10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C.  20549

___________________

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________to ________

Commission File Number 0-29030

SUSSEX BANCORP

(Exact name of registrant as specified in its charter)   

New Jersey 22-3475473

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

200 Munsonhurst Rd., Franklin, NJ	07416
(Address of principal executive offices)	(Zip Code)

(973) 827-2914

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes xNo ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 

Yes xNo ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨   Accelerated filer ¨        Non-accelerated filer ¨            Smaller reporting company x

(Do not check if a smaller reporting company)   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes ¨No x

As of November  7, 2013 there were 4,629,113  shares of common stock, no par value, outstanding.

SUSSEX BANCORP

FORM 10-Q

INDEX

FORWARD-LOOKING STATEMENTS	ii
PART I – FINANCIAL INFORMATION	1
Item 1 - Financial Statements	1
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	36
Item 4 - Controls and Procedures	36
PART II – OTHER INFORMATION	37
Item 1 - Legal Proceedings	37
Item 1A - Risk Factors	37
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3 - Defaults Upon Senior Securities	37
Item 4 - Mine Safety Disclosures	37
Item 5 - Other Information	37
Item 6 - Exhibits	37

1

FORWARD-LOOKING STATEMENTS

We may, from time to time, make written or oral “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements contained in our filings with the Securities and Exchange Commission (the “SEC”), our reports to shareholders and in other communications by us. This Report on Form 10-Q contains “forward-looking statements” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.”  Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operation and business that are subject to various factors which could cause actual results to differ materially from these estimates.  These factors include, but are not limited to:

§ changes in the interest rate environment that reduce margins;

§ changes in the regulatory environment;

§ the highly competitive industry and market area in which we operate;

§ general economic conditions, either nationally or regionally, resulting in, among other things, a deterioration in credit quality;

§ changes in business conditions and inflation;

§ changes in credit market conditions;

§ changes in the securities markets which affect investment management revenues;

§ increases in Federal Deposit Insurance Corporation (“FDIC”) deposit insurance premiums and assessments could adversely affect our financial condition;

§ changes in technology used in the banking business;

§ the soundness of other financial services institutions which may adversely affect our credit risk;

§ our controls and procedures may fail or be circumvented;

§ new lines of business or new products and services which may subject us to additional risks;

§ changes in key management personnel which may adversely impact our operations;

§ the effect on our operations of recent legislative and regulatory initiatives that were or may be enacted in response to the ongoing financial crisis;

§ severe weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business; and

§ other factors detailed from time to time in our filings with the SEC.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  We do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

2

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	September 30, 2013		December 31, 2012
		(Unaudited)
ASSETS
Cash and due from banks	$	7,784	$	6,268
Interest-bearing deposits with other banks		3,256		5,400
Cash and cash equivalents		11,040		11,668
Interest bearing time deposits with other banks		100		100
Securities available for sale, at fair value		95,378		118,881
Securities held to maturity, at cost (fair value of $5,856 and
$5,472 at September 30, 2013 and December 31, 2012, respectively)		5,824		5,221
Federal Home Loan Bank Stock, at cost		2,480		1,980
Loans receivable, net of unearned income		392,300		347,736
Less:  allowance for loan losses		5,655		4,976
Net loans receivable		386,645		342,760
Foreclosed real estate		3,077		5,066
Premises and equipment, net		6,556		6,476
Accrued interest receivable		1,695		1,741
Goodwill		2,820		2,820
Bank-owned life insurance		11,803		11,536
Other assets		7,468		6,485
Total Assets	$	534,886	$	514,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	59,438	$	48,375
Interest bearing		377,536		384,061
Total Deposits		436,974		432,436
Long-term borrowings		36,000		26,000
Accrued interest payable and other liabilities		3,012		3,039
Junior subordinated debentures		12,887		12,887
Total Liabilities		488,873		474,362
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-		-
Common stock, no par value, 10,000,000 shares authorized;
4,640,296 and 3,409,056 shares issued and 4,629,113 and 3,397,873 shares
outstanding at September 30, 2013 and December 31, 2012, respectively		35,187		28,117
Treasury stock, at cost; 11,183 shares		(59)		(59)
Retained earnings		12,765		11,958
Accumulated other comprehensive (loss) income		(1,880)		356
Total Stockholders' Equity		46,013		40,372
Total Liabilities and Stockholders' Equity	$	534,886	$	514,734
See Notes to Unaudited Consolidated Financial Statements

1

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands except per share data)		2013		2012		2013		2012
INTEREST INCOME
Loans receivable, including fees	$	4,599	$	4,467	$	13,360	$	13,292
Securities:
Taxable		130		241		410		994
Tax-exempt		254		292		762		827
Interest bearing deposits		2		4		9		30
Total Interest Income		4,985		5,004		14,541		15,143
INTEREST EXPENSE
Deposits		419		587		1,410		1,938
Borrowings		293		268		828		797
Junior subordinated debentures		54		60		163		183
Total Interest Expense		766		915		2,401		2,918
Net Interest Income		4,219		4,089		12,140		12,225
PROVISION FOR LOAN LOSSES		500		1,104		2,342		2,922
Net Interest Income after Provision for Loan Losses		3,719		2,985		9,798		9,303
OTHER INCOME
Service fees on deposit accounts		283		292		840		842
ATM and debit card fees		181		165		519		453
Bank-owned life insurance		85		96		267		300
Insurance commissions and fees		756		684		2,245		1,892
Investment brokerage fees		37		46		136		118
Net gain on sale of loans held for sale		-		-		-		47
Net gain on securities transactions		-		569		399		763
Net loss on sale of premises and equipment		-		-		-		(6)
Other		92		108		276		291
Total Other Income		1,434		1,960		4,682		4,700
OTHER EXPENSES
Salaries and employee benefits		2,387		2,196		6,943		6,744
Occupancy, net		342		355		1,083		1,071
Furniture, equipment and data processing		326		326		983		1,014
Advertising and promotion		63		63		198		222
Professional fees		153		175		536		478
Director fees		106		56		299		236
FDIC assessment		176		177		523		516
Insurance		65		68		204		179
Stationary and supplies		43		44		143		128
Loan collection costs		37		204		251		539
Net expenses and write-downs related to foreclosed real estate		317		232		1,325		1,039
Amortization of intangible assets		-		1		1		4
Other		420		396		1,213		1,095
Total Other Expenses		4,435		4,293		13,702		13,265
Income before Income Taxes		718		652		778		738
EXPENSE (BENEFIT) FOR INCOME TAXES		143		106		(29)		(94)
Net Income		575		546		807		832
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on available for sale securities arising during the period		430		693		(3,327)		1,413
Reclassification adjustment for net gain on securities transactions included in net income		-		(569)		(399)		(763)
Income tax (benefit) expense related to items of other comprehensive income (loss)		(173)		(49)		1,490		(259)
Other comprehensive income (loss), net of income taxes		257		75		(2,236)		391
Comprehensive income (loss)	$	832	$	621	$	(1,429)	$	1,223
EARNINGS PER SHARE
Basic	$	0.14	$	0.17	$	0.23	$	0.26
Diluted	$	0.14	$	0.17	$	0.23	$	0.25
See Notes to Unaudited Consolidated Financial Statements

2

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended September 30, 2013 and 2012
(Unaudited)
							Accumulated
	Number of						Other				Total
	Shares		Common		Retained		Comprehensive		Treasury		Stockholders'
(Dollars In Thousands)	Outstanding		Stock		Earnings		Income (Loss)		Stock		Equity
Balance December 31, 2011	3,372,949	$	27,964	$	11,223	$	719	$	(4)	$	39,902
Net income	-		-		832		-		-		832
Other comprehensive income	-		-		-		391		-		391
Treasury shares purchased	(10,339)								(55)		(55)
Restricted stock granted	37,496		-		-		-		-		-
Restricted stock forfeited	(2,233)		-		-		-		-		-
Compensation expense related to stock
option and restricted stock grants	-		112		-		-		-		112
Balance September 30, 2012	3,397,873	$	28,076	$	12,055	$	1,110	$	(59)	$	41,182
Balance December 31, 2012	3,397,873	$	28,117	$	11,958	$	356	$	(59)	$	40,372
Net income	-		-		807		-		-		807
Other comprehensive loss	-		-		-		(2,236)		-		(2,236)
Restricted stock granted	32,940		-		-		-		-		-
Stock issued in rights offering	1,198,300		6,896		-		-		-		6,896
Compensation expense related to stock
option and restricted stock grants	-		174		-		-		-		174
Balance September 30, 2013	4,629,113	$	35,187	$	12,765	$	(1,880)	$	(59)	$	46,013
See Notes to Unaudited Consolidated Financial Statements

3

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine Months Ended September 30,
(Dollars in thousands)	2013		2012
Cash Flows from Operating Activities
Net income	$	807	$	832
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,342		2,922
Depreciation and amortization		510		509
Net amortization of securities premiums and discounts		2,496		1,991
Net realized gain on sale of securities		(399)		(763)
Net realized gain on sale of loans held for sale		-		(47)
Proceeds from the sale of loans held for sale		-		638
Net realized loss on sale of premises and equipment		-		6
Net realized gain on sale of foreclosed real estate		(50)		(5)
Write-downs of and provisions for foreclosed real estate		995		871
Deferred income taxes		648		(509)
Earnings on bank owned life insurance		(267)		(300)
Compensation expense for stock options and stock awards		174		112
(Increase) decrease in assets:
Accrued interest receivable		46		(126)
Other assets		(142)		1,060
Decrease in accrued interest payable and other liabilities		(27)		4,096
Net Cash Provided by Operating Activities		7,133		11,287
Cash Flows from Investing Activities
Securities available for sale:
Purchases		(28,745)		(71,850)
Sales		13,029		24,187
Maturities, calls and principal repayments		33,431		24,475
Securities held to maturity:
Purchases		(1,860)		(2,623)
Maturities, calls and principal repayments		1,222		1,220
Net increase in loans		(49,080)		(5,632)
Proceeds from the sale of foreclosed real estate		3,897		425
Purchases of bank premises and equipment		(589)		(375)
Proceeds from the sale of premises and equipment		-		12
Increase in FHLB stock		(500)		(106)
Net Cash Used in Investing Activities		(29,195)		(30,267)
Cash Flows from Financing Activities
Net increase (decrease) in deposits		4,538		(8,035)
Increase in borrowed funds		10,000		-
Purchase of treasury stock		-		(55)
Net proceeds from issuance of common stock		6,896		-
Net Cash Provided by Financing Activities		21,434		(8,090)
Net Decrease in Cash and Cash Equivalents		(628)		(27,070)
Cash and Cash Equivalents - Beginning		11,668		37,500
Cash and Cash Equivalents - Ending	$	11,040	$	10,430
Supplementary Cash Flows Information
Interest paid	$	2,468	$	2,952
Income taxes paid	$	33	$	212
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	$	2,853	$	940
Loans transferred to held for sale	$	-	$	591
See Notes to Unaudited Consolidated Financial Statements

4

NOTE 1  –  SUMMARY OF SIGNIFICANT ACOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Sussex Bancorp (“we,” “us” or “our”) and our whollyowned subsidiary Sussex Bank (the “Bank”).  The Bank’s whollyowned subsidiaries are SCB Investment Company, Inc., SCBNY Company, Inc., ClassicLake Enterprises, LLC, Wheatsworth Properties Corp., PPD Holding Company, LLC, and Tri-State Insurance Agency, Inc. (“Tri-State”), a full service insurance agency located in Sussex County, New Jersey with a satellite office located in Bergen County, New Jersey.  Tri-State’s operations are considered a separate segment for financial disclosure purposes.  All inter-company transactions and balances have been eliminated in consolidation.  The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York.

Sussex Bancorp is subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (the “FRB”).  The Bank’s deposits are insured by the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits.  The operations of Sussex Bancorp and Sussex Bank are subject to the supervision and regulation of the FRB, FDIC and the New Jersey Department of Banking and Insurance (the “Department”) and the operations of Tri-State are subject to supervision and regulation by the Department.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for full year financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature.  Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2013, for items that should potentially be recognized or disclosed in these unaudited consolidated financial statements.  The evaluation was conducted through the date these unaudited consolidated financial statements were issued.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income.

New Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date.For public entities, the guidance is effective for fiscal years beginning after December 15, 2013 and interim periods within those years.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  This ASU requires entities to disclose the effect of items reclassified out of accumulated other comprehensive income (“AOCI”) on each affected net income line item.  For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures.  This information may be provided either in the notes or parenthetically on the face of the financial statements.  For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2012, and interim periods within those years.  The adoption of this guidance did not have a material impact on our consolidated financial statements and the required disclosures are included in Note 6 to these consolidated financial statements.

5

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and fair value of securities available for sale as of September 30, 2013 and December 31, 2012 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
U.S. government agencies	$	5,517	$	24	$	(28)	$	5,513
State and political subdivisions		28,772		3		(2,660)		26,115
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		320		(830)		63,304
Equity securities-financial services industry and other		408		55		(17)		446
	$	98,511	$	402	$	(3,535)	$	95,378
December 31, 2012
State and political subdivisions	$	27,341	$	594	$	(194)	$	27,741
Mortgage-backed securities:
U.S. government-sponsored enterprises		90,487		671		(449)		90,709
Equity securities-financial services industry and other		460		16		(45)		431
	$	118,288	$	1,281	$	(688)	$	118,881

Securities with a carrying value of approximately $39.9 million and $26.1 million at September 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes required or permitted by applicable laws and regulations.

The amortized cost and fair value of securities available for sale at September 30, 2013, are shown below by contractual maturity.  Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	-	$	-
Due after one year through five years		502		496
Due after five years through ten years		2,102		2,032
Due after ten years		26,168		23,587
Total bonds and obligations		28,772		26,115
U.S. government agencies		5,517		5,513
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		63,304
Equity securities-financial services industry and other		408		446
Total available for sale securities	$	98,511	$	95,378

6

There were no gross realized gains on sales of securities available for sale for the three months ended September 30, 2013. Gross realized gains on sales of securities available for sale were $561 thousand for the three months ended September 30, 2012, and there were no gross realized losses for the three months ended September 30, 2013 and 2012.  Gross realized gains on sales of securities available for sale were $407 thousand and$775 thousand for the nine months ended September 30, 2013and 2012, respectively, and gross realized losses were $8 thousand and $20 thousand for the nine months ended September 30, 2013and 2012, respectively. In addition, we realized gross gains of $8 thousand on debt securities that were called during the three and nine month period ended September 30, 2012.

Temporarily Impaired Securities

The following table shows gross unrealized losses and fair value of securities with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by category and length of time that individual available for sale securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012.

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
U.S. government agencies	$	3,303	$	(28)	$	-	$	-	$	3,303	$	(28)
State and political subdivisions		25,194		(2,603)		465		(57)		25,659		(2,660)
Mortgage-backed securities:								-
U.S. government-sponsored enterprises		33,977		(612)		8,102		(218)		42,079		(830)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	62,474	$	(3,243)	$	8,693	$	(292)	$	71,167	$	(3,535)
December 31, 2012
State and political subdivisions	$	9,788	$	(194)	$	-	$	-	$	9,788	$	(194)
Mortgage-backed securities:
U.S. government-sponsored enterprises		31,901		(305)		4,658		(144)		36,559		(449)
Equity securities-financial services industry and other		106		(37)		109		(8)		215		(45)
Total temporarily impaired securities	$	41,795	$	(536)	$	4,767	$	(152)	$	46,562	$	(688)

As of September 30, 2013, we reviewed our available for sale securitiesportfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security.  The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. 

U.S. Government Agencies

At September 30, 2013, the decline in fair value and the unrealized losses for our U.S. government agencies securities were primarily due to changes in spreads and market conditions and not credit quality.  At September 30, 2013, there weretwo securities with a fair value of $3.3 million that had an unrealized loss that amounted to $28 thousand.  As of September 30, 2013, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of the U.S. government agency securities at September 30, 2013, were deemed to be other-than-temporarily impaired.

State and Political Subdivisions

At September 30, 2013, the decline in fair value and the unrealized losses for our state and political subdivisions securitieswere caused by changes in interest rates and spreads and were not the result of credit quality.  At September 30, 2013, there were 51securities with a fair value of $25.7 million that had an unrealized loss that amounted to $2.7 million.  The average loss amounts to 9.4% of amortized cost at September 30, 2013.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of September 30, 2013,  wedid not intend to sell and it was not more-likely-than-not that we would be required to sell any

7

of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at September 30, 2013, were deemed to be other-than-temporarily-impaired.

At December 31, 2012, the decline in fair value and the related unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At December 31, 2012, there were 17 securities with a fair value of $9.8 million that had an unrealized loss that amounted to $194 thousand.  The average loss amounts to 1.9% of amortized cost at December 31, 2012.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore none of our state and political subdivision securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

Mortgage-Backed Securities

At September 30, 2013, the decline in fair value and the unrealized losses for our mortgaged-backed securities guaranteedby U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality.  At September 30, 2013, there were 35securities with a fair value of $42.1 million that had an unrealized loss that amounted to $830thousand.  As of September 30, 2013,  we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our mortgage-backed securities at September  30, 2013, were deemed to be other-than-temporarily impaired.

At December 31, 2012, the decline in fair value and the unrealized losses for our mortgage-backed securities guaranteed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality.  At December 31, 2012, there were 22 securities with a fair value of $36.6 million that had an unrealized loss that amounted to $449 thousand.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our mortgage-backed securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

Equity Securities

Our marketable equity securities portfolio consists primarily of one equity fund and common stock of entities in the financial services industry.  At September 30, 2013, there wasone securitywith a fair value of $126 thousand that had an unrealized loss of $17 thousand.  These securities have been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated each of the underlying banks for credit impairment based on its financial condition and performance.Based on our evaluation and expectation that these securitieswill recover within a reasonable period of time, we do not consider these investments to be other-than-temporarily impaired at September 30, 2013. 

At December 31, 2012, there were two securities with a fair value of $215 thousand that had an unrealized loss of $45 thousand.  These securities have been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated each of the underlying banks for credit impairment based on its financial condition and performance.  Based on our evaluation and expectation that these investments will recover within a reasonable period of time, we do not consider these investments to be other-than-temporarily impaired at December 31, 2012. 

We continue to closely monitor the performance of the securities we own as well as the impact from any further deterioration in the economy or in the banking industry that may adversely affect these securities. We will continue to evaluate them for other-than-temporary impairment, which could result in a future non-cash charge to earnings.

8

Held to Maturity Securities

The amortized cost and fair value of securities held to maturity as of September  30, 2013 and December 31, 2012, are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
State and political subdivisions	$	5,824	$	101	$	(69)	$	5,856
December 31, 2012
State and political subdivisions	$	5,221	$	260	$	(9)	$	5,472

The amortized cost and carrying value of securities held to maturity at September 30, 2013, are shown below by contractual maturity.  Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized		Fair
(Dollars in thousands)		Cost		Value
Due in one year or less	$	1,860	$	1,860
Due after one year through five years		-		-
Due after five years through ten years		1,290		1,285
Due after ten years		2,674		2,711
Total held to maturity securities	$	5,824	$	5,856

Temporarily Impaired Securities

The following table shows gross unrealized losses and fair value of held to maturity securities with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by category and length of time that individual held to maturity securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012:

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
State and political subdivisions	$	1,617	$	(58)	$	253	$	(11)	$	1,870	$	(69)
December 31, 2012
State and political subdivisions	$	830	$	(9)	$	-	$	-	$	830	$	(9)

As of September 30, 2013, we reviewed our held to maturity securitiesportfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security.  The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. 

State and Political Subdivisions

At September 30, 2013, the decline in fair value and the unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At September

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30, 2013, there were foursecurities with a fair value of $1.9 million that had an unrealized loss that amounted to $69 thousand.  These securities typically have maturity dates greater than 10years and the fair values are more sensitive to changes in market interest rates.  As of September 30, 2013,  we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at September 30, 2013, were deemed to be other-than-temporarily impaired.

At December 31, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At December 31, 2012, there were two securities with a fair value of $830 thousand that had an unrealized loss that amounted to $9 thousand.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

NOTE 3 – LOANS

The composition of net loans receivable atSeptember 30, 2013 and December 31, 2012 is as follows:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	17,999	$	16,158
Construction		9,649		7,004
Commercial real estate		256,976		225,345
Residential real estate		106,448		98,301
Consumer and other		1,615		1,255
		392,687		348,063
Unearned net loan origination fees		(387)		(327)
Allowance for loan losses		(5,655)		(4,976)
Net loans receivable	$	386,645	$	342,760

Mortgage loans serviced for others are not included in the accompanying balance sheets.  The total amount of loans serviced for the benefit of others was approximately $553 thousand and $695 thousand at September 30, 2013 and December 31, 2012, respectively.

