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13. Regulatory Matters

12 Months Ended

Dec. 31, 2012

Banking and Thrift [Abstract]

Regulatory Matters

(13) Regulatory Matters

The Company is 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 Company must meet specific capital guidelines that involve quantitative measures of the assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The 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 Company to maintain minimum amounts and ratios of capital in relation to both on- and off-balance sheet items at various risk weights. Total capital consists of two tiers of capital. Tier 1 Capital includes common shareholders’ equity and trust preferred securities less adjustments for intangible assets. Tier 2 Capital consists of the allowance for loan losses, up to 1.25% of risk-weighted assets and other adjustments.  Management believes, as of December 31, 2012, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2012, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There have been no conditions or events since that notification that management believes have changed the Bank’s category.

The Company’s and the Bank’s actual capital amounts and ratios are presented below:

(Dollars in thousands)
		Actual								For Capital Adequacy Purposes								To Be Well Capitalized Under Prompt Corrective Action Provisions
		Amount				Ratio				Amount				Ratio				Amount				Ratio
As of December 31, 2012:
Total Capital (to Risk-Weighted Assets)
Consolidated		$	121,246				17.34	%			55,928				8.00	%			N/A				N/A
Bank		$	117,453				16.84	%			55,784				8.00	%			69,730				10.00	%
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated		$	112,135				16.04	%			27,964				4.00	%			N/A				N/A
Bank		$	108,379				15.54	%			27,892				4.00	%			41,838				6.00	%
Tier 1 Capital (to Average Assets)
Consolidated		$	112,135				11.12	%			40,342				4.00	%			N/A				N/A
Bank		$	108,379				10.76	%			40,302				4.00	%			50,377				5.00	%
As of December 31, 2011:
Total Capital (to Risk-Weighted Assets)
Consolidated		$	129,495				17.38	%			59,607				8.00	%			N/A				N/A
Bank		$	111,807				15.04	%			59,463				8.00	%			74,329				10.00	%
Tier 1 Capital (to Risk-Weighted Assets)
Consolidated		$	119,950				16.10	%			29,804				4.00	%			N/A				N/A
Bank		$	102,264				13.76	%			29,731				4.00	%			44,597				6.00	%
Tier 1 Capital (to Average Assets)
Consolidated		$	119,950				11.06	%			43,379				4.00	%			N/A				N/A
Bank		$	102,264				9.44	%			43,328				4.00	%			54,160				5.00	%

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The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

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-Publisher FASB

-Name Accounting Standards Codification

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-Publisher AICPA

-Name Audit and Accounting Guide (AAG)

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-Paragraph 15, 16, 17

-IssueDate 2006-05-01

-Chapter 17

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.



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