22. CAPITAL

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

22. CAPITAL

NOTE 22 CAPITAL:

Capital Requirements and Ratios

The Company and the Bank are subject to various capital requirements administered by 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’s and the Bank’s 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 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. Prompt corrective action provisions are not applicable to bank holding companies.

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 table) of total and Tier 1 capital (as defined) to risk-weighted assets (as defined), Tier 1 capital (as defined) to average assets (as defined), and Common Equity Tier 1 capital (as defined) to risk-weighted assets (as defined). Management believes that, as of December 31, 2015, the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2015 the Bank was well capitalized 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. There are no conditions or events since the notification that management believes have changed the Company’s and Bank’s category.

The Company’s and the Bank’s actual capital amounts and ratios are presented in the table as of December 31, 2015 and 2014, respectively. The December 31, 2015 ratios comply with Federal Reserve rules to align with the Basel III Capital requirements effective January 1, 2015.

	Actual					Minimum Capital Requirement					Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars are in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
December 31, 2015:
Total Capital to Risk Weighted Assets
The Company	$	66,649		17.80	%	$	29,954		8.0	%	$	N/A		N/A
The Bank		65,713		17.55	%		29,954		8.0	%		37,443		10.0	%
Tier 1 Capital Risk Weighted Assets:
The Company		61,406		16.40	%		22,465		6.0	%		N/A		N/A
The Bank		60,998		16.29	%		22,466		6.0	%		29,954		8.0	%
Tier 1 Capital to Average Assets:
The Company		61,406		9.74	%		25,229		4.0	%		N/A		N/A
The Bank		60,998		9.67	%		25,239		4.0	%		31,549		5.0	%
Common Equity Tier 1 Capital
to Risk Weighted Assets:
The Company		45,934		12.27	%		16,849		4.5	%		N/A		N/A
The Bank		60,998		16.29	%		16,849		4.5	%		24,338		6.5	%
December 31, 2014:
Total Capital to Risk Weighted Assets
The Company	$	59,816		15.98	%	$	29,948		8.0	%	$	N/A		N/A
The Bank		58,869		15.73	%		29,938		8.0	%		37,422		10.0	%
Tier 1 Capital Risk Weighted Assets:
The Company		53,379		14.26	%		14,974		4.0	%		N/A		N/A
The Bank		54,127		14.46	%		14,969		4.0	%		22,453		6.0	%
Tier 1 Capital to Average Assets:
The Company		53,379		8.07	%		26,453		4.0	%		N/A		N/A
The Bank		54,127		8.19	%		26,447		4.0	%		33,058		5.0	%

Capital Injections

On September 29, 2014 $500 thousand was injected into the Bank’s capital from the Company. On October 9, 2014 $1.25 million was injected into the Bank’s capital from the Company. The total $1.75 million in capital injections was to increase the capital position and capital ratios of the Bank.

Board of Directors and Management Exercise of Common Stock Warrants

During the month of October 2014, members of the board of directors and management of the Company exercised 1,006,261 common stock warrants at a price of $1.75 per share. As a result an additional $1.76 million of capital was raised at the Company. These funds helped to offset the $1.75 million of funds used for the capital injections mentioned above.

During the month of October 2015, a member of the board of directors of the Company and his family exercised 233,886 common stock warrants at a price of $1.75 per share. During the month of November 2015, a member of the board of directors of the Company exercised 225,000 common stock warrants at a price of $1.75 per share. During the month of December 2015, a member of the board of directors of the Company and his family exercised 16,542 common stock warrants at a price of $1.75 per share. As a result of these exercises an additional $832 thousand of capital was raised at the Company. The additional liquidity provided by the funds will be used by the Company to pay its operating expenses and trust preferred interest payments.

Common Stock Warrants

As of December 31, 2015, 882,353 common stock warrants were outstanding as compared to 1,357,781 common stock warrants as of December 31, 2014. During 2015, 475,428 of the common stock warrants were exercised at a price of $1.75. During 2014, 1,006,361 of common stock warrants were exercised at a price of $1.75. A summary of common stock warrants outstanding at December 31, 2015 follows:

Expiration Date	Exercise Price		Number Outstanding And Exercisable		Weighted Average Remaining Contractual Life
December 20, 2017	$	1.75		882,353		1.97 years
		Totals		882,353		1.97 years