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, 2012

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

For the transition period from ___________to ________

Commission File Number 0-29030

SUSSEX BANCORP

(Exact name of registrant as specified in its charter)

New Jersey	22-3475473
State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
200 Munsonhurst Rd., Franklin, NJ	07416
(Address of principal executive offices)	(Zip Code)

(973) 827-2914

(Registrant’s telephone number, including area code)

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

Yes x                 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 SD-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                 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 x
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes £                 No S

As of August 3, 2012 there were 3,396,873 shares of common stock, no par value, outstanding.

SUSSEX BANCORP

FORM 10-Q

INDEX

FORWARD-LOOKING STATEMENTS	i
PART I – FINANCIAL INFORMATION	1
Item 1 - Financial Statements	1
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3 - Quantitative and Qualitative Disclosures about Market Risk	31
Item 4 - Controls and Procedures	31
PART II – OTHER INFORMATION	32
Item 1 - Legal Proceedings	32
Item 1A - Risk Factors	32
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3 - Defaults Upon Senior Securities	32
Item 4 – Mine Safety Disclosures	32
Item 5 - Other Information	32
Item 6 - Exhibits	32

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 to interest rates, the ability to control costs and expenses;

§ our ability to integrate new technology into our operations;

§ general economic conditions;

§ the success of our efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee based business;

§ the impact on us of the changing statutory and regulatory requirements; and

§ the risks inherent in commencing operations in new markets.

Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q, and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward-looking statements can be guaranteed. We disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events.

i

PART I – FINANCIAL INFORMATION

Item 1 - Financial Statements

SUSSEX BANCORP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in thousands)	June 30, 2012			December 31, 2011
ASSETS
Cash and due from banks	$	5,553		$	3,903
Interest-bearing deposits with other banks		6,978			33,597
Cash and cash equivalents		12,531			37,500
Interest bearing time deposits with other banks		100			100
Securities available-for-sale, at estimated fair value		115,508			96,361
Securities held to maturity, at cost (estimated fair value of $5,316 at June 30, 2012 and $4,345 at December 31, 2011)		5,168			4,220
Federal Home Loan Bank Stock, at cost		1,943			1,837
Loans receivable, net of unearned income		346,884			339,705
Less:  allowance for loan losses		6,260			7,210
Net loans receivable		340,624			332,495
Foreclosed real estate		5,566			5,509
Premises and equipment, net		6,784			6,778
Accrued interest receivable		1,688			1,735
Goodwill		2,820			2,820
Bank-owned life insurance		11,346			11,142
Other assets		8,112			6,456
Total Assets	$	512,190		$	506,953
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	48,089		$	44,762
Interest bearing		381,993			380,614
Total deposits		430,082			425,376
Long term borrowings		26,000			26,000
Accrued interest payable and other liabilities		2,699			2,788
Junior subordinated debentures		12,887			12,887
Total Liabilities		471,668			467,051
Stockholders’ Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued		-			-
Common stock, no par value, 10,000,000 shares authorized; issued shares 3,409,307 in 2012 and 3,373,793 in 2011; outstanding shares 3,398,124 in 2012 and 3,372,949 in 2011		28,037			27,964
Treasury stock, at cost; 11,183 shares in 2012 and 844 shares in 2011		(59	)		(4	)
Retained earnings		11,509			11,223
Accumulated other comprehensive income		1,035			719
Total Stockholders’ Equity		40,522			39,902
Total Liabilities and Stockholders’ Equity	$	512,190		$	506,953

See Notes to Unaudited Consolidated Financial Statements

1

SUSSEX BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except per share data)	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
INTEREST INCOME
Loans receivable, including fees	$	4,375		$	4,739		$	8,825		$	9,523
Securities:
Taxable		433			310			753			675
Tax-exempt		290			291			535			583
Federal funds sold		-			2			-			3
Interest bearing deposits		9			10			26			13
Total Interest Income		5,107			5,352			10,139			10,797
INTEREST EXPENSE
Deposits		632			767			1,351			1,536
Borrowings		264			264			529			529
Junior subordinated debentures		61			55			123			109
Total Interest Expense		957			1,086			2,003			2,174
Net Interest Income		4,150			4,266			8,136			8,623
PROVISION FOR LOAN LOSSES		958			1,112			1,818			1,951
Net Interest Income after Provision for Loan Losses		3,192			3,154			6,318			6,672
OTHER INCOME
Service fees on deposit accounts		275			328			550			644
ATM and debit card fees		151			138			288			260
Bank-owned life insurance		101			105			204			209
Insurance commissions and fees		609			564			1,208			1,179
Investment brokerage fees		36			39			72			70
Gain on sale of loans, held for sale		-			-			47			-
Gain on sale of securities, available for sale		135			269			194			269
Loss on sale of premises and equipment		(7	)		-			(6	)		-
Gain (loss) on sale of foreclosed real estate		1			7			3			(4	)
Other		118			51			183			119
Total Other Income		1,419			1,501			2,743			2,746
OTHER EXPENSES
Salaries and employee benefits		2,124			1,986			4,548			3,993
Occupancy, net		354			336			716			717
Furniture, equipment and data processing		334			288			688			588
Advertising and promotion		88			46			159			89
Professional fees		145			149			303			276
Director fees		74			72			180			139
FDIC assessment		172			126			339			382
Insurance		58			54			111			110
Stationary and supplies		39			40			84			83
Loan collection costs		201			177			335			292
Write-down on foreclosed real estate		69			-			684			145
Expenses related to foreclosed real estate		33			79			126			103
Amortization of intangible assets		1			2			3			5
Other		373			344			699			637
Total Other Expenses		4,065			3,699			8,975			7,559
Income before Income Taxes		546			956			86			1,859
PROVISION (BENEFIT) FOR INCOME TAXES		65			229			(200	)		438
Net Income	$	481		$	727		$	286		$	1,421
OTHER COMPREHENSIVE INCOME:
Net unrealized gains on available for sale securities arising during the period		303			855			720			1,072
Reclassification adjustment for gain on sales included in net income		(135	)		(269	)		(194	)		(269	)
Income tax expense related to other comprehensive income		(67	)		(234	)		(210	)		(321	)
Other comprehensive income, net of income taxes		101			352			316			482
Comprehensive income	$	582		$	1,079		$	602		$	1,903
EARNINGS PER SHARE
Basic	$	0.15		$	0.22		$	0.09		$	0.44
Diluted	$	0.14		$	0.22		$	0.09		$	0.43

See Notes to Unaudited Consolidated Financial Statements

2

SUSSEX BANCORP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Six Months Ended June 30, 2012 and 2011

(Unaudited)

								Accumulated
	Number of							Other					Total
	Shares			Common		Retained		Comprehensive		Treasury			Stockholders'
(Dollars in thousand)	Outstanding			Stock		Earnings		Income		Stock			Equity
Balance December 31, 2010		3,351,566		$	27,870	$	8,753	$	47	$	(4	)	$	36,666
Net income		-			-		1,421		-		-			1,421
Other comprehensive income		-			-		-		482		-			482
Restricted stock granted		22,218			-		-		-		-			-
Restricted stock forfeited		(399	)		-		-		-		-			-
Compensation expense related to stock option and restricted stock grants		-			46		-		-		-			46
Balance June 30, 2011		3,373,385		$	27,916	$	10,174	$	529	$	(4	)	$	38,615
Balance December 31, 2011		3,372,949		$	27,964	$	11,223	$	719	$	(4	)	$	39,902
Net income		-			-		286		-		-			286
Other comprehensive income		-			-		-		316		-			316
Treasury stock purchased		(10,339	)		-		-		-		(55	)		(55	)
Restricted stock granted		36,496			-		-		-		-			-
Restricted stock forfeited		(982	)		-		-		-		-			-
Compensation expense related to stock option and restricted stock grants		-			73		-		-		-			73
Balance June 30, 2012		3,398,124		$	28,037	$	11,509	$	1,035	$	(59	)	$	40,522

See Notes to Unaudited Consolidated Financial Statements

3

SUSSEX BANCORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30,
(Dollars in thousands)	2012			2011
Cash Flows from Operating Activities
Net income	$	286		$	1,421
Adjustments to reconcile net income  to net cash provided by operating activities:
Provision for loan losses		1,818			1,951
Provision for depreciation and amortization		336			307
Net amortization of securities premiums and discounts		1,212			416
Net realized gain on sale of securities		(194	)		(269	)
Net realized gain on sale of loans, held for sale		(47	)		-
Proceeds from the sale of loans held for sale		638			-
Net realized loss on sale of premises and equipment		6			-
Net realized (gain) loss on sale of foreclosed real estate		(3	)		4
Provision for foreclosed real estate		684			145
Deferred income taxes		(418	)		-
Earnings on bank owned life insurance		(204	)		(209	)
Compensation expense for stock options and stock awards		73			46
(Increase) decrease in assets:
Accrued interest receivable		47			135
Other assets		(1,451	)		(3,665	)
(Decrease) increase in accrued interest payable and other liabilities		(89	)		244
Net Cash Provided by Operating Activities		2,694			526
Cash Flows from Investing Activities
Securities available for sale:
Purchases		(40,131	)		(7,297	)
Sales		7,125			6,271
Maturities, calls and principal repayments		13,386			19,172
Securities held to maturity:
Purchases		(1,933	)		(966	)
Maturities, calls and principal repayments		966			-
Net increase in loans		(11,478	)		(4,842	)
Maturities of interest bearing time deposits		-			403
Proceeds from the sale of foreclosed real estate		202			-
Purchases of bank premises and equipment		(357	)		(69	)
Proceeds from the sale of premises and equipment		12			-
Purchases of bank owned life insurance		-			398
Net increase in FHLB stock		(106	)		-
Net Cash (Used in) Provided by Investing Activities		(32,314	)		13,070
Cash Flows from Financing Activities
Net increase in deposits		4,706			6,947
Repayments of borrowings		-			(10,000	)
Purchase of treasury stock		(55	)		-
Net Cash Provided by (Used in) Financing Activities		4,651			(3,053	)
Net (Decrease) Increase in Cash and Cash Equivalents		(24,969	)		10,543
Cash and Cash Equivalents - Beginning		37,500			17,749
Cash and Cash Equivalents - Ending	$	12,531		$	28,292
Supplementary Cash Flows Information
Interest paid	$	2,040		$	2,194
Income taxes paid	$	162		$	834
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	$	940		$	2,700
Loans transferred to held for sale	$	591		$	-

See Notes to Unaudited Consolidated Financial Statements

4

NOTE 1 – SUMMARY OF SIGNIFICANT ACOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements include the accounts of Sussex Bancorp (“we,” “us” or “our”) and our 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. Tri-State’s operations are considered a separate segment for financial disclosure purposes. All inter-company transactions and balances have been eliminated in consolidation. The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York. In 2011, we opened a loan production and insurance agency satellite office in Rochelle Park, New Jersey.

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

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2012, 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 December, 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-11, Disclosures about Offsetting Assets and Liabilities, in an effort to improve comparability between U.S. GAAP and International Financial Reporting Standards (“IFRS”) financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

5

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and approximate fair value of securities available for sale as of June 30, 2012, and December 31, 2011 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
June 30, 2012
State and political subdivisions	$	26,820	$	1,201	$	(52	)	$	27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		842		(260	)		86,194
Equity securities-financial services industry and other		1,351		23		(29	)		1,345
	$	113,783	$	2,066	$	(341	)	$	115,508
December 31, 2011
State and political subdivisions	$	19,706	$	883	$	(19	)	$	20,570
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,684		786		(472	)		71,998
Private mortgage-backed securities		2,423		58		(4	)		2,477
Equity securities-financial services industry and other		1,349		1		(34	)		1,316
	$	95,162	$	1,728	$	(529	)	$	96,361

Securities with a carrying value of approximately $26.5 million and $21.5 million at June 30, 2012, and December 31, 2011, 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, 2012, 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		-		-
Due after five years through ten years		1,076		1,129
Due after ten years		25,744		26,840
Total bonds and obligations		26,820		27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		86,194
Equity securities-financial services industry and other		1,351		1,345
Total available for sale securities	$	113,783	$	115,508

Gross gains on sales of securities available for sale were $214 thousand and $269 thousand for the six months ended June 30, 2012 and 2011, respectively, and gross losses were $20 thousand for the six months ended June 30, 2012. There were no gross losses on the sales of securities in the first six months of 2011.

6

Temporarily Impaired Securities

The following table shows our investments’ gross unrealized losses and fair value with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual available for sale securities have been in a continuous unrealized loss position at June 30, 2012, and December 31, 2011.

	Less Than Twelve Months					Twelve Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
June 30, 2012
State and political subdivisions	$	4,965	$	(50	)	$	139	$	(2	)	$	5,104	$	(52	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		26,933		(260	)		-		-			26,933		(260	)
Equity securities-financial services industry and other		122		(21	)		206		(8	)		328		(29	)
Total temporarily impaired securities	$	32,020	$	(331	)	$	345	$	(10	)	$	32,365	$	(341	)
December 31, 2011
State and political subdivisions	$	115	$	(2	)	$	124	$	(17	)	$	239	$	(19	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		34,576		(472	)		-		-			34,576		(472	)
Private mortgage-backed securities		518		(4	)		-		-			518		(4	)
Equity securities-financial services industry and other		-		-			1,025		(34	)		1,025		(34	)
Total temporarily impaired securities	$	35,209	$	(478	)	$	1,149	$	(51	)	$	36,358	$	(529	)

As of June 30, 2012, we reviewed our available for sale investment portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred.

State and Political Subdivisions

At June 30, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions portfolio were caused by changes in interest rates and spreads and were not the result of credit quality. At June 30, 2012, there were 10 securities with a fair value of $5.1 million that had an unrealized loss that amounted to $52 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, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our state and political subdivision securities at June 30, 2012 were deemed to be other-than-temporarily-impaired.

Mortgage-Backed Securities

At June 30, 2012, the decline in fair value and the unrealized losses for our mortgaged-backed securities backed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality. At June 30, 2012, there were 13 securities with a fair value of $26.9 million that had an unrealized loss that amounted to $260 thousand. As of June 30, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our mortgage-backed securities at June 30, 2012, were deemed to be other-than-temporarily impaired.

Equity Securities

Our investments in marketable equity securities consist primarily of a mutual fund, one equity portfolio fund and common stock of entities in the financial services industry. At June 30, 2012, there were three securities with a fair value of $328 thousand that had an unrealized loss of $29 thousand. These securities have been adversely impacted by the effects of the current economic environment on the financial services industry. We evaluated each of the underlying banks for credit impairment based on its financial condition and performance. Based on our evaluation and our ability and intent to hold those investments for a reasonable period of time sufficient for a forecasted recovery of amortized cost, we do not consider these investments to be other-than-temporarily impaired at June 30, 2012. We continue to closely monitor the performance of the securities we own as well as the impact from any further deterioration in the economy or in the banking industry that may adversely affect these securities. We will continue to evaluate them for other-than-temporary impairment, which could result in a future non-cash charge to earnings.

7

Held to Maturity Securities

The amortized cost and approximate fair value of securities held to maturity as of June 30, 2012, and December 31, 2011 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
June 30, 2012
State and political subdivisions	$	5,168	$	169	$	(21	)	$	5,316
December 31, 2011
State and political subdivisions	$	4,220	$	125	$	-		$	4,345

The amortized cost and carrying value of securities held to maturity at June 30, 2012, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	1,146	$	1,146
Due after five years through ten years		1,052		1,100
Due after ten years		2,970		3,070
Total held to maturity securities	$	5,168	$	5,316

Temporarily Impaired Securities

The following table shows our held to maturity investments’ gross unrealized losses and fair value with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual held to maturity securities have been in a continuous unrealized loss position, at June 30, 2012. There were no securities with unrealized losses on December 31, 2011.

	Less Than Twelve Months					Twelve Months or More				Total
			Gross					Gross				Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses		Value		Losses
June 30, 2012
State and political subdivisions	$	1,374	$	(21	)	$	-	$	-	$	1,374	$	(21	)

As of June 30, 2012, we reviewed our held to maturity investment portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred.

State and Political Subdivisions

At June 30, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions portfolio were caused by changes in interest rates and spreads and were not the result of credit quality. At June 30, 2012, there were 3 securities with a fair value of $1.4 million that had an unrealized loss that amounted to $21 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, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our state and political subdivision securities at June 30, 2012, were deemed to be other-than-temporarily impaired.

8

NOTE 3 – LOANS

The composition of net loans receivable at June 30, 2012, and December 31, 2011 is as follows:

(Dollars in thousands)	June 30, 2012			December 31, 2011
Commercial and industrial loans	$	13,106		$	13,711
Construction		7,103			8,520
Commercial real estate		228,042			216,191
Residential real estate		97,635			100,175
Consumer and other		1,328			1,336
		347,214			339,933
Unearned net loan origination fees		(330	)		(228	)
Allowance for loan losses		(6,260	)		(7,210	)
Net loans receivable	$	340,624		$	332,495

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 $827 thousand and $852 thousand at June 30, 2012, and December 31, 2011, respectively.

