10-Q

UNITED STATES OF AMERICA

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q  

                               (Mark One)

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

For the Quarterly Period Ended March 31, 2014

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:  000-11486

CENTER BANCORP, INC.

(Exact Name of Registrant as Specified in Its Charter) 

New Jersey	52-1273725
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

2455 Morris Avenue

Union, New Jersey 07083-0007

(Address of Principal Executive Offices) (Zip Code)

(908) 688-9500

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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

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

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

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

Common Stock, no par value:	16,401,762 shares
(Title of Class)	(Outstanding as of May 9, 2014)

Table of Contents

		Page
PART I – FINANCIAL INFORMATION		3
Item  1.	Financial Statements
	Consolidated Statements of Condition at March 31, 2014 (unaudited) and December 31, 2013	4
	Consolidated Statements of Income for the three months ended March 31, 2014 and 2013 (unaudited)	5
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013 (unaudited)	6
	Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2014 and 2013 (unaudited)	7
	Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	8
	Notes to Consolidated Financial Statements	9
Item  2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item  3.	Qualitative and Quantitative Disclosures about Market Risks	56
Item  4.	Controls and Procedures	57
PART II – OTHER INFORMATION
Item  1.	Legal Proceedings	57
Item  6.	Exhibits	58
SIGNATURES		59

2

PART I – FINANCIAL INFORMATION

The following unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and, accordingly, do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014, or for any other interim period. The Center Bancorp, Inc. 2013 Annual Report on Form 10-K, should be read in conjunction with these financial statements.

3

Item 1. Financial Statements

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

( in thousands, except for share and per share data)	March 31, 2014			December 31, 2013
	(Unaudited)
ASSETS
Cash and due from banks	$	106,282		$	82,692
Investment securities:
Available-for-sale		287,471			323,070
Held-to-maturity (fair value of $ 214,952 and $210,958)		214,191			215,286
Loans		987,529			960,943
Less: Allowance for loan losses		10,633			10,333
Net loans		976,896			950,610
Restricted investment in bank stocks, at cost		8,986			8,986
Premises and equipment, net		13,833			13,681
Accrued interest receivable		6,341			6,802
Bank-owned life insurance		35,989			35,734
Goodwill and other intangible assets		16,821			16,828
Other real estate owned		220			220
Due from brokers for investment securities		—			8,759
Other assets		9,130			10,414
Total assets	$	1,676,160		$	1,673,082
LIABILITIES
Deposits:
Non-interest bearing	$	223,332		$	227,370
Interest-bearing:
Time deposits $100 and over		110,353			99,444
Interest-bearing transaction, savings and time deposits less than $100		1,006,200			1,015,191
Total deposits		1,339,885			1,342,005
Long-term borrowings		146,000			146,000
Subordinated debentures		5,155			5,155
Accounts payable and accrued liabilities		11,307			11,338
Total liabilities		1,502,347			1,504,498
STOCKHOLDERS’ EQUITY
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued and outstanding 11,250 shares of Series B preferred stock at March 31, 2014 and December 31, 2013; total liquidation value of $11,250,000 at March 31, 2014 and December 31, 2013		11,250			11,250
Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412 shares at March 31, 2014 and December 31, 2013; outstanding 16,369,012 shares at March 31, 2014 and December 31, 2013		110,056			110,056
Additional paid-in capital		5,002			4,986
Retained earnings		65,053			61,914
Treasury stock, at cost (2,108,400 common shares at March 31, 2014 and December 31, 2013)		(17,078	)		(17,078	)
Accumulated other comprehensive loss		(470	)		(2,544	)
Total stockholders’ equity		173,813			168,584
Total liabilities and stockholders’ equity	$	1,676,160		$	1,673,082

See accompanying notes to unaudited consolidated financial statements.

4

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,
(in thousands, except for share and per share data)	2014		2013
Interest income
Interest and fees on loans	$	10,111	$	9,923
Interest and dividends on investment securities:
Taxable		3,016		2,972
Tax-exempt		1,056		1,076
Dividends		154		131
Interest on federal funds sold and other short-term investment		—		2
Total interest income		14,337		14,104
Interest expense
Interest on certificates of deposit $100 or more		207		239
Interest on other deposits		1,109		1,045
Interest on borrowings		1,411		1,450
Total interest expense		2,727		2,734
Net interest income		11,610		11,370
Provision for loan losses		625		—
Net interest income after provision for loan losses		10,985		11,370
Other income
Service charges, commissions and fees		497		406
Annuities and insurance commissions		100		100
Bank-owned life insurance		255		565
Loan related fees		181		227
Net gains on sale of loans held for sale		36		138
Other		37		90
Other-than-temporary impairment losses on investment securities		—		(24	)
Net gains on sale of investment securities		1,415		343
Net investment securities gains		1,415		319
Total other income		2,521		1,845
Other expense
Salaries and employee benefits		3,332		3,490
Occupancy and equipment		1,080		906
FDIC insurance		300		313
Professional and consulting		255		219
Stationery and printing		84		85
Marketing and advertising		40		101
Computer expense		345		353
Other real estate owned, net		2		19
Merger-related expenses		1,060		—
All other		998		1,052
Total other expense		7,496		6,538
Income before income tax expense		6,010		6,677
Income tax expense		1,612		1,753
Net Income		4,398		4,924
Preferred stock dividends		28		56
Net income available to common stockholders	$	4,370	$	4,868
Earnings per common share
Basic	$	0.27	$	0.30
Diluted	$	0.27	$	0.30
Weighted average common shares outstanding
Basic		16,350,183		16,348,215
Diluted		16,405,540		16,373,588
Dividend paid per common share	$	0.075	$	0.055

See accompanying notes to unaudited consolidated financial statements.

5

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,
(in thousands)	2014			2013
Net income	$	4,398		$	4,924
Other comprehensive income, net of tax:
Unrealized gains on securities available-for-sale:
Unrealized holding gains on available-for-sale securities		3,516			548
Tax effect		(1,190	)		(200	)
Net of tax amount		2,326			348
Reclassification adjustment of OTTI losses		—			24
Tax effect		—			(6	)
Net of tax amount		—			18
Reclassification adjustment for net gains arising during the period		(1,415	)		(343	)
Tax effect		380			90
Net of tax amount		(1,035	)		(253	)
Amortization of unrealized holding gains (losses) on securities transferred from available-for-sale to held-to-maturity		45			(14	)
Tax effect		(20	)		5
Net of tax amount		25			(9	)
Pension Plan:
Actuarial gains		1,281			—
Tax effect		(523	)		—
Net of tax amount		758			—
Total other comprehensive income		2,074			104
Total comprehensive income	$	6,472		$	5,028

See accompanying notes to unaudited consolidated financial statements.

