Regulatory Matters

3 Months Ended

Mar. 31, 2013

Banking and Thrift [Abstract]

Regulatory Matters

Regulatory Matters

Federal banking regulations require that the Bank maintain certain cash reserves based on a percent of deposits. This requirement was $3.805 million at March 31, 2013 and $3.053 million at December 31, 2012. The reserve requirements were covered by vault cash of $11.490 million at March 31, 2013 and $11.543 million at December 31, 2012.

The Company and its subsidiary bank are subject to various regulatory capital requirements administered by 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 financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, specific capital requirements that involve quantitative measures of assets, liabilities and certain off-balance-sheet items, calculated under regulatory accounting practices must be met. The capital amounts and classifications 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 maintenance of minimum amounts and ratios (set forth in the table below) of Total Capital and Tier I Capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I Capital (as defined) to average assets (as defined). Management believes, as of March 31, 2013, that all capital adequacy requirements have been met.

As of March 31, 2013, the most recent notification by the Federal Deposit Insurance Corporation 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 table. There are no conditions or events since that notification that management believes have changed the Bank's category.

Note 11:  (Continued)

The Company's and Bank's actual capital amounts and ratios as of March 31, 2013, and December 31, 2012, are also presented in the table:

(Dollars in thousands)	Actual				Minimum Capital				Well Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio
March 31, 2013:
Total capital (to risk weighted assets):
Company	$	158,512	13.57	%	$	93,457	8.00	%	$	—	—	%
Bank	156,161		13.40	%	93,239		8.00	%	116,548		10.00	%
Tier I capital (to risk weighted assets):
Company	143,864		12.31	%	46,728		4.00	%	—		—	%
Bank	141,547		12.14	%	46,619		4.00	%	69,929		6.00	%
Tier I capital (to average assets):
Company	143,864		9.20	%	62,560		4.00	%	—		—	%
Bank	141,547		9.09	%	62,287		4.00	%	77,859		5.00	%
December 31, 2012:
Total capital (to risk weighted assets):
Company	$	155,088	13.30	%	$	93,319	8.00	%	$	—	—	%
Bank	153,091		13.15	%	93,168		8.00	%	116,459		10.00	%
Tier I capital (to risk weighted assets):
Company	140,471		12.04	%	46,660		4.00	%	—		—	%
Bank	138,497		11.89	%	46,584		4.00	%	69,876		6.00	%
Tier I capital (to average assets):
Company	140,471		8.91	%	63,087		4.00	%	—		—	%
Bank	138,497		8.83	%	62,768		4.00	%	78,460		5.00	%

Dividends paid by the Bank are the primary source of funds available to the Company for payment of dividends to its shareholders and other cash needs. Applicable Federal and state statutes and regulations impose restrictions on the amounts of dividends that may be declared by the Bank. The Bank may also be restricted in its ability to pay dividends due to regulatory violations cited in an examination. In addition to the formal statutes and regulations, regulatory authorities also consider the Bank’s ability to produce current earnings and the adequacy of the Bank's total capital in relation to its assets, deposits and other such items, and as a result, capital adequacy considerations could further limit the availability of dividends from the Bank.

The Bank is required to obtain prior approval from its primary regulators – the Federal Deposit Insurance Corporation (FDIC) and the State of Mississippi Department of Banking and Consumer Finance (MDBCF) – to pay dividends to the Company.

Pursuant to its pending acquisition by Renasant Corporation, the Company may redeem its TARP Community Development Capital Initiative (CDCI) preferred stock and common stock warrant. The funds required to redeem the $30 million par value preferred stock and repurchase the warrant would be obtained from the Bank. Therefore, any such redemption and repurchase transaction will only occur if the Bank receives approval from the FDIC and MDBCF to pay a dividend to the Company in an amount sufficient to complete the transactions.

Under the terms of the Exchange Agreement related to the Company's participation in the TARP CDCI, the Company may not pay common dividends in excess of the current rate of $.01 per share per quarter ($.04 per share per year) through the earlier of September 2018 or the date the preferred stock is redeemed.