Note 16 - Regulatory Restrictions

12 Months Ended

Dec. 31, 2012

Regulatory Capital Requirements under Banking Regulations [Text Block]

Note 16. Regulatory Restrictions

Dividends

The Company, as a Virginia banking corporation, may pay dividends only out of its retained earnings. However, regulatory authorities may limit payment of dividends by any company when it is determined that such a limitation is in the public interest and is necessary to ensure financial soundness of the Company. At December 31, 2012 there was no retained earnings available from which to pay dividends.

Capital Requirements

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by federal and state 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 their 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 table below) of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets, as all those terms are defined in the applicable regulations. As of December 31, 2012, management believes the Company and the Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2012, the most recent notification from the Federal Reserve Bank, categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table. 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 also presented in the following table.

	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2012	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	38,818		13.8	%	$	22,499		8.0	%		N/A		N/A
HomeTown Bank	$	37,243		13.2	%	$	22,499		8.0	%	$	28,124		10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	$	35,299		12.6	%	$	11,250		4.0	%		N/A		N/A
HomeTown Bank	$	33,724		12.0	%	$	11,250		4.0	%	$	16,874		6.0	%
Tier I Capital (to Average Assets)
Consolidated	$	35,299		9.5	%	$	14,877		4.0	%		N/A		N/A
HomeTown Bank	$	33,724		9.1	%	$	14,877		4.0	%	$	18,596		5.0	%

	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2011	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to Risk-Weighted Assets)
Consolidated	$	35,288		13.5	%	$	20,928		8.0	%		N/A		N/A
HomeTown Bank	$	32,997		12.6	%	$	20,928		8.0	%	$	26,160		10.0	%
Tier I Capital (to Risk-Weighted Assets)
Consolidated	$	32,009		12.2	%	$	10,464		4.0	%		N/A		N/A
HomeTown Bank	$	29,718		11.4	%	$	10,464		4.0	%	$	15,696		6.0	%
Tier I Capital (to Average Assets)
Consolidated	$	32,009		8.9	%	$	14,320		4.0	%		N/A		N/A
HomeTown Bank	$	29,718		8.3	%	$	14,320		4.0	%	$	17,899		5.0	%