its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank  holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound  practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the  payment of dividends by banks and bank holding companies.  Federal Securities Regulation. The Company’s common stock is registered with the SEC under the  Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Consequently, the Company is subject to the information, proxy solicitation, insider trading and other restrictions  and requirements of the SEC under the Exchange Act.  Corporate Governance . The Dodd-Frank Act addresses many investor protection, corporate governance  and executive compensation matters that will affect most U.S. publicly traded companies. The Dodd-Frank Act will  increase stockholder influence over boards of directors by requiring companies to give stockholders a nonbinding  vote on executive compensation and so-called “golden parachute” payments, and authorizing the SEC to promulgate  rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy  materials. The legislation also directs the Federal Reserve to promulgate rules prohibiting excessive compensation  paid to bank holding company executives, regardless of whether the Company is publicly traded.  General. The Bank is a national bank, chartered by the OCC under the National Bank Act. The deposit  accounts of the Bank are insured by the FDIC’s Deposit Insurance Fund (the “DIF”) to the maximum extent provided  under federal law and FDIC regulations, and the Bank is a member of the Federal Reserve System. As a national bank,  the Bank is subject to the examination, supervision, reporting and enforcement requirements of the OCC, the chartering  authority for national banks. The FDIC, as administrator of the DIF, also has regulatory authority over the Bank. The  Bank is also a member of the Federal Home Loan Bank System, which provides a central credit facility primarily for  member institutions.  Deposit Insurance . As an FDIC-insured institution, the Bank is required to pay deposit insurance premium  assessments to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured depository  institutions pay insurance premiums at rates based on their risk classification. An institution’s risk classification is  assigned based on its capital levels and the level of supervisory concern the institution poses to the regulators. On November 12, 2009, the FDIC adopted a final rule that required insured depository institutions to  prepay on December 30, 2009, their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for  all of 2010, 2011, and 2012. As such, on December 31, 2009, the Bank prepaid its assessments based on its actual  September 30, 2009 assessment base, adjusted quarterly by an estimated 5% annual growth rate through the end of  2012. The FDIC also used the institution’s total base assessment rate in effect on September 30, 2009, increasing it  by an annualized 3 basis points beginning in 2011. The FDIC began to offset prepaid assessments on March 30,  2010, representing payment of the regular quarterly risk-based deposit insurance assessment for the fourth quarter of  2009. Any prepaid assessment not exhausted after collection of the amount due on June 30, 2013, will be returned to  the institution.  Amendments to the Federal Deposit Insurance Act also revise the assessment base against which an insured  depository institution’s deposit insurance premiums paid to the DIF will be calculated. Under the amendments, the  assessment base will no longer be the institution’s deposit base, but rather its average consolidated total assets less its  average tangible equity. This may shift the burden of deposit insurance premiums toward those large depository  institutions that rely on funding sources other than U.S. deposits. Additionally, the Dodd-Frank Act makes changes  to the minimum designated reserve ratio of the DIF, increasing the minimum from 1.15% to 1.35% of the estimated  amount of total insured deposits, and eliminating the requirement that the FDIC pay dividends to depository  institutions when the reserve ratio exceeds certain thresholds. The FDIC is given until September 3, 2020 to meet  the 1.35% reserve ratio target. Several of these provisions could increase the Bank’s FDIC deposit insurance  premiums. The Dodd-Frank Act permanently increases the maximum amount of deposit insurance for banks, savings  institutions and credit unions to $250,000 per insured depositor, retroactive to January 1, 2009. Although the  legislation provided that non-interest-bearing transaction accounts had unlimited deposit insurance coverage through  December 31, 2012. 21  The Bank 