6

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except for share and per share data)	Preferred Stock		Common Stock		Additional Paid In Capital		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance as of January 1, 2013	$	11,250	$	110,056	$	4,801	$	46,753		$	(17,232	)	$	5,063		$	160,691
Net income								4,924									4,924
Other comprehensive income, net of tax														104			104
Dividend on series B preferred stock								(85	)								(85	)
Issuance cost of common stock								(3	)								(3	)
Cash dividends declared on common stock ($0.055 per share)								(899	)								(899	)
Stock issued for options exercise (1,000 shares)						8					2						10
Stock-based compensation expense						11											11
Balance as of March 31, 2013	$	11,250	$	110,056	$	4,820	$	50,690		$	(17,230	)	$	5,167		$	164,753
Balance as of January 1, 2014	$	11,250	$	110,056	$	4,986	$	61,914		$	(17,078	)	$	(2,544	)	$	168,584
Net income								4,398									4,398
Other comprehensive income, net of tax														2,074			2,074
Dividend on series B preferred stock								(28	)								(28	)
Issuance cost of common stock								(3	)								(3	)
Cash dividends declared on common stock ($0.075 per share)								(1,228	)								(1,228	)
Stock-based compensation expense						16											16
Balance as of March 31, 2014	$	11,250	$	110,056	$	5,002	$	65,053		$	(17,078	)	$	(470	)	$	173,813

See accompanying notes to unaudited consolidated financial statements.

7

CENTER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	4,398		$	4,924
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of premiums and accretion of discounts on investment securities, net		536			958
Depreciation and amortization		204			212
Stock-based compensation		16			11
Provision for loan losses		625			—
Net other-than-temporary impairment losses on investment securities		—			24
Gains on sales of investment securities, net		(1,415	)		(343	)
Loans originated for resale		(2,168	)		(7,605	)
Proceeds from sale of loans held for sale		2,204			8,460
Gains on sale of loans held for sale		(36	)		(138	)
Decrease in accrued interest receivable		461			426
Decrease in prepaid FDIC insurance assessments		—			286
Increase in cash surrender value of bank-owned life insurance		(255	)		(274	)
Life insurance death benefit		—			(291	)
Decrease in other assets		1,588			909
(Decrease) increase in other liabilities		(31	)		609
Net cash provided by operating activities		6,127			8,168
Cash flows from investing activities:
Investment securities available-for-sale:
Purchases		(10,397	)		(37,204	)
Sales		50,611			45,006
Maturities, calls and principal repayments		6,999			14,121
Investment securities held-to-maturity:
Purchases		—			(4,996	)
Maturities and principal repayments		890			689
Net redemption (purchases) of restricted investment in bank stocks		—			(2	)
Net (increase) decrease in loans		(26,911	)		10,044
Purchases of premises and equipment		(350	)		(182	)
Proceeds from bank-owned life insurance death benefits		—			592
Net cash provided by investing activities		20,842			28,068
Cash flows from financing activities:
Net decrease in deposits		(2,120	)		(24,699	)
Cash dividends on preferred stock		(28	)		(28	)
Cash dividends on common stock		(1,228	)		(899	)
Issuance cost of common stock		(3	)		(3	)
Proceeds from exercise of stock options		—			10
Net cash used in financing activities		(3,379	)		(25,619	)
Net increase in cash and cash equivalents		23,590			10,617
Cash and cash equivalents at beginning of period		82,692			106,138
Cash and cash equivalents at end of period	$	106,282		$	116,755
Supplemental disclosures of cash flow information:
Cash payments for:
Interest paid on deposits and borrowings	$	2,723		$	2,727
Income taxes	$	500		$	—
Supplemental disclosures of non-cash investing activities:
Trade date accounting settlements for investments, net	$	—		$	650
Transfer of loans to other real estate owned	$	—		$	236
Transfer from investment securities available-for-sale to investment securities held-to-maturity	$	—		$	15,936

 See accompanying notes to unaudited consolidated financial statements.

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1.   Basis of Presentation

The consolidated financial statements of Center Bancorp, Inc. (the “Parent Corporation”) are prepared on the accrual basis and include the accounts of the Parent Corporation and its wholly-owned subsidiary, Union Center National Bank (the “Bank” and, collectively with the Parent Corporation and the Parent Corporation’s other direct and indirect subsidiaries, the “Corporation”). All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements.

In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to change in the near term relate to the determination of the allowance for loan losses, the other-than-temporary impairment evaluation of securities, the evaluation of the impairment of goodwill and the evaluation of deferred tax assets.

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”).

Note 2.  Earnings per Common Share

Basic earnings per common share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. Diluted EPS includes any additional common shares as if all potentially dilutive common shares were issued (e.g., stock options). The Corporation’s weighted average common shares outstanding for diluted EPS include the effect of stock options and restricted stock awards outstanding using the Treasury Stock Method, which are not included in the calculation of basic EPS. Anti-dilutive stock option and restricted stock award shares outstanding were 757 for the three months ended March 31, 2014, and anti-dilutive stock option shares outstanding were 31,604, for the three months ended March 31, 2013.

Earnings per common share have been computed based on the following:

	Three Months Ended March 31,
(in thousands, except per share amounts)	2014			2013
Net income	$	4,398		$	4,924
Preferred stock dividends		(28	)		(56	)
Net income available to common shareholders	$	4,370		$	4,868
Basic weighted average common shares outstanding		16,350			16,348
Plus: effect of dilutive options		56			26
Diluted weighted average common shares outstanding		16,406			16,374
Earnings per common share:
Basic	$	0.27		$	0.30
Diluted	$	0.27		$	0.30

Note 3.  Stock-Based Compensation

The Corporation maintains two stock-based compensation plans from which new grants could be issued. The Corporation’s stock-based compensation plans permit Parent Corporation common stock to be issued to key employees and directors of the Corporation and its subsidiaries. The options granted under the plans are intended to be either incentive stock options or non-qualified options. Under the 2009 Equity Incentive Plan, a total of 363,081 shares are available for grant and issuance as of March 31, 2014. Under the 2003 Non-Employee Director Stock Option Plan, a total of 380,644 shares remain available for grant and issuance under the plan as of March 31, 2014. Such shares may be treasury shares, newly issued shares or a combination thereof.