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NOTE 4 – ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY OF FINANCING RECEIVABLES

The following table presents changes in the allowance for loan losses disaggregated by the class of loans receivable for the three and ninemonths ended September 30, 2013 and 2012:

	Commercial				Commercial		Residential		Consumer
	and				Real		Real		and
(Dollars in	Industrial		Construction		Estate		Estate		Other		Unallocated		Total
thousands)
Three Months Ended:
September 30, 2013
Beginning balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Charge-offs		-		(19)		(747)		(89)		(7)		-		(862)
Recoveries		-		-		343		24		3		-		370
Provision		(10)		16		358		(58)		4		190		500
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	430	$	170	$	4,547	$	1,055	$	11	$	47	$	6,260
Charge-offs		-		(122)		(264)		(266)		(8)		-		(660)
Recoveries		-		-		2		-		15		-		17
Provision		183		131		153		393		(10)		254		1,104
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721
Nine Months Ended:
September 30, 2013
Beginning balance	$	271	$	223	$	3,395	$	869	$	38	$	180	$	4,976
Charge-offs		(6)		(141)		(1,759)		(155)		(22)		-		(2,083)
Recoveries		-		-		387		24		9		-		420
Provision		(26)		315		1,403		129		(10)		531		2,342
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	304	$	294	$	4,833	$	987	$	9	$	783	$	7,210
Charge-offs		-		(830)		(2,081)		(546)		(53)		-		(3,510)
Recoveries		2		-		71		-		26		-		99
Provision		307		715		1,615		741		26		(482)		2,922
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721

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The following table presents the balance of the allowance of loan losses and loans receivable by class at September 30, 2013 and December 31, 2012,disaggregated on the basis of our impairment methodology.

	Allowance for Loan Losses						Loans Receivable
			Balance		Balance
			Related to		Related to
			Loans		Loans
			Individually		Collectively				Individually		Collectively
			Evaluated for		Evaluated for				Evaluated for		Evaluated for
(Dollars in thousands)	Balance		Impairment		Impairment		Balance		Impairment		Impairment
September 30, 2013
Commercial and industrial	$	239	$	-	$	239	$	17,999	$	-	$	17,999
Construction		397		27		370		9,649		269		9,380
Commercial real estate		3,426		308		3,118		256,976		10,930		246,046
Residential real estate		867		99		768		106,448		2,819		103,629
Consumer and other loans		15		-		15		1,615		-		1,615
Unallocated		711		-		-		-		-		-
Total	$	5,655	$	434	$	4,510	$	392,687	$	14,018	$	378,669
December 31, 2012
Commercial and industrial	$	271	$	27	$	244	$	16,158	$	27	$	16,131
Construction		223		42		181		7,004		2,462		4,542
Commercial real estate		3,395		230		3,165		225,345		12,682		212,663
Residential real estate		869		66		803		98,301		3,351		94,950
Consumer and other loans		38		-		38		1,255		-		1,255
Unallocated		180		-		-		-		-		-
Total	$	4,976	$	365	$	4,431	$	348,063	$	18,522	$	329,541

An age analysis of loans receivable which were past due as of September 30, 2013 and December 31, 2012, is as follows:

													Recorded
													Investment
					Greater						Total		> 90 Days
	30-59 Days		60-89 days		Than		Total Past				Financing		and
(Dollars in thousands)	Past Due		Past Due		90 Days (a)		Due		Current		Receivables		Accruing
September 30, 2013
Commercial and industrial	$	-	$	-	$	50	$	50	$	17,949	$	17,999	$	50
Construction		-		-		269		269		9,380		9,649		-
Commercial real estate		988		260		10,319		11,567		245,409		256,976		-
Residential real estate		372		407		2,962		3,741		102,707		106,448		144
Consumer and other		2		5		3		10		1,605		1,615		3
Total	$	1,362	$	672	$	13,603	$	15,637	$	377,050	$	392,687	$	197
December 31, 2012
Commercial and industrial	$	-	$	-	$	27	$	27	$	16,131	$	16,158	$	-
Construction		-		-		2,462		2,462		4,542		7,004		-
Commercial real estate		1,103		1,303		12,127		14,533		210,812		225,345		65
Residential real estate		207		127		3,315		3,649		94,652		98,301		-
Consumer and other		12		3		144		159		1,096		1,255		143
Total	$	1,322	$	1,433	$	18,075	$	20,830	$	327,233	$	348,063	$	208
(a) includes loans greater than 90 days past due and still accruing and non-accrual loans.

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Loans for which the accrual of interest has been discontinued at September 30, 2013 and December 31, 2012, were:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	-	$	27
Construction		269		2,462
Commercial real estate		10,319		12,062
Residential real estate		2,818		3,315
Consumer and other		-		1
Total	$	13,406	$	17,867

In determining the adequacy of the allowance for loan losses, we estimate losses based on the identification of specific problem loans through our credit review process and also estimate losses inherent in other loans on an aggregate basis by loan type.  The credit review process includes the independent evaluation of the loan officer assigned risk ratings by the Chief Credit Officer and a third party loan review company.  Such risk ratings are assigned loss component factors that reflect our loss estimate for each group of loans.  It is management’s and the Board of Directors’ responsibility to oversee the lending process to ensure that all credit risks are properly identified, monitored, and controlled, and that loan pricing, terms, and other safeguards against non-performance and default are commensurate with the level of risk undertaken and is rated as such based on a risk-rating system.  Factors considered in assigning risk ratings and loss component factors include: borrower specific information related to expected future cash flows and operating results, collateral values, financial condition, payment status and other information; levels of and trends in portfolio charge-offs and recoveries; levels in portfolio delinquencies; effects of changes in loan concentrations and observed trends in the economy and other qualitative measurements.

Our risk-rating system as defined below is consistent with the system used by regulatory agencies and consistent with industry practices. Loan classifications of Substandard, Doubtful or Loss are consistent with the regulatory definitions of classified assets. 

Pass: This category represents loans performing to contractual terms and conditions and the primary source of repayment is adequate to meet the obligation.  We have five categories within the Pass classification depending on strength of repayment sources, collateral values and financial condition of the borrower. 

Special Mention:  This category represents loans performing to contractual terms and conditions; however the primary source of repayment or the borrower is exhibiting some deterioration or weaknesses in financial condition that could potentially threaten the borrowers’ future ability to repay our loan principal and interest or fees due.

Substandard: This category represents loans that the primary source of repayment has significantly deteriorated or weakened which has or could threaten the borrowers’ ability to make scheduled payments.  The weaknesses require close supervision by management and there is a distinct possibility that we could sustain some loss if the deficiencies are not corrected.  Such weaknesses could jeopardize the timely and ultimate collection of our loan principal and interest or fees due.  Loss may not be expected or evident, however, loan repayment is inadequately supported by current financial information or pledged collateral.

Doubtful: Loans so classified have all the inherent weaknesses of a substandard loan with the added provision that collection or liquidation in full is highly questionable and not reasonably assured.  The probability of at least partial loss is high, but extraneous factors might strengthen the asset to prevent loss. The validity of the extraneous factors must be continuously monitored. Once these factors are questionable the loan should be considered for full or partial charge-off.

Loss: Loans so classified are considered uncollectible, and of such little value that their continuance as active assets is not warranted.  Such loans are fully charged off.

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The following tables illustrate our corporate credit risk profile by creditworthiness category as of September 30, 2013 and December 31, 2012: 

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
September 30, 2013
Commercial and industrial	$	17,936	$	63	$	-	$	-	$	17,999
Construction		9,380		-		269		-		9,649
Commercial real estate		234,820		7,188		14,968		-		256,976
Residential real estate		102,371		1,045		3,017		15		106,448
Consumer and other		1,474		141		-		-		1,615
	$	365,981	$	8,437	$	18,254	$	15	$	392,687
December 31, 2012
Commercial and industrial	$	15,860	$	269	$	23	$	6	$	16,158
Construction		4,542		-		2,462		-		7,004
Commercial real estate		203,106		4,648		17,256		335		225,345
Residential real estate		93,563		253		4,485		-		98,301
Consumer and other		1,112		-		143		-		1,255
	$	318,183	$	5,170	$	24,369	$	341	$	348,063

The following table reflectsinformation about ourimpaired loans by class as of September 30, 2013 and December 31, 2012:

		September 30, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Construction	$	-	$	-	$	-	$	2,421	$	2,743	$	-
Commercial real estate		8,039		8,398		-		10,466		13,581		-
Residential real estate		2,182		2,237		-		2,675		2,768		-
With an allowance recorded:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		42		42		42
Commercial real estate		2,891		3,967		308		2,216		3,135		230
Residential real estate		637		730		99		675		675		66
Total:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		2,463		2,785		42
Commercial real estate		10,930		12,365		308		12,682		16,716		230
Residential real estate		2,819		2,967		99		3,350		3,443		66
	$	14,018	$	15,723	$	434	$	18,522	$	22,971	$	365

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The following table presents the average recorded investment and income recognized for the three and nine months ended September  30, 2013 and 2012:

	For the Three Months Ended September 30, 2013				For the Three Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	2,251	$	-
Commercial real estate		8,386		11		4,538		12
Residential real estate		2,261		22		1,964		9
Total impaired loans without a related allowance		10,647		33		8,753		21
With an allowance recorded:
Commercial and industrial		-		-		398		-
Construction		328		-		1,765		3
Commercial real estate		2,764		-		13,092		10
Residential real estate		887		-		991		2
Total impaired  loans with an allowance		3,979		-		16,246		15
Total impaired loans	$	14,626	$	33	$	24,999	$	36

	For the Nine Months Ended September 30, 2013				For the Nine Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	329	$	-	$	1,986	$	-
Commercial real estate		8,334		51		6,505		42
Residential real estate		2,288		24		1,756		41
Total impaired loans without a related allowance		10,951		75		10,247		83
With an allowance recorded:
Commercial and industrial		-		-		189		-
Construction		374		-		1,405		3
Commercial real estate		2,927		-		14,610		59
Residential real estate		946		3		786		17
Total impaired  loans with an allowance		4,247		3		16,990		79
Total impaired loans	$	15,198	$	78	$	27,237	$	162

We recognize income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to us.  If these factors do not exist, we will record all payments as a reduction of principal on such loans. 

Impaired loans include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, postponement or forgiveness of principal, forbearance or other actions intended to maximize collection.  The concessions rarely result in the forgiveness of principal or accrued interest.  In addition, we attempt to obtain additional collateral or guarantor support when modifying such loans.  Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

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The following table presents the recorded investment in troubled debt restructured loans, based on payment performance status:

(Dollars in thousands)		Commercial Real Estate	Commercial & Industrial		Residential Real Estate		Total
September 30, 2013
Performing	$	612	$	-	$	-	$	612
Non-performing		4,720		-		527		5,247
Total	$	5,332	$	-	$	527	$	5,859
December 31, 2012
Performing	$	603	$	-	$	5	$	608
Non-performing		1,829		6		228		2,063
Total	$	2,432	$	6	$	233	$	2,671

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote.  As of September 30, 2013, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

The following table summarizes troubled debt restructurings that occurred during the three and nine months ended September 30, 2013:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three months ended September 30, 2013
Commercial real estate	1	$	1,201	$	1,201
Nine months ended September 30, 2013
Commercial real estate	3	$	3,100	$	3,100
Residential real estate	1		302		302

The troubled debt restructurings presented in the table above resulted in an allocation of the allowance for credit losses of $49 thousand and $112 thousand for the three and nine months ended September 30, 2013, respectively.  These specific reserves are included in the allowance for credit losses for loans individually evaluated for impairment. There were $200 thousand in charge-offs on the troubled debt restructurings presented in the table above during the three and nine months ended September 30, 2013.

There were no troubled debt restructurings that occurred during the three and nine months ended September 30, 2012, therefore, no allocation for the allowance for credit losses or charge-offs were required on loans modified as troubled debt restructurings during the three and nine months ended September 30, 2012.

There were no troubled debt restructurings for which there was a payment default within twelve months following the date of the restructuring for the three and nine months ended September 30, 2013 and 2012.

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NOTE 5 – EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares (non-vested restricted stock grants and stock options) had been issued, as well as any adjustment to income that would result from the assumed issuance of potential common shares that may be issued by us. Potential common shares related to stock options are determined using the treasury stock method.

	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	575	4,031,022	$	0.14	$	546	3,264,034	$	0.17
Effect of dilutive securities:
Nonvested stock awards		-	35,887				-	24,933
Diluted earnings per share:
Net earnings applicable to common shareholders and assumed conversions	$	575	4,066,909	$	0.14	$	546	3,288,967	$	0.17

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net income applicable to common shareholders	$	807	3,538,770	$	0.23	$	832	3,260,827	$	0.26
Effect of dilutive securities:
Nonvested stock awards		-	31,393				-	21,399
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	807	3,570,163	$	0.23	$	832	3,282,226	$	0.25

Options to purchase43,022and 65,036 shares of common stock were outstanding at September 30, 2013 and 2012, respectively, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares.

NOTE 6 – OTHER COMPREHENSIVE (LOSS) INCOME

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.  Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

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The components of other comprehensive (loss) income, both before tax and net of tax, are as follows:

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income:
Unrealized gains on available for sale securities	$	430	$	173	$	257	$	693	$	277	$	416
Reclassification adjustment for net gains on securities transactions included in net income		-		-		-		(569)		(228)		(341)
Total other comprehensive income	$	430	$	173	$	257	$	124	$	49	$	75

	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive (loss) income:
Unrealized (losses) gains on available for sale securities	$	(3,327)	$	(1,330)	$	(1,997)	$	1,413	$	564	$	849
Reclassification adjustment for net gains on securities transactions included in net income		(399)		(160)		(239)		(763)		(305)		(458)
Total other comprehensive (loss) income	$	(3,726)	$	(1,490)	$	(2,236)	$	650	$	259	$	391

Reclassification adjustments for gains on securities transactions of $399 thousand for the nine months ended September 30, 2013and $569 thousand and $763 thousand for the three and nine months ended September 30, 2012, respectively,are presented in the income statement on the line item for net gain on securities transactions.  There were no reclassification adjustments for gains on securities transactions for the three months ended September 30, 2013.

NOTE 7 – SEGMENT INFORMATION

Our insurance agency operations are managed separately from the traditional banking and related financial services that we also offer.  The insurance agency operation provides commercial, individual, and group benefit plans and personal coverage.

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,219	$	-	$	4,219	$	4,089	$	-	$	4,089
Other income from external sources		678		756		1,434		1,276		684		1,960
Depreciation and amortization		162		4		166		170		3		173
Income (loss) before income taxes		588		130		718		546		106		652
Income tax (benefit) expense (1)		91		52		143		64		42		106
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

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	Nine Months Ended September 30, 2013						Nine Months Ended September30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	12,140	$	-	$	12,140	$	12,225	$	-	$	12,225
Other income from external sources		2,437		2,245		4,682		2,808		1,892		4,700
Depreciation and amortization		502		8		510		501		8		509
Income (loss) before income taxes		389		389		778		522		216		738
Income tax (benefit) expense (1)		(185)		156		(29)		(180)		86		(94)
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

(1) Insurance Services calculated at statutory tax rate of 40%

NOTE 8–  STOCK-BASED COMPENSATION

We currently have stock-based compensation plans in place for our directors, officers, employees, consultants and advisors.  Under the terms of these plans we may grant restricted shares and stock options for the purchase of our common stock.  The stock-based compensation is granted under terms determined by our Compensation Committee.Our standard stock option grants have a maximum term of 10 years, generally vest over periods ranging between one and four years, and are granted with an exercise price equal to the fair market value of the common stock on the date the options are granted.  Restricted stock is valued at the market value of the common stock on the date of grant and generally vests between two and seven years.  All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans as of September 30, 2013, was as follows:

			Weighted
			Average	Weighted
			Exercise	Average	Aggregate
	Number of		Price per	Contractual	Intrinsic
	Shares		Share	Term	Value
Options outstanding, beginning of year	55,751	$	12.48
Options expired	(12,729)		10.59
Options outstanding, end of quarter	43,022	$	13.04	0.76	-
Options exercisable, end of quarter	43,022	$	13.04	0.76	-
Option price range at end of quarter	$8.99 to $16.45
Option price range for exercisable shares	$8.99 to $16.45

During the three months ended September30, 2013 and 2012, we expensed $60 thousand and $39 thousand, respectively, in stock-based compensation under restricted stock awards.During the nine months ended September 30, 2013 and 2012, we expensed $174 thousand and $112 thousand, respectively, in stock-based compensation under restricted stock awards.  The summary of changes in unvested restricted stock awards for the nine months endedSeptember 30, 2013, is as follows:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	123,144	$	4.83
Granted	32,940		6.06
Vested	(28,162)		5.52
Unvested restricted stock, end of period	127,922	$	4.99

At September 30, 2013, unrecognized compensation expense for non-vested restricted stock was $500 thousand, which is expected to be recognized over an average period of 2.5years. 

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NOTE 9 – GUARANTEES

We do not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit.  Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party.  Generally, all letters of credit, when issued, have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.  We, generally, hold collateral and/or personal guarantees supporting these commitments.  As of September 30, 2013, we had $2.0 million of outstanding letters of credit.  Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.  The amount of the liability as of September 30, 2013, for guarantees under standby letters of credit issued is not material.

NOTE 10–  FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of our consolidated 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 we could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period ends, 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 period end.

Under FASB Accounting Standards Codification (“ASC”) 820Fair Value Measurement and Disclosure, there is a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value.  The three broad levels defined by the FASB ASC 820 hierarchy are as follows:

Level I - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The nature of these asset and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III - Assets and liabilities that have little to no pricing observability as of the reporting date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following table summarizes the valuation of our financial assets measured on a recurring basis by the above FASB ASC 820 pricing observability levels:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
U.S. government agencies	$	5,513	$	-	$	5,513	$	-
State and political subdivisions		26,115		-		26,115		-
Mortgage-backed securities
U.S. government-sponsored enterprises		63,304		-		63,304		-
Equity securities-financial services industry and other		446		446		-		-
December 31, 2012:
State and political subdivisions	$	27,741	$	-	$	27,741	$	-
Mortgage-backed securities
U.S. government-sponsored enterprises		90,709		-		90,709		-
Equity securities-financial services industry and other		431		431		-		-

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Our available for sale and held to maturity securities portfolios contain investments, which were all rated within our investment policy guidelines at time of purchase and upon review of the entire portfolio all securities are marketable and have observable pricing inputs.

For financial assets measured at fair value on a nonrecurring basis the fair value measurements by level within the fair value hierarchy used at September 30, 2013 and December 31, 2012,are as follows:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
Impaired loans	$	4,207	$	-	$	-	$	4,207
Foreclosed real estate		789		-		-		789
December 31, 2012:
Impaired loans	$	6,239	$	-	$	-	$	6,239
Foreclosed real estate		3,612		-		-		3,612

The following table presents additional qualitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were used to determine fair value:

	Qualitative Information about Level 3 Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
September 30, 2013:
Impaired loans	$	4,207	Appraisal of	Appraisal	0% to -61.2%
			collateral	adjustments (1)	(-7.5%)
Foreclosed real estate		789	Appraisal of	Selling
			collateral	expenses (1)	-7.0% (-7.0%)
December 31, 2012:
Impaired loans	$	6,239	Appraisal of	Appraisal	0% to -57.1%
			collateral	adjustments (1)	(-21.8%)
Foreclosed real estate		3,612	Appraisal of	Selling
			collateral	expenses (1)	-7.0% (-7.0%)
(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated selling expenses.  The range and weighted average of selling expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following methods and assumptions were used to estimate the fair value of our financial instruments at September 30, 2013 and December 31, 2012:  

Cash and Cash Equivalents (Carried at Cost): The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair value.

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Time Deposits with Other Banks (Carried at Cost): Fair value for fixed-rate time certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.  We generally purchase amounts below the insured limit, limiting the amount of credit risk on these time deposits.  

Securities: The fair value of securities, available for sale (carried at fair value) is determined by obtaining quoted market prices on nationally recognized securities exchanges (Level I), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3).  In the absence of such evidence, management’s best estimate is used.  Management’s best estimate consists of both internal and external support on certain Level 3 investments.  Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

Loans Receivable (Carried at Cost): The fair values of loans are estimated using discounted cash flow analyses, using the market rates on the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.  Projected future cash flows are calculated based upon contractual maturity or call dates and projected repayments and prepayments of principal.  Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Carried at the Lower of Cost or Fair Value): Impaired loans are those that are accounted for under FASB ASC 310, Accounting by Creditors for Impairment of a Loan, in which we have measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties,  or discounted cash flows based upon the expected proceeds.  These assets are included in Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. 

Federal Home Loan Bank Stock (Carried at Cost): The carrying amount of restricted investment in bank stock approximates fair value and considers the limited marketability of such securities.

Foreclosed Real Estate  (Carried at the Lower of Cost or Fair Value): Foreclosed real estate is recorded at estimated fair value, less estimated costs to sell when the property is acquired.  Fair value is generally based on independent appraisals and is considered a  Level 3 fair value input.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell.

Deposit Liabilities (Carried at Cost): The fair values disclosed for demand, savings and club accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. 

Borrowings (Carried at Cost): Fair values of Federal Home Loan Bank (“FHLB”) advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity.  These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. 

Junior Subordinated Debentures (Carried at Cost): Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. 

Accrued Interest Receivable and Accrued Interest Payable (Carried at Cost): The carrying amounts of accrued interest receivable and payable approximate their fair values.

Off-Balance Sheet Instruments (Disclosed at Cost): Fair values for our off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. 

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of our assets and liabilities.  The following information is an estimate of the fair value of a limited portion of our assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between our disclosures and those of other companies may not be meaningful. 

