Capital Requirements

9 Months Ended

Sep. 30, 2012

Capital Requirements

NOTE 14 — Capital Requirements

The Company is subject to various regulatory capital requirements administered by the 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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s 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.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined in the regulations), and of Tier 1 capital to average assets (as defined in the regulations). Management believes the Company met all capital adequacy requirements to which it was subject as of September 30, 2012.

As of September 30, 2012, the most recent notification from the FDIC categorized the Company as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios, as set forth in the table below. Since that notification, management believes there are no conditions or events to change the Company’s category.

The Company’s actual capital amounts and ratios are presented in the following table:

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2012 (Unaudited)
Total Capital to Risk Weighted Assets	$	60,405		12.50	%	$	38,655		>8.0	%	$	48,319		>10.0	%
Tier 1 Capital to Risk Weighted Assets		51,865		10.73	%		19,328		>4.0	%		28,991		>6.0	%
Tier 1 Capital to Average Assets		51,865		9.29	%		22,343		>4.0	%		27,929		>5.0	%
As of December 31, 2011
Total Capital to Risk Weighted Assets	$	53,206		11.84	%	$	35,580		>8.0	%	$	44,475		>10.0	%
Tier 1 Capital to Risk Weighted Assets		48,122		10.73	%		17,790		>4.0	%		26,685		>6.0	%
Tier 1 Capital to Average Assets		48,122		9.06	%		21,081		>4.0	%		26,352		>5.0	%