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REGULATORY MATTERS
12 Months Ended
Jun. 30, 2013
Commitments and Contingencies Disclosure [Abstract]  
Legal Matters and Contingencies [Text Block]
NOTE 10—REGULATORY MATTERS
 
The Bank is subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective-action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings, and other factors and the regulators can lower classifications in certain cases. Failure to meet various capital requirements can initiate regulatory action that could have a direct material effect on the financial statements. Management believes as of June 30, 2013, the Bank has met all capital adequacy requirements to which it is subject.  
 
The prompt corrective action regulations provide five classifications, including well capitalized, adequately capitalized, under-capitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and plans for capital restoration are required.
 
As of fiscal year-end 2013, the Corporation met the definition of a small bank holding company and, therefore, was exempt from consolidated risk-based and leverage capital adequacy guidelines for bank holding companies. At year-end 2013 and 2012, actual Bank capital levels (in millions) and minimum required levels were as follows:
 
 
 
Actual
 
Minimum Required
For Capital
Adequacy Purposes
 
Minimum Required
To Be Well
Capitalized Under
Prompt Corrective
Action Regulations
 
 
 
Amount
 
Ratio
 
 
Amount
 
Ratio
 
 
Amount
 
Ratio
 
June 30, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets) Bank
 
$
30.5
 
 
13.0
%
 
$
18.8
 
 
8.0
%
 
$
23.4
 
 
10.0
%
Tier 1 capital (to risk weighted assets) Bank
 
 
28.0
 
 
12.0
 
 
 
9.4
 
 
4.0
 
 
 
14.1
 
 
6.0
 
Tier 1 capital (to average assets) Bank
 
 
28.0
 
 
8.1
 
 
 
13.9
 
 
4.0
 
 
 
17.4
 
 
5.0
 
June 30, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total capital (to risk weighted assets) Bank
 
$
28.5
 
 
13.4
%
 
$
17.0
 
 
8.0
%
 
$
21.2
 
 
10.0
%
Tier 1 capital (to risk weighted assets) Bank
 
 
24.2
 
 
11.4
 
 
 
8.5
 
 
4.0
 
 
 
12.7
 
 
6.0
 
Tier 1 capital (to average assets) Bank
 
 
24.2
 
 
7.4
 
 
 
13.1
 
 
4.0
 
 
 
16.4
 
 
5.0
 
 
As of the latest regulatory examination, the Bank was categorized as well capitalized. There are no conditions or events since that examination that management believes may have changed the Bank’s category.
 
The Corporation’s principal source of funds for dividend payment is dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid without prior approval of regulatory agencies. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years, subject to the capital requirements described above. As of June 30, 2013 the Bank could, without prior approval, declare a dividend of approximately $4,494.
 
On February 26, 2013, the Corporation filed a registration statement with the Securities and Exchange Commission (SEC) related to a $10 million shareholder rights offering. Under the rights offering, the Corporation distributed to its shareholders of record as of March 26, 2013, proportional rights to purchase additional shares and the opportunity to purchase shares in excess of their basic subscription rights. The Corporation also offered any shares not subscribed for in the rights offering and public offering through a subsequent public offering. In July 2013, the Corporation completed its rights offering with the sale of 655,668 shares of common stock for gross proceeds of approximately $10.0 million. The Corporation intends to use the net proceeds to enhance the Bank’s overall capital position, for general corporate purposes and future organic and other growth opportunities.