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, 2012

OR

     [  ]         TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE

                   SECURITIES EXCHANGE ACT OF 1934

For the transition period from:                    to

Commission file number: 51018

THE BANCORP, INC.

(Exact name of registrant as specified in its charter)

Delaware	23-3016517
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

409 Silverside Road
Wilmington, DE	19809
(Address of principal	(Zip code)
executive offices)

Registrant's telephone number, including area code:  (302) 385-5000

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 [ ]

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

Yes [X]  No  ¨

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

(Check one): Large accelerated filer [ ]Accelerated filer [X]

Non-accelerated filer [ ]                                                      Smaller reporting company [ ]

(Do not check if a smaller

  reporting company)

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

Yes [ ]  No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of November 2, 2012 there were 33,101,281 outstanding shares of common stock, $1.00 par value.

2

THE BANCORP, INC

Form 10-Q Index

Page

Item 1.	Financial Statements:
	Unaudited Consolidated Balance Sheets – September 30, 2012 and December 31, 2011
	Unaudited Consolidated Statements of Operations – Three and nine months ended September 30, 2012 and 2011
	Unaudited Consolidated Statements of Comprehensive Income – Nine months ended September 30, 2012
	Unaudited Consolidated Statements of Changes in Shareholders’ Equity – Nine months ended September 30, 2012
	Unaudited Consolidated Statements of Cash Flows – Nine months ended September 30, 2012 and 2011
	Unaudited Notes to Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures

Part II Other Information

Item 6.	Exhibits
Signatures

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

THE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEETS
	September 30,			December 31,
	2012			2011
	(in thousands)
ASSETS
Cash and cash equivalents
Cash and due from banks	$	4,648		$	96,228
Interest earning deposits at Federal Reserve Bank		540,010			652,946
Total cash and cash equivalents		544,658			749,174
Investment securities, available-for-sale, at fair value		634,894			448,204
Investment securities, held-to-maturity (fair value $18,634 and $13,826, respectively)		22,707			18,044
Federal Home Loan and Atlantic Central Bankers Bank stock		4,160			5,088
Loans held for sale		7,970			-
Loans, net of deferred loan costs		1,856,992			1,744,828
Allowance for loan and lease losses		(33,071	)		(29,568	)
Loans, net		1,823,921			1,715,260
Premises and equipment, net		9,802			8,358
Accrued interest receivable		10,061			8,476
Intangible assets, net		7,254			8,004
Other real estate owned		3,065			7,405
Deferred tax asset, net		19,708			21,941
Other assets		24,925			20,727
Total assets	$	3,113,125		$	3,010,681
LIABILITIES
Deposits
Demand and interest checking	$	2,300,025		$	2,192,938
Savings and money market		459,725			454,343
Time deposits		12,606			25,528
Time deposits, $100,000 and over		8,819			9,742
Total deposits		2,781,175			2,682,551
Securities sold under agreements to repurchase		18,802			33,177
Accrued interest payable		100			123
Subordinated debenture		13,401			13,401
Other liabilities		10,662			9,950
Total liabilities		2,824,140			2,739,202

4

SHAREHOLDERS' EQUITY
Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,208,781 and 33,196,281
shares issued at September 30, 2012 and December 31, 2011, respectively		33,209			33,196
Treasury stock, at cost (100,000 shares)		(866	)		(866	)
Additional paid-in capital		243,954			241,997
Retained earnings (accumulated deficit)		2,110			(9,277	)
Accumulated other comprehensive income		10,578			6,429
Total shareholders' equity		288,985			271,479
Total liabilities and shareholders' equity	$	3,113,125		$	3,010,681
The accompanying notes are an integral part of these statements.

5

THE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
	For the three months ended September 30,					For the nine months ended September 30,
	2012			2011		2012			2011
	(in thousands, except per share data)
Interest income
Loans, including fees	$	19,787		$	19,011	$	57,993		$	55,448
Interest on investment securities:
Taxable interest		3,507			2,732		10,068			6,629
Tax-exempt interest		709			651		2,114			1,993
Interest bearing deposits		356			296		2,014			1,041
		24,359			22,690		72,189			65,111
Interest expense
Deposits		2,556			2,783		8,104			8,238
Securities sold under agreements to repurchase		24			96		75			173
Short-term borrowings		-			-		-			3
Subordinated debenture		218			216		652			647
		2,798			3,095		8,831			9,061
Net interest income		21,561			19,595		63,358			56,050
Provision for loan and lease losses		5,540			5,019		15,047			16,654
Net interest income after provision for loan and lease losses		16,021			14,576		48,311			39,396
Non-interest income
Service fees on deposit accounts		928			589		2,512			1,813
Merchant credit card processing and ACH fees		740			591		2,222			1,750
Prepaid card fees		7,459			4,030		23,570			13,175
Gain on sales of investment securities		107			20		107			623
Other than temporary impairment on securities held-to-maturity (1)		-			-		(126	)		(75	)
Leasing income		552			538		2,345			1,887
Debit card income		98			129		402			532
Affinity fees		792			547		1,979			1,081
Other		557			229		961			1,357
Total non-interest income		11,233			6,673		33,972			22,143
Non-interest expense
Salaries and employee benefits		9,991			8,030		28,706			22,560
Depreciation and amortization		854			767		2,508			2,219
Rent and related occupancy cost		895			749		2,487			2,182
Data processing expense		2,547			2,080		7,915			6,646
Printing and supplies		422			395		1,336			1,075
Audit expense		284			295		859			805
Legal expense		1,243			662		2,386			1,858
Amortization of intangible assets		250			250		750			750
Losses on sale and write downs on other real estate owned		533			64		2,405			555
FDIC Insurance		716			705		2,404			2,628
Software, maintenance and equipment		411			429		1,325			1,176
Other real estate owned expense		(30	)		357		509			841
Other		3,782			2,975		11,134			9,685
Total non-interest expense		21,898			17,758		64,724			52,980
Net income before income tax		5,356			3,491		17,559			8,559
Income tax provision		1,795			1,209		6,172			2,929
Net income available to common shareholders	$	3,561		$	2,282	$	11,387		$	5,630

6

Net income per share - basic	$	0.11	$	0.07	$	0.34	$	0.18
Net income per share - diluted	$	0.11	$	0.07	$	0.34	$	0.18
(1) Other than temporary impairment was due to credit loss and therefore did not include amounts due to market conditions.
The accompanying notes are an integral part of these statements.

7

THE BANCORP INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the nine months
	ended September 30,
	2012			2011
	(in thousands)
Net income	$	11,387		$	5,630
Other comprehensive income, net of tax
Unrealized gains on securities
Unrealized holding gains arising during the period		6,403			12,598
Reclassification adjustment for gains included in net income		(27	)		(623	)
Amortization of losses previously held as available-for-sale		8			855
		6,384			12,830
Deferred tax expense
Unrealized holding gain arising during the period		2,232			4,191
Amortization of losses previously held as available-for-sale		3			273
		2,235			4,464
Other comprehensive income		4,149			8,366
Comprehensive income	$	15,536		$	13,996

The accompanying notes are an integral part of these statements.

8

THE BANCORP INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the nine months ended September 30, 2012
(in thousands, except share data)
										Retained			Accumulated
	Common							Additional		earnings			other
	stock		Common		Treasury			paid-in		(accumulated			comprehensive
	shares		stock		stock			capital		deficit)			income		Total
Balance at January 1, 2012		33,196,281		33,196		(866	)		241,997		(9,277	)		6,429		271,479
Net income											11,387					11,387
Common stock issued from option exercises, net of tax benefits		12,500		13		-			85		-			-		98
Stock-based compensation		-		-		-			1,872		-			-		1,872
Other comprehensive income, net of
reclassification adjustments and tax		-		-		-			-		-			4,149		4,149
Balance at September 30, 2012		33,208,781	$	33,209	$	(866	)	$	243,954	$	2,110		$	10,578	$	288,985

The accompanying notes are an integral part of this statement.

9

THE BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
	For the nine months ended
	September 30,
	2012			2011
Operating activities
Net income	$	11,387		$	5,630
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization		3,258			2,969
Provision for loan and lease losses		15,047			16,654
Net amortization of investment securities discounts/premiums		1,360			483
Stock-based compensation expense		1,872			1,276
Mortgage loans originated for sale		(233	)		(458	)
Sale of mortgage loans originated for resale		237			462
Gain on sale of mortgage loans originated for resale		(4	)		(4	)
Net change in commercial loans held for sale		(7,970	)		-
Deferred income tax expense		2			-
Gain on sales of fixed assets		(29	)		(26	)
Other than temporary impairment on securities held-to-maturity		126			75
Losses on sale and writedowns of other real estate owned		2,405			555
Gain on sales of investment securities		(107	)		(623	)
(Increase) decrease in accrued interest receivable		(1,585	)		337
Decrease in interest payable		(23	)		(11	)
Increase in other assets		(4,693	)		(335	)
Increase in other liabilities		711			3,450
Net cash provided by operating activities		21,761			30,434
Investing activities
Purchase of  investment securities available-for-sale		(282,669	)		(283,914	)
Proceeds from call of securities held-to-maturity		-			4,000
Proceeds from sale of investment securities available-for-sale		6,297			23,846
Proceeds from redemptions and prepayments of securities available-for-sale		90,951			81,680
Proceeds from sale of other real estate owned		5,157			894
Net increase in loans		(126,930	)		(115,248	)
Proceeds from sale of fixed assets		171			68
Purchases of premises and equipment		(3,599	)		(1,390	)
Net cash used in investing activities		(310,622	)		(290,064	)
Financing activities
Net increase in deposits		98,624			1,049,404
Net (decrease) increase in securities sold under agreements to repurchase		(14,375	)		10,674
Repayment of short-term borrowings and federal funds purchased		-			(136,000	)
Proceeds from issuance of common stock		-			54,501
Proceeds from the exercise of options		98			-
Excess tax benefit from share-based payment arrangements		(2	)		-
Net cash provided by financing activities		84,345			978,579
Net (decrease) increase in cash and cash equivalents		(204,516	)		718,949
Cash and cash equivalents, beginning of period		749,174			472,319

10

Cash and cash equivalents, end of period	$	544,658	$	1,191,268
Supplemental disclosure:
Interest paid	$	8,854	$	9,072
Taxes paid	$	8,367	$	5,132
Transfers of loans to other real estate owned	$	3,222	$	5,749

The accompanying notes are an integral part of these statements.

11

THE BANCORP, INC. AND SUBSIDIARY

NOTES TO THE CONSOLDIATED FINANCIAL STATEMENTS

Note 1. Formation and Structure of Company

The Bancorp, Inc. (the Company) is a Delaware corporation and a registered financial holding company with a wholly owned subsidiary bank, The Bancorp Bank (the Bank). The Bank is a Delaware chartered commercial bank located in Wilmington, Delaware and is a Federal Deposit Insurance Corporation (FDIC) insured institution. Through the Bank, the Company provides retail and commercial banking services in the Philadelphia, Pennsylvania and Wilmington, Delaware areas and other banking services nationally, which include prepaid debit cards, health savings accounts, wealth management and private label banking. The principal medium for the delivery of the Company’s banking services is the Internet.

Note 2. Significant Accounting Policies

Basis of Presentation

The financial statements of the Company, as of September 30, 2012 and for the three and nine month periods ended September 30, 2012 and 2011, are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (Form 10-K report). The results of operations for the nine month period ended September 30, 2012 may not necessarily be indicative of the results of operations for the full year ending December 31, 2012.

Note 3. Share-based Compensation

The Company recognizes compensation expense for stock options in accordance with FASB ASC topic 718, Stock Based Compensation. The expense of the option is generally measured at fair value at the grant date with compensation expense recognized over the service period, which is usually the vesting period. For grants subject to a service condition, the Company utilizes the Black-Scholes option-pricing model to estimate the fair value of each option on the date of grant. The Black-Scholes model takes into consideration the exercise price and expected life of the options, the current price of the underlying stock and its expected volatility, the expected dividends on the stock and the current risk-free interest rate for the expected life of the option. The Company’s estimate of the fair value of a stock option is based on expectations derived from historical experience and may not necessarily equate to its market value when fully vested. In accordance with ASC topic 718, the Company estimates the number of options for which the requisite service is expected to be rendered. At September 30, 2012, the Company had three stock-based compensation plans, which are more fully described in its Form 10-K report and the portions of the Company’s Proxy Statement dated March 21, 2012, incorporated therein by reference.

The Company granted 500,000 common stock options in the first quarter of 2012, 40,000 with a vesting period of one year and 460,000 with a vesting period of four years.  The weighted-average fair value of the stock options issued was $5.06. During the third quarter of 2011, the Company granted 500,000 stock options, 40,000 with a vesting period of one year and 460,000 with a vesting period of four years.  The weighted-average fair value of the stock options issued was $3.82. There were 7,500 common stock options exercised for the three month period ending September 30, 2012 and no common stock options exercised for the three month period ending September 30, 2011.

The Company estimated the fair value of each grant on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:

	September 30,
	2012			2011
Risk-free interest rate		1.97	%		2.19	%
Expected dividend yield		-			-
Expected volatility		72.90	%		53.10	%
Expected lives (years)		4.83			5.47

12

Expected volatility is based on the historical volatility of the Company’s stock and peer group comparisons over the expected life of the grant. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury strip rate in effect at the time of the grant. The life of the option is based on historical factors which include the contractual term, vesting period, exercise behavior and employee terminations. In accordance with the ASC topic 718, Stock Based Compensation, stock based compensation expense for the nine month period ended September 30, 2012 is based on awards that are ultimately expected to vest and has been reduced for estimated forfeitures. The Company estimates forfeitures using historical data based upon the groups identified by management.

As of September 30, 2012, there was a total of $5.7 million of unrecognized compensation cost related to unvested awards under share-based plans.  This cost is expected to be recognized over a weighted average period of 2.2 years.  Related compensation expense for the nine months ended September 30, 2012 and 2011 was $1.9 million and $1.3 million respectively.

A summary of the status of the Company’s equity compensations plans is presented below.

						Weighted-
						average
				Weighted		remaining
				average		contractual		Aggregate
				exercise		term		intrinsic
	Shares			price		(years)		value
	(in thousands, except per share data)
Outstanding at January 1, 2012		2,745,115		$	10.10
Granted		500,000			8.50		-		-
Exercised		(12,500	)		7.81		-		-
Expired		(16,000	)		10.00		-		-
Forfeited		(128,248	)		9.07		-		-
Outstanding at September 30, 2012		3,088,367		$	9.89		6.19	$	-
Exercisable at September 30, 2012		1,677,367					4.15	$	-

A summary of the status of the Company’s stock appreciation rights is presented below.

						Average
						remaining
				Weighted-		contractual
				average		term
	Shares			price		(years)
Outstanding at January 1, 2012		60,000		$	11.41
Granted		-			-		-
Exercised		-			-		-
Expired/forfeited		(60,000	)		11.41		-
Outstanding at September 30, 2012		-		$	-		-

13

Note 4. Earnings Per Share

The Company calculates earnings per share under FASB ASC topic 260, Earnings Per Share. Basic earnings per share exclude dilution and are computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

The following tables show the Company’s earnings per share for the periods presented:

	For the three months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	3,561		33,105,194	$	0.11
Effect of dilutive securities
Common stock options		-		67,658		-
Diluted earnings per share
Net income available to common shareholders	$	3,561		33,172,852	$	0.11

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise price per share was greater than the average market price.

	For the nine months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	11,387		33,101,281	$	0.34
Effect of dilutive securities
Common stock options		-		32,026		-
Diluted earnings per share
Net income available to common shareholders	$	11,387		33,133,307	$	0.34

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise share price was greater than the average market price.

	For the three months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	2,282		33,196,281	$	0.07
Effect of dilutive securities
Stock options		-		7,381		-
Diluted earnings per share
Net income available to common shareholders	$	2,282		33,203,662	$	0.07

Stock options for 2,766,115 shares and stock appreciation rights for 60,000 shares, exercisable at prices between $7.36 and $25.43 per share, were outstanding at September 30, 2011 but were not included in the diluted earnings per share computation because the exercise price per share was greater than the average market price of the common stock.

14

	For the nine months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	5,630		31,500,347	$	0.18
Effect of dilutive securities
Stock options		-		6,461		-
Diluted earnings per share
Net income available to common shareholders	$	5,630		31,506,808	$	0.18

Stock options for 2,766,115 shares and stock appreciation rights for 60,000 shares, exercisable at prices between $7.36 and $25.43 per share, were outstanding at September 30, 2011 but were not included in the diluted earnings per share computation because the exercise price per share was greater than the average market price of the common stock.

Note 5. Investment Securities

The amortized cost, gross unrealized gains and losses, and fair values of the Company’s investment securities classified as available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

Available-for-sale	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	8,537	$	291	$	-		$	8,828
Federally insured student loan securities		111,197		483		(135	)		111,545
Tax-exempt obligations of states and political subdivisions		111,456		5,585		(1	)		117,040
Taxable obligations of states and political subdivisions		43,120		3,245		(30	)		46,335
Residential mortgage-backed securities		194,322		3,228		(392	)		197,158
Commercial mortgage-backed securities		98,417		4,116		(56	)		102,477
Other debt securities		47,687		1,050		(301	)		48,436
Other equity securities		3,000		75		-			3,075
	$	617,736	$	18,073	$	(915	)	$	634,894
Held-to-maturity	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	21,335	$	344	$	(4,181	)	$	17,498
Other debt securities - pooled		1,372		-		(236	)		1,136
	$	22,707	$	344	$	(4,417	)	$	18,634

Available-for-sale	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	9,087	$	198	$	-		$	9,285
Tax-exempt obligations of states and political subdivisions		94,227		3,580		(8	)		97,799
Taxable obligations of states and political subdivisions		50,778		2,149		(60	)		52,867
Residential mortgage-backed securities		190,214		3,582		(111	)		193,685
Commercial mortgage-backed securities		51,242		875		(56	)		52,061

15

Other debt securities		38,873		1,058		(399	)		39,532
Other equity securities		3,000		-		(25	)		2,975
	$	437,421	$	11,442	$	(659	)	$	448,204
Held-to-maturity	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	16,337	$	138	$	(4,051	)	$	12,424
Other debt securities - pooled		1,707		-		(305	)		1,402
	$	18,044	$	138	$	(4,356	)	$	13,826

Investments in Federal Home Loan and Atlantic Central Bankers Bank stock are recorded at cost and amounted to $4.2 million at September 30, 2012 and $5.1 million at December 31, 2011.

The amortized cost and fair value of the Company’s investment securities at September 30, 2012, by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized		Fair		Amortized		Fair
	cost		value		cost		value
Due before one year	$	73,508	$	73,622	$	-	$	-
Due after one year through five years		158,815		164,380		-		-
Due after five years through ten years		36,614		37,780		8,240		8,056
Due after ten years		345,799		356,037		14,467		10,578
Other equity securities		3,000		3,075		-		-
	$	617,736	$	634,894	$	22,707	$	18,634

At September 30, 2012 and December 31, 2011, investment securities with a book value of approximately $37.0 million and $44.6 million, respectively, were pledged to secure securities sold under repurchase agreements as required or permitted by law.

Available-for-sale securities fair values are based on the fair market value supplied by the third-party market data provider while held-to-maturity securities are based on the present value of cash flows, which discounts expected cash flows from principal and interest using yield to maturity at the measurement date. The Company periodically reviews its investment portfolio to determine whether unrealized losses are temporary, based on an evaluations of the creditworthiness of the issuers/guarantors as well as the underlying collateral if applicable, in addition to the continuing performance of the securities. The Company recognized other-than-temporary impairment charges of $126,000 on one trust preferred pooled security in the first nine months of 2012 as compared to $75,000 on one trust preferred pooled security in the first nine months of 2011.  The amount of the credit impairment was calculated by estimating the discounted cash flows for those securities.

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at September 30, 2012 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Federally insured student loan securities		7	$	38,952	$	(135	)	$	-	$	-		$	38,952	$	(135	)
Tax-exempt obligations of states and
political subdivisions		4		3,479		(1	)		1,241		-			4,720		(1	)
Taxable obligations of states and
political subdivisions		7		7,715		(20	)		4,035		(10	)		11,750		(30	)

16

Residential mortgage-backed securities		9		43,529		(386	)		358		(6	)		43,887		(392	)
Commercial mortgage-backed securities		2		15,279		(56	)		-		-			15,279		(56	)
Other debt securities		3		-		-			9,770		(301	)		9,770		(301	)
Total temporarily impaired
investment securities		32	$	108,954	$	(598	)	$	15,404	$	(317	)	$	124,358	$	(915	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	7,906	$	(4,181	)	$	7,906	$	(4,181	)
Other debt securities - pooled		2		-		-			1,136		(236	)		1,136		(236	)
Total temporarily impaired
investment securities		4	$	-	$	-		$	9,042	$	(4,417	)	$	9,042	$	(4,417	)

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at December 31, 2011 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Tax-exempt obligations of states and
political subdivisions		7	$	11,104	$	(8	)	$	-	$	-		$	11,104	$	(8	)
Taxable obligations of states and
political subdivisions		10		16,905		(60	)		-		-			16,905		(60	)
Residential mortgage-backed securities		5		10,054		(111	)		-		-			10,054		(111	)
Commercial mortgage-backed securities		4		24,421		(56	)		-		-			24,421		(56	)
Other debt securities		3		10,929		(93	)		2,549		(306	)		13,478		(399	)
Other equity securities		1		2,975		(25	)		-		-			2,975		(25	)
Total temporarily impaired
investment securities		30	$	76,388	$	(353	)	$	2,549	$	(306	)	$	78,937	$	(659	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	8,021	$	(4,051	)	$	8,021	$	(4,051	)
Other debt securities - pooled		2		-		-			1,402		(305	)		1,402		(305	)
Total temporarily impaired
investment securities		4	$	-	$	-		$	9,423	$	(4,356	)	$	9,423	$	(4,356	)

The other debt securities included in the held-to-maturity classification on the Company’s balance sheet at September 30, 2012 included four single issuer trust preferred securities issued by either banks or insurance companies and two pooled issuer trust preferred securities, whose collateral is made up of trust preferred securities issued by banks. The amortized cost of the single issuer trust preferred securities was $16.3 million, of which two securities totaling $4.2 million were issued by two different banks and two securities totaling $12.1 million were issued by two different insurance companies. The two pooled trust preferred securities had an aggregate amortized cost of $1.4 million.

17

The Company has evaluated the securities in the above tables and has concluded that none of these securities has impairment that is other-than-temporary. The Company evaluates whether a credit impairment exists by considering primarily the following factors: (a) the length of time and extent to which the fair value has been less than the amortized cost of the security, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, (c) whether the issuer is current on contractually obligated interest and principal payments, (d) changes in the financial condition of the security’s underlying collateral and (e) the payment structure of the security. The Company’s best estimate of expected future cash flows which is used to determine the credit loss amount is a quantitative and qualitative process that incorporates information received from third-party sources along with internal assumptions and judgments regarding the future performance of the security. The Company concluded that most of the securities that are in an unrealized loss position are in a loss position because of changes in interest rates after the securities were purchased. The securities that have been in an unrealized loss position for 12 months or longer include other securities whose market values are sensitive to interest rates and changes in credit quality. The Company’s unrealized loss for the debt securities, which includes four single issuer trust preferred securities and two pooled trust preferred securities, is primarily related to general market conditions and the resultant lack of liquidity in the market. The severity of the impairments in relation to the carrying amounts of the individual investments is consistent with market developments. The Company’s analysis for each investment is performed at the security level. As a result of its review, the Company concluded that other-than-temporary impairment did not exist due to the Company’s ability and intention to hold these securities to recover their amortized cost basis.

Note 6. Loans

At September 30, 2012 the Company had $7.9 million of commercial mortgage loans held for sale, which were originated for sale to institutions which issue commercial mortgaged backed securities.  The Company has elected  fair value treatment for these loans and during the third quarter of 2012, the Company recognized a related gain of $156,000.

Major classifications of loans not including loans held for sale are as follows (in thousands):

	September 30,		December 31,
	2012		2011
Commercial	$	453,444	$	450,411
Commercial mortgage *		614,410		609,487
Construction		263,726		246,611
Total commercial loans		1,331,580		1,306,509
Direct lease financing		146,728		129,682
Residential mortgage		97,589		96,110
Consumer loans and others		276,427		209,041
		1,852,324		1,741,342
Unamortized loan costs		4,668		3,486
Total loans, net of deferred loan costs	$	1,856,992	$	1,744,828
Supplemental loan data:
Construction 1-4 family	$	71,599	$	85,189
Commercial construction, acquisition and development		192,127		161,422
	$	263,726	$	246,611
* At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

The Company has identified thirty loans as impaired, where it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. The balance of these impaired loans was $29.2 million at September 30, 2012, of which $20.2 million had a specific reserve of $10.9 million. The remaining $9.0 million of impaired loans did not have a reserve. Included within the impaired loans at September 30, 2012 are eight troubled debt restructured loans with a balance of $8.3 million with a total specific reserve of $4.2 million.  The Company recognizes income on impaired loans when they are placed into non-accrual status on a cash basis when the loans are both current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company will not recognize income on such loans. Interest income would have increased by $631,000 in third quarter 2012 if interest on impaired loans had been accrued. The balance of impaired loans was $17.6 million at December 31, 2011, of which $14.5 million had specific reserves of $5.9 million.  The Company did recognize interest income of $65,000 on impaired loans in the nine months ended September 30, 2012 and did not recognize any interest income for the nine months ended September 30, 2011.

18

The following table provides information about impaired loans at September 30, 2012 and December 31, 2011 (in thousands):

	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
September 30, 2012
Without an allowance recorded
Construction	$	276	$	276	$	-	$	911	$	-
Commercial mortgage		3,582		4,403		-		2,058		-
Commercial		4,219		6,257		-		2,017		-
Consumer - home equity		927		927		-		927		-
Residential		-		-		-		316		-
With an allowance recorded
Construction		8,886		8,886		4,899		7,523		-
Commercial mortgage		7,742		8,287		4,028		4,090		-
Commercial		3,435		3,631		1,885		5,397		-
Consumer - home equity		-		-		-		81		-
Residential		93		93		71		47		-
Total
Construction	$	9,162	$	9,162	$	4,899	$	8,434	$	-
Commercial mortgage	$	11,324	$	12,690	$	4,028	$	6,148	$	-
Commercial	$	7,654	$	9,888	$	1,885	$	7,414	$	-
Consumer - home equity	$	927	$	927	$	-	$	1,008	$	-
Residential	$	93	$	93	$	71	$	363	$	-
December 31, 2011
Without an allowance recorded
Construction	$	-	$	-	$	-	$	100	$	-
Commercial mortgage		-		-		-		310		-
Commercial		900		2,042		6,831		626		-
Consumer - home equity		927		927		3,765		371		-
Residential		1,264		1,414		149		662		-
With an allowance recorded
Construction		4,949		4,949		2,296		2,123		-
Commercial mortgage		3,672		3,672		712		2,793		-
Commercial		5,550		5,550		2,724		3,075		-
Consumer - home equity		325		325		204		510		-
Residential		-		-		-		5,048		-
Total
Construction	$	4,949	$	4,949	$	2,296	$	2,223	$	-
Commercial mortgage	$	3,672	$	3,672	$	712	$	3,103	$	-
Commercial	$	6,450	$	7,592	$	9,555	$	3,701	$	-
Consumer - home equity	$	1,252	$	1,252	$	3,969	$	881	$	-
Residential	$	1,264	$	1,414	$	149	$	5,710	$	-

19

The following tables summarize the Company’s non-accrual loans, loans past due 90 days and other real estate owned for the periods indicated (the Company had no non-accrual leases at September 30, 2012 or December 31, 2011):

	September 30,		September 30,		December 31,
	2012		2011		2011
	(in thousands)
Non-accrual loans
Construction *	$	8,886	$	2,321	$	4,949
Commercial mortgage *		8,894		3,848		3,672
Commercial *		7,654		4,212		6,450
Consumer		927		1,560		1,252
Residential		93		5,260		1,264
Total non-accrual loans		26,454		17,201		17,587
Loans past due 90 days or more		3,861		5,550		4,101
Total non-performing loans		30,315		22,751		21,688
Other real estate owned		3,065		6,415		7,405
Total non-performing assets	$	33,380	$	29,166	$	29,093

* Included in the non-accrual loans as of September 30, 2012 were five troubled debt restructured loans classified as follows:  $725,000 in commercial mortgage, $2.3 million in commercial and $2.6 million in construction.

 Of the $8.3 million of loans that were modified and considered troubled debt restructurings as of September 30, 2012 $5.6 million and $1.1 million were already included in non-accrual and non-performing loan totals as of that date. An analysis of those loans is as follows (dollars in thousands):

	September 30, 2012						December 31, 2011
	Number		Pre-modification recorded investment		Post-modification recorded investment		Number		Pre-modification recorded investment		Post-modification recorded investment
Commercial		1	$	2,255	$	2,255		-	$	-	$	-
Commercial mortgage		3		3,156		3,156		1		759		759
Construction		4		2,913		2,913		-		-		-
Residential mortgage		-		-		-		1		364		364
Total		8	$	8,324	$	8,324		2	$	1,123	$	1,123

The balances below provide information as to how the loans were modified as troubled debt restructurings loans as of  September 30, 2012 and December 31, 2011  (dollars in thousands):

	September 30, 2012						December 31, 2011
	Adjusted interest rate		Extended maturity		Combined rate and maturity		Adjusted interest rate		Extended maturity		Combined rate and maturity
Commercial	$	-	$	2,255	$	-	$	-	$	-	$	-
Commercial mortgage		725		214		2,217		759		-		-
Construction		-		2,913		-		-		-		-
Residential mortgage		-		-		-		364		-		-
Total	$	725	$	5,382	$	2,217	$	1,123	$	-	$	-

20

As of September 30, 2012 and December 31, 2011, the Company has no commitments to lend additional funds to loan customers whose terms have been modified in troubled debt restructurings.