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

The following table presents changes in the allowance for loan losses disaggregated by the class of loans receivable for the three and six months ended June 30, 2012 and 2011:

	Commercial						Commercial			Residential			Consumer
(Dollars in thousands)	and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Three Months Ended June 30, 2012:
Beginning balance	$	305		$	582		$	5,186		$	976		$	31		$	537		$	7,617
Charge-offs		-			-			(2,230	)		(123	)		(29	)		-			(2,382	)
Recoveries		1			-			58			-			8			-			67
Provision		124			(412	)		1,533			202			1			(490	)		958
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	448		$	1,347		$	3,953		$	832		$	54		$	592		$	7,226
Charge-offs		(13	)		(909	)		(394	)		-			(11	)		-			(1,327	)
Recoveries		2			516			1			-			6			-			525
Provision		(9	)		15			1,213			113			(4	)		(216	)		1,112
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

	Commercial						Commercial			Residential			Consumer
(Dollars in thousands)	and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Six Months Ended:
June 30, 2012:
Beginning balance	$	304		$	294		$	4,833		$	987		$	9		$	783		$	7,210
Charge-offs		-			-			(2,525	)		(280	)		(45	)		-			(2,850	)
Recoveries		2			-			69			-			11			-			82
Provision		124			(124	)		2,170			348			36			(736	)		1,818
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	436		$	1,183		$	3,760		$	798		$	56		$	164		$	6,397
Charge-offs		(13	)		(909	)		(395	)		(12	)		(23	)		-			(1,352	)
Recoveries		3			516			8			-			13			-			540
Provision		2			179			1,400			159			(1	)		212			1,951
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

9

The following table presents the balance in the allowance of loan losses at June 30, 2012, and December 31, 2011 disaggregated on the basis of our impairment method by class of loans receivable along with the balance of loans receivable by class 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		Evaluated
			Evaluated		Evaluated				for		for
(Dollars in thousands)	Balance		Impairment		Impairment		Balance		Impairment		Impairment
June 30, 2012:
Commercial and industrial	$	430	$	200	$	230	$	13,106	$	396	$	12,710
Construction		170		112		58		7,103		3,529		3,574
Commercial real estate		4,547		1,614		2,933		228,042		18,013		210,029
Residential real estate		1,055		307		748		97,635		2,908		94,727
Consumer and other		11		-		11		1,328		-		1,328
Unallocated		47		-		-		-		-		-
Total	$	6,260	$	2,233	$	3,980	$	347,214	$	24,846	$	322,368
December 31, 2011:
Commercial and industrial	$	304	$	16	$	288	$	13,711	$	32	$	13,679
Construction		294		50		244		8,520		2,458		6,062
Commercial real estate		4,833		1,572		3,261		216,191		22,722		193,469
Residential real estate		987		319		668		100,175		2,482		97,693
Consumer and other		9		-		9		1,336		-		1,336
Unallocated		783		-		-		-		-		-
Total	$	7,210	$	1,957	$	4,470	$	339,933	$	27,694	$	312,239

An age analysis of loans receivable which were past due as of June 30, 2012, and December 31, 2011 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, 2012:
Commercial and industrial	$	22	$	111	$	396	$	529	$	12,577	$	13,106	$	-
Construction		-		-		3,647		3,647		3,456		7,103		118
Commercial real estate		3,004		2,802		17,410		23,216		204,826		228,042		-
Residential real estate		1,268		551		2,908		4,727		92,908		97,635		-
Consumer and other		13		4		-		17		1,311		1,328		-
Total	$	4,307	$	3,468	$	24,361	$	32,136	$	315,078	$	347,214	$	118
December 31, 2011:
Commercial and industrial	$	428	$	-	$	32	$	460	$	13,251	$	13,711	$	-
Construction		558		-		3,243		3,801		4,719		8,520		785
Commercial real estate		5,238		137		19,311		24,686		191,505		216,191		-
Residential real estate		940		-		2,482		3,422		96,753		100,175		-
Consumer and other		17		1		18		36		1,300		1,336		18
Total	$	7,181	$	138	$	25,086	$	32,405	$	307,528	$	339,933	$	803

(a) includes loans greater than 90 days past due and still accruing and non-accrual loans

10

Loans for which the accrual of interest has been discontinued at June 30, 2012, and December 31, 2011 were:

(Dollars in thousands)	June 30, 2012		December 31, 2011
Commercial and industrial	$	396	$	32
Construction		3,529		2,458
Commercial real estate		17,410		19,311
Residential real estate		2,908		2,482
Total	$	24,243	$	24,283

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 we 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. Loans rated “Substandard”, “Doubtful” or “Loss” is 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 a 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 little value that their continuance as active assets is not warranted. Such loans are fully charged off.

11

The following tables illustrate our corporate credit risk profile by creditworthiness category as of June 30, 2012, and December 31, 2011:

			Special
(Dollars in thousands)	Pass		Mention		Substandard		Doubtful		Total
June 30, 2012:
Commercial and industrial	$	12,376	$	333	$	22	$	375	$	13,106
Construction		3,574		-		3,529		-		7,103
Commercial real estate		199,673		6,330		21,467		572		228,042
Residential real estate		93,092		452		3,759		332		97,635
Consumer and other		1,328		-		-		-		1,328
	$	310,043	$	7,115	$	28,777	$	1,279	$	347,214
December 31, 2011:
Commercial and industrial	$	13,103	$	398	$	202	$	8	$	13,711
Construction		5,057		-		3,463		-		8,520
Commercial real estate		180,862		6,987		27,769		573		216,191
Residential real estate		95,491		494		4,190		-		100,175
Consumer and other		1,336		-		-		-		1,336
	$	295,849	$	7,879	$	35,624	$	581	$	339,933

A loan is considered impaired, in accordance FASB ASC 310-10-35-16, 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. 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 average recorded investment in impaired loans is calculated using the average of impaired loans over the past five quarter-end periods. 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.

The following table reflects our impaired loans by class as of June 30, 2012, and December 31, 2011:

	June 30, 2012						December 31, 2011
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)	Investment (1)		Balance (2)		Allowance		Investment (1)		Balance (2)		Allowance
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	-	$	-	$	-	$	-
Construction		2,134		3,111		-		2,062		2,331		-
Commercial real estate		6,209		6,970		-		10,362		12,932		-
Residential real estate		1,848		1,842		-		1,758		1,757		-
Total impaired loans without a related allowance		10,191		11,923		-		14,182		17,020		-
With an allowance recorded:
Commercial and industrial		401		396		200		32		32		16
Construction		1,391		1,395		112		396		396		50
Commercial real estate		11,832		13,930		1,614		12,404		12,399		1,572
Residential real estate		1,074		1,067		307		732		724		319
Total impaired  loans with an allowance		14,698		16,788		2,233		13,564		13,551		1,957
Total impaired loans	$	24,889	$	28,711	$	2,233	$	27,746	$	30,571	$	1,957

(1) The recorded investment of impaired loans includes the outstanding principal balance and any unpaid interest and escrow balances due.

(2) Unpaid principal balance includes the present recorded principal balance plus any amounts that have been previously charged-off.

12

The average recorded investment and income recognized is presented for the six month periods ended June 30, 2012, and 2011:

	For the Six Months Ended  June 30, 2012				For the Six Months Ended  June 30, 2011
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
(Dollars in thousands)	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	19	$	-
Construction		2,293		-		3,795		1
Commercial real estate		8,534		30		8,859		80
Residential real estate		1,663		32		816		17
Consumer and other		-		-		3		-
Total impaired loans without a related allowance		12,490		62		13,492		98
With an allowance recorded:
Commercial and industrial		127		-		77		-
Construction		796		-		1,941		-
Commercial real estate		13,571		49		9,694		105
Residential real estate		732		15		611		1
Consumer and other		-		-		-		-
Total impaired  loans with an allowance		15,226		64		12,323		106
Total impaired loans	$	27,716	$	126	$	25,815	$	204

The following table presents the recorded investment in troubled debt restructured loans as of June 30, 2012, based on payment performance status:

(Dollars in thousands)	Commercial Real Estate
Performing	$	604
Non-performing		1,864
Total	$	2,468

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote. As of June 30, 2012, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

Troubled debt restructured loans can include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; change in scheduled payment amount; or permanent reduction of the principal or interest of the loan.

During the first six months of 2012, we have not restructured any troubled debt or required an allocation of the allowance for credit losses. There were no payment defaults of loans during the six months ended June 30, 2012, which were modified in a troubled debt restructuring within the previous twelve months.

A troubled debt restructured loan is considered to be in payment default once it is greater than 30 days contractually past due under the modified terms. The troubled debt restructurings that subsequently defaulted resulted in a net allocation of the allowance for credit losses of $4 thousand at June 30, 2012. There were no charge-offs on defaulted troubled debt restructurings during the six month period ended June 30, 2012.

13

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, 2012						Three Months Ended June 30, 2011
					Per						Per
	Income		Shares		Share		Income		Shares		Share
(In thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share:
Net income applicable to common Shareholders	$	481		3,257	$	0.15	$	727		3,255	$	0.22
Effect of dilutive securities:
Nonvested stock awards		-		84				-		71
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	481		3,341	$	0.14	$	727		3,326	$	0.22

	Six Months Ended June 30, 2012						Six Months Ended June 30, 2011
					Per						Per
	Income		Shares		Share		Income		Shares		Share
(In thousands, except per share data)	(Numerator)		(Denominator)		Amount		(Numerator)		(Denominator)		Amount
Basic earnings per share:
Net income applicable to common shareholders	$	286		3,259	$	0.09	$	1,421		3,255	$	0.44
Effect of dilutive securities:
Nonvested stock awards		-		82				-		68
Diluted earnings per share:
Net income applicable to common shareholders and assumed conversions	$	286		3,341	$	0.09	$	1,421		3,323	$	0.43

Options to purchase 83,371 and 116,075 shares of common stock were outstanding at June 30, 2012 and 2011, respectively, but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares.

NOTE 6 – OTHER COMPREHENSIVE INCOME

The components of other comprehensive income and related tax effects for the three and six months ended June 30, 2012 and 2011 are as follows:

(Dollars in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Net unrealized gains on available for sale securities arising during the period	$	303		$	855		$	720		$	1,072
Less: reclassification adjustments for net gains included in net income		135			269			194			269
		168			586			526			803
Tax effect		(67	)		(234	)		(210	)		(321	)
	$	101		$	352		$	316		$	482

14

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, 2012						Three Months Ended June 30, 2011
	Banking and						Banking and
	Financial		Insurance				Financial		Insurance
(Dollars in thousands)	Services		Services		Total		Services		Services		Total
Net interest income from external sources	$	4,150	$	-	$	4,150	$	4,266	$	-	$	4,266
Other income from external sources		810		609		1,419		937		564		1,501
Depreciation and amortization		169		2		171		151		3		154
Income before income taxes		475		71		546		908		48		956
Income tax expense (benefit)(1)		37		28		65		210		19		229
Total assets		508,701		3,489		512,190		470,020		3,143		473,163

	Six Months Ended June 30, 2012								Six Months Ended June 30, 2011
	Banking and								Banking and
	Financial			Insurance					Financial		Insurance
	Services			Services		Total			Services		Services		Total
Net interest income from external sources	$	8,136		$	-	$	8,136		$	8,623	$	-	$	8,623
Other income from external sources		1,535			1,208		2,743			1,567		1,179		2,746
Depreciation and amortization		331			5		336			301		6		307
Income (loss) before income taxes		(24	)		110		86			1,701		158		1,859
Income tax expense (benefit)(1)		(244	)		44		(200	)		375		63		438
Total assets		508,701			3,489		512,190			470,020		3,143		473,163

(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 ten years, generally vest over periods ranging between one and four years, and are granted with an exercise price equal to the fair market value of the common stock on the date the options are granted. Restricted stock is valued at the market value of the common stock on the date of grant and generally vests between two and seven years. All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans as of June 30, 2012, was as follows:

				Weighted		Weighted
	Number of			Average Exercise		Average		Aggregate
	Shares			Price per Share		Contractual Term		Intrinsic Value
Outstanding, beginning of year		111,034		$	12.25
Options expired		(4,389	)		8.90
Options forfeited		(23,274	)		11.97
Outstanding, end of quarter		83,371		$	12.51		1.59	$	-
Exercisable, end of quarter		83,371		$	12.51		1.59	$	-

15

During the first six months of 2012 and 2011, we expensed $73 thousand and $46 thousand, respectively, in stock-based compensation under restricted stock awards. The summary of changes in unvested restricted stock awards for the three months ended June 30, 2012, is as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Unvested restricted stock, beginning of year		115,729		$	4.86
Granted		36,496			4.98
Forfeited		(982	)		5.19
Vested		(17,153	)		6.04
Unvested restricted stock, end of period		134,090		$	4.74

At June 30, 2012, unrecognized compensation expense for non-vested restricted stock was $560 thousand, which is expected to be recognized over an average period of 3.6 years.

NOTE 9 – GUARANTEES

We do not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit. Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. We, generally, hold collateral and/or personal guarantees supporting these commitments. We had $624 thousand of undrawn standby letters of credit outstanding as of June 30, 2012. 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, 2012, for guarantees under standby letters of credit issued is not material.

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of our consolidated financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts we could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period ends, and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end.

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

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

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

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

16

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

			Quoted Prices in		Significant
			Active Markets		Other		Significant
	Fair		for Identical		Observable		Unobservable
	Value		Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
June 30, 2012:
State and political subdivisions	$	27,969	$	-	$	27,969	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		86,194		-		86,194		-
Equity securities-financial services industry and other		1,345		1,195		150		-
	$	115,508	$	1,195	$	114,313	$	-
December 31, 2011:
State and political subdivisions	$	20,570	$	-	$	20,570	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,998		-		71,998		-
Private mortgage-backed securities		2,477		-		2,477		-
Equity securities-financial services industry and other		1,316		1,173		143		-
	$	96,361	$	1,173	$	95,188	$	-

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 are as follows:

			Quoted Prices		Significant
			In Active		Other		Significant
	Fair		Markets for		Observable		Unobservable
	Value		Identical Assets		Inputs		Inputs
(Dollars in thousands)	Measurements		(Level I)		(Level II)		(Level III)
June 30, 2012:
Impaired loans	$	12,433	$	-	$	-	$	12,433
Foreclosed real estate		5,064		-		-		5,064
December 31, 2011:
Impaired loans	$	11,571	$	-	$	-	$	11,571
Foreclosed real estate		4,959		-		-		4,959

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

	Qualitative Information about Level 3 Fair Value Measurements
	Fair				Range
	Value		Valuation	Unobservable	(Weighted
(Dollars in thousands)	Estimate		Techniques	Input	Average)
June 30, 2012:
Impaired loans	$	12,433	Appraisal of	Appraisal	0.00% to -66.3	%
			collateral	adjustments (1)	(-11.3)	%
				Selling
				expenses (1)	-7.0% (-7.0)	%
Foreclosed real estate		5,064	Appraisal of
			collateral

(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.

17

The following methods and assumptions were used to estimate the fair value of our financial instruments at June 30, 2012, and December 31, 2011:

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

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

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

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

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

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

Foreclosed Real Estate (Carried at the Lower of Cost or Fair Value): Foreclosed real estate is recorded at estimated fair value, less estimated costs to sell when the property is acquired. Fair value is generally based on independent appraisals and is considered a Level 3 fair value input.

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

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

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

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

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

18

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

The estimated fair values of our financial instruments at June 30, 2012, and December 31, 2011 were as follows:

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	June 30, 2012				for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Amount		Value		(Level I)		(Level II)		(Level III)
Financial assets:
Cash and cash equivalents	$	12,531	$	12,531	$	12,531	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		115,508		115,508		1,195		114,313		-
Securities held to maturity		5,168		5,316		-		5,316		-
Federal Home Loan Bank stock		1,943		1,943		1,943		-		-
Loans receivable, net of allowance		340,624		352,675		-		-		352,675
Accrued interest receivable		1,688		1,688		1,688		-		-
Financial liabilities:
Deposits		430,082		429,110		321,415		107,695		-
Borrowings		26,000		29,333		-		29,333		-
Junior subordinated debentures		12,887		6,418		-		6,418		-
Accrued interest payable		264		264		264		-		-

					Quoted Prices in		Significant
					Active Markets		Other		Significant
	December 31, 2011				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	$	37,500	$	37,500	$	37,500	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		96,361		96,361		1,173		95,188		-
Securities held to maturity		4,220		4,345		-		4,345		-
Federal Home Loan Bank stock		1,837		1,837		-		-		-
Loans receivable, net of allowance		332,495		334,403		-		-		334,403
Accrued interest receivable		1,735		1,735		1,735		-		-
Financial liabilities:
Deposits		425,376		428,098		314,571		113,527		-
Borrowings		26,000		29,696		-		29,696		-
Junior subordinated debentures		12,887		6,613		-		6,613		-
Accrued interest payable		301		301		301		-		-

19

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

MANAGEMENT STRATEGY

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

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

RECENT LEGISLATIVE UPDATES

In June 2012, the FRB, the Office of the Comptroller of the Currency and the FDIC issued three proposals that would amend the existing regulatory risk-based capital adequacy requirements of banks and bank holding companies. The proposed rules implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act. The Basel III proposal would increase the minimum levels of required capital, narrow the definition of capital, and places much greater emphasis on common equity. The proposed rules will be subject to a comment period through September 7, 2012.

The proposed rules include new risk-based capital and leverage ratios, which would be phased in from 2013 to 2019, and would refine the definition of what constitutes “capital” for purposes of calculating those ratios. The proposed new minimum capital level requirements applicable to us and the Bank under the proposals would be: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions. The proposed rules would also establish a "capital conservation buffer" of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. The new capital conservation buffer requirement would be phased in beginning in January 2016 at 0.625% of risk-weighted assets and would increase by that amount each year until fully implemented in January 2019. An institution would be subject to limitations on paying dividends, engaging in share repurchases and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations would establish a maximum percentage of eligible retained income that could be utilized for such actions.

The proposed rules also implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, such as trust preferred securities, which would be phased out over time. Although the Dodd-Frank Act only required the phase out of such instruments for institutions with total consolidated assets of $15 billion or more, the proposed rules would require almost all institutions to phase out instruments that will no longer qualify as Tier 1 capital, albeit on a longer time frame than for institutions with total consolidated assets of $15 billion or more.

The federal bank regulatory agencies also proposed revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions, including the Bank, if their capital levels begin to show signs of weakness. These revisions would take effect January 1, 2015. We are still in the process of assessing the impacts of these complex proposals.

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 the 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. For additional information on our critical accounting policies, please refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated financial statements included in our 2011 Annual Report on Form 10-K.

20

COMPARISION OF OPERATING RESULTS FOR THREE MONTHS ENDED JUNE 30, 2012 AND 2011

Overview - We reported net income of $481 thousand for the second quarter of 2012 as compared to net income of $727 thousand for the same period in 2011. Basic and diluted loss per share for the three months ended June 30, 2012 were $0.15 and $0.14, respectively, compared to the basic and diluted earnings per share of $0.22 for the comparable period of 2011. The decline in net income was largely attributed to higher operating costs attributed to supporting growth initiatives and a decline in the net interest margin. Management continues to focus on strengthening our core operations as well as resolving and mitigating our credit exposures.

