10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2014

or

o 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: 000-32891

1ST CONSTITUTION BANCORP

(Exact Name of Registrant as Specified in Its Charter)

New Jersey	22-3665653
(State of Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

2650 Route 130, P.O. Box 634, Cranbury, NJ	08512
(Address of Principal Executive Offices)	(Zip Code)

(609) 655-4500

(Issuer’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

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 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x       No o

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. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

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

As of November 10, 2014, there were 7,134,774 shares of the registrant’s common stock, no par value, outstanding.

1ST CONSTITUTION BANCORP

FORM 10-Q

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets
	(unaudited) at September 30, 2014
	and December 31, 2013	1
	Consolidated Statements of Income
	(unaudited) for the Three Months and Nine Months Ended
	September  30, 2014 and September  30, 2013	2
	Consolidated Statements of Comprehensive Income
	(unaudited) for the Three Months  and Nine Months Ended
	September 30, 2014 and September 30, 2013	3
	Consolidated Statements of Changes in Shareholders’ Equity
	(unaudited) for the Nine Months Ended
	September 30, 2014 and September 30, 2013	4
	Consolidated Statements of Cash Flows
	(unaudited) for the Nine Months Ended
	September 30, 2014 and September 30, 2013	5
	Notes to Consolidated Financial Statements (unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition
	and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 4.	Controls and Procedures	68
PART II.	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 6.	Exhibits	71
SIGNATURES		72

PART I. FINANCIAL INFORMATION

Item 1.               Financial Statements.

1st Constitution Bancorp and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	September 30, 2014			December 31, 2013
ASSETS
CASH AND DUE FROM BANKS	$	20,371,823		$	69,267,345
FEDERAL FUNDS SOLD / SHORT-TERM INVESTMENTS		-			11,426
Total cash and cash equivalents		20,371,823			69,278,771
INVESTMENT SECURITIES:
Available for sale, at fair value		103,959,466			99,198,807
Hel             Held to maturity (fair value of $152,466,765 and $153,629,773 at Mar                 September 30, 2014 and December 31, 2013, respectively)		148,182,693			152,816,815
Total investment securities		252,142,159			252,015,622
LOANS HELD FOR SALE		9,459,172			10,923,689
LOANS		620,395,918			373,336,082
Less- Allowance for loan losses		(7,107,872	)		(7,038,571	)
Net loans		613,288,046			366,297,511
PREMISES AND EQUIPMENT, net		12,065,252			10,043,505
ACCRUED INTEREST RECEIVABLE		2,798,265			2,542,602
BANK-OWNED LIFE INSURANCE		21,074,473			16,183,574
OTHER REAL ESTATE OWNED		1,748,455			2,136,341
GOODWILL AND INTANGIBLE ASSETS		13,587,701			4,889,575
OTHER ASSETS		7,769,204			8,013,897
Total assets	$	954,304,550		$	742,325,087
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
Deposits
Non-interest bearing	$	172,185,545		$	121,891,752
Interest bearing		651,379,201			516,660,278
Total deposits		823,564,746			638,552,030
BORROWINGS		20,798,473			10,000,000
REDEEMABLE SUBORDINATED DEBENTURES		18,557,000			18,557,000
ACCRUED INTEREST PAYABLE		802,851			883,212
ACCRUED EXPENSES AND OTHER LIABILITIES		6,105,078			5,974,531
Total liabilities		869,828,148			673,966,773
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value; 5,000,000 shares authorized, none issued		-			-
Common Stock, no par value; 30,000,000 shares authorized; 7,165,084, and 6,081,961 shares issued and 7,134,774 and  6,065,123 shares outstanding at     September 30,2014 and December 31, 2013, respectively		61,383,079			49,403,450
Retained earnings		23,714,254			21,374,381
Treasury Stock, 30,310 shares and 16,838 shares at September 30, 2014     and December 31, 2013, respectively		(309,871	)		(171,883	)
Accumulated other comprehensive (loss)		(311,060	)		(2,247,634	)
Total shareholders’ equity		84,476,402			68,358,314
Total liabilities and shareholders’ equity	$	954,304,550		$	742,325,087

The accompanying notes are an integral part of these unaudited financial statements.

1

1st Constitution Bancorp and Subsidiaries

Consolidated Statements of Income

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013			2014		2013
INTEREST INCOME:
Loans, including fees	$	8,585,950	$	5,701,804		$	22,694,649	$	17,319,258
Securities:
Taxable		961,043		980,004			3,141,787		2,818,800
Tax-exempt		575,977		575,301			1,745,708		1,633,799
Federal funds sold and short-term investments		10,184		81,745			110,892		221,087
Total interest income		10,133,154		7,338,854			27,693,036		21,992,944
INTEREST EXPENSE:
Deposits		955,246		842,372			2,826,339		2,668,306
Borrowings		144,005		103,122			387,422		310,649
Redeemable subordinated debentures		86,534		88,338			257,314		263,982
Total interest expense		1,185,785		1,033,832			3,471,075		3,242,937
Net interest income		8,947,369		6,305,022			24,221,961		18,750,007
PROVISION FOR LOAN LOSSES		649,998		539,998			5,249,994		776,664
Net interest income after provision for loan losses		8,297,371		5,765,024			18,971,967		17,973,343
NON-INTEREST INCOME:
Service charges on deposit accounts		267,625		231,169			753,976		675,839
Gain on sales of loans		556,054		641,966			1,562,790		1,852,821
Income on Bank-owned life insurance		143,884		115,840			422,022		348,206
Other income		514,279		627,573			1,640,068		1,796,104
Total non-interest income		1,481,842		1,616,548			4,378,856		4,672,970
NON-INTEREST EXPENSE:
Salaries and employee benefits		3,922,104		3,060,143			11,194,732		9,458,247
Occupancy expense		833,813		629,922			2,498,903		1,930,227
Data processing expense		313,237		273,272			941,046		868,960
Other real estate owned expenses		131,973		176,796			272,014		770,858
Merger related expenses		0		0			1,532,153		0
FDIC insurance expense		210,000		111,562			544,631		146,249
Other operating expenses		1,312,524		1,001,788			3,792,012		3,324,210
Total non-interest expenses		6,723,651		5,253,483			20,775,491		16,498,751
Income before income taxes		3,055,562		2,128,089			2,575,332		6,147,562
INCOME TAXES		917,483		604,851			235,459		1,741,974
Net income	$	2,138,079	$	1,523,238		$	2,339,873	$	4,405,588
NET INCOME PER COMMON SHARE:
Basic	$	0.30	$	0.25		$	0.33	$	0.74
Diluted	$	0.30	$	0.25		$	0.33	$	0.72

The accompanying notes are an integral part of these unaudited financial statements.

2

1st Constitution Bancorp and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Net Income	$	2,138,079		$	1,523,238		$	2,339,873		$	4,405,588
Other comprehensive income (loss)  :
Unrealized gains (losses) on securities available for           sale		476,686			(53,738	)		2,758,346			(4,466,187	)
Tax effect		(255,347	)		18,270			(1,014,127	)		1,518,504
Net of tax amount		221,339			(35,468	)		1,744,219			(2,947,683	)
Realized loss on securities available for sale (1)		-			-			2,516			-
Tax effect		-			-			(1,006	)		-
Net of tax amount		-			-			1,510			-
Pension liability (2)		159,474			63,265			318,075			129,751
Tax effect		(63,789	)		(25,305	)		(127,230	)		(51,907	)
Net of tax amount		95,685			37,960			190,845			77,844
Total other comprehensive income (loss)		317,024			2,492			1,936,574			(2,869,839	)
Comprehensive income	$	2,455,103		$	1,525,730		$	4,276,447		$	1,535,749

The accompanying notes are an integral part of these unaudited financial statements.

(1) Included in other income on the Consolidated Statements of Income.

(2) Included in salaries and employee benefits on the Consolidated Statements of Income.

3

1st Constitution Bancorp and Subsidiaries

Consolidated Statements of Changes in Shareholders’ Equity

For the Nine Months Ended September 30, 2014 and 2013

(Unaudited)

	Common Stock		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive (Loss) Income			Total Shareholders’ Equity
Balance, January 1, 2013	$	48,716,032	$	15,594,293	$	(61,086	)	$	804,293		$	65,053,532
Exercise of stock options and issuance of       shares under employee benefit program (23,233       shares)		603,342										603,342
Share-based compensation		75,948										75,948
Treasury stock purchased (6,440 shares)						(116,451	)					(116,451	)
Net income for the nine month ended       September  30, 2013				4,405,588								4,405,588
Other comprehensive (loss)									(2,869,839	)		(2,869,839	)
Balance, September 30, 2013	$	49,395,322	$	19,999,881	$	(177,537	)	$	(2,065,546	)	$	67,152,120
Balance, January 1, 2014	$	49,403,450	$	21,374,381	$	(171,883	)	$	(2,247,634	)	$	68,358,314
Exercise of stock options and issuance  of       shares under employee  benefit program (63,900       shares)		741,806										741,806
Share-based compensation		77,123										77,123
Treasury stock purchased (13,472 shares)						(137,988	)					(137,988	)
Acquisition of Rumson-Fair Haven Bank and       Trust Company (1,019,223 shares)		11,160,700										11,160,700
Net income for the nine months ended      September 30, 2014				2,339,873								2,339,873
Other comprehensive income									1,936,574			1,936,574
Balance, September 30, 2014	$	61,383,079	$	23,714,254	$	(309,871	)	$	(311,060	)	$	84,476,402

The accompanying notes are an integral part of these financial statements.

4

1st Constitution Bancorp and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2014			2013
OPERATING ACTIVITIES:
Net income	$	2,339,873		$	4,405,588
Adjustments to reconcile net income to net cash provided by operating activities-
Provision for loan losses		5,249,994			776,664
Provision for loss on other real estate owned		111,545			662,918
Depreciation and amortization		1,338,569			805.823
Net amortization of premiums and discounts on securities		852,302			868,639
Loss on sales of securities held for sale		2,516			-
Gains on sales of other real estate owned		(21,012	)		(292,170	)
Gains on sales of loans held for sale		(1,562,790	)		(1,852,821	)
Originations of loans held for sale		(84,044,668	)		(114,126,927	)
Proceeds from sales of loans held for sale		87,071,975			137,972,505
Income on Bank – owned life insurance		(422,022	)		(348,206	)
Share-based compensation expense		443,673			380,471
Decrease in accrued interest receivable		340,949			728,564
(Increase) decrease in other assets		(307,003	)		925,461
Decrease in accrued interest payable		(227,735	)		(269,852	)
Increase (decrease) in accrued expenses and other liabilities		(388,648	)		517,255
Net cash  provided by operating activities		10,777,518			31,153,912
INVESTING ACTIVITIES:
Purchases of securities -
Available for sale		-			(16,947,137	)
Held to maturity		(14,229,098	)		(62,560,993	)
Proceeds from maturities and prepayments of securities -
Available for sale		21,503,769			20,423,187
Held to maturity		18,572,106			27,488,848
Proceeds from sales of securities available for sale		5,957,188			-
Net (increase) decrease in loans		(108,783,950	)		155,845,716
Capital expenditures		(262,407	)		(147,040	)
Net cash received in the acquisition		21,375,071			-
Additional investment in other real estate owned		-			(11,500	)
Proceeds from sales of other real estate owned		230,949			7,183,854
Net cash (used in) provided by  investing activities		(55,636,372	)		131,274,935
FINANCING ACTIVITIES:
Issuance of vested shares		741,806			603,342
Purchase of Treasury Stock		(137,988	)		(116,451	)
Net decrease in demand, savings and time deposits		(4,471,836	)		(20,745,521	)
Net increase (decrease in borrowings		(180,076	)		(32,400,000	)
Net cash used in financing activities		(4,048,094	)		(52,658,630	)
(Decrease) increase in cash and cash equivalents		(48,906,948	)		109,770,217
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR		69,278,771			14,044,921
CASH AND CASH EQUIVALENTS
AT END OF YEAR	$	20,371,823		$	123,815,138
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION
Cash paid during the period for -
Interest	$	3,551,436			3,512,789
Income taxes		656,223			1,721,000
Non-cash investing activities
Real estate acquired in full satisfaction of loans in foreclosure	$	-			2,311,225
Acquisition of Rumson-Fair Haven Bank and Trust Company
Noncash assets acquired:
Investment securities available for sale	$	30,024,458
Loans		143,714,377
Accrued interest receivable		596,612
Premises and equipment, net		2,551,939
Goodwill		7,698,427
Core deposit intangible		1,188,836
Bank-owned life insurance		4,470,579
Other assets		885,576
		191,130,804
Liabilities assumed:
Deposits		189,490,005
Advances from FHLB		11,030,000
Other liabilities		825,170
		201,345,175
Common stock issued as consideration	$	11,160,700

The accompanying notes are an integral part of these financial statements.

5

1st Constitution Bancorp and Subsidiaries

Notes To Consolidated Financial Statements

(Unaudited)

(1)  Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements include 1st Constitution Bancorp (the “Company”), its wholly-owned subsidiary, 1st Constitution Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, 1st Constitution Investment Company of New Jersey, Inc., FCB Assets Holdings, Inc., 1st Constitution Title Agency, LLC, 204 South Newman Street Corp. and 249 New York Avenue, LLC.  1st Constitution Capital Trust II, a subsidiary of the Company, is not included in the Company’s consolidated financial statements, as it is a variable interest entity and the Company is not the primary beneficiary.  All significant intercompany accounts and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform to current year presentation.  The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Article 8 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2013, filed with the SEC on March 31, 2014.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2014 for items that should potentially be recognized or disclosed in these financial statements.  The evaluation was conducted through the date these financial statements were issued.

(2)  Acquisition of Rumson-Fair Haven Bank and Trust Company

On February 7, 2014, the Company completed its acquisition of Rumson-Fair Haven Bank and Trust Company, a New Jersey state commercial bank (“Rumson”), which merged with and into the Bank, with the Bank as the surviving entity. The merger agreement among the Company, the Bank and Rumson (the “Merger Agreement”) provided that the shareholders of Rumson would receive, at their election, for each outstanding share of Rumson common stock that they own at the effective time of the merger, either 0.7772 shares of the Company common stock or $7.50 in cash or a combination thereof, subject to proration as described in the Merger Agreement, so that 60% of the aggregate merger consideration consisted of cash and 40% consisted of shares of the Company’s common stock. The Company issued an aggregate of 1,019,223 shares of its common stock and paid $14.8 million in cash in the transaction.

The merger was accounted for under the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at preliminary estimated fair values as of the acquisition date. Rumson’s results of operations have been included in the Company’s Consolidated Statements of Income since February 7, 2014.

The assets acquired and liabilities assumed in the merger were recorded at their estimated fair values based on management’s best estimates using information available at the date of the merger, including the use of a third party valuation specialist. The fair values are preliminary estimates and subject to adjustment for up to one year after the closing date of the merger. The following table summarizes the estimated fair value of the acquired assets and liabilities.

6

($ in thousands)	Amount
Consideration paid:
Company stock issued	$	11,161
Cash payment		14,770
Total consideration paid		25,931
Recognized amounts of identifiable assets and liabilities assumed at fair value:
Cash and cash equivalents		36,045
Short-term investments		100
Securities available for sale		30,024
Loans		143,714
Premises and equipment, net		2,552
Identifiable intangible assets		1,189
Bank-owned life insurance		4,471
Accrued interest receivable and other assets		1,483
Deposits		(189,490	)
Borrowings		(11,030	)
Other liabilities		(825	)
Total identifiable assets		18,233
Goodwill	$	7,698

Accounting Standards Codification (“ASC”) Topic 805-10 provides that if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete.  During the measurement period, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.  During the measurement period, the acquirer also shall recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date.  The measurement period may not exceed one year from the acquisition date.  As of September 30, 2014, independent appraisals of branch office real estate and leases had not been completed and the fair value of these assets and liabilities had not been determined.

Loans and leases acquired in the Rumson acquisition were recorded at fair value and subsequently accounted for in accordance with ASC Topic 310, and there was no carryover of Rumson’s allowance for loan losses. The fair values of loans acquired from Rumson were estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted for estimated future credit losses and the rate of prepayments. Projected cash flows were then discounted to present value using a risk-adjusted market rate for similar loans.

At the acquisition date, the Company recorded $141.1 million of loans without evidence of credit quality deterioration and $2.6 million of loans with evidence of credit quality deterioration. The following table summarizes the composition of the loans acquired and recorded at fair value.

7

	At February 7, 2014
($ in thousands)	Loans acquired with no credit quality deterioration		Loans acquired with credit quality deterioration		Total
Commercial
Construction	$	11,920	$	-	$	11,920
Commercial Real Estate		62,398		1,832		64,230
Commercial Business		18,086		368		18,454
Residential Real Estate		32,743		180		32,923
Consumer		15,953		234		16,187
Total	$	141,100	$	2,614	$	143,714

The following is a summary of the loans acquired with evidence of deteriorated credit quality in the Rumson acquisition as of the closing date.

($ in thousands)	Acquired Credit Impaired Loans
Contractually required principal and interest at acquisition	$	4,451
Contractual cash flows not expected to be collected (non-accretable difference)		1,543
Expected cash flows at acquisition		2,908
Interest component of expected cash flows (accretable difference)		294
Fair value of acquired loans	$	2,614

The core deposit intangible totaled $1.2 million and is being amortized over its estimated useful life of approximately 10 years using an accelerated method. The goodwill will be evaluated annually for impairment. The goodwill is not deductible for tax purposes.

8

The following table presents the projected amortization of the core deposit intangible for each period presented:

		($ in thousands)
2014	$	216
2015		195
2016		173
2017		151
2018		130
Thereafter		324
	$	1,189

The fair values of deposit liabilities with no stated maturities, such as checking, money market and savings accounts, were assumed to equal the carrying amounts since these deposits are payable on demand. The fair values of certificates of deposits and IRAs represent the present value of contractual cash flows discounted at market rates for similar certificates of deposit.

Direct costs related to the acquisition were expensed as incurred. During the nine months ended September 30, 2014, the Company incurred $1.5 million of merger and acquisition integration-related expenses, which have been separately stated in the Company’s Consolidated Statements of Income.

Supplemental Pro Forma Financial Information

The following table presents financial information regarding the former Rumson operations included in the Consolidated Statements of Income from the date of the acquisition, February 7, 2014, through September 30, 2014 under the column “Actual from acquisition date to September 30, 2014.”  In addition, the table provides unaudited condensed pro forma financial information assuming that the Rumson acquisition had been completed as of January 1, 2013. In the table below, merger-related expenses of $1.8 million were excluded from pro forma non-interest expenses for the nine months ended September 30, 2014.  Income taxes were also adjusted to exclude income tax benefits of $624,000 related to the merger expenses for the nine months ended September 30, 2014.

The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited pro forma financial information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings that may have occurred as a result of the integration and consolidation of Rumson’s operations. The pro forma financial information reflects adjustments related to certain purchase accounting fair value adjustments; amortization of core deposit and other intangibles; and related income tax effects.

9

	Actual from Acquisition date to September 30, 2014		Pro Forma for the nine months ended September 30, 2014		Pro Forma for the Nine months  ended September 30, 2013
	(in thousands, except per share amounts)
Net interest income	$	4,430	$	25,021	$	24,434
Non-interest income		176		4,428		5,476
Non-interest expenses		1,926		19,964		20,802
Income taxes		1,070		839		2,543
Net income		1,610		3,395		5,648
Earnings per share-diluted			$	0.48	$	0.79

 (3)  Net Income Per Common Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during each period.

Diluted net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding, as adjusted for the assumed exercise of potential common stock warrants, and common stock options, using the treasury stock method.  For periods when a net loss is incurred, there is no dilutive effect of share equivalents. Accordingly, these shares are not included in the calculation of diluted earnings per share.

The following tables illustrate the reconciliation of the numerators and denominators of the basic and diluted earnings per common share (EPS) calculations.  Dilutive securities in the tables below exclude common stock options and warrants with exercise prices that exceed the average market price of the Company’s common stock during the periods presented.  Inclusion of these common stock options and warrants would be anti-dilutive to the diluted earnings per common share calculation. 

	Three Months Ended September 30, 2014
	Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net Income	$	2,138,079		7,119,113	$	0.30
Effect of dilutive securities:
Stock options and warrants				122,436
Diluted EPS:
Net income plus assumed conversion	$	2,138,079		7,241,549	$	0.30

10

	Three Months Ended September 30, 2013
	Net  Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	1,523,238		5,991,480	$	0.25
Effect of Dilutive Securities:
Stock options and warrants				155,182
Diluted EPS:
Net income plus assumed conversions	$	1,523,238		6,146,662	$	0.25

	Nine Months Ended September 30, 2014
	Net  Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	2,339,873		7,013,776	$	0.33
Effect of Dilutive Securities:
Stock options  and warrants				127,792
Diluted EPS:
Net income plus assumed conversions	$	2,339,873		7,141,568	$	0.33

	Nine Months Ended September 30, 2013
	Net  Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	4,405,588		5,960,294	$	0.74
Effect of Dilutive Securities:
Stock options and warrants				128,539
Diluted EPS:
Net income plus assumed conversions	$	4,405,588		6,088,833	$	0.72

 For the three months and nine months ended September 30, 2014 and 2013, 90,296 and 247,298 options, respectively, were anti-dilutive and were not included in the computation of diluted earnings per common shares.

11

(4)           Investment Securities

 Amortized cost, gross unrealized gains and losses, and the estimated fair value by security type are as follows:

September 30, 2014	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government
sponsored corporations (“GSE”) and agencies	$	11,431,027	$	-	$	(444,332	)	$	10,986,695
Residential collateralized mortgage obligations – GSE		3,684,424		82,520		(43,280	)		3,723,664
Residential collateralized mortgage obligations – non GSE		2,564,282		39,395		(6,013	)		2,597,664
Residential mortgage backed securities – GSE		28,136,260		822,737		(278,630	)		28,680,367
Obligations of State and Political subdivisions		22,023,131		244,381		(649,000	)		21,618,512
Trust preferred debt securities – single issuer		2,471,060		-		(287,360	)		2,183,700
Corporate debt securities		32,294,145		322,566		(34,747	)		32,581,964
Restricted stock		1,561,900		-		-			1,561,900
Mutual fund		25,000		-		-			25,000
	$	104,191,229	$	1,511,599	$	(1,743,362		$	103,959,466

September 30, 2014	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
U. S. Treasury securities and
obligations of U.S. Government
sponsored corporations (“GSE”)  and agencies	$	-	$	-		$	-	$	-	$	-		$	-
Residential collateralized mortgage obligations – GSE		12,300,297		-			12,300,297		429,031		-			12,729,328
Residential collateralized mortgage obligations – non-GSE		9,099,412		-			9,099,412		292,039					9,391,451
Residential mortgage backed securities – GSE		58,526,504		-			58,526,504		1,085,369		(122,585	)		59,489,288
Obligations of State and Political subdivisions		68,100,762		-			68,100,762		2,250,385		(105,740	)		70,245,407
Trust preferred debt securities-pooled		656,662		(500,944	)		155,718		455,573		-			611,291
Corporate debt securities		-		-			-		-		-			-
	$	148,683,637	$	(500,944	)	$	148,182,693	$	4,512,397	$	(228,325	)	$	152,466,765

12

December 31, 2013	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government
sponsored corporations (“GSE”) and agencies	$	22,386,761	$	33,213	$	(910,274	)	$	21,509,700
Residential collateralized mortgage obligations – GSE		3,547,404		134,388		-			3,681,792
Residential collateralized mortgage obligations – non GSE		2,782,843		52,227		(8,674	)		2,826,396
Residential mortgage backed securities – GSE		31,532,051		872,169		(438,273	)		31,965,947
Obligations of State and Political subdivisions		22,206,959		149,959		(2,710,874	)		19,646,044
Trust preferred debt securities – single issuer		2,468,839		-		(455,739	)		2,013,100
Corporate debt securities		16,228,474		318,590		(29,336	)		16,517,728
Restricted stock		1,013,100		-		-			1,013,100
Mutual fund		25,000		-		-			25,000
	$	102,191,431	$	1,560,546	$	(4,553,170		$	99,198,807

December 31, 2013	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
Obligations of U.S. Government
sponsored corporations (“GSE”) and agencies	$	1,524,860	$	-		$	1,524,860	$	10,310	$	-		$	1,535,170
Residential collateralized mortgage          obligations – GSE		14,803,739		-			14,803,739		379,815		-			15,183,554
Residential collateralized  mortgage         obligations – non-GSE		10,682,363		-			10,682,363		119,777		(27,526	)		10,774,614
Residential mortgage backed  securities –         GSE		65,240,620		-			65,240,620		611,062		(387,034	)		65,464,648
Obligations of State and Political    subdivisions		59,400,916		-			59,400,916		1,399,938		(1,296,357	)		59,504,497
Trust preferred debt securities – pooled		656,662		(500,944	)		155,718		-		(6,863	)		148,855
Corporate debt securities		1,008,599		-			1,008,599		9,836		-			1,018,435
	$	153,317,759	$	(500,944	)	$	152,816,815	$	2,530,738	$	(1,717,780	)	$	153,629,773

Restricted stock at September 30, 2014 and December 31, 2013 consisted of $1,496,900 and $998,100, respectively, of Federal Home Loan Bank of New York stock and $65,000 and $15,000, respectively, of Atlantic Central Bankers Bank stock.

The amortized cost and estimated fair value of investment securities at September 30, 2014, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Restricted stock is included in “Available for sale - Due in one year or less.”

13

	Amortized Cost		Fair Value
Available for sale-
Due in one year or less
Residential collateralized mortgage obligations - non GSE	$	263,345	$	264,102
Residential mortgage backed securities – GSE		250		250
Obligations of State and Political subdivisions		264,775		265,665
Corporate debt securities		10,224,296		10,198,171
Restricted stock		1,561,900		1,561,900
Mutual fund		25,000		25,000
	$	12,339,566	$	12,315,088
Due after one year through five years
U.S. Treasury securities and obligations of U.S.                     Government sponsored corporations (“GSE”) and                     agencies	$	1,540,385	$	1,535,895
Residential collateralized mortgage obligations –                      non-GSE		-		-
Residential mortgage backed securities – GSE		7,450,510		7,358,278
Obligations of State and Political subdivisions		681,967		714,360
Corporate debt securities		21,050,621		21,351,292
	$	30,723,483	$	30,959,825
Due after five years through ten years
U.S. Treasury securities and obligations of US                     Government sponsored corporations (“GSE”) and                     agencies	$	9,890,642	$	9,450,800
Residential collateralized mortgage obligations – GSE		102,768		109,333
Residential mortgage backed Securities – GSE		6,661,024		6,742,207
Obligations of State and Political Subdivisions		4,796,387		4,866,134
Corporate debt securities		1,019,227		1,032,500
	$	22,470,048	$	22,200,974
Due after ten years
Residential collateralized mortgage obligations – GSE	$	3,581,657	$	3,614,332
Residential collateralized mortgage obligations – non-GSE		2,300,936		2,333,561
Residential mortgage backed securities – GSE		14,024,476		14,579,634
Obligations of State and Political subdivisions		16,280,003		15,772,352
Corporate debt securities		-		-
Trust preferred debt securities		2,471,060		2,183,700
	$	38,658,132	$	38,483,579
Total	$	104,191,229	$	103,959,466

14

Held to maturity-
Due in one year or less
U. S. Treasury securities and obligations of U.S.                     Government sponsored corporations (“GSE”)                      and agencies	$	-	$	-
Obligations of State and Political subdivisions		18,205,158		18,211,282
Corporate debt securities		-		-
		18,205,158		18,211,282
Due after one year through five years
U.S. Treasury securities and obligations of US                     Government sponsored corporations (“GSE”) and                      agencies	$	-	$	-
Obligations of State and Political subdivisions		13,503,851		14,035,745
Corporate debt securities		-		-
	$	13,503,851	$	14,035,745
Due after five years through ten years
Residential collateralized mortgage obligations – GSE	$	-	$	-
Residential collateralized mortgage obligations – non-GSE		802,511		805,099
Residential mortgage backed securities – GSE		19,279,679		19,492,168
Obligations of State and Political subdivisions		18,544,514		19,475,290
	$	38,626,704	$	39,772,557
Due after ten years
Residential collateralized mortgage obligations – GSE	$	12,299,996	$	12,729,330
Residential collateralized mortgage obligations – non-GSE		8,297,202		8,586,350
Residential mortgage backed securities – GSE		39,246,826		39,997,121
Obligations of State and Political subdivisions		17,847,239		18,523,090
Trust preferred debt securities – pooled		656,661		611,290
	$	78,347,924	$	80,447,181
Total	$	148,683,637	$	152,466,765

Gross unrealized losses on available for sale and held to maturity securities and the estimated fair value of the related securities aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2014 and December 31, 2013 were as follows:

15

September 30, 2014		Less than 12 months					12 months or longer					Total
	Number of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations       of U.S. Government sponsored           corporations and agencies	2	$	1,535,895	$	(4,490)		$	9,450,800	$	(439,842	)	$	10,986,695	$	(444,332	)
Residential collateralized mortgage obligations – GSE	1		1,074,027		(43,280	)		-		-			1,074,027		(43,280	)
Residential collateralized mortgage        obligations – non-GSE	2		989,807		(892	)		93,295		(5,121	)		1,083,102		(6,013	)
Residential mortgage backed        securities – GSE	18		1,711,545		(1,679)			17,021,564		(399,536	)		18,733,109		(401,215	)
Obligations of State and Political       Subdivisions	63		394,002		(1,596	)		21,564,852		(753,144	)		21,958,854		(754,740	)
Trust preferred debt securities –         single issuer	4		-		-			2,183,700		(287,360	)		2,183,700		(287,360	)
Corporate Debt Securities	2		1,420,594		(1,233	)		1,028,880		(33,514	)		2,449,474		(34,747	)
Total temporarily impaired securities	92	$	7,125,870	$	(53,170	)	$	51,343,091	$	(1,918,517	)	$	58,468,961	$	(1,971,687	)

December 31, 2013		Less than 12 months					12 months or longer					Total
	Number of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and      obligations of U.S. Government      sponsored corporations (GSE) and      agencies	3	$	11,507,350	$	(910,274	)	$	-	$	-		$	11,507,350	$	(910,274	)
Residential collateralized mortgage      Obligations – non-GSE	8		5,328,485		(28,231	)		1,094,754		(7,969	)		6,423,239		(36,200	)
Residential mortgage backed securities      GSE	38		40,504,327		(825,307	)		-		-			40,504,327		(825,307	)
Obligations of State and Political      Subdivisions	95		19,403,457		(2,285,759	)		8,936,441		(1,721,472	)		28,339,898		(4,007,231	)
Trust preferred debt securities –         single issuer	4		-		-			2,013,100		(455,739	)		2,013,100		(455,739	)
Trust preferred debt securities –         Pooled	1		-		-			148,855		(507,807	)		148,855		(507,807	)
Corporate debt securities	1		-		-			1,056,110		(29,336	)		1,056,110		(29,336	)
Total temporarily impaired securities	150	$	76,743,619	$	(4,049,571	)	$	13,249,260	$	(2,722,323	)	$	89,992,879	$	(6,771,894	)

16

U.S. Treasury securities and obligations of U.S. Government sponsored corporations and agencies:  The unrealized losses on investments in these securities were caused by increases in market interest rates.  The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity; therefore, these investments are not considered other-than-temporarily impaired.

Residential collateralized mortgage obligations and residential mortgage-backed securities: The unrealized losses on investments in residential collateralized residential mortgage obligations and mortgage-backed securities were caused by increases in market interest rates. The contractual cash flows of these securities are guaranteed by the issuer, which are primarily government or government sponsored agencies. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. These investments are not considered to be other than temporarily impaired because the decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is  not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity.

Obligations of State and Political Subdivisions:  The unrealized losses or investments in these securities were caused by increases in market interest rates.  None of the issuers have defaulted on interest payments. It is expected that the securities would not be settled at a price less than the amortized cost of the investment.  These investments are not considered to be other than temporarily impaired because the decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity..

Corporate debt securities:   The unrealized losses on investments in corporate debt securities were caused by increases in market interest rates.  None of the corporate issuers have defaulted on interest payments. These investments are not considered to be other than temporarily impaired because  the decline in fair value is attributable to changes in interest rates and not a decline in credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity.

Trust preferred debt securities – single issuer:  The investments in these securities with unrealized losses are comprised of four corporate trust preferred securities issued by two large financial institutions that mature in 2027. The contractual terms of the trust preferred securities do not allow the issuer to settle the securities at a price less than the face value of the trust preferred securities, which is greater than the amortized cost of the trust preferred securities.  Neither of the issuers has defaulted on interest payments.  The decline in fair value is attributable to the widening of interest rate spreads and the lack of an active trading market for these securities and, to a lesser degree, market concerns about the issuers’ credit quality. These investments are not considered to be other than temporarily impaired because the Company does not intend to sell these investments and it is not likely that the Company will be required to sell these investments before a market price recovery or maturity.

Trust preferred debt securities – pooled:   This trust preferred debt security was issued by a two issuer pool (Preferred Term Securities XXV, Ltd. co-issued by Keefe, Bruyette and Woods, Inc. and First Tennessee (“PRETSL XXV”)) consisting primarily of securities issued by financial institution holding companies.  During 2009, the Company recognized an other-than-temporary impairment of $864,727, of which $363,783 was determined to be a credit loss and charged to operations, and $500,944 was recognized in the other comprehensive income (loss) component of shareholders’ equity.

The primary factor used to determine the credit portion of the impairment loss to be recognized in the income statement for this security was the discounted present value of projected cash flow where that present value of cash flow was less than the amortized cost basis of the security.  The present value of cash flow was developed using an EITF 99-20 model that considered performing collateral ratios, the level of subordination to senior tranches of the security, credit ratings of and projected credit defaults in the underlying collateral.

17

On a quarterly basis, management evaluates this security to determine if any additional other-than-temporary impairment is required.  As of September 30, 2014, our evaluation was as follows:

a. We obtained the PRETSL XXV Depository Institutions Issuer List as of September30, 2014 from the FTN Financial Corp. (“FTN”) website and reviewed the financial ratios and capital levels of each individual financial institution issuer.

b. We sorted the financial institutions on the issuer list to develop three “buckets” (or categories) for further deferred/default analysis based upon the indicated “Texas Ratio.”  The Texas Ratio is calculated by dividing the institution’s Non-Performing Assets plus loans 90 days past due by the combined total of Tangible Equity plus the Allowance for Loan Losses.  The three buckets consisted of those institutions with a Texas Ratio of:

(1) Above 100;

(2) 75 to 100; and

(3) Below 75.

c. We then applied the following asset specific deferral/default assumptions to each of these buckets:

(1) Above 100 - 100% default; 0% recovery;

(2) 75 to 100 – 100% deferred; 15% recovery at 2 years from initial date of deferral; and

(3) Below 75 – no deferral/default.

d. We then performed a cash flow projection to analyze the impact of future deferral/default activity by applying the following assumption on those institutions in bucket (3) of our analysis:

· Defaults at 75 basis points applied annually; 15% recovery with a 2-year lag from the initial date of deferral.

Our rationale for these metrics is as follows:  (1) The FDIC lists the number of bank failures each year from 1934 – 2008.  Comparing bank failures to the number of FDIC institutions produces an annual average default rate of 36 basis points. Given the continuing uncertain economic environment, we believe the doubling of this amount, or 75 basis points, to be an appropriate measurement for defaults; and (2) Standard & Poor’s published “Global Methodology for Rating Trust Preferred/Hybrid Securities Revised” on November 21, 2008.  This analysis uses a recovery assumption of 15%, which we also deem an appropriate measurement.

Our position is that it is appropriate to apply this future default factor in our analysis as it is not realistic to assume no adverse conditions will occur over the remaining 23-year stated maturity of this pooled security even though the individual institutions are currently performing according to terms.

e. This September 30, 2014 projection of future cash flows produced a present value that exceeded the carrying value of the pooled trust preferred security; therefore, management concluded that no other-than-temporary impairment issues were present at September 30, 2014.

18

A number of factors could cause management to conclude in one or more future reporting periods that an unrealized loss that exists with respect to PRETSL XXV constitutes an additional credit impairment.  These factors include, but are not limited to, failure to make interest payments, an increase in the severity of the unrealized loss, an increase in the continuous duration of the unrealized loss without an impairment in value or changes in market conditions and/or industry or issuer specific factors that would render management unable to forecast a full recovery in value.  In addition, the fair value of trust preferred securities could decline if the overall economy and the financial condition of the issuers continue to deteriorate and there remains limited liquidity for this security.

The following table sets forth information with respect to this security at September 30, 2014:

Security

Class

Book Value

Fair Value

Unrealized Gain (Loss)

Percent of  Underlying  Collateral Performing

Percent of Underlying Collateral In Deferral (1)

Percent of Underlying Collateral In Default  (1)

Expected Deferrals and Defaults as a % of Remaining Performing Collateral

Moody's S&P / Ratings

Excess Subordination        (2)

Amount

%  of  Current Performing Collateral

PreTSL  XXV

B-1

$155,718

$611,290

$455,572

69.0%

5.8%

25.2%

13.7%

B1/ NR

$136,000

26.0%

Notes to table above:

(1) This percentage represents the amount of specific deferrals / defaults that have occurred, plus those that are known for the following quarters to the total amount of original collateral. Fewer deferrals / defaults produce a lower percentage.

(2) “Excess subordination” amount is the additional defaults / deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a “break in yield”. This amount assumes that all currently performing collateral continues to perform.  A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity.  The “percent of underlying collateral performing” is the ratio of the “excess subordination amount” to current performing collateral - a higher percentage means there is more excess subordination to absorb additional defaults / deferrals, and the better our security is protected from loss.

The Company regularly reviews the composition of the investment securities portfolio, taking into account market risks, the current and expected interest rate environment, liquidity needs, and its overall interest rate risk profile and strategic goals.

The following table presents a cumulative roll forward of the amount of other-than-temporary impairment related to credit losses, all of which relate to PRETSL XXV, which have been recognized in earnings for debt securities held to maturity and not intended to be sold.

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014			2013
Balance at beginning of period	$	364	$	364		$	364	$	364
Change during the period		-		-			-		-
Balance at end of period	$	364	$	364		$	364	$	364

19

(5)   Allowance for Loan Losses and Credit Quality Disclosure

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans and mortgage warehouse lines of credit.  Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values.  Any one, or a combination, of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

            The following table provides an aging of the loan portfolio by loan class at September 30, 2014:

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment  > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	-	$	-	$	88,547,583	$	88,547,583	$	-	$	-
Commercial Business		959,386		14,051		390,396		1,363,833		107,689,596		109,053,429		-		356,577
Commercial Real Estate		2,290,804		-		6,119,386		8,410,190		183,957,654		192,367,844		-		5,787,533
Mortgage Warehouse Lines		-		-		-		-		157,333,717		157,333,717		-		-
Residential Real Estate		-		-		1,714,972		1,714,972		47,017,079		48,732,051		320,315		1,394,657
Consumer
Loans to Individuals		279,909		-		-		279,909		23,083,133		23,363,042		-		-
Other		-		-		-		-		197,704		197,704		-		-
Deferred Loan Costs		-		-		-		-		800,548		800,548		-		-
Total	$	3,530,099	$	14,051	$	8,224,754	$	11,768,904	$	608,627,014	$	620,395,918		320,315	$	7,538,767

As provided by ASC 310-30, the excess of cash flows expected at acquisition over the initial investment in the loan is recognized as interest income over the life of the loan. Accordingly, loans acquired with evidence of deteriorated credit quality of $1,246,640 at September 30, 2014 were not classified as non-performing loans. Of this amount, loans aggregating $699,287 were included in the Greater than 90 Days category.

20

The following table provides an aging of the loan portfolio by loan class at December 31, 2013:

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	_	$	-	$	51,002,172	$	51,002,172	$	-	$	-
Commercial Business		385,133		58,665		453,325		897,123		81,450,932		82,348,055		-		511,990
Commercial Real Estate		-		-		5,217,173		5,217,173		93,172,557		98,389,730		-		5,555,851
Mortgage Warehouse Lines		-		-		-		-		116,951,357		116,951,357		-		-
Residential Real Estate		315,615		967,099		33,494		1,316,208		12,447,970		13,764,178		-		162,012
Consumer
Loans to Individuals		-		-		-		-		9,766,114		9,766,114		-		92,103
Other		-		-		-		-		170,526		170,526		-		-
Deferred Loan Costs		-		-		-		-		943,950		943,950		-		-
Total	$	700,748	$	1,025,764	$	5,703,992	$	7,430,504	$	365,905,578	$	373,336,082		-	$	6,321,956

Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements and is consistent with generally accepted accounting principles (GAAP) and regulatory interagency supervisory guidance.  The allowance for loan losses methodology consists of two major components.  The first component is an estimation of losses associated with individually identified impaired loans, which follows Accounting Standards Codification (ASC) Topic 310 (formerly SFAS 114).  The second major component is an estimation of losses under ASC Topic 450 (formerly SFAS 5), which provides guidance for estimating losses on groups of loans with similar risk characteristics.  The Company’s methodology results in an allowance for loan losses which includes a specific reserve for impaired loans, an allocated reserve, and an unallocated portion.

When analyzing groups of loans under ASC 450, the Bank follows the Interagency Policy Statement on the Allowance for Loan and Lease Losses.  The methodology considers the Company’s historical loss experience adjusted for changes in trends, conditions, and other relevant factors that affect repayment of the loans as of the evaluation date.  These adjustment factors, known as qualitative factors, include:

· Delinquencies and nonaccruals

· Portfolio quality

· Concentration of credit

· Trends in volume of loans

· Quality of collateral

· Policy and procedures

· Experience, ability, and depth of management

· Economic trends – national and local

· External factors – competition, legal and regulatory

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The methodology includes the segregation of the loan portfolio into loan types with a further segregation into internal risk rating categories, such as special mention, substandard, doubtful, and loss. This allows for an allocation of the allowance for loan losses by loan type; however, the allowance is available to absorb any loan loss without restriction. Larger balance, non-homogeneous loans representing significant individual credit exposures are evaluated individually through the internal loan review process. It is this process that produces the watch list. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated. Based on these reviews, an estimate of probable losses for the individual larger-balance loans are determined, whenever possible, and used to establish specific loan loss reserves. In general, for non-homogeneous loans not individually assessed and for homogeneous groups, such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The watch list includes loans that are assigned a rating of special mention, substandard, doubtful and loss. Loans rated as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans rated as doubtful in whole, or in part, are placed in nonaccrual status. Loans classified as a loss are considered uncollectible and are charged off against the allowance for loan losses.

The specific allowance for impaired loans is established for specific loans that have been identified by management as being impaired. These loans are considered to be impaired primarily because the loans have not performed according to payment terms and there is reason to believe that repayment of the loan principal in whole or in part, is unlikely. The specific portion of the allowance is the total amount of potential unconfirmed losses for these individual impaired loans. To assist in determining the fair value of loan collateral, the Company often utilizes independent third party qualified appraisal firms which in turn employ their own criteria and assumptions that may include occupancy rates, rental rates, and property expenses, among others.

The second category of reserves consists of the allocated portion of the allowance. The allocated portion of the allowance is determined by taking pools of loans outstanding that have similar characteristics and applying historical loss experience for each pool. This estimate represents the potential unconfirmed losses within the portfolio. Individual loan pools are created for commercial and commercial real estate loans, construction loans, warehouse lines of credit and various types of loans to individuals. The historical estimation for each loan pool is then adjusted to account for current conditions, current loan portfolio performance, loan policy or management changes, or any other qualitative factor which may cause future losses to deviate from historical levels.

The Company also maintains an unallocated allowance. The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable. It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates by definition lack precision. Management must make estimates using assumptions and information that is often subjective and changing rapidly.