A detail of the changes in the allowance for loan and lease losses by loan category is as follows (in thousands):

				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
September 30, 2012
Beginning balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Charge-offs		(3,487	)		(2,466	)		(6,931	)		-			(299	)		(87	)		-			(13,270	)
Recoveries		505			1,028			95			85			-			13			-			1,726
Provision		1,843			476			12,544			81			626			(25	)		(498	)		15,047
Ending balance	$	9,075		$	8,312		$	11,060		$	2,256		$	1,673		$	155		$	540		$	33,071
Ending balance: Individually evaluated for impairment	$	1,884		$	4,028		$	4,899		$	71		$	-		$	-		$	-		$	10,882
Ending balance: Collectively evaluated for impairment	$	7,191		$	4,284		$	6,161		$	2,185		$	1,673		$	155		$	540		$	22,189
Loans:
Ending balance	$	453,444		$	614,410		$	263,726		$	97,589		$	276,427		$	146,728		$	4,668		$	1,856,992
Ending balance: Individually evaluated for impairment	$	7,654		$	11,324		$	9,162		$	93		$	927		$	-		$	-		$	29,160
Ending balance: Collectively evaluated for impairment	$	445,790		$	603,086		$	254,564		$	97,496		$	275,500		$	146,728		$	4,668		$	1,827,832
				Commercial						Residential						Direct lease
Twelve months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
December 31, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624		$	24,063
Charge-offs		(7,453	)		(1,198	)		(3,254	)		(2,870	)		(1,280	)		(39	)		-			(16,094	)
Recoveries		2			89			4			-			6			-			-			101
Provision		11,614			882			3,572			2,845			2,042			129			414			21,498
Ending balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Ending balance: Individually evaluated for impairment	$	2,724		$	712		$	2,296		$	-		$	204		$	-		$	-		$	5,936
Ending balance: Collectively evaluated for impairment	$	7,490		$	8,562		$	3,056		$	2,090		$	1,142		$	254		$	1,038		$	23,632
Loans:
Ending balance	$	450,411		$	609,487		$	246,611		$	96,110		$	209,041		$	129,682		$	3,486		$	1,744,828
Ending balance: Individually evaluated for impairment	$	6,450		$	3,672		$	4,949		$	1,264		$	1,252		$	-		$	-		$	17,587
Ending balance: Collectively evaluated for impairment	$	443,961		$	605,815		$	241,662		$	94,846		$	207,789		$	129,682		$	3,486		$	1,727,241

21

				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated		Total
September 30, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624	$	24,063
Charge-offs		(6,729	)		(642	)		(3,003	)		(1,876	)		(815	)		-			-		(13,065	)
Recoveries		2			14			3			-			-			-			-		19
Provision		11,034			(1,108	)		2,061			2,636			1,688			(36	)		379		16,654
Ending balance	$	10,358		$	7,765		$	4,091		$	2,875		$	1,451		$	128		$	1,003	$	27,671
Ending balance: Individually evaluated for impairment	$	1,127		$	615		$	622		$	1,037		$	449		$	-		$	-	$	3,850
Ending balance: Collectively evaluated for impairment	$	9,231		$	7,150		$	3,469		$	1,838		$	1,002		$	128		$	1,003	$	23,821
Loans:
Ending balance	$	461,679		$	577,237		$	242,806		$	96,139		$	205,243		$	129,400		$	3,144	$	1,715,648
Ending balance: Individually evaluated for impairment	$	4,212		$	3,848		$	2,321		$	5,260		$	1,560		$	-		$	-	$	17,201
Ending balance: Collectively evaluated for impairment	$	457,467		$	573,389		$	240,485		$	90,879		$	203,683		$	129,400		$	3,144	$	1,698,447

The Company did not have loans acquired with deteriorated credit quality at either September 30, 2012 or December 31, 2011.

A detail of the Company’s delinquent loans by loan category is as follows (in thousands):

	30-59 Days		60-89 Days		Greater than				Total				Total
September 30, 2012	past due		past due		90 days		Non-accrual		past due		Current		loans
Commercial	$	1,357	$	1,500	$	107	$	7,654	$	10,618	$	442,826	$	453,444
Commercial mortgage		1,042		-		3,077		8,894		13,013		601,397		614,410
Construction		-		-		667		8,886		9,553		254,173		263,726
Direct lease financing		788		1,026		8		-		1,822		144,906		146,728
Consumer - other		1,091		-		2		-		1,093		231,057		232,150
Consumer - home equity		-		420		-		927		1,347		42,930		44,277
Residential mortgage		-		-		-		93		93		97,496		97,589
Unamortized costs		-		-		-		-		-		4,668		4,668
	$	4,278	$	2,946	$	3,861	$	26,454	$	37,539	$	1,819,453	$	1,856,992
December 31, 2011
Commercial	$	-	$	242	$	817	$	6,450	$	7,509	$	442,902	$	450,411
Commercial mortgage		278		1,763		1,597		3,672		7,310		602,177		609,487
Construction		-		825		942		4,949		6,716		239,895		246,611
Direct lease financing		1,230		606		745		-		2,581		127,101		129,682

22

Consumer - other		-		-		-		1,252		1,252		164,145		165,397
Consumer - home equity		-		2		-		-		2		43,642		43,644
Residential mortgage		-		-		-		1,264		1,264		94,846		96,110
Unamortized costs		-		-		-		-		-		3,486		3,486
	$	1,508	$	3,438	$	4,101	$	17,587	$	26,634	$	1,718,194	$	1,744,828

The Company evaluates its loans under an internal loan risk rating system as a means of identifying problem loans.  The following table provides information by credit risk rating indicator for each segment of the loan portfolio not including loans held for sale at the dates indicated (in thousands):

									Commercial				Residential
	Commercial				Construction				mortgage				mortgage
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	331,624	$	320,287	$	236,486	$	176,824	$	490,001	$	476,421	$	28,792	$	28,981
Special Mention		2,939		1,049		-		-		23,862		21,615		-		-
Substandard		8,045		7,696		9,553		6,716		12,740		6,867		-		1,264
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		28,253		60,938		10,711		49,700		23,502		26,543		1,590		2,084
Unrated not subject to review		82,583		60,441		6,976		13,371		64,305		78,041		67,114		63,781
Total	$	453,444	$	450,411	$	263,726	$	246,611	$	614,410	$	609,487	$	97,589	$	96,110
					Direct lease
	Consumer				financing				Unamortized costs				Total
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	56,020	$	64,236	$	54,747	$	12,025	$	-	$	-	$	1,197,670	$	1,078,774
Special Mention		-		-		-		-		-		-		26,801		22,664
Substandard		3,672		2,718		61		649		-		-		34,071		25,910
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		25,573		2,873		-		29,174		-		-		89,629		171,312
Unrated not subject to review		191,162		139,214		91,920		87,834		4,668		3,486		508,728		446,168
Total	$	276,427	$	209,041	$	146,728	$	129,682	$	4,668	$	3,486	$	1,856,992	$	1,744,828

* Unrated loans consist of performing loans which did not exhibit any negative characteristics which would require the loan to be evaluated, or fell below the dollar threshold requiring review ender the Bank’s internal policy and was not one of the loans otherwise selected in ongoing portfolio evaluation.  The scope of the Bank’s loan review policy encompasses commercial and construction loans and leases which singly, or in aggregate for loans to related borrowers, exceed $3.0 million. The loan portfolio review coverage was approximately 68% at September 30, 2012 and approximately 65% at December 31, 2011. This review is performed by the loan review department, which is independent of the loan origination department and reports directly to the audit committee.  Potential problem loans which are identified by either the independent loan review department or line management are reviewed. All classified loans are continuously reviewed quarterly by the independent loan review function of the Bank. Additionally, all loans are subject to ongoing monitoring by portfolio managers and loan officers.  Also, many of the Bank’s loans are relatively short term, and are subject to reconsideration with a full review in loan committee between one and three years.

Note 7. Transactions with Affiliates

The Company entered into a sublease for office space in Philadelphia, Pennsylvania with RAIT Financial Trust (RAIT) commencing in October 2000. The former Chief Executive Officer of RAIT (from December 2006 to February 2009), who was also a RAIT trustee, is the Chairman of the Company and a director and Chairman of the Executive Committee of the Bank.  RAIT paid the Company approximately $228,000 and $223,000, for the nine months ended September 30, 2012 and 2011, respectively.

The Company entered into a space sharing agreement for office space in New York, New York with Resource America Inc. commencing in September 2011.  The Chairman of the Board of Resource America, Inc is the father of the Chairman of the Board and the spouse of the Chief Executive Officer of the Company.  The Chief Executive Officer of Resource America is the brother of the Chairman of the Board and the son of the Chief Executive Officer of the Company.  Rent expense for the nine months ended September 30, 2012 was $77,000.

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The Company entered into a space sharing agreement for office space in New York, New York with Atlas Energy, L.P. commencing in May 2012.  The Chairman of the Board of Atlas Energy, L.P. is the brother of the Chairman of the Board and the son of the Chief Executive Officer of the Company.  The Chief Executive Officer of Atlas Energy, L.P. is the father of the Chairman of the Board and the spouse of the Chief Executive Officer of the Company.  Rent expense for the nine months ended September 30, 2012 was $14,000.

The Bank maintains deposits for various affiliated companies totaling approximately $47.1 million and $88.8 million as of September 30, 2012 and December 31, 2011, respectively.

The Bank has entered into lending transactions in the ordinary course of business with directors, executive officers, principal stockholders and affiliates of such persons on the same terms as those prevailing for comparable transactions with other borrowers. At September 30, 2012, these loans were current as to principal and interest payments and did not involve more than normal risk of collectability. At September 30, 2012, loans to these related parties amounted to $31.5 million as compared to $32.4 million at December 31, 2011.

The Company executed security transactions through PrinceRidge, a brokerage firm in which the Company’s Chairman is a principal.  For the nine months ended September 30, 2012 a total of $35.8 million of securities rated AAA by at least one rating agency were purchased from that firm at market, the market price having been confirmed by an independent security advisor.  All of the securities purchased were commercial mortgage-backed securities.  The Company does not pay a separate fee or commission to PrinceRidge. We do not have information as to PrinceRidge’s actual profits or losses. All of the purchases were classified as available for sale.

Note 8. Fair Value Measurements

FASB ASC topic 825, Financial Instruments, requires disclosure of the estimated fair value of an entity’s assets and liabilities considered to be financial instruments. For the Company, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. However, many of such instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. Also, it is the Company’s general practice and intent to hold its financial instruments to maturity whether or not categorized as “available-for-sale” and not to engage in trading or sales activities, except for certain loans. For fair value disclosure purposes, the Company utilized certain value measurement criteria required under the FASB ASC 820, Fair Value Measurements and Disclosures, and discussed below.

Estimated fair values have been determined by the Company using the best available data and an estimation methodology it believes to be suitable for each category of financial instruments. Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. Also, there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

Cash and cash equivalents, which are comprised of cash and due from banks, our balance at the Federal Reserve Bank and federal funds sold, had recorded values of $544.7 million and $749.2 million as of September 30, 2012 and December 31, 2011, respectively, which approximated fair values.

The estimated fair values of investment securities are based on quoted market prices, if available, or by an estimated methodology based on management’s inputs. The fair values of the Company’s investment securities held-to-maturity are based on using “unobservable inputs” that are the best information available in the circumstances.

The net loan portfolio at September 30, 2012 and December 31, 2011 has been valued using the present value of discounted cash flow where market prices were not available. The discount rate used in these calculations is the estimated current market rate adjusted for credit risk. The carrying value of accrued interest approximates fair value.

The estimated fair values of demand deposits (i.e. interest-and noninterest-bearing checking accounts, savings, and certain types of demand and money market accounts are equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). The fair values of securities sold under agreements to repurchase and short term borrowings are equal to their carrying amounts as they are overnight borrowings.

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The fair values of certificates of deposit and subordinated debentures are estimated using a discounted cash flow calculation that applies current interest rates to discounted expected cash flows. Based upon time deposit maturities at September 30, 2012, the carrying values approximate their fair values. The carrying amount of accrued interest payable approximates its fair value (in thousands).

	September 30, 2012
					Quoted prices in active		Significant other		Significant
					markets for identical		observable		unobservable
	Carrying		Estimated		assets		inputs		inputs
	amount		fair value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	544,658	$	544,658	$	544,658	$	-	$	-
Investment securities available-for-sale		634,894		634,894		3,075		631,211		608
Investment securities held-to-maturity		22,707		18,634		-		-		18,634
Federal Home Loan and Atlantic Central Bankers Bank stock		4,160		4,160		4,160		-		-
Commercial loans held for sale		7,970		7,970		-		-		7,970
Loans receivable, net		1,856,992		1,855,671		-		-		1,855,671
Demand and interest checking		2,300,025		2,300,025		2,300,025		-		-
Savings and money market		459,725		459,725		459,725		-		-
Time deposits		21,425		21,491		-		-		21,491
Subordinated debenture		13,401		9,268		-		-		9,268
Securities sold under agreements to repurchase		18,802		18,802		18,802		-		-
Accrued interest payable		100		100		100		-		-
	December 31, 2011
	Carrying		Estimated
	amount		fair value
Cash and cash equivalents	$	749,174	$	749,174
Investment securities available-for-sale		448,204		448,204
Investment securities held-to-maturity		18,044		13,826
Federal Home Loan and Atlantic Central Bankers Bank stock		5,088		5,088
Loans receivable, net		1,744,828		1,718,698
Demand and interest checking		2,192,938		2,192,938
Savings and money market		454,343		454,343
Time deposits		35,270		35,336
Subordinated debenture		13,401		9,287
Securities sold under agreements to repurchase		33,177		33,177
Accrued interest payable		123		123

The fair value of commitments to extend credit is estimated based on the amount of unamortized deferred loan commitment fees. The fair value of letters of credit is based on the amount of unearned fees plus the estimated cost to terminate the letters of credit. Fair values of unrecognized financial instruments, including commitments to extend credit, and the fair value of letters of credit are considered immaterial.

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In addition, FASB ASC topic 820, Fair Value Measurements and Disclosures, establishes a common definition for fair value to be applied to assets and liabilities. It clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures concerning fair value measurements. FASB ASC topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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). Level 1 valuation is based on quoted market prices for identical assets or liabilities to which the Company has access at the measurement date. Level 2 valuation is based on other observable inputs for the asset or liability, either directly or indirectly. This includes quoted prices for similar assets in active or inactive markets, inputs other than quoted prices that are observable for the asset or liability such as yield curves, volatilities, prepayment speeds, credit risks, default rates, or inputs that are derived principally from, or corroborated through, observable market data by market-corroborated reports. Level 3 valuation is based on “unobservable inputs” which the Company believes is the best information available in the circumstances. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assets measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	8,828	$	-	$	8,828	$	-
Federally insured student loan securities		111,545		-		111,545
Obligations of states and political subdivisions		163,375		-		163,375		-
Residential mortgage-backed securities		197,158		-		197,158		-
Commercial mortgage-backed securities		102,477		-		102,477		-
Other debt securities		48,436		-		47,828		608
Other equity securities		3,075		3,075		-		-
	$	634,894	$	3,075	$	631,211	$	608
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	9,285	$	-	$	9,285	$	-
Obligations of states and political subdivisions		150,666		-		150,666		-
Residential mortgage-backed securities		193,685		-		193,685		-
Commercial mortgage-backed securities		52,061		-		52,061		-
Other debt securities		39,532		-		38,902		630
Other equity securities		2,975		2,975		-		-
	$	448,204	$	2,975	$	444,599	$	630

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The changes in the Company’s Level 3 assets are set forth below (in thousands).

Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
		Available-for-sale
		securities
		September 30, 2012		December 31, 2011
Beginning balance		$                      630	$                          748
	Transfers into level 3	-	-
	Transfers out of level 3	-	-
	Total gains or losses (realized/unrealized)
	Included in earnings	-	(2)
	Included in other comprehensive income	15	(62)
	Purchases, issuances, and settlements
	Purchases	-	-
	Issuances	-	-
	Sales
	Settlements	(37)	(54)
Ending balance		$                      608	$                          630

The other debt securities included in level 3 at September 30, 2012 and December 31, 2011 have been valued on the present value of cash flows, which discounts expected cash flows from principal and interest using yield to maturity at the measurement date. The discount rate used in these calculations is the estimated current market rate adjusted for credit risk.

Assets measured at fair value on a nonrecurring basis, segregated by fair value hierarchy, during the periods shown are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	29,160	$	-	$	-	$	29,160
Other real estate owned		3,065		-		-		3,065
	$	32,225	$	-	$	-	$	32,225
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	17,587	$	-	$	-	$	17,587
Other real estate owned		7,405		-		-		7,405
	$	24,992	$	-	$	-	$	24,992

At September 30, 2012, impaired loans that are collateral dependent have been presented at their fair value, less costs to sell, of $29.2 million through specific reserves and other write downs of $10.9 million or by recording charge-offs when the carrying value exceeds the fair value. Included in the impaired balance at September 30, 2012 were troubled debt restructured loans with a balance of $8.3 million which have specific reserves of $4.2 million.  Valuation techniques consistent with the market and/or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as recent sales of similar assets or observable market data for operational or carrying costs. In cases where such inputs were unobservable, the loan balance is reflected within the Level 3 hierarchy. The fair value of other real estate owned is based on an appraisal of the property using the market approach for valuation.

Note 9. Derivatives

The Company utilizes derivative instruments to assist in the management of interest rate sensitivity by modifying the repricing, maturity and option characteristics on commercial real estate loans held for sale. The Company entered into two interest rate swap agreements with an aggregate notional amount of $5.9 million. These swap agreements provide for the Company to receive an adjustable rate of interest based upon the three-month London Interbank Offering Rate (LIBOR).  The Company recorded expense on derivative instruments of $14,000 for the nine months ended September 30, 2012.  It recorded income of $156,000 for the nine months ended September 30, 2012 to recognize fair value income on related commercial real estate loans held for sale.  The amount payable by the Company under these swap agreements was $14,000 at September 30, 2012.

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The maturity dates, notional amounts, interest rates paid and received and fair value of the Company’s remaining interest rate swap agreements as of September 30, 2012 are summarized below (in thousands):

	September 30, 2012
Maturity date	Notional amount		Interest rate paid			Interest rate received			Fair value
August 1, 2022	$	2,200		1.64	%		0.44	%	$	5
September 27, 2022		3,700		1.74	%		0.36	%		(19	)
Total	$	5,900							$	(14	)

Note 10. Subsequent Events

The Company evaluated its September 30, 2012 financial statements for subsequent events through the date the financial statements were issued.  The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

 Note 11. Recent Accounting Pronouncements

FASB Accounting Standards Update No. 2011-03.  In April 2011, the FASB issued Standards Update (ASU) No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements.  This accounting standard modifies the criteria for determining when repurchase agreements would be accounted for as a secured borrowing rather than as a sale.  Currently, an entity that maintains effective control over transferred financial assets must account for the transfer as a secured borrowing rather than as a sale.  The provisions of ASU No. 2011-03 removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee.  The FASB believes that contractual rights and obligations determine effective control and that there does not need to be a requirement to assess the ability to exercise those rights.  ASU No. 2011-03 does not change the other existing criteria used in the assessment of effective control.  The provisions of ASU No. 2011-03 are effective prospectively for transactions, or modifications of existing transactions, that occur on or after January 1, 2012.  The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

FASB Accounting Standards Update No. 2011-04.  In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.  This accounting standard results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards (“IFRS”).  The changes to U.S. GAAP as a result of ASU No. 2011-04 are as follows:  (1) The concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets (that is, it does not apply to financial assets or any liabilities). (2) U.S. GAAP currently prohibits application of a blockage factor in valuing financial instruments with quoted prices in active markets.  ASU No. 2011-04 extends that prohibition to all fair value measurements. (3) An exception is provided to the basic fair value measurement principles for an entity that holds a group of financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk that are managed on the basis of the entity’s net exposure to either of those risks.  This exception allows the entity, if certain criteria are met, to measure the fair value of the net asset or liability position in a manner consistent with how market participants would price the net risk position. (4) ASU No. 2011-04 aligns the fair value measurement of instruments classified within an entity’s shareholders’ equity with the guidance for liabilities. (5) Disclosure requirements have been enhanced for recurring Level 3 fair value measurements to disclose quantitative information about unobservable inputs and assumptions used, to describe the valuation processes used by the entity, and to describe the sensitivity of fair value measurements to changes in unobservable inputs and interrelationships between those inputs.  In addition, entities must report the level in the fair value hierarchy of items that are not measured at fair value in the statement of condition but whose fair value must be disclosed.  The provisions of ASU No. 2011-04 are effective for the Company’s interim reporting period beginning on or after December 15, 2011.  The adoption of ASU No. 2011-04 did not have a material impact on the Company’s consolidated financial statements.

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FASB Accounting Standards Update No. 2011-05.  In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05 Presentation of Comprehensive Income.  This accounting standard allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income.  The statement(s) are required to be presented with equal prominence as the other primary financial statements.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders’ equity but does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  The provisions of ASU No. 2011-05 are effective for the Company’s interim reporting period beginning on or after December 15, 2011, with retrospective application required.  The adoption of ASU No. 2011-05 resulted in the addition of a statement of comprehensive income, but did not otherwise have a material impact on the Company’s consolidated financial statements.

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Part I - Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operation

Forward-Looking Statements

When used in this Form 10-Q, the words “believes” “anticipates” “expects” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties more particularly described in Item 1A, under the caption “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2011 and in other of our public filings with the Securities and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from those expressed or implied in this Form 10-Q. We caution readers not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly revise or update these forward-looking statements to reflect events or circumstances after the date of this report except as required by applicable law.

In the following discussion we provide information about our results of operations, financial condition, liquidity and asset quality. We intend that this information facilitate your understanding and assessment of significant changes and trends related to our financial condition and results of operations. You should read this section in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” included in our Annual Report on Form 10-K for the year ended December 31, 2011.

 Overview

We are a Delaware financial holding company with a wholly owned subsidiary, The Bancorp Bank, which we refer to as the Bank. Through the Bank, we provide a wide range of commercial and retail banking services and related banking services, which include private label banking, healthcare accounts, prepaid and debit cards, and merchant card processing to both regional and national markets.

Regionally, we focus on providing our banking services directly to retail and commercial customers in the Philadelphia-Wilmington metropolitan area, consisting of the 12 counties surrounding Philadelphia, Pennsylvania and Wilmington, Delaware  including Philadelphia, Delaware, Chester, Montgomery, Bucks and Lehigh Counties in Pennsylvania, New Castle County in Delaware and Mercer, Burlington, Camden, Ocean and Cape May Counties in New Jersey. We believe that changes over the past ten years in this market have created an underserved base of small and middle-market businesses and high net worth individuals that are interested in banking with a company headquartered in and with decision-making authority based in, the Philadelphia-Wilmington area. We believe that our presence in the area provides us with insights as to the local market and, as a result, with the ability to tailor our products and services, and especially the structure of our loans, more closely to the needs of our targeted customers. We seek to develop overall banking relationships with our targeted customers so that our lending operations serve as a generator of deposits and our deposit relationships serve as a source of loan assets. We believe that our regional presence also allows us to oversee and further develop our existing customer relationships.

Nationally, we focus on providing our services to organizations with a pre-existing customer base who can use one or more selected banking services tailored to support or complement the services provided by these organizations to their customers. These services include private label banking; credit and debit card processing for merchants affiliated with independent service organizations; healthcare savings accounts for healthcare providers and third-party plan administrators; and prepaid cards, also known as stored value cards, for insurers, incentive plans, large retail chains and consumer service organizations. We typically provide these services under the name and through the facilities of each organization with whom we develop a relationship. We refer to this, generally, as affinity group banking. Our private label banking, merchant processing, healthcare accounts and prepaid card programs are a source of fee income and low-cost deposits.

Critical Accounting Policies and Estimates

Our accounting and reporting policies conform with accounting principles generally accepted in the United States and general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates. We believe that the determination of our allowance for loan and lease losses, our determination of the fair value of financial instruments, and income tax involve a higher degree of judgment and complexity than our other significant accounting policies.

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We determine our allowance for loan and lease losses with the objective of maintaining a reserve level we believe to be sufficient to absorb our estimated probable credit losses. We base our determination of the adequacy of the allowance on periodic evaluations of our loan portfolio and other relevant factors. However, this evaluation is inherently subjective as it requires material estimates, including, among others, expected default probabilities, the amount of loss we may incur on a defaulted loan, expected commitment usage, the amounts and timing of expected future cash flows on impaired loans, value of collateral, estimated losses on consumer loans and residential mortgages, and general amounts for historical loss experience. We also evaluate economic conditions and uncertainties in estimating losses and inherent risks in our loan portfolio. To the extent actual outcomes differ from our estimates, we may need additional provisions for loan losses. Any such additional provisions for loan losses will be a direct charge to our earnings.  See “Allowance for Loan and Lease Losses”.

The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. Our valuation methods and inputs consider factors such as types of underlying assets or liabilities, rates of estimated credit losses, interest rate or discount rate and collateral. Our best estimate of fair value involves assumptions including, but not limited to, various performance indicators, such as historical and projected default and recovery rates, credit ratings, current delinquency rates, loan-to value ratios and the possibility of obligor refinancing.

At the end of each quarter, we assess the valuation hierarchy for each asset or liability measured. From time to time, assets or liabilities may be transferred within hierarchy levels due to changes in availability of observable market inputs to measure fair value at the measurement date. Transfers into or out of hierarchy levels are based upon the fair value at the beginning of the reporting period.

We periodically review our investment portfolio to determine whether unrealized losses on securities are temporary, based on evaluations of the creditworthiness of the issuers or guarantors, and underlying collateral, as applicable. In addition, we consider the continuing performance of the securities. We recognize credit losses through the income statement. If management believes market value losses are temporary and that we have the ability and intention to hold those securities to maturity, we recognize the reduction in other comprehensive income, through equity.

We account for our stock-based compensation plans based on the fair value of the awards made, which include stock options, restricted stock, and performance based shares. To assess the fair value of the awards made, management makes assumptions as to expected stock price volatility, option terms, forfeiture rates and dividend rates. All of these estimates and assumptions may be susceptible to significant change that may impact earnings in future periods.

We account for income taxes under the liability method whereby we determine deferred tax assets and liabilities based on the difference between the carrying values on our financial statements and the tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense (benefit) is the result of changes in deferred tax assets and liabilities.

Results of Operations

Third quarter 2012 to third quarter 2011

Net Income:  Net income for the third quarter of 2012 was $3.6 million, compared to $2.3 million for the third quarter of 2011. The $1.3 million, or 56.0% increase, reflected a $2.0 million increase in net interest income and a $4.5 million increase in non-interest income (excluding security gains) which were partially offset by a $4.1 million increase in non-interest expense.  Non-interest income (excluding security gains) increased to $11.1 million in third quarter 2012 from $6.7 million in third quarter 2011, primarily due to increases in prepaid card fees, which reflected an increased volume of accounts and related transaction fees.  Other non-interest income categories increased as a result of both an increased volume of transactions   and increased service charges on certain health savings accounts.  Net interest income increased to $21.6 million primarily as a result of higher loan and investment security interest.  The provision for loan and lease losses increased $521,000 in third quarter 2012, compared to third quarter 2011.  Diluted earnings per share were $0.11 in third quarter 2012 compared to $0.07 in the third quarter of 2011.  Return on average assets was 0.46% and return on average equity was 4.97% for the third quarter of 2012, as compared to 0.33% and 3.43%, respectively, for the third quarter of 2011.

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Net Interest Income:  Our net interest income for third quarter 2012 increased to $21.6 million, an increase of $2.0 million or 10.0% from $19.6 million in third quarter 2011. Our interest income for third quarter 2012 increased to $24.4 million, an increase of $1.7 million or 7.4% from $22.7 million for third quarter 2011.  The increase in interest income resulted primarily from higher balances of investment securities and loans.  Investment security balances have been trending higher to levels more consistent with our peer ratios for securities to average assets.  Our average investment securities increased to $625.3 million for third quarter 2012 from $384.8 million for third quarter 2011, while related interest income increased $833,000.  Our average loans and leases increased to $1.84 billion for third quarter 2012 from $1.70 billion for third quarter 2011, while related interest income increased $776,000.

Our net interest margin (calculated by dividing net interest income by average interest earning assets) for third quarter 2012 decreased to 2.90% from 3.15% in third quarter of 2011, a decrease of 25 basis points.  The decrease in the net interest margin resulted primarily from lower yields on interest earning assets.  Such deposits were invested at the Federal Reserve Bank for liquidity purposes, but bore interest at only 25 basis points.  Federal Reserve Bank deposits are included in interest earning deposits in the balance sheet, thereby lowering the net interest margin.  In third quarter 2012, the average yield on our loans decreased to 4.30% from 4.47% for third quarter 2011, a decrease of 17 basis points.  This decrease was partially offset by an 8 basis point decrease in the cost of our deposits to 0.37% from 0.45%.  Yields on taxable investment securities were lower at 2.70% compared to 3.47%, respectively, a decrease of 77 basis points.  The lower yield reflected new purchases with shorter average lives or earlier repricing periods which typically have lower yields and lower market rates on such purchases. Average interest earning deposits increased $114.4 million to $570.7 million in third quarter 2012 from $456.3 million in third quarter 2011, reflecting continued deposit growth.  These funds earn interest at a rate of 25 basis points which lowers our asset yield and net interest margin.  The interest cost of total deposits and interest bearing liabilities amounted to 0.40% for third quarter 2012 compared to 0.50% in third quarter 2011.  The decrease is the result of continuing decreases in both our deposit rates due to the decrease in market interest rates, as well as changes in the mix of our deposits reflecting increases in demand and interest checking deposits.  In third quarter 2012, average demand and interest checking deposits amounted to $2.30 billion, compared to $2.08 billion in third quarter 2011.  Deposit growth continued in wealth management, health savings, merchant processing and prepaid cards.  In third quarter 2012, average deposits amounted to $2.76 billion, compared to $2.46 billion in third quarter 2011.