Net income before taxes for our Tri-State segment increased $23 thousand, or 47.9%, resulting in a net income before taxes of $71 thousand for the second quarter of 2012 compared to $48 thousand for the same period in 2011. This increase was due to insurance commission and fee income increasing $45 thousand, or 8.0%, between the two periods.

Comparative Average Balances and Average Interest Rates

The following table presents, on a fully taxable equivalent basis, a summary of our interest-earning assets and their average yields, and interest-bearing liabilities and their average costs for the three month periods ended June 30, 2012 and 2011.

	Three Months Ended June 30,
(Dollars in thousands)	2012									2011
	Average						Average			Average						Average
Earning Assets:	Balance			Interest  (1)			Rate (2)			Balance			Interest  (1)			Rate (2)
Securities:
Tax exempt (3)	$	31,416		$	440			5.64	%	$	29,805		$	441			5.94	%
Taxable		90,026			433			1.93	%		48,992			310			2.54	%
Total securities		121,442			873			2.89	%		78,797			751			3.83	%
Total loans receivable (4)		341,426			4,375			5.15	%		343,333			4,739			5.54	%
Other interest-earning assets		19,162			9			0.18	%		22,674			12			0.20	%
Total earning assets		482,030		$	5,257			4.39	%		444,804		$	5,502			4.96	%
Non-interest earning assets		41,691									36,421
Allowance for loan losses		(7,798	)								(7,602	)
Total Assets	$	515,923								$	473,623
Sources of Funds:
Interest bearing deposits:
NOW	$	95,817		$	42			0.17	%	$	78,439		$	106			0.54	%
Money market		18,849			15			0.33	%		14,504			20			0.55	%
Savings		164,106			154			0.38	%		169,086			296			0.70	%
Time		108,124			421			1.57	%		91,804			345			1.51	%
Total interest bearing deposits		386,896			632			0.66	%		353,833			767			0.87	%
Borrowed funds		26,000			264			4.02	%		26,000			264			4.02	%
Junior subordinated debentures		12,887			61			1.86	%		12,887			55			1.69	%
Total interest bearing liabilities		425,783			957			0.90	%		392,720		$	1,086			1.11	%
Non-interest bearing liabilities:
Demand deposits		47,801									40,402
Other liabilities		1,931									2,370
Total non-interest bearing liabilities		49,732									42,772
Stockholders' equity		40,408									38,131
Total Liabilities and Stockholders' Equity	$	515,923								$	473,623
Net Interest Income and Margin (5)					4,300			3.59	%					4,416			3.98	%
Tax-equivalent basis adjustment (6)					(150	)								(150	)
Net Interest Income				$	4,150								$	4,266

(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

(6) Calculated using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

21

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.

Our net interest income, on a fully tax equivalent basis, declined $116 thousand, or 2.6%, to $4.3 million for the quarter ended June 30, 2012, as compared to $4.4 million for same period in 2011. The decrease in net interest income was largely due to our net interest margin declining 39 basis points to 3.59% for the second quarter of 2012 primarily due to a 39 basis point decline in the average rate earned on loans. This decline in net interest income was partially offset by a decrease in the average rate paid on total interest bearing liabilities, which decreased 21 basis points to 0.90% for the second quarter of 2012 from 1.11% for the same period in 2011. The decline was in part offset by a $37.2 million, or 8.4%, increase in average interest earning assets, principally securities.

Interest Income – Our total interest income, on a fully taxable equivalent basis, decreased $245 thousand, or 4.5%, to $5.3 million for the quarter ended June 30, 2012, as compared to the same period last year. The decline was due to lower earning asset yields, which decreased 58 basis points to 4.39% for the quarter ended June 30, 2012 as compared to the same period in 2011.

Our total interest income earned on loans receivable decreased $364 thousand, or 7.7%, to $4.4 million for the second quarter of 2012 as compared to the same period in 2011. The decline was driven by a 39 basis point decline in average yields to 5.15% for the quarter end June 30, 2012, as compared to the same period in 2011. The decline in interest income earned on loans receivable was also impacted by a $1.9 million decline in average balances on loans receivable to $341.4 million for the quarter-end June 30, 2012, as compared to the same period in 2011.

Our total interest income earned on securities, on a fully taxable equivalent basis, increased $122 thousand, to $873 thousand for the quarter ended June 30, 2012, from $751 thousand for the same period in 2011. This increase was largely due to a $42.6 million, or 54.1%, increase in average balance of securities for the quarter ended June 30, 2012, as compared to same period last year. The increase resulted from investing excess liquidity from interest bearing deposits yielding less than 25 basis points into securities with higher yields. The increase in interest income on securities was partly offset by a decline in the average rate earned on securities, which declined 93 basis points for the quarter ended June 30, 2012, as compared to the same period last year. The lower yields on securities reflect investment in securities in a low market rate environment.

Other interest-earning assets include federal funds sold and interest bearing deposits in other banks. Our interest earned on total other interest-earning assets decreased $3 thousand for the second quarter of 2012 as compared to the same period in 2011 due to a decline in average balances. The average balances in other interest-earning assets decreased $3.5 million to $19.2 million in the second quarter of 2012 from $22.7 million during the second quarter a year earlier.

Interest Expense - Our interest expense for the three months ended June 30, 2012 decreased $129 thousand, or 11.9%, to $957 thousand from $1.1 million for the same period in 2011. The improvement was principally due to lower average rates paid on total interest-bearing liabilities, which declined 21 basis points from 1.11% for the three months ended June 30, 2011, to 0.90% for the same period in 2012. The improvement in interest expense was partly offset by an increase in average balances in interest-bearing liabilities, which grew $33.1 million, or 8.4%, to $425.8 million for the second quarter in 2012 from $392.7 million for the same period in 2011.

Our interest expense on deposits declined $135 thousand, or 17.6%, for the quarter ended June 30, 2012, as compared to the same period last year. The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 21 basis points to 0.66% for the second quarter 2012 as compared to the same period in 2011. The decrease in rates on deposit products reflects managements’ asset/liability strategies and a lower market rate environment between the two second quarter periods. The aforementioned benefit from the decline in rates paid on deposits was partly offset by $33.1 million, or 8.4%, increase in interest bearing deposits.

Provision for Loan Losses - The loan loss provision for the second quarter of 2012 decreased $154 thousand, or 13.8%, to $958 thousand compared to a provision of $1.1 million in the second quarter of 2011. 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.

22

Non-Interest Income - Our non-interest income decreased $82 thousand, or 5.5%, to $1.4 million for the quarter ended June 30, 2012, as compared to the same period last year. The decrease in non-interest income was largely due to a $134 thousand decline in gain on the sale of securities and a $53 thousand decrease in service fees on deposit accounts. The decrease in non-interest income was partly offset by increases in other income and insurance commissions and fees of $67 thousand and $45 thousand, respectively. 

Non-Interest Expense – Our non-interest expenses increased $366 thousand, or 9.9%, to $4.1 million for the quarter ended June 30, 2012 as compared to the same period last year. The increase for the second quarter of 2012 versus the same period in 2011 was largely due to an increase of $138 thousand in salaries and employee benefits. The increase was mostly attributed to approximate costs of $110 thousand related to the hiring of additional commercial lenders and support staff. In addition, furniture, equipment and data processing, advertising and promotion and FDIC assessments increased $46 thousand, $42 thousand and $46 thousand, respectively, for the second quarter of 2012 versus the same period in 2011. The increase in FDIC assessments resulted from deposit growth for 2012 as compared to the prior year.

Income Taxes - our income tax expense, which includes both federal and state taxes, was $65 thousand for the three months ended June 30, 2012, representing a 11.9% effective tax rate, compared to income tax expense of $229 thousand for the second quarter of 2011, representing a 24.0% effective tax rate. The effective tax rate benefited from tax exempt income from securities and bank-owned life insurance policies.

23

COMPARISION OF OPERATING RESULTS FOR SIX MONTHS ENDED JUNE 30, 2012 AND 2011

Overview – We reported net income of $286 thousand for the six months ended June 30, 2012, as compared to net income of $1.4 million for the same period in 2011. Basic and diluted income per share for the six months ended June 30, 2012 were $0.09 compared to the basic and diluted earnings per share of $0.44 and $0.43, respectively, for the comparable period of 2011. The decline in net income was largely attributed to higher operating costs attributed to supporting our growth initiatives, costs related to the resolution of one of our largest foreclosed assets and a decline in the net interest margin.

Net income before taxes for our Tri-State segment decreased $48 thousand, or 30.4%, resulting in a net income before taxes of $110 thousand for the first six months of 2012 compared $158 thousand for the same period in 2011. The decline was largely due to the expansion of sales staff and a decline in contingency income. The Tri-State revenues for the first half of 2012 were higher by 2.5% and when adjusting for a decline in contingency income ($69 thousand), core revenues were up 9.4% first six months of 2012 as compared to the same period last year. Expenses were higher for the first half of 2012 by $77 thousand, or 7.5%, as compared to the same period last year principally due to the addition of sales staff.

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 period ended June 30, 2012 and 2011.

	Six Months Ended June 30,
(Dollars in thousands)	2012									2011
	Average						Average			Average						Average
Earning Assets:	Balance			Interest  (1)			Rate (2)			Balance			Interest  (1)			Rate (2)
Securities:
Tax exempt (3)	$	28,051		$	811			5.81	%	$	29,913		$	883			5.95	%
Taxable		83,766			753			1.81	%		54,181			675			2.51	%
Total securities		111,817			1,564			2.81	%		84,094			1,558			3.74	%
Total loans receivable (4)		338,492			8,825			5.24	%		342,511			9,523			5.61	%
Other interest-earning assets		26,499			26			0.20	%		17,111			16			0.19	%
Total earning assets		476,808		$	10,415			4.39	%		443,716		$	11,097			5.04	%
Non-interest earning assets		41,447									36,425
Allowance for loan losses		(7,670	)								(7,209	)
Total Assets	$	510,585								$	472,932
Sources of Funds:
Interest bearing deposits:
NOW	$	94,055		$	93			0.20	%	$	79,558		$	220			0.56	%
Money market		18,204			36			0.39	%		13,960			38			0.56	%
Savings		163,619			359			0.44	%		169,839			594			0.71	%
Time		109,037			863			1.59	%		90,919			684			1.52	%
Total interest bearing deposits		384,915			1,351			0.71	%		354,276			1,536			0.87	%
Borrowed funds		26,000			529			4.03	%		27,295			529			3.86	%
Junior subordinated debentures		12,887			123			1.88	%		12,887			109			1.69	%
Total interest bearing liabilities		423,802		$	2,003			0.95	%		394,458		$	2,174			1.11	%
Non-interest bearing liabilities:
Demand deposits		44,557									38,616
Other liabilities		1,972									2,332
Total non-interest bearing liabilities		46,529									40,948
Stockholders' equity		40,254									37,526
Total Liabilities and Stockholders' Equity	$	510,585								$	472,932
Net Interest Income and Margin (5)				$	8,412			3.55	%				$	8,923			4.06	%
Tax-equivalent basis adjustment  (6)					(276	)								(300	)
Net Interest Income				$	8,136								$	8,623

(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

(6) Calculated using a 39% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance

24

Net Interest Income – Net interest income, on a fully taxable equivalent basis, decreased $511 thousand, or 5.7%, to $8.4 million for the six months ended June 30, 2012, as compared to $8.9 million for same period in 2011. Our net interest margin declined 51 basis points to 3.55% for the first six months of 2012, compared to 4.06% for the same period last year. The decline was mostly attributed to a 65 basis point decline in the average rate on earning assets to 4.39% for the six month period ended June 30, 2012, as compared to the same period last year. The decline in net interest income was partly offset by an increase in the average balance of earning assets, which grew $33.1 million to $476.8 million at June 30, 2012, as compared to June 30, 2011.

Interest Income – Our total interest income, on a fully taxable equivalent basis, decreased $682 thousand, or 6.1%, to $10.4 million for the six months ended June 30, 2012, as compared to the same period last year. The decline was due to lower earning asset yields, which decreased 65 basis points to 4.39% for the six months ended June 30, 2012, as compared to the same period in 2011.

Our total interest income earned on loans receivable decreased $698 thousand, or 7.3%, to $8.8 million for the six months ended June 30, 2012, as compared to the same period in 2011. The decline was driven by a 37 basis point decline in average yields to 5.24% for the six months ended June 30, 2012, as compared to the same period in 2011. The decline in interest income earned on loans receivable was also impacted by a $4.0 million decline in average balances on loans receivable to $338.5 million for the six months ended June 30, 2012, as compared to the same period in 2011.

Our total interest income earned on securities, on a fully taxable equivalent basis, increased $6 thousand, or 0.4%, to $1.6 million for the six months ended June 30, 2012 and 2011. This increase was largely due to a $27.7 million, or 33.0%, increase in average balance of securities for the six months ended June 30, 2012 as compared to same period last year. The increase resulted from investing excess liquidity generated from deposit growth outpacing loan growth. The increase in interest income on securities was mostly offset by a decrease in the average rate earned on securities, which declined 93 basis points for the six months ended June 30, 2012, as compared to the same period last year. The lower yields on securities reflect investment in securities in a low market rate environment.

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 $10 thousand for the six months ended June 30, 2012, as compared to the same period in 2011 due to a $9.4 million growth in average balances.

Interest Expense – Our interest expense for the six months ended June 30, 2012 decreased $171 thousand, or 7.9%, to $2.0 million from $2.2 million for the same period in 2011. The improvement was principally due to lower average rates paid on total interest-bearing liabilities, which declined 16 basis points from 1.11% for the six months ended June 30, 2011, to 0.95% for the same period in 2012. The improvement in interest expense was partly offset by an increase in average balances in interest-bearing liabilities, which grew $29.3 million, or 7.4%, to $423.8 million for the six months ended June 30, 2012, from $394.5 million for the same period in 2011.

Our interest expense on deposits declined $185 thousand, or 12.0%, for the six months ended June 30, 2012, as compared to the same period last year. The decline was largely attributed to lower rates on total interest bearing deposits, which decreased 16 basis points for the six months ended 2012 as compared to the same period in 2011. The decrease in rates on deposit products reflects managements’ asset/liability strategies and a lower market rate environment between the two periods. The aforementioned benefit from the decline in rates paid on deposits was partly offset by $30.6 million, or 8.6%, increase in interest bearing deposits.

Provision for Loan Losses – The loan loss provision for the first six months of 2012 decreased $133 thousand, or 6.8%, to $1.8 million compared to a provision of $2.0 million for the same period in 2011. 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 – Our non-interest income decreased $3 thousand, or 0.1%, to $2.7 million for the six months ended June 30, 2012, as compared to the same period last year. The decrease in non-interest income was largely due to a $94 thousand decrease in service fees on deposits and a $75 thousand decline in gain on sale of securities. Increases in other income, gain on sale of loans and insurance commissions and fees of $64 thousand, $47 thousand and $45 thousand, respectively, mostly offset the aforementioned declines.

25

Non-Interest Expense – Our non-interest expenses increased $1.4 million, or 18.7%, to $9.0 million for the six months ended June 30, 2012, as compared to the same period last year. The increase for the first half of 2012 compared to the same period in 2011 was largely due to increases in salaries and benefits and write-downs on foreclosed real estate of $555 thousand and $539 thousand, respectively, between the two first six months of 2012 and 2011. The increase in write-downs and expenses related to foreclosed real estate was principally due to the prospective sale of our largest foreclosed asset scheduled for closing during the third quarter. The increase in salaries and employee benefits was mostly attributed to costs of $270 thousand related to the hiring of additional commercial lenders and support staff, higher medical benefit costs and severance costs of $110 thousand for a former executive during the first quarter of 2012.

Income Taxes – Our income tax expense, which includes both federal and state taxes, was a tax benefit of $200 thousand for the six months ended June 30, 2012, representing a 233.2% effective tax benefit rate, compared to a tax expense of $438 thousand for the same period in 2011, representing a 23.6% effective tax rate. The effective tax rate benefited from tax exempt income from securities and bank-owned life insurance policies.

COMPARISION OF FINANCIAL CONDITION AT JUNE 30, 2012 TO DECEMBER 31, 2011

At June 30, 2012, our total assets were $512.2 million, an increase of $5.2 million, or 1.0%, as compared to total assets of $507.0 million at December 31, 2011.

Cash and Cash Equivalents – Our cash and cash equivalents decreased by $25.0 million to $12.5 million at June 30, 2012, or 2.4% of total assets, from $37.5 million, or 7.4% of total assets, at December 31, 2011. The decrease was largely due to the investment of excess liquidity into securities.

Securities Portfolio – At June 30, 2012, total investment securities, which include available-for-sale and held-to-maturity securities, were $120.7 million compared to $100.6 million at December 31, 2011. Available-for-sale securities were $115.5 million at June 30, 2012, compared to $96.4 million at December 31, 2011. 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 $5.2 million at June 30, 2012, compared to $4.2 million at December 31, 2011.

Other investments totaled $1.9 million at June 30, 2012, and December 31, 2011 and consisted primarily of FHLB stock. We also held $100 thousand in time deposits with other financial institutions at June 30, 2012, and at December 31, 2011.

Net unrealized gains were $1.9 million and $1.3 million at June 30, 2012, and December 31, 2011, respectively. The improvement in the fair value of the investment securities is driven by state and political subdivisions. Gross unrealized gains improved by $383 thousand to $2.2 million at June 30, 2012, as compared to $1.9 million at December 31, 2011. The improvement in gross unrealized losses of $167 thousand to $362 thousand at June 30, 2012, as compared to December 31, 2011, was largely attributed to higher fair values of state and political subdivisions.

We conduct a regular assessment of our investment securities to determine whether any securities are other-than-temporarily impaired (“OTTI”). Further detail of the composition of the securities portfolio and discussion of the results of the most recent OTTI assessment are in Note 2 – Securities to the unaudited consolidated financial statements. Our securities in unrealized loss positions are mostly driven by changes in spreads and market interest rates. All of our debt and equity securities have been evaluated for other-than-temporary impairment as of June 30, 2012, and we do not consider any security OTTI. We evaluated the prospects of the issuers in relation to the severity and the duration of the unrealized losses. Based on that evaluation, we do not intend to sell and it is more likely than not that we will not have to sell any of our securities before recovery of their cost basis.

