Capital Requirements

6 Months Ended

Jun. 30, 2011

Capital Requirements

Capital Requirements

NOTE 4    CAPITAL REQUIREMENTS:

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) and of Tier 1 capital (as defined) to average assets (as defined).  Management believes that, as of June 30, 2011, the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of June 30, 2011 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 Tier1 leverage ratios as set forth in the following tables.  There are no conditions or events since the notification that management believes have changed the Bank's category.

The Company's and the Bank's actual capital amounts and ratios are presented in the table as of June 30, 2011 and December 31, 2010, respectively.

		Actual			Minimum Capital Requirement			Minimum to Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars are in thousands)		Amount	Ratio		Amount	Ratio		Amount	Ratio
June 30, 2011:
Total Capital to Risk Weighted Assets:
The Company	$	51,988	9.35%	$	44,496	8%	$	N/A	N/A
The Bank		56,651	10.21%		44,384	8%		55,480	10%
Tier 1 Capital Risk Weighted Assets:
The Company		39,615	7.12%		22,248	4%		N/A	N/A
The Bank		49,571	8.93%		22,192	4%		33,288	6%
Tier 1 Capital to Average Assets:
The Company		39,615	4.74%		33,409	4%		N/A	N/A
The Bank		49,571	5.97%		33,194	4%		41,492	5%
December 31, 2010:
Total Capital to Risk Weighted Assets:
The Company	$	53,020	8.87%	$	47,825	8%	$	N/A	N/A
The Bank		58,466	9.79%		47,786	8%		59,732	10%
Tier 1 Capital Risk Weighted Assets:
The Company		39,108	6.54%		23,913	4%		N/A	N/A
The Bank		50,777	8.50%		23,893	4%		35,839	6%
Tier 1 Capital to Average Assets:
The Company		39,108	4.62%		33,857	4%		N/A	N/A
The Bank		50,777	6.00%		33,857	4%		42,321	5%