STOCKHOLDERS' EQUITY AND REGULATORY REQUIREMENTS

12 Months Ended

Dec. 31, 2014

Stockholders' Equity Note [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

NOTE 15—STOCKHOLDERS’ EQUITY AND REGULATORY REQUIREMENTS

On January 12, 2009, the Company issued $10 million in nonvoting senior preferred stock to the U.S. Department of Treasury under the Capital Purchase Program. As part of the transaction, the Company also issued warrants to the U.S. Treasury to purchase 173,410 shares of common stock of the Company at an exercise price of $8.65 per share. As a result of the successful completion of a rights offering in October 2009, the number of shares underlying the warrants held by the U.S. Treasury was reduced to 86,705 shares, or 50% of the original 173,410 shares as outlined by the provisions of the Capital Purchase Program.

On September 15, 2011, the Company issued $ 11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”). Under the Securities Purchase Agreement, the Company issued to the Treasury a total of 11,250 shares of the Company’s Senior Noncumulative Perpetual Preferred Stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the SBLF Preferred Stock, the Company redeemed from the Treasury, all 10,000 outstanding shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provides the Company with approximately $1.25 million additional Tier 1 capital. The capital received under the program will allow the Company to continue to serve its small business clients through the commercial lending program. The current dividend rate is 1.0% and will increase to 9.0% on January 1, 2016. The Company expects to repurchase all $11.25 million of this preferred stock prior to January 1, 2016

On December 7, 2011, the Company repurchased the warrants issued on January 12, 2009 to the U.S. Treasury as part of its participation in the U.S. Treasury’s TARP Capital Purchase Program. In the repurchase, the Company paid the U.S. Treasury $245,000 for the warrants.

Federal Deposit Insurance Corporation (“FDIC”) and the Board of Governors of the Federal Reserve System (“FRB”) regulations require banks to maintain minimum levels of regulatory capital. Under the regulations in effect at December 31, 2013 (but subject to the enhanced requirement described below), the Bank was required to maintain (i) a minimum leverage ratio of Tier I capital to total adjusted assets of 4.00 percent, and (ii) minimum ratios of Tier I and total capital to risk-weighted assets of 4.00 percent and 8.00 percent, respectively.

Under its prompt corrective action regulations, the regulators are required to take certain supervisory actions with respect to an undercapitalized institution. Such actions could have a direct material effect on the institution’s financial statements. The regulations establish a framework for the classification of financial institutions into five categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized. Generally, an institution is considered well capitalized if it has a leverage (Tier I) capital ratio of at least 5.00 percent; a Tier I risk-based capital ratio of at least 6.00 percent; and a total risk-based capital ratio of at least 10.00 percent. At year-end 2014 and 2013, the most recent regulatory notifications categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category.

The foregoing capital ratios are based in part on specific quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by the regulators about capital components, risk weightings and other factors.

At December 31, 2014, management believes that the Bank and the Parent Corporation met all capital adequacy requirements to which they are subject.

The following is a summary of the Bank’s and the Parent Corporation’s actual capital amounts and ratios as of December 31, 2014 and 2013, compared to the FRB and FDIC minimum capital adequacy requirements and the FRB and FDIC requirements for classification as a well-capitalized institution.

The Bank	Amount			Ratio			Minimum Capital Adequacy						For Classification Under Corrective Action Plan as Well Capitalized
							Amount			Ratio			Amount			Ratio
	(Dollars in Thousands)
December 31, 2014
Leverage (Tier 1) capital		$	300,399		9.33	%		$	128,729		4.00	%		$	160,911		5.00	%
Risk-Based Capital:
Tier 1		$	300,399		10.40	%		$	115,493		4.00	%		$	173,239		6.00	%
Total			314,769		10.90	%			230,986		8.00	%			288,732		10.00	%
December 31, 2013
Leverage (Tier 1) capital		$	159,431		9.69	%		$	65,813		4.00	%		$	82,266		5.00	%
Risk-Based Capital:
Tier 1		$	159,431		12.10	%		$	52,704		4.00	%		$	79,057		6.00	%
Total			169,974		12.91	%			105,329		8.00	%			131,661		10.00	%

The Company	Amount			Ratio			Minimum Capital Adequacy						For Classification as Well Capitalized
							Amount			Ratio			Amount		Ratio
	(Dollars in Thousands)
December 31, 2014
Leverage (Tier 1) capital		$	301,593		9.37	%		$	128,747		4.00	%		N/A		N/A
Risk-Based Capital:
Tier 1		$	301,593		10.44	%		$	115,561		4.00	%		N/A		N/A
Total			315,963		10.94	%			231,121		8.00	%		N/A		N/A
December 31, 2013
Leverage (Tier 1) capital		$	159,316		9.69	%		$	65,765		4.00	%		N/A		N/A
Risk-Based Capital:
Tier 1		$	159,316		12.10	%		$	52,666		4.00	%		N/A		N/A
Total			169,894		12.90	%			105,361		8.00	%		N/A		N/A

The Company issued $ 5.2 million of subordinated debentures in 2003. These securities are included as a component of Tier 1 Capital for regulatory purposes.