10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2016 OR

☐ 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 000-53528

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
(Registrant’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  ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§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 ☒  No ☐

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

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

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

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 May 6, 2016	($1.00 Par Value)	7,413,481
	(Title Class)	(Outstanding Shares)

Embassy Bancorp, Inc.                                                                                                                          

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	27
Item 3 – Quantitative and Qualitative Disclosures About Market Risk	36
Item 4 – Controls and Procedures	36
Part II - Other Information	37
Item 1 - Legal Proceedings	37
Item 1A - Risk Factors	37
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3 - Defaults Upon Senior Securities	37
Item 4 – Mine Safety Disclosures	37
Item 5 - Other Information	37
Item 6 - Exhibits	38

2

Embassy Bancorp, Inc.                                                                                                                          

Part I – Financial Information

Item 1 – Financial Statements

Consolidated Balance Sheets (Unaudited)

	March 31,		December 31,
ASSETS	2016		2015
	(In Thousands, Except Share Data)
Cash and due from banks	$	14,090	$	12,459
Interest bearing demand deposits with banks		35,668		6,067
Federal funds sold		1,000		1,000
Cash and Cash Equivalents		50,758		19,526
Securities available for sale		75,214		77,253
Restricted investment in bank stock		535		2,178
Loans receivable, net of allowance for loan losses of $6,209 in 2016; $6,068 in 2015		705,181		684,047
Premises and equipment, net of accumulated depreciation		2,314		2,258
Bank owned life insurance		12,391		12,343
Accrued interest receivable		1,691		1,637
Other real estate owned		701		1,224
Other assets		4,183		3,572
Total Assets	$	852,968	$	804,038
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	92,794	$	89,959
Interest bearing		659,295		570,307
Total Deposits		752,089		660,266
Securities sold under agreements to repurchase		25,752		27,535
Short-term borrowings		-		39,306
Long-term borrowings		-		3,820
Accrued interest payable		586		462
Other liabilities		4,465		4,548
Total Liabilities		782,892		735,937
Stockholders' Equity:
Common stock, $1 par value; authorized 20,000,000 shares;
2016 issued 7,413,481 shares; outstanding 7,413,481 shares;
2015 issued 7,407,547 shares; outstanding 7,407,547 shares		7,413		7,408
Surplus		24,377		24,299
Retained earnings		36,766		35,158
Accumulated other comprehensive income		1,520		1,236
Total Stockholders' Equity		70,076		68,101
Total Liabilities and Stockholders' Equity	$	852,968	$	804,038

See notes to consolidated financial statements.

3

Embassy Bancorp, Inc.                                                                                                                          

Consolidated Statements of Income (Unaudited)

	Three Months Ended March 31,
	2016			2015
	(In Thousands, Except Per Share Data)
INTEREST INCOME
Loans receivable, including fees	$	6,809	$	6,295
Securities, taxable		179		207
Securities, non-taxable		285		303
Federal funds sold, and other		41		49
Total Interest Income		7,314		6,854
INTEREST EXPENSE
Deposits		857		673
Securities sold under agreements to repurchase		4		4
Short-term borrowings		30		15
Long-term borrowings		5		35
Total Interest Expense		896		727
Net Interest Income		6,418		6,127
PROVISION FOR LOAN LOSSES		185		22
Net Interest Income after    Provision for Loan Losses		6,233		6,105
OTHER INCOME
Credit card processing fees		414		363
Other service fees		161		159
Bank owned life insurance		48		98
Gain on sale of securities, net		-		139
Gain on sale of other real estate owned		10		6
Impairment on other real estate owned		-		(42)
Total Other Income		633		723
OTHER EXPENSES
Salaries and employee benefits		1,970		1,742
Occupancy and equipment		675		629
Data processing		389		359
Credit card processing		402		354
Advertising and promotion		324		292
Professional fees		127		122
FDIC insurance		102		87
Insurance		13		14
Loan & real estate		64		44
Charitable contributions		237		209
Other real estate owned expenses		37		36
Other		273		218
Total Other Expenses		4,613		4,106
Income before Income Taxes		2,253		2,722
INCOME TAX EXPENSE		645		781
Net Income	$	1,608	$	1,941
BASIC EARNINGS PER SHARE	$	0.22	$	0.26
DILUTED EARNINGS PER SHARE	$	0.22	$	0.26

See notes to consolidated financial statements

4

Embassy Bancorp, Inc.                                                                                                                          

Consolidated Statements of Comprehensive Income (Unaudited)

	Three Months Ended March 31,
	2016			2015
		(In Thousands)
Net Income	$		1,608	$		1,941
Change in Accumulated Other Comprehensive Income:
Unrealized holding gain on securities available for sale		431			338
Less: reclassification adjustment for realized gains		-			(139)
		431			199
Income tax effect		(147)			(68)
Net unrealized gain		284			131
Other comprehensive gain, net of tax			284			131
Comprehensive Income	$		1,892	$		2,072

See notes to consolidated financial statements.

5

Embassy Bancorp, Inc.                                                                                                                          

Consolidated Statements of Stockholders’ Equity (Unaudited)

Three Months Ended March 31, 2016 and 2015

	Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Income		Total
	(In Thousands, Except Share Data)
BALANCE - DECEMBER 31, 2014	$	7,358	$	24,024	$	28,485	$	1,465	$	61,332
Net income		-		-		1,941		-		1,941
Other comprehensive income, net of tax		-		-		-		131		131
Compensation expense recognized on     stock options		-		16		-		-		16
Common stock grants to directors,    9,112 shares		9		87		-		-		96
BALANCE - MARCH 31, 2015	$	7,367	$	24,127	$	30,426	$	1,596	$	63,516
BALANCE - DECEMBER 31, 2015	$	7,408	$	24,299	$	35,158	$	1,236	$	68,101
Net income		-		-		1,608		-		1,608
Other comprehensive income, net of tax		-		-		-		284		284
Compensation expense recognized on     stock options		-		9		-		-		9
Common stock grants to directors,    5,934 shares		5		57		-		-		62
Compensation expense recognized on     stock grants, net of unearned compensation
expense of $248		-		12		-		-		12
BALANCE - MARCH 31, 2016	$	7,413	$	24,377	$	36,766	$	1,520	$	70,076

See notes to consolidated financial statements.

6

Embassy Bancorp, Inc.                                                                                                                          

Consolidated Statements of Cash Flows (Unaudited)

	Three Months Ended March 31,
	2016		2015
	(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,608	$	1,941
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		185		22
Amortization of deferred loan costs		21		6
Depreciation and amortization		184		157
Net amortization of investment security premiums and discounts		57		53
Stock compensation expense		21		16
Net realized gain on sale of other real estate owned		(10)		-
Impairment on other real estate owned		-		42
Income on bank owned life insurance		(48)		(98)
Net realized gain on sale of securities available for sale		-		(139)
Increase in accrued interest receivable		(54)		(13)
Increase in other assets		(758)		(108)
Increase (decrease) in accrued interest payable		124		(51)
Decrease in other liabilities		(10)		(138)
Net Cash Provided by Operating Activities		1,320		1,690
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale		-		(13,869)
Maturities, calls and principal repayments of securities available for sale		2,413		5,625
Proceeds from sales of securities available for sale		-		442
Net increase in loans		(20,818)		(14,408)
Net redemption (purchases) of restricted investment in bank stock		1,643		(859)
Proceeds from sale of other real estate owned		-		26
Purchases of premises and equipment		(240)		(38)
Net Cash Used in Investing Activities		(17,002)		(23,081)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits		91,823		(2,219)
Net (decrease) increase in securities sold under agreements to repurchase		(1,783)		1,106
(Decrease) increase in short-term borrowed funds		(39,306)		21,458
Payments of long-term borrowed funds		(3,820)		(500)
Net Cash Provided by Financing Activities		46,914		19,845
Net Increase (Decrease) in Cash and Cash Equivalents		31,232		(1,546)
CASH AND CASH EQUIVALENTS - BEGINNING		19,526		16,390
CASH AND CASH EQUIVALENTS - ENDING	$	50,758	$	14,844
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	$	760	$	779
Income taxes paid	$	705	$	960
Other real estate sold through bank financing	$	522	$	-
Deferral of gain from sale of other real estate sold through bank financing	$	11	$	68

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 months endedMarch 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2016.  

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred after March 31, 2016 through the date these consolidated financial statements were issued.

Certain amounts in the 2015 financial statements may have been reclassified to conform to 2016 presentation. These reclassifications had no effect on 2015 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, 2015.

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.

Note 4 – 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 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.At inception, the aggregate number of shares available for issuance under the SIP was 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

8

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

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. At March 31, 2016 there were 322,210 shares available for issuance under the SIP.

The Company grants shares of restricted stock, under the SIP, to certain members of its Board of Directors as compensation for their services, in accordance with the Company’s Non-employee Directors Compensation program adopted in October 2010. The Company also grants restricted stock to certain officers under individual agreements with these officers. Some of these restricted stock awards vest immediately, while the remainder vest over three to nine service years. Management recognizes compensation expense for the fair value of the restricted stock awards on a straight-line basis over the requisite service period. Since inception of the plan and through the period ended March 31, 2016, there have been  65,744 awards granted. During the three months ended March 31, 2016 and 2015 there were 5,934 and 9,112 awards granted, respectively. During the three months ended March 31, 2016 the Company recognized $12 thousand in compensation expense for the restricted stock awards.  There was no compensation expense recognized for the restricted stock awards during the three months ended March 31, 2015.

In January 2014, February 2013 and February 2012, the Company granted stock options to purchase 29,663,  29,742 and 52,611shares of stock to certain executive officers in accordance with their respective employment agreements. No stock options were granted in the quarters ended March 31, 2016 and 2015. Stock compensation expense related to these options was $9 thousand and $16 thousand for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016, approximately $19 thousand unrecognized cost related to stock options granted in 2014 will be recognized over the next 0.80 years. The fair value of the options granted in 2014, 2013 and 2012 was determined with the following weighted average assumptions: dividend yield of 0%, risk free interest rate of 2.30%,  1.34% and 1.43%,  respectively, expected life of 6.0 years, 6.0 years and 7.5 years, respectively, and expected volatility of 28.93%,  28.79% and 31.10%, respectively. The weighted average fair value of options granted in 2014, 2013 and 2012 was $2.46,  $2.14 and $2.56 per share, respectively.

Note 5 – Other Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

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

	Three Months Ended March 31,
	2016						2015
	(In Thousands)
	Before		Tax		Net of		Before		Tax		Net of
	Tax		Effect		Tax		Tax		Effect		Tax
Change in accumulated other comprehensive income:
Unrealized holding gains on securities    available for sale	$	431	$	(147)	$	284	$	338	$	(115)	$	223
Reclassification adjustments for gains on securities    transactions included in net income (A),(B)		-		-		-		(139)		47		(92)
Total other comprehensive income	$	431	$	(147)	$	284	$	199	$	(68)	$	131

A. Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

B. Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

A summary of the realized gains on securities available for sale, net of tax, for the three ended March 31, 2016 and 2015 are as follows:

	Three Months Ended
	March 31,
		2016		2015
		(In Thousands)
Securities available for sale:
Realized gains on securities transactions	$	-	$	(139)
Income taxes		-		47
Net of tax	$	-	$	(92)

9

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

A summary of the accumulated other comprehensive income, net of tax, is as follows:

	Securities
	Available
	for Sale
Three Months Ended March 31, 2016 and 2015	(In Thousands)
Balance January 1, 2016	$	1,236
Other comprehensive income before reclassifications		284
Amounts reclassified from accumulated other    comprehensive income		-
Net other comprehensive income during the period		284
Balance March 31, 2016	$	1,520
Balance January 1, 2015	$	1,465
Other comprehensive income before reclassifications		223
Amounts reclassified from accumulated other    comprehensive income		(92)
Net other comprehensive income during the period		131
Balance March 31, 2015	$	1,596

Note 6 – 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 March 31,
	2016		2015
	(Dollars In Thousands, Except Per Share Data)
Net income	$	1,608	$	1,941
Weighted average shares outstanding		7,411,395		7,364,846
Dilutive effect of potential common shares, stock options		34,098		29,843
Diluted weighted average common shares outstanding		7,445,493		7,394,689
Basic earnings per share	$	0.22	$	0.26
Diluted earnings per share	$	0.22	$	0.26

There were no stock options not considered in computing diluted earnings per common share for the three months ended March 31, 2016 and 2015.

Note 7 – 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 and FHLBank Pittsburgh (“FHLB”) deposit 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 $3.8 million of standby letters of credit outstanding as of March 31, 2016. The approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $3.6 million. Management does not consider the current amount of the liability as of March 31, 2016 for guarantees under standby letters of credit issued to be material.  

10

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

FHLB deposit letters of credit are standby letters of credit commitments issued to the Bank for the benefit of a third party (the “Beneficiary”), which secure public deposits in the Bank.FHLB deposit letter of credits are secured by qualifying assets of the Bank. The Company, through the Bank, had $10.9 million of FHLB deposit letters of credit outstanding as of March 31, 2016.

Note 8 – Short-term and Long-term Borrowings

Securities sold under agreements to repurchase, federal funds purchased and FHLBank 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 March 31, 2016, the Bank had a maximum borrowing capacity for short-term and long-term advances of approximately $402.1 million.  This borrowing capacity with the FHLB includes a line of credit of $150.0 million. There were no short-term FHLB advances outstanding as of March 31, 2016 and $39.3 million were outstanding as of December 31, 2015.  No long-term FHLB advances were outstanding as of March 31, 2016 and $3.8 million were outstanding as of December 31, 2015.  All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank has a federal funds line of credit with the Atlantic Community Bankers Bank (“ACBB”) of approximately $10.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015. Advances from this line are unsecured.

The Company has one line of credit with Univest Bank and Trust Co. (“Univest”) totaling $4.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015.  This line of credit is secured by 333,333 shares of Bank common stock, subordinate to all senior indebtedness of the Company. 

The components of long-term borrowings with the FHLB at December 31, 2015, which have all been repaid in the quarter ending March 31, 2016, were as follows:

	December 31, 2015
	(Dollars in Thousands)
Maturity Date	Interest Rate		Outstanding
April 2016, repaid	0.26%	$	667
April 2017, repaid	0.48%		668
April 2018, repaid	0.69%		779
April 2019, repaid	0.88%		836
April 2020, repaid	1.06%		870
Total Outstanding Borrowings		$	3,820

11

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

Note 9 – Securities Available For Sale

At March 31, 2016 and December 31, 2015, respectively, the amortized cost and approximate fair values of securities available-for-sale were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
March 31, 2016 :
U.S. Government agency obligations	$	32,635	$	128	$	(7)	$	32,756
Municipal bonds		39,061		2,049		(15)		41,095
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,215		148		-		1,363
Total	$	72,911	$	2,325	$	(22)	$	75,214
December 31, 2015 :
U.S. Government agency obligations	$	34,676	$	15	$	(121)	$	34,570
Municipal bonds		39,378		1,970		(144)		41,204
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,327		152		-		1,479
Total	$	75,381	$	2,137	$	(265)	$	77,253

The amortized cost and fair value of securities as of March 31, 2016, 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	$	5,072	$	5,076
Due after one year through five years		32,907		33,181
Due after five years through ten years		18,556		19,472
Due after ten years		15,161		16,122
		71,696		73,851
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential		1,215		1,363
	$	72,911	$	75,214

There were no sales of securities during the three months ended March 31, 2016. Gross gains of $139 thousand were realized on sales of securities for the three months ended March 31, 2015.  There were no gross losses on the sales of securities during the three months ended March 31, 2015.

