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Note 20 - Regulatory Capital
 12 Months Ended
Dec. 31, 2014
Disclosure Text Block [Abstract]  
Regulatory Capital Requirements under Banking Regulations [Text Block]

NOTE 20. REGULATORY CAPITAL


The Company 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 Consolidated 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 the Bank’s prompt corrective action classifications 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 following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets and of Tier 1 capital to average assets. Management believes as of December 31, 2014 that the Company and the Bank met all capital adequacy requirements to which they are subject.


As of December 31, 2014, the most recent notification from the FDIC 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 that notification that management believes have changed the Bank’s category. The Company’s and the Bank’s actual capital amounts and ratios as of December 31, 2014 and 2013 are presented in the following table.


   

Actual

   

For Capital Adequacy Purposes

   

To Be Well Capitalized

 

(Dollars in thousands)

 

Amount

   

Ratio

   

Amount

   

Ratio

   

Amount

   

Ratio

 

At December 31, 2014:

                                               

Company

                                               

Leverage capital (to average assets)

  $ 113,963       11.59

%

  $ 39,328       4.00

%

 

n/a

   

n/a

 

Tier 1 capital (to risk-weighted assets)

  $ 113,963       13.91

%

  $ 32,764       4.00

%

 

n/a

   

n/a

 

Total capital (to risk-weighted assets)

  $ 124,217       15.16

%

  $ 65,529       8.00

%

 

n/a

   

n/a

 

Bank

                                               

Leverage capital (to average assets)

  $ 113,640       11.57

%

  $ 39,279       4.00

%

  $ 49,098       5.00

%

Tier 1 capital (to risk-weighted assets)

  $ 113,640       13.89

%

  $ 32,734       4.00

%

  $ 49,101       6.00

%

Total capital (to risk-weighted assets)

  $ 123,885       15.14

%

  $ 65,469       8.00

%

  $ 81,836       10.00

%

                                                 

At December 31, 2013:

                                               

Company

                                               

Leverage capital (to average assets)

  $ 120,661       12.80

%

  $ 37,720       4.00

%

 

n/a

   

n/a

 

Tier 1 capital (to risk-weighted assets)

  $ 120,661       15.94

%

  $ 30,280       4.00

%

 

n/a

   

n/a

 

Total capital (to risk-weighted assets)

  $ 130,191       17.20

%

  $ 60,559       8.00

%

 

n/a

   

n/a

 

Bank

                                               

Leverage capital (to average assets)

  $ 117,354       12.49

%

  $ 37,595       4.00

%

  $ 46,994       5.00

%

Tier 1 capital (to risk-weighted assets)

  $ 117,354       15.56

%

  $ 30,173       4.00

%

  $ 45,260       6.00

%

Total capital (to risk-weighted assets)

  $ 126,850       16.82

%

  $ 60,347       8.00

%

  $ 75,433       10.00

%


The principal source of cash for the Holding Company is dividends from the Bank. Dividends from the Bank to the Holding Company are restricted under California law to the lesser of the Bank’s retained earnings or the Bank’s net income for the latest three fiscal years, less dividends previously declared during that period. With the approval of the CDBO, the dividend restriction can be expanded to the greater of the retained earnings of the Bank, the net income of the Bank for its last fiscal year, or the net income of the Bank for its current fiscal year. Also with the prior approval of the CDBO and the shareholders of the Bank, the Bank may make a distribution to its shareholders, as a reduction in capital of the Bank.


In the event that the Commissioner determines that the shareholders' equity of a bank is inadequate or that the making of a distribution by a bank would be unsafe or unsound, the Commissioner may order a bank to refrain from making such a proposed distribution. As of January 1, 2015, the bank will be required to obtain regulatory approval from the CDBO for a dividend or other distribution to the Company.


The Bank is subject to certain restrictions under the Federal Reserve Act, including restrictions on the extension of credit to affiliates. In particular, it is prohibited from lending to an affiliated company unless the loans are secured by specific types of collateral. Such secured loans and other advances from the subsidiaries are limited to 10% of the Bank’s Tier 1 and Tier 2 capital.