Our equity portfolio, which amounted to a fair value of $1.3 million, is comprised primarily of investments in other banks, an equity fund and a tax exempt mutual fund. During the fourth quarter of 2011, we recognized a $231 thousand pre-tax ($183 thousand after-tax, or $0.06 per share) non-cash impairment charge related to an equity portfolio fund and common stock. We recognized a $144 thousand charge on the equity portfolio fund comprised of common stocks of bank holding companies that had an amortized cost of $250 thousand and a termination date of December 2012. The additional $87 thousand impairment charge was recognized on a common stock that had an amortized cost of $230 thousand. The impairment was recognized because the market value of this security was below our amortized cost for an extended period of time along with credit deterioration in some of the underlying collateral and it was not believed the market value of this security would recover to our amortized cost. We continue to closely monitor the performance of our equity securities that 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 OTTI, which could result in a future non-cash charge to earnings. We held no high-risk securities or derivatives at June 30, 2012, or December 31, 2011.

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Loans – The loan portfolio comprises our largest class of earning assets.Total loans receivable, net of unearned income, at June 30, 2012, increased $7.2 million to $346.9 million from $339.7 million at year-end 2011. The increase was largely in commercial real estate loans, which grew by $11.9 million, or 5.5%, to $228.0 million at June 30, 2012 as compared to December 31, 2011. Approximately 96% of our loan portfolio is secured by real estate and less than 5% of the loan portfolio is commercial and industrial based loans. We do not originate sub-prime or unconventional one to four family real estate loans.

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

(Dollars in thousands)	June 30, 2012		December 31, 2011
Commercial and industrial loans	$	13,106	$	13,711
Construction		7,103		8,520
Commercial real estate		228,042		216,191
Residential real estate		97,635		100,175
Consumer and other		1,328		1,336
Total gross loans	$	347,214	$	339,933

Loan and Asset Quality – Our overall asset quality continues to show signs of improvement as our classified/criticized/foreclosed assets declined $6.9 million, or 13.8% for June 30, 2012 as compared to December 31, 2011. Our classified/criticized/foreclosed assets totaled $42.7 million at June 30, 2012, as compared to $49.6 million at December 31, 2011 and have declined 31.9% from a historical high of $62.8 million at March 31, 2010. Loans internally rated “Substandard,” “Doubtful” or “Loss” are considered classified assets, while loans rated as “Special Mention” are considered criticized. Such risk ratings are consistent with the classification system used by regulatory agencies and are consistent with industry practices.

Non-performing assets, which include non-accrual loans, 90 days past due and still accruing, performing troubled debt restructured loans and foreclosed assets, decreased $3.5 million, or 10.2%, to $30.5 million at June 30, 2012, as compared to $34.0 million at December 31, 2011. The decrease was largely due to the pay-off of our second largest non-performing asset ($2.9 million), net charge-offs of $2.8 million and a $2.8 million reduction in trouble debt restructured loans. The decrease was partly offset by one borrowing relationship that totaled $3.8 million that was previously classified that became non-accrual during the first quarter of 2012. The ratio of non-performing assets to total assets for June 30, 2012, and December 31, 2011 were 5.96% and 6.71%, respectively. The allowance for loan losses was $6.3 million, or 1.8% of total loans, at June 30, 2012, compared to $7.2 million, or 2.1% of total loans, at December 31, 2011. Non-accrual loans at June 30, 2012, primarily consist of loans which are collateralized by real estate. At June 30, 2012, we held 15 foreclosed real estate properties totaling $5.6 million. Foreclosed real estate properties were recorded at the lower of its carrying value or fair value less costs to sell and are currently being marketed for sale.

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, 2012			December 31, 2011
Non-accrual loans	$	24,243		$	24,283
Non-accrual loans to total loans		6.96	%		7.15	%
Non-performing assets	$	30,531		$	34,006
Non-performing assets to total assets		5.96	%		6.71	%
Allowance for loan losses as a % of non-performing loans		25.19	%		26.03	%
Allowance for loan losses to total loans		1.80	%		2.12	%

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A loan is considered impaired, in accordance with the impairment accounting guidance (FASB ASC 310-10-35-16), 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, 2012, were $24.9 million and at December 31, 2011, were $27.7 million. Impaired loans measured at fair value on a non-recurring basis increased to $12.4 million on June 30, 2012 from $11.6 million at December 31, 2011. The principal balances on loans measured at fair value were $14.7 million and $13.6 million, net of valuation allowance of $2.2 million at June 30, 2012 and $2.0 million at December 31, 2011. 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. Impaired and restructured loans still accruing totaled $604 thousand million at June 30, 2012, and $3.4 million at December 31, 2011. 

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, 2012, we had eight loan relationships totaling $3.4 million that it deemed potential problem loans. Management is actively monitoring these loans.

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

Allowance for Loan Losses – The allowance for loan losses consists of general, allocated and unallocated components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified 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, 2012, the total allowance for loan losses decreased $950 thousand, or 13.2%, to $6.3 million, as compared to $7.2 million at December 31, 2011. The components of this decrease were a provision for loan losses of $1.8 million and net charge-offs totaling $2.8 million in the first six months of 2012. 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 1.80% at June 30, 2012, and 2.12% at December 31, 2011.

The table below presents information regarding our provision and allowance for loan losses at June 30, 2012 and 2011:

(Dollars in thousands)	June 30, 2012			June 30, 2011
Balance, beginning of period	$	7,210		$	6,397
Provision		1,818			1,951
Charge-offs		(2,850	)		(1,352	)
Recoveries		82			540
Balance, end of period	$	6,260		$	7,536

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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, 2012					December 31, 2011
			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	$	430		3.8	%	$	304		4.0	%
Construction		170		2.0	%		294		2.5	%
Commercial real estate		4,547		65.7	%		4,833		63.6	%
Residential real estate		1,055		28.1	%		987		29.5	%
Consumer and other loans		11		0.4	%		9		0.4	%
Unallocated		47		-			783
Total	$	6,260		100.0	%	$	7,210		100.0	%

Bank-Owned Life Insurance (BOLI) – Our BOLI carrying value amounted to $11.3 million at June 30, 2012, and $11.1 million at December 31, 2011.

Goodwill and Other Intangibles – Goodwill represents the excess of the purchase price over the fair market value of net assets acquired. At June 30, 2012 and December 31, 2011, 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 – Total deposits increased $4.7 million, or 1.1%, to $430.1 million at June 30, 2012 from $425.4 million at December 31, 2011. The increase was largely in non-interest bearing deposits, which increased $3.3 million to $48.1 million at June 30, 2012, from $44.8 million at December 31, 2011.

Borrowings – Borrowings consist of long term advances from the FHLB. The advances are secured under terms of a blanket collateral agreement by a pledge of qualifying mortgage loans. We had $26.0 million in borrowings, at a weighted average interest rate of 4.03%, at June 30, 2012, and at December 31, 2011. The borrowings at June 30, 2012 consisted of advances with quarterly convertible options that allow the FHLB to change the note rate to a then current market rate.

Junior Subordinated Debentures – On June 28, 2007, we raised $12.5 million in capital through the issuance of junior subordinated debentures to a non-consolidated statutory trust subsidiary. The subsidiary in turn issued $12.5 million in variable rate capital trust pass through securities to investors in a private placement. The interest rate is based on the three-month LIBOR plus 144 basis points and adjusts quarterly. The rate at June 30, 2012, was 1.91%. The capital securities are redeemable by us during the first five years at a redemption price of 103.5% of par for the first year and thereafter on a sliding scale down to 100% of par on or after September 15, 2012, in whole or in part or earlier if the regulatory capital or tax treatment of the securities is substantially changed. 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 $40.5 million at June 30, 2012, and $39.9 million at year-end 2011. In order to preserve capital, our Board of Directors elected not to declare any cash dividends in the first six months of 2012 or 2011. The Board will review our dividend policy based on a number of factors, including current economic and regulatory conditions, our earnings and asset quality and capital needs. On April 27, 2011, at our Annual Meeting of Stockholders, stockholders approved an increase in the number of authorized shares of common stock from 5 million to 10 million shares.

29

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, 2012, total deposits amounted to $430.1 million, an increase of $4.7 million, or 1.1%, from December 31, 2011. At June 30, 2012, advances from FHLB and subordinated debentures totaled $38.9 million and represented 7.6% of total assets as compared to $38.9 million and 7.7% of total assets at December 31, 2011.

Loan production continued to be our principal investing activity. Total loans receivable at June 30, 2012, amounted to $346.9 million, an increase of $7.2 million, or 2.1%, compared to December 31, 2011.

Our most liquid assets are cash and due from banks and federal funds sold. At June 30, 2012, the total of such assets amounted to $12.5 million, or 2.4%, of total assets, compared to $37.5 million, or 7.4%, of total assets at year-end 2011. Another significant liquidity source is our available-for-sale securities portfolio. At June 30, 2012, available-for-sale securities amounted to $115.5 million compared to $96.4 million at year-end 2011.

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 $27.9 millionthrough its membership in the FHLB and $4.0 million at Atlantic Central Bankers Bank at June 30, 2012. 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, 2012, the Bank's Tier I and Tier II capital ratios were 12.77% and 14.02%, respectively. In addition to the risk-based guidelines, the Bank's regulators require that banks which meet the regulators' highest performance and operational standards maintain a minimum leverage ratio (Tier I capital as a percent of tangible assets) of 4.0%. As of June 30, 2012, the Bank had a leverage ratio of 9.10%. 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. As of June 30, 2012, Sussex Bancorp’s total assets exceeded $500 million.

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, 2012, totaled $44.2 million and consisted of $22.1 million in commitments to grant commercial real estate, construction and land development loans, $10.5 million in home equity lines of credit, $9.9 million in other unused commitments and $1.7 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.

30

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 periodically involved in various legal proceedings as a normal incident to their businesses. In the opinion of management no material loss is expected from any such pending lawsuit.

Item 1A - Risk Factors

For a summary of risk factors relevant to our operations, see Part 1, Item 1A, “Risk Factors” in our 2011 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 Vice President and
	Chief Financial Officer
	Date: August 10, 2012

33

EXHIBIT INDEX

Number	Description
3.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on 10-Q filed with the SEC on August 15, 2011.)
3.2	Amended and Restated By-laws (incorporated by reference to Exhibit 3.II to the Current Report on Form 8-K filed with the SEC on April 28, 2010.)
31.1*	Certification of Anthony Labozzetta pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Steven M. Fusco pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	Financial statements from the quarterly report on Form 10-Q of Sussex Bancorp for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.

* Filed herewith

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

34

EX-31.1

Exhibit 31.1

I, Anthony Labozzetta, certify that:

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

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

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

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

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

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

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

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

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

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

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

By:	/s/ Anthony Labozzetta
	ANTHONY LABOZZETTA
	President and
	Chief Executive Officer
	Date: August 10, 2012

EX-31.2

Exhibit 31.2

I, Steven M. Fusco, certify that:

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

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

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

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

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

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

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

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

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

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

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

By:	/s/ Steven M. Fusco
	STEVEN M. FUSCO
	Senior Vice President and
	Chief Financial Officer
	Date: August 10, 2012

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

This statement is being furnished in connection with the filing by the Company of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2012 (the “Report”).

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

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

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

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

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

By:	/s/ Anthony Labozzetta
	ANTHONY LABOZZETTA
	President and
	Chief Executive Officer
	Date: August 10, 2012
By:	/s/ Steven M. Fusco
	STEVEN M. FUSCO
	Senior Vice President and
	Chief Financial Officer
	Date: August 10, 2012

XML

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, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 24,243	$ 24,283
Commercial And Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	396	32
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	3,529	2,458
Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	17,410	19,311
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total	$ 2,908	$ 2,482

XML

Fair Value Of Financial Instruments (Estimated Fair Values Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 115,508	$ 96,361
Carrying Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	12,531	37,500
Time deposits with other banks	100	100
Securities available-for-sale	115,508	96,361
Securities held-to-maturity	5,168	4,220
Federal Home Loan Bank stock	1,943	1,837
Loans receivable, net of allowance	340,624	332,495
Accrued interest receivable	1,688	1,735
Deposits	430,082	425,376
Borrowings	26,000	26,000
Junior subordinated debentures	12,887	12,887
Accrued interest payable	264	301
Fair Value Estimate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	12,531	37,500
Time deposits with other banks	100	100
Securities available-for-sale	115,508	96,361
Securities held-to-maturity	5,316	4,345
Federal Home Loan Bank stock	1,943	1,837
Loans receivable, net of allowance	352,675	334,403
Accrued interest receivable	1,688	1,735
Deposits	429,110	428,098
Borrowings	29,333	29,696
Junior subordinated debentures	6,418	6,613
Accrued interest payable	264	301
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	12,531	37,500
Time deposits with other banks	100	100
Securities available-for-sale	1,195	1,173
Federal Home Loan Bank stock	1,943
Accrued interest receivable	1,688	1,735
Deposits	321,415	314,571
Accrued interest payable	264	301
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	114,313	95,188
Securities held-to-maturity	5,316	4,345
Deposits	107,695	113,527
Borrowings	29,333	29,696
Junior subordinated debentures	6,418	6,613
Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
Loans receivable, net of allowance	$ 352,675	$ 334,403

XML

Stock-Based Compensation (Summary Of Information Regarding Stock Option Plans) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Stock-Based Compensation [Abstract]
Options outstanding, beginning of year, Number of Shares,	111,034
Options expired, Number of Shares	(4,389)
Options forfeited, Number of Shares	(23,274)
Options outstanding, end of quarter, Number of Shares	83,371
Options outstanding, beginning of year, Weighted Average Exercise Price per Share,	$ 12.25
Options expired, Weighted Average Exercise Price per Share	$ 8.90
Options forfeited, Weighted Average Exercise Price per Share	$ 11.97
Options outstanding, end of quarter, Weighted Average Exercise Price per Share	$ 12.51
Options outstanding, end of quarter, Weighted Average Contractual Term	1 year 10 months 2 days
Options outstanding, end of quarter, Aggregate Intrinsic Value
Options exercisable, end of quarter, Number of Shares	83,371
Options exercisable, end of quarter, Weighted Average Exercise Price per Share	$ 12.51
Options exercisable, end of quarter, Weighted Average Contractual Term	1 year 10 months 2 days
Options exercisable, end of quarter, Aggregate Intrinsic Value

XML

Segment Information (Schedule Of Segment Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011		Dec. 31, 2011
Segment Reporting Information [Line Items]
Net interest income from external sources	$ 4,150		$ 4,266		$ 8,136		$ 8,623
Other income from external sources	1,419		1,501		2,743		2,746
Depreciation and amortization	171		154		336		307
Income (loss) before income taxes	546		956		86		1,859
Income tax expense (benefit)	65	[1]	229	[1]	(200)	[1]	438	[1]
Total assets	512,190		473,163		512,190		473,163		506,953
Statutory tax rate					40.00%
Banking And Financial Services [Member]
Segment Reporting Information [Line Items]
Net interest income from external sources	4,150		4,266		8,136		8,623
Other income from external sources	810		937		1,535		1,567
Depreciation and amortization	169		151		331		301
Income (loss) before income taxes	475		908		(24)		1,701
Income tax expense (benefit)	37	[1]	210	[1]	(244)	[1]	375	[1]
Total assets	508,701		470,020		508,701		470,020
Insurance Services [Member]
Segment Reporting Information [Line Items]
Other income from external sources	609		564		1,208		1,179
Depreciation and amortization	2		3		5		6
Income (loss) before income taxes	71		48		110		158
Income tax expense (benefit)	28	[1]	19	[1]	44	[1]	63	[1]
Total assets	$ 3,489		$ 3,143		$ 3,489		$ 3,143

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

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	Jun. 30, 2012
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 1,374
Less Than Twelve Months, Gross Unrealized Losses	(21)
Total, Fair Value	1,374
Total, Gross Unrealized Losses	$ (21)

XML

Fair Value Of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Qualitative Information About Level 3 Fair Value Measurements

		Qualitative Information about Level 3 Fair Value Measurements
		Fair				Range
		Value	Valuation	Unobservable		(Weighted
(Dollars in thousands)		Estimate	Techniques	Input		Average)
June 30, 2012:
Impaired loans	$	12,433	Appraisal of	Appraisal		0.00% to -66.3%
			collateral	adjustments (1)		(-11.3	%)
				Selling
				expenses (1)	-7.0%	(-7.0	%)
Foreclosed real estate		5,064	Appraisal of
			collateral

Estimated Fair Values Of Financial Instruments

						Quoted Prices in		Significant
						Active Markets		Other	Significant
	June 30, 2012					for Identical		Observable	Unobservable
		Carrying		Fair		Assets		Inputs	Inputs
(Dollars in thousands)		Amount		Value		(Level I)		(Level II)	(Level III)
Financial assets:
Cash and cash equivalents	$	12,531	$	12,531	$	12,531	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		115,508		115,508		1,195		114,313		-
Securities held to maturity		5,168		5,316		-		5,316		-
Federal Home Loan Bank stock		1,943		1,943		1,943		-		-
Loans receivable, net of allowance		340,624		352,675		-		-		352,675
Accrued interest receivable		1,688		1,688		1,688		-		-
Financial liabilities:
Deposits		430,082		429,110		321,415		107,695		-
Borrowings		26,000		29,333		-		29,333		-
Junior subordinated debentures		12,887		6,418		-		6,418		-
Accrued interest payable		264		264		264		-		-

						Quoted Prices in		Significant
						Active Markets		Other	Significant
		December 31, 2011				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	$	37,500	$	37,500	$	37,500	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		96,361		96,361		1,173		95,188		-
Securities held to maturity		4,220		4,345		-		4,345		-
Federal Home Loan Bank stock		1,837		1,837		-		-		-
Loans receivable, net of allowance		332,495		334,403		-		-		334,403
Accrued interest receivable		1,735		1,735		1,735		-		-
Financial liabilities:
Deposits		425,376		428,098		314,571		113,527		-
Borrowings		26,000		29,696		-		29,696		-
Junior subordinated debentures		12,887		6,613		-		6,613		-
Accrued interest payable		301		301		301		-		-

Measured On A Recurring Basis [Member]

