10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2012 OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________________ TO __________________

Commission file number 000-1449794

Embassy Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania	26-3339011
(State of incorporation)	(I.R.S. Employer Identification No.)
One Hundred Gateway Drive, Suite 100 Bethlehem, PA	18017
(Address of principal executive offices)	(Zip Code)

(610) 882-8800

(Issuer’s Telephone Number)

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 filing requirements for the past 90 days. Yes  x No o

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

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

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

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

Indicate the number of shares outstanding of each of the registrant’s classes of common equity, as of the latest practicable date:

COMMON STOCK
Number of shares outstanding as of August 10, 2012	($1.00 Par Value)	7,184,031
	(Title Class)	(Outstanding Shares)

Table of Contents

Part I – Financial Information	3
Item 1 – Financial Statements
Consolidated Balance Sheets (Unaudited)	3
Consolidated Statements of Income (Unaudited)	4
Consolidated Statements of Comprehensive Income (Unaudited)	5
Consolidated Statements of Stockholders’ Equity (Unaudited)	6
Consolidated Statements of Cash Flows (Unaudited)	7
Notes to Consolidated Financial Statements (Unaudited)	8
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	35
Item 4 – Controls and Procedures	35
Part II - Other Information	36
Item 1 - Legal Proceedings	36
Item 1A - Risk Factors	36
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3 - Defaults Upon Senior Securities	36
Item 4 – Mine Safety Disclosures	36
Item 5 - Other Information	36
Item 6 - Exhibits	36
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32

2

Embassy Bancorp, Inc.

Part I – Financial Information

Item 1 – Financial Statements

Consolidated Balance Sheets (Unaudited)

	June 30,			December 31,
ASSETS	2012			2011
	(In Thousands, Except Share and Per Share Data)
Cash and due from banks	$	13,178		$	12,039
Interest bearing demand deposits with banks		34,606			33,605
Federal funds sold		1,333			491
Cash and Cash Equivalents		49,117			46,135
Interest bearing time deposits		7,717			7,698
Securities available for sale		97,288			92,110
Restricted investment in bank stock		1,485			1,641
Loans receivable, net of allowance for loan losses of $4,760 in 2012; $4,215 in 2011		457,380			419,126
Premises and equipment, net of accumulated depreciation		2,218			2,095
Accrued interest receivable		1,713			1,568
Other real estate owned		2,969			3,388
Other assets		2,111			1,719
Total Assets	$	621,998		$	575,480
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	43,488		$	38,386
Interest bearing		491,621			443,389
Total Deposits		535,109			481,775
Securities sold under agreements to repurchase		24,283			33,953
Long-term borrowings		12,986			13,086
Accrued interest payable		399			582
Other liabilities		2,435			1,751
Total Liabilities		575,212			531,147
Stockholders' Equity:
Common stock, $1 par value; authorized 20,000,000 shares; 2012 issued 7,182,520 shares; outstanding 7,182,167 shares; 2011 issued 7,171,551 shares; outstanding 7,171,198 shares;		7,182			7,171
Surplus		22,943			22,872
Retained earnings		13,969			11,905
Accumulated other comprehensive income		2,695			2,388
Treasury stock, at cost, 353 shares		(3	)		(3	)
Total Stockholders' Equity		46,786			44,333
Total Liabilities and Stockholders' Equity	$	621,998		$	575,480

See notes to consolidated financial statements.

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Embassy Bancorp, Inc.

Consolidated Statements of Income (Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012			2011
INTEREST INCOME	(In Thousands, Except Per Share Data)
Loans receivable, including fees	$	5,399		5,088	$	10,706		$	10,154
Securities, taxable		312		430		640			901
Securities, non-taxable		343		251		656			496
Federal funds sold, and other		25		9		53			15
Interest on time deposits		26		30		53			61
Total Interest Income		6,105		5,808		12,108			11,627
INTEREST EXPENSE
Deposits		865		1,012		1,868			2,025
Securities sold under agreements to repurchase and federal funds purchased		17		39		43			98
Long-term borrowings		174		186		352			370
Total Interest Expense		1,056		1,237		2,263			2,493
Net Interest Income		5,049		4,571		9,845			9,134
PROVISION FOR LOAN LOSSES		445		138		575			303
Net Interest Income after Provision for Loan Losses		4,604		4,433		9,270			8,831
OTHER INCOME
Credit card processing fees		280		231		566			459
Other service fees		113		115		218			209
Loss on sale of other real estate owned		-		-		(8	)		-
Impairment on other real estate owned		-		-		(100	)		-
Total Other Income		393		346		676			668
OTHER EXPENSES
Salaries and employee benefits		1,426		1,377		2,914			2,767
Occupancy and equipment		555		540		1,157			1,094
Data processing		272		292		539			507
Credit card processing		244		226		493			443
Advertising and promotion		236		225		424			417
Professional fees		142		91		249			171
FDIC insurance		101		169		188			341
Insurance		12		15		24			28
Loan department		54		49		103			94
Charitable contributions		111		92		253			211
Other real estate owned		18		31		44			73
Other		207		120		342			251
Total Other Expenses		3,378		3,227		6,730			6,397
Income before Income Taxes		1,619		1,552		3,216			3,102
INCOME TAX EXPENSE		438		441		865			877
Net Income	$	1,181	$	1,111	$	2,351		$	2,225
BASIC EARNINGS PER SHARE	$	0.16	$	0.16	$	0.33		$	0.31
DILUTED EARNINGS PER SHARE	$	0.16	$	0.15	$	0.33		$	0.31
DIVIDENDS PER SHARE	$	0.04	$	0.03	$	0.04		$	0.03

See notes to consolidated financial statements.

4

Embassy Bancorp, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended June 30,
	2012					2011
	(In Thousands)
Net Income				$	1,181				$	1,111
Other comprehensive income:
Unrealized holding gains on securities available for sale		371					1,493
Less: reclassification adjustment for realized gains (losses)		-					-
		371					1,493
Income tax effect		(126	)				(507	)
Net unrealized gains		245					986
Other comprehensive income:					245					986
Comprehensive Income				$	1,426				$	2,097

	Six Months Ended June 30,
	2012					2011
	(In Thousands)
Net Income				$	2,351				$	2,225
Other comprehensive income:
Unrealized holding gains on securities available for sale		465					2,248
Less: reclassification adjustment for realized gains (losses)		-					-
		465					2,248
Income tax effect		(158	)				(764	)
Net unrealized gains		307					1,484
Other comprehensive income:					307					1,484
Comprehensive Income				$	2,658				$	3,709

See notes to consolidated financial statements.

5

Embassy Bancorp, Inc.

Consolidated Statements of Stockholders’ Equity (Unaudited)

Six Months Ended June 30, 2012 and 2011

										Accumulated
										Other
	Common						Retained			Comprehensive		Treasury
	Stock			Surplus			Earnings			Income		Stock			Total
	(In Thousands, Except Share Data)
BALANCE - DECEMBER 31, 2010	$	7,157		$	22,303		$	6,976		$	296	$	(3	)	$	36,729
Net income		-			-			2,225			-		-			2,225
Net change in unrealized gain on securities available for sale, net of reclassification adjustment and income tax effects		-			-			-			1,484		-			1,484
Dividend declared, $0.03 per share		-			-			(215	)							(215	)
Exercise of stock options, 20,248 shares		20			40			-			-		-			60
Stock tendered for funding exercise of stock options, 11,024 shares		(11	)		(63	)		-			-		-			(74	)
BALANCE - JUNE 30, 2011	$	7,166		$	22,280		$	8,986		$	1,780	$	(3	)	$	40,209
BALANCE - DECEMBER 31, 2011	$	7,171		$	22,872		$	11,905		$	2,388	$	(3	)	$	44,333
Net income		-			-			2,351			-		-			2,351
Net change in unrealized gain on securities available for sale, net of reclassification adjustment and income tax effects		-			-			-			307		-			307
Dividend declared, $.04 per share		-			-			(287	)		-		-			(287	)
Exercise of stock options, 4,075 shares		4			12			-			-		-			16
Tax benefit of stock options exercised		-			1			-			-		-			1
Stock tendered for funding exercise of stock options, 1,098 shares		(1	)		(7	)		-			-		-			(8	)
Compensation expense recognized on stock options		-			17			-			-		-			17
Common stock grants to directors, 7,992 shares		8			48			-			-		-			56
BALANCE - JUNE 30, 2012	$	7,182		$	22,943		$	13,969		$	2,695	$	(3	)	$	46,786

See notes to consolidated financial statements.

6

Embassy Bancorp, Inc.

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
	2012			2011
	(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,351		$	2,225
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		575			303
Accretion of deferred loan costs		(26	)		(36	)
Depreciation and amortization		324			314
Net amortization of securities premiums and discounts		198			169
Loss on sale of other real estate owned		8			-
Stock compensation expense		73			-
Impairment on other real estate owned		100			-
Increase in accrued interest receivable		(145	)		(102	)
(Increase) decrease in other assets		(392	)		710
Decrease in accrued interest payable		(183	)		(298	)
Increase in other liabilities		239			463
Net Cash Provided by Operating Activities		3,122			3,748
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale		(8,570	)		(2,880	)
Maturities, calls and principal repayments of securities available for sale		3,659			6,781
Net increase in loans		(38,803	)		(4,603	)
Redemption of restricted investment in bank stock		156			192
Net (purchases) maturities of interest bearing time deposits		(19	)		731
Proceeds from sale of other real estate owned		311			-
Purchases of premises and equipment		(447	)		(89	)
Net Cash (Used in) Provided by Investing Activities		(43,713	)		132
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		53,334			16,356
Net decrease in securities sold under agreements to repurchase and federal funds purchased		(9,670	)		(10,283	)
Payment of long-term borrowed funds		(100	)		(100	)
Net payment of stock tendered		(8	)		(14	)
Proceeds from the exercise of stock options		16			-
Tax benefit of stock options exercised		1
Net Cash Provided by Financing Activities		43,573			5,959
Net Increase in Cash and Cash Equivalents		2,982			9,839
CASH AND CASH EQUIVALENTS - BEGINNING		46,135			19,643
CASH AND CASH EQUIVALENTS - ENDING	$	49,117		$	29,482
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	$	2,446		$	2,791
Income taxes paid	$	1,175		$	300

See notes to consolidated financial statements.

7

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1 – Basis of Presentation

Embassy Bancorp, Inc. (the “Company”) is a Pennsylvania corporation organized in 2008 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the “BHC Act”). The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the “Bank”) in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008. Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow. Embassy Holdings, LLC (the “LLC”) is a wholly-owned subsidiary of the Bank organized to engage in the holding of property acquired by the Bank in satisfaction of debts previously contracted.  As such, the consolidated financial statements contained herein include the accounts of the Company, the Bank and the LLC. All significant intercompany transactions and balances have been eliminated.

The Bank, which is the Company’s principal operating subsidiary, was originally incorporated as a Pennsylvania bank on May 11, 2001 and opened its doors on November 6, 2001. It was formed by a group of local business persons and professionals with significant prior experience in community banking in the Lehigh Valley area of Pennsylvania, the Bank’s primary market area.

The accompanying unaudited financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“US GAAP”) for interim financial information and in accordance with instructions for Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2011, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2012.

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred after June 30, 2012 through the date these consolidated financial statements were issued.

Certain amounts in the 2011 financial statements may have been reclassified to conform to 2012 presentation. These reclassifications had no effect on 2011 net income.

Note 2 - Summary of Significant Accounting Policies

The significant accounting policies of the Company as applied in the interim financial statements presented are substantially the same as those followed on an annual basis as presented in the Company’s Form 10-K for the year ended December 31, 2011.

Note 3 – Stockholders’ Equity

On November 11, 2008, the Company consummated its acquisition of Embassy Bank For The Lehigh Valley pursuant to a Plan of Merger and Reorganization dated April 18, 2008, pursuant to which the Bank was reorganized into a bank holding company structure. At the effective time of the reorganization, each share of common stock of Embassy Bank For The Lehigh Valley issued and outstanding was automatically converted into one share of Company common stock. The issuance of Company common stock in connection with the reorganization was exempt from registration pursuant to Section 3(a)(12) of the Securities Act of 1933, as amended.

8

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 4 – Stock Incentive Plan

Stock Incentive Plan:

At the Company’s annual meeting on June 16, 2010, the shareholders approved the Embassy Bancorp, Inc. 2010 Stock Incentive Plan (the “SIP”).  The SIP authorizes the Board of Directors, or a committee authorized by the Board of Directors, to award a stock based incentive to (i) designated officers (including officers who are directors) and other designated employees at the Company and its subsidiaries, and (ii) non-employee members of the Board of Directors and advisors and consultants to the Company and its subsidiaries.  The Board of Directors believes that the SIP will encourage the designated participants to contribute materially to the growth of the Company. The SIP provides for stock based incentives in the form of incentive stock options as provided in Section 422 of the Internal Revenue Code of 1986, non-qualified stock options, stock appreciation rights, restricted stock and deferred stock awards.  The term of the option, the amount of time for the option to vest after grant, if any, and other terms and limitations will be determined at the time of grant. Options granted under the SIP may not have an exercise period that is more than ten years from the time the option is granted.

The aggregate number of shares available for issuance under the SIP is 500,000.  The SIP provides for appropriate adjustments in the number and kind of shares available for grant or subject to outstanding awards under the SIP to avoid dilution in the event of merger, stock splits, stock dividends or other changes in the capitalization of the Company.  The SIP expires on June 15, 2020.  There were no awards granted under the SIP for the years ended December 31, 2011 and 2010.  In February 2012, the Company granted 7,992 shares of restricted stock to certain members of its Board of Directors as compensation for their service in 2011 in accordance with the Company’s Non-employee Directors Compensation program adopted in October of 2010.  Such compensation was accrued for as of December 31, 2011.  In February 2012, the Company also granted stock options to purchase 52,611 shares of stock to certain executive officers in accordance with their respective employment agreements.  Stock compensation expense related to these options was $5 thousand and $17 thousand for the three and six months ended June 30, 2012, respectively.  At June 30, 2012, approximately $119 thousand unrecognized cost related to these stock options will be recognized over the next 2.7 years.

Note 5 – Basic and Diluted Earnings per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period, as adjusted for stock dividends and splits. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
	(Dollars In Thousands, except per share data)
Net income	$	1,181	$	1,111	$	2,351	$	2,225
Weighted average shares outstanding		7,181		7,162		7,178		7,159
Dilutive effect of potential common shares, stock options		28		23		28		26
Diluted weighted average common shares outstanding		7,209		7,185		7,206		7,185
Basic earnings per share	$	0.16	$	0.16	$	0.33	$	0.31
Diluted earnings per share	$	0.16	$	0.15	$	0.33	$	0.31

Stock options of 122,200 and 72,439 for the three and six  months ended June 30, 2012 and 2011, respectively, were not considered in computing diluted earnings per common share, because they are not dilutive to earnings.

9

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 6 – Guarantees

The Company, through the Bank, does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Bank generally holds collateral and/or personal guarantees supporting these commitments. The Company had $­4.6 million of standby letters of credit outstanding as of June 30, 2012. The approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $4.5 million. Management does not consider the current amount of the liability as of June 30, 2012 for guarantees under standby letters of credit issued to be material.

Note 7 – Short-term and Long-term Borrowings

Securities sold under agreements to repurchase, federal funds purchased and Federal Home Loan Bank of Pittsburgh (“FHLB”) short term advances generally represent overnight or less than twelve month borrowings. Long term advances from the FHLB are for periods of twelve months or more and are generally less than sixty months. The Bank has an agreement with the FHLB which allows for borrowings up to a percentage of qualifying assets. At June 30, 2012, the Bank had a maximum borrowing capacity for short-term and long-term advances of approximately $218.8 million, of which $7.9 million were outstanding in long-term loans.  This borrowing capacity with the FHLB includes a line of credit of $25.0 million. Long-term loans with FHLB of $7.9 million were outstanding at December 31, 2011. There were no short-term advances outstanding at June 30, 2012 and December 31, 2011. All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank has a federal funds line of credit with the Atlantic Central Bankers Bank (“ACBB”) of approximately $6.0 million, of which none was outstanding at June 30, 2012 and December 31, 2011. Advances from this line are unsecured.

The Company has two lines of credit with Univest Bank and Trust Co. (“Univest”) totaling $10 million. As of June 30, 2012 and December 31, 2011, the outstanding balance was $5.1 million and $5.2 million, respectively. Advances from these lines of credit are secured by 833,333 shares of Bank common stock. Under the terms of the loan agreement, the Bank is required to remain well capitalized. The proceeds of the loan were primarily used for the holding company’s investment in the Bank, thus providing additional capital to support the Bank’s growth.

Note 8 – Securities Available For Sale

At June 30, 2012 and December 31, 2011, respectively, the amortized cost and fair values of securities available-for-sale were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
June 30, 2012
U.S. Government agency obligations	$	33,253	$	274	$	-		$	33,527
Municipal bonds		45,953		3,185		(32	)		49,106
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential		10,741		650		-			11,391
Corporate bonds		3,258		50		(44	)		3,264
Total	$	93,205	$	4,159	$	(76	)	$	97,288
December 31, 2011:
U.S. Government agency obligations	$	33,399	$	297	$	(7	)	$	33,689
Municipal bonds		37,415		2,633		-			40,048
U.S. Government Sponsored Enterprise (GSE) Mortgage-backed securities - residential		13,164		677		-			13,841
Corporate bonds		4,514		91		(73	)		4,532
Total	$	88,492	$	3,698	$	(80	)	$	92,110

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Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 8 – Securities Available For Sale (Continued)

The amortized cost and fair value of securities as of June 30, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without any penalties.

	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	19,130	$	19,183
Due after one year through five years		20,013		20,364
Due after five years through ten years		17,214		18,270
Due after ten years		26,107		28,080
		82,464		85,897
U.S. GSE - Mortgage-backed securities - residential		10,741		11,391
	$	93,205	$	97,288

There were no sales of securities for the three and six months ended June 30, 2012 and 2011.

Securities with a carrying value of $41.3 and $47.7 million at June 30, 2012 and December 31, 2011, respectively, were subject to agreements to repurchase, pledged to secure public deposits, or pledged for other purposes required or permitted by law.

The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2012 and December 31, 2011, respectively:

	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2012	(In Thousands)
Municipal bonds	$	2,707	$	(32	)	$	-	$	-	$	2,707	$	(32	)
Corporate bonds		1,952		(44	)		-		-		1,952		(44	)
Total Temporarily Impaired Securities	$	4,659	$	(76	)	$	-	$	-	$	4,659	$	(76	)
December 31, 2011:
U.S. Government agency obligations	$	2,007	$	(7	)	$	-	$	-	$	2,007	$	(7	)
Corporate bonds		1,922		(73	)		-		-		1,922		(73	)
Total Temporarily Impaired Securities	$	3,929	$	(80	)	$	-	$	-	$	3,929	$	(80	)

The Company had seven (7) securities in an unrealized loss position at June 30, 2012. The unrealized losses are due only to market rate fluctuations. As of June 30, 2012, the Company either has the intent and ability to hold the securities until maturity or market price recovery, or believes that it is more likely than not that it will not be required to sell such securities. Management believes that the unrealized loss only represents temporary impairment of the securities.  None of the individual losses are significant.

