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excess, from the Corporation’s net earnings for such fiscal year and/or the preceding fiscal year). The Federal Reserve Board has also issued a policy statement that provides that bank holding companies should generally pay dividends only out of current operating earnings. 

## Note 4 - Regulatory Capital Requirements >. 

The Corporation is subject to various regulatory capital requirements imposed by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discre- tionary actions by regulators that, if undertaken, could have a direct mate- rial effect on the Corporation’s financial statements. Under capital ade- quacy guidelines and the regulatory framework for prompt corrective action, the Corporation must meet specific capital guidelines that involve quantitative measures of the Corporation’s assets, liabilities, and certain off- balance sheet items as calculated under regulatory accounting practices. The Corporation’s capital amounts and classification are also subject to qualitative judgment by the regulators about components, risk weightings and other factors. 

Capital standards established by regulations require the Corporation to maintain minimum amounts and ratios of Tier 1 capital to total average assets (leverage ratio) and ratios of Tier 1 and total capital to risk-weight- ed assets, as defined in the regulations. The total amount of risk-weighted assets is computed by applying risk weighting factors to the Corporation’s assets, which vary from 0% to 100% depending on the nature of the asset. 

At December 31, 2001 and 2000, the most recent notification from FDIC, categorized the Corporation as a well capitalized institution under the reg- ulatory framework for prompt corrective action. To be categorized as well capitalized the Corporation must maintain minimum total risk based,Tier 1 risk based and Tier 1 leverage ratios as set forth in the following table. Management believes that there are no conditions or events since that date that have changed that classification. 

The Corporation’s and its banking subsidiary’s regulatory capital positions were as follows: 

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