Capital Requirements and Regulatory Matters

12 Months Ended

Dec. 31, 2012

Capital Requirements And Regulatory Matters [Abstract]

Capital Requirements And Regulatory Matters

Note 15:  Capital Requirements and Regulatory Matters

We, Stillwater National, and Bank of Kansas are 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 regulators that, if undertaken, could have a direct material effect on our, Stillwater National’s, and Bank of Kansas’ financial statements.  Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we, Stillwater National, and Bank of Kansas must meet specific capital guidelines that involve quantitative measures of our, Stillwater National’s, and Bank of Kansas’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices.  We, Stillwater National’s, and Bank of Kansas’ capital amounts and classifications 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 us, Stillwater National, and Bank of Kansas to maintain minimum amounts 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 and 2011, that we, Stillwater National, and Bank of Kansas met all capital adequacy requirements.

The OCC notified Stillwater National, that effective May 17, 2012, it is no longer subject to the written formal agreemententered into on January 27, 2010. The written formal agreement primarily related to levels of commercial real estate lending and problem assets, and included arequirement for Stillwater National to submit written plans to the OCC and to take required actions related to improving credit risk management. Inaddition, the written formal agreement required submission of a three-year capital plan and required Stillwater National to obtain OCC approval before increasingits use of brokered deposits or declaring dividends.

Further, the OCC has notified Stillwater National that it is no longer subject to the informal Individual Minimum Capital agreement entered into on January 27, 2010, which required Stillwater National to maintain a ratio of total capital to risk weighted assets of at least 12.5% and a Tier 1 leverage ratio of at least 8.5%.  The general regulatory minimums to be well-capitalized are a total risk based capital ratio of 10.00%, a Tier 1 risk based capital ratio of 6.00%, and a leverage ratio of 5.00%.

As of December 31, 2012 and 2011, Stillwater National and Bank of Kansas were categorized as well-capitalized under the regulatory framework for prompt corrective action.  To be categorized as well-capitalized, Stillwater National and Bank of Kansas must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table.

Southwest’s, Stillwater National’s, and Bank of Kansas’ actual capital amounts and ratios are presented below.

					To Be Well Capitalized
					Under Prompt Corrective				For Capital
	Actual				Action Provisions				Adequacy Purposes
(Dollars in thousands)	Amount		Ratio			Amount	Ratio			Amount	Ratio
As of December 31, 2012:
Total Capital (to risk-weighted assets)
Southwest	$	339,964	21.56	%	$	N/A	N/A	%	$	126,122	8.00	%
Stillwater National		269,323	19.55			137,793	10.00			110,234	8.00
Bank of Kansas		33,356	18.37			18,161	10.00			14,529	8.00
Tier I Capital (to risk-weighted assets)
Southwest		319,665	20.28			N/A	N/A			63,061	4.00
Stillwater National		236,705	17.18			82,676	6.00			55,117	4.00
Bank of Kansas		31,064	17.10			10,896	6.00			7,264	4.00
Tier I Leverage (to average assets)
Southwest		319,665	15.01			N/A	N/A			85,201	4.00
Stillwater National		236,705	13.14			90,088	5.00			72,070	4.00
Bank of Kansas		31,064	10.02			15,506	5.00			12,405	4.00
As of December 31, 2011:
Total Capital (to risk-weighted assets)
Southwest	$	395,292	20.78	%	$	N/A	N/A	%	$	152,211	8.00	%
Stillwater National		314,550	18.56			169,462	10.00			135,570	8.00
Bank of Kansas		35,731	18.82			18,984	10.00			15,187	8.00
Tier I Capital (to risk-weighted assets)
Southwest		371,114	19.51			N/A	N/A			76,106	4.00
Stillwater National		278,079	16.41			101,677	6.00			67,785	4.00
Bank of Kansas		33,325	17.55			11,390	6.00			7,593	4.00
Tier I Leverage (to average assets)
Southwest		371,114	14.50			N/A	N/A			102,346	4.00
Stillwater National		278,079	12.53			110,966	5.00			88,773	4.00
Bank of Kansas		33,325	10.32			16,143	5.00			12,914	4.00

The approval of the OCC is required if the total of all dividends declared by Stillwater National in any calendar year exceeds the total of its net profits of that year combined with its retained net profits of the preceding two years.  In addition, Stillwater National may not pay a dividend if, after paying the dividend, Stillwater National would be undercapitalized.  For the year ended December 31, 2012, Stillwater National declared $65.0 million in dividends.  No dividends were declared by Stillwater National for the years ended December 31, 2011 and 2010.

The same dividend restrictions apply to Bank of Kansas with approval required from the FDIC.   Bank of Kansas declared $5.0 million in dividends for the year ended December 31, 2012.  No dividends were declared by Bank of Kansas for the years ended December 31, 2011 and 2010.