Note 23 - Regulatory Capital

12 Months Ended

Mar. 31, 2012

23. REGULATORY CAPITAL

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (OCC). Failure to meet the minimum regulatory capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators, that if undertaken, could have a direct material effect on the Bank and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines 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 of: total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined), and tangible capital to adjusted total assets (as defined). Management believes that, as of March 31, 2012, the Bank met all capital adequacy requirements to which it was subject.

As of March 31, 2012, the most recent notification from the OCC, the Bank was categorized as “well capitalized” under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank would have to maintain minimum total risk-based, Tier I risk-based, Tier I leverage and Tangible Capital to adjusted total assets ratios as disclosed in the table below. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category.

The Bank’s actual and required capital amounts and ratios as of March 31, 2012 and 2011 are as follows:

	Actual					For Capital Adequacy Purposes and to Be Adequately Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount			Ratio
As of March 31, 2012:
Total Risk-Based Capital
(to Risk-Weighted Assets)	$	11,615,000		14.13	%	≥	$	6,576,160	≥	8.0	%
Tier I Capital
(to Risk-Weighted Assets)		10,586,000		12.88	%	≥		3,288,080	≥	4.0	%
Tier I Capital
(to Adjusted Total Assets)		10,586,000		7.93	%	≥		5,342,400	≥	4.0	%
Tangible Capital
(to Adjusted Total Assets)		10,586,000		7.93	%	≥		2,003,400	≥	1.5	%

	Actual					For Capital Adequacy Purposes and to Be Adequately Capitalized Under the Prompt Corrective Action Provisions
	Amount		Ratio			Amount			Ratio
As of March 31, 2011:
Total Risk-Based Capital
(to Risk-Weighted Assets)	$	12,579,000		14.52	%	≥	$	6,932,240	≥	8.0	%
Tier I Capital
(to Risk-Weighted Assets)		11,795,000		13.61	%	≥		3,466,120	≥	4.0	%
Tier I Capital
(to Adjusted Total Assets)		11,795,000		8.67	%	≥		5,443,720	≥	4.0	%
Tangible Capital
(to Adjusted Total Assets)		11,795,000		8.67	%	≥		2,041,395	≥	1.5	%

Federal regulations place certain restrictions on dividends paid by the Bank to the Company. The total amount of dividends that may be paid at any date is generally limited to the earnings of the Bank year to date plus retained earnings for the prior two fiscal years, net of any prior capital distributions. In addition, dividends paid by the Bank to the Company would be prohibited if the distribution would cause the Bank’s capital to be reduced below the applicable minimum capital requirements.

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

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