Regulatory Matters

3 Months Ended

Mar. 31, 2015

Regulatory Matters

Regulatory Matters

(17)Regulatory Matters

Bancorp and the Bank are subject to various capital requirements prescribed by banking regulations and administered by state and federal banking agencies. Under these requirements, Bancorp and the Bank must meet minimum amounts and percentages of Tier 1, common equity Tier 1, and total capital, as defined, to risk weighted assets and Tier 1 capital to average assets. Risk weighted assets are determined by applying certain risk weightings prescribed by the regulations to various categories of assets and off-balance sheet commitments. Capital and risk weighted assets may be further subject to qualitative judgments by regulators as to components, risk weighting and other factors. Failure to meet the capital requirements can result in certain mandatory, and possibly discretionary, corrective actions prescribed by the regulations or determined to be necessary by the regulators, which could materially affect the unaudited consolidated financial statements.

In 2013, the Federal Reserve Board and the FDIC approved final rules that substantially amend the regulatory risk-based capital rules applicable to Bancorp and Bank. The final rules implement the regulatory capital reforms of the Basel Committee on Banking Supervision reflected in “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” (Basel III) and changes required by the Dodd-Frank Act. The final rules implementing the Basel III regulatory capital reforms became effective for Bancorp and Bank on January 1, 2015, and include new minimum risk-based capital and leverage ratios.  Capital ratios for December 31, 2014 were calculated using the former rules and for March 31, 2015 ratios were calculated using the new Basel III rules.  For Bancorp, key differences under Basel III include risk weighting for commitments under one year and higher risk weighting for certain commercial real estate and construction loans.  These differences resulted in higher risk-weighted assets, and therefore, somewhat lower risk-based capital ratios.

Bancorp and the Bank met all capital requirements to which they were subject as of March 31, 2015.

The following table sets forth consolidated Bancorp’s and the Bank’s risk based capital amounts and ratios as of March 31, 2015 and December 31, 2014.

(Dollars in thousands)	Actual				Minimum for adequately capitalized				Minimum for well capitalized
March 31, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital (1)
Consolidated	$	287,402	13.82	%	$	166,369	8.00	%	NA		NA
Bank	281,890		13.58	%	166,062		8.00	%	$	207,577	10.00	%
Common Equity Tier 1 risk-based capital (2)
Consolidated	$	262,520	12.63	%	$	93,534	4.50	%	NA		NA
Bank	257,008		12.38	%	93,420		4.50	%	$	124,560	6.00	%
Tier 1 risk-based capital (1)
Consolidated	$	262,520	12.63	%	$	124,713	6.00	%	NA		NA
Bank	257,008		12.38	%	124,560		6.00	%	$	124,560	6.00	%
Leverage (3)
Consolidated	$	262,520	10.41	%	$	100,872	4.00	%	NA		NA
Bank	257,008		10.21	%	100,689		4.00	%	$	125,861	5.00	%

	Actual				Minimum for adequately capitalized				Minimum for well capitalized
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital (1)
Consolidated	$	280,228	13.86	%	$	161,748	8.00	%	NA		NA
Bank	274,345		13.59	%	161,498		8.00	%	$	201,873	10.00	%
Tier 1 risk-based capital (1)
Consolidated	$	255,308	12.63	%	$	80,858	4.00	%	NA		NA
Bank	249,425		12.36	%	80,720		4.00	%	$	121,080	6.00	%
Leverage (3)
Consolidated	$	255,308	10.26	%	$	74,651	3.00	%	NA		NA
Bank	249,425		10.04	%	74,529		3.00	%	$	124,216	5.00	%

(1) Ratio is computed in relation to risk-weighted assets.

(2) Ratio became effective January 2015.

(3) Ratio is computed in relation to average assets.

NA — Not applicable.  Regulatory framework does not define well capitalized for holding companies.