Average Daily Balances.  The following table presents the average daily balances of assets, liabilities and stockholders’ equity and the respective interest earned or paid on interest earning assets and interest-bearing liabilities, as well as average rates, for the periods indicated:

	Three months ended September 30,
	2012								2011
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
				(dollars in thousands)								(dollars in thousands)
Assets:
Interest earning assets:
Loans net of unearned discount **	$	1,827,348		$	19,646		4.30	%	$	1,693,500		$	18,927		4.47	%
Leases - bank qualified*		15,012			217		5.78	%		5,328			128		9.61	%
Investment securities-taxable		519,377			3,507		2.70	%		314,800			2,732		3.47	%
Investment securities-nontaxable*		105,918			1,091		4.12	%		70,049			1,003		5.73	%
Interest earning deposits at Federal Reserve Bank		570,667			356		0.25	%		456,260			296		0.26	%
Net interest earning assets		3,038,322			24,817		3.27	%		2,539,937			23,086		3.64	%
Allowance for loan and lease losses		(32,385	)							(28,415	)
Other assets		78,241								258,610
	$	3,084,178							$	2,770,132
Liabilities and shareholders' equity:
Deposits:
Demand and interest checking	$	2,296,193		$	1,884		0.33	%	$	2,078,118		$	1,993		0.38	%
Savings and money market		436,484			574		0.53	%		354,189			696		0.79	%
Time		24,042			98		1.63	%		29,690			94		1.27	%
Total deposits		2,756,719			2,556		0.37	%		2,461,997			2,783		0.45	%
Repurchase agreements		20,489			24		0.47	%		23,271			96		1.65	%
Subordinated debt		13,401			218		6.51	%		13,401			216		6.45	%
Total deposits and interest bearing liabilities		2,790,609			2,798		0.40	%		2,498,669			3,095		0.50	%

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Other liabilities		8,462						7,757
Total liabilities		2,799,071						2,506,426
Shareholders' equity		285,107						263,706
	$	3,084,178					$	2,770,132
Net interest income on tax equivalent basis *			$	22,019					$	19,991
Tax equivalent adjustment				458						396
Net interest income			$	21,561					$	19,595
Net interest margin *					2.90	%					3.15	%
* Full taxable equivalent basis, using a 35% statutory tax rate.
** Includes loans held for sale.

For third quarter 2012, average interest earning assets increased to $3.04 billion, an increase of $498.4 million or 19.6% from third quarter 2011.  The increase reflected increased average balances of loans and leases of $143.5 million or 8.4%, and increased average balances of investment securities of $240.4 million or 62.5%.  Average demand and interest checking deposits increased $218.1 million or 10.5%. Average savings and money market deposits increased $82.3 million or 23.2%. The Bank experienced growth in deposits relating to prepaid, wealth management, healthcare, merchant acquiring and other categories.  Prepaid and merchant acquiring balances increased primarily due to the acquisition of new clients and processors.

Provision for Loan and Lease Losses. Our provision for loan and lease losses was $5.5 million for the third quarter of 2012 compared to $5.0 million for the third quarter of 2011.  The increase in the provision is based on our evaluation of the adequacy of our allowance for loan and leases losses, particularly in light of current economic conditions.  That evaluation reflected the impact of an increase in impaired loans which totaled $29.2 million at September 30, 2012 compared to $17.2 million at September 30, 2011.  At September 30, 2012, our allowance for loan and lease losses amounted to $33.1 million or 1.78% of total loans as compared to $29.6 million or 1.69% of total loans at December 31, 2011.  We believe that our allowance is adequate to cover inherent losses   For more information about our provision and allowance for loan and lease losses and our loss experience, see “Financial Condition-Allowance for loan and lease losses”, “-Summary of loan and lease loss experience,” “-Net charge-offs,” and “-Non-performing loans, loans 90 days delinquent and still accruing, and troubled debt restructurings,” below.

Non-Interest Income. Non-interest income was $11.1 million in third quarter 2012 compared to $6.7 million in third quarter 2011 before gains on securities of $107,000 in the third quarter of 2012 and $20,000 in the third quarter of 2011. The $4.5 million or 67.2% increase in third quarter 2012 compared to third quarter 2011 primarily reflected increases in prepaid card transaction volume. Those increases were reflected in a $3.4 million or 85.1% increase in prepaid fees to $7.5 million for third quarter 2012 from $4.0 million for third quarter 2011.  It also reflected increases in service fees on deposit accounts of $339,000 or 57.6% to $928,000 for third quarter 2012 from $589,000 for third quarter 2011 reflecting the institution of monthly service charges on certain health savings accounts.  Affinity fees increased $245,000 or 44.8% to $792,000 for third quarter 2012 from $547,000 for third quarter 2011.  This increase resulted primarily from an increase in fees from one affinity relationship.  Other non-interest income increased $328,000 or 143.2% to $557,000 for third quarter 2012 from $229,000 from third quarter 2011.  This increase reflected a $156,000 fair value adjustment on  commercial mortgage loans held for sale in the third quarter of 2012 .

Non-Interest Expense. Total non-interest expense was $21.9 million for third quarter 2012, an increase of $4.1 million or 23.3% over $17.8 million for third quarter 2011.  Salaries and employee benefits amounted to $10.0 million, an increase of $2.0 million or 24.4% over $8.0 million for third quarter 2011.  The increase in salaries and employee benefits reflected staff additions and expense related to customer service and a significantly expanded call center, compliance, small business lending, prepaid cards and our new commercial mortgage securitization department and a $157,000 increase in employee stock option expense.  It also reflected annual salary increases between 0% and 3.0% for our staff.  Depreciation and amortization increased $87,000 or 11.3% to $854,000 in third quarter 2012 from $767,000 in third quarter 2011 which reflected increased depreciation costs related to equipment for staff additions and increased amortization costs for internally developed software costs related to our affinity programs.  Rent and occupancy increased $146,000 or 19.5% to $895,000 in third quarter 2012 from $749,000 in third quarter 2011 which reflected additional prepaid card, compliance and other office rent.  Data processing increased $467,000 or 22.5% to $2.5 million in third quarter 2012 from $2.1 million in third quarter 2011 due to an increased number of deposit accounts and related transaction volume.  Printing and supplies increased $27,000 or 6.8% to $422,000, in third quarter 2012 from $395,000 in third quarter 2011 reflecting increased deposit account volume.  Audit expense decreased $11,000 or 3.7% to $284,000 for third quarter 2012 from $295,000 in third quarter 2011.  Legal expense increased $581,000 or 87.8% to $1.2 million for third quarter 2012 from $662,000 in third quarter 2011.  The increase reflected $310,000 of legal fees related to the acquisition of European prepaid card contracts and a platform on which to process related transactions.  Losses on sale and write downs on other real estate owned increased $469,000 to $533,000 in third quarter of 2012 from $64,000 in third quarter of 2011 primarily due to a loss on

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one property. Federal Deposit Insurance Corporation (FDIC) insurance expense increased $11,000 or 1.6% to $716,000 for third quarter 2012 from $705,000 in third quarter 2011.  This increase resulted primarily from growth in deposits.  Software, maintenance and equipment expense decreased $18,000 or 4.2% to $411,000 in third quarter 2012 from $429,000 in third quarter 2011.  Other real estate owned expense decreased $387,000 or 108.4% to ($30,000) in third quarter 2012 from $357,000 in third quarter 2011.  The decrease resulted from expense on a fewer number of properties and a reimbursement of expenses on one property.  Other non-interest expense increased $807,000 or 27.1% to $3.8 million in third quarter 2012 from $3.0 million in third quarter of 2011.  The $807,000 increase resulted primarily from increases in loan expenses of $261,000, an increase in telephone expense of $164,000, an increase in check card losses of $112,000 and increased losses related to prepaid cards of $56,000.

Income Taxes.  Income tax expense was $1.8 million for third quarter 2012 compared to $1.2 million in third quarter 2011, an increase of $586,000.  The increase resulted primarily from an increase in taxable income.  Our effective tax rate for third quarter 2012 was 33.5% compared to 34.6% in third quarter 2011.

First nine months of 2012 to first nine months of 2011

Net Income:  Net income for the first nine months of 2012 was $11.4 million, compared to $5.6 million for the first nine months of 2011. The $5.6 million, or 102.2% increase, reflected a $7.3 million increase in net interest income and a $12.4 million increase in non-interest income (excluding security gains and other-than-temporary impairment (OTTI)) which were partially offset by a $11.7 million increase in non-interest expense.  Non-interest income (excluding security gains and other-than-temporary-impairment (OTTI)) increased to $34.0 million in first nine months 2012 from $21.6 million in the first nine months of 2011, primarily due to increases in prepaid card fees, which reflected an increased volume of accounts and related transaction fees.  Other non-interest income categories increased as a result of both an increased volume of transactions and  higher service charges on certain health savings accounts.  Net interest income increased to $63.4 million primarily as a result of higher investment security and loan interest.  The provision for loan and lease losses decreased $1.6 million in the first nine months of 2012 compared to the first nine months of 2011 reflecting decreased levels of net charge-offs and other factors.  Diluted earnings per share were $0.34 in first nine months 2012 compared to $0.18 in the first nine months of 2011.  Return on average assets was 0.43% and return on average equity was 5.44% for the first nine months of 2012, as compared to 0.27% and 3.06%, respectively, for the first nine months of 2011.

Net Interest Income:  Our net interest income for first nine months 2012 increased to $63.4 million, an increase of $7.3 million or 13.0% from $56.1 million in first nine months 2011. Our interest income for first nine months 2012 increased to $72.2 million, an increase of $7.1 million or 10.9% from $65.1 million for first nine months 2011.  The increase in interest income resulted primarily from higher balances of investment securities and loans.  Investment security balances have been trending higher to levels more consistent with our peer ratios for securities to average assets.  Our average investment securities increased to $544.8 million for first nine months 2012 from $328.1 million for first nine months 2011, while related interest income increased $3.6 million.  Our average loans and leases increased to $1.79 billion for first nine months 2012 from $1.66 billion for first nine months 2011, while related interest income increased $2.5 million.

Our net interest margin (calculated by dividing net interest income by average interest earning assets) for first nine months 2012 decreased to 2.53% from 3.00% in first nine months of 2011, a decrease of 47 basis points.  The decrease in the net interest margin resulted primarily from increases in deposit seasonality and deposit growth in excess of immediate funding needs.  Such deposits were invested at the Federal Reserve Bank for liquidity purposes, but bore interest at only 25 basis points.  Federal Reserve Bank deposits are included in interest earning deposits in the balance sheet, thereby lowering the net interest margin.  In first nine months  2012, the average yield on our loans decreased to 4.31% from 4.45% for first nine months 2011, a decrease of 14 basis points.  This decrease was partially offset by a 10 basis point decrease in the cost of our deposits to 0.34% from 0.44%.  Yields on taxable investment securities were lower at 3.04% compared to 3.49%, respectively, a decrease of 45 basis points.of the lower yield reflected new purchases with shorter average lives or earlier repricing periods which typically have lower yields and lower market rates on such purchases. Average interest earning deposits increased $515.0 million to $1.07 billion in first nine months 2012 from $558.3 million in first nine months 2011, reflecting deposit seasonality from primarily the first and second quarters.  These funds earn interest at a rate of 25 basis points which lowers our asset yield and net interest margin.  The interest cost

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of total deposits and interest bearing liabilities amounted to 0.36% for first nine months 2012 compared to 0.48% in first nine months 2011.  The decrease is the result of continuing decreases in both our deposit rates due to the decrease in market interest rates, as well as changes in the mix of our deposits and, in particular, a significant increase in demand deposits.  In the first nine months of 2012, average demand and interest checking deposits amounted to $2.72 billion, compared to $2.14 billion in first nine months 2011.  Deposit growth continued in wealth management, health savings, merchant processing and prepaid cards. In the first nine months of 2012, average deposits amounted to $3.20 billion, compared to $2.51 billion in first nine months of 2011.

Average Daily Balances.  The following table presents the average daily balances of assets, liabilities and stockholders’ equity and the respective interest earned or paid on interest earning assets and interest-bearing liabilities, as well as average rates, for the periods indicated:

	Nine months ended September 30,
	2012								2011
	Average					Average			Average					Average
	Balance			Interest		Rate			Balance			Interest		Rate
				(dollars in thousands)								(dollars in thousands)
Assets:
Interest earning assets:
Loans net of unearned discount **	$	1,780,565		$	57,594		4.31	%	$	1,655,013		$	55,252		4.45	%
Leases - bank qualified*		13,081			614		6.26	%		4,174			302		9.65	%
Investment securities-taxable		442,043			10,068		3.04	%		253,507			6,629		3.49	%
Investment securities-nontaxable*		102,736			3,252		4.22	%		74,560			3,066		5.48	%
Interest earning deposits at Federal Reserve Bank		1,073,305			2,014		0.25	%		558,333			1,041		0.25	%
Net interest earning assets		3,411,730			73,542		2.87	%		2,545,587			66,290		3.47	%
Allowance for loan and lease losses		(31,728	)							(26,597	)
Other assets		143,839								276,095
	$	3,523,841							$	2,795,085
Liabilities and shareholders' equity:
Deposits:
Demand and interest checking	$	2,721,620		$	5,971		0.29	%	$	2,138,525		$	5,991		0.37	%
Savings and money market		447,596			1,832		0.55	%		337,422			2,006		0.79	%
Time		28,403			301		1.41	%		29,608			241		1.09	%
Total deposits		3,197,619			8,104		0.34	%		2,505,555			8,238		0.44	%
Short term borrowings		-			-		0.00	%		996			3		0.40	%
Repurchase agreements		23,656			75		0.42	%		20,067			173		1.15	%
Subordinated debt		13,401			652		6.49	%		13,401			647		6.44	%
Total deposits and interest bearing liabilities		3,234,676			8,831		0.36	%		2,540,019			9,061		0.48	%
Other liabilities		9,526								8,944
Total liabilities		3,244,202								2,548,963
Shareholders' equity		279,639								246,122
	$	3,523,841							$	2,795,085
Net interest income on tax equivalent basis *				$	64,711							$	57,229
Tax equivalent adjustment					1,353								1,179
Net interest income				$	63,358							$	56,050
Net interest margin *							2.53	%							3.00	%
* Full taxable equivalent basis, using a 35% statutory tax rate.
** Includes loans held for sale.

For first nine months of 2012, average interest earning assets increased to $3.41 billion, an increase of $866,000 or 34.0% from first nine months of 2011.  The increase reflected increased average balances of loans and leases of $134.5 million or 8.1%, and increased average balances of investment securities of $216.7 million or 66.1%.  Average demand and interest checking deposits increased $583.1 million or 27.3%. Average savings and money market deposits increased $110.2 million or 32.7%. The Bank experienced growth in deposits relating to prepaid, wealth management, healthcare, merchant acquiring and other categories.  Prepaid and merchant acquiring balances increased primarily due to the acquisition of new clients and processors.

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Provision for Loan and Lease Losses. Our provision for loan and lease losses was $15.0 million for the first nine months of 2012 compared to $16.7 million for the first nine months of 2011.  The decrease in the provision is based on our evaluation of the adequacy of our allowance for loan and leases losses, particularly in light of current economic conditions.  That evaluation reflected the impact of lower levels of net charge-offs and other factors.  At September 30, 2012, our allowance for loan and lease losses amounted to $33.1 million or 1.78% of total loans as compared to $29.6 million or 1.69% of total loans at December 31, 2011.  We believe that our allowance is adequate to cover expected losses   For more information about our provision and allowance for loan and lease losses and our loss experience, see “Financial Condition-Allowance for loan and lease losses”, “-Summary of loan and lease loss experience,” “-Net charge-offs,” and “-Non-performing loans, loans 90 days delinquent and still accruing, and troubled debt restructurings,” below.

Non-Interest Income. Non-interest income was $34.0 million in first nine months 2012 compared to $20.9 million in first nine months  2011 before security gains of $107,000 and OTTI of $126,000 in the first nine months of 2012 and before security gains of $623,000 and OTTI of $75,000 excluding a $718,000 legal settlement in the first nine months of 2011. The $13.1 million or 62.8% increase in first nine months 2012 compared to first nine months 2011 primarily reflected increases in prepaid card transaction volume. Those increases were reflected in a $10.4 million or 78.9% increase in prepaid fees to $23.6 million for first nine months 2012 from $13.2 million for first nine months 2011. First nine months prepaid income is impacted by our electronic tax refund business which increased significantly over the prior year period and which is concentrated in the first quarter and by an overall increase in other prepaid transaction volume.  It also reflected increases in service fees on deposit accounts of $699,000 or 38.6% to $2.5 million for first nine months 2012 from $1.8 million for first nine months of 2011 reflecting the institution of monthly service charges on certain health savings accounts.  Affinity fees increased $898,000 to $2.0 million for first nine months 2012 from $1.1 million, or 83.1% for first nine months 2011.  That increase resulted primarily from an increase in fees from one affinity relationship.  Other non-interest income decreased $396,000 or 29.2% to $961,000 for first nine months 2012 from $1.4 million from first nine months 2011.  This decrease was primarily due to a $718,000 legal settlement in favor of the Bank in 2011.

Non-Interest Expense. Total non-interest expense was $64.7 million for first nine months 2012, an increase of $11.7 million or 22.2% over $53.0 million for first nine months 2011.  Salaries and employee benefits amounted to $28.7 million, an increase of $6.1 million or 27.2% over $22.6 million for first nine months 2011.  The increase in salaries and employee benefits reflected staff additions and expense related to compliance, small business lending, prepaid cards and our new commercial mortgage securitization department and a $597,000 increase in employee stock option expense.  It also reflected annual salary increases between 0% and 3.0% for our staff.  Depreciation and amortization increased $289,000 or 13.0% to $2.5 million in first nine months 2012 from $2.2 million in first nine months 2011 which reflected increased depreciation costs related to equipment for staff additions and increased amortization costs for internally developed software costs related to our affinity programs.  Rent and occupancy increased $305,000 or 14.0% to $2.5 million in first nine months 2012 from $2.2 million in first nine months 2011 which reflected additional prepaid card, compliance and other office rent.  Data processing increased $1.3 million or 19.1% to $7.9 million in first nine months 2012 from $6.6 million in first nine months of 2011 due to an increased number of deposit accounts and related transaction volume.  Printing and supplies increased to $1.3 million, an increase of $261,000 or 24.3% from $1.1 million in first nine months 2011 reflecting increased deposit account volume.  Audit expense increased $54,000 or 6.7% to $859,000 for first nine months 2012 from $805,000 in first nine months of 2011, reflecting higher information technology (IT) and data security audit costs.  Legal expense increased $528,000 or 28.4% to $2.4 million for first nine months 2012 from $1.9 million in first nine months 2011. The increase reflected $310,000 of legal fees related to the acquisition of European prepaid card contracts and a platform on which to process related transactions.  Losses and write downs on other real estate owned increased $1.9 million to $2.4 million in the first nine months of 2012 from $555,000 in first nine months 2011.  The increase resulted from $1.3 million of losses on sale of other real estate and write downs to reduce carrying costs to expected proceeds from sale.  Federal Deposit Insurance Corporation (FDIC) insurance expense decreased $224,000 or 8.5% to $2.4 million for first nine months 2012 from $2.6 million in first nine months 2011.  This decrease resulted primarily from a reduction in the assessment rate for the Bank which was partially offset by growth in deposits.  Software, maintenance and equipment expense increased $149,000 or 12.7% to $1.3 million in first nine months 2012 from $1.2 million in first nine months 2011. This increase included software and hardware for the SBA lending unit and for loan, prepaid card, and deposit products, increased security, regulatory compliance and storage.  Other real estate owned expense decreased $332,000 or 39.5% to $509,000 in first nine months 2012 from $841,000 in first nine months 2011.  The decrease resulted from expense on a fewer number of properties.  Other non-interest expense increased $1.4 million or 15.0% to $11.1 million in the first nine months 2012 from $9.7 million in the first nine months of 2011.  The $1.4 million increase resulted primarily from an increase of $361,000 in customer identification verification expense for  tax refund prepaid cards,  $407,000 in loan expenses, $301,000 in telephone expense and $219,000 in check card losses.  Other expense in 2012 also included a $173,000 civil money penalty which originated from 2010 and was related to a customer relationship which the Bank has terminated.

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Income Taxes.  Income tax expense was $6.2 million for first nine months 2012 compared to $2.9 million in first nine months 2011, an increase of $3.2 million.  The increase resulted primarily from an increase in taxable income.  Our effective tax rate for first nine months 2012 was 35.2% compared to 34.2% in first nine months 2011 reflecting the greater impact of tax exempt income on lower pre-tax income in the prior year.

Liquidity and Capital Resources

Liquidity defines our ability to generate funds to support asset growth, meet deposit withdrawals, satisfy borrowing needs and otherwise operate on an ongoing basis. We invest the funds we do not need for daily operations primarily in overnight federal funds or in our interest-bearing account at the Federal Reserve.

The primary source of funds for our financing activities during the first nine months of 2012 was cash inflows from net increases in deposits, which were $98.6 million. Loan repayments, also a source of funds, were exceeded by new loan disbursements during that period and securities maturities and repayments were exceeded by new purchases.  While we do not have a traditional branch system, we believe that our core deposits, which include our demand, interest checking, savings and money market accounts, have similar characteristics to those of a bank with a branch system. We seek to set rates on our deposits at levels competitive with the rates offered in our market; however we do not seek to compete principally on rate. The focus of our business model is to identify affinity groups that control significant amounts of deposits as part of their business. A key component to the model is that the deposits are both stable and “sticky,” in the sense that they do not react to fluctuations in the market. However, certain components of the deposits do experience seasonality, creating excess liquidity at certain times.

Historically, we have also used sources outside of our deposit products to fund our loan growth, including Federal Home Loan Bank (FHLB) advances, repurchase agreements, and institutional (brokered) certificates of deposit as a significant funding source. We have shifted to primarily using our deposits as our funding source as a result of deposit growth. We still maintain our secured borrowing lines with the Federal Home Loan Bank of Pittsburgh and other unsecured lines from our correspondent banks, which include Atlantic Central Bankers Bank, Wells Fargo Bank and PNC Bank. We have a $429.0 million line of credit with the Federal Home Loan Bank and $49.0 million in additional lines of credit with correspondent banks. As of September 30, 2012, we had no amounts outstanding on our borrowing lines.  We expect to continue to use our facility with the Federal Home Loan Bank and our correspondent banks. At no time during the quarter did we experience any difficulties accessing these lines.  We actively monitor our positions and contingent funding sources on a daily basis.

Included in our cash and cash-equivalents at September 30, 2012 are $540.0 million of interest earning deposits which primarily consisted of deposits with the Federal Reserve Bank. Traditionally, we sell our excess funds overnight to other financial institutions, with which we have correspondent relationships, to obtain better returns. As the federal funds rates decreased to the same 25 basis point level offered by the Federal Reserve Bank, we have adjusted our strategy to retain our excess funds at the Federal Reserve Bank, which also offers the full guarantee of the federal government. In addition, we diverted a portion of our excess funds to short term securities to generate better returns.

Funding was directed primarily at cash outflows required for purchases of investment securities (net of repayments), which were $185.5 million for the year to date period September 30, 2012 and $174.4 million for the prior year to date period ended September 30, 2011 and funding for net loan growth, which was $121.4 million for the year to date period September 30, 2012 and $115.2 million for the prior year to date period.  We had outstanding commitments to fund loans, including unused lines of credit, of $476.6 million and $380.3 million as of September 30, 2012 and December 31, 2011, respectively.

We must comply with capital adequacy guidelines issued by the FDIC. A bank must, in general, have a Tier 1 leverage ratio of 5.0%, a ratio of Tier I capital to risk-weighted assets of 6.0% and a ratio of total capital to risk-weighted assets of 10.0% in order to be considered “well capitalized.” The Tier I leverage ratio is the ratio of Tier 1 capital to average assets for the period. “Tier I capital” includes common shareholders’ equity, certain qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, less intangibles. At September 30, 2012 we were “well capitalized” under banking regulations

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The following table sets forth our regulatory capital amounts and ratios for the periods indicated:

	Tier 1 capital			Tier 1 capital			Total capital
	to average			to risk-weighted			to risk-weighted
	assets ratio			assets ratio			assets ratio
As of September 30, 2012
The Company		9.20	%		14.51	%		15.77	%
The Bancorp Bank		7.58	%		11.98	%		13.24	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%
As of December 31, 2011
The Company		8.69	%		14.64	%		15.89	%
The Bancorp Bank		6.13	%		10.34	%		11.60	%
"Well capitalized" institution (under FDIC regulations)		5.00	%		6.00	%		10.00	%

  The excess deposits were substantially all maintained at the Federal Reserve Bank.  See Results of Operations – Average Daily Balances.”

Asset and Liability Management

The management of rate sensitive assets and liabilities is essential to controlling interest rate risk and optimizing interest margins. An interest rate sensitive asset or liability is one that, within a defined time period, either matures or experiences an interest rate change in line with general market rates. Interest rate sensitivity measures the relative volatility of an institution’s interest margin resulting from changes in market interest rates.

We monitor, manage and control interest rate risk through a variety of techniques, including use of traditional interest rate sensitivity analysis (also known as “gap analysis”) and an interest rate risk management model. With the interest rate risk management model, we project future net interest income and then estimate the effect of various changes in interest rates and balance sheet growth rates on that projected net interest income. We also use the interest rate risk management model to calculate the change in net portfolio value over a range of interest rate change scenarios. Traditional gap analysis involves arranging our interest earning assets and interest bearing liabilities by repricing periods and then computing the difference (or “interest rate sensitivity gap”) between the assets and liabilities that we estimate will reprice during each time period and cumulatively through the end of each time period.

Both interest rate sensitivity modeling and gap analysis are done at a specific point in time and involve a variety of significant estimates and assumptions. Interest rate sensitivity modeling requires, among other things, estimates of how much and when yields and costs on individual categories of interest earning assets and interest bearing liabilities will respond to general changes in market rates, future cash flows and discount rates. Gap analysis requires estimates as to when individual categories of interest-sensitive assets and liabilities will reprice, and assumes that assets and liabilities assigned to the same repricing period will reprice at the same time and in the same amount. Gap analysis does not account for the fact that repricing of assets and liabilities is discretionary and subject to competitive and other pressures. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds interest rate sensitive assets. During a period of falling interest rates, a positive gap would tend to adversely affect net interest income, while a negative gap would tend to result in an increase in net interest income. During a period of rising interest rates, a positive gap would tend to result in an increase in net interest income while a negative gap would tend to affect net interest income adversely.

The following table sets forth the estimated maturity or repricing structure of our interest earning assets and interest bearing liabilities at September 30, 2012. We estimate the repricing characteristics of deposits based on historical performance, past experience at other institutions, wholly judgmental predictions and other deposit behavior assumptions. However, we may choose not to reprice liabilities proportionally to changes in market interest rates for competitive or other reasons. The table does not assume any prepayment of fixed-rate loans and mortgage-backed securities, which are scheduled based on their anticipated cash flow, including prepayments based on historical data and current market trends. The table does not necessarily indicate the impact of general interest rate movements on our net interest income because the repricing of certain categories of assets and liabilities is beyond our control as, for example, prepayments of loans and withdrawal of deposits. As a result, certain assets and liabilities indicated as repricing within a stated period may in fact reprice at different times and at different rate levels.

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	1-90			91-364			1-3			3-5			Over 5
	Days			Days			Years			Years			Years
	(dollars in thousands)
Interest earning assets:
Loans net of deferred loan costs	$	795,003		$	293,900		$	330,707		$	222,550		$	214,832
Investment securities		163,381			47,486			123,467			134,058			189,209
Interest earning deposits		540,010			-			-			-			-
Total interest earning assets		1,498,394			341,386			454,174			356,608			404,041
Interest bearing liabilities:
Demand and interest checking		1,435,899			128,309			128,309			-			-
Savings and money market		114,931			229,863			114,931			-			-
Time deposits		1,481			11,073			8,822			25			24
Securities sold under agreements to repurchase		18,802			-			-			-			-
Subordinated debenture		3,401			-			-			10,000			-
Total interest bearing liabilities		1,574,514			369,245			252,062			10,025			24
Gap	$	(76,120	)	$	(27,859	)	$	202,112		$	346,583		$	404,017
Cumulative gap	$	(76,120	)	$	(103,979	)	$	98,133		$	444,716		$	848,733
Gap to assets ratio		-2	%		*			6	%		11	%		13	%
Cumulative gap to assets ratio		-2	%		-3	%		3	%		14	%		27	%

* While demand deposits are non-interest bearing, related fees paid to affinity groups may reprice according to specified indices.

The methods used to analyze interest rate sensitivity in this table have a number of limitations.  Certain assets and liabilities may react differently to changes in interest rates even though they reprice or mature in the same or similar time periods. The interest rates on certain assets and liabilities may change at different times than changes in market interest rates, with some changing in advance of changes in market rates and some lagging behind changes in market rates. Additionally, the actual prepayments and withdrawals we experience when interest rates change may deviate significantly from those assumed in calculating the data shown in the table.   Accordingly actual results can and often do differ from projections.

