Note 15 - Regulatory Capital Requirements and Restrictions on Dividends

12 Months Ended

Dec. 31, 2011

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 15.                 Regulatory Capital Requirements and Restrictions on Dividends

The Company (on a consolidated basis) and the subsidiary banks are subject to various regulatory capital requirements administered by the 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 and subsidiary banks’ financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.  The 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 Company and the subsidiary banks 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).   Management believes, as of December 31, 2011 and 2010, that the Company and the subsidiary banks met all capital adequacy requirements to which they are subject.

Under the regulatory framework for prompt corrective action, to be categorized as “well capitalized,” an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables.  The Company and the subsidiary banks’ actual capital amounts and ratios as of December 31, 2011 and 2010 are also presented in the following table (dollars in thousands).  As of December 31, 2011 and 2010, the subsidiary banks met the requirements to be “well capitalized”.

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011:
Company:
Total risk-based capital	$	191,419		13.84	%	$	110,686	>	8.0	%		N/A		N/A
Tier 1 risk-based capital		169,360		12.24	%		55,343	>	4.0	%		N/A		N/A
Tier 1 leverage		169,360		8.70	%		77,857	>	4.0	%		N/A		N/A
Quad City Bank & Trust:
Total risk-based capital	$	98,382		13.03	%	$	60,391	>	8.0	%	$	75,488	>	10.00	%
Tier 1 risk-based capital		90,336		11.97	%		30,195	>	4.0			45,293	>	6.00	%
Tier 1 leverage		90,336		8.21	%		44,009	>	4.0			55,012	>	5.00	%
Cedar Rapids Bank & Trust:
Total risk-based capital	$	56,312		14.44	%	$	31,198	>	8.0	%	$	38,998	>	10.00	%
Tier 1 risk-based capital		51,415		13.18	%		15,599	>	4.0			23,399	>	6.00	%
Tier 1 leverage		51,415		9.02	%		22,807	>	4.0			28,509	>	5.00	%
Rockford Bank & Trust:
Total risk-based capital	$	36,259		15.27	%	$	19,001	>	8.0	%	$	23,752	>	10.00	%
Tier 1 risk-based capital		33,277		14.01	%		9,501	>	4.0			14,251	>	6.00	%
Tier 1 leverage		33,277		11.31	%		11,770	>	4.0			14,713	>	5.00	%

											To Be Well
											Capitalized Under
						For Capital					Prompt Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2010:
Company:
Total risk-based capital	$	183,030		13.70	%	$	106,870	>	8.0	%		N/A		N/A
Tier 1 risk-based capital		161,939		12.12	%		53,435	>	4.0	%		N/A		N/A
Tier 1 leverage		161,939		8.71	%		74,342	>	4.0	%		N/A		N/A
Quad City Bank & Trust:
Total risk-based capital	$	95,875		13.12	%	$	58,455	>	8.0	%	$	73,069	>	10.00	%
Tier 1 risk-based capital		86,821		11.88	%		29,228	>	4.0	%		43,841	>	6.00	%
Tier 1 leverage		86,821		8.48	%		40,965	>	4.0	%		51,206	>	5.00	%
Cedar Rapids Bank & Trust:
Total risk-based capital	$	55,401		14.14	%	$	31,335	>	8.0	%	$	39,169	>	10.00	%
Tier 1 risk-based capital		50,465		12.88	%		15,667	>	4.0	%		23,501	>	6.00	%
Tier 1 leverage		50,465		9.03	%		22,354	>	4.0	%		27,942	>	5.00	%
Rockford Bank & Trust:
Total risk-based capital	$	33,852		15.82	%	$	17,119	>	8.0	%	$	21,399	>	10.00	%
Tier 1 risk-based capital		31,171		14.57	%		8,560	>	4.0	%		12,839	>	6.00	%
Tier 1 leverage		31,171		11.31	%		11,027	>	4.0	%		13,784	>	5.00	%

The Company’s ability to pay dividends to its shareholders may be affected by both general corporate law considerations and policies of the Federal Reserve applicable to bank holding companies.

The payment of dividends by any financial institution or its holding company is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and a financial institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.  Notwithstanding the availability of funds for dividends, however, the Federal Reserve may prohibit the payment of any dividends by the Banks if the Federal Reserve determines such payment would constitute an unsafe or unsound practice.

The Company also has certain contractual restrictions on its ability to pay dividends.  The Company has issued junior subordinated debentures in four private placements.  Under the terms of the debentures, the Company may be prohibited, under certain circumstances, from paying dividends on shares of its common stock.  Additionally, the Company has issued shares of non-cumulative perpetual preferred stock and under the terms of this preferred stock, the Company may be prohibited, under certain circumstances, from paying dividends on shares of its common stock.  None of these circumstances currently exist.