Regulatory Matters

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Legal Matters and Contingencies [Text Block]

12. Regulatory Matters

Restrictions on Dividends, Loans and Advances

The Bank is subject to a regulatory dividend restriction that generally limits the amount of dividends that can be paid by the Bank to the Corporation. Prior regulatory approval is required if the total of all dividends declared in any calendar year exceeds net profits (as defined in the regulations) for the year combined with net retained earnings (as defined) for the two preceding calendar years. In addition, dividends paid by the Bank to the Corporation would be prohibited if the effect thereof would cause the Bank’s capital to be reduced below applicable minimum capital requirements. As of December 31, 2012, $3.2 million of undistributed earnings of the Bank was available for distribution of dividends without prior regulatory approval.

Loans or advances from the Bank to the Corporation are limited to 10% of the Bank’s capital stock and surplus on a secured basis. Funds available for loans or advances by the Bank to the Corporation amounted to approximately $3.3 million. The Corporation has a $2.2 million commercial line of credit available at the Bank for the primary purpose of purchasing qualified equity investments. At December 31, 2012, the Corporation had an outstanding balance on this line of $1.4 million.

Minimum Regulatory Capital Requirements

The Corporation (on a consolidated basis) 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 Corporation’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The 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 Corporation 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 (as defined) and of Tier 1 capital (as defined) to average assets (as defined).

As of December 31, 2012, 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 the notification that management believes have changed the Bank’s category.

The following table sets forth certain information concerning the Bank’s regulatory capital as of the dates presented:

(Dollar amounts in thousands)	December 31, 2012										December 31, 2011
	Consolidated					Bank					Consolidated					Bank
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk-weighted assets:
Actual	$	50,035		16.62	%	$	48,585		16.21	%	$	50,512		17.85	%	$	45,550		16.25	%
For capital adequacy purposes		24,083		8.00	%		23,971		8.00	%		22,636		8.00	%		22,422		8.00	%
To be well capitalized		N/A		N/A			29,964		10.00	%		N/A		N/A			28,027		10.00	%
Tier 1 capital to risk-weighted assets:
Actual	$	46,252		15.36	%	$	44,820		14.96	%	$	47,008		16.61	%	$	42,046		15.00	%
For capital adequacy purposes		12,042		4.00	%		11,985		4.00	%		11,318		4.00	%		11,211		4.00	%
To be well capitalized		N/A		N/A			17,978		6.00	%		N/A		N/A			16,816		6.00	%
Tier 1 capital to average assets:
Actual	$	46,252		9.18	%	$	44,820		8.92	%	$	47,008		9.71	%	$	42,046		8.69	%
For capital adequacy purposes		20,148		4.00	%		20,101		4.00	%		19,362		4.00	%		19,347		4.00	%
To be well capitalized		N/A		N/A			25,126		5.00	%		N/A		N/A			24,183		5.00	%