v2.4.0.6
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS
12 Months Ended
Dec. 31, 2011
CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

NOTE 18 - CAPITAL REQUIREMENTS AND RESTRICTIONS ON RETAINED EARNINGS

 

Banks and bank holding companies 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 initiate regulatory action. Management believes as of December 31, 2011, the Company and Bank meet all capital adequacy requirements to which they are subject.

 

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. At year-end 2011 and 2010, the most recent regulatory notifications categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action.

 

There have been no subsequent conditions or events that management believes have changed the institution's category.

 

The consolidated and Bank’s capital amounts and ratios, at December 31, 2011 and 2010 are presented below:

                To Be Well  
                Capitalized Under  
          For Capital     Prompt Corrective  
    Actual     Adequacy Purposes     Action Provisions  
    Amount     Ratio     Amount     Ratio     Amount     Ratio  
2011                                                
Total Capital to risk weighted assets                                                
Consolidated   $ 180,043       12.95 %   $ 111,193       8.00 %   $ N/A       N/A  
Bank     179,253       12.91 %     111,101       8.00 %     138,877       10.00 %
Tier 1 (Core) Capital to risk weighted assets                                                
Consolidated   $ 142,658       10.26 %   $ 55,596       4.00 %   $ N/A       N/A  
Bank     141,882       10.22 %     55,551       4.00 %     83,326       6.00 %
Tier 1 (Core) Capital to average assets                                                
Consolidated   $ 142,658       8.45 %   $ 67,569       4.00 %   $ N/A       N/A  
Bank     141,882       8.43 %     67,298       4.00 %     84,123       5.00 %

 

                To Be Well  
                Capitalized Under  
          For Capital     Prompt Corrective  
    Actual     Adequacy Purposes     Action Provisions  
    Amount     Ratio     Amount     Ratio     Amount     Ratio  
2010                                                
Total Capital to risk weighted assets                                                
Consolidated   $ 184,077       13.77 %   $ 106,930       8.00 %     N/A       N/A  
Bank     180,545       13.52 %     106,842       8.00 %   $ 133,553       10.00 %
Tier 1 (Core) Capital to risk weighted assets                                                
Consolidated   $ 147,361       11.02 %   $ 53,465       4.00 %     N/A       N/A  
Bank     143,833       10.77 %     53,421       4.00 %   $ 80,132       6.00 %
Tier 1 (Core) Capital to average assets                                                
Consolidated   $ 147,361       9.41 %   $ 62,669       4.00 %     N/A       N/A  
Bank     143,833       9.22 %     62,404       4.00 %   $ 78,005       5.00 %

  

The Company’s 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. At December 31, 2011 the Bank could pay $13,529 without regulatory approval.