Financial Condition

General.Our total assets at September 30, 2012 were $3.11 billion, of which our total loans were $1.86 billion. At December 31, 2011 our total assets were $3.01 billion, of which our total loans were $1.74 billion.

Interest earning deposits and federal funds sold.  At September 30, 2012, we had a total of $540.0 million of interest earning deposits as compared to $652.9 million at December 31, 2011.  These deposits were comprised primarily of balances at the Federal Reserve Bank, which pays interest on such balances.

Investment portfolio.  For detailed information on the composition and maturity distribution of our investment portfolio, see Note 5 to the Financial Statements. Total investment securities increased to $657.6 million at September 30, 2012, an increase of $191.4 million or 41.0% from year-end 2011. The increase in investment securities was primarily a result of increased purchases of U.S government insured student loan securities which reprice quarterly to three-month LIBOR.  The purchases carry higher yields than overnight investments which, because of the historically low rate environment, earn approximately 25 basis points.

Other securities, included in the held-to-maturity classification at September 30, 2012 consisted of four single issuer trust preferred securities and two pooled issuer trust preferred securities.  The amortized cost of the single issuer trust preferred securities was $16.3 million, of which two securities totaling $4.2 million were issued by two different banks and two securities totaling $12.1 million were issued by two different insurance companies. The two pooled trust preferred securities totaled $1.4 million and were collateralized by bank trust preferred securities.

The following table provides additional information related to our single issuer trust preferred securities as of September 30, 2012 (in thousands):

Single issuer	Book value	Fair value	Unrealized gain/(loss)	Credit rating
Security A	$            1,888	$             1,999	$                  111	Not rated
Security B	2,360	2,393	33	Not rated
Security C	3,240	2,857	(383)	Not rated
Security D	8,847	5,049	(3,798)	Not rated
Class: All of the above are trust preferred securities.

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The following table provides additional information related to our pooled trust preferred securities as of September 30, 2012:

Pooled issue	Class	Book value		Fair value		Unrealized gain/(loss)			Credit rating	Excess subordination
Pool A (17 performing issuers)	Mezzanine *	$	777	$	592	$	(185	)	Ca		***
Pool B (14 performing issuers)	Mezzanine **		595		544		(51	)	Ca		***
* The actual deferrals and defaults as a percentage of the original collateral were 27%. Assumed losses resulting from expected deferrals and defaults as a percentage of remaining collateral is .75% annually with 15% recovery with a two year lag.
** The actual deferrals and defaults as a percentage of the original collateral were 27%. Assumed losses resulting from expected deferrals and defaults as a percentage of remaining collateral is 1.2% every three years with no recoveries.
*** There is no excess subordination in these securities.

Under the accounting guidance related to the recognition of other-than-temporary impairment charges on debt securities an impairment on a debt security is deemed to be other-than-temporary if it meets the following conditions: 1) we intend to sell or it is more likely than not we will be required to sell the security before a recovery in value, or 2) we do not expect to recover the entire amortized cost basis of the security. If we intend to sell or it is more likely than not we will be required to sell the security before a recovery in value, a charge is recorded in net realized capital losses equal to the difference between the fair value and amortized cost basis of the security. For those other-than-temporarily impaired debt securities which do not meet the first condition and for which we do not expect to recover the entire amortized cost basis, the difference between the security’s amortized cost basis and the fair value is separated into the portion representing a credit impairment, which is recorded in net realized capital losses, and the remaining impairment, which is recorded in other comprehensive income. Generally, a security’s credit impairment is the difference between its amortized cost basis and the best estimate of its expected future cash flows discounted at the security’s effective yield prior to impairment. The previous amortized cost basis less the impairment recognized in net realized capital losses becomes the security’s new cost basis. As prescribed by accounting standards, for year to date September 30, 2012 and December 31, 2011 respectively, we recognized other-than-temporary impairment charges of $126,000 and $75,000 related to trust preferred securities classified in our held-to-maturity portfolio.

Investments in Federal Home Loan and Atlantic Central Bankers Bank stock are recorded at cost and amounted to $4.2 million at September 30, 2012 and $5.1 million at December 31, 2011.

Investment securities with a carrying value of $37.0 million at September 30, 2012 and $44.6 million at December 31, 2011, were pledged as collateral for Federal Home Loan Bank advances and to secure securities sold under repurchase agreements as required or permitted by law.

Loans held for sale.  Loans held for sale are comprised of commercial mortgage loans and residential mortgage loans originated for sale in the secondary market.  The fair value of commercial mortgage loans originated for sale is based on purchase commitments or quoted prices for the same or similar loans.  The residential mortgage loans held for sale are carried at the lower of cost of market.

Loan portfolio. Total loans increased to $1.86 billion at September 30, 2012 from $1.74 billion at December 31, 2011.

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The following table summarizes our loan portfolio not including loans held for sale by loan category for the periods indicated (in thousands):

	September 30,		December 31,
	2012		2011
Commercial	$	453,444	$	450,411
Commercial mortgage *		614,410		609,487
Construction		263,726		246,611
Total commercial loans		1,331,580		1,306,509
Direct lease financing		146,728		129,682
Residential mortgage		97,589		96,110
Consumer loans and others		276,427		209,041
		1,852,324		1,741,342
Unamortized loan costs		4,668		3,486
Total loans, net of deferred loan costs	$	1,856,992	$	1,744,828
Supplemental loan data:
Construction 1-4 family	$	71,599	$	85,189
Commercial construction, acquisition and development		192,127		161,422
	$	263,726	$	246,611
* At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

Allowance for loan and lease losses.  We review the adequacy of our allowance for loan and lease losses on at least a quarterly basis to determine that the provision for loan losses is made in an amount necessary to maintain our allowance at a level that is appropriate, based on management’s estimate of inherent losses. Our estimates of loan and lease losses are intended to, and, in management’s opinion, do, meet the criteria for accrual of loss contingencies in accordance with ASC topic 450, Contingencies, and ASC topic 310, Receivables. The process of evaluating this adequacy has two basic elements: first, the identification of problem loans or leases based on current financial information and the fair value of the underlying collateral; and second, a methodology for estimating general loss reserves. For loans or leases classified as “special mention,” “substandard” or “doubtful,” we reserve all losses inherent in the portfolio at the time we classify the loan or lease. This “specific” portion of the allowance is the total of potential, although unconfirmed, losses for individually classified loans. In this process, we establish specific reserves based on an analysis of the most probable sources of repayment and liquidation of collateral. While each impaired loan is individually evaluated, not every loan requires a reserve when the collateral value and estimated cash flows exceed the current balance.

The second phase of our analysis represents an allocation of the allowance. This methodology analyzes pools of loans that have similar characteristics and applies historical loss experience and other factors for each pool including management’s experience with similar loan and lease portfolios at other institutions, the historic loss experience of our peers and a review of statistical information from various industry reports to determine the allocable portion of the allowance. This estimate is intended to represent the potential unconfirmed and inherent losses within the portfolio. Individual loan pools are created for major loan categories: commercial loans, commercial mortgages, construction loans, direct lease financing and various types of loans to individuals. We augment historical experience for each loan pool by accounting for such items as current economic conditions, current loan portfolio performance, loan policy or management changes, loan concentrations, increases in our lending limit, average loan size and other factors as appropriate. Our Chief Risk Officer, who reports directly to our audit committee, oversees the loan review department processes and measures the adequacy of the allowance independently of management. The loan review department’s oversight parameters include borrower relationships over $3.0 million and loans that are 90 days or more past due or which have been previously adversely classified.  Approximately 68% of the portfolio was reviewed at September 30, 2012 and approximately 65% of the portfolio was reviewed at December 31, 2011.

The following table presents delinquencies by type of loan as follows (in thousands):

	30-59 Days		60-89 Days		Greater than				Total				Total
September 30, 2012	past due		past due		90 days		Non-accrual		past due		Current		loans
Commercial	$	1,357	$	1,500	$	107	$	7,654	$	10,618	$	442,826	$	453,444
Commercial mortgage		1,042		-		3,077		8,894		13,013		601,397		614,410
Construction		-		-		667		8,886		9,553		254,173		263,726
Direct lease financing		788		1,026		8		-		1,822		144,906		146,728
Consumer - other		1,091		-		2		-		1,093		231,057		232,150
Consumer - home equity		-		420		-		927		1,347		42,930		44,277
Residential mortgage		-		-		-		93		93		97,496		97,589
Unamortized costs		-		-		-		-		-		4,668		4,668
	$	4,278	$	2,946	$	3,861	$	26,454	$	37,539	$	1,819,453	$	1,856,992

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December 31, 2011
Commercial	$	-	$	242	$	817	$	6,450	$	7,509	$	442,902	$	450,411
Commercial mortgage		278		1,763		1,597		3,672		7,310		602,177		609,487
Construction		-		825		942		4,949		6,716		239,895		246,611
Direct lease financing		1,230		606		745		-		2,581		127,101		129,682
Consumer - other		-		-		-		1,252		1,252		164,145		165,397
Consumer - home equity		-		2		-		-		2		43,642		43,644
Residential mortgage		-		-		-		1,264		1,264		94,846		96,110
Unamortized costs		-		-		-		-		-		3,486		3,486
	$	1,508	$	3,438	$	4,101	$	17,587	$	26,634	$	1,718,194	$	1,744,828

Although we consider our allowance for loan and lease losses to be adequate based on information currently available, future additions to the allowance may be necessary due to changes in economic conditions, our ongoing loss experience and that of our peers, changes in management’s assumptions as to future delinquencies, recoveries and losses, deterioration of specific credits and management’s intent with regard to the disposition of loans and leases.

Summary of loan and lease loss experience. The following tables summarize our credit loss experience for each of the periods indicated:

The following table summarizes select asset quality ratios for each of the periods indicated:

	As of or for the three months ended
	September 30,
	2012			2011
Ratio of the allowance for loan losses to total loans		1.78	%		1.61	%
Ratio of the allowance for loan losses to nonperforming loans (1)		109.09	%		121.63	%
Ratio of the nonperforming assets to total assets (1)		1.07	%		0.86	%
Ratio of the net charge-offs to average loans		0.64	%		0.79	%
(1) Includes loans 90 days past due still accruing interest

The ratio of the allowance for loan and lease losses to total loans increased to 1.78% at September 30, 2012 from 1.61% at September 30, 2011.  The increase primarily reflected an increase in the reserves for impaired loans.  The ratio of the allowance for loan losses to non-performing loans decreased to 109.09% at September 30, 2012 from 121.63% at September 30, 2011 as a result of increased non-performing loans.  The ratio of non-performing assets to total assets increased as a result of increased non-performing loans at September 30, 2012.  Net charge-offs to average loans decreased to 0.64% year to date September 30, 2012 from 0.79% year to date September 30, 2011, due primarily to increased recoveries.

Net charge-offs.  Net charge-offs were $11.5 million for the nine months ended September 30, 2012 a decrease of $1.5 million over net charge-offs for the same period of 2011.  The majority of the charge-offs in the first nine months of 2012 were associated with eleven commercial loans totaling $5.5 million, eight construction loans totaling $6.9 million and one consumer loan totaling $151,000.

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Non-performing loans, loans 90 days delinquent and still accruing, and troubled debt restructurings.  Loans are considered to be non-performing if they are on a non-accrual basis or they are past due 90 days or more and still accruing interest. A loan which is past due 90 days or more and still accruing interest remains on accrual status only when it is both adequately secured as to principal and interest, and is in the process of collection.  Troubled debt restructurings are loans with terms that have been renegotiated to provide a reduction or deferral of interest or principal because of a weakening in the financial positions of the borrowers.  The following tables summarize our non-performing loans, other real estate owned and our loans past due 90 days or more still accruing interest (in thousands).  The footnote details the troubled debt restructurings.

	September 30,		September 30,		December 31,
	2012		2011		2011
	(in thousands)
Non-accrual loans
Construction *	$	8,886	$	2,321	$	4,949
Commercial mortgage *		8,894		3,848		3,672
Commercial *		7,654		4,212		6,450
Consumer		927		1,560		1,252
Residential		93		5,260		1,264
Total non-accrual loans		26,454		17,201		17,587
Loans past due 90 days or more		3,861		5,550		4,101
Total non-performing loans		30,315		22,751		21,688
Other real estate owned		3,065		6,415		7,405
Total non-performing assets	$	33,380	$	29,166	$	29,093

* Included in the non-accrual loans as of September 30, 2012 are five troubled debt restructured loans classified as follows:  $725,000 in commercial mortgage, $2.3 million in commercial and $2.6 million in construction.

Of the $8.3 million of loans that were modified and considered troubled debt restructurings as of September 30, 2012 $5.6 million and $1.1 million were already included in non-accrual and non-performing loan totals . An analysis of those loans is as follows (dollars in thousands):

	September 30, 2012						December 31, 2011
	Number		Pre-modification recorded investment		Post-modification recorded investment		Number		Pre-modification recorded investment		Post-modification recorded investment
Commercial		1	$	2,255	$	2,255		-	$	-	$	-
Commercial mortgage		3		3,156		3,156		1		759		759
Construction		4		2,913		2,913		-		-		-
Residential mortgage		-		-		-		1		364		364
Total		8	$	8,324	$	8,324		2	$	1,123	$	1,123

The balances below provide information as to how the loans were modified as troubled debt restructurings loans during the nine months ended September 30, 2012 and year ended December 31, 2011.  $5.6 million and $1.1 million were already included in non-accrual and non-performing loan totals as of September 30, 2012 and December 31, 2011, respectively, and are detailed as follows (dollars in thousands).

	September 30, 2012						December 31, 2011
	Adjusted interest rate		Extended maturity		Combined rate and maturity		Adjusted interest rate		Extended maturity		Combined rate and maturity
Commercial	$	-	$	2,255	$	-	$	-	$	-	$	-
Commercial mortgage		725		214		2,217		759		-		-
Construction		-		2,913		-		-		-		-
Residential mortgage		-		-		-		364		-		-
Total	$	725	$	5,382	$	2,217	$	1,123	$	-	$	-

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The following table provides information about impaired loans at September 30, 2012 and December 31, 2011 (in thousands):

	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
September 30, 2012
Without an allowance recorded
Construction	$	276	$	276	$	-	$	911	$	-
Commercial mortgage		3,582		4,403		-		2,058		-
Commercial		4,219		6,257		-		2,017		-
Consumer - home equity		927		927		-		927		-
Residential		-		-		-		316		-
With an allowance recorded
Construction		8,886		8,886		4,899		7,523		-
Commercial mortgage		7,742		8,287		4,028		4,090		-
Commercial		3,435		3,631		1,885		5,397		-
Consumer - home equity		-		-		-		81		-
Residential		93		93		71		47		-
Total
Construction	$	9,162	$	9,162	$	4,899	$	8,434	$	-
Commercial mortgage	$	11,324	$	12,690	$	4,028	$	6,148	$	-
Commercial	$	7,654	$	9,888	$	1,885	$	7,414	$	-
Consumer - home equity	$	927	$	927	$	-	$	1,008	$	-
Residential	$	93	$	93	$	71	$	363	$	-
December 31, 2011
Without an allowance recorded
Construction	$	-	$	-	$	-	$	100	$	-
Commercial mortgage		-		-		-		310		-
Commercial		900		2,042		6,831		626		-
Consumer - home equity		927		927		3,765		371		-
Residential		1,264		1,414		149		662		-
With an allowance recorded
Construction		4,949		4,949		2,296		2,123		-
Commercial mortgage		3,672		3,672		712		2,793		-
Commercial		5,550		5,550		2,724		3,075		-
Consumer - home equity		325		325		204		510		-
Residential		-		-		-		5,048		-
Total
Construction	$	4,949	$	4,949	$	2,296	$	2,223	$	-
Commercial mortgage	$	3,672	$	3,672	$	712	$	3,103	$	-
Commercial	$	6,450	$	7,592	$	9,555	$	3,701	$	-
Consumer - home equity	$	1,252	$	1,252	$	3,969	$	881	$	-
Residential	$	1,264	$	1,414	$	149	$	5,710	$	-

We had $26.5 million of non-accrual loans at September 30, 2012 compared to $17.6 million of non-accrual loans at December 31, 2011. The increase in non-accrual loans was primarily due to $25.9 million of loans placed on non-accrual status offset by $10.3 million of loan charge-offs, $2.0 million of loans transferred to other real estate owned and $4.9 million of loan payments.  Included within the non-accrual loans at September 30, 2012 are five troubled debt restructured loans with a balance of $5.6 million.  Loans past due 90 days or more still accruing interest amounted to $3.9 million at September 30, 2012 and $4.1 million at December 31, 2011. The $240,000 decrease reflected $3.0 million of additions partially offset by $1.5 million of loans transferred to non-accrual status, $1.4 million of loan payments and $277,000 of charge-offs.

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We had $3.1 million of other real estate owned at September 30, 2012 compared to $7.4 million at December 31, 2011.  The decrease in other real estate owned was primarily due to $5.2 million of cash received due to sales, $1.4 million of write-downs and $1.0 million of realized losses which were partially offset by $3.2 million of additions.

The following table classifies our loans (not including loans held for sale) by categories which are used throughout the industry as of September 30, 2012 and December 31, 2011 (in thousands):

									Commercial				Residential
	Commercial				Construction				mortgage				mortgage
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	331,624	$	320,287	$	236,486	$	176,824	$	490,001	$	476,421	$	28,792	$	28,981
Special Mention		2,939		1,049		-		-		23,862		21,615		-		-
Substandard		8,045		7,696		9,553		6,716		12,740		6,867		-		1,264
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		28,253		60,938		10,711		49,700		23,502		26,543		1,590		2,084
Unrated not subject to review		82,583		60,441		6,976		13,371		64,305		78,041		67,114		63,781
Total	$	453,444	$	450,411	$	263,726	$	246,611	$	614,410	$	609,487	$	97,589	$	96,110
					Direct lease
	Consumer				financing				Unamortized costs				Total
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	56,020	$	64,236	$	54,747	$	12,025	$	-	$	-	$	1,197,670	$	1,078,774
Special Mention		-		-		-		-		-		-		26,801		22,664
Substandard		3,672		2,718		61		649		-		-		34,071		25,910
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		25,573		2,873		-		29,174		-		-		89,629		171,312
Unrated not subject to review		191,162		139,214		91,920		87,834		4,668		3,486		508,728		446,168
Total	$	276,427	$	209,041	$	146,728	$	129,682	$	4,668	$	3,486	$	1,856,992	$	1,744,828

* Unrated loans consist of performing loans which did not exhibit any negative characteristics which would require the loan to be evaluated, or fell below the dollar threshold requiring review and was not one of the loans otherwise selected in ongoing portfolio evaluation.  The scope of the Bank’s loan review policy encompasses commercial and construction loans and leases which singly or in the aggregate in the case of loans with related borrowers, equal or exceed $3.0 million. The loan portfolio review coverage was approximately 68% at September 30, 2012 and approximately 65% at December 31, 2011. This review is performed by the loan review department, which is independent of the loan department and reports directly to the audit committee.  All classified loans are reviewed by the independent loan review function of the Bank. Potential problem loans which are identified by either the independent loan review department or line management are also reviewed. All loans are subject to review by their relationship manager and senior loan personnel.  Also, many of the Bank’s loans are relatively short term, and are subject to reconsideration with a full review in loan committee between one and three years.

Deposits.A primary source of funding is deposit acquisition. We offer a variety of deposit accounts with a range of interest rates and terms, including demand, checking and money market accounts. One strategic focus is growing these accounts through affinity groups.  To offset deposit seasonality, management has historically used certificates of deposit including brokered certificates of deposit. However, as a result of deposit growth in other areas, the use of brokered certificates of deposit are currently minimal.  At September 30, 2012, we had total deposits of $2.78 billion compared to $2.68 billion at December 31, 2011, an increase of $98.6 million or 3.7%, which was the result of growth in prepaid, wealth management and healthcare amounts.  Increases in average deposit trends have allowed us to virtually eliminate time deposits, which may bear higher interest rates than transaction accounts. The following table presents the average balance and rates paid on deposits for the periods indicated (in thousands):

45

	For the nine months ended					For the year ended
	September 30, 2012					December 31, 2011
	Average		Average			Average		Average
	balance		rate			balance		rate
	(unaudited)
Demand and interest checking	$	2,721,620		0.29	%	$	2,175,972		0.35	%
Savings and money market		447,596		0.55	%		355,094		0.86	%
Time		28,403		1.41	%		31,066		1.14	%
Total deposits	$	3,197,619		0.34	%	$	2,562,132		0.43	%

Borrowings.  We had no outstanding advances from the Federal Home Loan Bank as of September 30, 2012 and December 31, 2011.  Additionally, we had no outstanding balances on the Bank’s lines of credit as of September 30, 2012 and December 31, 2011.  We do not have any policy prohibiting us from incurring debt.

46

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Except as discussed in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” there has been no material change in our assessment of our sensitivity to market risk since our presentation in our Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Under the supervision of our Chief Executive Officer and Chief Financial Officer, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level.

There has been no change in our internal control over financial reporting that occurred during the quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

47

PART II – OTHER INFORMATION

Item 6. Exhibits

The Exhibits furnished as part of this Quarterly Report on Form 10-Q are identified in the Exhibit Index immediately following the signature page of this Report.  Such Exhibit Index is incorporated herein by reference.

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.

	THE BANCORP INC.
	(Registrant)
November 9, 2012	/s/ Betsy Z. Cohen
Date	Betsy Z. Cohen
	Chief Executive Officer
November 9, 2012	/s/ Paul Frenkiel
Date	Executive Vice President of Strategy,
	Chief Financial Officer and Secretary

Exhibit No.	Description
3.1	Certificate of Incorporation (1)
3.2	Bylaws (1)
31.1	Rule 13a-14(a)/15d-14(a) Certifications
31.2	Rule 13a-14(a)/15d-14(a) Certifications
32.1	Section 1350 Certifications
32.2	Section 1350 Certifications

101.INS	XBRL Instance Document (2)
101.SCH	XBRL Taxonomy Extension Schema Document(2)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document(2)
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document(2)
101.LAB	XBRL Taxonomy Extension Label Linkbase Document(2)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document(2)

(1)	Filed previously as an exhibit to our Registration Statement on Form S-4, as amended, registration number 333-117385, and by this reference incorporated herein.
(2)	Furnished herewith.

48

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Betsy Z. Cohen, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2012 of The Bancorp, Inc.;

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 statement for external purposes in accordance with generally accepted accounting principals;

(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 9, 2012	/s/ Betsy Z. Cohen
	Name: Betsy Z. Cohen
	Title: Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Paul Frenkiel, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the quarterly period ended September 30, 2012 of The Bancorp, Inc.;

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 statement for external purposes in accordance with generally accepted accounting principals;

(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 9, 2012	/s/Paul  Frenkiel
	Name: Paul  Frenkiel
	Executive Vice President of Strategy,
	Chief Financial Officer and Secretary

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Bancorp, Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Betsy Z. Cohen, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

/s/ Betsy Z. Cohen                                          

Betsy Z. Cohen

Chief Executive Officer

November 9, 2012

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The Bancorp Inc. (the "Company") on Form 10-Q for the quarterly period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Paul Frenkiel, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(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.

/s/Paul  Frenkiel                               

Executive Vice President of Strategy,

Chief Financial Officer and Secretary

November 9, 2012

XML

Loans, Allowance for Loan and Lease Losses (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	$ 29,568	$ 24,063	$ 24,063
Charge-offs	(13,270)	(13,065)	(16,094)
Recoveries	1,726	19	101
Provision	15,047	16,654	21,498
Ending balance	33,071	27,671	29,568
Ending balance: Individually evaluated for impairment	10,882	3,850	5,936
Ending balance: Collectively evaluated for impairment	22,189	23,821	23,632
Loans
Loans, net of deferred loan costs	1,856,992	1,715,648	1,744,828
Ending balance: Individually evaluated for impairment	29,160	17,201	17,587
Ending balance: Collectively evaluated for impairment	1,827,832	1,698,447	1,727,241
Loans acquired with deteriorated credit quality	0		0
Commercial [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	10,214	6,051	6,051
Charge-offs	(3,487)	(6,729)	(7,453)
Recoveries	505	2	2
Provision	1,843	11,034	11,614
Ending balance	9,075	10,358	10,214
Ending balance: Individually evaluated for impairment	1,884	1,127	2,724
Ending balance: Collectively evaluated for impairment	7,191	9,231	7,490
Loans
Loans, net of deferred loan costs	453,444	461,679	450,411
Ending balance: Individually evaluated for impairment	7,654	4,212	6,450
Ending balance: Collectively evaluated for impairment	445,790	457,467	443,961
Commercial mortgage [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	9,274	9,501	9,501
Charge-offs	(2,466)	(642)	(1,198)
Recoveries	1,028	14	89
Provision	476	(1,108)	882
Ending balance	8,312	7,765	9,274
Ending balance: Individually evaluated for impairment	4,028	615	712
Ending balance: Collectively evaluated for impairment	4,284	7,150	8,562
Loans
Loans, net of deferred loan costs	614,410	577,237	609,487
Ending balance: Individually evaluated for impairment	11,324	3,848	3,672
Ending balance: Collectively evaluated for impairment	603,086	573,389	605,815
Construction [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	5,352	5,030	5,030
Charge-offs	(6,931)	(3,003)	(3,254)
Recoveries	95	3	4
Provision	12,544	2,061	3,572
Ending balance	11,060	4,091	5,352
Ending balance: Individually evaluated for impairment	4,899	622	2,296
Ending balance: Collectively evaluated for impairment	6,161	3,469	3,056
Loans
Loans, net of deferred loan costs	263,726	242,806	246,611
Ending balance: Individually evaluated for impairment	9,162	2,321	4,949
Ending balance: Collectively evaluated for impairment	254,564	240,485	241,662
Direct lease financing [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	254	164	164
Charge-offs	(87)	0	(39)
Recoveries	13	0	0
Provision	(25)	(36)	129
Ending balance	155	128	254
Ending balance: Individually evaluated for impairment	0	0	0
Ending balance: Collectively evaluated for impairment	155	128	254
Loans
Loans, net of deferred loan costs	146,728	129,400	129,682
Ending balance: Individually evaluated for impairment	0	0	0
Ending balance: Collectively evaluated for impairment	146,728	129,400	129,682
Residential mortgage [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	2,090	2,115	2,115
Charge-offs	0	(1,876)	(2,870)
Recoveries	85	0	0
Provision	81	2,636	2,845
Ending balance	2,256	2,875	2,090
Ending balance: Individually evaluated for impairment	71	1,037	0
Ending balance: Collectively evaluated for impairment	2,185	1,838	2,090
Loans
Loans, net of deferred loan costs	97,589	96,139	96,110
Ending balance: Individually evaluated for impairment	93	5,260	1,264
Ending balance: Collectively evaluated for impairment	97,496	90,879	94,846
Consumer loans and others [Member]
Loans
Loans, net of deferred loan costs	232,150		165,397
Consumer [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	1,346	578	578
Charge-offs	(299)	(815)	(1,280)
Recoveries	0	0	6
Provision	626	1,688	2,042
Ending balance	1,673	1,451	1,346
Ending balance: Individually evaluated for impairment	0	449	204
Ending balance: Collectively evaluated for impairment	1,673	1,002	1,142
Loans
Loans, net of deferred loan costs	276,427	205,243	209,041
Ending balance: Individually evaluated for impairment	927	1,560	1,252
Ending balance: Collectively evaluated for impairment	275,500	203,683	207,789
Unallocated [Member]
Changes in allowance for loan and lease losses by loan category [Abstract]
Beginning balance	1,038	624	624
Charge-offs	0	0	0
Recoveries	0	0	0
Provision	(498)	379	414
Ending balance	540	1,003	1,038
Ending balance: Individually evaluated for impairment	0	0	0
Ending balance: Collectively evaluated for impairment	540	1,003	1,038
Loans
Loans, net of deferred loan costs	4,668	3,144	3,486
Ending balance: Individually evaluated for impairment	0	0	0
Ending balance: Collectively evaluated for impairment	$ 4,668	$ 3,144	$ 3,486

XML

Derivatives (Tables)

9 Months Ended

Sep. 30, 2012

Derivatives [Abstract]

Derivatives

The maturity dates, notional amounts, interest rates paid and received and fair value of the Company's remaining interest rate swap agreements as of September 30, 2012 are summarized below (in thousands):

	September 30, 2012
Maturity date	Notional amount		Interest rate paid			Interest rate received			Fair value
August 1, 2022	$	2,200		1.64	%		0.44	%	$	5
September 27, 2022		3,700		1.74	%		0.36	%		(19	)
Total	$	5,900							$	(14	)