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The fair values of our financial instruments at September 30, 2013 and December 31, 2012, were as follows:

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	September 30, 2013				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,040	$	11,040	$	11,040	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		95,378		95,378		446		94,932		-
Securities held to maturity		5,824		5,856		-		5,856		-
Federal Home Loan Bank stock		2,480		2,480		-		2,480		-
Loans receivable, net of allowance		386,645		387,076		-		-		387,076
Accrued interest receivable		1,695		1,695		-		1,695		-
Financial liabilities:
Non-maturity deposits		340,503		325,590		325,590		-		-
Time deposits		96,471		97,616		-		97,616		-
Borrowings		36,000		38,130		-		38,130		-
Junior subordinated debentures		12,887		7,581		-		7,581		-
Accrued interest payable		206		206		-		206		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 2012				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,668	$	11,668	$	11,668	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		118,881		118,881		431		118,450		-
Securities held to maturity		5,221		5,472		-		5,472		-
Federal Home Loan Bank stock		1,980		1,980		-		1,980		-
Loans receivable, net of allowance		342,760		353,208		-		-		353,208
Accrued interest receivable		1,741		1,741		-		1,741		-
Financial liabilities:
Non-maturity deposits		328,856		327,096		327,096		-		-
Time deposits		103,580		105,680		-		105,680		-
Borrowings		26,000		29,476		-		29,476		-
Junior subordinated debentures		12,887		6,315		-		6,315		-
Accrued interest payable		273		273		-		273		-

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Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT STRATEGY

We are a community-oriented financial institution serving northern New Jersey, northeastern Pennsylvania and Orange County, New York.  While offering traditional community bank loan and deposit products and services, we obtain non-interest income through our insurance brokerage operations and the sale of non-deposit products. 

We continue to focus on strengthening our core operating performance by improving our net interest income and margin by closely monitoring our yield on earning assets and adjusting the rates offered on deposit products.  The economic downturn continues to impact our level of nonperforming assets and in turn has increased our provision for loan losses.  We have beenfocused on building for the future and strengthening our core operating results within a risk management framework. 

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with U.S. GAAP and practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in our consolidated financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Actual results could differ from those estimates.

Critical accounting estimates are necessary in the application of certain accounting policies and procedures, and are particularly susceptible to significant change. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. There have been no material changes to our critical accounting policies during the nine months ended September 30, 2013.  For additional information on our critical accounting policies, please refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated financial statements included in our 2012 Annual Report on Form 10-K.

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COMPARISION OF OPERATING RESULTS FOR THREE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

Overview - For the quarter ended September 30, 2013, we reported net income of $575 thousand, or $0.14 per basic and diluted share, as compared to net income of $546 thousand, or $0.17 per basic and diluted share, for the same period last year.  The increase in net income for the quarter ended September 30, 2013 was largely due to decreases in credit quality costs (provision for loan losses, loan collection costs and expenses and write-downs related to foreclosed real estate), which decreased $686 thousand or 44.5%, which was partially offset by a decrease in gain on securities transactions of $569 thousand. 

Comparative Average Balances and Average Interest Rates

The following table presents, on a fully taxable equivalent basis, a summary of our interest-earning assets and their average yields, and interest-bearing liabilities and their average costs for the three month periods ended September 30, 2013 and 2012:

	Three Months Ended September 30,
(Dollars in thousands)	2013					2012
		Average			Average		Average			Average
Earning Assets:		Balance		Interest (1)	Rate (2)		Balance		Interest (1)	Rate (2)
Securities:
Tax exempt (3)	$	30,413	$	382	4.98%	$	32,199	$	442	5.46%
Taxable		81,765		130	0.63%		86,766		241	1.10%
Total securities		112,178		512	1.81%		118,965		683	2.28%
Total loans receivable (4)		383,690		4,599	4.76%		342,502		4,467	5.19%
Other interest-earning assets		5,807		2	0.14%		10,405		4	0.15%
Total earning assets		501,675	$	5,113	4.04%	$	471,872	$	5,154	4.35%
Non-interest earning assets		35,011					43,319
Allowance for loan losses		(6,019)					(6,671)
Total Assets	$	530,667					508,520
Sources of Funds:
Interest bearing deposits:
NOW	$	114,972	$	38	0.13%	$	95,611	$	36	0.15%
Money market		15,044		8	0.21%		14,506		11	0.30%
Savings		152,168		80	0.21%		162,762		133	0.33%
Time		96,396		293	1.21%		104,128		407	1.55%
Total interest bearing deposits		378,580		419	0.44%		377,007		587	0.62%
Borrowed funds		36,598		293	3.18%		26,196		268	4.07%
Junior subordinated debentures		12,887		54	1.66%		12,887		60	1.85%
Total interest bearing liabilities		428,065	$	766	0.71%	$	416,090	$	915	0.87%
Non-interest bearing liabilities:
Demand deposits		58,591					48,702
Other liabilities		1,405					2,676
Total non-interest bearing liabilities		59,996					51,378
Stockholders' equity		42,606					41,052
Total Liabilities and Stockholders' Equity	$	530,667				$	508,520
Net Interest Income and Margin (5)				4,347	3.44%				4,239	3.57%
Tax-equivalent basis adjustment				(128)					(150)
Net Interest Income			$	4,219				$	4,089
(1) Includes loan fee income
(2) Average rates on securities are calculated on amortized costs
(3) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(4) Loans outstanding include non-accrual loans
(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

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Net Interest Income – Net interest income is the difference between interest and fees on loans and other interest-earning assets and interest paid on interest-bearing liabilities.  Net interest income is directly affected by changes in volume and mix of interest-earning assets and interest-bearing liabilities that support those assets, as well as changing interest rates when differences exist in repricing dates of assets and liabilities.

Net interest income on a fully tax equivalent basis increased $108 thousand, or 2.5%, to $4.3 million for the third quarter of 2013 as compared to $4.2 million for same period in 2012.  The increase in net interest income was largely due to a $29.8 million, or 6.3%, increase in average interest earning assets, principally loans receivable.  The aforementioned increase was partly offset by a 13 basis point decline in the net interest margin to 3.44% for the third quarter of 2013 as compared to the same period last year. The decline in the net interest margin was mostly due to a 31 basis point decline in the average rate earned on interest earning assets.  This decline was partially offset by a decrease in the average rate paid on total interest bearing liabilities, which decreased 16 basis points to 0.71% for the third quarter of 2013 from 0.87% for the same period in 2012.

Interest Income – Our total interest income, on a fully tax equivalent basis, decreased $41 thousand, or 0.8%, to $5.1 million for the quarter ended September 30, 2013, as compared to the same period last year.  The decline was due to lower earning asset yields, which decreased 31 basis points to 4.04% for the quarter ended September 30, 2013, as compared to the same period in 2012. 

Our total interest income earned on loans receivable increased $132 thousand, or 3.0%, to $4.6 million for the third quarter of 2013 as compared to the same period in 2012.  The increase was driven by an increase in average balance of loans receivable of $41.2 million, or 12.0%, for the three months ended September 30, 2013, as compared to same period last year.  The increase in interest income earned on loans receivable was partly offset by a 43 basis point decline in average yields to 4.76% for the quarter ended September 30, 2013, as compared to the same period in 2012. 

Our total interest income earned on securities, on a fully taxable equivalent basis, decreased $171 thousand, to $512 thousand for the quarter ended September 30, 2013, from $683 thousand for the same period in 2012.  This decrease was largely due to a decline in the average rate earned on securities, which declined 47 basis points for the quarter ended September 30, 2013, as compared to the same period last year.  The decrease in yields on securities was largely due to an increase in premium amortization relating to the government sponsored mortgage backed securities portion of our securities portfolio and the investment in securities in a low market rate environment.  Premium amortization has increased as a result of faster prepayment speeds stemming from the historical low mortgage rate environment and government sponsored programs facilitating the consumer refinancing process.  The decrease in interest income on securities was also affected by a $6.8 million, or 5.7%, decrease in average balance of securities for the three months ended September 30, 2013, as compared to same period last year. This decrease resulted primarily from principal pay-downs and amortization of securities as well as sales of securities during the quarter.  The proceeds from securities sales were primarily reinvested in the securities portfolio with the remaining difference used to fund loan growth.

Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. Our interest earned on total other interest-earning assets decreased $2 thousand for the third quarter of 2013 as compared to the same period in 2012 due to a decline in average balances.  The average balances in other interest-earning assets decreased $4.6 million to $5.8 million in the third quarter of 2013 from $10.4 million during the third quarter a year earlier. 

Interest Expense – Our interest expense for the three months ended September 30, 2013 decreased $149 thousand, or 16.3%, to $766 thousand from $915 thousand for the same period in 2012.  The improvement was principally due to lower average rates paid on total interest-bearing liabilities, which declined 16 basis points from 0.87% for the three months ended September 30, 2012, to 0.71% for the same period in 2013 and a increase in average balances in interest-bearing liabilities, which increased $12.0 million, or 2.9%, to $428.1 million for the second quarter of 2013 from $416.1 million for the same period in 2012.

Our interest expense on deposits declined $168 thousand, or 28.6%, for the quarter ended September 30, 2013, as compared to the same period last year.  The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 18 basis points to 0.44% for the second quarter 2013 as compared to the same period in 2012.  The decrease in rates on deposit products reflects management’s asset/liability strategies and a lower market rate environment between the two periods.

Provision for Loan Losses – Provision for loan losses decreased $604 thousand to $500 thousand for the third quarter of 2013, as compared to $1.1 million for the same period in 2012.  The provision for loan losses reflects management’s judgment concerning the risks inherent in our existing loan portfolio and the size of the allowance necessary to absorb the risks, as well as the activity in the allowance during the periods.  Management reviews the adequacy of its allowance on an ongoing basis and will provide additional provisions, as management may deem necessary. 

Non-Interest Income – We reported a decrease in non-interest income of $526 thousand, or 26.8%, to $1.4 million for the third quarter of 2013 as compared to the same period last year.  The decrease in non-interest income was largely due

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to a decrease in gains on securities transactions of $569 thousand, which was partially offset by an increase in insurance commissions and fees of $72 thousand, or 10.5%.

Non-Interest Expense – Our non-interest expenses increased $142 thousand, or 3.3%, to $4.4 million for the third quarter of 2013 as compared to the same period last year.  The increase for the third quarter of 2013 versus the same period in 2012 was largely due to increases in salaries and employee benefits expense and expenses related to foreclosed real estate, which increased $191 thousand and $85 thousand, respectively.  The aforementioned increases were partly offset by decreases in loan collection costs and professional fees of $167 thousand and $22 thousand, respectively.

Income Taxes – Our income tax expense, which includes both federal and state tax expenses, was $143 thousand for the three months ended September 30, 2013, compared to income tax expense of $106 thousand for the three months ended September 30, 2012.

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COMPARISION OF OPERATING RESULTS FOR NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

Overview - For the nine months ended September 30, 2013, we reported net income of $807 thousand, or $0.23 per basic and diluted share, as compared to net income of $832 thousand, or $0.26 per basic and $0.25 per diluted share, for the same period last year.  The decline in net income for the nine months ended September 30, 2013 was primarily attributed to an increase in non-interest expenses of $437 thousand, or 3.3%, which was partially offset by a decrease in the provision for loan losses of $580 thousand, or 19.8%.

Comparative Average Balances and Average Interest Rates

The following table presents, on a fully taxable equivalent basis, a summary of our interest-earning assets and their average yields, and interest-bearing liabilities and their average costs for the nine month periods ended September 30, 2013 and 2012:

	Nine Months Ended September 30,
(Dollars in thousands)	2013					2012
	Average				Average	Average				Average
Earning Assets:	Balance			Interest (1)	Rate (2)	Balance		Interest (1)		Rate (2)
Securities:
Tax exempt (3)	$	30,723	$	1,148	5.00%	$	29,444	$	1,253	5.68%
Taxable		91,750		410	0.60%		84,774		994	1.57%
Total securities		122,473		1,558	1.70%		114,218		2,247	2.63%
Total loans receivable (4)		365,847		13,360	4.88%		339,839		13,292	5.22%
Other interest-earning assets		5,294		9	0.23%		21,095		30	0.19%
Total earning assets		493,614	$	14,927	4.04%		475,152	$	15,569	4.38%
Non-interest earning assets		38,274					42,076
Allowance for loan losses		(5,702)					(7,335)
Total Assets	$	526,186				$	509,893
Sources of Funds:
Interest bearing deposits:
NOW	$	111,947	$	109	0.13%	$	94,578	$	129	0.18%
Money market		14,633		23	0.21%		16,962		47	0.37%
Savings		155,056		274	0.24%		163,331		492	0.40%
Time		99,426		1,004	1.35%		107,389		1,270	1.58%
Total interest bearing deposits		381,062		1,410	0.49%		382,260		1,938	0.68%
Borrowed funds		32,619		828	3.39%		26,066		797	4.08%
Junior subordinated debentures		12,887		163	1.69%		12,887		183	1.90%
Total interest bearing liabilities		426,568	$	2,401	0.75%		421,213	$	2,918	0.93%
Non-interest bearing liabilities:
Demand deposits		55,652					45,949
Other liabilities		2,992					2,209
Total non-interest bearing liabilities		58,644					48,158
Stockholders' equity		40,974					40,522
Total Liabilities and Stockholders' Equity	$	526,186				$	509,893
Net Interest Income and Margin (5)			$	12,526	3.39%			$	12,651	3.56%
Tax-equivalent basis adjustment				(386)					(426)
Net Interest Income			$	12,140				$	12,225
(1) Includes loan fee income
(2) Average rates on securities are calculated on amortized costs
(3) Full taxable equivalent basis, using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(4) Loans outstanding include non-accrual loans
(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets

Net Interest Income – Net interest income is the difference between interest and fees on loans and other interest-earning assets and interest paid on interest-bearing liabilities.  Net interest income is directly affected by changes in volume and mix of interest-earning assets and interest-bearing liabilities that support those assets, as well as changing interest rates when differences exist in repricing dates of assets and liabilities.

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Net interest income on a fully tax equivalent basis declined $125 thousand, or 1.0%, to $12.5 million for the first nine months of 2013 as compared to $12.7 million for same period in 2012.  The decrease in net interest income was largely due to the Company’s net interest margin declining 17 basis points to 3.39% for the first nine months of 2013 compared to the same period last year.  The decline in the net interest margin was mostly due to a 34 basis point decline in the average rate earned on interest earning assets.  This decline was partially offset by a decrease in the average rate paid on total interest bearing liabilities, which decreased 18 basis points to 0.75% for the first nine months of 2013 from 0.93% for the same period in 2012, and a $18.5 million, or 3.9%, increase in average interest earning assets, principally loans receivable and securities.

Interest Income – Our total interest income, on a fully tax equivalent basis, decreased $642 thousand, or 4.1%, to $14.9 million for the nine months ended September 30, 2013, as compared to the same period last year.  The decline was due to lower earning asset yields, which decreased 34 basis points to 4.04% for the nine months ended September 30, 2013, as compared to the same period in 2012. 

Our total interest income earned on loans receivable increased $68 thousand, or 0.5%, to $13.4 million for the first nine months of 2013 as compared to the same period in 2012.  The increase was driven by an increase in average balance of loans receivable of $26.0 million, or 7.7%, for the nine months ended September 30, 2013, as compared to same period last year.  The increase in interest income earned on loans receivable was partly offset by a 34 basis point decline in average yields to 4.88% for the year ended September 30, 2013, as compared to the same period in 2012.

Our total interest income earned on securities, on a fully taxable equivalent basis, decreased $689 thousand, to $1.6 million for the nine months ended September 30, 2013, from $2.2 million for the same period in 2012.  This decrease was largely due to a decline in the average rate earned on securities, which declined 93 basis points for the nine months ended September 30, 2013, as compared to the same period last year.  The decrease in yields on securities was largely due to an increase in premium amortization relating to the government sponsored mortgage backed securities portion of our securities portfolio.  Premium amortization has increased as a result of faster prepayment speeds stemming from the historical low mortgage rate environment and government sponsored programs facilitating the consumer refinancing process.  To a lesser extent, the lower yields on the securities portfolio reflect the investment in securities in a low market rate environment.The decrease in interest income on securities was offset by a $8.3 million, or 7.2%, increase in average balance of securities for the nine months ended September 30, 2013, as compared to same period last year. The increase resulted from investing excess liquidity generated from deposit growth outpacing loan growth.

Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. Our interest earned on total other interest-earning assets decreased $21 thousand for the first nine months of 2013 as compared to the same period in 2012 due to a decline in average balances.  The average balances in other interest-earning assets decreased $15.8 million to $5.3 million in the first nine months of 2013 from $21.1 million during the first six months a year earlier. 

Interest Expense – Our interest expense for the nine months ended September 30, 2013 decreased $517 thousand, or 17.7%, to $2.4 million from $2.9 million for the same period in 2012.  The improvement was principally due to lower average rates paid on total interest-bearing liabilities, which declined 18 basis points from 0.93% for the nine months ended September 30, 2012, to 0.75% for the same period in 2013.  The improvement in interest expense was partly offset by an increase in average balances in interest-bearing liabilities, which grew $5.4 million, or 1.3%, to $426.6 million for the first nine months of 2013 from $421.2 million for the same period in 2012.

Our interest expense on deposits declined $528 thousand, or 27.2%, for the nine months ended September 30, 2013, as compared to the same period last year.  The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 19 basis points to 0.49% for the first nine months 2013 as compared to the same period in 2012.  The decrease in rates on deposit products reflects management’s asset/liability strategies and a lower market rate environment between the two periods.

Provision for Loan Losses – Provision for loan losses decreased $580 thousand to $2.3 million for the first nine months of 2013, as compared to $2.9 million for the same period in 2012.  The provision for loan losses reflects management’s judgment concerning the risks inherent in our existing loan portfolio and the size of the allowance necessary to absorb the risks, as well as the activity in the allowance during the periods.  Management reviews the adequacy of its allowance on an ongoing basis and will provide additional provisions, as management may deem necessary. 

Non-Interest Income – We reported a decrease in non-interest income of $18 thousand, or 0.4%, to $4.7 million for the first nine months of 2013 as compared to the same period last year.  The decrease in non-interest income was primarily due to a decrease in gains on securities transactions of $364 thousand, which was partially offset by an increase in insurance commissions and fees of $353 thousand, or 18.7%. 

Non-Interest Expense – Our non-interest expenses increased $437 thousand, or 3.3%, to $13.7 million for the first nine months of 2013 as compared to the same period last year.  The increase for the first nine months of 2013 versus the

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same period in 2012 was primarily due to increases in expenses related to foreclosed real estate, salaries and employee benefits expense and other expenses of $286 thousand, $199 thousand and $118 thousand, respectively, which was partially offset by decreases in loan collection costs of $288 thousand.

Income Taxes – Our income tax benefit, which includes both federal and state tax expense, was a benefit of $29 thousand for the nine months ended September 30, 2013, compared to income tax benefit of $94 thousand for the nine months ended September 30, 2012.

COMPARISION OF FINANCIAL CONDITION ATSEPTEMBER 30, 2013 TO DECEMBER 31, 2012

At September 30, 2013, our total assets were $534.9 million, an increase of $20.2 million, or 3.9%, as compared to total assets of $514.7 million at December 31, 2012.  The increase in total assets was largely driven by net loans receivable growth of $43.9 million, or 12.8%, which was partially offset by a decline in the securities portfolio of $22.9 million, or 18.5%.

Cash and Cash Equivalents – Our cash and cash equivalents decreased by $628 thousand to $11.0 million at September 30, 2013, or 2.1% of total assets, from $11.7 million, or 2.3% of total assets, at December 31, 2012.  The decrease was largely due to the investment of excess liquidity into loans.

Securities Portfolio – At September 30, 2013,  the securities portfolio, which includes availableforsale and held to maturity securities, was  $101.2 million compared to $124.1 million at December 31, 2012. Availableforsale securities were $95.4 million at September 30, 2013, compared to $118.9 million at December 31, 2012. The available for sale securities are held primarily for liquidity, interest rate risk management and profitability. Accordingly, our investment policy is to invest in securities with low credit risk, such as U.S. government agency obligations, state and political obligations and mortgage-backed securities. Heldtomaturity securities were$5.8 million at September 30, 2013 compared to $5.2 million at December 31, 2012.

Net unrealized (losses) gains in the securities portfolio were ($3.1) million  and $844 thousand at September 30, 2013 and December 31, 2012, respectively. The decrease in the fair value of the investment securities was driven by state and political subdivisions and mortgage-backed securities. Gross unrealized gains decreased by $1.0 million to $503 thousand at September 30, 2013, as compared to $1.5 million at December 31, 2012.  The increase in gross unrealized losses of $2.9 million to $3.6 million at September 30, 2013, as compared to December 31, 2012, was largely attributed to lower fair values of state and political subdivisions due to an increase in spreads and an 86 basis point rate increase in the 10 year U.S. Treasury.

We conduct a regular assessment of our investment securities to determine whether any securities are other-than-temporarily impaired (“OTTI”).  Further detail of the composition of the securities portfolio and discussion of the results of the most recent OTTI assessment are in Note 2 –  Securities to the unaudited consolidated financial statements. Our securities in unrealized loss positions are mostly driven by changes in spreads and market interest rates.  All of our debt and equity securities have been evaluated for other-than-temporary impairment as of September 30, 2013 and we do not consider any security OTTI.  We evaluated the prospects of the issuers in relation to the severity and the duration of the unrealized losses.  Based on that evaluation, we do not intend to sell and it is more likely than not that we will not have to sell any of our securities before recovery of their cost basis.

Other investments totaled $2.5 million and $2.0 million at September 30, 2013 and December 31, 2012, respectively, and consisted primarily of FHLB stock. We also held $100 thousand in time deposits with other financial institutions at September 30, 2013 and December 31, 2012. 

Loans – The loan portfolio comprises our largest class of earning assets.Total loans receivable, net of unearned income, increased $44.6 million, or 12.8%, to $392.3 million at September 30, 2013, from $347.7 million at year-end 2012. 

