Other Assets

9 Months Ended

Sep. 30, 2011

Other Assets [Abstract]

Other Assets [Text Block]

Note 6 -- Other Assets

Federal Home Loan Bank stock is a required investment for institutions that are members of the Federal Home Loan Bank system.  The required investment in the common stock is based on a predetermined formula. The Company owns approximately $3.7 million of Federal Home Loan Bank of Chicago (FHLBC) stock included in other assets as of September 30, 2011 and December 31, 2010. During the third quarter of 2007, the FHLBC received a Cease and Desist Order from its regulator, the Federal Housing Finance Agency (FHFA). The FHLBC will continue to provide liquidity and funding through advances; however, the order prohibited capital stock repurchases until a time to be determined by the FHFA and requires FHFA approval for dividends. On July 24, 2008, the FHFA amended the order to allow the FHLBC to repurchase or redeem any capital stock issued to support new advances after the repayment of those new advances if certain conditions are met.  The amended order, however, provides that the Director of the Office of Supervision of the Federal Housing Finance Board may direct the FHLBC to halt the repurchase of redemption of capital stock if, in his sole discretion, the continuation of such transactions would be inconsistent with maintaining the capital adequacy of the FHLBC and its safe and sound operations. On October 3, 2011 the FHLBC announced that it had received approval of a capital stock conversion plan from the FHFA. Under this plan, as of January 1, 2012 members’ capital stock will be converted into two subclasses of stock, redeemable in five years pursuant to the Capital Plan, which complies with the Gramm-Leach-Bliley Act of 1999. Also under the approved plan, the FHLB can submit a plan to the FHFA to repurchase excess stock of its members, subject to certain conditions, which the FHLBC plans to do in December.

With regard to dividends, the FHLBC continues to assess its dividend capacity each quarter and make appropriate request for approval. There were no dividends paid by the FHLBC during 2010. In 2011 the FHLBC declared and paid dividends at an annualized rate of 10 basis points per share during the first, second and third quarters of 2011. The Company evaluated its cost investment in FHLBC stock and deemed it was ultimately recoverable.