Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

12 Months Ended

Dec. 31, 2019

Banking and Thrift [Abstract]

Regulatory Capital Requirements and Restrictions on Subsidiary Dividends

REGULATORY CAPITAL REQUIREMENTS AND RESTRICTIONS ON SUBSIDIARY DIVIDENDS

The Heartland banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Heartland banks’ financial statements. The regulations prescribe specific capital adequacy guidelines that involve quantitative measures of a bank’s assets, liabilities and certain off balance sheet items as calculated under regulatory accounting practices. Capital classification is also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Heartland banks to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined).

The requirements to be categorized as well-capitalized under the Tier 1 leverage capital ratio is 4% for all banks. The minimum requirement to be well-capitalized for the Tier 1 risk-based capital ratio is 8%. The total risk-based capital ratio minimum requirement to be well-capitalized remained is 10%. Management believes, as of December 31, 2019 and 2018, that the Heartland banks met all capital adequacy requirements to which they were subject.

As of December 31, 2019 and 2018, the FDIC categorized each of the Heartland banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Heartland banks must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 common equity and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since December 31, 2019, that management believes have changed each institution’s category.

The Heartland banks’ actual capital amounts and ratios are also presented in the tables below, in thousands:

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount		Ratio
As of December 31, 2019
Total Capital (to Risk-Weighted Assets)
Consolidated	$	1,388,511	13.75	%	$	807,881		8.00	%	N/A
Dubuque Bank and Trust Company	168,959		14.55		92,872			8.00		$	116,090	10.00	%
Illinois Bank & Trust	107,678		10.54		81,731			8.00		102,164		10.00
Wisconsin Bank & Trust	117,355		14.13		66,431			8.00		83,039		10.00
New Mexico Bank & Trust	157,555		12.33		102,193			8.00		127,741		10.00
Arizona Bank & Trust	75,498		11.19		53,982			8.00		67,477		10.00
Rocky Mountain Bank	53,266		13.80		30,868			8.00		38,585		10.00
Citywide Banks	240,735		13.88		138,704			8.00		173,380		10.00
Minnesota Bank & Trust	76,400		13.50		45,260			8.00		56,575		10.00
Bank of Blue Valley	145,256		14.50		80,153			8.00		100,191		10.00
Premier Valley Bank	91,257		13.21		55,273			8.00		69,091		10.00
First Bank & Trust	109,545		14.11		62,128		—	8.00		77,660		10.00

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount		Ratio
As of December 31, 2019
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	1,243,582	12.31	%	$	605,911		6.00	%	N/A
Dubuque Bank and Trust Company	159,579		13.75		69,654			6.00		$	92,872	8.00	%
Illinois Bank & Trust	103,011		10.08		61,298			6.00		81,731		8.00
Wisconsin Bank & Trust	109,939		13.24		49,824			6.00		66,431		8.00
New Mexico Bank & Trust	148,227		11.60		76,645			6.00		102,193		8.00
Arizona Bank & Trust	69,648		10.32		40,486			6.00		53,982		8.00
Rocky Mountain Bank	48,692		12.62		23,151			6.00		30,868		8.00
Citywide Banks	231,085		13.33		104,028			6.00		138,704		8.00
Minnesota Bank & Trust	70,235		12.41		33,945			6.00		45,260		8.00
Bank of Blue Valley	140,195		13.99		60,115			6.00		80,153		8.00
Premier Valley Bank	87,335		12.64		41,455			6.00		55,273		8.00
First Bank & Trust	104,914		13.51		46,596			6.00		62,128		8.00
Common Equity Tier 1 (to Risk-Weighted Assets)
Consolidated	$	1,098,428	10.88	%	$	454,433		4.50	%	N/A
Dubuque Bank and Trust Company	159,579		13.75		52,241			4.50		$	75,459	6.50	%
Illinois Bank & Trust	103,011		10.08		45,974			4.50		66,407		6.50
Wisconsin Bank & Trust	109,939		13.24		37,368			4.50		53,976		6.50
New Mexico Bank & Trust	148,227		11.60		57,484			4.50		83,032		6.50
Arizona Bank & Trust	69,648		10.32		30,365			4.50		43,860		6.50
Rocky Mountain Bank	48,692		12.62		17,363			4.50		25,080		6.50
Citywide Banks	231,085		13.33		78,021			4.50		112,697		6.50
Minnesota Bank & Trust	70,235		12.41		25,459			4.50		36,774		6.50
Bank of Blue Valley	140,195		13.99		45,086			4.50		65,124		6.50
Premier Valley Bank	87,335		12.64		31,091			4.50		44,909		6.50
First Bank & Trust	104,914		13.51		34,947		—	4.50		50,479		6.50
Tier 1 Capital (to Average Assets)
Consolidated	$	1,243,582	10.10	%	$	492,725		4.00	%	N/A
Dubuque Bank and Trust Company	159,579		9.83		64,961			4.00		$	81,202	5.00	%
Illinois Bank & Trust	103,011		10.26		40,144			4.00		50,180		5.00
Wisconsin Bank & Trust	109,939		10.76		40,863			4.00		51,078		5.00
New Mexico Bank & Trust	148,227		9.11		65,076			4.00		81,345		5.00
Arizona Bank & Trust	69,648		9.87		28,235			4.00		35,293		5.00
Rocky Mountain Bank	48,692		9.22		21,132			4.00		26,415		5.00
Citywide Banks	231,085		10.66		86,732			4.00		108,416		5.00
Minnesota Bank & Trust	70,235		10.51		26,740			4.00		33,426		5.00
Bank of Blue Valley	140,195		11.07		50,638			4.00		63,297		5.00
Premier Valley Bank	87,335		10.43		33,487			4.00		41,859		5.00
First Bank & Trust	104,914		10.25		40,941			4.00		51,177		5.00