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The following table summarizes the composition of our gross loan portfolio by type:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial loans	$	17,999	$	16,158
Construction		9,649		7,004
Commercial real estate		256,976		225,345
Residential real estate		106,448		98,301
Consumer and other		1,615		1,255
Total gross loans	$	392,687	$	348,063

Loan and Asset Quality – Our overall credit quality of the Company continued to improve through September 30, 2013, as our total problem assets, which is comprised of foreclosed real estate, criticized assets and classified assets, declined $5.2 million, or 14.8%, to $29.8 million at September 30, 2013, from $34.9 million at December 31, 2012. Our total problem assets declined 52.8% from a historical high of $62.8 million at March 31, 2010, as compared to September 30, 2013.

Non-performing assets (“NPAs”), which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, decreased $6.5 million, or 27.2%, to $17.3 million at September 30, 2013, as compared to $23.8 million at December 31, 2012.  The ratios of NPAs to total assets for September 30, 2013 and December 31, 2012 were 3.2% and 4.6%, respectively.  Non-accrual loans decreased $4.5 million, or 25.0%, to $13.4 million at September 30, 2013, as compared to $17.9 million at December 31, 2012, and declined 44.1%  since September 30, 2012.  Non-accrual loans to total assets fell to 2.51% at September 30, 2013, which is the lowest level since 2007.

We continue to actively market our foreclosed real estate properties, which decreased $2.0 million to $3.1 million at September 30, 2013, as compared to $5.1 million at December 31, 2012.  The decrease was primarily due to the sale of foreclosed real estate properties and write-downs on foreclosed real estate of $3.9 million and $995 thousand, respectively, which was partially offset by the addition of $2.9 million in new foreclosed real estate properties during the first nine months of 2013.  At September 30, 2013, our foreclosed real estate properties had an average value of approximately $220 thousand per property. 

The allowance for loan losses was $5.7 million, or 1.4% of total loans, at September 30, 2013, compared to $5.0 million, or 1.4% of total loans, at December 31, 2012. The increase in the allowance for loan losses was largely attributed to $2.3 million in provision for loan losses, which was in partly offset by $1.7 million in net charge-offs for the first nine months of 2013.

Management continues to monitor our asset quality and believes that the non-performing assets are adequately collateralized and anticipated material losses have been adequately reserved for in the allowance for loan losses.  However, given the uncertainty of the current real estate market, additional provisions for losses may be deemed necessary in future periods.  The following table provides information regarding risk elements in the loan portfolio at each of the periods presented:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Non-accrual loans	$	13,406	$	$ 17,867
Non-accrual loans to total loans		3.42%		5.14%
Non-performing assets	$	17,292	$	$ 23,750
Non-performing assets to total assets		3.23%		4.61%
Allowance for loan losses as a % of non-performing loans		39.78%		26.63%
Allowance for loan losses to total loans		1.44%		1.43%

A loan is considered impaired, in accordance with the impairment accounting guidance, when based on current information and events, it is probable that we will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan.  Total impaired loans at September 30, 2013 were $14.0 million and at December 31, 2012 were $18.5 million.  Impaired loans measured at fair value on a non-recurring basis decreased to $4.2 million on September 30, 2013 from $6.2 million at December 31, 2012. The principal balances on loans measured at fair value were $4.6 million and $6.6 million, net of valuation allowance of $434 thousand at September 30, 2013 and $365 thousand at December 31, 2012.  Impaired loans include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a

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reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.  Not all impaired loans and restructured loans are on non-accrual, and therefore not all are considered non-performing loans.  Restructured loans still accruing totaled $612 thousand at September 30, 2013 and $608 thousand at December 31, 2012.

We also continue to monitor our portfolio for potential problem loans. Potential problem loans are defined as loans which causes management to have serious concerns as to the ability of such borrowers to comply with the present loan repayment terms and which may cause the loan to be placed on non-accrual status. As of September 30, 2013, we had 5 loan relationships totaling $2.2 million that we deemed potential problem loans. Management is actively monitoring these loans.

Further detail of the credit quality of the loan portfolio is in Note 3 –  Loans and Note 4 –  Allowance for Loan Losses and Credit Quality of Financing Receivables to the unaudited consolidated financial statements.

Allowance for Loan Losses – The allowance for loan losses consists of general, allocated and unallocated components.  The allocated component relates to loans that are classified as impaired.  For those loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience and expected losses derived from our internal risk rating process.  The unallocated component covers the potential for other adjustments that may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. 

Management regularly assesses the appropriateness and adequacy of the loan loss reserve in relation to credit exposure associated with individual borrowers, overall trends in the loan portfolio and other relevant factors, and believes the reserve is reasonable and adequate for each of the periods presented.

At September 30, 2013, the total allowance for loan losses increased $679 thousand, or 13.6%, to $5.7 million, as compared to $5.0 million at December 31, 2012.  The components of this increase were a provision for loan losses of $2.3 million and net charge-offs totaling $1.7 million in the first nine months of 2013.  The provision also reflects the continued weakness in current real estate values in our market area and reduced cash flows to support the repayment of loans.  The allowance for loan losses as a percentage of total loans was 1.4% at September 30, 2013 and December 31, 2012. 

The table below presents information regarding our provision and allowance for loan losses at September 30, 2013 and 2012:

(Dollars in thousands)	September 30, 2013		September 30, 2012
Balance, beginning of period	$	4,976	$	7,210
Provision		2,342		2,922
Charge-offs		(2,083)		(3,510)
Recoveries		420		99
Balance, end of period	$	5,655	$	6,721

The table below presents details concerning the allocation of the allowance for loan losses to the various categories for each of the periods presented.  The allocation is made for analytical purposes and it is not necessarily indicative of the categories in which future credit losses may occur.  The total allowance is available to absorb losses from any category of loans.

	September 30, 2013			December 31, 2012
			Percent of			Percent of
			Loans In Each			Loans In Each
			Category To			Category To
(Dollars in thousands)	Amount		Gross Loans		Amount	Gross Loans
Commercial and industrial	$	239	4.6%	$	271	4.6%
Construction		397	2.5%		223	2.0%
Commercial real estate		3,426	65.4%		3,395	64.7%
Residential real estate		867	27.1%		869	28.3%
Consumer and other loans		15	0.4%		38	0.4%
Unallocated		711	-		180	-
Total	$	5,655	100.0%	$	4,976	100.0%

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Bank-Owned Life Insurance (BOLI) –  Our BOLI carrying value amounted to $11.8 million at September 30, 2013 and $11.5 million at December 31, 2012.

Goodwill and Other Intangibles – Goodwill represents the excess of the purchase price over the fair market value of net assets acquired.  At September 30, 2013 and December 31, 2012, we had recorded goodwill totaling $2.8 million, primarily as a result of the acquisition of Tri-State in 2001.  In accordance with U.S. GAAP, goodwill is not amortized, but evaluated at least annually for impairment.  Any impairment of goodwill results in a charge to income.  We periodically assess whether events and changes in circumstances indicate that the carrying amounts of goodwill and intangible assets may be impaired.  The estimated fair value of the reporting segment exceeded its book value; therefore, no write-down of goodwill was required.  The goodwill related to the insurance agency is not deductible for tax purposes.

Deposits – Our total deposits increased $4.5 million, or 1.0%, to $437.0 million at September 30, 2013, from $432.4 million at December 31, 2012.  The increase in deposits was due to an increase in non-interest bearing deposits of $11.1 million, or 22.9%, partially offset by a decrease in interest bearing deposits of $6.5 million, or 1.7%, for September 30, 2013, as compared to December 31, 2012.  Our funding mix continues to improve as low cost deposits grow.

Borrowings – Borrowings consist of long term advances from the FHLB.  The advances are secured under terms of a blanket collateral agreement by a pledge of qualifying mortgage loans.  We had $36.0 million and $26.0 million in borrowings, at a weighted average interest rate of 3.39% at September 30, 2013 and 4.03% at December 31, 2012.  The borrowings at September 30, 2013 consisted of $25.0 million of fixed rate advances and $11.0 million of advances with quarterly convertible options that allow the FHLB to change the note rate to a then current market rate. 

Junior Subordinated Debentures – On June 28, 2007, we raised $12.5 million in capital through the issuance of junior subordinated debentures to a non-consolidated statutory trust subsidiary.  The subsidiary in turn issued $12.5 million in variable rate capital trust pass through securities to investors in a private placement.  The interest rate is based on the three-month LIBOR plus 144 basis points and adjusts quarterly.  The rate at September 30, 2013, was 1.69%.  The capital securities are currently redeemable by us at a redemption price of 100% of par, in whole or in part.  These trust preferred securities must be redeemed upon final maturity on September 15, 2037. The proceeds of these trust preferred securities, which have been contributed to the Bank, are included in the Bank’s capital ratio calculations and treated as Tier I capital.

In accordance with FASB ASC 810, Consolidations, our whollyowned subsidiary, Sussex Capital Trust II, is not included in our consolidated financial statements.

Equity–Stockholders’ equity, inclusive of accumulated other comprehensive income, net of income taxes, was $46.0 million at September 30, 2013 and $40.4 million at December 31, 2012.  The increase was largely due to an increase in capital due to a successful capital raise that was completed in the third quarter of 2013, which resulted in gross proceeds of $7.2 million. This increase was partially offset by a $2.2 million decline in accumulated other comprehensive income relating to net unrealized losses on available for sale securities.In order to preserve capital, our Board of Directors elected not to declare any cash dividends in the first nine months of 2013 or 2012. The Board will review our dividend policy based on a number of factors, including current economic and regulatory conditions, our earnings and asset quality and capital needs.

LIQUIDITY AND CAPITAL RESOURCES

A fundamental component of our business strategy is to manage liquidity to ensure the availability of sufficient resources to meet all financial obligations and to finance prospective business opportunities. Liquidity management is critical to our stability. Our liquidity position over any given period of time is a product of our operating, financing and investing activities. The extent of such activities is often shaped by such external factors as competition for deposits and loan demand.

Traditionally, financing for our loans and investments is derived primarily from deposits, along with interest and principal payments on loans and investments.  At September 30, 2013, total deposits amounted to $437.0 million, a increase of $4.5 million, or 1.0%, from December 31, 2012. At September 30, 2013 and December 31, 2012, advances from FHLB and subordinated debentures totaled $48.9 million and  $38.9 million, respectively, and represented 9.1% and 7.6% of total assets, respectively. 

Loan production continued to be our principal investing activity. Net loans receivable at September 30, 2013, amounted to $386.6 million, an increase of $43.9 million, or 12.8%, compared to December 31, 2012.

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Our most liquid assets are cash and due from banks and federal funds sold.  At September 30, 2013, the total of such assets amounted to $11.0 million, or 2.1%, of total assets, compared to $11.7 million, or 2.3%, of total assets at December 31, 2012. Another significant liquidity source is our available for sale securities portfolio.  At  September 30, 2013, available for sale securities amounted to $95.4 million compared to $118.9 million at December 31, 2012.

In addition to the aforementioned sources of liquidity, we have available various other sources of liquidity, including federal funds purchased from other banks and the Federal Reserve Bank discount window.  The Bank also has the capacity to borrow an additional $26.2 millionthrough its membership in the FHLB and $7.0 million at Atlantic Central Bankers Bank at September 30, 2013.  Management believes that our sources of funds are sufficient to meet our present funding requirements.

The Bank's regulators have implemented risk based guidelines that require banks to maintain Tier I capital as a percent of risk-adjusted assets of 4.0% and Tier II capital as a percentage of risk-adjusted assets of 8.0% at a minimum.  At September 30, 2013, the Bank's Tier I and Tier II capital ratios were 13.78% and 15.04%, respectively.  In addition to the risk-based guidelines, the Bank's regulators require that banks which meet the regulators' highest performance and operational standards maintain a minimum leverage ratio (Tier I capital as a percent of tangible assets) of 4.0%.  As of September 30, 2013, the Bank had a leverage ratio of 10.39%.  The Bank’s risk based and leverage ratios are in excess of those required to be considered “well-capitalized” under FDIC regulations.

The Board of Governors of the Federal Reserve System also imposes similar capital requirements on bank holding companies with consolidated assets of $500 million or more. Under Federal Reserve reporting requirements, a bank holding company that reaches $500 million or more in total consolidated assets as of June 30 of the preceding year must begin reporting its consolidated capital beginning in March of the following year.  The Bank began reporting its consolidated capital beginning in March of 2013.

We have no investment or financial relationship with any unconsolidated entities that are reasonably likely to have a material effect on liquidity or the availability of capital resources, except for the trust preferred securities of Sussex Capital Trust II.  We are not aware of any known trends or any known demands, commitments, events or uncertainties, which would result in any material increase or decrease in liquidity.  Management believes that any amounts actually drawn upon can be funded in the normal course of operations.

Off-Balance Sheet Arrangements – Our consolidated financial statements do not reflect off-balance sheet arrangements that are made in the normal course of business.  These off-balance sheet arrangements consist of unfunded loans and letters of credit made under the same standards as on-balance sheet instruments.  These unused commitments, at September 30, 2013, totaled $71.4 millionand consisted of $33.0 million in commitments to grant commercial real estate, construction and land development loans, $18.8 million in home equity lines of credit, $18.9 million in other unused commitments and $646 thousand in letters of credit.  These instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk to us.  Management believes that any amounts actually drawn upon can be funded in the normal course of operations.

REGULATORY UPDATES

On July 2, 2013, the Federal Reserve Board issued final rules, and on July 9, 2013, the Office of the Comptroller of the Currency issued interim final rules that revise the existing regulatory capital requirements to incorporate certain revisions to the Basel capital framework, including Basel III,  and to implement certain provisions of the Dodd Frank Wall Street Reform and Consumer Protection Act (“Dodd Frank Act”). The final and interim final rules seek to strengthen the components of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets.  The final and interim final rules, among other things:

· revise minimum capital requirements and adjust prompt corrective action thresholds;

· revise the components of regulatory capital, add a new minimum common equity Tier 1 capital ratio of 4.5% of risk-weighted assets, increase the minimum Tier 1 capital ratio requirement from 4% to 6%;

· retain the existing risk-based capital treatment for 1-4 family residential mortgage exposures;

· permit most banking organizations, including us, to retain, through a one-time permanent election, the existing capital treatment for accumulated other comprehensive income;

· implement a new capital conservation buffer of common equity Tier 1 capital equal to 2.5% of risk-weighted assets, which will be in addition to the 4.5% common equity Tier 1 capital ratio and be phased in over a three year period beginning January 1, 2016 which buffer is generally required to make capital distributions and pay executive bonuses;

· increase capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term loan commitments;

· require the deduction of mortgage servicing assets and deferred tax assets that exceed 10% of common equity Tier 1 capital in each category and 15% of common equity Tier 1 capital in the aggregate; and

34

· remove references to credit ratings consistent with the Dodd-Frank Act and establish due diligence requirements for securitization exposures.

Under the final and interim rules, compliance is required beginning January 1, 2015, for most banking organizations, subject to a transition period for several aspects of the rule, including the new minimum capital ratio requirements, the capital conservation buffer, and the regulatory capital adjustments and deductions. We are still in the process of assessing the impacts of these complex final and interim final rules, however, we believe we will continue to exceed all estimated well-capitalized regulatory requirements on a fully phased-in basis.

35

Item 3 - Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this report. Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that have materially effected, or that are reasonably likely to materially effect, our internal control over financial reporting.

36

PART II – OTHER INFORMATION

Item 1 - Legal Proceedings

We are not involved in any legal proceedings other than routine legal proceedings occurring in the ordinary course of business.  Management believes that such proceedings are, in the aggregate, immaterial to our financial condition and results of operations.

Item 1A - Risk Factors

For a summary of risk factors relevant to our operations, see Part 1, Item 1A, “Risk Factors” in our 2012 Annual Report on Form 10-K.  There are no material changes in the risk factors relevant to our operations.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

Not applicable.

Item 4 – Mine Safety Disclosures

Not applicable.

Item 5 - Other Information

Not applicable.

Item 6 - Exhibits

The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit Index attached hereto and are incorporated herein by reference.

37

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

SUSSEX BANCORP

By: /s/ Steven M. Fusco                .

      STEVEN M. FUSCO

      Senior Vice President and

      Chief Financial Officer

 (Principle Financial and Accounting Officer)

      Date: November 13, 2013

38

EXHIBIT INDEX

Number	Description
3.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on 10-Q filed with the SEC on August 15, 2011).
3.2	Amended and Restated By-laws (incorporated by reference to Exhibit 3.II to the Current Report on Form 8-K filed with the SEC on April 28, 2010).
31.1*	Certification of Anthony Labozzetta pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Steven M. Fusco pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Financial statements from the quarterly report on Form 10-Q of Sussex Bancorp for the quarter ended September 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Income and Comprehensive (Loss) Income; (iii) the Consolidated Statements of Stockholders’ Equity; (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.

_______________________________

*  Filed herewith

39

EX-31.1

Exhibit 31.1

I, Anthony Labozzetta, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Sussex Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: /s/ Anthony Labozzetta               .

      ANTHONY LABOZZETTA

      President and

      Chief Executive Officer

      (Principle Executive Officer)

      Date: November 13, 2013

EX-31.2

Exhibit 31.2

I, Steven M. Fusco, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sussex Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

By: /s/ Steven M. Fusco             .

      STEVEN M. FUSCO

      Senior Vice President and

      Chief Financial Officer

(Principle Financial and Accounting Officer)

      Date: November 13, 2013

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

This statement is being furnished in connection with the filing by the Company of the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013 (the “Report”).

By execution of this statement, the undersigned, Anthony Labozzetta, Chief Executive Officer, and Steven M. Fusco, Chief Financial Officer, certify that:

A) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)), and

B) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

This statement is authorized to be attached as an exhibit to the Report so that this statement will accompany the Report at such time as the Report is filed with the Securities and Exchange Commission, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.  It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

By: /s/ Anthony Labozzetta           .

      ANTHONY LABOZZETTA

      President and

      Chief Executive Officer

     (Principle Executive Officer)

      Date: November 13, 2013

By: /s/ Steven M. Fusco                .

      STEVEN M. FUSCO

      Senior Vice President and

      Chief Financial Officer

(Principle Financial and Accounting Officer)

      Date: November 13, 2013

XML

Summary Of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Basis Of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Sussex Bancorp (“we,” “us” or “our”) and our wholly owned subsidiary Sussex Bank (the “Bank”).  The Bank’s wholly owned subsidiaries are SCB Investment Company, Inc., SCBNY Company, Inc., ClassicLake Enterprises, LLC, Wheatsworth Properties Corp., PPD Holding Company, LLC, and Tri-State Insurance Agency, Inc. (“Tri-State”), a full service insurance agency located in Sussex County, New Jersey with a satellite office located in Bergen County, New Jersey.  Tri-State’s operations are considered a separate segment for financial disclosure purposes.  All inter-company transactions and balances have been eliminated in consolidation.  The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York.

Sussex Bancorp is subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (the “FRB”).  The Bank’s deposits are insured by the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits.  The operations of Sussex Bancorp and Sussex Bank are subject to the supervision and regulation of the FRB, FDIC and the New Jersey Department of Banking and Insurance (the “Department”) and the operations of Tri-State are subject to supervision and regulation by the Department.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for full year financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature.  Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2013, for items that should potentially be recognized or disclosed in these unaudited consolidated financial statements.  The evaluation was conducted through the date these unaudited consolidated financial statements were issued.

Reclassifications

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income.

New Accounting Standards

New Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date.For public entities, the guidance is effective for fiscal years beginning after December 15, 2013 and interim periods within those years.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  This ASU requires entities to disclose the effect of items reclassified out of accumulated other comprehensive income (“AOCI”) on each affected net income line item.  For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures.  This information may be provided either in the notes or parenthetically on the face of the financial statements.  For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2012, and interim periods within those years.  The adoption of this guidance did not have a material impact on our consolidated financial statements and the required disclosures are included in Note 6 to these consolidated financial statements.