11

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 9 – Restricted Investment in Bank Stock

Restricted investments in bank stock consist of Federal Home Loan Bank of Pittsburgh (“FHLB”) stock and Atlantic Central Bankers Bank (“ACBB”) stock.  The restricted stocks are carried at cost.  Federal law requires a member institution of the FHLB to hold stock of its district FHLB according to a predetermined formula.

In December 2008, the FHLB of Pittsburgh notified member banks that it was suspending dividend payments and the repurchase of capital stock, and any future capital stock repurchases will be made on a quarterly basis if conditions warrant such repurchases.  During 2012, 2011 and 2010, the FHLB conducted limited excess capital stock repurchases based upon positive quarterly net income.  Any future capital stock repurchases will be made on a quarterly basis if conditions warrant such repurchases.  In connection with this program, the Bank had stock at a carrying value of $76 thousand and $93 thousand repurchased during the three months ended June 30, 2012 and 2011, respectively, and $156 thousand and $192 thousand repurchased during the six months ended June 30, 2012 and 2011, respectively..  Any future capital stock repurchases are expected to be made on a quarterly basis if conditions warrant such repurchases.  In February 2012, the FHLB announced that dividend payments would resume in 2012.  Two dividend payments were received totaling $1 thousand during the six months ended June 30, 2012.

Management evaluates the FHLB and ACBB restricted stock for impairment. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the issuer as compared to the capital stock amount for the issuer and the length of time this situation has persisted, (2) commitments by the issuer to make payments required by law or regulation and the level of such payments in relation to the operating performance of the issuer, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the issuer.

Based upon its evaluation of the foregoing criteria, management believes no impairment charge is necessary related to the FHLB stock as of June 30, 2012.

Note 10 – Loans Receivable and Credit Quality

The following table presents the composition of loans receivable at June 30, 2012 and December 31, 2011, respectively:

	June 30, 2012						December 31, 2011
				Percentage of						Percentage of
	Balance			Total Loans			Balance			Total Loans
	(In Thousands)
Commercial real estate	$	180,891			39.12	%	$	171,792			40.56	%
Commercial construction		16,763			3.62	%		13,414			3.17	%
Commercial		30,683			6.64	%		26,879			6.35	%
Residential real estate		228,397			49.39	%		210,361			49.65	%
Consumer		5,674			1.23	%		1,140			0.27	%
Gross loans		462,408			100.00	%		423,586			100.00	%
Unearned origination (fees) costs		(268	)					(245	)
Allowance for loan losses		(4,760	)					(4,215	)
	$	457,380					$	419,126

12

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention (potential weaknesses), substandard (well defined weaknesses) and doubtful (full collection unlikely) within the Company's internal risk rating system as of June 30, 2012 and December 31, 2011, respectively:

June 30, 2012:	Pass		Special Mention		Substandard		Doubtful		Total
	(In Thousands)
Commercial real estate	$	173,950	$	855	$	6,086	$	-	$	180,891
Commercial construction		12,789		-		3,974		-		16,763
Commercial		30,423		193		67		-		30,683
Residential real estate		227,403		278		669		47		228,397
Consumer		5,674		-		-		-		5,674
Total	$	450,239	$	1,326	$	10,796	$	47	$	462,408
December 31, 2011:
Commercial real estate	$	163,828	$	865	$	7,099	$	-	$	171,792
Commercial construction		9,090		-		4,324		-		13,414
Commercial		26,612		194		73		-		26,879
Residential real estate		209,810		282		269		-		210,361
Consumer		1,140		-		-		-		1,140
Total	$	410,480	$	1,341	$	11,765	$	-	$	423,586

13

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following table summarizes information in regards to impaired loans by loan portfolio class as of June 30, 2012 and December 31, 2011, respectively:

							Quarter-to-date					Year-to-date
June 30, 2012:	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized			Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:	(In Thousands)
Commercial real estate	$	6,007	$	6,007			$	5,887	$	82		$	6,529	$	168
Commercial construction		4,315		4,315				4,320		40			4,204		70
Commercial		302		302				305		4			324		7
Residential real estate		278		278				297		4			382		7
Consumer		-		-				-		-			-		-
With an allowance recorded:
Commercial real estate	$	2,190	$	2,190	$	527	$	2,144	$	54		$	1,653	$	106
Commercial construction		-		-		-		-		-			-		-
Commercial		3		52		1		4		(1	)		21		-
Residential real estate		716		716		131		717		7			478		8
Consumer		-		-		-		-		-			-		-
Total:
Commercial real estate	$	8,197	$	8,197	$	527	$	8,031	$	136		$	8,182	$	274
Commercial construction		4,315		4,315		-		4,320		40			4,204		70
Commercial		305		354		1		309		3			345		7
Residential real estate		994		994		131		1,014		11			860		15
Consumer		-		-		-		-		-			-		-
	$	13,811	$	13,860	$	659	$	13,673	$	190		$	13,591	$	366
												Year-to-date
December 31, 2011:		Recorded Investment		Unpaid Principal Balance		Related Allowance							Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:	$	7,814	$	7,863								$	5,787	$	492
Commercial real estate		3,974		3,974									3,360		156
Commercial construction		362		362									363		15
Commercial		552		552									498		24
Residential real estate		-		-									-		-
Consumer
With an allowance recorded:	$	670	$	670	$	107						$	463	$	42
Commercial real estate		-		-		-							-		-
Commercial construction		55		55		19							61		4
Commercial		-		-		-							-		-
Residential real estate		-		-		-							-		-
Consumer
Total:	$	8,484	$	8,533	$	107						$	6,250	$	534
Commercial real estate		3,974		3,974		-							3,360		156
Commercial construction		417		417		19							424		19
Commercial		552		552		-							498		24
Residential real estate		-		-		-							-		-
Consumer	$	13,427	$	13,476	$	126						$	10,532	$	733

14

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2012 and December 31, 2011, respectively:

	June 30,		December 31,
	2012		2011
	(In Thousands)
Commercial real estate	$	2,449	$	1,869
Commercial construction		-		-
Commercial		-		-
Residential real estate		47		-
Consumer		-		-
Total	$	2,496	$	1,869

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due.  The following table presents the classes of the loan portfolio summarized by the past due status as of June 30, 2012 and December 31, 2011, respectively:

June 30, 2012:	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days and Accruing
	(In Thousands)
Commercial real estate	$	29	$	116	$	2,438	$	2,583	$	178,308	$	180,891	$	-
Commercial construction		-		2,559		351		2,910		13,853		16,763		351
Commercial		43		-		-		43		30,640		30,683		-
Residential real estate		457		-		47		504		227,893		228,397		-
Consumer		17		-		-		17		5,657		5,674		-
Total	$	546	$	2,675	$	2,836	$	6,057	$	456,351	$	462,408	$	351
December 31, 2011:
Commercial real estate	$	300	$	1,222	$	2,074	$	3,596	$	168,196	$	171,792	$	205
Commercial construction		-		1,412		-		1,412		12,002		13,414		-
Commercial		-		-		61		61		26,818		26,879		61
Residential real estate		-		269		-		269		210,092		210,361		-
Consumer		22		-		-		22		1,118		1,140		-
Total	$	322	$	2,903	$	2,135	$	5,360	$	418,226	$	423,586	$	266

15

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following tables detail the activity in the allowance for loan losses for the three and six months ended June 30, 2012 and 2011:

	Commercial Real Estate			Commercial Construction			Commercial			Residential Real Estate			Consumer		Unallocated			Total
Allowance for credit losses	(In Thousands)
Three months ending June 30, 2012:
Beginning Balance - March 31, 2012	$	1,643		$	391		$	363		$	1,748		$	39	$	162		$	4,346
Charge-offs		-			-			-			(35	)		-		-			(35	)
Recoveries		-			-			-			4			-		-			4
Provisions		308			49			45			169			11		(137	)		445
Ending balance - June 30, 2012	$	1,951		$	440		$	408		$	1,886		$	50	$	25		$	4,760
Six months ending June 30, 2012:
Beginning Balance - December 31, 2011	$	1,264		$	352		$	423		$	1,691		$	40	$	445		$	4,215
Charge-offs		(3	)		-			-			(35	)		-		-			(38	)
Recoveries		-			-			-			8			-		-			8
Provisions		690			88			(15	)		222			10		(420	)		575
Ending balance - June 30, 2012	$	1,951		$	440		$	408		$	1,886		$	50	$	25		$	4,760
Three months ending June 30, 2011:
Beginning Balance - March 31, 2011	$	1,328		$	392		$	323		$	1,332		$	37	$	377		$	3,789
Charge-offs		(19	)		-			(1	)		-			-		-			(20	)
Recoveries		1			-			-			-			4		-			5
Provisions		74			(52	)		(13	)		81			12		36			138
Ending balance - June 30, 2011	$	1,384		$	340		$	309		$	1,413		$	53	$	413		$	3,912
Six months ending June 30, 2011:
Beginning Balance - December 31, 2010	$	1,014		$	443		$	325		$	1,309		$	35	$	583		$	3,709
Charge-offs		(87	)		-			(1	)		(25	)		-		-			(113	)
Recoveries		1			-			4						8		-			13
Provisions		456			(103	)		(19	)		129			10		(170	)		303
Ending balance - June 30, 2011	$	1,384		$	340		$	309		$	1,413		$	53	$	413		$	3,912

16

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following tables represent the allocation of the allocation for loan losses and the related loan portfolio disaggregated based on impairment methodology at June 30, 2012 and December 31, 2011.

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
June 30, 2012:
Allowance for Loan Losses
Ending balance	$	1,951	$	440	$	408	$	1,886	$	50	$	25	$	4,760
Ending balance: individually evaluated for impairment	$	527	$	-	$	1	$	131	$	-	$	-	$	659
Ending balance: collectively evaluted for impairment	$	1,424	$	440	$	407	$	1,755	$	50	$	25	$	4,101
Loans receivables:
Ending balance	$	180,891	$	16,763	$	30,683	$	228,397	$	5,674			$	462,408
Ending balance: individually evaluted  for impairment	$	8,197	$	4,315	$	305	$	994	$	-			$	13,811
Ending balance: collectively evaluated for impairment	$	172,694	$	12,448	$	30,378	$	227,403	$	5,674			$	448,597
December 31, 2011:
Allowance for Loan Losses
Ending balance	$	1,264	$	352	$	423	$	1,691	$	40	$	445	$	4,215
Ending balance: individually evaluated for impairment	$	107	$	-	$	19	$	-	$	-	$	-	$	126
Ending balance: collectively evaluted for impairment	$	1,157	$	352	$	404	$	1,691	$	40	$	445	$	4,089
Loans receivables:
Ending balance	$	171,792	$	13,414	$	26,879	$	210,361	$	1,140			$	423,586
Ending balance: individually evaluted  for impairment	$	8,484	$	3,974	$	417	$	552	$	-			$	13,427
Ending balance: collectively evaluated for impairment	$	163,308	$	9,440	$	26,462	$	209,809	$	1,140			$	410,159

17

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

Troubled Debt Restructurings

The Company may grant a concession or modification for economic or legal reasons related to a borrower’s financial condition than it would not otherwise consider, resulting in a modified loan which is then identified as troubled debt restructuring (“TDR”).  The Company may modify loans through rate reductions, extensions to maturity, interest only payments, or payment modifications to better coincide the timing of payments due under the modified terms with the expected timing of cash flows from the borrowers’ operations.  Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral.  TDRs are considered impaired loans for purposes of calculating the Company’s allowance for loan losses.

The Company identifies loans for potential restructure primarily through direct communication with the borrower and the evaluation of the borrower’s financial statements, revenue projections, tax returns, and credit reports.  Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future.

The following table presents TDRs outstanding as of June 30, 2012:

	June 30, 2012
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	5,008	$	660	$	5,668
Commercial construction		2,799		-		2,799
Commercial		199		-		199
Residential real estate		827		-		827
Consumer		-		-		-
	$	8,833	$	660	$	9,493

                           As of June 30, 2012, no available commitments were outstanding on TDRs.

The following tables present newly restructured loans that occurred during the three and six months ended June 30, 2012, respectively:

	Number of Loans		Pre-Modification Outstanding Balance		Post- Modification Outstanding Balance
Three months ended June 30, 2012:	(Dollars in Thousands)
Commercial real estate		3	$	652	$	652
Commercial construction		1		341		341
		4	$	993	$	993
Six months ended June 30, 2012:
Commercial real estate		4	$	1,259	$	1,259
Commercial construction		1		341		341
Residential real estate		1		670		670
		6	$	2,270	$	2,270

Of the TDRs described above, five loans required an impairment reserve of $483 thousand recorded in the allowance for loan losses for the six months ended June 30, 2012.

18

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 10 – Loans Receivable and Credit Quality (Continued)

The following table presents loans that were classified as a TDR within the prior twelve months that experienced a payment default (loans ninety or more days past due) during the three and six month periods ended June 30, 2012, respectively:

	Number of Loans		Recorded Investment
Three months ended June 30, 2012:	(Dollars In Thousands)
Commercial real estate		3	$	999
		3	$	999
Six months ended June 30, 2012:
Commercial real estate		3	$	999
		3	$	999

Note 11 – Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.  The fair value of a financial instrument is the price 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. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

ASC Topic 860 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 860 are as follows:

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

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

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

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

19

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 11 – Fair Value Measurements (Continued)

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy utilized at June 30, 2012 and December 31, 2011, respectively, are as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total
	(In Thousands)
U.S. Government agency obligations	$	-	$	33,527	$	-	$	33,527
Municipal bonds		-		49,106		-		49,106
U.S. GSE - Mortgage-backed securities - residential		-		11,391		-		11,391
Corporate bonds		-		3,264		-		3,264
June 30, 2012 Securities available for sale	$	-	$	97,288	$	-	$	97,288
U.S. Government agency obligations	$	-	$	33,689	$	-	$	33,689
Municipal bonds		-		40,048		-		40,048
U.S. GSE - Mortgage-backed securities - residential		-		13,841		-		13,841
Corporate bonds		-		4,532		-		4,532
December 31, 2011 Securities available for sale	$	-	$	92,110	$	-	$	92,110

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2012 and December 31, 2011, respectively, are as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs		Total
	(In Thousands)
June 30, 2012 Impaired loans	$	-	$	-	$	2,250	$	2,250
June 30, 2012 Other real estate owned	$	-	$	-	$	2,969	$	2,969
December 31, 2011 Impaired loans	$	-	$	-	$	599	$	599
December 31, 2011 Other real estate owned	$	-	$	-	$	3,388	$	3,388

Impaired loans are those that are accounted for under existing FASB guidance, in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

At June 30, 2012, of the impaired loans having an aggregate balance of $13.8 million, $10.9 million did not require a valuation allowance because the value of the collateral securing the loan was determined to meet or exceed the balance owed on the loan. Of the remaining $2.9 million in impaired loans, an aggregate valuation allowance of $659 thousand was required to reflect what was determined to be a shortfall in the value of the collateral as compared to the balance on such loans.

Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell.  Fair value is based upon independent market prices or appraised value of the property.  These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

20

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 11 – Fair Value Measurements (Continued)

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

	Quantitative Information about Level 3 Fair Value Measurements
Description	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
June 30, 2012 Impaired loans	$	2,250	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -34% (-20.3%)
				Liquidation expenses (3)		-10% (-10%)
June 30, 2012 Other real estate owned	$	2,969	Pending agreement of sale (4)	Liquidation expenses (3)		-5% (-5%)

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

(2) Appraisals may be adjusted by management for qualitative factors including economic conditions and the age of the appraisal.  The range and weighted average of appraisal adjustments are presented as a percent of the appraisal.

(3) Appraisals and pending agreements of sale are adjusted by management for liquidation expenses.  The range and weighted average of liquidation expense adjustments are presented as a percent of the appraisal or pending agreement of sale.

(4) Fair value is determined by a pending agreements of sale, of a portion of the real estate.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at June 30, 2012 and December 31, 2011:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Interest Bearing Time Deposits (Carried at Cost)

Fair values for fixed-rate time certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. The Company generally purchases amounts below the insured limit, limiting the amount of credit risk on these time deposits.

Securities Available for Sale (Carried at Fair Value)

The fair value of securities available for sale are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted prices. For these securities, the Company obtains fair value measurements from an independent pricing service.  The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security’s terms and conditions, among other things.

Loans Receivable (Carried at Cost)

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

21

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 11 – Fair Value Measurements (Continued)

Restricted Investment in Bank Stock (Carried at Cost)

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities (Carried at Cost)

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

Securities Sold Under Agreements to Repurchase and Federal Funds Purchased (Carried at Cost)

These borrowings are short term and the carrying amount approximates the fair value.

Long-Term Borrowings (Carried at Cost)

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

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.

22

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 11 – Fair Value Measurements (Continued)

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

	June 30, 2012
	Carrying Amount		Fair Value Estimate		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	49,117	$	49,117	$	49,117	$	-	$	-
Interest bearing time deposits		7,717		7,798		-		7,798		-
Securities available-for-sale		97,288		97,288		-		97,288		-
Loans receivable, net of allowance		457,380		466,440		-		-		466,440
Restricted investment in bank stock		1,485		1,485		1,485		-		-
Accrued interest receivable		1,713		1,713		1,713		-		-
Financial liabilities:
Deposits		535,109		535,644		470,829		64,815		-
Securities sold under agreements to repurchase and federal funds purchased		24,283		24,283		24,283		-		-
Long-term borrowings		12,986		13,215		-		-		13,215
Accrued interest payable		399		399		399		-		-
Off-balance sheet finanacial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-

	December 31, 2011
	Carrying		Fair Value
	Amount		Estimate
	(In Thousands)
Financial assets:
Cash and cash equivalents	$	46,135	$	46,135
Interest bearing time deposits		7,698		7,720
Securities available-for-sale		92,110		92,110
Loans receivable, net of allowance		419,126		427,861
Restricted investments in bank stock		1,641		1,641
Accrued interest receivable		1,568		1,568
Financial liabilities:
Deposits		481,775		482,344
Securities sold under agreements to repurchase and federal funds purchased		33,953		33,953
Long-term borrowings		13,086		13,422
Accrued interest payable		582		582
Off-balance sheet finanacial instruments:
Commitments to grant loans		-		-
Unfunded commitments under lines of credit		-		-
Standby letters of credit		-		-

23

Embassy Bancorp, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 12 – New Accounting Standards

ASU 2011-04 (Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs):

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This update amends FASB ASC Topic 820, Fair Value Measurements, to bring U.S. GAAP for fair value measurements in line with International Accounting Standards. The Update clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity’s stockholder’s equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The Update also creates an exception to Topic 820 for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The Update also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. For public entities, this Update is effective for interim and annual periods beginning after December 15, 2011. Early adoption was not permitted.  The Company adopted this update on January 1, 2012 and the new disclosures are included in Note 11.

ASU 2011-05 (Comprehensive Income: Presentation of Comprehensive Income):

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income.  The provisions of this update amend FASB ASC Topic 220, Comprehensive Income, to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The Update prohibits the presentation of the components of comprehensive income in the statement of stockholder’s equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The provisions of this Update were effective for fiscal years and interim periods beginning after December 31, 2011 for public entities.  The Company adopted this update on January 1, 2012, and the new Consolidated Statements of Comprehensive Income is included in these financial statements.

24

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

This discussion and analysis provides an overview of the financial condition and results of operations of Embassy Bancorp, Inc. (the “Company”) as of June 30, 2012 and for the three and six month periods ended June 30, 2012 and 2011, respectively. This discussion should be read in conjunction with the preceding consolidated financial statements and related footnotes, as well as with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2011, included in the Company’s Form 10-K filed with the Securities and Exchange Commission. Current performance does not guarantee and may not be indicative of similar performance in the future.