The following discusses the risk characteristics of each of our loan portfolio segments, commercial, mortgage warehouse lines of credit, and consumer.

Commercial

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans. Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values. Any one or a combination of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

22

Mortgage Warehouse Lines of Credit

The Company’s Mortgage Warehouse Group provides revolving lines of credit that are available to licensed mortgage banking companies (the “Warehouse Line of Credit”). The Warehouse Line of Credit is used by the mortgage banker to fund the origination of one-to-four family residential mortgage loans that are pre-sold to the secondary mortgage market, which includes state and national banks, national mortgage banking firms, insurance companies and government-sponsored enterprises, including the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and others. On average, an advance under the Warehouse Line of Credit remains outstanding for a period of less than 30 days, with repayment coming directly from the sale of the loan into the secondary mortgage market. Interest and a transaction fee are collected by the Bank at the time of repayment. Additionally, customers of the Warehouse Lines of Credit are required to maintain deposit relationships with the Bank that, on average, represent 10% to 15% of the loan balances.

As a separate segment of the total portfolio, the warehouse loan portfolio is analyzed as a whole for allowance for loan losses purposes.  Warehouse lines of credit are subject to the same inherent risks as other commercial lending, but the overall degree of risk differs. While the Company’s loss experience with this type of lending has been non-existent since the product was introduced in 2008; there are other risks unique to this lending that still must be considered in assessing the adequacy of the allowance for loan losses. These unique risks may include, but are not limited to, (i) credit risks relating to the mortgage bankers that borrow from us, (ii) the risk of intentional misrepresentation or fraud by any of such mortgage bankers, (iii) changes in the market value of mortgage loans originated by the mortgage banker, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit, due to changes in interest rates during the time in warehouse, or (iv) unsalable or impaired mortgage loans so originated, which could lead to decreased collateral value and the failure of a purchaser of the mortgage loan to purchase the loan from the mortgage banker.

 These factors, along with the other qualitative factors such as economic trends, concentrations of credit, trends in the volume of loans, portfolio quality, delinquencies and nonaccruals, are also considered and may have positive or negative effects on the allocated allowance.  The aggregate amount resulting from the application of these qualitative factors determines the overall risk for the portfolio and results in an allocated allowance for warehouse lines of credit.

Consumer

The Company’s loan portfolio consumer segment is comprised of residential real estate loans, home equity loans and other loans to individuals. Individual loan pools are created for the various types of loans to individuals.

In general, for homogeneous groups such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The Company considers the following credit quality indicators in assessing the risk in the loan portfolio:

· Consumer credit scores

· Internal credit risk grades

· Loan-to-value ratios

· Collateral

· Collection experience

The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies.  The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list are treated as “pass” for grading purposes:

1.  Excellent - Loans that are based upon cash collateral held at the Bank and adequately margined. Loans that are based upon "blue chip" stocks listed on the major exchanges and adequately margined.

23

2.  Above Average - Loans to companies whose balance sheets show excellent liquidity and long-term debt is on well-spread schedules of repayment easily covered by cash flow.  Such companies have been consistently profitable and have diversification in their product lines or sources of revenue.  The continuation of profitable operations for the foreseeable future is likely.  Management is comprised of a mix of ages, experience, and backgrounds and management succession is in place.  Sources of raw materials are abundant, and for service companies, the source of revenue is abundant.  Future needs have been planned for.  Character and management ability of individuals or company principals are excellent.  Loans to individuals are supported by high net worths and liquid assets.

3.  Good - Loans to companies whose balance sheets show good liquidity and cash flow adequate to meet maturities of long-term debt with a comfortable margin.  Such companies have established profitable records over a number of years, and there has been growth in net worth.  Operating ratios are in line with those of the industry, and expenses are in proper relationship to the volume of business done and the profits achieved.  Management is well-balanced and competent in their responsibilities.  Economic environment is favorable; however, competition is strong.  The prospects for growth are good.  Loans in this category do not meet the collateral requirements of loans in categories 1 and 2 above. Loans to individuals are supported by good net worths but whose supporting assets are illiquid.

3w. Watch - Included in this category are loans evidencing problems identified by Bank management that require closer supervision.  Such problem has not developed to the point which requires a Special Mention rating.  This category also covers situations where the Bank does not have adequate current information upon which credit quality can be determined.  The account officer has the obligation to correct these deficiencies within 30 days from the time of notification.

4.  Special Mention - Loans or borrowing relationships that require more than the usual amount of attention by Bank management.  Industry conditions may be adverse or weak.  The borrower's ability to meet current payment schedules may be questionable, even though interest and principal are being paid as agreed. Heavy reliance has been placed on the collateral.  Profits, if any, are interspersed with losses.  Management is “one man,” ineffective or there is no plan for management succession.  Expectations of a loan loss are not immediate; however, if present trends continue, a loan loss could be expected.

5.  Substandard - Loans in this category possess weaknesses that jeopardize the ultimate collection of total outstandings.  These weaknesses require close supervision by Bank management.  Current financial statements are unavailable and the loan is inadequately protected by the collateral pledged.

6.  Doubtful - Loans with the same weaknesses inherent in the substandard classification and where collection or liquidation in full is highly questionable.  It is likely that the loan will not be collected in full and the Bank will suffer some loss which is not quantifiable at the time of review.

7.  Loss - Loans considered uncollectable and of such little value that their continuance as an active asset is not warranted.  Loans in this category should be charged off to the Bank's loan loss reserve.  Any accrued interest should be backed out of income.

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The following table provides a breakdown of the loan portfolio by credit quality indicator at September 30, 2014.

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	88,353,183	$	100,658,477	$	167,521,583	$	157,333,717	$	47,017,079
Special Mention		194,400		7,645,736		14,177,468		-		127,977
Substandard		-		715,397		10,668,793		-		1,586,995
Doubtful		-		33,819		-		-		-
Total	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051
	Loans To Individuals		Other
Consumer Credit Exposure - By Payment Activity
Performing	$	23,363,042	$	197,704
Nonperforming		-		-
Total	$	23,363,042	$	197,704

The following table provides a breakdown of the loan portfolio by credit quality indictor at December 31, 2013.

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	47,539,033	$	79,832,704	$	68,620,450	$	116,951,357	$	12,635,067
Special Mention		-		1,406,143		19,396,574		-		1,129,111
Substandard		3,463,139		792,057		10,372,706		-		-
Doubtful		-		258,486
Loss		-		58,665		-		-		-
Total	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178
Consumer Credit Exposure - By Payment Activity	Loans To Individuals		Other
Performing	$	9,674,011	$	170,526
Nonperforming		92,103		-
Total	$	9,766,114	$	170,526

Impaired Loans Disclosures

Loans are considered to be impaired when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled interest payments.  When a loan is placed on nonaccrual status, it is also considered to be impaired.  Loans are placed on nonaccrual status when: (1) the full collection of interest or principal becomes uncertain; or (2) they are contractually past due 90 days or more as to interest or principal payments unless the loans are both well secured and in the process of collection.

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The following tables summarize the distribution of the allowance for loan losses and loans receivable by loan class and impairment method at September 30, 2014 and December 31, 2013:

Period-End Allowance for Loan Losses by Impairment Method September 30, 2014
					Commercial		Mortgage		Residential								Loan		Total
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs
Allowance for loan losses:
Ending Balance	$	1,099,053	$	1,641,189	$	2,974,785	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	7,107,872
Ending Balance
Individually evaluated      for impairment		-		1,874		1,274,380		-		-		-		-		-		-		1,276,254
Collectively evaluated       for impairment	$	1,099,053	$	1,639,315	$	1,700,405	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	5,831,618
Loans receivables:
Ending Balance	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051	$	23,363,042	$	197,704	$	-	$	800,548	$	620,395,918
Individually evaluated         for impairment		449,663		492,940		9,129,396		-		1,394,657		-		-		-		-		11,466,656
Loans acquired with        deteriorated credit        quality		-		332,175		1,713,910		-		-		-		-		-		-		2,046,085
Collectively evaluated        for impairment	$	88,097,920	$	108,228,314	$	181,524,538	$	157,333,717	$	47,337,394	$	23,363,042	$	197,704	$	-	$	800,548	$	606,883,177

Period-End Allowance for Loan Losses by Impairment Method December 31, 2013
					Commercial		Mortgage		Residential								Loan		Total
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs
Allowance for loan losses:
Ending Balance	$	1,205,267	$	1,271,733	$	3,021,766	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	7,038,571
Ending Balance
Individually evaluated      for impairment		-		293,692		1,490,169		-		-		-		-		-		-		1,783,861
Collectively evaluated       for impairment	$	1,205,267	$	978,041	$	1,531,597	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	5,254,710
Loans receivables:
Ending Balance	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178	$	9,766,114	$	170,526	$	-	$	943,950	$	373,336,082
Individually evaluated         for impairment		19,930		776,101		9,130,605		-		162,012		92,103		-		-		-		10,180,751
Collectively evaluated        for impairment	$	50,982,242	$	81,571,954	$	89,259,125	$	116,951,357	$	13,602,166	$	9,674,011	$	170,526	$	-	$	943,950	$	363,155,331

The activity in the allowance for loan loss by loan class for the nine months ended September 30, 2014 and 2013 was as follows:

	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2013	$	1,205,267		$	1,271,733		$	3,021,766		$	584,757		$	164,673		$	108,849		$	2,183		$	679,343		$	7,038,571
Provision charged to operations		60,163			454,031			113,961			(63,082	)		17,332			(16,462	)		(560	)		(65,385	)		499,998
Loans charged off		-			(510,952	)		-			-			-			-			-			-			(510,952	)
Recoveries of loans charged off		-			3,225			-			-			-			-			-			-			3,225
Balance – March 31, 2014	$	1,265,430		$	1,218,037		$	3,135,727		$	521,675		$	182,005		$	92,387		$	1,623		$	613,958		$	7,030,842
Provision charged to operations		(315,416	)		4,041,190			471,356			387,884			(9,152	)		(1,655	)		42			(474,251	)		4,099,998
Loans charged off		-			(3,713,789	)		-			-			-			-			-			-			(3,713,789	)
Recoveries of loans charged off		-			1,328			-			-			-			-			-			-			1,328
Balance – June 30, 2014	$	950,014		$	1,546,766		$	3,607,083		$	909,559		$	172,853		$	90,732		$	1,665		$	139,707		$	7,418,379
Provision charged to operations		149,039			185,109			222,506			(122,890	)		44,308			685			(82	)		171,323			649,998
Loans charged off		-			(99,402	)		(893,804	)		-			(15,015	)		-			-			-			(1,008,221	)
Recoveries of loans charged off		-			8,716			39,000			-			-			-			-			-			47,716
Balance September 30, 2014	$	1,099,053		$	1,641,189		$	2,974,785		$	786,669		$	202,146		$	91,417		$	1,583		$	311,030		$	7,107,872

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	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2012	$	1,990,292		$	972,789		$	2,262,221		$	1,420,638		$	112,103		$	102,583		$	2,271		$	288,315		$	7,151,212
Provision charged to operations		(218,010	)		(18,319	)		245,769			(429,900	)		262			50,506			(212	)		369,804			-
Loans charged off		(561,993	)		(139,289	)		(384,688	)		-			-			(50,855	)		-			-			(1,136,825	)
Recoveries of loans charged off		-			2,000			6,895			-			-			-			-			-			8,895
Balance – March 31, 2013	$	1,210,289		$	817,181		$	2,130,197		$	990,738		$	112,365		$	102,334		$	2,059		$	658,119		$	6,023,282
Provision charged to operations		1,872			160,164			321,659			(62,039	)		(19,632	)		(2,444	)		45			(162,958	)		236,667
Loans charged off		-			-			-			-			-			-			-			-			-
Recoveries of loans charged off		417			8,574			-			-			-			-			-			-			8,991
Balance – June 30, 2013	$	1,212,578		$	985,919		$	2,451,856		$	928,699		$	92,733		$	99,890		$	2,104		$	495,161		$	6,268,940
Provision charged to operations		(4,555	)		34,446			612,392			(256,028	)		49,093			10,178			(53	)		94,525			539,998
Loans charged off		-			(2,068	)		-			-			-			-			-			-			(2,068	)
Recoveries of loans charged off		-			13,310			-			-			-			-			-			-			13,310
Balance – September 30, 2013	$	1,208,023		$	1,031,607		$	3,064,248		$	672,671		$	141,826		$	110,068		$	2,051		$	589,686		$	6,820,180

When a loan is identified as impaired, the measurement of impairment is based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole remaining source of repayment for the loan is the liquidation of the collateral.  In such cases, the current fair value of the collateral less selling costs is used.  If the value of the impaired loan is less than the recorded investment in the loan, the impairment is recognized through an allowance estimate or a charge to the allowance.

Impaired Loans Receivables (By Class) September 30, 2014							Three months ended  September 30, 2014				Nine months ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	449,663	$	449,663	$	-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial Business		793,992		1,380,582		-		786,051		6,971		579,721		20,055
Commercial Real Estate		2,913,499		3,215,830		-		2,431,613		35,288		1,511,916		105,522
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		4,157,154		5,046,075		-		3,667,327		48,393		2,394,293		136,532
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer
Loans to individuals		-		-		-		77,329		8,164		135,612		15,433
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		77,329		8,164		135,612		15,433
With no related allowance	$	5,551,811	$	6,455,747	$	-	$	5,212,691	$	63,230	$	3,827,987	$	172,907
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial Business		31,123		31,123		1,874		94,772		-		245,858		-
Commercial Real Estate		7,929,807		8,638,477		1,274,380		8,700,575		54,695		8,975,029		160,475
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		7,960,930		8,669,600		1,276,254		8,795,347		54,695		9,220,887		160,475
Residential Real Estate		-		-		-		-		-		-		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		-		-		-		-
With an allowance	$	7,960,930	$	8,669,600	$	1,276,254	$	8,795,347	$	54,695	$	9,220,887	$	160,475
Total:
Construction	$	449,663	$	449,663		-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial Business		825,115		1,411,705		1,874		880,823		6,971		825,579		20,055
Commercial Real Estate		10,843,306		11,854,307		1,274,380		11,132,188		89,983		10,468,945		265,997
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer		-		-		-		77,239		8,164		135,612		15,433
Total	$	13,512,741	$	15,125,347	$	1,276,254	$	14,008,038	$	117,925	$	13,048,874	$	333,382

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Impaired Loans Receivables (By Class)							Year ended
December 31 , 2013							12/31/2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	19,930	$	19,930	$	-	$	965,268	$	33,946
Commercial Business		243,840		400,297				258,139		5,094
Commercial Real Estate		-		-		-		1,032,115		-
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		263,770		420,227		-		2,255,522		39,040
Residential Real Estate		162,012		162,012		-		117,746		-
Consumer
Loans to Individuals		92,103		92,103		-		34,292		-
Other		-		-		-		-		-
Subtotal		92,103		92,103		-		34,292		-
With no related allowance	$	517,885	$	674,342	$	-	$	2,407,560	$	39,040
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	246,853	$	-
Commercial Business		532,261		532,261		293,692		562,346		9,728
Commercial Real Estate		9,130,605		9,130,605		1,490,169		5,546,690		247,277
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		9,662,866		9,662,866		1,783,861		6,355,889		257,005
Residential Real Estate		-		-		-		44,196		-
Consumer
Loans to Individuals		-		-		-		4,238		-
Other		-		-		-		-		-
Subtotal		-		-		-		4,238		-
With an allowance	$	9,662,866	$	9,662,866	$	1,783,861	$	6,404,323	$	257,005
Total:
Construction		19,930		19,930		-		1,212,121		33,946
Commercial Business		776,101		932,558		293,692		820,485		14,822
Commercial Real Estate		9,130,605		9,130,605		1,490,169		6,578,805		247,277
Mortgage Warehouse		-		-		-		-		-
Residential Real Estate		162,012		162,012		-		161,942		-
Consumer		92,103		92,103		-		38,530		-
Total	$	10,180,751	$	10,337,208	$	1,783,861	$	8,811,883	$	296,045

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Impaired Loans Receivables (By Class) – September 30, 2013
							Three months ended				Nine months ended
							September 30, 2013				September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	1,015,112	$	1,015,112	$	-	$	1,184,249	$	4,660	$	636,741	$	37,420
Commercial Business		225,899		382,356		-		157,334		1,516		532,119		-
Commercial Real Estate		-		-		-		4,004,515		-		1,480,516		-
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		1,241,011		1,397,468		-		5,346,098		6,176		2,649,376		-
Residential Real Estate		164,542		164,542		-		164,542		-		102,706		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		22,540		-
Subtotal				-		-		-		-		22,540		-
With no related allowance:	$	1,405,553	$	1,562,010	$	-	$	5,510,640	$	6,176		2,774,622		37,420
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	329,138	$	-
Commercial Business		475,136		475,136		235,027		566,473		3,915		578,713		28,570
Commercial Real Estate		9,646,821		9,646,821		1,476,632		6,184,255		61,306		4,326,187		182,967
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,234,038		211,537
Residential Real Estate		-		-		-		-		-		58,928		-
Consumer
Loans to Individuals		-		-		-		-		-		5,650
Other		-		-		-		-		-		-
Subtotal		-		-		-		-		-		5,650		-
With an allowance:		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,298,616		-
Total:
Commercial		11,362,968		11,519,425		1,711,659		12,096,826		71,397		7,883,414		248,957
Residential Real Estate		164,542		164,542		-		164,542		-		161,634		-
Consumer		-		-		-		-		-		28,190		-
Total	$	11,527,510	$	11,683,967	$	1,711,659	$	12,261,368	$	71,397	$	8,073,238	$	248,957

In the normal course of business, the Bank may consider modifying loan terms for various reasons. These reasons may include as a retention strategy to compete in the current interest rate environment or as a re-amortization or extension of a loan term to better match the loan’s repayment stream with the borrower’s cash flow. A modified loan would be considered a troubled debt restructuring (“TDR”) if the Bank grants a concession to a borrower and has determined that the borrower is troubled (i.e., experiencing financial difficulties).

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If the Bank restructures a loan to a troubled borrower, the loan terms (i.e. interest rate, payment, amortization period and maturity date) may be modified in various ways to enable the borrower to cover the modified debt service payments based on current financial statements and cash flow adequacy. If a borrower’s hardship is thought to be temporary, then modified terms may only be offered for that time period. Where possible, the Bank would attempt to obtain additional collateral and/or secondary repayment sources at the time of the restructure in order to put the Bank in the best possible position if the borrower is not able to meet the modified terms. The Bank will not offer modified terms if it believes that modifying the loan terms will only delay an inevitable permanent default. In evaluating whether a restructuring constitutes a troubled debt restructuring, applicable guidance requires that a creditor must separately conclude that the restructuring constitutes a concession and the borrower is experiencing financial difficulties.

At September 30, 2014 the Bank had 9 loans totaling $4,288,699 which were classified as troubled debt restructurings.

The following table is a summary of troubled debt restructurings, all of which were classified as impaired and occurred during the three months ended September 30, 2014.

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Commercial		2	$	31,123	$	31,123
Commercial Real Estate		-		-		-
Residential Real Estate		-		-		-

There were no loans modified that were TDR’s during the three and nine month periods ended September 30, 2014 and September 30, 2013 that were in default.

Changes in the accretable discount for acquired credit impaired loans for the nine months ended September 30, 2014 were as follows:

Balance at beginning of period	$	-
Acquisition of impaired loans		240,917
Accretion of discount		(84,409	)
Balance at end of period	$	156,508

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

	February 7, 2014		September 30, 2014
	Acquired loans with Evidence of Credit Deterioration		Acquired loans with Evidence of Credit Deterioration
Outstanding balance	$	3,409,340	$	2,746,260
Carrying amount	$	2,613,826	$	2,046,085

There were no changes in the expected cash flows of these loans during the nine month period ended September 30, 2014. No allowance for loan losses has been recorded for acquired loans with or without evidence of deterioration as of the acquisition date or as of September 30, 2014.

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(6)  Share-Based Compensation

The Company’s share-based incentive plans (“Stock Plans”) authorize the issuance of an aggregate of 440,701 shares of the Company’s common stock (as adjusted for stock dividends) pursuant to awards that may be granted in the form of stock options to purchase common stock (“Options”) and awards of shares of common stock (“Stock Awards”).  The purpose of the Stock Plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, employees and other persons to promote the success of the Company.  Under the Stock Plans, options have a term of ten years after the date of grant, subject to earlier termination in certain circumstances.  Options are granted with an exercise price at the then fair market value of the Company’s common stock.  The grant date fair value of the option is calculated using the Black – Scholes option valuation model.  As of September 30, 2014, there were 317,866 shares of common stock available for future grants under the Stock Plans, of which 271,740 shares are available for future grants under the 2013 Equity Incentive Plan and 46,126 shares are available for future grant under the 2006 Directors Stock Plan.

Share-based compensation expense related to options was $77,123 and $75,949 for the nine months ended September 30, 2014 and 2013, respectively.

Transactions under the Stock Plans during the nine months ended September 30, 2014 are summarized as follows:

					Weighted
					Average
			Weighted		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
Stock Options	Shares		Exercise Price		Term (years)		Value
Outstanding at January 1, 2014		235,598	$	8.81
Granted		11,700		11.02
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at September 30, 2014		247,298	$	8.91		5.1	$	502,395
Exercisable at September 30, 2014		199,881	$	9.17		4.5	$	380,591

The fair value of each option and the significant weighted average assumptions used to calculate the fair value of the options granted for the nine months ended September 30, 2014 are as follows:

	January 2014			April 2014
Fair value of options granted	$	4.75		$	4.32
Risk-free rate of return		1.65	%		1.70	%
Expected option life in years		7			7
Expected volatility		38.01	%		38.01	%
Expected dividends (1)		-			-

(1)  To date, the Company has not paid cash dividends on its common stock.

As of September 30, 2014, there was approximately $62,341 of unrecognized compensation cost related to nonvested stock option- based compensation arrangements granted under the Company’s stock incentive plans. That cost is expected to be recognized over the next four years.

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The following table summarizes nonvested restricted shares for the nine months ended September 30, 2014:

				Average
	Number of			Grant-Date
Non-vested shares	Shares			Fair Value
Non-vested at January 1, 2014		136,490			$6.59
Granted		60,100			10.81
Vested		(55,410	)		8.77
Forfeited		-			-
Non-vested at September 30, 2014		141,180			$7.53

The value of restricted shares is based upon the closing price of the common stock on the date of grant. The shares generally vest over a four year service period with compensation expense recognized on a straight-line basis.

Stock based compensation expense related to stock grants was $366,550 and $326,085 for the nine months ended September 30, 2014 and 2013.

As of September 30, 2014, there was approximately $1,141,472 of unrecognized compensation cost related to non-vested stock grants that will be recognized over the next three years.

(7)  Benefit Plans

The Bank has a 401(k) plan which covers substantially all employees with six months or more of service. The 401(k) plan permits all eligible employees to make contributions to the plan up to the IRS salary deferral limit. The Bank’s contributions to the 401(k) plan are expensed as incurred.

The Company also provides retirement benefits to certain employees under supplemental executive retirement plans.  The plans are unfunded and the Company accrues actuarial determined benefit costs over the estimated service period of the employees in the plan.  The Company recognizes the over funded or under funded status of a defined benefit post-retirement plan as an asset or liability in its Consolidated Balance Sheet and to recognize changes in that funded status in the year in which the changes occur, through comprehensive income.

In connection with the benefit plans, the Bank has life insurance policies on the lives of its executives, directors and divisional officers. The Bank is the owner and beneficiary of the policies. The cash surrender values of the policies total approximately $21.1 million and $16.2 million at September 30, 2014 and December 31, 2013, respectively.

The components of net periodic expense for the Company’s supplemental executive retirement plans for the three month and nine month periods ended September 30, 2014 and 2013 were as follows:

	Three months ended September 30,					Nine months ended September 30,
	2014		2013			2014		2013
Service cost	$	102,337	$	30,539		$	159,504	$	214,257
Interest cost		77,583		22,229			120,922		155,951
Actuarial (gain) loss recognized		(3,718)		(29,893	)		(5,795)		(209,721	)
Prior service cost recognized		-		942			-		6,611
	$	176,202	$	23,817		$	274,631	$	167,098

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 (8)  Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is the total of (1) net income (loss), and (2) all other changes in equity from non-shareholder sources, which are referred to as other comprehensive income (loss).  The components of accumulated other comprehensive income (loss), and the related tax effects, are as follows:

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
September 30, 2014:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(231,763	)	$	44,966		$	(186,797	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		345,309			(138,949	)		206,360
Accumulated other comprehensive income ( loss)	$	(387,398	)	$	76,338		$	(311,060	)

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
December 31, 2013:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(2,992,624	)	$	1,060,098		$	(1,932,526	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		27,236			(11,721	)		15,515
Accumulated other comprehensive income ( loss)	$	(3,466,332	)	$	1,218,698		$	(2,247,634	)

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Changes in the components of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2014 and September 30, 2013 are as follows and are presented net of tax:

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2014:
Balance, beginning of period	$	(408,136	)	$	(330,623	)	$	110,675	$	(628,084	)
Other comprehensive income (loss) before      reclassifications		221,339			-			95,685		317,024
Amounts reclassified from accumulated other      comprehensive income (loss)		-			-			-		-
Other comprehensive income		221,339			-			95,685		317,024
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2013:
Balance, beginning of period	$	(1,677,012	)	$	(330,623	)	$	(60,403	)	$	(2,068,038	)
Other comprehensive income (loss) before      reclassifications		(35,468	)		-			37,960			2,492
Amounts reclassified from accumulated other      comprehensive income (loss)		-			-			-			-
Other comprehensive income		(35,468	)		-			37,960			2,492
Balance, end of period	$	(1,712,480	)	$	(330,623	)	$	(22,443	)	$	(2,065,546	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Nine Months Ended September 30, 2014:
Balance, beginning of period	$	(1,932,526	)	$	(330,623	)	$	15,515	$	(2,247,634	)
Other comprehensive income (loss) before      reclassifications		1,744,219			-			190,845		1,935,064
Amounts reclassified from accumulated other      comprehensive income (loss), net of tax (1)		1,510			-			-		1,510
Other comprehensive income		1,745,729			-			190,845		1,936,574
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

(1) Amounts reclassified are included in Other Income on the Consolidated Statement of Income.

34

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income
Nine Months Ended September 30, 2013:
Balance, beginning of period	$	1,235,204		$	(330,623	)	$	(100,288	)	$	804,293
Other comprehensive income (loss) before      reclassifications		(2,947,683	)		-			77,884			(2,869,839	)
Amounts reclassified from accumulated other      comprehensive income (loss)		-			-			-			-
Other comprehensive income		(2,947,683	)		-			77,884			(2,869,839	)
Balance, end of period	$	(1,712,479	)	$	(330,623	)	$	(22,444	)	$	(2,065,546	)

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(9) Recent Accounting Pronouncements

ASU 2014-04 (Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure)

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreements. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this update using either a modified retrospective transition method or a prospective transition method. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-9 Revenue from Contracts with Customers (Topic 606)

In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers (Topic 606)”. This update clarifies the principles for recognizing revenue from contracts with customers. This ASU, which does not apply to financial instruments, is effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

ASU 2014-11 Repurchase-to-maturity Transactions, Repurchase Financings, and Disclosures to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings.

On June 12, 2014, the FASB issued ASU 2014-11, Repurchase-to-maturity Transactions, Repurchase Financings, and Disclosures to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings. This will result in accounting for both types of arrangements as secured borrowings on the balance sheet. Additionally, the ASU introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction.

For public business entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the ASU are effective for public business entities for the first interim or annual period beginning after December 15, 2014. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-12 Accounting for Share-Based-Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period (a consensus of the FAS Emerging Issues Task Force).

36

On June 19, 2014, the FASB issued ASU 2014-12, Accounting for Share-Based-Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period (a consensus of the FAS Emerging Issues Task Force) to clarify that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award. As such, the performance target should not be reflected in estimating the grant-date fair value of the award.

ASU 2014-12 requires that a performance target included in a share-based payment award that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Therefore, such performance target should not be reflected in estimating the grant-date fair value of the award. A reporting entity should apply existing guidance in Topic 718 as it relates to the award with performance conditions that affect vesting.

Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. In current practice, two common performance targets-a change of control event and an IPO-are considered probable when they occur. Consequently, the award would be recognized in earnings at that time.

If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.

For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-14 Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310 – 40): Classification of Certain Government – Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40); Classification of Certain Government _ Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The amendments in this update address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. Specifically, creditors should reclassify loans that meet certain conditions to “other receivables” upon foreclosure rather than reclassifying them to other real estate owned (OREO). The separate other receivable recorded upon foreclosure is to be measured based on the amount of the loan balance (principal and interest) the creditor expects to recover from the guarantor.

The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

 (10)  Fair Value Disclosures

U.S. GAAP has established a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy are as follows:

37

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value.

In general, fair value is based upon quoted market prices, where available.  If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and counterparty creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Securities Available for Sale.  Securities classified as available for sale are reported at fair value utilizing quoted market prices on nationally recognized exchanges (Level 1) or by using Level 2 Inputs.  For Level 2 securities, the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other things.

Impaired loans.  Loans included in the following table are those which the Company has measured and recognized 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 collateral or discounted cash flows based on the expected proceeds.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.  The fair value consists of the loan balances less specific valuation allowances.

Other Real Estate Owned.  Foreclosed properties are adjusted to fair value less estimated selling costs at the time of foreclosure in preparation for transfer from portfolio loans to other real estate owned (“OREO”), establishing a new accounting basis.  The Company subsequently adjusts the fair value on the OREO utilizing Level 3 inputs on a non-recurring basis to reflect partial write-downs based on the observable market price, current appraised value of the asset or other estimates of fair value.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

38

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Securities available for sale:
U. S. Treasury securities and
`         obligations of U.S. Government
sponsored corporations (“GSE”) and agencies	$	9,470,990	$	1,515,705	$	-	$	10,986,695
Residential collateralized mortgage obligations – GSE				3,723664				3,723,664
Residential collateralized mortgage obligations – Non-GSE				2,597,664				2,597,664
Residential mortgage backed securities – GSE				28,680,367				28,680,367
Obligations of State and Political subdivisions				21,618,512				21,618,512
Trust preferred debt securities – single issuer				2,183,700				2,183,700
Corporate debt securities				32,581,964				32,581,964
Restricted stock				1,561,900				1,561,900
Mutual fund				25,000				25,000

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
December 31, 2013:
Securities available for sale:
U. S. Treasury securities and
obligations of U.S. Government
sponsored corporations (“GSE”) and agencies	$	19,994,430	$	1,515,270	$	-	$	21,509,700
Residential collateralized mortgage obligations – GSE		-		3,681,792		-		3,681,792
Residential collateralized mortgage obligations – non-GSE		-		2,826,396		-		2,826,396
Residential mortgage backed securities – GSE		-		31,965,947		-		31,965,947
Obligations of State and Political subdivisions		-		19,646,044		-		19,646,044
Trust preferred debt securities – single issuer		-		2,013,100		-		2,013,100
Corporate debt securities		-		16,517,728		-		16,517,728
Restricted stock		-		1,013,100		-		1,013,100
Mutual fund		-		25,000		-		25,000

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).  Financial assets and financial liabilities measured at fair value on a non-recurring basis at September 30, 2014 and December 31, 2013 were as follows:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Impaired loans	$	-	$	-	$	7,265,700	$	7,265,700
Other real estate owned		-		-		1,748,455		1,748,455
December 31, 2013:
Impaired loans	$	-	$	-	$	7,879,005	$	7,879,005
Other real estate owned		-		-		209,937		209,937

Impaired loans measured at fair value and included in the above table consisted of 10 loans having an aggregate recorded investment of $7,960,930 and specific loan loss allowances of $1,276,254 at September 30, 2014.  Charge-offs of approximately $928,000 of specific reserves for potential losses that were provided in prior periods were recorded during the third quarter ended September 30, 2014 on loans with an aggregate recorded investment of approximately $6,093,000.  At December 31, 2013, there were 17 loans having an aggregate balance of $9,662,862 and specific loan loss allowances of $1,783,861.

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

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
September 30, 2014
Impaired loans	$	7,265,700	Appraisal of	Appraisal		10-40% (19.1%)
			collateral (1)	adjustments (2)
Other real estate owned	$	1,748,455	Appraisal of	Appraisal		6%
			collateral (1)	adjustments (2)
December 31, 2013
Impaired loans	$	7,879,005	Appraisal of	Appraisal
			collateral (1)	adjustments (2)		5-15% (8.8%)
Other real estate owned	$	209,937	Appraisal of	Appraisal
			collateral (1)	adjustments (2)		5-45% (21.7%)

    (1)  Fair value is generally determined through independent appraisals of the underlying collateral, which generally

           include various Level 3 inputs which are not identifiable.

    (2)  Includes qualitative adjustments by management and estimated liquidation expenses. 

The fair value of other real estate owned was determined using appraisals, which may be discounted based on management’s review and changes in market conditions.

The following is a summary of fair value versus the carrying value of all the Company’s financial instruments.  For the Company and the Bank, as for most financial institutions, the bulk of its assets and liabilities are considered financial instruments.  Many of the financial instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.  Therefore, significant estimations and present value calculations were used for the purpose of this note.  Changes in assumptions could significantly affect these estimates.

Estimated fair values have been determined by using the best available data and an estimation methodology suitable for each category of financial instruments as follows:

Cash and Cash Equivalents, Accrued Interest Receivable and Accrued Interest Payable (Carried at Cost). The carrying amounts reported in the balance sheet for cash and cash equivalents, accrued interest receivable and accrued interest payable approximate fair value.

Securities Held to Maturity (Carried at Amortized Cost). The fair values of securities held to maturity are determined in the same manner as for securities available for sale.

Loans Held For Sale (Carried at Lower of Aggregated Cost or Fair Value). The fair values of loans held for sale are determined, when possible, using quoted secondary market prices. If no such quoted market prices exist, fair values are determined using quoted prices for similar loans, adjusted for the specific attributes of the loans.

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

Deposit Liabilities (Carried at Cost). The fair values disclosed for demand deposits (e.g., interest and non-interest demand and savings 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 and Subordinated Debentures (Carried at Cost). The carrying amounts of short-term borrowings approximate their fair values. The fair values of long-term FHLB advances and subordinated debentures are estimated using discounted cash flow analysis, based on quoted or estimated interest rates for new borrowings with similar credit risk characteristics, terms and remaining maturity. 

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The estimated fair values and carrying amounts of financial assets and liabilities were as follows:

September 30, 2014
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	20,371,823		$	20,371,823	$	-		$	-	$	20,371,823
Securities available for sale		103,959,466			9,470,990		94,488,476			-		103,959,466
Securities held to maturity		148,182,693			-		152,466,765			-		152,466,765
Loans held for sale		9,459,172			-		9,602,000			-		9,602,000
Loans, net		613,288,046			-		-			615,200,000		615,200,000
Accrued interest receivable		2,798,265			-		2,798,265			-		2,798,265
Deposits		(823,564,746	)		-		(824,154,00	)		-		(824,154,000	)
Borrowings		(20,798,473	)		-		(21,509,000	)		-		(21,509,000	)
Redeemable subordinated    debentures		(18,557,000	)		-		18,557,000	)		-		(18,557,000	)
Accrued interest payable		(802,851	)		-		(802,851	)		-		(802,851	)

December 31, 2013
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	69,278,771		$	69,278,771	$	-		$	-	$	69,278,771
Securities available for sale		99,198,807			19,994,430		79,204,377			-		99,198,807
Securities held to maturity		152,816,815			-		153,629,773			-		153,629,000
Loans held for sale		10,923,689			-		10,924,000			-		10,924,000
Loans, net		366,297,511			-		-			372,548,000		372,548,000
Accrued interest receivable		2,542,602			-		2,542,602			-		2,542,602
Deposits		(638,552,030	)		-		(639,539,000	)		-		(639,539,000	)
Borrowings		(10,000,000	)		-		(11,148,000	)		-		(11,148,000	)
Redeemable subordinated   debentures		(18,557,000	)		-		(18,557,000	)		-		(18,557,000	)
Accrued interest payable		(883,212	)		-		(883,212	)		-		(883,212	)

Loan commitments and standby letters of credit as of September 30, 2014 and December 31, 2013 are based on fees charged for similar agreements; accordingly, the estimated fair value of loan commitments and standby letters of credit is nominal.

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

The purpose of this discussion and analysis of the operating results and financial condition at September 30, 2014 is intended to help readers analyze the accompanying financial statements, notes and other supplemental information contained in this document. Results of operations for the three month and nine month periods ended September 30, 2014 are not necessarily indicative of results to be attained for any other period.

This discussion and analysis should be read in conjunction with the consolidated financial statements, notes and tables included elsewhere in this report and Part II, Item 7 of the Company’s Form 10-K (Management’s Discussion and Analysis of Financial Condition and Results of Operation) for the year ended December 31, 2013, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2014.

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General

Throughout the following sections, the “Company” refers to 1st Constitution Bancorp and, as the context requires, its wholly-owned subsidiary, 1st Constitution Bank (the “Bank”) and the Bank’s wholly-owned subsidiaries, 1st Constitution Investment Company of New Jersey, Inc., FCB Assets Holdings, Inc., 1st Constitution Title Agency, LLC, 204 South Newman Street Corp. and 249 New York Avenue, LLC.  1st Constitution Capital Trust II (“Trust II”), a subsidiary of the Company, is not included in the Company’s consolidated financial statements as it is a variable interest entity and the Company is not the primary beneficiary.

The Company is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company was organized under the laws of the State of New Jersey in February 1999 for the purpose of acquiring all of the issued and outstanding stock of the Bank, a full service commercial bank which began operations in August 1989, and thereby enabling the Bank to operate within a bank holding company structure. The Company became an active bank holding company on July 1, 1999. The Bank is a wholly-owned subsidiary of the Company. Other than its ownership interest in the Bank, the Company currently conducts no other significant business activities.

The Bank operates nineteen branches, and manages its investment portfolio through its subsidiary, 1st Constitution Investment Company of New Jersey, Inc. During the second quarter of 2014, the Bank completed the merger of RFHB Investment Company, a subsidiary of Rumson-Fair Haven Bank and Trust Company, a New Jersey state chartered commercial bank (“Rumson”) that managed Rumson’s investment portfolio, with and into 1st Constitution Investment Company of New Jersey, Inc.  FCB Assets Holdings, Inc., a subsidiary of the Bank, is used by the Bank to manage and dispose of repossessed real estate.

Trust II, a subsidiary of the Company, was created in May 2006 to issue trust preferred securities to assist the Company to raise additional regulatory capital.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward looking statements.  When used in this and in future filings by the Company with the SEC, in the Company’s press releases and in oral statements made with the approval of an authorized executive officer of the Company, the words or phrases “will,” “will likely result,” “could,” “anticipates,” “believes,” “continues,” “expects,” “plans,” “will continue,” “is anticipated,” “estimated,” “project” or “outlook” or similar expressions (including confirmations by an authorized executive officer of the Company of any such expressions made by a third party with respect to the Company) are intended to identify forward-looking statements. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, each of which speaks only as of the date made.  Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.

Factors that may cause actual results to differ from those results expressed or implied, include, but are not limited to, those listed under “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013filed with the SEC on March 31, 2014, such as the overall economy and the interest rate environment; the ability of customers to repay their obligations; the adequacy of the allowance for loan losses; competition; the ability to realize expected synergies from the Rumson merger in the time frame anticipated and cost or difficulties associated with integration matters that might be greater than anticipated; significant changes in accounting, tax or regulatory practices and requirements; certain interest rate risks; risks associated with investments in mortgage-backed securities; and risks associated with speculative construction lending. Although management has taken certain steps to mitigate any negative effect of the aforementioned items, significant unfavorable changes could severely impact the assumptions used and could have an adverse effect on profitability. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as required by law.

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Recent Developments

On February 7, 2014, the Company completed its acquisition of Rumson-Fair Haven Bank and Trust Company, a New Jersey state chartered commercial bank (“Rumson”), which merged with and into the Bank, with the Bank as the surviving entity. The merger agreement among the Company, the Bank and Rumson (the “Merger Agreement”) provided that the shareholders of Rumson would receive, at their election, for each outstanding share of Rumson common stock that they own at the effective time of the merger, either 0.7772 shares of the Company common stock or $7.50 in cash or a combination thereof, subject to proration as described in the Merger Agreement, so that 60% of the aggregate merger consideration consisted of cash and 40% consisted of shares of the Company’s common stock. The Company issued an aggregate of 1,019,242 shares of its common stock and paid $14.8 million in cash in the transaction.

The merger was accounted for under the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at their estimated fair values as of the acquisition date. Rumson’s results of operations have been included in the Company’s Consolidated Statements of Income since February 7, 2014.

In May of 2013, the Bank entered into a loan participation agreement with a lead lender and another bank to provide financing to Projuban, LLC d/b/a G3K Displays (the “Borrower” or “Projuban”). The loan is secured by a first security interest in the Borrower’s accounts receivable, inventory, equipment and fixtures, and is further secured by the continuing guarantees of the Borrower’s principals.

As previously disclosed in the Company’s Current Report on Form 8-K dated June 20, 2014 (the “Current Report”), the Bank became aware of an apparent fraud by the Borrower and its principals during the second quarter of 2014. The Bank, together with the lending group to the Borrower, commenced a review and investigation of the matter, which included the engagement of forensic accountants. This review and investigation revealed that the principals of the Borrower made fraudulent misrepresentations about the collateral securing the loan and the overall financial condition of the Borrower. The loan was current in payments prior to the initial discovery of the apparent fraud. As reported in the Current Report, management determined that the Borrower’s financial capacity to repay the remaining balance of the loan was unlikely due to the apparent fraud and the Borrower’s cessation of operations, and that substantial doubt existed regarding future repayment of the loan. Accordingly, the Bank recorded a provision for loan losses and a corresponding charge-off of the entire balance of the loan in the amount of $3.7 million in the second quarter of 2014.

Each of these events had a significant impact on the results of operations for the nine month period ended September 30, 2014.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013

Summary

The Company reported net income for the three month period ended September 30, 2014 of $2.1 million, a 40% increase compared to $1.5 million reported for the three month period ended September 30, 2013. Net income per diluted share for the three month period ended September 30, 2014 was $0.30, an increase of 20% compared to $0.25 per diluted share for the three month period ended September 30, 2013.

The significant increase in net income for the current quarter was due to the $2.6 million increase in net interest income to $8.9 million, which was driven by growth of our loan portfolio in the second and third quarters and the inclusion of the operations of Rumson. Non-interest income was $1.5 million and included gains from the sale of residential mortgage loans and SBA loans of $556,000.

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Return on average assets was 0.88% and return on average equity was 10.25% for the third quarter of 2014 compared to 0.76% and 9.25% respectively, in the third quarter of 2013.

Third Quarter Highlights

· Net interest income was $8.9 million in the third quarter of 2014 compared to $6.4 million in the second quarter of 2014 and $6.3 million in the third quarter of 2013. The net interest margin for each of these periods was 4.05%, 3.89% and 3.51%, respectively.

· Loans were $620 million at September 30, 2014 and included $124 million of Rumson loans. Excluding the effect of the Rumson acquisition in the first quarter of 2014, loans increased $123 million since December 31, 2013 primarily during the second and third quarters of 2014, with mortgage warehouse loans increasing $40.4 million, construction loans increasing $30.3 million, commercial and commercial real estate loans increasing a combined $46.8 million and residential mortgages increasing $5.1 million. The loan to asset ratio increased to 65% at September 30, 2014 compared to 50.3% at December 31. 2013.

· During the third quarter of 2014, our mortgage banking operations originated $50 million of residential mortgage loans and sold $44.7 million of residential mortgage loans. The September 30, 2014 pipeline of residential mortgage loans in process was $53 million.

· The integration of the former Rumson operations was completed at the end of the first quarter of 2014 and customer retention has been as expected, with loans of approximately $124 million and deposits of approximately $176 million at September 30, 2014.

