CASH 2018 Annual Report

152 Company Bank Minimum Requirement For Capital Adequacy Purposes Minimum Requirement To Be Well Capitalized Under Prompt Corrective Action Provisions September 30, 2018 Tier 1 leverage ratio 8.50% 9.75% 4.00% 5.00% Common equity Tier 1 capital ratio 10.56 12.50 4.50 6.50 Tier 1 capital ratio 10.97 12.56 6.00 8.00 Total qualifying capital ratio 13.18 12.89 8.00 10.00 September 30, 2017 Tier 1 leverage ratio 7.64% 9.64% 4.00% 5.00% Common equity Tier 1 capital ratio 13.97 18.22 4.50 6.50 Tier 1 capital ratio 14.46 18.22 6.00 8.00 Total qualifying capital ratio 18.41 18.59 8.00 10.00 The following table provides a reconciliation of the amounts included in the table above for the Company. Standardized Approach (1) September 30, 2018 (Dollars in Thousands) Total stockholders' equity $ 747,726 Adjustments: LESS: Goodwill, net of associated deferred tax liabilities 299,456 LESS: Certain other intangible assets 64,716 LESS: Net unrealized gains (losses) on available-for-sale securities (33,114) LESS: Non-controlling interest 3,574 LESS: Unrealized currency gains (losses) 3 Common Equity Tier 1 (1) 413,091 Long-term debt and other instruments qualifying as Tier 1 13,661 Tier 1 minority interest not included in common equity tier 1 capital 2,118 Total Tier 1 capital 428,870 Allowance for loan and lease losses 13,185 Subordinated debentures (net of issuance costs) 73,491 Total qualifying capital 515,546 (1) The Basel III Capital Rules revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio. Those changes became effective for the Company on January 1, 2015, and are being fully phased in through the end of 2021. The capital ratios were determined using the Basel III Capital Rules that became effective on January 1, 2015. Under the Basel III Capital Rules, 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. On January 1, 2018, the Company and Bank were in compliance with the capital conservation buffer requirement. The capital conservation buffer was subject to a three year phase-in and will increase the three risk-based capital ratios by 0.625% for 2019, at which point the Common Equity Tier 1 risk- based, Tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.