Regulatory Matters

9 Months Ended

Sep. 30, 2014

Regulatory Matters [Abstract]

Regulatory Matters

Note 7 -  Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies.  Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary actions by the regulators that, if undertaken, could have a direct material effect on Bancorp’s consolidated financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  The Bank’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The following table presents the Bank’s capital position:

	Actual at September 30 2014			Actual at December 31, 2013			To Be Well Capitalized Under Prompt Corrective Provisions
Tangible (1)		13.7	%		12.9	%		N/A
Tier 1 Capital (2)		19.0	%		18.6	%		6.0	%
Core (1)		13.7	%		12.9	%		5.0	%
Total Capital (2)		20.3	%		19.8	%		10.0	%

(1) To adjusted total assets.

(2) To risk-weighted assets.

On April 23, 2013, the Bank was notified by the Office of the Comptroller of the Currency (“OCC”) that the OCC established minimum capital ratios for the Bank requiring it to immediately maintain a Tier 1 Leverage Capital Ratio to Adjusted Total Assets of at least 10% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 15%.  The Bank was in compliance with these requirements as of September 30, 2014.

Federal banking agencies have adopted proposals that will substantially amend the regulatory capital rules applicable to Bancorp and the Bank.  The amendments implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.  The amended rules establish new higher capital ratio requirements, narrow the definitions of capital, impose new operating restrictions on banking organizations with insufficient capital buffers and increase the risk weighting of certain assets.  The amended rules will be effective with respect to Bancorp and the Bank in January 2015, with certain requirements to be phased in beginning in 2016.