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Regulatory Matters
 6 Months Ended
Jun. 30, 2023
Regulatory Matters [Abstract]  
Regulatory Matters Regulatory Matters
Capital guidelines adopted by federal and state regulatory agencies and restrictions imposed by law limit the amount of cash dividends our Bank can pay to us. Under these guidelines, the amount of dividends that may be paid in any calendar year is limited to the Bank’s current year net profits, combined with the retained net profits of the preceding two years. Further, the Bank cannot pay a dividend at any time that it has negative undivided profits. As of June 30, 2023, the Bank had positive undivided profits of $155.2 million. It is not our intent to have dividends paid in amounts that would reduce the capital of our Bank to levels below those which we consider prudent or that would not be in accordance with guidelines of regulatory authorities.
We are also subject to various regulatory capital requirements. The prompt corrective action regulations establish quantitative measures to ensure capital adequacy and require minimum amounts and ratios of total, Tier 1, and common equity Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. Failure to meet minimum capital requirements can result in certain mandatory, and possibly discretionary, actions by regulators that could have a material effect on our interim condensed consolidated financial statements. In addition, capital adequacy rules include a common equity Tier 1 capital conservation buffer of 2.5% of risk-weighted assets that applies to all supervised financial institutions. To avoid limits on capital distributions and certain discretionary bonus payments we must meet the minimum ratio for adequately capitalized institutions plus the buffer. Under capital adequacy guidelines, we must meet specific capital requirements that involve quantitative measures as well as qualitative judgments by the regulators. The most recent regulatory filings as of June 30, 2023 and December 31, 2022, categorized our Bank as well capitalized. Management is not aware of any conditions or events that would have changed the most recent Federal Deposit Insurance Corporation (“FDIC”) categorization.
Our actual capital amounts and ratios follow (1):
Actual Minimum for
Adequately Capitalized
Institutions 		Minimum for
Well-Capitalized
Institutions
AmountRatio AmountRatio AmountRatio
(Dollars in thousands)
June 30, 2023
Total capital to risk-weighted assets
Consolidated$550,804 13.66 %$322,554 8.00 %NANA
Independent Bank497,759 12.36 322,172 8.00 $402,715 10.00 %
Tier 1 capital to risk-weighted assets
Consolidated$460,342 11.42 %$241,916 6.00 %NANA
Independent Bank447,355 11.11 241,629 6.00 $322,172 8.00 %
Common equity tier 1 capital to risk-weighted assets
Consolidated$421,872 10.46 %$181,437 4.50 %NANA
Independent Bank447,355 11.11 181,222 4.50 $261,765 6.50 %
Tier 1 capital to average assets      
Consolidated$460,342 8.97 %$205,284 4.00 %NANA
Independent Bank447,355 8.72 205,226 4.00 $256,533 5.00 %
December 31, 2022      
Total capital to risk-weighted assets      
Consolidated$536,549 13.62 %$315,059 8.00 %NANA
Independent Bank480,886 12.22 314,733 8.00 $393,416 10.00 %
Tier 1 capital to risk-weighted assets      
Consolidated$447,299 11.36 %$236,294 6.00 %NANA
Independent Bank431,685 10.97 236,049 6.00 $314,733 8.00 %
Common equity tier 1 capital to risk-weighted assets      
Consolidated$408,863 10.38 %$177,221 4.50 %NANA
Independent Bank431,685 10.97 177,037 4.50 $255,720 6.50 %
Tier 1 capital to average assets      
Consolidated$447,299 8.86 %$201,875 4.00 %NANA
Independent Bank431,685 8.56 201,820 4.00 $252,275 5.00 %
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(1)
These ratios do not reflect a capital conservation buffer of 2.50% at June 30, 2023 and December 31, 2022.
NA - Not applicable
The components of our regulatory capital are as follows:
Consolidated Independent Bank
June 30,
2023		December 31,
2022		June 30,
2023		December 31,
2022
(In thousands)
Total shareholders' equity $375,162 $347,596 $400,645 $370,418 
Add (deduct) 
Accumulated other comprehensive (income) loss for regulatory purposes74,712 86,966 74,712 86,966 
Goodwill and other intangibles(30,578)(30,851)(30,578)(30,851)
CECL (1)2,576 5,152 2,576 5,152 
Common equity tier 1 capital421,872 408,863 447,355 431,685 
Qualifying trust preferred securities38,470 38,436 — — 
Tier 1 capital460,342 447,299 447,355 431,685 
Subordinated debt40,000 40,000 — — 
Allowance for credit losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets50,462 49,250 50,404 49,201 
Total risk-based capital$550,804 $536,549 $497,759 $480,886 
(1)
We elected the three year CECL transition method for regulatory purposes.