REGULATORY MATTERS AND RESTRICTIONS

12 Months Ended

Dec. 31, 2014

REGULATORY MATTERS AND RESTRICTIONS [Abstract]

REGULATORY MATTERS AND RESTRICTIONS

NOTE M – REGULATORY MATTERS AND RESTRICTIONS

The Corporation and the Bank are subject to various regulatory capital requirements administered by the Federal banking agencies. Failure to meet the 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 Corporation's consolidated financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation 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 classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The quantitative measures established by regulation to ensure capital adequacy require the Corporation and the Bank to maintain minimum amounts and ratios (set forth below) of tier 1 capital to average assets and tier 1 and total capital to risk-weighted assets.

As of December 31, 2014 and 2013, the Corporation and Bank were categorized as “well capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution's category. The following chart details the Corporation's and the Bank's capital levels as of December 31, 2014 and December 31, 2013, compared to regulatory levels.

CAPITAL LEVELS

(DOLLARS IN THOUSANDS)

									To Be Well
									Capitalized Under
					For Capital				Prompt Corrective
	Actual				Adequacy Purposes				Action Provision
	$		%		$		%		$		%
As of December 31, 2014
Total Capital to Risk-Weighted Assets
Consolidated		98,900		17.3		45,650		8.0		57,063		10.0
Bank		97,921		17.2		45,633		8.0		57,042		10.0
Tier I Capital to Risk-Weighted Assets
Consolidated		91,755		16.1		22,825		4.0		34,238		6.0
Bank		90,787		15.9		22,817		4.0		34,225		6.0
Tier I Capital to Average Assets
Consolidated		91,755		10.7		34,330		4.0		42,913		5.0
Bank		90,787		10.6		34,324		4.0		42,905		5.0
As of December 31, 2013
Total Capital to Risk-Weighted Assets
Consolidated		94,367		17.9		42,231		8.0		52,788		10.0
Bank		93,783		17.8		42,216		8.0		52,771		10.0
Tier I Capital to Risk-Weighted Assets
Consolidated		87,735		16.6		21,115		4.0		31,673		6.0
Bank		87,174		16.5		21,108		4.0		31,662		6.0
Tier I Capital to Average Assets
Consolidated		87,735		10.8		32,458		4.0		40,573		5.0
Bank		87,174		10.7		32,454		4.0		40,568		5.0

In addition to the capital guidelines, certain laws restrict the amount of dividends paid to stockholders in any given year. The approval of the OCC shall be required if the total of all dividends declared by the Corporation in any year shall exceed the total of its net profits for that year combined with retained net profits of the preceding two years. Under this restriction, the Corporation could declare dividends in 2015, without the approval of the OCC, of approximately $8.5 million, plus an additional amount equal to the Corporation's net profits for 2015, up to the date of any such dividend declaration.