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 June 30, 2014

[  ]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.)

399 Route 23, Franklin, NJ	07416
(Address of principal executive offices)	(Zip Code)

(844)  256-7328

(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 ☒No ☐

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 ☒No ☐

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 ☒
		(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 ☒

As of August 7, 2014 there were 4,664,856  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	8
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	8
Item 4 - Controls and Procedures	8
PART II – OTHER INFORMATION	8
Item 1 - Legal Proceedings	8
Item 1A - Risk Factors	8
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	8
Item 3 - Defaults Upon Senior Securities	8
Item 4 - Mine Safety Disclosures	8
Item 5 - Other Information	8
Item 6 - Exhibits	8

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.

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PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

SUSSEX BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	June 30, 2014		December 31, 2013
		(Unaudited)
ASSETS
Cash and due from banks	$	7,985	$	5,521
Interest-bearing deposits with other banks		3,126		7,725
Cash and cash equivalents		11,111		13,246
Interest bearing time deposits with other banks		100		100
Securities available for sale, at fair value		81,283		90,676
Securities held to maturity, at cost (fair value of $6,173 and
$6,060 at June 30, 2014 and December 31, 2013, respectively)		6,055		6,074
Federal Home Loan Bank Stock, at cost		2,960		2,705
Loans receivable, net of unearned income		428,339		392,402
Less:  allowance for loan losses		5,854		5,421
Net loans receivable		422,485		386,981
Foreclosed real estate		2,854		2,926
Premises and equipment, net		7,698		6,892
Accrued interest receivable		1,698		1,642
Goodwill		2,820		2,820
Bank-owned life insurance		12,054		11,889
Other assets		6,055		7,960
Total Assets	$	557,173	$	533,911
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	67,743	$	58,210
Interest bearing		376,603		372,087
Total Deposits		444,346		430,297
Long-term borrowings		46,000		41,000
Accrued interest payable and other liabilities		4,259		3,302
Junior subordinated debentures		12,887		12,887
Total Liabilities		507,492		487,486
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-		-
Common stock, no par value, 10,000,000 shares authorized;
4,676,039 and 4,640,296 shares issued and 4,664,856 and 4,629,113 shares
outstanding at June 30, 2014 and December 31, 2013, respectively		35,405		35,249
Treasury stock, at cost; 11,183 shares		(59)		(59)
Retained earnings		14,531		13,386
Accumulated other comprehensive loss		(196)		(2,151)
Total Stockholders' Equity		49,681		46,425
Total Liabilities and Stockholders' Equity	$	557,173	$	533,911
See Notes to Unaudited Consolidated Financial Statements

1

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE (LOSS) INCOME
(Unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands except per share data)		2014		2013		2014		2013
INTEREST INCOME
Loans receivable, including fees	$	4,800	$	4,485	$	9,423	$	8,761
Securities:
Taxable		214		126		431		280
Tax-exempt		255		246		509		508
Interest bearing deposits		4		2		7		7
Total Interest Income		5,273		4,859		10,370		9,556
INTEREST EXPENSE
Deposits		415		453		805		991
Borrowings		361		273		709		535
Junior subordinated debentures		52		55		105		109
Total Interest Expense		828		781		1,619		1,635
Net Interest Income		4,445		4,078		8,751		7,921
PROVISION FOR LOAN LOSSES		400		700		853		1,842
Net Interest Income after Provision for Loan Losses		4,045		3,378		7,898		6,079
OTHER INCOME
Service fees on deposit accounts		265		271		529		557
ATM and debit card fees		185		178		352		338
Bank-owned life insurance		82		90		165		182
Insurance commissions and fees		696		647		1,669		1,489
Investment brokerage fees		37		54		68		99
Net gain on securities transactions		94		29		94		399
Other		99		94		172		184
Total Other Income		1,458		1,363		3,049		3,248
OTHER EXPENSES
Salaries and employee benefits		2,441		2,321		4,859		4,556
Occupancy, net		397		347		850		741
Data processing		432		338		812		667
Furniture and equipment		112		145		276		297
Advertising and promotion		78		95		122		135
Professional fees		211		198		364		383
Director fees		105		(13)		242		193
FDIC assessment		175		178		351		347
Insurance		72		63		148		139
Stationary and supplies		52		51		107		100
Loan collection costs		169		116		246		214
Net expenses and write-downs related to foreclosed real estate		161		597		261		1,008
Amortization of intangible assets		-		-		-		1
Other		332		253		567		486
Total Other Expenses		4,737		4,689		9,205		9,267
Income before Income Taxes		766		52		1,742		60
EXPENSE (BENEFIT) FOR INCOME TAXES		159		(82)		457		(172)
Net Income		607		134		1,285		232
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on available for sale securities arising during the period		1,636		(3,113)		3,353		(3,757)
Reclassification adjustment for net gain on securities transactions included in net income		(94)		(29)		(94)		(399)
Income tax (expense) benefit related to items of other comprehensive income (loss)		(617)		1,258		(1,304)		1,663
Other comprehensive income (loss), net of income taxes		925		(1,884)		1,955		(2,493)
Comprehensive income (loss)	$	1,532	$	(1,750)	$	3,240	$	(2,261)
EARNINGS PER SHARE
Basic	$	0.13	$	0.04	$	0.28	$	0.07
Diluted	$	0.13	$	0.04	$	0.28	$	0.07
See Notes to Unaudited Consolidated Financial Statements

2

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Six Months Ended June 30, 2014 and 2013
(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, 2012	3,397,873	$	28,117	$	11,958	$	356	$	(59)	$	40,372
Net income	-		-		232		-		-		232
Other comprehensive loss	-		-		-		(2,493)		-		(2,493)
Restricted stock granted	32,940		-		-		-		-		-
Compensation expense related to stock
option and restricted stock grants	-		114		-		-		-		114
Balance June 30, 2013	3,430,813	$	28,231	$	12,190	$	(2,137)	$	(59)	$	38,225
Balance December 31, 2013	4,629,113	$	35,249	$	13,386	$	(2,151)	$	(59)	$	46,425
Net income	-		-		1,285		-		-		1,285
Other comprehensive income	-		-		-		1,955		-		1,955
Restricted stock granted	36,043		-		-		-		-		-
Restricted stock forfeited	(300)		-		-		-		-		-
Compensation expense related to stock
option and restricted stock grants	-		156		-		-		-		156
Dividends on common stock ($0.03 per share)			-		(140)		-		-		(140)
Balance June 30, 2014	4,664,856	$	35,405	$	14,531	$	(196)	$	(59)	$	49,681
See Notes to Unaudited Consolidated Financial Statements

3

SUSSEX BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Six Months Ended June 30,
(Dollars in thousands)	2014		2013
Cash Flows from Operating Activities
Net income	$	1,285	$	232
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		853		1,842
Depreciation and amortization		326		344
Net amortization of securities premiums and discounts		924		1,782
Net realized gain on sale of securities		(94)		(399)
Net realized gain on sale of foreclosed real estate		(5)		(35)
Write-downs of and provisions for foreclosed real estate		110		742
Deferred income taxes		(4)		943
Earnings on bank-owned life insurance		(165)		(182)
Compensation expense for stock options and stock awards		156		114
(Increase) decrease in assets:
Accrued interest receivable		(56)		24
Other assets		605		(961)
Decrease (increase) in accrued interest payable and other liabilities		957		(176)
Net Cash Provided by Operating Activities		4,892		4,270
Cash Flows from Investing Activities
Securities available for sale:
Purchases		(5)		(28,744)
Sales		5,033		13,029
Maturities, calls and principal repayments		6,818		23,884
Securities held to maturity:
Purchases		(577)		(573)
Maturities, calls and principal repayments		572		532
Net increase in loans		(37,072)		(32,307)
Proceeds from the sale of foreclosed real estate		682		3,656
Purchases of bank premises and equipment		(1,132)		(551)
Increase in FHLB stock		(255)		(905)
Net Cash Used in Investing Activities		(25,936)		(21,979)
Cash Flows from Financing Activities
Net increase (decrease) in deposits		14,049		(3,154)
Increase in borrowed funds		5,000		17,500
Dividends paid, net of reinvestments		(140)		-
Net Cash Provided by Financing Activities		18,909		14,346
Net Decrease in Cash and Cash Equivalents		(2,135)		(3,363)
Cash and Cash Equivalents - Beginning		13,246		11,668
Cash and Cash Equivalents - Ending	$	11,111	$	8,305
Supplementary Cash Flows Information
Interest paid	$	1,603	$	1,694
Income taxes paid	$	119	$	31
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	$	715	$	2,689
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 nine banking offices, eight located in Sussex County, New Jersey and one 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 the 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 sixmonth periods ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  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, 2013.  

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30,2014, 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.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2014, FASB issued ASU 2014-04, Receivables - Troubled Debt Restructurings by Creditors,  which clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers.The ASU’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the

5

contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016.We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-11,Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings.  This will result in accounting for both types of arrangements as secured borrowings on the balance sheet, rather than sales.  Additionally, the ASU introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. For public entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the ASU are effective for public business entities for the first interim or annual period beginning after December 15, 2014. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force), to clarify that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award. For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and fair value of securities available for sale as of June 30, 2014 and December 31, 2013 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
June 30, 2014
U.S. government agencies	$	5,063	$	-	$	(74)	$	4,989
State and political subdivisions		28,822		168		(745)		28,245
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,346		483		(192)		47,637
Equity securities-financial services industry and other		378		51		(17)		412
	$	81,609	$	702	$	(1,028)	$	81,283
December 31, 2013
U.S. government agencies	$	5,421	$	8	$	(49)	$	5,380
State and political subdivisions		28,788		3		(2,916)		25,875
Mortgage-backed securities -
U.S. government-sponsored enterprises		59,640		272		(975)		58,937
Equity securities-financial services industry and other		412		85		(13)		484
	$	94,261	$	368	$	(3,953)	$	90,676

Securities with a carrying value of approximately $24.8 million and $37.2 million at June 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits and for other purposes required or permitted by applicable laws and regulations.

6

The amortized cost and fair value of securities available for sale at June 30, 2014, 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		501		498
Due after five years through ten years		2,724		2,740
Due after ten years		25,597		25,007
Total bonds and obligations		28,822		28,245
U.S. government agencies		5,063		4,989
Mortgage-backed securities:
U.S. government-sponsored enterprises		47,346		47,637
Equity securities-financial services industry and other		378		412
Total available for sale securities	$	81,609	$	81,283

Gross realized gains on sales of securities available for sale were $118 thousand and $29 thousand for the three months ended June 30, 2014 and 2013, respectively. Gross realized losses were $24 thousand for the three months ended June 30, 2014. There were no gross realized losses on sales of securities available for sale for the three months ended June 30, 2013. 

Gross realized gains on sales of securities were $118 thousand and $407 thousand and gross losses were $24 thousand and $8 thousand for the six months ended June 30, 2014 and 2013, respectively.

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 June 30, 2014 and December 31, 2013.

	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
June 30, 2014
U.S. government agencies	$	3,603	$	(36)	$	1,386	$	(38)	$	4,989	$	(74)
State and political subdivisions		-		-		21,420		(745)		21,420		(745)
Mortgage-backed securities -								-
U.S. government-sponsored enterprises		3,188		(27)		13,714		(165)		16,902		(192)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	6,791	$	(63)	$	36,646	$	(965)	$	43,437	$	(1,028)
December 31, 2013
U.S. government agencies	$	3,246	$	(49)	$	-	$	-	$	3,246	$	(49)
State and political subdivisions		19,610		(2,046)		6,065		(870)		25,675		(2,916)
Mortgage-backed securities -
U.S. government-sponsored enterprises		30,830		(694)		9,147		(281)		39,977		(975)
Equity securities-financial services industry and other		-		-		130		(13)		130		(13)
Total temporarily impaired securities	$	53,686	$	(2,789)	$	15,342	$	(1,164)	$	69,028	$	(3,953)

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.As of June 30, 2014, 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

7

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.

U.S. Government Agencies

At June 30, 2014 and December 31, 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 June 30, 2014, there werethree securities with a fair value of $5.0 million that had an unrealized loss that amounted to $74 thousand.  As of June 30, 2014, 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 June 30, 2014, were deemed to be other-than-temporarily impaired.

At December 31, 2013, there were two securities with a fair value of $3.2 million that had an unrealized loss that amounted to $49 thousand.

State and Political Subdivisions

At June 30, 2014 and December 31, 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 June 30, 2014, there were 40securities with a fair value of $21.4 million that had an unrealized loss that amounted to $745 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 June 30, 2014,  wedid 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 June 30, 2014, were deemed to be other-than-temporarily-impaired.

At December 31, 2013, there were 52 securities with a fair value of $25.7 million that had an unrealized loss that amounted to $2.9 million.

Mortgage-Backed Securities

At June 30, 2014 and December 31, 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 June 30, 2014, there were 17securities with a fair value of $16.9 million that had an unrealized loss that amounted to $192thousand.  As of June 30, 2014,  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 June 30, 2014, were deemed to be other-than-temporarily impaired.

At December 31, 2013, there were 32 securities with a fair value of $40.0 million that had an unrealized loss that amounted to $975 thousand. 

Equity Securities

Our marketable equity securities portfolio consists primarily of common stock of entities in the financial services industry.  At June 30, 2014, there wasone securitywith a fair value of $126 thousandthat had an unrealized loss of $17 thousand.  This security has been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated the underlying bank for credit impairment based on its financial condition and performance.Based on our evaluation and expectation that thissecuritywill recover within a reasonable period of time, we do not consider it to be other-than-temporarily impaired at June 30, 2014. 

At December 31, 2013, there wasone security with a fair value of $130 thousand that had an unrealized loss of $13 thousand. 

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 June 30, 2014 and December 31, 2013, are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
June 30, 2014
State and political subdivisions	$	6,055	$	131	$	(13)	$	6,173
December 31, 2013
State and political subdivisions	$	6,074	$	78	$	(92)	$	6,060

The amortized cost and carrying value of securities held to maturity at June 30, 2014, 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	$	2,126	$	2,126
Due after one year through five years		-		-
Due after five years through ten years		1,831		1,823
Due after ten years		2,098		2,224
Total held to maturity securities	$	6,055	$	6,173

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 June 30, 2014 and December 31, 2013:

	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
June 30, 2014
State and political subdivisions	$	-	$	-	$	808	$	(13)	$	808	$	(13)
December 31, 2013
State and political subdivisions	$	2,080	$	(45)	$	780	$	(47)	$	2,860	$	(92)

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. As of June 30, 2014, 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.

At June 30, 2014 and December 31, 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 June 30, 2014, there were twosecurities with a fair value of $808 thousand that had an unrealized loss that amounted to $13 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 June 30, 2014,  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 June 30, 2014, were deemed to be other-than-temporarily impaired.

9

At December 31, 2013, there were five securities with a fair value of $2.9 million that had an unrealized loss that amounted to $92 thousand. 

NOTE 3 – LOANS

The composition of net loans receivable at June 30, 2014 and December 31, 2013 is as follows:

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial and industrial	$	19,189	$	15,205
Construction		8,923		7,307
Commercial real estate		292,620		260,664
Residential real estate		106,471		107,992
Consumer and other		1,488		1,617
		428,691		392,785
Unearned net loan origination fees		(352)		(383)
Allowance for loan losses		(5,854)		(5,421)
Net loans receivable	$	422,485	$	386,981

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 $536 thousand and $546 thousand at June 30, 2014 and December 31, 2013, respectively. Mortgage servicing rights were immaterial at June 30, 2014 and December 31, 2013.