Options have been granted to purchase common stock principally at the fair market value of the stock at the date of grant. Options are exercisable over a three year vesting period starting one year after the date of grant and generally expire ten years from the date of grant.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3.  Stock-Based Compensation—(continued)

Stock-based compensation expense for share-based payment awards is based on the grant date fair value estimated on the date of grant. The Corporation recognizes compensation costs for those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of three years. The Corporation estimates the forfeiture rate based on its historical experience during the preceding seven fiscal years.

For the three months ended March 31, 2014, the Corporation’s income before income taxes and net income were reduced by $29,000 and $17,000, respectively, as a result of the compensation expense related to stock options and restricted stock awards. For the three months ended March 31, 2013, the Corporation’s income before income taxes and net income were reduced by $11,000 and $7,000, respectively, as a result of the compensation expense related to stock options.

Under the principal stock-based compensation plans, the Corporation may also grant stock awards to certain employees. Stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of any applicable restrictions. Unless fully vested at the time of grant, such awards generally vest within 30 days to five years from the date of grant. During that period, ownership of the shares cannot be transferred. Restricted stock and stock awards that are fully vested at the time of grant have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding. The Corporation expenses the cost of stock awards, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which any restrictions lapse.

There were 18,829 restricted stock awards outstanding at March 31, 2014 and none at March 31, 2013. These awards were issued with an award price equal to the market price of the Corporation’s common stock on the award date and with a five year vesting period. Forfeiture provisions exist for personnel that separate employment before vesting period expires. During the three months of 2014, none of the shares of restricted stock were vested.

There were 0 and 31,257 shares of common stock underlying options that were granted during the three months ended March 31, 2014 and 2013, respectively. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values at the time the grants were awarded: 

	Three Months Ended March 31,
	2014			2013
Weighted average fair value of grants	$	—		$	2.50
Risk-free interest rate		—	%		1.86	%
Dividend yield		—	%		1.76	%
Expected volatility		—	%		23.21	%
Expected life in months		—			69

Activity under the stock-based compensation plans as of March 31, 2014 and changes during the three months ended March 31, 2014 were as follows:

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2013		214,263	$	10.59
Granted – options		—		—
Exercised		—		—
Canceled/expired		—		—
Forfeited		—		—
Outstanding at March 31, 2014		214,263		10.59		5.46	$	1,801,405
Exercisable at March 31, 2014		164,821	$	10.24		4.55	$	1,443,161

The aggregate intrinsic value of options above represents the total pre-tax intrinsic value (the difference between the Corporation’s closing stock price on the last trading day of the first quarter of 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2014. This amount changes based on the fair value of the Corporation’s stock.

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 3.  Stock-Based Compensation—(continued)

As of March 31, 2014, there was approximately $130,000 of total unrecognized compensation expense relating to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.74 years. As of March 31, 2014, there was approximately $207,000 of total unrecognized compensation expense relating to unvested restricted stock awards. These costs are expected to be recognized over a weighted average period of five years.  

 Note 4.  Recent Accounting Pronouncements

FASB ASU 2014-04: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. EITF Issue 13-E sought to define “in substance repossession or foreclosure” because of the diversity in practice regarding when entities were reclassifying loans receivable to other real estate owned instead of as a loan receivable. The timing of loan reclassifications to OREO may be qualitatively significant to regulators and other financial statement users. “In substance repossession or foreclosure” is clarified by the ASU. A creditor is considered to have received physical possession (resulting from an in substance repossession) of residential real estate property collateralizing a consumer mortgage loan only upon the occurrence of either of the following: a) The creditor obtains legal title to the residential real estate property upon completion of a foreclosure. A creditor may obtain legal title to the residential real estate property even if the borrower has redemption rights that provide the borrower with a legal right for a period of time after a foreclosure to reclaim the real estate property by paying certain amounts specified by law. b) The borrower conveys all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The deed in lieu of foreclosure or similar legal agreement is completed when agreed-upon terms and conditions have been satisfied by both the borrower and the creditor. The ASU is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The Corporation will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 5.  Comprehensive Income

Total comprehensive income includes all changes in equity during a period arising from transactions and other events and circumstances from non-owner sources. The Corporation’s other comprehensive income is comprised of unrealized holding gains and losses on investment securities available-for-sale, and actuarial gains of defined benefit plans, net of taxes.

Details about Accumulated Other	Amounts Reclassified from Accumulated						Affected Line Item in the Statement Where Net
Comprehensive Income Components	Other Comprehensive Income						Income is Presented
	Three Months Ended March 31,
(Dollars in thousands)	2014			2013
OTTI losses	$	—		$	(24	)	Net investment securities gains
		—			6		Tax benefit
		—			(18	)	Net of tax
Sale of investment securities available-for-sale		1,415			343		Net investment securities gains
		(380	)		(90	)	Tax expense
		1,035			253		Net of tax
Amortization of unrealized holding (losses) gains on securities transferred from available-for-sale to held-to-maturity		(45	)		14		Interest income
		20			(5	)	Tax benefit (expense)
		(25	)		9		Net of tax
Total reclassification	$	1,010		$	244		Net of tax

 Accumulated other comprehensive loss at March 31, 2014 and December 31, 2013 consisted of the following:

	March 31, 2014			December 31, 2013
	(Dollars in thousands)
Net unrealized gain on investment securities available-for-sale, net of tax	$	3,665		$	2,374
Unamortized component of securities transferred from available-for-sale to held-to-maturity, net of tax		(1,400	)		(1,425	)
Defined benefit pension and post-retirement plans, net of tax		(2,735	)		(3,493	)
Total accumulated other comprehensive loss	$	(470	)	$	(2,544	)

12

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 6.  Investment Securities

The Corporation’s investment securities are classified as available-for-sale and held-to-maturity at March 31, 2014 and December 31, 2013. Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value at the balance sheet date. Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value. See Note 8 of the Notes to Consolidated Financial Statements for a further discussion.

Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security. Premiums or discounts on investment securities are amortized or accreted using the effective interest method over the life of the security as an adjustment of yield. Unrealized holding gains or losses that remain in accumulated other comprehensive income are amortized or accreted over the remaining life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

The following tables present information related to the Corporation’s investment securities at March 31, 2014 and December 31, 2013.

