Cash and Cash Equivalents

3 Months Ended

Mar. 31, 2013

Cash and Cash Equivalents

2. Cash and Cash Equivalents

Noninterest-Earning Deposits with Financial Institutions

There were no noninterest-earning deposits with financial institutions included in the cash and due from banks at March 31, 2013 and December 31, 2012.

Required Reserve Balances

The Federal Reserve Act requires each depository institution to maintain reserves against certain liabilities. The Bank reports these liabilities to the Board of Governors of the Federal Reserve System (the “Federal Reserve”) on a weekly basis and maintains reserves on these liabilities with a 30-day lag. For the maintenance period ended on April 3, 2013, based on reported liabilities from February 19, 2013 through March 4, 2013, the Federal Reserve required the Bank to maintain reserves of $12.5 million. After taking into consideration the Bank’s levels of vault cash, reserves of $642 thousand were maintained with the Federal Reserve.

Concentrations and Restrictions

In an effort to manage counterparty risk, the Company generally does not sell federal funds to other financial institutions. Federal funds are essentially uncollateralized overnight loans. The Company regularly evaluates the risk associated with the counterparties to these potential transactions to ensure that it would not be exposed to any significant risks with regard to cash and cash equivalent balances if it were to sell federal funds.

Restricted cash and cash equivalents pledged as collateral relative to bankcard and public fund agreements totaled $704 thousand at both March 31, 2013 and December 31, 2012.