Regulatory Capital Requirements and Other Regulatory Matters

12 Months Ended

Dec. 31, 2011

Regulatory Capital Requirements and Other Regulatory Matters

Regulatory Capital Requirements and Other Regulatory Matters

2. Regulatory Capital Requirements and Other Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. 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 Company’s and the Bank’s 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 the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification 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 capital in order to meet certain capital ratios to be considered adequately capitalized or well capitalized under the regulatory framework for prompt corrective action.  As of the most recent formal notification from the Federal Reserve, the Bank was categorized as “well capitalized”. There are no conditions or events since that notification that management believes have changed the Bank’s categorization.  As defined in applicable regulations and set forth in the table below, at December 31, 2011, the Bank continues to exceed the “well capitalized” standards for Tier I capital to adjusted tangible assets of 5.00%, Tier I risk-based capital to risk-weighted assets of 6.00% and total capital to risk-weighted assets of 10.00%.

The Company’s and Bank’s actual capital amounts and ratios are presented in the table below:

	Actual				Minimum Required for Capital Adequacy Purposes				Required to be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(dollars in thousands)
At December 31, 2011
Tier 1 Capital (to adjusted tangible assets)
Bank	$	88,793	9.44	%	$	37,640	4.00	%	$	47,050	5.00	%
Consolidated	89,396		9.50	%	37,630		4.00	%	N/A		N/A
Tier 1 Risk-Based Capital (to risk-weighted assets)
Bank	88,793		11.68	%	30,408		4.00	%	45,611		6.00	%
Consolidated	89,396		11.69	%	30,590		4.00	%	N/A		N/A
Total Capital (to risk-weighted assets)
Bank	97,378		12.81	%	60,815		8.00	%	76,019		10.00	%
Consolidated	97,918		12.80	%	61,180		8.00	%	N/A		N/A
At December 31, 2010
Tier 1 Capital (to adjusted tangible assets)
Bank	$	82,784	10.29	%	$	32,183	4.00	%	$	40,229	5.00	%
Consolidated	83,712		10.41	%	32,176		4.00	%	N/A		N/A
Tier 1 Risk-Based Capital (to risk-weighted assets)
Bank	82,784		14.12	%	23,450		4.00	%	35,174		6.00	%
Consolidated	83,712		14.16	%	23,643		4.00	%	N/A		N/A
Total Capital (to risk-weighted assets)
Bank	90,132		15.38	%	46,899		8.00	%	58,624		10.00	%
Consolidated	91,119		15.42	%	47,287		8.00	%	N/A		N/A