	March 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,361	$	—	$	(465	)	$	13,896
Federal agency obligations		23,381		23		(314	)		23,090
Residential mortgage pass-through securities		46,354		936		(102	)		47,188
Commercial mortgage pass-through securities		3,079		—		(116	)		2,963
Obligations of U.S. states and political subdivisions		14,353		586		—			14,939
Trust preferred securities		19,764		329		(296	)		19,797
Corporate bonds and notes		136,152		5,647		(148	)		141,651
Asset-backed securities		15,386		168		—			15,554
Certificates of deposit		2,100		38		(9	)		2,129
Equity securities		376		—		(84	)		292
Mutual funds and money market funds		6,141		—		(169	)		5,972
Total	$	281,447	$	7,727	$	(1,703	)	$	287,471

Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,108	$	—	$	(315	)	$	27,793
Federal agency obligations		14,521		106		(71	)		14,556
Residential mortgage pass-through securities		2,160		—		(35	)		2,125
Commercial mortgage pass-through securities		4,379		59		(39	)		4,399
Obligations of U.S. states and political subdivisions		127,111		2,389		(1,685	)		127,815
Corporate bonds and notes		37,912		410		(58	)		38,264
Total	$	214,191	$	2,964	$	(2,203	)	$	214,952
Total investment securities	$	495,638	$	10,691	$	(3,906	)	$	502,423

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	December 31, 2013
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,344	$	—	$	(825	)	$	13,519
Federal agency obligations		20,567		29		(655	)		19,941
Residential mortgage pass-through securities		48,312		791		(229	)		48,874
Commercial mortgage pass-through securities		7,145		3		(157	)		6,991
Obligations of U.S. states and political subdivisions		30,804		711		(55	)		31,460
Trust preferred securities		19,763		150		(510	)		19,403
Corporate bonds and notes		154,182		4,930		(482	)		158,630
Asset-backed securities		15,733		246		—			15,979
Certificates of deposit		2,250		32		(20	)		2,262
Equity securities		376		—		(89	)		287
Mutual funds and money market funds		5,671		68		(15	)		5,724
Total	$	319,147	$	6,960	$	(3,037	)	$	323,070
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,056	$	—	$	(1,019	)	$	27,037
Federal agency obligations		15,249		23		(389	)		14,883
Residential mortgage-backed securities		2,246		—		(64	)		2,182
Commercial mortgage-backed securities		4,417		41		(62	)		4,396
Obligations of U.S. states and political subdivisions		127,418		1,303		(3,688	)		125,033
Corporate bonds and notes		37,900		149		(622	)		37,427
Total	$	215,286	$	1,516	$	(5,844	)	$	210,958
Total investment securities	$	534,433	$	8,476	$	(8,881	)	$	534,028

 The following table presents information for investment securities available-for-sale at March 31, 2014, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

	March 31, 2014
	Amortized Cost		Fair Value
Investment Securities Available-for-Sale :	(in thousands)
Due in one year or less	$	5,569	$	5,596
Due after one year through five years		50,584		51,839
Due after five years through ten years		121,166		125,250
Due after ten years		48,178		48,371
Residential mortgage pass-through securities		46,354		47,188
Commercial mortgage pass-through securities		3,079		2,963
Equity securities		376		292
Mutual funds and money market funds		6,141		5,972
Total	$	281,447	$	287,471
Investment Securities Held-to-Maturity :
Due in one year or less	$	2,056	$	2,060
Due after one year through five years		12,946		13,204
Due after five years through ten years		68,449		68,440
Due after ten years		124,201		124,724
Residential mortgage-backed securities		2,160		2,125
Commercial mortgage pass-through securities		4,379		4,399
Total	$	214,191	$	214,952
Total investment securities	$	495,638	$	502,423

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 For the three months ended March 31, 2014, proceeds of available-for-sale investment securities sold amounted to approximately $50.6 million. 

The varying amount of sales from the available-for-sale portfolio over the past few years reflect the significant volatility present in the market. Given the historic low interest rates prevalent in the market, it is necessary for the Corporation to protect itself from interest rate exposure. Securities that once appeared to be sound investments can, after changes in the market, become securities that the Corporation has the flexibility to sell to avoid losses and mismatches of interest-earning assets and interest-bearing liabilities at a later time

Gross gains and losses from the sales of investment securities for the three month periods ended March 31, 2014 and 2013 were as follows:

	Three Months Ended March 31,
(in thousands)	2014			2013
Gross gains on sales of investment securities	$	1,432		$	432
Gross losses on sales of investment securities		(17	)		(89	)
Net gains on sales of investment securities	$	1,415		$	343

The following summarizes OTTI charges for the periods indicated.

	Three Months Ended
	March 31,
(in thousands)	2014		2013
Principal losses on a variable rate CMO	$	—	$	24
Total other-than-temporary impairment charges	$	—	$	24

The Corporation performs regular analysis on all its investment securities to determine whether a decline in fair value indicates that an investment is other-than-temporarily impaired in accordance with FASB ASC 320-10. FASB ASC 320-10 requires companies to record OTTI charges, through earnings, if they have the intent to sell, or if it is more likely than not that they will be required to sell, an impaired debt security before recovery of its amortized cost basis. If the Corporation intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its estimated fair value at the balance sheet date. If the Corporation does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

The Corporation’s assessment of whether an impairment is other than temporary includes factors such as whether the issuer has defaulted on scheduled payments, announced a restructuring and/or filed for bankruptcy, has disclosed severe liquidity problems that cannot be resolved, disclosed a deteriorating financial condition or sustained significant losses. The Corporation maintains a watch list for the identification and monitoring of securities experiencing problems that require a heightened level of review. This could result from credit rating downgrades.

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table presents detailed information for each trust preferred security held by the Corporation at March 31, 2014 which has at least one rating below investment grade.

Deal Name	Single Issuer or Pooled	Class/ Tranche		Amortized Cost		Fair Value		Gross Unrealized Gain (Loss)			Lowest Credit Rating Assigned	Number of Banks Currently Performing		Deferrals and Defaults as % of Original Collateral	Expected Deferral/Defaults as % of Remaining Performing Collateral
	(dollars in thousands)
Countrywide Capital IV	Single		—	$	1,771	$	1,805	$	34		BB+		1	None	None
Countrywide Capital V	Single		—		2,747		2,803		56		BB+		1	None	None
Countrywide Capital V	Single		—		250		255		5		BB+		1	None	None
Citigroup Cap IX	Single		—		992		1,011		19		BB		1	None	None
Citigroup Cap IX	Single		—		1,907		1,952		45		BB		1	None	None
Citigroup Cap XI	Single		—		246		251		5		BB		1	None	None
Nationsbank Cap Trust III	Single		—		1,574		1,278		(296	)	BB+		1	None	None
Morgan Stanley Cap Trust IV	Single		—		2,500		2,506		6		BB+		1	None	None
Morgan Stanley Cap Trust IV	Single		—		1,742		1,752		10		BB+		1	None	None
Saturns — GS 2004-04	Single		—		535		535		—		BB+		1	None	None
Goldman Sachs	Single		—		1,000		1,032		32		BB+		1	None	None
Stifel Financial	Single		—		4,500		4,617		117		BBB-		1	None	None
Total				$	19,764	$	19,797	$	33

On April 28, 2014, the two Citigroup Cap IX and one Citigroup XI securities referenced in the table above were called at par and resulted in a realized gain of $35,000 at that date.