Critical Accounting Policies

Disclosure of the Company’s significant accounting policies is included in Note 1 to the consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2011. Some of these policies are particularly sensitive, requiring significant judgments, estimates and assumptions to be made by management, most particularly in connection with determining the provision for loan losses and the appropriate level of the allowance for loan losses and the valuation of deferred tax assets. Additional information is contained in this Form 10-Q under the paragraphs titled “Provision for Loan Losses,” “Credit Risk and Loan Quality,” and “Income Taxes” contained on the following pages.

Forward-looking Statements

This report contains forward-looking statements, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Company operations and policies and regarding general economic conditions. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.  These statements are based upon current and anticipated economic conditions, nationally and in the Company’s market, interest rates and interest rate policy, competitive factors and other conditions that, by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty.

Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy.

No assurance can be given that the future results covered by forward-looking statements will be achieved. Such statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could impact the Company’s operating results include, but are not limited to, (i) the effects of changing economic conditions in the Company’s market areas and nationally, (ii) credit risks of commercial, real estate, consumer and other lending activities, (iii) significant changes in interest rates, (iv) changes in federal and state banking laws and regulations which could impact the Company’s operations, and (iv) other external developments which could materially affect the Company’s business and operations.

OVERVIEW

The Company is a Pennsylvania corporation organized in 2008 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the “BHC Act). The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the “Bank”) in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008. Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow. Embassy Holdings, LLC (the “LLC”) is a wholly-owned subsidiary of the Bank organized to engage in the holding of property acquired by the Bank in satisfaction of debts previously contracted.  As such, the consolidated financial statements contained herein include the accounts of the Company, the Bank and the LLC.

The Bank, which is the Company’s primary operating subsidiary, was originally incorporated as a Pennsylvania bank on May 11, 2001 and opened its doors on November 6, 2001. It was formed by a group of local business persons and professionals with significant prior experience in community banking in the Lehigh Valley area of Pennsylvania, the Bank’s primary market area.

The Company’s assets grew $46.5 million from $575.5 million at December 31, 2011 to $622.0 million at June 30, 2012 due to the increase in cash and cash equivalents, loans, and the securities portfolio, which were offset slightly by a decrease in foreclosed real estate.

Net income for the three months ended June 30, 2012 was $1.2 million compared to a net income for the three months ended June 30, 2011 of $1.1 million.  Net income for the six months ended June 30, 2012 was $2.4 million compared to a net income for the six months ended June 30, 2011 of $2.2 million.  Loans receivable, net of the allowance for loan losses, increased $38.3 million to $457.4 million at June 30, 2012 from $419.1 million at December 31, 2011. The market is very competitive and the Company is committed to maintaining a high quality portfolio that returns a reasonable market rate. The Company expects to increase lending activity, as the Company expands its presence in its market and becomes more widely known.  The past and current economic conditions have created lower demand for loans by credit-worthy customers.  The lending staff has been active in contacting new prospects and promoting the Company’s name in the community. Management believes that this will translate into continued growth of a portfolio of quality loans, although there can be no assurance of this.

25

RESULTS OF OPERATIONS

Net Interest Income

Total interest income for the three months ended June 30, 2012 increased $297 thousand to $6.1 million, as compared to $5.8 million for the three months ended June 30, 2011, due to the increase in average earning assets offset by a decrease in the yield on earning assets.  Average earning assets were $600.7 million for the three months ended June 30, 2012 compared to $503.8 million for the three months ended June 30, 2011. The tax equivalent yield on average earning assets was 4.23% for the second quarter of 2012 compared to 4.73% for the second quarter of 2011.

Total interest expense for the three months ended June 30, 2012 decreased $181 thousand to $1.1 million as compared to $1.2 million for the three months ended June 30, 2011, primarily due to decreases in deposit rates offset by an increase in average deposits. Average interest bearing liabilities were $528.6 million for the three months ended June 30, 2012 compared to $447.7 million for the three months ended June 30, 2011.  The yield on average interest bearing liabilities was 0.80% for the second quarter of 2012 compared to 1.11% for the second quarter of 2011. This decrease was the result of market conditions, deposit mix, competition, and management’s resulting adjustments to the interest rates provided to depositors.

Net interest income for the three months ended June 30, 2012 was $5.0 million compared to $4.6 million for the three months ended June 30, 2011. The improvement in net interest income for the three months ended June 30, 2012 is a result of decreases in the interest expense associated with deposits and other borrowed funds and growth in interest earning assets, offset by a reduction in rates received on a higher level of interest earning assets. The Company’s net interest margin for the three months ended June 30, 2012 decreased twenty-three (23) basis points to 3.52% as compared to 3.75% for the three months ended June 30, 2011, due to the current interest rate environment, including decreased cost of deposits offset by decreased interest rates on the investment securities portfolio and the competitive interest rate pressure of lending.

Total interest income for the six months ended June 30, 2012 increased $481 thousand to $12.1 million, as compared to $11.6 million for the six months ended June 30, 2011, due to the increase in average earning assets offset by a decrease in the yield on earning assets.  Average earning assets were $592.4 million for the six months ended June 30, 2012 compared to $501 million for the six months ended June 30, 2011. The tax equivalent yield on average earning assets was 4.24% for the six months ended June 30, 2012 compared to 4.79% for the six months ended June 30, 2011.

Total interest expense for the six months ended June 30, 2012 decreased $230 thousand to $2.3 million as compared to $2.5 million for the six months ended June 30, 2011, primarily due to decreases in deposit rates offset by an increase in average deposits. Average interest bearing liabilities were $522.0 million for the six months ended June 30, 2011 compared to $447.4 million for the six months ended June 30, 2011.  The yield on average interest bearing liabilities was 0.87% for the six months ended June 30, 2012 compared to 1.13% for the six months ended June 30, 2011. This decrease was the result of market conditions, deposit mix, competition, and management’s resulting adjustments to the interest rates provided to depositors.

Net interest income for the six months ended June 30, 2012 was $9.8 million compared to $9.1 million for the six months ended June 30, 2011. The improvement in net interest income for the six months ended June 30, 2012 is a result of decreases in the interest expense associated with deposits and other borrowed funds and growth in interest earning assets, offset to a lesser extent by a reduction in rates received on increased levels of interest earning assets. The Company’s net interest margin for the six months ended June 30, 2012 decreased thirty-one (31) basis points to 3.48% as compared to 3.79% for the six months ended June 30, 2011, due to the current interest rate environment, including the decreased cost of deposits offset by decreased interest rates on the investment securities portfolio and the competitive interest rate pressure of lending.

26

Below are tables which set forth average balances and corresponding yields for the corresponding three month periods ended June 30, 2012 and June 30, 2011, respectively:

Distribution of Assets, Liabilities and Stockholders’ Equity:

Interest Rates and Interest Differential (quarter to date)

	Three Months Ended June 30,
	2012								2011
						Tax								Tax
	Average					Equivalent			Average					Equivalent
	Balance			Interest		Yield			Balance			Interest		Yield
	(Dollars In Thousands)
ASSETS
Loans - taxable	$	444,579		$	5,361		4.85	%	$	381,363		$	5,057		5.32	%
Loans - non-taxable		3,882			38		5.97	%		3,046			31		6.18	%
Investment securities - taxable		61,412			312		2.04	%		63,889			430		2.70	%
Investment securities - non-taxable		39,192			343		5.35	%		26,443			251		5.77	%
Federal funds sold		866			-		0.00	%		5,167			1		0.08	%
Time deposits		7,711			26		1.36	%		7,591			30		1.59	%
Interest bearing deposits with banks		43,074			25		0.23	%		16,336			8		0.20	%
TOTAL INTEREST EARNING ASSETS		600,716			6,105		4.23	%		503,835			5,808		4.73	%
Less allowance for loan losses		(4,438	)							(3,824	)
Other assets		23,870								22,402
TOTAL ASSETS	$	620,148							$	522,413
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing demand deposits, NOW and money market	$	55,097		$	19		0.14	%	$	39,504		$	21		0.21	%
Savings		366,318			639		0.70	%		270,761			634		0.94	%
Certificates of deposit		65,466			207		1.27	%		87,138			357		1.64	%
Securities sold under agreements to repurchase, federal funds purchased and long-term borrowings		41,715			191		1.84	%		50,279			225		1.79	%
TOTAL INTEREST BEARING LIABILITIES		528,596			1,056		0.80	%		447,682			1,237		1.11	%
Non-interest bearing demand deposits		39,224								31,155
Other liabilities		3,817								3,406
Stockholders' equity		48,511								40,170
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	620,148							$	522,413
Net interest income				$	5,049							$	4,571
Net interest spread							3.43	%							3.62	%
Net interest margin							3.52	%							3.75	%

27

Below are tables which set forth average balances and corresponding yields for the corresponding six month periods ended June 30, 2012 and June 30, 2011, respectively:

Distribution of Assets, Liabilities and Stockholders’ Equity:

Interest Rates and Interest Differential (quarter to date)

	Six Months Ended June 30,
	2012								2011
						Tax								Tax
	Average					Equivalent			Average					Equivalent
	Balance			Interest		Yield			Balance			Interest		Yield
	(Dollars In Thousands)
ASSETS
Loans - taxable	$	435,440		$	10,632		4.91	%	$	382,393		$	10,100		5.33	%
Loans - non-taxable		3,825			74		5.81	%		2,765			54		5.97	%
Investment securities - taxable		60,979			640		2.11	%		65,331			901		2.78	%
Investment securities - non-taxable		37,114			656		5.33	%		26,020			496		5.82	%
Federal funds sold		1,716			2		0.23	%		4,799			3		0.13	%
Time deposits		7,706			53		1.38	%		7,698			61		1.60	%
Interest bearing deposits with banks		45,641			51		0.22	%		11,957			12		0.20	%
TOTAL INTEREST EARNING ASSETS		592,421			12,108		4.24	%		500,963			11,627		4.79	%
Less allowance for loan losses		(4,353	)							(3,798	)
Other assets		23,284								22,876
TOTAL ASSETS	$	611,352							$	520,041
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing demand deposits, NOW and money market	$	53,247		$	42		0.16	%	$	38,826		$	45		0.23	%
Savings		357,793			1,378		0.77	%		260,736			1,213		0.94	%
Certificates of deposit		67,909			448		1.33	%		92,356			767		1.67	%
Securities sold under agreements to repurchase, federal funds purchased and long-term borrowings		43,099			395		1.84	%		55,477			468		1.70	%
TOTAL INTEREST BEARING LIABILITIES		522,048			2,263		0.87	%		447,395			2,493		1.13	%
Non-interest bearing demand deposits		38,222								30,952
Other liabilities		3,756								2,867
Stockholders' equity		47,326								38,827
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY	$	611,352							$	520,041
Net interest income				$	9,845							$	9,134
Net interest spread							3.37	%							3.66	%
Net interest margin							3.48	%							3.79	%

28

Provision for Loan Losses

The allowance for loan losses is established through provisions for loan losses charged against income. Loans deemed to be uncollectible are charged against the allowance for loan losses, and subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is maintained at a level considered by management to be adequate to provide for losses that can be reasonably anticipated. Management’s periodic evaluation of the adequacy of the allowance is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective, as it requires material estimates that may be susceptible to significant change.

The allowance consists of general, specific, qualitative and unallocated components. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors.  The specific component relates to loans that are classified as watch, other assets especially mentioned, substandard, doubtful or loss. For such loans they may also be classified as impaired or restructured.  For loans that are further classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and/or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and home equity loans for impairment disclosures, unless such loans are the subject of a restructuring agreement or there is a possible loss expected.

For the three months ended June 30, 2012, management has provisioned for loan losses of $445 thousand, as compared to $138 thousand, for the same period ended June 30, 2011.  In the first six months of 2012, there were charge-offs in the amount of $38 thousand, however principal in the amount of $8 thousand was recovered on one loan.  The allowance for loan losses is $4.8 million as of June 30, 2012, which is 1.03% of outstanding loans, compared to $3.9 million or 1.00% of outstanding loans as of June 30, 2011. At December 31, 2011, the allowance for loan losses of $4.2 million represented 1.00% of total outstanding loans. Based principally on economic conditions, asset quality, and loan-loss experience, including that of comparable institutions in the Bank’s market area, the allowance is believed to be adequate to absorb any losses inherent in the portfolio. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate, or that material increases will not be necessary should the quality of the loans deteriorate.  The Bank has not participated in any sub-prime lending activity.

29

The activity in the allowance for loan losses is shown in the following table, as well as period end loans receivable and the allowance for loan losses as a percent of the total loan portfolio:

	June 30
	2012			2011
	(In Thousands)
Total loans receivable at end of period	$	462,408		$	392,850
Allowance for loan losses:
Balance, beginning	$	4,215		$	3,709
Provision for loan losses		575			303
Loans charged off		(38	)		(113	)
Recoveries		8			13
Balance at end of period	$	4,760		$	3,912
Allowance for loan losses to loans receivable at end of period		1.03	%		1.00	%

Non-interest Income

Total non-interest income was $393 thousand for the three month period ended June 30, 2012 compared to $346 thousand for the same period in 2011.  The increase is primarily due to the growth in the Bank’s credit card and merchant processing customer base.  Total non-interest income was $676 thousand for the six month period ended June 30, 2012 compared to $668 thousand for the same period in 2011.  The decrease is due to $108 thousand of other real estate losses in 2012 offset by increased fee income due to the growth in the Bank’s credit card and merchant processing customer base.

Non-interest Expense

Non-interest expenses increased $151 thousand, or 4.7%, from $3.2 million for the three months ended June 30, 2011 to $3.4 million for the same period ended June 30, 2012. The increase is due to: an increase of $49 thousand in salary and employee benefits, the majority of which are in conjunction with increased branch staffing and salary adjustments; an increase of $18 thousand in credit card expense due to an increase in volume; an increase of $15 thousand in occupancy and equipment; an increase of $19 thousand in charitable contributions; an increase of $51 thousand in professional services due to the costs incurred relating to the Dividend Reinvestment Plan; an increase of $5 thousand in loan department expenses; an increase of $11 thousand advertising expense and an increase in other operating expenses of $87 thousand; offset by a decrease of $68 thousand in FDIC insurance expense; a decrease of $3 thousand in insurance expense; a decrease of $20 thousand in data processing and a decrease of $13 thousand in other real estate owned expenses.

Non-interest expenses increased $333 thousand, or 5.2%, from $6.4 million for the six months ended June 30, 2011 to $6.7 million for the same period ended June 30, 2012. The increase is due to: an increase of $147 thousand in salary and employee benefits, the majority of which are in conjunction with increased branch staffing and salary adjustments; an increase of $50 thousand in credit card expense due to an increase in volume; an increase of $63 thousand in occupancy and equipment; an increase of $32 thousand in data processing; an increase of $42 thousand in charitable contributions; an increase of $78 thousand in professional services due to the costs incurred relating to the Dividend Reinvestment Plan and the services agreement between entities; an increase of $9 thousand in loan department expenses; an increase of $7 thousand advertising expense and an increase in other operating expenses of $91 thousand; offset by a decrease of $4 thousand in insurance expense, a decrease of $153 thousand in FDIC insurance expenses and $29 thousand in other real estate owned expenses.

A breakdown of other expenses can be found in the statements of income.

Income Taxes

The provision for income taxes for the three months ended June 30, 2012 totaled $438 thousand, or 27.1% of income before taxes. The provision for income taxes for the three months ended June 30, 2011 totaled $441 thousand, or 28.4% of income before taxes. The provision for income taxes for the six months ended June 30, 2012 totaled $865 thousand, or 26.9% of income before taxes. The provision for income taxes for the six months ended June 30, 2011 totaled $877 thousand, or 28.3%. The decrease in the tax rate is a result of an increase in tax-free investments and loans.

30

FINANCIAL CONDITION

Securities

The Bank’s securities portfolio continues to be classified, in its entirety, as “available for sale.” Management believes that a portfolio classification of available for sale allows complete flexibility in the investment portfolio. Using this classification, the Bank intends to hold these securities for an indefinite amount of time, but not necessarily to maturity. Such securities are carried at fair value with unrealized gains or losses reported as a separate component of stockholders’ equity. The portfolio is structured to provide maximum return on investments while providing a consistent source of liquidity and meeting strict risk standards. Investment securities consist primarily of U.S. government agency securities, mortgage-backed securities issued by FHLMC or FNMA, corporate bonds, and taxable and non-taxable municipal bonds. The Bank holds no high-risk securities or derivatives as of June 30, 2012. The Bank has not made any investments in non-U.S. government agency mortgage backed securities or sub-prime loans.

Total securities at June 30, 2012 were $97.3 million compared to $92.1 million at December 31, 2011. The increase in the investment portfolio is the result of purchases of Municipal securities, offset by principal payments on U.S. GSEs and the maturity of a corporate bond.  The carrying value of the securities portfolio as of June 30, 2012 includes a net unrealized gain of $4.1 million, which is recorded as accumulated other comprehensive income in stockholders’ equity net of income tax effect. This compares to a net unrealized gain of $3.6 million at December 31, 2011. The current unrealized gain position of the securities portfolio is due to the changes in market rates since purchase. No securities are deemed to be other than temporarily impaired.

Restricted Investments in Bank Stock

Restricted investments in bank stock consists of FHLB stock and ACBB stock. Federal law requires a member institution of the FHLB to hold stock of its district FHLB according to a predetermined formula. The restricted stocks are carried at cost. The Company had $1.4 million of FHLB stock and $40 thousand of ACBB stock as of June 30, 2012.

In December 2008, the FHLB of Pittsburgh notified member banks that it was suspending dividend payments and the repurchase of capital stock, and any future capital stock repurchases will be made on a quarterly basis if conditions warrant such purchases.  During 2012 and 2011, FHLB of Pittsburgh conducted a limited excess capital stock repurchase based upon positive net income results. In connection with this program, the Bank had stock at a carrying value of $156 thousand repurchased during the six month period ended June 30, 2012, and $192 thousand repurchased during the same period in 2011.  In February 2012, the FHLB announced that dividend payments would resume in 2012.  Two dividend payments were received totaling $1 thousand during the six months ended June 30, 2012.

Management evaluates the restricted stock for impairment in accordance with ASC Topic 942, “Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others.” Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Based upon its evaluation of the foregoing criteria, management believes no impairment charge is necessary related to the FHLB or ACBB restricted stock as of June 30, 2012.

Loans

The loan portfolio comprises a major component of the Bank’s earning assets. All of the Bank’s loans are to domestic borrowers. Total net loans at June 30, 2012 increased $38.3 million to $457.4 million from $419.1 million at December 31, 2011. The loan to deposit ratio decreased slightly from 87.9% at December 31, 2011 to 86.4% at June 30, 2012. The Bank’s loan portfolio at June 30, 2012 was comprised of residential real estate and consumer loans of $234.1 million, an increase of $22.5 million from December 31, 2011, and commercial loans of $228.3 million, an increase of $16.3 million from December 31, 2011.  The Bank has not originated, nor does it intend to originate, sub-prime mortgage loans.