Earnings Analysis

The Bank’s results of operations depend primarily on net interest income, which is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, and the difference between the yield on interest-earning assets and the rate paid on interest-bearing liabilities. Other factors that may affect the Bank’s operating results are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

Net Interest Income

Net interest income, the Company’s largest and most significant component of net income, is the difference between interest and fees earned on loans and other earning assets, and interest paid on deposits and borrowed funds. This component represented 85.8% of the Company’s net revenues (defined as net interest income plus non-interest income) for the three month period ended September 30, 2014 and 79.6% of net revenues for the three month period ended June 30, 2013. Net interest income also depends upon the relative amount of average interest-earning assets, average interest-bearing liabilities, and the interest rate earned or paid on them, respectively.

Average interest earning assets increased by $159,272,860, or 21.4%, to $902,690,697 for the three month period ended September 30, 2014 compared to $743,417,837 for the three month period ended September 30, 2013. The overall yield on interest earning assets, on a tax-equivalent basis, increased 52 basis points to 4.58% for the three month period ended September 30, 2014 when compared to 4.06% for the three month period ended September 30, 2013 due primarily to the increase in the higher-yielding average balance of the loan portfolio in the current period.

This increase in the overall yield on interest earning assets for the quarter ended September 30, 2014 compared with the corresponding quarter in 2013 was primarily due to (1) the increase in construction, commercial real estate and commercial business loans; and (2) the increase in loans and investments resulting from the Rumson merger. These factors contributed to an increase in the yield on earning assets, which primarily drove the increase in the net interest margin and net interest income.

Average interest bearing liabilities increased by $127,853,647, or 21.8%, to $713,105,066 for the three month period ended September 30, 2014 compared to $585,251,419 for the three month period ended September 30, 2013.  Overall, the cost of total interest bearing liabilities decreased 4 basis points to 0.66% for the three months ended September 30, 2014 compared to 0.70% for the three months ended September 30, 2013. The increase in average interest bearing liabilities is due principally to the Rumson merger.

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The net interest margin (on a tax-equivalent basis), which is net interest income divided by average interest earning assets, was 4.05% for the three months ended September 30, 2014 compared to 3.51% for the three months ended September 30, 2013.  

The following table sets forth the Company’s consolidated average balances of assets and liabilities and shareholders’ equity as well as interest income and expense on related items, and the Company’s average yield or rate for the three month periods ended September 30, 2014 and 2013. The average rates are derived by dividing interest income and expense by the average balance of assets and liabilities, respectively.

Average Balance Sheets with Resultant Interest and Rates
(yields on a tax-equivalent basis)
	Three months ended September 30, 2014							Three months ended September 30, 2013
	Average Balance		Interest		Average Yield			Average Balance		Interest		Average Yield
Assets:
Federal Funds Sold/Short-Term       Investments	$	18,858,143	$	10,183		0.22	%	$	120,124,995	$	81,745		0.27	%
Investment Securities:
Taxable		168,912,644		961,043		2.28	%		160,094,754		980,004		2.45	%
Tax-exempt (4)		90,191,047		852,447		3.78	%		70,880,950		851,446		4.80	%
Total		259,103,691		1,813,490		2.80	%		230,975,704		1,831,450		3.17	%
Loan Portfolio: (1)
Construction		84,776,306		1,408,170		6.59	%		41,845,395		631,428		5.99	%
Residential real estate		49,466,308		524,861		4.21	%		11,104,532		141,896		5.07	%
Home Equity		23,097,660		356,320		6.12	%		9,391,470		125,134		5.29	%
Commercial and commercial    real estate		286,369,323		4,306,422		5.97	%		145,186,260		2,760,124		7.54	%
Mortgage warehouse lines		155,715,974		1,689,856		4.31	%		148,660,465		1,734,652		4.63	%
Installment		417,619		5,469		5.20	%		268,341		4,214		6.23	%
All Other Loans		24,885,673		294,851		4.70	%		35,860,675		304,357		3.37	%
Total		624,728,863		8,585,949		5.45	%		392,317,138		5,701,805		5.77	%
Total Interest-Earning Assets		902,690,697		10,409,622		4.58	%		743,417,837		7,615,000		4.06	%
Allowance for Loan Losses		(7,542,268)							(6,754,700)
Cash and Due From Bank		13,872,593							10,627,034
Other Assets		58,467,465							48,058,164
Total Assets	$	967,488,487						$	795,348,335
Liabilities and Shareholders’ Equity:
Money Market and Now Accounts	$	290,077,290	$	244,485		0.33	%	$	18,287,653	$	178,204		0.32	%
Savings Accounts		196,936,099		226,556		0.46	%		197,645,109		218,994		0.44	%
Certificates of Deposit		172,114,159		484,203		1.12	%		140,761,657		445,176		1.25	%
Other Borrowed Funds		35,420,518		144,006		1.61	%		10,000,000		103,121		4.09	%
Trust Preferred Securities		18,557,000		86,535		1.82	%		18,557,000		88,337		1.89	%
Total Interest-Bearing Liabilities		713,105,066		1,185,785		0.66	%		585,251,419		1,033,832		0.70	%
Net Interest Spread (2)						3.92	%						3.36	%
Demand Deposits		165,617,916							137,526,681
Other Liabilities		6,011,491							7220361
Total Liabilities		884,734,473							729,998,461
Shareholders’ Equity		18,557,000							65,349,874
Total Liabilities and Shareholders’ Equity	$	967,488,487						$	795,348,335
Net Interest Margin (3)			$	9,223,838		4.05	%			$	6,581,167		3.51	%

(1) Loan origination fees are considered an adjustment to interest income.  For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income and includes the average balance of loans held for sale. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operation under the heading “Non-Performing Assets” for a discussion of the Bank’s policy with regard to non-accrual loans.

(2) The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities.

(3) The net interest margin is equal to net interest income divided by average interest earning assets.

(4) Tax-equivalent basis.

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Provision for Loan Losses

Management considers a complete review of the following specific factors in determining the provisions for loan losses: historical losses by loan category, the level of non-accrual loans and problem loans as identified through internal classification, collateral values, and the growth and size of the loan portfolio.

In addition to these factors, management takes into consideration current economic conditions and local real estate market conditions.  Using this evaluation process, the Company recorded a provision for loan losses of $649,998 for the three months ended September 30, 2014 compared to $539,998 for the three months ended September 30, 2013.  At September 30, 2014, non-performing loans increased by $1,537,124 or 24.3%, to $7,538,765 and the ratio of non-performing loans to total loans was 1.22% at September 30, 2014 compared to 1.69% at December 31, 2013. Non-performing loans declined at September 30, 2014 compared to $10,237,477 at June 30, 2014.

Net charge-offs were $960,000 in the third quarter of 2014 and included $928,000 of gross charge-offs of specific reserves for potential loan losses that were recorded in prior periods. These charge-offs were recorded for loans in the process of foreclosure or resolution for which management determined the loss would be realized.

At September 30, 2014, the loan portfolio balance was $620,395,918, which represented an increase of $247,059,836 compared to the December 31, 2013 loan portfolio balance of $373,336,082. The primary reasons for the current period increase in the loan portfolio were the $124 million of loans acquired in the Rumson merger and still outstanding and the internal growth of the loan portfolio during 2014.

 There were no changes in the expected cash flows of the acquired loans from the Rumson merger during the third quarter of 2014.  No allowance for loan losses was recorded for acquired loans with or without evidence of deteriorated credit quality as of September 30, 2014.

Non-Interest Income

Total non-interest income for the three months ended September 30, 2014 was $1,481,842, a decrease of $134,706, or 8.3%, from non-interest income of $1,616,548 for the three months ended September 30, 2013. This component represented 14.2% of the Company’s net revenues for the three month period ended September 30, 2014 compared to 20.4% of net revenues for the three month period ended September 30, 2013.

Service charges on deposit accounts represent a consistent source of non-interest income. Service charge revenues increased by $36,456, or 15.8%, to $267,625 for the three months ended September 30, 2014 from $231,169 for the three months ended September 30, 2013. This increase was the result of a higher volume of uncollected funds and overdraft fees collected on deposit accounts in the third quarter of 2014.

Gain on sales of loans originated for sale decreased by $85,912, or 13.4%, to $556,054 for the three months ended September 30, 2014 when compared to $641,966 for the three months ended September 30, 2013.  The Bank originates and sells both residential mortgage loans and loans guaranteed by the Small Business Administration in the secondary market.  The higher interest rate environment that existed in the third quarter of 2014 compared to the same period in 2013 resulted in lower demand to refinance residential mortgages. As a result, the volume of mortgage loans originated and sold decreased for the three months ended September 30, 2014 compared to the three months ended September 30, 2013.

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Non-interest income also includes income from bank-owned life insurance (“BOLI”), which amounted to $143,884 for the three months ended September 30, 2014 compared to $115,840 for the three months ended September 30, 2013. The increase in income from BOLI in the third quarter of 2014 was due primarily to the acquisition of $4.5 million of BOLI assets in the Rumson merger.

The Bank also generates non-interest income from a variety of fee-based services. These include safe deposit box rentals, wire transfer service fees, cash counting fees and Automated Teller Machine fees for non-Bank customers. Decreased customer demand for these services in general contributed to the other income component of non-interest income declining to $514,279 for the three months ended September 30, 2014 compared to $627,573 for the three months ended September 30, 2013, a decrease of $113,294 for the third quarter of 2014.

Non-Interest Expense

Non-interest expenses increased by $1,470,168, or 28.0%, to $6,723,651 for the three months ended September 30, 2014 from $5,253,483 for the three months ended September 30, 2013. The following table presents the major components of non-interest expenses for the three months ended September 30, 2014 and 2013.

Non-interest Expenses
	Three months ended September 30,
	2014		2013
Salaries and employee benefits	$	3,922,104	$	3,060,143
Occupancy expenses		833,813		629,922
Data processing services		313,237		273,272
Equipment expense		224,872		189,871
Marketing		86,455		79,656
Regulatory, professional and other fees		399,379		303,114
Merger-related expenses		-		-
FDIC insurance expense		210,000		111,562
Directors’ fees		21,500		24,000
Other real estate owned expenses		131,973		176,796
Amortization of intangible assets		121,029		66,992
Other expenses		459,289		338,155
Total	$	6,723,651	$	5,253,483

Salaries and employee benefits, which represent the largest portion of non-interest expenses, increased by $861,961, or 28.2%, to $3,922,104 for the three months ended September 30, 2014 compared to $3,060,143 for the three months ended September 30, 2013. Of this increase approximately $298,000 was due to salary and benefits for former Rumson employees who were retained by the Bank. The balance of the increase in salaries and employee benefits for the three months ended September30, 2014 was a result of an increase in the number of employees, regular annual merit increases and increased health care costs. Staffing levels have increased to 177 full time equivalent employees at September 30, 2014 as compared to 150 full time equivalent employees at September 30, 2013.

Occupancy expenses increased by $203,891, or 32.4%, to $833,813 for the three months ended September 30, 2014 compared to $629,922 for the three months ended September 30, 2013.  The current period increase resulted primarily from increased depreciation, property taxes and maintenance costs of the five branch offices acquired as a result of the Rumson merger.  

The cost of data processing services increased to $313,237 for the three months ended September 30, 2014 from $273,272 for the three months ended September30, 2013 as additional expenses were incurred to support and maintain the five new locations acquired as a result of the Rumson merger within the Bank’s information technology systems and the growth of loan and deposit transaction volumes.

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Equipment expense increased by $35,001, or 18.4%, to $224,872 for the three months ended September 30, 2014 compared to $189,871 for the three months ended September 30, 2013 primarily due to maintenance agreement costs associated with the expansion of the branch network due to the Rumson merger. Regulatory, professional and other fees increased by $96,265, or 31.8%, to $399,379 for the three months ended September 30, 2014 compared to $303,114 for the three months ended June 30, 2013.  During the three months ended September 30, 2014, the Company incurred higher professional fees in connection with lending, collections, general corporate matters and post-merger matters.

FDIC insurance expense increased to $210,000 for the three months ended September 30, 2014 compared to $111,562 for the three months ended September 30, 2013 primarily as a result of the assumption of deposits and borrowings upon completion of the Rumson merger, which accounted for approximately $45,000 of the increase.

Other real estate owned expenses decreased by $44,823 to $131,973 for the three months ended September 30, 2014 compared to $176,796 for the three months ended September 30, 2013 as the Company incurred a higher level of property taxes, maintenance, disposition costs and other costs on repossessed properties held as other real estate owned during the third quarter of 2013 compared to the third quarter of 2014. At September 30, 2014, the Company held one property with a value of $1,748,455 as other real estate owned compared to four properties with an aggregate value of $2,808,554 at September 30, 2013.

Amortization of intangible assets increased $54,037 to $121,029 during the third quarter of 2014 when compared to the third quarter of 2013 due to the amortization of core deposit intangible assets of $1,189,000 recorded in the Rumson merger.

All other expenses increased to $459,289 for the three months ended September 30, 2014 compared to $338,155 for the three months ended September 30, 2013 as current year increases occurred in correspondent bank fees, maintenance agreements and ATM operating expenses.  All other expenses are comprised of a variety of operating expenses and fees, as well as expenses associated with lending activities.

Income Taxes

The pre-tax income was $3,055,562 for the three months ended September 30, 2014 compared to pre-tax income of $2,128,089 for the three months ended September 30, 2013.  

The Company recorded income tax expense of $917,483 for the three months ended September 30, 2014 compared to income tax expense of $604,851 for the three months ended September 30, 2013. The effective tax rate for the third quarter of 2014 was of 30.02%, which was lower than the combined statutory rate of 39.9% due primarily to the impact of tax exempt interest income. The effective tax rate for the 2013 quarter was 28.4%.

 Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013

Summary

The Company reported net income of $2,339,873, or $0.33 per diluted share, for the nine month period ended September 30, 2014 compared to net income of $4,405,588, or $0.72 per diluted share, for the nine month period ended September 30, 2013.

The results of operations for the nine months ended September 30, 2014 were impacted by the two events described above in the “Recent Developments” section. In the first quarter of 2014, the Company completed the acquisition of Rumson.  For the nine months ended September 30, 2014, the Company incurred a total of $1.5 million of merger-related expenses that reduced net income by $962,000, or $0.13 per diluted share.

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In the second quarter, the Projuban loan for approximately $3.7 million was fully charged-off and the provision for loan losses was increased by a similar amount due to the apparent fraud by the borrower and its principals. This additional provision reduced net income by $2.2 million, or $0.31 per diluted share, and resulted in a net loss for the second quarter of 2014 and substantially lower net income for the nine months ended September 30, 2014 when compared to the nine months ended September 30, 2013.

Net income, adjusted for the effect of these events (“Adjusted Net Income”), was $5.5 million for the nine month period ended September 30, 2014, or $0.77 per diluted share. For the nine month period ended September 30, 2013, net income was $4.4 million, or $0.72 per diluted share. Adjusted Net Income and Adjusted Net Income per diluted share are non-GAAP measures. A reconciliation of these non-GAAP measures to the reported net income or loss and net income of loss per diluted share is summarized in the table below:

Reconciliation of Non-GAAP Measures (1)

(Unaudited)

	Nine Months Ended
(In thousands, except per share amounts)	September 30, 2014			September 30, 2013
Adjusted Net Income:
Net Income	$	2,340		$	4,405
Adjustments :
Provisions for Loan losses		3,656			-
Merger-Related Expenses		1,532			-
Income Tax Effect of Adjustments (2)		(2,031	)		-
Adjusted Net Income	$	5,497		$	4,405
Adjusted Net Income per Diluted Share
Adjusted Net Income	$	5,497		$	4,405
Diluted Shares Outstanding		7,142			6,137
Adjusted Net Income per Diluted Share	$	0.77		$	0.72

(1) The Company used the non-GAAP financial measures, Adjusted Net Income and Adjusted Net Income per Diluted Share, because the Company believes that it is useful for the users of the financial information to understand the effect on net income of the merger related expenses incurred in the merger with Rumson Fair Haven Bank and Trust Company and the large provision for loan losses recorded as a result of the apparent fraud by a borrower and its principals. These non-GAAP financial measures improve the comparability of the current period results with the results of prior periods. The Company cautions that the non-GAAP financial measures should be considered in addition to, but not as a substitute for, the Company’s GAAP results

(2) Tax effected at an income tax rate of 39.94%, less the impact of non-deductible merger expenses.

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Earnings Analysis

The Banks’ results of operations depend primarily on net interest income, which is primarily affected by the market interest rate environment, the shape of the U.S. Treasury yield curve, and the difference between the yield on interest-earning assets and the rate paid on interest-bearing liabilities. Other factors that may affect the Bank’s operating results are general and local economic and competitive conditions, government policies and actions of regulatory authorities.

Net Interest Income

Net interest income, the Company’s largest and most significant component of net income, is the difference between interest and fees earned on loans and other earning assets, and interest paid on deposits and borrowed funds. This component represented 81.2% of the Company’s net revenues (defined as net interest income plus non-interest income) for the nine month period ended September 30, 2014 and 80.0% of net revenues for the nine-month period ended September 30, 2013. Net interest income also depends upon the relative amount of average interest-earning assets, average interest-bearing liabilities, and the interest rate earned or paid on them, respectively.

The following table sets forth the Company’s consolidated average balances of assets and liabilities and shareholders’ equity as well as interest income and expense on related items, and the Company’s average yield or rate for the nine month periods ended September 30, 2014 and 2013. The average rates are derived by dividing interest income and expense by the average balance of assets and liabilities, respectively.

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Average Balance Sheets with Resultant Interest and Rates

(yields on a tax-equivalent basis)

	Nine months ended September 30, 2014								Nine months ended September 30, 2013
	Average Balance			Interest		Average Yield			Average Balance			Interest		Average Yield
Assets:
Federal Funds Sold/Short-Term   Investments	$	60,616,449		$	110,892		0.24	%	$	112,351,662		$	221,087		0.26	%
Investment Securities:
Taxable		177,880,389			3,141,788		2.36	%		156,884,880			2,818,801		2.40	%
Tax-exempt (4)		87,095,642			2,583,648		3.97	%		67,610,995			2,418,022		4.77	%
Total		264,976,031			5,725,436		2.89	%		224,495,875			5,236,823		3.11	%
Loan Portfolio: (1)
Construction		73,497,268			3,791,105		6.90	%		42,149,774			1,926,931		6.11	%
Residential real estate		44,761,735			1,363,469		4.07	%		11,057,154			430,207		5.20	%
Home Equity		21,985,052			921,528		5.60	%		9,208,816			373,778		5.43	%
Commercial and commercial  real estate		264,617,694			11,779,442		5.95	%		143,067,333			7,838,953		7.33	%
Mortgage warehouse lines		118,959,945			4,022,743		4.52	%		166,142,165			5,808,889		4.67	%
Installment		321,030			13,668		5.69	%		254,238			12,284		6.46	%
All Other Loans		21,900,870			802,694		4.90	%		41,800,648			928,216		2.97	%
Total		546,043,594			22,694,649		5.56	%		413,680,128			17,319,258		5.60	%
Total Interest-Earning Assets		871,636,074			28,530,977		4.38	%		750,527,665			22,777,168		4.05	%
Allowance for Loan Losses		(7,547,794	)							(6,777,671	)
Cash and Due From Bank		15,325,837								18,481,914
Other Assets		57,087,058								48,636,271
Total Assets	$	936,501,175							$	810,868,179
Liabilities and Shareholders’ Equity:
Money Market and NOW Accounts	$	279,311,533		$	692,097		0.33	%	$	225,215,899		$	579,798		0.34	%
Savings Accounts		200,283,559			676,075		0.45	%		202,754,977			676,979		0.45	%
Certificates of Deposit		169,628,119			1,458,167		1.15	%		141,258,225			1,411,530		1.34	%
Other Borrowed Funds		24,630,579			387,422		2.10	%		10,380,769			310,649		4.00	%
Trust Preferred Securities		18,557,000			257,314		1.85	%		18,557,000			263,981		1.90	%
Total Interest-Bearing Liabilities		692,410,790			3,471,075		0.67	%		598,166,870			3,242,937		0.72	%
Net Interest Spread (2)							3.71	%							3.33	%
Demand Deposits		156,999,596								139,542,141
Other Liabilities		6,859,237								7,394,439
Total Liabilities		856,269,623								745,103,450
Shareholders’ Equity		80,231,552								65,764,729
Total Liabilities and Shareholders’ Equity	$	936,501,175							$	810,868,179
Net Interest Margin (3)				$	25,059,902		3.84	%				$	19,534,230		3.48	%

(1) Loan origination fees are considered an adjustment to interest income. For the purpose of calculating loan yields, average loan balances include nonaccrual loans with no related interest income and include the average balances of loans held for sale. Please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operation under the heading “Non-Performing Assets” for a discussion of the Bank’s policy with regard to non-accrual loans.

(2) The interest rate spread is the difference between the average yield on interest earning assets and the average rate paid on interest bearing liabilities.

(3) The net interest margin is equal to net interest income divided by average interest earning assets.

(4) Tax-equivalent basis.

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Average interest earning assets increased by $121,108,409, or 16.1%, to $871,636,074 for the nine month period ended September 30, 2014 compared to $750,527,665 for the nine month period ended September 30, 2013.  The average investment securities portfolio increased by $40,480,156 to $264,976,031 for the nine month period ended September 30, 2014 compared to $224,495,875 for the nine month period ended September 30, 2013. The average loan portfolio increased by $132,363,466, or 32.0%, to $546,043,594 for the nine month period ended September 30, 2014 compared to $413,680,128 for the nine month period ended September 30, 2013.  

Average interest bearing liabilities increased by $94,243,920, or 15.8%, to $692,410,790 for the nine month period ended September 30, 2014 from $598,166,870 for the nine month period ended September 30, 2013.  

The net interest margin (on a tax-equivalent basis), which is net interest income divided by average interest earning assets, was 3.84% for the nine months ended September 30, 2014 compared to 3.48% for the nine months ended September 30, 2013.

The Company’s net interest income increased on a tax-equivalent basis by $5,525,672, or 28.3%, to $25,059,902 for the nine months ended September 30, 2014 compared to $19,534,230 for the nine months ended September 30, 2013. This increase in the Company’s net interest income and net interest margin for the nine months ended September 30, 2014 compared to the corresponding period in 2013 was primarily due to higher yields earned on an increased level of interest-earning assets, combined with lower rates paid on interest-bearing liabilities during the current period. The average yield on interest-earning assets was 4.38% for the nine month period ended September 30, 2014, an increase of 33 basis points from the yield of 4.05% for the comparable period of 2013. The average rate paid on interest-bearing liabilities for the nine months ended September 30, 2014 was 0.67%, a reduction of 5 basis points from 0.72% paid for the nine months ended September 30, 2013. The average balances of both interest-earning assets and interest-bearing liabilities increased for the nine-month period ended September 30, 2014 compared to the same period in 2013 due primarily to the merger with Rumson, which was completed on February 7, 2014.

Provision for Loan Losses

Management considers a complete review of the following specific factors in determining the provisions for loan losses: historical losses by loan category, the level of non-accrual loans and problem loans as identified through internal review and classification, collateral values and the growth and size of the loan portfolio.

In addition to these factors, management takes into consideration current economic conditions and local real estate market conditions.  Using this evaluation process, the Company recorded a provision for loan losses of $5,249,994 for the nine months ended September 30, 2014 compared to a provision of $776,664 for the nine months ended September 30, 2013. The provision for loan losses increased to $5.2 million in the first nine months of 2014 due to the $3.7 million provision for and charge-off of the Projuban loan in the second quarter, other charge-offs of $1.5 million in 2014 and growth of the loan portfolio. Other charge-offs include $928,000 of gross charge-offs of specific reserves for potential losses that were recorded in prior periods. At September 30, 2014, non-performing loans increased by $1,537,124, or 24.3%, to $7,859,080 and the ratio of non-performing loans to total loans was 1.27% at September 30, 2014 compared to 1.69% at December 31, 2013.  At September 30, 2014, the loan portfolio balance was $620,395,918, which represented an increase of $247,059,836 compared to the December 31, 2013 loan portfolio balance of $373,336,082.

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There were no changes in the expected cash flows of the acquired loans from the Rumson merger from the date of merger to September 30, 2014.  No allowance for loan losses was recorded for acquired loans with or without evidence of deteriorated credit quality as of September 30, 2014.  The primary cause of the current period increase in the loan portfolio balance was the approximate $124 million of loans acquired in the Rumson merger and the growth of construction, commercial real estate and commercial loans during the second and third quarters of 2014.

Non-Interest Income

Total non-interest income for the nine months ended September 30, 2014 was $4,378,856, a decrease of $294,114, or 6.3%, compared to non-interest income of $4,672,970 for the nine months ended September 30, 2013.

Service charges on deposit accounts represent a consistent source of non-interest income. Service charge revenues increased to $753,976 for the nine months ended September 30, 2014 from $675,839 for the nine months ended September 30, 2013. This increase was the result of a higher volume of uncollected funds and overdraft fees collected on deposit accounts during the first nine months of 2014 compared to the first nine months of 2013.

Gain on sales of loans originated for sale decreased by $290,031, or 15.7%, to $1,562,790 for the nine months ended September 30, 2014 when compared to $1,852,821 for the nine months ended September 30, 2013.  The Bank sells both residential mortgage loans and loans guaranteed by the Small Business Administration in the secondary market. The resulting volume of residential mortgage loans originated and sold decreased for the first nine months of 2014 compared to the first nine months of 2013 due to the higher interest rate environment and lower level of mortgage refinancing activity in 2014 than in 2013 which resulted in a $708,000 decline in gains from the sale of residential mortgages. Gains from the sale of SBA loans increased $418,000 to $1.0 million, which partially offset the decline in gains from the sale of residential mortgages.

Non-interest income also includes income from bank-owned life insurance (“BOLI”), which amounted to $422,022 for the nine months ended September 30, 2014 compared to $348,206 for the nine months ended September 30, 2013. The increase in income from BOLI was due to the Bank’s acquisition of $4.5 million of BOLI assets in the Rumson merger.

The Bank also generates non-interest income from a variety of fee-based services. These include safe deposit box rentals, wire transfer service fees, cash counting fees and Automated Teller Machine fees for non-Bank customers. Decreased customer demand for these services contributed to the decline in the other income component of non-interest income to $1,640,068 for the nine months ended September 30, 2014 compared to $1,796,104 for the nine months ended September 30, 2013.

Non-Interest Expense

Non-interest expenses increased by $4,276,740, or 25.9%, to $20,775,491 for the nine months ended September 30, 2014 from $16,498,751 for the nine months ended September 30, 2013.  Excluding merger related expenses of $1,532,153, non-interest expenses would have been $19,243,338 in the first nine months of 2014, which would have been an increase of $2,744,587 when compared to non-interest expenses for the first nine months of 2013. Non-interest expenses attributable to the former Rumson operation were approximately $1.9 million February 7, 2014 (the date of the closing of the Rumson merger) through September 30, 2014. The following table presents the major components of non-interest expenses for the nine months ended September 30, 2014 and 2013.

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Non-interest Expenses
	Nine months ended September 30,
	2014		2013
Salaries and employee benefits	$	11,194,732	$	9,458,247
Occupancy expenses		2,498,903		1,930,227
Data processing services		941,046		868,960
Equipment expense		645,212		689,804
Marketing		240,001		219,326
Regulatory, professional and other fees		1,066,631		770,015
Merger-related expenses		1,532,153		0
FDIC insurance expense		544,631		146,249
Directors’ fees		67,500		78,000
Other real estate owned expenses		272,014		770,858
Amortization of intangible assets		345,076		200,975
Other expenses		1,427,592		1,366,090
Total	$	20,775,491	$	16,498,751

Salaries and employee benefits, which represent the largest portion of non-interest expenses, increased by $1,736,485, or 18.4%, to $11,194,732 for the nine months ended September 30, 2014 compared to $9,458,247 for the nine months ended September 30, 2013. Of this increase, approximately $744,000 was due to salary and benefits for former Rumson employees that were retained by the Bank. The balance of the increase in salaries and employee benefits for the nine months ended September 30, 2014 was a result of an increase in the number of employees, regular merit increases and increased health care costs. As a result of the Rumson merger completed on February 7, 2014, staffing levels increased to 177 full time equivalent employees at September 30, 2014 as compared to 150 full time equivalent employees at September 30, 2013.

Occupancy expenses increased by $568,676, or 29.5%, to $2,498,903 for the nine months ended September 30, 2014 compared to $1,930,227 for the nine months ended September 30, 2013.  The current period increase resulted primarily from increased depreciation, property taxes and maintenance costs of the five new branch office locations acquired as a result of the Rumson merger.

The cost of data processing services increased to $941,046 for the nine months ended September 30, 2014 from $868,960 for the nine months ended September 30, 2013 as additional expenses were incurred to support and maintain the five new locations acquired as a result of the Rumson merger within the Bank’s information technology systems and the cost of processing a higher level of loan and deposit transactions.

Equipment expense decreased by $44,592, or 6.5%, to $645,212 for the nine months ended September 30, 2014 compared to $689,804 for the nine months ended September 30, 2013 primarily due to non-recurring costs associated with the expansion of mobile banking capabilities incurred during the first nine months of 2013.

Regulatory, professional and other fees increased by $296,616 to $1,066,631 for the nine months ended September 30, 2014 compared to $770,015 for the nine months ended September 30, 2013.  During the first nine months of 2014, the Company incurred higher professional fees in connection with lending, collections other general corporate matters and post-merger related matters.

During the first nine months of 2014, the Company incurred merger-related expenses of $1,532,153 in connection with the Rumson transaction. These pre-tax expenses consisted primarily of (1) change-in-control payments of $883,000; (2) data processing contract termination payments of $228,000; (3) investment banker fees of $207,000; (4) legal fees of $94,430; and (5) severance payments of $119,723.

FDIC insurance expense increased to $554,631 for the nine months ended September 30, 2014 compared to $146,249 for the nine months ended September 30, 2013 as a result of the assumption of deposits upon completion of the Rumson merger, which accounted for approximately $90,000 of the increase.

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 Other real estate owned expenses decreased by $498,844 to $272,014 for the nine months ended September 30, 2014 compared to $770,858 for the nine months ended September 30, 2013 as the Company incurred a lower level of property tax, maintenance and other costs on fewer repossessed properties held as other real estate owned during the first nine months of 2014 compared with the same period in 2013. At September 30, 2014, the Company held one property with a value of $1,748,455 as other real estate owned compared to four properties with an aggregate value of $2,808,554 at September 30, 2013.

Amortization of intangible assets increased $144,101 to $345,076 during the nine months ended September 30, 2014 when compared to the corresponding period in 2013 due to the amortization of the core deposit intangible asset of $1,189,000 recorded in the Rumson merger.

All other expenses increased to $1,427,591 for the nine months ended September 30, 2014 compared to $1,366,090 for the nine months ended September 30, 2013 as current year increases occurred primarily in correspondent bank fees, maintenance agreements and ATM operating expenses.  All other expenses are also comprised of a variety of operating expenses and fees, as well as expenses associated with lending activities.

Income Taxes

Pre-tax income was $2,575,332 for the nine months ended September 30, 2014 compared to pre-tax income of $6,147,562 for the nine months ended September 30, 2013.

The Company recorded income tax expense of $235,459 for the nine months ended September 30, 2014 compared to income tax expense of $1,741,974 for the nine months ended September 30, 2013. The effective tax rate was a 9.1% for the nine months ended September 30, 2014 due principally to the lower level of pre-tax income and the effect of tax exempt interest income. The effective tax rate was 28.3% for the nine months ended September 30, 2013.

Financial Condition

September 30, 2014 Compared with December 31, 2013

Total consolidated assets at September 30, 2014 were $954,304,550, representing an increase of $211,979,463, or 28.6%, from total consolidated assets of $742,325,087 at December 31, 2013.  The increase in assets was primarily attributable to the merger with Rumson, which was completed on February 7, 2014. The merger was accounted for under the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at their fair values as of the acquisition date. Included in the acquisition were the assumption of deposit liabilities of $189.5 million, the acquisition of cash and cash equivalents of $36.0 million, securities available for sale of $30.0 million and loans of $143.7 million. The Bank recorded goodwill of approximately $7.7 million and a core deposit intangible asset of approximately $1.2 million as a result of the acquisition.

Cash and Cash Equivalents

Cash and cash equivalents at September 30, 2014 totaled $20,371,823 compared to $69,278,771 at December 31, 2013. Cash and cash equivalents at September 30, 2014 consisted entirely of cash and due from banks of $20,371,823. The corresponding balances at December 31, 2013 were cash and due from banks of $69,267,345 and short term investments of $11,426, respectively. The current period decrease was primarily due to the cash outflow to fund loan demand which occurred primarily during the second and third quarters of 2014. To the extent that the Bank did not utilize the funds for loan originations, securities purchases or repayment of borrowings, the cash inflows accumulated in cash and cash equivalents.

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Loans Held for Sale

Loans held for sale at September 30, 2014 were $9,459,172 compared to $10,923,689 at December 31, 2013. The amount of loans held for sale varies from period to period due to changes in the amount and timing of sales of residential mortgage loans.

Investment Securities

Investment securities represented 26.4% of total assets at September 30, 2014 and 33.9% of total assets at December 31, 2013. Total investment securities increased $126,537 to $252,142,159 at September 30, 2014 from $252,015,622 at December 31, 2013.  Purchases of investments totaled $14.2 million during the nine months ended September 30, 2014, and proceeds from calls, sales and repayments totaled $46 million during this period. Approximately $30 million of investment securities were acquired in the Rumson merger.

Securities available for sale are investments that may be sold in response to changing market and interest rate conditions or for other business purposes.  Activity in this portfolio is undertaken primarily to manage liquidity and interest rate risk and to take advantage of market conditions that create more economically attractive returns.  At September 30, 2014, securities available for sale totaled $103,959,466, which is an increase of $4,760,659, or 4.8%, from securities available for sale totaling $99,198,807 at December 31, 2013.

At September 30, 2014, the securities available for sale portfolio had net unrealized losses of $231,762 compared to net unrealized losses of $2,992,624 at December 31, 2013.  These unrealized losses are reflected, net of tax, in shareholders’ equity as a component of accumulated other comprehensive income.

Securities held to maturity, which are carried at amortized historical cost, are investments for which there is the positive intent and ability to hold to maturity.  At September 30, 2014, securities held to maturity were $148,182,693, a decrease of $4,634,122, from $152,816,815 at December 31, 2013.  The fair value of the held to maturity portfolio at September 30, 2014 was $152,466,765.

Loans

The loan portfolio, which represents our largest asset, is a significant source of both interest and fee income. Elements of the loan portfolio are subject to differing levels of credit and interest rate risk. The Bank’s primary lending focus continues to be mortgage warehouse lines, construction loans, commercial loans, owner-occupied commercial mortgage loans and commercial real estate mortgage loans on income producing assets.

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The following table represents the components of the loan portfolio at September 30, 2014 and December 31, 2013.

Loan Portfolio Composition

	September 30, 2014					December 31, 2013
Component	Amount		%			Amount		%
Construction loans	$	88,547,583		14	%	$	51,002,172		14	%
Residential real estate loans		48,732,051		8	%		13,764,178		4	%
Commercial business		109,053,429		18	%		82,348,055		22	%
Commercial real estate		192,367,844		31	%		98,389,730		26	%
Mortgage warehouse lines		157,333,717		25	%		116,951,357		31	%
Loans to individuals		23,363,042		4	%		9,766,114		3	%
Deferred loan costs		800,548		0	%		943,950		0	%
All other loans		197,704		0	%		170,526		0	%
	$	620,395,918		100	%	$	373,336,082		100	%

The loan portfolio increased by $247,059,836, or 66.2%, to $620,395,918 at September 30, 2014 compared to $373,336,082 at December 31, 2013.  The primary reasons for the increase in the loan portfolio were the Rumson merger which added approximately $124 million in loans to the Bank’s loan portfolio, principally in the residential real estate and commercial real estate components and the origination of approximately $123 million of new loans in the second and third quarters of 2014.

Commercial and commercial real estate loans totaled $301,421,273 at September 30, 2014, an increase of $120,683,488 when compared to $180,737,785 at December 31, 2013. Commercial loans consist primarily of loans to small and middle market businesses and are typically working capital loans used to finance inventory, receivables or equipment needs. These loans are generally secured by business assets of the commercial borrower. Excluding the effect of the Rumson merger, commercial and commercial real estate loans increased a combined $46.8 million in the second and third quarters.

Construction loans, excluding loans acquired in the Rumson merger, increased $29.3 million, reflecting increased real estate development activity of our customers.

The mortgage warehouse lines component of the loan portfolio increased by $40,382,360, or 34.5%, to $157,333,717 compared to $116,951,357 at December 31, 2013, reflecting the growth in residential mortgages originated for sale by our mortgage banking customers and the seasonality of the residential home purchases in our markets. The principal home buying season occurs in general from April through October.

The Bank’s Mortgage Warehouse Funding Group offers revolving lines of credit that are available to licensed mortgage banking companies (the “Warehouse Line of Credit”). The Warehouse Line of Credit is used by the mortgage banker to originate one-to-four family residential mortgage loans that are pre-sold to the secondary mortgage market, which includes state and national banks, national mortgage banking firms, insurance companies and government-sponsored enterprises, including the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and others.  On average, an advance under the Warehouse Line of Credit remains outstanding for a period of less than 30 days, with repayment coming directly from the sale of the loan into the secondary mortgage market.  Interest and a transaction fee are collected by the Bank at the time of repayment.  Additionally, customers of the Warehouse Line of Credit are required to maintain deposit relationships with the Bank that, on average, represent 10% to 15% of the loan balances.

The ability of the Company to enter into larger loan relationships and management’s philosophy of relationship banking are key factors in the Company’s strategy for loan growth.  The ultimate collectability of the loan portfolio and recovery of the carrying amount of real estate are subject to changes in the Company’s market region’s economic environment and real estate market.

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Non-Performing Assets

Non-performing assets consist of non-performing loans and other real estate owned. Non-performing loans are composed of (1) loans on a non-accrual basis and (2) loans which are contractually past due 90 days or more as to interest and principal payments but which have not been classified as non-accrual. Included in non-accrual loans are loans whose terms have been restructured to provide a reduction or deferral of interest and/or principal because of deterioration in the financial position of the borrower and which have not performed in accordance with the restructured terms. 

The Bank’s policy with regard to non-accrual loans is that generally, loans are placed on a non-accrual status when they are 90 days past due, unless these loans are well secured and in the process of collection or, regardless of the past due status of the loan, when management determines that the complete recovery of principal or interest is in doubt.  Consumer loans are generally charged off after they become 120 days past due.  Subsequent payments on loans in non-accrual status are credited to income only if collection of principal is not in doubt.

Non-performing loans increased by $1,537,124 to $7,859,080 at September 30, 2014 from $6,321,956 at December 31, 2013, but declined from $8,311,073 at June 30, 2014.  The major segments of non-accrual loans consist of commercial real estate loans and commercial loans, which are in the process of collection. The table below sets forth non-performing assets and risk elements in the Bank’s portfolio for the periods indicated.

As the table demonstrates, non-performing loans to total loans decreased to 1.27% at September 30, 2014 from 1.69% at December 31, 2013 primarily due to the increase in loans as a result of the Rumson merger and the internal growth of loans during 2014. At the date of this report, loan quality is considered to be sound. This was accomplished through quality loan underwriting, a proactive approach to loan monitoring and aggressive workout strategies.

Non-Performing Assets and Loans	September 30,			December 31,
	2014			2013
Non-Performing loans:
Loans 90 days or more past due and still accruing	$	320,315		$	-
Non-accrual loans		7,538,765			6,321,956
Total non-performing loans		7,859,080			6,321,956
Other real estate owned		1,748,455			2,136,341
Other repossessed asset		66,404			0
Total non-performing assets		9,673,939			8,458,297
Performing troubled debt restructurings		3,927,889			3,858,796
Performing troubled debt restructurings and total non-performing assets	$	13,601,828		$	12,317,093
Non-performing loans to total loans		1.27	%		1.69	%
Non-performing loans to total loans excluding mortgage          warehouse lines		1.70	%		2.47	%
Non-performing assets to total assets		1.01	%		1.14	%
Non-performing assets to total assets excluding mortgage          warehouse lines		1.21	%		1.35	%
Total non-performing assets and performing troubled debt restructurings to          total assets		1.43	%		1.66	%

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Non-performing assets increased by $1,215,642 to $9,673,939 at September 30, 2014 from $8,458,297 at December 31, 2013, but declined from $10,237,477 at June 30, 2014.  Other real estate owned was $1,748,455 and other repossessed assets totaled $66,404 at September 30, 2014.  Other real estate owned was $2,136,341 at December 31, 2013 and $1,860,000 at June 30, 2014. 

At September 30, 2014, the Bank had 9 loans totaling $4,288,699 which were troubled debt restructurings.  Two of these loans totaling $360,810 are included in the above table as non-accrual loans; the remaining seven loans totaling $3,927,889 are considered performing.

As provided by ASC 310-30, the excess of cash flows expected at acquisition over the initial investment in the purchase of a credit impaired loan is recognized as interest income over the life of the loan. Accordingly, Rumson loans acquired with evidence of deteriorated credit quality of $1,246,640 at September 30, 2014 were not classified as non-performing loans.

Non-performing assets represented 1.01% of total assets at September 30, 2014 and 1.14% at December 31, 2013.

Management takes a proactive approach in addressing delinquent loans. The Company’s President and Chief Executive Officer meets weekly with all loan officers to review the status of credits past-due 10 days or more. An action plan is discussed for delinquent loans to determine the steps necessary to induce the borrower to cure the delinquency and restore the loan to a current status. Also, delinquency notices are system generated when loans are five days past-due and again at 15 days past-due.

In most cases, the Company’s collateral is real estate. If the collateral is foreclosed upon, the real estate is carried at fair market value less the estimated selling costs. The amount, if any, by which the recorded amount of the loan exceeds the fair market value of the collateral, less estimated selling costs, is a loss which is charged to the allowance for loan losses at the time of foreclosure or repossession. Resolution of a past-due loan can be delayed if the borrower files a bankruptcy petition because a collection action cannot be continued unless the Company first obtains relief from the automatic stay provided by the bankruptcy code.

Allowance for Loan Losses and Related Provision

The allowance for loan losses is maintained at a level sufficient to absorb estimated credit losses in the loan portfolio as of the date of the financial statements.  The allowance for loan losses is a valuation reserve available for losses incurred or inherent in the loan portfolio and other extensions of credit.  The determination of the adequacy of the allowance for loan losses is a critical accounting policy of the Company.

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans  and mortgage warehouse lines of credit.  Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values.  Any one, or a combination, of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

All, or part, of the principal balance of commercial, commercial real estate and construction loans are charged off against the allowance as soon as it is determined that the repayment of all, or part, of the principal balance is highly unlikely.  Consumer loans are generally charged off no later than 120 days past due on a contractual basis, earlier in the event of bankruptcy, or if there is an amount deemed uncollectible.  Because all identified losses are immediately charged off, no portion of the allowance for loan losses is restricted to any individual loan or groups of loans, and the entire allowance is available to absorb any and all loan losses.

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Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements and is consistent with GAAP and interagency supervisory guidance. The allowance for loan losses methodology consists of two major components. The first component is an estimation of losses associated with individually identified impaired loans, which follows Accounting Standards Codification (ASC) Topic 310 (formerly SFAS 114). The second major component is an estimation of losses under ASC Topic 450 (formerly SFAS 5), which provides guidance for estimating losses on groups of loans with similar risk characteristics. The Company’s methodology results in an allowance for loan losses which includes a specific reserve for impaired loans, an allocated reserve, and an unallocated portion.