 Credit Loss Portion of OTTI Recognized in Earnings on Debt Securities

	Three Months Ended  March 31,  2014		Year Ended December 31, 2013
	(in thousands)
Balance of credit-related OTTI at January 1,	$	—	$	4,450
Addition:
Credit losses on investment securities for which other-than-temporary impairment was not previously recognized		—		652
Reduction:
Credit losses on investment securities sold during the period		—		(5,102	)
Balance of credit-related OTTI at period end	$	—	$	—

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (Unaudited)

Temporarily Impaired Investments

For all securities, the Corporation does not believe that the unrealized losses, which were comprised of 130 investment securities as of March 31, 2014, represent an other-than-temporary impairment. The gross unrealized losses of $3.9 million associated with U.S. Treasury and agency securities, federal agency obligations, mortgage-backed securities, corporate bonds, tax-exempt securities, mutual funds and equity securities are not considered to be other than temporary because these unrealized losses are related to changes in interest rates and do not affect the expected cash flows of the underlying collateral or issuer.

Factors affecting the market price include credit risk, market risk, interest rates, economic cycles, and liquidity risk. The magnitude of any unrealized loss may be affected by the relative concentration of the Corporation’s investment in any one issuer or industry. The Corporation has established policies to reduce exposure through diversification of concentration of the investment portfolio including limits on concentrations to any one issuer. The Corporation believes the investment portfolio is prudently diversified.

The decline in value is related to a change in interest rates and subsequent change in credit spreads required for these issues affecting market price. All issues are performing and are expected to continue to perform in accordance with their respective contractual terms and conditions. Short to intermediate average durations and in certain cases monthly principal payments should reduce further market value exposure to increases in rates.  

The Corporation evaluates all securities with unrealized losses quarterly to determine whether the loss is other than temporary. Unrealized losses in the collateralized mortgage obligations category consist primarily of private issue collateralized mortgage obligations. Unrealized losses in the corporate debt securities category consist of losses on single issuer corporate trust preferred securities, and corporate debt securities issued by large financial institutions, insurance companies and other corporate issuers. The unrealized loss in equity securities consists of losses on other bank equities. The decline in fair value is due in large part to the lack of an active trading market for these securities, changes in market credit spreads and rating agency downgrades. For collateralized mortgage obligations, management reviewed expected cash flows and credit support to determine if it was probable that all principal and interest would be repaid. None of the corporate issuers have defaulted on interest payments. Management concluded that these securities were not other-than-temporarily impaired at March 31, 2014. Future deterioration in the cash flow on collateralized mortgage obligations or the credit quality of these large financial institution issuers of TRUP debt securities could result in impairment charges in the future.

In determining that the securities giving rise to the previously mentioned unrealized losses were not other-than-temporary, the Corporation evaluated the factors cited above, which the Corporation considers when assessing whether a security is other-than-temporarily impaired. In making these evaluations the Corporation must exercise considerable judgment. Accordingly there can be no assurance that the actual results will not differ from the Corporation’s judgments and that such differences may not require the future recognition of other-than-temporary impairment charges that could have a material effect on the Corporation’s financial position and results of operations. In addition, the value of, and the realization of any loss on an investment security are subject to numerous risks as cited above.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013:

	March 31, 2014
	Total					Less than 12 Months					12 Months or Longer
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,896	$	(465	)	$	13,896	$	(465	)	$	—	$	—
Federal agency obligations		19,508		(314	)		19,032		(275	)		476		(39	)
Residential mortgage pass-through securities		5,344		(102	)		5,344		(102	)		—		—
Commercial mortgage pass-through securities		2,963		(116	)		2,963		(116	)		—		—
Trust preferred securities		1,278		(296	)		—		—			1,278		(296	)
Corporate bonds and notes		13,387		(148	)		11,440		(112	)		1,947		(36	)
Certificates of deposit		415		(9	)		415		(9	)		—		—
Equity securities		292		(84	)		—		—			292		(84	)
Mutual funds and money market funds		5,330		(169	)		4,355		(145	)		975		(24	)
Total		62,413		(1,703	)		57,445		(1,224	)		4,968		(479	)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities		27,793		(315	)		27,793		(315	)		—		—
Federal agency obligations		5,751		(71	)		5,751		(71	)		—		—
Residential mortgage pass-through securities		2,125		(35	)		2,125		(35	)		—		—
Commercial mortgage pass-through securities		1,402		(39	)		1,402		(39	)		—		—
Obligations of U.S. states and political subdivisions		57,017		(1,685	)		39,474		(960	)		17,543		(725	)
Corporate bonds and notes		11,396		(58	)		11,396		(58	)		—		—
Total		105,484		(2,203	)		87,941		(1,478	)		17,543		(725	)
Total Temporarily Impaired Securities	$	167,897	$	(3,906	)	$	145,386	$	(2,702	)	$	22,511	$	(1,204	)

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	December 31, 2013
	Total					Less than 12 Months					12 Months or Longer
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,519	$	(825	)	$	13,519	$	(825	)	$	—	$	—
Federal agency obligation		17,200		(655	)		17,200		(655	)		—		—
Residential mortgage pass-through securities		18,293		(229	)		18,293		(229	)		—		—
Commercial mortgage pass-through securities		2,924		(157	)		2,924		(157	)		—		—
Obligations of U.S. states and political subdivisions		4,199		(55	)		4,199		(55	)		—		—
Trust preferred securities		5,306		(510	)		4,031		(211	)		1,275		(299	)
Corporate bonds and notes		32,498		(482	)		30,533		(448	)		1,965		(34	)
Certificates of deposit		552		(20	)		552		(20	)		—		—
Equity securities		287		(89	)		—		—			287		(89	)
Mutual funds and money market funds		985		(15	)		—		—			985		(15	)
Total		95,763		(3,037	)		91,251		(2,600	)		4,512		(437	)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	27,037	$	(1,019	)	$	27,037	$	(1,019	)	$	—	$	—
Federal agency obligation		13,492		(389	)		13,197		(388	)		295		(1	)
Residential mortgage pass-through securities		2,182		(64	)		2,182		(64	)		—		—
Commercial mortgage pass-through securities		1,395		(62	)		1,395		(62	)		—		—
Obligations of U.S. states and political subdivisions		66,034		(3,688	)		57,072		(2,957	)		8,962		(731	)
Corporate bonds and notes		27,210		(622	)		27,210		(622	)		—		—
Total		137,350		(5,844	)		128,093		(5,112	)		9,257		(732	)
Total Temporarily Impaired Securities	$	233,113	$	(8,881	)	$	219,344	$	(7,712	)	$	13,769	$	(1,169	)

Investment securities having a carrying value of approximately $110.4 million and $109.3 million at March 31, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, borrowings, and Federal Home Loan Bank advances and for other purposes required or permitted by law.