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 months ended June  30, 2014 and 2013:

	Commercial				Commercial		Residential		Consumer
	and				Real		Real		and
(Dollars in	Industrial		Construction		Estate		Estate		Other		Unallocated		Total
thousands)
Three Months Ended:
June 30, 2014
Beginning balance	$	289	$	315	$	3,687	$	862	$	19	$	265	$	5,437
Charge-offs		(1)		-		-		1		(9)		-		(9)
Recoveries		3		-		17		3		3		-		26
Provision		(34)		39		46		(29)		-		378		400
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	275		401		3,452		899		12		267	$	5,306
Charge-offs		-		(80)		(273)		(38)		(6)		-		(397)
Recoveries		-		-		37		-		1		-		38
Provision		(26)		79		256		129		8		254		700
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Six Months Ended:
June 30, 2014
Beginning balance	$	222	$	308	$	3,399	$	941	$	16	$	535	$	5,421
Charge-offs		(1)		-		(358)		(85)		(22)		-		(466)
Recoveries		15		-		21		4		6		-		46
Provision		21		46		688		(23)		13		108		853
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	271		223		3,395		869		38		180	$	4,976
Charge-offs		(6)		(122)		(1,012)		(66)		(15)		-		(1,221)
Recoveries		-		-		44		-		6		-		50
Provision		(16)		299		1,045		187		(14)		341		1,842
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647

10

The following table presents the balance of the allowance of loan losses and loans receivable by class at June 30, 2014 and December 31, 2013,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
June 30, 2014
Commercial and industrial	$	257	$	-	$	257	$	19,189	$	-	$	19,189
Construction		354		-		354		8,923		-		8,923
Commercial real estate		3,750		547		3,203		292,620		9,559		283,061
Residential real estate		837		88		749		106,471		2,229		104,242
Consumer and other loans		13		-		13		1,488		-		1,488
Unallocated		643		-		-		-		-		-
Total	$	5,854	$	635	$	4,576	$	428,691	$	11,788	$	416,903
December 31, 2013
Commercial and industrial	$	222	$	-	$	222	$	15,205	$	-	$	15,205
Construction		308		-		308		7,307		-		7,307
Commercial real estate		3,399		322		3,077		260,664		10,894		249,770
Residential real estate		941		163		778		107,992		2,626		105,366
Consumer and other loans		16		-		16		1,617		-		1,617
Unallocated		535		-		-		-		-		-
Total	$	5,421	$	485	$	4,401	$	392,785	$	13,520	$	379,265

An age analysis of loans receivable which were past due as of June 30, 2014 and December 31, 2013, 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
June 30, 2014
Commercial and industrial	$	62	$	-	$	-	$	62	$	19,127	$	19,189	$	-
Construction		-		-		-		-		8,923		8,923		-
Commercial real estate		2,396		338		8,375		11,109		281,511		292,620		-
Residential real estate		177		-		1,824		2,001		104,470		106,471		-
Consumer and other		6		-		1		7		1,481		1,488		-
Total	$	2,641	$	338	$	10,200	$	13,179	$	415,512	$	428,691	$	-
December 31, 2013
Commercial and industrial	$	13	$	-	$	-	$	13	$	15,192	$	15,205	$	-
Construction		-		-		-		-		7,307		7,307		-
Commercial real estate		2,139		775		9,823		12,737		247,927		260,664		123
Residential real estate		495		247		2,192		2,934		105,058		107,992		-
Consumer and other		7		1		-		8		1,609		1,617		-
Total	$	2,654	$	1,023	$	12,015	$	15,692	$	377,093	$	392,785	$	123
(a) includes loans greater than 90 days past due and still accruing and non-accrual loans.

11

Loans for which the accrual of interest has been discontinued at June 30, 2014 and December 31, 2013, were:

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial real estate	$	8,375	$	9,700
Residential real estate		1,824		2,192
Consumer and other		1		-
Total	$	10,200	$	11,892

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.

12

The following tables illustrate our corporate credit risk profile by creditworthiness category as of June 30, 2014 and December 31, 2013: 

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
June 30, 2014
Commercial and industrial	$	19,170	$	19	$	-	$	-	$	19,189
Construction		8,923		-		-		-		8,923
Commercial real estate		274,480		6,358		11,651		131		292,620
Residential real estate		103,963		117		2,391		-		106,471
Consumer and other		1,487		-		1		-		1,488
	$	408,023	$	6,494	$	14,043	$	131	$	428,691
December 31, 2013
Commercial and industrial	$	15,192	$	13	$	-	$	-	$	15,205
Construction		7,307		-		-		-		7,307
Commercial real estate		240,204		7,378		12,917		165		260,664
Residential real estate		104,383		871		2,738		-		107,992
Consumer and other		1,477		140		-		-		1,617
	$	368,563	$	8,402	$	15,655	$	165	$	392,785

The following table reflectsinformation about ourimpaired loans by class as of June 30, 2014 and December 31, 2013:

		June 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	4,279	$	5,141	$	-	$	7,394	$	7,967	$	-
Residential real estate		1,687		1,712		-		1,849		1,874		-
With an allowance recorded:
Commercial real estate		5,280		6,375		547		3,500		4,595		322
Residential real estate		542		542		88		777		871		163
Total:
Commercial real estate		9,559		11,516		547		10,894		12,562		322
Residential real estate		2,229		2,254		88		2,626		2,745		163
	$	11,788	$	13,770	$	635	$	13,520	$	15,307	$	485

13

The following table presents the average recorded investment and income recognized for the three and six months ended June 30, 2014 and 2013:

	For the Three Months Ended June 30, 2014				For the Three Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	494	$	-
Commercial real estate		4,321		10		5,181		1
Residential real estate		1,683		9		1,516		-
Total impaired loans without a related allowance		6,004		19		7,191		1
With an allowance recorded:
Construction		-		-		427		-
Commercial real estate		5,298		-		6,246		32
Residential real estate		678		3		1,924		2
Total impaired  loans with an allowance		5,977		3		8,597		34
Total impaired loans	$	11,981	$	22	$	15,788	$	35

	For the Six Months Ended June 30, 2014				For the Six Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	993	$	-
Commercial real estate		5,372		18		5,431		3
Residential real estate		1,792		29		1,519		-
Total impaired loans without a related allowance		7,164		47		7,943		3
With an allowance recorded:
Commercial and industrial		-		-		9		-
Construction		-		-		441		-
Commercial real estate		4,672		1		6,415		37
Residential real estate		747		7		1,891		5
Total impaired  loans with an allowance		5,420		8		8,756		42
Total impaired loans	$	12,584	$	55	$	16,699	$	45

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:

14

(Dollars in thousands)		Commercial Real Estate	Residential Real Estate		Total
June 30, 2014
Performing	$	1,184	$	427	$	1,611
Non-performing		2,965		225		3,190
Total	$	4,149	$	652	$	4,801
December 31, 2013
Performing	$	1,195	$	433	$	1,628
Non-performing		3,000		496		3,496
Total	$	4,195	$	929	$	5,124

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote.  As of June 30, 2014, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

There were no troubled debt restructurings that occurred during the three and six months ended June 30, 2014.  The following table summarizes troubled debt restructurings that occurred during the three and six months ended June 30, 2013:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three Months Ended:
June 30, 2013
Commercial real estate	1	$	1,736	$	1,736
Six Months Ended:
June 30, 2013
Commercial real estate	2	$	1,899	$	1,899
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 $31 thousand and $63 thousandfor the three and six months ended June 30, 2013.  These specific reserves are included in the allowance for credit losses for loans individually evaluated for impairment. There were no charge-offs on the troubled debt restructurings presented in the table above during the three and six months ended June 30, 2013.

There were no troubled debt restructurings that occurred during the three and six months ended June 30, 2014, therefore, no allocation for the allowance for credit losses or charge-offs were required on loans modified as troubled debt restructurings during thethree and six months ended June 30, 2014.

There were no troubled debt restructurings for which there was a payment default within twelve months following the date of the restructuring for the threeand six months ended June 30, 2014 and 2013.

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.

15

	Three Months Ended June 30, 2014					Three Months Ended June 30, 2013
(In thousands, except share and	Income		Shares	Per Share		Loss		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	607	4,540,318	$	0.13	$	134	3,293,376	$	0.04
Effect of dilutive securities:
Nonvested stock awards		-	36,832				-	33,237
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	607	4,577,150	$	0.13	$	134	3,326,613	$	0.04

	Six Months Ended June 30, 2014					Six Months Ended June 30, 2013
(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	$	1,285	4,533,451	$	0.28	$	232	3,288,582	$	0.07
Effect of dilutive securities:
Nonvested stock awards		-	35,654				-	30,956
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	1,285	4,569,105	$	0.28	$	232	3,319,538	$	0.07

There were 7,000 and 7,500 shares of unvested restricted stock awards and options outstanding during the three months ended June 30, 2014 and 2013, respectively, which were not included in the computation of diluted EPS because to do so would have been anti-dilutive.  There were 36,043 and 33,340 shares of unvested restricted stock awards and options outstanding during the six months ended June 30, 2014 and 2013, respectively, which were not included in the computation of diluted EPS because to do so would have been anti-dilutive.

NOTE 6 – OTHER COMPREHENSIVEINCOME (LOSS)

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.

16

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

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	1,636	$	655	$	981	$	(3,113)	$	(1,246)	$	(1,867)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(29)		(12)		(17)
Total other comprehensive income (loss)	$	1,542	$	617	$	925	$	(3,142)	$	(1,258)	$	(1,884)

	Six  Months Ended June 30, 2014						Six  Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	3,353	$	1,342	$	2,011	$	(3,757)	$	(1,503)	$	(2,254)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(399)		(160)		(239)
Total other comprehensive income (loss)	$	3,259	$	1,304	$	1,955	$	(4,156)	$	(1,663)	$	(2,493)

Reclassification adjustments for gains on securities transactions of $94 thousand for the three and six months ended June 30, 2014and $29 thousand and $399 thousand for the three and six months ended June 30, 2013, respectively, are presented in the income statement on the line item for net gain on securities transactions.

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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 June 30, 2014						Three Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,444	$	1	$	4,445	$	4,078	$	-	$	4,078
Other income from external sources		760		698		1,458		716		647		1,363
Depreciation and amortization		157		6		163		171		2		173
Income (loss) before income taxes		724		42		766		(7)		59		52
Income tax expense (benefit) (1)		143		16		159		(105)		23		(82)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	8,749	$	2	$	8,751	$	7,921	$	-	$	7,921
Other income from external sources		1,366		1,683		3,049		1,759		1,489		3,248
Depreciation and amortization		315		11		326		339		5		344
Income (loss) before income taxes		1,346		396		1,742		(199)		259		60
Income tax expense (benefit) (1)		299		158		457		(275)		103		(172)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

(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 of grant.  Restricted stock is valued at the market value of the common stock on the date of grant and generally vests over periods oftwo toseven years.  All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans for the six months endedJune 30, 2014 is as follows:

			Weighted
			Average	Weighted
			Exercise	Average	Aggregate
	Number of		Price per	Contractual	Intrinsic
	Shares		Share	Term	Value
Options outstanding, beginning of year	32,749	$	14.31
Options expired	(14,090)		14.67
Options outstanding, end of quarter	18,659	$	14.03	0.8	-
Options exercisable, end of quarter	18,659	$	14.03	0.8	-
Option price range at end of quarter	$8.99 to $16.45

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Option price range for exercisable shares $8.99 to $16.45

The summary of changes in unvested restricted stock awards for the six months endedJune 30, 2014, is as follows:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	125,922	$	4.98
Granted	36,043		8.81
Forfeited	(300)		5.66
Vested	(44,278)		5.21
Unvested restricted stock, end of period	117,387	$	6.07

Total stock based compensation related to restricted stock awards was $76 thousand and $60 thousand for the three months ended June30, 2014 and 2013, respectively, and $156 thousand and $114 thousand for the six months ended June30, 2014 and 2013, respectively.

At June  30, 2014, unrecognized compensation expense for non-vested restricted stock was $600 thousand, which is expected to be recognized over an average period of 2.2years. 

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.  Generally, we hold collateral and/or personal guarantees supporting these commitments.  As of June 30, 2014, we had $1.4 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 June 30, 2014, 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 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 fair value amounts have been measured as of their respective year ends, and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year end.

In accordance with U.S. GAAP, we use a hierarchical 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 hierarchy are as follows:

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

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported 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 reported 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.

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The following table summarizes the fair value of our financial assets measured on a recurring basis by the above pricing observability levels as of June 30, 2014 and December 31, 2013:

			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)
June 30, 2014
U.S. government agencies	$	4,989	$	-	$	4,989	$	-
State and political subdivisions		28,245		-		28,245		-
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,637		-		47,637		-
Equity securities-financial services industry and other		412		412		-		-
December 31, 2013
U.S. government agencies	$	5,380	$	-	$	5,380	$	-
State and political subdivisions		25,875		-		25,875		-
Mortgage-backed securities -				-		-		-
U.S. government-sponsored enterprises		58,937		-		58,937		-
Equity securities-financial services industry and other		484		484		-		-

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 June 30, 2014 and December 31, 2013,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)
June 30, 2014
Impaired loans	$	3,631	$	-	$	-	$	3,631
Foreclosed real estate		149		-		-		149
December 31, 2013
Impaired loans	$	5,483	$	-	$	-	$	5,483
Foreclosed real estate		1,008		-		-		1,008

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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 III Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
June 30, 2014
Impaired loans	$	3,631	Appraisal of	Appraisal	0% to -66.1%
			collateral	adjustments (1)	(-11.0%)
Foreclosed real estate		149	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
December 31, 2013
Impaired loans	$	5,483	Appraisal of	Appraisal	0% to -67.9%
			collateral	adjustments (1)	(-7.8%)
Foreclosed real estate		1,008	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 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.  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 following methods and assumptions were used to estimate the fair value of our financial instruments at June 30, 2014 and December 31, 2013:  

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.

Deposits (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.  The Company generally purchases 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) and securities held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level I), or matrix pricing (Level II), 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 III).  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 III measurements.  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 III investments.

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.

Loans Receivable (Carried at Cost): The fair values of loans are estimated using discounted cash flow analyses, using the market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans.  Projected

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future cash flows are calculated based upon contractual maturity or call dates, 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 Lower of Cost or Fair Value): Fair value of impaired loans 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 III fair values, based upon the lowest level of input that is significant to the fair value measurements.  At June 30, 2014 and December 31, 2013, the fair value consists of the loan balances of $3.6 million and $5.5 million, net of valuation allowance of $597 thousand and $485 thousand, respectively. 

Deposit Liabilities (Carried at Cost): The fair values disclosed for demand, savings and money market 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 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 its fair value.

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 fair values of our financial instruments at June30, 2014 and December 31, 2013, were as follows:

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	June 30, 2014				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	$	11,111	$	11,111	$	11,111	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		81,283		81,283		412		80,871		-
Securities held to maturity		6,055		6,173		-		6,173		-
Federal Home Loan Bank stock		2,960		2,960		-		2,960		-
Loans receivable, net of allowance		422,485		418,915		-		-		418,915
Accrued interest receivable		1,698		1,698		-		1,698		-
Financial liabilities:
Non-maturity deposits		335,102		335,102		335,102		-		-
Time deposits		109,244		109,886		-		109,886		-
Borrowings		46,000		48,053		-		48,053		-
Junior subordinated debentures		12,887		8,905		-		8,905		-
Accrued interest payable		251		251		-		251		-

Quoted Prices in Significant

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					Active Markets		Other		Significant
	December 31, 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	$	13,246	$	13,246	$	13,246	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		90,676		90,676		484		90,192		-
Securities held to maturity		6,074		6,060		-		6,060		-
Federal Home Loan Bank stock		2,705		2,705		-		2,705		-
Loans receivable, net of allowance		386,981		383,269		-		-		383,269
Accrued interest receivable		1,642		1,642		-		1,642		-
Financial liabilities:
Non-maturity deposits		331,350		331,350		331,350		-		-
Time deposits		98,947		99,925		-		99,925		-
Borrowings		41,000		43,149		-		43,149		-
Junior subordinated debentures		12,887		7,710		-		7,710		-
Accrued interest payable		235		235		-		235		-

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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, New York City, New York 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.  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 six months ended June 30, 2014.  For additional information on our critical accounting policies, please refer to Note 1 of the consolidated financial statements included in our 2013 Annual Report on Form 10-K.