Summary Of Financial Assets Measured At Fair Value

				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, 2012:
State and political subdivisions	$	27,969	$	-	$	27,969	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		86,194		-		86,194		-
Equity securities-financial services industry and other		1,345		1,195		150		-
	$	115,508	$	1,195	$	114,313	$	-
December 31, 2011:
State and political subdivisions	$	20,570	$	-	$	20,570	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,998		-		71,998		-
Private mortgage-backed securities		2,477		-		2,477		-
Equity securities-financial services industry and other		1,316		1,173		143		-
	$	96,361	$	1,173	$	95,188	$	-

Measured On A Nonrecurring Basis [Member]

Summary Of Financial Assets Measured At Fair Value

			Quoted Prices		Significant
			In Active		Other			Significant
		Fair	Markets for		Observable			Unobservable
		Value	Identical Assets		Inputs			Inputs
(Dollars in thousands)		Measurements	(Level I)		(Level II)			(Level III)
June 30, 2012:
Impaired loans	$	12,433	$	-	$	-	$	12,433
Foreclosed real estate		5,064		-				5,064
December 31, 2011:
Impaired loans	$	11,571	$	-	$	-	$	11,571
Foreclosed real estate		4,959		-		-		4,959

XML

Guarantees (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Guarantees [Abstract]
Undrawn standby letters of credit outstanding	$ 624

XML

Allowance For Loan Losses And Credit Quality Of Financing Receivables (Average Recorded Investment And Income Recognized) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Average Recorded Investment	$ 27,716	$ 25,815
Interest Income Recognized	126	204
Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment	12,490	13,492
Interest Income Recognized	62	98
Impaired Financing Receivable With Related Allowances [Member]
Average Recorded Investment	15,226	12,323
Interest Income Recognized	64	106
Commercial And Industrial Loans [Member] | Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment		19
Commercial And Industrial Loans [Member] | Impaired Financing Receivable With Related Allowances [Member]
Average Recorded Investment	127	77
Construction [Member] | Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment	2,293	3,795
Interest Income Recognized		1
Construction [Member] | Impaired Financing Receivable With Related Allowances [Member]
Average Recorded Investment	796	1,941
Commercial Real Estate Loans [Member] | Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment	8,534	8,859
Interest Income Recognized	30	80
Commercial Real Estate Loans [Member] | Impaired Financing Receivable With Related Allowances [Member]
Average Recorded Investment	13,571	9,694
Interest Income Recognized	49	105
Residential Real Estate [Member] | Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment	1,663	816
Interest Income Recognized	32	17
Residential Real Estate [Member] | Impaired Financing Receivable With Related Allowances [Member]
Average Recorded Investment	732	611
Interest Income Recognized	15	1
Consumer And Other [Member] | Impaired Financing Receivable With No Related Allowances [Member]
Average Recorded Investment		$ 3

XML

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, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 6,260	$ 7,617	$ 7,210	$ 7,536	$ 7,226	$ 6,397
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	2,233		1,957
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	3,980		4,470
Balance, Loans Receivable	347,214		339,933
Loans Receivable, Individually Evaluated for Impairment	24,846		27,694
Loans Receivable, Collectively Evaluated for Impairment	322,368		312,239
Commercial And Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	430	305	304	428	448	436
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	200		16
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	230		288
Balance, Loans Receivable	13,106		13,711
Loans Receivable, Individually Evaluated for Impairment	396		32
Loans Receivable, Collectively Evaluated for Impairment	12,710		13,679
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	170	582	294	969	1,347	1,183
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	112		50
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	58		244
Balance, Loans Receivable	7,103		8,520
Loans Receivable, Individually Evaluated for Impairment	3,529		2,458
Loans Receivable, Collectively Evaluated for Impairment	3,574		6,062
Commercial Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	4,547	5,186	4,833	4,773	3,953	3,760
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	1,614		1,572
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	2,933		3,261
Balance, Loans Receivable	228,042		216,191
Loans Receivable, Individually Evaluated for Impairment	18,013		22,722
Loans Receivable, Collectively Evaluated for Impairment	210,029		193,469
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	1,055	976	987	945	832	798
Allowance for Loan Losses, Balance Related to Loans Individually Evaluated for Impairment	307		319
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	748		668
Balance, Loans Receivable	97,635		100,175
Loans Receivable, Individually Evaluated for Impairment	2,908		2,482
Loans Receivable, Collectively Evaluated for Impairment	94,727		97,693
Consumer And Other [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	11		9
Allowance for Loan Losses, Balance Related to Loans Collectively Evaluated for Impairment	11		9
Balance, Loans Receivable	1,328		1,336
Loans Receivable, Collectively Evaluated for Impairment	1,328		1,336
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance, Allowance for Loan Losses	$ 47	$ 537	$ 783	$ 376	$ 592	$ 164

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, 2012	Dec. 31, 2011
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	$ 12,433	$ 11,571
Impaired Loans [Member] | Quoted Prices In Active Markets For Identical Assets (Level I) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets
Impaired Loans [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	12,433	11,571
Foreclosed Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets	5,064	4,959
Foreclosed Real Estate [Member] | Quoted Prices In Active Markets For Identical Assets (Level I) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets
Foreclosed Real Estate [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets
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	$ 5,064	$ 4,959

XML

Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards expense	$ 73	$ 46
Unrecognized compensation expense for non-vested restricted stock	$ 560
Unrecognized compensation expense for non-vested restricted stock, period for recognition	3 years 9 months 18 days
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option grants, maximum term, in years	10 years
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

Loans

6 Months Ended

Jun. 30, 2012

Loans [Abstract]

Loans

NOTE 3 – LOANS

The composition of net loans receivable at June 30, 2012, and December 31, 2011 is as follows:

(Dollars in thousands)		June 30, 2012			December 31, 2011
Commercial and industrial loans	$	13,106		$	13,711
Construction		7,103			8,520
Commercial real estate		228,042			216,191
Residential real estate		97,635			100,175
Consumer and other		1,328			1,336
		347,214			339,933
Unearned net loan origination fees		(330	)		(228	)
Allowance for loan losses		(6,260	)		(7,210	)
Net loans receivable	$	340,624		$	332,495

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 $827 thousand and $852 thousand at June 30, 2012, and December 31, 2011, respectively.

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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, 2012
Financing Receivable, Modifications [Line Items]
Net allocation of the allowance for credit losses	$ 4
Commercial Real Estate Loans [Member]
Financing Receivable, Modifications [Line Items]
Total, Recorded Investment	2,468
Performing [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Modifications [Line Items]
Total, Recorded Investment	604
Non-performing [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Modifications [Line Items]
Total, Recorded Investment	$ 1,864

XML

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, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Due after five years through ten years, Amortized Cost	$ 1,076
Due after ten years, Amortized Cost	25,744
Total bonds and obligations, Amortized Cost	26,820
Due after five years through ten years, Fair Value	1,129
Due after ten years, Fair Value	26,840
Total bonds and obligations, Fair Value	27,969
Total available for sale securities, Amortized Cost	113,783	95,162
Total available for sale securities ,Fair Value	115,508	96,361
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost	85,612	71,684
Total available for sale securities ,Fair Value	86,194	71,998
Private Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost		2,423
Total available for sale securities ,Fair Value		2,477
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Total available for sale securities, Amortized Cost	1,351	1,349
Total available for sale securities ,Fair Value	$ 1,345	$ 1,316

XML

Securities (Amortized Cost And Approximate Fair Value Of Securities Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 113,783	$ 95,162
Gross Unrealized Gains	2,066	1,728
Gross Unrealized Losses	(341)	(529)
Total available for sale securities ,Fair Value	115,508	96,361
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	26,820	19,706
Gross Unrealized Gains	1,201	883
Gross Unrealized Losses	(52)	(19)
Total available for sale securities ,Fair Value	27,969	20,570
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	85,612	71,684
Gross Unrealized Gains	842	786
Gross Unrealized Losses	(260)	(472)
Total available for sale securities ,Fair Value	86,194	71,998
Private Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		2,423
Gross Unrealized Gains		58
Gross Unrealized Losses		(4)
Total available for sale securities ,Fair Value		2,477
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,351	1,349
Gross Unrealized Gains	23	1
Gross Unrealized Losses	(29)	(34)
Total available for sale securities ,Fair Value	$ 1,345	$ 1,316

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Earnings Per Share (Calculation Methods Of Earnings Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share [Abstract]
Net income applicable to common shareholders (Numerator)	$ 481	$ 727	$ 286	$ 1,421
Net income applicable to common shareholders and assumed conversions (Numerator)	$ 481	$ 727	$ 286	$ 1,421
Basic, Shares (Denominator)	3,257,000	3,255,000	3,259,000	3,255,000
Non-vested stock awards, Shares (Denominator)	84,000	71,000	82,000	68,000
Diluted, Shares (Denominator)	3,341,000	3,326,000	3,341,000	3,323,000
Basic, Per Share Amount	$ 0.15	$ 0.22	$ 0.09	$ 0.44
Diluted, Per Share Amount	$ 0.14	$ 0.22	$ 0.09	$ 0.43
Shares of common stock outstanding not included in the computation of diluted EPS			83,371	116,075

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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	Jun. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	$ 32,020	$ 35,209
Less Than Twelve Months, Gross Unrealized Losses	(331)	(478)
Twelve Months or More, Fair Value	345	1,149
Twelve Months or More, Gross Unrealized Losses	(10)	(51)
Total, Fair Value	32,365	36,358
Total, Gross Unrealized Losses	(341)	(529)
State And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	4,965	115
Less Than Twelve Months, Gross Unrealized Losses	(50)	(2)
Twelve Months or More, Fair Value	139	124
Twelve Months or More, Gross Unrealized Losses	(2)	(17)
Total, Fair Value	5,104	239
Total, Gross Unrealized Losses	(52)	(19)
U.S. Government-Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	26,933	34,576
Less Than Twelve Months, Gross Unrealized Losses	(260)	(472)
Total, Fair Value	26,933	34,576
Total, Gross Unrealized Losses	(260)	(472)
Private Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value		518
Less Than Twelve Months, Gross Unrealized Losses		(4)
Total, Fair Value		518
Total, Gross Unrealized Losses		(4)
Equity Securities-Financial Services Industry And Other [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months, Fair Value	122
Less Than Twelve Months, Gross Unrealized Losses	(21)
Twelve Months or More, Fair Value	206	1,025
Twelve Months or More, Gross Unrealized Losses	(8)	(34)
Total, Fair Value	328	1,025
Total, Gross Unrealized Losses	$ (29)	$ (34)

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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, 2012	Dec. 31, 2011
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 5,168
Total held to maturity securities, Fair Value	5,316	4,345
State And Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	5,168	4,220
Gross Unrealized Gains	169	125
Gross Unrealized Losses	(21)
Total held to maturity securities, Fair Value	$ 5,316	$ 4,345

XML

Securities

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

Securities

NOTE 2 – SECURITIES

Available for Sale

The amortized cost and approximate fair value of securities available for sale as of June 30, 2012, and December 31, 2011 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)		Cost		Gains		Losses			Value
June 30, 2012
State and political subdivisions	$	26,820	$	1,201	$	(52	)	$	27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		842		(260	)		86,194
Equity securities-financial services industry and other		1,351		23		(29	)		1,345
	$	113,783	$	2,066	$	(341	)	$	115,508
December 31, 2011
State and political subdivisions	$	19,706	$	883	$	(19	)	$	20,570
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,684		786		(472	)		71,998
Private mortgage-backed securities		2,423		58		(4	)		2,477
Equity securities-financial services industry and other		1,349		1		(34	)		1,316
	$	95,162	$	1,728	$	(529	)	$	96,361

Securities with a carrying value of approximately $26.5 million and $21.5 million at June 30, 2012, and December 31, 2011, 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, 2012, 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		-		-
Due after five years through ten years		1,076		1,129
Due after ten years		25,744		26,840
Total bonds and obligations		26,820		27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		86,194
Equity securities-financial services industry and other		1,351		1,345
Total available for sale securities	$	113,783	$	115,508

Gross gains on sales of securities available for sale were $214 thousand and $269 thousand for the six months ended June 30, 2012 and 2011, respectively, and gross losses were $20 thousand for the six months ended June 30, 2012. There were no gross losses on the sales of securities in the first six months of 2011.

Temporarily Impaired Securities

The following table shows our investments' gross unrealized losses and fair value with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual available for sale securities have been in a continuous unrealized loss position at June 30, 2012, and December 31, 2011.

		Less Than Twelve Months					Twelve Months or More				Total
			Gross					Gross					Gross
		Fair	Unrealized				Fair	Unrealized				Fair	Unrealized
(Dollars in thousands)		Value	Losses				Value	Losses				Value	Losses
June 30, 2012
State and political subdivisions	$	4,965	$	(50	)	$	139	$	(2	)	$	5,104	$	(52	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		26,933		(260	)		-		-			26,933		(260	)
Equity securities-financial services industry
and other		122		(21	)		206		(8	)		328		(29	)
Total temporarily impaired securities	$	32,020	$	(331	)	$	345	$	(10	)	$	32,365	$	(341	)
December 31, 2011
State and political subdivisions	$	115	$	(2	)	$	124	$	(17	)	$	239	$	(19	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		34,576		(472	)		-		-			34,576		(472	)
Private mortgage-backed securities		518		(4	)		-		-			518		(4	)
Equity securities-financial services industry
and other		-		-			1,025		(34	)		1,025		(34	)
Total temporarily impaired securities	$	35,209	$	(478	)	$	1,149	$	(51	)	$	36,358	$	(529	)

As of June 30, 2012, we reviewed our available for sale investment portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred.

State and Political Subdivisions

At June 30, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions portfolio were caused by changes in interest rates and spreads and were not the result of credit quality. At June 30, 2012, there were 10 securities with a fair value of $5.1 million that had an unrealized loss that amounted to $52 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, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our state and political subdivision securities at June 30, 2012 were deemed to be other-than-temporarily-impaired.

Mortgage-Backed Securities

At June 30, 2012, the decline in fair value and the unrealized losses for our mortgaged-backed securities backed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality. At June 30, 2012, there were 13 securities with a fair value of $26.9 million that had an unrealized loss that amounted to $260 thousand. As of June 30, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our mortgage-backed securities at June 30, 2012, were deemed to be other-than-temporarily impaired.

Equity Securities

Our investments in marketable equity securities consist primarily of a mutual fund, one equity portfolio fund and common stock of entities in the financial services industry. At June 30, 2012, there were three securities with a fair value of $328 thousand that had an unrealized loss of $29 thousand. These securities have been adversely impacted by the effects of the current economic environment on the financial services industry. We evaluated each of the underlying banks for credit impairment based on its financial condition and performance. Based on our evaluation and our ability and intent to hold those investments for a reasonable period of time sufficient for a forecasted recovery of amortized cost, we do not consider these investments to be other-than-temporarily impaired at June 30, 2012. We continue to closely monitor the performance of the securities we own as well as the impact from any further deterioration in the economy or in the banking industry that may adversely affect these securities. We will continue to evaluate them for other-than-temporary impairment, which could result in a future non-cash charge to earnings.

Held to Maturity Securities

The amortized cost and approximate fair value of securities held to maturity as of June 30, 2012, and December 31, 2011 are summarized as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)		Cost		Gains		Losses			Value
June 30, 2012
State and political subdivisions	$	5,168	$	169	$	(21	)	$	5,316
December 31, 2011
State and political subdivisions	$	4,220	$	125	$	-		$	4,345

The amortized cost and carrying value of securities held to maturity at June 30, 2012, are shown below by contractual maturity. Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	1,146	$	1,146
Due after five years through ten years		1,052		1,100
Due after ten years		2,970		3,070
Total held to maturity securities	$	5,168	$	5,316

Temporarily Impaired Securities

The following table shows our held to maturity investments' gross unrealized losses and fair value with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by investment category and length of time that individual held to maturity securities have been in a continuous unrealized loss position, at June 30, 2012. There were no securities with unrealized losses on December 31, 2011.

		Less Than Twelve Months					Twelve Months or More				Total
				Gross				Gross					Gross
		Fair		Unrealized			Fair	Unrealized			Fair		Unrealized
(Dollars in thousands)		Value		Losses			Value	Losses			Value		Losses
June 30, 2012
State and political subdivisions	$	1,374	$	(21	)	$	-	$	-	$	1,374	$	(21	)

As of June 30, 2012, we reviewed our held to maturity investment portfolio for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt and equity securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred.

State and Political Subdivisions

At June 30, 2012, the decline in fair value and the unrealized losses for our state and political subdivisions portfolio were caused by changes in interest rates and spreads and were not the result of credit quality. At June 30, 2012, there were 3 securities with a fair value of $1.4 million that had an unrealized loss that amounted to $21 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, 2012, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our state and political subdivision securities at June 30, 2012, were deemed to be other-than-temporarily impaired.