Note 7. Loans and the Allowance for Loan Losses

Loans are stated at their principal amounts inclusive of net deferred loan origination fees. Interest income is credited as earned except when a loan becomes past due 90 days or more and doubt exists as to the ultimate collection of interest or principal; in those cases the recognition of income is discontinued. Loans that are past due 90 days or more that are both well secured and in the process of collection will remain on an accruing basis. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income.

Portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. Management has determined that the Corporation has two portfolio segments of loans and leases (commercial and consumer) in determining the allowance. Both quantitative and qualitative factors are used by management at the portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans and leases are a disaggregation of the Corporation's portfolio segments. Classes are defined as a group of loans and leases which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. Management has determined that the Corporation has five classes of loans and leases: commercial and industrial (including lease financing), commercial – real estate, construction, residential mortgage (including home equity) and installment.

Generally, all classes of commercial and consumer loans and leases are placed on non-accrual status upon becoming contractually past due 90 days or more as to principal or interest (unless loans and leases are adequately secured by collateral, are in the process of collection, and are reasonably expected to result in repayment), when terms are renegotiated below market levels, or where substantial doubt about full repayment of principal or interest is evident. For certain installment loans the entire outstanding balance on the loan is charged-off when the loan becomes 60 days past due.

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Payments received on non-accrual loans are applied against principal. A loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection or all past due amounts have been collected and six months of payments have been received to demonstrate that the borrower can continue to meet the loan terms. Loan origination fees and certain direct loan origination costs are deferred and recognized over the life of the loan as an adjustment to the loan’s yield using the level yield method.

Impaired Loans

The Corporation accounts for impaired loans in accordance with FASB ASC 310-10-35. The value of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or at the fair value of the collateral if the loan is collateral dependent.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will not be able to collect all amounts due from the borrower in accordance with the contractual terms of the loan, including scheduled interest payments. The Corporation has defined its population of impaired loans to include all classes of non-accrual and troubled debt restructuring (“TDR”) loans. As part of the evaluation of impaired loans, the Corporation individually reviews for impairment all non-homogeneous loans (in each instance, above an established dollar threshold of $200,000) internally classified as substandard or below. Generally, smaller impaired non-homogeneous loans and impaired homogeneous loans are collectively evaluated for impairment.

When a loan has been identified as being impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral-dependent. If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net of deferred loan fees or costs and unamortized premiums or discounts), an impairment is recognized by creating or adjusting an existing allocation of the allowance, or by recording a partial charge-off of the loan to its fair value. Interest payments made on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest income may be accrued or recognized on a cash basis.

Loans Modified in a Troubled Debt Restructuring

Loans are considered to have been modified in a TDR when due to a borrower's financial difficulties, the Corporation makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a non-accrual loan that has been modified in a TDR remains on non-accrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains on non-accrual status.

Reserve for Credit Losses

The Corporation's reserve for credit losses is comprised of two components, the allowance for loan losses and the reserve for unfunded commitments (the "Unfunded Commitments").

Allowance for Loan Losses

The allowance for loan losses is maintained at a level determined adequate to provide for probable loan losses. The allowance is increased by provisions charged to operations and reduced by loan charge-offs, net of recoveries. The allowance is based on management’s evaluation of the loan portfolio considering economic conditions, the volume and nature of the loan portfolio, historical loan loss experience and individual credit situations.

Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The ultimate collectability of a substantial portion of the Corporation’s loan portfolio is susceptible to changes in the real estate market and economic conditions in the State of New Jersey and the impact of such conditions on the creditworthiness of the borrowers.

Management believes that the allowance for loan losses is adequate. Management uses available information to recognize loan losses; however, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

Reserve for Unfunded Commitments

The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities and is included in other liabilities in the consolidated statements of condition. The determination of the adequacy of the reserve is based upon an evaluation of the unfunded credit facilities, including an assessment of historical commitment utilization experience, and credit risk. Net adjustments to the reserve for unfunded commitments are included in other expense.

Risk Related to Representation and Warranty Provisions

The Corporation sells residential mortgage loans in the secondary market primarily to Fannie Mae. The Corporation sells residential mortgage loans to Fannie Mae that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state, and local laws, and other matters.

As of March 31, 2014, the unpaid principal balance of the Corporation’s portfolio of residential mortgage loans sold to Fannie Mae was $8.2 million. These loans are generally sold on a non-recourse basis. The agreements under which the Corporation sells residential mortgage loans require the Corporation to deliver various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, the Corporation may be obligated to repurchase residential mortgage loans where required documents are not delivered or are defective. Investors may require the immediate repurchase of a mortgage loan when an early payment default discovered in an underwriting review reveals significant underwriting deficiencies, even if the mortgage loan has subsequently been brought current. As of March 31, 2014, there were no pending repurchase requests related to representation and warranty provisions.

Composition of Loan Portfolio

The following table sets forth the composition of the Corporation’s loan portfolio, including net deferred fees and costs, at March 31, 2014 and December 31, 2013:

	March 31,		December 31,
	2014		2013
	(in thousands)
Commercial and industrial	$	249,365	$	229,688
Commercial real estate		548,133		536,539
Construction		39,308		42,722
Residential mortgage		149,653		150,571
Installment		747		1,084
Subtotal		987,206		960,604
Net deferred loan costs		323		339
Total loans	$	987,529	$	960,943

At March 31, 2014 and December 31, 2013, loans to executive officers and directors aggregated approximately $20,282,000 and $20,365,000, respectively. During the three months ended March 31, 2014, the Corporation made new loans and advances to executive officers and directors in the amount of $465,000. Payments and payoffs by such persons during the three months ended March 31, 2014 aggregated $548,000. Management is of the opinion that the above loans were made on the same terms and conditions as those prevailing for comparable transactions with non-related borrowers.

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At March 31, 2014 and December 31, 2013, loan balances of approximately $582.2 million and $564.7 million, respectively, were pledged to secure borrowings from the Federal Reserve Bank of New York and the Federal Home Loan Bank of New York.

