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REGULATORY CAPITAL REQUIREMENTS
 12 Months Ended
Dec. 31, 2012
Regulatory Capital Requirements [Abstract]  
Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 17. REGULATORY CAPITAL REQUIREMENTS

 

Shore Bancshares, Inc. and each of the Banks are subject to various regulatory capital requirements administered by the federal banking agencies. 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 the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Banks must meet specific capital guidelines that involve quantitative measures of the Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

Quantitative measures established by regulation to ensure capital adequacy require the Banks to maintain amounts and ratios (set forth in the table below) of Tier 1 and total capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (leverage ratio). As of December 31, 2012, management believes that Shore Bancshares, Inc. and the Banks met all capital adequacy requirements to which they are subject.

 

As of December 31, 2012 and 2011, the most recent notification from the Federal Deposit Insurance Corporation categorized the Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum Tier 1 risk-based and total risk-based capital ratios, and Tier 1 leverage ratios. Management believes that there are no conditions or events since that notification that have changed the well-capitalized category of Shore Bancshares, Inc. or either of the Banks.

 

The minimum ratios for capital adequacy purposes are 4.00%, 8.00% and 4.00% for the Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively. To be categorized as well capitalized, a bank must maintain minimum ratios of 6.00%, 10.00% and 5.00% for its Tier 1 risk-based capital, total risk-based capital and leverage ratios, respectively. Shore Bancshares, Inc., as a financial holding company, is subject to the well-capitalized requirement.

 

The following tables present the capital amounts and ratios for Shore Bancshares, Inc., Talbot Bank and CNB as of December 31, 2012 and 2011.

 

 

 

December 31, 2012

(Dollars in thousands)

   Tier 1
Capital		     Total
Risk-
Based
Capital		     Net
Risk-
Weighted
Assets		     Adjusted
Average
Total Assets		     Tier 1
Risk-Based
Capital
Ratio		     Total
Risk-Based
Capital
Ratio		     Tier 1
Leverage
Ratio		  
Company   $ 97,049     $ 107,208     $ 805,108     $ 1,166,865       12.05 %     13.32 %     8.32 %
Talbot Bank     53,496       59,847       501,612       713,472       10.66       11.93       7.50  
CNB     41,976       45,780       303,627       450,109       13.82       15.08       9.33  
                                                         

 

December 31, 2011
(Dollars in thousands)		   Tier 1
Capital		     Total
Risk-
Based
Capital		     Net
Risk-
Weighted
Assets		     Adjusted
Average
Total Assets		     Tier 1
Risk-Based
Capital
Ratio		     Total
Risk-Based
Capital
Ratio		     Tier 1
Leverage
Ratio		  
Company   $ 106,276     $ 116,917     $ 846,936     $ 1,143,990       12.55 %     13.80 %     9.29 %
Talbot Bank     63,667       70,604       551,202       706,984       11.55       12.81       9.01  
CNB     41,542       45,246       295,232       431,968       14.07       15.33       9.62  

 

Federal and state laws and regulations applicable to banks and their holding companies impose certain restrictions on dividend payments by the Banks, as well as restricting extensions of credit and transfers of assets between the Banks and Shore Bancshares, Inc. Talbot Bank is currently prohibited from paying dividends to Shore Bancshares, Inc. without the prior consent of its banking regulators. CNB paid dividends of $2.3 million to Shore Bancshares, Inc. during 2012. At December 31, 2012, CNB could have paid additional dividends to Shore Bancshares, Inc. of approximately $2.7 million without the prior consent and approval of its regulatory agencies. Shore Bancshares, Inc. had no outstanding receivables from subsidiaries at December 31, 2012 or 2011.