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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, 2012	Dec. 31, 2011
Securities [Abstract]
Due in one year or less, Amortized Cost	$ 1,146
Due after five years through ten years, Amortized Cost	1,052
Due after ten years, Amortized Cost	2,970
Due in one year or less, Fair Value	1,146
Due after five years through ten years, Fair Value	1,100
Due after ten years, Fair Value	3,070
Total held to maturity securities, Amortized Cost	5,168
Total held to maturity securities, Fair Value	$ 5,316	$ 4,345

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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, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 347,214	$ 339,933
Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	13,106	13,711
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	7,103	8,520
Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	228,042	216,191
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	97,635	100,175
Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,328	1,336
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	310,043	295,849
Pass [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	12,376	13,103
Pass [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	3,574	5,057
Pass [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	199,673	180,862
Pass [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	93,092	95,491
Pass [Member] | Consumer And Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,328	1,336
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	7,115	7,879
Special Mention [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	333	398
Special Mention [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	6,330	6,987
Special Mention [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	452	494
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	28,777	35,624
Substandard [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	22	202
Substandard [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	3,529	3,463
Substandard [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	21,467	27,769
Substandard [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	3,759	4,190
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	1,279	581
Doubtful [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	375	8
Doubtful [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	572	573
Doubtful [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans receivable	$ 332

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Fair Value Of Financial Instruments (Qualitative Information About Level 3 Fair Value Measurements) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Impaired Loans [Member]
Financial Assets	$ 12,433	$ 11,571
Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Financial Assets	12,433	11,571
Valuation Techniques	Apprasial of collateral
Foreclosed Real Estate [Member]
Financial Assets	5,064	4,959
Foreclosed Real Estate [Member] | Significant Unobservable Inputs (Level III) [Member]
Financial Assets	$ 5,064	$ 4,959
Valuation Techniques	Apprasial of collateral
Appraisal Adjustments [Member] | Maximum [Member] | Significant Unobservable Inputs (Level III) [Member]
Range (Weighted Average)	66.30%
Appraisal Adjustments [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level III) [Member]
Range (Weighted Average)	11.30%
Appraisal Adjustments [Member] | Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Unobservable Input	Apprasial adjustments
Appraisal Adjustments [Member] | Impaired Loans [Member] | Minimum [Member] | Significant Unobservable Inputs (Level III) [Member]
Range (Weighted Average)	0.00%
Selling Expenses [Member] | Impaired Loans [Member] | Significant Unobservable Inputs (Level III) [Member]
Unobservable Input	Selling expenses
Selling Expenses [Member] | Impaired Loans [Member] | Minimum [Member] | Significant Unobservable Inputs (Level III) [Member]
Range (Weighted Average)	7.00%
Selling Expenses [Member] | Impaired Loans [Member] | Weighted Average [Member] | Significant Unobservable Inputs (Level III) [Member]
Range (Weighted Average)	7.00%

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 5,553	$ 3,903
Interest-bearing deposits with other banks	6,978	33,597
Cash and cash equivalents	12,531	37,500
Interest bearing time deposits with other banks	100	100
Securities available-for-sale, at estimated fair value	115,508	96,361
Securities held-to-maturity, at cost (estimated fair value of $5,316 At June 30, 2012 and $4,345 at December 31, 2011)	5,168	4,220
Federal Home Loan Bank Stock, at cost	1,943	1,837
Loans receivable, net of unearned income	346,884	339,705
Less: allowance for loan losses	6,260	7,210
Net loans receivable	340,624	332,495
Foreclosed real estate	5,566	5,509
Premises and equipment, net	6,784	6,778
Accrued interest receivable	1,688	1,735
Goodwill	2,820	2,820
Bank-owned life insurance	11,346	11,142
Other assets	8,112	6,456
Total Assets	512,190	506,953
LIABILITIES AND STOCKHOLDERS' EQUITY
Non-interest bearing	48,089	44,762
Interest bearing	381,993	380,614
Total deposits	430,082	425,376
Long term borrowings	26,000	26,000
Accrued interest payable and other liabilities	2,699	2,788
Junior subordinated debentures	12,887	12,887
Total Liabilities	471,668	467,051
Stockholders' Equity:
Preferred stock, no par value, 1,000,000 shares authorized; none issued
Common stock, no par value, 10,000,000 shares authorized; issued shares 3,409,307 in 2012 and 3,373,793 in 2011; outstanding shares 3,398,124 in 2012 and 3,372,949 in 2011	28,037	27,964
Treasury stock, at cost; 11,183 shares in 2012 and 844 shares in 2011	(59)	(4)
Retained earnings	11,509	11,223
Accumulated other comprehensive income	1,035	719
Total Stockholders' Equity	40,522	39,902
Total Liabilities and Stockholders' Equity	$ 512,190	$ 506,953

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Other Comprehensive Income (Components Of Other Comprehensive Income And Related Tax Effects) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Other Comprehensive Income [Abstract]
Net unrealized gains on available for sale securities arising during the period	$ 303	$ 855	$ 720	$ 1,072
Less: reclassification adjustments for net gains included in net income (loss)	135	269	194	269
Net unrealized gain	168	586	526	803
Tax effect	(67)	(234)	(210)	(321)
Other comprehensive income, net of tax	$ 101	$ 352	$ 316	$ 482

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash Flows from Operating Activities
Net income	$ 286	$ 1,421
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,818	1,951
Provision for depreciation and amortization	336	307
Net amortization of securities premiums and discounts	1,212	416
Net realized gain on sale of securities	(194)	(269)
Net realized gain on sale of loans, held for sale	(47)
Proceeds from the sale of loans held for sale	638
Net realized gain on sale of premises and equipment	6
Net realized (gain) loss on sale of foreclosed real estate	(3)	4
Provision for foreclosed real estate	684	145
Deferred income taxes	(418)
Earnings on bank owned life insurance	(204)	(209)
Compensation expense for stock options and stock awards	73	46
(Increase) decrease in assets:
Accrued interest receivable	47	135
Other assets	(1,451)	(3,665)
(Decrease) increase in accrued interest payable and other liabilities	(89)	244
Net Cash Provided by Operating Activities	2,694	526
Cash Flows from Investing Activities
Purchases	(40,131)	(7,297)
Sales	7,125	6,271
Maturities, calls and principal repayments	13,386	19,172
Securities held-to-maturity:
Purchases	(1,933)	(966)
Maturities, calls and principal repayments	966
Net increase in loans	(11,478)	(4,842)
Maturities of interest bearing time deposits		403
Proceeds from the sale of foreclosed real estate	202
Purchases of bank premises and equipment	(357)	(69)
Proceeds from the sale of premises and equipment	12
Purchases of bank-owned life insurance		398
Net increase in FHLB stock	(106)
Net Cash (Used in) Provided by Investing Activities	(32,314)	13,070
Cash Flows from Financing Activities
Net increase in deposits	4,706	6,947
Repayments of borrowings		(10,000)
Purchase of treasury stock	(55)
Net Cash Provided by (Used in) Financing Activities	4,651	(3,053)
Net (Decrease) Increase in Cash and Cash Equivalents	(24,969)	10,543
Cash and Cash Equivalents - Beginning	37,500	17,749
Cash and Cash Equivalents - Ending	12,531	28,292
Supplementary Cash Flows Information
Interest paid	2,040	2,194
Income taxes paid	162	834
Supplementary Schedule of Noncash Investing and Financing Activities
Foreclosed real estate acquired in settlement of loans	940	2,700
Loans transferred to held for sale	$ 591

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Loans (Composition Of Net Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 347,214	$ 339,933
Unearned net loan origination fees	(330)	(228)
Allowance for loan losses	(6,260)	(7,210)
Net Loans Receivable	340,624	332,495
Commercial And Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	13,106	13,711
Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	7,103	8,520
Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	228,042	216,191
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	97,635	100,175
Consumer And Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans receivable, gross	$ 1,328	$ 1,336

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2012

Other Comprehensive Income [Abstract]

Components Of Other Comprehensive Income And Related Tax Effects

(Dollars in thousands)		Three Months Ended June 30,						Six Months Ended June 30,
		2012			2011			2012		2011
Net unrealized gains on available for sale securities arising during the period	$	303		$	855		$	720		$	1,072
Less: reclassification adjustments for net gains included in net income		135			269			194			269
		168			586			526			803
Tax effect		(67	)		(234	)		(210	)		(321	)
	$	101		$	352		$	316		$	482

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Changes In The Allowance For Loan Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 7,617	$ 7,226	$ 7,210	$ 6,397
Charge-offs	(2,382)	(1,327)	(2,850)	(1,352)
Recoveries	67	525	82	540
Provision	958	1,112	1,818	1,951
Ending balance	6,260	7,536	6,260	7,536
Commercial And Industrial Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	305	448	304	436
Charge-offs		(13)		(13)
Recoveries	1	2	2	3
Provision	124	(9)	124	2
Ending balance	430	428	430	428
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	582	1,347	294	1,183
Charge-offs		(909)		(909)
Recoveries		516		516
Provision	(412)	15	(124)	179
Ending balance	170	969	170	969
Commercial Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	5,186	3,953	4,833	3,760
Charge-offs	(2,230)	(394)	(2,525)	(395)
Recoveries	58	1	69	8
Provision	1,533	1,213	2,170	1,400
Ending balance	4,547	4,773	4,547	4,773
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	976	832	987	798
Charge-offs	(123)		(280)	(12)
Provision	202	113	348	159
Ending balance	1,055	945	1,055	945
Consumer Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	31	54	9	56
Charge-offs	(29)	(11)	(45)	(23)
Recoveries	8	6	11	13
Provision	1	(4)	36	(1)
Ending balance	11	45	11	45
Unallocated Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	537	592	783	164
Provision	(490)	(216)	(736)	212
Ending balance	$ 47	$ 376	$ 47	$ 376

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Summary Of Information Regarding Stock Option Plans

				Weighted	Weighted
	Number of			Average Exercise	Average	Aggregate
	Shares			Price per Share	Contractual Term	Intrinsic Value
Outstanding, beginning of year	111,034		$	12.25
Options expired	(4,389	)		8.90
Options forfeited	(23,274	)		11.97
Outstanding, end of quarter	83,371		$	12.51	1.59	$	-
Exercisable, end of quarter	83,371		$	12.51	1.59	$	-

Summary Of Information Regarding Restricted Stock Activity

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	115,729		$	4.86
Granted	36,496			4.98
Forfeited	(982	)		5.19
Vested	(17,153	)		6.04
Unvested restricted stock, end of period	134,090		$	4.74

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Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

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. Tri-State's operations are considered a separate segment for financial disclosure purposes. All inter-company transactions and balances have been eliminated in consolidation. The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York. In 2011, we opened a loan production and insurance agency satellite office in Rochelle Park, New Jersey.

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

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America ("U.S. GAAP") for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2012, 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 December, 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-11, Disclosures about Offsetting Assets and Liabilities, in an effort to improve comparability between U.S. GAAP and International Financial Reporting Standards ("IFRS") financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. We do not expect that the adoption of this guidance will 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, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Securities held to maturity, estimated fair value	$ 5,316	$ 4,345
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0	$ 0
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	3,409,307	3,373,793
Common stock, shares outstanding	3,398,124	3,372,949
Treasury stock, shares	11,183	844

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Summary Of Significant Accounting Policies (Policy)

6 Months Ended

Jun. 30, 2012

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. Tri-State's operations are considered a separate segment for financial disclosure purposes. All inter-company transactions and balances have been eliminated in consolidation. The Bank operates ten banking offices, eight located in Sussex County, New Jersey and two in Orange County, New York. In 2011, we opened a loan production and insurance agency satellite office in Rochelle Park, New Jersey.

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

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America ("U.S. GAAP") for full year financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal, recurring nature. Operating results for the six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. 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, 2011.

We have evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2012, 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 December, 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2011-11, Disclosures about Offsetting Assets and Liabilities, in an effort to improve comparability between U.S. GAAP and International Financial Reporting Standards ("IFRS") financial statements with regard to the presentation of offsetting assets and liabilities on the statement of financial position arising from financial and derivative instruments, and repurchase agreements. The ASU establishes additional disclosures presenting the gross amounts of recognized assets and liabilities, offsetting amounts, and the net balance reflected in the statement of financial position. Descriptive information regarding the nature and rights of the offset must also be disclosed. The new standards are effective for annual periods beginning January 1, 2013, and interim periods within those annual periods. Retrospective application is required. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

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Document And Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 03, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2012
Entity Registrant Name	SUSSEX BANCORP
Entity Central Index Key	0001028954
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		3,396,873

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Securities (Tables)

6 Months Ended

Jun. 30, 2012

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, 2012
State and political subdivisions	$	26,820	$	1,201	$	(52	)	$	27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		842		(260	)		86,194
Equity securities-financial services industry and other		1,351		23		(29	)		1,345
	$	113,783	$	2,066	$	(341	)	$	115,508
December 31, 2011
State and political subdivisions	$	19,706	$	883	$	(19	)	$	20,570
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,684		786		(472	)		71,998
Private mortgage-backed securities		2,423		58		(4	)		2,477
Equity securities-financial services industry and other		1,349		1		(34	)		1,316
	$	95,162	$	1,728	$	(529	)	$	96,361

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		-		-
Due after five years through ten years		1,076		1,129
Due after ten years		25,744		26,840
Total bonds and obligations		26,820		27,969
Mortgage-backed securities:
U.S. government-sponsored enterprises		85,612		86,194
Equity securities-financial services industry and other		1,351		1,345
Total available for sale securities	$	113,783	$	115,508

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

		Less Than Twelve Months					Twelve Months or More				Total
			Gross					Gross					Gross
		Fair	Unrealized				Fair	Unrealized				Fair	Unrealized
(Dollars in thousands)		Value	Losses				Value	Losses				Value	Losses
June 30, 2012
State and political subdivisions	$	4,965	$	(50	)	$	139	$	(2	)	$	5,104	$	(52	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		26,933		(260	)		-		-			26,933		(260	)
Equity securities-financial services industry
and other		122		(21	)		206		(8	)		328		(29	)
Total temporarily impaired securities	$	32,020	$	(331	)	$	345	$	(10	)	$	32,365	$	(341	)
December 31, 2011
State and political subdivisions	$	115	$	(2	)	$	124	$	(17	)	$	239	$	(19	)
Mortgage-backed securities:
U.S. government-sponsored enterprises		34,576		(472	)		-		-			34,576		(472	)
Private mortgage-backed securities		518		(4	)		-		-			518		(4	)
Equity securities-financial services industry
and other		-		-			1,025		(34	)		1,025		(34	)
Total temporarily impaired securities	$	35,209	$	(478	)	$	1,149	$	(51	)	$	36,358	$	(529	)

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, 2012
State and political subdivisions	$	5,168	$	169	$	(21	)	$	5,316
December 31, 2011
State and political subdivisions	$	4,220	$	125	$	-		$	4,345

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

	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	1,146	$	1,146
Due after five years through ten years		1,052		1,100
Due after ten years		2,970		3,070
Total held to maturity securities	$	5,168	$	5,316

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

		Less Than Twelve Months					Twelve Months or More				Total
				Gross				Gross					Gross
		Fair		Unrealized			Fair	Unrealized			Fair		Unrealized
(Dollars in thousands)		Value		Losses			Value	Losses			Value		Losses
June 30, 2012
State and political subdivisions	$	1,374	$	(21	)	$	-	$	-	$	1,374	$	(21	)

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Consolidated Statements Of Operations And Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2012		Jun. 30, 2011		Jun. 30, 2012		Jun. 30, 2011
INTEREST INCOME
Loans receivable, including fees	$ 4,375		$ 4,739		$ 8,825		$ 9,523
Securities:
Taxable	433		310		753		675
Tax-exempt	290		291		535		583
Federal funds sold			2				3
Interest bearing deposits	9		10		26		13
Total Interest Income	5,107		5,352		10,139		10,797
INTEREST EXPENSE
Deposits	632		767		1,351		1,536
Borrowings	264		264		529		529
Junior subordinated debentures	61		55		123		109
Total Interest Expense	957		1,086		2,003		2,174
Net Interest Income	4,150		4,266		8,136		8,623
PROVISION FOR LOAN LOSSES	958		1,112		1,818		1,951
Net Interest Income after Provision for Loan Losses	3,192		3,154		6,318		6,672
OTHER INCOME
Service fees on deposit accounts	275		328		550		644
ATM and debit card fees	151		138		288		260
Bank-owned life insurance	101		105		204		209
Insurance commissions and fees	609		564		1,208		1,179
Investment brokerage fees	36		39		72		70
Gain on sale of loans, held for sale					47
Gain on sale of securities, available-for-sale	135		269		194		269
Loss on sale of premises and equipment	(7)				(6)
Gain (loss) on sale of foreclosed real estate	1		7		3		(4)
Other	118		51		183		119
Total Other Income	1,419		1,501		2,743		2,746
OTHER EXPENSES
Salaries and employee benefits	2,124		1,986		4,548		3,993
Occupancy, net	354		336		716		717
Furniture, equipment and data processing	334		288		688		588
Advertising and promotion	88		46		159		89
Professional fees	145		149		303		276
Director fees	74		72		180		139
FDIC assessment	172		126		339		382
Insurance	58		54		111		110
Stationary and supplies	39		40		84		83
Loan collection costs	201		177		335		292
Write-down on foreclosed assets	69				684		145
Expenses related to foreclosed assets	33		79		126		103
Amortization of intangible assets	1		2		3		5
Other	373		344		699		637
Total Other Expenses	4,065		3,699		8,975		7,559
Income before Income Taxes	546		956		86		1,859
PROVISION (BENEFIT) FOR INCOME TAXES	65	[1]	229	[1]	(200)	[1]	438	[1]
Net Income	481		727		286		1,421
OTHER COMPREHENSIVE INCOME:
Net unrealized gains on available for sale securities arising during the period	303		855		720		1,072
Reclassification adjustment for gain on sales included in net income	(135)		(269)		(194)		(269)
Income tax expense related to other comprehensive income	(67)		(234)		(210)		(321)
Other comprehensive income, net of income taxes	101		352		316		482
Comprehensive income	$ 582		$ 1,079		$ 602		$ 1,903
EARNINGS PER SHARE
Basic	$ 0.15		$ 0.22		$ 0.09		$ 0.44
Diluted	$ 0.14		$ 0.22		$ 0.09		$ 0.43

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

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2012

Other Comprehensive Income [Abstract]

Other Comprehensive Income

NOTE 6 – OTHER COMPREHENSIVE INCOME

The components of other comprehensive income and related tax effects for the three and six months ended June 30, 2012 and 2011 are as follows:

(Dollars in thousands)		Three Months Ended June 30,						Six Months Ended June 30,
		2012			2011			2012		2011
Net unrealized gains on available for sale securities arising during the period	$	303		$	855		$	720		$	1,072
Less: reclassification adjustments for net gains included in net income		135			269			194			269
		168			586			526			803
Tax effect		(67	)		(234	)		(210	)		(321	)
	$	101		$	352		$	316		$	482

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Earnings Per Share

6 Months Ended

Jun. 30, 2012

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, 2012					Three Months Ended June 30, 2011
					Per				Per
		Income	Shares		Share		Income	Shares	Share
(In thousands, except per share data)		(Numerator)	(Denominator)		Amount		(Numerator)	(Denominator)	Amount
Basic earnings per share:
Net income applicable to common
Shareholders	$	481	3,257	$	0.15	$	727	3,255	$	0.22
Effect of dilutive securities:
Nonvested stock awards		-	84				-	71
Diluted earnings per share:
Net income applicable to common
shareholders and assumed conversions	$	481	3,341	$	0.14	$	727	3,326	$	0.22

		Six Months Ended June 30, 2012					Six Months Ended June 30, 2011
					Per				Per
		Income	Shares		Share		Income	Shares	Share
(In thousands, except per share data)		(Numerator)	(Denominator)		Amount		(Numerator)	(Denominator)	Amount
Basic earnings per share:
Net income applicable to common
shareholders	$	286	3,259	$	0.09	$	1,421	3,255	$	0.44
Effect of dilutive securities:
Nonvested stock awards		-	82				-	68
Diluted earnings per share:
Net income applicable to common
shareholders and assumed conversions	$	286	3,341	$	0.09	$	1,421	3,323	$	0.43

Options to purchase 83,371 and 116,075 shares of common stock were outstanding at June 30, 2012 and 2011, respectively, but were not included in the computation of diluted EPS because the options' exercise price was greater than the average market price of the common shares.