31

Credit Risk and Loan Quality

The allowance for loan losses increased $545 thousand to $4.8 million at June 30, 2012 from $4.2 million at December 31, 2011. At June 30, 2012 and December 31, 2011, the allowance for loan losses represented 1.03% of total loans. Based upon current economic conditions, the composition of the loan portfolio, the perceived credit risk in the portfolio and loan-loss experience of comparable institutions in the Bank’s market area, management feels the allowance is adequate to absorb reasonably anticipated losses.

At June 30, 2012, aggregate balances on non-performing loans equaled $11.7 million compared to $9.4 million at December 31, 2011 and $8.3 million at June 30, 2011, representing 2.53%, 2.22% and 2.11% of total loans at June 30, 2012, December 31, 2011 and June 30, 2011, respectively. Troubled debt restructurings, included in the following table, represent loans where the Company, for economic or legal reasons related to the debtor’s financial difficulties, has granted a concession to the debtor that it would not otherwise consider.  There were three loans classified as a TDR within the prior twelve months that experienced a payment default (loans ninety or more days past due) during the three months ending June 30, 2012.  The Company has one foreclosed asset in the amount of $3.0 million as of June 30, 2012, as compared to two foreclosed assets at December 31, 2011 in the amount of $3.4 million.  The net change is a result of the sale of one asset with a loss of $8 thousand and net proceeds of $311 thousand, along with a $100 thousand write-down on the remaining foreclosed asset.  The details for non-performing loans are included in the following table:

	June 30,			December 31,			June 30,
	2012			2011			2011
	(Dollars in Thousands)
Non-accrual - commercial	$	2,449		$	1,869		$	2,583
Non-accrual - consumer		47			-			356
Restructured loans, still accruing interest		8,833			7,264			4,880
Loans past due 90 or more days, accruing interest		351			265			451
Total nonperforming loans		11,680			9,398			8,270
Foreclosed assets		2,969			3,388			3,069
Total nonperforming assets	$	14,649		$	12,786		$	11,339
Nonperforming loans to total loans at period-end		2.53	%		2.22	%		2.11	%
Nonperforming assets to total assets		2.36	%		2.22	%		2.16	%

 Premises and Equipment

Company premises and equipment, net of accumulated depreciation, increased $123 thousand from December 31, 2011 to June 30, 2012. This increase is due primarily to the leasehold improvements placed in service in January 2012 due to the lease expansion addendum detailed below, offset by depreciation on existing premises and equipment.

On May 4, 2012, the Bank entered into a lease renewal and modification agreement (the “Agreement”) with Red Bird Associates, LLC (“Red Bird”) providing for an extension of the term of the lease of the Bank’s principal office located at 100 Gateway Drive in Bethlehem, Pennsylvania (the “Lease”).   The agreement provided for an additional five year term.  The new term continues through February 28, 2017 and is subject to a 2.0% increase on March 1 of each year.  The agreement further provides coterminous terms and options to the original lease agreement for Suite 100, the first lease expansion agreement for Suite 200, and the second lease expansion addendum for Suite 210 of the Gateway office building.  As disclosed in the Company’s definitive proxy statement filed with the SEC on April 27, 2012, Red Bird is a real estate holding company owned by six Directors of the Company, as well as Judith A. Hunsicker, Senior Executive Vice President and Chief Operating and Financial Officer.  Prior to its execution, the terms of the Agreement, including the rental amount, were determined by a majority of the disinterested Directors to be no less favorable to the Bank than the terms then prevailing in the relevant market.

 Deposits

Total deposits at June 30, 2012 increased $53.3 million to $535.1 million from $481.8 million at December 31, 2011. Savings deposits increased by $43.1 million and demand deposits increased by $21.9 million, while time deposits decreased $11.9 million. The significant growth in savings and demand deposits is attributed to successful promotions, as well as migration from time deposits.

Liquidity

Liquidity represents the Company’s ability to meet the demands required for the funding of loans and to meet depositors’ requirements for use of their funds. The Company’s sources of liquidity are cash balances, due from banks, and federal funds sold. Cash and cash equivalents were $49.1 million at June 30, 2012, compared to $46.1 million at December 31, 2011.

Additional asset liquidity sources include principal and interest payments from the investment security and loan portfolios. Long-term liquidity needs may be met by selling unpledged securities available for sale, selling loans or raising additional capital. At June 30, 2012, the Company had $97.3 million of available for sale securities. Securities with carrying values of approximately $41.3 million and $47.7 million at June 30, 2012 and December 31, 2011, respectively, were pledged as collateral to secure securities sold under agreements to repurchase, public deposits, and for other purposes required or permitted by law.

32

The Bank also has borrowing capacity with the FHLB of approximately $218.8 million, of which $7.9 million was outstanding in long-term loans at June 30, 2012 and December 31, 2011.  This borrowing capacity with the FHLB includes a line of credit for $25 million, of which there is no balance outstanding as of June 30, 2012.   All of the long-term loans mature in 2013.  There were no short-term advances outstanding at June 30, 2012 and December 31, 2011. All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank also has a line of credit with ACBB of approximately $6.0 million, of which none was outstanding at June 30, 2012.   Advances from this line are unsecured.

The Company has two lines of credit totaling an aggregate of $10 million with Univest, of which an aggregate of $5.1 million was outstanding at June 30, 2012. These lines of credit are secured by 833,333 shares of Bank common stock.

The Company has no investment in or financial relationship with any unconsolidated entities that are reasonably likely to have a material effect on liquidity or capital resources.

Off-Balance Sheet Arrangements

The Company’s consolidated financial statements do not reflect various off-balance sheet arrangements that are made in the normal course of business, which may involve some liquidity risk. These off-balance sheet arrangements consist of unfunded loans and commitments, as well as lines of credit made under the same standards as on-balance sheet instruments. These unused commitments totaled $85.0 million at June 30, 2012. The Company also has letters of credit outstanding of $4.6 million at June 30, 2012. Because these instruments have fixed maturity dates, and because many of them will expire without being drawn upon, they do not generally present any significant liquidity risk to the Company. Management is of the opinion that the Company’s liquidity is sufficient to meet its anticipated needs.

Capital Resources and Adequacy

Total stockholders’ equity was $46.8 million as of June 30, 2012, representing a net increase of $2.5 million from December 31, 2011.  The increase in capital was primarily the result of the net income of $2.4 million and the increase in unrealized holding gains on available for sale securities of $307 thousand, offset by a dividend declared in the amount of $287 thousand.

The Company and the Bank are subject to various regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can initiate certain actions by regulators that could have a material effect on the consolidated financial statements.

The regulations require that banks maintain minimum amounts and ratios of total and Tier I capital (as defined in the regulations) to risk weighted assets (as defined), and Tier I capital to average assets (as defined). As of June 30, 2012, the Bank met the minimum requirements. In addition, the Bank’s capital ratios exceeded the amounts required to be considered “well capitalized” as defined in the regulations.

The following table provides a comparison of the Bank’s risk-based capital ratios and leverage ratios:

	June 30,			December 31,
	2012			2011
	(Dollars In Thousands)
Tier I, common stockholders' equity	$	48,748		$	46,648
Tier II, allowable portion of allowance for loan losses		4,760			4,215
Total capital	$	53,508		$	50,863
Tier I risk based capital ratio		12.3	%		12.7	%
Total risk based capital ratio		13.5	%		13.8	%
Tier I leverage ratio		7.9	%		8.3	%

Note: Unrealized gains on securities available for sale are excluded from regulatory capital components of risk-based capital and leverage ratios

33

The Federal banking regulators have adopted risk-based capital guidelines for bank holding companies. Currently, the required minimum ratio of total capital to risk-weighted assets (including off-balance sheet activities, such as standby letters of credit) is 8%. At least half of the total capital is required to be Tier I capital, consisting principally of common shareholders’ equity, non-cumulative perpetual preferred stock, a limited amount of cumulative perpetual preferred stock and minority interests in the equity accounts of consolidated subsidiaries, less goodwill. The remainder (Tier II capital) may consist of a limited amount of subordinated debt and intermediate-term preferred stock, certain hybrid capital instruments and other debt securities, perpetual preferred stock and a limited amount of the general loan loss allowance.

In addition to the risk-based capital guidelines, the federal banking regulators established minimum leverage ratio (Tier I capital to total assets) guidelines for bank holding companies. These guidelines provide for a minimum leverage ratio of 3% for those bank holding companies which have the highest regulatory examination ratings and are not contemplating or experiencing significant growth or expansion. All other bank holding companies are required to maintain a leverage ratio of at least 4%.

The following table provides the Company’s risk-based capital ratios and leverage ratios:

	June 30,			December 31,
	2012			2011
	(Dollars In Thousands)
Tier I, common stockholders' equity	$	44,091		$	41,945
Tier II, allowable portion of allowance for loan losses		4,760			4,215
Total capital	$	48,851		$	46,160
Tier I risk based capital ratio		11.2	%		11.4	%
Total risk based capital ratio		12.4	%		12.6	%
Tier I leverage ratio		7.1	%		7.4	%

34

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4 – Controls and Procedures

The term “disclosure controls and procedures” is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2012, and they have concluded that, as of this date, our disclosure controls and procedures were effective at ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act.

There were no significant changes to our internal controls over financial reporting or in the other factors that could significantly affect our internal controls over financial reporting during the quarter ended June 30, 2012, including any corrective actions with regard to significant deficiencies and material weakness.

35

Part II - Other Information

Item 1 - Legal Proceedings

The Company and the Bank are an occasional party to legal actions arising in the ordinary course of its business. In the opinion of management, the Company has adequate legal defenses and/or insurance coverage respecting any and each of these actions and does not believe that they will materially affect the Company’s operations or financial position.

Item 1A - Risk Factors

Not Applicable

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

Not Applicable

Item 3 - Defaults Upon Senior Securities

Not Applicable.

Item 4 – Mine Safety Disclosures

Not Applicable

Item 5 - Other Information

Not Applicable.

Item 6 - Exhibits

Exhibit Number	Description
3.1	Articles of Incorporation as amended (conformed) (Incorporated by reference to Exhibit 3.1 of Registrant’s Form 10-Q filed on May 14, 2010).
3.2	By-Laws (Incorporated by reference to Exhibit 2 of Registrant’s Form 8-A filed on December 11, 2008).
10.1	Lease Renewal and Modification Agreement dated May 4, 2012 by and between Embassy Bank for the Lehigh Valley and Red Bird Associates, LLC (Incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed on May 7, 2012.)
11.1	The statement regarding computation of per share earnings required by this exhibit is contained in Note 5 to the financial statements under the caption “Basic and Diluted Earnings Per Share.”
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002.

The following Exhibits are being furnished* as part of this report:

No.	Description
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document.*

* These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

36

SIGNATURES

In accordance with 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.

		EMBASSY BANCORP, INC.
		(Registrant)
	By:	/s/ David M. Lobach, Jr.
Dated: August 14, 2012		David M. Lobach, Jr.
		President and Chief Executive Officer
Dated: August 14, 2012	By:	/s/ Judith A. Hunsicker
		Judith A. Hunsicker
		Senior Executive Vice President,
		Chief Operating Officer, Secretary and
		Chief Financial Officer

37

EXHIBIT INDEX

Exhibit Number	Description
3.1	Articles of Incorporation as amended (conformed) (Incorporated by reference to Exhibit 3.1 of Registrant’s Form 10-Q filed on May 14, 2010).
3.2	By-Laws (Incorporated by reference to Exhibit 2 of Registrant’s Form 8-A filed on December 11, 2008).
10.1	Lease Renewal and Modification Agreement dated May 4, 2012 by and between Embassy Bank for the Lehigh Valley and Red Bird Associates, LLC (Incorporated by reference to Exhibit 10.1 of Registrant’s Form 8-K filed on May 7, 2012.)
11.1	The statement regarding computation of per share earnings required by this exhibit is contained in Note 5 to the financial statements under the caption “Basic and Diluted Earnings Per Share.”
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a).
32.	Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002.

The following Exhibits are being furnished* as part of this report:

No.	Description
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document.*

* These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

38

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David M. Lobach, Jr., certify that:

1. I have reviewed this quarterly report on Form 10-Q of Embassy 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 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 is made known to us by others, particularly during the period in which this report is being prepared;

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

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

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

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

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

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

By:	/s/ David M. Lobach, Jr.
DAVID M. LOBACH, JR.
President and Chief Executive Officer

DATED:  August 14, 2012

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Judith A. Hunsicker, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Embassy 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 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 is made known to us by others, particularly during the period in which this report is being prepared;

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

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

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

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

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

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

By:	/s/ Judith A. Hunsicker
JUDITH A. HUNSICKER
Senior Executive Vice President, Chief
Operating Officer and Chief Financial Officer

DATED:  August 14, 2012

EX-32

EXHIBIT 32

Certification Pursuant to 18 U.S.C. 1350 and

Section 906 of Sarbanes-Oxley Act of 2002

We hereby certify that the foregoing Form 10-Q of Embassy Bancorp, Inc. for the quarter ending June 30, 2012 complies in all respects with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of Embassy Bancorp, Inc.

/s/ David M. Lobach, Jr.

DAVID M. LOBACH, JR.

President and Chief Executive Officer

/s/ Judith A. Hunsicker

JUDITH A. HUNSICKER

Senior Executive Vice President,

Chief Operating Officer and

Chief Financial Officer

Dated: August 14, 2012

XML

Loans Receivable and Credit Quality (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 462,408	$ 423,586
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	450,239	410,480
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	1,326	1,341
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	10,796	11,765
Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	47
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	180,891	171,792
Commercial real estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	173,950	163,828
Commercial real estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	855	865
Commercial real estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	6,086	7,099
Commercial construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	16,763	13,414
Commercial construction [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	12,789	9,090
Commercial construction [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	3,974	4,324
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	30,683	26,879
Commercial [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	30,423	26,612
Commercial [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	193	194
Commercial [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	67	73
Residential real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	228,397	210,361
Residential real estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	227,403	209,810
Residential real estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	278	282
Residential real estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	669	269
Residential real estate [Member] | Doubtful [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	47
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	5,674	1,140
Consumer [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 5,674	$ 1,140

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Fair Value Measurements (Fair Value, Assets and Liabilities Measured on Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 97,288	$ 92,110
(Level 2) Significant Other Observable Inputs [Member] | U.S Government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	33,527	33,689
(Level 2) Significant Other Observable Inputs [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	49,106	40,048
(Level 2) Significant Other Observable Inputs [Member] | U.S. GSE - Mortgage-backed securities - residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	11,391	13,841
(Level 2) Significant Other Observable Inputs [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	3,264	4,532
Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	97,288	92,110
Total Fair Value [Member] | U.S Government agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	33,527	33,689
Total Fair Value [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	49,106	40,048
Total Fair Value [Member] | U.S. GSE - Mortgage-backed securities - residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	11,391	13,841
Total Fair Value [Member] | Corporate bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 3,264	$ 4,532

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Loans Receivable and Credit Quality (Troubled Debt Restructuring Current Period) (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Loans with Impairment Reserve	five	five
Troubled debt Restructuring related allowance		$ 483,000
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	999,000	999,000
Newly Restructured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of Loans	4	6
Pre-Modification Outstanding Balance	993,000	2,270,000
Post-Modification Outstanding Balance	993,000	2,270,000
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	999,000	999,000
Commercial real estate [Member] | Newly Restructured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of Loans	3	4
Pre-Modification Outstanding Balance	652,000	1,259,000
Post-Modification Outstanding Balance	652,000	1,259,000
Commercial construction [Member] | Newly Restructured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of Loans	1	1
Pre-Modification Outstanding Balance	341,000	341,000
Post-Modification Outstanding Balance	341,000	341,000
Residential real estate [Member] | Newly Restructured [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Number of Loans		1
Pre-Modification Outstanding Balance		670,000
Post-Modification Outstanding Balance		$ 670,000

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Short-term and Long-term Borrowings (Narrative) (Details) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Federal Home Loan Bank Advances [Member]
Line of Credit Facility [Line Items]
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 218,800,000
Line of Credit Facility, Amount Outstanding	7,900,000	7,900,000
Line of Credit Facility, Maximum Borrowing Capacity	25,000,000
Federal Home Loan Bank, Advances, Short-term	0	0
Atlantic Central Bankers Bank Borrowings [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Amount Outstanding	0	0
Line of Credit Facility, Maximum Borrowing Capacity	6,000,000
Univest Bank and Trust Co. Borrowings [Member]
Line of Credit Facility [Line Items]
Line of Credit Facility, Amount Outstanding	5,100,000	5,200,000
Line of Credit Facility, Maximum Borrowing Capacity	$ 10,000,000
Credit Security	833,333

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Basic and Diluted Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Basic and Diluted Earnings per Share [Abstract]

Earnings Per Share [Table Text Block]

	Three Months Ended June 30,		Six Months Ended June 30,
	2012	2011	2012	2011
	(Dollars In Thousands, except per share data)
Net income	$              1,181	$              1,111	$              2,351	$              2,225
Weighted average shares outstanding	7,181	7,162	7,178	7,159
Dilutive effect of potential common shares, stock options	28	23	28	26
Diluted weighted average common shares outstanding	7,209	7,185	7,206	7,185
Basic earnings per share	$                0.16	$                0.16	$                0.33	$                0.31
Diluted earnings per share	$                0.16	$                0.15	$                0.33	$                0.31

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Fair Value Measurements (Quantitative Information about Level 3 Fair Value Measurements) (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Maximum [Member] | (Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	0.00%
Minimum [Member] | (Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(34.00%)
Weighted Average [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(5.00%)
Weighted Average [Member] | Liquidation Expenses [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(10.00%)
Weighted Average [Member] | Appraisal Adjustments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	(20.30%)
Appraisal Adjustments [Member] | (Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Estimate	2,250
Valuation Techniques	Appraisal of collateral (1)
Unobservable Input	Appraisal adjustments (2)
Liquidation Expenses [Member] | (Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Unobservable Input	Liquidation expenses (3)
Liquidation Expenses [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value Estimate	2,969
Valuation Techniques	Pending agreement of sale (4)
Unobservable Input	Liquidation expenses (3)

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Loans Receivable and Credit Quality (Loan Portfolio Summarized by the Past Due Status) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 546	$ 322
60-89 Days Past Due	2,675	2,903
Greater than 90 Days	2,836	2,135
Total Past Due	6,057	5,360
Current Loans Receivable	456,351	418,226
Loan receivables, Ending Balance	462,408	423,586
Loans Receivable > 90 Days and Accruing	351	266
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	29	300
60-89 Days Past Due	116	1,222
Greater than 90 Days	2,438	2,074
Total Past Due	2,583	3,596
Current Loans Receivable	178,308	168,196
Loan receivables, Ending Balance	180,891	171,792
Loans Receivable > 90 Days and Accruing		205
Commercial construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
60-89 Days Past Due	2,559	1,412
Greater than 90 Days	351
Total Past Due	2,910	1,412
Current Loans Receivable	13,853	12,002
Loan receivables, Ending Balance	16,763	13,414
Loans Receivable > 90 Days and Accruing	351
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	43
Greater than 90 Days		61
Total Past Due	43	61
Current Loans Receivable	30,640	26,818
Loan receivables, Ending Balance	30,683	26,879
Loans Receivable > 90 Days and Accruing		61
Residential real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	457
60-89 Days Past Due		269
Greater than 90 Days	47
Total Past Due	504	269
Current Loans Receivable	227,893	210,092
Loan receivables, Ending Balance	228,397	210,361
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	17	22
Total Past Due	17	22
Current Loans Receivable	5,657	1,118
Loan receivables, Ending Balance	$ 5,674	$ 1,140

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Restricted Investment In Bank Stock (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Restricted Investment in Bank Stock Disclosure [Abstract]
Redemption of restricted investment in bank stock	$ 76	$ 93	$ 156	$ 192
Restricted Stock Dividend			$ 1

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Loans Receivable and Credit Quality (Troubled Debt Restructuring payment default Current Period) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	3
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	$ 999
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	3
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	$ 999

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Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

Embassy Bancorp, Inc. (the "Company") is a Pennsylvania corporation organized in 2008 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the "Bank") in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008. Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow. Embassy Holdings, LLC (the "LLC") is a wholly-owned subsidiary of the Bank organized to engage in the holding of property acquired by the Bank in satisfaction of debts previously contracted. As such, the consolidated financial statements contained herein include the accounts of the Company, the Bank and the LLC. All significant intercompany transactions and balances have been eliminated.

