RESTRICTED CASH BALANCES

12 Months Ended

Dec. 31, 2012

RESTRICTED CASH BALANCES

RESTRICTED CASH BALANCES

Note 3.  RESTRICTED CASH BALANCES

The Bank is required to maintain certain average reserve balances as established by the Federal Reserve Bank.  The amount of those reserve balances for the reserve computation period which included December 31, 2012 and 2011 was $1.4 million and $1.7 million, respectively, which amount was satisfied through the restriction of vault cash and deposits maintained at the Federal Reserve Bank.

At December 31, 2011, the Bank was required to maintain a compensating balance at the Federal Home Loan Bank of Pittsburgh in the amount of $30 million to collateralize a letter of credit which the Bank had pledged to collateralize certain municipal deposits. The Bank was not required to maintain any such compensating balance at December 31, 2012.

In addition, the Bank maintains compensating balances at correspondent banks, most of which are not required, but are used to offset specific charges for services.  At December 31, 2012 and 2011, the amount of these balances was $378 thousand and $775 thousand, respectively.