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COMPARISION OF OPERATING RESULTS FOR THREE MONTHS ENDED JUNE 30, 2014 AND 2013

Overview - For the quarter ended June 30, 2014, we reported net income of $607 thousand, or $0.13 per basic and diluted share, as compared to net income of $134 thousand, or $0.04 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended June 30, 2014 was largely due to a decrease in credit quality costs (provision for loan losses, loan collection costs and expenses and write-downs related to foreclosed real estate) of $683 thousand or 48.3%, and increases in net interest income of $367 thousand and gain on securities transactions of $65 thousand.

Comparative Average Balances and Average Interest Rates - The following table presents, on a fully tax 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 June 30, 2014 and 2013:

	Three Months Ended June 30,
(Dollars in thousands)	2014					2013
		Average			Average		Average			Average
Earning Assets:		Balance		Interest	Rate (2)		Balance		Interest	Rate (2)
Securities:
Tax exempt (3)	$	33,764	$	384	4.56%	$	29,579	$	373	5.06%
Taxable		62,775		214	1.37%		94,286		126	0.54%
Total securities		96,539		598	2.48%		123,865		499	1.62%
Total loans receivable (1) (4)		420,506		4,800	4.58%		363,996		4,485	4.94%
Other interest-earning assets		7,368		4	0.22%		2,122		2	0.38%
Total earning assets		524,413	$	5,402	4.13%	$	489,983	$	4,986	4.08%
Non-interest earning assets		37,675					39,409
Allowance for loan losses		(5,653)					(5,777)
Total Assets	$	556,435					523,615
Sources of Funds:
Interest bearing deposits:
NOW	$	115,065	$	43	0.15%	$	108,523	$	35	0.13%
Money market		11,146		4	0.14%		13,950		6	0.17%
Savings		144,942		74	0.20%		155,156		83	0.21%
Time		108,133		294	1.09%		98,482		329	1.34%
Total interest bearing deposits		379,286		415	0.44%		376,111		453	0.48%
Borrowed funds		49,244		361	2.94%		34,549		273	3.17%
Junior subordinated debentures		12,887		52	1.62%		12,887		55	1.71%
Total interest bearing liabilities		441,417	$	828	0.75%	$	423,547	$	781	0.74%
Non-interest bearing liabilities:
Demand deposits		63,239					58,411
Other liabilities		2,713					1,806
Total non-interest bearing liabilities		65,952					60,217
Stockholders' equity		49,066					39,851
Total Liabilities and Stockholders' Equity	$	556,435				$	523,615
Net Interest Income and Margin (5)				4,574	3.50%				4,205	3.44%
Tax-equivalent basis adjustment				(129)					(127)
Net Interest Income			$	4,445				$	4,078
(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 increased $369 thousand, or 8.8%, to $4.6 million for the second quarter of 2014 as compared to $4.2 million for same period in 2013.  The increase in net interest income was largely due to a $34.4 million, or 7.0%, increase in average interest earning assets, principally loans receivable, which increased $56.5 million, or 15.5%, and was partially offset by a decrease in the average balance on the securities portfolio of $27.3 million, or 22.1%.  The aforementioned increase also benefited from a 6 basis point increase in the net interest margin to 3.50% for the second quarter of 2014 as compared to the same period last year. The increase in the net interest margin was mostly due to an increase in the average rate received on interest earning assets, which increased 5 basis points to 4.13% for the second quarter of 2014 from 4.08% for the same period in 2013.

Interest Income – Our total interest income, on a fully tax equivalent basis, increased $416 thousand, or 8.3%, to $5.4 million for the quarter ended June 30, 2014 as compared to the same period last year.  The increase was due to higher earning asset yields, which increased 5 basis points to 4.13% for the quarter ended June 30, 2014, as compared to the same period in 2013. 

Our total interest income earned on loans receivable increased $315 thousand, or 7.0%, to $4.8 million for the second quarter of 2014 as compared to the same period in 2013.  The increase was driven by an increase in average balance of loans receivable of $56.5 million, or 15.5%, for the three months ended June 30, 2014, as compared to same period last year.  The increase in interest income earned on loans receivable was partly offset by a 36 basis point decline in average yields to 4.58% for the quarter ended June 30, 2014, as compared to the same period in 2013. 

Our total interest income earned on securities, on a fully tax equivalent basis, increased $99 thousand, to $598 thousand for the quarter ended June 30, 2014, from $499 thousand for the same period in 2013.  This increase was largely due to an increase in the average rate earned on securities, which increased 86 basis points for the quarter ended June 30, 2014, as compared to the same period last year. 

Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. Our interest earned on total other interest-earning assets increased $2 thousand for the second quarter of 2014 as compared to the same period in 2013 due to an increase in average balances.  The average balances in other interest-earning assets increased $5.2 million to $7.4 million in the first quarter of 2014 from $2.1 million during the second quarter a year earlier. 

Interest Expense – Our interest expense for the three months ended June 30, 2014 increased $47 thousand, or 6.0%, to $828 thousand from $781 thousand for the same period in 2013.  The improvement was principally due to higher average rates paid on total interest-bearing liabilities, which increased 1 basis points from 0.74% for the three months ended June 30, 2013 to 0.75% for the same period in 2014 combined with an increase in average balances in interest-bearing liabilities, which increased $17.9 million, or 4.2%, to $441.4 million for the second quarter of 2014 from $423.5 million for the same period in 2013.

Our interest expense on deposits declined $38 thousand, or 8.4%, for the quarter ended June 30, 2014, as compared to the same period last year.  The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 4 basis points to 0.44% for the second quarter 2014 as compared to the same period in 2013.  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 $300 thousand to $400 thousand for the second quarter of 2014, as compared to $700 thousand for the same period in 2013.The decrease in the provision for loan losses for the quarter ended June 30, 2014 was largely attributed to the resolution of problem loans.  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 an increase in non-interest income of $95 thousand, or 7.0%, to $1.5 million for the second quarter of 2014 as compared to the same period last year.  The increase in non-interest income was largely due to an increase in gains on securities transactions of $65 thousand and increases in insurance commissions and fees of $49 thousand, or 7.6%, which were partially offset by a decrease in investment brokerage fees of $17 thousand, or 31.5%.

Non-Interest Expense – Our non-interest expenses increased $48 thousand, or 1.0%, to $4.7 million for the second quarter of 2014 as compared to the same period last year.  The increase for the second quarter of 2014 as compared to the same period in 2013 was largely due to increases in salaries and employee benefits expense of $120 thousand, director fees of $118 thousand and data processing fees of $94 thousand, which were partially offset by decreases in expenses and write-downs related to foreclosed real estate of $436 thousand.  The increase in director fees was principally related to a deferred compensation plan that is tied to the performance of our common stock.  The increase in data processing fees was principally due to de-conversion charges related to a planned technology upgrade scheduled for the third quarter of 2014.

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Income Taxes – Our income tax expense, which includes both federal and state tax expenses, was $159 thousand for the three months ended June 30, 2014, compared to income tax benefit of $82 thousand for the three months ended June 30, 2013.

COMPARISION OF OPERATING RESULTS FOR SIX MONTHS ENDED JUNE 30, 2014 AND 2013

Overview - For the six months ended June 30, 2014, we reported net income of $1.3 million, or $0.28 per basic and diluted share, as compared to net income of $232 thousand, or $0.07 per basic and diluted share, for the same period last year.  The increase in net income for the six months ended June 30, 2014 was largely due to a decrease in credit quality costs (provision for loan losses, loan collection costs and expenses and write-downs related to foreclosed real estate) of $1.7 million or 55.6%, and an increase in net interest income of $830 thousand, which were partially offset by a decrease in gain on securities transactions of $305 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 six month periods ended June 30, 2014 and 2013:

	Six Months Ended June 30,
(Dollars in thousands)	2014					2013
	Average				Average	Average				Average
Earning Assets:	Balance			Interest (1)	Rate (2)	Balance		Interest (1)		Rate (2)
Securities:
Tax exempt (3)	$	33,747	$	767	4.58%	$	30,881	$	766	5.00%
Taxable		65,119		431	1.33%		96,824		280	0.58%
Total securities		98,866		1,198	2.44%		127,705		1,046	1.65%
Total loans receivable (4)		411,681		9,423	4.62%		356,778		8,761	4.95%
Other interest-earning assets		6,399		7	0.22%		5,033		7	0.28%
Total earning assets		516,946	$	10,628	4.15%		489,516	$	9,814	4.04%
Non-interest earning assets		36,647					39,932
Allowance for loan losses		(5,651)					(5,541)
Total Assets	$	547,942				$	523,907
Sources of Funds:
Interest bearing deposits:
NOW	$	115,361	$	82	0.14%	$	110,410	$	71	0.13%
Money market		11,855		8	0.14%		14,424		15	0.21%
Savings		145,509		149	0.21%		156,524		194	0.25%
Time		103,557		566	1.10%		100,967		711	1.42%
Total interest bearing deposits		376,282		805	0.43%		382,325		991	0.52%
Borrowed funds		47,741		709	2.99%		30,597		535	3.53%
Junior subordinated debentures		12,887		105	1.64%		12,887		109	1.71%
Total interest bearing liabilities		436,910	$	1,619	0.75%		425,809	$	1,635	0.77%
Non-interest bearing liabilities:
Demand deposits		60,405					54,158
Other liabilities		2,458					3,796
Total non-interest bearing liabilities		62,863					57,954
Stockholders' equity		48,169					40,144
Total Liabilities and Stockholders' Equity	$	547,942				$	523,907
Net Interest Income and Margin (5)			$	9,009	3.51%			$	8,179	3.37%
Tax-equivalent basis adjustment				(258)					(258)
Net Interest Income			$	8,751				$	7,921
(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 $830 thousand, or 10.1%, to $9.0 million for the first six months of 2014 as compared to $8.2 million for same period in 2013.  The increase in net interest income was largely due to a $27.4 million, or 5.6%, increase in average interest earning assets, principally loans receivable, which increased $54.9 million, or 15.4%, and was partially offset by a decrease in the average balance on the securities portfolio of $28.8 million, or 22.6%.  The aforementioned increase also benefited from a 14 basis point increase in the net interest margin to 3.51% for the first six months of 2014 as compared to the same period last year. The increase in the net interest margin was mostly due to an increase in the average rate received on interest earning assets, which increased 11 basis points to 4.15% for the first six months of 2014 from 4.04% for the same period in 2013.

Interest Income – Our total interest income, on a fully tax equivalent basis, increased $814 thousand, or 8.3%, to $10.6 million for the six months ended June 30, 2014, as compared to the same period last year.  The increase was due to higher earning asset yields, which increased 11 basis points to 4.15% for the six months ended June 30, 2014, as compared to the same period in 2013. 

Our total interest income earned on loans receivable increased $662 thousand, or 7.6%, to $9.4 million for the second quarter of 2014 as compared to the same period in 2013.  The increase was driven by an increase in average balance of loans receivable of $54.9 million, or 15.4%, for the six months ended June 30, 2014, as compared to same period last year.  The increase in interest income earned on loans receivable was partly offset by a 33 basis point decline in average yields to 4.62% for the six months ended June 30, 2014, as compared to the same period in 2013. 

Our total interest income earned on securities, on a fully tax equivalent basis, increased $152 thousand, to $1.2 million for the six months ended June 30, 2014, from $1.0 million for the same period in 2013.  This increase was largely due to an increase in the average rate earned on securities, which increased 79 basis points for the six months ended June 30, 2014, as compared to the same period last year. 

Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. Our interest earned on total other interest-earning assets remained flat for the first six months of 2014 as compared to the same period in 2013.  The average balances in other interest-earning assets increased $1.4 million to $6.4 million in the first six months of 2014 from $5.0 million during the first six months a year earlier. 

Interest Expense – Our interest expense for the six months ended June 30, 2014 decreased $16 thousand, or 1.0%, to $1.6 million from $1.6 million for the same period in 2013.  The improvement was principally due to lower average rates paid on total interest-bearing liabilities, which declined 2 basis points from 0.77% for the six months ended June 30, 2013 to 0.75% for the same period in 2014 partially offset by an increase in average balances in interest-bearing liabilities, which increased $11.1 million, or 2.6%, to $436.9 million for the first six months of 2014 from $425.8 million for the same period in 2013.

Our interest expense on deposits declined $186 thousand, or 18.8%, for the six months ended June 30, 2014, as compared to the same period last year.  The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 9 basis points to 0.43% for the first six months of 2014 as compared to the same period in 2013.  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 $989 thousand to $853 thousand for the first six months of 2014 as compared to $1.8 million for the same period in 2013.The decrease in the provision for loan losses for the six months ended June 30, 2014 was largely attributed to the resolution of problem loans.  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 $199 thousand, or 6.1%, to $3.0 million for the first six months of 2014 as compared to the same period last year.  The decrease in non-interest income was largely due to a decrease in gains on securities transactions of $305 thousand, which was partially offset by increases in insurance commissions and fees of $180 thousand, or 12.1%.

Non-Interest Expense – Our non-interest expenses decreased $62 thousand, or 0.7%, to $9.2 million for the first six months of 2014 as compared to the same period last year.  The decrease for the first six months of 2014 as compared to the same period in 2013 was largely due to a decrease in expenses and write-downs related to foreclosed real estate of $747 thousand, which was partly offset by increases in salaries and employee benefits expense of $303 thousand, data

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processing fees of $145 thousand and occupancy of $109 thousand The increase in data processing fees was principally due to de-conversion charges related to a planned technology upgrade scheduled for the third quarter of 2014.

Income Taxes – Our income tax expense, which includes both federal and state tax expenses, was $457 thousand for the six months ended June 30, 2014, compared to income tax benefit of $172 thousand for the six months ended June 30, 2013.

COMPARISION OF FINANCIAL CONDITION AT JUNE 30, 2014 TO DECEMBER 31, 2013

Total Assets – At June 30, 2014, the Company’s total assets were $557.2 million, an increase of $23.3 million, or 4.4%, as compared to total assets of $533.9 million at December 31, 2013.  The increase in total assets was largely driven by net growth in total loans of $35.9 million, or 9.2%, which was partially offset by declines in the securities portfolio of $9.4 million, or 9.7%, and in cash and cash equivalents of $2.1 million, or 16.1%.

Cash and Cash Equivalents – Our cash and cash equivalents decreased by $2.1 million to $11.1 million at June 30, 2014, or 2.0% of total assets, from $13.2 million, or 2.5%, of total assets, at December 31, 2013.  The decrease was largely due to the investment of excess liquidity into loans.

Securities Portfolio – At June 30, 2014, the securities portfolio, which includes available for sale and held to maturity securities, was $87.3 million compared to $96.8 million at December 31, 2013. Available for sale securities were $81.3 million at June 30, 2014, compared to $90.7 million at December 31, 2013. 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. Held to maturity securities were $6.1 million at June 30, 2014 and December 31, 2013.

Net unrealized gains (losses) in the securities portfolio were $327 thousand and ($3.6) million at June 30, 2014 and December 31, 2013, respectively.

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 our 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 in an unrealized loss position have been evaluated for other-than-temporary impairment as of June 30, 2014 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.  In addition, 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 $3.0 million and $2.7 million at June 30, 2014 and December 31, 2013, respectively, and consisted primarily of FHLB stock. We also held $100 thousand in time deposits with other financial institutions at June 30, 2014 and December 31, 2013. 

Loans – The loan portfolio comprises our largest class of earning assets.Total loans receivable, net of unearned income, increased $35.9 million, or 9.2%, to $428.3 million at June 30, 2014, as compared to $392.4 million at December 31, 2013.  The increase in loans was primarily in the commercial real estate portfolio, which increased $32.0 million, or 12.3%, to $292.6 million at June 30, 2014, as compared to $260.7 million at December 31, 2013 and in the commercial and industrial portfolio, which increased $4.0 million, or 26.2%, to $19.2 million at June 30, 2014, as compared to $15.2 million at December 31, 2013.

