SIERRA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
102
14.
REGULATORY MATTERS
(Continued)
Tier 1 Risk-Based Capital Ratio
Sierra Bancorp and subsidiary
$199,903
17.39% $198,225
20.39%
Minimum requirement for "Well-Capitalized" institutions 68,972
6.0% 58,330
6.0%
Minimum regulatory requirement
45,981
4.0% 38,887
4.0%
Bank of the Sierra
$195,174
17.01% $195,001
20.11%
Minimum requirement for "Well-Capitalized" institutions 68,843
6.0% 58,174
6.0%
Minimum regulatory requirement
45,895
4.0% 38,783
4.0%
Total Risk-Based Capital Ratio
Sierra Bancorp and subsidiary
$211,973
18.44% $210,669
21.67%
Minimum requirement for "Well-Capitalized" institutions 114,953
10.0% 97,217
10.0%
Minimum regulatory requirement
91,962
8.0% 77,773
8.0%
Bank of the Sierra
$206,736
18.02% $206,960
21.35%
Minimum requirement for "Well-Capitalized" institutions 114,739
10.0% 96,957
10.0%
Minimum regulatory requirement
91,791
8.0% 77,565
8.0%
2014
2013
Capital
Amount
Ratio
Capital
Amount
Ratio
Under current rules of the Federal Reserve Board, qualified trust preferred securities are one of several
“restricted” core capital elements which may be included in Tier 1 capital in an aggregate amount limited
to 25% of all core capital elements, net of goodwill less any associated deferred tax liability. Amounts of
restricted core capital elements in excess of these limits generally may be included in Tier 2 capital. Since
the Company had less than $15 billion in assets at December 31, 2014, under the Dodd-Frank Act the
Company will be able to continue to include its existing trust preferred securities in Tier 1 Capital to the
extent permitted by FRB guidelines.
Dividend Restrictions
The Company’s ability to pay cash dividends is dependent on dividends paid to it by the Bank, and is also
limited by state corporation law. The California General Corporation Law allows a California corporation
to pay dividends if the Company’s retained earnings equal at least the amount of the proposed dividend.
If the Company does not have sufficient retained earnings available for the proposed dividend, it may still
pay a dividend to its shareholders if immediately after giving effect to the dividend the sum of the
company’s assets (exclusive of goodwill and deferred charges) would be at least equal to 125% of its
liabilities (not including deferred taxes, deferred income and other deferred liabilities) and the current
assets of the company would be at least equal to its current liabilities, or, if the average of its earnings
before taxes on income and before interest expense for the two preceding fiscal years was less than the
average of its interest expense for the two preceding fiscal years, at least equal to 125% of its current
liabilities.
Dividends from the Bank to the Company are restricted under California law to the lesser of the Bank’s
retained earnings or the Bank’s net income for the latest three fiscal years, less dividends previously
declared during that period, or, with the approval of the Department of Business Oversight, to the greater
of the retained earnings of the Bank, the net income of the Bank for its last fiscal year, or the net income
of the Bank for its current fiscal year. As of December 31, 2014, the maximum amount available for
dividend distribution under this restriction was approximately $20,618,000.