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2012

Segment Information [Abstract]

Schedule Of Segment Information

		Three Months Ended June 30, 2012						Three Months Ended June 30, 2011
		Banking and						Banking and
		Financial	Insurance					Financial	Insurance
(Dollars in thousands)		Services	Services			Total		Services	Services			Total
Net interest income from external sources	$	4,150	$	-	$	4,150	$	4,266	$	-	$	4,266
Other income from external sources		810		609		1,419		937		564		1,501
Depreciation and amortization		169		2		171		151		3		154
Income before income taxes		475		71		546		908		48		956
Income tax expense (benefit)(1)		37		28		65		210		19		229
Total assets		508,701		3,489		512,190		470,020		3,143		473,163

		Six Months Ended June 30, 2012								Six Months Ended June 30, 2011
		Banking and								Banking and
		Financial		Insurance						Financial	Insurance
		Services		Services			Total			Services	Services			Total
Net interest income from external sources	$	8,136		$	-	$	8,136		$	8,623	$	-	$	8,623
Other income from external sources		1,535			1,208		2,743			1,567		1,179		2,746
Depreciation and amortization		331			5		336			301		6		307
Income (loss) before income taxes		(24	)		110		86			1,701		158		1,859
Income tax expense (benefit)(1)		(244	)		44		(200	)		375		63		438
Total assets		508,701			3,489		512,190			470,020		3,143		473,163

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

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Loans (Tables)

6 Months Ended

Jun. 30, 2012

Loans [Abstract]

Composition Of Net Loans Receivable

(Dollars in thousands)		June 30, 2012			December 31, 2011
Commercial and industrial loans	$	13,106		$	13,711
Construction		7,103			8,520
Commercial real estate		228,042			216,191
Residential real estate		97,635			100,175
Consumer and other		1,328			1,336
		347,214			339,933
Unearned net loan origination fees		(330	)		(228	)
Allowance for loan losses		(6,260	)		(7,210	)
Net loans receivable	$	340,624		$	332,495

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Guarantees

6 Months Ended

Jun. 30, 2012

Guarantees [Abstract]

Guarantees

NOTE 9 – GUARANTEES

We do not issue any guarantees that would require liability recognition or disclosure, other than standby letters of credit. Standby letters of credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. We, generally, hold collateral and/or personal guarantees supporting these commitments. We had $624 thousand of undrawn standby letters of credit outstanding as of June 30, 2012. 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, 2012, for guarantees under standby letters of credit issued is not material.

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Segment Information

6 Months Ended

Jun. 30, 2012

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, 2012						Three Months Ended June 30, 2011
		Banking and						Banking and
		Financial	Insurance					Financial	Insurance
(Dollars in thousands)		Services	Services			Total		Services	Services			Total
Net interest income from external sources	$	4,150	$	-	$	4,150	$	4,266	$	-	$	4,266
Other income from external sources		810		609		1,419		937		564		1,501
Depreciation and amortization		169		2		171		151		3		154
Income before income taxes		475		71		546		908		48		956
Income tax expense (benefit)(1)		37		28		65		210		19		229
Total assets		508,701		3,489		512,190		470,020		3,143		473,163

		Six Months Ended June 30, 2012								Six Months Ended June 30, 2011
		Banking and								Banking and
		Financial		Insurance						Financial	Insurance
		Services		Services			Total			Services	Services			Total
Net interest income from external sources	$	8,136		$	-	$	8,136		$	8,623	$	-	$	8,623
Other income from external sources		1,535			1,208		2,743			1,567		1,179		2,746
Depreciation and amortization		331			5		336			301		6		307
Income (loss) before income taxes		(24	)		110		86			1,701		158		1,859
Income tax expense (benefit)(1)		(244	)		44		(200	)		375		63		438
Total assets		508,701			3,489		512,190			470,020		3,143		473,163

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

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

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 ten years, generally vest over periods ranging between one and four years, and are granted with an exercise price equal to the fair market value of the common stock on the date the options are granted. Restricted stock is valued at the market value of the common stock on the date of grant and generally vests between two and seven years. All dividends paid on restricted stock, whether vested or unvested, are granted to the shareholder.

Information regarding our stock option plans as of June 30, 2012, was as follows:

				Weighted	Weighted
	Number of			Average Exercise	Average	Aggregate
	Shares			Price per Share	Contractual Term	Intrinsic Value
Outstanding, beginning of year	111,034		$	12.25
Options expired	(4,389	)		8.90
Options forfeited	(23,274	)		11.97
Outstanding, end of quarter	83,371		$	12.51	1.59	$	-
Exercisable, end of quarter	83,371		$	12.51	1.59	$	-

During the first six months of 2012 and 2011, we expensed $73 thousand and $46 thousand, respectively, in stock-based compensation under restricted stock awards. The summary of changes in unvested restricted stock awards for the three months ended June 30, 2012, is as follows:

			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value
Unvested restricted stock, beginning of year	115,729		$	4.86
Granted	36,496			4.98
Forfeited	(982	)		5.19
Vested	(17,153	)		6.04
Unvested restricted stock, end of period	134,090		$	4.74

At June 30, 2012, unrecognized compensation expense for non-vested restricted stock was $560 thousand, which is expected to be recognized over an average period of 3.6 years.

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Fair Value Of Financial Instruments

6 Months Ended

Jun. 30, 2012

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

NOTE 10 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Management uses its best judgment in estimating the fair value of our consolidated financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts we could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period ends, and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period end.

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

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

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

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

The following table summarizes the valuation of our financial assets measured on a recurring basis by the above FASB

ASC 820 pricing observability levels:

				Quoted Prices in		Significant
				Active Markets		Other	Significant
		Fair		for Identical		Observable	Unobservable
		Value		Assets		Inputs	Inputs
(Dollars in thousands)		Measurements		(Level I)		(Level II)	(Level III)
June 30, 2012:
State and political subdivisions	$	27,969	$	-	$	27,969	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		86,194		-		86,194		-
Equity securities-financial services industry and other		1,345		1,195		150		-
	$	115,508	$	1,195	$	114,313	$	-
December 31, 2011:
State and political subdivisions	$	20,570	$	-	$	20,570	$	-
Mortgage-backed securities:
U.S. government-sponsored enterprises		71,998		-		71,998		-
Private mortgage-backed securities		2,477		-		2,477		-
Equity securities-financial services industry and other		1,316		1,173		143		-
	$	96,361	$	1,173	$	95,188	$	-

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 are as follows:

			Quoted Prices		Significant
			In Active		Other			Significant
		Fair	Markets for		Observable			Unobservable
		Value	Identical Assets		Inputs			Inputs
(Dollars in thousands)		Measurements	(Level I)		(Level II)			(Level III)
June 30, 2012:
Impaired loans	$	12,433	$	-	$	-	$	12,433
Foreclosed real estate		5,064		-				5,064
December 31, 2011:
Impaired loans	$	11,571	$	-	$	-	$	11,571
Foreclosed real estate		4,959		-		-		4,959

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

		Qualitative Information about Level 3 Fair Value Measurements
		Fair				Range
		Value	Valuation	Unobservable		(Weighted
(Dollars in thousands)		Estimate	Techniques	Input		Average)
June 30, 2012:
Impaired loans	$	12,433	Appraisal of	Appraisal		0.00% to -66.3%
			collateral	adjustments (1)		(-11.3	%)
				Selling
				expenses (1)	-7.0%	(-7.0	%)
Foreclosed real estate		5,064	Appraisal of
			collateral

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

.

The following methods and assumptions were used to estimate the fair value of our financial instruments at June 30, 2012, and December 31, 2011:

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

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

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

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

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

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

Foreclosed Real Estate (Carried at the Lower of Cost or Fair Value): Foreclosed real estate is recorded at estimated fair value, less estimated costs to sell when the property is acquired. Fair value is generally based on independent appraisals and is considered a Level 3 fair value input.

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

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

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

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

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

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

The estimated fair values of our financial instruments at June 30, 2012, and December 31, 2011 were as follows:

						Quoted Prices in		Significant
						Active Markets		Other	Significant
	June 30, 2012					for Identical		Observable	Unobservable
		Carrying		Fair		Assets		Inputs	Inputs
(Dollars in thousands)		Amount		Value		(Level I)		(Level II)	(Level III)
Financial assets:
Cash and cash equivalents	$	12,531	$	12,531	$	12,531	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		115,508		115,508		1,195		114,313		-
Securities held to maturity		5,168		5,316		-		5,316		-
Federal Home Loan Bank stock		1,943		1,943		1,943		-		-
Loans receivable, net of allowance		340,624		352,675		-		-		352,675
Accrued interest receivable		1,688		1,688		1,688		-		-
Financial liabilities:
Deposits		430,082		429,110		321,415		107,695		-
Borrowings		26,000		29,333		-		29,333		-
Junior subordinated debentures		12,887		6,418		-		6,418		-
Accrued interest payable		264		264		264		-		-

						Quoted Prices in		Significant
						Active Markets		Other	Significant
		December 31, 2011				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	$	37,500	$	37,500	$	37,500	$	-	$	-
Time deposits with other banks		100		100		100		-		-
Securities available for sale		96,361		96,361		1,173		95,188		-
Securities held to maturity		4,220		4,345		-		4,345		-
Federal Home Loan Bank stock		1,837		1,837		-		-		-
Loans receivable, net of allowance		332,495		334,403		-		-		334,403
Accrued interest receivable		1,735		1,735		1,735		-		-
Financial liabilities:
Deposits		425,376		428,098		314,571		113,527		-
Borrowings		26,000		29,696		-		29,696		-
Junior subordinated debentures		12,887		6,613		-		6,613		-
Accrued interest payable		301		301		301		-		-

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Loans (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Loans [Abstract]
Mortgage loans serviced for the benefit of others	$ 827	$ 852

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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, 2012	Dec. 31, 2011
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	$ 115,508	$ 96,361
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	1,195	1,173
Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	114,313	95,188
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	27,969	20,570
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	27,969	20,570
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	86,194	71,998
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	86,194	71,998
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
Private Mortgage-Backed Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale		2,477
Private Mortgage-Backed Securities [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale		2,477
Private Mortgage-Backed Securities [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	1,345	1,316
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	1,195	1,173
Equity Securities-Financial Services Industry And Other [Member] | Significant Other Observable Inputs (Level II) [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available-for-sale	150	143
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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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share [Abstract]

Calculation Methods Of Earnings Per Share

		Three Months Ended June 30, 2012					Three Months Ended June 30, 2011
					Per				Per
		Income	Shares		Share		Income	Shares	Share
(In thousands, except per share data)		(Numerator)	(Denominator)		Amount		(Numerator)	(Denominator)	Amount
Basic earnings per share:
Net income applicable to common
Shareholders	$	481	3,257	$	0.15	$	727	3,255	$	0.22
Effect of dilutive securities:
Nonvested stock awards		-	84				-	71
Diluted earnings per share:
Net income applicable to common
shareholders and assumed conversions	$	481	3,341	$	0.14	$	727	3,326	$	0.22

		Six Months Ended June 30, 2012					Six Months Ended June 30, 2011
					Per				Per
		Income	Shares		Share		Income	Shares	Share
(In thousands, except per share data)		(Numerator)	(Denominator)		Amount		(Numerator)	(Denominator)	Amount
Basic earnings per share:
Net income applicable to common
shareholders	$	286	3,259	$	0.09	$	1,421	3,255	$	0.44
Effect of dilutive securities:
Nonvested stock awards		-	82				-	68
Diluted earnings per share:
Net income applicable to common
shareholders and assumed conversions	$	286	3,341	$	0.09	$	1,421	3,323	$	0.43

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Summary Of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2012
Banking offices	10
Sussex County, New Jersey [Member]
Banking offices	8
Orange County, New York [Member]
Banking offices	2

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Stock-Based Compensation (Summary Of Information Regarding Restricted Stock Activity) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Stock-Based Compensation [Abstract]
Restricted stock, beginning of year, Number of Shares	115,729
Restricted stock, beginning of year, Weighted Average Grant Date Fair value	$ 4.86
Granted, Number of Shares	36,496
Granted, Weighted Average Grant Date Fair value	$ 4.98
Forfeited, Number of Shares	(982)
Forfeited, Weighted Average Grant Date Fair value	$ 5.19
Vested, Number of Shares	(17,153)
Vested, Weighted Average Grant Date Fair value	$ 6.04
Restricted stock, end of quarter, Number of Shares	134,090
Restricted stock, end of quarter, Weighted Average Grant Date Fair value	$ 4.74

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Recorded Investment	$ 24,889	[1]	$ 27,746	[1]
Unpaid Principal Balance	28,711	[2]	30,571	[2]
Related Allowance	2,233		1,957
Impaired Financing Receivable With No Related Allowances [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	10,191	[1]	14,182	[1]
Unpaid Principal Balance	11,923	[2]	17,020	[2]
Impaired Financing Receivable With No Related Allowances [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment		[1]		[1]
Unpaid Principal Balance		[2]		[2]
Related Allowance
Impaired Financing Receivable With No Related Allowances [Member] | Construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	2,134	[1]	2,062	[1]
Unpaid Principal Balance	3,111	[2]	2,331	[2]
Impaired Financing Receivable With No Related Allowances [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	6,209	[1]	10,362	[1]
Unpaid Principal Balance	6,970	[2]	12,932	[2]
Impaired Financing Receivable With No Related Allowances [Member] | Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,848	[1]	1,758	[1]
Unpaid Principal Balance	1,842	[2]	1,757	[2]
Impaired Financing Receivable With Related Allowances [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	14,698	[1]	13,564	[1]
Unpaid Principal Balance	16,788	[2]	13,551	[2]
Related Allowance	2,233		1,957
Impaired Financing Receivable With Related Allowances [Member] | Commercial And Industrial Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	401	[1]	32	[1]
Unpaid Principal Balance	396	[2]	32	[2]
Related Allowance	200		16
Impaired Financing Receivable With Related Allowances [Member] | Construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,391	[1]	396	[1]
Unpaid Principal Balance	1,395	[2]	396	[2]
Related Allowance	112		50
Impaired Financing Receivable With Related Allowances [Member] | Commercial Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	11,832	[1]	12,404	[1]
Unpaid Principal Balance	13,930	[2]	12,399	[2]
Related Allowance	1,614		1,572
Impaired Financing Receivable With Related Allowances [Member] | Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment	1,074	[1]	732	[1]
Unpaid Principal Balance	1,067	[2]	724	[2]
Related Allowance	$ 307		$ 319

[1] The recorded investment of impaired loans includes the outstanding principal balance and any unpaid interest and escrow balances due

[2] Unpaid principal balance includes the present recorded principal balance plus any amounts that have been previously charged-off.

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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 [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2010	$ 27,870	$ 8,753	$ 47	$ (4)	$ 36,666
Balance, shares at Dec. 31, 2010	3,351,566
Net income		1,421			1,421
Other comprehensive income			482		482
Restricted stock granted	22,218
Restricted stock forfeited	(399)
Compensation expense related to stock option and restricted stock grants	46				46
Balance at Jun. 30, 2011	27,916	10,174	529	(4)	38,615
Balance, shares at Jun. 30, 2011	3,373,385
Balance at Dec. 31, 2011	27,964	11,223	719	(4)	39,902
Balance, shares at Dec. 31, 2011	3,372,949				3,372,949
Net income		286			286
Other comprehensive income			316		316
Treasury stock purchased				(55)	(55)
Treasury stock purchased, shares	(10,339)
Restricted stock granted	36,496
Restricted stock forfeited	(982)
Compensation expense related to stock option and restricted stock grants	73				73
Balance at Jun. 30, 2012	$ 28,037	$ 11,509	$ 1,035	$ (59)	$ 40,522
Balance, shares at Jun. 30, 2012	3,398,124				3,398,124

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Allowance For Loan Losses And Credit Quality Of Financing Receivables

6 Months Ended

Jun. 30, 2012

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

Allowance For Loan Losses And Credit Quality Of Financing Receivables

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

The following table presents changes in the allowance for loan losses disaggregated by the class of loans receivable for the three and six months ended June 30, 2012 and 2011:

		Commercial						Commercial			Residential			Consumer
(Dollars in thousands)		and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Three Months Ended
June 30, 2012:
Beginning balance	$	305		$	582		$	5,186		$	976		$	31		$	537		$	7,617
Charge-offs		-			-			(2,230	)		(123	)		(29	)		-			(2,382	)
Recoveries		1			-			58			-			8			-			67
Provision		124			(412	)		1,533			202			1			(490	)		958
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	448		$	1,347		$	3,953		$	832		$	54		$	592		$	7,226
Charge-offs		(13	)		(909	)		(394	)		-			(11	)		-			(1,327	)
Recoveries		2			516			1			-			6			-			525
Provision		(9	)		15			1,213			113			(4	)		(216	)		1,112
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

		Commercial						Commercial			Residential			Consumer
(Dollars in thousands)		and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Six Months Ended:
June 30, 2012:
Beginning balance	$	304		$	294		$	4,833		$	987		$	9		$	783		$	7,210
Charge-offs		-			-			(2,525	)		(280	)		(45	)		-			(2,850	)
Recoveries		2			-			69			-			11			-			82
Provision		124			(124	)		2,170			348			36			(736	)		1,818
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	436		$	1,183		$	3,760		$	798		$	56		$	164		$	6,397
Charge-offs		(13	)		(909	)		(395	)		(12	)		(23	)		-			(1,352	)
Recoveries		3			516			8			-			13			-			540
Provision		2			179			1,400			159			(1	)		212			1,951
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

