Regulatory Matters

9 Months Ended

Sep. 30, 2014

Regulatory Matters

Regulatory Matters

NOTE (8) — Regulatory Matters

Effective September 9, 2010, the Company and the Bank agreed to the issuance of cease and desist orders (the “Orders”) by the Office of Thrift Supervision, which was the regulatory predecessor of the Office of the Comptroller of the Currency (“OCC”).  The Order applicable to the Company prohibits the Company from paying dividends to its stockholders without the prior written approval of the FRB, which is now the federal regulator for savings and loan holding companies.  In addition, the Company is not permitted to incur, issue, renew, repurchase, make payments on or increase any debt or redeem any capital stock without prior notice to and receipt of written notice of non-objection from the FRB.

Effective October 30, 2013, the Bank entered into a Consent Order with the OCC, which superseded the Order applicable to the Bank.  The Bank’s capital requirements are administered by the OCC and 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.

As part of the Consent Order, the Bank is required to maintain a Tier 1 (Core) Capital to Adjusted Total Assets ratio of at least 9% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 13%, both of which ratios are greater than the respective 4% and 8% levels for such ratios that are generally required under OCC regulations.

The Bank met the minimum capital requirements under the Consent Order at September 30, 2014 and December 31, 2013.  Actual and required capital amounts and ratios at September 30, 2014 and December 31, 2013, together with the higher capital requirements that the Bank is required to meet under the Consent 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)
September 30, 2014:
Tangible Capital to adjusted total assets	$	36,606	10.84%	$	5,066	1.50%	N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	36,606	10.84%	$	13,510	4.00%	$	30,398	9.00%
Total Capital to risk weighted assets	$	39,614	16.89%	$	18,764	8.00%	$	30,492	13.00%
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%
Total Capital to risk weighted assets	$	36,845	16.95%	$	17,394	8.00%	$	28,286	13.00%