Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2017

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Regulatory Capital Requirements

The Company (on a consolidated basis) and its banking subsidiary are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and its banking subsidiary’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its banking subsidiary must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Basel III capital requirements became effective on January 1, 2015. The new capital requirements, among other things (i) specify that Tier 1 capital consists of “Common Equity Tier 1,” or CET1, and “Additional Tier 1 capital” instruments meeting specified requirements, (ii) define CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iii) expand the scope of the deductions/adjustments to capital as compared to existing regulations. Under the requirements that are now effective, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital to risk-weighted assets, (iii) 8% total capital to risk-weighted assets and (iv) 4% Tier 1 capital to average total assets (Tier 1 leverage). The Company and the Bank have made the one-time election to opt-out of including accumulated other comprehensive income items in regulatory capital calculations.

The New Capital Rules also require a new capital conservation buffer designed to absorb losses during periods of economic stress. The capital conservation buffer is composed entirely of CET1, on top of these minimum risk-weighted asset ratios. In addition, the New Capital Rules provide for a countercyclical capital buffer applicable only to certain covered institutions. We do not expect the countercyclical capital buffer to be applicable to us or the Bank. Banking institutions with a ratio of CET1 to risk-weighted assets above the minimum but below the capital conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a three-year period (increasing by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019). When fully phased-in, the New Capital Rules will require us, and the Bank, to maintain such additional capital conservation buffer of 2.5% of CET1, effectively resulting in minimum ratios of (i) 7% CET1 to risk-weighted assets, (ii) 8.5% Tier 1 capital to risk-weighted assets, and (iii) 10.5% total capital to risk-weighted assets. At December 31, 2017, the capital conservation buffer for the Company and the Bank was 4.9796% and 4.8123%, respectively. As such, we believe that, as of December 31, 2017, we and the Bank would meet all capital adequacy requirements under the New Capital Rules on a fully phased-in basis as if all such requirements were then in effect.

FDIC regulations set forth the qualifications necessary for a bank to be classified as “well-capitalized,” primarily for assignment of FDIC insurance premium rates. To qualify as “well-capitalized,” banks must have a CET1 risk-adjusted capital ratio of 6.5%, a Tier I risk-adjusted capital ratio of at least 8%, a total risk-adjusted capital ratio of at least 10% and a leverage ratio of at least 5%. Failure to qualify as “well-capitalized” can negatively impact a bank’s ability to expand and to engage in certain activities.

As of December 31, 2017, the most recent notification from the Federal Deposit Insurance Corporation categorized Columbia Bank as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well- capitalized, an institution must maintain minimum CET1 risk-based, Tier 1 risk-based, total risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed Columbia Bank’s category.

The Company and its banking subsidiary’s actual capital amounts and ratios as of December 31, 2017 and 2016 are presented in the following table:

	Actual				Minimum Required For Capital Adequacy Purposes				Minimum Required Plus Capital Conservation Buffer Phase-In				Minimum Required Plus Capital Conservation Buffer Fully Phased-In				To Be Well Capitalized Under Prompt Corrective Action Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
	(dollars in thousands)
As of December 31, 2017
CET1 Capital (to risk-weighted assets):
The Company	$	1,158,252	11.7421	%	$	443,886	4.50	%	$	567,187	5.75	%	$	690,489	7.00	%	N/A		N/A
Columbia Bank	$	1,184,476	12.0133	%	$	443,687	4.50	%	$	566,933	5.75	%	$	690,180	7.00	%	$	640,881	6.50	%
Tier 1 Capital (to risk-weighted assets):
The Company	$	1,165,903	11.8196	%	$	591,848	6.00	%	$	715,149	7.25	%	$	838,451	8.50	%	N/A		N/A
Columbia Bank	$	1,184,476	12.0133	%	$	591,582	6.00	%	$	714,829	7.25	%	$	838,075	8.50	%	$	788,777	8.00	%
Total Capital (to risk-weighted assets):
The Company	$	1,280,326	12.9796	%	$	789,130	8.00	%	$	912,432	9.25	%	$	1,035,734	10.50	%	N/A		N/A
Columbia Bank	$	1,263,252	12.8123	%	$	788,777	8.00	%	$	912,023	9.25	%	$	1,035,269	10.50	%	$	985,971	10.00	%
Tier 1 Capital Leverage (to average assets):
The Company	$	1,165,903	10.9611	%	$	425,469	4.00	%	$	425,469	4.00	%	$	425,469	4.00	%	N/A		N/A
Columbia Bank	$	1,184,476	10.8186	%	$	437,939	4.00	%	$	437,939	4.00	%	$	437,939	4.00	%	$	547,423	5.00	%
As of December 31, 2016
CET1 Capital (to risk-weighted assets):
The Company	$	873,217	11.6450	%	$	337,439	4.50	%	$	384,306	5.125	%	$	524,906	7.00	%	N/A		N/A
Columbia Bank	$	862,381	11.5051	%	$	337,304	4.50	%	$	384,152	5.125	%	$	524,696	7.00	%	$	487,217	6.50	%
Tier 1 Capital (to risk-weighted assets):
The Company	$	874,688	11.6646	%	$	449,919	6.00	%	$	496,786	6.625	%	$	637,386	8.50	%	N/A		N/A
Columbia Bank	$	862,381	11.5051	%	$	449,739	6.00	%	$	496,587	6.625	%	$	637,130	8.50	%	$	599,652	8.00	%
Total Capital (to risk-weighted assets):
The Company	$	947,436	12.6347	%	$	599,892	8.00	%	$	646,759	8.625	%	$	787,359	10.50	%	N/A		N/A
Columbia Bank	$	935,129	12.4756	%	$	599,652	8.00	%	$	646,500	8.625	%	$	787,043	10.50	%	$	749,565	10.00	%
Tier 1 Capital Leverage (to average assets):
The Company	$	874,688	9.5526	%	$	366,263	4.00	%	$	366,263	4.00	%	$	366,263	4.00	%	N/A		N/A
Columbia Bank	$	862,381	9.4275	%	$	365,902	4.00	%	$	365,902	4.00	%	$	365,902	4.00	%	$	457,378	5.00	%