Regulatory Matters

3 Months Ended

Mar. 31, 2013

Regulatory Matters

NOTE (11) – Regulatory Matters

The Bank is subject to regulatory capital requirements now administered by the Office of the Comptroller of the Currency, or OCC, which is the statutory successor under the Dodd-Frank Act to the former Office of Thrift Supervision, or OTS. The capital requirements, which remain the same as when administered by the OTS, 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.

The Bank met the minimum capital requirements at March 31, 2013 and December 31, 2012 to conform to the general regulatory definition of “well-capitalized” under the prompt corrective action regulations, as well as the higher capital standards under the cease and desist orders, but it cannot be considered well capitalized while under the cease and desist order.

Actual and normally required capital amounts and ratios at March 31, 2013 and December 31, 2012, together with the higher capital requirements that the Bank is required to meet under the cease and desist order applicable to it, are presented below.

	Actual					Required for Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Regulations					Capital Requirements under Cease and Desist Order
	Amount		Ratio			Amount		Ratio			Amount		Ratios			Amount		Ratios
	(Dollars in thousands)
March 31, 2013:
Tangible Capital to adjusted total assets	$	32,674		9.00	%	$	5,446		1.50	%		N/A		N/A			N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	32,674		9.00	%	$	14,522		4.00	%	$	18,152		5.00	%	$	29,043		8.00	%
Tier 1(Core) Capital to risk weighted assets	$	32,674		13.94	%		N/A		N/A		$	14,068		6.00	%		N/A		N/A
Total Capital to risk weighted assets	$	35,698		15.22	%	$	18,758		8.00	%	$	23,447		10.00	%	$	28,137		12.00	%
December 31, 2012:
Tangible Capital to adjusted total assets	$	32,936		8.82	%	$	5,603		1.50	%		N/A		N/A			N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	32,936		8.82	%	$	14,940		4.00	%	$	18,675		5.00	%	$	29,881		8.00	%
Tier 1(Core) Capital to risk weighted assets	$	32,936		13.12	%		N/A		N/A		$	15,067		6.00	%		N/A		N/A
Total Capital to risk weighted assets	$	36,183		14.41	%	$	20,090		8.00	%	$	25,112		10.00	%	$	30,135		12.00	%