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

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial and industrial loans	$	19,189	$	15,205
Construction		8,923		7,307
Commercial real estate		292,620		260,664
Residential real estate		106,471		107,992
Consumer and other		1,488		1,617
Total gross loans	$	428,691	$	392,785

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Loan and Asset Quality – Our overall credit quality continued to improve through June 30, 2014, as our total problem assets, which is composed of foreclosed real estate, criticized assets and classified assets, declined $3.5 million, or 12.8%, to $23.5 million at June 30, 2014, from $27.1 million at December 31, 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 $1.9 million, or 11.5%, to $14.7 million at June 30, 2014, as compared to $16.6 million at December 31, 2013.  Non-accrual loans decreased $1.7 million, or 14.2%, to $10.2 million at June 30, 2014, as compared to $11.9 million at December 31, 2013.  The top five non-accrual loan relationships total $6.4 million, or 63.1%, of total non-accrual loans and 43.9% of total NPAs at June 30, 2014.  The remaining non-accrual loans have an average loan balance of $111 thousand.  Loans past due 30 to 89 days decreased $698 thousand, or 19.0%, to $3.0 million at June 30, 2014, as compared to $3.7 million at December 31, 2013.

We continue to actively market our foreclosed real estate properties, which decreased $72 thousand to $2.9 million at June 30, 2014, as compared to $2.9 million at December 31, 2013.  The decrease was primarily due to the sale of foreclosed real estate properties for $683 thousand and write downs of $110 thousand, which were partially offset by additions of $715 thousand in new foreclosed real estate properties during 2014.  At June 30, 2014, our foreclosed real estate properties had an average value of approximately $317 thousand per property.

The allowance for loan losses increased $433 thousand, or 8.0% to $5.9 million, or 1.37% of total loans, at June 30, 2014, compared to $5.4 million, or 1.38% of total loans, at December 31, 2013. We recorded $853 thousand in provision for loan losses, which was partly offset by $420 thousand in net charge-offs for 2014. The allowance for loan losses as a percentage of non-accrual loans improved to 57.4% at June 30, 2014 from 45.6% at December 31, 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)	June 30, 2014		December 31, 2013
Non-accrual loans	$	10,200	$	11,892
Non-accrual loans to total loans		2.38%		3.03%
Non-performing assets	$	14,665	$	16,569
Non-performing assets to total assets		2.63%		3.10%
Allowance for loan losses as a % of non-accrual loans		57.39%		45.59%
Allowance for loan losses to total loans		1.37%		1.38%

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 June 30, 2014 were $11.8 million and at December 31, 2013 were $13.5 million.  Impaired loans measured at fair value on a non-recurring basis decreased to $3.6 million on June 30, 2014 from $5.5 million at December 31, 2013. The principal balances on loans measured at fair value were $4.2 million and $6.0 million, net of valuation allowance of $597 thousand at June 30, 2014 and $485 thousand at December 31, 2013.  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, 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 $1.6 million at June 30, 2014 and December 31, 2013.

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 June 30, 2014, we had 8loan relationships totaling $1.4 million that we deemed potential problem loans. Management is actively monitoring these loans.

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

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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 June 30, 2014, the total allowance for loan losses increased $433 thousand, or 8.0%, to $5.9 million, as compared to $5.4 million at December 31, 2013.  The components of this increase were a provision for loan losses of $853 thousand and net charge-offs totaling $420 thousand in the first six months of 2014.  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 June 30, 2014 and December 31, 2013. 

The table below presents information regarding our provision and allowance for loan losses for the six months ended June 30, 2014 and 2013:

(Dollars in thousands)	June 30, 2014		June 30, 2013
Balance, beginning of period	$	5,421	$	4,976
Provision		853		1,842
Charge-offs		(466)		(1,221)
Recoveries		46		50
Balance, end of period	$	5,854	$	5,647

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.

	June 30, 2014			December 31, 2013
			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	$	257	4.5%	$	222	3.9%
Construction		354	2.1%		308	1.9%
Commercial real estate		3,750	68.3%		3,399	66.4%
Residential real estate		837	24.8%		941	27.5%
Consumer and other loans		13	0.3%		16	0.4%
Unallocated		643	-		535	-
Total	$	5,854	100.0%	$	5,421	100.0%

Bank-Owned Life Insurance (BOLI) –  Our BOLI carrying value amounted to $12.1 million at June 30, 2014 and $11.9 million at December 31, 2013.

Goodwill and Other Intangibles – Goodwill represents the excess of the purchase price over the fair market value of net assets acquired.  At June 30, 2014 and December 31, 2013, 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 $14.0 million, or 3.3%, to $444.3 million at June 30, 2014, from $430.3 million at December 31, 2013.  The increase in deposits was due to an increase in non-interest bearing deposits of $9.5 million,

31

or 16.4%, and interest bearing deposits of $4.5 million, or 1.2%, for June 30, 2014, as compared to December 31, 2013.  Our funding mix continues to improve as low cost deposits grow.

Borrowings – Borrowings consist of short term and 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 $46.0 million and $41.0 million in borrowings, at a weighted average interest rate of 3.09% at June 30, 2014 and 3.22% at December 31, 2013.  The borrowings at June 30, 2014 consisted of $25.0 million of fixed rate advances, $10.0 million of advances with quarterly convertible puts that allow us to put the advance back to the FHLB quarterly after one year from issuance 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, Sussex Capital Trust II, a Delaware statutory business trust and wholly-owned subsidiary of the Company, issued $12.5 million of variable rate capital trust pass-through securities to investors.  Sussex Capital Trust II purchased $12.9 million of variable rate junior subordinated deferrable interest debentures from us.  The debentures are the sole asset of the Trust.  The terms of the junior subordinated debentures are the same as the terms of the capital securities.  We have also fully and unconditionally guaranteed the obligations of the Trust under the capital securities.  The interest rate is based on the three-month LIBOR plus 144 basis points and adjusts quarterly.  The rate at June 30, 2014, was 1.67%.  The capital securities are currently redeemable by us at par in whole or in part.  The capital securities must be redeemed upon final maturity of the subordinated debentures 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 wholly owned 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 $49.7 million, an increase of $3.3 million when compared to December 31, 2013.  The increase was largely due to net income for the year and an increase in accumulated other comprehensive income relating to a reduction in the net unrealized losses on available for sale securities.  At June 30, 2014, the leverage, Tier I risk-based capital and total risk-based capital ratios for the Bank were 10.31%, 13.60% and 14.85%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”

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 June 30, 2014, total deposits amounted to $444.3 million, an increase of $14.0 million, or 3.3%, from December 31, 2013. At June 30, 2014 and December 31, 2013, advances from FHLB and subordinated debentures totaled $58.9 million and $53.9 million, respectively, and represented 10.6% and 10.1% of total assets, respectively. 

Loan production continued to be our principal investing activity. Net loans receivable at June 30, 2014, amounted to $422.5 million, an increase of $35.5 million, or 9.2%, compared to December 31, 2013.

Our most liquid assets are cash and due from banks and federal funds sold.  At June 30, 2014, the total of such assets amounted to $11.1 million, or 2.0%, of total assets, compared to $13.2 million, or 2.5%, of total assets at December 31, 2013. Another significant liquidity source is our available for sale securities portfolio.  At June 30, 2014, available for sale securities amounted to $81.3 million compared to $90.7 million at December 31, 2013.

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 $5.4 millionthrough its membership in the FHLB and $10.0 million at Atlantic Central Bankers Bank at June 30, 2014.  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 June 30, 2014, the Bank’s Tier I and Tier II capital ratios were 13.60% and 14.85%, respectively.  In addition to the risk-

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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 June 30, 2014, the Bank had a leverage ratio of 10.31%.  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 in March 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 June 30, 2014, totaled $66.2 millionand consisted of $18.9 million in commitments to grant commercial real estate, construction and land development loans, $22.2 million in home equity lines of credit, $23.6 million in other unused commitments and $1.4 million 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.

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.

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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 2013 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.

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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 Executive Vice President and Chief Financial Officer
	(Principle Financial and Accounting Officer)
	Date: August 12, 2014

35

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 3.1 to the Current Report on Form 8-K filed with the SEC on June 3, 2014).
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 June 30, 2014, 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

36

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(s) 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;

(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;

(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; and

5. The registrant’s other certifying officer(s) 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: August 12, 2014

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(s) 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;

(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;

(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; and

5. The registrant’s other certifying officer(s) 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 Executive Vice President and

      Chief Financial Officer

      (Principle Financial and Accounting Officer)

      Date: August 12, 2014

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED 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 June 30, 2014 (the “Report”). Each of the undersigned, Anthony Labozzetta, Chief Executive Officer, and Steven M. Fusco, Chief Financial Officer, hereby certifies that, to his knowledge:

A) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

B) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By: /s/ Anthony Labozzetta           .

      ANTHONY LABOZZETTA

      President and

      Chief Executive Officer

     (Principle Executive Officer)

      Date: August 12, 2014

By: /s/ Steven M. Fusco                .

      STEVEN M. FUSCO

      Senior Executive Vice President and

      Chief Financial Officer

      (Principle Financial and Accounting Officer)

      Date: August 12, 2014

XML

Allowance For Loan Losses And Credit Quality Of Financing Receivables (An Age Analysis Of Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	$ 2,641	$ 2,654
Loans receivable 60-89 days past due	338	1,023
Loans receivable greater than 90 days past due	10,200	12,015
Total past due	13,179	15,692
Loans receivable current	415,512	377,093
Total financing receivables	428,691	392,785
Recorded investment greater that 90 days and accruing		123
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	62	13
Total past due	62	13
Loans receivable current	19,127	15,192
Total financing receivables	19,189	15,205
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable current	8,923	7,307
Total financing receivables	8,923	7,307
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	2,396	2,139
Loans receivable 60-89 days past due	338	775
Loans receivable greater than 90 days past due	8,375	9,823
Total past due	11,109	12,737
Loans receivable current	281,511	247,927
Total financing receivables	292,620	260,664
Recorded investment greater that 90 days and accruing		123
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	177	495
Loans receivable 60-89 days past due		247
Loans receivable greater than 90 days past due	1,824	2,192
Total past due	2,001	2,934
Loans receivable current	104,470	105,058
Total financing receivables	106,471	107,992
Consumer And Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	6	7
Loans receivable 60-89 days past due		1
Loans receivable greater than 90 days past due	1
Total past due	7	8
Loans receivable current	1,481	1,609
Total financing receivables	$ 1,488	$ 1,617

XML

Fair Value Of Financial Instruments (Financial Assets Measured At Fair Value On A Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 3,631	$ 5,483
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	3,631	5,483
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	149	1,008
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	$ 149	$ 1,008

XML

Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option grants, maximum term, in years			10 years
Restricted stock awards expense	$ 76	$ 60	$ 156	$ 114
Unrecognized compensation expense for non-vested restricted stock	$ 600		$ 600
Unrecognized compensation expense for non-vested restricted stock, period for recognition			2 years 2 months 12 days
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

XML

Fair Value Of Financial Instruments (Qualitative Information About Level 3 Fair Value Measurements) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2014		Dec. 31, 2013
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 3,631		$ 5,483
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	3,631		5,483
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)	(66.10%)		(67.90%)
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)	(11.00%)		(7.80%)
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	149		1,008
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	$ 149		$ 1,008
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.

XML

Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Other Comprehensive Income (Loss) [Abstract]
Unrealized gains on available for sale securities, Before Tax	$ 1,636	$ (3,113)	$ 3,353	$ (3,757)
Reclassification adjustment for net gains on securities transactions included in net income, Before Tax	(94)	(29)	(94)	(399)
Total other comprehensive income (loss), Before Tax	1,542	(3,142)	3,259	(4,156)
Unrealized (losses) gains on available for sale securities, Tax Effect	655	(1,246)	1,342	(1,503)
Reclassification adjustment for net gains on securities transactions included in net income, Tax Effect	(38)	(12)	(38)	(160)
Total other comprehensive loss, Tax Effect	617	(1,258)	1,304	(1,663)
Unrealized (losses) gains on available for sale securities, Net of Tax	981	(1,867)	2,011	(2,254)
Reclassification adjustment for net gains on securities transactions included in net income, Net of Tax	(56)	(17)	(56)	(239)
Other comprehensive income (loss), net of income taxes	925	(1,884)	1,955	(2,493)
Net gain on securities transactions	$ 94	$ 29	$ 94	$ 399

XML

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	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than Twelve Months, Fair Value		$ 2,080
Less Than Twelve Months, Gross Unrealized Losses		(45)
Twelve Months or More, Fair Value	808	780
Twelve Months or More, Gross Unrealized Losses	(13)	(47)
Total, Fair Value	808	2,860
Total, Gross Unrealized Losses	$ (13)	$ (92)

XML

Fair Value Of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2014

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)
June 30, 2014
U.S. government agencies	$	4,989	$	-	$	4,989	$	-
State and political subdivisions		28,245		-		28,245		-
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,637		-		47,637		-
Equity securities-financial services industry and other		412		412		-		-
December 31, 2013
U.S. government agencies	$	5,380	$	-	$	5,380	$	-
State and political subdivisions		25,875		-		25,875		-
Mortgage-backed securities -				-		-		-
U.S. government-sponsored enterprises		58,937		-		58,937		-
Equity securities-financial services industry and other		484		484		-		-

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)
June 30, 2014
Impaired loans	$	3,631	$	-	$	-	$	3,631
Foreclosed real estate		149		-		-		149
December 31, 2013
Impaired loans	$	5,483	$	-	$	-	$	5,483
Foreclosed real estate		1,008		-		-		1,008

Qualitative Information About Level 3 Fair Value Measurements

	Qualitative Information about Level III Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
June 30, 2014
Impaired loans	$	3,631	Appraisal of	Appraisal	0% to -66.1%
			collateral	adjustments (1)	(-11.0%)
Foreclosed real estate		149	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
December 31, 2013
Impaired loans	$	5,483	Appraisal of	Appraisal	0% to -67.9%
			collateral	adjustments (1)	(-7.8%)
Foreclosed real estate		1,008	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
	June 30, 2014				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	$	11,111	$	11,111	$	11,111	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		81,283		81,283		412		80,871		-
Securities held to maturity		6,055		6,173		-		6,173		-
Federal Home Loan Bank stock		2,960		2,960		-		2,960		-
Loans receivable, net of allowance		422,485		418,915		-		-		418,915
Accrued interest receivable		1,698		1,698		-		1,698		-
Financial liabilities:
Non-maturity deposits		335,102		335,102		335,102		-		-
Time deposits		109,244		109,886		-		109,886		-
Borrowings		46,000		48,053		-		48,053		-
Junior subordinated debentures		12,887		8,905		-		8,905		-
Accrued interest payable		251		251		-		251		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 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	$	13,246	$	13,246	$	13,246	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		90,676		90,676		484		90,192		-
Securities held to maturity		6,074		6,060		-		6,060		-
Federal Home Loan Bank stock		2,705		2,705		-		2,705		-
Loans receivable, net of allowance		386,981		383,269		-		-		383,269
Accrued interest receivable		1,642		1,642		-		1,642		-
Financial liabilities:
Non-maturity deposits		331,350		331,350		331,350		-		-
Time deposits		98,947		99,925		-		99,925		-
Borrowings		41,000		43,149		-		43,149		-
Junior subordinated debentures		12,887		7,710		-		7,710		-
Accrued interest payable		235		235		-		235		-

XML

Stock-Based Compensation (Summary Of Information Regarding Restricted Stock Activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Stock-Based Compensation [Abstract]
Restricted stock, beginning of year, Number of Shares	125,922
Granted, Number of Shares	36,043
Forfeited, Number of Shares	(300)
Vested, Number of Shares	(44,278)
Restricted stock, end of period, Number of Shares	117,387
Restricted stock, beginning of year, Weighted Average Grant Date Fair value	$ 4.98
Granted, Weighted Average Grant Date Fair value	$ 8.81
Forfeited, Weighted Average Grant Date Fair value	$ 5.66
Vested, Weighted Average Grant Date Fair value	$ 5.21
Restricted stock, end of period, Weighted Average Grant Date Fair value	$ 6.07