XML

Fair Value Of Financial Instruments (Summary Of Valuation Of Financial Assets Measured On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	$ 95,378	$ 118,881
Quoted Prices In Active Markets For Identical Assets (Level I) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	446	431
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	94,932	118,450
U.S. Government Agencies [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	5,513
U.S. Government Agencies [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	5,513
U.S. Government Agencies [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale
State And Political Subdivisions [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	26,115	27,741
State And Political Subdivisions [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	26,115	27,741
State And Political Subdivisions [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale
U.S. Government-Sponsored Enterprises [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	63,304	90,709
U.S. Government-Sponsored Enterprises [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	63,304	90,709
U.S. Government-Sponsored Enterprises [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale
Equity Securities-Financial Services Industry And Other [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	446	431
Equity Securities-Financial Services Industry And Other [Member] | Quoted Prices In Active Markets For Identical Assets (Level I) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	446	431
Equity Securities-Financial Services Industry And Other [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale

XML

Consolidated Statements Of Income And Comprehensive (Loss) Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012
INTEREST INCOME
Loans receivable, including fees	$ 4,599		$ 4,467		$ 13,360		$ 13,292
Securities:
Taxable	130		241		410		994
Tax-exempt	254		292		762		827
Interest bearing deposits	2		4		9		30
Total Interest Income	4,985		5,004		14,541		15,143
INTEREST EXPENSE
Deposits	419		587		1,410		1,938
Borrowings	293		268		828		797
Junior subordinated debentures	54		60		163		183
Total Interest Expense	766		915		2,401		2,918
Net Interest Income	4,219		4,089		12,140		12,225
PROVISION FOR LOAN LOSSES	500		1,104		2,342		2,922
Net Interest Income after Provision for Loan Losses	3,719		2,985		9,798		9,303
OTHER INCOME
Service fees on deposit accounts	283		292		840		842
ATM and debit card fees	181		165		519		453
Bank-owned life insurance	85		96		267		300
Insurance commissions and fees	756		684		2,245		1,892
Investment brokerage fees	37		46		136		118
Net gain on sale of loans, held for sale							47
Net gain on securities transactions			569		399		763
Net gain on sale of premises and equipment							(6)
Other	92		108		276		291
Total Other Income	1,434		1,960		4,682		4,700
OTHER EXPENSES
Salaries and employee benefits	2,387		2,196		6,943		6,744
Occupancy, net	342		355		1,083		1,071
Furniture, equipment and data processing	326		326		983		1,014
Advertising and promotion	63		63		198		222
Professional fees	153		175		536		478
Director fees	106		56		299		236
FDIC assessment	176		177		523		516
Insurance	65		68		204		179
Stationary and supplies	43		44		143		128
Loan collection costs	37		204		251		539
Net expenses and write-downs related to foreclosed real estate	317		232		1,325		1,039
Amortization of intangible assets			1		1		4
Other	420		396		1,213		1,095
Total Other Expenses	4,435		4,293		13,702		13,265
Income before Income Taxes	718		652		778		738
EXPENSE (BENEFIT) FOR INCOME TAXES	143	[1]	106	[1]	(29)	[1]	(94)	[1]
Net Income	575		546		807		832
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on available for sale securities arising during the period	430		693		(3,327)		1,413
Reclassification adjustment for net gains on securities transactions included in net income			(569)		(399)		(763)
Income tax (benefit) expense related to items of other comprehensive income (loss)	(173)		(49)		1,490		(259)
Other comprehensive income (loss), net of income taxes	257		75		(2,236)		391
Comprehensive income (loss)	$ 832		$ 621		$ (1,429)		$ 1,223
EARNINGS (LOSS) PER SHARE
Basic	$ 0.14		$ 0.17		$ 0.23		$ 0.26
Diluted	$ 0.14		$ 0.17		$ 0.23		$ 0.25

[1] Insurance Services calculated at statutory tax rate of 40%

XML

Allowance For Loan Losses And Credit Quality Of Financing Receivables

9 Months Ended

Sep. 30, 2013

Allowance For Loan Losses And Credit Quality Of Financing Receivables [Abstract]

Allowance For Loan Losses And Credit Quality Of Financing Receivables

NOTE 4 – ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY OF FINANCING RECEIVABLES

The following table presents changes in the allowance for loan losses disaggregated by the class of loans receivable for the three and nine months ended September 30, 2013 and 2012:

	Commercial				Commercial		Residential		Consumer
	and				Real		Real		and
(Dollars in	Industrial		Construction		Estate		Estate		Other		Unallocated		Total
thousands)
Three Months Ended:
September 30, 2013
Beginning balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Charge-offs		-		(19)		(747)		(89)		(7)		-		(862)
Recoveries		-		-		343		24		3		-		370
Provision		(10)		16		358		(58)		4		190		500
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	430	$	170	$	4,547	$	1,055	$	11	$	47	$	6,260
Charge-offs		-		(122)		(264)		(266)		(8)		-		(660)
Recoveries		-		-		2		-		15		-		17
Provision		183		131		153		393		(10)		254		1,104
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721
Nine Months Ended:
September 30, 2013
Beginning balance	$	271	$	223	$	3,395	$	869	$	38	$	180	$	4,976
Charge-offs		(6)		(141)		(1,759)		(155)		(22)		-		(2,083)
Recoveries		-		-		387		24		9		-		420
Provision		(26)		315		1,403		129		(10)		531		2,342
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	304	$	294	$	4,833	$	987	$	9	$	783	$	7,210
Charge-offs		-		(830)		(2,081)		(546)		(53)		-		(3,510)
Recoveries		2		-		71		-		26		-		99
Provision		307		715		1,615		741		26		(482)		2,922
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721

The following table presents the balance of the allowance of loan losses and loans receivable by class at September 30, 2013 and December 31, 2012, disaggregated on the basis of our impairment methodology.

	Allowance for Loan Losses						Loans Receivable
			Balance		Balance
			Related to		Related to
			Loans		Loans
			Individually		Collectively				Individually		Collectively
			Evaluated for		Evaluated for				Evaluated for		Evaluated for
(Dollars in thousands)	Balance		Impairment		Impairment		Balance		Impairment		Impairment
September 30, 2013
Commercial and industrial	$	239	$	-	$	239	$	17,999	$	-	$	17,999
Construction		397		27		370		9,649		269		9,380
Commercial real estate		3,426		308		3,118		256,976		10,930		246,046
Residential real estate		867		99		768		106,448		2,819		103,629
Consumer and other loans		15		-		15		1,615		-		1,615
Unallocated		711		-		-		-		-		-
Total	$	5,655	$	434	$	4,510	$	392,687	$	14,018	$	378,669
December 31, 2012
Commercial and industrial	$	271	$	27	$	244	$	16,158	$	27	$	16,131
Construction		223		42		181		7,004		2,462		4,542
Commercial real estate		3,395		230		3,165		225,345		12,682		212,663
Residential real estate		869		66		803		98,301		3,351		94,950
Consumer and other loans		38		-		38		1,255		-		1,255
Unallocated		180		-		-		-		-		-
Total	$	4,976	$	365	$	4,431	$	348,063	$	18,522	$	329,541

An age analysis of loans receivable which were past due as of September 30, 2013 and December 31, 2012, is as follows:

													Recorded
													Investment
					Greater						Total		> 90 Days
	30-59 Days		60-89 days		Than		Total Past				Financing		and
(Dollars in thousands)	Past Due		Past Due		90 Days (a)		Due		Current		Receivables		Accruing
September 30, 2013
Commercial and industrial	$	-	$	-	$	50	$	50	$	17,949	$	17,999	$	50
Construction		-		-		269		269		9,380		9,649		-
Commercial real estate		988		260		10,319		11,567		245,409		256,976		-
Residential real estate		372		407		2,962		3,741		102,707		106,448		144
Consumer and other		2		5		3		10		1,605		1,615		3
Total	$	1,362	$	672	$	13,603	$	15,637	$	377,050	$	392,687	$	197
December 31, 2012
Commercial and industrial	$	-	$	-	$	27	$	27	$	16,131	$	16,158	$	-
Construction		-		-		2,462		2,462		4,542		7,004		-
Commercial real estate		1,103		1,303		12,127		14,533		210,812		225,345		65
Residential real estate		207		127		3,315		3,649		94,652		98,301		-
Consumer and other		12		3		144		159		1,096		1,255		143
Total	$	1,322	$	1,433	$	18,075	$	20,830	$	327,233	$	348,063	$	208
(a) includes loans greater than 90 days past due and still accruing and non-accrual loans.

Loans for which the accrual of interest has been discontinued at September 30, 2013 and December 31, 2012, were:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	-	$	27
Construction		269		2,462
Commercial real estate		10,319		12,062
Residential real estate		2,818		3,315
Consumer and other		-		1
Total	$	13,406	$	17,867

In determining the adequacy of the allowance for loan losses, we estimate losses based on the identification of specific problem loans through our credit review process and also estimate losses inherent in other loans on an aggregate basis by loan type.  The credit review process includes the independent evaluation of the loan officer assigned risk ratings by the Chief Credit Officer and a third party loan review company.  Such risk ratings are assigned loss component factors that reflect our loss estimate for each group of loans.  It is management’s and the Board of Directors’ responsibility to oversee the lending process to ensure that all credit risks are properly identified, monitored, and controlled, and that loan pricing, terms, and other safeguards against non-performance and default are commensurate with the level of risk undertaken and is rated as such based on a risk-rating system.  Factors considered in assigning risk ratings and loss component factors include: borrower specific information related to expected future cash flows and operating results, collateral values, financial condition, payment status and other information; levels of and trends in portfolio charge-offs and recoveries; levels in portfolio delinquencies; effects of changes in loan concentrations and observed trends in the economy and other qualitative measurements.

Our risk-rating system as defined below is consistent with the system used by regulatory agencies and consistent with industry practices. Loan classifications of Substandard, Doubtful or Loss are consistent with the regulatory definitions of classified assets. 

Pass: This category represents loans performing to contractual terms and conditions and the primary source of repayment is adequate to meet the obligation.  We have five categories within the Pass classification depending on strength of repayment sources, collateral values and financial condition of the borrower. 

Special Mention:  This category represents loans performing to contractual terms and conditions; however the primary source of repayment or the borrower is exhibiting some deterioration or weaknesses in financial condition that could potentially threaten the borrowers’ future ability to repay our loan principal and interest or fees due.

Substandard: This category represents loans that the primary source of repayment has significantly deteriorated or weakened which has or could threaten the borrowers’ ability to make scheduled payments.  The weaknesses require close supervision by management and there is a distinct possibility that we could sustain some loss if the deficiencies are not corrected.  Such weaknesses could jeopardize the timely and ultimate collection of our loan principal and interest or fees due.  Loss may not be expected or evident, however, loan repayment is inadequately supported by current financial information or pledged collateral.

Doubtful: Loans so classified have all the inherent weaknesses of a substandard loan with the added provision that collection or liquidation in full is highly questionable and not reasonably assured.  The probability of at least partial loss is high, but extraneous factors might strengthen the asset to prevent loss. The validity of the extraneous factors must be continuously monitored. Once these factors are questionable the loan should be considered for full or partial charge-off.

Loss: Loans so classified are considered uncollectible, and of such little value that their continuance as active assets is not warranted.  Such loans are fully charged off.

The following tables illustrate our corporate credit risk profile by creditworthiness category as of September 30, 2013 and December 31, 2012: 

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
September 30, 2013
Commercial and industrial	$	17,936	$	63	$	-	$	-	$	17,999
Construction		9,380		-		269		-		9,649
Commercial real estate		234,820		7,188		14,968		-		256,976
Residential real estate		102,371		1,045		3,017		15		106,448
Consumer and other		1,474		141		-		-		1,615
	$	365,981	$	8,437	$	18,254	$	15	$	392,687
December 31, 2012
Commercial and industrial	$	15,860	$	269	$	23	$	6	$	16,158
Construction		4,542		-		2,462		-		7,004
Commercial real estate		203,106		4,648		17,256		335		225,345
Residential real estate		93,563		253		4,485		-		98,301
Consumer and other		1,112		-		143		-		1,255
	$	318,183	$	5,170	$	24,369	$	341	$	348,063

The following table reflects information about our impaired loans by class as of September 30, 2013 and December 31, 2012:

		September 30, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Construction	$	-	$	-	$	-	$	2,421	$	2,743	$	-
Commercial real estate		8,039		8,398		-		10,466		13,581		-
Residential real estate		2,182		2,237		-		2,675		2,768		-
With an allowance recorded:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		42		42		42
Commercial real estate		2,891		3,967		308		2,216		3,135		230
Residential real estate		637		730		99		675		675		66
Total:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		2,463		2,785		42
Commercial real estate		10,930		12,365		308		12,682		16,716		230
Residential real estate		2,819		2,967		99		3,350		3,443		66
	$	14,018	$	15,723	$	434	$	18,522	$	22,971	$	365

The following table presents the average recorded investment and income recognized for the three and nine months ended September 30, 2013 and 2012:

	For the Three Months Ended September 30, 2013				For the Three Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	2,251	$	-
Commercial real estate		8,386		11		4,538		12
Residential real estate		2,261		22		1,964		9
Total impaired loans without a related allowance		10,647		33		8,753		21
With an allowance recorded:
Commercial and industrial		-		-		398		-
Construction		328		-		1,765		3
Commercial real estate		2,764		-		13,092		10
Residential real estate		887		-		991		2
Total impaired  loans with an allowance		3,979		-		16,246		15
Total impaired loans	$	14,626	$	33	$	24,999	$	36

	For the Nine Months Ended September 30, 2013				For the Nine Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	329	$	-	$	1,986	$	-
Commercial real estate		8,334		51		6,505		42
Residential real estate		2,288		24		1,756		41
Total impaired loans without a related allowance		10,951		75		10,247		83
With an allowance recorded:
Commercial and industrial		-		-		189		-
Construction		374		-		1,405		3
Commercial real estate		2,927		-		14,610		59
Residential real estate		946		3		786		17
Total impaired  loans with an allowance		4,247		3		16,990		79
Total impaired loans	$	15,198	$	78	$	27,237	$	162

We recognize income on impaired loans under the cash basis when the collateral on the loan is sufficient to cover the outstanding obligation to us.  If these factors do not exist, we will record all payments as a reduction of principal on such loans. 

Impaired loans include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties.  These concessions could include a reduction in the interest rate on the loan, payment extensions, postponement or forgiveness of principal, forbearance or other actions intended to maximize collection.  The concessions rarely result in the forgiveness of principal or accrued interest.  In addition, we attempt to obtain additional collateral or guarantor support when modifying such loans.  Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.

The following table presents the recorded investment in troubled debt restructured loans, based on payment performance status:

(Dollars in thousands)		Commercial Real Estate	Commercial & Industrial		Residential Real Estate		Total
September 30, 2013
Performing	$	612	$	-	$	-	$	612
Non-performing		4,720		-		527		5,247
Total	$	5,332	$	-	$	527	$	5,859
December 31, 2012
Performing	$	603	$	-	$	5	$	608
Non-performing		1,829		6		228		2,063
Total	$	2,432	$	6	$	233	$	2,671

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote.  As of September 30, 2013, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

The following table summarizes troubled debt restructurings that occurred during the three and nine months ended September 30, 2013:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three months ended September 30, 2013
Commercial real estate	1	$	1,201	$	1,201
Nine months ended September 30, 2013
Commercial real estate	3	$	3,100	$	3,100
Residential real estate	1		302		302

The troubled debt restructurings presented in the table above resulted in an allocation of the allowance for credit losses of $49 thousand and $112 thousand for the three and nine months ended September 30, 2013, respectively.  These specific reserves are included in the allowance for credit losses for loans individually evaluated for impairment. There were $200 thousand in charge-offs on the troubled debt restructurings presented in the table above during the three and nine months ended September 30, 2013.

There were no troubled debt restructurings that occurred during the three and nine months ended September 30, 2012, therefore, no allocation for the allowance for credit losses or charge-offs were required on loans modified as troubled debt restructurings during the three and nine months ended September 30, 2012.

There were no troubled debt restructurings for which there was a payment default within twelve months following the date of the restructuring for the three and nine months ended September 30, 2013 and 2012.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Stock-Based Compensation [Abstract]

Summary Of Information Regarding Stock Option Plans

			Weighted
			Average	Weighted
			Exercise	Average	Aggregate
	Number of		Price per	Contractual	Intrinsic
	Shares		Share	Term	Value
Options outstanding, beginning of year	55,751	$	12.48
Options expired	(12,729)		10.59
Options outstanding, end of quarter	43,022	$	13.04	0.76	-
Options exercisable, end of quarter	43,022	$	13.04	0.76	-
Option price range at end of quarter	$8.99 to $16.45
Option price range for exercisable shares	$8.99 to $16.45

Summary Of Information Regarding Restricted Stock Activity

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	123,144	$	4.83
Granted	32,940		6.06
Vested	(28,162)		5.52
Unvested restricted stock, end of period	127,922	$	4.99

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Fair Value Of Financial Instruments (Estimated Fair Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 95,378	$ 118,881
Securities held to maturity	5,856	5,472
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	11,040	11,668
Time deposits with other banks	100	100
Securities available-for-sale	95,378	118,881
Securities held to maturity	5,824	5,221
Federal Home Loan Bank stock	2,480	1,980
Loans receivable, net of allowance	386,645	342,760
Accrued interest receivable	1,695	1,741
Non-maturity deposits	340,503	328,856
Time deposits	96,471	103,580
Borrowings	36,000	26,000
Junior subordinated debentures	12,887	12,887
Accrued interest payable	206	273
Estimated Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	11,040	11,668
Time deposits with other banks	100	100
Securities available-for-sale	95,378	118,881
Securities held to maturity	5,856	5,472
Federal Home Loan Bank stock	2,480	1,980
Loans receivable, net of allowance	387,076	353,208
Accrued interest receivable	1,695	1,741
Non-maturity deposits	325,590	327,096
Time deposits	97,616	105,680
Borrowings	38,130	29,476
Junior subordinated debentures	7,581	6,315
Accrued interest payable	206	273
Quoted Prices In Active Markets For Identical Assets (Level I) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	11,040	11,668
Time deposits with other banks	100	100
Securities available-for-sale	446	431
Non-maturity deposits	325,590	327,096
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	94,932	118,450
Securities held to maturity	5,856	5,472
Federal Home Loan Bank stock	2,480	1,980
Accrued interest receivable	1,695	1,741
Time deposits	97,616	105,680
Borrowings	38,130	29,476
Junior subordinated debentures	7,581	6,315
Accrued interest payable	206	273
Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, net of allowance	$ 387,076	$ 353,208

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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Amortized Cost And Approximate Fair Value Of Securities Available-For-Sale

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
U.S. government agencies	$	5,517	$	24	$	(28)	$	5,513
State and political subdivisions		28,772		3		(2,660)		26,115
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		320		(830)		63,304
Equity securities-financial services industry and other		408		55		(17)		446
	$	98,511	$	402	$	(3,535)	$	95,378
December 31, 2012
State and political subdivisions	$	27,341	$	594	$	(194)	$	27,741
Mortgage-backed securities:
U.S. government-sponsored enterprises		90,487		671		(449)		90,709
Equity securities-financial services industry and other		460		16		(45)		431
	$	118,288	$	1,281	$	(688)	$	118,881

Amortized Cost And Fair Value Of Securities By Contractual Maturity Of Available-For-Sale Securities

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	-	$	-
Due after one year through five years		502		496
Due after five years through ten years		2,102		2,032
Due after ten years		26,168		23,587
Total bonds and obligations		28,772		26,115
U.S. government agencies		5,517		5,513
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		63,304
Equity securities-financial services industry and other		408		446
Total available for sale securities	$	98,511	$	95,378

Temporarily Impaired Gross Unrealized Losses And Fair Value Of Available-For-Sale Securities

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
U.S. government agencies	$	3,303	$	(28)	$	-	$	-	$	3,303	$	(28)
State and political subdivisions		25,194		(2,603)		465		(57)		25,659		(2,660)
Mortgage-backed securities:								-
U.S. government-sponsored enterprises		33,977		(612)		8,102		(218)		42,079		(830)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	62,474	$	(3,243)	$	8,693	$	(292)	$	71,167	$	(3,535)
December 31, 2012
State and political subdivisions	$	9,788	$	(194)	$	-	$	-	$	9,788	$	(194)
Mortgage-backed securities:
U.S. government-sponsored enterprises		31,901		(305)		4,658		(144)		36,559		(449)
Equity securities-financial services industry and other		106		(37)		109		(8)		215		(45)
Total temporarily impaired securities	$	41,795	$	(536)	$	4,767	$	(152)	$	46,562	$	(688)

Amortized Cost And Approximate Fair Value Of Securities Held-To-Maturity

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
State and political subdivisions	$	5,824	$	101	$	(69)	$	5,856
December 31, 2012
State and political subdivisions	$	5,221	$	260	$	(9)	$	5,472

Amortized Cost And Fair Value Of Securities By Contractual Maturity Of Held-To-Maturity Securities

		Amortized		Fair
(Dollars in thousands)		Cost		Value
Due in one year or less	$	1,860	$	1,860
Due after one year through five years		-		-
Due after five years through ten years		1,290		1,285
Due after ten years		2,674		2,711
Total held to maturity securities	$	5,824	$	5,856

Temporarily Impaired Gross Unrealized Losses And Fair Value Of Held-To-Maturity Securities

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
State and political subdivisions	$	1,617	$	(58)	$	253	$	(11)	$	1,870	$	(69)
December 31, 2012
State and political subdivisions	$	830	$	(9)	$	-	$	-	$	830	$	(9)

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2013		Sep. 30, 2012		Sep. 30, 2013		Sep. 30, 2012		Dec. 31, 2012
Segment Reporting Information [Line Items]
Net interest income from external sources	$ 4,219		$ 4,089		$ 12,140		$ 12,225
Other income from external sources	1,434		1,960		4,682		4,700
Depreciation and amortization	166		173		510		509
Income (loss) before income taxes	718		652		778		738
Income tax (benefit) expense	143	[1]	106	[1]	(29)	[1]	(94)	[1]
Total assets	534,886		504,294		534,886		504,294		514,734
Banking And Financial Services [Member]
Segment Reporting Information [Line Items]
Net interest income from external sources	4,219		4,089		12,140		12,225
Other income from external sources	678		1,276		2,437		2,808
Depreciation and amortization	162		170		502		501
Income (loss) before income taxes	588		546		389		522
Income tax (benefit) expense	91	[1]	64	[1]	(185)	[1]	(180)	[1]
Total assets	531,730		500,594		531,730		500,594
Insurance Services [Member]
Segment Reporting Information [Line Items]
Other income from external sources	756		684		2,245		1,892
Depreciation and amortization	4		3		8		8
Income (loss) before income taxes	130		106		389		216
Income tax (benefit) expense	52	[1]	42	[1]	156	[1]	86	[1]
Total assets	$ 3,156		$ 3,700		$ 3,156		$ 3,700
Statutory tax rate					40.00%		40.00%

