Regulatory Matters

12 Months Ended

Dec. 31, 2018

Regulatory Capital Requirements [Abstract]

Regulatory Matters

REGULATORY MATTERS

Wealth and Investment Businesses

The Company’s Wealth and Investment businesses are highly regulated, primarily at the federal level by the SEC, and by state regulatory agencies. The Company has subsidiaries which are RIAs under the Investment Advisers Act of 1940. The Investment Advisers Act of 1940 imposes numerous obligations on RIAs, including fiduciary, record keeping, operational, and disclosure obligations. The subsidiaries, as investment advisers, are also subject to regulation under the federal and state securities laws and the fiduciary laws of certain states. In addition, the Company has a subsidiary which act as a sub-adviser to mutual funds, which are registered under the Investment Company Act of 1940 and are subject to that Act’s provisions and regulations. The Company’s subsidiaries are also subject to the provisions and regulations of ERISA, to the extent any such entities act as a “fiduciary” under ERISA with respect to certain of its clients. ERISA and the related provisions of the federal tax laws impose a number of duties on persons who are fiduciaries under ERISA, and prohibit certain transactions involving the assets of each ERISA plan which is a client, as well as certain transactions by the fiduciaries and certain other related parties to such plans.

Private Banking

The Company and the Bank are subject to extensive supervision and regulation by the Federal Reserve, the FDIC, which insures the deposits of the Bank to the maximum extent permitted by law, the Massachusetts Commissioner of Banks, and the California Banking Commission. The federal and state laws and regulations which are applicable to banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds, and the nature and amount of collateral for certain loans. The laws and regulations governing the Bank generally have been promulgated to foster the safety and soundness of the Bank and protect depositors, and not for the purpose of protecting shareholders of the Company.

As of December 31, 2018, quantitative measures established by regulation to ensure capital adequacy required us to maintain minimum ratios of Common Equity Tier 1 ("CET1"), Tier 1, and total capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations) and of Tier 1 capital (as defined in the regulations) to average assets (as defined in the regulations). 

The following table presents the Company’s and the Bank’s amount of regulatory capital and related ratios as of December 31, 2018 and 2017. Also presented are the minimum requirements established by the Federal Reserve and the FDIC as of those dates for the Company and the Bank, respectively, to meet applicable capital requirements and the requirements of the FDIC as of those dates for the Bank to be considered “well capitalized” under the FDIC’s prompt corrective action provisions. On July 28, 2017, Boston Private Bank became a member of the Federal Reserve System.

The Federal Reserve and the Massachusetts Commissioner of Banks may impose higher capital ratios than those listed below based upon the results of regulatory exams. The Bank was categorized as “well capitalized” under the FDIC’s prompt corrective action provisions as of December 31, 2018 and 2017.

	Actual				For capital adequacy purposes (at least)				To be well capitalized under prompt corrective action provisions (at least)				Basel III minimum capital ratio with capital conservation buffer (1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(In thousands)
As of December 31, 2018
Common equity tier 1 risk-based capital
Company	$	702,728	11.40	%	$	277,275	4.5	%	n/a		n/a		7.0	%
Boston Private Bank	745,051		12.13		276,352		4.5		$	399,175	6.5	%	7.0
Tier 1 risk-based capital
Company	803,311		13.04		369,701		6.0		n/a		n/a		8.5
Boston Private Bank	745,051		12.13		368,469		6.0		491,292		8.0		8.5
Total risk-based capital
Company	879,927		14.28		492,934		8.0		n/a		n/a		10.5
Boston Private Bank	821,584		13.38		491,292		8.0		614,115		10.0		10.5
Tier 1 leverage capital
Company	803,311		9.54		336,648		4.0		n/a		n/a		4.0
Boston Private Bank	745,051		8.92		334,029		4.0		417,537		5.0		4.0
As of December 31, 2017
Common equity tier 1 risk-based capital
Company	$	607,800	10.32	%	$	265,153	4.5	%	n/a		n/a		7.0	%
Boston Private Bank	694,201		11.83		264,028		4.5		$	381,373	6.5%		7.0
Tier 1 risk-based capital
Company	758,089		12.87		353,537		6.0		n/a		n/a		8.5
Boston Private Bank	694,201		11.83		352,037		6.0		469,382		8.0		8.5
Total risk-based capital
Company	832,182		14.12		471,383		8.0		n/a		n/a		10.5
Boston Private Bank	767,576		13.08		469,382		8.0		586,728		10.0		10.5
Tier 1 leverage capital
Company	758,089		9.34		324,725		4.0		n/a		n/a		4.0
Boston Private Bank	694,201		8.63		321,920		4.0		402,400		5.0		4.0

___________________

n/a = not applicable

(1) Required capital ratios under the Basel III capital rules with the fully phased-in capital conservation buffer added to the minimum risk-based capital ratios. The fully phased-in ratios are effective for 2019, with lower requirements during the transition years 2016 through 2018.

Bank regulatory authorities restrict the Bank from lending or advancing funds to, or investing in the securities, of the Company. Further, these authorities restrict the amounts available for the payment of dividends by the Bank to the Company.

The Company has sponsored the creation of two statutory trusts for the sole purpose of issuing trust preferred securities and investing the proceeds in junior subordinated debentures of the Company. In accordance with ASC 810-10-55, Consolidation - Overall - Implementation Guidance and Illustrations - Variable Interest Entities, these statutory trusts created by the Company are not consolidated into the Company’s financial statements; however, the Company reflects the amounts of junior subordinated debentures payable to the preferred stockholders of statutory trusts as debt in its financial statements. As of both December 31, 2018, and 2017, all $100.0 million of the net balance of these trust preferred securities qualified as Tier 1 capital.