Annual report pursuant to Section 13 and 15(d)

REGULATORY MATTERS AND CAPITAL

v3.6.0.2
REGULATORY MATTERS AND CAPITAL
 12 Months Ended
Dec. 31, 2016
Regulatory Capital Requirements [Abstract]  
REGULATORY MATTERS AND CAPITAL
REGULATORY MATTERS AND CAPITAL
 
Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds. Management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses, yet allow management to effectively leverage its capital to maximize return to shareholders. 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 financial statements of the Company and the Bank. Under capital adequacy guidelines and the regulatory framework for PCA, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. PCA provisions are not applicable to financial holding companies and bank holding companies, but only to their bank subsidiaries.
 
As of December 31, 2016, the most recent notification from the Federal Reserve Bank categorized the Bank as “well capitalized” under the regulatory framework for PCA. To be categorized as “well-capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage, and common equity Tier 1 ratios as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the Bank’s category.
 
The Company and the Bank’s capital amounts and ratios are also presented in the following table at December 31, 2016 and 2015 (dollars in thousands):
 
 
Actual
 
Required for Capital
Adequacy Purposes
 
Required in Order to Be
Well Capitalized Under
PCA
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
As of December 31, 2016
 
 
 

 
 

 
 

 
 

 
 

Common equity Tier 1 capital to risk weighted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
$
699,728

 
9.72
%
 
$
324,035

 
4.50
%
 
NA

 
NA

Union Bank & Trust
901,783

 
12.58
%
 
322,531

 
4.50
%
 
465,878

 
6.50
%
Tier 1 capital to risk weighted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
790,228

 
10.97
%
 
432,047

 
6.00
%
 
NA

 
NA

Union Bank & Trust
901,783

 
12.58
%
 
430,042

 
6.00
%
 
573,389

 
8.00
%
Total capital to risk weighted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
976,145

 
13.56
%
 
576,062

 
8.00
%
 
NA

 
NA

Union Bank & Trust
939,700

 
13.11
%
 
573,390

 
8.00
%
 
716,737

 
10.00
%
Tier 1 capital to average adjusted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
790,228

 
9.87
%
 
320,316

 
4.00
%
 
NA

 
NA

Union Bank & Trust
901,783

 
11.31
%
 
319,046

 
4.00
%
 
398,807

 
5.00
%
As of December 31, 2015
 

 
 

 
 

 
 

 
 

 
 

Common equity Tier 1 capital to risk weighted assets:
 
 
 
 
 
 
 
 
 
 
 
Consolidated
$
691,195

 
10.55
%
 
$
294,823

 
4.50
%
 
NA

 
NA

Union Bank & Trust
751,992

 
11.52
%
 
293,747

 
4.50
%
 
424,301

 
6.50
%
Tier 1 capital to risk weighted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
781,695

 
11.93
%
 
393,141

 
6.00
%
 
NA

 
NA

Union Bank & Trust
751,992

 
11.52
%
 
391,663

 
6.00
%
 
522,217

 
8.00
%
Total capital to risk weighted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
816,041

 
12.46
%
 
523,943

 
8.00
%
 
NA

 
NA

Union Bank & Trust
786,339

 
12.05
%
 
522,051

 
8.00
%
 
652,563

 
10.00
%
Tier 1 capital to average adjusted assets:
 

 
 

 
 

 
 

 
 

 
 

Consolidated
781,695

 
10.68
%
 
292,770

 
4.00
%
 
NA

 
NA

Union Bank & Trust
751,992

 
10.31
%
 
291,752

 
4.00
%
 
364,691

 
5.00
%

 
In July 2013, the FRB issued a final rule that makes technical changes to its market risk capital rules to align them with the Basel III regulatory capital framework and meet certain requirements of the Dodd-Frank Act. The phase-in period for the final rules began on January 1, 2015, with full compliance with the final rules to be phased in by January 1, 2019. Refer to Item 7. – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” section “Capital Resources” in this Form 10-K for additional information.