XML

Allowance For Loan Losses And Credit Quality Of Financing Receivables (Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Recorded Investment, Total	$ 11,788		$ 11,788		$ 13,520
Unpaid Principal Balance, Total	13,770		13,770		15,307
Related Allowance	635		635		485
Average Recorded Investment, With no recorded allowance	6,004	7,191	7,164	7,943
Average Recorded Investment, With an allowance recorded	5,977	8,597	5,420	8,756
Average Recorded Investment, Total	11,981	15,788	12,584	16,699
Interest Income Recognized, With no recorded allowance	19	1	47	3
Interest Income Recognized, With an allowance recorded	3	34	8	42
Interest Income Recognized, Total	22	35	55	45
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, With an allowance recorded				9
Construction [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, With no recorded allowance		494		993
Average Recorded Investment, With an allowance recorded		427		441
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance	4,279		4,279		7,394
Recorded Investment, With an allowance recorded	5,280		5,280		3,500
Recorded Investment, Total	9,559		9,559		10,894
Unpaid Principal Balance, With no related allowance	5,141		5,141		7,967
Unpaid Principal Balance, With an allowance recorded	6,375		6,375		4,595
Unpaid Principal Balance, Total	11,516		11,516		12,562
Related Allowance	547		547		322
Average Recorded Investment, With no recorded allowance	4,321	5,181	5,372	5,431
Average Recorded Investment, With an allowance recorded	5,298	6,246	4,672	6,415
Interest Income Recognized, With no recorded allowance	10	1	18	3
Interest Income Recognized, With an allowance recorded		32	1	37
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance	1,687		1,687		1,849
Recorded Investment, With an allowance recorded	542		542		777
Recorded Investment, Total	2,229		2,229		2,626
Unpaid Principal Balance, With no related allowance	1,712		1,712		1,874
Unpaid Principal Balance, With an allowance recorded	542		542		871
Unpaid Principal Balance, Total	2,254		2,254		2,745
Related Allowance	88		88		163
Average Recorded Investment, With no recorded allowance	1,683	1,516	1,792	1,519
Average Recorded Investment, With an allowance recorded	678	1,924	747	1,891
Interest Income Recognized, With no recorded allowance	9		29
Interest Income Recognized, With an allowance recorded	$ 3	$ 2	$ 7	$ 5

XML

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		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 5,437	$ 5,306	$ 5,421	$ 4,976
Charge-offs	(9)	(397)	(466)	(1,221)
Recoveries	26	38	46	50
Provision	400	700	853	1,842
Ending balance	5,854	5,647	5,854	5,647
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	289	275	222	271
Charge-offs	(1)		(1)	(6)
Recoveries	3		15
Provision	(34)	(26)	21	(16)
Ending balance	257	249	257	249
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	315	401	308	223
Charge-offs		(80)		(122)
Provision	39	79	46	299
Ending balance	354	400	354	400
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	3,687	3,452	3,399	3,395
Charge-offs		(273)	(358)	(1,012)
Recoveries	17	37	21	44
Provision	46	256	688	1,045
Ending balance	3,750	3,472	3,750	3,472
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	862	899	941	869
Charge-offs	1	(38)	(85)	(66)
Recoveries	3		4
Provision	(29)	129	(23)	187
Ending balance	837	990	837	990
Consumer And Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	19	12	16	38
Charge-offs	(9)	(6)	(22)	(15)
Recoveries	3	1	6	6
Provision		8	13	(14)
Ending balance	13	15	13	15
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	265	267	535	180
Provision	378	254	108	341
Ending balance	$ 643	$ 521	$ 643	$ 521

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Fair Value Of Financial Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, valuation allowance	$ 597	$ 485
Impaired Loans [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Impaired loans, fair value	$ 3,631	$ 5,483

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013		Dec. 31, 2013
Segment Reporting Information [Line Items]
Net interest income from external sources	$ 4,445		$ 4,078		$ 8,751		$ 7,921
Other income from external sources	1,458		1,363		3,049		3,248
Depreciation and amortization	163		173		326		344
Income (loss) before income taxes	766		52		1,742		60
Income tax expense (benefit)	159	[1]	(82)	[1]	457	[1]	(172)	[1]
Total assets	557,173		526,757		557,173		526,757		533,911
Banking And Financial Services [Member]
Segment Reporting Information [Line Items]
Net interest income from external sources	4,444		4,078		8,749		7,921
Other income from external sources	760		716		1,366		1,759
Depreciation and amortization	157		171		315		339
Income (loss) before income taxes	724		(7)		1,346		(199)
Income tax expense (benefit)	143	[1]	(105)	[1]	299	[1]	(275)	[1]
Total assets	552,065		523,885		552,065		523,885
Insurance Services [Member]
Segment Reporting Information [Line Items]
Net interest income from external sources	1				2
Other income from external sources	698		647		1,683		1,489
Depreciation and amortization	6		2		11		5
Income (loss) before income taxes	42		59		396		259
Income tax expense (benefit)	16	[1]	23	[1]	158	[1]	103	[1]
Total assets	$ 5,108		$ 2,872		$ 5,108		$ 2,872
Statutory tax rate	40.00%		40.00%		40.00%		40.00%

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

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Loans

6 Months Ended

Jun. 30, 2014

Loans [Abstract]

Loans

NOTE 3 – LOANS

The composition of net loans receivable at June 30, 2014 and December 31, 2013 is as follows:

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial and industrial	$	19,189	$	15,205
Construction		8,923		7,307
Commercial real estate		292,620		260,664
Residential real estate		106,471		107,992
Consumer and other		1,488		1,617
		428,691		392,785
Unearned net loan origination fees		(352)		(383)
Allowance for loan losses		(5,854)		(5,421)
Net loans receivable	$	422,485	$	386,981

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 $536 thousand and $546 thousand at June 30, 2014 and December 31, 2013, respectively. Mortgage servicing rights were immaterial at June 30, 2014 and December 31, 2013.

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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	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Modifications [Line Items]
Total	$ 4,801	$ 5,124
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	4,149	4,195
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	652	929
Performing [Member]
Financing Receivable, Modifications [Line Items]
Total	1,611	1,628
Performing [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	1,184	1,195
Performing [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	427	433
Non-performing [Member]
Financing Receivable, Modifications [Line Items]
Total	3,190	3,496
Non-performing [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	2,965	3,000
Non-performing [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	$ 225	$ 496

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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	Jun. 30, 2014	Dec. 31, 2013
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	501
Due after five years through ten years, Amortized Cost	2,724
Due after ten years, Amortized Cost	25,597
Total bonds and obligations, Amortized Cost	28,822
Due in one year or less, Fair Value
Due after one year through five years, Fair Value	498
Due after five years through ten years, Fair Value	2,740
Due after ten years, Fair Value	25,007
Total bonds and obligations, Fair Value	28,245
Amortized Cost	81,609	94,261
Fair Value	81,283	90,676
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,063	5,421
Fair Value	4,989	5,380
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	47,346	59,640
Fair Value	47,637	58,937
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	378	412
Fair Value	$ 412	$ 484

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Securities (Amortized Cost And Approximate Fair Value Of Securities Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 81,609	$ 94,261
Gross Unrealized Gains	702	368
Gross Unrealized Losses	(1,028)	(3,953)
Securities available for sale, at fair value	81,283	90,676
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	5,063	5,421
Gross Unrealized Gains		8
Gross Unrealized Losses	(74)	(49)
Securities available for sale, at fair value	4,989	5,380
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	28,822	28,788
Gross Unrealized Gains	168	3
Gross Unrealized Losses	(745)	(2,916)
Securities available for sale, at fair value	28,245	25,875
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	47,346	59,640
Gross Unrealized Gains	483	272
Gross Unrealized Losses	(192)	(975)
Securities available for sale, at fair value	47,637	58,937
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	378	412
Gross Unrealized Gains	51	85
Gross Unrealized Losses	(17)	(13)
Securities available for sale, at fair value	$ 412	$ 484

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Fair Value Of Financial Instruments (Estimated Fair Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 81,283	$ 90,676
Securities held to maturity	6,173	6,060
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	11,111	13,246
Time deposits with other banks	100	100
Securities available-for-sale	81,283	90,676
Securities held to maturity	6,055	6,074
Federal Home Loan Bank stock	2,960	2,705
Loans receivable, net of allowance	422,485	386,981
Accrued interest receivable	1,698	1,642
Non-maturity deposits	335,102	331,350
Time deposits	109,244	98,947
Borrowings	46,000	41,000
Junior subordinated debentures	12,887	12,887
Accrued interest payable	251	235
Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	11,111	13,246
Time deposits with other banks	100	100
Securities available-for-sale	81,283	90,676
Securities held to maturity	6,173	6,060
Federal Home Loan Bank stock	2,960	2,705
Loans receivable, net of allowance	418,915	383,269
Accrued interest receivable	1,698	1,642
Non-maturity deposits	335,102	331,350
Time deposits	109,886	99,925
Borrowings	48,053	43,149
Junior subordinated debentures	8,905	7,710
Accrued interest payable	251	235
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	11,111	13,246
Time deposits with other banks	100	100
Securities available-for-sale	412	484
Non-maturity deposits	335,102	331,350
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	80,871	90,192
Securities held to maturity	6,173	6,060
Federal Home Loan Bank stock	2,960	2,705
Accrued interest receivable	1,698	1,642
Time deposits	109,886	99,925
Borrowings	48,053	43,149
Junior subordinated debentures	8,905	7,710
Accrued interest payable	251	235
Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, net of allowance	$ 418,915	$ 383,269

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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	6 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014 loan	Jun. 30, 2014 loan	Jun. 30, 2013 Commercial Real Estate [Member] security	Jun. 30, 2013 Commercial Real Estate [Member] security	Jun. 30, 2013 Residential Real Estate [Member] security
Financing Receivable, Modifications [Line Items]
Number of loans modified by troubled debt restructuring	0	0	1	2	1
Pre-modification outstanding recorded investment			$ 1,736	$ 1,899	$ 302
Post-Modification Outstanding Recorded Investment			$ 1,736	$ 1,899	$ 302

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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	6 Months Ended	12 Months Ended
	Jun. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 6,791	$ 53,686
Less Than Twelve Months, Gross Unrealized Losses	(63)	(2,789)
Twelve Months or More, Fair Value	36,646	15,342
Twelve Months or More, Gross Unrealized Losses	(965)	(1,164)
Total, Fair Value	43,437	69,028
Total, Gross Unrealized Losses	(1,028)	(3,953)
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	3,603	3,246
Less Than Twelve Months, Gross Unrealized Losses	(36)	(49)
Twelve Months or More, Fair Value	1,386
Twelve Months or More, Gross Unrealized Losses	(38)
Total, Fair Value	4,989	3,246
Total, Gross Unrealized Losses	(74)	(49)
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value		19,610
Less Than Twelve Months, Gross Unrealized Losses		(2,046)
Twelve Months or More, Fair Value	21,420	6,065
Twelve Months or More, Gross Unrealized Losses	(745)	(870)
Total, Fair Value	21,420	25,675
Total, Gross Unrealized Losses	(745)	(2,916)
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	3,188	30,830
Less Than Twelve Months, Gross Unrealized Losses	(27)	(694)
Twelve Months or More, Fair Value	13,714	9,147
Twelve Months or More, Gross Unrealized Losses	(165)	(281)
Total, Fair Value	16,902	39,977
Total, Gross Unrealized Losses	(192)	(975)
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Twelve Months or More, Fair Value	126	130
Twelve Months or More, Gross Unrealized Losses	(17)	(13)
Total, Fair Value	126	130
Total, Gross Unrealized Losses	$ (17)	$ (13)

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Securities (Amortized Cost And Approximate Fair Value Of Securities Held-To-Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 6,055
Securities held to maturity, fair value	6,173	6,060
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	6,055	6,074
Gross Unrealized Gains	131	78
Gross Unrealized Losses	(13)	(92)
Securities held to maturity, fair value	$ 6,173	$ 6,060

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Securities

6 Months Ended

Jun. 30, 2014

Securities [Abstract]

Securities

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and fair value of securities available for sale as of June 30, 2014 and December 31, 2013 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
June 30, 2014
U.S. government agencies	$	5,063	$	-	$	(74)	$	4,989
State and political subdivisions		28,822		168		(745)		28,245
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,346		483		(192)		47,637
Equity securities-financial services industry and other		378		51		(17)		412
	$	81,609	$	702	$	(1,028)	$	81,283
December 31, 2013
U.S. government agencies	$	5,421	$	8	$	(49)	$	5,380
State and political subdivisions		28,788		3		(2,916)		25,875
Mortgage-backed securities -
U.S. government-sponsored enterprises		59,640		272		(975)		58,937
Equity securities-financial services industry and other		412		85		(13)		484
	$	94,261	$	368	$	(3,953)	$	90,676

Securities with a carrying value of approximately $24.8 million and $37.2 million at June 30, 2014 and December 31, 2013, 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 June 30, 2014, 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		501		498
Due after five years through ten years		2,724		2,740
Due after ten years		25,597		25,007
Total bonds and obligations		28,822		28,245
U.S. government agencies		5,063		4,989
Mortgage-backed securities:
U.S. government-sponsored enterprises		47,346		47,637
Equity securities-financial services industry and other		378		412
Total available for sale securities	$	81,609	$	81,283

Gross realized gains on sales of securities available for sale were $118 thousand and $29 thousand for the three months ended June 30, 2014 and 2013, respectively. Gross realized losses were $24 thousand for the three months ended June 30, 2014. There were no gross realized losses on sales of securities available for sale for the three months ended June 30, 2013. 

Gross realized gains on sales of securities were $118 thousand and $407 thousand and gross losses were $24 thousand and $8 thousand for the six months ended June 30, 2014 and 2013, respectively.

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 June 30, 2014 and December 31, 2013.

	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
June 30, 2014
U.S. government agencies	$	3,603	$	(36)	$	1,386	$	(38)	$	4,989	$	(74)
State and political subdivisions		-		-		21,420		(745)		21,420		(745)
Mortgage-backed securities -								-
U.S. government-sponsored enterprises		3,188		(27)		13,714		(165)		16,902		(192)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	6,791	$	(63)	$	36,646	$	(965)	$	43,437	$	(1,028)
December 31, 2013
U.S. government agencies	$	3,246	$	(49)	$	-	$	-	$	3,246	$	(49)
State and political subdivisions		19,610		(2,046)		6,065		(870)		25,675		(2,916)
Mortgage-backed securities -
U.S. government-sponsored enterprises		30,830		(694)		9,147		(281)		39,977		(975)
Equity securities-financial services industry and other		-		-		130		(13)		130		(13)
Total temporarily impaired securities	$	53,686	$	(2,789)	$	15,342	$	(1,164)	$	69,028	$	(3,953)

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.As of June 30, 2014, 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.

U.S. Government Agencies

At June 30, 2014 and December 31, 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 June 30, 2014, there were three securities with a fair value of $5.0 million that had an unrealized loss that amounted to $74 thousand.  As of June 30, 2014, 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 June 30, 2014, were deemed to be other-than-temporarily impaired.

At December 31, 2013, there were two securities with a fair value of $3.2 million that had an unrealized loss that amounted to $49 thousand.

State and Political Subdivisions

At June 30, 2014 and December 31, 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 June 30, 2014, there were 40 securities with a fair value of $21.4 million that had an unrealized loss that amounted to $745 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 June 30, 2014, 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 June 30, 2014, were deemed to be other-than-temporarily-impaired.

At December 31, 2013, there were 52 securities with a fair value of $25.7 million that had an unrealized loss that amounted to $2.9 million.

Mortgage-Backed Securities

At June 30, 2014 and December 31, 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 June 30, 2014, there were 17 securities with a fair value of $16.9 million that had an unrealized loss that amounted to $192 thousand.  As of June 30, 2014, 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 June 30, 2014, were deemed to be other-than-temporarily impaired.

At December 31, 2013, there were 32 securities with a fair value of $40.0 million that had an unrealized loss that amounted to $975 thousand. 

Equity Securities

Our marketable equity securities portfolio consists primarily of common stock of entities in the financial services industry.  At June 30, 2014, there wasone security with a fair value of $126 thousand that had an unrealized loss of $17 thousand.  This security has been adversely impacted by the effects of the current economic environment on the financial services industry.  We evaluated the underlying bank for credit impairment based on its financial condition and performance.  Based on our evaluation and expectation that this securitywill recover within a reasonable period of time, we do not consider it to be other-than-temporarily impaired at June 30, 2014. 

At December 31, 2013, there wasone security with a fair value of $130 thousand that had an unrealized loss of $13 thousand. 

