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Regulatory Restrictions and Capital Ratios
 12 Months Ended
Dec. 31, 2012
Regulatory Capital Requirements [Abstract]  
Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 19: REGULATORY RESTRICTIONS AND CAPITAL RATIOS

 

The Company and the Bank are subject to various regulatory capital requirements and policies administered by federal and State of Alabama banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory – and possibly additional discretionary – actions by regulators that, if undertaken, could have a material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company's and Bank's assets, liabilities, and certain off–balance sheet items as calculated under regulatory accounting practices. The Company's and Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors, including anticipated capital needs, and the Federal Reserve is encouraging the maintenance of higher levels of capital well above the minimum ratios and is expected to propose higher capital requirements to implement the Dodd-Frank Act and Basel III capital requirements. Supervisory assessments of capital adequacy may differ significantly from conclusions based solely upon risk-based capital ratios. Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table below) Tier 1 leverage capital ratio, Tier 1 risk-based ratio and total risk-based ratio. 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 Bank is “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. Management has not received any notification from the Company's or the Bank's regulators that  changes the Bank's regulatory capital status.

 

The actual capital amounts and ratios and the aforementioned minimums as of December 31, 2012 and 2011 are presented below.

        Minimum for capital Minimum to be
  Actual adequacy purposes well capitalized
(Dollars in thousands) Amount Ratio   Amount Ratio   Amount Ratio 
At December 31, 2012:                 
Tier 1 Leverage Capital                 
 Auburn National Bancorporation$71,982 9.58% $30,069 4.00%  N/A N/A 
 AuburnBank 71,277 9.50   30,011 4.00  $37,514 5.00%
                   
Tier 1 Risk-Based Capital                 
 Auburn National Bancorporation$71,982 16.20% $17,768 4.00%  N/A N/A 
 AuburnBank 71,277 16.02   17,794 4.00  $26,691 6.00%
                   
Total Risk-Based Capital                 
 Auburn National Bancorporation$77,558 17.46% $35,536 8.00%  N/A N/A 
 AuburnBank 76,853 17.28   35,588 8.00  $44,485 10.00%
At December 31, 2011:                 
Tier 1 Leverage Capital                 
 Auburn National Bancorporation$68,220 8.82% $30,927 4.00%  N/A N/A 
 AuburnBank 67,542 8.75   30,868 4.00  $38,585 5.00%
                   
Tier 1 Risk-Based Capital                 
 Auburn National Bancorporation$68,220 15.40% $17,715 4.00%  N/A N/A 
 AuburnBank 67,542 15.23   17,742 4.00  $26,614 6.00%
                   
Total Risk-Based Capital                 
 Auburn National Bancorporation$73,800 16.66% $35,430 8.00%  N/A N/A 
 AuburnBank 73,122 16.49   35,485 8.00  $44,356 10.00%

Dividends paid by the Bank are a principal source of funds available to the Company for payment of dividends to its stockholders and for other needs. Applicable federal and state statutes and regulations impose restrictions on the amounts of dividends that may be declared by the subsidiary bank. State law and Federal Reserve policy restrict the Bank from declaring dividends in excess of the sum of the current year's earnings plus the retained net earnings from the preceding two years without prior approval. In addition to the formal statutes and regulations, regulatory authorities also consider the adequacy of the Bank's total capital in relation to its assets, deposits, and other such items. Capital adequacy considerations could further limit the availability of dividends from the Bank. At December 31, 2012, the Bank could have declared additional dividends of approximately $9.0 million without prior approval of regulatory authorities. As a result of this limitation, approximately $67.5 million of the Company's investment in the Bank was restricted from transfer in the form of dividends.