STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

13. STOCKHOLDERS' EQUITY

        Capital Adequacy—The Company and the Bank are subject to various regulatory capital requirements administered by state and 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 Company's 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 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 December 31, 2012, the Company meets all capital adequacy requirements to which it is subject.

        As of December 31, 2012, the Bank was considered "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.

        The Company's and the Bank's actual capital amounts and ratios are also presented in the table below (in thousands):

	Actual					For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of December 31, 2012
Total capital (to risk weighted assets):
Consolidated	$	44,422		19	%	$	19,038		8	%		N/A		N/A
Bank		44,099		19	%		19,019		8	%	$	23,774		10	%
Tier I capital (to risk weighted assets):
Consolidated		41,441		17	%		9,519		4	%		N/A		N/A
Bank		41,121		17	%		9,510		4	%		14,265		6	%
Tier I capital (to average assets):
Consolidated		41,441		11	%		15,455		4	%		N/A		N/A
Bank		41,121		11	%		15,447		4	%		19,309		5	%
As of December 31, 2011
Total capital (to risk weighted assets):
Consolidated	$	44,205		18	%	$	20,185		8	%		N/A		N/A
Bank		43,378		17	%		20,197		8	%	$	25,247		10	%
Tier I capital (to risk weighted assets):
Consolidated		41,041		16	%		10,093		4	%		N/A		N/A
Bank		40,214		16	%		10,098		4	%		15,148		6	%
Tier I capital (to average assets):
Consolidated		41,041		11	%		15,327		4	%		N/A		N/A
Bank		40,214		10	%		15,282		4	%		17,103		5	%

        Dividend Limitation—The amount of dividends paid by the Bank to the Company or paid by the Company to its shareholders is limited by various banking regulatory agencies. Any such dividends will be subject to maintenance of required capital levels. The Georgia Department of Banking and Finance must approve dividend payments that would exceed 50% of the Bank's net income for the prior year to the Company. The Georgia Department of Banking and Finance and the Federal Reserve Bank requires prior approval for the Company to pay dividends to its shareholders.

        When the Company received a capital investment from the United States Department of the Treasury in exchange for Preferred Stock under the Troubled Assets Relief Program ("TARP") Capital Purchase Program on March 6, 2009, the Company became subject to additional limitations on the payment of dividends. These limitations require, among other things, that for as long as the Preferred Stock is outstanding, no dividends may be declared or paid on the Company's common stock until all accrued and unpaid dividends on the Preferred Stock are fully paid. In addition, the U.S. Treasury's consent is required for any increase in dividends on common stock before the third anniversary of issuance of the Preferred Stock.

        The Company paid dividends of $169,000 on its common stock in 2012 and 2011. The annual dividend payout rate was $0.08 per common share in 2012 and 2011. In addition, the Company paid cash dividends totaling $237,000 in 2012 and 2011 on its preferred stock issued to the Treasury.