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 June 30, 2014 and December 31, 2013, are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
June 30, 2014
State and political subdivisions	$	6,055	$	131	$	(13)	$	6,173
December 31, 2013
State and political subdivisions	$	6,074	$	78	$	(92)	$	6,060

The amortized cost and carrying value of securities held to maturity at June 30, 2014, 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	$	2,126	$	2,126
Due after one year through five years		-		-
Due after five years through ten years		1,831		1,823
Due after ten years		2,098		2,224
Total held to maturity securities	$	6,055	$	6,173

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 June 30, 2014 and December 31, 2013:

	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
June 30, 2014
State and political subdivisions	$	-	$	-	$	808	$	(13)	$	808	$	(13)
December 31, 2013
State and political subdivisions	$	2,080	$	(45)	$	780	$	(47)	$	2,860	$	(92)

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. As of June 30, 2014, 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.

At June 30, 2014 and December 31, 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 June 30, 2014, there were two securities with a fair value of $808 thousand that had an unrealized loss that amounted to $13 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 June 30, 2014, 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 June 30, 2014, were deemed to be other-than-temporarily impaired.

At December 31, 2013, there were five securities with a fair value of $2.9 million that had an unrealized loss that amounted to $92 thousand. 

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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	Jun. 30, 2014	Dec. 31, 2013
Securities [Abstract]
Due in one year or less, Amortized Cost	$ 2,126
Due after one year through five years, Amortized Cost
Due after five years through ten years, Amortized Cost	1,831
Due after ten years, Amortized Cost	2,098
Amortized Cost	6,055
Due in one year or less, Fair Value	2,126
Due after one year through five years, Fair Value
Due after five years through ten years, Fair Value	1,823
Due after ten years, Fair Value	2,224
Total held to maturity securities, Fair Value	$ 6,173	$ 6,060

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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	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 10,200	$ 11,892
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	8,375	9,700
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	1,824	2,192
Consumer And Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 1

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Fair Value Of Financial Instruments (Summary Of Valuation Of Financial Assets Measured On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	$ 81,283	$ 90,676
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	412	484
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	80,871	90,192
U.S. Government Agencies [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	4,989	5,380
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	4,989	5,380
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	28,245	25,875
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	28,245	25,875
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	47,637	58,937
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	47,637	58,937
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	412	484
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	412	484
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

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 7,985	$ 5,521
Interest-bearing deposits with other banks	3,126	7,725
Cash and cash equivalents	11,111	13,246
Interest bearing time deposits with other banks	100	100
Securities available for sale, at fair value	81,283	90,676
Securities held to maturity, at cost (fair value of $6,173 and $6,060 at June 30, 2014 and December 31, 2013, respectively)	6,055	6,074
Federal Home Loan Bank Stock, at cost	2,960	2,705
Loans receivable, net of unearned income	428,339	392,402
Less: allowance for loan losses	5,854	5,421
Net loans receivable	422,485	386,981
Foreclosed real estate	2,854	2,926
Premises and equipment, net	7,698	6,892
Accrued interest receivable	1,698	1,642
Goodwill	2,820	2,820
Bank-owned life insurance	12,054	11,889
Other assets	6,055	7,960
Total Assets	557,173	533,911
Deposits:
Non-interest bearing	67,743	58,210
Interest bearing	376,603	372,087
Total Deposits	444,346	430,297
Long-term borrowings	46,000	41,000
Accrued interest payable and other liabilities	4,259	3,302
Junior subordinated debentures	12,887	12,887
Total Liabilities	507,492	487,486
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, no par value, 10,000,000 shares authorized; 4,676,039 and 4,640,296 shares issued and 4,664,856 and 4,629,113 shares outstanding at June 30, 2014 and December 31, 2013, respectively	35,405	35,249
Treasury stock, at cost; 11,183 shares	(59)	(59)
Retained earnings	14,531	13,386
Accumulated other comprehensive loss	(196)	(2,151)
Total Stockholders' Equity	49,681	46,425
Total Liabilities and Stockholders' Equity	$ 557,173	$ 533,911

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share [Abstract]
Net income applicable to common shareholders (Numerator)	$ 607	$ 134	$ 1,285	$ 232
Net income applicable to common shareholders and assumed conversions (Numerator)	$ 607	$ 134	$ 1,285	$ 232
Basic, Shares (Denominator)	4,540,318	3,293,376	4,533,451	3,288,582
Non-vested stock awards, Shares (Denominator)	36,832	33,237	35,654	30,956
Diluted, Shares (Denominator)	4,577,150	3,326,613	4,569,105	3,319,538
Basic, Per Share Amount	$ 0.13	$ 0.04	$ 0.28	$ 0.07
Diluted, Per Share Amount	$ 0.13	$ 0.04	$ 0.28	$ 0.07
Shares of common stock outstanding not included in the computation of diluted EPS	7,000	7,500	36,043	33,340

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash Flows from Operating Activities
Net income	$ 1,285	$ 232
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	853	1,842
Depreciation and amortization	326	344
Net amortization of securities premiums and discounts	924	1,782
Net realized gain on sale of securities	(94)	(399)
Net realized gain on sale of foreclosed real estate	(5)	(35)
Write-downs of and provisions for foreclosed real estate	110	742
Deferred income taxes	(4)	943
Earnings on bank owned life insurance	(165)	(182)
Compensation expense for stock options and stock awards	156	114
(Increase) decrease in assets:
Accrued interest receivable	(56)	24
Other assets	605	(961)
Decrease (increase) in accrued interest payable and other liabilities	957	(176)
Net Cash Provided by Operating Activities	4,892	4,270
Securities available for sale:
Purchases	(5)	(28,744)
Sales	5,033	13,029
Maturities, calls and principal repayments	6,818	23,884
Securities held to maturity:
Purchases	(577)	(573)
Maturities, calls and principal repayments	572	532
Net increase in loans	(37,072)	(32,307)
Proceeds from the sale of foreclosed real estate	682	3,656
Purchases of bank premises and equipment	(1,132)	(551)
Increase in FHLB stock	(255)	(905)
Net Cash Used in Investing Activities	(25,936)	(21,979)
Cash Flows from Financing Activities
Net increase (decrease) in deposits	14,049	(3,154)
Increase in borrowed funds	5,000	17,500
Dividends paid, net of reinvestments	(140)
Net Cash Provided by Financing Activities	18,909	14,346
Net Decrease in Cash and Cash Equivalents	(2,135)	(3,363)
Cash and Cash Equivalents - Beginning	13,246	11,668
Cash and Cash Equivalents - Ending	11,111	8,305
Supplementary Cash Flows Information
Interest paid	1,603	1,694
Income taxes paid	119	31
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	$ 715	$ 2,689

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Loans (Composition Of Net Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 428,691	$ 392,785
Unearned net loan origination fees	(352)	(383)
Allowance for loan losses	(5,854)	(5,421)
Net loans receivable	422,485	386,981
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	19,189	15,205
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	8,923	7,307
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	292,620	260,664
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	106,471	107,992
Consumer And Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,488	$ 1,617

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Other Comprehensive (Loss) Income (Tables)

6 Months Ended

Jun. 30, 2014

Other Comprehensive Income (Loss) [Abstract]

Components Of Other Comprehensive Income And Related Tax Effects

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	1,636	$	655	$	981	$	(3,113)	$	(1,246)	$	(1,867)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(29)		(12)		(17)
Total other comprehensive income (loss)	$	1,542	$	617	$	925	$	(3,142)	$	(1,258)	$	(1,884)

	Six  Months Ended June 30, 2014						Six  Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	3,353	$	1,342	$	2,011	$	(3,757)	$	(1,503)	$	(2,254)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(399)		(160)		(239)
Total other comprehensive income (loss)	$	3,259	$	1,304	$	1,955	$	(4,156)	$	(1,663)	$	(2,493)

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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		6 Months Ended
	Jun. 30, 2014 loan	Jun. 30, 2013 loan	Jun. 30, 2014 loan	Jun. 30, 2013 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		$ 31	$ 0	$ 63
Troubled debt restructuring, charge-offs	$ 0	$ 0	$ 0	$ 0
Number of loans with subsequent default	0	0	0	0

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2014

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	32,749	$	14.31
Options expired	(14,090)		14.67
Options outstanding, end of quarter	18,659	$	14.03	0.8	-
Options exercisable, end of quarter	18,659	$	14.03	0.8	-
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	125,922	$	4.98
Granted	36,043		8.81
Forfeited	(300)		5.66
Vested	(44,278)		5.21
Unvested restricted stock, end of period	117,387	$	6.07

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2014

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 nine banking offices, eight located in Sussex County, New Jersey and one 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 the 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 six month periods ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  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, 2013.  

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2014, 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.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2014, FASB issued ASU 2014-04, Receivables - Troubled Debt Restructurings by Creditors, which clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The ASU’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016.We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-11,Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings.  This will result in accounting for both types of arrangements as secured borrowings on the balance sheet, rather than sales.  Additionally, the ASU introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. For public entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the ASU are effective for public business entities for the first interim or annual period beginning after December 15, 2014. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force), to clarify that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award. For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Consolidated Balance Sheets [Abstract]
Securities held to maturity, fair value	$ 6,173	$ 6,060
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	4,676,039	4,640,296
Common stock, shares outstanding	4,664,856	4,629,113
Treasury stock, shares	11,183	11,183

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Summary Of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2014

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 nine banking offices, eight located in Sussex County, New Jersey and one 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 the 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 six month periods ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.  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, 2013.  

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2014, 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.  The adoption of this guidance did not have a material impact on our consolidated financial statements.

In January 2014, FASB issued ASU 2014-04, Receivables - Troubled Debt Restructurings by Creditors, which clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014.  We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers. The ASU’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. To accomplish this objective, the standard requires five basic steps: i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.For public entities, the guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016.We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-11,Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures, to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings.  This will result in accounting for both types of arrangements as secured borrowings on the balance sheet, rather than sales.  Additionally, the ASU introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. For public entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the ASU are effective for public business entities for the first interim or annual period beginning after December 15, 2014. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In June 2014, FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force), to clarify that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award.  As such, the performance target should not be reflected in estimating the grant-date fair value of the award. For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 07, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2014
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2014
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		4,664,856

XML

Securities (Tables)

6 Months Ended

Jun. 30, 2014

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
June 30, 2014
U.S. government agencies	$	5,063	$	-	$	(74)	$	4,989
State and political subdivisions		28,822		168		(745)		28,245
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,346		483		(192)		47,637
Equity securities-financial services industry and other		378		51		(17)		412
	$	81,609	$	702	$	(1,028)	$	81,283
December 31, 2013
U.S. government agencies	$	5,421	$	8	$	(49)	$	5,380
State and political subdivisions		28,788		3		(2,916)		25,875
Mortgage-backed securities -
U.S. government-sponsored enterprises		59,640		272		(975)		58,937
Equity securities-financial services industry and other		412		85		(13)		484
	$	94,261	$	368	$	(3,953)	$	90,676

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		501		498
Due after five years through ten years		2,724		2,740
Due after ten years		25,597		25,007
Total bonds and obligations		28,822		28,245
U.S. government agencies		5,063		4,989
Mortgage-backed securities:
U.S. government-sponsored enterprises		47,346		47,637
Equity securities-financial services industry and other		378		412
Total available for sale securities	$	81,609	$	81,283

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
June 30, 2014
U.S. government agencies	$	3,603	$	(36)	$	1,386	$	(38)	$	4,989	$	(74)
State and political subdivisions		-		-		21,420		(745)		21,420		(745)
Mortgage-backed securities -								-
U.S. government-sponsored enterprises		3,188		(27)		13,714		(165)		16,902		(192)
Equity securities-financial services industry and other		-		-		126		(17)		126		(17)
Total temporarily impaired securities	$	6,791	$	(63)	$	36,646	$	(965)	$	43,437	$	(1,028)
December 31, 2013
U.S. government agencies	$	3,246	$	(49)	$	-	$	-	$	3,246	$	(49)
State and political subdivisions		19,610		(2,046)		6,065		(870)		25,675		(2,916)
Mortgage-backed securities -
U.S. government-sponsored enterprises		30,830		(694)		9,147		(281)		39,977		(975)
Equity securities-financial services industry and other		-		-		130		(13)		130		(13)
Total temporarily impaired securities	$	53,686	$	(2,789)	$	15,342	$	(1,164)	$	69,028	$	(3,953)

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

				Gross		Gross
		Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)		Cost		Gains		Losses		Value
June 30, 2014
State and political subdivisions	$	6,055	$	131	$	(13)	$	6,173
December 31, 2013
State and political subdivisions	$	6,074	$	78	$	(92)	$	6,060

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	$	2,126	$	2,126
Due after one year through five years		-		-
Due after five years through ten years		1,831		1,823
Due after ten years		2,098		2,224
Total held to maturity securities	$	6,055	$	6,173

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
June 30, 2014
State and political subdivisions	$	-	$	-	$	808	$	(13)	$	808	$	(13)
December 31, 2013
State and political subdivisions	$	2,080	$	(45)	$	780	$	(47)	$	2,860	$	(92)

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Consolidated Statements Of Income And Comprehensive (Loss) Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
INTEREST INCOME
Loans receivable, including fees	$ 4,800		$ 4,485		$ 9,423		$ 8,761
Securities:
Taxable	214		126		431		280
Tax-exempt	255		246		509		508
Interest bearing deposits	4		2		7		7
Total Interest Income	5,273		4,859		10,370		9,556
INTEREST EXPENSE
Deposits	415		453		805		991
Borrowings	361		273		709		535
Junior subordinated debentures	52		55		105		109
Total Interest Expense	828		781		1,619		1,635
Net Interest Income	4,445		4,078		8,751		7,921
PROVISION FOR LOAN LOSSES	400		700		853		1,842
Net Interest Income after Provision for Loan Losses	4,045		3,378		7,898		6,079
OTHER INCOME
Service fees on deposit accounts	265		271		529		557
ATM and debit card fees	185		178		352		338
Bank-owned life insurance	82		90		165		182
Insurance commissions and fees	696		647		1,669		1,489
Investment brokerage fees	37		54		68		99
Net gain on securities transactions	94		29		94		399
Other	99		94		172		184
Total Other Income	1,458		1,363		3,049		3,248
OTHER EXPENSES
Salaries and employee benefits	2,441		2,321		4,859		4,556
Occupancy, net	397		347		850		741
Data processing	432		338		812		667
Furniture and equipment	112		145		276		297
Advertising and promotion	78		95		122		135
Professional fees	211		198		364		383
Director fees	105		(13)		242		193
FDIC assessment	175		178		351		347
Insurance	72		63		148		139
Stationary and supplies	52		51		107		100
Loan collection costs	169		116		246		214
Net expenses and write-downs related to foreclosed real estate	161		597		261		1,008
Amortization of intangible assets							1
Other	332		253		567		486
Total Other Expenses	4,737		4,689		9,205		9,267
Income before Income Taxes	766		52		1,742		60
EXPENSE (BENEFIT) FOR INCOME TAXES	159	[1]	(82)	[1]	457	[1]	(172)	[1]
Net Income	607		134		1,285		232
OTHER COMPREHENSIVE INCOME (LOSS):
Unrealized gains (losses) on available for sale securities arising during the period	1,636		(3,113)		3,353		(3,757)
Reclassification adjustment for net gains on securities transactions included in net income	(94)		(29)		(94)		(399)
Income tax (expense) benefit related to items of other comprehensive income (loss)	(617)		1,258		(1,304)		1,663
Other comprehensive income (loss), net of income taxes	925		(1,884)		1,955		(2,493)
Comprehensive income (loss)	$ 1,532		$ (1,750)		$ 3,240		$ (2,261)
EARNINGS PER SHARE
Basic	$ 0.13		$ 0.04		$ 0.28		$ 0.07
Diluted	$ 0.13		$ 0.04		$ 0.28		$ 0.07

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

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Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2014

Other Comprehensive Income (Loss) [Abstract]

Other Comprehensive Income (Loss)

NOTE 6 – OTHER COMPREHENSIVE INCOME (LOSS)

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 income (loss), both before tax and net of tax, are as follows:

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	1,636	$	655	$	981	$	(3,113)	$	(1,246)	$	(1,867)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(29)		(12)		(17)
Total other comprehensive income (loss)	$	1,542	$	617	$	925	$	(3,142)	$	(1,258)	$	(1,884)

	Six  Months Ended June 30, 2014						Six  Months Ended June 30, 2013
	Before Tax		Tax Effect		Net of Tax		Before Tax		Tax Effect		Net of Tax
Other comprehensive income (loss):
Unrealized gains (losses) on available for sale securities	$	3,353	$	1,342	$	2,011	$	(3,757)	$	(1,503)	$	(2,254)
Reclassification adjustment for net gains on securities transactions included in net income		(94)		(38)		(56)		(399)		(160)		(239)
Total other comprehensive income (loss)	$	3,259	$	1,304	$	1,955	$	(4,156)	$	(1,663)	$	(2,493)

Reclassification adjustments for gains on securities transactions of $94 thousand for the three and six months ended June 30, 2014 and $29 thousand and $399 thousand for the three and six months ended June 30, 2013, respectively, are presented in the income statement on the line item for net gain on securities transactions.

