Regulatory Matters

6 Months Ended

Jun. 30, 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 June 30, 2019, the Bank had positive undivided profits of $32.6 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 June 30, 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)
June 30, 2019
Total capital to risk-weighted assets
Consolidated	$	360,894		13.36	%	$	216,166		8.00	%	NA		NA
Independent Bank		346,015		12.81			216,074		8.00		$	270,093		10.00	%
Tier 1 capital to risk-weighted assets
Consolidated	$	333,508		12.34	%	$	162,125		6.00	%	NA		NA
Independent Bank		318,629		11.80			162,056		6.00		$	216,074		8.00	%
Common equity tier 1 capital to risk-weighted assets
Consolidated	$	295,310		10.93	%	$	121,594		4.50	%	NA		NA
Independent Bank		318,629		11.80			121,542		4.50		$	175,561		6.50	%
Tier 1 capital to average assets
Consolidated	$	333,508		9.95	%	$	134,131		4.00	%	NA		NA
Independent Bank		318,629		9.50			134,138		4.00		$	167,673		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	%

(1) These ratios do not reflect a capital conservation buffer of 2.50% and 1.875% at June 30, 2019 and December 31, 2018, respectfully.

NA - Not applicable

The components of our regulatory capital are as follows:

	Consolidated						Independent Bank
	June 30, 2019			December 31, 2018			June 30, 2019			December 31, 2018
	(In thousands)
Total shareholders’ equity	$	330,846		$	338,994		$	354,165		$	341,496
Add (deduct)
Accumulated other comprehensive (income) loss for regulatory purposes		(1,366	)		4,311			(1,366	)		4,311
Goodwill and other intangibles		(34,170	)		(34,715	)		(34,170	)		(34,715	)
Disallowed deferred tax assets		-			(1,335	)		-			(49	)
Common equity tier 1 capital		295,310			307,255			318,629			311,043
Qualifying trust preferred securities		38,198			38,164			-			-
Tier 1 capital		333,508			345,419			318,629			311,043
Allowance for loan losses and allowance for unfunded lending commitments limited to 1.25% of total risk-weighted assets		27,386			26,184			27,386			26,184
Total risk-based capital	$	360,894		$	371,603		$	346,015		$	337,227