When analyzing groups of loans under ASC 450, the Bank follows the Interagency Policy Statement on the Allowance for Loan and Lease Losses.  The methodology considers the Company’s historical loss experience adjusted for changes in trends, conditions, and other relevant factors that affect repayment of the loans as of the evaluation date. These adjustment factors, known as qualitative factors, include:

· Delinquencies and nonaccruals

· Portfolio quality

· Concentration of credit

· Trends in volume of loans

· Quality of collateral

· Policy and procedures

· Experience, ability, and depth of management

· Economic trends – national and local

· External factors – competition, legal and regulatory

The methodology includes the segregation of the loan portfolio into loan types with a further segregation into risk rating categories, such as special mention, substandard, doubtful and loss. This allows for an allocation of the allowance for loan losses by loan type; however, the allowance is available to absorb any loan loss without restriction.  Larger balance, non-homogeneous loans representing significant individual credit exposures are evaluated individually through the internal loan review process.  It is this process that produces the watch list.  The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated. Based on these reviews, an estimate of probable losses for the individual larger-balance loans are determined, whenever possible, and used to establish specific loan loss reserves.  In general, for non-homogeneous loans not individually assessed, and for homogeneous groups of loans, such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The watch list includes loans that are assigned a rating of special mention, substandard, doubtful and loss.  Loans classified as special mention have potential weaknesses that deserve management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.  Loans rated as doubtful in whole, or in part, are placed in nonaccrual status.  Loans classified as a loss are considered uncollectible and are charged-off against the allowance for loan losses.

The specific allowance for impaired loans is established for specific loans which have been identified by management as being impaired. These loans are considered to be impaired primarily because the loans have not performed according to payment terms and there is reason to believe that repayment of the loan principal in whole, or in part, is unlikely. The specific portion of the allowance is the total amount of potential unconfirmed losses for these individual impaired loans. To assist in determining the fair value of loan collateral, the Company often utilizes independent third party qualified appraisal firms which in turn employ their own criteria and assumptions that may include occupancy rates, rental rates, and property expenses, among others.

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The second category of reserves consists of the allocated portion of the allowance.  The allocated portion of the allowance is determined by taking pools of outstanding loans that have similar characteristics and applying historical loss experience for each pool.  This estimate represents the potential unconfirmed losses within the portfolio. Individual loan pools are created for commercial and commercial real estate loans, construction loans, warehouse lines of credit, and various types of loans to individuals.  The historical estimation for each loan pool is then adjusted to account for current conditions, current loan portfolio performance, loan policy or management changes, or any other qualitative factor which may cause future losses to deviate from historical levels.

The Company also maintains an unallocated allowance.  The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable.  It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates by definition lack precision.  Management must make estimates using assumptions and information that is often subjective and changing rapidly.

The following discusses the risk characteristics of each of our loan portfolio segments: commercial, mortgage warehouse lines of credit, and consumer.

Commercial

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans. Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values. Any one or a combination of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

Mortgage Warehouse Lines of Credit

The Company’s Mortgage Warehouse Group provides revolving lines of credit that are available to licensed mortgage banking companies. The Warehouse Line of Credit is used by the mortgage banker to originate one-to-four family residential mortgage loans that are pre-sold to the secondary mortgage market, which includes state and national banks, national mortgage banking firms, insurance companies and government-sponsored enterprises, including the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and others. On average, an advance under the Warehouse Line of Credit remains outstanding for a period of less than 30 days, with repayment coming directly from the sale of the loan into the secondary mortgage market. Interest and a transaction fee are collected by the Bank at the time of repayment. Additionally, customers of the Warehouse Lines of Credit are required to maintain deposit relationships with the Bank that, on average, represent 10% to 15% of the loan balances.

As a separate segment of the total portfolio, the warehouse loan portfolio is individually analyzed as a whole for allowance for loan losses purposes. Warehouse Lines of Credit are subject to the same inherent risks as other commercial lending, but the overall degree of risk differs. While the Company’s loss experience with this type of lending has been non-existent since the product was introduced in 2008; there are other risks unique to this lending that still must be considered in assessing the adequacy of the allowance for loan losses. These unique risks may include, but are not limited to, (i) credit risks relating to the mortgage bankers that borrow from us, (ii) the risk of intentional misrepresentation or fraud by any of such mortgage bankers, (iii) changes in the market value of mortgage loans originated by the mortgage banker, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit, due to changes in interest rates during the time in warehouse, or (iv) unsalable or impaired mortgage loans so originated, which could lead to decreased collateral value and the failure of a purchaser of the mortgage loan to purchase the loan from the mortgage banker.

These factors, along with the other qualitative factors such as economic trends, concentrations of credit, trends in the volume of loans, portfolio quality, delinquencies and nonaccruals, are also considered and may have positive or negative effects on the allocated allowance. The aggregate amount resulting from the application of these qualitative factors determines the overall risk for the portfolio and results in an allocated allowance for warehouse lines of credit.

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Consumer

The Company’s consumer loan portfolio segment is comprised of residential real estate loans, home equity loans and other loans to individuals. Individual loan pools are created for the various types of loans to individuals.

In general, for homogeneous groups such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The Company considers the following credit quality indicators in assessing the risk in the loan portfolio:

· Consumer credit scores

· Internal credit risk grades

· Loan-to-value ratios

· Collateral

· Collection experience

·

The following table presents, for the periods indicated, an analysis of the allowance for loan losses and other related data.

Allowance for Loan Losses
	September 30,			December 31,			September 30,
	2014			2013			2013
Balance, beginning of period	$	7,038,571		$	7,151,212		$	7,151,212
Provision charged to operating expenses		5,249,994			1,076,662			776,664
Loans charged off :
Construction loans		-			(561,993	)		(561,993	)
Residential real estate loans		(15,015	)		-			-
Commercial and commercial real estate		(5,217,947	)		(554,827	)		(486,034	)
Loans to individuals		-			(91,920	)		(90,865	)
Lease financing		-			-			-
All other loans		-			-			-
		(5,232,962	)		(1,208,739	)		(1,138,892	)
Recoveries
Construction loans		-			417			417
Residential real estate loans		-			-			-
Commercial and commercial real estate		52,269			19,020			17,947
Loans to individuals		-			-			12,832
Lease financing		-			-			-
All other loans		-			-			-
		52,269			19,437			31,196
Net (charge offs) / recoveries		(5,180,693	)		(1,189,302	)		(1,107,696	)
Balance, end of period	$	7,107,872		$	7,038,571		$	6,820,180
Loans :
At period end	$	620,395,918		$	373,336,082		$	362,549,473
Average during the period		539,261,215			248,126,605			386,475,158
Net charge offs to average loans outstanding		(0.96	%)		(0.48	%)		(0.29	%)
Allowance for loan losses to :
Total loans at period end		1.15	%		1.89	%		1.88	%
Total loans at period  end excluding mortgage warehouse         lines		1.34	%		2.52	%		2.99	%
Non-performing loans		90.44	%		111.34	%		88.02	%

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The following table represents the allocation of the allowance for loan losses among the various categories of loans and certain other information as of September 30, 2014 and December 31, 2013, respectively.  The allocation is made for analytical purposes and is not necessarily indicative of the categories in which future losses may occur. The total allowance is available to absorb losses from any segment of loans.

	September 30, 2014								December 31, 2013
	Amount		ALL as a % of Loans			% of Loans			Amount		ALL as a % of Loans			% of Loans
Commercial and commercial real estate	$	4,615,974		1.53	%		49	%	$	4,293,499		2.38	%		48	%
Construction loans		1,099,053		1.24	%		14	%		1,205,267		2.36	%		14	%
Residential real estate loans		202,146		0.41	%		8	%		164,673		1.20	%		4	%
Consumer and other		93,000		0.39	%		4	%		111,032		1.14	%		3	%
Subtotal		6,010,173		1.30	%		75	%		5,774,471		2.26	%		69	%
Mortgage warehouse lines		786,669		0.50	%		25	%		584,757		0.50	%		31	%
Unallocated reserves		311,030		-			-			679,343		-			-
Total	$	7,107,872		1.15	%		100	%	$	7,038,571		1.89	%		100	%

The Company recorded a provision for loan losses of $5,249,994 for the nine months ended September 30, 2014 compared to a loan loss provision of $776,664 for the nine months ended September 30, 2013.  Net charge offs/recoveries amounted to a net charge-off of $5,180,693 for the nine months ended September 30, 2014.  The higher provision for loan losses and net charge offs for the nine months ended September 30, 2014 resulted primarily from the provision and charge-off of the Projuban loan which was described earlier in the “Recent Developments” section. In addition, net charge-offs were $960,000 in the third quarter of 2014 and included $928,000 of gross charge-offs of specific reserves for potential loan losses that were recorded in prior periods. These charge-offs were recorded for loans in the process of foreclosure or resolution for which management determined the loss would be realized.

At September 30, 2014, the allowance for loan losses was $7,107,872 compared to $7,038,571 at December 31, 2013, an increase of $69,301.  The ratio of the allowance for loan losses to total loans was 1.15% and 1.89%, respectively, at September 30, 2014 and December 31, 2013.  The allowance for loan losses declined to 1.15% of total loans at September 30, 2014 due primarily to the recording of $143,714,000 of loans at fair value that were acquired in the Rumson merger. No allowance for loan losses was recorded at the date of acquisition or at September 30, 2014 with respect to these loans. The allowance for loan losses as a percentage of non-performing loans was 90.44% at September 30, 2014 compared to 111.34% at December 31, 2013. Management believes that the quality of the loan portfolio remains sound considering the economic climate in the State of New Jersey and that the allowance for loan losses is adequate in relation to credit risk exposure levels.

Deposits

Deposits, which include demand deposits (interest bearing and non-interest bearing), savings deposits and time deposits, are a fundamental and cost-effective source of funding.  The flow of deposits is influenced significantly by general economic conditions, changes in market interest rates and competition.  The Bank offers a variety of products designed to attract and retain customers, with the Bank’s primary focus being on the building and expanding of long-term relationships.

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The following table summarizes deposits at September 30, 2014 and December 31, 2013.

	September 30, 2014		December 31, 2013
Demand
Non-interest bearing	$	172,185,545	$	121,891,752
Interest bearing		283,403,448		200,737,912
Savings		196,578,527		180,002,971
Time		171,397,226		135,919,395
	$	823,564,746	$	638,552,030

At September 30, 2014, total deposits were $823,564,746, an increase of $185,012,716 or 29.0%, from $638,552,030 at December 31, 2013.  This increase was primarily due to the inflow of deposits resulting from the Rumson merger. On the closing date of February 7, 2014 for the Rumson merger, the Company assumed approximately $189.5 million in total deposits. Of these deposits, $176 million were retained at September 30, 2014.

Borrowings

Borrowings are comprised of Federal Home Loan Bank (“FHLB”) borrowings and overnight funds purchased.  These borrowings are primarily used to fund asset growth not supported by deposit generation.  The balance of borrowings was $20,798,473 at September 30, 2014, consisting solely of long-term FHLB borrowings. The corresponding balance of borrowings at December 31, 2013 was $10,000,000, consisting solely of long-term FHLB borrowings.  Two long term FHLB fixed rate convertible advances were assumed by the Bank as a result of the Rumson merger. These two advances total $10,000,000 and bear interest at 4.11% and 4.63%, respectively. As a result of acquisition accounting, the two advances were fair valued and a premium of $1,030,000 was assigned. The premium is amortized over the remaining term of the borrowings. The two advances had a combined carrying amount of $10,798,473 at September 30, 2014.

The Bank also has a fixed rate convertible advance from the FHLB in the amount of $10,000,000 that bears interest at the rate of 4.08%.  This advance may be called by the FHLB quarterly at the option of the FHLB if rates rise and the rate earned by the FHLB is no longer a “market” rate.  This advance is fully secured by marketable securities.

Shareholders’ Equity and Dividends

Shareholders’ equity increased by $16,117,088, or 23.6%, to $84,476,402 at September 30, 2014 from $68,358,314 at December 31, 2013.  Tangible book value per common share decreased by $0.52 to $9.94 at September 30, 2014 from $10.46 at December 31, 2013.  The ratio of average shareholders’ equity to total average assets was 8.57% at September 30, 2014 and 8.26% at December 31, 2013, respectively.  

During February 2014, the Company issued an aggregate of 1,019,223 shares of its common stock in conjunction with the Rumson merger that increased shareholders’ equity by $11,160,700. Shareholders’ equity was also increased by net income of $2,339,873 and other comprehensive income of $1,936,574 for the nine month period ended September 30, 2014. Partially offsetting these increases were treasury stock purchases of $137,988 during the period.

In lieu of cash dividends to common shareholders, the Company (and its predecessor, the Bank) had declared a stock dividend every year (except 2013) since 1992 and has paid such stock dividends every year since 1993 (except 2014). A 5% stock dividend was declared in 2012 and paid in 2013. No stock dividend was declared in 2013.  

The Company’s common stock is quoted on the Nasdaq Global Market under the symbol “FCCY”.

In 2005, the Company’s board of directors authorized a common stock repurchase program that allows for the repurchase of a limited number of the Company’s shares at management’s discretion on the open market. The Company undertook this repurchase program in order to increase shareholder value. Disclosure of repurchases of Company shares, if any, made during the quarter ended September 30, 2014 is set forth under Part II, Item 2 of this report, “Unregistered Sales of Equity Securities and Use of Proceeds.” There were no repurchases of Company shares under this repurchase program during the first nine months of 2014.

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Actual capital amounts and ratios for the Company and the Bank as of September 30, 2014 and December 31, 2013 were as follows:

					For Capital				To Be Well Capitalized Under Prompt Corrective Action
			Actual		Adequacy Purposes				Provision
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2014
Company
Total Capital to Risk Weighted Assets	$	96,307,633		12.33%	$	62,509,840		>8%		N/A		N/A
Tier 1 Capital to Risk Weighted Assets		89,199,761		11.42%		31,254,920		>4%		N/A		N/A
Tier 1 Capital to Average Assets		89,199,761		9.35%		38,171,292		>4%		N/A		N/A
Bank
Total Capital to Risk Weighted Assets	$	94,071,043		12.04%	$	62,509,840		>8%	$	78,137,300		>10%
Tier 1 Capital to Risk Weighted Assets		86,963,171		11.13%		31,254,920		>4%		46,882,380		>6-%
Tier 1 Capital to Average Assets		86,963,171		9.11%		38,171,292		>4%		47,714,115		>5%

As of December 31, 2013
Company
Total Capital to Risk Weighted Assets	$	89,532,373	19.29%	$	37,123,200	>8%		N/A	N/A
Tier 1 Capital to Risk Weighted Assets		83,716,373	18.04%		18,561,600	>4%		N/A	N/A
Tier 1 Capital to Average Assets		83,716,373	10.89%		30,757,840	>4%		N/A	N/A
Bank
Total Capital to Risk Weighted Assets	$	87,253,384	18.80%	$	37,123,200	>8%	$	46,404,000	>10%
Tier 1 Capital to Risk Weighted Assets		81,437,384	17.55%		18,561,600	>4%		27,842,400	>6%
Tier 1 Capital to Average Assets		81,437,384	10.59%		30,757,840	>4%		38,447,300	>5%

The minimum regulatory capital requirements for financial institutions require institutions to have a Tier 1 capital to average assets ratio of 4.0%, a Tier 1 capital to risk weighted assets ratio of 4.0% and a total capital to risk weighted assets ratio of 8.0%.  To be considered “well capitalized,” an institution must have a minimum Tier 1 leverage ratio of 5.0%.  At September 30, 2014, the ratios of the Company exceeded the ratios required to be considered well capitalized. It is management’s goal to monitor and maintain adequate capital levels to continue to support asset growth and expansion of the Bank and continue its status as a well capitalized institution.

In July 2013, the Federal Reserve Board and the FDIC approved revisions to their capital adequacy guidelines and prompt corrective action rules that implement the revised standards of Basel III and address relevant provisions of the Dodd-Frank Act. The Federal Reserve Board’s final rules and the FDIC’s interim final rules apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $500 million or more, and top-tier savings and loan holding companies (“banking organizations”). Among other things, the rules establish a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets) and increase the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets). Banking organizations will also be required to have a total capital ratio of 8% (unchanged from current rules) and a Tier 1 leverage ratio of 4% (unchanged from current rules). The rules also limit a banking organization’s ability to pay dividends, engage in share repurchases or pay discretionary bonuses if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The rules become effective for the Company and the Bank on January 1, 2015. The capital conservation buffer requirement will be phased in beginning in January 1, 2016 at 0.625% of common equity Tier 1 capital to risk-weighted assets and would increase by that amount each year until fully implemented in January 2019 at 2.5% of common equity Tier 1 capital to risk-weighted assets. Under the new capital rules in effect on January 1, 2015, management estimates that the Bank’s common equity Tier 1 capital to risk weighted assets, total capital to risk weighted assets and Tier 1 capital to average assets ratios would be 11.23%, 12.13% and 9.24%, respectively at September 30, 2014.

66

 Liquidity

At September 30, 2014, the amount of liquid assets remained at a level management deemed adequate to ensure that contractual liabilities, depositors’ withdrawal requirements, and other operational and customer credit needs could be satisfied.

Liquidity management refers to the Company’s ability to support asset growth while satisfying the borrowing needs and deposit withdrawal requirements of customers.  In addition to maintaining liquid assets, factors such as capital position, profitability, asset quality and availability of funding affect a bank’s ability to meet its liquidity needs.  On the asset side, liquid funds are maintained in the form of cash and cash equivalents, Federal funds sold, investment securities held to maturity maturing within one year, securities available for sale and loans held for sale.  Additional asset-based liquidity is derived from scheduled loan repayments as well as investment repayments of principal and interest from mortgage-backed securities.  On the liability side, the primary source of liquidity is the ability to generate core deposits.  Short-term and long-term borrowings are used as supplemental funding sources when growth in the core deposit base does not keep pace with that of earning assets.

The Bank has established a borrowing relationship with FHLB, which further supports and enhances liquidity. During 2010, FHLB replaced its Overnight Line of Credit and One-Month Overnight Repricing Line of Credit facilities available to member banks with a fully secured line of up to 50 percent of a bank’s quarter-end total assets.  Under the terms of this facility, the Bank’s total credit exposure to FHLB cannot exceed 50 percent, or $477,152,275, of its total assets at September 30, 2014.  In addition, the aggregate outstanding principal amount of the Bank’s advances, letters of credit, the dollar amount of the FHLB’s minimum collateral requirement for off-balance sheet financial contracts and advance commitments cannot exceed 30 percent of the Bank’s total assets, unless the Bank obtains approval from FHLB’s Board of Directors or its Executive Committee.  These limits are further restricted by a member’s ability to provide eligible collateral to support its obligations to FHLB as well as the ability to meet the FHLB’s stock requirement. At September 30, 2014, the Bank pledged collateral to the FHLB to support a borrowing line of $132 million, of which $20 million was utilized at September 30, 2014. The Bank also maintains an unsecured federal funds line of $25 million with a correspondent bank.

The Consolidated Statements of Cash Flows present the changes in cash from operating, investing and financing activities.  At September 30, 2014, the balance of cash and cash equivalents was $20,371,823.

Net cash provided by operating activities totaled $10.8 million for the nine months ended September 30, 2014 compared to net cash provided by operations of $31.2 million for the nine months ended September 30, 2013.  The decline in the current period was due primarily to a lower level of net proceeds from the origination and sale of residential mortgages compared to the prior year period. A source of funds is net income from operations adjusted for activity related to loans originated for sale, the provision for loan losses, depreciation expenses, and net amortization of premiums on securities.

Net cash used in investing activities totaled $55.6 million for the nine months ended September 30, 2014. The primary uses of funds for the nine months ended September 30, 2014 were the increase in the loan portfolio and purchase of securities. For the corresponding period in 2013, net cash was provided by investing activities due to the reduction of loans, primarily mortgage warehouse lines. Net cash of $21.4 million was received in the Rumson merger and represents cash of $36.1 million held by Rumson, less cash consideration of $14.8 million paid to shareholders of Rumson.

Net cash used in financing activities totaled $4.0 million for the nine months ended September 30, 2014 compared to net cash used in financing activities of $52.7 million for the nine months ended September 30, 2013.  The primary use of funds for the nine months ended September 30, 2014 was the net decrease in total deposits of $4.5 million while for the nine months ended September 30, 2013, the decrease in borrowings of $32.4 million and the decrease in deposits of $20.7 million were the primary uses of funds.

The securities portfolios are also a source of liquidity, providing cash flows from maturities and periodic repayments of principal.  For the nine months ended September 30, 2014, prepayments and maturities of investment securities totaled $40.1 million. Proceeds from the sale of securities were $6.0 million during the nine month period ended September 30, 2014. Another source of liquidity is the loan portfolio, which provides a flow of payments and maturities.

67

Interest Rate Sensitivity Analysis

The largest component of the Company’s total income is net interest income, and the majority of the Company’s financial instruments are composed of interest rate-sensitive assets and liabilities with various terms and maturities. The primary objective of management is to maximize net interest income while minimizing interest rate risk. Interest rate risk is derived from timing differences and the magnitude of relative changes in the repricing of assets and liabilities, loan prepayments, deposit withdrawals, and differences in lending and funding rates. Management actively seeks to monitor and control the mix of interest rate-sensitive assets and interest rate-sensitive liabilities.

Under our interest rate risk policy established by our Board of Directors, we established quantitative guidelines with respect to our interest rate risk and how interest rate shocks are projected to affect our net interest income and economic value of equity. Summarized below is the projected effect of a parallel shift of an increase of 200 and 300 basis points, respectively, in market interest rates on our net interest income and economic value of equity.

Based upon the current interest rate environment, as of September 30, 2014, our sensitivity to interest rate risk was as follows:

(Dollars in thousands)	Next 12 Months Net Interest Income		Economic Value of Equity
Interest Rate Change in Basis Points	$ Change	% Change	$ Change	% Change
300	$2,489	7.1%	($3,821)	(3.25)%
200	1,393	4.0%	(2,540)	(2.16)
-	-	0.0%	-	0.0%

We employ many assumptions to calculate the impact of changes in interest rates on our assets and liabilities, and actual results may not be similar to projections due to several factors, including the timing and frequency of rate changes, market conditions and the shape of the yield curve. Actual results may also differ due to our actions, if any, in response to the changing rates. In calculating these exposures, we utilized an interest rate simulation model which is validated by third-party reviewers on an annual basis.

The Company continually evaluates interest rate risk management opportunities, including the use of derivative financial instruments. Management has focused its efforts on increasing the Bank’s interest rate spread by attracting lower-cost retail deposits and increasing loans. As of September 30, 2014 we were in compliance with our interest rate risk policy.

Item 3.                    Quantitative and Qualitative Disclosures About Market Risk.

Not required. 

Item 4.                    Controls and Procedures.

The Company has established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

68

The Company’s principal executive officer and principal financial officer, with the assistance of other members of the Company’s management, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report.  Based upon such evaluation, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

The Company’s principal executive officer and principal financial officer have also concluded that there was no change in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

69

PART II. OTHER INFORMATION

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

Issuer Purchases of Equity Securities

On July 21, 2005, the board of directors authorized a stock repurchase program under which the Company may repurchase in open market or privately negotiated transactions up to 5% of its common shares outstanding at that date.  The Company undertook this repurchase program in order to increase shareholder value. The following table provides common stock repurchases made by or on behalf of the Company during the three months ended September 30, 2014, if any.

 Issuer Purchases of Equity Securities (1)

Period		Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased As Part of Publicly Announced Plan or Program	Maximum Number of Shares That May Yet be Purchased Under the Plan or Program
Beginning	Ending
July 1, 2014	July 31, 2014	-	-	-	134,115
August 1, 2014	August 31, 2014	-	-	-	134,115
September 1, 2014	September 30, 2014	9,581	$10.24	9,581	124,534
Total		9,581	$10.24	9,581	124,534

(1) The Company’s common stock repurchase program covers a maximum of 225,824 shares of common stock of the Company, representing 5% of the outstanding common stock of the Company on July 21, 2005, as adjusted for subsequent common stock dividends.

70

Item 6.   Exhibits.

31.1	*	Certification of Robert F. Mangano, principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
31.2	*	Certification of Stephen J. Gilhooly, principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
32	*	Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by Robert F. Mangano, principal executive officer of the Company, and Stephen J. Gilhooly, principal financial officer of the Company
101.INS	*	XBRL Instance Document
101.SCH	*	XBRL Taxonomy Extension Schema Document
101.CAL	*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	XBRL Taxonomy Extension Presentation Linkbase Document

_____________________

*                     Filed herewith.

71

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	1ST CONSTITUTION BANCORP
Date: November 13, 2014	By:	/s/ ROBERT F. MANGANO
		Robert F. Mangano
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 13, 2014	By:	/s/ STEPHEN J. GILHOOLY
		Stephen J. Gilhooly
		Senior Vice President, Treasurer and Chief Financial Officer
		(Principal Financial Officer)

72

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Robert F. Mangano, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 13, 2014
/s/ ROBERT F. MANGANO
Name:	Robert F. Mangano
Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Stephen J. Gilhooly, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: November 13, 2014
/s/STEPHEN J. GILHOOLY
Name:	Stephen J. Gilhooly
Title:	Senior Vice President, Treasurer and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report on Form 10-Q of 1st Constitution Bancorp (the “Company”) for the fiscal quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

ROBERT F. MANGANO
Name:	Robert F. Mangano
Title:	President and Chief Executive Officer
Date:	November 13, 2014

STEPHEN J. GILHOOLY
Name:	Stephen J. Gilhooly
Title:	Senior Vice President, Treasurer and Chief Financial Officer
Date:	November 13, 2014

XML

Note 4 - Investment Securities (Details) - Securities by Contractual Maturity (USD $)	Sep. 30, 2014	Dec. 31, 2013
Due in one year or less
Available for sale, due in one year or less, amortized cost	$ 12,339,566
Available for sale, due in one year or less, fair value	12,315,088
Due after one year through five years
Available for sale, due after one year through five years, amortized cost	30,723,483
Available for sale, due after one year through five years, fair value	30,959,825
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	22,470,048
Available for sale, due after five years through ten years, fair value	22,200,974
Due after ten years
Available for sale, due after ten years, amortized cost	38,658,132
Available for sale, due after ten years, fair value	38,483,579
Total	104,191,229	102,191,431
Total	103,959,466	99,198,807
Due in one year or less
Held to maturity, due in one year or less, amortized cost	18,205,158
Held to maturity, due in one year or less, fair value	18,211,282
Due after one year through five years
Held to maturity, due after one year through five years, amortized cost	13,503,851
Held to maturity, due after one year through five years, fair value	14,035,745
Due after five years through ten years
Held to maturity, due after five years through ten years, amortized cost	38,626,704
Held to maturity, due after five years through ten years, fair value	39,772,557
Due after ten years
Held to maturity, due after ten years, amortized cost	78,347,924
Held to maturity, due after ten years, fair value	80,447,181
Total	148,683,637	153,317,759
Total	152,466,765	153,629,773
Residential Collateralized Mortgage Obligations- Non GSE [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	263,345
Available for sale, due in one year or less, fair value	264,102
Due after ten years
Available for sale, due after ten years, amortized cost	2,300,936
Available for sale, due after ten years, fair value	2,333,561
Total	2,564,282	2,782,843
Total	2,597,664	2,826,396
Due after five years through ten years
Held to maturity, due after five years through ten years, amortized cost	802,511
Held to maturity, due after five years through ten years, fair value	805,099
Due after ten years
Held to maturity, due after ten years, amortized cost	8,297,202
Held to maturity, due after ten years, fair value	8,586,350
Total	9,099,412	10,682,363
Total	9,391,451	10,774,614
Residential Mortgage Backed Securities [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	250
Available for sale, due in one year or less, fair value	250
Due after one year through five years
Available for sale, due after one year through five years, amortized cost	7,450,510
Available for sale, due after one year through five years, fair value	7,358,278
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	6,661,024
Available for sale, due after five years through ten years, fair value	6,742,207
Due after ten years
Available for sale, due after ten years, amortized cost	14,024,476
Available for sale, due after ten years, fair value	14,579,634
Total	28,680,367	31,965,947
Due after five years through ten years
Held to maturity, due after five years through ten years, amortized cost	19,279,679
Held to maturity, due after five years through ten years, fair value	19,492,168
Due after ten years
Held to maturity, due after ten years, amortized cost	39,246,826
Held to maturity, due after ten years, fair value	39,997,121
US States and Political Subdivisions Debt Securities [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	264,775
Available for sale, due in one year or less, fair value	265,665
Due after one year through five years
Available for sale, due after one year through five years, amortized cost	681,967
Available for sale, due after one year through five years, fair value	714,360
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	4,796,387
Available for sale, due after five years through ten years, fair value	4,866,134
Due after ten years
Available for sale, due after ten years, amortized cost	16,280,003
Available for sale, due after ten years, fair value	15,772,352
Total	22,023,131	22,206,959
Total	21,618,512	19,646,044
Due in one year or less
Held to maturity, due in one year or less, amortized cost	18,205,158
Held to maturity, due in one year or less, fair value	18,211,282
Due after one year through five years
Held to maturity, due after one year through five years, amortized cost	13,503,851
Held to maturity, due after one year through five years, fair value	14,035,745
Due after five years through ten years
Held to maturity, due after five years through ten years, amortized cost	18,544,514
Held to maturity, due after five years through ten years, fair value	19,475,290
Due after ten years
Held to maturity, due after ten years, amortized cost	17,847,239
Held to maturity, due after ten years, fair value	18,523,090
Total	68,100,762	59,400,916
Total	70,245,407	59,504,497
Corporate Debt Securities [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	10,224,296
Available for sale, due in one year or less, fair value	10,198,171
Due after one year through five years
Available for sale, due after one year through five years, amortized cost	21,050,621
Available for sale, due after one year through five years, fair value	21,351,292
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	1,019,227
Available for sale, due after five years through ten years, fair value	1,032,500
Due after ten years
Available for sale, due after ten years, amortized cost	0
Available for sale, due after ten years, fair value	0
Total	32,294,145	16,228,474
Total	32,581,964	16,517,728
Due in one year or less
Held to maturity, due in one year or less, amortized cost	0
Held to maturity, due in one year or less, fair value	0
Due after ten years
Total		1,008,599
Total		1,018,435
Equity Securities, Restricted Stock [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	1,561,900
Available for sale, due in one year or less, fair value	1,561,900
Due after ten years
Total	1,561,900	1,013,100
Total	1,561,900	1,013,100
Mutual Fund [Member]
Due in one year or less
Available for sale, due in one year or less, amortized cost	25,000
Available for sale, due in one year or less, fair value	25,000
Due after ten years
Total	25,000	25,000
Total	25,000	25,000
US Treasury and Government [Member]
Due after one year through five years
Available for sale, due after one year through five years, amortized cost	1,540,385
Available for sale, due after one year through five years, fair value	1,535,895
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	9,890,642
Available for sale, due after five years through ten years, fair value	9,450,800
Due after ten years
Total	11,431,027	22,386,761
Total	10,986,695	21,509,700
Due in one year or less
Held to maturity, due in one year or less, amortized cost	0
Held to maturity, due in one year or less, fair value	0
Due after ten years
Total		1,524,860
Total		1,535,170
Residential Collateralized Mortgage Obligations- GSE [Member]
Due after five years through ten years
Available for sale, due after five years through ten years, amortized cost	102,768
Available for sale, due after five years through ten years, fair value	109,333
Due after ten years
Available for sale, due after ten years, amortized cost	3,581,657
Available for sale, due after ten years, fair value	3,614,332
Total	3,684,424	3,547,404
Total	3,723,664	3,681,792
Due after ten years
Held to maturity, due after ten years, amortized cost	12,299,996
Held to maturity, due after ten years, fair value	12,729,330
Total	12,300,297	14,803,739
Total	12,729,328	15,183,554
Trust Preferred Debt Securities [Member]
Due after ten years
Available for sale, due after ten years, amortized cost	2,471,060
Available for sale, due after ten years, fair value	2,183,700
Total	2,471,060	2,468,839
Total	2,183,700	2,013,100
Trust Preferred Debt Securities Pooled [Member]
Due after ten years
Held to maturity, due after ten years, amortized cost	656,661
Held to maturity, due after ten years, fair value	611,290
Total	656,662	656,662
Total	$ 611,291	$ 148,855

XML

Note 6 - Share-Based Compensation (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Note 6 - Share-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in Shares)	440,701
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)	317,866
Allocated Share-based Compensation Expense	$ 77,123	$ 75,949
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	62,341
Employee Stock Option [Member]
Note 6 - Share-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	4 years
Restricted Stock [Member]
Note 6 - Share-Based Compensation (Details) [Line Items]
Allocated Share-based Compensation Expense	366,550	326,085
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 1,141,472
The 2013 Equity Incentive Plan [Member]
Note 6 - Share-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)	271,740
2006 Directors Stock Plan [Member]
Note 6 - Share-Based Compensation (Details) [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in Shares)	46,126

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity (USD $)	3 Months Ended						9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2014	Sep. 30, 2013
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	$ 7,418,379	$ 7,030,842	$ 7,038,571	$ 6,268,940	$ 6,023,282	$ 7,151,212	$ 7,038,571	$ 7,151,212
Provision charged to operations	649,998	4,099,998	499,998	539,998	236,667		5,249,994	776,664
Loans charged off	(1,008,221)	(3,713,789)	(510,952)	(2,068)		(1,136,825)
Recoveries of loans charged off	47,716	1,328	3,225	13,310	8,991	8,895
Allowance for loan losses	7,107,872	7,418,379	7,030,842	6,820,180	6,268,940	6,023,282	7,107,872	6,820,180
Construction [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	950,014	1,265,430	1,205,267	1,212,578	1,210,289	1,990,292	1,205,267	1,990,292
Provision charged to operations	149,039	(315,416)	60,163	(4,555)	1,872	(218,010)
Loans charged off						(561,993)
Recoveries of loans charged off					417
Allowance for loan losses	1,099,053	950,014	1,265,430	1,208,023	1,212,578	1,210,289	1,099,053	1,208,023
Commercial Business [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	1,546,766	1,218,037	1,271,733	985,919	817,181	972,789	1,271,733	972,789
Provision charged to operations	185,109	4,041,190	454,031	34,446	160,164	(18,319)
Loans charged off	(99,402)	(3,713,789)	(510,952)	(2,068)		(139,289)
Recoveries of loans charged off	8,716	1,328	3,225	13,310	8,574	2,000
Allowance for loan losses	1,641,189	1,546,766	1,218,037	1,031,607	985,919	817,181	1,641,189	1,031,607
Commercial Real Estate Portfolio Segment [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	3,607,083	3,135,727	3,021,766	2,451,856	2,130,197	2,262,221	3,021,766	2,262,221
Provision charged to operations	222,506	471,356	113,961	612,392	321,659	245,769
Loans charged off	(893,804)					(384,688)
Recoveries of loans charged off	39,000					6,895
Allowance for loan losses	2,974,785	3,607,083	3,135,727	3,064,248	2,451,856	2,130,197	2,974,785	3,064,248
Mortgage Warehouse Lines [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	909,559	521,675	584,757	928,699	990,738	1,420,638	584,757	1,420,638
Provision charged to operations	(122,890)	387,884	(63,082)	(256,028)	(62,039)	(429,900)
Allowance for loan losses	786,669	909,559	521,675	672,671	928,699	990,738	786,669	672,671
Residential Portfolio Segment [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	172,853	182,005	164,673	92,733	112,365	112,103	164,673	112,103
Provision charged to operations	44,308	(9,152)	17,332	49,093	(19,632)	262
Loans charged off	(15,015)
Allowance for loan losses	202,146	172,853	182,005	141,826	92,733	112,365	202,146	141,826
Consumer Portfolio Segment [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	90,732	92,387	108,849	99,890	102,334	102,583	108,849	102,583
Provision charged to operations	685	(1,655)	(16,462)	10,178	(2,444)	50,506
Loans charged off						(50,855)
Allowance for loan losses	91,417	90,732	92,387	110,068	99,890	102,334	91,417	110,068
Consumer Other Financing Receivable [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	1,665	1,623	2,183	2,104	2,059	2,271	2,183	2,271
Provision charged to operations	(82)	42	(560)	(53)	45	(212)
Allowance for loan losses	1,583	1,665	1,623	2,051	2,104	2,059	1,583	2,051
Unallocated Financing Receivables [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses Activity [Line Items]
Allowance for loan losses	139,707	613,958	679,343	495,161	658,119	288,315	679,343	288,315
Provision charged to operations	171,323	(474,251)	(65,385)	94,525	(162,958)	369,804
Allowance for loan losses	$ 311,030	$ 139,707	$ 613,958	$ 589,686	$ 495,161	$ 658,119	$ 311,030	$ 589,686

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Note 6 - Share-Based Compensation (Details) - Share-based Compensation Activity (USD $)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Activity [Abstract]
Outstanding at January 1, 2014	235,598
Outstanding at January 1, 2014	$ 8.81
Granted	11,700
Granted	$ 11.02
Outstanding at September 30, 2014	247,298
Outstanding at September 30, 2014	$ 8.91
Outstanding at September 30, 2014	5 years 36 days
Outstanding at September 30, 2014	$ 502,395
Exercisable at September 30, 2014	199,881
Exercisable at September 30, 2014	$ 9.17
Exercisable at September 30, 2014	4 years 6 months
Exercisable at September 30, 2014	$ 380,591

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Consumer Loans by Credit Quality Indicators (USD $)	Sep. 30, 2014	Feb. 07, 2014	Dec. 31, 2013
Consumer Credit Exposure - By Payment Activity
Loans	$ 620,395,918	$ 143,714,000	$ 373,336,082
Loans to Individuals [Member] | Performing Financing Receivable [Member]
Consumer Credit Exposure - By Payment Activity
Loans	23,363,042		9,674,011
Loans to Individuals [Member] | Nonperforming Financing Receivable [Member]
Consumer Credit Exposure - By Payment Activity
Loans			92,103
Loans to Individuals [Member]
Consumer Credit Exposure - By Payment Activity
Loans	23,363,042		9,766,114
Consumer Other Financing Receivable [Member] | Performing Financing Receivable [Member]
Consumer Credit Exposure - By Payment Activity
Loans	197,704		170,526
Consumer Other Financing Receivable [Member]
Consumer Credit Exposure - By Payment Activity
Loans	$ 197,704		$ 170,526

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Pro Forma Information (USD $)	3 Months Ended		9 Months Ended		8 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2014 Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2013 Rumson-Fair Haven Bank and Trust Company [Member]
Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Pro Forma Information [Line Items]
Net interest income	$ 8,947,369	$ 6,305,022	$ 24,221,961	$ 18,750,007	$ 4,430,000
Net interest income						25,021,000	24,434,000
Non-interest income	1,481,842	1,616,548	4,378,856	4,672,970	176,000
Non-interest income						4,428,000	5,476,000
Non-interest expenses	6,723,651	5,253,483	20,775,491	16,498,751	1,926,000
Non-interest expenses						19,964,000	20,802,000
Income taxes	917,483	604,851	235,459	1,741,974	1,070,000
Income taxes						839,000	2,543,000
Net income	2,138,079	1,523,238	2,339,873	4,405,588	1,610,000
Net income						$ 3,395,000	$ 5,648,000
Earnings per share-diluted (in Dollars per share)						$ 0.48	$ 0.79

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Note 6 - Share-Based Compensation (Details) - Restricted Stock Activity (USD $)	9 Months Ended
	Sep. 30, 2014
Restricted Stock Activity [Abstract]
Non-vested at January 1, 2014	136,490
Non-vested at January 1, 2014	$ 6.59
Granted	60,100
Granted	$ 10.81
Vested	(55,410)
Vested	$ 8.77
Non-vested at September 30, 2014	141,180
Non-vested at September 30, 2014	$ 7.53

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Note 7 - Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Schedule of Net Benefit Costs [Table Text Block]

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Service cost	$	102,337		$	30,539		$	159,504		$	214,257
Interest cost		77,583			22,229			120,922			155,951
Actuarial (gain) loss recognized		(3,718	)		(29,893	)		(5,795	)		(209,721	)
Prior service cost recognized		-			942			-			6,611
	$	176,202		$	23,817		$	274,631		$	167,098

