Capital Adequacy and Restriction on Dividends

12 Months Ended

Dec. 31, 2012

Capital Adequacy and Restriction on Dividends [Abstract]

Capital Adequacy and Restriction on Dividends

(18) Capital Adequacy and Restriction on Dividends

The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company's 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 Bank to maintain minimum amounts and ratios (set forth in the table below).

First, a bank must meet a minimum Tier I Capital ratio (as defined in the regulations) ranging from 3% to 5% based upon the bank's CAMELS (capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk) rating.

Second, a bank must meet minimum Total Risk-Based Capital to risk-weighted assets ratio of 8%. Risk-based capital and asset guidelines vary from Tier I capital guidelines by redefining the components of capital, categorizing assets into different risk classes, and including certain off-balance sheet items in the calculation of the capital ratio. The effect of the risk-based capital guidelines is that banks with high risk exposure will be required to raise additional capital while institutions with low risk exposure could, with the concurrence of regulatory authorities, be permitted to operate with lower capital ratios. In addition, a bank must meet minimum Tier I Leverage Capital to average assets ratio.

Management believes, as of December 31, 2012, that the Bank meets all capital adequacy requirements to which it is subject. As of December 31, 2012, the most recent notification from the Federal Deposit Insurance Corporation ("FDIC") categorized the Bank as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Bank must meet the minimum ratios as set forth above. As of the date hereof, there have been no conditions or events since that notification that management believes have changed the institution's category.

The Company and the Bank had Tier I Leverage, Tier I risk-based and Total Risk-Based capital above the "well capitalized" levels at December 31, 2012 and 2011, respectively, as set forth in the following tables:

	The Company
											Adequately
	2012					2011					Capitalized
	Capital		Ratio			Capital		Ratio			Ratio
Tier 1 Leverage Capital (to Average Assets)	$	86,830		10.5	%	$	81,302		10.5	%		4.0	%
Tier 1 Capital (to Risk-Weighted Assets)		86,830		17.8	%		81,302		17.4	%		4.0	%
Total Risk-Based Capital (to Risk-Weighted Assets)		92,960		19.1	%		87,221		18.6	%		8.0	%

	The Bank
											Adequately			Well
	2012					2011					Capitalized			Capitalized
	Capital		Ratio			Capital		Ratio			Ratio			Ratio
Tier 1 Leverage Capital (to Average Assets)	$	82,477		10.0	%	$	75,952		9.8	%		4.0	%		5.0	%
Tier 1 Capital (to Risk-Weighted Assets)		82,477		16.9	%		75,952		16.2	%		4.0	%		6.0	%
Total Risk-Based Capital (to Risk-Weighted Assets)		88,607		18.2	%		81,871		17.5	%		8.0	%		10.0	%

Cash dividends declared by the Bank are restricted under California State banking laws to the lesser of the Bank's retained earnings or the Bank's net income for the latest three fiscal years, less dividends previously declared during that period.