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REGULATORY CAPITAL
 3 Months Ended
Mar. 31, 2022
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 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.

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 rules revised the definition and calculation of Tier 1 capital, Total Capital, and risk-weighted assets.
As of March 31, 2022, and December 31, 2021, the Company and Bank were well-capitalized under the regulatory framework for prompt corrective action ("PCA") under the new Basel III Capital Rules. Management believes, as of March 31, 2022 and December 31, 2021, 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, 2022December 31, 2021March 31, 2022December 31, 2021
Common equity$193,140 $208,133 $222,753 $236,561 
Goodwill(10,835)(10,835)(10,835)(10,835)
Core deposit intangible (net of deferred tax liability)(685)(766)(685)(766)
AOCI losses18,969 1,952 18,969 1,952 
Common Equity Tier 1 Capital200,589 198,484 230,202 226,912 
TRUPs12,000 12,000 — — 
Tier 1 Capital212,589 210,484 230,202 226,912 
Allowable reserve for credit losses and other Tier 2 adjustments21,619 18,468 21,619 18,468 
Subordinated notes19,524 19,510 — — 
Tier 2 Capital$253,732 $248,462 $251,821 $245,380 
Risk-Weighted Assets ("RWA")$1,731,539 $1,665,296 $1,729,914 $1,663,831 
Average Assets ("AA")$2,319,531 $2,281,210 $2,317,923 $2,279,835 
Regulatory Minimum Ratio + CCB (1)
Common Tier 1 Capital to RWA7.00 %11.58 %11.92 %13.31 %13.64 %
Tier 1 Capital to RWA8.50 12.28 12.64 13.31 13.64 
Tier 2 Capital to RWA10.50 14.65 14.92 14.56 14.75 
Tier 1 Capital to AA (Leverage) (2)
n/a9.17 9.23 9.93 9.95 
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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. The PCA well capitalized is defined as 5.00%.
Dividends paid by the Company are substantially funded from dividends received from the Bank. Federal and holding company regulations, as well as Maryland law, impose certain restrictions on capital distributions, including dividend payments and share repurchases. These restrictions generally require advanced approval from the Bank's regulator for payment of dividends in excess of the sum of net income for the current calendar year and the retained net income of the prior two calendar years.