Regulatory Matters

12 Months Ended

Dec. 31, 2012

Regulatory Matters

Regulatory Matters

(21) Regulatory Matters

Bancorp and the Bank are subject to various capital requirements prescribed by banking regulations and administered by state and federal banking agencies. Under these requirements, Bancorp and the Bank must meet minimum amounts and percentages of Tier I and total capital, as defined, to risk weighted assets and Tier I capital to average assets. Risk weighted assets are determined by applying certain risk weightings prescribed by the regulations to various categories of assets and off-balance sheet commitments. Capital and risk weighted assets may be further subject to qualitative judgments by regulators as to components, risk weighting and other factors. Failure to meet the capital requirements can result in certain mandatory, and possibly discretionary, corrective actions prescribed by the regulations or determined to be necessary by the regulators, which could materially affect the consolidated financial statements. Management believes Bancorp and the Bank met all capital requirements to which they were subject as of December 31, 2012.

As of December 2012 and 2011, the Bank’s primary regulator categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since those notifications that management believes have changed the Bank’s capital categories.

A summary of Bancorp’s and the Bank’s capital ratios at December 31, 2012 and 2011 follows:

December 31, 2012	Actual				Minimum for adequate				Minimum for well capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital (1)
Consolidated	$	250,837	14.42	%	$	139,161	8.00	%	NA		NA
Bank	220,133		12.70	%	138,666		8.00	%	$	173,333	10.00	%
Tier I risk-based capital (1)
Consolidated	$	228,972	13.17	%	$	69,544	4.00	%	NA		NA
Bank	198,339		11.44	%	69,349		4.00	%	$	104,024	6.00	%
Leverage (2)
Consolidated	$	228,972	10.79	%	$	63,662	3.00	%	NA		NA
Bank	198,339		9.37	%	63,502		3.00	%	$	105,837	5.00	%

December 31, 2011	Actual				Minimum for adequate				Minimum for well capitalized
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total risk-based capital (1)
Consolidated	$	242,365	14.63	%	$	132,530	8.00	%	NA		NA
Bank	210,614		12.77	%	131,943		8.00	%	$	164,929	10.00	%
Tier I risk-based capital (1)
Consolidated	$	211,544	12.77	%	$	66,263	4.00	%	NA		NA
Bank	179,890		10.91	%	65,954		4.00	%	$	98,931	6.00	%
Leverage (2)
Consolidated	$	211,544	10.53	%	$	60,269	3.00	%	NA		NA
Bank	179,890		8.99	%	60,030		3.00	%	$	100,050	5.00	%

(1) Ratio is computed in relation to risk-weighted assets.

(2) Ratio is computed in relation to average assets.

NA — Not applicable.  Well capitalized is not defined for holding companies in regulatory framework.

Included in the total risk-based capital at December 31, 2011 was $10 million of subordinated debentures, which qualified as Tier 2 capital.  Bancorp prepaid the debentures in the first quarter of 2012.