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13. Regulatory Matters
 12 Months Ended
Dec. 31, 2013
Banking and Thrift [Abstract]  
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, 2013, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

 

As of December 31, 2013, 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.

 

On July 2, 2013, the FRB approved its final rule on the Basel III capital standards, which implement changes to the regulatory capital framework for banking organizations.  Capital levels at the Company and the Bank currently exceed the new capital requirements, which will be effective on January 1, 2015.

 

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, 2013:                      
                       
Total Capital (to Risk-Weighted Assets)                      
Consolidated $ 114,185   16.14%   56,582   8.00%   N/A   N/A
Bank $ 110,935   15.73%   56,412   8.00%   70,515   10.00%
Tier 1 Capital (to Risk-Weighted Assets)                        
Consolidated $ 104,890   14.83%   28,291   4.00%   N/A   N/A
Bank $ 101,733   14.43%   28,206   4.00%   42,309   6.00%
Tier 1 Capital (to Average Assets)                        
Consolidated $ 104,890   10.08%   41,622   4.00%   N/A   N/A
Bank $ 101,733   9.79%   41,584   4.00%   51,981   5.00%
                         
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%