Regulatory Capital Requirements

12 Months Ended

Jun. 30, 2019

Regulatory Capital Requirements [Abstract]

(17) Regulatory Capital Requirements

Deposits at the Bank are insured up to standard limits of coverage provided by the Deposit Insurance Fund (DIF) of the FDIC. The Bank is a New Jersey state chartered savings bank and is subject to comprehensive regulation, supervision and periodic examinations by the FDIC and by the NJDOBI. The Company is regulated by the FRB.

FDIC regulations require banks to maintain minimum levels of regulatory capital. Under the regulations in effect at June 30, 2019, the Bank and the Company are required to maintain (a) a minimum leverage ratio of Tier 1 capital to total adjusted assets of 4.0%, and (b) minimum ratios of common equity Tier 1, Tier 1 and total capital to risk-weighted assets of 6.0% and 8.0%, respectively.

Under its prompt corrective action regulations, the FDIC is required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution. Such actions could have a direct material effect on the institution's financial statements. The regulations establish a framework for the classification of savings banks into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. Generally, an institution is considered well capitalized if it has a leverage (Tier 1) capital ratio of at least 5.0%; a common equity Tier 1 capital to risk-based assets ratio of 6.5% or more; a Tier 1 risk-based capital ratio of at least 8.0%; and a total risk-based capital ratio of at least 10%.

On January 1, 2015, a final rule issued by the Federal Deposit Insurance Corporation and the other federal bank regulatory agencies became effective which revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio of 4%, increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain "available-for-sale" securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out is exercised and requires more stringent treatment of mortgage servicing assets and certain deferred tax assets. The rule limits a banking organization's capital distributions and certain discretionary bonus payments if the banking organization does not hold a "capital conservation buffer" consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The capital conservation buffer as of June 30, 2019 is 2.50% and is fully phased in.

The foregoing capital ratios are based in part on specific quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the FDIC about capital components, risk weightings and other factors.

Management believes that, as of June 30, 2019, the Bank meets all capital adequacy requirements to which it is subject. Further, the most recent FDIC notification categorized the Bank as a well-capitalized institution under the prompt corrective action regulations. There have been no conditions or events since that notification that management believes have changed the Bank’s capital classification.

The following is a summary of the Company’s actual capital amounts and ratios as of June 30, 2019 and 2018, compared to the FRB minimum capital adequacy requirements.

	June 30, 2019
	Actual						Required
	Amount			Rate			Amount		Rate
	(Dollars in thousands)
Common Equity Tier 1 ("CET1") (to risk weighted assets)		$	529,692		14.57	%	$	163,558		4.50	%
Tier 1 capital (to risk-weighted assets)			529,692		14.57			218,078		6.00
Total capital (to risk-weighted assets)			558,288		15.36			290,770		8.00
Tier 1 Leverage capital (to average assets)			529,692		12.98			163,288		4.00
Capital conservation buffer			267,518		7.36			90,866		2.500

	June 30, 2018
	Actual					Required
	Amount		Rate			Amount		Rate
	(Dollars in thousands)
Common Equity Tier 1 ("CET1") (to risk weighted assets)	$	548,122		14.82	%	$	166,458		4.50	%
Tier 1 capital (to risk-weighted assets)		548,122		14.82			221,945		6.00
Total capital (to risk-weighted assets)		578,685		15.64			295,926		8.00
Tier 1 Leverage capital (to average assets)		548,122		13.25			165,465		4.00
Capital conservation buffer		282,759		7.64			69,358		1.875

The following is a summary of the Bank’s actual capital amounts and ratios as of June 30, 2019 and 2018, compared to the FDIC minimum capital adequacy requirements and the FDIC requirements for classification as a well-capitalized institution.

	June 30, 2019
	Actual					Required					Well-Capitalized
	Amount		Rate			Amount		Rate			Amount		Rate
	(Dollars in thousands)
Common Equity Tier 1 ("CET1") (to risk weighted assets)	$	485,683		13.36	%	$	163,533		4.50	%	$	236,215		6.50	%
Tier 1 capital (to risk-weighted assets)		485,683		13.36			218,044		6.00			290,726		8.00
Total capital (to risk-weighted assets)		514,279		14.15			290,726		8.00			363,407		10.00
Tier 1 Leverage capital (to average assets)		485,683		11.90			163,258		4.00			204,073		5.00
Capital conservation buffer		223,553		6.15			90,582		2.500

	June 30, 2018
	Actual					Required					Well-Capitalized
	Amount		Rate			Amount		Rate			Amount		Rate
	(Dollars in thousands)
Common Equity Tier 1 ("CET1") (to risk weighted assets)	$	470,857		12.73	%	$	166,431		4.50	%	$	240,401		6.50	%
Tier 1 capital (to risk-weighted assets)		470,857		12.73			221,908		6.00			295,878		8.00
Total capital (to risk-weighted assets)		501,419		13.56			295,878		8.00			369,847		10.00
Tier 1 Leverage capital (to average assets)		470,857		11.38			165,438		4.00			206,797		5.00
Capital conservation buffer		205,541		5.56			69,346		1.875

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958572-112826

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1D
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958573-112826

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958570-112826

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958569-112826

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958577-112826

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1F
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958575-112826

Reference 7: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1E
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958574-112826

Reference 8: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=117337116&loc=SL5958568-112826

Reference 9: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1H
-URI http://asc.fasb.org/extlink&oid=117337116&loc=d3e65071-112826

+ Details

Oritani Financial Corp 10-K