Regulatory Capital Matters

12 Months Ended

Dec. 31, 2013

Regulatory Capital Matters

Regulatory Capital Matters

Note 15 – Regulatory Capital Matters

The Bank is subject to regulatory capital requirements now administered by the OCC, which is the statutory successor under the Dodd-Frank Act to the former Office of Thrift Supervision, or OTS. The capital requirements involve quantitative measures of assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the OCC. Failure to meet capital requirements can result in regulatory action.

Prompt corrective action regulations also administered by the OCC provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

On October 30, 2013, the Bank entered into a Consent Order with the OCC that superseded the cease and desist order applicable to the Bank that had been in effect since September 2010. The Consent Order raises the minimum capital requirements to 9% for Tier 1 (Core) Capital and 13% for Total Capital to risk weighted assets.

The Bank met the minimum capital requirements at December 31, 2013 and 2012 to conform to the general regulatory definition of "well-capitalized" under the current prompt corrective action regulations, as well as the higher capital standards under the Consent Order at December 31, 2013 and the cease and desist order at December 31, 2012. However it cannot be considered well-capitalized while under the Consent Order. Actual required capital amounts and ratios at December 31, 2013 and December 31, 2012, together with the higher capital requirements that the Bank is required to meet under the Consent Order and the former cease and desist order applicable to it, are presented below.

	Actual					Required for Capital Adequacy Purposes					Capital Requirements under Consent Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2013:
Tangible Capital to adjusted total assets	$	34,035		10.24	%	$	4,986		1.50	%		N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	34,035		10.24	%	$	13,295		4.00	%	$	29,914		9.00	%
Tier 1(Core) Capital to risk weighted assets	$	34,035		15.65	%		N/A		N/A			N/A		N/A
Total Capital to risk weighted assets	$	36,845		16.95	%	$	17,394		8.00	%	$	28,286		13.00	%

	Actual					Required for Capital Adequacy Purposes					Capital Requirements under Cease and Desist Order
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2012:
Tangible Capital to adjusted total assets	$	32,936		8.82	%	$	5,603		1.50	%		N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	32,936		8.82	%	$	14,940		4.00	%	$	29,881		8.00	%
Tier 1(Core) Capital to risk weighted assets	$	32,936		13.12	%		N/A		N/A			N/A		N/A
Total Capital to risk weighted assets	$	36,183		14.41	%	$	20,090		8.00	%	$	30,135		12.00	%