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Impaired Loans Receivables (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Commercial
Impaired loans with no related allowance, recorded investment	$ 5,551,811,000,000	$ 1,405,553,000,000	$ 5,551,811,000,000	$ 1,405,553,000,000	$ 517,885
Impaired loans with no related allowance, unpaid principal balance	6,455,747,000,000	1,562,010,000,000	6,455,747,000,000	1,562,010,000,000	674,342
Impaired loans with no related allowance, average recorded investment	5,212,691,000,000	5,510,640,000,000	3,827,987,000,000	2,774,622,000,000	2,407,560
Impaired loans with no related allowance, interest income recognized	63,230,000,000	6,176,000,000	172,907,000,000	37,420,000,000	39,040
Commercial
Impaired loans with an allowance, recorded investment	7,960,930,000,000	10,121,957,000,000	7,960,930,000,000	10,121,957,000,000	9,662,866
Impaired loans with an allowance, unpaid principal balance	8,669,600,000,000	10,121,957,000,000	8,669,600,000,000	10,121,957,000,000	9,662,866
Impaired loans, related allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Impaired loans with an allowance, average recorded investment	8,795,347,000,000	6,750,728,000,000	9,220,887,000,000	5,298,616,000,000	6,404,323
Impaired loans with an allowance, interest income recognized	54,695,000,000	65,221,000,000	160,475,000,000		257,005
Total:
Impaired loans, recorded investment	13,512,741,000,000	11,527,510,000,000	13,512,741,000,000	11,527,510,000,000	10,180,751
Impaired loans, unpaid principal balance	15,125,347,000,000	11,683,967,000,000	15,125,347,000,000	11,683,967,000,000	10,337,208
Impaired loans, related allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Impaired loans, average recorded investment	14,008,038,000,000	12,261,368,000,000	13,048,874,000,000	8,073,238,000,000	8,811,883
Impaired loans, interest income recognized	117,925,000,000	71,397,000,000	333,382,000,000	248,957,000,000	296,045
Construction [Member]
Commercial
Impaired loans with no related allowance, recorded investment	449,663,000,000	1,015,112,000,000	449,663,000,000	1,015,112,000,000	19,930
Impaired loans with no related allowance, unpaid principal balance	449,663,000,000	1,015,112,000,000	449,663,000,000	1,015,112,000,000	19,930
Impaired loans with no related allowance, average recorded investment	449,663,000,000	1,184,249,000,000	302,656,000,000	636,741,000,000	965,268
Impaired loans with no related allowance, interest income recognized	6,134,000,000	4,660,000,000	10,955,000,000	37,420,000,000	33,946
Commercial
Impaired loans with an allowance, average recorded investment				329,138,000,000	246,853
Total:
Impaired loans, recorded investment	449,663,000,000		449,663,000,000		19,930
Impaired loans, unpaid principal balance	449,663,000,000		449,663,000,000		19,930
Impaired loans, average recorded investment	449,663,000,000		302,656,000,000		1,212,121
Impaired loans, interest income recognized	6,134,000,000		10,955,000,000		33,946
Commercial Business [Member]
Commercial
Impaired loans with no related allowance, recorded investment	793,992,000,000	225,899,000,000	793,992,000,000	225,899,000,000	243,840
Impaired loans with no related allowance, unpaid principal balance	1,380,582,000,000	382,356,000,000	1,380,582,000,000	382,356,000,000	400,297
Impaired loans with no related allowance, average recorded investment	786,051,000,000	157,334,000,000	579,721,000,000	532,119,000,000	258,139
Impaired loans with no related allowance, interest income recognized	6,971,000,000	1,516,000,000	20,055,000,000		5,094
Commercial
Impaired loans with an allowance, recorded investment	31,123,000,000	475,136,000,000	31,123,000,000	475,136,000,000	532,261
Impaired loans with an allowance, unpaid principal balance	31,123,000,000	475,136,000,000	31,123,000,000	475,136,000,000	532,261
Impaired loans, related allowance	1,874,000,000	235,027,000,000	1,874,000,000	235,027,000,000	293,692
Impaired loans with an allowance, average recorded investment	94,772,000,000	566,473,000,000	245,858,000,000	578,713,000,000	562,346
Impaired loans with an allowance, interest income recognized		3,915,000,000		28,570,000,000	9,728
Total:
Impaired loans, recorded investment	825,115,000,000		825,115,000,000		776,101
Impaired loans, unpaid principal balance	1,411,705,000,000		1,411,705,000,000		932,558
Impaired loans, related allowance	1,874,000,000	235,027,000,000	1,874,000,000	235,027,000,000	293,692
Impaired loans, average recorded investment	880,823,000,000		825,579,000,000		820,485
Impaired loans, interest income recognized	6,971,000,000		20,055,000,000		14,822
Commercial Real Estate Portfolio Segment [Member]
Commercial
Impaired loans with no related allowance, recorded investment	2,913,499,000,000		2,913,499,000,000
Impaired loans with no related allowance, unpaid principal balance	3,215,830,000,000		3,215,830,000,000
Impaired loans with no related allowance, average recorded investment	2,431,613,000,000	4,004,515,000,000	1,511,916,000,000	1,480,516,000,000	1,032,115
Impaired loans with no related allowance, interest income recognized	35,288,000,000		105,522,000,000
Commercial
Impaired loans with an allowance, recorded investment	7,929,807,000,000	9,646,821,000,000	7,929,807,000,000	9,646,821,000,000	9,130,605
Impaired loans with an allowance, unpaid principal balance	8,638,477,000,000	9,646,821,000,000	8,638,477,000,000	9,646,821,000,000	9,130,605
Impaired loans, related allowance	1,274,380,000,000	1,476,632,000,000	1,274,380,000,000	1,476,632,000,000	1,490,169
Impaired loans with an allowance, average recorded investment	8,700,575,000,000	6,184,255,000,000	8,975,029,000,000	4,326,187,000,000	5,546,690
Impaired loans with an allowance, interest income recognized	54,695,000,000	61,306,000,000	160,475,000,000	182,967,000,000	247,277
Total:
Impaired loans, recorded investment	10,843,306,000,000		10,843,306,000,000		9,130,605
Impaired loans, unpaid principal balance	11,854,307,000,000		11,854,307,000,000		9,130,605
Impaired loans, related allowance	1,274,380,000,000	1,476,632,000,000	1,274,380,000,000	1,476,632,000,000	1,490,169
Impaired loans, average recorded investment	11,132,188,000,000		10,468,945,000,000		6,578,805
Impaired loans, interest income recognized	89,983,000,000		265,997,000,000		247,277
Commercial Portfolio Segment [Member]
Commercial
Impaired loans with no related allowance, recorded investment	4,157,154,000,000	1,241,011,000,000	4,157,154,000,000	1,241,011,000,000	263,770
Impaired loans with no related allowance, unpaid principal balance	5,046,075,000,000	1,397,468,000,000	5,046,075,000,000	1,397,468,000,000	420,227
Impaired loans with no related allowance, average recorded investment	3,667,327,000,000	5,346,098,000,000	2,394,293,000,000	2,649,376,000,000	2,255,522
Impaired loans with no related allowance, interest income recognized	48,393,000,000	6,176,000,000	136,532,000,000		39,040
Commercial
Impaired loans with an allowance, recorded investment	7,960,930,000,000	10,121,957,000,000	7,960,930,000,000	10,121,957,000,000	9,662,866
Impaired loans with an allowance, unpaid principal balance	8,669,600,000,000	10,121,957,000,000	8,669,600,000,000	10,121,957,000,000	9,662,866
Impaired loans, related allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Impaired loans with an allowance, average recorded investment	8,795,347,000,000	6,750,728,000,000	9,220,887,000,000	5,234,038,000,000	6,355,889
Impaired loans with an allowance, interest income recognized	54,695,000,000	65,221,000,000	160,475,000,000	211,537,000,000	257,005
Total:
Impaired loans, recorded investment		11,362,968,000,000		11,362,968,000,000
Impaired loans, unpaid principal balance		11,519,425,000,000		11,519,425,000,000
Impaired loans, related allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Impaired loans, average recorded investment		12,096,826,000,000		7,883,414,000,000
Impaired loans, interest income recognized		71,397,000,000		248,957,000,000
Residential Portfolio Segment [Member]
Commercial
Impaired loans with no related allowance, recorded investment	1,394,657,000,000	164,542,000,000	1,394,657,000,000	164,542,000,000	162,012
Impaired loans with no related allowance, unpaid principal balance	1,409,672,000,000	164,542,000,000	1,409,672,000,000	164,542,000,000	162,012
Impaired loans with no related allowance, average recorded investment	1,468,125,000,000	164,542,000,000	1,298,082,000,000	102,706,000,000	117,746
Impaired loans with no related allowance, interest income recognized	6,673,000,000		20,942,000,000
Commercial
Impaired loans with an allowance, average recorded investment				58,928,000,000	44,196
Total:
Impaired loans, recorded investment	1,394,657,000,000	164,542,000,000	1,394,657,000,000	164,542,000,000	162,012
Impaired loans, unpaid principal balance	1,409,672,000,000	164,542,000,000	1,409,672,000,000	164,542,000,000	162,012
Impaired loans, average recorded investment	1,468,125,000,000	164,542,000,000	1,298,082,000,000	161,634,000,000	161,942
Impaired loans, interest income recognized	6,673,000,000		20,942,000,000
Loans to Individuals [Member]
Commercial
Impaired loans with no related allowance, recorded investment					92,103
Impaired loans with no related allowance, unpaid principal balance					92,103
Impaired loans with no related allowance, average recorded investment	77,329,000,000		135,612,000,000		34,292
Impaired loans with no related allowance, interest income recognized	8,164,000,000		15,433,000,000
Commercial
Impaired loans with an allowance, average recorded investment				5,650,000,000	4,238
Consumer Other Financing Receivable [Member]
Commercial
Impaired loans with no related allowance, average recorded investment				22,540,000,000
Consumer Portfolio Segment [Member]
Commercial
Impaired loans with no related allowance, recorded investment					92,103
Impaired loans with no related allowance, unpaid principal balance					92,103
Impaired loans with no related allowance, average recorded investment	77,329,000,000		135,612,000,000	22,540,000,000	34,292
Impaired loans with no related allowance, interest income recognized	8,164,000,000		15,433,000,000
Commercial
Impaired loans with an allowance, average recorded investment				5,650,000,000	4,238
Total:
Impaired loans, recorded investment					92,103
Impaired loans, unpaid principal balance					92,103
Impaired loans, average recorded investment	77,239,000,000		135,612,000,000	28,190,000,000	38,530
Impaired loans, interest income recognized	$ 8,164,000,000		$ 15,433,000,000

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Note 4 - Investment Securities (Details) - Other than Temporary Impairment, Credit Losses Recognized in Earnings (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Abstract]
Balance at beginning of period	$ 364	$ 364	$ 364	$ 364	$ 364	$ 364
Balance at end of period	$ 364	$ 364	$ 364	$ 364	$ 364	$ 364

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Note 4 - Investment Securities (Details) - Available-for-sale Securities (USD $)	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	$ 104,191,229	$ 102,191,431
Available for sale, gross unrealized gains	1,511,599	1,560,546
Available for sale, gross unrealized losses	(1,743,362)	(4,553,170)
Available for sale, fair value	103,959,466	99,198,807
US Treasury and Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	11,431,027	22,386,761
Available for sale, gross unrealized gains		33,213
Available for sale, gross unrealized losses	(444,332)	(910,274)
Available for sale, fair value	10,986,695	21,509,700
Residential Collateralized Mortgage Obligations- GSE [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	3,684,424	3,547,404
Available for sale, gross unrealized gains	82,520	134,388
Available for sale, gross unrealized losses	(43,280)
Available for sale, fair value	3,723,664	3,681,792
Residential Collateralized Mortgage Obligations- Non GSE [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	2,564,282	2,782,843
Available for sale, gross unrealized gains	39,395	52,227
Available for sale, gross unrealized losses	(6,013)	(8,674)
Available for sale, fair value	2,597,664	2,826,396
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	28,136,260	31,532,051
Available for sale, gross unrealized gains	822,737	872,169
Available for sale, gross unrealized losses	(278,630)	(438,273)
Available for sale, fair value	28,680,367	31,965,947
US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	22,023,131	22,206,959
Available for sale, gross unrealized gains	244,381	149,959
Available for sale, gross unrealized losses	(649,000)	(2,710,874)
Available for sale, fair value	21,618,512	19,646,044
Trust Preferred Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	2,471,060	2,468,839
Available for sale, gross unrealized losses	(287,360)	(455,739)
Available for sale, fair value	2,183,700	2,013,100
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	32,294,145	16,228,474
Available for sale, gross unrealized gains	322,566	318,590
Available for sale, gross unrealized losses	(34,747)	(29,336)
Available for sale, fair value	32,581,964	16,517,728
Equity Securities, Restricted Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	1,561,900	1,013,100
Available for sale, fair value	1,561,900	1,013,100
Mutual Fund [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale, amortized cost	25,000	25,000
Available for sale, fair value	$ 25,000	$ 25,000

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Acquired Credit Impaired Loans (USD $)	9 Months Ended
	Sep. 30, 2014
Acquired Credit Impaired Loans [Abstract]
Acquisition of impaired loans	$ 240,917
Accretion of discount	(84,409)
Balance at end of period	$ 156,508

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Note 8 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) (Details) - Changes in the Components of AOCI (USD $)	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended									3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014		Sep. 30, 2013	Sep. 30, 2014 Accumulated Net Unrealized Investment Gain (Loss) [Member]	Sep. 30, 2013 Accumulated Net Unrealized Investment Gain (Loss) [Member]	Sep. 30, 2014 Accumulated Net Unrealized Investment Gain (Loss) [Member]		Sep. 30, 2013 Accumulated Net Unrealized Investment Gain (Loss) [Member]	Sep. 30, 2014 Accumulated Other-than-Temporary Impairment [Member]		Jun. 30, 2014 Accumulated Other-than-Temporary Impairment [Member]	Sep. 30, 2013 Accumulated Other-than-Temporary Impairment [Member]	Jun. 30, 2013 Accumulated Other-than-Temporary Impairment [Member]	Dec. 31, 2012 Accumulated Other-than-Temporary Impairment [Member]	Sep. 30, 2014 Accumulated Defined Benefit Plans Adjustment [Member]	Sep. 30, 2013 Accumulated Defined Benefit Plans Adjustment [Member]	Sep. 30, 2014 Accumulated Defined Benefit Plans Adjustment [Member]		Sep. 30, 2013 Accumulated Defined Benefit Plans Adjustment [Member]
Note 8 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) (Details) - Changes in the Components of AOCI [Line Items]
Accumulated other comprehensive income (loss)	$ (628,084)	$ (2,068,038)	$ (2,247,634)		$ 804,293	$ (408,136)	$ (1,677,012)	$ (1,932,526)		$ 1,235,204	$ (330,623)		$ (330,623)	$ (330,623)	$ (330,623)	$ (330,623)	$ 110,675	$ (60,403)	$ 15,515		$ (100,288)
Other comprehensive income (loss) before reclassifications	317,024	2,492	1,935,064		(2,869,839)	221,339	(35,468)	1,744,219		(2,947,683)							95,685	37,960	190,845		77,884
Amounts reclassified from accumulated other comprehensive income (loss)			1,510	[1]				1,510	[1]			[1]								[1]
Other comprehensive income (loss)	317,024	2,492	1,936,574		(2,869,839)	221,339	(35,468)	1,745,729		(2,947,683)							95,685	37,960	190,845		77,884
Accumulated other comprehensive income (loss)	$ (311,060)	$ (2,065,546)	$ (311,060)		$ (2,065,546)	$ (186,797)	$ (1,712,480)	$ (186,797)		$ (1,712,480)	$ (330,623)		$ (330,623)	$ (330,623)	$ (330,623)	$ (330,623)	$ 206,360	$ (22,443)	$ 206,360		$ (22,443)

[1] Amounts reclassified are included in Other Income on the Consolidated Statement of Income.

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Allowance for Loan Losses (USD $)	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Feb. 07, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2012
Allowance for loan losses:
Allowance for loan losses	$ 7,107,872	$ 7,418,379	$ 7,030,842		$ 7,038,571	$ 6,820,180	$ 6,268,940	$ 6,023,282	$ 7,151,212
Ending Balance
Allowance for loan losses, individually evaluated for impairment	1,276,254				1,783,861
Allowance for loan losses, collectively evaluated for impairment	5,831,618				5,254,710
Loans receivables:
Loans	620,395,918			143,714,000	373,336,082
Loans, individually evaluated for impairment	11,466,656				10,180,751
Loans acquired with deteriorated credit quality	2,046,085			2,614,000
Loans, collectively evaluated for impairment	606,883,177				363,155,331
Construction [Member]
Allowance for loan losses:
Allowance for loan losses	1,099,053	950,014	1,265,430		1,205,267	1,208,023	1,212,578	1,210,289	1,990,292
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	1,099,053				1,205,267
Loans receivables:
Loans	88,547,583				51,002,172
Loans, individually evaluated for impairment	449,663				19,930
Loans, collectively evaluated for impairment	88,097,920				50,982,242
Commercial Business [Member]
Allowance for loan losses:
Allowance for loan losses	1,641,189	1,546,766	1,218,037		1,271,733	1,031,607	985,919	817,181	972,789
Ending Balance
Allowance for loan losses, individually evaluated for impairment	1,874				293,692
Allowance for loan losses, collectively evaluated for impairment	1,639,315				978,041
Loans receivables:
Loans	109,053,429				82,348,055
Loans, individually evaluated for impairment	492,940				776,101
Loans acquired with deteriorated credit quality	332,175
Loans, collectively evaluated for impairment	108,228,314				81,571,954
Commercial Real Estate Portfolio Segment [Member]
Allowance for loan losses:
Allowance for loan losses	2,974,785	3,607,083	3,135,727		3,021,766	3,064,248	2,451,856	2,130,197	2,262,221
Ending Balance
Allowance for loan losses, individually evaluated for impairment	1,274,380				1,490,169
Allowance for loan losses, collectively evaluated for impairment	1,700,405				1,531,597
Loans receivables:
Loans	192,367,844				98,389,730
Loans, individually evaluated for impairment	9,129,396				9,130,605
Loans acquired with deteriorated credit quality	1,713,910
Loans, collectively evaluated for impairment	181,524,538				89,259,125
Mortgage Warehouse Lines [Member]
Allowance for loan losses:
Allowance for loan losses	786,669	909,559	521,675		584,757	672,671	928,699	990,738	1,420,638
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	786,669				584,757
Loans receivables:
Loans	157,333,717				116,951,357
Loans, collectively evaluated for impairment	157,333,717				116,951,357
Residential Portfolio Segment [Member]
Allowance for loan losses:
Allowance for loan losses	202,146	172,853	182,005		164,673	141,826	92,733	112,365	112,103
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	202,146				164,673
Loans receivables:
Loans	48,732,051				13,764,178
Loans, individually evaluated for impairment	1,394,657				162,012
Loans, collectively evaluated for impairment	47,337,394				13,602,166
Consumer Portfolio Segment [Member]
Allowance for loan losses:
Allowance for loan losses	91,417	90,732	92,387		108,849	110,068	99,890	102,334	102,583
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	91,417				108,849
Loans receivables:
Loans	23,363,042				9,766,114
Loans, individually evaluated for impairment					92,103
Loans, collectively evaluated for impairment	23,363,042				9,674,011
Consumer Other Financing Receivable [Member]
Allowance for loan losses:
Allowance for loan losses	1,583	1,665	1,623		2,183	2,051	2,104	2,059	2,271
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	1,583				2,183
Loans receivables:
Loans	197,704				170,526
Loans, collectively evaluated for impairment	197,704				170,526
Unallocated Financing Receivables [Member]
Allowance for loan losses:
Allowance for loan losses	311,030	139,707	613,958		679,343	589,686	495,161	658,119	288,315
Ending Balance
Allowance for loan losses, collectively evaluated for impairment	311,030				679,343
Loan Cost [Member]
Loans receivables:
Loans	800,548				943,950
Loans, collectively evaluated for impairment	$ 800,548				$ 943,950

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Note 1 - Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

(1)  Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements include 1st Constitution Bancorp (the “Company”), its wholly-owned subsidiary, 1st Constitution Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, 1st Constitution Investment Company of New Jersey, Inc., FCB Assets Holdings, Inc., 1st Constitution Title Agency, LLC, 204 South Newman Street Corp. and 249 New York Avenue, LLC.  1st Constitution Capital Trust II, a subsidiary of the Company, is not included in the Company’s consolidated financial statements, as it is a variable interest entity and the Company is not the primary beneficiary.  All significant intercompany accounts and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform to current year presentation.  The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Article 8 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2013, filed with the SEC on March 31, 2014.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2014 for items that should potentially be recognized or disclosed in these financial statements.  The evaluation was conducted through the date these financial statements were issued.

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Note 10 - Fair Value Disclosures (Details) (USD $)	3 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Sep. 30, 2013	Mar. 31, 2013	Dec. 31, 2013
Note 10 - Fair Value Disclosures (Details) [Line Items]
Impaired Financing Receivable, Recorded Investment	$ 13,512,741,000,000			$ 11,527,510,000,000		$ 10,180,751
Impaired Financing Receivable, Related Allowance	1,276,254,000,000			1,711,659,000,000		1,783,861
Financing Receivable, Allowance for Credit Losses, Write-downs	1,008,221	3,713,789	510,952	2,068	1,136,825
Loan Reserve Charged Off [Member] | Fair Value, Inputs, Level 3 [Member]
Note 10 - Fair Value Disclosures (Details) [Line Items]
Impaired Financing Receivable, Recorded Investment	6,093,000
Fair Value, Inputs, Level 3 [Member]
Note 10 - Fair Value Disclosures (Details) [Line Items]
Number of Impaired Loans	10					17
Impaired Financing Receivable, Recorded Investment	7,960,930					9,662,862
Impaired Financing Receivable, Related Allowance	1,276,254					1,783,861
Financing Receivable, Allowance for Credit Losses, Write-downs	$ 928,000

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Feb. 07, 2014
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) [Line Items]
Financing Receivable, Acquired with Deteriorated Credit Quality (in Dollars)	$ 2,046,085		$ 2,046,085		$ 2,614,000
Financing Receivable, Modifications, Number of Contracts			9
Financing Receivable, Modifications, Recorded Investment (in Dollars)	4,288,699		4,288,699
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	0	0	0
Financing Receivable, Allowance for Credit Losses, Acquired with Deteriorated Credit Quality (in Dollars)	0		0
90 Days or Greater Past Due [Member] | Not Classified As Nonperforming [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) [Line Items]
Financing Receivable, Acquired with Deteriorated Credit Quality (in Dollars)	699,287		699,287
Mortgage Warehouse Lines [Member] | Minimum [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) [Line Items]
Line of Credit, Required Deposit Balance, Percent	10.00%		10.00%
Mortgage Warehouse Lines [Member] | Maximum [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) [Line Items]
Line of Credit, Required Deposit Balance, Percent	15.00%		15.00%
Not Classified As Nonperforming [Member]
Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) [Line Items]
Financing Receivable, Acquired with Deteriorated Credit Quality (in Dollars)	$ 1,246,640		$ 1,246,640

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Assets Acquired and Liabilities Assumed (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Consideration paid:
Company stock issued	$ 11,161
Cash payment	14,770
Total consideration paid	25,931
Recognized amounts of identifiable assets and liabilities assumed at fair value:
Cash and cash equivalents	36,045
Short-term investments	100
Securities available for sale	30,024
Loans	143,714
Premises and equipment, net	2,552
Identifiable intangible assets	1,189
Bank-owned life insurance	4,471
Accrued interest receivable and other assets	1,483
Deposits	(189,490)
Borrowings	(11,030)
Other liabilities	(825)
Total identifiable assets	18,233
Goodwill	$ 7,698

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) (USD $)	3 Months Ended		9 Months Ended				9 Months Ended		6 Months Ended	8 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Feb. 07, 2014	Feb. 07, 2014 No Evidence of Creidt Quality Deterioration [Member] Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2014 Acquisition-related Costs [Member] Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2014 Income Tax Expense (Benefit) [Member] Rumson-Fair Haven Bank and Trust Company [Member]	Jun. 30, 2014 Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2014 Rumson-Fair Haven Bank and Trust Company [Member]	Sep. 30, 2014 Rumson-Fair Haven Bank and Trust Company [Member]	Feb. 07, 2014 Rumson-Fair Haven Bank and Trust Company [Member]
Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares Per Exchanged Share (in Shares)												0.7772
Business Acquisition, Share Price (in Dollars per share)												$ 7.50
Business Acquisition, Percent of Cash Consideration												60.00%
Business Acquisition, Percent of Equity Consideration												40.00%
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares)											1,019,223
Business Combination, Acquired Receivables, Gross Contractual Amount						$ 141,100,000
Financing Receivable, Acquired with Deteriorated Credit Quality	2,046,085		2,046,085		2,614,000							2,600,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles												1,200,000
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life									10 years
Business Combination, Acquisition Related Costs	0	0	1,532,153	0			1,800,000				1,500,000
Income Tax Expense (Benefit)	$ 917,483	$ 604,851	$ 235,459	$ 1,741,974				$ 624,000		$ 1,070,000

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Note 6 - Share-Based Compensation (Details) - Fair Value Inputs, Assets, Quantitative Information (USD $)	1 Months Ended
	Apr. 30, 2014		Jan. 31, 2014
Fair Value Inputs, Assets, Quantitative Information [Abstract]
Fair value of options granted (in Dollars per share)	$ 4.32		$ 4.75
Risk-free rate of return	1.70%		1.65%
Expected option life in years	7 years		7 years
Expected volatility	38.01%		38.01%
Expected dividends (1)		[1]		[1]

[1] To date, the Company has not paid cash dividends on its common stock.

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Aging of Loan Portfolio (USD $)	Sep. 30, 2014	Feb. 07, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 30-59 days past due	$ 3,530,099		$ 700,748
Loans, 60-89 days past due	14,051		1,025,764
Loans, greater than 90 days past due	8,224,754		5,703,992
Loans, past due	11,768,904		7,430,504
Loans, current	608,627,014		365,905,578
Loans	620,395,918	143,714,000	373,336,082
Loans >90 Days Accruing	320,315
Loans, nonaccrual	7,538,767		6,321,956
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, current	88,547,583		51,002,172
Loans	88,547,583		51,002,172
Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 30-59 days past due	959,386		385,133
Loans, 60-89 days past due	14,051		58,665
Loans, greater than 90 days past due	390,396		453,325
Loans, past due	1,363,833		897,123
Loans, current	107,689,596		81,450,932
Loans	109,053,429		82,348,055
Loans, nonaccrual	356,577		511,990
Commercial Real Estate Other Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 30-59 days past due	2,290,804
Loans, greater than 90 days past due	6,119,386		5,217,173
Loans, past due	8,410,190		5,217,173
Loans, current	183,957,654		93,172,557
Loans	192,367,844		98,389,730
Loans, nonaccrual	5,787,533		5,555,851
Mortgage Warehouse Lines [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, current	157,333,717		116,951,357
Loans	157,333,717		116,951,357
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 30-59 days past due			315,615
Loans, 60-89 days past due			967,099
Loans, greater than 90 days past due	1,714,972		33,494
Loans, past due	1,714,972		1,316,208
Loans, current	47,017,079		12,447,970
Loans	48,732,051		13,764,178
Loans >90 Days Accruing	320,315
Loans, nonaccrual	1,394,657		162,012
Loans to Individuals [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, 30-59 days past due	279,909
Loans, past due	279,909
Loans, current	23,083,133		9,766,114
Loans	23,363,042		9,766,114
Loans, nonaccrual			92,103
Consumer Other Financing Receivable [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, current	197,704		170,526
Loans	197,704		170,526
Deferred Loan Cost [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans, current	800,548		943,950
Loans	$ 800,548		$ 943,950

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Loans Acquired at Fair Value (USD $)	Sep. 30, 2014	Feb. 07, 2014	Dec. 31, 2013
Commercial
Loans acquired with credit quality deterioration	$ 2,046,085	$ 2,614,000
Loans	620,395,918	143,714,000	373,336,082
Commercial Construction [Member] | No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		11,920,000
Commercial Construction [Member]
Commercial
Loans		11,920,000
Commercial Real Estate [Member] | No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		62,398,000
Commercial Real Estate [Member]
Commercial
Loans acquired with credit quality deterioration		1,832,000
Loans		64,230,000
Commercial Business [Member] | No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		18,086,000
Commercial Business [Member]
Commercial
Loans acquired with credit quality deterioration		368,000
Loans		18,454,000
Residential Mortgage [Member] | No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		32,743,000
Residential Mortgage [Member]
Commercial
Loans acquired with credit quality deterioration		180,000
Loans		32,923,000
Consumer Loan [Member] | No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		15,953,000
Consumer Loan [Member]
Commercial
Loans acquired with credit quality deterioration		234,000
Loans		16,187,000
No Evidence of Creidt Quality Deterioration [Member]
Commercial
Loans acquired with no credit quality deterioration		$ 141,100,000

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Loans Acquired with Evidence of Credit Quality Deterioration (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Loans Acquired with Evidence of Credit Quality Deterioration [Abstract]
Contractually required principal and interest at acquisition	$ 4,451
Contractual cash flows not expected to be collected (non-accretable difference)	1,543
Expected cash flows at acquisition	2,908
Interest component of expected cash flows (accretable difference)	294
Fair value of acquired loans	$ 2,614

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Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
OPERATING ACTIVITIES:
Net income	$ 2,339,873	$ 4,405,588
Provision for loan losses	5,249,994	776,664
Provision for loss on other real estate owned	111,545	662,918
Depreciation and amortization	1,338,569	805,823
Net amortization of premiums and discounts on securities	852,302	868,639
Loss on sales of securities held for sale	2,516
Gains on sales of other real estate owned	(21,012)	(292,170)
Gains on sales of loans held for sale	(1,562,790)	(1,852,821)
Originations of loans held for sale	(84,044,668)	(114,126,927)
Proceeds from sales of loans held for sale	87,071,975	137,972,505
Income on Bank – owned life insurance	(422,022)	(348,206)
Share-based compensation expense	443,673	380,471
Decrease in accrued interest receivable	340,949	728,564
(Increase) decrease in other assets	(307,003)	925,461
Decrease in accrued interest payable	(227,735)	(269,852)
Increase (decrease) in accrued expenses and other liabilities	(388,648)	517,255
Net cash provided by operating activities	10,777,518	31,153,912
Purchases of securities -
Available for sale		(16,947,137)
Held to maturity	(14,229,098)	(62,560,993)
Proceeds from maturities and prepayments of securities -
Available for sale	21,503,769	20,423,187
Held to maturity	18,572,106	27,488,848
Proceeds from sales of securities available for sale	5,957,188
Net (increase) decrease in loans	(108,783,950)	155,845,716
Capital expenditures	(262,407)	(147,040)
Net cash received in the acquisition	21,375,071
Additional investment in other real estate owned		(11,500)
Proceeds from sales of other real estate owned	230,949	7,183,854
Net cash (used in) provided by investing activities	(55,636,372)	131,274,935
FINANCING ACTIVITIES:
Issuance of vested shares	741,806	603,342
Purchase of Treasury Stock	(137,988)	(116,451)
Net decrease in demand, savings and time deposits	(4,471,836)	(20,745,521)
Net increase (decrease) in borrowings	(180,076)	(32,400,000)
Net cash used in financing activities	(4,048,094)	(52,658,630)
(Decrease) increase in cash and cash equivalents	(48,906,948)	109,770,217
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	69,278,771	14,044,921
CASH AND CASH EQUIVALENTS AT END OF YEAR	20,371,823	123,815,138
Cash paid during the period for -
Interest	3,551,436	3,512,789
Income taxes	656,223	1,721,000
Non-cash investing activities
Real estate acquired in full satisfaction of loans in foreclosure		2,311,225
Noncash assets acquired:
	191,130,804
Liabilities assumed:
	201,345,175
Common stock issued as consideration	11,160,700
Investment Securities Available For Sale [Member]
Noncash assets acquired:
Investments	30,024,458
Loans [Member]
Noncash assets acquired:
Investments	143,714,377
Accrued Interest Receivable [Member]
Noncash assets acquired:
Other assets	596,612
Premises and Equipment [Member]
Noncash assets acquired:
Premises and equipment, net	2,551,939
Noncash Acquisition of Goodwill [Member]
Noncash assets acquired:
Intangible assets	7,698,427
Core Deposit Intangible [Member]
Noncash assets acquired:
Intangible assets	1,188,836
Bankowned Life Insurance [Member]
Noncash assets acquired:
Other assets	4,470,579
Other Assets [Member]
Noncash assets acquired:
Other assets	885,576
Deposits [Member]
Liabilities assumed:
Other liabilities	189,490,005
Advance from FHLB [Member]
Liabilities assumed:
Other liabilities	11,030,000
Other Liabilities [Member]
Liabilities assumed:
Other liabilities	$ 825,170

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Core Deposit Future Amortization Expense (Core Deposits [Member], Rumson-Fair Haven Bank and Trust Company [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Core Deposits [Member] | Rumson-Fair Haven Bank and Trust Company [Member]
Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Details) - Core Deposit Future Amortization Expense [Line Items]
2014	$ 216
2015	195
2016	173
2017	151
2018	130
Thereafter	324
	$ 1,189

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Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position (USD $)	Sep. 30, 2014	Dec. 31, 2013
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	92	150
Securities in a continuous unrealized loss position, less than 12 months, fair value	$ 7,125,870	$ 76,743,619
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(53,170)	(4,049,571)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	51,343,091	13,249,260
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(1,918,517)	(2,722,323)
Securities in a continuous unrealized loss position, fair value	58,468,961	89,992,879
Securities in a continuous unrealized loss position, unrealized losses	(1,971,687)	(6,771,894)
US Treasury and Government [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	2	3
Securities in a continuous unrealized loss position, less than 12 months, fair value	1,535,895	11,507,350
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(4,490)	(910,274)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	9,450,800
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(439,842)
Securities in a continuous unrealized loss position, fair value	10,986,695	11,507,350
Securities in a continuous unrealized loss position, unrealized losses	(444,332)	(910,274)
Residential Collateralized Mortgage Obligations- GSE [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	1
Securities in a continuous unrealized loss position, less than 12 months, fair value	1,074,027
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(43,280)
Securities in a continuous unrealized loss position, fair value	1,074,027
Securities in a continuous unrealized loss position, unrealized losses	(43,280)
Residential Collateralized Mortgage Obligations- Non GSE [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	2	8
Securities in a continuous unrealized loss position, less than 12 months, fair value	989,807	5,328,485
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(892)	(28,231)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	93,295	1,094,754
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(5,121)	(7,969)
Securities in a continuous unrealized loss position, fair value	1,083,102	6,423,239
Securities in a continuous unrealized loss position, unrealized losses	(6,013)	(36,200)
Residential Mortgage Backed Securities [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	18	38
Securities in a continuous unrealized loss position, less than 12 months, fair value	1,711,545	40,504,327
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(1,679)	(825,307)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	17,021,564
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(399,536)
Securities in a continuous unrealized loss position, fair value	18,733,109	40,504,327
Securities in a continuous unrealized loss position, unrealized losses	(401,215)	(825,307)
US States and Political Subdivisions Debt Securities [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	63	95
Securities in a continuous unrealized loss position, less than 12 months, fair value	394,002	19,403,457
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(1,596)	(2,285,759)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	21,564,852	8,936,441
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(753,144)	(1,721,472)
Securities in a continuous unrealized loss position, fair value	21,958,854	28,339,898
Securities in a continuous unrealized loss position, unrealized losses	(754,740)	(4,007,231)
Trust Preferred Debt Securities [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	4	4
Securities in a continuous unrealized loss position, 12 months or longer, fair value	2,183,700	2,013,100
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(287,360)	(455,739)
Securities in a continuous unrealized loss position, fair value	2,183,700	2,013,100
Securities in a continuous unrealized loss position, unrealized losses	(287,360)	(455,739)
Corporate Debt Securities [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number	2	1
Securities in a continuous unrealized loss position, less than 12 months, fair value	1,420,594
Securities in a continuous unrealized loss position, less than 12 months, unrealized losses	(1,233)
Securities in a continuous unrealized loss position, 12 months or longer, fair value	1,028,880	1,056,110
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses	(33,514)	(29,336)
Securities in a continuous unrealized loss position, fair value	2,449,474	1,056,110
Securities in a continuous unrealized loss position, unrealized losses	(34,747)	(29,336)
Trust Preferred Debt Securities Pooled [Member]
Note 4 - Investment Securities (Details) - Securities in a Continuous Unrealized Loss Position [Line Items]
Securities in a continuous unrealized loss position, number		1
Securities in a continuous unrealized loss position, 12 months or longer, fair value		148,855
Securities in a continuous unrealized loss position, 12 months or longer, unrealized losses		(507,807)
Securities in a continuous unrealized loss position, fair value		148,855
Securities in a continuous unrealized loss position, unrealized losses		$ (507,807)

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Additional Information for Acquired Credit Impaired Loans (USD $)	Sep. 30, 2014	Feb. 07, 2014
Additional Information for Acquired Credit Impaired Loans [Abstract]
Outstanding balance	$ 2,746,260	$ 3,409,340
Carrying amount	$ 2,046,085	$ 2,613,826

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Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
ASSETS
CASH AND DUE FROM BANKS	$ 20,371,823	$ 69,267,345
FEDERAL FUNDS SOLD / SHORT-TERM INVESTMENTS		11,426
Total cash and cash equivalents	20,371,823	69,278,771
INVESTMENT SECURITIES:
Available for sale, at fair value	103,959,466	99,198,807
Held to maturity (fair value of $152,466,765 and $153,629,773 at Mar September 30, 2014 and December 31, 2013, respectively)	148,182,693	152,816,815
Total investment securities	252,142,159	252,015,622
LOANS HELD FOR SALE	9,459,172	10,923,689
LOANS	620,395,918	373,336,082
Less- Allowance for loan losses	(7,107,872)	(7,038,571)
Net loans	613,288,046	366,297,511
PREMISES AND EQUIPMENT, net	12,065,252	10,043,505
ACCRUED INTEREST RECEIVABLE	2,798,265	2,542,602
BANK-OWNED LIFE INSURANCE	21,074,473	16,183,574
OTHER REAL ESTATE OWNED	1,748,455	2,136,341
GOODWILL AND INTANGIBLE ASSETS	13,587,701	4,889,575
OTHER ASSETS	7,769,204	8,013,897
Total assets	954,304,550	742,325,087
Deposits
Non-interest bearing	172,185,545	121,891,752
Interest bearing	651,379,201	516,660,278
Total deposits	823,564,746	638,552,030
BORROWINGS	20,798,473	10,000,000
REDEEMABLE SUBORDINATED DEBENTURES	18,557,000	18,557,000
ACCRUED INTEREST PAYABLE	802,851	883,212
ACCRUED EXPENSES AND OTHER LIABILITIES	6,105,078	5,974,531
Total liabilities	869,828,148	673,966,773
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, no par value; 5,000,000 shares authorized, none issued
Common Stock, no par value; 30,000,000 shares authorized; 7,165,084, and 6,081,961 shares issued and 7,134,774 and 6,065,123 shares outstanding at September 30,2014 and December 31, 2013, respectively	61,383,079	49,403,450
Retained earnings	23,714,254	21,374,381
Treasury Stock, 30,310 shares and 16,838 shares at September 30, 2014 and December 31, 2013, respectively	(309,871)	(171,883)
Accumulated other comprehensive (loss)	(311,060)	(2,247,634)
Total shareholders’ equity	84,476,402	68,358,314
Total liabilities and shareholders’ equity	$ 954,304,550	$ 742,325,087

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Commercial Loans by Credit Quality Indicators (USD $)	Sep. 30, 2014	Feb. 07, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 620,395,918	$ 143,714,000	$ 373,336,082
Construction [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	88,353,183		47,539,033
Construction [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	194,400
Construction [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans			3,463,139
Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	88,547,583		51,002,172
Commercial Business [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	100,658,477		79,832,704
Commercial Business [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	7,645,736		1,406,143
Commercial Business [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	715,397		792,057
Commercial Business [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	33,819		258,486
Commercial Business [Member] | Unlikely to be Collected Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans			58,665
Commercial Business [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	109,053,429		82,348,055
Commercial Real Estate Other Receivable [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	167,521,583		68,620,450
Commercial Real Estate Other Receivable [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,177,468		19,396,574
Commercial Real Estate Other Receivable [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	10,668,793		10,372,706
Commercial Real Estate Other Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	192,367,844		98,389,730
Mortgage Warehouse Lines [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	157,333,717		116,951,357
Mortgage Warehouse Lines [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	157,333,717		116,951,357
Residential Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	47,017,079		12,635,067
Residential Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	127,977		1,129,111
Residential Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,586,995
Residential Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 48,732,051		$ 13,764,178

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $)	Common Stock [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balance at Dec. 31, 2012	$ 48,716,032	$ 15,594,293	$ (61,086)	$ 804,293	$ 65,053,532
Exercise of stock options and issuance of shares under employee benefit program	603,342				603,342
Share-based compensation	75,948				75,948
Treasury stock purchased			(116,451)		(116,451)
Net income		4,405,588			4,405,588
Other comprehensive income (loss)				(2,869,839)	(2,869,839)
Balance at Sep. 30, 2013	49,395,322	19,999,881	(177,537)	(2,065,546)	67,152,120
Balance at Dec. 31, 2013	49,403,450	21,374,381	(171,883)	(2,247,634)	68,358,314
Exercise of stock options and issuance of shares under employee benefit program	741,806				741,806
Share-based compensation	77,123				77,123
Treasury stock purchased			(137,988)		(137,988)
Acquisition of Rumson-Fair Haven Bank and Trust Company (1,019,223 shares)	11,160,700				11,160,700
Net income		2,339,873			2,339,873
Other comprehensive income (loss)				1,936,574	1,936,574
Balance at Sep. 30, 2014	$ 61,383,079	$ 23,714,254	$ (309,871)	$ (311,060)	$ 84,476,402

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Note 7 - Benefit Plans (Details) - Net Periodic Benefit Costs (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net Periodic Benefit Costs [Abstract]
Service cost	$ 102,337	$ 30,539	$ 159,504	$ 214,257
Interest cost	77,583	22,229	120,922	155,951
Actuarial (gain) loss recognized	(3,718)	(29,893)	(5,795)	(209,721)
Prior service cost recognized		942		6,611
	$ 176,202	$ 23,817	$ 274,631	$ 167,098

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Note 3 - Net Income Per Common Share (Details) - Earnings Per Share, Basic and Diluted (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic earnings per common share:
Net income (in Dollars)	$ 2,138,079	$ 1,523,238	$ 2,339,873	$ 4,405,588
Weighted-average shares, basic	7,119,113	5,991,480	7,013,776	5,960,294
Basic earnings per share (in Dollars per share)	$ 0.30	$ 0.25	$ 0.33	$ 0.74
Effect of dilutive securities:
Stock options and warrants	122,436	155,182	127,792	128,539
Diluted EPS:
Net income plus assumed conversions (in Dollars)	$ 2,138,079	$ 1,523,238	$ 2,339,873	$ 4,405,588
Weighted-average shares, diluted	7,241,549	6,146,662	7,141,568	6,088,833
Dilutued earnings per share (in Dollars per share)	$ 0.30	$ 0.25	$ 0.33	$ 0.72

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Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014		Dec. 31, 2013
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Impaired loans (in Dollars)	$ 7,265,700		$ 7,879,005
Other real estate owned (in Dollars)	1,748,455		209,937
Impaired Loans [Member] | Minimum [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments	10.00%		5.00%
Impaired Loans [Member] | Maximum [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments	40.00%		15.00%
Impaired Loans [Member] | Weighted Average [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments	(19.10%)		(8.80%)
Impaired Loans [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Impaired loans (in Dollars)	7,265,700		7,879,005
Valuation techniques	Appraisal of collateral (1)	[1]	Appraisal of collateral (1)	[1]
Unobservable Input	Appraisal adjustments (2)	[2]	Appraisal adjustments (2)	[2]
Other Real Estate Owned [Member] | Minimum [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments			5.00%
Other Real Estate Owned [Member] | Maximum [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments			45.00%
Other Real Estate Owned [Member] | Weighted Average [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Appraisal adjustments			(21.70%)
Other Real Estate Owned [Member]
Note 10 - Fair Value Disclosures (Details) - Fair Value Qualitative Information [Line Items]
Valuation techniques	Appraisal of collateral (1)	[1]	Appraisal of collateral (1)	[1]
Unobservable Input	Appraisal adjustments (2)	[2]	Appraisal adjustments (2)	[2]
Appraisal adjustments	6.00%
Other real estate owned (in Dollars)	$ 1,748,455		$ 209,937

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

[2] Includes qualitative adjustments by management and estimated liquidation expenses.