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of December 31, 2018
Total Capital (to Risk-Weighted Assets)
Consolidated	$	1,200,947	13.72	%	$	700,490	8.00	%	N/A
Dubuque Bank and Trust Company	165,687		14.10		93,975		8.00		$	117,469	10.00	%
Illinois Bank & Trust	74,657		13.02		45,884		8.00		57,355		10.00
Wisconsin Bank & Trust	115,318		13.90		66,351		8.00		82,939		10.00
New Mexico Bank & Trust	150,261		12.92		93,063		8.00		116,328		10.00
Arizona Bank & Trust	63,606		11.90		42,766		8.00		53,458		10.00
Rocky Mountain Bank	51,982		14.26		29,160		8.00		36,449		10.00
Citywide Banks	235,691		13.46		140,117		8.00		175,146		10.00
Minnesota Bank & Trust	69,002		12.99		42,493		8.00		53,117		10.00
Bank of Blue Valley(1)	72,520		16.14		35,937		8.00		44,922		10.00
Premier Valley Bank	85,710		13.71		50,017		8.00		62,521		10.00
First Bank & Trust	102,795		13.48		61,004		8.00		76,255		10.00
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	$	1,064,669	12.16	%	$	525,368	6.00	%	N/A
Dubuque Bank and Trust Company	155,391		13.23		70,482		6.00		$	93,975	8.00	%
Illinois Bank & Trust	70,470		12.29		34,413		6.00		45,884		8.00
Wisconsin Bank & Trust	108,193		13.04		49,763		6.00		66,351		8.00
New Mexico Bank & Trust	141,161		12.13		69,797		6.00		93,063		8.00
Arizona Bank & Trust	59,993		11.22		32,075		6.00		42,766		8.00
Rocky Mountain Bank	48,428		13.29		21,870		6.00		29,160		8.00
Citywide Banks	226,645		12.94		105,088		6.00		140,117		8.00
Minnesota Bank & Trust	63,633		11.98		31,870		6.00		42,493		8.00
Bank of Blue Valley(1)	67,975		15.13		26,953		6.00		35,937		8.00
Premier Valley Bank	82,321		13.17		37,513		6.00		50,017		8.00
First Bank & Trust	100,884		13.23		45,753		6.00		61,004		8.00
Common Equity Tier 1 (to Risk Weighted Assets)
Consolidated	$	933,755	10.66	%	$	394,026	4.50	%	N/A
Dubuque Bank and Trust Company	155,391		13.23		52,861		4.50		$	76,355	6.50	%
Illinois Bank & Trust	70,470		12.29		25,810		4.50		37,281		6.50
Wisconsin Bank & Trust	108,193		13.04		37,323		4.50		53,910		6.50
New Mexico Bank & Trust	141,161		12.13		52,348		4.50		75,613		6.50
Arizona Bank & Trust	59,993		11.22		24,056		4.50		34,748		6.50
Rocky Mountain Bank	48,428		13.29		16,402		4.50		23,692		6.50
Citywide Banks	226,645		12.94		78,816		4.50		113,845		6.50
Minnesota Bank & Trust	63,633		11.98		23,903		4.50		34,526		6.50
Bank of Blue Valley(1)	67,975		15.13		20,215		4.50		29,199		6.50
Premier Valley Bank	82,321		13.17		28,134		4.50		40,639		6.50
First Bank & Trust	100,884		13.23		34,315		4.50		49,566		6.5
Tier 1 Capital (to Average Assets)
Consolidated	$	1,064,669	9.73	%	$	437,858	4.00	%	N/A
Dubuque Bank and Trust Company	155,391		9.97		62,317		4.00		$	77,897	5.00	%

	Actual		For Capital Adequacy Purposes		To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
Illinois Bank & Trust	70,470	8.56	32,941	4.00	41,177	5.00
Wisconsin Bank & Trust	108,193	10.47	41,317	4.00	51,647	5.00
New Mexico Bank & Trust	141,161	9.58	58,958	4.00	73,697	5.00
Arizona Bank & Trust	59,993	9.20	26,089	4.00	32,611	5.00
Rocky Mountain Bank	48,428	9.82	19,730	4.00	24,662	5.00
Citywide Banks	226,645	10.53	86,129	4.00	107,662	5.00
Minnesota Bank & Trust	63,633	10.00	25,445	4.00	31,806	5.00
Bank of Blue Valley(1)	67,975	11.31	24,041	4.00	30,052	5.00
Premier Valley Bank	82,321	10.53	31,285	4.00	39,106	5.00
First Bank & Trust	100,884	10.13	39,846	4.00	49,807	5.00
(1) Morrill & Janes Bank and Trust Company changed its name to Bank of Blue Valley upon the acquisition of Blue Valley Ban Corp. on May 10, 2019.

The ability of Heartland to pay dividends to its stockholders is dependent upon dividends paid by its subsidiaries. The Heartland banks are subject to certain statutory and regulatory restrictions on the amount they may pay in dividends. To maintain acceptable capital ratios for the Banks, certain portions of their retained earnings are not available for the payment of dividends. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $533.9 million as of December 31, 2019, under the most restrictive minimum capital requirements. Retained earnings that could be available for the payment of dividends to Heartland totaled approximately $331.5 million as of December 31, 2019, under the capital requirements to remain well capitalized.