Note 21 - Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2011

Note 21 - Regulatory Capital Requirements Disclosure

Note 21 - Regulatory Capital Requirements

NOTE 21 - Regulatory Capital Requirements

The Corporation (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the 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 Corporation's and the Bank's 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 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 Corporation and the  Bank to maintain minimum amounts and ratios (set forth in the table that follows) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and Tier 1 capital (as defined) to average assets (as defined).  As of December 31, 2011 and 2010 the Corporation and the Bank met all capital adequacy requirements to which they are subject.

As of December 31, 2011, the most recent notification from the regulatory agencies categorized the Bank as well-capitalized under the regulatory framework for prompt corrective action.  To be categorized as well-capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table.  There are no conditions or events since these notifications that management believes have changed the institution's category.

Listed below is a comparison of the Corporation's and the Bank's actual capital amounts with the minimum requirements for well capitalized and adequately capitalized banks, as defined by the federal regulatory agencies' Prompt Corrective Action Rules, as of December 31, 2011 and 2010.

											To Be Well Capitalized
											Under
						For Capital Adequacy					Prompt Corrective Action
	Actual					Purposes					Provision
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2011
Total capital (to risk weighted assets)
Tri City Bankshares Corporation	$	130,371,000		17.1	%	$	61,037,000		8.0	%	$	n/a		n/a
Tri City National Bank	$	125,937,000		16.6	%	$	60,783,000		8.0	%	$	75,979,000		10.0	%
Tier 1 capital (to risk weighted assets)
Tri City Bankshares Corporation	$	120,816,000		15.8	%	$	30,414,000		4.0	%	$	n/a		n/a
Tri City National Bank	$	116,421,000		15.5	%	$	30,392,000		4.0	%	$	45,588,000		6.0	%
Tier 1 capital (to average assets)
Tri City Bankshares Corporation	$	120,816,000		10.6	%	$	45,524,000		4.0	%	$	n/a		n/a
Tri City National Bank	$	116,421,000		10.2	%	$	45,515,000		4.0	%	$	56,894,000		5.0	%
As of December 31, 2010
Total capital (to risk weighted assets)
Tri City Bankshares Corporation	$	122,268,000		15.8	%	$	62,107,000		8.0	%	$	n/a		n/a
Tri City National Bank	$	117,822,000		15.2	%	$	62,011,000		8.0	%	$	77,514,000		10.0	%
Tier 1 capital (to risk weighted assets)
Tri City Bankshares Corporation	$	112,741,000		14.5	%	$	31,053,000		4.0	%	$	n/a		n/a
Tri City National Bank	$	108,295,000		14.0	%	$	31,006,000		4.0	%	$	46,509,000		6.0	%
Tier 1 capital (to average assets)
Tri City Bankshares Corporation	$	112,741,000		10.4	%	$	43,566,000		4.0	%	$	n/a		n/a
Tri City National Bank	$	108,295,000		10.0	%	$	43,298,000		4.0	%	$	54,122,000		5.0	%