Securities with a carrying value of $66.3 million and $64.9 million at March 31, 2016 and December 31, 2015, respectively, were subject to agreements to repurchase, pledged to secure public deposits, or pledged for other purposes required or permitted by law.

12

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

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 March 31, 2016 and December 31, 2015, respectively:

		Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2016 :	(In Thousands)
U.S. Government agency obligations	$	9,035	$	(7)	$	-	$	-	$	9,035	$	(7)
Municipal bonds		1,779		(15)		-		-		1,779		(15)
Total Temporarily Impaired Securities	$	10,814	$	(22)	$	-	$	-	$	10,814	$	(22)
December 31, 2015 :
U.S. Government agency obligations	$	25,525	$	(121)	$	-	$	-	$	25,525	$	(121)
Municipal bonds		6,180		(144)		-		-		6,180		(144)
Total Temporarily Impaired Securities	$	31,705	$	(265)	$	-	$	-	$	31,705	$	(265)

The Company had nine (9) securities in an unrealized loss position at March 31, 2016. The unrealized losses are due only to market rate fluctuations. As of March 31, 2016, 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.

Note 10 – Restricted Investment in Bank Stock

Restricted investments in bank stock consist of FHLBank of Pittsburgh (“FHLB”) stock and Atlantic Community 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.  The Bank had FHLB stock at a carrying value of $1.8 million repurchased during the three months endedMarch 31, 2016.  The Bank had no FHLB stock repurchased during the three months ended March 31, 2015. FHLB stock purchases of $185 thousand and $858thousand were made during the three months endedMarch 31, 2016 andMarch 31, 2015, respectively.  Dividend payments of $25thousand and $45thousand were received during the three months endedMarch 31, 2016 andMarch 31, 2015, respectively.

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 or ACBB stock as of March 31, 2016.

13

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

Note 11 – Loans Receivable and Credit Quality

The following table presents the composition of loans receivable at March 31, 2016 and December 31, 2015, respectively:

	March 31, 2016			December 31, 2015
			Percentage of			Percentage of
	Balance		total Loans	Balance		total Loans
		(Dollars in Thousands)
Commercial real estate	$	290,400	40.83%	$	289,304	41.92%
Commercial construction		22,436	3.15%		17,786	2.58%
Commercial		41,249	5.80%		34,955	5.06%
Residential real estate		356,577	50.13%		347,316	50.33%
Consumer		668	0.09%		745	0.11%
Total loans		711,330	100.00%		690,106	100.00%
Unearned origination fees		60			9
Allowance for loan losses		(6,209)			(6,068)
	$	705,181		$	684,047

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 March 31, 2016 and December 31, 2015, respectively:

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2016		(In Thousands)
Commercial real estate	$	288,489	$	311	$	1,600	$	-	$	290,400
Commercial construction		21,621		-		815		-		22,436
Commercial		41,234		15		-		-		41,249
Residential real estate		355,983		-		594		-		356,577
Consumer		668		-		-		-		668
Total	$	707,995	$	326	$	3,009	$	-	$	711,330
December 31, 2015
Commercial real estate	$	287,755	$	-	$	1,549	$	-	$	289,304
Commercial construction		16,971		-		815		-		17,786
Commercial		34,889		66		-		-		34,955
Residential real estate		346,787		-		529		-		347,316
Consumer		745		-		-		-		745
Total	$	687,147	$	66	$	2,893	$	-	$	690,106

14

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

The following table summarizes information in regards to impaired loans by loan portfolio class as of March 31, 2016 and December 31, 2015, respectively:

							Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2016		(In Thousands)
With no related allowance recorded:
Commercial real estate	$	3,678	$	3,996			$	3,661	$	18
Commercial construction		815		815				815		7
Commercial		-		-				-		-
Residential real estate		821		830				790		1
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	-	$	-
Commercial construction		-		-		-		-		-
Commercial		254		254		47		288		3
Residential real estate		827		827		248		831		1
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,678	$	3,996	$	-	$	3,661	$	18
Commercial construction		815		815		-		815		7
Commercial		254		254		47		288		3
Residential real estate		1,648		1,657		248		1,621		2
Consumer		-		-		-		-		-
	$	6,395	$	6,722	$	295	$	6,385	$	30
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,644	$	3,928			$	3,672	$	139
Commercial construction		815		815				1,096		38
Commercial		-		-				-		-
Residential real estate		758		758				1,029		10
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	336	$	-
Commercial construction		-		-		-		-		-
Commercial		321		321		115		323		10
Residential real estate		834		834		255		878		5
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,644	$	3,928	$	-	$	4,008	$	139
Commercial construction		815		815		-		1,096		38
Commercial		321		321		115		323		10
Residential real estate		1,592		1,592		255		1,907		15
Consumer		-		-		-		-		-
	$	6,372	$	6,656	$	370	$	7,334	$	202

15

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

The following table presents non-accrual loans by classes of the loan portfolio:

	March 31, 2016		December 31, 2015
	(In Thousands)
Commercial real estate	$	221	$	164
Commercial construction		-		-
Commercial		-		66
Residential real estate		594		529
Consumer		-		-
Total	$	815	$	759

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 March 31, 2016 and December 31, 2015, respectively:

					Greater								Loan
					than								Receivables >
	30-59 Days		60-89 Days		90 Days		Total				Total Loan		90 Days and
	Past Due		Past Due		Past Due		Past Due		Current		Receivables		Accruing
March 31, 2016	(In Thousands)
Commercial real estate	$	571	$	217	$	221	$	1,009	$	289,391	$	290,400	$	-
Commercial construction		500		-		-		500		21,936		22,436		-
Commercial		-		-		-		-		41,249		41,249		-
Residential real estate		158		-		594		752		355,825		356,577		-
Consumer		-		-		-		-		668		668		-
Total	$	1,229	$	217	$	815	$	2,261	$	709,069	$	711,330	$	-
December 31, 2015
Commercial real estate	$	219	$	-	$	164	$	383	$	288,921	$	289,304	$	-
Commercial construction		500		-		-		500		17,286		17,786		-
Commercial		-		-		66		66		34,889		34,955		-
Residential real estate		159		76		529		764		346,552		347,316		-
Consumer		-		-		-		-		745		745		-
Total	$	878	$	76	$	759	$	1,713	$	688,393	$	690,106	$	-

16

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

The following tables detail the activity in the allowance for loan losses for the three months endedMarch 31, 2016 and 2015:

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses	(In Thousands)
Three Months Ending March 31, 2016
Beginning Balance - December 31, 2015	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Charge-offs		(35)		-		-		(9)		-		-		(44)
Recoveries		-		-		-		-		-		-		-
Provisions		60		77		(6)		61		1		(8)		185
Ending Balance - March 31, 2016	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Three Months Ending March 31, 2015
Beginning Balance - December 31, 2014	$	1,704	$	401	$	407	$	1,955	$	22	$	1,125	$	5,614
Charge-offs		-		-		-		(1)		-		-		(1)
Recoveries		-		-		-		-		-		-		-
Provisions		283		(76)		55		276		-		(516)		22
Ending Balance - March 31, 2015	$	1,987	$	325	$	462	$	2,230	$	22	$	609	$	5,635

17

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

The following tables represent the allocation for loan losses and the related loan portfolio disaggregated based on impairment methodology at March 31, 2016 and December 31, 2015:

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
	(In Thousands)
March 31, 2016
Allowance for Loan Losses
Ending Balance	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Ending balance: individually evaluated for impairment	$	-	$	-	$	47	$	248	$	-	$	-	$	295
Ending balance: collectively evaluated for impairment	$	2,157	$	371	$	349	$	2,333	$	30	$	674	$	5,914
Loans receivables:
Ending balance	$	290,400	$	22,436	$	41,249	$	356,577	$	668			$	711,330
Ending balance: individually evaluated  for impairment	$	3,678	$	815	$	254	$	1,648	$	-			$	6,395
Ending balance: collectively evaluated for impairment	$	286,722	$	21,621	$	40,995	$	354,929	$	668			$	704,935
December 31, 2015
Allowance for Loan Losses
Ending Balance	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Ending balance: individually evaluated for impairment	$	-	$	-	$	115	$	255	$	-	$	-	$	370
Ending balance: collectively evaluated for impairment	$	2,132	$	294	$	287	$	2,274	$	29	$	682	$	5,698
Loans receivables:
Ending balance	$	289,304	$	17,786	$	34,955	$	347,316	$	745			$	690,106
Ending balance: individually evaluated  for impairment	$	3,644	$	815	$	321	$	1,592	$	-			$	6,372
Ending balance: collectively evaluated for impairment	$	285,660	$	16,971	$	34,634	$	345,724	$	745			$	683,734

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.

18

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

The following table presents TDRs outstanding:

	March 31, 2016
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,128	$	-	$	3,128
Commercial construction		260		-		260
Commercial		254		-		254
Residential real estate		1,053		-		1,053
Consumer		-		-		-
	$	4,695	$	-	$	4,695
	December 31, 2015
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,145	$	-	$	3,145
Commercial construction		260		-		260
Commercial		255		-		255
Residential real estate		1,063		-		1,063
Consumer		-		-		-
	$	4,723	$	-	$	4,723

As of March 31, 2016,  no available commitments were outstanding on TDRs.

There were no newly restructured loans that occurred during the three months ended March 31, 2016 and 2015.  

There were no loans that were modified and classified as a TDR within the prior twelve months that experienced a payment default (loans ninety days or more past due) during the three months ended March 31, 2016 and 2015.

19

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

Note 12 – 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.

20

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy utilized at March 31, 2016 and December 31, 2015, respectively, are as follows:

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
U.S. Government agency obligations	$	-	$	32,756	$	-	$	32,756
Municipal bonds		-		41,095		-		41,095
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,363		-		1,363
March 31, 2016 Securities available for sale	$	-	$	75,214	$	-	$	75,214
U.S. Government agency obligations	$	-	$	34,570	$	-	$	34,570
Municipal bonds		-		41,204		-		41,204
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,479		-		1,479
December 31, 2015 Securities available for sale	$	-	$	77,253	$	-	$	77,253

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2016 and December 31, 2015, respectively, are as follows:

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
March 31, 2016 Impaired loans (1)	$	-	$	-	$	786	$	786
March 31, 2016 Impaired loans (2)	$	-	$	-	$	-	$	-
March 31, 2016 Other real estate owned (1)	$	-	$	-	$	701	$	701
December 31, 2015 Impaired loans (1)	$	-	$	-	$	785	$	785
December 31, 2015 Impaired loans (2)	$	-	$	-	$	-	$	-
December 31, 2015 Other real estate owned (1)	$	-	$	-	$	1,224	$	1,224
(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 input which
are not identifiable.  Fair values may also include qualitative adjustments by management based on economic conditions and liquidation expenses.
(2) Fair Value determined using the debt service of the borrower.

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 March 31, 2016, of the impaired loans having an aggregate balance of $6.4 million, $5.3million did not require a valuation allowance because the value of the collateral, including estimated selling costs, securing the loan was determined to meet or exceed the balance owed on the loan. Of the remaining $1.1 million in impaired loans, an aggregate valuation allowance of $295 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.

21

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

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)
March 31, 2016:
Impaired loans	$	786	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	701	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)
December 31, 2015:
Impaired loans	$	785	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	1,224	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)

1. Fair value is generally determined through independent appraisals of the underlying collateral, which generally include 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 listings, letters of intent or third-party evaluations.

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 March 31, 2016 and December 31, 2015:

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.

22

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

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, Federal Funds Purchased and Short-Term Borrowings (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.

23

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

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 March 31, 2016 and December 31, 2015:

						(Level 1)
						Quoted		(Level 2)		(Level 3)
						Prices in Active		Significant Other		Significant
		Carrying		Fair Value		Markets for		Observable		Unobservable
		Amount		Estimate		Identical Assets		Inputs		Inputs
	(In Thousands)
March 31, 2016:
Financial assets:
Cash and cash equivalents	$	50,758	$	50,758	$	50,758	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		75,214		75,214		-		75,214		-
Loans receivable, net of allowance		705,181		716,677		-		-		716,677
Restricted investments in bank stock		535		535		-		535		-
Accrued interest receivable		1,691		1,691		-		1,691		-
Financial liabilities:
Deposits		752,089		752,985		-		752,985		-
Securities sold under agreements to
repurchase and federal funds purchased		25,752		25,747		-		25,747		-
Short-term borrowings		-		-		-		-		-
Long-term borrowings		-		-		-		-		-
Accrued interest payable		586		586		-		586		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-
December 31, 2015:
Financial assets:
Cash and cash equivalents	$	19,526	$	19,527	$	19,527	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		77,253		77,253		-		77,253		-
Loans receivable, net of allowance		684,047		688,645		-		-		688,645
Restricted investments in bank stock		2,178		2,178		-		2,178		-
Accrued interest receivable		1,637		1,637		-		1,637		-
Financial liabilities:
Deposits		660,266		660,503		-		660,503		-
Securities sold under agreements to
repurchase and federal funds purchased		27,535		7,529		-		27,529		-
Short-term borrowings		39,306		3,973		-		39,273		-
Long-term borrowings		3,820		3,740		-		-		3,740
Accrued interest payable		462		462		-		462		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-

24

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

Note 13 – Offsetting Assets and Liabilities

The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities.  Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets.  As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities.  The obligation to repurchase the securities is reflected as a liability in the Company's consolidated statements of condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not enter into reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fails to make an interest payment to the counterparty). For private institution repurchase agreements, if the private institution counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement.

The following table presents the liabilities subject to an enforceable master netting arrangement or repurchase agreements as of March 31, 2016 and December 31, 2015:

						Net Amounts
		Gross		Gross Amounts		of Liabilities
		Amounts of		Offset in the		Presented in the				Cash
		Recognized		Consolidated		Consolidated		Financial		Collateral
		Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
		(In Thousands)
March 31, 2016
Repurchase Agreements:
Corporate Institutions	$	25,752	$	-	$	25,752	$	(25,752)	$	-	$	-
December 31, 2015
Repurchase Agreements:
Corporate Institutions	$	27,535	$	-	$	27,535	$	(27,535)	$	-	$	-

As of March 31, 2016 and December 31, 2015, the fair value of securities pledged was $30.1 million and $35.0 million, respectively.