The following table presents information about loan receivables on non-accrual status at March 31, 2014 and December 31, 2013:

Loans Receivable on Non-Accrual Status
	March 31, 2014		December 31, 2013
	(in thousands)
Commercial and industrial	$	404	$	753
Commercial real estate		1,413		744
Residential mortgage		1,606		1,640
Total loans receivable on non-accrual status	$	3,423	$	3,137

The amount of interest income that would have been recorded on non-accrual loans during the three months ended March 31, 2014, the year ended December 31, 2013 and three months ended March 31, 2013, had payments remained in accordance with the original contractual terms, was $54,000, $104,000 and $33,000, respectively.

On April 4, 2014 the Corporation received on contract of sale for collateral securing $729,000 loan reported as non-accrual at March 31, 2014.

The Corporation continuously monitors the credit quality of its loans receivable. In addition to its internal staff, the Corporation utilizes the services of a third party loan review firm to rate the credit quality of its loans receivable. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Corporation’s credit position at some future date. Assets are classified “Substandard” if the asset has a well defined weakness that requires management’s attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected. All loans past due 90 days or more and all impaired loans are included in the appropriate category below. The following table presents information, excluding net deferred costs, about the Corporation’s loan credit quality at March 31, 2014 and December 31, 2013:

Credit Quality Indicators
	March 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	246,130	$	1,796	$	1,112	$	327	$	249,365
Commercial real estate		520,626		17,419		10,088		—		548,133
Construction		38,078		—		1,230		—		39,308
Residential mortgage		146,265		970		2,418		—		149,653
Installment		632		—		115		—		747
Total loans	$	951,731	$	20,185	$	14,963	$	327	$	987,206

	December 31, 2013
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	226,013	$	1,719	$	1,284	$	672	$	229,688
Commercial real estate		509,679		14,544		12,316		—		536,539
Construction		41,492		—		1,230		—		42,722
Residential mortgage		147,379		978		2,214		—		150,571
Installment		964		—		120		—		1,084
Total loans	$	925,527	$	17,241	$	17,164	$	672	$	960,604

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides an analysis of the impaired loans at March 31, 2014 and December 31, 2013:

	March 31, 2014
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
No Related Allowance Recorded	(in thousands)
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		8,244		8,545		—
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total	$	11,113	$	11,889	$	—
With An Allowance Recorded
Commercial real estate	$	4,333	$	4,333	$	227
Total	$	4,333	$	4,333	$	227
Total
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		12,577		12,878		227
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total (including related allowance)	$	15,446	$	16,222	$	227

	December 31, 2013
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
No Related Allowance Recorded	(in thousands)
Commercial and industrial	$	449	$	449	$	—
Commercial real estate		10,482		10,783		—
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total	$	12,909	$	13,352	$	—
With An Allowance Recorded
Commercial and industrial	$	672	$	672	$	300
Commercial real estate		4,344		4,344		115
Total	$	5,016	$	5,016	$	415
Total
Commercial and industrial	$	1,121	$	1,121	$	300
Commercial real estate		14,826		15,127		115
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total (including related allowance)	$	17,925	$	18,368	$	415

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides an analysis related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2014 and 2013.

	Three Months Ended March 31,
	2014				2013
	Average Recorded Investment		Interest Income Recognized		Average  Recorded Investment		Interest Income Recognized
(in thousands)
Impaired loans with no related allowance recorded:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		8,278		78		9,086		119
Residential mortgage		2,270		19		420		5
Installment		117		1		—		—
Total	$	11,324	$	112	$	10,232	$	134
Impaired loans with an allowance recorded:
Commercial real estate	$	4,337	$	53	$	4,180	$	34
Residential mortgage		—		—		1,249		10
Total	$	4,337	$	53	$	5,429	$	44
Total impaired loans:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		12,615		131		13,266		153
Residential mortgage		2,270		19		1,669		15
Installment		117		1		—		—
Total	$	15,661	$	165	$	15,661	$	178

Included in impaired loans at March 31, 2014 and 2013 are loans that are deemed troubled debt restructurings.

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides an analysis of the aging of loans, excluding net deferred costs that are past due at March 31, 2014 and December 31, 2013:

Aging Analysis
	March 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	400	$	94	$	404	$	898	$	248,467	$	249,365	$	—
Commercial Real Estate		2,348		5,915		1,413		9,676		538,457		548,133		—
Construction		—		—		—		—		39,308		39,308		—
Residential Mortgage		1,248		43		1,843		3,134		146,519		149,653		237
Installment		7		—		—		7		740		747		—
Total	$	4,003	$	6,052	$	3,660	$	13,715	$	973,491	$	987,206	$	237

	December 31, 2013
	30-59 Days  Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	18	$	—	$	753	$	771	$	228,917	$	229,688	$	—
Commercial Real Estate		221		—		744		965		535,574		536,539		—
Construction		—		—		—		—		42,722		42,722		—
Residential Mortgage		990		258		1,640		2,888		147,683		150,571		—
Installment		5		—		—		5		1,079		1,084		—
Total	$	1,234	$	258	$	3,137	$	4,629	$	955,975	$	960,604	$	—

The following table details the amount of loans receivable that are evaluated individually, and collectively, for impairment (excluding net deferred costs), and the related portion of the allowance for loan loss that is allocated to each loan portfolio segment:

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Allowance for loan and lease losses
	March 31, 2014
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment	$	—	$	227	$	—	$	—	$	—	$	—	$	227
Collectively evaluated for impairment		2,225		5,157		434		1,004		79		1,507		10,406
Total	$	2,225	$	5,384	$	434	$	1,004	$	79	$	1,507	$	10,633
Loans Receivable
Individually evaluated for impairment	$	642	$	12,577	$	—	$	2,112	$	115	$	—	$	15,446
Collectively evaluated for impairment		246,657		520,729		38,078		134,175		511		—		940,150
Loans acquired with discounts related to credit quality		2,066		14,827		1,230		13,366		121		—		31,610
Total	$	249,365	$	548,133	$	39,308	$	149,653	$	747	$	—	$	987,206

Allowance for loan and lease losses
	December 31, 2013
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and  lease losses:
Individually evaluated for impairment	$	300	$	115	$	—	$	—	$	—	$	—	$	415
Collectively evaluated for impairment		1,398		5,631		362		990		146		1,391		9,918
Total	$	1,698	$	5,746	$	362	$	990	$	146	$	1,391	$	10,333
Loans Receivable
Individually evaluated for impairment	$	1,121	$	14,826	$	—	$	1,858	$	120	$	—	$	17,925
Collectively evaluated for impairment		226,450		505,361		41,493		135,031		839		—		909,174
Loans acquired with discounts related to credit quality		2,117		16,352		1,229		13,682		125		—		33,505
Total	$	229,688	$	536,539	$	42,722	$	150,571	$	1,084	$	—	$	960,604

