XML 121 R21.htm IDEA: XBRL DOCUMENT v2.4.0.8
Stockholders' Equity and Regulatory Requirements
 12 Months Ended
Dec. 31, 2013
Stockholders' Equity [Abstract]  
STOCKHOLDERS' EQUITY
Note 14 — Stockholders’ Equity and Regulatory Requirements
 
On January 12, 2009, the Corporation issued $10 million in nonvoting senior preferred stock to the U.S. Department of Treasury under the Capital Purchase Program. As part of the transaction, the Corporation also issued warrants to the U.S. Treasury to purchase 173,410 shares of common stock of the Corporation at an exercise price of $8.65 per share. As a result of the successful completion of a rights offering in October 2009, the number of shares underlying the warrants held by the U.S. Treasury was reduced to 86,705 shares, or 50 percent of the original 173,410 shares as outlined by the provisions of the Capital Purchase Program.
 
On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”). Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the SBLF Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provides the Corporation with approximately $1.25 million additional Tier 1 capital. The capital received under the program will allow the Corporation to continue to serve its small business clients through the commercial lending program.
 
On December 7, 2011, the Corporation repurchased the warrants issued on January 12, 2009 to the U.S. Treasury as part of its participation in the U.S. Treasury’s TARP Capital Purchase Program. In the repurchase, the Corporation paid the U.S. Treasury $245,000 for the warrants.
 
Federal Deposit Insurance Corporation (“FDIC”) and the Board of Governors of the Federal Reserve System (“FRB”) regulations require banks to maintain minimum levels of regulatory capital. Under the regulations in effect at December 31, 2013 (but subject to the enhanced requirement described below), the Bank was required to maintain (i) a minimum leverage ratio of Tier I capital to total adjusted assets of 4.00 percent, and (ii) minimum ratios of Tier I and total capital to risk-weighted assets of 4.00 percent and 8.00 percent, respectively.
 
Under its prompt corrective action regulations, the regulators are required to take certain supervisory 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 financial institutions 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 I) capital ratio of at least 5.00 percent; a Tier I risk-based capital ratio of at least 6.00 percent; and a total risk-based capital ratio of at least 10.00 percent.
 
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 regulators about capital components, risk weightings and other factors.
 
At December 31, 2013, management believes that the Bank and the Parent Corporation met all capital adequacy requirements to which they are subject.
 
The following is a summary of the Bank’s and the Parent Corporation’s actual capital amounts and ratios as of December 31, 2013 and 2012, compared to the FRB and FDIC minimum capital adequacy requirements and the FRB and FDIC requirements for classification as a well-capitalized institution.
 
 
 
 
Union Center
National Bank
 
Minimum
Capital Adequacy
 
For Classification
Under Corrective
Action Plan
as Well Capitalized
 
 
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
 
 
 
(Dollars in Thousands)
 
December 31, 2013
     Leverage (Tier 1)
     capital
 
$
159,431
 
9.69
%
 
$
65,813
 
4.00
%
 
$
82,266
 
5.00
%
 
Risk-Based
     Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1
 
$
159,431
 
12.10
%
 
$
52,704
 
4.00
%
 
$
79,057
 
6.00
%
 
Total
 
 
169,974
 
12.91
%
 
 
105,329
 
8.00
%
 
 
131,661
 
10.00
%
 
December 31, 2012
     Leverage (Tier 1)
     capital
 
$
143,294
 
8.99
%
 
$
63,757
 
4.00
%
 
$
79,696
 
5.00
%
 
Risk-Based
     Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1
 
$
143,294
 
11.35
%
 
$
50,500
 
4.00
%
 
$
75,750
 
6.00
%
 
Total
 
 
153,776
 
12.18
%
 
 
101,002
 
8.00
%
 
 
126,253
 
10.00
%
 
 
 
 
Parent Corporation
 
Minimum Capital
Adequacy
 
For Classification
as Well Capitalized
 
 
 
Amount
 
Ratio
 
Amount
 
Ratio
 
Amount
 
Ratio
 
 
 
(Dollars in Thousands)
 
December 31, 2013
     Leverage (Tier 1)
     capital
 
$
159,316
 
9.69
%
 
$
65,765
 
4.00
%
 
$
N/A
 
N/A
%
 
Risk-Based
     Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1
 
$
159,316
 
12.10
%
 
$
52,666
 
4.00
%
 
$
N/A
 
N/A
%
 
Total
 
 
169,894
 
12.90
%
 
 
105,361
 
8.00
%
 
 
N/A
 
N/A
 
 
December 31, 2012
     Leverage (Tier 1)
     capital
 
$
143,824
 
9.02
%
 
$
63,780
 
4.00
%
 
$
N/A
 
N/A
%
 
Risk-Based
     Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1
 
$
143,824
 
11.39
%
 
$
50,509
 
4.00
%
 
$
N/A
 
N/A
%
 
Total
 
 
154,271
 
12.22
%
 
 
100,996
 
8.00
%
 
 
N/A
 
N/A
 
 
 
The Corporation issued $5.2 million of subordinated debentures in 2003. These securities are included as a component of Tier 1 Capital for regulatory purposes.