25

Embassy Bancorp, Inc.                                                                                                                          

Notes to Consolidated Financial Statements (Unaudited)

Note 14 – New Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year.  The new guidance will be effective for public companies for periods beginning after December 15, 2017 with private companies provided a one-year deferral until periods beginning after December 15, 2018. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company has not yet determined which application method it will use or the potential effects of the new standard on the financial statements, if any. The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for years beginning after December 15, 2018 for public companies and for years beginning after December 15, 2019 for private companies. Once effective, the standard will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718).  This ASU was issued as part of FASB’s Simplification Initiative.  The areas for simplification in this Update include income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows for share-based payment transactions.  For public companies, this ASU will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  For all other entities, the amendments will be effective for annual periods beginning after December 31, 2017, and interim periods within annual periods beginning after December 15, 2018.  Early adoption is permitted.  The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

26

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 March 31, 2016 and for thethree months endedMarch 31, 2016  and 2015, 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, 2015, 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, 2015. 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 (v) 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 increased $49.0 million from $804.0 million at December 31, 2015 to $853.0 million at March 31, 2016 due primarily to an increase in interest bearing demand deposits with banks and loans receivable.

Net income for the three months endedMarch 31, 2016 was $1.6 million compared to a net income for the three months endedMarch 31, 2015 of $1.9 million.  The difference in net income for the quarters ended March 31, 2016 and March 31, 2015 resulted, in part, from an increase in the provision for loans and lease losses of $163 thousand due to loan growth in the quarter ending March 31, 2016, the personnel costs associated with opening a new branch in December 2015, no gains on sales of securities in the quarter ending

27

March 31, 2016, compared to gross gains of $139 thousand realized on sales of securities in the quarter ending March 31, 2015, and a commercial loan recovery of $169 thousand in interest income during the three months ended March 31, 2015.  Loans receivable, net of the allowance for loan losses, increased $21.2 million to $705.2 million at March 31, 2016 from $684.0 million at December 31, 2015.  With the market beingvery competitive, the Company remains 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 continues to become 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 and core deposit relationships, although there can be no assurance of this. The Company continues to monitor interest rate exposure of its interest bearing assets and liabilities and believes that it is well positioned for any future market rate adjustments.

RESULTS OF OPERATIONS

Net Interest Income

Total interest income for the three months endedMarch 31, 2016 and 2015 totaled $7.3 million and $6.9 million, respectively.  Average earning assets were $792.2 million for the three months endedMarch 31, 2016 compared to $708.0 million for the three months endedMarch 31, 2015. The tax equivalent yield on average earning assets was 3.81% for the first quarter of 2016compared to 4.04% for the first quarter of 2015.

Total interest expense for the three months endedMarch 31, 2016increased  $169 thousand to $896 thousand as compared to $727 thousand for the three months endedMarch 31, 2015, primarily due to an increase in savings balances and increase in average certificates of deposit balances and rates. During March 2016, short-term and long-term borrowings were paid off. The interest expense associated with these borrowings was $35 thousand and $50 thousand, respectively, for the three months ended March 31, 2016 and March 31, 2015. Average interest bearing liabilities were $657.4 million for the three months endedMarch 31, 2016 compared to $597.9 million for the three months endedMarch 31, 2015.  The yield on average interest bearing liabilities was 0.55%and 0.49% for the first quarters of 2016and 2015, respectively.

Net interest income for the three months endedMarch 31, 2016 was $6.4 million compared to $6.1 million for the three months endedMarch 31, 2015. The improvement in net interest income for the three months endedMarch 31, 2016 is a result of the growth in the loan portfolio, offset by growth in savings and certificates of deposits. The Company’s net interest margin for the three months endedMarch 31, 2016 decreased twenty-nine(29) basis points to 3.35% as compared to 3.64% for the three months endedMarch 31, 2015, due to the current interest rate environment and competitive pressure, inclusive of decreased interest rates on the loan portfolio and increased interest rates on certificate of deposits. 

28

The table below sets forth average balances and corresponding yields for the corresponding periods ended March 31, 2016 and 2015, respectively:

Distribution of Assets, Liabilities and Stockholders’ Equity:

Interest Rates and Interest Differential (quarter to date)

	Three Months Ended March 31,
	2016			2015
			Tax			Tax
	Average		Equivalent	Average		Equivalent
	Balance	Interest	Yield	Balance	Interest	Yield
	(Dollars In Thousands)
ASSETS
Loans - taxable	$      690,599	$     6,735	3.92%	$       606,359	$     6,217	4.16%
Loans - non-taxable	9,747	74	4.63%	9,566	78	5.01%
Investment securities - taxable	45,639	179	1.58%	50,464	207	1.65%
Investment securities - non-taxable	31,218	285	5.56%	34,205	303	5.44%
Federal funds sold	720	1	0.47%	769	-	0.22%
Time deposits	-	-	-	250	-	0.55%
Interest bearing deposits with banks	14,280	40	1.13%	6,413	49	3.10%
TOTAL INTEREST EARNING ASSETS	792,203	7,314	3.81%	708,026	6,854	4.04%
Less allowance for loan losses	(6,133)			(5,614)
Other assets	34,522			32,200
TOTAL ASSETS	$      820,592			$       734,612
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing demand deposits,    NOW and money market	$        72,460	$          16	0.09%	$         61,005	$            8	0.05%
Savings	423,113	515	0.49%	411,213	492	0.49%
Certificates of deposit	110,886	326	1.18%	72,820	173	0.96%
Securities sold under agreements to    repurchase, and short & long-term borrowings	50,939	39	0.31%	52,906	54	0.41%
TOTAL INTEREST BEARING LIABILITIES	657,398	896	0.55%	597,944	727	0.49%
Non-interest bearing demand deposits	87,023			68,007
Other liabilities	5,675			5,158
Stockholders' equity	70,496			63,503
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$      820,592			$       734,612
Net interest income		$     6,418			$     6,127
Net interest spread			3.26%			3.55%
Net interest margin			3.35%			3.64%

29

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 management considers 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. Such loans may also be classified as impaired and/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 endedMarch 31, 2016, the provision for loan losses was $185 thousand, as compared to $22 thousand for the same period ended March 31, 2015.  In the three months endedMarch 31, 2016, there were charge-offs in the amount of $44 thousand, as compared to $1 thousand in the three months endedMarch 31, 2015.  The allowance for loan losses is $6.2 million as of March 31, 2016, which is 0.87% of outstanding loans, compared to $5.6 million or 0.91% of outstanding loans as of March 31, 2015. At December 31, 2015, the allowance for loan losses of $6.1 million represented 0.88% 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.

30

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:

	Three Months Ended
	March 31,
	2016		2015
	(In Thousands)
Loans receivable at end of period	$	711,330	$	625,116
Allowance for loan losses:
Balance, beginning	$	6,068	$	5,614
Provision for loan losses		185		22
Loans charged off:
Commercial real estate		(35)		-
Commercial construction		-		-
Commercial		-		-
Residential real estate		(9)		(1)
Consumer		-		-
Total loans charged off		(44)		(1)
Recoveries of loans previously charged off:
Commercial real estate		-		-
Commercial construction		-		-
Commercial		-		-
Residential real estate		-		-
Consumer		-		-
Total recoveries		-		-
Net charge offs		(44)		(1)
Balance at end of period	$	6,209	$	5,635
Allowance for loan losses to loans receivable at end of period		0.87%		0.90%

Non-interest Income

Total non-interest income was $633 thousand for the three months endedMarch 31, 2016 compared to $723 thousand for the same period in 2015.  The decrease is due primarily to the  $139 thousand gain on sale of securities realized in 2015 compared to no gains on sale of securities during the same period in 2016 and a decrease in the income associated with bank owned life insurance valuation, offset by increased fee income due to growth in the Bank’s credit card and merchant processing customer base and $42 thousand in impairment losses on other real estate owned in 2015 compared to no impairment losses for the same period in 2016.

Non-interest Expense

Non-interest expenses increased $507 thousandfrom $4.1 million for the three months endedMarch 31, 2015 to $4.6 million for the same period ended March 31, 2016. The increase is due to: an increase of $20 thousand in loan and real estate fees; an increase of $15 thousand in FDIC insurance expense;an increase of $48 thousand due to credit card processing volume; an increase of $228 thousand in salaries and employee benefits due to annual raises and new hires for the Nazareth office in December 2015; an increase of $28 thousand in charitable contributions due to the approved increase in EITC contributions; an increase of $32 thousand in advertising and promotion expense due primarily to a new advertising campaign; an increase of $46 thousand in occupancy and equipment due primarily to the addition of the Nazareth branch; an increase of $30 thousand in data processing expense,and an increase of $55 thousand in other expenses due primarily to operating expenses.

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

Income Taxes

The allocated provision for income taxes for the three months endedMarch 31, 2016 totaled $645 thousand, or 28.6% of income before taxes.The allocated provision for income taxes for the three months endedMarch 31, 2015 totaled $781 thousand, or 28.7% of income before taxes. 

31

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, and taxable and non-taxable municipal bonds. The Bank holds no high-risk securities or derivatives as of March 31, 2016. The Bank has not made any investments in non-U.S. government agency mortgage backed securities or sub-prime loans.

Total securities at March 31, 2016 were $75.2 million compared to $77.3 million at December 31, 2015. The decrease in the investment portfolio is the result of the pay downs on mortgage-backed securities, maturities and calls, offset by anincrease in unrealized gains. The carrying value of the securities portfolio as of March  31, 2016 includes a net unrealized gain of $2.3 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 $1.9 million at December 31, 2015. 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.

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 March  31, 2016 increased $21.2 million to $705.2 million from $684.0 million at December 31, 2015. The loan-to-deposit ratio decreased from 105% at December 31, 2015 to 95% at March  31, 2016 due primarily to the significant increase in deposits. The Bank’s loan portfolio at March 31, 2016 was comprised of residential real estate and consumer loans of $357.2 million, an increase of $9.2 million from December 31, 2015, and commercial loans of $354.1 million, an increase of $12.0 million from December 31, 2015.  The Bank has not originated, nor does it intend to originate, sub-prime mortgage loans.

Credit Risk and Loan Quality

The allowance for loan losses increased $141 thousand totaling $6.2 million at March  31, 2016 compared to $6.1 million at December 31, 2015. At March 31, 2016 and December 31, 2015, the allowance for loan losses represented 0.87% and 0.88%, respectively, 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 the Bank and comparable institutions in the Bank’s market area, management feels the allowance is adequate to absorb reasonably anticipated losses.

At March 31, 2016, December 31, 2015, and March 31, 2015 aggregate balances on non-performing loans equaled $5.5 million, $5.5 million and $6.7 million, respectively, representing 0.77%, 0.79% and 1.07% of total loans at March 31, 2016, December 31, 2015 and March 31, 2015, 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 no loans that were modified and classified as a TDR within the prior twelve months that experienced a payment default (loans ninety or more days past due) for the three months ended March 31, 2016.  The Company has three  (3) foreclosed assets in the amount of $701 thousand as of March 31, 2016,  of which $221 thousand is residential real estate, as compared to four (4) foreclosed assets at December 31, 2015 in the amount of $1.2 million with $221 thousand in residential real estate.  The net change is a result of: the sale of one  (1) asset in the amount of $123 thousand and the sale of a portion of a foreclosed property in the amount of $400 thousand.  At March 31, 2016 and December 31, 2015 the Company had $529 thousand in recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure.

32

The details for non-performing loans are included in the following table:

		March 31,			December 31,			March 31,
		2016			2015			2015
	(In Thousands)
Non-accrual - commercial	$	221		$	230		$	858
Non-accrual - consumer		594			529			896
Restructured loans, accruing interest and less than 90 days past due		4,695			4,723			4,944
Loans past due 90 or more days, accruing interest		-			-			20
Total nonperforming loans		5,510			5,482			6,718
Foreclosed assets		701			1,224			1,038
Total nonperforming assets	$	6,211		$	6,706		$	7,756
Nonperforming loans to total loans at period-end		0.77	%		0.79	%		1.07	%
Nonperforming assets to total assets		0.73	%		0.83	%		1.05	%

Premises and Equipment

Company premises and equipment, net of accumulated depreciation, increased $56 thousand from December 31, 2015 to March 31, 2016. This increase is due primarily to increases related to purchases, offset by depreciation on existing premises and equipment.

Deposits

Total deposits at March 31, 2016 increased$91.8 million to $752.1 million from $660.3 million at December 31, 2015 due to enhanced deposit advertising, new branch, and expansion of existing deposit relationships. Demand deposits increased $6.9 million, time deposits increased $24.2 million, and savings deposits increased $60.7 million.

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 $50.8 million at March 31, 2016, compared to $19.5 million at December 31, 2015.

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 March 31, 2016, the Company had $75.2 million of available for sale securities. Securities with carrying values of approximately $66.3 million and $64.9 million at March 31, 2016 and December 31, 2015, respectively, were pledged as collateral to secure securities sold under agreements to repurchase, public deposits, and for other purposes required or permitted by law.

At March 31, 2016, the Bank had a maximum borrowing capacity for short-term and long-term advances of approximately $402.1 million.  This borrowing capacity with the FHLB includes a line of credit of $150.0 million. There were no short-term FHLB advances outstanding as of March 31, 2016 and $39.3 million were outstanding as of December 31, 2015.  No long-term FHLB advances were outstanding as of March 31, 2016 and $3.8 million were outstanding as of December 31, 2015.  All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank has a federal funds line of credit with the Atlantic Community Bankers Bank (“ACBB”) of approximately $10.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015. Advances from this line are unsecured.

The Company has one line of credit with Univest Bank and Trust Co. (“Univest”) totaling $4.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015.  This line of credit is secured by 333,333 shares of Bank common stock, subordinate to all senior indebtedness of the Company.   

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.

33

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 $104.8 million  at  March 31, 2016.  At March 31, 2016 the Company also had letters of credit outstanding of $3.8 million and FHLB deposit letters of credit outstanding of $10.9 million. 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 $70.1 million as of March 31, 2016, representing a net increase of $2.0million from December 31, 2015.  The increase in capital was primarily the result of the net income of $1.6million and an increase of $284 thousand in unrealized gains on available for sale securities.

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 March 31, 2016, 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:

	March 31, 2016			December 31, 2015
	(Dollars In Thousands)
Tier I, common stockholders' equity	$	68,474		$	66,812
Tier II, allowable portion of allowance for loan losses		6,209			6,068
Total capital	$	74,683		$	72,880
Common equity tier 1 capital ratio		11.6	%		11.5	%
Tier I risk based capital ratio		11.6	%		11.5	%
Total risk based capital ratio		12.7	%		12.6	%
Tier I leverage ratio		8.4	%		8.4	%

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

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%.

34

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

.