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Earnings Per Share

6 Months Ended

Jun. 30, 2014

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 June 30, 2014					Three Months Ended June 30, 2013
(In thousands, except share and	Income		Shares	Per Share		Loss		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	607	4,540,318	$	0.13	$	134	3,293,376	$	0.04
Effect of dilutive securities:
Nonvested stock awards		-	36,832				-	33,237
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	607	4,577,150	$	0.13	$	134	3,326,613	$	0.04

	Six Months Ended June 30, 2014					Six Months Ended June 30, 2013
(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	$	1,285	4,533,451	$	0.28	$	232	3,288,582	$	0.07
Effect of dilutive securities:
Nonvested stock awards		-	35,654				-	30,956
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	1,285	4,569,105	$	0.28	$	232	3,319,538	$	0.07

There were 7,000 and 7,500 shares of unvested restricted stock awards and options outstanding during the three months ended June 30, 2014 and 2013, respectively, which were not included in the computation of diluted EPS because to do so would have been anti-dilutive.  There were 36,043 and 33,340 shares of unvested restricted stock awards and options outstanding during the six months ended June 30, 2014 and 2013, respectively, which were not included in the computation of diluted EPS because to do so would have been anti-dilutive.

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Information [Abstract]

Schedule Of Segment Information

	Three Months Ended June 30, 2014						Three Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,444	$	1	$	4,445	$	4,078	$	-	$	4,078
Other income from external sources		760		698		1,458		716		647		1,363
Depreciation and amortization		157		6		163		171		2		173
Income (loss) before income taxes		724		42		766		(7)		59		52
Income tax expense (benefit) (1)		143		16		159		(105)		23		(82)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	8,749	$	2	$	8,751	$	7,921	$	-	$	7,921
Other income from external sources		1,366		1,683		3,049		1,759		1,489		3,248
Depreciation and amortization		315		11		326		339		5		344
Income (loss) before income taxes		1,346		396		1,742		(199)		259		60
Income tax expense (benefit) (1)		299		158		457		(275)		103		(172)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

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

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Loans (Tables)

6 Months Ended

Jun. 30, 2014

Loans [Abstract]

Composition Of Net Loans Receivable

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial and industrial	$	19,189	$	15,205
Construction		8,923		7,307
Commercial real estate		292,620		260,664
Residential real estate		106,471		107,992
Consumer and other		1,488		1,617
		428,691		392,785
Unearned net loan origination fees		(352)		(383)
Allowance for loan losses		(5,854)		(5,421)
Net loans receivable	$	422,485	$	386,981

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Guarantees

6 Months Ended

Jun. 30, 2014

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.  Generally, we hold collateral and/or personal guarantees supporting these commitments.  As of June 30, 2014, we had $1.4 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 June 30, 2014, for guarantees under standby letters of credit issued is not material.

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Segment Information

6 Months Ended

Jun. 30, 2014

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 June 30, 2014						Three Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,444	$	1	$	4,445	$	4,078	$	-	$	4,078
Other income from external sources		760		698		1,458		716		647		1,363
Depreciation and amortization		157		6		163		171		2		173
Income (loss) before income taxes		724		42		766		(7)		59		52
Income tax expense (benefit) (1)		143		16		159		(105)		23		(82)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

	Six Months Ended June 30, 2014						Six Months Ended June 30, 2013
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	8,749	$	2	$	8,751	$	7,921	$	-	$	7,921
Other income from external sources		1,366		1,683		3,049		1,759		1,489		3,248
Depreciation and amortization		315		11		326		339		5		344
Income (loss) before income taxes		1,346		396		1,742		(199)		259		60
Income tax expense (benefit) (1)		299		158		457		(275)		103		(172)
Total assets		552,065		5,108		557,173		523,885		2,872		526,757

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

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2014

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 of grant.  Restricted stock is valued at the market value of the common stock on the date of grant and generally vests over periods oftwo toseven years.  All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans for the six months ended June 30, 2014 is as follows:

			Weighted
			Average	Weighted
			Exercise	Average	Aggregate
	Number of		Price per	Contractual	Intrinsic
	Shares		Share	Term	Value
Options outstanding, beginning of year	32,749	$	14.31
Options expired	(14,090)		14.67
Options outstanding, end of quarter	18,659	$	14.03	0.8	-
Options exercisable, end of quarter	18,659	$	14.03	0.8	-
Option price range at end of quarter	$8.99 to $16.45
Option price range for exercisable shares	$8.99 to $16.45

The summary of changes in unvested restricted stock awards for the six months ended June 30, 2014, is as follows:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	125,922	$	4.98
Granted	36,043		8.81
Forfeited	(300)		5.66
Vested	(44,278)		5.21
Unvested restricted stock, end of period	117,387	$	6.07

Total stock based compensation related to restricted stock awards was $76 thousand and $60 thousand for the three months ended June30, 2014 and 2013, respectively, and $156 thousand and $114 thousand for the six months ended June30, 2014 and 2013, respectively.

At June 30, 2014, unrecognized compensation expense for non-vested restricted stock was $600 thousand, which is expected to be recognized over an average period of 2.2 years. 

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Fair Value Of Financial Instruments

6 Months Ended

Jun. 30, 2014

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 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 fair value amounts have been measured as of their respective year ends, and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each year end.

In accordance with U.S. GAAP, we use a hierarchical 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 hierarchy are as follows:

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

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported 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 reported 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 fair value of our financial assets measured on a recurring basis by the above pricing observability levels as of June 30, 2014 and December 31, 2013:

			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)
June 30, 2014
U.S. government agencies	$	4,989	$	-	$	4,989	$	-
State and political subdivisions		28,245		-		28,245		-
Mortgage-backed securities -
U.S. government-sponsored enterprises		47,637		-		47,637		-
Equity securities-financial services industry and other		412		412		-		-
December 31, 2013
U.S. government agencies	$	5,380	$	-	$	5,380	$	-
State and political subdivisions		25,875		-		25,875		-
Mortgage-backed securities -				-		-		-
U.S. government-sponsored enterprises		58,937		-		58,937		-
Equity securities-financial services industry and other		484		484		-		-

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 June 30, 2014 and December 31, 2013, 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)
June 30, 2014
Impaired loans	$	3,631	$	-	$	-	$	3,631
Foreclosed real estate		149		-		-		149
December 31, 2013
Impaired loans	$	5,483	$	-	$	-	$	5,483
Foreclosed real estate		1,008		-		-		1,008

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 III Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
June 30, 2014
Impaired loans	$	3,631	Appraisal of	Appraisal	0% to -66.1%
			collateral	adjustments (1)	(-11.0%)
Foreclosed real estate		149	Appraisal of	Selling
			collateral	expenses (1)	-7.0%(-7.0%)
December 31, 2013
Impaired loans	$	5,483	Appraisal of	Appraisal	0% to -67.9%
			collateral	adjustments (1)	(-7.8%)
Foreclosed real estate		1,008	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 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.  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 following methods and assumptions were used to estimate the fair value of our financial instruments at June 30, 2014 and December 31, 2013:  

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.

Deposits (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.  The Company generally purchases 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) and securities held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level I), or matrix pricing (Level II), 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 III).  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 III measurements.  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 III investments.

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.

Loans Receivable (Carried at Cost): The fair values of loans are estimated using discounted cash flow analyses, using the market rates at 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, 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 Lower of Cost or Fair Value): Fair value of impaired loans 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 III fair values, based upon the lowest level of input that is significant to the fair value measurements.  At June 30, 2014 and December 31, 2013, the fair value consists of the loan balances of $3.6 million and $5.5 million, net of valuation allowance of $597 thousand and $485 thousand, respectively. 

Deposit Liabilities (Carried at Cost): The fair values disclosed for demand, savings and money market 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 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 its fair value.

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 fair values of our financial instruments at June 30, 2014 and December 31, 2013, were as follows:

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	June 30, 2014				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	$	11,111	$	11,111	$	11,111	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		81,283		81,283		412		80,871		-
Securities held to maturity		6,055		6,173		-		6,173		-
Federal Home Loan Bank stock		2,960		2,960		-		2,960		-
Loans receivable, net of allowance		422,485		418,915		-		-		418,915
Accrued interest receivable		1,698		1,698		-		1,698		-
Financial liabilities:
Non-maturity deposits		335,102		335,102		335,102		-		-
Time deposits		109,244		109,886		-		109,886		-
Borrowings		46,000		48,053		-		48,053		-
Junior subordinated debentures		12,887		8,905		-		8,905		-
Accrued interest payable		251		251		-		251		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 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	$	13,246	$	13,246	$	13,246	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		90,676		90,676		484		90,192		-
Securities held to maturity		6,074		6,060		-		6,060		-
Federal Home Loan Bank stock		2,705		2,705		-		2,705		-
Loans receivable, net of allowance		386,981		383,269		-		-		383,269
Accrued interest receivable		1,642		1,642		-		1,642		-
Financial liabilities:
Non-maturity deposits		331,350		331,350		331,350		-		-
Time deposits		98,947		99,925		-		99,925		-
Borrowings		41,000		43,149		-		43,149		-
Junior subordinated debentures		12,887		7,710		-		7,710		-
Accrued interest payable		235		235		-		235		-

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Loans (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Loans [Abstract]
Mortgage loans serviced for the benefit of others	$ 536	$ 546

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Guarantees (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014
Guarantees [Abstract]
Undrawn standby letters of credit outstanding	$ 1.4
Letter of credit, expiration term	1 year

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share [Abstract]

Calculation Methods Of Earnings Per Share

	Three Months Ended June 30, 2014					Three Months Ended June 30, 2013
(In thousands, except share and	Income		Shares	Per Share		Loss		Shares	Per Share
per share data)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount
Basic earnings per share:
Net earnings applicable to common shareholders	$	607	4,540,318	$	0.13	$	134	3,293,376	$	0.04
Effect of dilutive securities:
Nonvested stock awards		-	36,832				-	33,237
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	607	4,577,150	$	0.13	$	134	3,326,613	$	0.04

	Six Months Ended June 30, 2014					Six Months Ended June 30, 2013
(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	$	1,285	4,533,451	$	0.28	$	232	3,288,582	$	0.07
Effect of dilutive securities:
Nonvested stock awards		-	35,654				-	30,956
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	1,285	4,569,105	$	0.28	$	232	3,319,538	$	0.07

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Summary Of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2014 site
Significant Accounting Policies [Line Items]
Banking offices	9
NEW JERSEY
Significant Accounting Policies [Line Items]
Banking offices	8
NEW YORK
Significant Accounting Policies [Line Items]
Banking offices	1

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Stock-Based Compensation (Summary Of Information Regarding Stock Option Plans) (Details) (USD $)	6 Months Ended
	Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Shares, Outstanding, beginning of year	32,749
Number of Shares, Options expired	(14,090)
Number of Shares, Outstanding, end of period	18,659
Number of Shares, Exercisable, end of period	18,659
Weighted Average Exercise Price per Share, Outstanding, beginning of year	$ 14.31
Weighted Average Exercise Price per Share, Options expired	$ 14.67
Weighted Average Exercise Price per Share, Outstanding, end of period	$ 14.03
Weighted Average Exercise Price per Share, Exercisable, end of period	$ 14.03
Weighted Average Contractual Term, Outstanding, end of period	9 months 18 days
Weighted Average Contractual Term, Exercisable, end of period	9 months 18 days
Aggregate Intrinsic Value, Outstanding, end of period
Aggregate Intrinsic Value, Exercisable, end of period
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 (Credit Risk Profile By Creditworthiness) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 428,691	$ 392,785
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	19,189	15,205
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	8,923	7,307
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	292,620	260,664
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	106,471	107,992
Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,488	1,617
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	408,023	368,563
Pass [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	19,170	15,192
Pass [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	8,923	7,307
Pass [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	274,480	240,204
Pass [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	103,963	104,383
Pass [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,487	1,477
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	6,494	8,402
Special Mention [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	19	13
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	6,358	7,378
Special Mention [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	117	871
Special Mention [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable		140
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	14,043	15,655
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	11,651	12,917
Substandard [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	2,391	2,738
Substandard [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	131	165
Doubtful [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 131	$ 165

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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, 2012	$ 28,117	$ 11,958	$ 356	$ (59)	$ 40,372
Balance, shares at Dec. 31, 2012	3,397,873
Net income		232			232
Other comprehensive income (loss)			(2,493)		(2,493)
Restricted stock granted, shares	32,940
Compensation expense related to stock option and restricted stock grants	114				114
Balance at Jun. 30, 2013	28,231	12,190	(2,137)	(59)	38,225
Balance, shares at Jun. 30, 2013	3,430,813
Balance at Dec. 31, 2013	35,249	13,386	(2,151)	(59)	46,425
Balance, shares at Dec. 31, 2013	4,629,113				4,629,113
Net income		1,285			1,285
Other comprehensive income (loss)			1,955		1,955
Restricted stock granted, shares	36,043
Restricted stock forfeited, shares	(300)
Compensation expense related to stock option and restricted stock grants	156				156
Dividends on common stock		(140)			(140)
Balance at Jun. 30, 2014	$ 35,405	$ 14,531	$ (196)	$ (59)	$ 49,681
Balance, shares at Jun. 30, 2014	4,664,856				4,664,856

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Allowance For Loan Losses And Credit Quality Of Financing Receivables

6 Months Ended

Jun. 30, 2014

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 months ended June  30, 2014 and 2013:

	Commercial				Commercial		Residential		Consumer
	and				Real		Real		and
(Dollars in	Industrial		Construction		Estate		Estate		Other		Unallocated		Total
thousands)
Three Months Ended:
June 30, 2014
Beginning balance	$	289	$	315	$	3,687	$	862	$	19	$	265	$	5,437
Charge-offs		(1)		-		-		1		(9)		-		(9)
Recoveries		3		-		17		3		3		-		26
Provision		(34)		39		46		(29)		-		378		400
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	275		401		3,452		899		12		267	$	5,306
Charge-offs		-		(80)		(273)		(38)		(6)		-		(397)
Recoveries		-		-		37		-		1		-		38
Provision		(26)		79		256		129		8		254		700
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Six Months Ended:
June 30, 2014
Beginning balance	$	222	$	308	$	3,399	$	941	$	16	$	535	$	5,421
Charge-offs		(1)		-		(358)		(85)		(22)		-		(466)
Recoveries		15		-		21		4		6		-		46
Provision		21		46		688		(23)		13		108		853
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	271		223		3,395		869		38		180	$	4,976
Charge-offs		(6)		(122)		(1,012)		(66)		(15)		-		(1,221)
Recoveries		-		-		44		-		6		-		50
Provision		(16)		299		1,045		187		(14)		341		1,842
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647

