Capital and Regulatory Matters

12 Months Ended

Jun. 30, 2015

Capital and Regulatory Matters

Capital and Regulatory Matters

10. Capital and Regulatory Matters

        The Company and the Bank are 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 and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and the Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

        The prompt corrective action regulations define specific capital categories based on an institution's capital ratios. The capital categories, in declining order, are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized."

        As of June 30, 2015 and 2014, the most recent notification from the Company's and the Bank's regulator categorized the Company and the Bank as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Company and the Bank must maintain minimum Common equity tier 1 risk-based, total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the institution's regulatory designation as "well-capitalized" under the regulatory framework for prompt corrective action.

        Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios as set forth in the table below. At June 30, 2015 and 2014, the Company's and the Bank's ratios exceeded the regulatory requirements. Management believes that the Company and the Bank met all capital adequacy requirements to which they were subject as of June 30, 2015 and 2014. The Company's and the Bank's regulatory capital ratios are set forth below.

	Actual					Minimum Capital Requirements					Minimum To Be Well Capitalized Under Prompt Correction Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
June 30, 2015:
Common equity tier 1 capital to risk weighted assets:
Company	$	120,461		19.72	%	$	27,489		4.5	%	$	N/A		N/A
Bank		107,589		17.57	%		27,556		4.5	%		39,802		6.5	%
Total capital to risk weighted assets:
Company		122,424		20.04	%		48,872		8.0	%		N/A		N/A
Bank		111,340		18.18	%		48,994		8.0	%		61,243		10.0	%
Tier 1 capital to risk weighted assets:
Company		120,461		19.72	%		24,434		4.0	%		N/A		N/A
Bank		107,589		17.57	%		24,494		4.0	%		36,741		6.0	%
Tier 1 capital to average assets:
Company		120,461		14.42	%		33,415		4.0	%		N/A		N/A
Bank		107,589		12.87	%		33,439		4.0	%		41,798		5.0	%
June 30, 2014:
Total capital to risk weighted assets:
Company	$	120,818		23.69	%	$	40,808		8.0	%	$	N/A		N/A
Bank		103,160		20.12	%		41,027		8.0	%		51,284		10.0	%
Tier 1 capital to risk weighted assets:
Company		119,421		23.41	%		20,404		4.0	%		N/A		N/A
Bank		99,256		19.35	%		20,514		4.0	%		30,771		6.0	%
Tier 1 capital to average assets:
Company		119,421		15.90	%		30,049		4.0	%		N/A		N/A
Bank		99,256		13.22	%		30,028		4.0	%		37,536		5.0	%

        The Bank may not declare or pay a cash dividend on, or repurchase, any of its capital stock from the Parent if the effect thereof would cause the capital of the Bank to be reduced below the capital requirements imposed by the regulatory authorities or if such amount exceeds the otherwise allowable amount under FRB rules.

        In connection with the Merger, as part of the regulatory approval process, the Company and the Bank made certain commitments to the Federal Reserve, the most significant of which are (i) to maintain a Tier 1 leverage ratio of at least 10%, (ii) to maintain a total risk-based capital ratio of at least 15%, (iii) to limit purchased loans to 40% of total loans, (iv) to fund 100% of the Company's loans with core deposits (defined as non-maturity deposits and non-brokered insured time deposits), and (v) to hold non-owner occupied commercial real estate loans to within 300% of total risk-based capital. The Company and the Bank are currently in compliance with all commitments to the Federal Reserve.