	March 31, 2016			December 31, 2015
	(Dollars In Thousands)
Tier I, common stockholders' equity	$	68,556		$	66,865
Tier II, allowable portion of allowance for loan losses		6,209			6,068
Total capital	$	74,765		$	72,933
Common equity tier 1 capital ratio		11.6	%		11.5	%
Tier I risk based capital ratio		11.6	%		11.5	%
Total risk based capital ratio		12.7	%		12.6	%
Tier I leverage ratio		8.4	%		8.3	%

In July 2013, the FDIC and the Federal Reserve approved a new rule that will substantially amend the regulatory risk based capital rules applicable to the Bank and the Company. The final rule implements the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.

The final rule includes new minimum risk-based capital and leverage ratios, which became effective for the Bank and the Company on January 1, 2015, and refines the definition of what constitutes “capital” for purposes of calculating these ratios. The new minimum capital requirements are: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 to risk-based assets capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4%. The final rule also establishes a “capital conservation buffer” of 2.5%, and will result in the following minimum ratios: (i) a common equity Tier 1 capital ratio of 7.0%; (ii) a Tier 1 to risk-based assets capital ratio of 8.5%; and (iii) a total capital ratio of 10.5%. In January 2016, the new capital conservation buffer requirement started being phased in at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019. An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such actions.

35

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 March 31, 2016, 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 March 31, 2016, including any corrective actions with regard to significant deficiencies and material weakness.

36

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

None.

37

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-K filed on March 30, 2016).
3.2	Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.2 of Registrant’s Form 8-K
	filed on August 19, 2014).
11.1	The statement regarding computation of per share earnings required by this exhibit is contained in Note 6
	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.
101.1	Interactive Data Files (XBRL)

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.

38

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)
Dated: May 13, 2016	By:	/s/ David M. Lobach, Jr.
		David M. Lobach, Jr.
		President and Chief Executive Officer
Dated: May 13, 2016	By:	/s/ Judith A. Hunsicker
		Judith A. Hunsicker
		Senior Executive Vice President,
		Chief Operating Officer, Secretary and
		Chief Financial Officer

39

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-K filed on March 30, 2016).
3.2	Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.2 of Registrant’s Form 8-K
	filed on August 19, 2014).
11.1	The statement regarding computation of per share earnings required by this exhibit is contained in Note 6
	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.
101.1	Interactive Data Files (XBRL)

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.

40

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; and

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: May 13, 2016

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; and

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: May 13, 2016

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 March 31, 2016  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.

By:/s/ David M. Lobach, Jr.

DAVID M. LOBACH, JR.

President and Chief Executive Officer

By: /s/ Judith A. Hunsicker

JUDITH A. HUNSICKER

Senior Executive Vice President,

Chief Operating Officer and

Chief Financial Officer

Dated: May 13, 2016

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 06, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1
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		7,413,481

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 14,090	$ 12,459
Interest bearing demand deposits with banks	35,668	6,067
Federal funds sold	1,000	1,000
Cash and Cash Equivalents	50,758	19,526
Securities available for sale	75,214	77,253
Restricted investment in bank stock	535	2,178
Loans receivable, net of allowance for loan losses of $6,209 in 2016; $6,068 in 2015	705,181	684,047
Premises and equipment, net of accumulated depreciation	2,314	2,258
Bank owned life insurance	12,391	12,343
Accrued interest receivable	1,691	1,637
Other real estate owned	701	1,224
Other assets	4,183	3,572
Total Assets	852,968	804,038
Liabilities:
Deposits: Non-interest bearing	92,794	89,959
Deposits: Interest bearing	659,295	570,307
Total deposits	752,089	660,266
Securities sold under agreements to repurchase	25,752	27,535
Short-term borrowings		39,306
Long-term borrowings		3,820
Accrued interest payable	586	462
Other liabilities	4,465	4,548
Total Liabilities	782,892	735,937
Stockholders' Equity:
Common stock, $1 par value; authorized 20,000,000 shares; 2016 issued 7,413,481 shares; outstanding 7,413,481 shares; 2015 issued 7,407,547 shares; outstanding 7,407,547 shares	7,413	7,408
Surplus	24,377	24,299
Retained earnings	36,766	35,158
Accumulated other comprehensive income	1,520	1,236
Total Stockholders' Equity	70,076	68,101
Total Liabilities and Stockholders' Equity	$ 852,968	$ 804,038

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Consolidated Balance Sheets [Abstract]
Loans and Leases Receivable, Allowance	$ 6,209	$ 6,068
Common Stock, Par or Stated Value Per Share	$ 1	$ 1
Common Stock, Shares Authorized	20,000,000	20,000,000
Common Stock, Shares, Issued	7,413,481	7,407,547
Common Stock, Shares, Outstanding	7,413,481	7,407,547

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
INTEREST INCOME
Loans receivable, including fees	$ 6,809	$ 6,295
Securities, taxable	179	207
Securities, non-taxable	285	303
Federal funds sold, and other	41	49
Total Interest Income	7,314	6,854
INTEREST EXPENSE
Deposits	857	673
Securities sold under agreements to repurchase	4	4
Short-term borrowings	30	15
Long-term borrowings	5	35
Total Interest Expense	896	727
Net Interest Income	6,418	6,127
Provision for loan losses	185	22
Net Interest Income after Provision for Loan Losses	6,233	6,105
OTHER INCOME
Credit card processing fees	414	363
Other service fees	161	159
Bank owned life insurance	48	98
Gain on sale of securities, net		139
Gain on sale of other real estate owned	10	6
Impairment on other real estate owned		(42)
Total Other Income	633	723
OTHER EXPENSES
Salaries and employee benefits	1,970	1,742
Occupancy and equipment	675	629
Data processing	389	359
Credit card processing	402	354
Advertising and promotion	324	292
Professional fees	127	122
FDIC insurance	102	87
Insurance	13	14
Loan & real estate	64	44
Charitable contributions	237	209
Other real estate owned expenses	37	36
Other	273	218
Total Other Expenses	4,613	4,106
Income before Income Taxes	2,253	2,722
INCOME TAX EXPENSE	645	781
Net Income	$ 1,608	$ 1,941
BASIC EARNINGS PER SHARE	$ 0.22	$ 0.26
DILUTED EARNINGS PER SHARE	$ 0.22	$ 0.26

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements Of Comprehensive Income [Abstract]
Net Income		$ 1,608	$ 1,941
Change in Accumulated Other Comprehensive Income:
Unrealized holding gain on securities available for sale		$ 431	338
Less: reclassification adjustment for realized gains	[1],[2]		(139)
Total other comprehensive income, before tax		$ 431	199
Income tax effect		(147)	(68)
Net unrealized gain		284	131
Other comprehensive gain, net of tax		284	131
Comprehensive Income		$ 1,892	$ 2,072

[1] Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

[2] Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

XML

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]	Total
BALANCE-Beginning at Dec. 31, 2014	$ 7,358	$ 24,024	$ 28,485	$ 1,465	$ 61,332
Net income			1,941		1,941
Other comprehensive income, net of tax				131	131
Compensation expense recognized on stock options		16			16
Common stock grants to directors	9	87			96
BALANCE-Ending at Mar. 31, 2015	7,367	24,127	30,426	1,596	63,516
BALANCE-Beginning at Dec. 31, 2015	7,408	24,299	35,158	1,236	68,101
Net income			1,608		1,608
Other comprehensive income, net of tax				284	284
Compensation expense recognized on stock options		9			9
Common stock grants to directors	5	57			62
Compensation expense recognized on stock grants, net of unearned compensation expense		12			12
BALANCE-Ending at Mar. 31, 2016	$ 7,413	$ 24,377	$ 36,766	$ 1,520	$ 70,076

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Consolidated Statements Of Stockholders' Equity [Abstract]
Common stock grants to directors, shares	5,934	9,112
Unearned compensation expense	$ 248

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 1,608	$ 1,941
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	185	22
Amortization of deferred loan costs	21	6
Depreciation and amortization	184	157
Net amortization of investment security premiums and discounts	57	53
Stock compensation expense	21	16
Net realized gain on sale of other real estate owned	(10)
Impairment on other real estate owned		42
Income on bank owned life insurance	(48)	(98)
Net realized gain on sale of securities available for sale		(139)
Increase in accrued interest receivable	(54)	(13)
Increase in other assets	(758)	(108)
Increase (decrease) in accrued interest payable	124	(51)
Decrease in other liabilities	(10)	(138)
Net Cash Provided by Operating Activities	1,320	1,690
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale		(13,869)
Maturities, calls and principal repayments of securities available for sale	2,413	5,625
Proceeds from sales of securities available for sale		442
Net increase in loans	(20,818)	(14,408)
Net redemption (purchases) of restricted investment in bank stock	1,643	(859)
Proceeds from sale of other real estate owned		26
Purchases of premises and equipment	(240)	(38)
Net Cash Used in Investing Activities	(17,002)	(23,081)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits	91,823	(2,219)
Net (decrease) increase in securities sold under agreements to repurchase	(1,783)	1,106
(Decrease) increase in short-term borrowed funds	(39,306)	21,458
Payments of long-term borrowed funds	(3,820)	(500)
Net Cash Provided by Financing Activities	46,914	19,845
Net Increase (Decrease) in Cash and Cash Equivalents	31,232	(1,546)
CASH AND CASH EQUIVALENTS - BEGINNING	19,526	16,390
CASH AND CASH EQUIVALENTS - ENDING	50,758	14,844
SUPPLEMENTARY CASH FLOWS INFORMATION
Interest paid	760	779
Income taxes paid	705	960
Other real estate sold through bank financing	522
Deferral of gain from sale of other real estate sold through bank financing	$ (11)	$ (68)

XML

Basis Of Presentation

3 Months Ended

Mar. 31, 2016

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 months endedMarch 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

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, 2015, included in the Company’s Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 30, 2016.  

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred after March 31, 2016 through the date these consolidated financial statements were issued.

Certain amounts in the 2015 financial statements may have been reclassified to conform to 2016 presentation. These reclassifications had no effect on 2015 net income.

XML

Summary Of Significant Accounting Policies

3 Months Ended

Mar. 31, 2016

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, 2015.

XML

Stockholders' Equity

3 Months Ended

Mar. 31, 2016

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.

XML

Stock Incentive Plan

3 Months Ended

Mar. 31, 2016

Stock Incentive Plan [Abstract]

Stock Incentive Plan

Note 4 – 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 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.At inception, the aggregate number of shares available for issuance under the SIP was 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. At March 31, 2016 there were 322,210 shares available for issuance under the SIP.

The Company grants shares of restricted stock, under the SIP, to certain members of its Board of Directors as compensation for their services, in accordance with the Company’s Non-employee Directors Compensation program adopted in October 2010. The Company also grants restricted stock to certain officers under individual agreements with these officers. Some of these restricted stock awards vest immediately, while the remainder vest over three to nine service years. Management recognizes compensation expense for the fair value of the restricted stock awards on a straight-line basis over the requisite service period. Since inception of the plan and through the period ended March 31, 2016, there have been  65,744 awards granted. During the three months ended March 31, 2016 and 2015 there were 5,934 and 9,112 awards granted, respectively. During the three months ended March 31, 2016 the Company recognized $12 thousand in compensation expense for the restricted stock awards.  There was no compensation expense recognized for the restricted stock awards during the three months ended March 31, 2015.

In January 2014, February 2013 and February 2012, the Company granted stock options to purchase 29,663,  29,742 and 52,611shares of stock to certain executive officers in accordance with their respective employment agreements. No stock options were granted in the quarters ended March 31, 2016 and 2015. Stock compensation expense related to these options was $9 thousand and $16 thousand for the three months ended March 31, 2016 and 2015, respectively. At March 31, 2016, approximately $19 thousand unrecognized cost related to stock options granted in 2014 will be recognized over the next 0.80 years. The fair value of the options granted in 2014, 2013 and 2012 was determined with the following weighted average assumptions: dividend yield of 0%, risk free interest rate of 2.30%,  1.34% and 1.43%,  respectively, expected life of 6.0 years, 6.0 years and 7.5 years, respectively, and expected volatility of 28.93%,  28.79% and 31.10%, respectively. The weighted average fair value of options granted in 2014, 2013 and 2012 was $2.46,  $2.14 and $2.56 per share, respectively.

XML

Other Comprehensive Income

3 Months Ended

Mar. 31, 2016

Other Comprehensive Income [Abstract]

Other Comprehensive Income

Note 5 – Other Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

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

	Three Months Ended March 31,
	2016						2015
	(In Thousands)
	Before		Tax		Net of		Before		Tax		Net of
	Tax		Effect		Tax		Tax		Effect		Tax
Change in accumulated other comprehensive income:
Unrealized holding gains on securities    available for sale	$	431	$	(147)	$	284	$	338	$	(115)	$	223
Reclassification adjustments for gains on securities    transactions included in net income (A),(B)		-		-		-		(139)		47		(92)
Total other comprehensive income	$	431	$	(147)	$	284	$	199	$	(68)	$	131

A. Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

B. Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

A summary of the realized gains on securities available for sale, net of tax, for the three ended March 31, 2016 and 2015 are as follows:

	Three Months Ended
	March 31,
		2016		2015
		(In Thousands)
Securities available for sale:
Realized gains on securities transactions	$	-	$	(139)
Income taxes		-		47
Net of tax	$	-	$	(92)

A summary of the accumulated other comprehensive income, net of tax, is as follows:

	Securities
	Available
	for Sale
Three Months Ended March 31, 2016 and 2015	(In Thousands)
Balance January 1, 2016	$	1,236
Other comprehensive income before reclassifications		284
Amounts reclassified from accumulated other    comprehensive income		-
Net other comprehensive income during the period		284
Balance March 31, 2016	$	1,520
Balance January 1, 2015	$	1,465
Other comprehensive income before reclassifications		223
Amounts reclassified from accumulated other    comprehensive income		(92)
Net other comprehensive income during the period		131
Balance March 31, 2015	$	1,596

XML

Basic And Diluted Earnings Per Share

3 Months Ended

Mar. 31, 2016

Basic And Diluted Earnings Per Share [Abstract]

Basic And Diluted Earnings Per Share

Note 6 – 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 March 31,
	2016		2015
	(Dollars In Thousands, Except Per Share Data)
Net income	$	1,608	$	1,941
Weighted average shares outstanding		7,411,395		7,364,846
Dilutive effect of potential common shares, stock options		34,098		29,843
Diluted weighted average common shares outstanding		7,445,493		7,394,689
Basic earnings per share	$	0.22	$	0.26
Diluted earnings per share	$	0.22	$	0.26

There were no stock options not considered in computing diluted earnings per common share for the three months ended March 31, 2016 and 2015.

XML

Guarantees

3 Months Ended

Mar. 31, 2016

Guarantees [Abstract]

Guarantees

Note 7 – 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 and FHLBank Pittsburgh (“FHLB”) deposit 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 $3.8 million of standby letters of credit outstanding as of March 31, 2016. The approximate value of underlying collateral upon liquidation that would be expected to cover this maximum potential exposure was $3.6 million. Management does not consider the current amount of the liability as of March 31, 2016 for guarantees under standby letters of credit issued to be material.  

