Regulatory Matters

12 Months Ended

Dec. 31, 2013

Regulatory Matters [Abstract]

Regulatory Matters

Note R—Regulatory Matters

It is the policy of the Federal Reserve that financial holding companies should pay cash dividends on common stock only out of income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that financial holding companies should not maintain a level of cash dividends that undermines the financial holding company’s ability to serve as a source of strength to its banking subsidiaries.

Various federal and state statutory provisions limit the amount of dividends that subsidiary banks can pay to their holding companies without regulatory approval. Under Delaware banking law, the Bank’s directors may declare dividends on common or preferred stock of so much of its net profits as they judge expedient, but the Bank must, before the declaration of a dividend on common stock from net profits, carry 50% of its net profits from the preceding period for which the dividend is paid to its surplus fund until its surplus fund amounts to 50% of its capital stock and thereafter must carry 25% of its net profits for the preceding period for which the dividend is paid to its surplus fund until its surplus fund amounts to 100% of its capital stock.

In addition to these explicit limitations, federal and state regulatory agencies are authorized to prohibit a banking subsidiary or financial holding company from engaging in an unsafe or unsound practice. Depending upon the circumstances, the agencies could take the position that paying a dividend would constitute an unsafe or unsound banking practice.

The Company and Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible 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 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 capital amounts and classification of the Company and the Bank are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

					To be well
					capitalized under
			For capital		prompt corrective
	Actual		adequacy purposes		action provisions
	Amount	Ratio	Amount	Ratio	Amount	Ratio
	(dollars in thousands)
As of December 31, 2013
Total capital
(to risk-weighted assets)
Company	$          395,781	15.83%	$            200,072	>=8.00	N/A	N/A
Bank	315,275	12.66%	199,251	8.00	249,064	>= 10.00%
Tier I capital
(to risk-weighted assets)
Company	364,434	14.57%	100,036	>=4.00	N/A	N/A
Bank	284,055	11.40%	99,626	4.00	149,438	>= 6.00%
Tier I capital
(to average assets)
Company	364,434	8.58%	169,994	>=4.00	N/A	N/A
Bank	284,055	6.72%	169,120	4.00	211,400	>= 5.00%
As of December 31, 2012
Total capital
(to risk-weighted assets)
Company	$          357,887	17.64%	$            162,306	>=8.00	N/A	N/A
Bank	266,062	13.16%	161,739	8.00	202,174	>= 10.00%
Tier I capital
(to risk-weighted assets)
Company	332,432	16.39%	81,153	>=4.00	N/A	N/A
Bank	240,694	11.91%	80,870	4.00	121,304	>= 6.00%
Tier I capital
(to average assets)
Company	332,432	10.00%	132,938	>=4.00	N/A	N/A
Bank	240,694	7.25%	132,813	4.00	166,016	>= 5.00%

As of December 31, 2013, the Company and the Bank met all regulatory requirements for classification as well capitalized under the regulatory framework for prompt corrective action. Effective January 1, 2015, capital rules will begin to be modified as part of a multi year phase in period.  The new rules emphasize common equity capital of which the vast majority of the Company and the Bank’s capital is comprised.  In 2012 the Company paid a $172,000 civil money penalty as part of an administrative agreement with the FDIC which also requires additional quarterly reporting on the part of the Bank to the FDIC.