Cash and Due from Banks

12 Months Ended

Dec. 31, 2012

Cash and Due from Banks.

Cash and Due from Banks

Note 2.  Cash and Due from Banks

The Bank is required to maintain certain cash reserve balances with the Federal Reserve Bank of Chicago, which may be offset by cash on hand.  The required reserve balances as of December 31, 2012 and 2011 were approximately $4.3 million and $4.0 million, respectively.  The December 31, 2011 balance included a clearing balance requirement.

Effective July 12, 2012, the contractual clearing balance program was eliminated by the Federal Reserve Bank.  Prior to that,  the Bank had established a clearing balance requirement with the Federal Reserve Bank of Chicago to use Federal Reserve Bank services.  As of December 31, 2011, the clearing balance requirement totaled $2.8 million.  These deposited funds generated earnings credits at market rates which offset service charges resulting from the use of Federal Reserve Bank services.  The clearing balance requirement was included in the required reserve balance referred to above for 2011.

The Company maintains its cash in deposit accounts which, at times, may exceed federally insured limits.  The Company has not experienced any losses in such accounts.  Management believes the Company is not exposed to any significant credit risk on cash and cash equivalents.