Cash and Cash Equivalents

12 Months Ended

Dec. 31, 2012

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 line item in the Consolidated Balance Sheets at December 31, 2012 and 2011.

Required Reserve Balances

The Federal Reserve Act requires each depository institution to maintain reserves against certain liabilities. The Bank reports these liabilities to the Federal Reserve on a weekly basis. Weekly reporting institutions maintain reserves on these liabilities with a 30-day lag. For the maintenance period ended on January 9, 2013, based on reported liabilities from November 27, 2012 through December 10, 2012, the Federal Reserve required the Bank to maintain reserves of $12.5 million. After taking into consideration the Company’s levels of vault cash and clearing balance requirements, reserves of $2.3 million 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 and $703 thousand at December 31, 2012 and 2011, respectively.