CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

12 Months Ended

Sep. 30, 2022

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS [Abstract]

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

As U.S. banking organizations, the Company and the Bank are required to comply with the regulatory capital rules adopted by the Federal Reserve and the OCC (the "Capital Rules") that became effective on January 1, 2015, subject to phase-in periods for certain requirements and other provisions of the Capital Rules. Under the Capital Rules and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

The Capital Rules require the Company and the Bank to maintain minimum ratios (set forth in the table below) of total risk-based capital and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and a leverage ratio consisting of Tier 1 capital (as defined) to average assets (as defined). At September 30, 2022, the Company and the Bank exceeded federal regulatory minimum capital requirements to be classified as well-capitalized under the prompt corrective action requirements. The Company and the Bank made the accumulated other comprehensive income (“AOCI”) opt-out election; under the rule, non-advanced approach banking organizations were given a one-time option to exclude certain AOCI components. 

The tables below include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies. Management reviews these measures along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the corresponding reconciliation to total equity.

	Company		Bank		Minimum to be Adequately Capitalized Under Prompt Corrective Action Provisions		Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
At September 30, 2022
Tier 1 leverage capital ratio	8.10	%	8.19	%	4.00	%	5.00	%
Common equity Tier 1 capital ratio	12.07		12.55		4.50		6.50
Tier 1 capital ratio	12.39		12.55		6.00		8.00
Total capital ratio	13.88		13.57		8.00		10.00
At September 30, 2021
Tier 1 leverage capital ratio	7.67	%	8.69	%	4.00	%	5.00	%
Common equity Tier 1 capital ratio	12.12		14.11		4.50		6.50
Tier 1 capital ratio	12.46		14.13		6.00		8.00
Total capital ratio	15.45		15.38		8.00		10.00

The following table provides a reconciliation of the amounts included in the table above for the Company.

(Dollars in thousands)	Standardized Approach(1) September 30, 2022
Total stockholders' equity	$	645,140
Adjustments:
LESS: Goodwill, net of associated deferred tax liabilities	299,186
LESS: Certain other intangible assets	26,406
LESS: Net deferred tax assets from operating loss and tax credit carry-forwards	17,968
LESS: Net unrealized gains (losses) on available for sale securities	(211,600)
LESS: Noncontrolling interest	(30)
ADD: Adoption of Accounting Standards Update 2016-13	2,689
Common Equity Tier 1(1)	515,899
Long-term borrowings and other instruments qualifying as Tier 1	13,661
Tier 1 minority interest not included in common equity Tier 1 capital	(20)
Total Tier 1 capital	529,540
Allowance for credit losses	43,623
Subordinated debentures, net of issuance costs	20,000
Total capital	$	593,163

(1) Capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015. Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum common equity tier 1 capital ratio; those changes are being fully phased in through the end of 2021.

The following table provides a reconciliation of tangible common equity and tangible common equity excluding AOCI, each of which is used in calculating tangible book value data, to total stockholders' equity. Each of tangible common equity and tangible common equity excluding AOCI is a non-GAAP financial measure that is commonly used within the banking industry.

(Dollars in thousands)	At September 30, 2022
Total stockholders' equity	$	645,140
LESS: Goodwill	309,505
LESS: Intangible assets	25,691
Tangible common equity	309,944
LESS: AOCI	(213,080)
Tangible common equity excluding AOCI	$	523,024

Since January 1, 2016, the Company and the Bank have been required to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively composed of Common Equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not the leverage ratio. The required Common Equity Tier 1 risk-based, Tier 1 risk-based and total risk-based capital ratios with the buffer are currently 7.0%, 8.5% and 10.5%, respectively.

Based on current and expected continued profitability and subject to continued access to capital markets, we believe that the Company and the Bank will continue to meet the capital conservation buffer of 2.5% in addition to required minimum capital ratios.