STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Stockholders' Equity Note Disclosure [Text Block]

14. STOCKHOLDERS’ EQUITY

(a) Regulatory Capital Requirements – The Corporation and the Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and, additionally for banks, prompt corrective action regulations 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 regulators. Failure to meet capital requirements can result in regulatory action.

Prompt corrective action regulations 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 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.

Quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth in the following table) of Total and Tier 1 capital (as defined in the regulations) to risk weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined).

As a result of the Consent Order the Bank entered into with the FDIC and KDFI described in greater detail in Note 2, the Bank is categorized as a "troubled institution" by bank regulators, which by definition does not permit the Bank to be considered "well-capitalized".

On March 9, 2012, the Bank entered into a new Consent Order with the FDIC and KDFI. The 2012 Consent Order requires the Bank to achieve the same minimum capital ratios mandated by the January 2011 Consent Order, which are set forth below. See Note 2 for additional information.

Our actual and required capital amounts and ratios are presented below.

(Dollars in thousands)						For Capital
	Actual					Adequacy Purposes
As of December 31, 2012:	Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk- weighted assets)
Consolidated	$	68,791		11.36	%	$	48,438		8.00	%
Bank		73,951		12.21			48,439		8.00
Tier I capital (to risk-weighted assets)
Consolidated		58,010		9.58			24,219		4.00
Bank		66,256		10.94			24,219		4.00
Tier I capital (to average assets)
Consolidated		58,010		5.72			40,580		4.00
Bank		66,256		6.53			40,608		4.00

(Dollars in thousands)						For Capital
	Actual					Adequacy Purposes
As of December 31, 2011:	Amount		Ratio			Amount		Ratio
Total risk-based capital (to risk- weighted assets)
Consolidated	$	79,593		9.87	%	$	64,493		8.00	%
Bank		82,081		10.18			64,486		8.00
Tier I capital (to risk-weighted assets)
Consolidated		69,425		8.61			32,246		4.00
Bank		71,914		8.92			32,243		4.00
Tier I capital (to average assets)
Consolidated		69,425		5.71			48,666		4.00
Bank		71,914		5.86			49,111		4.00

The 2012 Consent Order requires the Bank to achieve the minimum capital ratios presented below.

	Actual as of			Ratio Required
	12/31/2012			by Consent Order
Total capital to risk-weighted assets		12.21	%		12.00	%
Tier 1 capital to average total assets		6.53	%		9.00	%

(b) Dividend Restrictions – Our principal source of funds for dividend payments is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. The Bank’s Consent Order with the FDIC and KDFI requires us to obtain the consent of the Regional Director of the FDIC and the Commissioner of the KDFI to declare and pay cash dividends. The Corporation has also entered into an agreement with the Federal Reserve to obtain regulatory approval before declaring any dividends. The Corporation may not redeem shares or borrow funds without prior approval.

(c) Liquidation Account – In connection with our conversion from mutual to stock form of ownership during 1987, we established a “liquidation account”, currently in the amount of $597,000 for the purpose of granting to eligible deposit account holders a priority in the event of future liquidation. Only in such an event, an eligible account holder who continues to maintain a deposit account will be entitled to receive a distribution from the liquidation account. The total amount of the liquidation account decreases in an amount proportionately corresponding to decreases in the deposit account balances of the eligible account holders.

(d) Capital Purchase Program – On January 9, 2009, we sold $20 million of Senior Preferred Shares to the U.S. Treasury under the terms of its Capital Purchase Plan. The Senior Preferred Shares constitute Tier 1 capital and rank senior to our common shares. The Senior Preferred Shares pay cumulative dividends at a rate of 5% per annum for the first five years and will reset to a rate of 9% per annum after five years. The Senior Preferred Shares may be redeemed at any time, subject to prior regulatory approval. See Note 12 for additional information.