The following table presents the balance in the allowance of loan losses at June 30, 2012, and December 31, 2011 disaggregated on the basis of our impairment method by class of loans receivable along with the balance of loans receivable by class 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		Evaluated
			Evaluated			Evaluated				for		for
(Dollars in thousands)		Balance	Impairment			Impairment		Balance		Impairment		Impairment
June 30, 2012:
Commercial and industrial	$	430	$	200	$	230	$	13,106	$	396	$	12,710
Construction		170		112		58		7,103		3,529		3,574
Commercial real estate		4,547		1,614		2,933		228,042		18,013		210,029
Residential real estate		1,055		307		748		97,635		2,908		94,727
Consumer and other		11		-		11		1,328		-		1,328
Unallocated		47		-		-		-		-		-
Total	$	6,260	$	2,233	$	3,980	$	347,214	$	24,846	$	322,368
December 31, 2011:
Commercial and industrial	$	304	$	16	$	288	$	13,711	$	32	$	13,679
Construction		294		50		244		8,520		2,458		6,062
Commercial real estate		4,833		1,572		3,261		216,191		22,722		193,469
Residential real estate		987		319		668		100,175		2,482		97,693
Consumer and other		9		-		9		1,336		-		1,336
Unallocated		783		-		-		-		-		-
Total	$	7,210	$	1,957	$	4,470	$	339,933	$	27,694	$	312,239

An age analysis of loans receivable which were past due as of June 30, 2012, and December 31, 2011 is as follows:

														Recorded
														Investment
						Greater						Total		> 90Days
		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, 2012:
Commercial and industrial	$	22	$	111	$	396	$	529	$	12,577	$	13,106	$	-
Construction		-		-		3,647		3,647		3,456		7,103		118
Commercial real estate		3,004		2,802		17,410		23,216		204,826		228,042		-
Residential real estate		1,268		551		2,908		4,727		92,908		97,635		-
Consumer and other		13		4		-		17		1,311		1,328		-
Total	$	4,307	$	3,468	$	24,361	$	32,136	$	315,078	$	347,214	$	118
December 31, 2011:
Commercial and industrial	$	428	$	-	$	32	$	460	$	13,251	$	13,711	$	-
Construction		558		-		3,243		3,801		4,719		8,520		785
Commercial real estate		5,238		137		19,311		24,686		191,505		216,191		-
Residential real estate		940		-		2,482		3,422		96,753		100,175		-
Consumer and other		17		1		18		36		1,300		1,336		18
Total	$	7,181	$	138	$	25,086	$	32,405	$	307,528	$	339,933	$	803

(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, 2012, and December 31, 2011 were:

(Dollars in thousands)		June 30, 2012		December 31, 2011
Commercial and industrial	$	396	$	32
Construction		3,529		2,458
Commercial real estate		17,410		19,311
Residential real estate		2,908		2,482
Total	$	24,243	$	24,283

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 we 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. Loans rated "Substandard", "Doubtful" or "Loss" is 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 a 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 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, 2012, and December 31, 2011:

				Special
(Dollars in thousands)		Pass		Mention		Substandard			Doubtful		Total
June 30, 2012:
Commercial and industrial	$	12,376	$	333	$	22		$	375	$	13,106
Construction		3,574		-		3,529			-		7,103
Commercial real estate		199,673		6,330		21,467			572		228,042
Residential real estate		93,092		452		3,759			332		97,635
Consumer and other		1,328		-		-			-		1,328
	$	310,043	$	7,115	$	28,777		$	1,279	$	347,214
December 31, 2011:
Commercial and industrial	$	13,103	$	398	$	202	$		8	$	13,711
Construction		5,057		-		3,463			-		8,520
Commercial real estate		180,862		6,987		27,769			573		216,191
Residential real estate		95,491		494		4,190			-		100,175
Consumer and other		1,336		-		-			-		1,336
	$	295,849	$	7,879	$	35,624	$		581	$	339,933

A loan is considered impaired, in accordance FASB ASC 310-10-35-16, 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. 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 average recorded investment in impaired loans is calculated using the average of impaired loans over the past five quarter-end periods. 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.

The following table reflects our impaired loans by class as of June 30, 2012, and December 31, 2011:

	June 30, 2012						December 31, 2011
				Unpaid						Unpaid
		Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)		Investment (1)		Balance (2)		Allowance		Investment (1)		Balance (2)		Allowance
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	-	$	-	$	-	$	-
Construction		2,134		3,111		-		2,062		2,331		-
Commercial real estate		6,209		6,970		-		10,362		12,932		-
Residential real estate		1,848		1,842		-		1,758		1,757		-
Total impaired loans without a
related allowance		10,191		11,923		-		14,182		17,020		-
With an allowance recorded:
Commercial and industrial		401		396		200		32		32		16
Construction		1,391		1,395		112		396		396		50
Commercial real estate		11,832		13,930		1,614		12,404		12,399		1,572
Residential real estate		1,074		1,067		307		732		724		319
Total impaired loans with an
allowance		14,698		16,788		2,233		13,564		13,551		1,957
Total impaired loans	$	24,889	$	28,711	$	2,233	$	27,746	$	30,571	$	1,957

(1) The recorded investment of impaired loans includes the outstanding principal balance and any unpaid interest and escrow balances due.

(2) Unpaid principal balance includes the present recorded principal balance plus any amounts that have been previously charged-off.

The average recorded investment and income recognized is presented for the six month periods ended June 30, 2012, and 2011:

	For the Six Months Ended				For the Six Months Ended
	June 30, 2012				June 30, 2011
		Average	Interest			Average	Interest
		Recorded	Income			Recorded	Income
(Dollars in thousands)		Investment	Recognized			Investment	Recognized
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	19	$	-
Construction		2,293		-		3,795		1
Commercial real estate		8,534		30		8,859		80
Residential real estate		1,663		32		816		17
Consumer and other		-		-		3		-
Total impaired loans without a related allowance		12,490		62		13,492		98
With an allowance recorded:
Commercial and industrial		127		-		77		-
Construction		796		-		1,941		-
Commercial real estate		13,571		49		9,694		105
Residential real estate		732		15		611		1
Consumer and other		-		-		-		-
Total impaired loans with an allowance		15,226		64		12,323		106
Total impaired loans	$	27,716	$	126	$	25,815	$	204

The following table presents the recorded investment in troubled debt restructured loans as of June 30, 2012, based on payment performance status:

		Commercial
(Dollars in thousands)		Real Estate
Performing	$	604
Non-performing		1,864
Total	$	2,468

Troubled debt restructured loans are considered impaired and are included in the previous impaired loans disclosures in this footnote. As of June 30, 2012, we have not committed to lend additional amounts to customers with outstanding loans that are classified as troubled debt restructurings.

Troubled debt restructured loans can include one or a combination of the following: an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; temporary reduction in the interest rate; change in scheduled payment amount; or permanent reduction of the principal or interest of the loan.

During the first six months of 2012, we have not restructured any troubled debt or required an allocation of the allowance for credit losses. There were no payment defaults of loans during the six months ended June 30, 2012, which were modified in a troubled debt restructuring within the previous twelve months.

A troubled debt restructured loan is considered to be in payment default once it is greater than 30 days contractually past due under the modified terms. The troubled debt restructurings that subsequently defaulted resulted in a net allocation of the allowance for credit losses of $4 thousand at June 30, 2012. There were no charge-offs on defaulted troubled debt restructurings during the six month period ended June 30, 2012.

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Securities (Narrative) (Details) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Available for sale securities carrying value pledged to secure public deposits	$ 26,500,000		$ 21,500,000
Gains on sales of securities available for sales	214,000	269,000
Gross losses on sales of securities avaiable for sale	20,000
Fair value of available-for-sale securities	115,508,000		96,361,000
Unrealized loss of available-for-sale securities	341,000		529,000
Fair value of held-to-maturity securities	5,316,000		4,345,000
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 investment	3
Fair value of available-for-sale securities	27,969,000		20,570,000
Unrealized loss of available-for-sale securities	52,000		19,000
Fair value of held-to-maturity securities	5,316,000		4,345,000
Unrealized loss of held-to-maturity securites	21,000
Mortgage- Backed Securities [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number mortgaged-backed securities with unrealized losses	13
Fair value of available-for-sale securities	26,900,000
Unrealized loss of available-for-sale securities	260,000
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 investment	10
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	5,100,000
Unrealized loss of available-for-sale securities	52,000
Fair value of held-to-maturity securities	1,400,000
Unrealized loss of held-to-maturity securites	21,000
Adversely Impacted By The Effects Of The Current Economic Environment [Member]
Schedule Of Available-For-Sale And Held-To-Maturity [Line Items]
Number equity securities with unrealized losses	3
Unrealized loss of available-for-sale securities	29,000
Fair value of equity securities	$ 328,000

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Allowance For Loan Losses And Credit Quality Of Financing Receivables (An Age Analysis Of Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	$ 4,307		$ 7,181
Loans receivable 60-89 days past due	3,468		138
Loans receivable greater than 90 days past due	24,361	[1]	25,086	[1]
Total past due	32,136		32,405
Loans receivable current	315,078		307,528
Total financing receivables	347,214		339,933
Recorded investment greater that 90 days and accruing	118		803
Commercial And Industrial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	22		428
Loans receivable 60-89 days past due	111
Loans receivable greater than 90 days past due	396	[1]	32	[1]
Total past due	529		460
Loans receivable current	12,577		13,251
Total financing receivables	13,106		13,711
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due			558
Loans receivable greater than 90 days past due	3,647	[1]	3,243	[1]
Total past due	3,647		3,801
Loans receivable current	3,456		4,719
Total financing receivables	7,103		8,520
Recorded investment greater that 90 days and accruing	118		785
Commercial Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	3,004		5,238
Loans receivable 60-89 days past due	2,802		137
Loans receivable greater than 90 days past due	17,410	[1]	19,311	[1]
Total past due	23,216		24,686
Loans receivable current	204,826		191,505
Total financing receivables	228,042		216,191
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	1,268		940
Loans receivable 60-89 days past due	551
Loans receivable greater than 90 days past due	2,908	[1]	2,482	[1]
Total past due	4,727		3,422
Loans receivable current	92,908		96,753
Total financing receivables	97,635		100,175
Consumer And Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans receivable 30-59 days past due	13		17
Loans receivable 60-89 days past due	4		1
Loans receivable greater than 90 days past due			18	[1]
Total past due	17		36
Loans receivable current	1,311		1,300
Total financing receivables	1,328		1,336
Recorded investment greater that 90 days and accruing			$ 18

[1] includes loans greater than 90 days past due and still accruing and non-accrual loans

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

6 Months Ended

Jun. 30, 2012

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

Changes In The Allowance For Loan Losses

		Commercial						Commercial			Residential			Consumer
(Dollars in thousands)		and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Three Months Ended
June 30, 2012:
Beginning balance	$	305		$	582		$	5,186		$	976		$	31		$	537		$	7,617
Charge-offs		-			-			(2,230	)		(123	)		(29	)		-			(2,382	)
Recoveries		1			-			58			-			8			-			67
Provision		124			(412	)		1,533			202			1			(490	)		958
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	448		$	1,347		$	3,953		$	832		$	54		$	592		$	7,226
Charge-offs		(13	)		(909	)		(394	)		-			(11	)		-			(1,327	)
Recoveries		2			516			1			-			6			-			525
Provision		(9	)		15			1,213			113			(4	)		(216	)		1,112
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

		Commercial						Commercial			Residential			Consumer
(Dollars in thousands)		and Industrial			Construction			Real Estate			Real Estate			and Other			Unallocated			Total
Six Months Ended:
June 30, 2012:
Beginning balance	$	304		$	294		$	4,833		$	987		$	9		$	783		$	7,210
Charge-offs		-			-			(2,525	)		(280	)		(45	)		-			(2,850	)
Recoveries		2			-			69			-			11			-			82
Provision		124			(124	)		2,170			348			36			(736	)		1,818
Ending balance	$	430		$	170		$	4,547		$	1,055		$	11		$	47		$	6,260
June 30, 2011:
Beginning balance	$	436		$	1,183		$	3,760		$	798		$	56		$	164		$	6,397
Charge-offs		(13	)		(909	)		(395	)		(12	)		(23	)		-			(1,352	)
Recoveries		3			516			8			-			13			-			540
Provision		2			179			1,400			159			(1	)		212			1,951
Ending balance	$	428		$	969		$	4,773		$	945		$	45		$	376		$	7,536

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		Evaluated
			Evaluated			Evaluated				for		for
(Dollars in thousands)		Balance	Impairment			Impairment		Balance		Impairment		Impairment
June 30, 2012:
Commercial and industrial	$	430	$	200	$	230	$	13,106	$	396	$	12,710
Construction		170		112		58		7,103		3,529		3,574
Commercial real estate		4,547		1,614		2,933		228,042		18,013		210,029
Residential real estate		1,055		307		748		97,635		2,908		94,727
Consumer and other		11		-		11		1,328		-		1,328
Unallocated		47		-		-		-		-		-
Total	$	6,260	$	2,233	$	3,980	$	347,214	$	24,846	$	322,368
December 31, 2011:
Commercial and industrial	$	304	$	16	$	288	$	13,711	$	32	$	13,679
Construction		294		50		244		8,520		2,458		6,062
Commercial real estate		4,833		1,572		3,261		216,191		22,722		193,469
Residential real estate		987		319		668		100,175		2,482		97,693
Consumer and other		9		-		9		1,336		-		1,336
Unallocated		783		-		-		-		-		-
Total	$	7,210	$	1,957	$	4,470	$	339,933	$	27,694	$	312,239

An Age Analysis Of Loans Receivable

														Recorded
														Investment
						Greater						Total		> 90Days
		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, 2012:
Commercial and industrial	$	22	$	111	$	396	$	529	$	12,577	$	13,106	$	-
Construction		-		-		3,647		3,647		3,456		7,103		118
Commercial real estate		3,004		2,802		17,410		23,216		204,826		228,042		-
Residential real estate		1,268		551		2,908		4,727		92,908		97,635		-
Consumer and other		13		4		-		17		1,311		1,328		-
Total	$	4,307	$	3,468	$	24,361	$	32,136	$	315,078	$	347,214	$	118
December 31, 2011:
Commercial and industrial	$	428	$	-	$	32	$	460	$	13,251	$	13,711	$	-
Construction		558		-		3,243		3,801		4,719		8,520		785
Commercial real estate		5,238		137		19,311		24,686		191,505		216,191		-
Residential real estate		940		-		2,482		3,422		96,753		100,175		-
Consumer and other		17		1		18		36		1,300		1,336		18
Total	$	7,181	$	138	$	25,086	$	32,405	$	307,528	$	339,933	$	803

Loans Which The Accrual Of Interest Has Been Discontinued

(Dollars in thousands)		June 30, 2012		December 31, 2011
Commercial and industrial	$	396	$	32
Construction		3,529		2,458
Commercial real estate		17,410		19,311
Residential real estate		2,908		2,482
Total	$	24,243	$	24,283

Credit Risk Profile By Creditworthiness

				Special
(Dollars in thousands)		Pass		Mention		Substandard			Doubtful		Total
June 30, 2012:
Commercial and industrial	$	12,376	$	333	$	22		$	375	$	13,106
Construction		3,574		-		3,529			-		7,103
Commercial real estate		199,673		6,330		21,467			572		228,042
Residential real estate		93,092		452		3,759			332		97,635
Consumer and other		1,328		-		-			-		1,328
	$	310,043	$	7,115	$	28,777		$	1,279	$	347,214
December 31, 2011:
Commercial and industrial	$	13,103	$	398	$	202	$		8	$	13,711
Construction		5,057		-		3,463			-		8,520
Commercial real estate		180,862		6,987		27,769			573		216,191
Residential real estate		95,491		494		4,190			-		100,175
Consumer and other		1,336		-		-			-		1,336
	$	295,849	$	7,879	$	35,624	$		581	$	339,933

Impaired Loans

	June 30, 2012						December 31, 2011
				Unpaid						Unpaid
		Recorded		Principal		Related		Recorded		Principal		Related
(Dollars in thousands)		Investment (1)		Balance (2)		Allowance		Investment (1)		Balance (2)		Allowance
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	-	$	-	$	-	$	-
Construction		2,134		3,111		-		2,062		2,331		-
Commercial real estate		6,209		6,970		-		10,362		12,932		-
Residential real estate		1,848		1,842		-		1,758		1,757		-
Total impaired loans without a
related allowance		10,191		11,923		-		14,182		17,020		-
With an allowance recorded:
Commercial and industrial		401		396		200		32		32		16
Construction		1,391		1,395		112		396		396		50
Commercial real estate		11,832		13,930		1,614		12,404		12,399		1,572
Residential real estate		1,074		1,067		307		732		724		319
Total impaired loans with an
allowance		14,698		16,788		2,233		13,564		13,551		1,957
Total impaired loans	$	24,889	$	28,711	$	2,233	$	27,746	$	30,571	$	1,957

(1) The recorded investment of impaired loans includes the outstanding principal balance and any unpaid interest and escrow balances due.

(2) Unpaid principal balance includes the present recorded principal balance plus any amounts that have been previously charged-off.

Average Recorded Investment And Income Recognized

	For the Six Months Ended				For the Six Months Ended
	June 30, 2012				June 30, 2011
		Average	Interest			Average	Interest
		Recorded	Income			Recorded	Income
(Dollars in thousands)		Investment	Recognized			Investment	Recognized
With no related allowance recorded:
Commercial and industrial	$	-	$	-	$	19	$	-
Construction		2,293		-		3,795		1
Commercial real estate		8,534		30		8,859		80
Residential real estate		1,663		32		816		17
Consumer and other		-		-		3		-
Total impaired loans without a related allowance		12,490		62		13,492		98
With an allowance recorded:
Commercial and industrial		127		-		77		-
Construction		796		-		1,941		-
Commercial real estate		13,571		49		9,694		105
Residential real estate		732		15		611		1
Consumer and other		-		-		-		-
Total impaired loans with an allowance		15,226		64		12,323		106
Total impaired loans	$	27,716	$	126	$	25,815	$	204

Troubled Debt Restructured On Recorded Investment

		Commercial
(Dollars in thousands)		Real Estate
Performing	$	604
Non-performing		1,864
Total	$	2,468