Regulatory Capital

12 Months Ended

Dec. 31, 2018

The Company and its subsidiary Bank are subject to regulatory capital requirements promulgated by the federal banking agencies. The Federal Reserve establishes capital requirements, including well capitalized standards, for the consolidated financial holding company, and the OCC has similar requirements for the Company's subsidiary bank. 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's consolidated statements of financial condition.

Federal regulators require federally insured depository institutions to meet several minimum capital standards: (1) total capital to risk-weighted assets of 8.0%; (2) tier 1 capital to risk-weighted assets of 6.0%; (3) common equity tier 1 capital to risk-weighted assets of 4.5%; and (4) tier 1 capital to adjusted total assets of 4.0%. In addition to establishing the minimum regulatory capital requirements,

(10) Regulatory Capital

the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a "capital conservation buffer" consisting of 2.5% of common equity tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016, at 0.625% of risk-weighted assets and increased each year until it was fully implemented at 2.5% on January 1, 2019. The regulators established a framework for the classification of savings institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Generally, an institution is considered well capitalized if it has: a total capital to risk-weighted assets ratio of at least 10.0%, a tier 1 capital to risk-weighted assets ratio of at least 8.0%, a common tier 1 capital to risk-weighted assets ratio of at least 6.5%, and a tier 1 capital to adjusted total assets ratio of at least 5.0%. As of December 31, 2018 and 2017, the Company and the Bank exceeded all capital adequacy requirements to which it is subject.

Based upon most recent notification from federal banking regulators, the Bank was categorized as well capitalized as of September 30, 2018, under the regulatory framework for prompt corrective action. There are no conditions existing or events which have occurred since notification that management believes have changed the Bank's category.

The following table presents the Company's and the Bank's actual capital amounts and ratios as of December 31, 2018 and 2017 as compared to the Federal Reserve Bank minimum capital adequacy requirements and the Federal Reserve Bank requirements for classification as a well-capitalized institution:

(10) Regulatory Capital (continued)



	Actual				Minimum capital adequacy requirements				Minimum capital adequacy requirements with capital conservation buffer				To be well capitalized under prompt corrective action provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Company	(In thousands, except ratio data)
At December 31, 2018:
Total capital (to risk-weighted assets)	$	1,094,062	23.45	%	$	373,276	8.00	%	$	460,763	9.88	%	N/A		N/A
Tier 1 capital (to risk-weighted assets)	1,035,477		22.19		279,957		6.00		367,444		7.88		N/A		N/A
Common equity tier 1 capital (to risk-weighted assets)	1,035,477		22.19		209,968		4.50		297,455		6.38		N/A		N/A
Tier 1 capital (to adjusted total assets)	1,035,477		15.75		263,037		4.00		263,037		4.00		N/A		N/A

At December 31, 2017:
Total capital (to risk-weighted assets)	$	631,952	15.01	%	$	336,730	8.00	%	$	389,244	9.25	%	N/A		N/A
Tier 1 capital (to risk-weighted assets)	579,080		13.76		252,547		6.00		305,161		7.25		N/A		N/A
Common equity tier 1 capital (to risk-weighted assets)	528,080		12.55		189,410		4.50		242,025		5.75		N/A		N/A
Tier 1 capital (to adjusted total assets)	579,080		10.54		219,833		4.00		219,833		4.00		N/A		N/A

Bank
At December 31, 2018:
Total capital (to risk-weighted assets)	$	886,728	19.04	%	$	372,550	8.00	%	$	459,866	9.88	%	$	465,687	10.00	%
Tier 1 capital (to risk-weighted assets)	828,257		17.79		279,412		6.00		366,729		7.88		372,550		8.00
Common equity tier 1 capital (to risk-weighted assets)	828,257		17.79		209,559		4.50		296,875		6.38		302,697		6.50
Tier 1 capital (to adjusted total assets)	828,257		12.60		263,025		4.00		263,025		4.00		328,781		5.00

At December 31, 2017:
Total capital (to risk-weighted assets)	$	625,336	14.90	%	$	335,736	8.00	%	$	388,196	9.25	%	$	419,671	10.00	%
Tier 1 capital (to risk-weighted assets)	572,617		13.64		251,802		6.00		304,262		7.25		335,736		8.00
Common equity tier 1 capital (to risk-weighted assets)	572,617		13.64		188,852		4.50		241,311		5.75		272,786		6.50
Tier 1 capital (to adjusted total assets)	572,617		10.44		221,257		4.00		221,257		4.00		276,571		5.00

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

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+ Details