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Regulatory Capital
 9 Months Ended
Sep. 30, 2024
Regulatory Capital Requirements under Banking Regulations [Abstract]  
Regulatory Capital Regulatory Capital
Banks and bank holding companies 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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company and Bank to maintain amounts and ratios (set forth in the table below) of Common Equity Tier 1, Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio). As of September 30, 2024 and December 31, 2023, management believes that the Company and the Bank met all capital adequacy requirements to which they were subject.
As of December 31, 2023, the most recent notification from our primary regulator categorized the Bank, as well capitalized under the regulatory framework for prompt corrective action. At September 30, 2024, there were no conditions or events since that notification that management believes would change the Bank’s classification. To be categorized as well capitalized, the Bank must maintain minimum common equity Tier 1, Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios, which are described below.
The minimum ratios for capital adequacy purposes are 7.00%, 8.50%, 10.50% and 4.00% for the common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively which include a capital conservation buffer of 2.50% for common equity Tier 1, Tier 1, and total capital ratios. To be categorized as well capitalized, a bank must maintain minimum ratios of 6.50%, 8.00%, 10.00% and 5.00% for its common equity Tier 1, Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively.
The table presents the actual and required capital ratios for the Company and the Bank as of September 30, 2024 and December 31, 2023.
The CompanyThe Bank
Regulatory min ratio + CCB (1)
To Be Well-Capitalized Under Prompt Corrective Action Regulation (5)
($ in thousands)AmountRatioAmountRatio
September 30, 2024
Common Tier 1 Capital to RWA$446,402 9.27 %509,511 10.60 %7.00 %6.50 %
Tier 1 Capital to RWA476,170 9.89 %509,511 10.60 %8.50 %8.00 %
Total Capital to RWA579,664 12.04 %569,317 11.84 %10.50 %10.00 %
Tier 1 Capital to AA (Leverage) (2)
476,170 8.31 %509,511 8.90 %4.00 %5.00 %
December 31, 2023
Common Tier 1 Capital to RWA$408,317 8.69 %470,200 10.02 %7.00 %6.50 %
Tier 1 Capital to RWA437,847 9.32 %470,200 10.02 %8.50 %8.00 %
Total Capital to RWA539,572 11.49 %528,786 11.27 %10.50 %10.00 %
Tier 1 Capital to AA (Leverage) (2)
437,847 7.75 %470,200 8.33 %4.00 %5.00 %
Regulatory Capital and RatiosThe CompanyThe Bank
($ in thousands)September 30, 2024December 31, 2023September 30, 2024December 31, 2023
Common equity$533,271 $511,135 $595,954 $570,100 
Goodwill(4)
(61,397)(63,266)(61,397)(63,266)
Core deposit intangible (3)
(30,572)(38,069)(30,572)(38,069)
DTAs that arise from net operating loss and tax credit carry forwards(426)(8,977)— (6,059)
AOCI losses
5,526 7,494 5,526 7,494 
Common Equity Tier 1 Capital446,402 408,317 509,511 470,200 
TRUPs29,768 29,530 — — 
Tier 1 Capital476,170 437,847 509,511 470,200 
Allowable reserve for credit losses and other Tier 2 adjustments59,806 58,586 59,806 58,586 
Subordinated debentures43,688 43,139 — — 
Total Capital$579,664 $539,572 $569,317 $528,786 
Risk-Weighted Assets (“RWA”)$4,816,165 $4,697,504 $4,808,058 $4,693,009 
Average Assets (“AA”)$5,729,576 $5,649,116 $5,721,995 $5,644,930 
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(1)The regulatory minimum capital ratio ("Min. Ratio") + the capital conservation buffer ("CCB").
(2)Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined. The PCA well capitalized is defined as 5.00%.
(3)Core deposit intangible is net of deferred tax liability.
(4)Goodwill is net of deferred tax liability.
(5)Applies to the Bank only.
Bank and holding company regulations impose certain restrictions on dividend payments by the Bank, as well as restricting extensions of credit and transfers of assets between the Bank and the Company.
At September 30, 2024, the Bank could pay dividends to the Company to the extent of its current period earnings plus the earnings of the preceding two years, so long as it maintained required capital ratios.