FHLB deposit letters of credit are standby letters of credit commitments issued to the Bank for the benefit of a third party (the “Beneficiary”), which secure public deposits in the Bank. FHLB deposit letter of credits are secured by qualifying assets of the Bank. The Company, through the Bank, had $10.9 million of FHLB deposit letters of credit outstanding as of March 31, 2016.

XML

Short-Term And Long-Term Borrowings

3 Months Ended

Mar. 31, 2016

Short-Term And Long-Term Borrowings [Abstract]

Short-Term And Long-Term Borrowings

Note 8 – Short-term and Long-term Borrowings

Securities sold under agreements to repurchase, federal funds purchased and FHLBank 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 March 31, 2016, the Bank had a maximum borrowing capacity for short-term and long-term advances of approximately $402.1 million.  This borrowing capacity with the FHLB includes a line of credit of $150.0 million. There were no short-term FHLB advances outstanding as of March 31, 2016 and $39.3 million were outstanding as of December 31, 2015.  No long-term FHLB advances were outstanding as of March 31, 2016 and $3.8 million were outstanding as of December 31, 2015.  All FHLB borrowings are secured by qualifying assets of the Bank.

The Bank has a federal funds line of credit with the Atlantic Community Bankers Bank (“ACBB”) of approximately $10.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015. Advances from this line are unsecured.

The Company has one line of credit with Univest Bank and Trust Co. (“Univest”) totaling $4.0 million, of which none was outstanding at March 31, 2016 and December 31, 2015.  This line of credit is secured by 333,333 shares of Bank common stock, subordinate to all senior indebtedness of the Company. 

The components of long-term borrowings with the FHLB at December 31, 2015, which have all been repaid in the quarter ending March 31, 2016, were as follows:

	December 31, 2015
	(Dollars in Thousands)
Maturity Date	Interest Rate		Outstanding
April 2016, repaid	0.26%	$	667
April 2017, repaid	0.48%		668
April 2018, repaid	0.69%		779
April 2019, repaid	0.88%		836
April 2020, repaid	1.06%		870
Total Outstanding Borrowings		$	3,820

XML

Securities Available For Sale

3 Months Ended

Mar. 31, 2016

Securities Available For Sale [Abstract]

Securities Available For Sale

Note 9 – Securities Available For Sale

At March 31, 2016 and December 31, 2015, respectively, the amortized cost and approximate fair values of securities available-for-sale were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
March 31, 2016 :
U.S. Government agency obligations	$	32,635	$	128	$	(7)	$	32,756
Municipal bonds		39,061		2,049		(15)		41,095
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,215		148		-		1,363
Total	$	72,911	$	2,325	$	(22)	$	75,214
December 31, 2015 :
U.S. Government agency obligations	$	34,676	$	15	$	(121)	$	34,570
Municipal bonds		39,378		1,970		(144)		41,204
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,327		152		-		1,479
Total	$	75,381	$	2,137	$	(265)	$	77,253

The amortized cost and fair value of securities as of March 31, 2016, 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	$	5,072	$	5,076
Due after one year through five years		32,907		33,181
Due after five years through ten years		18,556		19,472
Due after ten years		15,161		16,122
		71,696		73,851
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential		1,215		1,363
	$	72,911	$	75,214

There were no sales of securities during the three months endedMarch 31, 2016. Gross gains of $139 thousand were realized on sales of securities for the three months ended March 31, 2015.  There were no gross losses on the sales of securities during the three months ended March 31, 2015.

Securities with a carrying value of $66.3 million and $64.9 million at March 31, 2016 and December 31, 2015, 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 March 31, 2016 and December 31, 2015, respectively:

		Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2016 :	(In Thousands)
U.S. Government agency obligations	$	9,035	$	(7)	$	-	$	-	$	9,035	$	(7)
Municipal bonds		1,779		(15)		-		-		1,779		(15)
Total Temporarily Impaired Securities	$	10,814	$	(22)	$	-	$	-	$	10,814	$	(22)
December 31, 2015 :
U.S. Government agency obligations	$	25,525	$	(121)	$	-	$	-	$	25,525	$	(121)
Municipal bonds		6,180		(144)		-		-		6,180		(144)
Total Temporarily Impaired Securities	$	31,705	$	(265)	$	-	$	-	$	31,705	$	(265)

The Company had nine (9) securities in an unrealized loss position at March 31, 2016. The unrealized losses are due only to market rate fluctuations. As of March 31, 2016, 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.

XML

Restricted Investment In Bank Stock

3 Months Ended

Mar. 31, 2016

Restricted Investment In Bank Stock [Abstract]

Restricted Investments In Bank Stock

Note 10 – Restricted Investment in Bank Stock

Restricted investments in bank stock consist of FHLBank of Pittsburgh (“FHLB”) stock and Atlantic Community 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.  The Bank had FHLB stock at a carrying value of$1.8 million repurchased during the three months endedMarch 31, 2016.  The Bank had no FHLB stock repurchased during the three months ended March 31, 2015. FHLB stock purchases of $185 thousand and $858thousand were made during the three months endedMarch 31, 2016 andMarch 31, 2015, respectively.  Dividend payments of $25thousand and $45thousand were received during the three months endedMarch 31, 2016 andMarch 31, 2015, respectively.

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 or ACBB stock as of March 31, 2016.

XML

Loans Receivable And Credit Quality

3 Months Ended

Mar. 31, 2016

Loans Receivable And Credit Quality [Abstract]

Loans Receivable And Credit Quality

Note 11 – Loans Receivable and Credit Quality

The following table presents the composition of loans receivable at March 31, 2016 and December 31, 2015, respectively:

	March 31, 2016			December 31, 2015
			Percentage of			Percentage of
	Balance		total Loans	Balance		total Loans
		(Dollars in Thousands)
Commercial real estate	$	290,400	40.83%	$	289,304	41.92%
Commercial construction		22,436	3.15%		17,786	2.58%
Commercial		41,249	5.80%		34,955	5.06%
Residential real estate		356,577	50.13%		347,316	50.33%
Consumer		668	0.09%		745	0.11%
Total loans		711,330	100.00%		690,106	100.00%
Unearned origination fees		60			9
Allowance for loan losses		(6,209)			(6,068)
	$	705,181		$	684,047

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 March 31, 2016 and December 31, 2015, respectively:

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2016		(In Thousands)
Commercial real estate	$	288,489	$	311	$	1,600	$	-	$	290,400
Commercial construction		21,621		-		815		-		22,436
Commercial		41,234		15		-		-		41,249
Residential real estate		355,983		-		594		-		356,577
Consumer		668		-		-		-		668
Total	$	707,995	$	326	$	3,009	$	-	$	711,330
December 31, 2015
Commercial real estate	$	287,755	$	-	$	1,549	$	-	$	289,304
Commercial construction		16,971		-		815		-		17,786
Commercial		34,889		66		-		-		34,955
Residential real estate		346,787		-		529		-		347,316
Consumer		745		-		-		-		745
Total	$	687,147	$	66	$	2,893	$	-	$	690,106

The following table summarizes information in regards to impaired loans by loan portfolio class as of March 31, 2016 and December 31, 2015, respectively:

							Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2016		(In Thousands)
With no related allowance recorded:
Commercial real estate	$	3,678	$	3,996			$	3,661	$	18
Commercial construction		815		815				815		7
Commercial		-		-				-		-
Residential real estate		821		830				790		1
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	-	$	-
Commercial construction		-		-		-		-		-
Commercial		254		254		47		288		3
Residential real estate		827		827		248		831		1
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,678	$	3,996	$	-	$	3,661	$	18
Commercial construction		815		815		-		815		7
Commercial		254		254		47		288		3
Residential real estate		1,648		1,657		248		1,621		2
Consumer		-		-		-		-		-
	$	6,395	$	6,722	$	295	$	6,385	$	30
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,644	$	3,928			$	3,672	$	139
Commercial construction		815		815				1,096		38
Commercial		-		-				-		-
Residential real estate		758		758				1,029		10
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	336	$	-
Commercial construction		-		-		-		-		-
Commercial		321		321		115		323		10
Residential real estate		834		834		255		878		5
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,644	$	3,928	$	-	$	4,008	$	139
Commercial construction		815		815		-		1,096		38
Commercial		321		321		115		323		10
Residential real estate		1,592		1,592		255		1,907		15
Consumer		-		-		-		-		-
	$	6,372	$	6,656	$	370	$	7,334	$	202

The following table presents non-accrual loans by classes of the loan portfolio:

	March 31, 2016		December 31, 2015
	(In Thousands)
Commercial real estate	$	221	$	164
Commercial construction		-		-
Commercial		-		66
Residential real estate		594		529
Consumer		-		-
Total	$	815	$	759

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 March 31, 2016 and December 31, 2015, respectively:

					Greater								Loan
					than								Receivables >
	30-59 Days		60-89 Days		90 Days		Total				Total Loan		90 Days and
	Past Due		Past Due		Past Due		Past Due		Current		Receivables		Accruing
March 31, 2016	(In Thousands)
Commercial real estate	$	571	$	217	$	221	$	1,009	$	289,391	$	290,400	$	-
Commercial construction		500		-		-		500		21,936		22,436		-
Commercial		-		-		-		-		41,249		41,249		-
Residential real estate		158		-		594		752		355,825		356,577		-
Consumer		-		-		-		-		668		668		-
Total	$	1,229	$	217	$	815	$	2,261	$	709,069	$	711,330	$	-
December 31, 2015
Commercial real estate	$	219	$	-	$	164	$	383	$	288,921	$	289,304	$	-
Commercial construction		500		-		-		500		17,286		17,786		-
Commercial		-		-		66		66		34,889		34,955		-
Residential real estate		159		76		529		764		346,552		347,316		-
Consumer		-		-		-		-		745		745		-
Total	$	878	$	76	$	759	$	1,713	$	688,393	$	690,106	$	-

The following tables detail the activity in the allowance for loan losses for the three months endedMarch 31, 2016 and 2015:

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses	(In Thousands)
Three Months Ending March 31, 2016
Beginning Balance - December 31, 2015	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Charge-offs		(35)		-		-		(9)		-		-		(44)
Recoveries		-		-		-		-		-		-		-
Provisions		60		77		(6)		61		1		(8)		185
Ending Balance - March 31, 2016	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Three Months Ending March 31, 2015
Beginning Balance - December 31, 2014	$	1,704	$	401	$	407	$	1,955	$	22	$	1,125	$	5,614
Charge-offs		-		-		-		(1)		-		-		(1)
Recoveries		-		-		-		-		-		-		-
Provisions		283		(76)		55		276		-		(516)		22
Ending Balance - March 31, 2015	$	1,987	$	325	$	462	$	2,230	$	22	$	609	$	5,635

The following tables represent the allocation for loan losses and the related loan portfolio disaggregated based on impairment methodology at March 31, 2016 and December 31, 2015:

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
	(In Thousands)
March 31, 2016
Allowance for Loan Losses
Ending Balance	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Ending balance: individually evaluated for impairment	$	-	$	-	$	47	$	248	$	-	$	-	$	295
Ending balance: collectively evaluated for impairment	$	2,157	$	371	$	349	$	2,333	$	30	$	674	$	5,914
Loans receivables:
Ending balance	$	290,400	$	22,436	$	41,249	$	356,577	$	668			$	711,330
Ending balance: individually evaluated  for impairment	$	3,678	$	815	$	254	$	1,648	$	-			$	6,395
Ending balance: collectively evaluated for impairment	$	286,722	$	21,621	$	40,995	$	354,929	$	668			$	704,935
December 31, 2015
Allowance for Loan Losses
Ending Balance	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Ending balance: individually evaluated for impairment	$	-	$	-	$	115	$	255	$	-	$	-	$	370
Ending balance: collectively evaluated for impairment	$	2,132	$	294	$	287	$	2,274	$	29	$	682	$	5,698
Loans receivables:
Ending balance	$	289,304	$	17,786	$	34,955	$	347,316	$	745			$	690,106
Ending balance: individually evaluated  for impairment	$	3,644	$	815	$	321	$	1,592	$	-			$	6,372
Ending balance: collectively evaluated for impairment	$	285,660	$	16,971	$	34,634	$	345,724	$	745			$	683,734

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:

	March 31, 2016
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,128	$	-	$	3,128
Commercial construction		260		-		260
Commercial		254		-		254
Residential real estate		1,053		-		1,053
Consumer		-		-		-
	$	4,695	$	-	$	4,695
	December 31, 2015
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,145	$	-	$	3,145
Commercial construction		260		-		260
Commercial		255		-		255
Residential real estate		1,063		-		1,063
Consumer		-		-		-
	$	4,723	$	-	$	4,723

As of March 31, 2016,  no available commitments were outstanding on TDRs.

There were no newly restructured loans that occurred during the three months ended March 31, 2016 and 2015.  

There were no loans that were modified and classified as a TDR within the prior twelve months that experienced a payment default (loans ninety days or more past due) during the three months ended March 31, 2016 and 2015.

XML

Fair Value Measurements

3 Months Ended

Mar. 31, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 12 – 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 March 31, 2016 and December 31, 2015, respectively, are as follows:

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
U.S. Government agency obligations	$	-	$	32,756	$	-	$	32,756
Municipal bonds		-		41,095		-		41,095
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,363		-		1,363
March 31, 2016 Securities available for sale	$	-	$	75,214	$	-	$	75,214
U.S. Government agency obligations	$	-	$	34,570	$	-	$	34,570
Municipal bonds		-		41,204		-		41,204
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,479		-		1,479
December 31, 2015 Securities available for sale	$	-	$	77,253	$	-	$	77,253

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2016 and December 31, 2015, respectively, are as follows:

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
March 31, 2016 Impaired loans (1)	$	-	$	-	$	786	$	786
March 31, 2016 Impaired loans (2)	$	-	$	-	$	-	$	-
March 31, 2016 Other real estate owned (1)	$	-	$	-	$	701	$	701
December 31, 2015 Impaired loans (1)	$	-	$	-	$	785	$	785
December 31, 2015 Impaired loans (2)	$	-	$	-	$	-	$	-
December 31, 2015 Other real estate owned (1)	$	-	$	-	$	1,224	$	1,224
(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 input which
are not identifiable.  Fair values may also include qualitative adjustments by management based on economic conditions and liquidation expenses.
(2) Fair Value determined using the debt service of the borrower.

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 March 31, 2016, of the impaired loans having an aggregate balance of $6.4 million, $5.3million did not require a valuation allowance because the value of the collateral, including estimated selling costs, securing the loan was determined to meet or exceed the balance owed on the loan. Of the remaining $1.1 million in impaired loans, an aggregate valuation allowance of $295 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)
March 31, 2016:
Impaired loans	$	786	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	701	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)
December 31, 2015:
Impaired loans	$	785	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	1,224	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)

1. Fair value is generally determined through independent appraisals of the underlying collateral, which generally include 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 listings, letters of intent or third-party evaluations.

