To be Well Capitalized under Prompt Corrective Action December 31, 2012 Actual For Capital Adequacy Purposes Provisions Amount Ratio Amount Ratio Amount Ratio Total capital (to risk weighted assets) $  30, 733 14. 07% $ >_ 17, 472 >_ 8. 0% $ >_ 21, 841 >_ 10. 0%  Tier 1 capital (to risk -  weighted assets)  28, 513 13. 05% >_  8, 736 >_ 4.0% >_ 13, 105 >_  6. 0%  Tier 1 capital (to average assets)  28, 513 10. 26% >_ 11, 114 >_ 4.0% >_ 13, 893 >_  5. 0%  The Bank is subject to certain restrictions on the amount of dividends that it may declare due to regulatory considerations. The Pennsylvania Banking Code provides that cash dividends may be declared and paid only out of accumulated net earnings.  The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31,  2013, the reserve balance amounted to $ 548, 000. At December 31,  2012,  the reserve balance amounted to $761, 000.  17. Fair Value of Financial Instruments Management uses its best judgment in estimating the fair value of the Bank’ s financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Bank could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective reporting dates and have not been re- evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year -end.  FASB ASC 820 -10 defines fair value, establishes a framework for measuring fair value under GAAP,  and expands disclosures about fair value measurements. FASB ASC 820 -10 applies to other accounting pronouncements that require or permit fair value measurements.  FASB ASC 820 -10 defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction ( that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions.  FASB ASC 820 -10 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities ( Level 1 measurements) and the lowest priority to unobservable inputs ( Level 3 measurements).  The three levels of the fair value hierarchy under FASB ASC 820 -10 are as follows:  Level 1 -  Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.  Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.  Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable ( i. e.,  supported with little or no market activity).  36