The Bank, which is the Company's principal operating subsidiary, was originally incorporated as a Pennsylvania bank on May 11, 2001 and opened its doors on November 6, 2001. It was formed by a group of local business persons and professionals with significant prior experience in community banking in the Lehigh Valley area of Pennsylvania, the Bank's primary market area.

The accompanying unaudited financial statements have been prepared in accordance with United States of America generally accepted accounting principles ("US GAAP") for interim financial information and in accordance with instructions for Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2011, included in the Company's Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 30, 2012.

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred after June 30, 2012 through the date these consolidated financial statements were issued.

Certain amounts in the 2011 financial statements may have been reclassified to conform to 2012 presentation. These reclassifications had no effect on 2011 net income.

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Loans Receivable and Credit Quality (Allowance for Loan Losses and Recorded Investment in Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	$ 4,346	$ 3,789	$ 4,215	$ 3,709
Charge-offs	(35)	(20)	(38)	(113)
Recoveries	4	5	8	13
Provisions	445	138	575	303
Ending balance,	4,760	3,912	4,760	3,912
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	1,643	1,328	1,264	1,014
Charge-offs		(19)	(3)	(87)
Recoveries		1		1
Provisions	308	74	690	456
Ending balance,	1,951	1,384	1,951	1,384
Commercial construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	391	392	352	443
Provisions	49	(52)	88	(103)
Ending balance,	440	340	440	340
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	363	323	423	325
Charge-offs		(1)		(1)
Recoveries				4
Provisions	45	(13)	(15)	(19)
Ending balance,	408	309	408	309
Residential real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	1,748	1,332	1,691	1,309
Charge-offs	(35)		(35)	(25)
Recoveries	4		8
Provisions	169	81	222	129
Ending balance,	1,886	1,413	1,886	1,413
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	39	37	40	35
Recoveries		4		8
Provisions	11	12	10	10
Ending balance,	50	53	50	53
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance,	162	377	445	583
Provisions	(137)	36	(420)	(170)
Ending balance,	$ 25	$ 413	$ 25	$ 413

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Basis of Presentation (Narrative) (Details)	6 Months Ended
	Jun. 30, 2012
Basis of Presentation [Abstract]
Business Combination, Reason for Business Combination	The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the "Bank") in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008.
Business Acquisition, Effective Date of Acquisition	Nov. 11, 2008
Business Acquisition, Cost of Acquired Entity, Description of Purchase Price Components	Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow.

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

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

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs	Total
	(In Thousands)
U.S.Government agency obligations	$                   -	$           33,527	$                   -	$           33,527
Municipal Bonds	-	49,106	-	49,106
U.S. Government Sponored Enterprise (GSE) - Mortgage-backed securities - residential	-	11,391	-	11,391
Corporate bonds	-	3,264	-	3,264
June 30, 2012 Securities available for sale	$                   -	$         97,288	$                   -	$         97,288
U.S.Government agency obligations	$                   -	$           33,689	$                   -	$           33,689
Municipal Bonds	-	40,048	-	40,048
U.S. Government Sponored Enterprise (GSE) - Mortgage-backed securities - residential	-	13,841	-	13,841
Corporate bonds	-	4,532	-	4,532
December 31, 2011 Securities available for sale	$                   -	$           92,110	$                   -	$           92,110

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

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs	Total
	(In Thousands)
June 30, 2012 Impaired loans (1)	$                  -	$                  -	$            2,250	$            2,250
June 30, 2012 Other real estate owned (2)	$                  -	$                  -	$            2,969	$            2,969
December 31, 2011 Impaired loans (1)	$                  -	$                  -	$                599	$                599
December 31, 2011 Other real estate owned (2)	$                  -	$                  -	$             3,388	$             3,388

Quantitative Information about Level 3 Fair Value Measurements [Table Text Block]

	Quantitative Information about Level 3 Fair Value Measurements
Description	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
June 30, 2012 Impaired loans	2,250	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -34% (-20.3%)
			Liquidation expenses (3)	-10% (-10%)
June 30, 2012 Other real estate owned	2,969	Pending agreement of sale (4)	Liquidation expenses (3)	-5% (-5%)
(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not
identifiable.
(2) Appraisals may be adjusted by management for qualitative factors including economic conditions and the age of the appraisal.  The range and weighted
average of appraisal adjustments are presented as a percent of the appraisal.
(3)  Appraisals and pending agreements of sale are adjusted by management for liquidation expenses.  The range and weighted average of liquidation expense adjustments
are presented as a percent of the appraisal or pending agreement of sale.
(4)  Fair value is determined by a pending agreements of sale, of a portion of the real estate.

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

		June 30, 2012
		Carrying Amount	Fair Value Estimate	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs
		(In Thousands)
Financial assets:
	Cash and cash equivalents	$   49,117	$   49,117	$          49,117	$               -	$                   -
	Interest bearing time deposits	7,717	7,798	-	7,798	-
	Securities available-for-sale	97,288	97,288	-	97,288	-
	Loans receivable, net of allowance	457,380	466,440	-	-	466,440
	Restricted investments in bank stock	1,485	1,485	1,485	-	-
	Accrued interest receivable	1,713	1,713	1,713	-	-
Financial liabilities:
	Deposits	535,109	535,644	470,829	64,815	-
	Securities sold under agreements to
	repurchase and federal funds purchased	24,283	24,283	24,283	-	-
	Long-term borrowings	12,986	13,215	-	-	13,215
	Accrued interest payable	399	399	399	-	-
Off-balance sheet finanacial instruments:
	Commitments to grant loans	-	-	-	-	-
	Unfunded commitments under lines of credit	-	-	-	-	-
	Standby letters of credit	-	-	-	-	-
			December 31, 2011
			Carrying	Fair Value
			Amount	Estimate
			(In Thousands)
Financial assets:
	Cash and cash equivalents		$     46,135	$            46,135
	Interest bearing time deposits		7,698	7,720
	Securities available-for-sale		92,110	92,110
	Loans receivable, net of allowance		419,126	427,861
	Restricted investments in bank stock		1,641	1,641
	Accrued interest receivable		1,568	1,568
Financial liabilities:
	Deposits		481,775	482,344
	Securities sold under agreements to
	repurchase and federal funds purchased		33,953	33,955
	Long-term borrowings		13,086	13,422
	Accrued interest payable		582	582
Off-balance sheet finanacial instruments:
	Commitments to grant loans		-	-
	Unfunded commitments under lines of credit		-	-
	Standby letters of credit		-	-

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Loans Receivable and Credit Quality (Allowance for Loan Losses and Recorded Investment in Financing Receivables) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	$ 4,760	$ 4,346	$ 4,215	$ 3,912	$ 3,789	$ 3,709
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	659		126
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	4,101		4,089
Loan receivables, Ending Balance	462,408		423,586
Loans receivables, Ending balance: individually evaluated for impairment	13,811		13,427
Loans receivables, Ending balance: collectively evaluated for impairment	448,597		410,159
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	1,951	1,643	1,264	1,384	1,328	1,014
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	527		107
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	1,424		1,157
Loan receivables, Ending Balance	180,891		171,792
Loans receivables, Ending balance: individually evaluated for impairment	8,197		8,484
Loans receivables, Ending balance: collectively evaluated for impairment	172,694		163,308
Commercial construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	440	391	352	340	392	443
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	440		352
Loan receivables, Ending Balance	16,763		13,414
Loans receivables, Ending balance: individually evaluated for impairment	4,315		3,974
Loans receivables, Ending balance: collectively evaluated for impairment	12,448		9,440
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	408	363	423	309	323	325
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	1		19
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	407		404
Loan receivables, Ending Balance	30,683		26,879
Loans receivables, Ending balance: individually evaluated for impairment	305		417
Loans receivables, Ending balance: collectively evaluated for impairment	30,378		26,462
Residential real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	1,886	1,748	1,691	1,413	1,332	1,309
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	131
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	1,755		1,691
Loan receivables, Ending Balance	228,397		210,361
Loans receivables, Ending balance: individually evaluated for impairment	994		552
Loans receivables, Ending balance: collectively evaluated for impairment	227,403		209,809
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	50	39	40	53	37	35
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	50		40
Loan receivables, Ending Balance	5,674		1,140
Loans receivables, Ending balance: collectively evaluated for impairment	5,674		1,140
Unallocated Financing Receivables [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	25	162	445	413	377	583
Allowance for Loan Losses, Ending balance: collectively evaluted for impairment	$ 25		$ 445

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Stock Incentive Plan (Narrative) (Details) (USD $)	3 Months Ended	6 Months Ended	12 Months Ended	24 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2010	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	500,000	500,000
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Date		Jun. 15, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period			0	0
Compensation expense recognized on stock options	$ 5	$ 17,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options	$ 119,000	$ 119,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition		2 years 10 months 24 days
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		7,992
Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		52,611

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Basic and Diluted Earnings Per Share (Earnings Per Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Basic and Diluted Earnings per Share [Abstract]
Net income	$ 1,181	$ 1,111	$ 2,351	$ 2,225
Weighted average shares outstanding	7,181	7,162	7,178	7,159
Dilutive effect of potential common shares, stock options	28	23	28	26
Diluted weighted average common shares outstanding	7,209	7,185	7,206	7,185
Basic earnings per share	$ 0.16	$ 0.16	$ 0.33	$ 0.31
Diluted earnings per share	$ 0.16	$ 0.15	$ 0.33	$ 0.31
Stock Excluded from Diluted Earnings Per Share Computation	130,192	72,439	122,200	72,439

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,351	$ 2,225
Adjustments to reconcile net income to net cash provided by operating activities:
PROVISION FOR LOAN LOSSES	575	303
Accretion of deferred loan costs	(26)	(36)
Depreciation and amortization	324	314
Net amortization of securities premiums and discounts	198	169
Loss on sale of other real estate owned	8
Stock compensation expense	73
Impairment on other real estate owned	100
Increase in accrued interest receivable	(145)	(102)
(Increase) decrease in other assets	(392)	710
Decrease in accrued interest payable	(183)	(298)
Increase in other liabilities	239	463
Net Cash Provided by Operating Activities	3,122	3,748
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale	(8,570)	(2,880)
Maturities, calls and principal repayments of securities available for sale	3,659	6,781
Net increase in loans	(38,803)	(4,603)
Redemption of restricted investment in bank stock	156	192
Net (purchases) maturities of interest bearing time deposits	(19)	731
Proceeds from sale of other real estate owned	311
Purchases of premises and equipment	(447)	(89)
Net Cash (Used in) Provided by Investing Activities	(43,713)	132
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits	53,334	16,356
Net decrease in securities sold under agreements to repurchase and federal funds purchased	(9,670)	(10,283)
Payment of long-term borrowed funds	(100)	(100)
Net payment of stock tendered	(8)	(14)
Proceeds from the exercise of stock options	16
Tax benefit of stock options exercised	1
Net Cash Provided by Financing Activities	43,573	5,959
Net Increase in Cash and Cash Equivalents	2,982	9,839
CASH AND CASH EQUIVALENTS - BEGINNING	46,135	19,643
CASH AND CASH EQUIVALENTS - ENDING	49,117	29,482
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	2,446	2,791
Income taxes paid	$ 1,175	$ 300

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Guarantees (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2012
Guarantees [Abstract]
Letters of Credit Outstanding, Amount	$ 4.6
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 4.5

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Loans Receivable and Credit Quality (Impaired Loans by Loan Portfolio Class) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Total Recorded Investment Impaired	$ 13,811	$ 13,811	$ 13,427
Total Unpaid Principal Balance Impaired	13,860	13,860	13,476
Related Allowance Impaired	659	659	126
Total Average Recorded Investment Impaired	13,673	13,591	10,532
Total Interest Income Recognized Impaired	190	366	733
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	6,007	6,007	7,814
Recorded Investment, With an allowance recorded	2,190	2,190	670
Total Recorded Investment Impaired	8,197	8,197	8,484
Unpaid Principal Balance, With no related allowance recorded	6,007	6,007	7,863
Unpaid Principal Balance, With an allowance recorded	2,190	2,190	670
Total Unpaid Principal Balance Impaired	8,197	8,197	8,533
Related Allowance Impaired	527	527	107
Average Recorded Investment, With no related allowance recorded	5,887	6,529	5,787
Average Recorded Investment, With an allowance recorded	2,144	1,653	463
Total Average Recorded Investment Impaired	8,031	8,182	6,250
Interest Income Recognized, With no related allowance recorded	82	168	492
Interest Income Recognized, With an allowance recorded	54	106	42
Total Interest Income Recognized Impaired	136	274	534
Commercial construction [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	4,315	4,315	3,974
Total Recorded Investment Impaired	4,315	4,315	3,974
Unpaid Principal Balance, With no related allowance recorded	4,315	4,315	3,974
Total Unpaid Principal Balance Impaired	4,315	4,315	3,974
Average Recorded Investment, With no related allowance recorded	4,320	4,204	3,360
Total Average Recorded Investment Impaired	4,320	4,204	3,360
Interest Income Recognized, With no related allowance recorded	40	70	156
Total Interest Income Recognized Impaired	40	70	156
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	302	302	362
Recorded Investment, With an allowance recorded	3	3	55
Total Recorded Investment Impaired	305	305	417
Unpaid Principal Balance, With no related allowance recorded	302	302	362
Unpaid Principal Balance, With an allowance recorded	52	52	55
Total Unpaid Principal Balance Impaired	354	354	417
Related Allowance Impaired	1	1	19
Average Recorded Investment, With no related allowance recorded	305	324	363
Average Recorded Investment, With an allowance recorded	4	21	61
Total Average Recorded Investment Impaired	309	345	424
Interest Income Recognized, With no related allowance recorded	4	7	15
Interest Income Recognized, With an allowance recorded	(1)		4
Total Interest Income Recognized Impaired	3	7	19
Residential real estate [Member]
Financing Receivable, Impaired [Line Items]
Recorded Investment, With no related allowance recorded	278	278	552
Recorded Investment, With an allowance recorded	716	716
Total Recorded Investment Impaired	994	994	552
Unpaid Principal Balance, With no related allowance recorded	278	278	552
Unpaid Principal Balance, With an allowance recorded	716	716
Total Unpaid Principal Balance Impaired	994	994	552
Related Allowance Impaired	131	131
Average Recorded Investment, With no related allowance recorded	297	382	498
Average Recorded Investment, With an allowance recorded	717	478
Total Average Recorded Investment Impaired	1,014	860	498
Interest Income Recognized, With no related allowance recorded	4	7	24
Interest Income Recognized, With an allowance recorded	7	8
Total Interest Income Recognized Impaired	$ 11	$ 15	$ 24

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 13,178	$ 12,039
Interest bearing demand deposits with banks	34,606	33,605
Federal funds sold	1,333	491
Cash and Cash Equivalents	49,117	46,135
Interest bearing time deposits	7,717	7,698
Securities available for sale	97,288	92,110
Restricted investment in bank stock	1,485	1,641
Loans receivable, net of allowance for loan losses of $4,760 in 2012; $4,215 in 2011	457,380	419,126
Premises and equipment, net of accumulated depreciation	2,218	2,095
Accrued interest receivable	1,713	1,568
Other real estate owned	2,969	3,388
Other assets	2,111	1,719
Total Assets	621,998	575,480
Liabilities:
Deposits: Non-interest bearing	43,488	38,386
Deposits: Interest bearing	491,621	443,389
Total Deposits	535,109	481,775
Securities sold under agreements to repurchase	24,283	33,953
Long-term borrowings	12,986	13,086
Accrued interest payable	399	582
Other liabilities	2,435	1,751
Total Liabilities	575,212	531,147
Stockholders' Equity:
Common stock, $1 par value; authorized 20,000,000 shares; 2012 issued 7,180,520 shares; outstanding 7,182,167 shares; 2011 issued 7,171,551 shares; outstanding 7,171,198 shares	7,182	7,171
Surplus	22,943	22,872
Retained earnings	13,969	11,905
Accumulated other comprehensive income	2,695	2,388
Treasury stock, at cost, 353 shares	(3)	(3)
Total Stockholders' Equity	46,786	44,333
Total Liabilities and Stockholders' Equity	$ 621,998	$ 575,480

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Loans Receivable and Credit Quality (Troubled Debt Restructuring Outstanding) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	$ 9,493
Available Commitments Outstanding on TDRs	0
Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	8,833
Non-Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	660
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	5,668
Commercial real estate [Member] | Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	5,008
Commercial real estate [Member] | Non-Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	660
Commercial construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	2,799
Commercial construction [Member] | Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	2,799
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	199
Commercial [Member] | Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	199
Residential real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	827
Residential real estate [Member] | Accrual Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Modifications	$ 827

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Consolidated Statements of Stockholders' Equity (USD $)	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Treasury Stock [Member]	Total
BALANCE- at Dec. 31, 2010	$ 7,157,000	$ 22,303,000	$ 6,976,000	$ 296,000	$ (3,000)	$ 36,729,000
Net income			2,225,000			2,225,000
Net change in unrealized gain on securities available for sale, net of reclassification adjustment and income tax effects				1,484,000		1,484,000
Dividend declared			(215,000)			(215,000)
Exercise of stock options	20,000	40,000				60,000
Stock tendered for funding exercise of stock options	(11,000)	(63,000)				(74,000)
BALANCE- at Jun. 30, 2011	7,166,000	22,280,000	8,986,000	1,780,000	(3,000)	40,209,000
BALANCE- at Dec. 31, 2011	7,171,000	22,872,000	11,905,000	2,388,000	(3,000)	44,333,000
Net income			2,351,000			2,351,000
Net change in unrealized gain on securities available for sale, net of reclassification adjustment and income tax effects				307,000		307,000
Dividend declared			(287,000)			(287,000)
Exercise of stock options	4,000	12,000				16,000
Tax benefit of stock options exercised		1,000				1,000
Stock tendered for funding exercise of stock options	(1,000)	(7,000)				(8,000)
Compensation expense recognized on stock options		17,000				17,000
Common stock grants to directors	8,000	48,000				56,000
BALANCE- at Jun. 30, 2012	$ 7,182,000	$ 22,943,000	$ 13,969,000	$ 2,695,000	$ (3,000)	$ 46,786,000

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Securities Available For Sale (Securities Available-For-Sale by Contractual Maturity) (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Securities Avaliable For Sale [Abstract]
Amortized Cost, Due in one year or less	$ 19,130,000		$ 19,130,000
Amortized Cost, Due after one year through five years	20,013,000		20,013,000
Amortized Cost, Due after five years through ten years	17,214,000		17,214,000
Amortized Cost, Due after ten years	26,107,000		26,107,000
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	82,464,000		82,464,000
Amortized Cost, Without single maturity date	10,741,000		10,741,000
Amortized Cost, Total	93,205,000		93,205,000		88,492,000
Fair Value, Due in one year or less	19,183,000		19,183,000
Fair Value, Due after one year through five years	20,364,000		20,364,000
Fair Value, Due after five years through ten years	18,270,000		18,270,000
Fair Value, Due after ten years	28,080,000		28,080,000
Available-for-sale Securities, Debt Securities	85,897,000		85,897,000
Fair Value, Without single maturity date	11,391,000		11,391,000
Fair Value, Total	97,288,000		97,288,000		92,110,000
Proceeds from Sale of Available-for-sale Securities	0	0	0	0
Available-for-sale Securities Pledged as Collateral	$ 41,300,000		$ 41,300,000		$ 47,700,000

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Stock Incentive Plan (Policy)

6 Months Ended

Jun. 30, 2012

Stock Incentive Plan [Abstract]

Stock Incentive Plan

At the Company's annual meeting on June 16, 2010, the shareholders approved the Embassy Bancorp, Inc. 2010 Stock Incentive Plan (the "SIP"). The SIP authorizes the Board of Directors, or a committee authorized by the Board of Directors, to award a stock based incentive to (i) designated officers (including officers who are directors) and other designated employees at the Company and its subsidiaries, and (ii) non-employee members of the Board of Directors and advisors and consultants to the Company and its subsidiaries. The Board of Directors believes that the SIP will encourage the designated participants to contribute materially to the growth of the Company. The SIP provides for stock based incentives in the form of incentive stock options as provided in Section 422 of the Internal Revenue Code of 1986, non-qualified stock options, stock appreciation rights, restricted stock and deferred stock awards. The term of the option, the amount of time for the option to vest after grant, if any, and other terms and limitations will be determined at the time of grant. Options granted under the SIP may not have an exercise period that is more than ten years from the time the option is granted.

