Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2018

Regulatory Capital Requirements [Abstract]

Regulatory Capital Requirements

Regulatory Capital Requirements

A. General Regulatory Capital Information

Both the Corporation and the Bank are subject to various regulatory capital requirements, administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if taken, could have a direct material effect on the Corporation’s and the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies. Beginning in 2015, new regulatory capital reforms, known as Basel III, issued as part of the Dodd-Frank Act began to be phased in. For more information, refer to the section titled Capital Adequacy within Item 1 - Business - Supervision and Regulation beginning at page 5 in this Form 10-K.

B. S-3 Shelf Registration Statement and Offerings Thereunder

In May 2018, the Corporation filed a shelf registration statement on Form S-3, SEC File No. 333-224849 (the “Shelf Registration Statement”). The Shelf Registration Statement allows the Corporation to raise additional capital from time to time through offers and sales of registered securities consisting of common stock, debt securities, warrants, purchase contracts, rights and units or units consisting of any combination of the foregoing securities. The Corporation may sell these securities using the prospectus in the Shelf Registration Statement, together with applicable prospectus supplements, from time to time, in one or more offerings.

In addition, the Corporation has in place under its Shelf Registration Statement a Dividend Reinvestment and Stock Purchase Plan (the “Plan”), which allows it to issue up to 1,500,000 shares of registered common stock. The Plan allows for the grant of a request for waiver (“RFW”) above the Plan’s maximum investment of $120 thousand per account per year. An RFW is granted based on a variety of factors, including the Corporation’s current and projected capital needs, prevailing market prices of the Corporation’s common stock and general economic and market conditions.

For the year ended December 31, 2018, the Corporation did not issue any shares through the Plan, nor were any RFWs approved. The Plan administrator conducted dividend reinvestments for Plan participants through open market purchases. No other sales of equity securities were executed under the Shelf Registration Statement during the year ended December 31, 2018.

C. Shares Issued in Mergers and Acquisitions

In connection with the RBPI Merger, the Corporation issued 3,101,316 common shares, valued at $136.8 million, to former shareholders of RBPI. These shares were registered on an S-4 registration statement filed by the Corporation in April 2017 (SEC File No. 333-216995).

D. Share Repurchases

For the years ended December 31, 2018 and 2017, the Corporation repurchased 149,284 and 0 shares, respectively, of Corporation stock through its announced repurchase program. In addition, it is the Corporation’s practice to retire shares to its treasury account upon the vesting of stock awards to certain officers, in order to cover the statutory income tax withholdings related to such vesting.

E. Regulatory Capital Ratios

As set forth in the following table, quantitative measures have been established to ensure capital adequacy ratios required of both the Corporation and the Bank. As of December 31, 2018 and 2017, the Corporation and the Bank had met all capital adequacy requirements to which they were subject. Federal banking regulators have defined specific capital categories, and categories range from a best of “well capitalized” to a worst of “critically under-capitalized.” Both the Corporation and the Bank were classified as “well capitalized” as of December 31, 2018 and 2017.

The Corporation’s and the Bank’s capital amounts and ratios as of December 31, 2018 and 2017 are presented in the following table: 

	Actual				Minimum to be Well Capitalized
(dollars in thousands)	Amount		Ratio		Amount		Ratio
December 31, 2018
Total capital to risk weighted assets:
Corporation	$	500,375	14.30	%	$	349,918	10.00	%
Bank	$	419,136	11.99	%	$	349,692	10.00	%
Tier I capital to risk weighted assets:
Corporation	$	382,151	10.92	%	$	279,934	8.00	%
Bank	$	399,438	11.42	%	$	279,754	8.00	%
Common equity Tier I risk weighted assets:
Corporation	$	361,256	10.32	%	$	227,446	6.50	%
Bank	$	399,438	11.42	%	$	227,300	6.50	%
Tier I leverage ratio (Tier I capital to total quarterly average assets):
Corporation	$	382,151	9.06	%	$	210,830	5.00	%
Bank	$	399,438	9.48	%	$	210,615	5.00	%
December 31, 2017
Total capital to risk weighted assets:
Corporation	$	463.637	13.92	%	$	333,068	10.00	%
Bank	$	387,067	11.65	%	$	332,388	10.00	%
Tier I capital to risk weighted assets:
Corporation	$	347.187	10.42	%	$	266,454	8.00	%
Bank	$	369,033	11.10	%	$	265,910	8.00	%
Common equity Tier I to risk weighted assets:
Corporation	$	328.676	9.87	%	$	216,494	6.50	%
Bank	$	369,033	11.10	%	$	216,052	6.50	%
Tier I leverage ratio (Tier I capital to total quarterly average assets):
Corporation	$	347.187	10.10	%	$	171,804	5.00	%
Bank	$	369,033	10.75	%	$	171,609	5.00	%