REGULATORY MATTERS

12 Months Ended

Dec. 31, 2011

REGULATORY MATTERS

NOTE J - REGULATORY MATTERS

The Company and its subsidiary bank are subject to regulatory capital requirements administered by 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 Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its subsidiary bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgment by regulators about components, risk weightings, and other related factors.

To ensure capital adequacy, quantitative measures have been established by regulators, and these require the Company and its subsidiary bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined) to risk-weighted assets (as defined), and of Tier I capital to adjusted total assets (leverage). Management believes, as of December 31, 2011, that the Company and its subsidiary bank exceeded all capital adequacy requirements.

At December 31, 2011 and 2010, the subsidiary bank was categorized by regulators as well-capitalized under the regulatory framework for prompt corrective action. A financial institution is considered to be well-capitalized if it has a total risk-based capital ratio of 10% or more, has a Tier I risk-based capital ratio of 6% or more, and has a Tier I leverage capital ratio of 5% or more. There are no conditions or anticipated events that, in the opinion of management, would change the categorization. The actual capital amounts and ratios at December 31, 2011 and 2010, are presented in the following table. No amount was deducted from capital for interest-rate risk exposure.

	Company					Subsidiary
	(Consolidated)					The First
	Amount		Ratio			Amount		Ratio
December 31, 2011
Total risk-based	$	62,071		13.6	%	$	60,910		13.3	%
Tier I risk-based		57,560		12.6	%		56,399		12.4	%
Tier I leverage		57,560		8.5	%		56,399		8.3	%
December 31, 2010
Total risk-based	$	70,818		19.6	%	$	58,368		16.2	%
Tier I risk-based		66,307		18.4	%		53,867		15.0	%
Tier I leverage		66,307		13.1	%		53,867		10.7	%

The minimum amounts of capital and ratios as established by banking regulators at December 31, 2011 and 2010, were as follows:

	Company					Subsidiary
	(Consolidated)					The First
	Amount		Ratio			Amount		Ratio
December 31, 2011
Total risk-based	$	36,649		8.0	%	$	36,527		8.0	%
Tier I risk-based		18,324		4.0	%		18,264		4.0	%
Tier I leverage		27,164		4.0	%		27,103		4.0	%
December 31, 2010
Total risk-based	$	28,860		8.0	%	$	28,798		8.0	%
Tier I risk-based		14,430		4.0	%		14,399		4.0	%
Tier I leverage		20,249		4.0	%		20,212		4.0	%

The Company’s dividends, if any, are expected to be made from dividends received from its subsidiary bank. The OCC limits dividends of a national bank in any calendar year to the net profits of that year combined with the retained net profits for the two preceding years.