Regulatory Capital

3 Months Ended

Jun. 30, 2011

Regulatory Capital [Abstract]

Regulatory Capital

Note 8 – Regulatory Capital

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 possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s 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 classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Qualitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of core, tangible, and risk-based capital. Management believes, as of March 31, 2011, that the Bank was adequately capitalized under PCA guidelines. Under these OTS requirements, a bank must have a total Risk-Based Capital Ratio of 8.0 percent or greater to be considered “adequately capitalized.” The Bank continues to work toward the requirements of the previously issued Cease and Desist Order which requires a total Risk-Based Capital Ratio of 12.0 percent, which exceeds traditional capital requirements for a bank. The Bank does not currently meet these elevated capital levels. See Note 3.

The following summarizes the Bank’s capital levels and ratios at June 30, 2011 and March 31, 2011 and those required by the OTS:

											Minimum Required
						Minimum					to be Well
						Required					Capitalized
						For Capital					Under					Minimum Required
						Adequacy					OTS					Under Order to
	Actual					Purposes					Requirements					Cease and Desist
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
						(Dollars In Thousands)
At June 30, 2011
Tier 1 capital (to adjusted tangible assets)	$	144,385		4.44	%	$	97,662		3.00	%	$	162,769		5.00	%	$	260,431		8.00	%
Risk-based capital (to risk-based assets)		171,564		8.32			165,018		8.00			206,272		10.00			247,526		12.00
Tangible capital (to tangible assets)		144,385		4.44			48,831		1.50			N/A		N/A			N/A		N/A
At March 31, 2011:
Tier 1 capital (to adjusted tangible assets)	$	145,807		4.26	%	$	102,669		3.00	%	$	171,115		5.00	%	$	273,784		8.00	%
Risk-based capital (to risk-based assets)		174,453		8.04			173,616		8.00			217,020		10.00			260,424		12.00
Tangible capital (to tangible assets)		145,807		4.26			51,335		1.50			N/A		N/A			N/A		N/A

In June 2009, the Bank consented to the issuance of a Cease and Desist Order with the OTS which requires, among other things, capital requirements in excess of the generally applicable minimum requirements. The Bank’s official regulatory reporting capital levels as reported for the fiscal quarters ended March 31, 2011 and June 30, 2011 were 8.04% and 8.32%, respectively. Under OTS requirements, a bank is deemed adequately capitalized with a risk-based capital level of 8.0% or greater.

The following table reconciles the Bank’s stockholders’ equity to regulatory capital at June 30, 2011 and March 31, 2011:

	June 30,			March 31,
	2011			2011
	(In Thousands)
Stockholders’ equity of the Bank	$	138,786		$	126,916
Less: Disallowed servicing assets		(1,417	)		(1,061	)
Accumulated other comprehensive loss		7,016			19,952
Tier 1 and tangible capital		144,385			145,807
Plus: Allowable general valuation allowances		27,179			28,646
Risk-based capital	$	171,564		$	174,453