[1] Insurance Services calculated at statutory tax rate of 40%

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Allowances Of Loan Losses And Loans Receivable By Class Disaggregated) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 5,655	$ 5,647	$ 4,976	$ 6,721	$ 6,260	$ 7,210
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	434		365
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	4,510		4,431
Balance, Loans Receivable	392,687		348,063
Loans Receivable, Individually Evaluated for Impairment	14,018		18,522
Loans Receivable, Collectively Evaluated for Impairment	378,669		329,541
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	239	249	271	613	430	304
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment			27
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	239		244
Balance, Loans Receivable	17,999		16,158
Loans Receivable, Individually Evaluated for Impairment			27
Loans Receivable, Collectively Evaluated for Impairment	17,999		16,131
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	397	400	223	179	170	294
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	27		42
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	370		181
Balance, Loans Receivable	9,649		7,004
Loans Receivable, Individually Evaluated for Impairment	269		2,462
Loans Receivable, Collectively Evaluated for Impairment	9,380		4,542
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	3,426	3,472	3,395	4,438	4,547	4,833
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	308		230
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	3,118		3,165
Balance, Loans Receivable	256,976		225,345
Loans Receivable, Individually Evaluated for Impairment	10,930		12,682
Loans Receivable, Collectively Evaluated for Impairment	246,046		212,663
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	867	990	869	1,182	1,055	987
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	99		66
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	768		803
Balance, Loans Receivable	106,448		98,301
Loans Receivable, Individually Evaluated for Impairment	2,819		3,351
Loans Receivable, Collectively Evaluated for Impairment	103,629		94,950
Consumer And Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	15		38
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	15		38
Balance, Loans Receivable	1,615		1,255
Loans Receivable, Collectively Evaluated for Impairment	1,615		1,255
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 711	$ 521	$ 180	$ 301	$ 47	$ 783

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Securities (Narrative) (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Available for sale securities carrying value pledged to secure public deposits	$ 39,900,000		$ 39,900,000		$ 26,100,000
Gains on sales of securities available for sale	0	561,000	407,000	775,000
Gross losses on sales of securities avaiable for sale	0	0	8,000	20,000
Gain on available-for-sale securities called		8,000		8,000
Fair value of available-for-sale securities	71,167,000		71,167,000		46,562,000
Unrealized loss of available-for-sale securities			3,535,000		688,000
Fair value of held-to-maturity securities	5,856,000		5,856,000		5,472,000
U.S. Government Agencies [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses			2
Fair value of available-for-sale securities	3,303,000		3,303,000
Unrealized loss of available-for-sale securities			28,000
State And Political Subdivisions [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses			51		17
Number of securities with unrealized losses from state and political subdivisions maturity minimum number of years			10 years		10 years
Fair value of available-for-sale securities	25,659,000		25,659,000		9,788,000
Unrealized loss of available-for-sale securities			2,660,000		194,000
Fair value of held-to-maturity securities	5,856,000		5,856,000		5,472,000
Unrealized loss of held-to-maturity securites	69,000		69,000		9,000
Average loss percentage of book value			9.40%		1.90%
Equity Securities-Financial Services Industry And Other [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses			1		2
Fair value of available-for-sale securities	126,000		126,000		215,000
Unrealized loss of available-for-sale securities			17,000		45,000
U.S. Government-Sponsored Enterprises [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses			35		22
Fair value of available-for-sale securities	42,079,000		42,079,000		36,559,000
Unrealized loss of available-for-sale securities			830,000		449,000
More Sensitive To Changes In Market Interest Retes [Member] | State And Political Subdivisions [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses			4		2
Number of securities with unrealized losses from state and political subdivisions maturity minimum number of years			10 years		10 years
Fair value of held-to-maturity securities	1,900,000		1,900,000		830,000
Unrealized loss of held-to-maturity securites	$ 69,000		$ 69,000		$ 9,000

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Summary Of Significant Accounting Policies (Details)	9 Months Ended
	Sep. 30, 2013 site
Summary Of Significant Accounting Policies [Line Items]
Banking offices	10
Sussex County, New Jersey [Member]
Summary Of Significant Accounting Policies [Line Items]
Banking offices	8
Orange County, New York [Member]
Summary Of Significant Accounting Policies [Line Items]
Banking offices	2

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Earnings Per Share [Abstract]
Net income applicable to common shareholders (Numerator)	$ 575	$ 546	$ 807	$ 832
Net income applicable to common shareholders and assumed conversions (Numerator)	$ 575	$ 546	$ 807	$ 832
Basic, Shares (Denominator)	4,031,022	3,264,034	3,538,770	3,260,827
Non-vested stock awards, Shares (Denominator)	35,887	24,933	31,393	21,399
Diluted, Shares (Denominator)	4,066,909	3,288,967	3,570,163	3,282,226
Basic, Per Share Amount	$ 0.14	$ 0.17	$ 0.23	$ 0.26
Diluted, Per Share Amount	$ 0.14	$ 0.17	$ 0.23	$ 0.25
Shares of common stock outstanding not included in the computation of diluted EPS			43,022	65,036

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Loans (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Loans [Abstract]
Mortgage loans serviced for the benefit of others	$ 553	$ 695

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Loans Which The Accrual Of Interest Has Been Discontinued) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 13,406	$ 17,867
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		27
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	269	2,462
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	10,319	12,062
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	2,818	3,315
Consumer And Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total		$ 1

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Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option grants, maximum term, in years			10 years
Restricted stock awards expense	$ 60	$ 39	$ 174	$ 112
Unrecognized compensation expense for non-vested restricted stock	$ 500		$ 500
Unrecognized compensation expense for non-vested restricted stock, period for recognition			2 years 6 months
Minimum [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			1 year
Minimum [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			2 years
Maximum [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			4 years
Maximum [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period, years			7 years

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Securities (Amortized Cost And Approximate Fair Value Of Securities Held-To-Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 5,824
Total held to maturity securities, Fair Value	5,856	5,472
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	5,824	5,221
Gross Unrealized Gains	101	260
Gross Unrealized Losses	(69)	(9)
Total held to maturity securities, Fair Value	$ 5,856	$ 5,472

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Average Recorded Investment And Interest Paid) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financing Receivable, Impaired [Line Items]
With no recorded allowance, Average Recorded Investment	$ 10,647	$ 8,753	$ 10,951	$ 10,247
With no recorded allowance, Interest Income Recognized	33	21	75	83
With an allowance recorded, Average Recorded Investment	3,979	16,246	4,247	16,990
With an allowance recorded, Interest Income Recognized		15	3	79
Average Recorded Investment	14,626	24,999	15,198	27,237
Interest Income Recognized	33	36	78	162
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With an allowance recorded, Average Recorded Investment		398		189
Construction [Member]
Financing Receivable, Impaired [Line Items]
With no recorded allowance, Average Recorded Investment		2,251	329	1,986
With an allowance recorded, Average Recorded Investment	328	1,765	374	1,405
With an allowance recorded, Interest Income Recognized		3		3
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no recorded allowance, Average Recorded Investment	8,386	4,538	8,334	6,505
With no recorded allowance, Interest Income Recognized	11	12	51	42
With an allowance recorded, Average Recorded Investment	2,764	13,092	2,927	14,610
With an allowance recorded, Interest Income Recognized		10		59
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no recorded allowance, Average Recorded Investment	2,261	1,964	2,288	1,756
With no recorded allowance, Interest Income Recognized	22	9	24	41
With an allowance recorded, Average Recorded Investment	887	991	946	786
With an allowance recorded, Interest Income Recognized		$ 2	$ 3	$ 17

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Fair Value Of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Of Financial Instruments [Abstract]

Summary Of Financial Assets Measured On A Recurring Basis

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
U.S. government agencies	$	5,513	$	-	$	5,513	$	-
State and political subdivisions		26,115		-		26,115		-
Mortgage-backed securities
U.S. government-sponsored enterprises		63,304		-		63,304		-
Equity securities-financial services industry and other		446		446		-		-
December 31, 2012:
State and political subdivisions	$	27,741	$	-	$	27,741	$	-
Mortgage-backed securities
U.S. government-sponsored enterprises		90,709		-		90,709		-
Equity securities-financial services industry and other		431		431		-		-

Summary Of Financial Assets Measured On A Nonrecurring Basis

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
Impaired loans	$	4,207	$	-	$	-	$	4,207
Foreclosed real estate		789		-		-		789
December 31, 2012:
Impaired loans	$	6,239	$	-	$	-	$	6,239
Foreclosed real estate		3,612		-		-		3,612

Qualitative Information About Level 3 Fair Value Measurements

	Qualitative Information about Level 3 Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
September 30, 2013:
Impaired loans	$	4,207	Appraisal of	Appraisal	0% to -61.2%
			collateral	adjustments (1)	(-7.5%)
Foreclosed real estate		789	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
December 31, 2012:
Impaired loans	$	6,239	Appraisal of	Appraisal	0% to -57.1%
			collateral	adjustments (1)	(-21.8%)
Foreclosed real estate		3,612	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated selling expenses.  The range and weighted average of selling expenses and other appraisal adjustments are presented as a percent of the appraisal.

Estimated Fair Values Of Financial Instruments

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	September 30, 2013				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,040	$	11,040	$	11,040	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		95,378		95,378		446		94,932		-
Securities held to maturity		5,824		5,856		-		5,856		-
Federal Home Loan Bank stock		2,480		2,480		-		2,480		-
Loans receivable, net of allowance		386,645		387,076		-		-		387,076
Accrued interest receivable		1,695		1,695		-		1,695		-
Financial liabilities:
Non-maturity deposits		340,503		325,590		325,590		-		-
Time deposits		96,471		97,616		-		97,616		-
Borrowings		36,000		38,130		-		38,130		-
Junior subordinated debentures		12,887		7,581		-		7,581		-
Accrued interest payable		206		206		-		206		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 2012				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,668	$	11,668	$	11,668	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		118,881		118,881		431		118,450		-
Securities held to maturity		5,221		5,472		-		5,472		-
Federal Home Loan Bank stock		1,980		1,980		-		1,980		-
Loans receivable, net of allowance		342,760		353,208		-		-		353,208
Accrued interest receivable		1,741		1,741		-		1,741		-
Financial liabilities:
Non-maturity deposits		328,856		327,096		327,096		-		-
Time deposits		103,580		105,680		-		105,680		-
Borrowings		26,000		29,476		-		29,476		-
Junior subordinated debentures		12,887		6,315		-		6,315		-
Accrued interest payable		273		273		-		273		-

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash Flows from Operating Activities
Net income	$ 807	$ 832
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	2,342	2,922
Depreciation and amortization	510	509
Net amortization of securities premiums and discounts	2,496	1,991
Net realized gain on sale of securities	(399)	(763)
Net realized gain on sale of loans, held for sale		(47)
Proceeds from the sale of loans held for sale		638
Net realized loss on sale of premises and equipment		6
Net realized gain on sale of foreclosed real estate	(50)	(5)
Write-downs of and provisions for foreclosed real estate	995	871
Deferred income taxes	648	(509)
Earnings on bank owned life insurance	(267)	(300)
Compensation expense for stock options and stock awards	174	112
(Increase) decrease in assets:
Accrued interest receivable	46	(126)
Other assets	(142)	1,060
Decrease in accrued interest payable and other liabilities	(27)	4,096
Net Cash Provided by Operating Activities	7,133	11,287
Cash Flows from Investing Activities
Purchases	(28,745)	(71,850)
Sales	13,029	24,187
Maturities, calls and principal repayments	33,431	24,475
Securities held to maturity:
Purchases	(1,860)	(2,623)
Maturities, calls and principal repayments	1,222	1,220
Net increase in loans	(49,080)	(5,632)
Proceeds from the sale of foreclosed real estate	3,897	425
Purchases of bank premises and equipment	(589)	(375)
Proceeds from the sale of premises and equipment		12
Increase in FHLB stock	(500)	(106)
Net Cash Used in Investing Activities	(29,195)	(30,267)
Cash Flows from Financing Activities
Net (decrease) increase in deposits	4,538	(8,035)
Increase in borrowed funds	10,000
Purchase of treasury stock		(55)
Proceeds from issuance of common stock	6,896
Net Cash Provided by Financing Activities	21,434	(8,090)
Net Decrease in Cash and Cash Equivalents	(628)	(27,070)
Cash and Cash Equivalents - Beginning	11,668	37,500
Cash and Cash Equivalents - Ending	11,040	10,430
Supplementary Cash Flows Information
Interest paid	2,468	2,952
Income taxes paid	33	212
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	2,853	940
Loans transferred to held for sale		$ 591

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Securities

9 Months Ended

Sep. 30, 2013

Securities [Abstract]

Securities

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and fair value of securities available for sale as of September 30, 2013 and December 31, 2012 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
U.S. government agencies	$	5,517	$	24	$	(28)	$	5,513
State and political subdivisions		28,772		3		(2,660)		26,115
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		320		(830)		63,304
Equity securities-financial services industry and other		408		55		(17)		446
	$	98,511	$	402	$	(3,535)	$	95,378
December 31, 2012
State and political subdivisions	$	27,341	$	594	$	(194)	$	27,741
Mortgage-backed securities:
U.S. government-sponsored enterprises		90,487		671		(449)		90,709
Equity securities-financial services industry and other		460		16		(45)		431
	$	118,288	$	1,281	$	(688)	$	118,881

Securities with a carrying value of approximately $39.9 million and $26.1 million at September 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes required or permitted by applicable laws and regulations.

The amortized cost and fair value of securities available for sale at September 30, 2013, are shown below by contractual maturity.  Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	-	$	-
Due after one year through five years		502		496
Due after five years through ten years		2,102		2,032
Due after ten years		26,168		23,587
Total bonds and obligations		28,772		26,115
U.S. government agencies		5,517		5,513
Mortgage-backed securities:
U.S. government-sponsored enterprises		63,814		63,304
Equity securities-financial services industry and other		408		446
Total available for sale securities	$	98,511	$	95,378

There were no gross realized gains on sales of securities available for sale for the three months ended September 30, 2013. Gross realized gains on sales of securities available for sale were $561 thousand for the three months ended September 30, 2012, and there were no gross realized losses for the three months ended September 30, 2013 and 2012.  Gross realized gains on sales of securities available for sale were $407 thousand and $775 thousand for the nine months ended September 30, 2013 and 2012, respectively, and gross realized losses were $8 thousand and $20 thousand for the nine months ended September 30, 2013 and 2012, respectively. In addition, we realized gross gains of $8 thousand on debt securities that were called during the three and nine month period ended September 30, 2012.

Temporarily Impaired Securities

The following table shows gross unrealized losses and fair value of securities with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by category and length of time that individual available for sale securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012.

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
U.S. government agencies	$	3,303	$	(28)	$	-	$	-	$	3,303	$	(28)
State and political subdivisions		25,194		(2,603)		465		(57)		25,659		(2,660)
Mortgage-backed securities:								-
U.S. government-sponsored enterprises		33,977		(612)		8,102		(218)		42,079		(830)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	62,474	$	(3,243)	$	8,693	$	(292)	$	71,167	$	(3,535)
December 31, 2012
State and political subdivisions	$	9,788	$	(194)	$	-	$	-	$	9,788	$	(194)
Mortgage-backed securities:
U.S. government-sponsored enterprises		31,901		(305)		4,658		(144)		36,559		(449)
Equity securities-financial services industry and other		106		(37)		109		(8)		215		(45)
Total temporarily impaired securities	$	41,795	$	(536)	$	4,767	$	(152)	$	46,562	$	(688)

As of September 30, 2013, we reviewed our available for sale securities portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security.  The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. 

U.S. Government Agencies

At September 30, 2013, the decline in fair value and the unrealized losses for our U.S. government agencies securities were primarily due to changes in spreads and market conditions and not credit quality.  At September 30, 2013, there weretwo securities with a fair value of $3.3 million that had an unrealized loss that amounted to $28 thousand.  As of September 30, 2013, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of the U.S. government agency securities at September 30, 2013, were deemed to be other-than-temporarily impaired.

State and Political Subdivisions

At September 30, 2013, the decline in fair value and the unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At September 30, 2013, there were 51 securities with a fair value of $25.7 million that had an unrealized loss that amounted to $2.7 million.  The average loss amounts to 9.4% of amortized cost at September 30, 2013.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of September 30, 2013, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at September 30, 2013, were deemed to be other-than-temporarily-impaired.

At December 31, 2012, the decline in fair value and the related unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At December 31, 2012, there were 17 securities with a fair value of $9.8 million that had an unrealized loss that amounted to $194 thousand.  The average loss amounts to 1.9% of amortized cost at December 31, 2012.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore none of our state and political subdivision securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

Mortgage-Backed Securities

At September 30, 2013, the decline in fair value and the unrealized losses for our mortgaged-backed securities guaranteed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality.  At September 30, 2013, there were 35 securities with a fair value of $42.1 million that had an unrealized loss that amounted to $830 thousand.  As of September 30, 2013, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our mortgage-backed securities at September  30, 2013, were deemed to be other-than-temporarily impaired.

At December 31, 2012, the decline in fair value and the unrealized losses for our mortgage-backed securities guaranteed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality.  At December 31, 2012, there were 22 securities with a fair value of $36.6 million that had an unrealized loss that amounted to $449 thousand.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our mortgage-backed securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

Equity Securities

Our marketable equity securities portfolio consists primarily of one equity fund and common stock of entities in the financial services industry.  At September 30, 2013, there wasone security with a fair value of $126 thousand that had an unrealized loss of $17 thousand.  These securities have been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated each of the underlying banks for credit impairment based on its financial condition and performance.  Based on our evaluation and expectation that these securitieswill recover within a reasonable period of time, we do not consider these investments to be other-than-temporarily impaired at September 30, 2013. 

At December 31, 2012, there were two securities with a fair value of $215 thousand that had an unrealized loss of $45 thousand.  These securities have been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated each of the underlying banks for credit impairment based on its financial condition and performance.  Based on our evaluation and expectation that these investments will recover within a reasonable period of time, we do not consider these investments to be other-than-temporarily impaired at December 31, 2012. 

We continue to closely monitor the performance of the securities we own as well as the impact from any further deterioration in the economy or in the banking industry that may adversely affect these securities. We will continue to evaluate them for other-than-temporary impairment, which could result in a future non-cash charge to earnings.

Held to Maturity Securities

The amortized cost and fair value of securities held to maturity as of September  30, 2013 and December 31, 2012, are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
September 30, 2013
State and political subdivisions	$	5,824	$	101	$	(69)	$	5,856
December 31, 2012
State and political subdivisions	$	5,221	$	260	$	(9)	$	5,472

The amortized cost and carrying value of securities held to maturity at September 30, 2013, are shown below by contractual maturity.  Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized		Fair
(Dollars in thousands)		Cost		Value
Due in one year or less	$	1,860	$	1,860
Due after one year through five years		-		-
Due after five years through ten years		1,290		1,285
Due after ten years		2,674		2,711
Total held to maturity securities	$	5,824	$	5,856

Temporarily Impaired Securities

The following table shows gross unrealized losses and fair value of held to maturity securities with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by category and length of time that individual held to maturity securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012:

	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2013
State and political subdivisions	$	1,617	$	(58)	$	253	$	(11)	$	1,870	$	(69)
December 31, 2012
State and political subdivisions	$	830	$	(9)	$	-	$	-	$	830	$	(9)

As of September 30, 2013, we reviewed our held to maturity securities portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security.  The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. 

State and Political Subdivisions

At September 30, 2013, the decline in fair value and the unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At September 30, 2013, there were four securities with a fair value of $1.9 million that had an unrealized loss that amounted to $69 thousand.  These securities typically have maturity dates greater than 10years and the fair values are more sensitive to changes in market interest rates.  As of September 30, 2013,  we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at September 30, 2013, were deemed to be other-than-temporarily impaired.

At December 31, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions securities were caused by changes in interest rates and spreads and were not the result of credit quality.  At December 31, 2012, there were two securities with a fair value of $830 thousand that had an unrealized loss that amounted to $9 thousand.  These securities typically have maturity dates greater than 10 years and the fair values are more sensitive to changes in market interest rates.  As of December 31, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis.  Therefore, none of our state and political subdivision securities at December 31, 2012, were deemed to be other-than-temporarily impaired.

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Earnings Per Share

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 5 – EARNINGS PER SHARE

Basic earnings per share are calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares (non-vested restricted stock grants and stock options) had been issued, as well as any adjustment to income that would result from the assumed issuance of potential common shares that may be issued by us. Potential common shares related to stock options are determined using the treasury stock method.

	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	575	4,031,022	$	0.14	$	546	3,264,034	$	0.17
Effect of dilutive securities:
Nonvested stock awards		-	35,887				-	24,933
Diluted earnings per share:
Net earnings applicable to common shareholders and assumed conversions	$	575	4,066,909	$	0.14	$	546	3,288,967	$	0.17

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net income applicable to common shareholders	$	807	3,538,770	$	0.23	$	832	3,260,827	$	0.26
Effect of dilutive securities:
Nonvested stock awards		-	31,393				-	21,399
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	807	3,570,163	$	0.23	$	832	3,282,226	$	0.25

Options to purchase 43,022 and 65,036 shares of common stock were outstanding at September 30, 2013 and 2012, respectively, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares.

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Loans

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Loans

NOTE 3 – LOANS

The composition of net loans receivable at September 30, 2013 and December 31, 2012 is as follows:

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	17,999	$	16,158
Construction		9,649		7,004
Commercial real estate		256,976		225,345
Residential real estate		106,448		98,301
Consumer and other		1,615		1,255
		392,687		348,063
Unearned net loan origination fees		(387)		(327)
Allowance for loan losses		(5,655)		(4,976)
Net loans receivable	$	386,645	$	342,760

Mortgage loans serviced for others are not included in the accompanying balance sheets.  The total amount of loans serviced for the benefit of others was approximately $553 thousand and $695 thousand at September 30, 2013 and December 31, 2012, respectively.