The aggregate number of shares available for issuance under the SIP is 500,000. The SIP provides for appropriate adjustments in the number and kind of shares available for grant or subject to outstanding awards under the SIP to avoid dilution in the event of merger, stock splits, stock dividends or other changes in the capitalization of the Company. The SIP expires on June 15, 2020. There were no awards granted under the SIP for the years ended December 31, 2011 and 2010. In February 2012, the Company granted 7,992 shares of restricted stock to certain members of its Board of Directors as compensation for their service in 2011 in accordance with the Company's Non-employee Directors Compensation program adopted in October of 2010. Such compensation was accrued for as of December 31, 2011. In February 2012, the Company also granted stock options to purchase 52,611 shares of stock to certain executive officers in accordance with their respective employment agreements. Stock compensation expense related to these options was $5 thousand and $17 thousand for the three and six months ended June 30, 2012, respectively. At June 30, 2012, approximately $119 thousand unrecognized cost related to these stock options will be recognized over the next 2.7 years.

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Securities Available For Sale (Investments' Gross Unrealized Losses and Fair Value) (Details) (USD $)
In Thousands, unless otherwise specified

6 Months Ended

Jun. 30, 2012

Dec. 31, 2011

Schedule of Investments [Line Items]

Fair Value, Less Than 12 Months

$ 4,659

$ 3,929

Unrealized Losses, Less Than 12 Months

(76)

(80)

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total

4,659

3,929

Unrealized Losses

(76)

(80)

Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions

7

Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Severity

The Company had seven (7) securities in an unrealized loss position at June 30, 2012. The unrealized losses are due only to market rate fluctuations. As of June 30, 2012, the Company either has the intent and ability to hold the securities until maturity or market price recovery, or believes that it is more likely than not that it will not be required to sell such securities. Management believes that the unrealized loss only represents temporary impairment of the securities. None of the individual losses are significant.

Municipal Bonds [Member]

Schedule of Investments [Line Items]

Fair Value, Less Than 12 Months

2,707

Unrealized Losses, Less Than 12 Months

(32)

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total

2,707

Unrealized Losses

(32)

U.S Government agency obligations [Member]

Schedule of Investments [Line Items]

Fair Value, Less Than 12 Months

2,007

Unrealized Losses, Less Than 12 Months

(7)

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total

2,007

Unrealized Losses

(7)

Corporate bonds [Member]

Schedule of Investments [Line Items]

Fair Value, Less Than 12 Months

1,952

1,922

Unrealized Losses, Less Than 12 Months

(44)

(73)

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total

1,952

1,922

Unrealized Losses

$ (44)

$ (73)

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Restricted Investment In Bank Stock (Policy)

6 Months Ended

Jun. 30, 2012

Restricted Investment in Bank Stock Disclosure [Abstract]

Cost Method Investments, Policy [Policy Text Block]

Management evaluates the FHLB and ACBB restricted stock for impairment. Management's determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the issuer as compared to the capital stock amount for the issuer and the length of time this situation has persisted, (2) commitments by the issuer to make payments required by law or regulation and the level of such payments in relation to the operating performance of the issuer, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the issuer.

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Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Stockholders' Equity
Common Stock, Dividends, Per Share, Declared	$ 0.04	$ 0.03
Stock Issued During Period, Shares, Stock Options Exercised	4,075	20,248
Stock Repurchased During Period, Shares	1,098	11,024
Common stock grants to directors, shares	7,992

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets
Loans and Leases Receivable, Allowance	$ 4,760	$ 4,215
Common Stock, Par or Stated Value Per Share	$ 1	$ 1
Common Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Shares, Issued	7,182,520	7,171,551
Common Stock, Shares, Outstanding	7,182,167	7,171,198
Treasury Stock, Shares	353	353

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Restricted Investment In Bank Stock

6 Months Ended

Jun. 30, 2012

Restricted Investment in Bank Stock Disclosure [Abstract]

Restricted Investments in Bank Stock

Note 9 – Restricted Investment in Bank Stock

Restricted investments in bank stock consist of Federal Home Loan Bank of Pittsburgh ("FHLB") stock and Atlantic Central Bankers Bank ("ACBB") stock. The restricted stocks are carried at cost. Federal law requires a member institution of the FHLB to hold stock of its district FHLB according to a predetermined formula.

In December 2008, the FHLB of Pittsburgh notified member banks that it was suspending dividend payments and the repurchase of capital stock, and any future capital stock repurchases will be made on a quarterly basis if conditions warrant such repurchases. During 2012, 2011 and 2010, the FHLB conducted limited excess capital stock repurchases based upon positive quarterly net income. Any future capital stock repurchases will be made on a quarterly basis if conditions warrant such repurchases. In connection with this program, the Bank had stock at a carrying value of $76 thousand and $93 thousand repurchased during the three months ended June 30, 2012 and 2011, respectively, and $156 thousand and $192 thousand repurchased during the six months ended June 30, 2012 and 2011, respectively.. Any future capital stock repurchases are expected to be made on a quarterly basis if conditions warrant such repurchases. In February 2012, the FHLB announced that dividend payments would resume in 2012. Two dividend payments were received totaling $1 thousand during the six months ended June 30, 2012.

Management evaluates the FHLB and ACBB restricted stock for impairment. Management's determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as (1) the significance of the decline in net assets of the issuer as compared to the capital stock amount for the issuer and the length of time this situation has persisted, (2) commitments by the issuer to make payments required by law or regulation and the level of such payments in relation to the operating performance of the issuer, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the issuer.

Based upon its evaluation of the foregoing criteria, management believes no impairment charge is necessary related to the FHLB stock as of June 30, 2012.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Aug. 10, 2012
Document and Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Entity Registrant Name	Embassy Bancorp, Inc.
Entity Central Index Key	0001449794
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		7,184,031

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Loans Receivable and Credit Quality

6 Months Ended

Jun. 30, 2012

Loans Receivable and Credit Quality [Abstract]

Loans Receivable and Credit Quality

Note 10 – Loans Receivable and Credit Quality

The following table presents the composition of loans receivable at June 30, 2012 and December 31, 2011, respectively:

	June 30, 2012		December 31, 2011
		Percentage of		Percentage of
	Balance	total Loans	Balance	total Loans
	(Dollars in Thousands)
Commercial real estate	$                 180,891	39.12%	$ 171,792	40.56%
Commercial construction	16,763	3.63%	13,414	3.17%
Commercial	30,683	6.64%	26,879	6.35%
Residential real estate	228,397	49.39%	210,361	49.65%
Consumer	5,674	1.23%	1,140	0.27%
Gross loans	462,408	100.00%	423,586	100.00%
Unearned origination (fees) costs	(268)		(245)
Allowance for loan losses:	(4,760)		(4,215)
	$                 457,380		$ 419,126

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention (potential weaknesses), substandard (well defined weaknesses) and doubtful (full collection unlikely) within the Company's internal risk rating system as of June 30, 2012 and December 31, 2011, respectively:

	Pass	Special Mention	Substandard	Doubtful	Total
June 30, 2012	(In Thousands)
Commercial real estate	$        173,950	$                855	$            6,086	$             -	$        180,891
Commercial construction	12,789	-	3,974	-	16,763
Commercial	30,423	193	67	-	30,683
Residential real estate	227,403	278	669	47	228,397
Consumer	5,674	-	-	-	5,674
Total	$        450,239	$             1,326	$          10,796	$            47	$        462,408
December 31, 2011
Commercial real estate	$          163,828	$                 865	$             7,099	$             -	$          171,792
Commercial construction	9,090	-	4,324	-	13,414
Commercial	26,612	194	73	-	26,879
Residential real estate	209,810	282	269	-	210,361
Consumer	1,140	-	-	-	1,140
Total	$          410,480	$               1,341	$            11,765	$             -	$          423,586

The following table summarizes information in regards to impaired loans by loan portfolio class as of June 30, 2012 and December 31, 2011, respectively:

				Quarter-to-date		Year-to-date
June 30, 2012	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized	Average Recorded Investment	Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Commercial real estate	$         6,007	$      6,007		$         5,887	$            82	$          6,529	$           168
Commercial construction	4,315	4,315		4,320	40	4,204	70
Commercial	302	302		305	4	324	7
Residential real estate	278	278		297	4	382	7
Consumer	-	-		-	-	-	-
With an allowance recorded:
Commercial real estate	$         2,190	$      2,190	$          527	$         2,144	$            54	$          1,653	$           106
Commercial construction	-	-	-	-	-	-	-
Commercial	3	52	1	4	(1)	21	-
Residential real estate	716	716	131	717	7	478	8
Consumer	-	-	-	-	-	-	-
Total:
Commercial real estate	$         8,197	$      8,197	$          527	$         8,031	$          136	$          8,182	$           274
Commercial construction	4,315	4,315	-	4,320	40	4,204	70
Commercial	305	354	1	309	3	345	7
Residential real estate	994	994	131	1,014	11	860	15
Consumer	-	-	-	-	-	-	-
	$      13,811	$  13,860	$         659	$      13,673	$         190	$      13,591	$          366
December 31, 2011	Recorded Investment	Unpaid Principal Balance	Related Allowance			Average Recorded Investment	Interest Income Recognized
With no related allowance recorded:						Year-to-date
Commercial real estate	$         7,814	$      7,863				$          5,787	$           492
Commercial construction	3,974	3,974				3,360	156
Commercial	362	362				363	15
Residential real estate	552	552				498	24
Consumer	-	-				-	-
With an allowance recorded:
Commercial real estate	$            670	$        670	$          107			$            463	$             42
Commercial construction	-	-	-			-	-
Commercial	55	55	19			61	4
Residential real estate	-	-	-			-	-
Consumer	-	-	-			-	-
Total:
Commercial real estate	$         8,484	$      8,533	$          107			$          6,250	$           534
Commercial construction	3,974	3,974	-			3,360	156
Commercial	417	417	19			424	19
Residential real estate	552	552	-			498	24
Consumer	-	-	-			-	-
	$      13,427	$  13,476	$         126			$      10,532	$          733

The following table presents nonaccrual loans by classes of the loan portfolio as of June 30, 2012 and December 31, 2011, respectively:

	June 30, 2012	December 31, 2011
	(In Thousands)
Commercial real estate	$            2,449	$                        1,869
Commercial construction	-	-
Commercial	-	-
Residential real estate	47	-
Consumer	-	-
Total	$            2,496	$                        1,869

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of June 30, 2012 and December 31, 2011, respectively:

June 30, 2012	30-59 Days Past Due	60-89 Days Past Due	Greater than 90 Days	Total Past Due	Current	Total Loan Receivables	Loans Receivable > 90 Days and Accruing
	(In Thousands)
Commercial real estate	$           29	$             116	$   2,438	$         2,583	$      178,308	$           180,891	$                   -
Commercial construction	-	2,559	351	2,910	13,853	16,763	351
Commercial	43	-	-	43	30,640	30,683	-
Residential real estate	457	-	47	504	227,893	228,397	-
Consumer	17	-	-	17	5,657	5,674	-
Total	$         546	$          2,675	$   2,836	$         6,057	$      456,351	$           462,408	$                351
December 31, 2011
Commercial real estate	$          300	$           1,222	$     2,074	$          3,596	$        168,196	$             171,792	$                 205
Commercial construction	-	1,412	-	1,412	12,002	13,414	-
Commercial	-	-	61	61	26,818	26,879	61
Residential real estate	-	269	-	269	210,092	210,361	-
Consumer	22	-	-	22	1,118	1,140	-
Total	$          322	$           2,903	$     2,135	$          5,360	$        418,226	$             423,586	$                 266

The following tables represent the allocation of the allocation for loan losses and the related loan portfolio disaggregated based on impairment methodology at June 30, 2012 and December 31, 2011.

	Commercial Real Estate	Commercial Construction	Commercial	Residential Real Estate	Consumer	Unallocated	Total
Allowance for credit losses	(In Thousands)
Three months ending June 30, 2012:
Beginning Balance - March 31, 2012	$          1,643	$            391	$             363	$       1,748	$              39	$          162	$   4,346
Charge-offs	-	-	-	(35)	-	-	(35)
Recoveries	-	-	-	4	-	-	4
Provisions	308	49	45	169	11	(137)	445
Ending balance - June 30, 2012	$          1,951	$            440	$             408	$       1,886	$              50	$           25	$   4,760
Six months ending June 30, 2012:
Beginning Balance - December 31, 2011	$          1,264	$            352	$             423	$       1,691	$              40	$          445	$   4,215
Charge-offs	(3)	-	-	(35)	-	-	(38)
Recoveries	-	-	-	8	-	-	8
Provisions	690	88	(15)	222	10	(420)	575
Ending balance - June 30, 2012	$          1,951	$            440	$             408	$       1,886	$              50	$           25	$   4,760
Three months ending June 30, 2011:
Beginning Balance - March 31, 2011	$          1,328	$            392	$             323	$       1,332	$              37	$          377	$   3,789
Charge-offs	(19)	-	(1)	-	-	-	(20)
Recoveries	1	-	-	-	4	-	5
Provisions	74	(52)	(13)	81	12	36	138
Ending balance - June 30, 2011	$          1,384	$            340	$             309	$       1,413	$              53	$          413	$   3,912
Six months ending June 30, 2011:
Beginning Balance - December 31, 2010	$          1,014	$            443	$             325	$       1,309	$              35	$          583	$   3,709
Charge-offs	(87)	-	(1)	(25)	-	-	(113)
Recoveries	1	-	4		8	-	13
Provisions	456	(103)	(19)	129	10	(170)	303
Ending balance - June 30, 2011	$          1,384	$            340	$             309	$       1,413	$              53	$          413	$   3,912

 

The following tables detail the activity in the allowance for loan losses for the three and six months ended June 30, 2012 and 2011:

	Commercial Real Estate	Commercial Construction	Commercial	Residential Real Estate	Consumer	Unallocated	Total
June 30, 2012
Allowance for Loan Losses
Ending Balance	$               1,951	$                  440	$             408	$             1,886	$                    50	$                 25	$       4,760
Ending balance: individually evaluated for impairment	$                  527	$                    -	$                1	$               131	$                    -	$                 -	$          659
Ending balance: collectively evaluated for impairment	$               1,424	$                  440	$             407	$             1,755	$                    50	$                 25	$       4,101
Loans receivables:
Ending balance	$            180,891	$              16,763	$        30,683	$         228,397	$                5,674		$    462,408
Ending balance: individually evaluated  for impairment	$               8,197	$                4,315	$             305	$               994	$                    -		$     13,811
Ending balance: collectively evaluated for impairment	$            172,694	$              12,448	$        30,378	$         227,403	$                5,674		$    448,597
December 31, 2011
Allowance for Loan Losses
Ending Balance	$               1,264	$                  352	$              423	$             1,691	$                    40	$               445	$       4,215
Ending balance: individually evaluated for impairment	$                  107	$                    -	$              19	$                 -	$                    -	$                 -	$          126
Ending balance: collectively evaluated for impairment	$               1,157	$                  352	$             404	$             1,691	$                    40	$               445	$       4,089
Loans receivables:
Ending balance	$            171,792	$              13,414	$        26,879	$         210,361	$                1,140		$    423,586
Ending balance: individually evaluated  for impairment	$               8,484	$                3,974	$             417	$               552	$                    -		$     13,427
Ending balance: collectively evaluated for impairment	$            163,308	$                9,440	$        26,462	$         209,809	$                1,140		$    410,159

Troubled Debt Restructurings

The Company may grant a concession or modification for economic or legal reasons related to a borrower's financial condition than it would not otherwise consider, resulting in a modified loan which is then identified as troubled debt restructuring ("TDR"). The Company may modify loans through rate reductions, extensions to maturity, interest only payments, or payment modifications to better coincide the timing of payments due under the modified terms with the expected timing of cash flows from the borrowers' operations. Loan modifications are intended to minimize the economic loss and to avoid foreclosure or repossession of the collateral. TDRs are considered impaired loans for purposes of calculating the Company's allowance for loan losses.

The Company identifies loans for potential restructure primarily through direct communication with the borrower and the evaluation of the borrower's financial statements, revenue projections, tax returns, and credit reports.  Even if the borrower is not presently in default, management will consider the likelihood that cash flow shortages, adverse economic conditions, and negative trends may result in a payment default in the near future.

The following table presents TDRs outstanding as of June 30, 2012:

	June 30, 2012
	Accrual Loans	Non-Accrual Loans	Total Modifications
	(In Thousands)
Commercial real estate	$        5,008	$           660	$            5,668
Commercial construction	2,799	-	2,799
Commercial	199	-	199
Residential real estate	827	-	827
Consumer	-	-	-
	$        8,833	$           660	$            9,493

                           As of June 30, 2012, no available commitments were outstanding on TDRs.

The following tables present newly restructured loans that occurred during the three and six months ended June 30, 2012, respectively:

	Number of Loans	Pre-Modification Outstanding Balance	Post- Modification Outstanding Balance
Three months ended June 30, 2012:	(Dollars In Thousands)
Commercial real estate	3	$                             652	$                           652
Commercial construction	1	341	341
Commercial	-	-	-
Residential real estate	-	-	-
Consumer	-	-	-
	4	$                             993	$                           993
Six months ended June 30, 2012:
Commercial real estate	4	$                          1,259	$                       1,259
Commercial construction	1	341	341
Commercial	-	-	-
Residential real estate	1	670	670
Consumer	-	-	-
	6	$                          2,270	$                       2,270

Of the TDRs described above, five loans required an impairment reserve of $483 thousand recorded in the allowance for loan losses for the six months ended June 30, 2012.