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 March 31, 2016 and December 31, 2015:

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, Federal Funds Purchased and Short-Term Borrowings (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 March 31, 2016 and December 31, 2015:

						(Level 1)
						Quoted		(Level 2)		(Level 3)
						Prices in Active		Significant Other		Significant
		Carrying		Fair Value		Markets for		Observable		Unobservable
		Amount		Estimate		Identical Assets		Inputs		Inputs
	(In Thousands)
March 31, 2016:
Financial assets:
Cash and cash equivalents	$	50,758	$	50,758	$	50,758	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		75,214		75,214		-		75,214		-
Loans receivable, net of allowance		705,181		716,677		-		-		716,677
Restricted investments in bank stock		535		535		-		535		-
Accrued interest receivable		1,691		1,691		-		1,691		-
Financial liabilities:
Deposits		752,089		752,985		-		752,985		-
Securities sold under agreements to
repurchase and federal funds purchased		25,752		25,747		-		25,747		-
Short-term borrowings		-		-		-		-		-
Long-term borrowings		-		-		-		-		-
Accrued interest payable		586		586		-		586		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-
December 31, 2015:
Financial assets:
Cash and cash equivalents	$	19,526	$	19,527	$	19,527	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		77,253		77,253		-		77,253		-
Loans receivable, net of allowance		684,047		688,645		-		-		688,645
Restricted investments in bank stock		2,178		2,178		-		2,178		-
Accrued interest receivable		1,637		1,637		-		1,637		-
Financial liabilities:
Deposits		660,266		660,503		-		660,503		-
Securities sold under agreements to
repurchase and federal funds purchased		27,535		7,529		-		27,529		-
Short-term borrowings		39,306		3,973		-		39,273		-
Long-term borrowings		3,820		3,740		-		-		3,740
Accrued interest payable		462		462		-		462		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-

XML

Offsetting Assets And Liabilities

3 Months Ended

Mar. 31, 2016

Offsetting Assets And Liabilities [Abstract]

Offsetting Assets And Liabilities

Note 13 – Offsetting Assets and Liabilities

The Company enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities.  Under these arrangements, the Company may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Company to repurchase the assets.  As a result, these repurchase agreements are accounted for as collateralized financing arrangements (i.e., secured borrowings) and not as a sale and subsequent repurchase of securities.  The obligation to repurchase the securities is reflected as a liability in the Company's consolidated statements of condition, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts. In other words, there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities. In addition, as the Company does not enter into reverse repurchase agreements, there is no such offsetting to be done with the repurchase agreements.

The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., fails to make an interest payment to the counterparty). For private institution repurchase agreements, if the private institution counterparty were to default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri-party agreement.

The following table presents the liabilities subject to an enforceable master netting arrangement or repurchase agreements as of March 31, 2016 and December 31, 2015:

						Net Amounts
		Gross		Gross Amounts		of Liabilities
		Amounts of		Offset in the		Presented in the				Cash
		Recognized		Consolidated		Consolidated		Financial		Collateral
		Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
		(In Thousands)
March 31, 2016
Repurchase Agreements:
Corporate Institutions	$	25,752	$	-	$	25,752	$	(25,752)	$	-	$	-
December 31, 2015
Repurchase Agreements:
Corporate Institutions	$	27,535	$	-	$	27,535	$	(27,535)	$	-	$	-

As of March 31, 2016 and December 31, 2015, the fair value of securities pledged was $30.1 million and $35.0 million, respectively.

XML

New Accounting Standards

3 Months Ended

Mar. 31, 2016

New Accounting Standards [Abstract]

New Accounting Standards

Note 14 – New Accounting Standards

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede the current revenue recognition requirements in Topic 605, Revenue Recognition. The ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 by one year.  The new guidance will be effective for public companies for periods beginning after December 15, 2017 with private companies provided a one-year deferral until periods beginning after December 15, 2018. The ASU permits application of the new revenue recognition guidance to be applied using one of two retrospective application methods. The Company has not yet determined which application method it will use or the potential effects of the new standard on the financial statements, if any. The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will supersede the current lease requirements in Topic 840. The ASU requires lessees to recognize a right of use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the statement of income. Currently, leases are classified as either capital or operating, with only capital leases recognized on the balance sheet. The reporting of lease related expenses in the statements of operations and cash flows will be generally consistent with the current guidance. The new guidance will be effective for years beginning after December 15, 2018 for public companies and for years beginning after December 15, 2019 for private companies. Once effective, the standard will be applied using a modified retrospective transition method to the beginning of the earliest period presented. The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation (Topic 718).  This ASU was issued as part of FASB’s Simplification Initiative.  The areas for simplification in this Update include income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows for share-based payment transactions.  For public companies, this ASU will be effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  For all other entities, the amendments will be effective for annual periods beginning after December 31, 2017, and interim periods within annual periods beginning after December 15, 2018.  Early adoption is permitted.  The Company is currently assessing the impact this new standard will have on its consolidated financial statements.

XML

Basis Of Presentation (Policy)

3 Months Ended

Mar. 31, 2016

Basis Of Presentation [Abstract]

Consolidation

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 months endedMarch 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

XML

Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2016

Other Comprehensive Income [Abstract]

Schedule Of Comprehensive Income (Loss)

	Three Months Ended March 31,
	2016						2015
	(In Thousands)
	Before		Tax		Net of		Before		Tax		Net of
	Tax		Effect		Tax		Tax		Effect		Tax
Change in accumulated other comprehensive income:
Unrealized holding gains on securities    available for sale	$	431	$	(147)	$	284	$	338	$	(115)	$	223
Reclassification adjustments for gains on securities    transactions included in net income (A),(B)		-		-		-		(139)		47		(92)
Total other comprehensive income	$	431	$	(147)	$	284	$	199	$	(68)	$	131

A. Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

B. Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

Schedule Of The Realized Gains On Securities Available For Sale, Net Of Tax

	Three Months Ended
	March 31,
		2016		2015
		(In Thousands)
Securities available for sale:
Realized gains on securities transactions	$	-	$	(139)
Income taxes		-		47
Net of tax	$	-	$	(92)

Schedule Of Accumulated Other Comprehensive Income

	Securities
	Available
	for Sale
Three Months Ended March 31, 2016 and 2015	(In Thousands)
Balance January 1, 2016	$	1,236
Other comprehensive income before reclassifications		284
Amounts reclassified from accumulated other    comprehensive income		-
Net other comprehensive income during the period		284
Balance March 31, 2016	$	1,520
Balance January 1, 2015	$	1,465
Other comprehensive income before reclassifications		223
Amounts reclassified from accumulated other    comprehensive income		(92)
Net other comprehensive income during the period		131
Balance March 31, 2015	$	1,596

XML

Basic And Diluted Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2016

Basic And Diluted Earnings Per Share [Abstract]

Earnings Per Share

	Three Months Ended March 31,
	2016		2015
	(Dollars In Thousands, Except Per Share Data)
Net income	$	1,608	$	1,941
Weighted average shares outstanding		7,411,395		7,364,846
Dilutive effect of potential common shares, stock options		34,098		29,843
Diluted weighted average common shares outstanding		7,445,493		7,394,689
Basic earnings per share	$	0.22	$	0.26
Diluted earnings per share	$	0.22	$	0.26

XML

Short-Term And Long-Term Borrowings (Tables)

3 Months Ended

Mar. 31, 2016

Short-Term And Long-Term Borrowings [Abstract]

Components Of Long-Term Borrowings With FHLB

	December 31, 2015
	(Dollars in Thousands)
Maturity Date	Interest Rate		Outstanding
April 2016, repaid	0.26%	$	667
April 2017, repaid	0.48%		668
April 2018, repaid	0.69%		779
April 2019, repaid	0.88%		836
April 2020, repaid	1.06%		870
Total Outstanding Borrowings		$	3,820

XML

Securities Available For Sale (Tables)

3 Months Ended

Mar. 31, 2016

Securities Available For Sale [Abstract]

Amortized Cost And Fair Values Of Securities Available-For-Sale

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
March 31, 2016 :
U.S. Government agency obligations	$	32,635	$	128	$	(7)	$	32,756
Municipal bonds		39,061		2,049		(15)		41,095
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,215		148		-		1,363
Total	$	72,911	$	2,325	$	(22)	$	75,214
December 31, 2015 :
U.S. Government agency obligations	$	34,676	$	15	$	(121)	$	34,570
Municipal bonds		39,378		1,970		(144)		41,204
U.S. Government Sponsored Enterprise (GSE) -    Mortgage-backed securities - residential		1,327		152		-		1,479
Total	$	75,381	$	2,137	$	(265)	$	77,253

Securities Available-For-Sale By Contractual Maturity

		Amortized		Fair
		Cost		Value
	(In Thousands)
Due in one year or less	$	5,072	$	5,076
Due after one year through five years		32,907		33,181
Due after five years through ten years		18,556		19,472
Due after ten years		15,161		16,122
		71,696		73,851
U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential		1,215		1,363
	$	72,911	$	75,214

Investments' Gross Unrealized Losses And Fair Value

		Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2016 :	(In Thousands)
U.S. Government agency obligations	$	9,035	$	(7)	$	-	$	-	$	9,035	$	(7)
Municipal bonds		1,779		(15)		-		-		1,779		(15)
Total Temporarily Impaired Securities	$	10,814	$	(22)	$	-	$	-	$	10,814	$	(22)
December 31, 2015 :
U.S. Government agency obligations	$	25,525	$	(121)	$	-	$	-	$	25,525	$	(121)
Municipal bonds		6,180		(144)		-		-		6,180		(144)
Total Temporarily Impaired Securities	$	31,705	$	(265)	$	-	$	-	$	31,705	$	(265)

XML

Loans Receivable And Credit Quality (Tables)

3 Months Ended

Mar. 31, 2016

Loans Receivable And Credit Quality [Abstract]

Composition Of Loans Receivable

	March 31, 2016			December 31, 2015
			Percentage of			Percentage of
	Balance		total Loans	Balance		total Loans
		(Dollars in Thousands)
Commercial real estate	$	290,400	40.83%	$	289,304	41.92%
Commercial construction		22,436	3.15%		17,786	2.58%
Commercial		41,249	5.80%		34,955	5.06%
Residential real estate		356,577	50.13%		347,316	50.33%
Consumer		668	0.09%		745	0.11%
Total loans		711,330	100.00%		690,106	100.00%
Unearned origination fees		60			9
Allowance for loan losses		(6,209)			(6,068)
	$	705,181		$	684,047

Schedule Of Loan Portfolio By Aggregate Risk Rating

	Pass		Special Mention		Substandard		Doubtful		Total
March 31, 2016		(In Thousands)
Commercial real estate	$	288,489	$	311	$	1,600	$	-	$	290,400
Commercial construction		21,621		-		815		-		22,436
Commercial		41,234		15		-		-		41,249
Residential real estate		355,983		-		594		-		356,577
Consumer		668		-		-		-		668
Total	$	707,995	$	326	$	3,009	$	-	$	711,330
December 31, 2015
Commercial real estate	$	287,755	$	-	$	1,549	$	-	$	289,304
Commercial construction		16,971		-		815		-		17,786
Commercial		34,889		66		-		-		34,955
Residential real estate		346,787		-		529		-		347,316
Consumer		745		-		-		-		745
Total	$	687,147	$	66	$	2,893	$	-	$	690,106

Schedule Of Impaired Loans

							Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
March 31, 2016		(In Thousands)
With no related allowance recorded:
Commercial real estate	$	3,678	$	3,996			$	3,661	$	18
Commercial construction		815		815				815		7
Commercial		-		-				-		-
Residential real estate		821		830				790		1
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	-	$	-
Commercial construction		-		-		-		-		-
Commercial		254		254		47		288		3
Residential real estate		827		827		248		831		1
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,678	$	3,996	$	-	$	3,661	$	18
Commercial construction		815		815		-		815		7
Commercial		254		254		47		288		3
Residential real estate		1,648		1,657		248		1,621		2
Consumer		-		-		-		-		-
	$	6,395	$	6,722	$	295	$	6,385	$	30
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,644	$	3,928			$	3,672	$	139
Commercial construction		815		815				1,096		38
Commercial		-		-				-		-
Residential real estate		758		758				1,029		10
Consumer		-		-				-		-
With an allowance recorded:
Commercial real estate	$	-	$	-	$	-	$	336	$	-
Commercial construction		-		-		-		-		-
Commercial		321		321		115		323		10
Residential real estate		834		834		255		878		5
Consumer		-		-		-		-		-
Total:
Commercial real estate	$	3,644	$	3,928	$	-	$	4,008	$	139
Commercial construction		815		815		-		1,096		38
Commercial		321		321		115		323		10
Residential real estate		1,592		1,592		255		1,907		15
Consumer		-		-		-		-		-
	$	6,372	$	6,656	$	370	$	7,334	$	202

Schedule Of Nonaccrual Loans

	March 31, 2016		December 31, 2015
	(In Thousands)
Commercial real estate	$	221	$	164
Commercial construction		-		-
Commercial		-		66
Residential real estate		594		529
Consumer		-		-
Total	$	815	$	759

Schedule Of Past Due Loans

					Greater								Loan
					than								Receivables >
	30-59 Days		60-89 Days		90 Days		Total				Total Loan		90 Days and
	Past Due		Past Due		Past Due		Past Due		Current		Receivables		Accruing
March 31, 2016	(In Thousands)
Commercial real estate	$	571	$	217	$	221	$	1,009	$	289,391	$	290,400	$	-
Commercial construction		500		-		-		500		21,936		22,436		-
Commercial		-		-		-		-		41,249		41,249		-
Residential real estate		158		-		594		752		355,825		356,577		-
Consumer		-		-		-		-		668		668		-
Total	$	1,229	$	217	$	815	$	2,261	$	709,069	$	711,330	$	-
December 31, 2015
Commercial real estate	$	219	$	-	$	164	$	383	$	288,921	$	289,304	$	-
Commercial construction		500		-		-		500		17,286		17,786		-
Commercial		-		-		66		66		34,889		34,955		-
Residential real estate		159		76		529		764		346,552		347,316		-
Consumer		-		-		-		-		745		745		-
Total	$	878	$	76	$	759	$	1,713	$	688,393	$	690,106	$	-

Activity In The Allowance For Loan Losses

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
Allowance for loan losses	(In Thousands)
Three Months Ending March 31, 2016
Beginning Balance - December 31, 2015	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Charge-offs		(35)		-		-		(9)		-		-		(44)
Recoveries		-		-		-		-		-		-		-
Provisions		60		77		(6)		61		1		(8)		185
Ending Balance - March 31, 2016	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Three Months Ending March 31, 2015
Beginning Balance - December 31, 2014	$	1,704	$	401	$	407	$	1,955	$	22	$	1,125	$	5,614
Charge-offs		-		-		-		(1)		-		-		(1)
Recoveries		-		-		-		-		-		-		-
Provisions		283		(76)		55		276		-		(516)		22
Ending Balance - March 31, 2015	$	1,987	$	325	$	462	$	2,230	$	22	$	609	$	5,635

Allocation For Loan Losses And The Related Portfolio Disaggregated Based On Impairment Methodology

