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Regulatory Matters
3 Months Ended
Mar. 31, 2019
Regulatory Matters [Abstract]  
Regulatory Matters
10.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 March 31, 2019, the Bank had positive undivided profits of $28.5 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 and 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. 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 March 31, 2019 and December 31, 2018, 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
 
  
Amount
  
Ratio
  
Amount
  
Ratio
  
Amount
  
Ratio
 
  
(Dollars in thousands)
 
                   
March 31, 2019
                  
Total capital to risk-weighted assets
                  
Consolidated
 
$
376,194
   
14.29
%
 
$
210,568
   
8.00
%
 
NA
  
NA
 
Independent Bank
  
340,950
   
12.96
   
210,464
   
8.00
  
$
263,079
   
10.00
%
                         
Tier 1 capital to risk-weighted assets
                        
Consolidated
 
$
349,484
   
13.28
%
 
$
157,926
   
6.00
%
 
NA
  
NA
 
Independent Bank
  
314,240
   
11.94
   
157,848
   
6.00
  
$
210,464
   
8.00
%
                         
Common equity tier 1 capital to risk-weighted assets
                        
Consolidated
 
$
311,303
   
11.83
%
 
$
118,445
   
4.50
%
 
NA
  
NA
 
Independent Bank
  
314,240
   
11.94
   
118,386
   
4.50
  
$
171,002
   
6.50
%
                         
Tier 1 capital to average assets
                        
Consolidated
 
$
349,484
   
10.51
%
 
$
133,025
   
4.00
%
 
NA
  
NA
 
Independent Bank
  
314,240
   
9.46
   
132,924
   
4.00
  
$
166,154
   
5.00
%
                         
December 31, 2018
                        
Total capital to risk-weighted assets
                        
Consolidated
 
$
371,603
   
14.25
%
 
$
208,572
   
8.00
%
 
NA
  
NA
 
Independent Bank
  
337,227
   
12.94
   
208,456
   
8.00
  
$
260,569
   
10.00
%
                         
Tier 1 capital to risk-weighted assets
                        
Consolidated
 
$
345,419
   
13.25
%
 
$
156,429
   
6.00
%
 
NA
  
NA
 
Independent Bank
  
311,043
   
11.94
   
156,342
   
6.00
  
$
208,456
   
8.00
%
                         
Common equity tier 1 capital to risk-weighted assets
                        
Consolidated
 
$
307,255
   
11.79
%
 
$
117,322
   
4.50
%
 
NA
  
NA
 
Independent Bank
  
311,043
   
11.94
   
117,256
   
4.50
  
$
169,370
   
6.50
%
                         
Tier 1 capital to average assets
                        
Consolidated
 
$
345,419
   
10.47
%
 
$
131,930
   
4.00
%
 
NA
  
NA
 
Independent Bank
  
311,043
   
9.44
   
131,778
   
4.00
  
$
164,723
   
5.00
%
                         
NA - Not applicable
                        

(1)
These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at March 31, 2019 and December 31, 2018, respectfully.

The components of our regulatory capital are as follows:

  
Consolidated
  
Independent Bank
 
  
March 31,
2019
  
December 31,
2018
  
March 31,
2019
  
December 31,
2018
 
  
(In thousands)
 
Total shareholders' equity
 
$
344,726
  
$
338,994
  
$
347,663
  
$
341,496
 
Add (deduct)
                
Accumulated other comprehensive loss for regulatory purposes
  
1,020
   
4,311
   
1,020
   
4,311
 
Goodwill and other intangibles
  
(34,443
)
  
(34,715
)
  
(34,443
)
  
(34,715
)
Disallowed deferred tax assets
  
-
   
(1,335
)
  
-
   
(49
)
Common equity tier 1 capital
  
311,303
   
307,255
   
314,240
   
311,043
 
Qualifying trust preferred securities
  
38,181
   
38,164
   
-
   
-
 
Disallowed deferred tax assets
  
-
   
-
   
-
   
-
 
Tier 1 capital
  
349,484
   
345,419
   
314,240
   
311,043
 
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets
  
26,710
   
26,184
   
26,710
   
26,184
 
Total risk-based capital
 
$
376,194
  
$
371,603
  
$
340,950
  
$
337,227