XML

Fair Value Measurements (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Changes in Company's Level 3 assets [Roll Forward]
Beginning balance	$ 630,000	$ 748,000	$ 748,000
Transfers into level 3	0		0
Transfers out of level 3	0		0
Total gains or losses (realized/unrealized) Included in earnings	0		(2,000)
Included in other comprehensive income	15,000		(62,000)
Purchases, issuances, and settlements
Purchases	0		0
Issuances	0		0
Sales
Settlements	(37,000)		(54,000)
Ending balance	608,000		630,000
Specific reserves and other write downs on impaired loans	10,900,000		5,900,000
Troubled debt restructured loans	8,300,000
Troubled debt restructured loans, specific reserve	4,200,000
Impaired loans [Member]
Purchases, issuances, and settlements
Specific reserves and other write downs on impaired loans	10,900,000
Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	634,894,000		448,204,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	634,894,000		448,204,000
Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	32,225,000		24,992,000
U.S. Government agency securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	8,828,000		9,285,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	8,828,000		9,285,000
Federally insured student loan securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	111,545,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	111,545,000
Obligations of states and political subdivisions [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	163,375,000		150,666,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	163,375,000		150,666,000
Residential mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	197,158,000		193,685,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	197,158,000		193,685,000
Commercial mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	102,477,000		52,061,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	102,477,000		52,061,000
Other debt securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	48,436,000		39,532,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	48,436,000		39,532,000
Other equity securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	3,075,000		2,975,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	3,075,000		2,975,000
Impaired loans [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	29,160,000		17,587,000
Other real estate owned [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	3,065,000		7,405,000
Carrying amount [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Cash and cash equivalents	544,658,000		749,174,000
Investment securities available-for-sale	634,894,000		448,204,000
Investment securities held-to-maturity	22,707,000		18,044,000
Federal Home Loan and Atlantic Central Bankers Bank stock	4,160,000		5,088,000
Commercial loans held for sale	7,970,000
Loans receivable, net	1,856,992,000		1,744,828,000
Demand and interest checking	2,300,025,000		2,192,938,000
Savings and money market	459,725,000		454,343,000
Time deposits	21,425,000		35,270,000
Subordinated debenture	13,401,000		13,401,000
Securities sold under agreements to repurchase	18,802,000		33,177,000
Accrued interest payable	100,000		123,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	634,894,000		448,204,000
Estimated fair value [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Cash and cash equivalents	544,658,000		749,174,000
Investment securities available-for-sale	634,894,000		448,204,000
Investment securities held-to-maturity	18,634,000		13,826,000
Federal Home Loan and Atlantic Central Bankers Bank stock	4,160,000		5,088,000
Commercial loans held for sale	7,970,000
Loans receivable, net	1,855,671,000		1,718,698,000
Demand and interest checking	2,300,025,000		2,192,938,000
Savings and money market	459,725,000		454,343,000
Time deposits	21,491,000		35,336,000
Subordinated debenture	9,268,000		9,287,000
Securities sold under agreements to repurchase	18,802,000		33,177,000
Accrued interest payable	100,000		123,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	634,894,000		448,204,000
Quoted prices in active markets for identical assets (Level 1) [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Cash and cash equivalents	544,658,000
Investment securities available-for-sale	3,075,000
Investment securities held-to-maturity	0
Federal Home Loan and Atlantic Central Bankers Bank stock	4,160,000
Commercial loans held for sale	0
Loans receivable, net	0
Demand and interest checking	2,300,025,000
Savings and money market	459,725,000
Time deposits	0
Subordinated debenture	0
Securities sold under agreements to repurchase	18,802,000
Accrued interest payable	100,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	3,075,000
Quoted prices in active markets for identical assets (Level 1) [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	3,075,000		2,975,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	3,075,000		2,975,000
Quoted prices in active markets for identical assets (Level 1) [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | U.S. Government agency securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Federally insured student loan securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0
Quoted prices in active markets for identical assets (Level 1) [Member] | Obligations of states and political subdivisions [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Residential mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Commercial mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Other debt securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Other equity securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	3,075,000		2,975,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	3,075,000		2,975,000
Quoted prices in active markets for identical assets (Level 1) [Member] | Impaired loans [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Quoted prices in active markets for identical assets (Level 1) [Member] | Other real estate owned [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Significant other observable inputs (Level 2) [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Cash and cash equivalents	0
Investment securities available-for-sale	631,211,000
Investment securities held-to-maturity	0
Federal Home Loan and Atlantic Central Bankers Bank stock	0
Commercial loans held for sale	0
Loans receivable, net	0
Demand and interest checking	0
Savings and money market	0
Time deposits	0
Subordinated debenture	0
Securities sold under agreements to repurchase	0
Accrued interest payable	0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	631,211,000
Significant other observable inputs (Level 2) [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	631,211,000		444,599,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	631,211,000		444,599,000
Significant other observable inputs (Level 2) [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Significant other observable inputs (Level 2) [Member] | U.S. Government agency securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	8,828,000		9,285,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	8,828,000		9,285,000
Significant other observable inputs (Level 2) [Member] | Federally insured student loan securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	111,545,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	111,545,000
Significant other observable inputs (Level 2) [Member] | Obligations of states and political subdivisions [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	163,375,000		150,666,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	163,375,000		150,666,000
Significant other observable inputs (Level 2) [Member] | Residential mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	197,158,000		193,685,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	197,158,000		193,685,000
Significant other observable inputs (Level 2) [Member] | Commercial mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	102,477,000		52,061,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	102,477,000		52,061,000
Significant other observable inputs (Level 2) [Member] | Other debt securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	47,828,000		38,902,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	47,828,000		38,902,000
Significant other observable inputs (Level 2) [Member] | Other equity securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant other observable inputs (Level 2) [Member] | Impaired loans [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Significant other observable inputs (Level 2) [Member] | Other real estate owned [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	0		0
Significant unobservable inputs (Level 3) [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Cash and cash equivalents	0
Investment securities available-for-sale	608,000
Investment securities held-to-maturity	18,634,000
Federal Home Loan and Atlantic Central Bankers Bank stock	0
Commercial loans held for sale	7,970,000
Loans receivable, net	1,855,671,000
Demand and interest checking	0
Savings and money market	0
Time deposits	21,491,000
Subordinated debenture	9,268,000
Securities sold under agreements to repurchase	0
Accrued interest payable	0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	608,000
Significant unobservable inputs (Level 3) [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	608,000		630,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	608,000		630,000
Significant unobservable inputs (Level 3) [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	32,225,000		24,992,000
Significant unobservable inputs (Level 3) [Member] | U.S. Government agency securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant unobservable inputs (Level 3) [Member] | Obligations of states and political subdivisions [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant unobservable inputs (Level 3) [Member] | Residential mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant unobservable inputs (Level 3) [Member] | Commercial mortgage-backed securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant unobservable inputs (Level 3) [Member] | Other debt securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	608,000		630,000
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	608,000		630,000
Significant unobservable inputs (Level 3) [Member] | Other equity securities [Member] | Recurring [Member]
Carrying amount and estimated fair value of assets and liabilities [Abstract]
Investment securities available-for-sale	0		0
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Investment securities available-for-sale at fair value	0		0
Significant unobservable inputs (Level 3) [Member] | Impaired loans [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	29,160,000		17,587,000
Significant unobservable inputs (Level 3) [Member] | Other real estate owned [Member] | Nonrecurring [Member]
Assets measured at fair value on a recurring and nonrecurring basis [Abstract]
Assets measured at fair value	$ 3,065,000		$ 7,405,000

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Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 2. Significant Accounting Policies

Basis of Presentation

The financial statements of the Company, as of September 30, 2012 and for the three and nine month periods ended September 30, 2012 and 2011, are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (Form 10-K report). The results of operations for the nine month period ended September 30, 2012 may not necessarily be indicative of the results of operations for the full year ending December 31, 2012.

.

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Loans (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012		Sep. 30, 2012		Dec. 31, 2011		Sep. 30, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gain on fair value of loans	$ 156,000
Major classifications of loans [Abstract]
Total loans, gross	1,852,324,000		1,852,324,000		1,741,342,000
Unamortized loan costs	4,668,000		4,668,000		3,486,000
Total loans, net of deferred loan costs	1,856,992,000		1,856,992,000		1,744,828,000		1,715,648,000
Supplemental loan data
Total supplemental loans	1,852,324,000		1,852,324,000		1,741,342,000
Number of loans identified as impaired			30
Balance of impaired loans	29,200,000		29,200,000		17,600,000
Balance of impaired loans related to specific reserve	20,200,000		20,200,000		14,500,000
Number of troubled debt restructured loans	8		8		2
Specific reserve	10,900,000		10,900,000		5,900,000
Balance of impaired loans without specific reserve	9,000,000		9,000,000
Troubled debt restructured loans	8,300,000		8,300,000
Troubled debt restructured loans, specific reserve	4,200,000		4,200,000
Interest income lost on impaired loans	631,000
Interest income on impaired loans			65,000
Commercial [Member]
Major classifications of loans [Abstract]
Total loans, gross	453,444,000		453,444,000		450,411,000
Total loans, net of deferred loan costs	453,444,000		453,444,000		450,411,000		461,679,000
Supplemental loan data
Total supplemental loans	453,444,000		453,444,000		450,411,000
Balance of impaired loans	7,654,000		7,654,000		6,450,000
Balance of impaired loans related to specific reserve	3,435,000		3,435,000		5,550,000
Specific reserve	1,885,000		1,885,000		2,724,000
Balance of impaired loans without specific reserve	4,219,000		4,219,000		900,000
Commercial mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans available-for-sale	7,900,000		7,900,000
Major classifications of loans [Abstract]
Total loans, gross	614,410,000	[1]	614,410,000	[1]	609,487,000	[1]
Total loans, net of deferred loan costs	614,410,000		614,410,000		609,487,000		577,237,000
Supplemental loan data
Total supplemental loans	614,410,000	[1]	614,410,000	[1]	609,487,000	[1]
Amount of owner occupied loans	157,200,000		157,200,000		137,900,000
Percentage of owner occupied loans (in hundredths)	25.60%		25.60%		22.60%
Balance of impaired loans	11,324,000		11,324,000		3,672,000
Balance of impaired loans related to specific reserve	7,742,000		7,742,000		3,672,000
Specific reserve	4,028,000		4,028,000		712,000
Balance of impaired loans without specific reserve	3,582,000		3,582,000		0
Construction [Member]
Major classifications of loans [Abstract]
Total loans, gross	263,726,000		263,726,000		246,611,000
Total loans, net of deferred loan costs	263,726,000		263,726,000		246,611,000		242,806,000
Supplemental loan data
Total supplemental loans	263,726,000		263,726,000		246,611,000
Balance of impaired loans	9,162,000		9,162,000		4,949,000
Balance of impaired loans related to specific reserve	8,886,000		8,886,000		4,949,000
Specific reserve	4,899,000		4,899,000		2,296,000
Balance of impaired loans without specific reserve	276,000		276,000		0
Total commercial loans [Member]
Major classifications of loans [Abstract]
Total loans, gross	1,331,580,000		1,331,580,000		1,306,509,000
Supplemental loan data
Total supplemental loans	1,331,580,000		1,331,580,000		1,306,509,000
Direct lease financing [Member]
Major classifications of loans [Abstract]
Total loans, gross	146,728,000		146,728,000		129,682,000
Total loans, net of deferred loan costs	146,728,000		146,728,000		129,682,000		129,400,000
Supplemental loan data
Total supplemental loans	146,728,000		146,728,000		129,682,000
Residential mortgage [Member]
Major classifications of loans [Abstract]
Total loans, gross	97,589,000		97,589,000		96,110,000
Total loans, net of deferred loan costs	97,589,000		97,589,000		96,110,000		96,139,000
Supplemental loan data
Total supplemental loans	97,589,000		97,589,000		96,110,000
Balance of impaired loans	93,000		93,000		1,264,000
Balance of impaired loans related to specific reserve	93,000		93,000		0
Specific reserve	71,000		71,000		0
Balance of impaired loans without specific reserve	0		0		1,264,000
Consumer loans and others [Member]
Major classifications of loans [Abstract]
Total loans, gross	276,427,000		276,427,000		209,041,000
Total loans, net of deferred loan costs	232,150,000		232,150,000		165,397,000
Supplemental loan data
Total supplemental loans	276,427,000		276,427,000		209,041,000
Construction 1-4 family [Member]
Major classifications of loans [Abstract]
Total loans, gross	71,599,000		71,599,000		85,189,000
Supplemental loan data
Total supplemental loans	71,599,000		71,599,000		85,189,000
Commercial construction, acquisition and development [Member]
Major classifications of loans [Abstract]
Total loans, gross	192,127,000		192,127,000		161,422,000
Supplemental loan data
Total supplemental loans	$ 192,127,000		$ 192,127,000		$ 161,422,000

[1] At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

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Investment Securities (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Available-for-sale [Abstract]
Amortized cost	$ 617,736,000		$ 437,421,000
Gross unrealized gains	18,073,000		11,442,000
Gross unrealized losses	(915,000)		(659,000)
Total	634,894,000		448,204,000
Held-to-maturity [Abstract]
Amortized cost	22,707,000		18,044,000
Gross unrealized gains	344,000		138,000
Gross unrealized losses	(4,417,000)		(4,356,000)
Fair value	18,634,000		13,826,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	32		30
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	108,954,000		76,388,000
12 months or longer, Fair Value	15,404,000		2,549,000
Total, Fair Value	124,358,000		78,937,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(598,000)		(353,000)
12 months or longer, Unrealized losses	(317,000)		(306,000)
Total, Unrealized losses	(915,000)		(659,000)
Held-to-maturity, continuous unrealized loss position [Abstract]
Number of securities	4		4
Held-to-maturity, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	0		0
12 months or longer, Fair Value	9,042,000		9,423,000
Total, Fair Value	9,042,000		9,423,000
Held-to-maturity, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	0		0
12 months or longer, Unrealized losses	(4,417,000)		(4,356,000)
Total, Unrealized losses	(4,417,000)		(4,356,000)
Investment in Federal Home Loan and Atlantic Central Bankers Bank stock recorded at cost	4,200,000		5,100,000
Available-for-sale, Amortized cost [Abstract]
Due before one year	73,508,000
Due after one year through five years	158,815,000
Due after five years through ten years	36,614,000
Due after ten years	345,799,000
Other equity securities	3,000,000
Total	617,736,000
Available-for-sale, Fair value [Abstract]
Due before one year	73,622,000
Due after one year through five years	164,380,000
Due after five years through ten years	37,780,000
Due after ten years	356,037,000
Other equity securities	3,075,000
Total	634,894,000		448,204,000
Held-to-maturity, Amortized cost [Abstract]
Due before one year	0
Due after one year through five years	0
Due after five years through ten years	8,240,000
Due after ten years	14,467,000
Other equity securities	0
Total	22,707,000
Held-to-maturity, Fair value [Abstract]
Due before one year	0
Due after one year through five years	0
Due after five years through ten years	8,056,000
Due after ten years	10,578,000
Other equity securities	0
Total	18,634,000
Investment securities pledged to secure securities sold under repurchase agreements	37,000,000		44,600,000
Other than temporary impairment charges on one trust preferred pool security	126,000	75,000
Number of single issuer trust preferred securities	4
Number of single issuer trust preferred securities issued by banks	2
Amortized cost of single issuer trust preferred securities	16,300,000
Amortized cost of single issuer trust preferred securities issued by banks	4,200,000
Number of single issuer trust preferred securities issued by insurance companies	2
Amortized cost of single issuer trust preferred securities issued by insurance companies	12,100,000
Number of pooled issuer trust preferred securities	2
Amortized cost of pooled trust preferred securities	1,400,000
U.S. Government agency securities [Member]
Available-for-sale [Abstract]
Amortized cost	8,537,000		9,087,000
Gross unrealized gains	291,000		198,000
Gross unrealized losses	0		0
Total	8,828,000		9,285,000
Available-for-sale, Fair value [Abstract]
Total	8,828,000		9,285,000
Federally insured student loan securities [Member]
Available-for-sale [Abstract]
Amortized cost	111,197,000
Gross unrealized gains	483,000
Gross unrealized losses	(135,000)
Total	111,545,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	7
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	38,952,000
12 months or longer, Fair Value	0
Total, Fair Value	38,952,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(135,000)
12 months or longer, Unrealized losses	0
Total, Unrealized losses	(135,000)
Available-for-sale, Fair value [Abstract]
Total	111,545,000
Tax-exempt obligations of states and political subdivisions
Available-for-sale [Abstract]
Amortized cost	111,456,000		94,227,000
Gross unrealized gains	5,585,000		3,580,000
Gross unrealized losses	(1,000)		(8,000)
Total	117,040,000		97,799,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	4		7
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	3,479,000		11,104,000
12 months or longer, Fair Value	1,241,000		0
Total, Fair Value	4,720,000		11,104,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(1,000)		(8,000)
12 months or longer, Unrealized losses	0		0
Total, Unrealized losses	(1,000)		(8,000)
Available-for-sale, Fair value [Abstract]
Total	117,040,000		97,799,000
Taxable obligations of states and political subdivisions [Member]
Available-for-sale [Abstract]
Amortized cost	43,120,000		50,778,000
Gross unrealized gains	3,245,000		2,149,000
Gross unrealized losses	(30,000)		(60,000)
Total	46,335,000		52,867,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	7		10
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	7,715,000		16,905,000
12 months or longer, Fair Value	4,035,000		0
Total, Fair Value	11,750,000		16,905,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(20,000)		(60,000)
12 months or longer, Unrealized losses	(10,000)		0
Total, Unrealized losses	(30,000)		(60,000)
Available-for-sale, Fair value [Abstract]
Total	46,335,000		52,867,000
Residential mortgage-backed securities [Member]
Available-for-sale [Abstract]
Amortized cost	194,322,000		190,214,000
Gross unrealized gains	3,228,000		3,582,000
Gross unrealized losses	(392,000)		(111,000)
Total	197,158,000		193,685,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	9		5
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	43,529,000		10,054,000
12 months or longer, Fair Value	358,000		0
Total, Fair Value	43,887,000		10,054,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(386,000)		(111,000)
12 months or longer, Unrealized losses	(6,000)		0
Total, Unrealized losses	(392,000)		(111,000)
Available-for-sale, Fair value [Abstract]
Total	197,158,000		193,685,000
Commercial mortgage-backed securities [Member]
Available-for-sale [Abstract]
Amortized cost	98,417,000		51,242,000
Gross unrealized gains	4,116,000		875,000
Gross unrealized losses	(56,000)		(56,000)
Total	102,477,000		52,061,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	2		4
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	15,279,000		24,421,000
12 months or longer, Fair Value	0		0
Total, Fair Value	15,279,000		24,421,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	(56,000)		(56,000)
12 months or longer, Unrealized losses	0		0
Total, Unrealized losses	(56,000)		(56,000)
Available-for-sale, Fair value [Abstract]
Total	102,477,000		52,061,000
Other debt securities [Member]
Available-for-sale [Abstract]
Amortized cost	47,687,000		38,873,000
Gross unrealized gains	1,050,000		1,058,000
Gross unrealized losses	(301,000)		(399,000)
Total	48,436,000		39,532,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities	3		3
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	0		10,929,000
12 months or longer, Fair Value	9,770,000		2,549,000
Total, Fair Value	9,770,000		13,478,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	0		(93,000)
12 months or longer, Unrealized losses	(301,000)		(306,000)
Total, Unrealized losses	(301,000)		(399,000)
Available-for-sale, Fair value [Abstract]
Total	48,436,000		39,532,000
Other equity securities [Member]
Available-for-sale [Abstract]
Amortized cost	3,000,000		3,000,000
Gross unrealized gains	75,000		0
Gross unrealized losses	0		(25,000)
Total	3,075,000		2,975,000
Available-for-sale, continuous unrealized loss position [Abstract]
Number of securities			1
Available-for-sale, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value			2,975,000
12 months or longer, Fair Value			0
Total, Fair Value			2,975,000
Available-for-sale, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses			(25,000)
12 months or longer, Unrealized losses			0
Total, Unrealized losses			(25,000)
Available-for-sale, Fair value [Abstract]
Total	3,075,000		2,975,000
Other debt securities - single issuers [Member]
Held-to-maturity [Abstract]
Amortized cost	21,335,000		16,337,000
Gross unrealized gains	344,000		138,000
Gross unrealized losses	(4,181,000)		(4,051,000)
Fair value	17,498,000		12,424,000
Held-to-maturity, continuous unrealized loss position [Abstract]
Number of securities	2		2
Held-to-maturity, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	0		0
12 months or longer, Fair Value	7,906,000		8,021,000
Total, Fair Value	7,906,000		8,021,000
Held-to-maturity, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	0		0
12 months or longer, Unrealized losses	(4,181,000)		(4,051,000)
Total, Unrealized losses	(4,181,000)		(4,051,000)
Other debt securities - pooled [Member]
Held-to-maturity [Abstract]
Amortized cost	1,372,000		1,707,000
Gross unrealized gains	0		0
Gross unrealized losses	(236,000)		(305,000)
Fair value	1,136,000		1,402,000
Held-to-maturity, continuous unrealized loss position [Abstract]
Number of securities	2		2
Held-to-maturity, continuous unrealized loss position, Fair Value [Abstract]
Less than 12 months, Fair Value	0		0
12 months or longer, Fair Value	1,136,000		1,402,000
Total, Fair Value	1,136,000		1,402,000
Held-to-maturity, continuous unrealized loss position, Unrealized losses [Abstract]
Less than 12 months, Unrealized losses	0		0
12 months or longer, Unrealized losses	(236,000)		(305,000)
Total, Unrealized losses	$ (236,000)		$ (305,000)

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Loans, Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Without an allowance recorded [Abstract]
Recorded investment	$ 9,000
With an allowance recorded [Abstract]
Recorded investment	20,200	14,500
Related allowance	10,900	5,900
Total allowance recorded [Abstract]
Total impaired loans	29,200	17,600
Commercial [Member]
Without an allowance recorded [Abstract]
Recorded investment	4,219	900
Unpaid principal balance	6,257	2,042
Related allowance	0	6,831
Average recorded investment	2,017	626
Interest income recognized	0	0
With an allowance recorded [Abstract]
Recorded investment	3,435	5,550
Unpaid principal balance	3,631	5,550
Related allowance	1,885	2,724
Average recorded investment	5,397	3,075
Interest income recognized	0	0
Total allowance recorded [Abstract]
Total impaired loans	7,654	6,450
Unpaid principal balance	9,888	7,592
Related allowance	1,885	9,555
Average recorded investment	7,414	3,701
Interest income recognized	0	0
Commercial mortgage [Member]
Without an allowance recorded [Abstract]
Recorded investment	3,582	0
Unpaid principal balance	4,403	0
Related allowance	0	0
Average recorded investment	2,058	310
Interest income recognized	0	0
With an allowance recorded [Abstract]
Recorded investment	7,742	3,672
Unpaid principal balance	8,287	3,672
Related allowance	4,028	712
Average recorded investment	4,090	2,793
Interest income recognized	0	0
Total allowance recorded [Abstract]
Total impaired loans	11,324	3,672
Unpaid principal balance	12,690	3,672
Related allowance	4,028	712
Average recorded investment	6,148	3,103
Interest income recognized	0	0
Construction [Member]
Without an allowance recorded [Abstract]
Recorded investment	276	0
Unpaid principal balance	276	0
Related allowance	0	0
Average recorded investment	911	100
Interest income recognized	0	0
With an allowance recorded [Abstract]
Recorded investment	8,886	4,949
Unpaid principal balance	8,886	4,949
Related allowance	4,899	2,296
Average recorded investment	7,523	2,123
Interest income recognized	0	0
Total allowance recorded [Abstract]
Total impaired loans	9,162	4,949
Unpaid principal balance	9,162	4,949
Related allowance	4,899	2,296
Average recorded investment	8,434	2,223
Interest income recognized	0	0
Residential mortgage [Member]
Without an allowance recorded [Abstract]
Recorded investment	0	1,264
Unpaid principal balance	0	1,414
Related allowance	0	149
Average recorded investment	316	662
Interest income recognized	0	0
With an allowance recorded [Abstract]
Recorded investment	93	0
Unpaid principal balance	93	0
Related allowance	71	0
Average recorded investment	47	5,048
Interest income recognized	0	0
Total allowance recorded [Abstract]
Total impaired loans	93	1,264
Unpaid principal balance	93	1,414
Related allowance	71	149
Average recorded investment	363	5,710
Interest income recognized	0	0
Consumer - home equity [Member]
Without an allowance recorded [Abstract]
Recorded investment	927	927
Unpaid principal balance	927	927
Related allowance	0	3,765
Average recorded investment	927	371
Interest income recognized	0	0
With an allowance recorded [Abstract]
Recorded investment	0	325
Unpaid principal balance	0	325
Related allowance	0	204
Average recorded investment	81	510
Interest income recognized	0	0
Total allowance recorded [Abstract]
Total impaired loans	927	1,252
Unpaid principal balance	927	1,252
Related allowance	0	3,969
Average recorded investment	1,008	881
Interest income recognized	$ 0	$ 0

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Loans, Non-performing Assets (Details) (USD $)	Sep. 30, 2012		Dec. 31, 2011		Sep. 30, 2011
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	$ 26,454,000		$ 17,587,000		$ 17,201,000
Loans past due 90 days or more	3,861,000		4,101,000		5,550,000
Total loans	1,852,324,000		1,741,342,000
Other real estate owned	3,065,000		7,405,000		6,415,000
Total non-performing assets	33,380,000		29,093,000		29,166,000
Number of troubled debt restructured loans, non accrual	8		2
Non-performing loans [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total loans	30,315,000		21,688,000		22,751,000
Number of troubled debt restructured loans, non accrual	5
Commercial [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	7,654,000	[1]	6,450,000	[1]	4,212,000	[1]
Total loans	453,444,000		450,411,000
Commercial [Member] | Troubled debt restructuring [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	2,300,000
Commercial mortgage [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	8,894,000	[1]	3,672,000	[1]	3,848,000	[1]
Total loans	614,410,000	[2]	609,487,000	[2]
Commercial mortgage [Member] | Troubled debt restructuring [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	725,000
Construction [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	8,886,000	[1]	4,949,000	[1]	2,321,000	[1]
Total loans	263,726,000		246,611,000
Construction [Member] | Troubled debt restructuring [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	2,600,000
Direct lease financing [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	0		0
Total loans	146,728,000		129,682,000
Residential mortgage [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	93,000		1,264,000		5,260,000
Total loans	97,589,000		96,110,000
Consumer loans and others [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	0		1,252,000
Total loans	276,427,000		209,041,000
Consumer - home equity [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	927,000		0
Consumer [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	927,000		1,252,000		1,560,000
Unallocated [Member]
Summarize non-accrual loans, loans past due and other real estate owned [Abstract]
Total non-accrual loans	$ 0		$ 0

[1] Included in the non-accrual loans as of September 30, 2012 are five troubled debt restructured loans. $725,000 in commercial mortgage, $2.3 million in commercial, and $2.6 million in construction.

[2] At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

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Formation and Structure of Company

9 Months Ended

Sep. 30, 2012

Formation and Structure of Company [Abstract]

Formation and Structure of Company

Note 1. Formation and Structure of Company

The Bancorp, Inc. (the Company) is a Delaware corporation and a registered financial holding company with a wholly owned subsidiary bank, The Bancorp Bank (the Bank). The Bank is a Delaware chartered commercial bank located in Wilmington, Delaware and is a Federal Deposit Insurance Corporation (FDIC) insured institution. Through the Bank, the Company provides retail and commercial banking services in the Philadelphia, Pennsylvania and Wilmington, Delaware areas and other banking services nationally, which include prepaid debit cards, health savings accounts, wealth management and private label banking. The principal medium for the delivery of the Company's banking services is the Internet.