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Note 4 - Investment Securities (Tables)

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

September 30, 2014	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	11,431,027	$	-	$	(444,332	)	$	10,986,695
Residential collateralized mortgage obligations – GSE		3,684,424		82,520		(43,280	)		3,723,664
Residential collateralized mortgage obligations – non GSE		2,564,282		39,395		(6,013	)		2,597,664
Residential mortgage backed securities – GSE		28,136,260		822,737		(278,630	)		28,680,367
Obligations of State and Political subdivisions		22,023,131		244,381		(649,000	)		21,618,512
Trust preferred debt securities – single issuer		2,471,060		-		(287,360	)		2,183,700
Corporate debt securities		32,294,145		322,566		(34,747	)		32,581,964
Restricted stock		1,561,900		-		-			1,561,900
Mutual fund		25,000		-		-			25,000
	$	104,191,229	$	1,511,599	$	(1,743,362	)	$	103,959,466

December 31, 2013	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	22,386,761	$	33,213	$	(910,274	)	$	21,509,700
Residential collateralized mortgage obligations – GSE		3,547,404		134,388		-			3,681,792
Residential collateralized mortgage obligations – non GSE		2,782,843		52,227		(8,674	)		2,826,396
Residential mortgage backed securities – GSE		31,532,051		872,169		(438,273	)		31,965,947
Obligations of State and Political subdivisions		22,206,959		149,959		(2,710,874	)		19,646,044
Trust preferred debt securities – single issuer		2,468,839		-		(455,739	)		2,013,100
Corporate debt securities		16,228,474		318,590		(29,336	)		16,517,728
Restricted stock		1,013,100		-		-			1,013,100
Mutual fund		25,000		-		-			25,000
	$	102,191,431	$	1,560,546	$	(4,553,170	)	$	99,198,807

Held-to-maturity Securities [Table Text Block]

September 30, 2014	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	-	$	-		$	-	$	-	$	-		$	-
Residential collateralized mortgage obligations – GSE		12,300,297		-			12,300,297		429,031		-			12,729,328
Residential collateralized mortgage obligations – non-GSE		9,099,412		-			9,099,412		292,039					9,391,451
Residential mortgage backed securities – GSE		58,526,504		-			58,526,504		1,085,369		(122,585	)		59,489,288
Obligations of State and Political subdivisions		68,100,762		-			68,100,762		2,250,385		(105,740	)		70,245,407
Trust preferred debt securities-pooled		656,662		(500,944	)		155,718		455,573		-			611,291
Corporate debt securities		-		-			-		-		-			-
	$	148,683,637	$	(500,944	)	$	148,182,693	$	4,512,397	$	(228,325	)	$	152,466,765

December 31, 2013	Amortized Cost		Other-Than-Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
Obligations of U.S. Government sponsored corporations(“GSE”) and agencies	$	1,524,860	$	-		$	1,524,860	$	10,310	$	-		$	1,535,170
Residential collateralized mortgage obligations – GSE		14,803,739		-			14,803,739		379,815		-			15,183,554
Residential collateralized mortgage obligations – non-GSE		10,682,363		-			10,682,363		119,777		(27,526	)		10,774,614
Residential mortgage backed securities – GSE		65,240,620		-			65,240,620		611,062		(387,034	)		65,464,648
Obligations of State and Political subdivisions		59,400,916		-			59,400,916		1,399,938		(1,296,357	)		59,504,497
Trust preferred debt securities – pooled		656,662		(500,944	)		155,718		-		(6,863	)		148,855
Corporate debt securities		1,008,599		-			1,008,599		9,836		-			1,018,435
	$	153,317,759	$	(500,944	)	$	152,816,815	$	2,530,738	$	(1,717,780	)	$	153,629,773

Investments Classified by Contractual Maturity Date [Table Text Block]

	Amortized Cost		Fair Value
Available for sale-
Due in one year or less
Residential collateralized mortgage obligations - non GSE	$	263,345	$	264,102
Residential mortgage backed securities – GSE		250		250
Obligations of State and Political subdivisions		264,775		265,665
Corporate debt securities		10,224,296		10,198,171
Restricted stock		1,561,900		1,561,900
Mutual fund		25,000		25,000
	$	12,339,566	$	12,315,088
Due after one year through five years
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	1,540,385	$	1,535,895
Residential collateralized mortgage obligations – non-GSE		-		-
Residential mortgage backed securities – GSE		7,450,510		7,358,278
Obligations of State and Political subdivisions		681,967		714,360
Corporate debt securities		21,050,621		21,351,292
	$	30,723,483	$	30,959,825
Due after five years through ten years
U.S. Treasury securities and obligations of US Government sponsored corporations (“GSE”) and agencies	$	9,890,642	$	9,450,800
Residential collateralized mortgage obligations – GSE		102,768		109,333
Residential mortgage backed Securities – GSE		6,661,024		6,742,207
Obligations of State and Political Subdivisions		4,796,387		4,866,134
Corporate debt securities		1,019,227		1,032,500
	$	22,470,048	$	22,200,974
Due after ten years
Residential collateralized mortgage obligations – GSE	$	3,581,657	$	3,614,332
Residential collateralized mortgage obligations – non-GSE		2,300,936		2,333,561
Residential mortgage backed securities – GSE		14,024,476		14,579,634
Obligations of State and Political subdivisions		16,280,003		15,772,352
Corporate debt securities		0		0
Trust preferred debt securities		2,471,060		2,183,700
	$	38,658,132	$	38,483,579
Total	$	104,191,229	$	103,959,466

Held to maturity-
Due in one year or less
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	0	$	0
Obligations of State and Political subdivisions		18,205,158		18,211,282
Corporate debt securities		0		0
		18,205,158		18,211,282
Due after one year through five years
U.S. Treasury securities and obligations of US Government sponsored corporations (“GSE”) and agencies	$	-	$	-
Obligations of State and Political subdivisions		13,503,851		14,035,745
Corporate debt securities		-		-
	$	13,503,851	$	14,035,745
Due after five years through ten years
Residential collateralized mortgage obligations – GSE	$	-	$	-
Residential collateralized mortgage obligations – non-GSE		802,511		805,099
Residential mortgage backed securities – GSE		19,279,679		19,492,168
Obligations of State and Political subdivisions		18,544,514		19,475,290
	$	38,626,704	$	39,772,557
Due after ten years
Residential collateralized mortgage obligations – GSE	$	12,299,996	$	12,729,330
Residential collateralized mortgage obligations – non-GSE		8,297,202		8,586,350
Residential mortgage backed securities – GSE		39,246,826		39,997,121
Obligations of State and Political subdivisions		17,847,239		18,523,090
Trust preferred debt securities – pooled		656,661		611,290
	$	78,347,924	$	80,447,181
Total	$	148,683,637	$	152,466,765

Investment Securities Continuous Unrealized Loss Position Fair Value [Table Text Block]

September 30, 2014			Less than 12 months					12 months or longer					Total
	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations and agencies		2	$	1,535,895	$	(4,490	)	$	9,450,800	$	(439,842	)	$	10,986,695	$	(444,332	)
Residential collateralized mortgage obligations – GSE		1		1,074,027		(43,280	)		-		-			1,074,027		(43,280	)
Residential collateralized mortgage obligations – non-GSE		2		989,807		(892	)		93,295		(5,121	)		1,083,102		(6,013	)
Residential mortgage backed securities – GSE		18		1,711,545		(1,679	)		17,021,564		(399,536	)		18,733,109		(401,215	)
Obligations of State and Political Subdivisions		63		394,002		(1,596	)		21,564,852		(753,144	)		21,958,854		(754,740	)
Trust preferred debt securities – single issuer		4		-		-			2,183,700		(287,360	)		2,183,700		(287,360	)
Corporate Debt Securities		2		1,420,594		(1,233	)		1,028,880		(33,514	)		2,449,474		(34,747	)
Total temporarily impaired securities		92	$	7,125,870	$	(53,170	)	$	51,343,091	$	(1,918,517	)	$	58,468,961	$	(1,971,687	)

December 31, 2013			Less than 12 months					12 months or longer					Total
	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (GSE) and agencies		3	$	11,507,350	$	(910,274	)	$	-	$	-		$	11,507,350	$	(910,274	)
Residential collateralized mortgage Obligations – non-GSE		8		5,328,485		(28,231	)		1,094,754		(7,969	)		6,423,239		(36,200	)
Residential mortgage backed securities GSE		38		40,504,327		(825,307	)		-		-			40,504,327		(825,307	)
Obligations of State and Political Subdivisions		95		19,403,457		(2,285,759	)		8,936,441		(1,721,472	)		28,339,898		(4,007,231	)
Trust preferred debt securities – single issuer		4		-		-			2,013,100		(455,739	)		2,013,100		(455,739	)
Trust preferred debt securities – Pooled		1		-		-			148,855		(507,807	)		148,855		(507,807	)
Corporate debt securities		1		-		-			1,056,110		(29,336	)		1,056,110		(29,336	)
Total temporarily impaired securities		150	$	76,743,619	$	(4,049,571	)	$	13,249,260	$	(2,722,323	)	$	89,992,879	$	(6,771,894	)

Schedule of Unrealized Loss on Investments [Table Text Block]

																					Excess Subordination (2)
Security	Class	Book Value		Fair Value		Unrealized Gain (Loss)		Percent of Underlying Collateral Performing			Percent of Underlying Collateral In Deferral (1)			Percent of Underlying Collateral In Default (1)			Expected Deferrals and Defaults as a % of Remaining Performing Collateral			Moody's S&P / Ratings	Amount		% of Current Performing Collateral
PreTSL XXV	B-1	$	155,718	$	611,290	$	455,572		69.0	%		5.8	%		25.2	%		13.7	%	B1/ NR	$	136,000		26.0	%

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block]

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Balance at beginning of period	$	364	$	364	$	364	$	364
Change during the period		-		-		-		-
Balance at end of period	$	364	$	364	$	364	$	364

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Note 4 - Investment Securities (Details) (USD $)	12 Months Ended			9 Months Ended
	Dec. 31, 2009	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Texas Ratio Bucket One [Member] Minimum [Member]	Sep. 30, 2014 Texas Ratio Bucket Two [Member] Minimum [Member]	Sep. 30, 2014 Texas Ratio Bucket Two [Member] Maximum [Member]	Sep. 30, 2014 Texas Ratio Bucket Three [Member] Maximum [Member]	Sep. 30, 2014 Scenario, Actual [Member] Texas Ratio Below 75 [Member]	Sep. 30, 2014 Scenario, Forecast [Member] Texas Ratio Below 75 [Member]	Sep. 30, 2014 Texas Ratio Above 100 [Member]	Sep. 30, 2014 Texas Ratio Between 75 and 100 [Member]	Sep. 30, 2014 Texas Ratio Below 75 [Member]
Note 4 - Investment Securities (Details) [Line Items]
Federal Home Loan Bank Stock (in Dollars)		$ 1,496,900	$ 998,100
Atlantic Central Bankers Bank Stock (in Dollars)		15,000	65,000
Other than Temporary Impairment Losses, Investments (in Dollars)	864,727
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net (in Dollars)	363,783
Other than Temporary Impairment Losses, Investments, Portion in Other Comprehensive Loss, before Tax, Including Portion Attributable to Noncontrolling Interest (in Dollars)	$ 500,944
Texas Ratio				100	75	100	75
Default Rate										100.00%		0.00%
Deferral Rate										0.00%	100.00%	0.00%
Recovery Rate											15.00%
Recovery Period												2 years
Expected Deferrals And Defaults, Default Basis Points Rate								0.36%	0.75%

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Note 6 - Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

					Weighted
					Average
			Weighted		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
Stock Options	Shares		Exercise Price		Term (years)		Value
Outstanding at January 1, 2014		235,598	$	8.81
Granted		11,700		11.02
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at September 30, 2014		247,298	$	8.91		5.1	$	502,395
Exercisable at September 30, 2014		199,881	$	9.17		4.5	$	380,591

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	January 2014			April 2014
Fair value of options granted	$	4.75		$	4.32
Risk-free rate of return		1.65	%		1.70	%
Expected option life in years		7			7
Expected volatility		38.01	%		38.01	%
Expected dividends (1)		-			-

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

				Average
	Number of			Grant-Date
Non-vested shares	Shares			Fair Value
Non-vested at January 1, 2014		136,490		$	6.59
Granted		60,100			10.81
Vested		(55,410	)		8.77
Forfeited		-			-
Non-vested at September 30, 2014		141,180		$	7.53

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Common Stock [Member]
Exercise of stock options and issuance of shares under employee benefit program (shares)	63,900	23,233
Acquisition of Rumson-Fair Haven Bank and Trust Company	1,019,223
Treasury Stock [Member]
Treasury stock purchased (shares)	13,472	6,440

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Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Held to maturity, fair value (in Dollars)	$ 152,466,765	$ 153,629,773
Preferred stock, par value (in Dollars per share)	$ 0	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in Dollars per share)	$ 0	$ 0
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	7,165,084	6,081,961
Common Stock, shares outstanding	7,134,774	6,065,123
Treasury stock shares	30,310	16,838

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Note 9 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

(9) Recent Accounting Pronouncements

ASU 2014-04 (Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure)

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreements. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this update using either a modified retrospective transition method or a prospective transition method. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-9 Revenue from Contracts with Customers (Topic 606)

In May 2014, the FASB issued ASU No. 2014-9, “Revenue from Contracts with Customers (Topic 606)”. This upgrade clarifies the principles for recognizing revenue from contracts with customers. This ASU, which does not apply to financial instruments, is effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently evaluating this ASU to determine the impact on its consolidated financial position, results of operations and cash flows.

ASU 2014-11 Repurchase-to-maturity Transactions, Repurchase Financings, and Disclosures to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings.

On June 12, 2014, the FASB issued ASU 2014-11, Repurchase-to-maturity Transactions, Repurchase Financings, and Disclosures to change the accounting for repurchase-to-maturity transactions and certain linked repurchase financings. This will result in accounting for both types of arrangements as secured borrowings on the balance sheet. Additionally, the ASU introduces new disclosures to (i) increase transparency about the types of collateral pledged in secured borrowing transactions and (ii) enable users to better understand transactions in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction.

For public business entities, the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. All other accounting and disclosure amendments in the ASU are effective for public business entities for the first interim or annual period beginning after December 15, 2014. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-12 Accounting for Share-Based-Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period (a consensus of the FAS Emerging Issues Task Force).

On June 19, 2014, the FASB issued ASU 2014-12, Accounting for Share-Based-Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved After the Requisite Service Period (a consensus of the FAS Emerging Issues Task Force) to clarify that a performance target in a share-based compensation award that could be achieved after an employee completes the requisite service period should be treated as a performance condition that affects the vesting of the award. As such, the performance target should not be reflected in estimating the grant-date fair value of the award.

ASU 2014-12 requires that a performance target included in a share-based payment award that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Therefore, such performance target should not be reflected in estimating the grant-date fair value of the award. A reporting entity should apply existing guidance in Topic 718 as it relates to the award with performance conditions that affect vesting.

Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. In current practice, two common performance targets-a change of control event and an IPO-are considered probable when they occur. Consequently, the award would be recognized in earnings at that time.

If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved.

For all entities, the amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

ASU 2014-14 Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310 – 40): Classification of Certain Government – Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40); Classification of Certain Government _ Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force). The amendments in this update address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. Specifically, creditors should reclassify loans that meet certain conditions to “other receivables” upon foreclosure rather than reclassifying them to other real estate owned (OREO). The separate other receivable recorded upon foreclosure is to be measured based on the amount of the loan balance (principal and interest) the creditor expects to recover from the guarantor.

The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The Company is currently evaluating the impact that the adoption of the standard will have on the Company’s consolidated financial position or results of operations.

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Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 10, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	1ST CONSTITUTION BANCORP
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		7,134,774
Amendment Flag	false
Entity Central Index Key	0001141807
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

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Note 10 - Fair Value Disclosures

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

(10)  Fair Value Disclosures

U.S. GAAP has established a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.  These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities carried at fair value.

In general, fair value is based upon quoted market prices, where available.  If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and counterparty creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Securities Available for Sale.  Securities classified as available for sale are reported at fair value utilizing quoted market prices on nationally recognized exchanges (Level 1) or by using Level 2 Inputs.  For Level 2 securities, the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayments speeds, credit information and the security’s terms and conditions, among other things.

Impaired loans.  Loans included in the following table are those which the Company has measured and recognized 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 collateral or discounted cash flows based on the expected proceeds.  These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.  The fair value consists of the loan balances less specific valuation allowances.

Other Real Estate Owned.  Foreclosed properties are adjusted to fair value less estimated selling costs at the time of foreclosure in preparation for transfer from portfolio loans to other real estate owned (“OREO”), establishing a new accounting basis.  The Company subsequently adjusts the fair value on the OREO utilizing Level 3 inputs on a non-recurring basis to reflect partial write-downs based on the observable market price, current appraised value of the asset or other estimates of fair value.

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Securities available for sale:
U. S. Treasury securities and ` obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	9,470,990	$	1,515,705	$	-	$	10,986,695
Residential collateralized mortgage obligations – GSE				3,723664				3,723,664
Residential collateralized mortgage obligations – Non-GSE				2,597,664				2,597,664
Residential mortgage backed securities – GSE				28,680,367				28,680,367
Obligations of State and Political subdivisions				21,618,512				21,618,512
Trust preferred debt securities – single issuer				2,183,700				2,183,700
Corporate debt securities				32,581,964				32,581,964
Restricted stock				1,561,900				1,561,900
Mutual fund				25,000				25,000

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
December 31, 2013:
Securities available for sale:
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	19,994,430	$	1,515,270	$	-	$	21,509,700
Residential collateralized mortgage obligations – GSE		-		3,681,792		-		3,681,792
Residential collateralized mortgage obligations – non-GSE		-		2,826,396		-		2,826,396
Residential mortgage backed securities – GSE		-		31,965,947		-		31,965,947
Obligations of State and Political subdivisions		-		19,646,044		-		19,646,044
Trust preferred debt securities – single issuer		-		2,013,100		-		2,013,100
Corporate debt securities		-		16,517,728		-		16,517,728
Restricted stock		-		1,013,100		-		1,013,100
Mutual fund		-		25,000		-		25,000

Certain financial assets and financial liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).  Financial assets and financial liabilities measured at fair value on a non-recurring basis at September 30, 2014 and December 31, 2013 were as follows:

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Impaired loans	$	-	$	-	$	7,265,700	$	7,265,700
Other real estate owned		-		-		1,748,455		1,748,455
December 31, 2013:
Impaired loans	$	-	$	-	$	7,879,005	$	7,879,005
Other real estate owned		-		-		209,937		209,937

Impaired loans measured at fair value and included in the above table consisted of 10 loans having an aggregate recorded investment of $7,960,930 and specific loan loss allowances of $1,276,254 at September 30, 2014. Charge-offs of approximately $928,000 of specific reserves for potential losses that were provided in prior periods were recorded during the third quarter ended September 30, 2014 on loans with an aggregate recorded investment of approximately $6,093,000. At December 31, 2013, there were 17 loans having an aggregate balance of $9,662,862 and specific loan loss allowances of $1,783,861.

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

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
September 30, 2014
Impaired loans	$	7,265,700	Appraisal of collateral (1)	Appraisal adjustments (2)	10-40		(19.1)	%
Other real estate owned	$	1,748,455	Appraisal of collateral (1)	Appraisal adjustments (2)	6	%
December 31, 2013
Impaired loans	$	7,879,005	Appraisal of collateral (1)	Appraisal adjustments (2)	5-15	%	(8.8)	%
Other real estate owned	$	209,937	Appraisal of collateral (1)	Appraisal adjustments (2)	5-45	%	(21.7)	%

    (1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable.

    (2) Includes qualitative adjustments by management and estimated liquidation expenses. 

The fair value of other real estate owned was determined using appraisals, which may be discounted based on management’s review and changes in market conditions.

The following is a summary of fair value versus the carrying value of all the Company’s financial instruments.  For the Company and the Bank, as for most financial institutions, the bulk of its assets and liabilities are considered financial instruments.  Many of the financial instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction.  Therefore, significant estimations and present value calculations were used for the purpose of this note.  Changes in assumptions could significantly affect these estimates.

Estimated fair values have been determined by using the best available data and an estimation methodology suitable for each category of financial instruments as follows:

Cash and Cash Equivalents, Accrued Interest Receivable and Accrued Interest Payable (Carried at Cost). The carrying amounts reported in the balance sheet for cash and cash equivalents, accrued interest receivable and accrued interest payable approximate fair value.

Securities Held to Maturity (Carried at Amortized Cost). The fair values of securities held to maturity are determined in the same manner as for securities available for sale.

Loans Held For Sale (Carried at Lower of Aggregated Cost or Fair Value). The fair values of loans held for sale are determined, when possible, using quoted secondary market prices. If no such quoted market prices exist, fair values are determined using quoted prices for similar loans, adjusted for the specific attributes of the loans.

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

Deposit Liabilities (Carried at Cost). The fair values disclosed for demand deposits (e.g., interest and non-interest demand and savings 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 and Subordinated Debentures (Carried at Cost). The carrying amounts of short-term borrowings approximate their fair values. The fair values of long-term FHLB advances and subordinated debentures are estimated using discounted cash flow analysis, based on quoted or estimated interest rates for new borrowings with similar credit risk characteristics, terms and remaining maturity. 

The estimated fair values and carrying amounts of financial assets and liabilities were as follows:

September 30, 2014
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	20,371,823		$	20,371,823	$	-		$	-	$	20,371,823
Securities available for sale		103,959,466			9,470,990		94,488,476			-		103,959,466
Securities held to maturity		148,182,693			-		152,466,765			-		152,466,765
Loans held for sale		9,459,172			-		9,602,000			-		9,602,000
Loans, net		613,288,046			-		-			615,200,000		615,200,000
Accrued interest receivable		2,798,265			-		2,798,265			-		2,798,265
Deposits		(823,564,746	)		-		(824,154,00	)		-		(824,154,000	)
Borrowings		(20,798,473	)		-		(21,509,000	)		-		(21,509,000	)
Redeemable subordinated debentures		(18,557,000	)		-		(18,557,000	)		-		(18,557,000	)
Accrued interest payable		(802,851	)		-		(802,851	)		-		(802,851	)

December 31, 2013
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	69,278,771		$	69,278,771	$	-		$	-	$	69,278,771
Securities available for sale		99,198,807			19,994,430		79,204,377			-		99,198,807
Securities held to maturity		152,816,815			-		153,629,773			-		153,629,000
Loans held for sale		10,923,689			-		10,924,000			-		10,924,000
Loans, net		366,297,511			-		-			372,548,000		372,548,000
Accrued interest receivable		2,542,602			-		2,542,602			-		2,542,602
Deposits		(638,552,030	)		-		(639,539,000	)		-		(639,539,000	)
Borrowings		(10,000,000	)		-		(11,148,000	)		-		(11,148,000	)
Redeemable subordinated debentures		(18,557,000	)		-		(18,557,000	)		-		(18,557,000	)
Accrued interest payable		(883,212	)		-		(883,212	)		-		(883,212	)

Loan commitments and standby letters of credit as of September 30, 2014 and December 31, 2013 are based on fees charged for similar agreements; accordingly, the estimated fair value of loan commitments and standby letters of credit is nominal.

XML

Consolidated Statements of Income (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
INTEREST INCOME:
Loans, including fees	$ 8,585,950	$ 5,701,804	$ 22,694,649	$ 17,319,258
Securities:
Taxable	961,043	980,004	3,141,787	2,818,800
Tax-exempt	575,977	575,301	1,745,708	1,633,799
Federal funds sold and short-term investments	10,184	81,745	110,892	221,087
Total interest income	10,133,154	7,338,854	27,693,036	21,992,944
INTEREST EXPENSE:
Deposits	955,246	842,372	2,826,339	2,668,306
Borrowings	144,005	103,122	387,422	310,649
Redeemable subordinated debentures	86,534	88,338	257,314	263,982
Total interest expense	1,185,785	1,033,832	3,471,075	3,242,937
Net interest income	8,947,369	6,305,022	24,221,961	18,750,007
PROVISION FOR LOAN LOSSES	649,998	539,998	5,249,994	776,664
Net interest income after provision for loan losses	8,297,371	5,765,024	18,971,967	17,973,343
NON-INTEREST INCOME:
Service charges on deposit accounts	267,625	231,169	753,976	675,839
Gain on sales of loans	556,054	641,966	1,562,790	1,852,821
Income on Bank-owned life insurance	143,884	115,840	422,022	348,206
Other income	514,279	627,573	1,640,068	1,796,104
Total non-interest income	1,481,842	1,616,548	4,378,856	4,672,970
NON-INTEREST EXPENSE:
Salaries and employee benefits	3,922,104	3,060,143	11,194,732	9,458,247
Occupancy expense	833,813	629,922	2,498,903	1,930,227
Data processing expense	313,237	273,272	941,046	868,960
Other real estate owned expenses	131,973	176,796	272,014	770,858
Merger related expenses	0	0	1,532,153	0
FDIC insurance expense	210,000	111,562	544,631	146,249
Other operating expenses	1,312,524	1,001,788	3,792,012	3,324,210
Total non-interest expenses	6,723,651	5,253,483	20,775,491	16,498,751
Income before income taxes	3,055,562	2,128,089	2,575,332	6,147,562
INCOME TAXES	917,483	604,851	235,459	1,741,974
Net income	$ 2,138,079	$ 1,523,238	$ 2,339,873	$ 4,405,588
NET INCOME PER COMMON SHARE:
Basic (in Dollars per share)	$ 0.30	$ 0.25	$ 0.33	$ 0.74
Diluted (in Dollars per share)	$ 0.30	$ 0.25	$ 0.33	$ 0.72

XML

Note 4 - Investment Securities

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

(4)           Investment Securities

 Amortized cost, gross unrealized gains and losses, and the estimated fair value by security type are as follows:

September 30, 2014	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	11,431,027	$	-	$	(444,332	)	$	10,986,695
Residential collateralized mortgage obligations – GSE		3,684,424		82,520		(43,280	)		3,723,664
Residential collateralized mortgage obligations – non GSE		2,564,282		39,395		(6,013	)		2,597,664
Residential mortgage backed securities – GSE		28,136,260		822,737		(278,630	)		28,680,367
Obligations of State and Political subdivisions		22,023,131		244,381		(649,000	)		21,618,512
Trust preferred debt securities – single issuer		2,471,060		-		(287,360	)		2,183,700
Corporate debt securities		32,294,145		322,566		(34,747	)		32,581,964
Restricted stock		1,561,900		-		-			1,561,900
Mutual fund		25,000		-		-			25,000
	$	104,191,229	$	1,511,599	$	(1,743,362	)	$	103,959,466

September 30, 2014	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	-	$	-		$	-	$	-	$	-		$	-
Residential collateralized mortgage obligations – GSE		12,300,297		-			12,300,297		429,031		-			12,729,328
Residential collateralized mortgage obligations – non-GSE		9,099,412		-			9,099,412		292,039					9,391,451
Residential mortgage backed securities – GSE		58,526,504		-			58,526,504		1,085,369		(122,585	)		59,489,288
Obligations of State and Political subdivisions		68,100,762		-			68,100,762		2,250,385		(105,740	)		70,245,407
Trust preferred debt securities-pooled		656,662		(500,944	)		155,718		455,573		-			611,291
Corporate debt securities		-		-			-		-		-			-
	$	148,683,637	$	(500,944	)	$	148,182,693	$	4,512,397	$	(228,325	)	$	152,466,765

December 31, 2013	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair value
Available for sale-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	22,386,761	$	33,213	$	(910,274	)	$	21,509,700
Residential collateralized mortgage obligations – GSE		3,547,404		134,388		-			3,681,792
Residential collateralized mortgage obligations – non GSE		2,782,843		52,227		(8,674	)		2,826,396
Residential mortgage backed securities – GSE		31,532,051		872,169		(438,273	)		31,965,947
Obligations of State and Political subdivisions		22,206,959		149,959		(2,710,874	)		19,646,044
Trust preferred debt securities – single issuer		2,468,839		-		(455,739	)		2,013,100
Corporate debt securities		16,228,474		318,590		(29,336	)		16,517,728
Restricted stock		1,013,100		-		-			1,013,100
Mutual fund		25,000		-		-			25,000
	$	102,191,431	$	1,560,546	$	(4,553,170	)	$	99,198,807

December 31, 2013	Amortized Cost		Other-Than-Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
Obligations of U.S. Government sponsored corporations(“GSE”) and agencies	$	1,524,860	$	-		$	1,524,860	$	10,310	$	-		$	1,535,170
Residential collateralized mortgage obligations – GSE		14,803,739		-			14,803,739		379,815		-			15,183,554
Residential collateralized mortgage obligations – non-GSE		10,682,363		-			10,682,363		119,777		(27,526	)		10,774,614
Residential mortgage backed securities – GSE		65,240,620		-			65,240,620		611,062		(387,034	)		65,464,648
Obligations of State and Political subdivisions		59,400,916		-			59,400,916		1,399,938		(1,296,357	)		59,504,497
Trust preferred debt securities – pooled		656,662		(500,944	)		155,718		-		(6,863	)		148,855
Corporate debt securities		1,008,599		-			1,008,599		9,836		-			1,018,435
	$	153,317,759	$	(500,944	)	$	152,816,815	$	2,530,738	$	(1,717,780	)	$	153,629,773

Restricted stock at September 30, 2014 and December 31, 2013 consisted of $1,496,900 and $998,100, respectively, of Federal Home Loan Bank of New York stock and $15,000 and $65,000, respectively of Atlantic Central Bankers Bank stock.

The amortized cost and estimated fair value of investment securities at September 30, 2014, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Restricted stock is included in “Available for sale - Due in one year or less.”

	Amortized Cost		Fair Value
Available for sale-
Due in one year or less
Residential collateralized mortgage obligations - non GSE	$	263,345	$	264,102
Residential mortgage backed securities – GSE		250		250
Obligations of State and Political subdivisions		264,775		265,665
Corporate debt securities		10,224,296		10,198,171
Restricted stock		1,561,900		1,561,900
Mutual fund		25,000		25,000
	$	12,339,566	$	12,315,088
Due after one year through five years
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	1,540,385	$	1,535,895
Residential collateralized mortgage obligations – non-GSE		-		-
Residential mortgage backed securities – GSE		7,450,510		7,358,278
Obligations of State and Political subdivisions		681,967		714,360
Corporate debt securities		21,050,621		21,351,292
	$	30,723,483	$	30,959,825
Due after five years through ten years
U.S. Treasury securities and obligations of US Government sponsored corporations (“GSE”) and agencies	$	9,890,642	$	9,450,800
Residential collateralized mortgage obligations – GSE		102,768		109,333
Residential mortgage backed Securities – GSE		6,661,024		6,742,207
Obligations of State and Political Subdivisions		4,796,387		4,866,134
Corporate debt securities		1,019,227		1,032,500
	$	22,470,048	$	22,200,974
Due after ten years
Residential collateralized mortgage obligations – GSE	$	3,581,657	$	3,614,332
Residential collateralized mortgage obligations – non-GSE		2,300,936		2,333,561
Residential mortgage backed securities – GSE		14,024,476		14,579,634
Obligations of State and Political subdivisions		16,280,003		15,772,352
Corporate debt securities		0		0
Trust preferred debt securities		2,471,060		2,183,700
	$	38,658,132	$	38,483,579
Total	$	104,191,229	$	103,959,466

Held to maturity-
Due in one year or less
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	0	$	0
Obligations of State and Political subdivisions		18,205,158		18,211,282
Corporate debt securities		0		0
		18,205,158		18,211,282
Due after one year through five years
U.S. Treasury securities and obligations of US Government sponsored corporations (“GSE”) and agencies	$	-	$	-
Obligations of State and Political subdivisions		13,503,851		14,035,745
Corporate debt securities		-		-
	$	13,503,851	$	14,035,745
Due after five years through ten years
Residential collateralized mortgage obligations – GSE	$	-	$	-
Residential collateralized mortgage obligations – non-GSE		802,511		805,099
Residential mortgage backed securities – GSE		19,279,679		19,492,168
Obligations of State and Political subdivisions		18,544,514		19,475,290
	$	38,626,704	$	39,772,557
Due after ten years
Residential collateralized mortgage obligations – GSE	$	12,299,996	$	12,729,330
Residential collateralized mortgage obligations – non-GSE		8,297,202		8,586,350
Residential mortgage backed securities – GSE		39,246,826		39,997,121
Obligations of State and Political subdivisions		17,847,239		18,523,090
Trust preferred debt securities – pooled		656,661		611,290
	$	78,347,924	$	80,447,181
Total	$	148,683,637	$	152,466,765

Gross unrealized losses on available for sale and held to maturity securities and the estimated fair value of the related securities aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2014 and December 31, 2013 were as follows:

September 30, 2014			Less than 12 months					12 months or longer					Total
	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations and agencies		2	$	1,535,895	$	(4,490	)	$	9,450,800	$	(439,842	)	$	10,986,695	$	(444,332	)
Residential collateralized mortgage obligations – GSE		1		1,074,027		(43,280	)		-		-			1,074,027		(43,280	)
Residential collateralized mortgage obligations – non-GSE		2		989,807		(892	)		93,295		(5,121	)		1,083,102		(6,013	)
Residential mortgage backed securities – GSE		18		1,711,545		(1,679	)		17,021,564		(399,536	)		18,733,109		(401,215	)
Obligations of State and Political Subdivisions		63		394,002		(1,596	)		21,564,852		(753,144	)		21,958,854		(754,740	)
Trust preferred debt securities – single issuer		4		-		-			2,183,700		(287,360	)		2,183,700		(287,360	)
Corporate Debt Securities		2		1,420,594		(1,233	)		1,028,880		(33,514	)		2,449,474		(34,747	)
Total temporarily impaired securities		92	$	7,125,870	$	(53,170	)	$	51,343,091	$	(1,918,517	)	$	58,468,961	$	(1,971,687	)

December 31, 2013			Less than 12 months					12 months or longer					Total
	Number of Securities		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (GSE) and agencies		3	$	11,507,350	$	(910,274	)	$	-	$	-		$	11,507,350	$	(910,274	)
Residential collateralized mortgage Obligations – non-GSE		8		5,328,485		(28,231	)		1,094,754		(7,969	)		6,423,239		(36,200	)
Residential mortgage backed securities GSE		38		40,504,327		(825,307	)		-		-			40,504,327		(825,307	)
Obligations of State and Political Subdivisions		95		19,403,457		(2,285,759	)		8,936,441		(1,721,472	)		28,339,898		(4,007,231	)
Trust preferred debt securities – single issuer		4		-		-			2,013,100		(455,739	)		2,013,100		(455,739	)
Trust preferred debt securities – Pooled		1		-		-			148,855		(507,807	)		148,855		(507,807	)
Corporate debt securities		1		-		-			1,056,110		(29,336	)		1,056,110		(29,336	)
Total temporarily impaired securities		150	$	76,743,619	$	(4,049,571	)	$	13,249,260	$	(2,722,323	)	$	89,992,879	$	(6,771,894	)

U.S. Treasury securities and obligations of U.S. Government sponsored corporations and agencies:  The unrealized losses on investments in these securities were caused by increases in market interest rates.  The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity; therefore, these investments are not considered other-than-temporarily impaired.

Residential collateralized mortgage obligations and residential mortgage-backed securities: The unrealized losses on investments in residential collateralized residential mortgage obligations and mortgage-backed securities were caused by increases in market interest rates. The contractual cash flows of these securities are guaranteed by the issuer, which are primarily government or government sponsored agencies. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. These investments are not considered to be other than temporarily impaired because The decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is more likely than not that the Company will be required to sell these investments before a market price recovery or maturity.

Obligations of State and Political Subdivisions:  The unrealized losses or investments in these securities were caused by increases in market interest rates.  None of the issuers have defaulted on interest payments. It is expected that the securities would not be settled at a price less than the amortized cost of the investment.  These investments are not considered to be other than temporarily impaired because the decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity; therefore, these investments are not considered other-than-temporarily impaired.

Corporate debt securities:   The unrealized losses on investments in corporate debt securities were caused by increases in market interest rates.  None of the corporate issuers have defaulted on interest payments. These investments are not considered to be other than temporarily impaired because  the decline in fair value is attributable to changes in interest rates and not a decline in credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity.

Trust preferred debt securities – single issuer:  The investments in these securities with unrealized losses are comprised of four corporate trust preferred securities issued by two large financial institutions that mature in 2027. The contractual terms of the trust preferred securities do not allow the issuer to settle the securities at a price less than the face value of the trust preferred securities, which is greater than the amortized cost of the trust preferred securities.  Neither of the issuers has defaulted on interest payments.  The decline in fair value is attributable to the widening of interest rate spreads and the lack of an active trading market for these securities and, to a lesser degree, market concerns about the issuers’ credit quality. These investments are not considered to be other than temporarily impaired because the Company does not intend to sell these investments and it is not likely that the Company will be required to sell these investments before a market price recovery or maturity.

Trust preferred debt securities – pooled:   This trust preferred debt security was issued by a two issuer pool (Preferred Term Securities XXV, Ltd. co-issued by Keefe, Bruyette and Woods, Inc. and First Tennessee (“PRETSL XXV”)) consisting primarily of securities issued by financial institution holding companies. During 2009, the Company recognized an other-than-temporary impairment of $864,727, of which $363,783 was determined to be a credit loss and charged to operations and $500,944 was recognized in the other comprehensive income (loss) component of shareholders’ equity.

The primary factor used to determine the credit portion of the impairment loss to be recognized in the income statement for this security was the discounted present value of projected cash flow where that present value of cash flow was less than the amortized cost basis of the security. The present value of cash flow was developed using an EITF 99-20 model that considered performing collateral ratios, the level of subordination to senior tranches of the security, credit ratings of and projected credit defaults in the underlying collateral.

On a quarterly basis, management evaluates this security to determine if any additional other-than-temporary impairment is required. As of September 30, 2014, our evaluation was as follows:

a. We obtained the PRETSL XXV Depository Institutions Issuer List as of September30, 2014 from the FTN Financial Corp. (“FTN”) website and reviewed the financial ratios and capital levels of each individual financial institution issuer.

b. We sorted the financial institutions on the issuer list to develop three “buckets” (or categories) for further deferred/default analysis based upon the indicated “Texas Ratio.” The Texas Ratio is calculated by dividing the institution’s Non-Performing Assets plus loans 90 days past due by the combined total of Tangible Equity plus the Allowance for Loan Losses. The three buckets consisted of those institutions with a Texas Ratio of:

(1) Above 100;

(2) 75 to 100; and

(3) Below 75.

c. We then applied the following asset specific deferral/default assumptions to each of these buckets:

(1) Above 100 - 100% default; 0% recovery;

(2) 75 to 100 – 100% deferred; 15% recovery at 2 years from initial date of deferral; and

(3) Below 75 – no deferral/default.

d. We then performed a cash flow projection to analyze the impact of future deferral/default activity by applying the following assumption on those institutions in bucket (3) of our analysis:

● Defaults at 75 basis points applied annually; 15% recovery with a 2-year lag from the initial date of deferral.

Our rationale for these metrics is as follows: (1) The FDIC lists the number of bank failures each year from 1934 – 2008. Comparing bank failures to the number of FDIC institutions produces an annual average default rate of 36 basis points. Given the continuing uncertain economic environment, we believe the doubling of this amount, or 75 basis points, to be an appropriate measurement for defaults; and (2) Standard & Poor’s published “Global Methodology for Rating Trust Preferred/Hybrid Securities Revised” on November 21, 2008. This analysis uses a recovery assumption of 15%, which we also deem an appropriate measurement.

Our position is that it is appropriate to apply this future default factor in our analysis as it is not realistic to assume no adverse conditions will occur over the remaining 23-year stated maturity of this pooled security even though the individual institutions are currently performing according to terms.

e. This September 30, 2014 projection of future cash flows produced a present value that exceeded the carrying value of the pooled trust preferred security; therefore, management concluded that no other-than-temporary impairment issues were present at September 30, 2014.

A number of factors could cause management to conclude in one or more future reporting periods that an unrealized loss that exists with respect to PRETSL XXV constitutes an additional credit impairment. These factors include, but are not limited to, failure to make interest payments, an increase in the severity of the unrealized loss, an increase in the continuous duration of the unrealized loss without an impairment in value or changes in market conditions and/or industry or issuer specific factors that would render management unable to forecast a full recovery in value. In addition, the fair value of trust preferred securities could decline if the overall economy and the financial condition of the issuers continue to deteriorate and there remains limited liquidity for this security.

The following table sets forth information with respect to this security at September 30, 2014:

																					Excess Subordination (2)
Security	Class	Book Value		Fair Value		Unrealized Gain (Loss)		Percent of Underlying Collateral Performing			Percent of Underlying Collateral In Deferral (1)			Percent of Underlying Collateral In Default (1)			Expected Deferrals and Defaults as a % of Remaining Performing Collateral			Moody's S&P / Ratings	Amount		% of Current Performing Collateral
PreTSL XXV	B-1	$	155,718	$	611,290	$	455,572		69.0	%		5.8	%		25.2	%		13.7	%	B1/ NR	$	136,000		26.0	%

Notes to table above:

(1) This percentage represents the amount of specific deferrals / defaults that have occurred, plus those that are known for the following quarters to the total amount of original collateral. Fewer deferrals / defaults produce a lower percentage.

(2) “Excess subordination” amount is the additional defaults / deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a “break in yield”. This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The “percent of underlying collateral performing” is the ratio of the “excess subordination amount” to current performing collateral - a higher percentage means there is more excess subordination to absorb additional defaults / deferrals, and the better our security is protected from loss.

The Company regularly reviews the composition of the investment securities portfolio, taking into account market risks, the current and expected interest rate environment, liquidity needs, and its overall interest rate risk profile and strategic goals.

The following table presents a cumulative roll forward of the amount of other-than-temporary impairment related to credit losses, all of which relate to PRETSL XXV, which have been recognized in earnings for debt securities held to maturity and not intended to be sold.

(in thousands)	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Balance at beginning of period	$	364	$	364	$	364	$	364
Change during the period		-		-		-		-
Balance at end of period	$	364	$	364	$	364	$	364

XML

Note 3 - Net Income Per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

(3)  Net Income Per Common Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during each period.

Diluted net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding, as adjusted for the assumed exercise of potential common stock warrants, and common stock options, using the treasury stock method. For periods when a net loss is incurred, there is no dilutive effect of share equivalents. Accordingly, these shares are not included in the calculation of diluted earnings per share.

The following tables illustrate the reconciliation of the numerators and denominators of the basic and diluted earnings per common share (EPS) calculations.  Dilutive securities in the tables below exclude common stock options and warrants with exercise prices that exceed the average market price of the Company’s common stock during the periods presented.  Inclusion of these common stock options and warrants would be anti-dilutive to the diluted earnings per common share calculation. 

	Three Months Ended September 30, 2014
	Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net Income	$	2,138,079		7,119,113	$	0.30
Effect of dilutive securities:
Stock options and warrants				122,436
Diluted EPS:
Net plus assumed conversion	$	2,138,079		7,241,549	$	0.30

	Three Months Ended September 30, 2013
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	1,523,238		5,991,480	$	0.25
Effect of Dilutive Securities:
Stock options and warrants				155,182
Diluted EPS:
Net income plus assumed conversions	$	1,523,238		6,146,662	$	0.25

	Nine Months Ended September 30, 2014
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	2,339,873		7,013,776	$	0.33
Effect of Dilutive Securities:
Stock options and warrants				127,792
Diluted EPS:
Net income plus assumed conversions	$	2,339,873		7,141,568	$	0.33

	Nine Months Ended September 30, 2013
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	4,405,588		5,960,294	$	0.74
Effect of Dilutive Securities:
Stock options and warrants				128,539
Diluted EPS:
Net income plus assumed conversions	$	4,405,588		6,088,833	$	0.72

For the three months and nine months ended September 30, 2014 and 2013, 90,296 and 247,298 options, respectively, were anti-dilutive and were not included in the computation of diluted earnings per common shares.