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Credit Risk Profile By Creditworthiness) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 392,687	$ 348,063
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	17,999	16,158
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	9,649	7,004
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	256,976	225,345
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	106,448	98,301
Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,615	1,255
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	365,981	318,183
Pass [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	17,936	15,860
Pass [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	9,380	4,542
Pass [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	234,820	203,106
Pass [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	102,371	93,563
Pass [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,474	1,112
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	8,437	5,170
Special Mention [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	63	269
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	7,188	4,648
Special Mention [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,045	253
Special Mention [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	141
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	18,254	24,369
Substandard [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable		23
Substandard [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	269	2,462
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	14,968	17,256
Substandard [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	3,017	4,485
Substandard [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable		143
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	15	341
Doubtful [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable		6
Doubtful [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable		335
Doubtful [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 15

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Securities (Amortized Cost And Approximate Fair Value Of Securities Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 98,511	$ 118,288
Gross Unrealized Gains	402	1,281
Gross Unrealized Losses	(3,535)	(688)
Fair Value	95,378	118,881
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,517
Gross Unrealized Gains	24
Gross Unrealized Losses	(28)
Fair Value	5,513
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,772	27,341
Gross Unrealized Gains	3	594
Gross Unrealized Losses	(2,660)	(194)
Fair Value	26,115	27,741
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	63,814	90,487
Gross Unrealized Gains	320	671
Gross Unrealized Losses	(830)	(449)
Fair Value	63,304	90,709
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	408	460
Gross Unrealized Gains	55	16
Gross Unrealized Losses	(17)	(45)
Fair Value	$ 446	$ 431

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Securities (Amortized Cost And Fair Value Of Securities By Contractual Maturity Of Held-To-Maturity Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities [Abstract]
Due in one year or less, Amortized Cost	$ 1,860
Due after one year through five years, Amortized Cost
Due after five years through ten years, Amortized Cost	1,290
Due after ten years, Amortized Cost	2,674
Total held to maturity securities, Amortized Cost	5,824
Due in one year or less, Fair Value	1,860
Due after one year through five years, Fair Value
Due after five years through ten years, Fair Value	1,285
Due after ten years, Fair Value	2,711
Total held to maturity securities, Fair Value	$ 5,856	$ 5,472

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Changes In The Allowance For Loan Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 5,647	$ 6,260	$ 4,976	$ 7,210
Charge-offs	(862)	(660)	(2,083)	(3,510)
Recoveries	370	17	420	99
Provision	500	1,104	2,342	2,922
Ending balance	5,655	6,721	5,655	6,721
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	249	430	271	304
Charge-offs			(6)
Recoveries				2
Provision	(10)	183	(26)	307
Ending balance	239	613	239	613
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	400	170	223	294
Charge-offs	(19)	(122)	(141)	(830)
Provision	16	131	315	715
Ending balance	397	179	397	179
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,472	4,547	3,395	4,833
Charge-offs	(747)	(264)	(1,759)	(2,081)
Recoveries	343	2	387	71
Provision	358	153	1,403	1,615
Ending balance	3,426	4,438	3,426	4,438
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	990	1,055	869	987
Charge-offs	(89)	(266)	(155)	(546)
Recoveries	24		24
Provision	(58)	393	129	741
Ending balance	867	1,182	867	1,182
Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	15	11	38	9
Charge-offs	(7)	(8)	(22)	(53)
Recoveries	3	15	9	26
Provision	4	(10)	(10)	26
Ending balance	15	8	15	8
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	521	47	180	783
Provision	190	254	531	(482)
Ending balance	$ 711	$ 301	$ 711	$ 301

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Fair Value Of Financial Instruments (Qualitative Information About Level 3 Fair Value Measurements) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2013		Dec. 31, 2012
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 4,207		$ 6,239
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,207		6,239
Valuation Techniques	Appraisal of collateral		Appraisal of collateral
Unobservable Input	Appraisal adjustments	[1]	Appraisal adjustments	[1]
Impaired Loans [Member] | Maximum [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(61.20%)		(57.10%)
Impaired Loans [Member] | Minimum [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.00%		0.00%
Impaired Loans [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(7.50%)		(21.80%)
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	789		3,612
Foreclosed Real Estate [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 789		$ 3,612
Valuation Techniques	Appraisal of collateral		Appraisal of collateral
Unobservable Input	Selling expenses	[1]	Selling expenses	[1]
Range (Weighted Average)	(7.00%)		(7.00%)
Foreclosed Real Estate [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(7.00%)		(7.00%)

[1] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated selling expenses. The range and weighted average of selling expenses and other appraisal adjustments are presented as a percent of the appraisal.

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Stock-Based Compensation (Summary Of Information Regarding Stock Option Plans) (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options outstanding, beginning of year, Number of Shares,	55,751
Options expired, Number of Shares	(12,729)
Options outstanding, end of quarter, Number of Shares	43,022
Options exercisable, end of quarter, Number of Shares	43,022
Options outstanding, beginning of year, Weighted Average Exercise Price per Share,	$ 12.48
Options expired, Weighted Average Exercise Price per Share	$ 10.59
Options outstanding, end of quarter, Weighted Average Exercise Price per Share	$ 13.04
Options exercisable, end of quarter, Weighted Average Exercise Price per Share	$ 13.04
Options outstanding, end of quarter, Weighted Average Contractual Term	9 months 4 days
Options exercisable, end of quarter, Weighted Average Contractual Term	9 months 4 days
Options outstanding, end of quarter, Aggregate Intrinsic Value
Options exercisable, end of quarter, Aggregate Intrinsic Value
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option price range at end of quarter	$ 8.99
Option price range for exercisable shares	$ 8.99
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option price range at end of quarter	$ 16.45
Option price range for exercisable shares	$ 16.45

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Summary Of Troubled Debt Restructuring) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2012 loan	Sep. 30, 2012 loan	Sep. 30, 2013 Commercial Real Estate [Member] loan	Sep. 30, 2013 Commercial Real Estate [Member] loan	Sep. 30, 2013 Residential Real Estate [Member] loan
Financing Receivable, Modifications [Line Items]
Number of loans modified by troubled debt restructuring	0	0	1	3	1
Pre-modification outstanding recorded investment			$ 1,201	$ 3,100	$ 302
Post-Modification Outstanding Recorded Investment			$ 1,201	$ 3,100	$ 302

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Consolidated Balance Sheets [Abstract]
Securities held to maturity, estimated fair value	$ 5,856	$ 5,472
Preferred stock, par value
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,640,296	3,409,056
Common stock, shares outstanding	4,629,113	3,397,873
Treasury stock, shares	11,183	11,183

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 8 – STOCK-BASED COMPENSATION

We currently have stock-based compensation plans in place for our directors, officers, employees, consultants and advisors.  Under the terms of these plans we may grant restricted shares and stock options for the purchase of our common stock.  The stock-based compensation is granted under terms determined by our Compensation Committee.  Our standard stock option grants have a maximum term of 10 years, generally vest over periods ranging between one and four years, and are granted with an exercise price equal to the fair market value of the common stock on the date the options are granted.  Restricted stock is valued at the market value of the common stock on the date of grant and generally vests between two and seven years.  All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans as of September 30, 2013, was as follows:

			Weighted
			Average	Weighted
			Exercise	Average	Aggregate
	Number of		Price per	Contractual	Intrinsic
	Shares		Share	Term	Value
Options outstanding, beginning of year	55,751	$	12.48
Options expired	(12,729)		10.59
Options outstanding, end of quarter	43,022	$	13.04	0.76	-
Options exercisable, end of quarter	43,022	$	13.04	0.76	-
Option price range at end of quarter	$8.99 to $16.45
Option price range for exercisable shares	$8.99 to $16.45

During the three months ended September 30, 2013 and 2012, we expensed $60 thousand and $39 thousand, respectively, in stock-based compensation under restricted stock awards.  During the nine months ended September 30, 2013 and 2012, we expensed $174 thousand and $112 thousand, respectively, in stock-based compensation under restricted stock awards.  The summary of changes in unvested restricted stock awards for the nine months ended September 30, 2013, is as follows:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	123,144	$	4.83
Granted	32,940		6.06
Vested	(28,162)		5.52
Unvested restricted stock, end of period	127,922	$	4.99

At September 30, 2013, unrecognized compensation expense for non-vested restricted stock was $500 thousand, which is expected to be recognized over an average period of 2.5 years. 

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Consolidated Statements Of Stockholders' Equity (USD $) In Thousands, except Share data	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2011	$ 27,964	$ 11,223	$ 719	$ (4)	$ 39,902
Balance, shares at Dec. 31, 2011	3,372,949
Net income		832			832
Other comprehensive income (loss)			391		391
Treasury stock purchased				(55)	(55)
Treasury stock purchased, shares	(10,339)
Restricted stock granted, shares	37,496
Restricted stock forfeited, shares	(2,233)
Compensation expense related to stock option and restricted stock grants	112				112
Balance at Sep. 30, 2012	28,076	12,055	1,110	(59)	41,182
Balance, shares at Sep. 30, 2012	3,397,873
Balance at Dec. 31, 2012	28,117	11,958	356	(59)	40,372
Balance, shares at Dec. 31, 2012	3,397,873				3,397,873
Net income		807			807
Other comprehensive income (loss)			(2,236)		(2,236)
Restricted stock granted, shares	32,940
Stock issued in rights offering	6,896				6,896
Stock issued in rights offering, shares	1,198,300
Compensation expense related to stock option and restricted stock grants	174				174
Balance at Sep. 30, 2013	$ 35,187	$ 12,765	$ (1,880)	$ (59)	$ 46,013
Balance, shares at Sep. 30, 2013	4,629,113				4,629,113

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 7,784	$ 6,268
Interest-bearing deposits with other banks	3,256	5,400
Cash and cash equivalents	11,040	11,668
Interest bearing time deposits with other banks	100	100
Securities available for sale, at fair value	95,378	118,881
Securities held to maturity, at cost (fair value of $5,856 and $5,472 at September 30, 2013 and December 31, 2012, respectively)	5,824	5,221
Federal Home Loan Bank Stock, at cost	2,480	1,980
Loans receivable, net of unearned income	392,300	347,736
Less: allowance for loan losses	5,655	4,976
Net loans receivable	386,645	342,760
Foreclosed real estate	3,077	5,066
Premises and equipment, net	6,556	6,476
Accrued interest receivable	1,695	1,741
Goodwill	2,820	2,820
Bank-owned life insurance	11,803	11,536
Other assets	7,468	6,485
Total Assets	534,886	514,734
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing	59,438	48,375
Interest bearing	377,536	384,061
Total deposits	436,974	432,436
Long term borrowings	36,000	26,000
Accrued interest payable and other liabilities	3,012	3,039
Junior subordinated debentures	12,887	12,887
Total Liabilities	488,873	474,362
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, no par value, 10,000,000 shares authorized; 4,640,296 and 3,409,056 shares issued and 4,629,113 and 3,397,873 shares outstanding at September 30, 2013 and December 31, 2012 respectively	35,187	28,117
Treasury stock, at cost; 11,183 shares	(59)	(59)
Retained earnings	12,765	11,958
Accumulated other comprehensive (loss) income	(1,880)	356
Total Stockholders' Equity	46,013	40,372
Total Liabilities and Stockholders' Equity	$ 534,886	$ 514,734

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Stock-Based Compensation (Summary Of Information Regarding Restricted Stock Activity) (Details) (USD $)	9 Months Ended
	Sep. 30, 2013
Stock-Based Compensation [Abstract]
Restricted stock, beginning of year, Number of Shares	123,144
Restricted stock, beginning of year, Weighted Average Grant Date Fair value	$ 4.83
Granted, Number of Shares	32,940
Granted, Weighted Average Grant Date Fair value	$ 6.06
Vested, Number of Shares	(28,162)
Vested, Weighted Average Grant Date Fair value	$ 5.52
Restricted stock, end of period, Number of Shares	127,922
Restricted stock, end of period, Weighted Average Grant Date Fair value	$ 4.99

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Securities (Amortized Cost And Fair Value Of Securities By Contractual Maturity Of Available-For-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Due in one year or less, Amortized Cost
Due after one year through five years, Amortized Cost	502
Due after five years through ten years, Amortized Cost	2,102
Due after ten years, Amortized Cost	26,168
Total bonds and obligations, Amortized Cost	28,772
Due in one year or less, Fair Value
Due after one year through five years, Fair Value	496
Due after five years through ten years, Fair Value	2,032
Due after ten years, Fair Value	23,587
Total bonds and obligations, Fair Value	26,115
Total available for sale securities, Amortized Cost	98,511	118,288
Fair Value	95,378	118,881
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost	5,517
Fair Value	5,513
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost	63,814	90,487
Fair Value	63,304	90,709
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost	408	460
Fair Value	$ 446	$ 431

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment Information [Abstract]

Schedule Of Segment Information

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,219	$	-	$	4,219	$	4,089	$	-	$	4,089
Other income from external sources		678		756		1,434		1,276		684		1,960
Depreciation and amortization		162		4		166		170		3		173
Income (loss) before income taxes		588		130		718		546		106		652
Income tax (benefit) expense (1)		91		52		143		64		42		106
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

	Nine Months Ended September 30, 2013						Nine Months Ended September30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	12,140	$	-	$	12,140	$	12,225	$	-	$	12,225
Other income from external sources		2,437		2,245		4,682		2,808		1,892		4,700
Depreciation and amortization		502		8		510		501		8		509
Income (loss) before income taxes		389		389		778		522		216		738
Income tax (benefit) expense (1)		(185)		156		(29)		(180)		86		(94)
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

(1) Insurance Services calculated at statutory tax rate of 40%

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Troubled Debt Restructured On Recorded Investment) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Modifications [Line Items]
Total	$ 5,859	$ 2,671
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	5,332	2,432
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total		6
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	527	233
Performing [Member]
Financing Receivable, Modifications [Line Items]
Total	612	608
Performing [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	612	603
Performing [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total		5
Non-performing [Member]
Financing Receivable, Modifications [Line Items]
Total	5,247	2,063
Non-performing [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	4,720	1,829
Non-performing [Member] | Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total		6
Non-performing [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	$ 527	$ 228

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Fair Value Of Financial Instruments (Financial Assets Measured At Fair Value On A Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 4,207	$ 6,239
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	4,207	6,239
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	789	3,612
Foreclosed Real Estate [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 789	$ 3,612

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (An Age Analysis Of Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	$ 1,362	$ 1,322
Loans receivable 60-89 days past due	672	1,433
Loans receivable greater than 90 days past due	13,603	18,075
Total past due	15,637	20,830
Loans receivable current	377,050	327,233
Total financing receivables	392,687	348,063
Recorded investment greater that 90 days and accruing	197	208
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable greater than 90 days past due	50	27
Total past due	50	27
Loans receivable current	17,949	16,131
Total financing receivables	17,999	16,158
Recorded investment greater that 90 days and accruing	50
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable greater than 90 days past due	269	2,462
Total past due	269	2,462
Loans receivable current	9,380	4,542
Total financing receivables	9,649	7,004
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	988	1,103
Loans receivable 60-89 days past due	260	1,303
Loans receivable greater than 90 days past due	10,319	12,127
Total past due	11,567	14,533
Loans receivable current	245,409	210,812
Total financing receivables	256,976	225,345
Recorded investment greater that 90 days and accruing		65
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	372	207
Loans receivable 60-89 days past due	407	127
Loans receivable greater than 90 days past due	2,962	3,315
Total past due	3,741	3,649
Loans receivable current	102,707	94,652
Total financing receivables	106,448	98,301
Recorded investment greater that 90 days and accruing	144
Consumer And Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	2	12
Loans receivable 60-89 days past due	5	3
Loans receivable greater than 90 days past due	3	144
Total past due	10	159
Loans receivable current	1,605	1,096
Total financing receivables	1,615	1,255
Recorded investment greater that 90 days and accruing	$ 3	$ 143

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Loans (Composition Of Net Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 392,687	$ 348,063
Unearned net loan origination fees	(387)	(327)
Allowance for loan losses	(5,655)	(4,976)
Net loans receivable	386,645	342,760
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	17,999	16,158
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	9,649	7,004
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	256,976	225,345
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	106,448	98,301
Consumer And Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,615	$ 1,255

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 loan	Sep. 30, 2012 loan	Sep. 30, 2013 loan	Sep. 30, 2012 loan
Allowance For Loan Losses And Credit Quality Of Financing Receivables [Abstract]
Number of loans modified by troubled debt restructuring		0		0
Net allocation of the allowance for credit losses	$ 49	$ 0	$ 112	$ 0
Troubled debt restructuring, charge-offs	$ 200	$ 0	$ 200	$ 0
Number of loans with subsequent default	0	0	0	0

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Segment Information

9 Months Ended

Sep. 30, 2013

Segment Information [Abstract]

Segment Information

NOTE 7 – SEGMENT INFORMATION

Our insurance agency operations are managed separately from the traditional banking and related financial services that we also offer.  The insurance agency operation provides commercial, individual, and group benefit plans and personal coverage.

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,219	$	-	$	4,219	$	4,089	$	-	$	4,089
Other income from external sources		678		756		1,434		1,276		684		1,960
Depreciation and amortization		162		4		166		170		3		173
Income (loss) before income taxes		588		130		718		546		106		652
Income tax (benefit) expense (1)		91		52		143		64		42		106
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

	Nine Months Ended September 30, 2013						Nine Months Ended September30, 2012
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	12,140	$	-	$	12,140	$	12,225	$	-	$	12,225
Other income from external sources		2,437		2,245		4,682		2,808		1,892		4,700
Depreciation and amortization		502		8		510		501		8		509
Income (loss) before income taxes		389		389		778		522		216		738
Income tax (benefit) expense (1)		(185)		156		(29)		(180)		86		(94)
Total assets		531,730		3,156		534,886		500,594		3,700		504,294

(1) Insurance Services calculated at statutory tax rate of 40%

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Securities (Temporarily Impaired Gross Unrealized Losses And Fair Value Of Available-For-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 62,474	$ 41,795
Less Than Twelve Months, Gross Unrealized Losses	(3,243)	(536)
Twelve Months or More, Fair Value	8,693	4,767
Twelve Months or More, Gross Unrealized Losses	(292)	(152)
Total, Fair Value	71,167	46,562
Total, Gross Unrealized Losses	(3,535)	(688)
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	3,303
Less Than Twelve Months, Gross Unrealized Losses	(28)
Total, Fair Value	3,303
Total, Gross Unrealized Losses	(28)
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	25,194	9,788
Less Than Twelve Months, Gross Unrealized Losses	(2,603)	(194)
Twelve Months or More, Fair Value	465
Twelve Months or More, Gross Unrealized Losses	(57)
Total, Fair Value	25,659	9,788
Total, Gross Unrealized Losses	(2,660)	(194)
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	33,977	31,901
Less Than Twelve Months, Gross Unrealized Losses	(612)	(305)
Twelve Months or More, Fair Value	8,102	4,658
Twelve Months or More, Gross Unrealized Losses	(218)	(144)
Total, Fair Value	42,079	36,559
Total, Gross Unrealized Losses	(830)	(449)
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value		106
Less Than Twelve Months, Gross Unrealized Losses		(37)
Twelve Months or More, Fair Value	126	109
Twelve Months or More, Gross Unrealized Losses	(17)	(8)
Total, Fair Value	126	215
Total, Gross Unrealized Losses	$ (17)	$ (45)

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Total Recorded Investment	$ 14,018	$ 18,522
Total Unpaid Principal Balance	15,723	22,971
Related Allowance	434	365
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With an allowance recorded, Recorded Investment		27
With an allowance recorded, Unpaid Principal Balance		27
Total Recorded Investment		27
Total Unpaid Principal Balance		27
Related Allowance		27
Construction [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment		2,421
With no related allowance, Unpaid Principal Balance		2,743
With an allowance recorded, Recorded Investment	269	42
With an allowance recorded, Unpaid Principal Balance	391	42
Total Recorded Investment	269	2,463
Total Unpaid Principal Balance	391	2,785
Related Allowance	27	42
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	8,039	10,466
With no related allowance, Unpaid Principal Balance	8,398	13,581
With an allowance recorded, Recorded Investment	2,891	2,216
With an allowance recorded, Unpaid Principal Balance	3,967	3,135
Total Recorded Investment	10,930	12,682
Total Unpaid Principal Balance	12,365	16,716
Related Allowance	308	230
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance, Recorded Investment	2,182	2,675
With no related allowance, Unpaid Principal Balance	2,237	2,768
With an allowance recorded, Recorded Investment	637	675
With an allowance recorded, Unpaid Principal Balance	730	675
Total Recorded Investment	2,819	3,350
Total Unpaid Principal Balance	2,967	3,443
Related Allowance	$ 99	$ 66

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Fair Value Of Financial Instruments

9 Months Ended

Sep. 30, 2013

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of our consolidated 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 we could have realized in a sale transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period ends, 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 period end.

Under FASB Accounting Standards Codification (“ASC”) 820Fair Value Measurement and Disclosure, there is a hierarchal disclosure framework associated with the level of pricing observability utilized in measuring assets and liabilities at fair value.  The three broad levels defined by the FASB ASC 820 hierarchy are as follows:

Level I - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date.

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The nature of these asset and liabilities include items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.

Level III - Assets and liabilities that have little to no pricing observability as of the reporting date.  These items do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.