The following table presents loans that were classified as a TDR within the prior twelve months that experienced a payment default (loans ninety or more days past due) during the three and six month periods ended June 30, 2012, respectively:

	Number of Loans	Recorded Investment
Three months ended June 30, 2012:	(Dollars In Thousands)
Commercial real estate	3	$                            999
	3	$                            999
Six months ended June 30, 2012:
Commercial real estate	3	$                            999
	3	$                            999

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
INTEREST INCOME
Loans receivable, including fees	$ 5,399	$ 5,088	$ 10,706	$ 10,154
Securities, taxable	312	430	640	901
Securities, non-taxable	343	251	656	496
Federal funds sold, and other	25	9	53	15
Interest on time deposits	26	30	53	61
Total Interest Income	6,105	5,808	12,108	11,627
INTEREST EXPENSE
Deposits	865	1,012	1,868	2,025
Securities sold under agreements to repurchase and federal funds purchased	17	39	43	98
Long-term borrowings	174	186	352	370
Total Interest Expense	1,056	1,237	2,263	2,493
Net Interest Income	5,049	4,571	9,845	9,134
PROVISION FOR LOAN LOSSES	445	138	575	303
Net Interest Income after Provision for Loan Losses	4,604	4,433	9,270	8,831
OTHER INCOME
Credit card processing fees	280	231	566	459
Other service fees	113	115	218	209
Loss on sale of other real estate owned			(8)
Impairment on other real estate owned			(100)
Total Other Income	393	346	676	668
OTHER EXPENSES
Salaries and employee benefits	1,426	1,377	2,914	2,767
Occupancy and equipment	555	540	1,157	1,094
Data processing	272	292	539	507
Credit card processing	244	226	493	443
Advertising and promotion	236	225	424	417
Professional fees	142	91	249	171
FDIC insurance	101	169	188	341
Insurance	12	15	24	28
Loan department	54	49	103	94
Charitable contributions	111	92	253	211
Other real estate owned	18	31	44	73
Other	207	120	342	251
Total Other Expenses	3,378	3,227	6,730	6,397
Income before Income Taxes	1,619	1,552	3,216	3,102
INCOME TAX EXPENSE	438	441	865	877
Net Income	$ 1,181	$ 1,111	$ 2,351	$ 2,225
BASIC EARNING PER SHARE	$ 0.16	$ 0.16	$ 0.33	$ 0.31
DILUTED EARNINGS PER SHARE	$ 0.16	$ 0.15	$ 0.33	$ 0.31
DIVIDENDS PER SHARE	$ 0.04	$ 0.03	$ 0.04	$ 0.03

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Stock Incentive Plans

6 Months Ended

Jun. 30, 2012

Stock Incentive Plan [Abstract]

Stock Incentive Plans

Note 4 – Stock Incentive Plan

Stock Incentive Plan:

At the Company's annual meeting on June 16, 2010, the shareholders approved the Embassy Bancorp, Inc. 2010 Stock Incentive Plan (the "SIP"). The SIP authorizes the Board of Directors, or a committee authorized by the Board of Directors, to award a stock based incentive to (i) designated officers (including officers who are directors) and other designated employees at the Company and its subsidiaries, and (ii) non-employee members of the Board of Directors and advisors and consultants to the Company and its subsidiaries. The Board of Directors believes that the SIP will encourage the designated participants to contribute materially to the growth of the Company. The SIP provides for stock based incentives in the form of incentive stock options as provided in Section 422 of the Internal Revenue Code of 1986, non-qualified stock options, stock appreciation rights, restricted stock and deferred stock awards. The term of the option, the amount of time for the option to vest after grant, if any, and other terms and limitations will be determined at the time of grant. Options granted under the SIP may not have an exercise period that is more than ten years from the time the option is granted.

The aggregate number of shares available for issuance under the SIP is 500,000. The SIP provides for appropriate adjustments in the number and kind of shares available for grant or subject to outstanding awards under the SIP to avoid dilution in the event of merger, stock splits, stock dividends or other changes in the capitalization of the Company. The SIP expires on June 15, 2020. There were no awards granted under the SIP for the years ended December 31, 2011 and 2010. In February 2012, the Company granted 7,992 shares of restricted stock to certain members of its Board of Directors as compensation for their service in 2011 in accordance with the Company's Non-employee Directors Compensation program adopted in October of 2010. Such compensation was accrued for as of December 31, 2011. In February 2012, the Company also granted stock options to purchase 52,611 shares of stock to certain executive officers in accordance with their respective employment agreements. Stock compensation expense related to these options was $5 thousand and $17 thousand for the three and six months ended June 30, 2012, respectively. At June 30, 2012, approximately $119 thousand unrecognized cost related to these stock options will be recognized over the next 2.7 years.

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Stockholders Equity

6 Months Ended

Jun. 30, 2012

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 3 – Stockholders' Equity

On November 11, 2008, the Company consummated its acquisition of Embassy Bank For The Lehigh Valley pursuant to a Plan of Merger and Reorganization dated April 18, 2008, pursuant to which the Bank was reorganized into a bank holding company structure. At the effective time of the reorganization, each share of common stock of Embassy Bank For The Lehigh Valley issued and outstanding was automatically converted into one share of Company common stock. The issuance of Company common stock in connection with the reorganization was exempt from registration pursuant to Section 3(a)(12) of the Securities Act of 1933, as amended.

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Guarantees (Policy)

6 Months Ended

Jun. 30, 2012

Guarantees [Abstract]

Guarantees, Indemnifications and Warranties Policies [Policy Text Block]

The Company, through the Bank, does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Bank generally holds collateral and/or personal guarantees supporting these commitments. The Company had $­4.6 million of standby letters of credit outstanding as of June 30, 2012. The approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $4.5 million. Management does not consider the current amount of the liability as of June 30, 2012 for guarantees under standby letters of credit issuedto be material.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 11 – Fair Value Measurements

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price 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. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation technique or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.

ASC Topic 860 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under ASC Topic 860 are as follows:

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

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

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

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

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy utilized at June 30, 2012 and December 31, 2011, respectively, are as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs	Total
	(In Thousands)
U.S.Government agency obligations	$                   -	$           33,527	$                   -	$           33,527
Municipal Bonds	-	49,106	-	49,106
U.S. Government Sponored Enterprise (GSE) - Mortgage-backed securities - residential	-	11,391	-	11,391
Corporate bonds	-	3,264	-	3,264
June 30, 2012 Securities available for sale	$                   -	$         97,288	$                   -	$         97,288
U.S.Government agency obligations	$                   -	$           33,689	$                   -	$           33,689
Municipal Bonds	-	40,048	-	40,048
U.S. Government Sponored Enterprise (GSE) - Mortgage-backed securities - residential	-	13,841	-	13,841
Corporate bonds	-	4,532	-	4,532
December 31, 2011 Securities available for sale	$                   -	$           92,110	$                   -	$           92,110

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at June 30, 2012 and December 31, 2011, respectively, are as follows:

Description	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs	Total
	(In Thousands)
June 30, 2012 Impaired loans (1)	$                  -	$                  -	$            2,250	$            2,250
June 30, 2012 Other real estate owned (2)	$                  -	$                  -	$            2,969	$            2,969
December 31, 2011 Impaired loans (1)	$                  -	$                  -	$                599	$                599
December 31, 2011 Other real estate owned (2)	$                  -	$                  -	$             3,388	$             3,388

Impaired loans are those that are accounted for under existing FASB guidance, in which the Bank has measured impairment generally based on the fair value of the loan's collateral. Fair value is generally determined based upon independent third-party appraisals of the

properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

At June 30, 2012, of the impaired loans having an aggregate balance of $13.8 million, $10.9 million did not require a valuation allowance because the value of the collateral securing the loan was determined to meet or exceed the balance owed on the loan. Of the remaining $2.9 million in impaired loans, an aggregate valuation allowance of $659 thousand was required to reflect what was determined to be a shortfall in the value of the collateral as compared to the balance on such loans.

Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices or appraised value of the property. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

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

	Quantitative Information about Level 3 Fair Value Measurements
Description	Fair Value Estimate	Valuation Techniques	Unobservable Input	Range (Weighted Average)
	(Dollars In Thousands)
June 30, 2012 Impaired loans	2,250	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -34% (-20.3%)
			Liquidation expenses (3)	-10% (-10%)
June 30, 2012 Other real estate owned	2,969	Pending agreement of sale (4)	Liquidation expenses (3)	-5% (-5%)
(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not
identifiable.
(2) Appraisals may be adjusted by management for qualitative factors including economic conditions and the age of the appraisal.  The range and weighted
average of appraisal adjustments are presented as a percent of the appraisal.
(3)  Appraisals and pending agreements of sale are adjusted by management for liquidation expenses.  The range and weighted average of liquidation expense adjustments
are presented as a percent of the appraisal or pending agreement of sale.
(4)  Fair value is determined by a pending agreements of sale, of a portion of the real estate.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company's financial instruments at June 30, 2012 and December 31, 2011:

Cash and Cash Equivalents (Carried at Cost)

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets' fair values.

Interest Bearing Time Deposits (Carried at Cost)

Fair values for fixed-rate time certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits. The Company generally purchases amounts below the insured limit, limiting the amount of credit risk on these time deposits.

Securities Available for Sale (Carried at Fair Value)

The fair value of securities available for sale are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities, but rather by relying on the securities' relationship to other benchmark quoted prices. For these securities, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, live trading levels, trade execution data, market consensus prepayment speeds, credit information and the security's terms and conditions, among other things.

Loans Receivable (Carried at Cost)

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

Restricted Investment in Bank Stock (Carried at Cost)

The carrying amount of restricted investment in bank stock approximates fair value, and considers the limited marketability of such securities.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities (Carried at Cost)

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

Securities Sold Under Agreements to Repurchase and Federal Funds Purchased (Carried at Cost)

These borrowings are short term and the carrying amount approximates the fair value.

Long-Term Borrowings (Carried at Cost)

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

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing.

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

		June 30, 2012
		Carrying Amount	Fair Value Estimate	(Level 1) Quoted Prices in Active Markets for Identical Assets	(Level 2) Significant Other Observable Inputs	(Level 3) Significant Unobservable Inputs
		(In Thousands)
Financial assets:
	Cash and cash equivalents	$   49,117	$   49,117	$          49,117	$               -	$                   -
	Interest bearing time deposits	7,717	7,798	-	7,798	-
	Securities available-for-sale	97,288	97,288	-	97,288	-
	Loans receivable, net of allowance	457,380	466,440	-	-	466,440
	Restricted investments in bank stock	1,485	1,485	1,485	-	-
	Accrued interest receivable	1,713	1,713	1,713	-	-
Financial liabilities:
	Deposits	535,109	535,644	470,829	64,815	-
	Securities sold under agreements to
	repurchase and federal funds purchased	24,283	24,283	24,283	-	-
	Long-term borrowings	12,986	13,215	-	-	13,215
	Accrued interest payable	399	399	399	-	-
Off-balance sheet finanacial instruments:
	Commitments to grant loans	-	-	-	-	-
	Unfunded commitments under lines of credit	-	-	-	-	-
	Standby letters of credit	-	-	-	-	-
			December 31, 2011
			Carrying	Fair Value
			Amount	Estimate
			(In Thousands)
Financial assets:
	Cash and cash equivalents		$     46,135	$            46,135
	Interest bearing time deposits		7,698	7,720
	Securities available-for-sale		92,110	92,110
	Loans receivable, net of allowance		419,126	427,861
	Restricted investments in bank stock		1,641	1,641
	Accrued interest receivable		1,568	1,568
Financial liabilities:
	Deposits		481,775	482,344
	Securities sold under agreements to
	repurchase and federal funds purchased		33,953	33,955
	Long-term borrowings		13,086	13,422
	Accrued interest payable		582	582
Off-balance sheet finanacial instruments:
	Commitments to grant loans		-	-
	Unfunded commitments under lines of credit		-	-
	Standby letters of credit		-	-

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Short-term and Long-term Borrowings

6 Months Ended

Jun. 30, 2012

Short-term and Long-term Borrowings [Abstract]

Short-term and Long-term Borrowings

Note 7 – Short-term and Long-term Borrowings

Securities sold under agreements to repurchase, federal funds purchased and Federal Home Loan Bank of Pittsburgh ("FHLB") short term advances generally represent overnight or less than twelve month borrowings. Long term advances from the FHLB are for periods of twelve months or more and are generally less than sixty months. The Bank has an agreement with the FHLB which allows for borrowings up to a percentage of qualifying assets. At June 30, 2012, the Bank had a maximum borrowing capacity for short-term and long-term advances of approximately $218.8 million, of which $7.9 million were outstanding in long-term loans. This borrowing capacity with the FHLB includes a line of credit of $25.0 million. Long-term loans with FHLB of $7.9 million were outstanding at December 31, 2011. There were no short-term advances outstanding at June 30, 2012 and December 31, 2011. All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank has a federal funds line of credit with the Atlantic Central Bankers Bank ("ACBB") of approximately $6.0 million, of which none was outstanding at June 30, 2012 and December 31, 2011. Advances from this line are unsecured.

The Company has two lines of credit with Univest Bank and Trust Co. ("Univest") totaling $10 million. As of June 30, 2012 and December 31, 2011, the outstanding balance was $5.1 million and $5.2 million, respectively. Advances from these lines of credit are secured by 833,333 shares of Bank common stock. Under the terms of the loan agreement, the Bank is required to remain well capitalized. The proceeds of the loan were primarily used for the holding company's investment in the Bank, thus providing additional capital to support the Bank's growth.

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Basic and Diluted Earnings per Share

6 Months Ended

Jun. 30, 2012

Basic and Diluted Earnings per Share [Abstract]

Basic and Diluted Earnings per Share

Note 5 – Basic and Diluted Earnings per Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period, as adjusted for stock dividends and splits. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustments to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and are determined using the treasury stock method.

	Three Months Ended June 30,		Six Months Ended June 30,
	2012	2011	2012	2011
	(Dollars In Thousands, except per share data)
Net income	$              1,181	$              1,111	$              2,351	$              2,225
Weighted average shares outstanding	7,181	7,162	7,178	7,159
Dilutive effect of potential common shares, stock options	28	23	28	26
Diluted weighted average common shares outstanding	7,209	7,185	7,206	7,185
Basic earnings per share	$                0.16	$                0.16	$                0.33	$                0.31
Diluted earnings per share	$                0.16	$                0.15	$                0.33	$                0.31

Stock options of 130,192 and 72,439 for the three months ended June 30, 2012 and 2011, respectively, and stock options of $122,200 and $72,439 for the six months ended June 30, 2012 and 2011, respectively, were not considered in computing diluted earnings per common share, because they are not dilutive to earnings.

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Guarantees

6 Months Ended

Jun. 30, 2012

Guarantees [Abstract]

Guarantees

Note 6 – Guarantees

The Company, through the Bank, does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Bank generally holds collateral and/or personal guarantees supporting these commitments. The Company had $­4.6 million of standby letters of credit outstanding as of June 30, 2012. The approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $4.5 million. Management does not consider the current amount of the liability as of June 30, 2012 for guarantees under standby letters of credit issuedto be material.

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Securities Available For Sale

6 Months Ended

Jun. 30, 2012

Securities Avaliable For Sale [Abstract]

Securities Available For Sale

Note 8 – Securities Available For Sale                                                                        

At June 30, 2012 and December 31, 2011, respectively, the amortized cost and fair values of securities available-for-sale were as follows:

			Gross	Gross
		Amortized	Unrealized	Unrealized	Fair
		Cost	Gains	Losses	Value
		(In Thousands)
June 30, 2012:
	U.S Government agency obligations	$          33,253	$             274	$               -	$         33,527
	Municipal bonds	45,953	3,185	(32)	49,106
	U.S. Government Sponsored Enterprise (GSE) -
	Mortgage-backed securities - residential	10,741	650	-	11,391
	Corporate Bonds	3,258	50	(44)	3,264
	Total	$          93,205	$           4,159	$             (76)	$         97,288
December 31, 2011:
	U.S Government agency obligations	$          33,399	$             297	$               (7)	$         33,689
	Municipal bonds	37,415	2,633	-	40,048
	U.S. Government Sponsored Enterprise (GSE) -
	Mortgage-backed securities - residential	13,164	677	-	13,841
	Corporate Bonds	4,514	91	(73)	4,532
	Total	$          88,492	$           3,698	$             (80)	$         92,110

The amortized cost and fair value of securities as of June 30, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without any penalties.

	Amortized	Fair
	Cost	Value
	(In Thousands)
Due in one year or less	$        19,130	$        19,183
Due after one year through five years	20,013	20,364
Due after five years through ten years	17,214	18,270
Due after ten years	26,107	28,080
	82,464	85,897
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securites - residential	10,741	11,391
	$        93,205	$        97,288

There were no sales of securities for the three and six months ended June 30, 2012 and 2011.

Securities with a carrying value of $41.3 and $47.7 million at June 30, 2012 and December 31, 2011, respectively, were subject to agreements to repurchase, pledged to secure public deposits, or pledged for other purposes required or permitted by law.

The following table shows the Company's investments' gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2012 and December 31, 2011, respectively:

		Less Than 12 Months		12 Months or More		Total
		Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
June 30, 2012:		(In Thousands)
	Municipal bonds	$      2,707	$          (32)	$              -	$              -	$      2,707	$          (32)
	Corporate Bonds	1,952	(44)	-	-	1,952	(44)
	Total Temporarily Impaired Securities	$      4,659	$          (76)	$              -	$              -	$      4,659	$          (76)
December 31, 2011:
	U.S. Government agency obligations	$        2,007	$            (7)	$              -	$              -	$       2,007	$             (7)
	Corporate Bonds	1,922	(73)	-	-	1,922	(73)
	Total Temporarily Impaired Securities	$        3,929	$          (80)	$              -	$              -	$       3,929	$           (80)

The Company had seven (7) securities in an unrealized loss position at June 30, 2012. The unrealized losses are due only to market rate fluctuations. As of June 30, 2012, the Company either has the intent and ability to hold the securities until maturity or market price recovery, or believes that it is more likely than not that it will not be required to sell such securities. Management believes that the unrealized loss only represents temporary impairment of the securities. None of the individual losses are significant.