XML

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables)

9 Months Ended

Sep. 30, 2014

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables) [Line Items]

Past Due Financing Receivables [Table Text Block]

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	-	$	-	$	88,547,583	$	88,547,583	$	-	$	-
Commercial Business		959,386		14,051		390,396		1,363,833		107,689,596		109,053,429		-		356,577
Commercial Real Estate		2,290,804		-		6,119,386		8,410,190		183,957,654		192,367,844		-		5,787,533
Mortgage Warehouse Lines		-		-		-		-		157,333,717		157,333,717		-		-
Residential Real Estate		-		-		1,714,972		1,714,972		47,017,079		48,732,051		320,315		1,394,657
Consumer
Loans to Individuals		279,909		-		-		279,909		23,083,133		23,363,042		-		-
Other		-		-		-		-		197,704		197,704		-		-
Deferred Loan Costs		-		-		-		-		800,548		800,548		-		-
Total	$	3,530,099	$	14,051	$	8,224,754	$	11,768,904	$	608,627,014	$	620,395,918		320,315	$	7,538,767

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	-	$	-	$	51,002,172	$	51,002,172	$	-	$	-
Commercial Business		385,133		58,665		453,325		897,123		81,450,932		82,348,055		-		511,990
Commercial Real Estate		-		-		5,217,173		5,217,173		93,172,557		98,389,730		-		5,555,851
Mortgage Warehouse Lines		-		-		-		-		116,951,357		116,951,357		-		-
Residential Real Estate		315,615		967,099		33,494		1,316,208		12,447,970		13,764,178		-		162,012
Consumer
Loans to Individuals		-		-		-		-		9,766,114		9,766,114		-		92,103
Other		-		-		-		-		170,526		170,526		-		-
Deferred Loan Costs		-		-		-		-		943,950		943,950		-		-
Total	$	700,748	$	1,025,764	$	5,703,992	$	7,430,504	$	365,905,578	$	373,336,082		-	$	6,321,956

Financing Receivable Credit Quality Indicators [Table Text Block]

	At February 7, 2014
($ in thousands)	Loans acquired with no credit quality deterioration		Loans acquired with credit quality deterioration		Total
Commercial
Construction	$	11,920	$	-	$	11,920
Commercial Real Estate		62,398		1,832		64,230
Commercial Business		18,086		368		18,454
Residential Real Estate		32,743		180		32,923
Consumer		15,953		234		16,187
Total	$	141,100	$	2,614	$	143,714

Allowance for Credit Losses on Financing Receivables [Table Text Block]

					Commercial		Mortgage		Residential								Loan
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs		Total
Allowance for loan losses:
Ending Balance	$	1,099,053	$	1,641,189	$	2,974,785	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	7,107,872
Ending Balance
Individually evaluated for impairment		-		1,874		1,274,380		-		-		-		-		-		-		1,276,254
Collectively evaluated for impairment	$	1,099,053	$	1,639,315	$	1,700,405	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	5,831,618
Loans receivables:
Ending Balance	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051	$	23,363,042	$	197,704	$	-	$	800,548	$	620,395,918
Individually evaluated for impairment		449,663		492,940		9,129,396		-		1,394,657		-		-		-		-		11,466,656
Loans acquired with deteriorated credit quality		-		332,175		1,713,910		-		-		-		-		-		-		2,046,085
Collectively evaluated for impairment	$	88,097,920	$	108,228,314	$	181,524,538	$	157,333,717	$	47,337,394	$	23,363,042	$	197,704	$	-	$	800,548	$	606,883,177

					Commercial		Mortgage		Residential								Loan
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs		Total
Allowance for loan losses:
Ending Balance	$	1,205,267	$	1,271,733	$	3,021,766	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	7,038,571
Ending Balance
Individually evaluated for impairment		-		293,692		1,490,169		-		-		-		-		-		-		1,783,861
Collectively evaluated for impairment	$	1,205,267	$	978,041	$	1,531,597	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	5,254,710
Loans receivables:
Ending Balance	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178	$	9,766,114	$	170,526	$	-	$	943,950	$	373,336,082
Individually evaluated for impairment		19,930		776,101		9,130,605		-		162,012		92,103		-		-		-		10,180,751
Collectively evaluated for impairment	$	50,982,242	$	81,571,954	$	89,259,125	$	116,951,357	$	13,602,166	$	9,674,011	$	170,526	$	-	$	943,950	$	363,155,331

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2013	$	1,205,267		$	1,271,733		$	3,021,766		$	584,757		$	164,673		$	108,849		$	2,183		$	679,343		$	7,038,571
Provision charged to operations		60,163			454,031			113,961			(63,082	)		17,332			(16,462	)		(560	)		(65,385	)		499,998
Loans charged off		-			(510,952	)		-			-			-			-			-			-			(510,952	)
Recoveries of loans charged off		-			3,225			-			-			-			-			-			-			3,225
Balance – March 31, 2014	$	1,265,430		$	1,218,037		$	3,135,727		$	521,675		$	182,005		$	92,387		$	1,623		$	613,958		$	7,030,842
Provision charged to operations		(315,416	)		4,041,190			471,356			387,884			(9,152	)		(1,655	)		42			(474,251	)		4,099,998
Loans charged off		-			(3,713,789	)		-			-			-			-			-			-			(3,713,789	)
Recoveries of loans charged off		-			1,328			-			-			-			-			-			-			1,328
Balance – June 30, 2014	$	950,014		$	1,546,766		$	3,607,083		$	909,559		$	172,853		$	90,732		$	1,665		$	139,707		$	7,418,379
Provision charged to operations		149,039			185,109			222,506			(122,890	)		44,308			685			(82	)		171,323			649,998
Loans charged off		-			(99,402	)		(893,804	)		-			(15,015	)		-			-			-			(1,008,221	)
Recoveries of loans charged off		-			8,716			39,000			-			-			-			-			-			47,716
Balance September 30, 2014	$	1,099,053		$	1,641,189		$	2,974,785		$	786,669		$	202,146		$	91,417		$	1,583		$	311,030		$	7,107,872

	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2012	$	1,990,292		$	972,789		$	2,262,221		$	1,420,638		$	112,103		$	102,583		$	2,271		$	288,315		$	7,151,212
Provision charged to operations		(218,010	)		(18,319	)		245,769			(429,900	)		262			50,506			(212	)		369,804			-
Loans charged off		(561,993	)		(139,289	)		(384,688	)		-			-			(50,855	)		-			-			(1,136,825	)
Recoveries of loans charged off		-			2,000			6,895			-			-			-			-			-			8,895
Balance – March 31, 2013	$	1,210,289		$	817,181		$	2,130,197		$	990,738		$	112,365		$	102,334		$	2,059		$	658,119		$	6,023,282
Provision charged to operations		1,872			160,164			321,659			(62,039	)		(19,632	)		(2,444	)		45			(162,958	)		236,667
Loans charged off		-			-			-			-			-			-			-			-			-
Recoveries of loans charged off		417			8,574			-			-			-			-			-			-			8,991
Balance – June 30, 2013	$	1,212,578		$	985,919		$	2,451,856		$	928,699		$	92,733		$	99,890		$	2,104		$	495,161		$	6,268,940
Provision charged to operations		(4,555	)		34,446			612,392			(256,028	)		49,093			10,178			(53	)		94,525			539,998
Loans charged off		-			(2,068	)		-			-			-			-			-			-			(2,068	)
Recoveries of loans charged off		-			13,310			-			-			-			-			-			-			13,310
Balance – September 30, 2013	$	1,208,023		$	1,031,607		$	3,064,248		$	672,671		$	141,826		$	110,068		$	2,051		$	589,686		$	6,820,180

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Commercial		2	$	31,123	$	31,123
Commercial Real Estate		-		-		-
Residential Real Estate		-		-		-

Credit Impaired Loans Acquired, Change In Amortizable Yield [Table Text Block]

Balance at beginning of period	$	-
Acquisition of impaired loans		240,917
Accretion of discount		(84,409	)
Balance at end of period	$	156,508

Loans Acquired, With Evidence Of Credit Deterioration [Table Text Block]

	February 7, 2014		September 30, 2014
	Acquired loans with Evidence of Credit Deterioration		Acquired loans with Evidence of Credit Deterioration
Outstanding balance	$	3,409,340	$	2,746,260
Carrying amount	$	2,613,826	$	2,046,085

Commercial Portfolio Segment [Member]

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables) [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	88,353,183	$	100,658,477	$	167,521,583	$	157,333,717	$	47,017,079
Special Mention		194,400		7,645,736		14,177,468		-		127,977
Substandard		-		715,397		10,668,793		-		1,586,995
Doubtful		-		33,819		-		-		-
Total	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	47,539,033	$	79,832,704	$	68,620,450	$	116,951,357	$	12,635,067
Special Mention		-		1,406,143		19,396,574		-		1,129,111
Substandard		3,463,139		792,057		10,372,706		-		-
Doubtful		-		258,486
Loss		-		58,665		-		-		-
Total	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178

Consumer Portfolio Segment [Member]

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables) [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

	Loans To Individuals		Other
Consumer Credit Exposure - By Payment Activity
Performing	$	23,363,042	$	197,704
Nonperforming		-		-
Total	$	23,363,042	$	197,704

Consumer Credit Exposure - By Payment Activity	Loans To Individuals		Other
Performing	$	9,674,011	$	170,526
Nonperforming		92,103		-
Total	$	9,766,114	$	170,526

Three and Nine Months Ended [Member]

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables) [Line Items]

Impaired Financing Receivables [Table Text Block]

Impaired Loans Receivables (By Class) September 30, 2014							Three months ended September 30, 2014				Nine months ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	449,663	$	449,663	$	-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial Business		793,992		1,380,582		-		786,051		6,971		579,721		20,055
Commercial Real Estate		2,913,499		3,215,830		-		2,431,613		35,288		1,511,916		105,522
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		4,157,154		5,046,075		-		3,667,327		48,393		2,394,293		136,532
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer
Loans to individuals		-		-		-		77,329		8,164		135,612		15,433
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		77,329		8,164		135,612		15,433
With no related allowance	$	5,551,811	$	6,455,747	$	-	$	5,212,691	$	63,230	$	3,827,987	$	172,907
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial Business		31,123		31,123		1,874		94,772		-		245,858		-
Commercial Real Estate		7,929,807		8,638,477		1,274,380		8,700,575		54,695		8,975,029		160,475
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		7,960,930		8,669,600		1,276,254		8,795,347		54,695		9,220,887		160,475
Residential Real Estate		-		-		-		-		-		-		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		-		-		-		-
With an allowance	$	7,960,930	$	8,669,600	$	1,276,254	$	8,795,347	$	54,695	$	9,220,887	$	160,475
Total:
Construction	$	449,663	$	449,663		-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial		-		-		-		-		-		-		-
Commercial Business		825,115		1,411,705		1,874		880,823		6,971		825,579		20,055
Commercial Real Estate		10,843,306		11,854,307		1,274,380		11,132,188		89,983		10,468,945		265,997
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer				-		-		77,239		8,164		135,612		15,433
Total	$	13,512,741	$	15,125,347	$	1,276,254	$	14,008,038	$	117,925	$	13,048,874	$	333,382

Impaired Loans Receivables (By Class) – September 30, 2013
							Three months ended				Nine months ended
							September 30, 2013				September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	1,015,112	$	1,015,112	$	-	$	1,184,249	$	4,660	$	636,741	$	37,420
Commercial Business		225,899		382,356		-		157,334		1,516		532,119		-
Commercial Real Estate		-		-		-		4,004,515		-		1,480,516		-
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		1,241,011		1,397,468		-		5,346,098		6,176		2,649,376		-
Residential Real Estate		164,542		164,542		-		164,542		-		102,706		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		22,540		-
Subtotal				-		-		-		-		22,540		-
With no related allowance:	$	1,405,553	$	1,562,010	$	-	$	5,510,640	$	6,176		2,774,622		37,420
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	329,138	$	-
Commercial Business		475,136		475,136		235,027		566,473		3,915		578,713		28,570
Commercial Real Estate		9,646,821		9,646,821		1,476,632		6,184,255		61,306		4,326,187		182,967
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,234,038		211,537
Residential Real Estate		-		-		-		-		-		58,928		-
Consumer
Loans to Individuals		-		-		-		-		-		5,650
Other		-		-		-		-		-		-
Subtotal		-		-		-		-		-		5,650		-
With an allowance:		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,298,616		-
Total:
Construction		-		-		-		-		-		-		-
Commercial		11,362,968		11,519,425		1,711,659		12,096,826		71,397		7,883,414		248,957
Commercial Business		-		-		-		-		-		-		-
Commercial Real Estate		-		-		-		-		-		-		-
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Residential Real Estate		164,542		164,542		-		164,542		-		161,634		-
Consumer		-		-		-		-		-		28,190		-
Total	$	11,527,510	$	11,683,967	$	1,711,659	$	12,261,368	$	71,397	$	8,073,238	$	248,957

Year Ended [Member]

Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Tables) [Line Items]

Impaired Financing Receivables [Table Text Block]

Impaired Loans Receivables (By Class) December 31 , 2013							Year ended 12/31/2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	19,930	$	19,930	$	-	$	965,268	$	33,946
Commercial Business		243,840		400,297				258,139		5,094
Commercial Real Estate		-		-		-		1,032,115		-
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		263,770		420,227		-		2,255,522		39,040
Residential Real Estate		162,012		162,012		-		117,746		-
Consumer
Loans to Individuals		92,103		92,103		-		34,292		-
Other		-		-		-		-		-
Subtotal		92,103		92,103		-		34,292		-
With no related allowance	$	517,885	$	674,342	$	-	$	2,407,560	$	39,040
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	246,853	$	-
Commercial Business		532,261		532,261		293,692		562,346		9,728
Commercial Real Estate		9,130,605		9,130,605		1,490,169		5,546,690		247,277
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		9,662,866		9,662,866		1,783,861		6,355,889		257,005
Residential Real Estate		-		-		-		44,196		-
Consumer
Loans to Individuals		-		-		-		4,238		-
Other		-		-		-		-		-
Subtotal		-		-		-		4,238		-
With an allowance	$	9,662,866	$	9,662,866	$	1,783,861	$	6,404,323	$	257,005
Total:
Construction		19,930		19,930		-		1,212,121		33,946
Commercial Business		776,101		932,558		293,692		820,485		14,822
Commercial Real Estate		9,130,605		9,130,605		1,490,169		6,578,805		247,277
Mortgage Warehouse		-		-		-		-		-
Residential Real Estate		162,012		162,012		-		161,942		-
Consumer		92,103		92,103		-		38,530		-
Total	$	10,180,751	$	10,337,208	$	1,783,861	$	8,811,883	$	296,045

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Accounting Policies, by Policy (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

The accompanying unaudited consolidated financial statements include 1st Constitution Bancorp (the “Company”), its wholly-owned subsidiary, 1st Constitution Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, 1st Constitution Investment Company of New Jersey, Inc., FCB Assets Holdings, Inc., 1st Constitution Title Agency, LLC, 204 South Newman Street Corp. and 249 New York Avenue, LLC.  1st Constitution Capital Trust II, a subsidiary of the Company, is not included in the Company’s consolidated financial statements, as it is a variable interest entity and the Company is not the primary beneficiary.  All significant intercompany accounts and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform to current year presentation.  The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) including the instructions to Form 10-Q and Article 8 of Regulation S-X.  Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2013, filed with the SEC on March 31, 2014.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) which are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year.

Subsequent Events, Policy [Policy Text Block]

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2014 for items that should potentially be recognized or disclosed in these financial statements.  The evaluation was conducted through the date these financial statements were issued.

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Note 7 - Benefit Plans

9 Months Ended

Sep. 30, 2014

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

(7)  Benefit Plans

The Bank has a 401(k) plan which covers substantially all employees with six months or more of service. The 401(k) plan permits all eligible employees to make contributions to the plan up to the IRS salary deferral limit. The Bank’s contributions to the 401(k) plan are expensed as incurred.

The Company also provides retirement benefits to certain employees under supplemental executive retirement plans.  The plans are unfunded and the Company accrues actuarial determined benefit costs over the estimated service period of the employees in the plan.  The Company recognizes the over funded or under funded status of a defined benefit post-retirement plan as an asset or liability in its Consolidated Balance Sheet and to recognize changes in that funded status in the year in which the changes occur, through comprehensive income.

In connection with the benefit plans, the Bank has life insurance policies on the lives of its executives, directors and divisional officers. The Bank is the owner and beneficiary of the policies. The cash surrender values of the policies total approximately $21.1 million and $16.2 million at September 30, 2014 and December 31, 2013, respectively.

The components of net periodic expense for the Company’s supplemental executive retirement plans for the three month and nine month periods ended September 30, 2014 and 2013 were as follows:

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Service cost	$	102,337		$	30,539		$	159,504		$	214,257
Interest cost		77,583			22,229			120,922			155,951
Actuarial (gain) loss recognized		(3,718	)		(29,893	)		(5,795	)		(209,721	)
Prior service cost recognized		-			942			-			6,611
	$	176,202		$	23,817		$	274,631		$	167,098

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Note 8 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) (Details) - Components of Accumulated Other Comprehensive Income (Loss) (USD $)	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Unrealized holding (losses) gains on available-for-sale securities:
Accumulated other comprehensive income (loss) before tax	$ (387,398)		$ (3,466,332)
Accumulated other comprehensive income (loss) income tax effect	76,338		1,218,698
Accumulated other comprehensive income (loss) net of tax	(311,060)	(628,084)	(2,247,634)	(2,065,546)	(2,068,038)	804,293
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Unrealized holding (losses) gains on available-for-sale securities:
Accumulated other comprehensive income (loss) before tax	(231,763)		(2,992,624)
Accumulated other comprehensive income (loss) income tax effect	44,966		1,060,098
Accumulated other comprehensive income (loss) net of tax	(186,797)	(408,136)	(1,932,526)	(1,712,480)	(1,677,012)	1,235,204
Accumulated Other-than-Temporary Impairment [Member]
Unrealized holding (losses) gains on available-for-sale securities:
Accumulated other comprehensive income (loss) before tax	(500,944)		(500,944)
Accumulated other comprehensive income (loss) income tax effect	170,321		170,321
Accumulated other comprehensive income (loss) net of tax	(330,623)	(330,623)	(330,623)	(330,623)	(330,623)	(330,623)
Accumulated Defined Benefit Plans Adjustment, Net Unamortized Gain (Loss) [Member]
Unrealized holding (losses) gains on available-for-sale securities:
Accumulated other comprehensive income (loss) before tax	345,309		27,236
Accumulated other comprehensive income (loss) income tax effect	(138,949)		(11,721)
Accumulated other comprehensive income (loss) net of tax	$ 206,360		$ 15,515

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(5)   Allowance for Loan Losses and Credit Quality Disclosure

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans and mortgage warehouse lines of credit.  Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values.  Any one, or a combination, of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

The following table provides an aging of the loan portfolio by loan class at September 30, 2014:

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	-	$	-	$	88,547,583	$	88,547,583	$	-	$	-
Commercial Business		959,386		14,051		390,396		1,363,833		107,689,596		109,053,429		-		356,577
Commercial Real Estate		2,290,804		-		6,119,386		8,410,190		183,957,654		192,367,844		-		5,787,533
Mortgage Warehouse Lines		-		-		-		-		157,333,717		157,333,717		-		-
Residential Real Estate		-		-		1,714,972		1,714,972		47,017,079		48,732,051		320,315		1,394,657
Consumer
Loans to Individuals		279,909		-		-		279,909		23,083,133		23,363,042		-		-
Other		-		-		-		-		197,704		197,704		-		-
Deferred Loan Costs		-		-		-		-		800,548		800,548		-		-
Total	$	3,530,099	$	14,051	$	8,224,754	$	11,768,904	$	608,627,014	$	620,395,918		320,315	$	7,538,767

As provided by ASC 310-30, the excess of cash flows expected at acquisition over the initial investment in the loan is recognized as interest income over the life of the loan. Accordingly, loans acquired with evidence of deteriorated credit quality of $1,246,640 at September 30, 2014 were not classified as non-performing loans. Of this amount, loans aggregating $699,287 were included in the Greater than 90 Days category.

The following table provides an aging of the loan portfolio by loan class at December 31, 2013:

	30-59 Days		60-89 Days		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment > 90 Days Accruing		Nonaccrual Loans
Commercial
Construction	$	-	$	-	$	-	$	-	$	51,002,172	$	51,002,172	$	-	$	-
Commercial Business		385,133		58,665		453,325		897,123		81,450,932		82,348,055		-		511,990
Commercial Real Estate		-		-		5,217,173		5,217,173		93,172,557		98,389,730		-		5,555,851
Mortgage Warehouse Lines		-		-		-		-		116,951,357		116,951,357		-		-
Residential Real Estate		315,615		967,099		33,494		1,316,208		12,447,970		13,764,178		-		162,012
Consumer
Loans to Individuals		-		-		-		-		9,766,114		9,766,114		-		92,103
Other		-		-		-		-		170,526		170,526		-		-
Deferred Loan Costs		-		-		-		-		943,950		943,950		-		-
Total	$	700,748	$	1,025,764	$	5,703,992	$	7,430,504	$	365,905,578	$	373,336,082		-	$	6,321,956

Management reviews the adequacy of the allowance on at least a quarterly basis to ensure that the provision for loan losses has been charged against earnings in an amount necessary to maintain the allowance at a level that is adequate based on management’s assessment of probable estimated losses. The Company’s methodology for assessing the adequacy of the allowance for loan losses consists of several key elements and is consistent with generally accepted accounting principles (GAAP) and regulatory interagency supervisory guidance. The allowance for loan losses methodology consists of two major components. The first component is an estimation of losses associated with individually identified impaired loans, which follows Accounting Standards Codification (ASC) Topic 310 (formerly SFAS 114). The second major component is an estimation of losses under ASC Topic 450 (formerly SFAS 5), which provides guidance for estimating losses on groups of loans with similar risk characteristics. The Company’s methodology results in an allowance for loan losses which includes a specific reserve for impaired loans, an allocated reserve, and an unallocated portion.

When analyzing groups of loans under ASC 450, the Bank follows the Interagency Policy Statement on the Allowance for Loan and Lease Losses. The methodology considers the Company’s historical loss experience adjusted for changes in trends, conditions, and other relevant factors that affect repayment of the loans as of the evaluation date. These adjustment factors, known as qualitative factors, include:

● Delinquencies and nonaccruals

● Portfolio quality

● Concentration of credit

● Trends in volume of loans

● Quality of collateral

● Policy and procedures

● Experience, ability, and depth of management

● Economic trends – national and local

● External factors – competition, legal and regulatory

The methodology includes the segregation of the loan portfolio into loan types with a further segregation into internal risk rating categories, such as special mention, substandard, doubtful, and loss. This allows for an allocation of the allowance for loan losses by loan type; however, the allowance is available to absorb any loan loss without restriction. Larger balance, non-homogeneous loans representing significant individual credit exposures are evaluated individually through the internal loan review process. It is this process that produces the watch list. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated. Based on these reviews, an estimate of probable losses for the individual larger-balance loans are determined, whenever possible, and used to establish specific loan loss reserves. In general, for non-homogeneous loans not individually assessed and for homogeneous groups, such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The watch list includes loans that are assigned a rating of special mention, substandard, doubtful and loss. Loans rated as special mention have potential weaknesses that deserve management’s close attention. If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects. Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable. Loans rated as doubtful in whole, or in part, are placed in nonaccrual status. Loans classified as a loss are considered uncollectible and are charged off against the allowance for loan losses.

The specific allowance for impaired loans is established for specific loans that have been identified by management as being impaired. These loans are considered to be impaired primarily because the loans have not performed according to payment terms and there is reason to believe that repayment of the loan principal in whole or in part, is unlikely. The specific portion of the allowance is the total amount of potential unconfirmed losses for these individual impaired loans. To assist in determining the fair value of loan collateral, the Company often utilizes independent third party qualified appraisal firms which in turn employ their own criteria and assumptions that may include occupancy rates, rental rates, and property expenses, among others.

The second category of reserves consists of the allocated portion of the allowance. The allocated portion of the allowance is determined by taking pools of loans outstanding that have similar characteristics and applying historical loss experience for each pool. This estimate represents the potential unconfirmed losses within the portfolio. Individual loan pools are created for commercial and commercial real estate loans, construction loans, warehouse lines of credit and various types of loans to individuals. The historical estimation for each loan pool is then adjusted to account for current conditions, current loan portfolio performance, loan policy or management changes, or any other qualitative factor which may cause future losses to deviate from historical levels.

The Company also maintains an unallocated allowance. The unallocated allowance is used to cover any factors or conditions which may cause a potential loan loss but are not specifically identifiable. It is prudent to maintain an unallocated portion of the allowance because no matter how detailed an analysis of potential loan losses is performed, these estimates by definition lack precision. Management must make estimates using assumptions and information that is often subjective and changing rapidly.

The following discusses the risk characteristics of each of our loan portfolio segments, commercial, mortgage warehouse lines of credit, and consumer.

Commercial

The Company’s primary lending emphasis is the origination of commercial and commercial real estate loans. Based on the composition of the loan portfolio, the inherent primary risks are deteriorating credit quality, a decline in the economy, and a decline in New Jersey real estate market values. Any one or a combination of these events may adversely affect the loan portfolio and may result in increased delinquencies, loan losses and increased future provision levels.

Mortgage Warehouse Lines of Credit

The Company’s Mortgage Warehouse Group provides revolving lines of credit that are available to licensed mortgage banking companies (the “Warehouse Line of Credit”). The Warehouse Line of Credit is used by the mortgage banker to fund the origination of one-to-four family residential mortgage loans that are pre-sold to the secondary mortgage market, which includes state and national banks, national mortgage banking firms, insurance companies and government-sponsored enterprises, including the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and others. On average, an advance under the Warehouse Line of Credit remains outstanding for a period of less than 30 days, with repayment coming directly from the sale of the loan into the secondary mortgage market. Interest and a transaction fee are collected by the Bank at the time of repayment. Additionally, customers of the Warehouse Lines of Credit are required to maintain deposit relationships with the Bank that, on average, represent 10% to 15% of the loan balances.

As a separate segment of the total portfolio, the warehouse loan portfolio is analyzed as a whole for allowance for loan losses purposes. Warehouse lines of credit are subject to the same inherent risks as other commercial lending, but the overall degree of risk differs. While the Company’s loss experience with this type of lending has been non-existent since the product was introduced in 2008; there are other risks unique to this lending that still must be considered in assessing the adequacy of the allowance for loan losses. These unique risks may include, but are not limited to, (i) credit risks relating to the mortgage bankers that borrow from us, (ii) the risk of intentional misrepresentation or fraud by any of such mortgage bankers, (iii) changes in the market value of mortgage loans originated by the mortgage banker, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit, due to changes in interest rates during the time in warehouse, or (iv) unsalable or impaired mortgage loans so originated, which could lead to decreased collateral value and the failure of a purchaser of the mortgage loan to purchase the loan from the mortgage banker.

These factors, along with the other qualitative factors such as economic trends, concentrations of credit, trends in the volume of loans, portfolio quality, delinquencies and nonaccruals, are also considered and may have positive or negative effects on the allocated allowance. The aggregate amount resulting from the application of these qualitative factors determines the overall risk for the portfolio and results in an allocated allowance for warehouse lines of credit.

Consumer

The Company’s loan portfolio consumer segment is comprised of residential real estate loans, home equity loans and other loans to individuals. Individual loan pools are created for the various types of loans to individuals.

In general, for homogeneous groups such as residential mortgages and consumer credits, the loans are collectively evaluated based on delinquency status, loan type, and historical losses. These loan groups are then internally risk rated.

The Company considers the following credit quality indicators in assessing the risk in the loan portfolio:

● Consumer credit scores

● Internal credit risk grades

● Loan-to-value ratios

● Collateral

● Collection experience

The Company’s internal credit risk grades are based on the definitions currently utilized by the banking regulatory agencies. The grades assigned and definitions are as follows, and loans graded excellent, above average, good and watch list are treated as “pass” for grading purposes:

1. Excellent - Loans that are based upon cash collateral held at the Bank and adequately margined. Loans that are based upon "blue chip" stocks listed on the major exchanges and adequately margined.

2. Above Average - Loans to companies whose balance sheets show excellent liquidity and long-term debt is on well-spread schedules of repayment easily covered by cash flow. Such companies have been consistently profitable and have diversification in their product lines or sources of revenue. The continuation of profitable operations for the foreseeable future is likely. Management is comprised of a mix of ages, experience, and backgrounds and management succession is in place. Sources of raw materials are abundant, and for service companies, the source of revenue is abundant. Future needs have been planned for. Character and management ability of individuals or company principals are excellent. Loans to individuals are supported by high net worths and liquid assets.

3. Good - Loans to companies whose balance sheets show good liquidity and cash flow adequate to meet maturities of long-term debt with a comfortable margin. Such companies have established profitable records over a number of years, and there has been growth in net worth. Operating ratios are in line with those of the industry, and expenses are in proper relationship to the volume of business done and the profits achieved. Management is well-balanced and competent in their responsibilities. Economic environment is favorable; however, competition is strong. The prospects for growth are good. Loans in this category do not meet the collateral requirements of loans in categories 1 and 2 above. Loans to individuals are supported by good net worths but whose supporting assets are illiquid.

3w. Watch - Included in this category are loans evidencing problems identified by Bank management that require closer supervision. Such problem has not developed to the point which requires a Special Mention rating. This category also covers situations where the Bank does not have adequate current information upon which credit quality can be determined. The account officer has the obligation to correct these deficiencies within 30 days from the time of notification.

4. Special Mention - Loans or borrowing relationships that require more than the usual amount of attention by Bank management. Industry conditions may be adverse or weak. The borrower's ability to meet current payment schedules may be questionable, even though interest and principal are being paid as agreed. Heavy reliance has been placed on the collateral. Profits, if any, are interspersed with losses. Management is “one man,” ineffective or there is no plan for management succession. Expectations of a loan loss are not immediate; however, if present trends continue, a loan loss could be expected.

5. Substandard - Loans in this category possess weaknesses that jeopardize the ultimate collection of total outstandings. These weaknesses require close supervision by Bank management. Current financial statements are unavailable and the loan is inadequately protected by the collateral pledged.

6. Doubtful - Loans with the same weaknesses inherent in the substandard classification and where collection or liquidation in full is highly questionable. It is likely that the loan will not be collected in full and the Bank will suffer some loss which is not quantifiable at the time of review.

7. Loss - Loans considered uncollectable and of such little value that their continuance as an active asset is not warranted. Loans in this category should be charged off to the Bank's loan loss reserve. Any accrued interest should be backed out of income.

The following table provides a breakdown of the loan portfolio by credit quality indicator at September 30, 2014.

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	88,353,183	$	100,658,477	$	167,521,583	$	157,333,717	$	47,017,079
Special Mention		194,400		7,645,736		14,177,468		-		127,977
Substandard		-		715,397		10,668,793		-		1,586,995
Doubtful		-		33,819		-		-		-
Total	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051

	Loans To Individuals		Other
Consumer Credit Exposure - By Payment Activity
Performing	$	23,363,042	$	197,704
Nonperforming		-		-
Total	$	23,363,042	$	197,704

The following table provides a breakdown of the loan portfolio by credit quality indictor at December 31, 2013.

Commercial Credit Exposure - By Internally Assigned Grade	Construction		Commercial Business		Commercial Real Estate		Mortgage Warehouse Lines		Residential Real Estate
Grade:
Pass	$	47,539,033	$	79,832,704	$	68,620,450	$	116,951,357	$	12,635,067
Special Mention		-		1,406,143		19,396,574		-		1,129,111
Substandard		3,463,139		792,057		10,372,706		-		-
Doubtful		-		258,486
Loss		-		58,665		-		-		-
Total	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178

Consumer Credit Exposure - By Payment Activity	Loans To Individuals		Other
Performing	$	9,674,011	$	170,526
Nonperforming		92,103		-
Total	$	9,766,114	$	170,526

Impaired Loans Disclosures

Loans are considered to be impaired when, based on current information and events, it is determined that the Company will not be able to collect all amounts due according to the loan contract, including scheduled      interest payments.  When a loan is placed on nonaccrual status, it is also considered to be impaired.  Loans are placed on nonaccrual status when: (1) the full collection of interest or principal becomes uncertain; or (2) they are contractually past due 90 days or more as to interest or principal payments unless the loans are both well secured and in the process of collection.

The following tables summarize the distribution of the allowance for loan losses and loans receivable by loan class and impairment method at September 30, 2014 and December 31, 2013:

 Period-End Allowance for Loan Losses by Impairment Method September 30, 2014 

					Commercial		Mortgage		Residential								Loan
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs		Total
Allowance for loan losses:
Ending Balance	$	1,099,053	$	1,641,189	$	2,974,785	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	7,107,872
Ending Balance
Individually evaluated for impairment		-		1,874		1,274,380		-		-		-		-		-		-		1,276,254
Collectively evaluated for impairment	$	1,099,053	$	1,639,315	$	1,700,405	$	786,669	$	202,146	$	91,417	$	1,583	$	311,030	$	-	$	5,831,618
Loans receivables:
Ending Balance	$	88,547,583	$	109,053,429	$	192,367,844	$	157,333,717	$	48,732,051	$	23,363,042	$	197,704	$	-	$	800,548	$	620,395,918
Individually evaluated for impairment		449,663		492,940		9,129,396		-		1,394,657		-		-		-		-		11,466,656
Loans acquired with deteriorated credit quality		-		332,175		1,713,910		-		-		-		-		-		-		2,046,085
Collectively evaluated for impairment	$	88,097,920	$	108,228,314	$	181,524,538	$	157,333,717	$	47,337,394	$	23,363,042	$	197,704	$	-	$	800,548	$	606,883,177

Period-End Allowance for Loan Losses by Impairment Method December 31, 2013 

					Commercial		Mortgage		Residential								Loan
	Construction		Commercial		Real Estate		Warehouse		Real Estate		Consumer		Other		Unallocated		Costs		Total
Allowance for loan losses:
Ending Balance	$	1,205,267	$	1,271,733	$	3,021,766	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	7,038,571
Ending Balance
Individually evaluated for impairment		-		293,692		1,490,169		-		-		-		-		-		-		1,783,861
Collectively evaluated for impairment	$	1,205,267	$	978,041	$	1,531,597	$	584,757	$	164,673	$	108,849	$	2,183	$	679,343	$	-	$	5,254,710
Loans receivables:
Ending Balance	$	51,002,172	$	82,348,055	$	98,389,730	$	116,951,357	$	13,764,178	$	9,766,114	$	170,526	$	-	$	943,950	$	373,336,082
Individually evaluated for impairment		19,930		776,101		9,130,605		-		162,012		92,103		-		-		-		10,180,751
Collectively evaluated for impairment	$	50,982,242	$	81,571,954	$	89,259,125	$	116,951,357	$	13,602,166	$	9,674,011	$	170,526	$	-	$	943,950	$	363,155,331

The activity in the allowance for loan loss by loan class for the nine months ended September 30, 2014 and 2013 was as follows:

	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2013	$	1,205,267		$	1,271,733		$	3,021,766		$	584,757		$	164,673		$	108,849		$	2,183		$	679,343		$	7,038,571
Provision charged to operations		60,163			454,031			113,961			(63,082	)		17,332			(16,462	)		(560	)		(65,385	)		499,998
Loans charged off		-			(510,952	)		-			-			-			-			-			-			(510,952	)
Recoveries of loans charged off		-			3,225			-			-			-			-			-			-			3,225
Balance – March 31, 2014	$	1,265,430		$	1,218,037		$	3,135,727		$	521,675		$	182,005		$	92,387		$	1,623		$	613,958		$	7,030,842
Provision charged to operations		(315,416	)		4,041,190			471,356			387,884			(9,152	)		(1,655	)		42			(474,251	)		4,099,998
Loans charged off		-			(3,713,789	)		-			-			-			-			-			-			(3,713,789	)
Recoveries of loans charged off		-			1,328			-			-			-			-			-			-			1,328
Balance – June 30, 2014	$	950,014		$	1,546,766		$	3,607,083		$	909,559		$	172,853		$	90,732		$	1,665		$	139,707		$	7,418,379
Provision charged to operations		149,039			185,109			222,506			(122,890	)		44,308			685			(82	)		171,323			649,998
Loans charged off		-			(99,402	)		(893,804	)		-			(15,015	)		-			-			-			(1,008,221	)
Recoveries of loans charged off		-			8,716			39,000			-			-			-			-			-			47,716
Balance September 30, 2014	$	1,099,053		$	1,641,189		$	2,974,785		$	786,669		$	202,146		$	91,417		$	1,583		$	311,030		$	7,107,872

	Construction			Commercial Business			Commercial Real Estate			Mortgage Warehouse			Residential Real Estate			Consumer			Other			Unallocated			Total
Balance - December 31, 2012	$	1,990,292		$	972,789		$	2,262,221		$	1,420,638		$	112,103		$	102,583		$	2,271		$	288,315		$	7,151,212
Provision charged to operations		(218,010	)		(18,319	)		245,769			(429,900	)		262			50,506			(212	)		369,804			-
Loans charged off		(561,993	)		(139,289	)		(384,688	)		-			-			(50,855	)		-			-			(1,136,825	)
Recoveries of loans charged off		-			2,000			6,895			-			-			-			-			-			8,895
Balance – March 31, 2013	$	1,210,289		$	817,181		$	2,130,197		$	990,738		$	112,365		$	102,334		$	2,059		$	658,119		$	6,023,282
Provision charged to operations		1,872			160,164			321,659			(62,039	)		(19,632	)		(2,444	)		45			(162,958	)		236,667
Loans charged off		-			-			-			-			-			-			-			-			-
Recoveries of loans charged off		417			8,574			-			-			-			-			-			-			8,991
Balance – June 30, 2013	$	1,212,578		$	985,919		$	2,451,856		$	928,699		$	92,733		$	99,890		$	2,104		$	495,161		$	6,268,940
Provision charged to operations		(4,555	)		34,446			612,392			(256,028	)		49,093			10,178			(53	)		94,525			539,998
Loans charged off		-			(2,068	)		-			-			-			-			-			-			(2,068	)
Recoveries of loans charged off		-			13,310			-			-			-			-			-			-			13,310
Balance – September 30, 2013	$	1,208,023		$	1,031,607		$	3,064,248		$	672,671		$	141,826		$	110,068		$	2,051		$	589,686		$	6,820,180

When a loan is identified as impaired, the measurement of impairment is based on the present value of expected future cash flows, discounted at the loan’s effective interest rate, except when the sole remaining source of repayment for the loan is the liquidation of the collateral.  In such cases, the current fair value of the collateral less selling costs is used.  If the value of the impaired loan is less than the recorded investment in the loan, the impairment is recognized through an allowance estimate or a charge to the allowance.

Impaired Loans Receivables (By Class) September 30, 2014							Three months ended September 30, 2014				Nine months ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	449,663	$	449,663	$	-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial Business		793,992		1,380,582		-		786,051		6,971		579,721		20,055
Commercial Real Estate		2,913,499		3,215,830		-		2,431,613		35,288		1,511,916		105,522
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		4,157,154		5,046,075		-		3,667,327		48,393		2,394,293		136,532
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer
Loans to individuals		-		-		-		77,329		8,164		135,612		15,433
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		77,329		8,164		135,612		15,433
With no related allowance	$	5,551,811	$	6,455,747	$	-	$	5,212,691	$	63,230	$	3,827,987	$	172,907
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial Business		31,123		31,123		1,874		94,772		-		245,858		-
Commercial Real Estate		7,929,807		8,638,477		1,274,380		8,700,575		54,695		8,975,029		160,475
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		7,960,930		8,669,600		1,276,254		8,795,347		54,695		9,220,887		160,475
Residential Real Estate		-		-		-		-		-		-		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		-		-
Subtotal		-		-		-		-		-		-		-
With an allowance	$	7,960,930	$	8,669,600	$	1,276,254	$	8,795,347	$	54,695	$	9,220,887	$	160,475
Total:
Construction	$	449,663	$	449,663		-	$	449,663	$	6,134	$	302,656	$	10,955
Commercial		-		-		-		-		-		-		-
Commercial Business		825,115		1,411,705		1,874		880,823		6,971		825,579		20,055
Commercial Real Estate		10,843,306		11,854,307		1,274,380		11,132,188		89,983		10,468,945		265,997
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Residential Real Estate		1,394,657		1,409,672		-		1,468,125		6,673		1,298,082		20,942
Consumer				-		-		77,239		8,164		135,612		15,433
Total	$	13,512,741	$	15,125,347	$	1,276,254	$	14,008,038	$	117,925	$	13,048,874	$	333,382

Impaired Loans Receivables (By Class) December 31 , 2013							Year ended 12/31/2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	19,930	$	19,930	$	-	$	965,268	$	33,946
Commercial Business		243,840		400,297				258,139		5,094
Commercial Real Estate		-		-		-		1,032,115		-
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		263,770		420,227		-		2,255,522		39,040
Residential Real Estate		162,012		162,012		-		117,746		-
Consumer
Loans to Individuals		92,103		92,103		-		34,292		-
Other		-		-		-		-		-
Subtotal		92,103		92,103		-		34,292		-
With no related allowance	$	517,885	$	674,342	$	-	$	2,407,560	$	39,040
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	246,853	$	-
Commercial Business		532,261		532,261		293,692		562,346		9,728
Commercial Real Estate		9,130,605		9,130,605		1,490,169		5,546,690		247,277
Mortgage Warehouse Lines		-		-		-		-		-
Subtotal		9,662,866		9,662,866		1,783,861		6,355,889		257,005
Residential Real Estate		-		-		-		44,196		-
Consumer
Loans to Individuals		-		-		-		4,238		-
Other		-		-		-		-		-
Subtotal		-		-		-		4,238		-
With an allowance	$	9,662,866	$	9,662,866	$	1,783,861	$	6,404,323	$	257,005
Total:
Construction		19,930		19,930		-		1,212,121		33,946
Commercial Business		776,101		932,558		293,692		820,485		14,822
Commercial Real Estate		9,130,605		9,130,605		1,490,169		6,578,805		247,277
Mortgage Warehouse		-		-		-		-		-
Residential Real Estate		162,012		162,012		-		161,942		-
Consumer		92,103		92,103		-		38,530		-
Total	$	10,180,751	$	10,337,208	$	1,783,861	$	8,811,883	$	296,045

Impaired Loans Receivables (By Class) – September 30, 2013
							Three months ended				Nine months ended
							September 30, 2013				September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Commercial
Construction	$	1,015,112	$	1,015,112	$	-	$	1,184,249	$	4,660	$	636,741	$	37,420
Commercial Business		225,899		382,356		-		157,334		1,516		532,119		-
Commercial Real Estate		-		-		-		4,004,515		-		1,480,516		-
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		1,241,011		1,397,468		-		5,346,098		6,176		2,649,376		-
Residential Real Estate		164,542		164,542		-		164,542		-		102,706		-
Consumer
Loans to Individuals		-		-		-		-		-		-		-
Other		-		-		-		-		-		22,540		-
Subtotal				-		-		-		-		22,540		-
With no related allowance:	$	1,405,553	$	1,562,010	$	-	$	5,510,640	$	6,176		2,774,622		37,420
With an allowance:
Commercial
Construction	$	-	$	-	$	-	$	-	$	-	$	329,138	$	-
Commercial Business		475,136		475,136		235,027		566,473		3,915		578,713		28,570
Commercial Real Estate		9,646,821		9,646,821		1,476,632		6,184,255		61,306		4,326,187		182,967
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Subtotal		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,234,038		211,537
Residential Real Estate		-		-		-		-		-		58,928		-
Consumer
Loans to Individuals		-		-		-		-		-		5,650
Other		-		-		-		-		-		-
Subtotal		-		-		-		-		-		5,650		-
With an allowance:		10,121,957		10,121,957		1,711,659		6,750,728		65,221		5,298,616		-
Total:
Construction		-		-		-		-		-		-		-
Commercial		11,362,968		11,519,425		1,711,659		12,096,826		71,397		7,883,414		248,957
Commercial Business		-		-		-		-		-		-		-
Commercial Real Estate		-		-		-		-		-		-		-
Mortgage Warehouse Lines		-		-		-		-		-		-		-
Residential Real Estate		164,542		164,542		-		164,542		-		161,634		-
Consumer		-		-		-		-		-		28,190		-
Total	$	11,527,510	$	11,683,967	$	1,711,659	$	12,261,368	$	71,397	$	8,073,238	$	248,957

In the normal course of business, the Bank may consider modifying loan terms for various reasons. These reasons may include as a retention strategy to compete in the current interest rate environment or as a re-amortization or extension of a loan term to better match the loan’s repayment stream with the borrower’s cash flow. A modified loan would be considered a troubled debt restructuring (“TDR”) if the Bank grants a concession to a borrower and has determined that the borrower is troubled (i.e., experiencing financial difficulties).

If the Bank restructures a loan to a troubled borrower, the loan terms (i.e. interest rate, payment, amortization period and maturity date) may be modified in various ways to enable the borrower to cover the modified debt service payments based on current financial statements and cash flow adequacy. If a borrower’s hardship is thought to be temporary, then modified terms may only be offered for that time period. Where possible, the Bank would attempt to obtain additional collateral and/or secondary repayment sources at the time of the restructure in order to put the Bank in the best possible position if the borrower is not able to meet the modified terms. The Bank will not offer modified terms if it believes that modifying the loan terms will only delay an inevitable permanent default. In evaluating whether a restructuring constitutes a troubled debt restructuring, applicable guidance requires that a creditor must separately conclude that the restructuring constitutes a concession and the borrower is experiencing financial difficulties.

At September 30, 2014 the Bank had 9 loans totaling $4,288,699 which were classified as troubled debt restructurings.

The following table is a summary of troubled debt restructurings, all of which were classified as impaired and occurred during the three months ended September 30, 2014. 

	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings:
Commercial		2	$	31,123	$	31,123
Commercial Real Estate		-		-		-
Residential Real Estate		-		-		-

There were no loans modified that were TDR’s during the three and nine month periods ended September 30, 2014 and September 30, 2013 that were in default.