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Loans, Troubled Debt Restructurings Loans (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Loans modified and considered troubled debt restructurings [Abstract]
Number	8	2
Pre-modification recorded investment	$ 8,324,000	$ 1,123,000
Post-modification recorded investment	8,324,000	1,123,000
Loans modified as troubled debt restructurings [Abstract]
Adjusted interest rate	725,000	1,123,000
Extended maturity	5,382,000	0
Combined rate and maturity	2,217,000	0
Loans modified and considered TDR included in nonaccrual	5,600,000
Loans modified and considered TDR classified non-performing	1,100,000
Commitments to lend additional funds to loan customers whose terms have been modified in troubled debt restructurings	0	0
Commercial [Member]
Loans modified and considered troubled debt restructurings [Abstract]
Number	1	0
Pre-modification recorded investment	2,255,000	0
Post-modification recorded investment	2,255,000	0
Loans modified as troubled debt restructurings [Abstract]
Adjusted interest rate	0	0
Extended maturity	2,255,000	0
Combined rate and maturity	0	0
Commercial mortgage [Member]
Loans modified and considered troubled debt restructurings [Abstract]
Number	3	1
Pre-modification recorded investment	3,156,000	759,000
Post-modification recorded investment	3,156,000	759,000
Loans modified as troubled debt restructurings [Abstract]
Adjusted interest rate	725,000	759,000
Extended maturity	214,000	0
Combined rate and maturity	2,217,000	0
Construction [Member]
Loans modified and considered troubled debt restructurings [Abstract]
Number	4	0
Pre-modification recorded investment	2,913,000	0
Post-modification recorded investment	2,913,000	0
Loans modified as troubled debt restructurings [Abstract]
Adjusted interest rate	0	0
Extended maturity	2,913,000	0
Combined rate and maturity	0	0
Residential mortgage [Member]
Loans modified and considered troubled debt restructurings [Abstract]
Number	0	1
Pre-modification recorded investment	0	364,000
Post-modification recorded investment	0	364,000
Loans modified as troubled debt restructurings [Abstract]
Adjusted interest rate	0	364,000
Extended maturity	0	0
Combined rate and maturity	$ 0	$ 0

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UNAUDITED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Cash and cash equivalents
Cash and due from banks	$ 4,648	$ 96,228
Interest earning deposits at Federal Reserve Bank	540,010	652,946
Total cash and cash equivalents	544,658	749,174
Investment securities, available-for-sale, at fair value	634,894	448,204
Investment securities, held-to-maturity (fair value $18,634 and $13,826, respectively)	22,707	18,044
Federal Home Loan and Atlantic Central Bankers Bank stock	4,160	5,088
Commercial loans held for sale	7,970	0
Loans, net of deferred loan costs	1,856,992	1,744,828
Allowance for loan and lease losses	(33,071)	(29,568)
Loans, net	1,823,921	1,715,260
Premises and equipment, net	9,802	8,358
Accrued interest receivable	10,061	8,476
Intangible assets, net	7,254	8,004
Other real estate owned	3,065	7,405
Deferred tax asset, net	19,708	21,941
Other assets	24,925	20,727
Total assets	3,113,125	3,010,681
Deposits
Demand and interest checking	2,300,025	2,192,938
Savings and money market	459,725	454,343
Time deposits	12,606	25,528
Time deposits, $100,000 and over	8,819	9,742
Total deposits	2,781,175	2,682,551
Securities sold under agreements to repurchase	18,802	33,177
Accrued interest payable	100	123
Subordinated debenture	13,401	13,401
Other liabilities	10,662	9,950
Total liabilities	2,824,140	2,739,202
SHAREHOLDERS' EQUITY
Common stock - authorized, 50,000,000 shares of $1.00 par value; 33,208,781 and 33,196,281 shares issued at September 30, 2012 and December 31, 2011, respectively	33,209	33,196
Treasury stock, at cost (100,000 shares)	(866)	(866)
Additional paid-in capital	243,954	241,997
Retained earnings (accumulated deficit)	2,110	(9,277)
Accumulated other comprehensive income	10,578	6,429
Total shareholders' equity	288,985	271,479
Total liabilities and shareholders' equity	$ 3,113,125	$ 3,010,681

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UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Common stock [Member]	Treasury stock [Member]	Additional paid-in capital [Member]	Retained earnings (accumulated deficit) [Member]	Accumulated other comprehensive income [Member]	Total
Balance at Dec. 31, 2011	$ 33,196	$ (866)	$ 241,997	$ (9,277)	$ 6,429	$ 271,479
Balance (in shares) at Dec. 31, 2011	33,196,281
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income				11,387		11,387
Common stock issued from option exercises, net of tax benefits	13		85			98
Common stock issued from option exercises, net of tax benefits (in shares)	12,500
Stock-based compensation			1,872			1,872
Other comprehensive income, net of reclassification adjustments and tax					4,149	4,149
Balance at Sep. 30, 2012	$ 33,209	$ (866)	$ 243,954	$ 2,110	$ 10,578	$ 288,985
Balance (in shares) at Sep. 30, 2012	33,208,781

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Loans, Loans Classified by Credit Quality Indicator (Details) (USD $)	9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Loans by categories [Abstract]
Total loans	$ 1,856,992,000	$ 1,744,828,000	$ 1,715,648,000
Threshold amount of commercial and construction loans and leases subject to loan review	3,000,000
Percentage of loan portfolio review coverage (in hundredths)	68.00%	65.00%
Period of full review in loan committee for loans with relatively short term, minimum	1 year
Period of full review in loan committee for loans with relatively short term, maximum	3 years
Commercial [Member]
Loans by categories [Abstract]
Total loans	453,444,000	450,411,000	461,679,000
Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	614,410,000	609,487,000	577,237,000
Construction [Member]
Loans by categories [Abstract]
Total loans	263,726,000	246,611,000	242,806,000
Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	146,728,000	129,682,000	129,400,000
Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	97,589,000	96,110,000	96,139,000
Consumer loans and others [Member]
Loans by categories [Abstract]
Total loans	232,150,000	165,397,000
Consumer [Member]
Loans by categories [Abstract]
Total loans	276,427,000	209,041,000	205,243,000
Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	4,668,000	3,486,000	3,144,000
Pass [Member]
Loans by categories [Abstract]
Total loans	1,197,670,000	1,078,774,000
Pass [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	331,624,000	320,287,000
Pass [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	490,001,000	476,421,000
Pass [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	236,486,000	176,824,000
Pass [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	54,747,000	12,025,000
Pass [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	28,792,000	28,981,000
Pass [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	56,020,000	64,236,000
Pass [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Special Mention [Member]
Loans by categories [Abstract]
Total loans	26,801,000	22,664,000
Special Mention [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	2,939,000	1,049,000
Special Mention [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	23,862,000	21,615,000
Special Mention [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	0	0
Special Mention [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	0	0
Special Mention [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	0	0
Special Mention [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	0	0
Special Mention [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Substandard [Member]
Loans by categories [Abstract]
Total loans	34,071,000	25,910,000
Substandard [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	8,045,000	7,696,000
Substandard [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	12,740,000	6,867,000
Substandard [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	9,553,000	6,716,000
Substandard [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	61,000	649,000
Substandard [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	0	1,264,000
Substandard [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	3,672,000	2,718,000
Substandard [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member]
Loans by categories [Abstract]
Total loans	93,000	0
Doubtful [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	93,000	0
Doubtful [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	0	0
Doubtful [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	0	0
Loss [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Unrated subject to review [Member]
Loans by categories [Abstract]
Total loans	89,629,000	171,312,000
Unrated subject to review [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	28,253,000	60,938,000
Unrated subject to review [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	23,502,000	26,543,000
Unrated subject to review [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	10,711,000	49,700,000
Unrated subject to review [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	0	29,174,000
Unrated subject to review [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	1,590,000	2,084,000
Unrated subject to review [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	25,573,000	2,873,000
Unrated subject to review [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	0	0
Unrated not subject to review [Member]
Loans by categories [Abstract]
Total loans	508,728,000	446,168,000
Unrated not subject to review [Member] | Commercial [Member]
Loans by categories [Abstract]
Total loans	82,583,000	60,441,000
Unrated not subject to review [Member] | Commercial mortgage [Member]
Loans by categories [Abstract]
Total loans	64,305,000	78,041,000
Unrated not subject to review [Member] | Construction [Member]
Loans by categories [Abstract]
Total loans	6,976,000	13,371,000
Unrated not subject to review [Member] | Direct lease financing [Member]
Loans by categories [Abstract]
Total loans	91,920,000	87,834,000
Unrated not subject to review [Member] | Residential mortgage [Member]
Loans by categories [Abstract]
Total loans	67,114,000	63,781,000
Unrated not subject to review [Member] | Consumer [Member]
Loans by categories [Abstract]
Total loans	191,162,000	139,214,000
Unrated not subject to review [Member] | Unamortized loan costs [Member]
Loans by categories [Abstract]
Total loans	$ 4,668,000	$ 3,486,000

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

Summarized investment securities classified as available-for-sale and held-to-maturity

The amortized cost, gross unrealized gains and losses, and fair values of the Company's investment securities classified as available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

Available-for-sale	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	8,537	$	291	$	-		$	8,828
Federally insured student loan securities		111,197		483		(135	)		111,545
Tax-exempt obligations of states and political subdivisions		111,456		5,585		(1	)		117,040
Taxable obligations of states and political subdivisions		43,120		3,245		(30	)		46,335
Residential mortgage-backed securities		194,322		3,228		(392	)		197,158
Commercial mortgage-backed securities		98,417		4,116		(56	)		102,477
Other debt securities		47,687		1,050		(301	)		48,436
Other equity securities		3,000		75		-			3,075
	$	617,736	$	18,073	$	(915	)	$	634,894
Held-to-maturity	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	21,335	$	344	$	(4,181	)	$	17,498
Other debt securities - pooled		1,372		-		(236	)		1,136
	$	22,707	$	344	$	(4,417	)	$	18,634

Available-for-sale	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	9,087	$	198	$	-		$	9,285
Tax-exempt obligations of states and political subdivisions		94,227		3,580		(8	)		97,799
Taxable obligations of states and political subdivisions		50,778		2,149		(60	)		52,867
Residential mortgage-backed securities		190,214		3,582		(111	)		193,685
Commercial mortgage-backed securities		51,242		875		(56	)		52,061
Other debt securities		38,873		1,058		(399	)		39,532
Other equity securities		3,000		-		(25	)		2,975
	$	437,421	$	11,442	$	(659	)	$	448,204
Held-to-maturity	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	16,337	$	138	$	(4,051	)	$	12,424
Other debt securities - pooled		1,707		-		(305	)		1,402
	$	18,044	$	138	$	(4,356	)	$	13,826

Amortized cost and fair value of investment securities by contractual maturity

The amortized cost and fair value of the Company's investment securities at September 30, 2012, by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized		Fair		Amortized		Fair
	cost		value		cost		value
Due before one year	$	73,508	$	73,622	$	-	$	-
Due after one year through five years		158,815		164,380		-		-
Due after five years through ten years		36,614		37,780		8,240		8,056
Due after ten years		345,799		356,037		14,467		10,578
Other equity securities		3,000		3,075		-		-
	$	617,736	$	634,894	$	22,707	$	18,634

Available-for-sale and held-to-maturity securities, continuous unrealized loss position

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at September 30, 2012 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Federally insured student loan securities		7	$	38,952	$	(135	)	$	-	$	-		$	38,952	$	(135	)
Tax-exempt obligations of states and     political subdivisions		4		3,479		(1	)		1,241		-			4,720		(1	)
Taxable obligations of states and     political subdivisions		7		7,715		(20	)		4,035		(10	)		11,750		(30	)
Residential mortgage-backed securities		9		43,529		(386	)		358		(6	)		43,887		(392	)
Commercial mortgage-backed securities		2		15,279		(56	)		-		-			15,279		(56	)
Other debt securities		3		-		-			9,770		(301	)		9,770		(301	)
Total temporarily impaired     investment securities		32	$	108,954	$	(598	)	$	15,404	$	(317	)	$	124,358	$	(915	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	7,906	$	(4,181	)	$	7,906	$	(4,181	)
Other debt securities - pooled		2		-		-			1,136		(236	)		1,136		(236	)
Total temporarily impaired     investment securities		4	$	-	$	-		$	9,042	$	(4,417	)	$	9,042	$	(4,417	)

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at December 31, 2011 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Tax-exempt obligations of states and political subdivisions		7	$	11,104	$	(8	)	$	-	$	-		$	11,104	$	(8	)
Taxable obligations of states and political subdivisions		10		16,905		(60	)		-		-			16,905		(60	)
Residential mortgage-backed securities		5		10,054		(111	)		-		-			10,054		(111	)
Commercial mortgage-backed securities		4		24,421		(56	)		-		-			24,421		(56	)
Other debt securities		3		10,929		(93	)		2,549		(306	)		13,478		(399	)
Other equity securities		1		2,975		(25	)		-		-			2,975		(25	)
Total temporarily impaired  investment securities		30	$	76,388	$	(353	)	$	2,549	$	(306	)	$	78,937	$	(659	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	8,021	$	(4,051	)	$	8,021	$	(4,051	)
Other debt securities - pooled		2		-		-			1,402		(305	)		1,402		(305	)
Total temporarily impaired investment securities		4	$	-	$	-		$	9,423	$	(4,356	)	$	9,423	$	(4,356	)

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Transactions with Affiliates (Details) (USD $)			9 Months Ended					9 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2012 Director [Member]	Sep. 30, 2011 Director [Member]	Sep. 30, 2012 Chairman of Board of Resource America [Member]	Sep. 30, 2012 Affiliates [Member]	Dec. 31, 2011 Affiliates [Member]	Sep. 30, 2012 Chairman of Board of Atlas Energy, L.P. [Member]
Related Party Transaction [Line Items]
Rent expense			$ 228,000	$ 223,000	$ 77,000			$ 14,000
Deposits						47,100,000	88,800,000
Due from related parties	31,500,000	32,400,000
Payments to acquire available-for-sale securities, debt					$ 35,800,000

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Carrying amount and estimated fair value of assets and liabilities

The fair values of certificates of deposit and subordinated debentures are estimated using a discounted cash flow calculation that applies current interest rates to discounted expected cash flows. Based upon time deposit maturities at September 30, 2012, the carrying values approximate their fair values. The carrying amount of accrued interest payable approximates its fair value (in thousands).

	September 30, 2012
					Quoted prices in active		Significant other		Significant
					markets for identical		observable		unobservable
	Carrying		Estimated		assets		inputs		inputs
	amount		fair value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	544,658	$	544,658	$	544,658	$	-	$	-
Investment securities available-for-sale		634,894		634,894		3,075		631,211		608
Investment securities held-to-maturity		22,707		18,634		-		-		18,634
Federal Home Loan and Atlantic Central Bankers Bank stock		4,160		4,160		4,160		-		-
Commerical loans held for sale		7,970		7,970		-		-		7,970
Loans receivable, net		1,856,992		1,855,671		-		-		1,855,671
Demand and interest checking		2,300,025		2,300,025		2,300,025		-		-
Savings and money market		459,725		459,725		459,725		-		-
Time deposits		21,425		21,491		-		-		21,491
Subordinated debenture		13,401		9,268		-		-		9,268
Securities sold under agreements to repurchase		18,802		18,802		18,802		-		-
Accrued interest payable		100		100		100		-		-

	December 31, 2011
	Carrying		Estimated
	amount		fair value
Cash and cash equivalents	$	749,174	$	749,174
Investment securities available-for-sale		448,204		448,204
Investment securities held-to-maturity		18,044		13,826
Federal Home Loan and Atlantic Central Bankers Bank stock		5,088		5,088
Loans receivable, net		1,744,828		1,718,698
Demand and interest checking		2,192,938		2,192,938
Savings and money market		454,343		454,343
Time deposits		35,270		35,336
Subordinated debenture		13,401		9,287
Securities sold under agreements to repurchase		33,177		33,177
Accrued interest payable		123		123

Assets measured at fair value on a recurring and nonrecurring basis

In addition, FASB ASC topic 820, Fair Value Measurements and Disclosures, establishes a common definition for fair value to be applied to assets and liabilities. It clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures concerning fair value measurements. FASB ASC topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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). Level 1 valuation is based on quoted market prices for identical assets or liabilities to which the Company has access at the measurement date. Level 2 valuation is based on other observable inputs for the asset or liability, either directly or indirectly. This includes quoted prices for similar assets in active or inactive markets, inputs other than quoted prices that are observable for the asset or liability such as yield curves, volatilities, prepayment speeds, credit risks, default rates, or inputs that are derived principally from, or corroborated through, observable market data by market-corroborated reports. Level 3 valuation is based on "unobservable inputs" which the Company believes is the best information available in the circumstances. A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assets measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	8,828	$	-	$	8,828	$	-
Federally insured student loan securities		111,545		-		111,545
Obligations of states and political subdivisions		163,375		-		163,375		-
Residential mortgage-backed securities		197,158		-		197,158		-
Commercial mortgage-backed securities		102,477		-		102,477		-
Other debt securities		48,436		-		47,828		608
Other equity securities		3,075		3,075		-		-
	$	634,894	$	3,075	$	631,211	$	608
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	9,285	$	-	$	9,285	$	-
Obligations of states and political subdivisions		150,666		-		150,666		-
Residential mortgage-backed securities		193,685		-		193,685		-
Commercial mortgage-backed securities		52,061		-		52,061		-
Other debt securities		39,532		-		38,902		630
Other equity securities		2,975		2,975		-		-
	$	448,204	$	2,975	$	444,599	$	630

Assets measured at fair value on a nonrecurring basis, segregated by fair value hierarchy, during the periods shown are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	29,160	$	-	$	-	$	29,160
Other real estate owned		3,065		-		-		3,065
	$	32,225	$	-	$	-	$	32,225
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	17,587	$	-	$	-	$	17,587
Other real estate owned		7,405		-		-		7,405
	$	24,992	$	-	$	-	$	24,992

Changes in Company's Level 3 assets

The changes in the Company's Level 3 assets are set forth below (in thousands).

Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
	Available-for-sale
	securities
	September 30, 2012			December 31, 2011
Beginning balance	$	630		$	748
Transfers into level 3		-			-
Transfers out of level 3		-			-
Total gains or losses (realized/unrealized)
Included in earnings		-			(2	)
Included in other comprehensive income		15			(62	)
Purchases, issuances, and settlements
Purchases		-			-
Issuances		-			-
Sales
Settlements		(37	)		(54	)
Ending balance	$	608		$	630

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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011
Operating activities
Net income	$ 11,387		$ 5,630
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	3,258		2,969
Provision for loan and lease losses	15,047		16,654
Net amortization of investment securities discounts/premiums	1,360		483
Stock-based compensation expense	1,872		1,276
Mortgage loans originated for sale	(233)		(458)
Sale of mortgage loans originated for resale	237		462
Gain on sale of mortgage loans originated for resale	(4)		(4)
Net change in commercial loans held for sale	(7,970)		0
Deferred income tax expense	2		0
Gain on sales of fixed assets	(29)		(26)
Other than temporary impairment on securities held-to-maturity	126	[1]	75	[1]
Losses on sale and writedowns on other real estate owned	2,405		555
Gain on sales of investment securities	(107)		(623)
(Increase) decrease in accrued interest receivable	(1,585)		337
Decrease in interest payable	(23)		(11)
Increase in other assets	(4,693)		(335)
Increase in other liabilities	711		3,450
Net cash provided by operating activities	21,761		30,434
Investing activities
Purchase of investment securities available-for-sale	(282,669)		(283,914)
Proceeds from call of securities held-to-maturity	0		4,000
Proceeds from sale of investment securities available-for-sale	6,297		23,846
Proceeds from redemptions and repayment of securities available-for-sale	90,951		81,680
Proceeds from sale of other real estate owned	5,157		894
Net (increase) decrease in loans	(126,930)		(115,248)
Proceeds from sale of fixed assets	171		68
Purchases of premises and equipment	(3,599)		(1,390)
Net cash used in investing activities	(310,622)		(290,064)
Financing activities
Net increase in deposits	98,624		1,049,404
Net (decrease) increase in securities sold under agreements to repurchase	(14,375)		10,674
Repayment of short-term borrowings and federal funds purchased	0		(136,000)
Proceeds from issuance of common stock	0		54,501
Proceeds from the exercise of options	98		0
Excess tax benefit from share-based payment arrangements	(2)		0
Net cash provided by financing activities	84,345		978,579
Net (decrease) increase in cash and cash equivalents	(204,516)		718,949
Cash and cash equivalents, beginning of period	749,174		472,319
Cash and cash equivalents, end of period	544,658		1,191,268
Supplemental disclosure:
Interest paid	8,854		9,072
Taxes paid	8,367		5,132
Transfers of loans to other real estate owned	$ 3,222		$ 5,749

[1] Other than temporary impairment was due to credit loss and therefore did not include amounts due to market conditions.

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UNAUDITED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Investment securities, held-to-maturity, fair value	$ 18,634	$ 13,826
SHAREHOLDERS' EQUITY
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized (in shares)	50,000,000	50,000,000
Common stock, issued (in shares)	33,208,781	33,196,281
Treasury stock (in shares)	100,000	100,000

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Abstract]

Subsequent Events

Note 10. Subsequent Events

The Company evaluated its September 30, 2012 financial statements for subsequent events through the date the financial statements were issued.  The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 02, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Bancorp, Inc.
Entity Central Index Key	0001295401
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		33,101,281
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

 Note 11. Recent Accounting Pronouncements

FASB Accounting Standards Update No. 2011-03.  In April 2011, the FASB issued Standards Update (ASU) No. 2011-03, Reconsideration of Effective Control for Repurchase Agreements.  This accounting standard modifies the criteria for determining when repurchase agreements would be accounted for as a secured borrowing rather than as a sale.  Currently, an entity that maintains effective control over transferred financial assets must account for the transfer as a secured borrowing rather than as a sale.  The provisions of ASU No. 2011-03 removes from the assessment of effective control the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee.  The FASB believes that contractual rights and obligations determine effective control and that there does not need to be a requirement to assess the ability to exercise those rights.  ASU No. 2011-03 does not change the other existing criteria used in the assessment of effective control.  The provisions of ASU No. 2011-03 are effective prospectively for transactions, or modifications of existing transactions, that occur on or after January 1, 2012.  The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

FASB Accounting Standards Update No. 2011-04.  In May 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.  This accounting standard results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards ("IFRS").  The changes to U.S. GAAP as a result of ASU No. 2011-04 are as follows:  (1) The concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets (that is, it does not apply to financial assets or any liabilities). (2) U.S. GAAP currently prohibits application of a blockage factor in valuing financial instruments with quoted prices in active markets.  ASU No. 2011-04 extends that prohibition to all fair value measurements. (3) An exception is provided to the basic fair value measurement principles for an entity that holds a group of financial assets and financial liabilities with offsetting positions in market risks or counterparty credit risk that are managed on the basis of the entity's net exposure to either of those risks.  This exception allows the entity, if certain criteria are met, to measure the fair value of the net asset or liability position in a manner consistent with how market participants would price the net risk position. (4) ASU No. 2011-04 aligns the fair value measurement of instruments classified within an entity's shareholders' equity with the guidance for liabilities. (5) Disclosure requirements have been enhanced for recurring Level 3 fair value measurements to disclose quantitative information about unobservable inputs and assumptions used, to describe the valuation processes used by the entity, and to describe the sensitivity of fair value measurements to changes in unobservable inputs and interrelationships between those inputs.  In addition, entities must report the level in the fair value hierarchy of items that are not measured at fair value in the statement of condition but whose fair value must be disclosed.  The provisions of ASU No. 2011-04 are effective for the Company's interim reporting period beginning on or after December 15, 2011.  The adoption of ASU No. 2011-04 did not have a material impact on the Company's consolidated financial statements.

FASB Accounting Standards Update No. 2011-05.  In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05 Presentation of Comprehensive Income.  This accounting standard allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.  In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income.  The statement(s) are required to be presented with equal prominence as the other primary financial statements.  ASU No. 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders' equity but does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  The provisions of ASU No. 2011-05 are effective for the Company's interim reporting period beginning on or after December 15, 2011, with retrospective application required.  The adoption of ASU No. 2011-05 resulted in the addition of a statement of comprehensive income, but did not otherwise have a material impact on the Company's consolidated financial statements.

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UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended				9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011		Sep. 30, 2012		Sep. 30, 2011
Interest income
Loans, including fees	$ 19,787		$ 19,011		$ 57,993		$ 55,448
Interest on investment securities:
Taxable interest	3,507		2,732		10,068		6,629
Tax-exempt interest	709		651		2,114		1,993
Interest bearing deposits	356		296		2,014		1,041
Total interest income	24,359		22,690		72,189		65,111
Interest expense
Deposits	2,556		2,783		8,104		8,238
Securities sold under agreements to repurchase	24		96		75		173
Short-term borrowings	0		0		0		3
Subordinated debenture	218		216		652		647
Total interest expense	2,798		3,095		8,831		9,061
Net interest income	21,561		19,595		63,358		56,050
Provision for loan and lease losses	5,540		5,019		15,047		16,654
Net interest income after provision for loan and lease losses	16,021		14,576		48,311		39,396
Non-interest income
Service fees on deposit accounts	928		589		2,512		1,813
Merchant credit card processing and ACH fees	740		591		2,222		1,750
Prepaid card fees	7,459		4,030		23,570		13,175
Gain on sales of investment securities	107		20		107		623
Other than temporary impairment on securities held-to-maturity	0	[1]	0	[1]	(126)	[1]	(75)	[1]
Leasing income	552		538		2,345		1,887
Debit card income	98		129		402		532
Affinity fees	792		547		1,979		1,081
Other	557		229		961		1,357
Total non-interest income	11,233		6,673		33,972		22,143
Non-interest expense
Salaries and employee benefits	9,991		8,030		28,706		22,560
Depreciation and amortization	854		767		2,508		2,219
Rent and related occupancy cost	895		749		2,487		2,182
Data processing expense	2,547		2,080		7,915		6,646
Printing and supplies	422		395		1,336		1,075
Audit expense	284		295		859		805
Legal expense	1,243		662		2,386		1,858
Amortization of intangible assets	250		250		750		750
Losses on sale and writedowns on other real estate owned	533		64		2,405		555
FDIC Insurance	716		705		2,404		2,628
Software, maintenance and equipment	411		429		1,325		1,176
Other real estate owned expense	(30)		357		509		841
Other	3,782		2,975		11,134		9,685
Total non-interest expense	21,898		17,758		64,724		52,980
Net income before income tax	5,356		3,491		17,559		8,559
Income tax provision	1,795		1,209		6,172		2,929
Net income available to common shareholders	$ 3,561		$ 2,282		$ 11,387		$ 5,630
Net income per share - basic (in dollars per share)	$ 0.11		$ 0.07		$ 0.34		$ 0.18
Net income per share - diluted (in dollars per share)	$ 0.11		$ 0.07		$ 0.34		$ 0.18

[1] Other than temporary impairment was due to credit loss and therefore did not include amounts due to market conditions.

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Investment Securities

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

Investment Securities

Note 5. Investment Securities

The amortized cost, gross unrealized gains and losses, and fair values of the Company's investment securities classified as available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

Available-for-sale	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	8,537	$	291	$	-		$	8,828
Federally insured student loan securities		111,197		483		(135	)		111,545
Tax-exempt obligations of states and political subdivisions		111,456		5,585		(1	)		117,040
Taxable obligations of states and political subdivisions		43,120		3,245		(30	)		46,335
Residential mortgage-backed securities		194,322		3,228		(392	)		197,158
Commercial mortgage-backed securities		98,417		4,116		(56	)		102,477
Other debt securities		47,687		1,050		(301	)		48,436
Other equity securities		3,000		75		-			3,075
	$	617,736	$	18,073	$	(915	)	$	634,894
Held-to-maturity	September 30, 2012
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	21,335	$	344	$	(4,181	)	$	17,498
Other debt securities - pooled		1,372		-		(236	)		1,136
	$	22,707	$	344	$	(4,417	)	$	18,634

Available-for-sale	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
U.S. Government agency securities	$	9,087	$	198	$	-		$	9,285
Tax-exempt obligations of states and political subdivisions		94,227		3,580		(8	)		97,799
Taxable obligations of states and political subdivisions		50,778		2,149		(60	)		52,867
Residential mortgage-backed securities		190,214		3,582		(111	)		193,685
Commercial mortgage-backed securities		51,242		875		(56	)		52,061
Other debt securities		38,873		1,058		(399	)		39,532
Other equity securities		3,000		-		(25	)		2,975
	$	437,421	$	11,442	$	(659	)	$	448,204
Held-to-maturity	December 31, 2011
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
Other debt securities - single issuers	$	16,337	$	138	$	(4,051	)	$	12,424
Other debt securities - pooled		1,707		-		(305	)		1,402
	$	18,044	$	138	$	(4,356	)	$	13,826

Investments in Federal Home Loan and Atlantic Central Bankers Bank stock are recorded at cost and amounted to $4.2 million at September 30, 2012 and $5.1 million at December 31, 2011.

The amortized cost and fair value of the Company's investment securities at September 30, 2012, by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized		Fair		Amortized		Fair
	cost		value		cost		value
Due before one year	$	73,508	$	73,622	$	-	$	-
Due after one year through five years		158,815		164,380		-		-
Due after five years through ten years		36,614		37,780		8,240		8,056
Due after ten years		345,799		356,037		14,467		10,578
Other equity securities		3,000		3,075		-		-
	$	617,736	$	634,894	$	22,707	$	18,634

At September 30, 2012 and December 31, 2011, investment securities with a book value of approximately $37.0 million and $44.6 million, respectively, were pledged to secure securities sold under repurchase agreements as required or permitted by law.

Available-for-sale securities fair values are based on the fair market value supplied by the third-party market data provider while held-to-maturity securities are based on the present value of cash flows, which discounts expected cash flows from principal and interest using yield to maturity at the measurement date. The Company periodically reviews its investment portfolio to determine whether unrealized losses are temporary, based on an evaluations of the creditworthiness of the issuers/guarantors as well as the underlying collateral if applicable, in addition to the continuing performance of the securities. The Company recognized other-than-temporary impairment charges of $126,000 on one trust preferred pooled security in the first nine months of 2012 as compared to $75,000 on one trust preferred pooled security in the first nine months of 2011.  The amount of the credit impairment was calculated by estimating the discounted cash flows for those securities.

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at September 30, 2012 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Federally insured student loan securities		7	$	38,952	$	(135	)	$	-	$	-		$	38,952	$	(135	)
Tax-exempt obligations of states and     political subdivisions		4		3,479		(1	)		1,241		-			4,720		(1	)
Taxable obligations of states and     political subdivisions		7		7,715		(20	)		4,035		(10	)		11,750		(30	)
Residential mortgage-backed securities		9		43,529		(386	)		358		(6	)		43,887		(392	)
Commercial mortgage-backed securities		2		15,279		(56	)		-		-			15,279		(56	)
Other debt securities		3		-		-			9,770		(301	)		9,770		(301	)
Total temporarily impaired     investment securities		32	$	108,954	$	(598	)	$	15,404	$	(317	)	$	124,358	$	(915	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	7,906	$	(4,181	)	$	7,906	$	(4,181	)
Other debt securities - pooled		2		-		-			1,136		(236	)		1,136		(236	)
Total temporarily impaired     investment securities		4	$	-	$	-		$	9,042	$	(4,417	)	$	9,042	$	(4,417	)

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at December 31, 2011 (dollars in thousands):

Available-for-sale			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Tax-exempt obligations of states and political subdivisions		7	$	11,104	$	(8	)	$	-	$	-		$	11,104	$	(8	)
Taxable obligations of states and political subdivisions		10		16,905		(60	)		-		-			16,905		(60	)
Residential mortgage-backed securities		5		10,054		(111	)		-		-			10,054		(111	)
Commercial mortgage-backed securities		4		24,421		(56	)		-		-			24,421		(56	)
Other debt securities		3		10,929		(93	)		2,549		(306	)		13,478		(399	)
Other equity securities		1		2,975		(25	)		-		-			2,975		(25	)
Total temporarily impaired  investment securities		30	$	76,388	$	(353	)	$	2,549	$	(306	)	$	78,937	$	(659	)
Held-to-maturity			Less than 12 months					12 months or longer					Total
	Number of securities		Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Description of Securities
Other debt securities - single issuers		2	$	-	$	-		$	8,021	$	(4,051	)	$	8,021	$	(4,051	)
Other debt securities - pooled		2		-		-			1,402		(305	)		1,402		(305	)
Total temporarily impaired investment securities		4	$	-	$	-		$	9,423	$	(4,356	)	$	9,423	$	(4,356	)

The other debt securities included in the held-to-maturity classification on the Company's balance sheet at September 30, 2012 included four single issuer trust preferred securities issued by either banks or insurance companies and two pooled issuer trust preferred securities, whose collateral is made up of trust preferred securities issued by banks. The amortized cost of the single issuer trust preferred securities was $16.3 million, of which two securities totaling $4.2 million were issued by two different banks and two securities totaling $12.1 million were issued by two different insurance companies. The two pooled trust preferred securities had an aggregate amortized cost of $1.4 million.