	Commercial Real Estate		Commercial Construction		Commercial		Residential Real Estate		Consumer		Unallocated		Total
	(In Thousands)
March 31, 2016
Allowance for Loan Losses
Ending Balance	$	2,157	$	371	$	396	$	2,581	$	30	$	674	$	6,209
Ending balance: individually evaluated for impairment	$	-	$	-	$	47	$	248	$	-	$	-	$	295
Ending balance: collectively evaluated for impairment	$	2,157	$	371	$	349	$	2,333	$	30	$	674	$	5,914
Loans receivables:
Ending balance	$	290,400	$	22,436	$	41,249	$	356,577	$	668			$	711,330
Ending balance: individually evaluated  for impairment	$	3,678	$	815	$	254	$	1,648	$	-			$	6,395
Ending balance: collectively evaluated for impairment	$	286,722	$	21,621	$	40,995	$	354,929	$	668			$	704,935
December 31, 2015
Allowance for Loan Losses
Ending Balance	$	2,132	$	294	$	402	$	2,529	$	29	$	682	$	6,068
Ending balance: individually evaluated for impairment	$	-	$	-	$	115	$	255	$	-	$	-	$	370
Ending balance: collectively evaluated for impairment	$	2,132	$	294	$	287	$	2,274	$	29	$	682	$	5,698
Loans receivables:
Ending balance	$	289,304	$	17,786	$	34,955	$	347,316	$	745			$	690,106
Ending balance: individually evaluated  for impairment	$	3,644	$	815	$	321	$	1,592	$	-			$	6,372
Ending balance: collectively evaluated for impairment	$	285,660	$	16,971	$	34,634	$	345,724	$	745			$	683,734

Troubled Debt Restructuring Outstanding

	March 31, 2016
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,128	$	-	$	3,128
Commercial construction		260		-		260
Commercial		254		-		254
Residential real estate		1,053		-		1,053
Consumer		-		-		-
	$	4,695	$	-	$	4,695
	December 31, 2015
	Accrual Loans		Non-Accrual Loans		Total Modifications
	(In Thousands)
Commercial real estate	$	3,145	$	-	$	3,145
Commercial construction		260		-		260
Commercial		255		-		255
Residential real estate		1,063		-		1,063
Consumer		-		-		-
	$	4,723	$	-	$	4,723

XML

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2016

Fair Value Measurements [Abstract]

Fair Value Of Financial Assets Measured On Recurring Basis

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
U.S. Government agency obligations	$	-	$	32,756	$	-	$	32,756
Municipal bonds		-		41,095		-		41,095
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,363		-		1,363
March 31, 2016 Securities available for sale	$	-	$	75,214	$	-	$	75,214
U.S. Government agency obligations	$	-	$	34,570	$	-	$	34,570
Municipal bonds		-		41,204		-		41,204
U.S. Government Sponsored Enterprise (GSE) -
Mortgage-backed securities - residential		-		1,479		-		1,479
December 31, 2015 Securities available for sale	$	-	$	77,253	$	-	$	77,253

Fair Value Of Financial Assets Measured On Nonrecurring Basis

		(Level 1)		(Level 2)
		Quoted		Significant		(Level 3)
		Prices in Active		Other		Significant
		Markets for		Observable		Unobservable
Description	Identical Assets		Inputs		Inputs		Total
		(In Thousands)
March 31, 2016 Impaired loans (1)	$	-	$	-	$	786	$	786
March 31, 2016 Impaired loans (2)	$	-	$	-	$	-	$	-
March 31, 2016 Other real estate owned (1)	$	-	$	-	$	701	$	701
December 31, 2015 Impaired loans (1)	$	-	$	-	$	785	$	785
December 31, 2015 Impaired loans (2)	$	-	$	-	$	-	$	-
December 31, 2015 Other real estate owned (1)	$	-	$	-	$	1,224	$	1,224
(1) Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 input which
are not identifiable.  Fair values may also include qualitative adjustments by management based on economic conditions and liquidation expenses.
(2) Fair Value determined using the debt service of the borrower.

Quantitative Information About Level 3 Fair Value Measurements

	Quantitative Information about Level 3 Fair Value Measurements
Description	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
		(Dollars In Thousands)
March 31, 2016:
Impaired loans	$	786	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	701	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)
December 31, 2015:
Impaired loans	$	785	Appraisal of collateral (1)	Appraisal adjustments (2)	0% to -25%  (-25.0%)
				Liquidation expenses (3)	0% to -7.5%  (-7.5%)
Other real estate owned	$	1,224	Listings, Letters of Intent	Liquidation expenses (3)	-5%  (-5%)
			& Third Party Evaluations (4)

1. Fair value is generally determined through independent appraisals of the underlying collateral, which generally include 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 listings, letters of intent or third-party evaluations.

Estimated Fair Value Of Financial Instruments

						(Level 1)
						Quoted		(Level 2)		(Level 3)
						Prices in Active		Significant Other		Significant
		Carrying		Fair Value		Markets for		Observable		Unobservable
		Amount		Estimate		Identical Assets		Inputs		Inputs
	(In Thousands)
March 31, 2016:
Financial assets:
Cash and cash equivalents	$	50,758	$	50,758	$	50,758	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		75,214		75,214		-		75,214		-
Loans receivable, net of allowance		705,181		716,677		-		-		716,677
Restricted investments in bank stock		535		535		-		535		-
Accrued interest receivable		1,691		1,691		-		1,691		-
Financial liabilities:
Deposits		752,089		752,985		-		752,985		-
Securities sold under agreements to
repurchase and federal funds purchased		25,752		25,747		-		25,747		-
Short-term borrowings		-		-		-		-		-
Long-term borrowings		-		-		-		-		-
Accrued interest payable		586		586		-		586		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-
December 31, 2015:
Financial assets:
Cash and cash equivalents	$	19,526	$	19,527	$	19,527	$	-	$	-
Interest bearing time deposits		-		-		-		-		-
Securities available-for-sale		77,253		77,253		-		77,253		-
Loans receivable, net of allowance		684,047		688,645		-		-		688,645
Restricted investments in bank stock		2,178		2,178		-		2,178		-
Accrued interest receivable		1,637		1,637		-		1,637		-
Financial liabilities:
Deposits		660,266		660,503		-		660,503		-
Securities sold under agreements to
repurchase and federal funds purchased		27,535		7,529		-		27,529		-
Short-term borrowings		39,306		3,973		-		39,273		-
Long-term borrowings		3,820		3,740		-		-		3,740
Accrued interest payable		462		462		-		462		-
Off-balance sheet financial instruments:
Commitments to grant loans		-		-		-		-		-
Unfunded commitments under lines of credit		-		-		-		-		-
Standby letters of credit		-		-		-		-		-

XML

Offsetting Assets And Liabilities (Tables)

3 Months Ended

Mar. 31, 2016

Offsetting Assets And Liabilities [Abstract]

Schedule Of Liabilities Subject To An Enforceable Master Netting Arrangement Or Repurchase Agreements

						Net Amounts
		Gross		Gross Amounts		of Liabilities
		Amounts of		Offset in the		Presented in the				Cash
		Recognized		Consolidated		Consolidated		Financial		Collateral
		Liabilities		Balance Sheet		Balance Sheet		Instruments		Pledged		Net Amount
		(In Thousands)
March 31, 2016
Repurchase Agreements:
Corporate Institutions	$	25,752	$	-	$	25,752	$	(25,752)	$	-	$	-
December 31, 2015
Repurchase Agreements:
Corporate Institutions	$	27,535	$	-	$	27,535	$	(27,535)	$	-	$	-

XML

Stock Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended			3 Months Ended		12 Months Ended			66 Months Ended
	Jan. 31, 2014	Feb. 28, 2013	Feb. 29, 2012	Mar. 31, 2016	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option compensation expense				$ 21	$ 16
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options granted	29,663	29,742	52,611	0	0
Stock option compensation expense				$ 9	$ 16
Unrecognized compensation cost				$ 19					$ 19
Unrecognized compensation cost, recognition period				9 months 18 days
Dividend yield						0.00%	0.00%	0.00%
Risk free interest rate						2.30%	1.34%	1.43%
Expected life, in years						6 years	6 years	7 years 6 months
Expected volatility						28.93%	28.79%	31.10%
Weighted average fair value of options granted, per share						$ 2.46	$ 2.14	$ 2.56
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted				5,934	9,112				65,744
Stock compensation expense				$ 12	$ 0
Minimum [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years
Maximum [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				9 years
Stock Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award expiration period				10 years
Number of shares authorized				500,000					500,000
Shares available for issuance				322,210					322,210

XML

Other Comprehensive Income (Schedule Of Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Other Comprehensive Income [Abstract]
Unrealized holding gains on available for sale, Before Tax		$ 431	$ 338
Unrealized holding gains on available for sale, Tax Effect		(147)	(115)
Unrealized holding gains on available for sale, Net of Tax		$ 284	223
Reclassification adjustments for gains on securities transactions included in net income, Before Tax	[1],[2]		(139)
Reclassification adjustments for gains on securities transactions in net income: Tax Effect	[1],[2]		47
Reclassification adjustments for gains on securities transactions in net income: Net of Tax	[1],[2]		(92)
Total other comprehensive income, before tax		$ 431	199
Total other comprehensive income, Tax Effect		(147)	(68)
Other comprehensive gain, net of tax		$ 284	$ 131

[1] Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

[2] Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

XML

Other Comprehensive Income (Schedule Of The Realized Gains On Securities Available For Sale, Net Of Tax) (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2016	Mar. 31, 2015
Other Comprehensive Income [Abstract]
Reclassification adjustments for gains on securities transactions included in net income, Before Tax	[1],[2]		$ (139)
Income taxes	[1],[2]		47
Reclassification adjustments for gains on securities transactions in net income: Net of Tax	[1],[2]		$ (92)

[1] Realized gains on securities transactions included in gain on sales of securities, net, in the accompanying Consolidated Statements of Income.

[2] Tax effect included in income tax expense in the accompanying Consolidated Statements of Income.

XML

Other Comprehensive Income (Schedule Of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Other Comprehensive Income [Abstract]
Beginning Balance	$ 1,236	$ 1,465
Other comprehensive income before reclassifications	284	223
Amounts reclassified from accumulated other comprehensive income		(92)
Other comprehensive gain, net of tax	284	131
Ending Balance	$ 1,520	$ 1,596

XML

Basic And Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Basic And Diluted Earnings Per Share [Abstract]
Net income	$ 1,608	$ 1,941
Weighted average shares outstanding	7,411,395	7,364,846
Dilutive effect of potential common shares, stock options	34,098	29,843
Diluted weighted average common shares outstanding	7,445,493	7,394,689
Basic earnings per share	$ 0.22	$ 0.26
Diluted earnings per share	$ 0.22	$ 0.26
Stock Excluded from Diluted Earnings Per Share Computation	0	0

XML

Guarantees (Details) $ in Millions	3 Months Ended
	Mar. 31, 2016 USD ($)
Guarantor Obligations [Line Items]
Guarantee obligations term	1 year
Maximum Potential Exposure	$ 3.6
Federal Home Loan Bank of Pittsburgh [Member]
Guarantor Obligations [Line Items]
Letters of Credit Outstanding	10.9
Financial Standby Letter of Credit [Member]
Guarantor Obligations [Line Items]
Stand by letters of credit	$ 3.8

XML

Short-Term And Long-Term Borrowings (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) item shares	Mar. 31, 2015 USD ($)	Dec. 31, 2015 USD ($)
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 402,100
Short-term borrowings			$ 39,306
Long-term advances FHLB	0		3,820
Repayment of long-term borrowed funds	3,820	$ 500
Federal Home Loan Bank Advances [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	150,000
Atlantic Community Bankers Bank Borrowings [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	10,000
Line of credit outstanding	0		0
Univest Bank and Trust Co. Borrowings [Member]
Line of Credit Facility [Line Items]
Line of credit, maximum borrowing capacity	4,000
Line of credit outstanding	$ 0		$ 0
Number of lines of credit | item	1
Number of shares used to secure the lines of credit | shares	333,333

XML

Short-Term And Long-Term Borrowings (Components Of Long-Term Borrowings With FHLB) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
April 2016, repaid		$ 667
April 2017, repaid		668
April 2018, repaid		779
April 2019, repaid		836
April 2020, repaid		870
Long-term Federal Home Loan Bank Advances, Total	$ 0	$ 3,820
April 2016 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		0.26%
April 2017 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		0.48%
April 2018 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		0.69%
April 2019 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		0.88%
April 2020 [Member]
Federal Home Loan Bank, Advances, Branch of FHLB Bank [Line Items]
Interest rate		1.06%

XML

Securities Available For Sale (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2015 USD ($)	Mar. 31, 2016 USD ($) security	Dec. 31, 2015 USD ($)
Securities Available For Sale [Abstract]
Realized gains	$ 139
Realized losses	$ 0
Securities in an unrealized loss position | security		9
Securities pledged as collateral		$ 66,300	$ 64,900

XML

Securities Available For Sale (Amortized Cost And Fair Values Of Securities Available-For-Sale) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Total	$ 72,911	$ 75,381
Gross Unrealized Gains	2,325	2,137
Gross Unrealized Losses	(22)	(265)
Fair Value	75,214	77,253
U.S Government Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Total	32,635	34,676
Gross Unrealized Gains	128	15
Gross Unrealized Losses	(7)	(121)
Fair Value	32,756	34,570
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Total	39,061	39,378
Gross Unrealized Gains	2,049	1,970
Gross Unrealized Losses	(15)	(144)
Fair Value	41,095	41,204
U.S. GSE - Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost, Total	1,215	1,327
Gross Unrealized Gains	148	152
Fair Value	$ 1,363	$ 1,479

XML

Securities Available For Sale (Securities Available-For-Sale By Contractual Maturity) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Securities Available For Sale [Abstract]
Amortized Cost, Due in one year or less	$ 5,072
Amortized Cost, Due after one year through five years	32,907
Amortized Cost, Due after five years through ten years	18,556
Amortized Cost, Due after ten years	15,161
Amortized Cost, Debt Maturities, Total	71,696
Amortized Cost, U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential	1,215
Amortized Cost, Total	72,911	$ 75,381
Fair Value, Due in one year or less	5,076
Fair Value, Due after one year through five years	33,181
Fair Value, Due after five years through ten years	19,472
Fair Value, Due after ten years	16,122
Fair Value, Debt maturities, Total	73,851
Fair Value, U.S. Government Sponsored Enterprise (GSE) - Mortgage-backed securities - residential	1,363
Fair Value, Total	$ 75,214	$ 77,253

XML

Securities Available For Sale (Investments' Gross Unrealized Losses And Fair Value) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less Than 12 Months	$ 10,814	$ 31,705
Fair Value, Total	10,814	31,705
Unrealized Losses, Less Than 12 Months	(22)	(265)
Unrealized Losses	(22)	(265)
U.S Government Agency Obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less Than 12 Months	9,035	25,525
Fair Value, Total	9,035	25,525
Unrealized Losses, Less Than 12 Months	(7)	(121)
Unrealized Losses	(7)	(121)
Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less Than 12 Months	1,779	6,180
Fair Value, Total	1,779	6,180
Unrealized Losses, Less Than 12 Months	(15)	(144)
Unrealized Losses	$ (15)	$ (144)

