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REGULATORY CAPITAL
 3 Months Ended
Mar. 31, 2020
Regulatory Assets and Liabilities Disclosure [Abstract]  
Regulatory Capital REGULATORY CAPITAL
The Bank’s primary regulator is the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation, supervision and regular examination by the Maryland Commissioner of Financial Regulation (the “Commissioner”) and the FDIC. The Company is subject to regulation, examination and supervision by the Federal Reserve Board under the Bank Holding Company Act of 1956, as amended (the “BHCA”).

The Company and Bank are subject to the Basel III Capital Rules which establish a comprehensive capital framework for U.S. banking organizations. The rules implement the Basel Committee’s “Basel III” framework for strengthening international capital standards as well as certain provisions of the Dodd-Frank Act. The Basel III Capital Rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions compared to the previous U.S. risk-based capital rules. The Basel III Capital Rules define the components of capital and address other issues affecting the numerator in banking institutions’ regulatory capital ratios. The Basel III Capital Rules also address risk weights and other issues affecting the denominator in banking institutions’ regulatory capital ratios and replace the existing risk-weighting
approach with a more risk-sensitive approach. The Basel III Capital Rules also implement the requirements of Section 939A of the Dodd-Frank Act to remove references to credit ratings from the federal banking agencies’ rules.

The rules include a common equity Tier 1 capital to risk-weighted assets minimum ratio of 4.50%, a minimum ratio of Tier 1 capital to risk-weighted assets of 6.0%, require a minimum ratio (“Min. Ratio”) of Total Capital to risk-weighted assets of 8.0%, and require a minimum Tier 1 leverage ratio of 4.0%. A capital conservation buffer (“CCB”) is also established above the regulatory minimum capital requirements. The capital conservation buffer was phased-in over a three-year period before reaching its final level of 2.5% on January 1, 2019. Strict eligibility criteria for regulatory capital instruments were also implemented under the rules. The rules revised the definition and calculation of Tier 1 capital, Total Capital, and risk-weighted assets.
As of March 31, 2020 and December 31, 2019, the Company and Bank were well-capitalized under the regulatory framework for prompt corrective action under the Basel III Capital Rules. Management believes, as of March 31, 2020 and December 31, 2019, that the Company and the Bank met all capital adequacy requirements to which they were subject. The Company’s and the Bank’s actual regulatory capital amounts and ratios are presented in the following table.

Regulatory Capital and RatiosThe CompanyThe Bank
(dollars in thousands)March 31, 2020December 31, 2019March 31, 2020December 31, 2019
Common equity$185,267  $181,494  $193,741  $202,604  
Goodwill(10,835) (10,835) (10,835) (10,835) 
Core deposit intangible (net of deferred tax liability)(1,422) (1,534) (1,422) (1,534) 
AOCI (gains) losses(3,159) (1,504) (3,159) (1,504) 
Common Equity Tier 1 Capital169,851  167,621  178,325  188,731  
TRUPs12,000  12,000  —  —  
Tier 1 Capital181,851  179,621  178,325  188,731  
Allowable reserve for credit losses and other Tier 2 adjustments15,112  10,993  15,112  10,993  
Subordinated notes—  23,000  —  —  
Tier 2 Capital$196,963  $213,614  $193,437  $199,724  
Risk-Weighted Assets ("RWA")$1,538,846  $1,508,352  $1,537,295  $1,506,766  
Average Assets ("AA")$1,782,372  $1,782,834  $1,780,765  $1,781,415  
Regulatory Min. Ratio + CCB (1)
Common Tier 1 Capital to RWA7.00 %11.04 %11.11 %11.60 %12.53 %
Tier 1 Capital to RWA8.50  11.82  11.91  11.60  12.53  
Tier 2 Capital to RWA10.50  12.80  14.16  12.58  13.26  
Tier 1 Capital to AA (Leverage) (2)
n/a10.20  10.08  10.01  10.59  
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(1)The regulatory minimum capital ratio ("Min. Ratio") + the capital conservation buffer ("CCB").
(2)Tier 1 Capital to AA (Leverage) has no capital conservation buffer defined. PCA well capitalized is defined as 5.00%.