(19)	REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the OCC. 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 Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines 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 Bank to maintain minimum amounts and ratios (set forth in the table below) of total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined) and tangible capital to adjusted total assets (as defined). Management believes, as of December 31, 2011, that the Bank meets all capital adequacy requirements to which it is subject.

As of December 31, 2011, the most recent notification from the OCC 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 I risk-based, and Tier I leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the institution’s category.

The actual capital amounts and ratios are also presented in the following table. No amounts were deducted from capital for interest-rate risk in either year.


											Minimum
											To Be Well
						Minimum					Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes:					Action Provisions:
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011:
Total capital (to risk weighted assets)	$	46,018		17.05	%	$	21,597		8.00	%	$	26,996		10.00	%
Tier I capital (to risk weighted assets)	$	43,494		16.11	%		N/A				$	16,197		6.00	%
Tier I capital (to adjusted total assets)	$	43,494		10.06	%	$	17,302		4.00	%	$	21,627		5.00	%
Tangible capital (to adjusted total assets)	$	43,494		10.06	%	$	6,488		1.50	%		N/A

As of December 31, 2010:
Total capital (to risk weighted assets)	$	43,607		15.54	%	$	22,448		8.00	%	$	28,060		10.00	%
Tier I capital (to risk weighted assets)	$	41,626		14.83	%		N/A				$	16,836		6.00	%
Tier I capital (to adjusted total assets)	$	41,626		9.32	%	$	17,866		4.00	%	$	22,332		5.00	%
Tangible capital (to adjusted total assets)	$	41,626		9.32	%	$	6,700		1.50	%		N/A