XML

Restricted Investment In Bank Stock (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Restricted Investment In Bank Stock [Abstract]
FHLB stock repurchased	$ 1,800	$ 0
Payments to Acquire Federal Home Loan Bank Stock	185	858
Restricted stock dividends received	$ 25	$ 45

XML

Loans Receivable And Credit Quality (Narrative) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2016 USD ($) loan	Mar. 31, 2015 USD ($) loan
Financing Receivable, Modifications [Line Items]
Available Commitments Outstanding on TDRs	$ 0
Number of Loans | loan	0	0
Provision for Loan and Lease Losses	$ 185	$ 22
Number of Loans experiencing payment default | loan	0	0
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Provision for Loan and Lease Losses	$ (6)	$ 55

XML

Loans Receivable And Credit Quality (Composition Of Loans Receivable) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	100.00%	100.00%
Gross loans	$ 711,330	$ 690,106
Unearned origination fees	60	9
Allowance for loan losses	(6,209)	(6,068)
Net Loans Receivable	$ 705,181	$ 684,047
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	40.83%	41.92%
Gross loans	$ 290,400	$ 289,304
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	5.80%	5.06%
Gross loans	$ 41,249	$ 34,955
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	50.13%	50.33%
Gross loans	$ 356,577	$ 347,316
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	0.09%	0.11%
Gross loans	$ 668	$ 745
Construction [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percentage of Total Loans	3.15%	2.58%
Gross loans	$ 22,436	$ 17,786

XML

Loans Receivable And Credit Quality (Schedule Of Loan Portfolio By Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 711,330	$ 690,106
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	707,995	687,147
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	326	66
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	3,009	2,893
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	290,400	289,304
Commercial Real Estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	288,489	287,755
Commercial Real Estate [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	311
Commercial Real Estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	1,600	1,549
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	41,249	34,955
Commercial [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	41,234	34,889
Commercial [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	15	66
Commercial [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	22,436	17,786
Commercial [Member] | Construction [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	21,621	16,971
Commercial [Member] | Construction [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	815	815
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	356,577	347,316
Residential Real Estate [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	355,983	346,787
Residential Real Estate [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	594	529
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	668	745
Consumer [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 668	$ 745

XML

Loans Receivable And Credit Quality (Schedule Of Impaired Loans) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Impaired loans without related allowance	$ 5,300
Impaired loans with related allowance	1,100
Total Recorded Investment Impaired	6,395	$ 6,372
Total Unpaid Principal Balance Impaired	6,722	6,656
Related Allowance	295	370
Total Average Recorded Investment Impaired	6,385	7,334
Total Interest Income Recognized Impaired	30	202
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without related allowance	3,678	3,644
Total Recorded Investment Impaired	3,678	3,644
Unpaid Principal Balance, With no related allowance recorded	3,996	3,928
Total Unpaid Principal Balance Impaired	3,996	3,928
Average Recorded Investment, With no related allowance recorded	3,661	3,672
Average Recorded Investment, With an allowance recorded		336
Total Average Recorded Investment Impaired	3,661	4,008
Interest Income Recognized, With no related allowance recorded	18	139
Total Interest Income Recognized Impaired	18	139
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans with related allowance	254	321
Total Recorded Investment Impaired	254	321
Unpaid Principal Balance, With an allowance recorded	254	321
Total Unpaid Principal Balance Impaired	254	321
Related Allowance	47	115
Average Recorded Investment, With an allowance recorded	288	323
Total Average Recorded Investment Impaired	288	323
Interest Income Recognized, With an allowance recorded	3	10
Total Interest Income Recognized Impaired	3	10
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without related allowance	821	758
Impaired loans with related allowance	827	834
Total Recorded Investment Impaired	1,648	1,592
Unpaid Principal Balance, With no related allowance recorded	830	758
Unpaid Principal Balance, With an allowance recorded	827	834
Total Unpaid Principal Balance Impaired	1,657	1,592
Related Allowance	248	255
Average Recorded Investment, With no related allowance recorded	790	1,029
Average Recorded Investment, With an allowance recorded	831	878
Total Average Recorded Investment Impaired	1,621	1,907
Interest Income Recognized, With no related allowance recorded	1	10
Interest Income Recognized, With an allowance recorded	1	5
Total Interest Income Recognized Impaired	$ 2	15
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without related allowance
Impaired loans with related allowance
Total Recorded Investment Impaired
Unpaid Principal Balance, With no related allowance recorded
Unpaid Principal Balance, With an allowance recorded
Total Unpaid Principal Balance Impaired
Related Allowance
Average Recorded Investment, With no related allowance recorded
Average Recorded Investment, With an allowance recorded
Total Average Recorded Investment Impaired
Interest Income Recognized, With no related allowance recorded
Interest Income Recognized, With an allowance recorded
Total Interest Income Recognized Impaired
Construction [Member] | Commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans without related allowance	$ 815	815
Total Recorded Investment Impaired	815	815
Unpaid Principal Balance, With no related allowance recorded	815	815
Total Unpaid Principal Balance Impaired	815	815
Average Recorded Investment, With no related allowance recorded	815	1,096
Total Average Recorded Investment Impaired	815	1,096
Interest Income Recognized, With no related allowance recorded	7	38
Total Interest Income Recognized Impaired	$ 7	$ 38

XML

Loans Receivable And Credit Quality (Schedule Of Nonaccrual Loans) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 815	$ 759
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	221	164
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans		66
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-Accrual Loans	$ 594	$ 529

XML

Loans Receivable And Credit Quality (Schedule Of Past Due Loans) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 2,261	$ 1,713
Current	709,069	688,393
Total Loan Receivables	711,330	690,106
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,229	878
60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	217	76
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	815	759
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,009	383
Current	289,391	288,921
Total Loan Receivables	290,400	289,304
Commercial Real Estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	571	219
Commercial Real Estate [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	217
Commercial Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	221	164
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		66
Current	41,249	34,889
Total Loan Receivables	41,249	34,955
Commercial [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		66
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	752	764
Current	355,825	346,552
Total Loan Receivables	356,577	347,316
Residential Real Estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	158	159
Residential Real Estate [Member] | 60-89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		76
Residential Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	594	529
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	668	745
Total Loan Receivables	668	745
Construction [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	500	500
Current	21,936	17,286
Total Loan Receivables	22,436	17,786
Construction [Member] | Commercial [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 500	$ 500

XML

Loans Receivable And Credit Quality (Activity In The Allowance For Loan Losses) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	$ 6,068	$ 5,614
Charge-offs	(44)	(1)
Provisions	185	22
Ending balance	6,209	5,635
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,132	1,704
Charge-offs	(35)
Provisions	60	283
Ending balance	2,157	1,987
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	402	407
Provisions	(6)	55
Ending balance	396	462
Commercial [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	294	401
Provisions	77	(76)
Ending balance	371	325
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	2,529	1,955
Charge-offs	(9)	(1)
Provisions	61	276
Ending balance	2,581	2,230
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	29	22
Provisions	1
Ending balance	30	22
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Beginning balance	682	1,125
Provisions	(8)	(516)
Ending balance	$ 674	$ 609

XML

Loans Receivable And Credit Quality (Allocation For Loan Losses And The Related Portfolio Disaggregated Based On Impairment Methodology) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	$ 6,209	$ 6,068	$ 5,635	$ 5,614
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	295	370
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	5,914	5,698
Total Loan Receivables	711,330	690,106
Loans receivables, Ending balance: individually evaluated for impairment	6,395	6,372
Loans receivables, Ending balance: collectively evaluated for impairment	704,935	683,734
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	2,157	2,132	1,987	1,704
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	2,157	2,132
Total Loan Receivables	290,400	289,304
Loans receivables, Ending balance: individually evaluated for impairment	3,678	3,644
Loans receivables, Ending balance: collectively evaluated for impairment	286,722	285,660
Commercial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	396	402	462	407
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	47	115
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	349	287
Total Loan Receivables	41,249	34,955
Loans receivables, Ending balance: individually evaluated for impairment	254	321
Loans receivables, Ending balance: collectively evaluated for impairment	40,995	34,634
Commercial [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	371	294	325	401
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	371	294
Total Loan Receivables	22,436	17,786
Loans receivables, Ending balance: individually evaluated for impairment	815	815
Loans receivables, Ending balance: collectively evaluated for impairment	21,621	16,971
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	2,581	2,529	2,230	1,955
Allowance for Loan Losses, Ending balance: individually evaluated for impairment	248	255
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	2,333	2,274
Total Loan Receivables	356,577	347,316
Loans receivables, Ending balance: individually evaluated for impairment	1,648	1,592
Loans receivables, Ending balance: collectively evaluated for impairment	354,929	345,724
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	30	29	22	22
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	30	29
Total Loan Receivables	668	745
Loans receivables, Ending balance: collectively evaluated for impairment	668	745
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for Loan Losses, Ending Balance	674	682	$ 609	$ 1,125
Allowance for Loan Losses, Ending balance: collectively evaluated for impairment	$ 674	$ 682

XML

Loans Receivable And Credit Quality (Troubled Debt Restructuring Outstanding) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Total Modifications	$ 4,695	$ 4,723
Accrual Loans [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	4,695	4,723
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	3,128	3,145
Commercial Real Estate [Member] | Accrual Loans [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	3,128	3,145
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	254	255
Commercial [Member] | Accrual Loans [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	254	255
Commercial [Member] | Construction [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	260	260
Commercial [Member] | Construction [Member] | Accrual Loans [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	260	260
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	1,053	1,063
Residential Real Estate [Member] | Accrual Loans [Member]
Financing Receivable, Modifications [Line Items]
Total Modifications	$ 1,053	$ 1,063

XML

Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value Measurements [Abstract]
Impaired loans aggregate balance	$ 6,395	$ 6,372
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	5,300
Impaired Financing Receivable, with Related Allowance, Recorded Investment	1,100
Related Allowance	$ 295	$ 370

XML

Fair Value Measurements (Fair Value Of Financial Assets Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 75,214	$ 77,253
U.S Government Agency Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	32,756	34,570
Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	41,095	41,204
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	$ 1,363	$ 1,479
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | U.S Government Agency Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities
(Level 1) Quoted Prices in Active Markets for Identical Assets [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
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 75,214	$ 77,253
(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	32,756	34,570
(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	41,095	41,204
(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	$ 1,363	$ 1,479
(Level 3) Significant Unobservable Inputs [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities
(Level 3) Significant Unobservable 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
(Level 3) Significant Unobservable Inputs [Member] | Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities
(Level 3) Significant Unobservable 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

XML

Fair Value Measurements (Fair Value Of Financial Assets Measured On Nonrecurring Basis) (Details) - FV determined through independent appraisals of the underlying collateral [Member] - USD ($) $ in Thousands		Mar. 31, 2016	Dec. 31, 2015
Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1]	$ 786	$ 785
Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1]	701	1,224
(Level 3) Significant Unobservable Inputs [Member] | Impaired Loan [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1]	786	785
(Level 3) Significant Unobservable Inputs [Member] | Other real estate owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1]	$ 701	$ 1,224

[1] Fair Value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. Fair values may also include qualitative adjustments by management based on economic conditions and liquidation expenses.

XML

Fair Value Measurements (Quantitative Information About Level 3 Fair Value Measurements) (Details) - (Level 3) Significant Unobservable Inputs [Member] - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Mar. 31, 2016	Dec. 31, 2015
Impaired Loan [Member] | Market Approach Valuation Technique [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1],[2]	$ 786	$ 785
Impaired Loan [Member] | Market Approach Valuation Technique [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	[3]	(25.00%)	(25.00%)
Impaired Loan [Member] | Market Approach Valuation Technique [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	[3]	0.00%	0.00%
Impaired Loan [Member] | Market Approach Valuation Technique [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)		(25.00%)	(25.00%)
Impaired Loan [Member] | Cost Approach Valuation Technique [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	[4]	(7.50%)	(7.50%)
Impaired Loan [Member] | Cost Approach Valuation Technique [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)	[4]	0.00%	0.00%
Impaired Loan [Member] | Cost Approach Valuation Technique [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)		(7.50%)	(7.50%)
Other real estate owned [Member] | Market Approach Valuation Technique [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset fair value	[1],[5]	$ 701	$ 1,224
Range (Weighted Average)	[4]	(5.00%)	(5.00%)
Other real estate owned [Member] | Cost Approach Valuation Technique [Member] | Weighted Average [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range (Weighted Average)		(5.00%)	(5.00%)

[1] Fair value is determined using the debt service of the borrower.

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

[3] 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.

[4] 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.

[5] Fair value is determined by listings, letters of intent or third-party evaluations.

XML

Fair Value Measurements (Estimated Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	$ 75,214	$ 77,253
Carrying Amount [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	50,758	19,526
Securities available for sale	75,214	77,253
Loans receivable, net of allowance	705,181	684,047
Restricted investment in bank stock	535	2,178
Accrued interest receivable	1,691	1,637
Deposits	752,089	660,266
Securities sold under agreements to repurchase and federal funds purchased	25,752	27,535
Short-term borrowings		39,306
Long-term borrowings		3,820
Accrued interest payable	586	462
Fair Value Estimate [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	50,758	19,527
Securities available for sale	75,214	77,253
Loans receivable, net of allowance	716,677	688,645
Restricted investment in bank stock	535	2,178
Accrued interest receivable	1,691	1,637
Deposits	752,985	660,503
Securities sold under agreements to repurchase and federal funds purchased	25,747	7,529
Short-term borrowings		3,973
Long-term borrowings		3,740
Accrued interest payable	586	462
(Level 1) Quoted Prices in Active Markets for Identical Assets [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	$ 50,758	$ 19,527
Securities available for sale
(Level 2) Significant Other Observable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale	$ 75,214	$ 77,253
Restricted investment in bank stock	535	2,178
Accrued interest receivable	1,691	1,637
Deposits	752,985	660,503
Securities sold under agreements to repurchase and federal funds purchased	25,747	27,529
Short-term borrowings		39,273
Accrued interest payable	$ 586	$ 462
(Level 3) Significant Unobservable Inputs [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Securities available for sale
Loans receivable, net of allowance	$ 716,677	$ 688,645
Long-term borrowings		$ 3,740

XML

Offsetting Assets And Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Securities Pledged as Collateral [Member]
Offsetting Liabilities [Line Items]
Off-balance sheet financial instruments	$ 30,100	$ 35,000
Repurchase Agreements [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	$ 25,752	$ 27,535
Gross Amounts Offset in the Consolidated Balance Sheet
Net Amounts of Liabilities Presented in Consolidated Balance Sheet	$ 25,752	$ 27,535
Financial Instruments	$ (25,752)	$ (27,535)
Cash Collateral Pledged
Net Amount