California Bank of Commerce NOTES TO FINANCIAL STATEMENTS 12.  SHAREHOLDERS’ EQUITY  (Continued) Regulatory Capital The Bank is subject to certain regulatory capital requirements administered by the Federal Deposit  Insurance Corporation (FDIC). Failure to meet these 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, the Bank must meet specific capital guidelines that involve  quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated  under regulatory accounting practices. These quantitative measures are established by regulation  and require that minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets and of  Tier 1 capital to average assets be maintained. Capital amounts and classification are also subject to  qualitative judgments by the regulators about components, risk weightings and other factors. The Bank is also subject to additional capital guidelines under the regulatory framework for prompt  corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk- based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table on the following page. The most recent notification from the FDIC categorized the Bank as well capitalized under these  guidelines. There are no conditions or events since that notification that management believes have  changed the Bank’s category. 2011 2010 Amount Ratio Amount Ratio Leverage Ratio California Bank of Commerce  $ 33,119,000 11.43% $ 24,361,000 10.73% Minimum requirement for “Well-Capitalized” institution under prompt corrective action provisions  $ 14,490,000 5.00% $ 11,347,000 5.00% Minimum regulatory requirement  11,592,000 9,078,000 4.00% Tier 1 Risk-Based Capital Ratio California Bank of Commerce  $ 33,119,000 13.99% $ 24,361,000 10.8% Minimum requirement for “Well-Capitalized” institution under prompt corrective action provisions  $ 14,205,000 6.00% $ 13,538,000 6.00% Minimum regulatory requirement  9,470,000 4.00% 9,025,000 4.00% Total Risk-Based Capital Ratio California Bank of Commerce  $ 36,094,000 15.25% $ 27,200,000 12.06% Minimum requirement for “Well-Capitalized” institution under prompt corrective action provisions  $ 23,674,000 10.00% $ 22,563,000 10.00% Minimum regulatory requirement  18,940,000 8.00% 18,050,000 8.00% Management believes that the Bank met all capital adequacy requirements as of December 31, 2011  and 2010. 45