Accrued Interest Receivable and Other Assets

12 Months Ended

Dec. 31, 2012

Accrued Interest Receivable and Other Assets [Abstract]

Accrued Interest Receivable and Other Assets

Note 8. Accrued Interest Receivable and Other Assets

The following table provides the details of accrued interest receivable and other assets:

	At December 31,
(Dollars in thousands)	2012		2011
Other real estate owned	$	1,607	$	6,600
Accrued interest receivable		6,747		6,904
Accrued income and other receivables		2,105		2,995
Fair market value of derivative financial instruments		1,547		1,079
Prepaid FDIC insurance assessments		2,426		4,025
Other prepaid expenses		6,004		9,813
Federal Reserve Bank stock, Federal Home Loan Bank stock and other not readily marketable equity securities		7,469		9,145
Net federal deferred tax assets		11,650		13,690
Other		624		624
Total accrued interest receivable and other assets	$	40,179	$	54,875

The FDIC Board implemented an institutional prepaid FDIC assessment to recapitalize the Deposit Insurance Fund during the fourth quarter of 2009. The amount was paid on December 30, 2009 for the fourth quarter 2009, and for 2010 through 2012. At December 31, 2012, $2.4 million remained in the prepaid asset account. The prepaid amount of $2.4 million has a zero percent risk-weighting for risk-based capital ratio calculations. The remaining prepaid amount will be expensed over the 2013 through 2014 periods as the actual FDIC assessments are determined for each interim quarterly period. Any excess prepaid amounts may be utilized up to December 30, 2014 at which time any excess will be returned to the Bank.

At December 31, 2012 and 2011, the Bank held $3.3 million in Federal Reserve Bank stock as required by the Federal Reserve System. The Bank is also required to hold stock in the Federal Home Loan Bank of Pittsburgh (FHLB) in relation to the level of outstanding borrowings. The Bank held FHLB stock of $4.1 million and $5.8 million at December 31, 2012 and 2011, respectively. Additionally, the FHLB might require its members to increase its capital stock requirement. Effective February 28, 2011, the FHLB entered into a Joint Capital Enhancement Agreement with the other 11 Federal Home Loan Banks (collectively, the FHLBanks). The agreement calls for a plan for each FHLBank to build additional retained earnings and enhance capital. On August 5, and August 8, 2011, the Standard & Poor’s Rating Services downgraded the credit ratings of the U.S government and federal agencies, including the FHLB, respectively, from AAA to AA+, with a negative outlook. These downgrades, and any future downgrades in the credit ratings of the U.S. government and the FHLB, could increase the borrowing costs of the FHLB and possibly have a negative impact on its operations and long-term performance. It is possible this could have an adverse effect on the value of the Corporation’s investment in the FHLB stock. However, based on current information from the FHLB, management believes that if there is any impairment in the FHLB stock, it is temporary. Therefore, at December 31, 2012, the FHLB stock is recorded at cost.