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Securities Available For Sale (Amortized Cost and Fair Value of Securities Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of Investments [Line Items]
Amortized Cost	$ 93,205	$ 88,492
Gross Unrealized Gains	4,159	3,698
Gross Unrealized Losses	(76)	(80)
Fair Value, Total	97,288	92,110
U.S Government agency obligations [Member]
Schedule of Investments [Line Items]
Amortized Cost	33,253	33,399
Gross Unrealized Gains	274	297
Gross Unrealized Losses		(7)
Fair Value, Total	33,527	33,689
Municipal Bonds [Member]
Schedule of Investments [Line Items]
Amortized Cost	45,953	37,415
Gross Unrealized Gains	3,185	2,633
Gross Unrealized Losses	(32)
Fair Value, Total	49,106	40,048
U.S. GSE - Mortgage-backed securities - residential [Member]
Schedule of Investments [Line Items]
Amortized Cost	10,741	13,164
Gross Unrealized Gains	650	677
Fair Value, Total	11,391	13,841
Corporate bonds [Member]
Schedule of Investments [Line Items]
Amortized Cost	3,258	4,514
Gross Unrealized Gains	50	91
Gross Unrealized Losses	(44)	(73)
Fair Value, Total	$ 3,264	$ 4,532

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Fair Value Measurements (Fair Value, by Balance Sheet Grouping) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest bearing time deposits	$ 34,606	$ 33,605
Accrued interest receivable	1,713	1,568
Accrued interest payable	399	582
Carrying Amount [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	49,117	46,135
Interest bearing time deposits	7,717	7,698
Securities available-for-sale	97,288	92,110
Loans receivable, net of allowance	457,380	419,126
Restricted investment in bank stock	1,485	1,641
Accrued interest receivable	1,713	1,568
Deposits	535,109	481,775
Securities sold under agreements to repurchase and federal funds purchased	24,283	33,953
Long-term borrowings	12,986	13,086
Accrued interest payable	399	582
Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	49,117	46,135
Interest bearing time deposits	7,798	7,720
Securities available-for-sale	97,288	92,110
Loans receivable, net of allowance	466,440	427,861
Restricted investment in bank stock	1,485	1,641
Accrued interest receivable	1,713	1,568
Deposits	535,644	482,344
Securities sold under agreements to repurchase and federal funds purchased	24,283	33,955
Long-term borrowings	13,215	13,422
Accrued interest payable	399	582
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	49,117
Restricted investment in bank stock	1,485
Accrued interest receivable	1,713
Deposits	470,829
Securities sold under agreements to repurchase and federal funds purchased	24,283
Accrued interest payable	399
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Interest bearing time deposits	7,798
Securities available-for-sale	97,288	92,110
Deposits	64,815
(Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Loans receivable, net of allowance	466,440
Long-term borrowings	$ 13,215

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Basis of Presentation (Policy)

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

Consolidation, Policy [Policy Text Block]

Embassy Bancorp, Inc. (the "Company") is a Pennsylvania corporation organized in 2008 and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the "BHC Act"). The Company was formed for purposes of acquiring Embassy Bank For The Lehigh Valley (the "Bank") in connection with the reorganization of the Bank into a bank holding company structure, which was consummated on November 11, 2008. Accordingly, the Company owns all of the capital stock of the Bank, giving the organization more flexibility in meeting its capital needs as the Company continues to grow. Embassy Holdings, LLC (the "LLC") is a wholly-owned subsidiary of the Bank organized to engage in the holding of property acquired by the Bank in satisfaction of debts previously contracted. As such, the consolidated financial statements contained herein include the accounts of the Company, the Bank and the LLC. All significant intercompany transactions and balances have been eliminated.

The Bank, which is the Company's principal operating subsidiary, was originally incorporated as a Pennsylvania bank on May 11, 2001 and opened its doors on November 6, 2001. It was formed by a group of local business persons and professionals with significant prior experience in community banking in the Lehigh Valley area of Pennsylvania, the Bank's primary market area.

The accompanying unaudited financial statements have been prepared in accordance with United States of America generally accepted accounting principles ("US GAAP") for interim financial information and in accordance with instructions for Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The consolidated financial statements presented in this report should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the year ended December 31, 2011, included in the Company's Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 30, 2012.

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Securities Available For Sale (Tables)

6 Months Ended

Jun. 30, 2012

Securities Avaliable For Sale [Abstract]

Amortized Cost and Fair Values of Securities Available-For-Sale [Table Text Block]

			Gross	Gross
		Amortized	Unrealized	Unrealized	Fair
		Cost	Gains	Losses	Value
		(In Thousands)
June 30, 2012:
	U.S Government agency obligations	$          33,253	$             274	$               -	$         33,527
	Municipal bonds	45,953	3,185	(32)	49,106
	U.S. Government Sponsored Enterprise (GSE) -
	Mortgage-backed securities - residential	10,741	650	-	11,391
	Corporate Bonds	3,258	50	(44)	3,264
	Total	$          93,205	$           4,159	$             (76)	$         97,288
December 31, 2011:
	U.S Government agency obligations	$          33,399	$             297	$               (7)	$         33,689
	Municipal bonds	37,415	2,633	-	40,048
	U.S. Government Sponsored Enterprise (GSE) -
	Mortgage-backed securities - residential	13,164	677	-	13,841
	Corporate Bonds	4,514	91	(73)	4,532
	Total	$          88,492	$           3,698	$             (80)	$         92,110

Securities Available-For-Sale by Contractual Maturity [Table Text Block]

	Amortized	Fair
	Cost	Value
	(In Thousands)
Due in one year or less	$        19,130	$        19,183
Due after one year through five years	20,013	20,364
Due after five years through ten years	17,214	18,270
Due after ten years	26,107	28,080
	82,464	85,897
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securites - residential	10,741	11,391
	$        93,205	$        97,288

Investments' Gross Unrealized Losses and Fair Value [Table Text Block]

		Less Than 12 Months		12 Months or More		Total
		Fair Value	Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
June 30, 2012:		(In Thousands)
	Municipal bonds	$      2,707	$          (32)	$              -	$              -	$      2,707	$          (32)
	Corporate Bonds	1,952	(44)	-	-	1,952	(44)
	Total Temporarily Impaired Securities	$      4,659	$          (76)	$              -	$              -	$      4,659	$          (76)
December 31, 2011:
	U.S. Government agency obligations	$        2,007	$            (7)	$              -	$              -	$       2,007	$             (7)
	Corporate Bonds	1,922	(73)	-	-	1,922	(73)
	Total Temporarily Impaired Securities	$        3,929	$          (80)	$              -	$              -	$       3,929	$           (80)

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Fair Value Measurements (Fair Value, Assets and Liabilities Measured on Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Financing Receivable, Recorded Investment	$ 13,811	$ 13,427
Impaired Financing Receivable, Related Allowance	659	126
(Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	2,969	3,388
Impaired Financing Receivable, Recorded Investment	2,250	599
Total Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned	2,969	3,388
Impaired Financing Receivable, Recorded Investment	$ 2,250	$ 599

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Loans Receivable and Credit Quality (Nonaccrual Loans by Classes of the Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 2,496	$ 1,869
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	2,449	1,869
Residential real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 47

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Comprehensive Income
Net Income	$ 1,181	$ 1,111	$ 2,351	$ 2,225
Other comprehensive income:
Unrealized holding gains on securities available for sale	371	1,493	465	2,248
Less: reclassification adjustment for realized gains (losses)	0	0	0	0
Securities available for sale, adjustment, before tax	371	1,493	465	2,248
Income tax effect	(126)	(507)	(158)	(764)
Net unrealized gains	245	986	307	1,484
Other comprehensive income:	245	986	307	1,484
Comprehensive Income	$ 1,426	$ 2,097	$ 2,658	$ 3,709

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

The significant accounting policies of the Company as applied in the interim financial statements presented are substantially the same as those followed on an annual basis as presented in the Company's Form 10-K for the year ended December 31, 2011.

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Loans Receivable and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2012

Loans Receivable and Credit Quality [Abstract]

Composition of Loans Receivable [Table Text Block]

	June 30, 2012		December 31, 2011
		Percentage of		Percentage of
	Balance	total Loans	Balance	total Loans
	(Dollars in Thousands)
Commercial real estate	$                 180,891	39.12%	$ 171,792	40.56%
Commercial construction	16,763	3.63%	13,414	3.17%
Commercial	30,683	6.64%	26,879	6.35%
Residential real estate	228,397	49.39%	210,361	49.65%
Consumer	5,674	1.23%	1,140	0.27%
Gross loans	462,408	100.00%	423,586	100.00%
Unearned origination (fees) costs	(268)		(245)
Allowance for loan losses:	(4,760)		(4,215)
	$                 457,380		$ 419,126

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating [Table Text Block]

	Pass	Special Mention	Substandard	Doubtful	Total
June 30, 2012	(In Thousands)
Commercial real estate	$        173,950	$                855	$            6,086	$             -	$        180,891
Commercial construction	12,789	-	3,974	-	16,763
Commercial	30,423	193	67	-	30,683
Residential real estate	227,403	278	669	47	228,397
Consumer	5,674	-	-	-	5,674
Total	$        450,239	$             1,326	$          10,796	$            47	$        462,408
December 31, 2011
Commercial real estate	$          163,828	$                 865	$             7,099	$             -	$          171,792
Commercial construction	9,090	-	4,324	-	13,414
Commercial	26,612	194	73	-	26,879
Residential real estate	209,810	282	269	-	210,361
Consumer	1,140	-	-	-	1,140
Total	$          410,480	$               1,341	$            11,765	$             -	$          423,586

Impaired Loans and Related Interest Income by Loan Portfolio Class [Table Text Block]

				Quarter-to-date		Year-to-date
June 30, 2012	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized	Average Recorded Investment	Interest Income Recognized
	(In Thousands)
With no related allowance recorded:
Commercial real estate	$         6,007	$      6,007		$         5,887	$            82	$          6,529	$           168
Commercial construction	4,315	4,315		4,320	40	4,204	70
Commercial	302	302		305	4	324	7
Residential real estate	278	278		297	4	382	7
Consumer	-	-		-	-	-	-
With an allowance recorded:
Commercial real estate	$         2,190	$      2,190	$          527	$         2,144	$            54	$          1,653	$           106
Commercial construction	-	-	-	-	-	-	-
Commercial	3	52	1	4	(1)	21	-
Residential real estate	716	716	131	717	7	478	8
Consumer	-	-	-	-	-	-	-
Total:
Commercial real estate	$         8,197	$      8,197	$          527	$         8,031	$          136	$          8,182	$           274
Commercial construction	4,315	4,315	-	4,320	40	4,204	70
Commercial	305	354	1	309	3	345	7
Residential real estate	994	994	131	1,014	11	860	15
Consumer	-	-	-	-	-	-	-
	$      13,811	$  13,860	$         659	$      13,673	$         190	$      13,591	$          366
December 31, 2011	Recorded Investment	Unpaid Principal Balance	Related Allowance			Average Recorded Investment	Interest Income Recognized
With no related allowance recorded:						Year-to-date
Commercial real estate	$         7,814	$      7,863				$          5,787	$           492
Commercial construction	3,974	3,974				3,360	156
Commercial	362	362				363	15
Residential real estate	552	552				498	24
Consumer	-	-				-	-
With an allowance recorded:
Commercial real estate	$            670	$        670	$          107			$            463	$             42
Commercial construction	-	-	-			-	-
Commercial	55	55	19			61	4
Residential real estate	-	-	-			-	-
Consumer	-	-	-			-	-
Total:
Commercial real estate	$         8,484	$      8,533	$          107			$          6,250	$           534
Commercial construction	3,974	3,974	-			3,360	156
Commercial	417	417	19			424	19
Residential real estate	552	552	-			498	24
Consumer	-	-	-			-	-
	$      13,427	$  13,476	$         126			$      10,532	$          733

Nonaccrual Loans by Classes of the Loan Portfolio [Table Text Block]

	June 30, 2012	December 31, 2011
	(In Thousands)
Commercial real estate	$            2,449	$                        1,869
Commercial construction	-	-
Commercial	-	-
Residential real estate	47	-
Consumer	-	-
Total	$            2,496	$                        1,869

Loan Portfolio Summarized by the Past Due Status [Table Text Block]

June 30, 2012	30-59 Days Past Due	60-89 Days Past Due	Greater than 90 Days	Total Past Due	Current	Total Loan Receivables	Loans Receivable > 90 Days and Accruing
	(In Thousands)
Commercial real estate	$           29	$             116	$   2,438	$         2,583	$      178,308	$           180,891	$                   -
Commercial construction	-	2,559	351	2,910	13,853	16,763	351
Commercial	43	-	-	43	30,640	30,683	-
Residential real estate	457	-	47	504	227,893	228,397	-
Consumer	17	-	-	17	5,657	5,674	-
Total	$         546	$          2,675	$   2,836	$         6,057	$      456,351	$           462,408	$                351
December 31, 2011
Commercial real estate	$          300	$           1,222	$     2,074	$          3,596	$        168,196	$             171,792	$                 205
Commercial construction	-	1,412	-	1,412	12,002	13,414	-
Commercial	-	-	61	61	26,818	26,879	61
Residential real estate	-	269	-	269	210,092	210,361	-
Consumer	22	-	-	22	1,118	1,140	-
Total	$          322	$           2,903	$     2,135	$          5,360	$        418,226	$             423,586	$                 266

Allowance for Loan Losses and Recorded Investment in Financing Receivables [Table Text Block]

	Commercial Real Estate	Commercial Construction	Commercial	Home Equity	Residential Real Estate	Unallocated	Total
Allowance for credit losses	(In Thousands)
Three months ending June 30, 2012:
Beginning Balance - March 31, 2012	$          1,643	$            391	$             363	$       1,748	$              39	$          162	$   4,346
Charge-offs	-	-	-	(35)	-	-	(35)
Recoveries	-	-	-	4	-	-	4
Provisions	308	49	45	169	11	(137)	445
Ending balance - June 30, 2012	$          1,951	$            440	$             408	$       1,886	$              50	$           25	$   4,760
Six months ending June 30, 2012:
Beginning Balance - December 31, 2011	$          1,264	$            352	$             423	$       1,691	$              40	$          445	$   4,215
Charge-offs	(3)	-	-	(35)	-	-	(38)
Recoveries	-	-	-	8	-	-	8
Provisions	690	88	(15)	222	10	(420)	575
Ending balance - June 30, 2012	$          1,951	$            440	$             408	$       1,886	$              50	$           25	$   4,760
Three months ending June 30, 2011:
Beginning Balance - March 31, 2011	$          1,328	$            392	$             323	$       1,332	$              37	$          377	$   3,789
Charge-offs	(19)	-	(1)	-	-	-	(20)
Recoveries	1	-	-	-	4	-	5
Provisions	74	(52)	(13)	81	12	36	138
Ending balance - June 30, 2011	$          1,384	$            340	$             309	$       1,413	$              53	$          413	$   3,912
Six months ending June 30, 2011:
Beginning Balance - December 31, 2010	$          1,014	$            443	$             325	$       1,309	$              35	$          583	$   3,709
Charge-offs	(87)	-	(1)	(25)	-	-	(113)
Recoveries	1	-	4		8	-	13
Provisions	456	(103)	(19)	129	10	(170)	303
Ending balance - June 30, 2011	$          1,384	$            340	$             309	$       1,413	$              53	$          413	$   3,912

	Commercial Real Estate	Commercial Construction	Commercial	Home Equity	Residential Real Estate	Unallocated	Total
June 30, 2012
Allowance for Loan Losses
Ending Balance	$               1,951	$                  440	$             408	$             1,886	$                    50	$                 25	$       4,760
Ending balance: individually evaluated for impairment	$                  527	$                    -	$                1	$               131	$                    -	$                 -	$          659
Ending balance: collectively evaluated for impairment	$               1,424	$                  440	$             407	$             1,755	$                    50	$                 25	$       4,101
Loans receivables:
Ending balance	$            180,891	$              16,763	$        30,683	$         228,397	$                5,674		$    462,408
Ending balance: individually evaluated  for impairment	$               8,197	$                4,315	$             305	$               994	$                    -		$     13,811
Ending balance: collectively evaluated for impairment	$            172,694	$              12,448	$        30,378	$         227,403	$                5,674		$    448,597
December 31, 2011
Allowance for Loan Losses
Ending Balance	$               1,264	$                  352	$              423	$             1,691	$                    40	$               445	$       4,215
Ending balance: individually evaluated for impairment	$                  107	$                    -	$              19	$                 -	$                    -	$                 -	$          126
Ending balance: collectively evaluated for impairment	$               1,157	$                  352	$             404	$             1,691	$                    40	$               445	$       4,089
Loans receivables:
Ending balance	$            171,792	$              13,414	$        26,879	$         210,361	$                1,140		$    423,586
Ending balance: individually evaluated  for impairment	$               8,484	$                3,974	$             417	$               552	$                    -		$     13,427
Ending balance: collectively evaluated for impairment	$            163,308	$                9,440	$        26,462	$         209,809	$                1,140		$    410,159

Troubled Debt Restructuring Outstanding [Table Text Block]

	June 30, 2012
	Accrual Loans	Non-Accrual Loans	Total Modifications
	(In Thousands)
Commercial real estate	$        5,008	$           660	$            5,668
Commercial construction	2,799	-	2,799
Commercial	199	-	199
Residential real estate	827	-	827
Consumer	-	-	-
	$        8,833	$           660	$            9,493

Troubled Debt Restructurings On Financing Receivables, Current Period [Table Text Block]

	Number of Loans	Pre-Modification Outstanding Balance	Post- Modification Outstanding Balance
Three months ended June 30, 2012:	(Dollars In Thousands)
Commercial real estate	3	$                             652	$                           652
Commercial construction	1	341	341
Commercial	-	-	-
Residential real estate	-	-	-
Consumer	-	-	-
	4	$                             993	$                           993
Six months ended June 30, 2012:
Commercial real estate	4	$                          1,259	$                       1,259
Commercial construction	1	341	341
Commercial	-	-	-
Residential real estate	1	670	670
Consumer	-	-	-
	6	$                          2,270	$                       2,270

Troubled Debt Restructuring payment default Current Period

	Number of Loans	Recorded Investment
Three months ended June 30, 2012:	(Dollars In Thousands)
Commercial real estate	3	$                            999
	3	$                            999
Six months ended June 30, 2012:
Commercial real estate	3	$                            999
	3	$                            999

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Loans Receivable and Credit Quality (Composition of Loans Receivable) (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 462,408	$ 423,586
Percentage of Total Loans	100.00%	100.00%
Unearned origination (fees) costs	(268)	(245)
Allowance for loan losses	(4,760)	(4,215)
Net Loans Receivable	457,380	419,126
Commercial real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	180,891	171,792
Percentage of Total Loans	39.12%	40.56%
Commercial construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	16,763	13,414
Percentage of Total Loans	3.63%	3.17%
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	30,683	26,879
Percentage of Total Loans	6.64%	6.35%
Residential real estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	228,397	210,361
Percentage of Total Loans	49.39%	49.65%
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 5,674	$ 1,140
Percentage of Total Loans	1.23%	0.27%

XML

New Accounting Standards

6 Months Ended

Jun. 30, 2012

New Accounting Standards [Abstract]

New Accounting Standards

Note 12 – New Accounting Standards

ASU 2011-04 (Fair Value Measurement: Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs):

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This update amends FASB ASC Topic 820, Fair Value Measurements, to bring U.S. GAAP for fair value measurements in line with International Accounting Standards. The Update clarifies existing guidance for items such as: the application of the highest and best use concept to non-financial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholder's equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The Update also creates an exception to Topic 820 for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. The Update also allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the ASU contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. For public entities, this Update is effective for interim and annual periods beginning after December 15, 2011. Early adoption was not permitted. The Company adopted this update on January 1, 2012 and the new disclosures are included in Note 11.

ASU 2011-05 (Comprehensive Income: Presentation of Comprehensive Income):

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The provisions of this update amend FASB ASC Topic 220, Comprehensive Income, to facilitate the continued alignment of U.S. GAAP with International Accounting Standards. The Update prohibits the presentation of the components of comprehensive income in the statement of stockholder's equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate statements of net income and other comprehensive income. Under previous GAAP, all 3 presentations were acceptable. Regardless of the presentation selected, the Reporting Entity is required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The provisions of this Update were effective for fiscal years and interim periods beginning after December 31, 2011 for public entities. The Company adopted this update on January 1, 2012, and the new Consolidated Statements of Comprehensive Income is included in these financial statements.