554,879	11.35		220,083	4.50		317,898	6.50
Tier 1 Capital (to Average Assets): (1)
Corporation	571,794	8.65		264,295	4.00		N/A	N/A
Bank	554,879	8.40		264,177	4.00		330,222	5.00

(1)Leverage ratio.

In addition to the minimum regulatory capital required for capital adequacy outlined in the table above, the Corporation and the Bank are required to maintain a minimum capital conversation buffer, in the form of common equity, of 2.50% resulting in a requirement for the Corporation and the Bank to effectively maintain total capital, Tier 1 capital and common equity Tier 1 capital ratios of 10.50%, 8.50% and 7.00%, respectively. The Corporation and the Bank must maintain the capital conservation buffer to avoid restrictions on the ability to pay dividends and discretionary bonuses. The Corporation’s and the Bank’s capital levels exceeded the minimum regulatory capital requirements plus the capital conservation buffer at December 31, 2023 and 2022.

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, 2023 and 2022, $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 capital adequacy guidelines of the Federal Reserve.

In accordance with regulatory capital rules, the Corporation elected the 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 exclude the full impact of the increased ACL on loans and unfunded loan commitments attributed to the adoption of ASC 326, adjusted for an approximation of the after-tax provision for credit losses attributable to ASC 326 relative to the incurred loss methodology during the two-year deferral period. The cumulative difference at the end of the deferral period is being phased-in to regulatory capital over the three-year transition period, which began January 1, 2022.