The following table presents the balance of the allowance of loan losses and loans receivable by class at June 30, 2014 and December 31, 2013, 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
June 30, 2014
Commercial and industrial	$	257	$	-	$	257	$	19,189	$	-	$	19,189
Construction		354		-		354		8,923		-		8,923
Commercial real estate		3,750		547		3,203		292,620		9,559		283,061
Residential real estate		837		88		749		106,471		2,229		104,242
Consumer and other loans		13		-		13		1,488		-		1,488
Unallocated		643		-		-		-		-		-
Total	$	5,854	$	635	$	4,576	$	428,691	$	11,788	$	416,903
December 31, 2013
Commercial and industrial	$	222	$	-	$	222	$	15,205	$	-	$	15,205
Construction		308		-		308		7,307		-		7,307
Commercial real estate		3,399		322		3,077		260,664		10,894		249,770
Residential real estate		941		163		778		107,992		2,626		105,366
Consumer and other loans		16		-		16		1,617		-		1,617
Unallocated		535		-		-		-		-		-
Total	$	5,421	$	485	$	4,401	$	392,785	$	13,520	$	379,265

An age analysis of loans receivable which were past due as of June 30, 2014 and December 31, 2013, 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
June 30, 2014
Commercial and industrial	$	62	$	-	$	-	$	62	$	19,127	$	19,189	$	-
Construction		-		-		-		-		8,923		8,923		-
Commercial real estate		2,396		338		8,375		11,109		281,511		292,620		-
Residential real estate		177		-		1,824		2,001		104,470		106,471		-
Consumer and other		6		-		1		7		1,481		1,488		-
Total	$	2,641	$	338	$	10,200	$	13,179	$	415,512	$	428,691	$	-
December 31, 2013
Commercial and industrial	$	13	$	-	$	-	$	13	$	15,192	$	15,205	$	-
Construction		-		-		-		-		7,307		7,307		-
Commercial real estate		2,139		775		9,823		12,737		247,927		260,664		123
Residential real estate		495		247		2,192		2,934		105,058		107,992		-
Consumer and other		7		1		-		8		1,609		1,617		-
Total	$	2,654	$	1,023	$	12,015	$	15,692	$	377,093	$	392,785	$	123
(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 June 30, 2014 and December 31, 2013, were:

(Dollars in thousands)	June 30, 2014		December 31, 2013
Commercial real estate	$	8,375	$	9,700
Residential real estate		1,824		2,192
Consumer and other		1		-
Total	$	10,200	$	11,892

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 June 30, 2014 and December 31, 2013: 

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
June 30, 2014
Commercial and industrial	$	19,170	$	19	$	-	$	-	$	19,189
Construction		8,923		-		-		-		8,923
Commercial real estate		274,480		6,358		11,651		131		292,620
Residential real estate		103,963		117		2,391		-		106,471
Consumer and other		1,487		-		1		-		1,488
	$	408,023	$	6,494	$	14,043	$	131	$	428,691
December 31, 2013
Commercial and industrial	$	15,192	$	13	$	-	$	-	$	15,205
Construction		7,307		-		-		-		7,307
Commercial real estate		240,204		7,378		12,917		165		260,664
Residential real estate		104,383		871		2,738		-		107,992
Consumer and other		1,477		140		-		-		1,617
	$	368,563	$	8,402	$	15,655	$	165	$	392,785

The following table reflects information about our impaired loans by class as of June 30, 2014 and December 31, 2013:

		June 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	4,279	$	5,141	$	-	$	7,394	$	7,967	$	-
Residential real estate		1,687		1,712		-		1,849		1,874		-
With an allowance recorded:
Commercial real estate		5,280		6,375		547		3,500		4,595		322
Residential real estate		542		542		88		777		871		163
Total:
Commercial real estate		9,559		11,516		547		10,894		12,562		322
Residential real estate		2,229		2,254		88		2,626		2,745		163
	$	11,788	$	13,770	$	635	$	13,520	$	15,307	$	485

The following table presents the average recorded investment and income recognized for the three and six months ended June 30, 2014 and 2013:

	For the Three Months Ended June 30, 2014				For the Three Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	494	$	-
Commercial real estate		4,321		10		5,181		1
Residential real estate		1,683		9		1,516		-
Total impaired loans without a related allowance		6,004		19		7,191		1
With an allowance recorded:
Construction		-		-		427		-
Commercial real estate		5,298		-		6,246		32
Residential real estate		678		3		1,924		2
Total impaired  loans with an allowance		5,977		3		8,597		34
Total impaired loans	$	11,981	$	22	$	15,788	$	35

	For the Six Months Ended June 30, 2014				For the Six Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	993	$	-
Commercial real estate		5,372		18		5,431		3
Residential real estate		1,792		29		1,519		-
Total impaired loans without a related allowance		7,164		47		7,943		3
With an allowance recorded:
Commercial and industrial		-		-		9		-
Construction		-		-		441		-
Commercial real estate		4,672		1		6,415		37
Residential real estate		747		7		1,891		5
Total impaired  loans with an allowance		5,420		8		8,756		42
Total impaired loans	$	12,584	$	55	$	16,699	$	45

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	Residential Real Estate		Total
June 30, 2014
Performing	$	1,184	$	427	$	1,611
Non-performing		2,965		225		3,190
Total	$	4,149	$	652	$	4,801
December 31, 2013
Performing	$	1,195	$	433	$	1,628
Non-performing		3,000		496		3,496
Total	$	4,195	$	929	$	5,124

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote.  As of June 30, 2014, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

There were no troubled debt restructurings that occurred during the three and six months ended June 30, 2014.  The following table summarizes troubled debt restructurings that occurred during the three and six months ended June 30, 2013:

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three Months Ended:
June 30, 2013
Commercial real estate	1	$	1,736	$	1,736
Six Months Ended:
June 30, 2013
Commercial real estate	2	$	1,899	$	1,899
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 $31 thousand and $63 thousand for the three and six months ended June 30, 2013.  These specific reserves are included in the allowance for credit losses for loans individually evaluated for impairment. There were no charge-offs on the troubled debt restructurings presented in the table above during the three and six months ended June 30, 2013.

There were no troubled debt restructurings that occurred during the three and six months ended June 30, 2014, 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 six months ended June 30, 2014.

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 six months ended June 30, 2014 and 2013.

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Securities (Narrative) (Details) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Available for sale securities carrying value pledged to secure public deposits	$ 24,800,000		$ 24,800,000		$ 37,200,000
Gains on sales of securities available for sale	118,000	29,000	118,000	407,000
Gross losses on sales of securities avaiable for sale	24,000	0	24,000	8,000
Fair value of available-for-sale securities	43,437,000		43,437,000		69,028,000
Unrealized loss of available-for-sale securities			1,028,000		3,953,000
Fair value of held-to-maturity securities	6,173,000		6,173,000		6,060,000
U.S. Government Agencies [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses, available-for-sale					2
Fair value of available-for-sale securities	4,989,000		4,989,000		3,246,000
Unrealized loss of available-for-sale securities			74,000		49,000
Number of securities with unrealized losses, held-to-maturity	3		3
State And Political Subdivisions [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number of securities with unrealized losses from state and political subdivisions maturity minimum number of years			10 years
Fair value of available-for-sale securities	21,420,000		21,420,000		25,675,000
Unrealized loss of available-for-sale securities			745,000		2,916,000
Number of securities with unrealized losses, held-to-maturity	40		40		52
U.S. Government-Sponsored Enterprises [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Fair value of available-for-sale securities	16,902,000		16,902,000		39,977,000
Unrealized loss of available-for-sale securities			192,000		975,000
Number of securities with unrealized losses, held-to-maturity	17		17		32
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, available-for-sale	1		1		1
Fair value of available-for-sale securities	126,000		126,000		130,000
Unrealized loss of available-for-sale securities			17,000		13,000
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 from state and political subdivisions maturity minimum number of years			10 years
Number of securities with unrealized losses, held-to-maturity	2		2		5
Fair value of held-to-maturity securities	808,000		808,000		2,900,000
Unrealized loss of held-to-maturity securites	$ 13,000		$ 13,000		$ 92,000

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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	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 5,854	$ 5,437	$ 5,421	$ 5,647	$ 5,306	$ 4,976
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	635		485
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	4,576		4,401
Balance, Loans Receivable	428,691		392,785
Loans Receivable, Individually Evaluated for Impairment	11,788		13,520
Loans Receivable, Collectively Evaluated for Impairment	416,903		379,265
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	257	289	222	249	275	271
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	257		222
Balance, Loans Receivable	19,189		15,205
Loans Receivable, Collectively Evaluated for Impairment	19,189		15,205
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	354	315	308	400	401	223
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	354		308
Balance, Loans Receivable	8,923		7,307
Loans Receivable, Collectively Evaluated for Impairment	8,923		7,307
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	3,750	3,687	3,399	3,472	3,452	3,395
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	547		322
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	3,203		3,077
Balance, Loans Receivable	292,620		260,664
Loans Receivable, Individually Evaluated for Impairment	9,559		10,894
Loans Receivable, Collectively Evaluated for Impairment	283,061		249,770
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	837	862	941	990	899	869
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	88		163
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	749		778
Balance, Loans Receivable	106,471		107,992
Loans Receivable, Individually Evaluated for Impairment	2,229		2,626
Loans Receivable, Collectively Evaluated for Impairment	104,242		105,366
Consumer And Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	13	19	16	15	12	38
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	13		16
Balance, Loans Receivable	1,488		1,617
Loans Receivable, Collectively Evaluated for Impairment	1,488		1,617
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 643	$ 265	$ 535	$ 521	$ 267	$ 180

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

6 Months Ended

Jun. 30, 2014

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:
June 30, 2014
Beginning balance	$	289	$	315	$	3,687	$	862	$	19	$	265	$	5,437
Charge-offs		(1)		-		-		1		(9)		-		(9)
Recoveries		3		-		17		3		3		-		26
Provision		(34)		39		46		(29)		-		378		400
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	275		401		3,452		899		12		267	$	5,306
Charge-offs		-		(80)		(273)		(38)		(6)		-		(397)
Recoveries		-		-		37		-		1		-		38
Provision		(26)		79		256		129		8		254		700
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647
Six Months Ended:
June 30, 2014
Beginning balance	$	222	$	308	$	3,399	$	941	$	16	$	535	$	5,421
Charge-offs		(1)		-		(358)		(85)		(22)		-		(466)
Recoveries		15		-		21		4		6		-		46
Provision		21		46		688		(23)		13		108		853
Ending balance	$	257	$	354	$	3,750	$	837	$	13	$	643	$	5,854
June 30, 2013
Beginning balance	$	271		223		3,395		869		38		180	$	4,976
Charge-offs		(6)		(122)		(1,012)		(66)		(15)		-		(1,221)
Recoveries		-		-		44		-		6		-		50
Provision		(16)		299		1,045		187		(14)		341		1,842
Ending balance	$	249	$	400	$	3,472	$	990	$	15	$	521	$	5,647

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
June 30, 2014
Commercial and industrial	$	257	$	-	$	257	$	19,189	$	-	$	19,189
Construction		354		-		354		8,923		-		8,923
Commercial real estate		3,750		547		3,203		292,620		9,559		283,061
Residential real estate		837		88		749		106,471		2,229		104,242
Consumer and other loans		13		-		13		1,488		-		1,488
Unallocated		643		-		-		-		-		-
Total	$	5,854	$	635	$	4,576	$	428,691	$	11,788	$	416,903
December 31, 2013
Commercial and industrial	$	222	$	-	$	222	$	15,205	$	-	$	15,205
Construction		308		-		308		7,307		-		7,307
Commercial real estate		3,399		322		3,077		260,664		10,894		249,770
Residential real estate		941		163		778		107,992		2,626		105,366
Consumer and other loans		16		-		16		1,617		-		1,617
Unallocated		535		-		-		-		-		-
Total	$	5,421	$	485	$	4,401	$	392,785	$	13,520	$	379,265

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
June 30, 2014
Commercial and industrial	$	62	$	-	$	-	$	62	$	19,127	$	19,189	$	-
Construction		-		-		-		-		8,923		8,923		-
Commercial real estate		2,396		338		8,375		11,109		281,511		292,620		-
Residential real estate		177		-		1,824		2,001		104,470		106,471		-
Consumer and other		6		-		1		7		1,481		1,488		-
Total	$	2,641	$	338	$	10,200	$	13,179	$	415,512	$	428,691	$	-
December 31, 2013
Commercial and industrial	$	13	$	-	$	-	$	13	$	15,192	$	15,205	$	-
Construction		-		-		-		-		7,307		7,307		-
Commercial real estate		2,139		775		9,823		12,737		247,927		260,664		123
Residential real estate		495		247		2,192		2,934		105,058		107,992		-
Consumer and other		7		1		-		8		1,609		1,617		-
Total	$	2,654	$	1,023	$	12,015	$	15,692	$	377,093	$	392,785	$	123
(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)	June 30, 2014		December 31, 2013
Commercial real estate	$	8,375	$	9,700
Residential real estate		1,824		2,192
Consumer and other		1		-
Total	$	10,200	$	11,892

Credit Risk Profile By Creditworthiness

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
June 30, 2014
Commercial and industrial	$	19,170	$	19	$	-	$	-	$	19,189
Construction		8,923		-		-		-		8,923
Commercial real estate		274,480		6,358		11,651		131		292,620
Residential real estate		103,963		117		2,391		-		106,471
Consumer and other		1,487		-		1		-		1,488
	$	408,023	$	6,494	$	14,043	$	131	$	428,691
December 31, 2013
Commercial and industrial	$	15,192	$	13	$	-	$	-	$	15,205
Construction		7,307		-		-		-		7,307
Commercial real estate		240,204		7,378		12,917		165		260,664
Residential real estate		104,383		871		2,738		-		107,992
Consumer and other		1,477		140		-		-		1,617
	$	368,563	$	8,402	$	15,655	$	165	$	392,785

Impaired Loans

		June 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	4,279	$	5,141	$	-	$	7,394	$	7,967	$	-
Residential real estate		1,687		1,712		-		1,849		1,874		-
With an allowance recorded:
Commercial real estate		5,280		6,375		547		3,500		4,595		322
Residential real estate		542		542		88		777		871		163
Total:
Commercial real estate		9,559		11,516		547		10,894		12,562		322
Residential real estate		2,229		2,254		88		2,626		2,745		163
	$	11,788	$	13,770	$	635	$	13,520	$	15,307	$	485

The following table presents the average recorded investment and income recognized for the three and six months ended June 30, 2014 and 2013:

	For the Three Months Ended June 30, 2014				For the Three Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	494	$	-
Commercial real estate		4,321		10		5,181		1
Residential real estate		1,683		9		1,516		-
Total impaired loans without a related allowance		6,004		19		7,191		1
With an allowance recorded:
Construction		-		-		427		-
Commercial real estate		5,298		-		6,246		32
Residential real estate		678		3		1,924		2
Total impaired  loans with an allowance		5,977		3		8,597		34
Total impaired loans	$	11,981	$	22	$	15,788	$	35

	For the Six Months Ended June 30, 2014				For the Six Months Ended June 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Construction	$	-	$	-	$	993	$	-
Commercial real estate		5,372		18		5,431		3
Residential real estate		1,792		29		1,519		-
Total impaired loans without a related allowance		7,164		47		7,943		3
With an allowance recorded:
Commercial and industrial		-		-		9		-
Construction		-		-		441		-
Commercial real estate		4,672		1		6,415		37
Residential real estate		747		7		1,891		5
Total impaired  loans with an allowance		5,420		8		8,756		42
Total impaired loans	$	12,584	$	55	$	16,699	$	45

Troubled Debt Restructured On Recorded Investment

(Dollars in thousands)		Commercial Real Estate	Residential Real Estate		Total
June 30, 2014
Performing	$	1,184	$	427	$	1,611
Non-performing		2,965		225		3,190
Total	$	4,149	$	652	$	4,801
December 31, 2013
Performing	$	1,195	$	433	$	1,628
Non-performing		3,000		496		3,496
Total	$	4,195	$	929	$	5,124

Summary Of Troubled Debt Restructured

		Pre-Modification		Post-Modification
		Outstanding		Outstanding
	Number of	Recorded		Recorded
(Dollars in thousands)	Loans	Investment		Investment
Three Months Ended:
June 30, 2013
Commercial real estate	1	$	1,736	$	1,736
Six Months Ended:
June 30, 2013
Commercial real estate	2	$	1,899	$	1,899
Residential real estate	1		302		302