Changes in the accretable discount for acquired credit impaired loans for the nine months ended September 30, 2014 were as follows:

Balance at beginning of period	$	-
Acquisition of impaired loans		240,917
Accretion of discount		(84,409	)
Balance at end of period	$	156,508

The following table presents additional information regarding loans acquired and accounted for in accordance with ASC 310-30:

	February 7, 2014		September 30, 2014
	Acquired loans with Evidence of Credit Deterioration		Acquired loans with Evidence of Credit Deterioration
Outstanding balance	$	3,409,340	$	2,746,260
Carrying amount	$	2,613,826	$	2,046,085

There were no changes in the expected cash flows of these loans during the nine month period ended September 30, 2014. No allowance for loan losses has been recorded for acquired loans with or without evidence of deterioration as of the acquisition date or as of September 30, 2014.

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Note 6 - Share-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

(6)  Share-Based Compensation

The Company’s share-based incentive plans (“Stock Plans”) authorize the issuance of an aggregate of 440,701 shares of the Company’s common stock (as adjusted for stock dividends) pursuant to awards that may be granted in the form of stock options to purchase common stock (“Options”) and awards of shares of common stock (“Stock Awards”).  The purpose of the Stock Plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, employees and other persons to promote the success of the Company.  Under the Stock Plans, options have a term of ten years after the date of grant, subject to earlier termination in certain circumstances.  Options are granted with an exercise price at the then fair market value of the Company’s common stock. The grant date fair value of the option is calculated using the Black – Scholes option valuation model.  As of September 30, 2014, there were 317,866 shares of common stock available for future grants under the Stock Plans, of which 271,740 shares are available for future grants under the 2013 Equity Incentive Plan and 46,126 shares are available for future grant under the 2006 Directors Stock Plan.

Share-based compensation expense related to options was $77,123 and $75,949 for the nine months ended September 30, 2014 and 2013, respectively.

Transactions under the Stock Plans during the nine months ended September 30, 2014 are summarized as follows:

					Weighted
					Average
			Weighted		Remaining		Aggregate
	Number of		Average		Contractual		Intrinsic
Stock Options	Shares		Exercise Price		Term (years)		Value
Outstanding at January 1, 2014		235,598	$	8.81
Granted		11,700		11.02
Exercised		-		-
Forfeited		-		-
Expired		-		-
Outstanding at September 30, 2014		247,298	$	8.91		5.1	$	502,395
Exercisable at September 30, 2014		199,881	$	9.17		4.5	$	380,591

The fair value of each option and the significant weighted average assumptions used to calculate the fair value of the options granted for the nine months ended September 30, 2014 are as follows:

	January 2014			April 2014
Fair value of options granted	$	4.75		$	4.32
Risk-free rate of return		1.65	%		1.70	%
Expected option life in years		7			7
Expected volatility		38.01	%		38.01	%
Expected dividends (1)		-			-

(1) To date, the Company has not paid cash dividends on its common stock.

As of September 30, 2014, there was approximately $62,341 of unrecognized compensation cost related to nonvested stock option- based compensation arrangements granted under the Company’s stock incentive plans. That cost is expected to be recognized over the next four years.

The following table summarizes nonvested restricted shares for the nine months ended September 30, 2014:

				Average
	Number of			Grant-Date
Non-vested shares	Shares			Fair Value
Non-vested at January 1, 2014		136,490		$	6.59
Granted		60,100			10.81
Vested		(55,410	)		8.77
Forfeited		-			-
Non-vested at September 30, 2014		141,180		$	7.53

The value of restricted shares is based upon the closing price of the common stock on the date of grant. The shares generally vest over a four year service period with compensation expense recognized on a straight-line basis.

Stock based compensation expense related to stock grants was $366,550 and $326,085 for the nine months ended September 30, 2014 and 2013.

As of September 30, 2014, there was approximately $1,141,472 of unrecognized compensation cost related to non-vested stock grants that will be recognized over the next three years.

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Note 8 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Comprehensive Income (Loss) Note [Text Block]

(8)  Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss)

Comprehensive income (loss) is the total of (1) net income (loss), and (2) all other changes in equity from non-shareholder sources, which are referred to as other comprehensive income (loss). The components of accumulated other comprehensive income (loss), and the related tax effects, are as follows:

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
September 30, 2014:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(231,763	)	$	44,966		$	(186,797	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		345,309			(138,949	)		206,360
Accumulated other comprehensive income ( loss)	$	(387,398	)	$	76,338		$	(311,060	)

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
December 31, 2013:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(2,992,624	)	$	1,060,098		$	(1,932,526	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		27,236			(11,721	)		15,515
Accumulated other comprehensive income ( loss)	$	(3,466,332	)	$	1,218,698		$	(2,247,634	)

Changes in the components of accumulated other comprehensive income (loss) for the three and nine month periods ended September 30, 2014 and September 30, 2013 are as follows and are presented net of tax:

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2014:
Balance, beginning of period	$	(408,136	)	$	(330,623	)	$	110,675	$	(628,084	)
Other comprehensive income (loss) before reclassifications		221,339			-			95,685		317,024
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-		-
Other comprehensive income		221,339			-			95,685		317,024
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2013:
Balance, beginning of period	$	(1,677,012	)	$	(330,623	)	$	(60,403	)	$	(2,068,038	)
Other comprehensive income (loss) before reclassifications		(35,468	)		-			37,960			2,492
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-			-
Other comprehensive income		(35,468	)		-			37,960			2,492
Balance, end of period	$	(1,712,480	)	$	(330,623	)	$	(22,443	)	$	(2,065,546	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Nine Months Ended September 30, 2014:
Balance, beginning of period	$	(1,932,526	)	$	(330,623	)	$	15,515	$	(2,247,634	)
Other comprehensive income (loss) before reclassifications		1,744,219			-			190,845		1,935,064
Amounts reclassified from accumulated other comprehensive income (loss), net of tax (1)		1,510			-			-		1,510
Other comprehensive income		1,745,729			-			190,845		1,936,574
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

(1) Amounts reclassified are included in Other Income on the Consolidated Statement of Income.

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income
Nine Months Ended September 30, 2013:
Balance, beginning of period	$	1,235,204		$	(330,623	)	$	(100,288	)	$	804,293
Other comprehensive income (loss) before reclassifications		(2,947,683	)		-			77,884			(2,869,839	)
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-			-
Other comprehensive income (loss)		(2,947,683	)		-			77,884			(2,869,839	)
Balance, end of period	$	(1,712,479	)	$	(330,623	)	$	(22,444	)	$	(2,065,546	)

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Note 10 - Fair Value Disclosures (Details) - Financial Assets and Liabillities at Fair Value Measured on Non-recurring Basis (USD $)	Sep. 30, 2014	Dec. 31, 2013
Note 10 - Fair Value Disclosures (Details) - Financial Assets and Liabillities at Fair Value Measured on Non-recurring Basis [Line Items]
Impaired loans	$ 7,265,700	$ 7,879,005
Other real estate owned	1,748,455	209,937
Fair Value, Inputs, Level 3 [Member]
Note 10 - Fair Value Disclosures (Details) - Financial Assets and Liabillities at Fair Value Measured on Non-recurring Basis [Line Items]
Impaired loans	7,265,700	7,879,005
Other real estate owned	$ 1,748,455	$ 209,937

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Note 10 - Fair Value Disclosures (Details) - Estimated Fair Value of Financial Assets and Liabilities (USD $)	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 20,371,823	$ 69,278,771
Cash and cash equivalents, fair value	20,371,823	69,278,771
Securities available for sale	103,959,466	99,198,807
Securities held to maturity	148,182,693	152,816,815
Securities held to maturity, fair value	152,466,765	153,629,773
Loans held for sale	9,459,172	10,923,689
Loans held for sale, fair value	9,602,000	10,924,000
Loans	613,288,046	366,297,511
Loans, fair value	615,200,000	372,548,000
Accrued interest receivable	2,798,265	2,542,602
Accrued interest receivable, fair value	2,798,265	2,542,602
Deposits	(823,564,746)	(638,552,030)
Deposits, fair value	(824,154,000)	(639,539,000)
Borrowings	(20,798,473)	(10,000,000)
Borrowings, fair value	(21,509,000)	(11,148,000)
Redeemable subordinated debentures	(18,557,000)	(18,557,000)
Redeemable subordinated debentures, fair value	(18,557,000)	(18,557,000)
Accrued interest payable	(802,851)	(883,212)
Accrued interest payable, fair value	(802,851)	(883,212)
Fair Value, Inputs, Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents, fair value	20,371,823	69,278,771
Securities available for sale	9,470,990	19,994,430
Fair Value, Inputs, Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	94,488,476	79,204,377
Securities held to maturity, fair value	152,466,765	153,629,773
Loans held for sale, fair value	9,602,000	10,924,000
Accrued interest receivable, fair value	2,798,265	2,542,602
Deposits, fair value	(82,415,400)	(639,539,000)
Borrowings, fair value	(21,509,000)	(11,148,000)
Redeemable subordinated debentures, fair value	(18,557,000)	(18,557,000)
Accrued interest payable, fair value	(802,851)	(883,212)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Loans, fair value	$ 615,200,000	$ 372,548,000

XML

Note 10 - Fair Value Disclosures (Details) - Financial Assets and Liabillities at Fair Value Measured on Recurring Basis (USD $)	Sep. 30, 2014	Dec. 31, 2013
Securities available for sale:
Securities available for sale	$ 103,959,466	$ 99,198,807
US Treasury and Government [Member] | Fair Value, Inputs, Level 1 [Member]
Securities available for sale:
Securities available for sale	9,470,990	19,994,430
US Treasury and Government [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	1,515,705	1,515,270
US Treasury and Government [Member]
Securities available for sale:
Securities available for sale	10,986,695	21,509,700
Residential Collateralized Mortgage Obligations- GSE [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	3,723,664	3,681,792
Residential Collateralized Mortgage Obligations- GSE [Member]
Securities available for sale:
Securities available for sale	3,723,664	3,681,792
Residential Collateralized Mortgage Obligations- Non GSE [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	2,597,664	2,826,396
Residential Collateralized Mortgage Obligations- Non GSE [Member]
Securities available for sale:
Securities available for sale	2,597,664	2,826,396
Residential Mortgage Backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	28,680,367	31,965,947
Residential Mortgage Backed Securities [Member]
Securities available for sale:
Securities available for sale	28,680,367	31,965,947
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	21,618,512	19,646,044
US States and Political Subdivisions Debt Securities [Member]
Securities available for sale:
Securities available for sale	21,618,512	19,646,044
Trust Preferred Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	2,183,700	2,013,100
Trust Preferred Debt Securities [Member]
Securities available for sale:
Securities available for sale	2,183,700	2,013,100
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	32,581,964	16,517,728
Corporate Debt Securities [Member]
Securities available for sale:
Securities available for sale	32,581,964	16,517,728
Equity Securities, Restricted Stock [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	1,561,900	1,013,100
Equity Securities, Restricted Stock [Member]
Securities available for sale:
Securities available for sale	1,561,900	1,013,100
Mutual Fund [Member] | Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	25,000	25,000
Mutual Fund [Member]
Securities available for sale:
Securities available for sale	25,000	25,000
Fair Value, Inputs, Level 1 [Member]
Securities available for sale:
Securities available for sale	9,470,990	19,994,430
Fair Value, Inputs, Level 2 [Member]
Securities available for sale:
Securities available for sale	$ 94,488,476	$ 79,204,377

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Note 3 - Net Income Per Common Share (Details) (Equity Option [Member])	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Equity Option [Member]
Note 3 - Net Income Per Common Share (Details) [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	90,296	247,298	90,296	247,298

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Troubled Debt Restructurings (USD $)	9 Months Ended	3 Months Ended
	Sep. 30, 2014	Sep. 30, 2014 Commercial Portfolio Segment [Member]
Troubled Debt Restructurings:
Number of Contracts	9	2
Pre-Modification Outstanding Recording Investment		$ 31,123
Post-Modification Outstanding Recording Investment		$ 31,123

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Note 3 - Net Income Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended September 30, 2014
	Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net Income	$	2,138,079		7,119,113	$	0.30
Effect of dilutive securities:
Stock options and warrants				122,436
Diluted EPS:
Net plus assumed conversion	$	2,138,079		7,241,549	$	0.30

	Three Months Ended September 30, 2013
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	1,523,238		5,991,480	$	0.25
Effect of Dilutive Securities:
Stock options and warrants				155,182
Diluted EPS:
Net income plus assumed conversions	$	1,523,238		6,146,662	$	0.25

	Nine Months Ended September 30, 2014
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	2,339,873		7,013,776	$	0.33
Effect of Dilutive Securities:
Stock options and warrants				127,792
Diluted EPS:
Net income plus assumed conversions	$	2,339,873		7,141,568	$	0.33

	Nine Months Ended September 30, 2013
	Net Income		Weighted- average shares		Per share amount
Basic earnings per common share:
Net income	$	4,405,588		5,960,294	$	0.74
Effect of Dilutive Securities:
Stock options and warrants				128,539
Diluted EPS:
Net income plus assumed conversions	$	4,405,588		6,088,833	$	0.72

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Note 8 - Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Text Block [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
September 30, 2014:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(231,763	)	$	44,966		$	(186,797	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		345,309			(138,949	)		206,360
Accumulated other comprehensive income ( loss)	$	(387,398	)	$	76,338		$	(311,060	)

	Before-Tax Amount			Income Tax Effect			Net-of-Tax Amount
December 31, 2013:
Unrealized holding (losses) gains on available-for-sale securities:
Unrealized holding (losses) on available-for-sale securities	$	(2,992,624	)	$	1,060,098		$	(1,932,526	)
Unrealized impairment loss on held to maturity security:
Unrealized impairment (loss) on held to maturity security		(500,944	)		170,321			(330,623	)
Unfunded pension liability:
Plan actuarial gains included in other comprehensive income		27,236			(11,721	)		15,515
Accumulated other comprehensive income ( loss)	$	(3,466,332	)	$	1,218,698		$	(2,247,634	)

Components of Accumulated Other Comprehensive Loss [Table Text Block]

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2014:
Balance, beginning of period	$	(408,136	)	$	(330,623	)	$	110,675	$	(628,084	)
Other comprehensive income (loss) before reclassifications		221,339			-			95,685		317,024
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-		-
Other comprehensive income		221,339			-			95,685		317,024
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income (Loss)
Three Months Ended September 30, 2013:
Balance, beginning of period	$	(1,677,012	)	$	(330,623	)	$	(60,403	)	$	(2,068,038	)
Other comprehensive income (loss) before reclassifications		(35,468	)		-			37,960			2,492
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-			-
Other comprehensive income		(35,468	)		-			37,960			2,492
Balance, end of period	$	(1,712,480	)	$	(330,623	)	$	(22,443	)	$	(2,065,546	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability		Accumulated Other Comprehensive Income (Loss)
Nine Months Ended September 30, 2014:
Balance, beginning of period	$	(1,932,526	)	$	(330,623	)	$	15,515	$	(2,247,634	)
Other comprehensive income (loss) before reclassifications		1,744,219			-			190,845		1,935,064
Amounts reclassified from accumulated other comprehensive income (loss), net of tax (1)		1,510			-			-		1,510
Other comprehensive income		1,745,729			-			190,845		1,936,574
Balance, end of period	$	(186,797	)	$	(330,623	)	$	206,360	$	(311,060	)

	Unrealized Holding Gains (Losses) on Available for Sale Securities			Unrealized Impairment Loss on Held to Maturity Security			Unfunded Pension Liability			Accumulated Other Comprehensive Income
Nine Months Ended September 30, 2013:
Balance, beginning of period	$	1,235,204		$	(330,623	)	$	(100,288	)	$	804,293
Other comprehensive income (loss) before reclassifications		(2,947,683	)		-			77,884			(2,869,839	)
Amounts reclassified from accumulated other comprehensive income (loss)		-			-			-			-
Other comprehensive income (loss)		(2,947,683	)		-			77,884			(2,869,839	)
Balance, end of period	$	(1,712,479	)	$	(330,623	)	$	(22,444	)	$	(2,065,546	)

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Note 5 - Allowance for Loan Losses and Credit Quality Disclosure (Details) - Impaired Loans Receivables (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Commercial
With No Related Allowance - Recorded Investment	$ 5,551,811,000,000	$ 1,405,553,000,000	$ 5,551,811,000,000	$ 1,405,553,000,000	$ 517,885
With No Related Allowance - Updaid Principal Balance	6,455,747,000,000	1,562,010,000,000	6,455,747,000,000	1,562,010,000,000	674,342
With No Related Allowance - Average Recorded Investment	5,212,691,000,000	5,510,640,000,000	3,827,987,000,000	2,774,622,000,000	2,407,560
With No Related Allowance - Interest Income Recognized	63,230,000,000	6,176,000,000	172,907,000,000	37,420,000,000	39,040
Commercial
With Related Allowance - Recorded Investment	7,960,930,000,000	10,121,957,000,000	7,960,930,000,000	10,121,957,000,000	9,662,866
With Related Allowance - Updaid Principal Balance	8,669,600,000,000	10,121,957,000,000	8,669,600,000,000	10,121,957,000,000	9,662,866
Related Allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
With Related Allowance - Average Recorded Investment	8,795,347,000,000	6,750,728,000,000	9,220,887,000,000	5,298,616,000,000	6,404,323
With Related Allowance - Interest Income Recognized	54,695,000,000	65,221,000,000	160,475,000,000		257,005
Total:
Recorded Investment	13,512,741,000,000	11,527,510,000,000	13,512,741,000,000	11,527,510,000,000	10,180,751
Updaid Principal Balance	15,125,347,000,000	11,683,967,000,000	15,125,347,000,000	11,683,967,000,000	10,337,208
Related Allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Average Recorded Investment	14,008,038,000,000	12,261,368,000,000	13,048,874,000,000	8,073,238,000,000	8,811,883
Interest Income Recognized	117,925,000,000	71,397,000,000	333,382,000,000	248,957,000,000	296,045
Construction [Member]
Commercial
With No Related Allowance - Recorded Investment	449,663,000,000	1,015,112,000,000	449,663,000,000	1,015,112,000,000	19,930
With No Related Allowance - Updaid Principal Balance	449,663,000,000	1,015,112,000,000	449,663,000,000	1,015,112,000,000	19,930
With No Related Allowance - Average Recorded Investment	449,663,000,000	1,184,249,000,000	302,656,000,000	636,741,000,000	965,268
With No Related Allowance - Interest Income Recognized	6,134,000,000	4,660,000,000	10,955,000,000	37,420,000,000	33,946
Commercial
With Related Allowance - Average Recorded Investment				329,138,000,000	246,853
Total:
Recorded Investment	449,663,000,000		449,663,000,000		19,930
Updaid Principal Balance	449,663,000,000		449,663,000,000		19,930
Average Recorded Investment	449,663,000,000		302,656,000,000		1,212,121
Interest Income Recognized	6,134,000,000		10,955,000,000		33,946
Commercial Business [Member]
Commercial
With No Related Allowance - Recorded Investment	793,992,000,000	225,899,000,000	793,992,000,000	225,899,000,000	243,840
With No Related Allowance - Updaid Principal Balance	1,380,582,000,000	382,356,000,000	1,380,582,000,000	382,356,000,000	400,297
With No Related Allowance - Average Recorded Investment	786,051,000,000	157,334,000,000	579,721,000,000	532,119,000,000	258,139
With No Related Allowance - Interest Income Recognized	6,971,000,000	1,516,000,000	20,055,000,000		5,094
Commercial
With Related Allowance - Recorded Investment	31,123,000,000	475,136,000,000	31,123,000,000	475,136,000,000	532,261
With Related Allowance - Updaid Principal Balance	31,123,000,000	475,136,000,000	31,123,000,000	475,136,000,000	532,261
Related Allowance	1,874,000,000	235,027,000,000	1,874,000,000	235,027,000,000	293,692
With Related Allowance - Average Recorded Investment	94,772,000,000	566,473,000,000	245,858,000,000	578,713,000,000	562,346
With Related Allowance - Interest Income Recognized		3,915,000,000		28,570,000,000	9,728
Total:
Recorded Investment	825,115,000,000		825,115,000,000		776,101
Updaid Principal Balance	1,411,705,000,000		1,411,705,000,000		932,558
Related Allowance	1,874,000,000	235,027,000,000	1,874,000,000	235,027,000,000	293,692
Average Recorded Investment	880,823,000,000		825,579,000,000		820,485
Interest Income Recognized	6,971,000,000		20,055,000,000		14,822
Commercial Real Estate Portfolio Segment [Member]
Commercial
With No Related Allowance - Recorded Investment	2,913,499,000,000		2,913,499,000,000
With No Related Allowance - Updaid Principal Balance	3,215,830,000,000		3,215,830,000,000
With No Related Allowance - Average Recorded Investment	2,431,613,000,000	4,004,515,000,000	1,511,916,000,000	1,480,516,000,000	1,032,115
With No Related Allowance - Interest Income Recognized	35,288,000,000		105,522,000,000
Commercial
With Related Allowance - Recorded Investment	7,929,807,000,000	9,646,821,000,000	7,929,807,000,000	9,646,821,000,000	9,130,605
With Related Allowance - Updaid Principal Balance	8,638,477,000,000	9,646,821,000,000	8,638,477,000,000	9,646,821,000,000	9,130,605
Related Allowance	1,274,380,000,000	1,476,632,000,000	1,274,380,000,000	1,476,632,000,000	1,490,169
With Related Allowance - Average Recorded Investment	8,700,575,000,000	6,184,255,000,000	8,975,029,000,000	4,326,187,000,000	5,546,690
With Related Allowance - Interest Income Recognized	54,695,000,000	61,306,000,000	160,475,000,000	182,967,000,000	247,277
Total:
Recorded Investment	10,843,306,000,000		10,843,306,000,000		9,130,605
Updaid Principal Balance	11,854,307,000,000		11,854,307,000,000		9,130,605
Related Allowance	1,274,380,000,000	1,476,632,000,000	1,274,380,000,000	1,476,632,000,000	1,490,169
Average Recorded Investment	11,132,188,000,000		10,468,945,000,000		6,578,805
Interest Income Recognized	89,983,000,000		265,997,000,000		247,277
Commercial Portfolio Segment [Member]
Commercial
With No Related Allowance - Recorded Investment	4,157,154,000,000	1,241,011,000,000	4,157,154,000,000	1,241,011,000,000	263,770
With No Related Allowance - Updaid Principal Balance	5,046,075,000,000	1,397,468,000,000	5,046,075,000,000	1,397,468,000,000	420,227
With No Related Allowance - Average Recorded Investment	3,667,327,000,000	5,346,098,000,000	2,394,293,000,000	2,649,376,000,000	2,255,522
With No Related Allowance - Interest Income Recognized	48,393,000,000	6,176,000,000	136,532,000,000		39,040
Commercial
With Related Allowance - Recorded Investment	7,960,930,000,000	10,121,957,000,000	7,960,930,000,000	10,121,957,000,000	9,662,866
With Related Allowance - Updaid Principal Balance	8,669,600,000,000	10,121,957,000,000	8,669,600,000,000	10,121,957,000,000	9,662,866
Related Allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
With Related Allowance - Average Recorded Investment	8,795,347,000,000	6,750,728,000,000	9,220,887,000,000	5,234,038,000,000	6,355,889
With Related Allowance - Interest Income Recognized	54,695,000,000	65,221,000,000	160,475,000,000	211,537,000,000	257,005
Total:
Recorded Investment		11,362,968,000,000		11,362,968,000,000
Updaid Principal Balance		11,519,425,000,000		11,519,425,000,000
Related Allowance	1,276,254,000,000	1,711,659,000,000	1,276,254,000,000	1,711,659,000,000	1,783,861
Average Recorded Investment		12,096,826,000,000		7,883,414,000,000
Interest Income Recognized		71,397,000,000		248,957,000,000
Residential Portfolio Segment [Member]
Commercial
With No Related Allowance - Recorded Investment	1,394,657,000,000	164,542,000,000	1,394,657,000,000	164,542,000,000	162,012
With No Related Allowance - Updaid Principal Balance	1,409,672,000,000	164,542,000,000	1,409,672,000,000	164,542,000,000	162,012
With No Related Allowance - Average Recorded Investment	1,468,125,000,000	164,542,000,000	1,298,082,000,000	102,706,000,000	117,746
With No Related Allowance - Interest Income Recognized	6,673,000,000		20,942,000,000
Commercial
With Related Allowance - Average Recorded Investment				58,928,000,000	44,196
Total:
Recorded Investment	1,394,657,000,000	164,542,000,000	1,394,657,000,000	164,542,000,000	162,012
Updaid Principal Balance	1,409,672,000,000	164,542,000,000	1,409,672,000,000	164,542,000,000	162,012
Average Recorded Investment	1,468,125,000,000	164,542,000,000	1,298,082,000,000	161,634,000,000	161,942
Interest Income Recognized	6,673,000,000		20,942,000,000
Loans to Individuals [Member]
Commercial
With No Related Allowance - Recorded Investment					92,103
With No Related Allowance - Updaid Principal Balance					92,103
With No Related Allowance - Average Recorded Investment	77,329,000,000		135,612,000,000		34,292
With No Related Allowance - Interest Income Recognized	8,164,000,000		15,433,000,000
Commercial
With Related Allowance - Average Recorded Investment				5,650,000,000	4,238
Consumer Other Financing Receivable [Member]
Commercial
With No Related Allowance - Average Recorded Investment				22,540,000,000
Consumer Portfolio Segment [Member]
Commercial
With No Related Allowance - Recorded Investment					92,103
With No Related Allowance - Updaid Principal Balance					92,103
With No Related Allowance - Average Recorded Investment	77,329,000,000		135,612,000,000	22,540,000,000	34,292
With No Related Allowance - Interest Income Recognized	8,164,000,000		15,433,000,000
Commercial
With Related Allowance - Average Recorded Investment				5,650,000,000	4,238
Total:
Recorded Investment					92,103
Updaid Principal Balance					92,103
Average Recorded Investment	77,239,000,000		135,612,000,000	28,190,000,000	38,530
Interest Income Recognized	$ 8,164,000,000		$ 15,433,000,000

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Note 4 - Investment Securities (Details) - Unrealized Losses on Investments (USD $)			9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Pretsl Xxv [Member]
Note 4 - Investment Securities (Details) - Unrealized Losses on Investments [Line Items]
PreTSL XXV			B-1
PreTSL XXV (in Dollars)	$ 148,683,637	$ 153,317,759	$ 155,718
PreTSL XXV (in Dollars)	152,466,765	153,629,773	611,290
PreTSL XXV (in Dollars)			455,572
PreTSL XXV			69.00%
PreTSL XXV			5.80%	[1]
PreTSL XXV			25.20%	[1]
PreTSL XXV			13.70%
PreTSL XXV			B1/ NR
PreTSL XXV (in Dollars)			$ 136,000	[2]
PreTSL XXV			26.00%	[2]

[1] This percentage represents the amount of specific deferrals / defaults that have occurred, plus those that are known for the following quarters to the total amount of original collateral. Fewer deferrals / defaults produce a lower percentage.

[2] "Excess subordination" amount is the additional defaults / deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield". This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of underlying collateral performing" is the ratio of the "excess subordination amount" to current performing collateral - a higher percentage means there is more excess subordination to absorb additional defaults / deferrals, and the better our security is protected from loss.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $)	3 Months Ended				9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013		Sep. 30, 2014		Sep. 30, 2013
Net Income	$ 2,138,079		$ 1,523,238		$ 2,339,873		$ 4,405,588
Other comprehensive income (loss) :
Unrealized gains (losses) on securities available for sale	476,686		(53,738)		2,758,346		(4,466,187)
Tax effect	(255,347)		18,270		(1,014,127)		1,518,504
Net of tax amount	221,339		(35,468)		1,744,219		(2,947,683)
Realized loss on securities available for sale (1)		[1]		[1]	2,516	[1]		[1]
Tax effect					(1,006)
Net of tax amount					1,510
Pension liability (2)	159,474	[2]	63,265	[2]	318,075	[2]	129,751	[2]
Tax effect	(63,789)		(25,305)		(127,230)		(51,907)
Net of tax amount	95,685		37,960		190,845		77,844
Total other comprehensive income (loss)	317,024		2,492		1,936,574		(2,869,839)
Comprehensive income	$ 2,455,103		$ 1,525,730		$ 4,276,447		$ 1,535,749

[1] Included in other income on the Consolidated Statements of Income.

[2] Included in salaries and employee benefits on the Consolidated Statements of Income.

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

(2) Acquisition of Rumson-Fair Haven Bank and Trust Company

On February 7, 2014, the Company completed its acquisition of Rumson-Fair Haven Bank and Trust Company, a New Jersey state commercial bank (“Rumson”), which merged with and into the Bank, with the Bank as the surviving entity. The merger agreement among the Company, the Bank and Rumson (the “Merger Agreement”) provided that the shareholders of Rumson would receive, at their election, for each outstanding share of Rumson common stock that they own at the effective time of the merger, either 0.7772 shares of the Company common stock or $7.50 in cash or a combination thereof, subject to proration as described in the Merger Agreement, so that 60% of the aggregate merger consideration consisted of cash and 40% consisted of shares of the Company’s common stock. The Company issued an aggregate of 1,019,223 shares of its common stock and paid $14.8 million in cash in the transaction.

The merger was accounted for under the acquisition method of accounting and accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at preliminary estimated fair values as of the acquisition date. Rumson’s results of operations have been included in the Company’s Consolidated Statements of Income since February 7, 2014.

The assets acquired and liabilities assumed in the merger were recorded at their estimated fair values based on management’s best estimates using information available at the date of the merger, including the use of a third party valuation specialist. The fair values are preliminary estimates and subject to adjustment for up to one year after the closing date of the merger. The following table summarizes the estimated fair value of the acquired assets and liabilities.

($ in thousands)	Amount
Consideration paid:
Company stock issued	$	11,161
Cash payment		14,770
Total consideration paid		25,931
Recognized amounts of identifiable assets and liabilities assumed at fair value:
Cash and cash equivalents		36,045
Short-term investments		100
Securities available for sale		30,024
Loans		143,714
Premises and equipment, net		2,552
Identifiable intangible assets		1,189
Bank-owned life insurance		4,471
Accrued interest receivable and other assets		1,483
Deposits		(189,490	)
Borrowings		(11,030	)
Other liabilities		(825	)
Total identifiable assets		18,233
Goodwill	$	7,698

Accounting Standards Codification (“ASC”) Topic 805-10 provides that if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the acquirer shall retrospectively adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. During the measurement period, the acquirer also shall recognize additional assets or liabilities if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period may not exceed one year from the acquisition date. As of September 30, 2014, independent appraisals of branch office real estate and leases had not been completed and the fair value of these assets and liabilities had not been determined.

Loans and leases acquired in the Rumson acquisition were recorded at fair value and subsequently accounted for in accordance with ASC Topic 310, and there was no carryover of Rumson’s allowance for loan losses. The fair values of loans acquired from Rumson were estimated using cash flow projections based on the remaining maturity and repricing terms. Cash flows were adjusted for estimated future credit losses and the rate of prepayments. Projected cash flows were then discounted to present value using a risk-adjusted market rate for similar loans.

At the acquisition date, the Company recorded $141.1 million of loans without evidence of credit quality deterioration and $2.6 million of loans with evidence of credit quality deterioration. The following table summarizes the composition of the loans acquired and recorded at fair value.

	At February 7, 2014
($ in thousands)	Loans acquired with no credit quality deterioration		Loans acquired with credit quality deterioration		Total
Commercial
Construction	$	11,920	$	-	$	11,920
Commercial Real Estate		62,398		1,832		64,230
Commercial Business		18,086		368		18,454
Residential Real Estate		32,743		180		32,923
Consumer		15,953		234		16,187
Total	$	141,100	$	2,614	$	143,714

The following is a summary of the loans acquired with evidence of deteriorated credit quality in the Rumson acquisition as of the closing date.  

($ in thousands)	Acquired Credit Impaired Loans
Contractually required principal and interest at acquisition	$	4,451
Contractual cash flows not expected to be collected (non-accretable difference)		1,543
Expected cash flows at acquisition		2,908
Interest component of expected cash flows (accretable difference)		294
Fair value of acquired loans	$	2,614

The core deposit intangible totaled $1.2 million and is being amortized over its estimated useful life of approximately 10 years using an accelerated method. The goodwill will be evaluated annually for impairment. The goodwill is not deductible for tax purposes.

The following table presents the projected amortization of the core deposit intangible for each period presented:

		($ in thousands)
2014	$	216
2015		195
2016		173
2017		151
2018		130
Thereafter		324
	$	1,189

The fair values of deposit liabilities with no stated maturities, such as checking, money market and savings accounts, were assumed to equal the carrying amounts since these deposits are payable on demand. The fair values of certificates of deposits and IRAs represent the present value of contractual cash flows discounted at market rates for similar certificates of deposit.

Direct costs related to the acquisition were expensed as incurred. During the nine months ended September 30, 2014, the Company incurred $1.5 million of merger and acquisition integration-related expenses, which have been separately stated in the Company’s Consolidated Statements of Income.

Supplemental Pro Forma Financial Information

The following table presents financial information regarding the former Rumson operations included in the Consolidated Statements of Income from the date of the acquisition, February 7, 2014, through September 30, 2014 under the column “Actual from acquisition date to September 30, 2014.” In addition, the table provides unaudited condensed pro forma financial information assuming that the Rumson acquisition had been completed as of January 1, 2013. In the table below, merger-related expenses of $1.8 million were excluded from pro forma non-interest expenses for the nine months ended September 30, 2014. Income taxes were also adjusted to exclude income tax benefits of $624,000 related to the merger expenses for the nine months ended September 30, 2014.

The table below has been prepared for comparative purposes only and is not necessarily indicative of the actual results that would have been attained had the acquisition occurred as of the beginning of the periods presented, nor is it indicative of future results. Furthermore, the unaudited pro forma financial information does not reflect management’s estimate of any revenue-enhancing opportunities nor anticipated cost savings that may have occurred as a result of the integration and consolidation of Rumson’s operations. The pro forma financial information reflects adjustments related to certain purchase accounting fair value adjustments; amortization of core deposit and other intangibles; and related income tax effects.

	Actual from Acquisition date to September 30, 2014		Pro Forma for the nine months ended September 30, 2014		Pro Forma for the Nine months ended September 30, 2013
	(in thousands, except per share amounts)
Net interest income	$	4,430	$	25,021	$	24,434
Non-interest income		176		4,428		5,476
Non-interest expenses		1,926		19,964		20,802
Income taxes		1,070		839		2,543
Net income		1,610		3,395		5,648
Earnings per share-diluted			$	0.48	$	0.79

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Note 7 - Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Compensation and Retirement Disclosure [Abstract]
Cash Surrender Value of Life Insurance	$ 21.1	$ 16.2

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Note 10 - Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Securities available for sale:
U. S. Treasury securities and ` obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	9,470,990	$	1,515,705	$	-	$	10,986,695
Residential collateralized mortgage obligations – GSE				3,723664				3,723,664
Residential collateralized mortgage obligations – Non-GSE				2,597,664				2,597,664
Residential mortgage backed securities – GSE				28,680,367				28,680,367
Obligations of State and Political subdivisions				21,618,512				21,618,512
Trust preferred debt securities – single issuer				2,183,700				2,183,700
Corporate debt securities				32,581,964				32,581,964
Restricted stock				1,561,900				1,561,900
Mutual fund				25,000				25,000

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
December 31, 2013:
Securities available for sale:
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	19,994,430	$	1,515,270	$	-	$	21,509,700
Residential collateralized mortgage obligations – GSE		-		3,681,792		-		3,681,792
Residential collateralized mortgage obligations – non-GSE		-		2,826,396		-		2,826,396
Residential mortgage backed securities – GSE		-		31,965,947		-		31,965,947
Obligations of State and Political subdivisions		-		19,646,044		-		19,646,044
Trust preferred debt securities – single issuer		-		2,013,100		-		2,013,100
Corporate debt securities		-		16,517,728		-		16,517,728
Restricted stock		-		1,013,100		-		1,013,100
Mutual fund		-		25,000		-		25,000

Fair Value Measurements, Nonrecurring [Table Text Block]

	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Fair Value
September 30, 2014:
Impaired loans	$	-	$	-	$	7,265,700	$	7,265,700
Other real estate owned		-		-		1,748,455		1,748,455
December 31, 2013:
Impaired loans	$	-	$	-	$	7,879,005	$	7,879,005
Other real estate owned		-		-		209,937		209,937

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques [Table Text Block]

Quantitative Information about Level 3 Fair Value Measurements
	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
September 30, 2014
Impaired loans	$	7,265,700	Appraisal of collateral (1)	Appraisal adjustments (2)	10-40		(19.1)	%
Other real estate owned	$	1,748,455	Appraisal of collateral (1)	Appraisal adjustments (2)	6	%
December 31, 2013
Impaired loans	$	7,879,005	Appraisal of collateral (1)	Appraisal adjustments (2)	5-15	%	(8.8)	%
Other real estate owned	$	209,937	Appraisal of collateral (1)	Appraisal adjustments (2)	5-45	%	(21.7)	%

Fair Value, by Balance Sheet Grouping [Table Text Block]

September 30, 2014
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	20,371,823		$	20,371,823	$	-		$	-	$	20,371,823
Securities available for sale		103,959,466			9,470,990		94,488,476			-		103,959,466
Securities held to maturity		148,182,693			-		152,466,765			-		152,466,765
Loans held for sale		9,459,172			-		9,602,000			-		9,602,000
Loans, net		613,288,046			-		-			615,200,000		615,200,000
Accrued interest receivable		2,798,265			-		2,798,265			-		2,798,265
Deposits		(823,564,746	)		-		(824,154,00	)		-		(824,154,000	)
Borrowings		(20,798,473	)		-		(21,509,000	)		-		(21,509,000	)
Redeemable subordinated debentures		(18,557,000	)		-		(18,557,000	)		-		(18,557,000	)
Accrued interest payable		(802,851	)		-		(802,851	)		-		(802,851	)

December 31, 2013
	Carrying			Level 1		Level 2			Level 3		Fair
	Value			Inputs		Inputs			Inputs		Value
Cash and cash equivalents	$	69,278,771		$	69,278,771	$	-		$	-	$	69,278,771
Securities available for sale		99,198,807			19,994,430		79,204,377			-		99,198,807
Securities held to maturity		152,816,815			-		153,629,773			-		153,629,000
Loans held for sale		10,923,689			-		10,924,000			-		10,924,000
Loans, net		366,297,511			-		-			372,548,000		372,548,000
Accrued interest receivable		2,542,602			-		2,542,602			-		2,542,602
Deposits		(638,552,030	)		-		(639,539,000	)		-		(639,539,000	)
Borrowings		(10,000,000	)		-		(11,148,000	)		-		(11,148,000	)
Redeemable subordinated debentures		(18,557,000	)		-		(18,557,000	)		-		(18,557,000	)
Accrued interest payable		(883,212	)		-		(883,212	)		-		(883,212	)

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Note 4 - Investment Securities (Details) - Held-to-maturity Securities (USD $)	Sep. 30, 2014	Dec. 31, 2013
Held to maturity-
Held to maturity, amortized cost	$ 148,683,637	$ 153,317,759
Held to maturity, other than temporary impairment recognized in accumlated other comprehensive income	(500,944)	(500,944)
Held to maturity	148,182,693	152,816,815
Held to maturity, gross unrealized gains	4,512,397	2,530,738
Held to maturity, gross unrealized losses	(228,325)	(1,717,780)
Held to maturity, fair value	152,466,765	153,629,773
US Treasury and Government [Member]
Held to maturity-
Held to maturity, amortized cost		1,524,860
Held to maturity		1,524,860
Held to maturity, gross unrealized gains		10,310
Held to maturity, fair value		1,535,170
Residential Collateralized Mortgage Obligations- GSE [Member]
Held to maturity-
Held to maturity, amortized cost	12,300,297	14,803,739
Held to maturity	12,300,297	14,803,739
Held to maturity, gross unrealized gains	429,031	379,815
Held to maturity, fair value	12,729,328	15,183,554
Residential Collateralized Mortgage Obligations- Non GSE [Member]
Held to maturity-
Held to maturity, amortized cost	9,099,412	10,682,363
Held to maturity	9,099,412	10,682,363
Held to maturity, gross unrealized gains	292,039	119,777
Held to maturity, gross unrealized losses		(27,526)
Held to maturity, fair value	9,391,451	10,774,614
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Held to maturity-
Held to maturity, amortized cost	58,526,504	65,240,620
Held to maturity	58,526,504	65,240,620
Held to maturity, gross unrealized gains	1,085,369	611,062
Held to maturity, gross unrealized losses	(122,585)	(387,034)
Held to maturity, fair value	59,489,288	65,464,648
US States and Political Subdivisions Debt Securities [Member]
Held to maturity-
Held to maturity, amortized cost	68,100,762	59,400,916
Held to maturity	68,100,762	59,400,916
Held to maturity, gross unrealized gains	2,250,385	1,399,938
Held to maturity, gross unrealized losses	(105,740)	(1,296,357)
Held to maturity, fair value	70,245,407	59,504,497
Trust Preferred Debt Securities Pooled [Member]
Held to maturity-
Held to maturity, amortized cost	656,662	656,662
Held to maturity, other than temporary impairment recognized in accumlated other comprehensive income	(500,944)	(500,944)
Held to maturity	155,718	155,718
Held to maturity, gross unrealized gains	455,573
Held to maturity, gross unrealized losses		(6,863)
Held to maturity, fair value	611,291	148,855
Corporate Debt Securities [Member]
Held to maturity-
Held to maturity, amortized cost		1,008,599
Held to maturity		1,008,599
Held to maturity, gross unrealized gains		9,836
Held to maturity, fair value		$ 1,018,435

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Note 2 - Acquisition of Rumson-Fair Haven Bank and Trust Company (Tables)

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]

($ in thousands)	Amount
Consideration paid:
Company stock issued	$	11,161
Cash payment		14,770
Total consideration paid		25,931
Recognized amounts of identifiable assets and liabilities assumed at fair value:
Cash and cash equivalents		36,045
Short-term investments		100
Securities available for sale		30,024
Loans		143,714
Premises and equipment, net		2,552
Identifiable intangible assets		1,189
Bank-owned life insurance		4,471
Accrued interest receivable and other assets		1,483
Deposits		(189,490	)
Borrowings		(11,030	)
Other liabilities		(825	)
Total identifiable assets		18,233
Goodwill	$	7,698

Financing Receivable Credit Quality Indicators [Table Text Block]

	At February 7, 2014
($ in thousands)	Loans acquired with no credit quality deterioration		Loans acquired with credit quality deterioration		Total
Commercial
Construction	$	11,920	$	-	$	11,920
Commercial Real Estate		62,398		1,832		64,230
Commercial Business		18,086		368		18,454
Residential Real Estate		32,743		180		32,923
Consumer		15,953		234		16,187
Total	$	141,100	$	2,614	$	143,714

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

($ in thousands)	Acquired Credit Impaired Loans
Contractually required principal and interest at acquisition	$	4,451
Contractual cash flows not expected to be collected (non-accretable difference)		1,543
Expected cash flows at acquisition		2,908
Interest component of expected cash flows (accretable difference)		294
Fair value of acquired loans	$	2,614

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

		($ in thousands)
2014	$	216
2015		195
2016		173
2017		151
2018		130
Thereafter		324
	$	1,189

Business Acquisition, Pro Forma Information [Table Text Block]

	Actual from Acquisition date to September 30, 2014		Pro Forma for the nine months ended September 30, 2014		Pro Forma for the Nine months ended September 30, 2013
	(in thousands, except per share amounts)
Net interest income	$	4,430	$	25,021	$	24,434
Non-interest income		176		4,428		5,476
Non-interest expenses		1,926		19,964		20,802
Income taxes		1,070		839		2,543
Net income		1,610		3,395		5,648
Earnings per share-diluted			$	0.48	$	0.79