Regulatory Matters

6 Months Ended

Jun. 30, 2020

REGULATORY MATTERS

WebBank is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain actions by regulators that, if undertaken, could have a direct material effect on WebBank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, WebBank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. WebBank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

In July 2013, the Federal Deposit Insurance Corporation ("FDIC") approved the final rules implementing the Basel Committee on Banking Supervision's capital guidelines for U.S. banks ("Basel III"). Under the final rules, which began for WebBank on January 1, 2015 and have been fully implemented as of January 1, 2019, minimum requirements increased for both the quantity and quality of capital held by WebBank. The rules include a new common equity Tier 1 capital to risk-weighted assets ratio ("CET1 Ratio") of 4.5% and a capital conservation buffer of 2.5% of risk-weighted assets, which as fully phased-in, effectively results in a minimum CET1 Ratio of 7.0%. Basel III raised the minimum ratio of Tier 1 capital to risk-weighted assets from 4.0% to 6.0% which, with the capital conservation buffer, effectively results in a minimum Tier 1 capital ratio of 8.5% as fully phased-in, and effectively results in a minimum total capital to risk-weighted assets ratio of 10.5% (with the capital conservation buffer fully phased-in), and requires a minimum leverage ratio of 4.0%. Basel III also made changes to risk weights for certain assets and off-balance-sheet exposures. WebBank expects that its capital ratios under Basel III will continue to exceed the well capitalized minimum capital requirements, and such amounts are disclosed in the table below:


					Amount of Capital Required
	Actual						For Capital Adequacy Purposes						Minimum Capital Adequacy With Capital Buffer				To Be Well Capitalized Under Prompt Corrective Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
As of June 30, 2020
Total Capital
(to risk-weighted assets)	$	174,013	29.70	%	$	46,808	8.00	%	$	61,435	10.50	%	$	58,510	10.00	%
Tier 1 Capital
(to risk-weighted assets)	$	166,062	28.40	%	$	35,106	6.00	%	$	49,733	8.50	%	$	46,808	8.00	%
Common Equity Tier 1 Capital
(to risk-weighted assets)	$	166,062	28.40	%	$	26,329	4.50	%	$	40,957	7.00	%	$	38,031	6.50	%
Tier 1 Capital
(to average assets)	$	166,062	19.60	%	$	33,834	4.00	%	n/a		n/a		$	42,293	5.00	%

As of December 31, 2019
Total Capital
(to risk-weighted assets)	$	178,930	19.50	%	$	73,525	8.00	%	$	96,502	10.50	%	$	91,907	10.00	%
Tier 1 Capital
(to risk-weighted assets)	$	167,131	18.20	%	$	55,144	6.00	%	$	78,121	8.50	%	$	73,525	8.00	%
Common Equity Tier 1 Capital
(to risk-weighted assets)	$	167,131	18.20	%	$	41,358	4.50	%	$	64,335	7.00	%	$	59,739	6.50	%
Tier 1 Capital
(to average assets)	$	167,131	18.30	%	$	36,489	4.00	%	n/a		n/a		$	45,611	5.00	%