Regulatory Matters

6 Months Ended

Jun. 30, 2013

Banking And Thrift [Abstract]

Regulatory Matters

NOTE 16 — Regulatory Matters

The Company and the Bank are subject to various regulatory capital requirements administered by the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (Federal Reserve Board). 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 the Bank’s Consolidated Financial Statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank 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 Company and the Bank’s capital amounts and classifications 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 Bank to maintain minimum amounts and ratios (set forth in the following Capital Adequacy table) of Tier I and Total Capital to risk-weighted assets and of Tier I Capital to average assets (Leverage ratio). The table also presents the Company’s actual capital amounts and ratios. Management believes, as of June 30, 2013, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of June 30, 2013, the most recent regulatory notifications categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized”, the Bank must maintain minimum Tier I Capital, Total Capital and Leverage ratios as set forth in the Capital Adequacy table. There are no conditions or events since that notification that management believes have changed the Company’s categorization by the FDIC.

The Company and Bank are also subject to minimum capital levels, which could limit the payment of dividends. As of June 30, 2013, the Company and Bank had capital levels that were in excess of the minimum capital level ratios required to pay dividends.

The Pennsylvania Banking Code restricts capital funds available for payment of dividends to the retained earnings of the Bank. The balances in the capital stock and surplus accounts are unavailable for dividends. Dividends from the Bank are the Company’s primary source of funds.

In addition, the Bank is subject to restrictions imposed by Federal law on certain transactions with the Company’s affiliates. These transactions include extensions of credit, purchases of or investments in stock issued by an affiliate, purchases of assets subject to certain exceptions, acceptance of securities issued by an affiliate as collateral for loans, and the issuance of guarantees, acceptances, and letters of credit on behalf of affiliates. These restrictions prevent the Company’s affiliates from borrowing from the Bank unless the loans are secured by obligations of designated amounts. Further, the aggregate value of such transactions between the Bank and a single affiliate is limited in amount to 10 percent of the Bank’s capital stock and surplus, and the aggregate value of such transactions with all affiliates is limited to 20 percent of the Bank’s capital stock and surplus. The Federal Reserve System has interpreted “capital stock and surplus” to include undivided profits.

Actual							Regulatory Requirements
							For Capital							To Be
							Adequacy Purposes							“Well Capitalized”
As of June 30, 2013	Amount		Ratio				Amount			Ratio				Amount			Ratio
Total Capital (to Risk Weighted Assets)
PFSC (Company)	$	111,959		17.78	%	³	$	50,376	³		8.0	%	³		N/A	³		N/A
PSB (Bank)	$	108,035		17.17	%	³	$	50,330	³		8.0	%	³	$	62,913	³		10.0	%
Tier 1 Capital (to Risk Weighted Assets)
PFSC (Company)	$	104,276		16.56	%	³	$	25,188	³		4.0	%	³		N/A	³		N/A
PSB (Bank)	$	100,483		15.97	%	³	$	25,165	³		4.0	%	³	$	37,748	³		6.0	%
Tier 1 Capital (to Average Assets)
PFSC (Company)	$	104,276		11.66	%	³	$	*	³		*		³		N/A	³		N/A
PSB (Bank)	$	100,483		11.29	%	³	$	*	³		*		³	$	44,487	³		5.0	%

PFSC – *3.0% ($26,829), 4.0% ($35,772) or 5.0% ($44,715) depending on the bank’s CAMELS Rating and other regulatory risk factors.

PSB – *3.0% ($26,692), 4.0% ($35,590) or 5.0% ($44,487) depending on the bank’s CAMELS Rating and other regulatory risk factors.

Actual							Regulatory Requirements
							For Capital							To Be
							Adequacy Purposes							“Well Capitalized”
As of December 31, 2012	Amount		Ratio				Amount			Ratio				Amount			Ratio
Total Capital (to Risk Weighted Assets)
PFSC (Company)	$	109,978		17.96	%	³	$	48,994	³		8.0	%	³		N/A	³		N/A
PSB (Bank)	$	106,135		17.35	%	³	$	48,934	³		8.0	%	³	$	61,167	³		10.0	%
Tier 1 Capital (to Risk Weighted Assets)
PFSC (Company)	$	102,906		16.80	%	³	$	24,497	³		4.0	%	³		N/A	³		N/A
PSB (Bank)	$	99,185		16.22	%	³	$	24,467	³		4.0	%	³	$	36,700	³		6.0	%
Tier 1 Capital (to Average Assets)
PFSC (Company)	$	102,906		11.50	%	³	$	*	³		*		³		N/A	³		N/A
PSB (Bank)	$	99,185		11.14	%	³	$	*	³		*		³	$	44,526	³		5.0	%

PFSC – *3.0% ($26,850), 4.0% ($35,799) or 5.0% ($44,749) depending on the bank’s CAMELS Rating and other regulatory risk factors.

PSB – *3.0% ($26,716), 4.0% ($35,621) or 5.0% ($44,526) depending on the bank’s CAMELS Rating and other regulatory risk factors.