The Company has evaluated the securities in the above tables and has concluded that none of these securities has impairment that is other-than-temporary. The Company evaluates whether a credit impairment exists by considering primarily the following factors: (a) the length of time and extent to which the fair value has been less than the amortized cost of the security, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, (c) whether the issuer is current on contractually obligated interest and principal payments, (d) changes in the financial condition of the security's underlying collateral and (e) the payment structure of the security. The Company's best estimate of expected future cash flows which is used to determine the credit loss amount is a quantitative and qualitative process that incorporates information received from third-party sources along with internal assumptions and judgments regarding the future performance of the security. The Company concluded that most of the securities that are in an unrealized loss position are in a loss position because of changes in interest rates after the securities were purchased. The securities that have been in an unrealized loss position for 12 months or longer include other securities whose market values are sensitive to interest rates and changes in credit quality. The Company's unrealized loss for the debt securities, which includes four single issuer trust preferred securities and two pooled trust preferred securities, is primarily related to general market conditions and the resultant lack of liquidity in the market. The severity of the impairments in relation to the carrying amounts of the individual investments is consistent with market developments. The Company's analysis for each investment is performed at the security level. As a result of its review, the Company concluded that other-than-temporary impairment did not exist due to the Company's ability and intention to hold these securities to recover their amortized cost basis.

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings Per Share

Note 4. Earnings Per Share

The Company calculates earnings per share under FASB ASC topic 260, Earnings Per Share. Basic earnings per share exclude dilution and are computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.

The following tables show the Company's earnings per share for the periods presented:

	For the three months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	3,561		33,105,194	$	0.11
Effect of dilutive securities
Common stock options		-		67,658		-
Diluted earnings per share
Net income available to common shareholders	$	3,561		33,172,852	$	0.11

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise price per share was greater than the average market price.

	For the nine months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	11,387		33,101,281	$	0.34
Effect of dilutive securities
Common stock options		-		32,026		-
Diluted earnings per share
Net income available to common shareholders	$	11,387		33,133,307	$	0.34

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise share price was greater than the average market price.

	For the three months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	2,282		33,196,281	$	0.07
Effect of dilutive securities
Stock options		-		7,381		-
Diluted earnings per share
Net income available to common shareholders	$	2,282		33,203,662	$	0.07

Stock options for 2,766,115 shares and stock appreciation rights for 60,000 shares, exercisable at prices between $7.36 and $25.43 per share, were outstanding at September 30, 2011 but were not included in the diluted earnings per share computation because the exercise price per share was greater than the average market price of the common stock.

	For the nine months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	5,630		31,500,347	$	0.18
Effect of dilutive securities
Stock options		-		6,461		-
Diluted earnings per share
Net income available to common shareholders	$	5,630		31,506,808	$	0.18

Stock options for 2,766,115 shares and stock appreciation rights for 60,000 shares, exercisable at prices between $7.36 and $25.43 per share, were outstanding at September 30, 2011 but were not included in the diluted earnings per share computation because the exercise price per share was greater than the average market price of the common stock.

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Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Major classifications of loans

Major classifications of loans not including loans held for sale are as follows (in thousands):

	September 30,		December 31,
	2012		2011
Commercial	$	453,444	$	450,411
Commercial mortgage *		614,410		609,487
Construction		263,726		246,611
Total commercial loans		1,331,580		1,306,509
Direct lease financing		146,728		129,682
Residential mortgage		97,589		96,110
Consumer loans and others		276,427		209,041
		1,852,324		1,741,342
Unamortized loan costs		4,668		3,486
Total loans, net of deferred loan costs	$	1,856,992	$	1,744,828
Supplemental loan data:
Construction 1-4 family	$	71,599	$	85,189
Commercial construction, acquisition and development		192,127		161,422
	$	263,726	$	246,611

* At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

Impaired loans

The following table provides information about impaired loans at September 30, 2012 and December 31, 2011 (in thousands):

	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
September 30, 2012
Without an allowance recorded
Construction	$	276	$	276	$	-	$	911	$	-
Commercial mortgage		3,582		4,403		-		2,058		-
Commercial		4,219		6,257		-		2,017		-
Consumer - home equity		927		927		-		927		-
Residential		-		-		-		316		-
With an allowance recorded
Construction		8,886		8,886		4,899		7,523		-
Commercial mortgage		7,742		8,287		4,028		4,090		-
Commercial		3,435		3,631		1,885		5,397		-
Consumer - home equity		-		-		-		81		-
Residential		93		93		71		47		-
Total
Construction	$	9,162	$	9,162	$	4,899	$	8,434	$	-
Commercial mortgage	$	11,324	$	12,690	$	4,028	$	6,148	$	-
Commercial	$	7,654	$	9,888	$	1,885	$	7,414	$	-
Consumer - home equity	$	927	$	927	$	-	$	1,008	$	-
Residential	$	93	$	93	$	71	$	363	$	-
December 31, 2011
Without an allowance recorded
Construction	$	-	$	-	$	-	$	100	$	-
Commercial mortgage		-		-		-		310		-
Commercial		900		2,042		6,831		626		-
Consumer - home equity		927		927		3,765		371		-
Residential		1,264		1,414		149		662		-
With an allowance recorded
Construction		4,949		4,949		2,296		2,123		-
Commercial mortgage		3,672		3,672		712		2,793		-
Commercial		5,550		5,550		2,724		3,075		-
Consumer - home equity		325		325		204		510		-
Residential		-		-		-		5,048		-
Total
Construction	$	4,949	$	4,949	$	2,296	$	2,223	$	-
Commercial mortgage	$	3,672	$	3,672	$	712	$	3,103	$	-
Commercial	$	6,450	$	7,592	$	9,555	$	3,701	$	-
Consumer - home equity	$	1,252	$	1,252	$	3,969	$	881	$	-
Residential	$	1,264	$	1,414	$	149	$	5,710	$	-

Non-accrual loans, loans past due 90 days and other real estate owned and delinquent loans by loan category

The following tables summarize the Company's non-accrual loans, loans past due 90 days and other real estate owned for the periods indicated (the Company had no non-accrual leases at September 30, 2012 or December 31, 2011):

	September 30,		September 30,		December 31,
	2012		2011		2011
	(in thousands)
Non-accrual loans
Construction *	$	8,886	$	2,321	$	4,949
Commercial mortgage *		8,894		3,848		3,672
Commercial *		7,654		4,212		6,450
Consumer		927		1,560		1,252
Residential		93		5,260		1,264
Total non-accrual loans		26,454		17,201		17,587
Loans past due 90 days or more		3,861		5,550		4,101
Total non-performing loans		30,315		22,751		21,688
Other real estate owned		3,065		6,415		7,405
Total non-performing assets	$	33,380	$	29,166	$	29,093

* Included in the non-accrual loans as of September 30, 2012 were five troubled debt restructured loans classified as follows: $725,000 in commercial mortgage, $2.3 million in commercial and $2.6 million in construction.

Loans modified and considered troubled debt restructurings

Of the $8.3 million of loans that were modified and considered troubled debt restructurings as of September 30, 2012 $5.6 million and $1.1 million were already included in non-accrual and non-performing loan totals as of that date.An analysis of those loans is as follows (dollars in thousands):

	September 30, 2012						December 31, 2011
	Number		Pre- modification recorded investment		Post- modification recorded investment		Number		Pre- modification recorded investment		Post- modification recorded investment
Commercial		1	$	2,255	$	2,255		-	$	-	$	-
Commercial mortgage		3		3,156		3,156		1		759		759
Construction		4		2,913		2,913		-		-		-
Residential mortgage		-		-		-		1		364		364
Total		8	$	8,324	$	8,324		2	$	1,123	$	1,123

Loans modified as troubled debt restructurings

The balances below provide information as to how the loans were modified as troubled debt restructurings loans as of September 30, 2012 and December 31, 2011 (dollars in thousands):

	September 30, 2012						December 31, 2011
	Adjusted interest rate		Extended maturity		Combined rate and maturity		Adjusted interest rate		Extended maturity		Combined rate and maturity
Commercial	$	-	$	2,255	$	-	$	-	$	-	$	-
Commercial mortgage		725		214		2,217		759		-		-
Construction		-		2,913		-		-		-		-
Residential mortgage		-		-		-		364		-		-
Total	$	725	$	5,382	$	2,217	$	1,123	$	-	$	-

Changes in allowance for loan and lease losses by loan category

A detail of the changes in the allowance for loan and lease losses by loan category is as follows (in thousands):

				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
September 30, 2012
Beginning balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Charge-offs		(3,487	)		(2,466	)		(6,931	)		-			(299	)		(87	)		-			(13,270	)
Recoveries		505			1,028			95			85			-			13			-			1,726
Provision		1,843			476			12,544			81			626			(25	)		(498	)		15,047
Ending balance	$	9,075		$	8,312		$	11,060		$	2,256		$	1,673		$	155		$	540		$	33,071
Ending balance: Individually evaluated for impairment	$	1,884		$	4,028		$	4,899		$	71		$	-		$	-		$	-		$	10,882
Ending balance: Collectively evaluated for impairment	$	7,191		$	4,284		$	6,161		$	2,185		$	1,673		$	155		$	540		$	22,189
Loans:
Ending balance	$	453,444		$	614,410		$	263,726		$	97,589		$	276,427		$	146,728		$	4,668		$	1,856,992
Ending balance: Individually evaluated for impairment	$	7,654		$	11,324		$	9,162		$	93		$	927		$	-		$	-		$	29,160
Ending balance: Collectively evaluated for impairment	$	445,790		$	603,086		$	254,564		$	97,496		$	275,500		$	146,728		$	4,668		$	1,827,832
				Commercial						Residential						Direct lease
Twelve months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
December 31, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624		$	24,063
Charge-offs		(7,453	)		(1,198	)		(3,254	)		(2,870	)		(1,280	)		(39	)		-			(16,094	)
Recoveries		2			89			4			-			6			-			-			101
Provision		11,614			882			3,572			2,845			2,042			129			414			21,498
Ending balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Ending balance: Individually evaluated for impairment	$	2,724		$	712		$	2,296		$	-		$	204		$	-		$	-		$	5,936
Ending balance: Collectively evaluated for impairment	$	7,490		$	8,562		$	3,056		$	2,090		$	1,142		$	254		$	1,038		$	23,632
Loans:
Ending balance	$	450,411		$	609,487		$	246,611		$	96,110		$	209,041		$	129,682		$	3,486		$	1,744,828
Ending balance: Individually evaluated for impairment	$	6,450		$	3,672		$	4,949		$	1,264		$	1,252		$	-		$	-		$	17,587
Ending balance: Collectively evaluated for impairment	$	443,961		$	605,815		$	241,662		$	94,846		$	207,789		$	129,682		$	3,486		$	1,727,241
				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
September 30, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624		$	24,063
Charge-offs		(6,729	)		(642	)		(3,003	)		(1,876	)		(815	)		-			-			(13,065	)
Recoveries		2			14			3			-			-			-			-			19
Provision		11,034			(1,108	)		2,061			2,636			1,688			(36	)		379			16,654
Ending balance	$	10,358		$	7,765		$	4,091		$	2,875		$	1,451		$	128		$	1,003		$	27,671
Ending balance: Individually evaluated for impairment	$	1,127		$	615		$	622		$	1,037		$	449		$	-		$	-		$	3,850
Ending balance: Collectively evaluated for impairment	$	9,231		$	7,150		$	3,469		$	1,838		$	1,002		$	128		$	1,003		$	23,821
Loans:
Ending balance	$	461,679		$	577,237		$	242,806		$	96,139		$	205,243		$	129,400		$	3,144		$	1,715,648
Ending balance: Individually evaluated for impairment	$	4,212		$	3,848		$	2,321		$	5,260		$	1,560		$	-		$	-		$	17,201
Ending balance: Collectively evaluated for impairment	$	457,467		$	573,389		$	240,485		$	90,879		$	203,683		$	129,400		$	3,144		$	1,698,447

Delinquent loans by loan category

A detail of the Company's delinquent loans by loan category is as follows (in thousands):

	30-59 Days		60-89 Days		Greater than				Total				Total
September 30, 2012	past due		past due		90 days		Non-accrual		past due		Current		loans
Commercial	$	1,357	$	1,500	$	107	$	7,654	$	10,618	$	442,826	$	453,444
Commercial mortgage		1,042		-		3,077		8,894		13,013		601,397		614,410
Construction		-		-		667		8,886		9,553		254,173		263,726
Direct lease financing		788		1,026		8		-		1,822		144,906		146,728
Consumer - other		1,091		-		2		-		1,093		231,057		232,150
Consumer - home equity		-		420		-		927		1,347		42,930		44,277
Residential mortgage		-		-		-		93		93		97,496		97,589
Unamortized costs		-		-		-		-		-		4,668		4,668
	$	4,278	$	2,946	$	3,861	$	26,454	$	37,539	$	1,819,453	$	1,856,992
December 31, 2011
Commercial	$	-	$	242	$	817	$	6,450	$	7,509	$	442,902	$	450,411
Commercial mortgage		278		1,763		1,597		3,672		7,310		602,177		609,487
Construction		-		825		942		4,949		6,716		239,895		246,611
Direct lease financing		1,230		606		745		-		2,581		127,101		129,682
Consumer - other		-		-		-		1,252		1,252		164,145		165,397
Consumer - home equity		-		2		-		-		2		43,642		43,644
Residential mortgage		-		-		-		1,264		1,264		94,846		96,110
Unamortized costs		-		-		-		-		-		3,486		3,486
	$	1,508	$	3,438	$	4,101	$	17,587	$	26,634	$	1,718,194	$	1,744,828

Loans by categories

The Company evaluates its loans under an internal loan risk rating system as a means of identifying problem loans.  The following table provides information by credit risk rating indicator for each segment of the loan portfolio not including loans held for sale at the dates indicated (in thousands):

									Commercial				Residential
	Commercial				Construction				mortgage				mortgage
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	331,624	$	320,287	$	236,486	$	176,824	$	490,001	$	476,421	$	28,792	$	28,981
Special Mention		2,939		1,049		-		-		23,862		21,615		-		-
Substandard		8,045		7,696		9,553		6,716		12,740		6,867		-		1,264
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		28,253		60,938		10,711		49,700		23,502		26,543		1,590		2,084
Unrated not subject to review		82,583		60,441		6,976		13,371		64,305		78,041		67,114		63,781
Total	$	453,444	$	450,411	$	263,726	$	246,611	$	614,410	$	609,487	$	97,589	$	96,110
					Direct lease
	Consumer				financing				Unamortized costs				Total
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	56,020	$	64,236	$	54,747	$	12,025	$	-	$	-	$	1,197,670	$	1,078,774
Special Mention		-		-		-		-		-		-		26,801		22,664
Substandard		3,672		2,718		61		649		-		-		34,071		25,910
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		25,573		2,873		-		29,174		-		-		89,629		171,312
Unrated not subject to review		191,162		139,214		91,920		87,834		4,668		3,486		508,728		446,168
Total	$	276,427	$	209,041	$	146,728	$	129,682	$	4,668	$	3,486	$	1,856,992	$	1,744,828

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Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The financial statements of the Company, as of September 30, 2012 and for the three and nine month periods ended September 30, 2012 and 2011, are unaudited. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission. However, in the opinion of management, these interim financial statements include all necessary adjustments to fairly present the results of the interim periods presented. The unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 (Form 10-K report). The results of operations for the nine month period ended September 30, 2012 may not necessarily be indicative of the results of operations for the full year ending December 31, 2012.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

 Note 8. Fair Value Measurements

FASB ASC topic 825, Financial Instruments, requires disclosure of the estimated fair value of an entity's assets and liabilities considered to be financial instruments. For the Company, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments. However, many of such instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. Also, it is the Company's general practice and intent to hold its financial instruments to maturity whether or not categorized as "available-for-sale" and not to engage in trading or sales activities, except for certain loans. For fair value disclosure purposes, the Company utilized certain value measurement criteria required under the FASB ASC 820, Fair Value Measurements and Disclosures, and discussed below.

Estimated fair values have been determined by the Company using the best available data and an estimation methodology it believes to be suitable for each category of financial instruments. Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. Also, there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

Cash and cash equivalents, which are comprised of cash and due from banks, our balance at the Federal Reserve Bank and federal funds sold, had recorded values of $544.7 million and $749.2 million as of September 30, 2012 and December 31, 2011, respectively, which approximated fair values.

The estimated fair values of investment securities are based on quoted market prices, if available, or by an estimated methodology based on management's inputs. The fair values of the Company's investment securities held-to-maturity are based on using "unobservable inputs" that are the best information available in the circumstances.

The net loan portfolio at September 30, 2012 and December 31, 2011 has been valued using the present value of discounted cash flow where market prices were not available. The discount rate used in these calculations is the estimated current market rate adjusted for credit risk. The carrying value of accrued interest approximates fair value.

The estimated fair values of demand deposits (i.e. interest-and noninterest-bearing checking accounts, savings, and certain types of demand and money market accounts are equal to the amount payable on demand at the reporting date (i.e. their carrying amounts). The fair values of securities sold under agreements to repurchase and short term borrowings are equal to their carrying amounts as they are overnight borrowings.

The fair values of certificates of deposit and subordinated debentures are estimated using a discounted cash flow calculation that applies current interest rates to discounted expected cash flows. Based upon time deposit maturities at September 30, 2012, the carrying values approximate their fair values. The carrying amount of accrued interest payable approximates its fair value (in thousands).

	September 30, 2012
					Quoted prices in active		Significant other		Significant
					markets for identical		observable		unobservable
	Carrying		Estimated		assets		inputs		inputs
	amount		fair value		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	544,658	$	544,658	$	544,658	$	-	$	-
Investment securities available-for-sale		634,894		634,894		3,075		631,211		608
Investment securities held-to-maturity		22,707		18,634		-		-		18,634
Federal Home Loan and Atlantic Central Bankers Bank stock		4,160		4,160		4,160		-		-
Commerical loans held for sale		7,970		7,970		-		-		7,970
Loans receivable, net		1,856,992		1,855,671		-		-		1,855,671
Demand and interest checking		2,300,025		2,300,025		2,300,025		-		-
Savings and money market		459,725		459,725		459,725		-		-
Time deposits		21,425		21,491		-		-		21,491
Subordinated debenture		13,401		9,268		-		-		9,268
Securities sold under agreements to repurchase		18,802		18,802		18,802		-		-
Accrued interest payable		100		100		100		-		-

	December 31, 2011
	Carrying		Estimated
	amount		fair value
Cash and cash equivalents	$	749,174	$	749,174
Investment securities available-for-sale		448,204		448,204
Investment securities held-to-maturity		18,044		13,826
Federal Home Loan and Atlantic Central Bankers Bank stock		5,088		5,088
Loans receivable, net		1,744,828		1,718,698
Demand and interest checking		2,192,938		2,192,938
Savings and money market		454,343		454,343
Time deposits		35,270		35,336
Subordinated debenture		13,401		9,287
Securities sold under agreements to repurchase		33,177		33,177
Accrued interest payable		123		123

The fair value of commitments to extend credit is estimated based on the amount of unamortized deferred loan commitment fees. The fair value of letters of credit is based on the amount of unearned fees plus the estimated cost to terminate the letters of credit. Fair values of unrecognized financial instruments, including commitments to extend credit, and the fair value of letters of credit are considered immaterial.

In addition, FASB ASC topic 820, Fair Value Measurements and Disclosures, establishes a common definition for fair value to be applied to assets and liabilities. It clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It also establishes a framework for measuring fair value and expands disclosures concerning fair value measurements. FASB ASC topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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). Level 1 valuation is based on quoted market prices for identical assets or liabilities to which the Company has access at the measurement date. Level 2 valuation is based on other observable inputs for the asset or liability, either directly or indirectly. This includes quoted prices for similar assets in active or inactive markets, inputs other than quoted prices that are observable for the asset or liability such as yield curves, volatilities, prepayment speeds, credit risks, default rates, or inputs that are derived principally from, or corroborated through, observable market data by market-corroborated reports. Level 3 valuation is based on "unobservable inputs" which the Company believes is the best information available in the circumstances. A financial instrument's level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assets measured at fair value on a recurring basis, segregated by fair value hierarchy level, are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	8,828	$	-	$	8,828	$	-
Federally insured student loan securities		111,545		-		111,545
Obligations of states and political subdivisions		163,375		-		163,375		-
Residential mortgage-backed securities		197,158		-		197,158		-
Commercial mortgage-backed securities		102,477		-		102,477		-
Other debt securities		48,436		-		47,828		608
Other equity securities		3,075		3,075		-		-
	$	634,894	$	3,075	$	631,211	$	608
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Investment
U.S. Government agency securities	$	9,285	$	-	$	9,285	$	-
Obligations of states and political subdivisions		150,666		-		150,666		-
Residential mortgage-backed securities		193,685		-		193,685		-
Commercial mortgage-backed securities		52,061		-		52,061		-
Other debt securities		39,532		-		38,902		630
Other equity securities		2,975		2,975		-		-
	$	448,204	$	2,975	$	444,599	$	630

The changes in the Company's Level 3 assets are set forth below (in thousands).

Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3)
	Available-for-sale
	securities
	September 30, 2012			December 31, 2011
Beginning balance	$	630		$	748
Transfers into level 3		-			-
Transfers out of level 3		-			-
Total gains or losses (realized/unrealized)
Included in earnings		-			(2	)
Included in other comprehensive income		15			(62	)
Purchases, issuances, and settlements
Purchases		-			-
Issuances		-			-
Sales
Settlements		(37	)		(54	)
Ending balance	$	608		$	630

The other debt securities included in level 3 at September 30, 2012 and December 31, 2011 have been valued on the present value of cash flows, which discounts expected cash flows from principal and interest using yield to maturity at the measurement date. The discount rate used in these calculations is the estimated current market rate adjusted for credit risk.

Assets measured at fair value on a nonrecurring basis, segregated by fair value hierarchy, during the periods shown are summarized below (in thousands):

			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	September 30, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	29,160	$	-	$	-	$	29,160
Other real estate owned		3,065		-		-		3,065
	$	32,225	$	-	$	-	$	32,225
			Fair Value Measurements at Reporting Date Using
			Quoted prices in active		Significant other		Significant
			markets for identical		observable		unobservable
	Fair value		assets		inputs		inputs
Description	December 31, 2011		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	17,587	$	-	$	-	$	17,587
Other real estate owned		7,405		-		-		7,405
	$	24,992	$	-	$	-	$	24,992

At September 30, 2012, impaired loans that are collateral dependent have been presented at their fair value, less costs to sell, of $29.2 million through specific reserves and other write downs of $10.9 million or by recording charge-offs when the carrying value exceeds the fair value. Included in the impaired balance at September 30, 2012 were troubled debt restructured loans with a balance of $8.3 million which have specific reserves of $4.2 million.  Valuation techniques consistent with the market and/or cost approach were used to measure fair value and primarily included observable inputs for the individual impaired loans being evaluated such as recent sales of similar assets or observable market data for operational or carrying costs. In cases where such inputs were unobservable, the loan balance is reflected within the Level 3 hierarchy. The fair value of other real estate owned is based on an appraisal of the property using the market approach for valuation.

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Loans

9 Months Ended

Sep. 30, 2012

Loans [Abstract]

Loans

Note 6. Loans

At September 30, 2012 the Company had $7.9 million of commercial mortgage loans held for sale, which were originated for sale to institutions which issue commercial mortgaged backed securities. The Company has elected fair value treatment for these loans and during the third quarter of 2012, the Company recognized a related gain of $156,000.

Major classifications of loans not including loans held for sale are as follows (in thousands):

	September 30,		December 31,
	2012		2011
Commercial	$	453,444	$	450,411
Commercial mortgage *		614,410		609,487
Construction		263,726		246,611
Total commercial loans		1,331,580		1,306,509
Direct lease financing		146,728		129,682
Residential mortgage		97,589		96,110
Consumer loans and others		276,427		209,041
		1,852,324		1,741,342
Unamortized loan costs		4,668		3,486
Total loans, net of deferred loan costs	$	1,856,992	$	1,744,828
Supplemental loan data:
Construction 1-4 family	$	71,599	$	85,189
Commercial construction, acquisition and development		192,127		161,422
	$	263,726	$	246,611

* At September 30, 2012, our owner occupied loans amounted to $157.2 million, or 25.6% of commercial mortgages as compared to $137.9 million, or 22.6% at December 31, 2011.

The Company has identified thirty loans as impaired, where it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. The balance of these impaired loans was $29.2 million at September 30, 2012, of which $20.2 million had a specific reserve of $10.9 million. The remaining $9.0 million of impaired loans did not have a reserve. Included within the impaired loans at September 30, 2012 are eight troubled debt restructured loans with a balance of $8.3 million with a total specific reserve of $4.2 million.  The Company recognizes income on impaired loans when they are placed into non-accrual status on a cash basis when the loans are both current and the collateral on the loan is sufficient to cover the outstanding obligation to the Company. If these factors do not exist, the Company will not recognize income on such loans. Interest income would have increased by $631,000 in third quarter 2012 if interest on impaired loans had been accrued. The balance of impaired loans was $17.6 million at December 31, 2011, of which $14.5 million had specific reserves of $5.9 million.  The Company did recognize interest income of $65,000 on impaired loans in the nine months ended September 30, 2012 and did not recognize any interest income for the nine months ended September 30, 2011.

The following table provides information about impaired loans at September 30, 2012 and December 31, 2011 (in thousands):

	Recorded investment		Unpaid principal balance		Related allowance		Average recorded investment		Interest income recognized
September 30, 2012
Without an allowance recorded
Construction	$	276	$	276	$	-	$	911	$	-
Commercial mortgage		3,582		4,403		-		2,058		-
Commercial		4,219		6,257		-		2,017		-
Consumer - home equity		927		927		-		927		-
Residential		-		-		-		316		-
With an allowance recorded
Construction		8,886		8,886		4,899		7,523		-
Commercial mortgage		7,742		8,287		4,028		4,090		-
Commercial		3,435		3,631		1,885		5,397		-
Consumer - home equity		-		-		-		81		-
Residential		93		93		71		47		-
Total
Construction	$	9,162	$	9,162	$	4,899	$	8,434	$	-
Commercial mortgage	$	11,324	$	12,690	$	4,028	$	6,148	$	-
Commercial	$	7,654	$	9,888	$	1,885	$	7,414	$	-
Consumer - home equity	$	927	$	927	$	-	$	1,008	$	-
Residential	$	93	$	93	$	71	$	363	$	-
December 31, 2011
Without an allowance recorded
Construction	$	-	$	-	$	-	$	100	$	-
Commercial mortgage		-		-		-		310		-
Commercial		900		2,042		6,831		626		-
Consumer - home equity		927		927		3,765		371		-
Residential		1,264		1,414		149		662		-
With an allowance recorded
Construction		4,949		4,949		2,296		2,123		-
Commercial mortgage		3,672		3,672		712		2,793		-
Commercial		5,550		5,550		2,724		3,075		-
Consumer - home equity		325		325		204		510		-
Residential		-		-		-		5,048		-
Total
Construction	$	4,949	$	4,949	$	2,296	$	2,223	$	-
Commercial mortgage	$	3,672	$	3,672	$	712	$	3,103	$	-
Commercial	$	6,450	$	7,592	$	9,555	$	3,701	$	-
Consumer - home equity	$	1,252	$	1,252	$	3,969	$	881	$	-
Residential	$	1,264	$	1,414	$	149	$	5,710	$	-

The following tables summarize the Company's non-accrual loans, loans past due 90 days and other real estate owned for the periods indicated (the Company had no non-accrual leases at September 30, 2012 or December 31, 2011):

	September 30,		September 30,		December 31,
	2012		2011		2011
	(in thousands)
Non-accrual loans
Construction *	$	8,886	$	2,321	$	4,949
Commercial mortgage *		8,894		3,848		3,672
Commercial *		7,654		4,212		6,450
Consumer		927		1,560		1,252
Residential		93		5,260		1,264
Total non-accrual loans		26,454		17,201		17,587
Loans past due 90 days or more		3,861		5,550		4,101
Total non-performing loans		30,315		22,751		21,688
Other real estate owned		3,065		6,415		7,405
Total non-performing assets	$	33,380	$	29,166	$	29,093

* Included in the non-accrual loans as of September 30, 2012 were five troubled debt restructured loans classified as follows: $725,000 in commercial mortgage, $2.3 million in commercial and $2.6 million in construction.