The following table summarizes the valuation of our financial assets measured on a recurring basis by the above FASB ASC 820 pricing observability levels:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
U.S. government agencies	$	5,513	$	-	$	5,513	$	-
State and political subdivisions		26,115		-		26,115		-
Mortgage-backed securities
U.S. government-sponsored enterprises		63,304		-		63,304		-
Equity securities-financial services industry and other		446		446		-		-
December 31, 2012:
State and political subdivisions	$	27,741	$	-	$	27,741	$	-
Mortgage-backed securities
U.S. government-sponsored enterprises		90,709		-		90,709		-
Equity securities-financial services industry and other		431		431		-		-

Our available for sale and held to maturity securities portfolios contain investments, which were all rated within our investment policy guidelines at time of purchase and upon review of the entire portfolio all securities are marketable and have observable pricing inputs.

For financial assets measured at fair value on a nonrecurring basis the fair value measurements by level within the fair value hierarchy used at September 30, 2013 and December 31, 2012, are as follows:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
September 30, 2013:
Impaired loans	$	4,207	$	-	$	-	$	4,207
Foreclosed real estate		789		-		-		789
December 31, 2012:
Impaired loans	$	6,239	$	-	$	-	$	6,239
Foreclosed real estate		3,612		-		-		3,612

The following table presents additional qualitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were used to determine fair value:

	Qualitative Information about Level 3 Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
September 30, 2013:
Impaired loans	$	4,207	Appraisal of	Appraisal	0% to -61.2%
			collateral	adjustments (1)	(-7.5%)
Foreclosed real estate		789	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
December 31, 2012:
Impaired loans	$	6,239	Appraisal of	Appraisal	0% to -57.1%
			collateral	adjustments (1)	(-21.8%)
Foreclosed real estate		3,612	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
(1) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated selling expenses.  The range and weighted average of selling expenses and other appraisal adjustments are presented as a percent of the appraisal.

The following methods and assumptions were used to estimate the fair value of our financial instruments at September 30, 2013 and December 31, 2012:

Cash and Cash Equivalents (Carried at Cost): The carrying amounts reported in the balance sheet for cash and cash equivalents approximate those assets’ fair value.

Time Deposits with Other Banks (Carried at Cost): Fair value for fixed-rate time certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.  We generally purchase amounts below the insured limit, limiting the amount of credit risk on these time deposits.  

Securities: The fair value of securities, available for sale (carried at fair value) is determined by obtaining quoted market prices on nationally recognized securities exchanges (Level I), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.  For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3).  In the absence of such evidence, management’s best estimate is used.  Management’s best estimate consists of both internal and external support on certain Level 3 investments.  Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) were used to support fair values of certain Level 3 investments.

Loans Receivable (Carried at Cost): The fair values of loans are estimated using discounted cash flow analyses, using the market rates on the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.  Projected future cash flows are calculated based upon contractual maturity or call dates and projected repayments and prepayments of principal.  Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Carried at the Lower of Cost or Fair Value): Impaired loans are those that are accounted for under FASB ASC 310, Accounting by Creditors for Impairment of a Loan, in which we have measured impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties,  or discounted cash flows based upon the expected proceeds.  These assets are included in Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. 

Federal Home Loan Bank Stock (Carried at Cost): The carrying amount of restricted investment in bank stock approximates fair value and considers the limited marketability of such securities.

Foreclosed Real Estate (Carried at the Lower of Cost or Fair Value): Foreclosed real estate is recorded at estimated fair value, less estimated costs to sell when the property is acquired.  Fair value is generally based on independent appraisals and is considered a Level 3 fair value input.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less costs to sell.

Deposit Liabilities (Carried at Cost): The fair values disclosed for demand, savings and club accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts).  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. 

Borrowings (Carried at Cost): Fair values of Federal Home Loan Bank (“FHLB”) advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity.  These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party. 

Junior Subordinated Debentures (Carried at Cost): Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity. 

Accrued Interest Receivable and Accrued Interest Payable (Carried at Cost): The carrying amounts of accrued interest receivable and payable approximate their fair values.

Off-Balance Sheet Instruments (Disclosed at Cost): Fair values for our off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. 

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of our assets and liabilities.  The following information is an estimate of the fair value of a limited portion of our assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between our disclosures and those of other companies may not be meaningful. 

The fair values of our financial instruments at September 30, 2013 and December 31, 2012, were as follows:

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	September 30, 2013				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,040	$	11,040	$	11,040	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		95,378		95,378		446		94,932		-
Securities held to maturity		5,824		5,856		-		5,856		-
Federal Home Loan Bank stock		2,480		2,480		-		2,480		-
Loans receivable, net of allowance		386,645		387,076		-		-		387,076
Accrued interest receivable		1,695		1,695		-		1,695		-
Financial liabilities:
Non-maturity deposits		340,503		325,590		325,590		-		-
Time deposits		96,471		97,616		-		97,616		-
Borrowings		36,000		38,130		-		38,130		-
Junior subordinated debentures		12,887		7,581		-		7,581		-
Accrued interest payable		206		206		-		206		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 2012				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	11,668	$	11,668	$	11,668	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		118,881		118,881		431		118,450		-
Securities held to maturity		5,221		5,472		-		5,472		-
Federal Home Loan Bank stock		1,980		1,980		-		1,980		-
Loans receivable, net of allowance		342,760		353,208		-		-		353,208
Accrued interest receivable		1,741		1,741		-		1,741		-
Financial liabilities:
Non-maturity deposits		328,856		327,096		327,096		-		-
Time deposits		103,580		105,680		-		105,680		-
Borrowings		26,000		29,476		-		29,476		-
Junior subordinated debentures		12,887		6,315		-		6,315		-
Accrued interest payable		273		273		-		273		-

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Other Comprehensive (Loss) Income

9 Months Ended

Sep. 30, 2013

Other Comprehensive Income (Loss) [Abstract]

Other Comprehensive (Loss) Income

NOTE 6 – OTHER COMPREHENSIVE (LOSS) INCOME

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.  Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

The components of other comprehensive (loss) income, both before tax and net of tax, are as follows:

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income:
Unrealized gains on available for sale securities	$	430	$	173	$	257	$	693	$	277	$	416
Reclassification adjustment for net gains on securities transactions included in net income		-		-		-		(569)		(228)		(341)
Total other comprehensive income	$	430	$	173	$	257	$	124	$	49	$	75

	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive (loss) income:
Unrealized (losses) gains on available for sale securities	$	(3,327)	$	(1,330)	$	(1,997)	$	1,413	$	564	$	849
Reclassification adjustment for net gains on securities transactions included in net income		(399)		(160)		(239)		(763)		(305)		(458)
Total other comprehensive (loss) income	$	(3,726)	$	(1,490)	$	(2,236)	$	650	$	259	$	391

Reclassification adjustments for gains on securities transactions of $399 thousand for the nine months ended September 30, 2013 and $569 thousand and $763 thousand for the three and nine months ended September 30, 2012, respectively, are presented in the income statement on the line item for net gain on securities transactions.  There were no reclassification adjustments for gains on securities transactions for the three months ended September 30, 2013.

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Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Summary Of Significant Accounting Policies [Abstract]

Summary Of Significant Accounting Policies

NOTE 1 – SUMMARY OF SIGNIFICANT ACOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Sussex Bancorp (“we,” “us” or “our”) and our wholly owned subsidiary Sussex Bank (the “Bank”).  The Bank’s wholly owned subsidiaries are SCB Investment Company, Inc., SCBNY Company, Inc., ClassicLake Enterprises, LLC, Wheatsworth Properties Corp., PPD Holding Company, LLC, and Tri-State Insurance Agency, Inc. (“Tri-State”), a full service insurance agency located in Sussex County, New Jersey with a satellite office located in Bergen County, New Jersey.  Tri-State’s operations are considered a separate segment for financial disclosure purposes.  All inter-company transactions and balances have been eliminated in consolidation.  The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York.

Sussex Bancorp is subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (the “FRB”).  The Bank’s deposits are insured by the Deposit Insurance Fund (“DIF”) of the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits.  The operations of Sussex Bancorp and Sussex Bank are subject to the supervision and regulation of the FRB, FDIC and the New Jersey Department of Banking and Insurance (the “Department”) and the operations of Tri-State are subject to supervision and regulation by the Department.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information.  Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for full year financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature.  Operating results for the three and nine month periods ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.  These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto that are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

We have evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2013, for items that should potentially be recognized or disclosed in these unaudited consolidated financial statements.  The evaluation was conducted through the date these unaudited consolidated financial statements were issued.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income.

New Accounting Standards

In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, which provides guidance on financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP.This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date.For public entities, the guidance is effective for fiscal years beginning after December 15, 2013 and interim periods within those years.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In February 2013, FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.  This ASU requires entities to disclose the effect of items reclassified out of accumulated other comprehensive income (“AOCI”) on each affected net income line item.  For AOCI reclassification items that are not reclassified in their entirety into net income, a cross reference to other required U.S. GAAP disclosures.  This information may be provided either in the notes or parenthetically on the face of the financial statements.  For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2012, and interim periods within those years.  The adoption of this guidance did not have a material impact on our consolidated financial statements and the required disclosures are included in Note 6 to these consolidated financial statements.

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Guarantees (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Guarantees [Abstract]
Undrawn standby letters of credit outstanding	$ 2.0
Letter of credit, expiration term	1 year

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Other Comprehensive (Loss) Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Other Comprehensive Income (Loss) [Abstract]
Unrealized gains (losses) on available for sale securities arising during the period	$ 430	$ 693	$ (3,327)	$ 1,413
Reclassification adjustment for net gains on securities transactions included in net income, Before Tax		(569)	(399)	(763)
Total other comprehensive (loss) income, Before Tax	430	124	(3,726)	650
Unrealized (losses) gains on available for sale securities, Tax Effect	173	277	(1,330)	564
Reclassification adjustment for net gains on securities transactions included in net income, Tax Effect		(228)	(160)	(305)
Total other comprehensive (loss) income, Tax Effect	173	49	(1,490)	259
Unrealized (losses) gains on available for sale securities, Net of Tax	257	416	(1,997)	849
Reclassification adjustment for net gains on securities transactions included in net income, Net of Tax		(341)	(239)	(458)
Other comprehensive income (loss), net of income taxes	257	75	(2,236)	391
Net gain on securities transactions		$ 569	$ 399	$ 763

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Securities (Temporarily Impaired Gross Unrealized Losses And Fair Value Of Held-To-Maturity Securities) (Details) (State And Political Subdivisions [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 1,617	$ 830
Less Than Twelve Months, Gross Unrealized Losses	(58)	(9)
Twelve Months or More, Fair Value	253
Twelve Months or More, Gross Unrealized Losses	(11)
Total, Fair Value	1,870	830
Total, Gross Unrealized Losses	$ (69)	$ (9)

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Loans (Tables)

9 Months Ended

Sep. 30, 2013

Loans [Abstract]

Composition Of Net Loans Receivable

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	17,999	$	16,158
Construction		9,649		7,004
Commercial real estate		256,976		225,345
Residential real estate		106,448		98,301
Consumer and other		1,615		1,255
		392,687		348,063
Unearned net loan origination fees		(387)		(327)
Allowance for loan losses		(5,655)		(4,976)
Net loans receivable	$	386,645	$	342,760

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Guarantees

9 Months Ended

Sep. 30, 2013

Guarantees [Abstract]

Guarantees

NOTE 9 – GUARANTEES

We do not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit.  Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party.  Generally, all letters of credit, when issued, have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.  We, generally, hold collateral and/or personal guarantees supporting these commitments.  As of September 30, 2013, we had $2.0 million of outstanding letters of credit.  Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.  The amount of the liability as of September 30, 2013, for guarantees under standby letters of credit issued is not material.

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Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Sep. 30, 2013

Other Comprehensive Income (Loss) [Abstract]

Components Of Other Comprehensive Income And Related Tax Effects

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income:
Unrealized gains on available for sale securities	$	430	$	173	$	257	$	693	$	277	$	416
Reclassification adjustment for net gains on securities transactions included in net income		-		-		-		(569)		(228)		(341)
Total other comprehensive income	$	430	$	173	$	257	$	124	$	49	$	75

	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive (loss) income:
Unrealized (losses) gains on available for sale securities	$	(3,327)	$	(1,330)	$	(1,997)	$	1,413	$	564	$	849
Reclassification adjustment for net gains on securities transactions included in net income		(399)		(160)		(239)		(763)		(305)		(458)
Total other comprehensive (loss) income	$	(3,726)	$	(1,490)	$	(2,236)	$	650	$	259	$	391

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Tables)

9 Months Ended

Sep. 30, 2013

Allowance For Loan Losses And Credit Quality Of Financing Receivables [Abstract]

Changes In The Allowance For Loan Losses

	Commercial				Commercial		Residential		Consumer
	and				Real		Real		and
(Dollars in	Industrial		Construction		Estate		Estate		Other		Unallocated		Total
thousands)
Three Months Ended:
September 30, 2013
Beginning balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Charge-offs		-		(19)		(747)		(89)		(7)		-		(862)
Recoveries		-		-		343		24		3		-		370
Provision		(10)		16		358		(58)		4		190		500
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	430	$	170	$	4,547	$	1,055	$	11	$	47	$	6,260
Charge-offs		-		(122)		(264)		(266)		(8)		-		(660)
Recoveries		-		-		2		-		15		-		17
Provision		183		131		153		393		(10)		254		1,104
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721
Nine Months Ended:
September 30, 2013
Beginning balance	$	271	$	223	$	3,395	$	869	$	38	$	180	$	4,976
Charge-offs		(6)		(141)		(1,759)		(155)		(22)		-		(2,083)
Recoveries		-		-		387		24		9		-		420
Provision		(26)		315		1,403		129		(10)		531		2,342
Ending balance	$	239	$	397	$	3,426	$	867	$	15	$	711	$	5,655
September 30, 2012
Beginning balance	$	304	$	294	$	4,833	$	987	$	9	$	783	$	7,210
Charge-offs		-		(830)		(2,081)		(546)		(53)		-		(3,510)
Recoveries		2		-		71		-		26		-		99
Provision		307		715		1,615		741		26		(482)		2,922
Ending balance	$	613	$	179	$	4,438	$	1,182	$	8	$	301	$	6,721

Allowances Of Loan Losses And Loans Receivable By Class Disaggregated

	Allowance for Loan Losses						Loans Receivable
			Balance		Balance
			Related to		Related to
			Loans		Loans
			Individually		Collectively				Individually		Collectively
			Evaluated for		Evaluated for				Evaluated for		Evaluated for
(Dollars in thousands)	Balance		Impairment		Impairment		Balance		Impairment		Impairment
September 30, 2013
Commercial and industrial	$	239	$	-	$	239	$	17,999	$	-	$	17,999
Construction		397		27		370		9,649		269		9,380
Commercial real estate		3,426		308		3,118		256,976		10,930		246,046
Residential real estate		867		99		768		106,448		2,819		103,629
Consumer and other loans		15		-		15		1,615		-		1,615
Unallocated		711		-		-		-		-		-
Total	$	5,655	$	434	$	4,510	$	392,687	$	14,018	$	378,669
December 31, 2012
Commercial and industrial	$	271	$	27	$	244	$	16,158	$	27	$	16,131
Construction		223		42		181		7,004		2,462		4,542
Commercial real estate		3,395		230		3,165		225,345		12,682		212,663
Residential real estate		869		66		803		98,301		3,351		94,950
Consumer and other loans		38		-		38		1,255		-		1,255
Unallocated		180		-		-		-		-		-
Total	$	4,976	$	365	$	4,431	$	348,063	$	18,522	$	329,541

An Age Analysis Of Loans Receivable

													Recorded
													Investment
					Greater						Total		> 90 Days
	30-59 Days		60-89 days		Than		Total Past				Financing		and
(Dollars in thousands)	Past Due		Past Due		90 Days (a)		Due		Current		Receivables		Accruing
September 30, 2013
Commercial and industrial	$	-	$	-	$	50	$	50	$	17,949	$	17,999	$	50
Construction		-		-		269		269		9,380		9,649		-
Commercial real estate		988		260		10,319		11,567		245,409		256,976		-
Residential real estate		372		407		2,962		3,741		102,707		106,448		144
Consumer and other		2		5		3		10		1,605		1,615		3
Total	$	1,362	$	672	$	13,603	$	15,637	$	377,050	$	392,687	$	197
December 31, 2012
Commercial and industrial	$	-	$	-	$	27	$	27	$	16,131	$	16,158	$	-
Construction		-		-		2,462		2,462		4,542		7,004		-
Commercial real estate		1,103		1,303		12,127		14,533		210,812		225,345		65
Residential real estate		207		127		3,315		3,649		94,652		98,301		-
Consumer and other		12		3		144		159		1,096		1,255		143
Total	$	1,322	$	1,433	$	18,075	$	20,830	$	327,233	$	348,063	$	208
(a) includes loans greater than 90 days past due and still accruing and non-accrual loans.

Loans Which The Accrual Of Interest Has Been Discontinued

(Dollars in thousands)	September 30, 2013		December 31, 2012
Commercial and industrial	$	-	$	27
Construction		269		2,462
Commercial real estate		10,319		12,062
Residential real estate		2,818		3,315
Consumer and other		-		1
Total	$	13,406	$	17,867

Credit Risk Profile By Creditworthiness

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
September 30, 2013
Commercial and industrial	$	17,936	$	63	$	-	$	-	$	17,999
Construction		9,380		-		269		-		9,649
Commercial real estate		234,820		7,188		14,968		-		256,976
Residential real estate		102,371		1,045		3,017		15		106,448
Consumer and other		1,474		141		-		-		1,615
	$	365,981	$	8,437	$	18,254	$	15	$	392,687
December 31, 2012
Commercial and industrial	$	15,860	$	269	$	23	$	6	$	16,158
Construction		4,542		-		2,462		-		7,004
Commercial real estate		203,106		4,648		17,256		335		225,345
Residential real estate		93,563		253		4,485		-		98,301
Consumer and other		1,112		-		143		-		1,255
	$	318,183	$	5,170	$	24,369	$	341	$	348,063

Impaired Loans

		September 30, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Construction	$	-	$	-	$	-	$	2,421	$	2,743	$	-
Commercial real estate		8,039		8,398		-		10,466		13,581		-
Residential real estate		2,182		2,237		-		2,675		2,768		-
With an allowance recorded:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		42		42		42
Commercial real estate		2,891		3,967		308		2,216		3,135		230
Residential real estate		637		730		99		675		675		66
Total:
Commercial and industrial		-		-		-		27		27		27
Construction		269		391		27		2,463		2,785		42
Commercial real estate		10,930		12,365		308		12,682		16,716		230
Residential real estate		2,819		2,967		99		3,350		3,443		66
	$	14,018	$	15,723	$	434	$	18,522	$	22,971	$	365

The following table presents the average recorded investment and income recognized for the three and nine months ended September 30, 2013 and 2012:

	For the Three Months Ended September 30, 2013				For the Three Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	2,251	$	-
Commercial real estate		8,386		11		4,538		12
Residential real estate		2,261		22		1,964		9
Total impaired loans without a related allowance		10,647		33		8,753		21
With an allowance recorded:
Commercial and industrial		-		-		398		-
Construction		328		-		1,765		3
Commercial real estate		2,764		-		13,092		10
Residential real estate		887		-		991		2
Total impaired  loans with an allowance		3,979		-		16,246		15
Total impaired loans	$	14,626	$	33	$	24,999	$	36

	For the Nine Months Ended September 30, 2013				For the Nine Months Ended September 30, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	329	$	-	$	1,986	$	-
Commercial real estate		8,334		51		6,505		42
Residential real estate		2,288		24		1,756		41
Total impaired loans without a related allowance		10,951		75		10,247		83
With an allowance recorded:
Commercial and industrial		-		-		189		-
Construction		374		-		1,405		3
Commercial real estate		2,927		-		14,610		59
Residential real estate		946		3		786		17
Total impaired  loans with an allowance		4,247		3		16,990		79
Total impaired loans	$	15,198	$	78	$	27,237	$	162

Troubled Debt Restructured On Recorded Investment

(Dollars in thousands)		Commercial Real Estate	Commercial & Industrial		Residential Real Estate		Total
September 30, 2013
Performing	$	612	$	-	$	-	$	612
Non-performing		4,720		-		527		5,247
Total	$	5,332	$	-	$	527	$	5,859
December 31, 2012
Performing	$	603	$	-	$	5	$	608
Non-performing		1,829		6		228		2,063
Total	$	2,432	$	6	$	233	$	2,671

Summary Of Troubled Debt Restructured

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three months ended September 30, 2013
Commercial real estate	1	$	1,201	$	1,201
Nine months ended September 30, 2013
Commercial real estate	3	$	3,100	$	3,100
Residential real estate	1		302		302

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Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 07, 2013
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013
Entity Registrant Name	SUSSEX BANCORP
Entity Central Index Key	0001028954
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	sbbx
Entity Common Stock, Shares Outstanding		4,629,113

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Calculation Methods Of Earnings Per Share

	Three Months Ended September 30, 2013					Three Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	575	4,031,022	$	0.14	$	546	3,264,034	$	0.17
Effect of dilutive securities:
Nonvested stock awards		-	35,887				-	24,933
Diluted earnings per share:
Net earnings applicable to common shareholders and assumed conversions	$	575	4,066,909	$	0.14	$	546	3,288,967	$	0.17

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 2012
(In thousands, except share and	Income		Shares	Per Share		Income		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net income applicable to common shareholders	$	807	3,538,770	$	0.23	$	832	3,260,827	$	0.26
Effect of dilutive securities:
Nonvested stock awards		-	31,393				-	21,399
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	807	3,570,163	$	0.23	$	832	3,282,226	$	0.25