Shareholders' Equity, Dividends Restrictions and Other Regulatory Matters

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

Shareholders' Equity, Dividend Restrictions and Other Regulatory Matters

SHAREHOLDERS' EQUITY, DIVIDEND RESTRICTIONS AND OTHER REGULATORY MATTERS

BancShares and FCB are required to meet minimum capital requirements set forth by regulatory authorities. Bank regulatory agencies approved regulatory capital guidelines (Basel III) aimed at strengthening existing capital requirements for banking organizations. Under Basel III, minimum requirements increase for both the quantity and quality of capital held by BancShares. Basel III included a new common equity Tier 1 ratio minimum of 4.50 percent, raised the minimum Tier 1 risk-based capital to 6.00 percent, requires a minimum total risk-based capital ratio of 8.00 percent and requires a minimum Tier 1 leverage capital ratio of 4.00 percent. Failure to meet minimum capital requirements may result in certain actions by regulators that could have a direct material effect on the consolidated financial statements. A new capital conservation buffer, comprised of common equity Tier 1 capital, was also established above the regulatory minimum requirements. This capital conservation buffer will be phased in beginning January 1, 2016 at 0.625 percent of risk-weighted assets and increase each subsequent year by an additional 0.625 percent until reaching its final level of 2.50 percent on January 1, 2019. The phase-in period for Basel III became effective for BancShares on January 1, 2015, with full compliance of all Basel III requirements phased in over a multi-year schedule, to be fully phased in by January 1, 2019.

Based on the most recent notifications from its regulators, FCB is well-capitalized under the regulatory framework for prompt corrective action. As of December 31, 2015, BancShares and FCB met all capital adequacy requirements to which they are subject and were not aware of any conditions or events that would affect each entity's well-capitalized status.

Following is an analysis of capital ratios for BancShares and FCB as of December 31, 2015 and 2014:

	December 31, 2015						December 31, 2014
(Dollars in thousands)	Amount (1)		Ratio (1)		Requirements to be well-capitalized (2)		Amount		Ratio		Requirements to be well-capitalized
BancShares
Tier 1 risk-based capital	$	2,831,242	12.65	%	8.00	%	$	2,690,324	13.61	%	6.00	%
Common equity Tier 1 (3)	2,799,163		12.51		6.50		N/A		N/A		N/A
Total risk-based capital	3,140,212		14.03		10.00		2,904,123		14.69		10.00
Leverage capital	2,831,242		8.96		5.00		2,690,324		8.91		5.00
FCB
Tier 1 risk-based capital	2,821,475		12.64		8.00		2,019,595		13.12		6.00
Common equity Tier 1 (3)	2,821,475		12.64		6.50		N/A		N/A		N/A
Total risk-based capital	3,038,070		13.61		10.00		2,212,163		14.37		10.00
Leverage capital	2,821,475		8.95		5.00		2,019,595		9.30		5.00
FCB-SC (4)
Tier 1 risk-based capital	N/A		N/A		N/A		653,515		15.11		6.00
Total risk-based capital	N/A		N/A		N/A		657,475		15.20		10.00
Leverage capital	N/A		N/A		N/A		653,515		7.89		5.00

⁽¹⁾ December 31, 2015 calculated under Basel III guidelines, which became effective January 1, 2015.

⁽²⁾ Regulatory well-capitalized requirements are based on 2015 Basel III regulatory capital guidelines.

⁽³⁾ Common equity Tier 1 ratio requirements were established under Basel III guidelines; therefore, this ratio is not applicable for periods prior to January 1, 2015.

⁽⁴⁾ FCB-SC merged into FCB effective January 1, 2015. As such, capital ratios are not applicable as of December 31, 2015.

At December 31, 2015, BancShares had $32.1 million of trust preferred capital securities included in Tier 1 capital, compared to $128.5 million at December 31, 2014. Effective January 1, 2015, 75 percent of BancShares' trust preferred capital securities were excluded from Tier 1 capital, with the remaining 25 percent to be phased out January 1, 2016. The inclusion of accumulated other comprehensive income in Tier 1 common equity, as described in Basel III, is only applicable for institutions larger than $50 billion in assets. Management continues to monitor developments and remains committed to managing capital levels in a prudent manner.

At December 31, 2015 and December 31, 2014, Tier 2 capital of BancShares included $6.0 million and $9.0 million, respectively, of qualifying subordinated debt acquired in the Bancorporation merger with a scheduled maturity date of June 1, 2018. Under current regulatory guidelines, when subordinated debt is within five years of its scheduled maturity date, issuers must discount the amount included in Tier 2 capital by 20 percent for each year until the debt matures.

BancShares has two classes of common stock—Class A common and Class B common. Shares of Class A common have one vote per share, while shares of Class B common have 16 votes per share.

During the fourth quarter of 2015, our board approved a stock repurchase plan that provides for the purchase of up to 100,000 shares of Class A common stock beginning on November 1, 2015 and continuing through October 31, 2016. As of December 31, 2015, no purchases had occurred pursuant to that authorization.

The Board of Directors of FCB may approve distributions, including dividends, as it deems appropriate, subject to the requirements of the FDIC and the General Statutes of North Carolina, provided that the distributions do not reduce capital below applicable capital requirements. As of December 31, 2015, the maximum amount of the dividend was limited to $902.6 million to preserve well-capitalized status. Dividends declared by FCB amounted to $75.0 million in 2015, $30.0 million in 2014 and $131.0 million in 2013.

BancShares and FCB are subject to various requirements imposed by state and federal banking statutes and regulations, including regulations requiring the maintenance of noninterest-bearing reserve balances at the Federal Reserve Bank. Banks are allowed to reduce the required balances by the amount of vault cash. For 2015, the requirements averaged $531.6 million.