Of the $8.3 million of loans that were modified and considered troubled debt restructurings as of September 30, 2012 $5.6 million and $1.1 million were already included in non-accrual and non-performing loan totals as of that date.An analysis of those loans is as follows (dollars in thousands):

	September 30, 2012						December 31, 2011
	Number		Pre- modification recorded investment		Post- modification recorded investment		Number		Pre- modification recorded investment		Post- modification recorded investment
Commercial		1	$	2,255	$	2,255		-	$	-	$	-
Commercial mortgage		3		3,156		3,156		1		759		759
Construction		4		2,913		2,913		-		-		-
Residential mortgage		-		-		-		1		364		364
Total		8	$	8,324	$	8,324		2	$	1,123	$	1,123

The balances below provide information as to how the loans were modified as troubled debt restructurings loans as of September 30, 2012 and December 31, 2011 (dollars in thousands):

	September 30, 2012						December 31, 2011
	Adjusted interest rate		Extended maturity		Combined rate and maturity		Adjusted interest rate		Extended maturity		Combined rate and maturity
Commercial	$	-	$	2,255	$	-	$	-	$	-	$	-
Commercial mortgage		725		214		2,217		759		-		-
Construction		-		2,913		-		-		-		-
Residential mortgage		-		-		-		364		-		-
Total	$	725	$	5,382	$	2,217	$	1,123	$	-	$	-

As of September 30, 2012 and December 31, 2011, the Company has no commitments to lend additional funds to loan customers whose terms have been modified in troubled debt restructurings.

A detail of the changes in the allowance for loan and lease losses by loan category is as follows (in thousands):

				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
September 30, 2012
Beginning balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Charge-offs		(3,487	)		(2,466	)		(6,931	)		-			(299	)		(87	)		-			(13,270	)
Recoveries		505			1,028			95			85			-			13			-			1,726
Provision		1,843			476			12,544			81			626			(25	)		(498	)		15,047
Ending balance	$	9,075		$	8,312		$	11,060		$	2,256		$	1,673		$	155		$	540		$	33,071
Ending balance: Individually evaluated for impairment	$	1,884		$	4,028		$	4,899		$	71		$	-		$	-		$	-		$	10,882
Ending balance: Collectively evaluated for impairment	$	7,191		$	4,284		$	6,161		$	2,185		$	1,673		$	155		$	540		$	22,189
Loans:
Ending balance	$	453,444		$	614,410		$	263,726		$	97,589		$	276,427		$	146,728		$	4,668		$	1,856,992
Ending balance: Individually evaluated for impairment	$	7,654		$	11,324		$	9,162		$	93		$	927		$	-		$	-		$	29,160
Ending balance: Collectively evaluated for impairment	$	445,790		$	603,086		$	254,564		$	97,496		$	275,500		$	146,728		$	4,668		$	1,827,832
				Commercial						Residential						Direct lease
Twelve months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
December 31, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624		$	24,063
Charge-offs		(7,453	)		(1,198	)		(3,254	)		(2,870	)		(1,280	)		(39	)		-			(16,094	)
Recoveries		2			89			4			-			6			-			-			101
Provision		11,614			882			3,572			2,845			2,042			129			414			21,498
Ending balance	$	10,214		$	9,274		$	5,352		$	2,090		$	1,346		$	254		$	1,038		$	29,568
Ending balance: Individually evaluated for impairment	$	2,724		$	712		$	2,296		$	-		$	204		$	-		$	-		$	5,936
Ending balance: Collectively evaluated for impairment	$	7,490		$	8,562		$	3,056		$	2,090		$	1,142		$	254		$	1,038		$	23,632
Loans:
Ending balance	$	450,411		$	609,487		$	246,611		$	96,110		$	209,041		$	129,682		$	3,486		$	1,744,828
Ending balance: Individually evaluated for impairment	$	6,450		$	3,672		$	4,949		$	1,264		$	1,252		$	-		$	-		$	17,587
Ending balance: Collectively evaluated for impairment	$	443,961		$	605,815		$	241,662		$	94,846		$	207,789		$	129,682		$	3,486		$	1,727,241
				Commercial						Residential						Direct lease
Nine months ended	Commercial			mortgage			Construction			mortgage			Consumer			financing			Unallocated			Total
September 30, 2011
Beginning balance	$	6,051		$	9,501		$	5,030		$	2,115		$	578		$	164		$	624		$	24,063
Charge-offs		(6,729	)		(642	)		(3,003	)		(1,876	)		(815	)		-			-			(13,065	)
Recoveries		2			14			3			-			-			-			-			19
Provision		11,034			(1,108	)		2,061			2,636			1,688			(36	)		379			16,654
Ending balance	$	10,358		$	7,765		$	4,091		$	2,875		$	1,451		$	128		$	1,003		$	27,671
Ending balance: Individually evaluated for impairment	$	1,127		$	615		$	622		$	1,037		$	449		$	-		$	-		$	3,850
Ending balance: Collectively evaluated for impairment	$	9,231		$	7,150		$	3,469		$	1,838		$	1,002		$	128		$	1,003		$	23,821
Loans:
Ending balance	$	461,679		$	577,237		$	242,806		$	96,139		$	205,243		$	129,400		$	3,144		$	1,715,648
Ending balance: Individually evaluated for impairment	$	4,212		$	3,848		$	2,321		$	5,260		$	1,560		$	-		$	-		$	17,201
Ending balance: Collectively evaluated for impairment	$	457,467		$	573,389		$	240,485		$	90,879		$	203,683		$	129,400		$	3,144		$	1,698,447

The Company did not have loans acquired with deteriorated credit quality at either September 30, 2012 or December 31, 2011.

A detail of the Company's delinquent loans by loan category is as follows (in thousands):

	30-59 Days		60-89 Days		Greater than				Total				Total
September 30, 2012	past due		past due		90 days		Non-accrual		past due		Current		loans
Commercial	$	1,357	$	1,500	$	107	$	7,654	$	10,618	$	442,826	$	453,444
Commercial mortgage		1,042		-		3,077		8,894		13,013		601,397		614,410
Construction		-		-		667		8,886		9,553		254,173		263,726
Direct lease financing		788		1,026		8		-		1,822		144,906		146,728
Consumer - other		1,091		-		2		-		1,093		231,057		232,150
Consumer - home equity		-		420		-		927		1,347		42,930		44,277
Residential mortgage		-		-		-		93		93		97,496		97,589
Unamortized costs		-		-		-		-		-		4,668		4,668
	$	4,278	$	2,946	$	3,861	$	26,454	$	37,539	$	1,819,453	$	1,856,992
December 31, 2011
Commercial	$	-	$	242	$	817	$	6,450	$	7,509	$	442,902	$	450,411
Commercial mortgage		278		1,763		1,597		3,672		7,310		602,177		609,487
Construction		-		825		942		4,949		6,716		239,895		246,611
Direct lease financing		1,230		606		745		-		2,581		127,101		129,682
Consumer - other		-		-		-		1,252		1,252		164,145		165,397
Consumer - home equity		-		2		-		-		2		43,642		43,644
Residential mortgage		-		-		-		1,264		1,264		94,846		96,110
Unamortized costs		-		-		-		-		-		3,486		3,486
	$	1,508	$	3,438	$	4,101	$	17,587	$	26,634	$	1,718,194	$	1,744,828

The Company evaluates its loans under an internal loan risk rating system as a means of identifying problem loans.  The following table provides information by credit risk rating indicator for each segment of the loan portfolio not including loans held for sale at the dates indicated (in thousands):

									Commercial				Residential
	Commercial				Construction				mortgage				mortgage
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	331,624	$	320,287	$	236,486	$	176,824	$	490,001	$	476,421	$	28,792	$	28,981
Special Mention		2,939		1,049		-		-		23,862		21,615		-		-
Substandard		8,045		7,696		9,553		6,716		12,740		6,867		-		1,264
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		28,253		60,938		10,711		49,700		23,502		26,543		1,590		2,084
Unrated not subject to review		82,583		60,441		6,976		13,371		64,305		78,041		67,114		63,781
Total	$	453,444	$	450,411	$	263,726	$	246,611	$	614,410	$	609,487	$	97,589	$	96,110
					Direct lease
	Consumer				financing				Unamortized costs				Total
	9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011		9/30/2012		12/31/2011
Risk Rating
Pass	$	56,020	$	64,236	$	54,747	$	12,025	$	-	$	-	$	1,197,670	$	1,078,774
Special Mention		-		-		-		-		-		-		26,801		22,664
Substandard		3,672		2,718		61		649		-		-		34,071		25,910
Doubtful		-		-		-		-		-		-		93		-
Loss		-		-		-		-		-		-		-		-
Unrated subject to review		25,573		2,873		-		29,174		-		-		89,629		171,312
Unrated not subject to review		191,162		139,214		91,920		87,834		4,668		3,486		508,728		446,168
Total	$	276,427	$	209,041	$	146,728	$	129,682	$	4,668	$	3,486	$	1,856,992	$	1,744,828

* Unrated loans consist of performing loans which did not exhibit any negative characteristics which would require the loan to be evaluated, or fell below the dollar threshold requiring review ender the Bank's internal policy and was not one of the loans otherwise selected in ongoing portfolio evaluation.  The scope of the Bank's loan review policy encompasses commercial and construction loans and leases which singly, or in aggregate for loans to related borrowers, exceed $3.0 million. The loan portfolio review coverage was approximately 68% at September 30, 2012 and approximately 65% at December 31, 2011. This review is performed by the loan review department, which is independent of the loan origination department and reports directly to the audit committee.  Potential problem loans which are identified by either the independent loan review department or line management are reviewed. All classified loans are continuously reviewed quarterly by the independent loan review function of the Bank. Additionally, all loans are subject to ongoing monitoring by portfolio managers and loan officers.  Also, many of the Bank's loans are relatively short term, and are subject to reconsideration with a full review in loan committee between one and three years.

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Transactions with Affiliates

9 Months Ended

Sep. 30, 2012

Transactions with Affiliates [Abstract]

Transactions with Affiliates

Note 7. Transactions with Affiliates

The Company entered into a sublease for office space in Philadelphia, Pennsylvania with RAIT Financial Trust (RAIT) commencing in October 2000. The former Chief Executive Officer of RAIT (from December 2006 to February 2009), who was also a RAIT trustee, is the Chairman of the Company and a director and Chairman of the Executive Committee of the Bank.  RAIT paid the Company approximately $228,000 and $223,000, for the nine months ended September 30, 2012 and 2011, respectively.

The Company entered into a space sharing agreement for office space in New York, New York with Resource America Inc. commencing in September 2011.  The Chairman of the Board of Resource America, Inc is the father of the Chairman of the Board and the spouse of the Chief Executive Officer of the Company.  The Chief Executive Officer of Resource America is the brother of the Chairman of the Board and the son of the Chief Executive Officer of the Company.  Rent expense for the nine months ended September 30, 2012 was $77,000.

The Company entered into a space sharing agreement for office space in New York, New York with Atlas Energy, L.P. commencing in May 2012.  The Chairman of the Board of Atlas Energy, L.P. is the brother of the Chairman of the Board and the son of the Chief Executive Officer of the Company.  The Chief Executive Officer of Atlas Energy, L.P. is the father of the Chairman of the Board and the spouse of the Chief Executive Officer of the Company.  Rent expense for the nine months ended September 30, 2012 was $14,000.

The Bank maintains deposits for various affiliated companies totaling approximately $47.1 million and $88.8 million as of September 30, 2012 and December 31, 2011, respectively.

The Bank has entered into lending transactions in the ordinary course of business with directors, executive officers, principal stockholders and affiliates of such persons on the same terms as those prevailing for comparable transactions with other borrowers. At September 30, 2012, these loans were current as to principal and interest payments and did not involve more than normal risk of collectability. At September 30, 2012, loans to these related parties amounted to $31.5 million as compared to $32.4 million at December 31, 2011.

The Company executed security transactions through PrinceRidge, a brokerage firm in which the Company's Chairman is a principal.  For the nine months ended September 30, 2012 a total of $35.8 million of securities rated AAA by at least one rating agency were purchased from that firm at market, the market price having been confirmed by an independent security advisor.  All of the securities purchased were commercial mortgage-backed securities.  The Company does not pay a separate fee or commission to PrinceRidge. We do not have information as to PrinceRidge's actual profits or losses. All of the purchases were classified as available for sale.

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Derivatives

9 Months Ended

Sep. 30, 2012

Derivatives [Abstract]

Derivatives

Note 9. Derivatives

The Company utilizes derivative instruments to assist in the management of interest rate sensitivity by modifying the repricing, maturity and option characteristics on commercial real estate loans held for sale. The Company entered into two interest rate swap agreements with an aggregate notional amount of $5.9 million. These swap agreements provide for the Company to receive an adjustable rate of interest based upon the three-month London Interbank Offering Rate (LIBOR). The Company recorded expense on derivative instruments of $14,000 for the nine months ended September 30, 2012. It recorded income of $156,000 for the nine months ended September 30, 2012 to recognize fair value income on related commercial real estate loans held for sale. The amount payable by the Company under these swap agreements was $14,000 at September 30, 2012.

The maturity dates, notional amounts, interest rates paid and received and fair value of the Company's remaining interest rate swap agreements as of September 30, 2012 are summarized below (in thousands):

	September 30, 2012
Maturity date	Notional amount		Interest rate paid			Interest rate received			Fair value
August 1, 2022	$	2,200		1.64	%		0.44	%	$	5
September 27, 2022		3,700		1.74	%		0.36	%		(19	)
Total	$	5,900							$	(14	)

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Loans, Delinquent Loans (Details) (USD $)	Sep. 30, 2012		Dec. 31, 2011		Sep. 30, 2011
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	$ 4,278,000		$ 1,508,000
60-89 Days past due	2,946,000		3,438,000
Greater than 90 days	3,861,000		4,101,000
Non-accrual	26,454,000		17,587,000		17,201,000
Total past due	37,539,000		26,634,000
Current	1,819,453,000		1,718,194,000
Total loans	1,856,992,000		1,744,828,000		1,715,648,000
Commercial [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	1,357,000		0
60-89 Days past due	1,500,000		242,000
Greater than 90 days	107,000		817,000
Non-accrual	7,654,000	[1]	6,450,000	[1]	4,212,000	[1]
Total past due	10,618,000		7,509,000
Current	442,826,000		442,902,000
Total loans	453,444,000		450,411,000		461,679,000
Commercial mortgage [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	1,042,000		278,000
60-89 Days past due	0		1,763,000
Greater than 90 days	3,077,000		1,597,000
Non-accrual	8,894,000	[1]	3,672,000	[1]	3,848,000	[1]
Total past due	13,013,000		7,310,000
Current	601,397,000		602,177,000
Total loans	614,410,000		609,487,000		577,237,000
Construction [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	0		0
60-89 Days past due	0		825,000
Greater than 90 days	667,000		942,000
Non-accrual	8,886,000	[1]	4,949,000	[1]	2,321,000	[1]
Total past due	9,553,000		6,716,000
Current	254,173,000		239,895,000
Total loans	263,726,000		246,611,000		242,806,000
Direct lease financing [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	788,000		1,230,000
60-89 Days past due	1,026,000		606,000
Greater than 90 days	8,000		745,000
Non-accrual	0		0
Total past due	1,822,000		2,581,000
Current	144,906,000		127,101,000
Total loans	146,728,000		129,682,000		129,400,000
Residential mortgage [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	0		0
60-89 Days past due	0		0
Greater than 90 days	0		0
Non-accrual	93,000		1,264,000		5,260,000
Total past due	93,000		1,264,000
Current	97,496,000		94,846,000
Total loans	97,589,000		96,110,000		96,139,000
Consumer loans and others [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	1,091,000		0
60-89 Days past due	0		0
Greater than 90 days	2,000		0
Non-accrual	0		1,252,000
Total past due	1,093,000		1,252,000
Current	231,057,000		164,145,000
Total loans	232,150,000		165,397,000
Consumer - home equity [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	0		0
60-89 Days past due	420,000		2,000
Greater than 90 days	0		0
Non-accrual	927,000		0
Total past due	1,347,000		2,000
Current	42,930,000		43,642,000
Total loans	44,277,000		43,644,000
Consumer [Member]
Age Analysis of Past Due Loans [Abstract]
Non-accrual	927,000		1,252,000		1,560,000
Total loans	276,427,000		209,041,000		205,243,000
Unamortized loan costs [Member]
Age Analysis of Past Due Loans [Abstract]
30-59 Days past due	0		0
60-89 Days past due	0		0
Greater than 90 days	0		0
Non-accrual	0		0
Total past due	0		0
Current	4,668,000		3,486,000
Total loans	$ 4,668,000		$ 3,486,000		$ 3,144,000

[1] Included in the non-accrual loans as of September 30, 2012 are five troubled debt restructured loans. $725,000 in commercial mortgage, $2.3 million in commercial, and $2.6 million in construction.

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Earnings Per Share [Abstract]

Earnings per share

The following tables show the Company's earnings per share for the periods presented:

	For the three months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	3,561		33,105,194	$	0.11
Effect of dilutive securities
Common stock options		-		67,658		-
Diluted earnings per share
Net income available to common shareholders	$	3,561		33,172,852	$	0.11

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise price per share was greater than the average market price.

	For the nine months ended
	September 30, 2012
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	11,387		33,101,281	$	0.34
Effect of dilutive securities
Common stock options		-		32,026		-
Diluted earnings per share
Net income available to common shareholders	$	11,387		33,133,307	$	0.34

Stock options for 1,528,367 shares, exercisable at prices between $9.58 and $25.43 per share, were outstanding at September 30, 2012 but were not included in the dilutive shares because the exercise share price was greater than the average market price.

	For the three months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	2,282		33,196,281	$	0.07
Effect of dilutive securities
Stock options		-		7,381		-
Diluted earnings per share
Net income available to common shareholders	$	2,282		33,203,662	$	0.07

Stock options for 2,766,115 shares and stock appreciation rights for 60,000 shares, exercisable at prices between $7.36 and $25.43 per share, were outstanding at September 30, 2011 but were not included in the diluted earnings per share computation because the exercise price per share was greater than the average market price of the common stock.

	For the nine months ended
	September 30, 2011
	Income		Shares		Per share
	(numerator)		(denominator)		amount
	(dollars in thousands except per share data)
Basic earnings per share
Net income available to common shareholders	$	5,630		31,500,347	$	0.18
Effect of dilutive securities
Stock options		-		6,461		-
Diluted earnings per share
Net income available to common shareholders	$	5,630		31,506,808	$	0.18

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Share-based Compensation (Details) (USD $)	3 Months Ended			9 Months Ended
	Sep. 30, 2012	Mar. 31, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Share-based Compensation [Abstract]
Number of stock-based compensation plans				3
Common stock option granted (in shares)		500,000	500,000
Common stock option vested in one year (in shares)		40,000	40,000
Common stock option vested in four year (in shares)		460,000	460,000
Weighted-average fair value of the stock options issued (in dollars per share)		$ 5.06	$ 3.82
Stock option exercised (in shares)	7,500		0
Fair value of grant on date of grant using the Black-Scholes options pricing model [Abstract]
Risk-free interest rate (in hundredths)				1.97%	2.19%
Expected dividend yield (in hundredths)				0.00%	0.00%
Expected volatility (in hundredths)				72.90%	53.10%
Expected lives (years)				4 years 9 months 29 days	5 years 5 months 19 days
Unrecognized compensation cost related to unvested awards under share-based plans	$ 5,700,000			$ 5,700,000
Cost expected to be recognized over a weighted average period				2 years 2 months 12 days
Stock-based compensation expense				1,872,000	1,276,000
Shares [Roll Forward]
Granted (in shares)		500,000	500,000
Exercised (in shares)	(7,500)		0
Stock appreciation rights [Member]
Shares [Roll Forward]
Outstanding, beginning of period (in shares)		60,000		60,000
Granted (in shares)				0
Exercised (in shares)				0
Expired/Forfeited (in shares)				(60,000)
Outstanding, end of period (in shares)	0			0
Weighted-average price [Roll forward]
Outstanding, beginning of period (in dollars per share)		$ 11.41		$ 11.41
Granted (in dollars per share)				$ 0
Exercised (in dollars per share)				$ 0
Expired/Forfeited (in dollars per share)				$ 11.41
Outstanding, end of period (in dollars per share)	$ 0			$ 0
Average remaining contractual term (years) [Abstract]
Granted				0 years
Exercised				0 years
Expired/forfeited				0 years
Outstanding				0 years
Equity compensations plans [Member]
Share-based Compensation [Abstract]
Common stock option granted (in shares)				500,000
Stock option exercised (in shares)				12,500
Shares [Roll Forward]
Outstanding, beginning of period (in shares)		2,745,115		2,745,115
Granted (in shares)				500,000
Exercised (in shares)				(12,500)
Expired (in shares)				(16,000)
Forfeited (in shares)				(128,248)
Outstanding, end of period (in shares)	3,088,367			3,088,367
Exercisable, end of period (in shares)	1,677,367			1,677,367
Weighted average exercise price [Roll Forward]
Outstanding, beginning of period (in dollars per share)		$ 10.10		$ 10.10
Granted (in dollars per share)				$ 8.50
Exercised (in dollars per share)				$ 7.81
Expired (in dollars per share)				$ 10.00
Forfeited (in dollars per share)				$ 9.07
Outstanding, end of period (in dollars per share)	$ 9.89			$ 9.89
Weighted-average remaining contractual term (years) [Abstract]
Granted				0 years
Exercised				0 years
Expired				0 years
Forfeited				0 years
Outstanding, end of period				6 years 2 months 8 days
Exercisable, end of period				4 years 1 month 24 days
Aggregate intrinsic value [Abstract]
Granted				0
Exercised				0
Expired				0
Forfeited				0
Outstanding, end of period	0			0
Exercisable, end of period	$ 0			$ 0

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UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income	$ 11,387	$ 5,630
Unrealized gains on securities
Unrealized holding gains arising during the period	6,403	12,598
Reclassification adjustment for gains included in net income	(27)	(623)
Amortization of losses previously held as available for sale	8	855
Net unrealized gains on securities	6,384	12,830
Deferred tax expense
Unrealized holding gain arising during the period	2,232	4,191
Amortization of losses previously held as available for sale	3	273
Net deferred tax expense	2,235	4,464
Other comprehensive income	4,149	8,366
Comprehensive income	$ 15,536	$ 13,996

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Share-based Compensation

9 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Share-based Compensation

Note 3. Share-based Compensation

The Company recognizes compensation expense for stock options in accordance with FASB ASC topic 718, Stock Based Compensation. The expense of the option is generally measured at fair value at the grant date with compensation expense recognized over the service period, which is usually the vesting period. For grants subject to a service condition, the Company utilizes the Black-Scholes option-pricing model to estimate the fair value of each option on the date of grant. The Black-Scholes model takes into consideration the exercise price and expected life of the options, the current price of the underlying stock and its expected volatility, the expected dividends on the stock and the current risk-free interest rate for the expected life of the option. The Company's estimate of the fair value of a stock option is based on expectations derived from historical experience and may not necessarily equate to its market value when fully vested. In accordance with ASC topic 718, the Company estimates the number of options for which the requisite service is expected to be rendered. At September 30, 2012, the Company had three stock-based compensation plans, which are more fully described in its Form 10-K report and the portions of the Company's Proxy Statement dated March 21, 2012, incorporated therein by reference.

The Company granted 500,000 common stock options in the first quarter of 2012, 40,000 with a vesting period of one year and 460,000 with a vesting period of four years. The weighted-average fair value of the stock options issued was $5.06. During the third quarter of 2011, the Company granted 500,000 stock options, 40,000 with a vesting period of one year and 460,000 with a vesting period of four years. The weighted-average fair value of the stock options issued was $3.82. There were 7,500 common stock options exercised for the three month period ending September 30, 2012 and no common stock options exercised for the three month period ending September 30, 2011.

The Company estimated the fair value of each grant on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:

	September 30,
	2012			2011
Risk-free interest rate		1.97	%		2.19	%
Expected dividend yield		-			-
Expected volatility		72.90	%		53.10	%
Expected lives (years)		4.83			5.47

Expected volatility is based on the historical volatility of the Company's stock and peer group comparisons over the expected life of the grant. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury strip rate in effect at the time of the grant. The life of the option is based on historical factors which include the contractual term, vesting period, exercise behavior and employee terminations. In accordance with the ASC topic 718, Stock Based Compensation, stock based compensation expense for the nine month period ended September 30, 2012 is based on awards that are ultimately expected to vest and has been reduced for estimated forfeitures. The Company estimates forfeitures using historical data based upon the groups identified by management.

As of September 30, 2012, there was a total of $5.7 million of unrecognized compensation cost related to unvested awards under share-based plans. This cost is expected to be recognized over a weighted average period of 2.2 years. Related compensation expense for the nine months ended September 30, 2012 and 2011 was $1.9 million and $1.3 million respectively.

A summary of the status of the Company's equity compensations plans is presented below.

						Weighted-
						average
				Weighted		remaining
				average		contractual		Aggregate
				exercise		term		intrinsic
	Shares			price		(years)		value
	(in thousands, except per share data)
Outstanding at January 1, 2012		2,745,115		$	10.10
Granted		500,000			8.50		-		-
Exercised		(12,500	)		7.81		-		-
Expired		(16,000	)		10.00		-		-
Forfeited		(128,248	)		9.07		-		-
Outstanding at September 30, 2012		3,088,367		$	9.89		6.19	$	-
Exercisable at September 30, 2012		1,677,367					4.15	$	-

A summary of the status of the Company's stock appreciation rights is presented below.

						Average
						remaining
				Weighted-		contractual
				average		term
	Shares			price		(years)
Outstanding at January 1, 2012		60,000		$	11.41
Granted		-			-		-
Exercised		-			-		-
Expired/forfeited		(60,000	)		11.41		-
Outstanding at September 30, 2012		-		$	-		-

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Income (numerator) [Abstract]
Basic earnings per share, Net income available to common shareholders	$ 3,561	$ 2,282	$ 11,387	$ 5,630
Effect of dilutive securities, Common stock options	0	0	0	0
Diluted earnings per share, Net income available to common shareholders	$ 3,561	$ 2,282	$ 11,387	$ 5,630
Shares (denominator) [Abstract]
Basic earnings per share, Net income available to common shareholders (in shares)	33,105,194	33,196,281	33,101,281	31,500,347
Effect of dilutive securities, Common stock options (in shares)	67,658	7,381	32,026	6,461
Diluted earnings per share, Net income available to common shareholders (in shares)	33,172,852	33,203,662	33,133,307	31,506,808
Per share amount [Abstract]
Basic earnings per share, Net income available to common shareholders (in dollars per share)	$ 0.11	$ 0.07	$ 0.34	$ 0.18
Effect of dilutive securities, Common stock options (in shares)	$ 0	$ 0	$ 0	$ 0
Diluted earnings per share, Net income available to common shareholders (in dollars per share)	$ 0.11	$ 0.07	$ 0.34	$ 0.18
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Minimum exercisable prices (in dollars per share)	$ 9.58	$ 7.36	$ 9.58	$ 7.36
Maximum exercisable prices (in dollars per share)	$ 25.43	$ 25.43	$ 25.43	$ 25.43
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock options (in shares)	1,528,367	2,766,115	1,528,367	2,766,115
Stock appreciation rights [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Common stock options (in shares)		60,000		60,000

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Derivatives (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Derivative [Line Items]
Number of interest rate swap agreements	2	2
Fair value adjustment on loans held-for-sale	$ 156,000	$ 156,000
Payable under agreements	14,000	14,000
Maturity dates, notional amounts, interest rates paid and received and fair value of derivative [Abstract]
Notional Amount	5,900	5,900
Fair Value	(14)	(14)
Interest Rate swaps, maturing August 1, 2022 [Member]
Maturity dates, notional amounts, interest rates paid and received and fair value of derivative [Abstract]
Maturity Date		Aug. 01, 2022
Notional Amount	2,200	2,200
Interest rate paid	1.64%	1.64%
Interest rate received	0.44%	0.44%
Fair Value	5	5
Interest rate swaps, maturing September 27, 2022 [Member]
Maturity dates, notional amounts, interest rates paid and received and fair value of derivative [Abstract]
Maturity Date		Sep. 27, 2022
Notional Amount	3,700	3,700
Interest rate paid	1.74%	1.74%
Interest rate received	0.36%	0.36%
Fair Value	$ (19)	$ (19)

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Share-based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Share-based Compensation [Abstract]

Fair value of grant on date of grant using the Black-Scholes options pricing model

The Company estimated the fair value of each grant on the date of grant using the Black-Scholes options pricing model with the following weighted average assumptions:

	September 30,
	2012			2011
Risk-free interest rate		1.97	%		2.19	%
Expected dividend yield		-			-
Expected volatility		72.90	%		53.10	%
Expected lives (years)		4.83			5.47

Summary of status of Company's equity compensations plans

A summary of the status of the Company's equity compensations plans is presented below.

						Weighted-
						average
				Weighted		remaining
				average		contractual		Aggregate
				exercise		term		intrinsic
	Shares			price		(years)		value
	(in thousands, except per share data)
Outstanding at January 1, 2012		2,745,115		$	10.10
Granted		500,000			8.50		-		-
Exercised		(12,500	)		7.81		-		-
Expired		(16,000	)		10.00		-		-
Forfeited		(128,248	)		9.07		-		-
Outstanding at September 30, 2012		3,088,367		$	9.89		6.19	$	-
Exercisable at September 30, 2012		1,677,367					4.15	$	-

Summary of status of Company's stock appreciation rights

A summary of the status of the Company's stock appreciation rights is presented below.

						Average
						remaining
				Weighted-		contractual
				average		term
	Shares			price		(years)
Outstanding at January 1, 2012		60,000		$	11.41
Granted		-			-		-
Exercised		-			-		-
Expired/forfeited		(60,000	)		11.41		-
Outstanding at September 30, 2012		-		$	-		-