The Corporation’s allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan loss methodology as disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

 A summary of the activity in the allowance for loan losses is as follows:

26

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Three Months Ended March 31, 2014
	C & I			Comm R/E			Construction		Res Mtge		Installment			Unallocated		Total
	(in thousands)
Balance at January 1,	$	1,698		$	5,746		$	362	$	990	$	146		$	1,391	$	10,333
Charge offs		(333	)		—			—		—		(3	)		—		(336	)
Recoveries		—			—			—		10		1			—		11
Provision		860			(362	)		72		4		(65	)		116		625
Balance at March 31,	$	2,225		$	5,384		$	434	$	1,004	$	79		$	1,507	$	10,633

	Three Months Ended March 31, 2013
	C & I			Comm R/E		Construction			Res Mtge			Installment			Unallocated		Total
	(in thousands)
Balance at January 1,	$	2,424		$	5,323	$	313		$	1,532		$	113		$	532	$	10,237
Charge offs		—			—		—			—			(6	)		—		(6	)
Recoveries		—			—		—			—			1			—		1
Provision		(341	)		30		(29	)		(154	)		(5	)		499		—
Balance at March 31,	$	2,083		$	5,353	$	284		$	1,378		$	103		$	1,031	$	10,232

At March 31, 2014, there were no commitments to lend additional funds to borrowers whose loans were on non-accrual status or were contractually past due in excess of 90 days and still accruing interest, or whose terms have been modified in troubled debt restructurings.

The policy of the Corporation generally is to grant commercial, mortgage and installment loans to New Jersey residents and businesses within its market area. The borrowers’ abilities to repay their obligations are dependent upon various factors, including the borrowers’ income and net worth, cash flows generated by the borrowers’ underlying collateral, value of the underlying collateral, and priority of the lender’s lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the control of the Corporation. The Corporation is therefore subject to risk of loss. The Corporation believes its lending policies and procedures adequately minimize the potential exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks. Collateral and/or personal guarantees are required for virtually all loans.

The Corporation added one new troubled debt restructuring during the three months ended March 31, 2014. The increase to troubled debt restructuring was a commercial and industrial loan amounting to $337,000 located in Morris County, New Jersey.

Loans modified in a troubled debt restructuring totaled $6.9 million at March 31, 2014, of which $1.2 million were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement. At December 31, 2013, loans modified in a troubled debt restructuring totaled $6.6 million, of which $826,000 were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement.

On April 30, 2014, a $4.1 million performing troubled debt restructuring was upgrade to pass watch status.

In an effort to proactively manage delinquent loans, the Corporation has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, principal or interest forgiveness, adjusted repayment terms, forbearance agreements, or combinations of two or more of these concessions. As of March 31, 2014, loans on which concessions were made with respect to adjusted repayment terms amounted to $1.5 million. Loans on which combinations of two or more concessions were made amounted to $5.4 million. The concessions granted included principal concessions, rate reduction, adjusted repayment, extended maturity and payment deferral. 

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8.  Fair Value Measurements and Fair Value of Financial Instruments

Fair Value Measurements

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

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

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

· Level 2: Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (for example, 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.

The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’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 Corporation’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 Corporation’s assets measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Investment Securities Available-for-Sale

Where quoted prices are available in an active market, investment securities are classified in Level 1 of the valuation hierarchy. Level 1 inputs include investment securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of instruments, which would generally be classified within Level 2 of the valuation hierarchy, include municipal bonds and certain agency collateralized mortgage obligations. In certain cases where there is limited activity in the market for a particular instrument, assumptions must be made to determine their fair value and are classified as Level 3. Due to the inactive condition of the markets amidst the financial crisis, the Corporation treated certain investment securities as Level 3 assets in order to provide more appropriate valuations. For assets in an inactive market, the infrequent trades that do occur are not a true indication of fair value. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. The Corporation’s evaluations are based on market data and the Corporation employs combinations of these approaches for its valuation methods depending on the asset class. In certain cases where there were limited or less transparent information provided by the Corporation’s third-party pricing service, fair value was estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes.

On a quarterly basis, management reviews the pricing information received from the Corporation’s third-party pricing service. This review process includes a comparison to non-binding third-party broker quotes, as well as a review of market-related conditions impacting the information provided by the Corporation’s third-party pricing service.

Management primarily identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume and frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. Investment securities that are deemed to have been trading in illiquid or inactive markets may require the use of significant unobservable inputs. For example, management may use quoted prices for similar investment securities in the absence of a liquid and active market for the securities being valued. As of March 31, 2014 and December 31, 2013, management made no adjustments to prices provided by the third-party pricing service as a result of illiquid or inactive markets.

The Corporation determined that an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at the prior measurement dates. As a result, the Corporation used the discount rate adjustment technique to determine fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2014 and December 31, 2013 are as follows:

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury & agency securities	$	13,896	$	13,896	$	—	$	—
Federal agency obligations		23,090		—		23,090		—
Residential mortgage pass-through securities		47,188		—		47,188		—
Commercial mortgage pass-through securities		2,963		—		2,963		—
Obligations of U.S. states and political subdivisions		14,939		—		14,939		—
Trust preferred securities		19,797		—		19,797		—
Corporate bonds and notes		141,651		—		141,651		—
Asset-backed securities		15,554		—		15,554		—
Certificates of deposit		2,129		—		2,129		—
Equity securities		292		292		—		—
Mutual funds and money market funds		5,972		5,972		—		—
Investment securities available-for-sale	$	287,471	$	20,160	$	267,311	$	—

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. treasury and agency securities	$	13,519	$	13,519	$	—	$	—
Federal agency obligations		19,941		—		19,941		—
Residential mortgage pass-through securities		48,874		—		48,874		—
Commercial mortgage pass-through securities		6,991		—		6,991		—
Obligations of U.S. states and political subdivisions		31,460		—		31,460		—
Trust preferred securities		19,403		—		19,403		—
Corporate bonds and notes		158,630		—		158,630		—
Asset-backed securities		15,979		—		15,979		—
Certificates of deposit		2,262		—		2,262		—
Equity securities		287		287		—		—
Mutual funds and money market funds		5,724		5,724		—		—
Securities available-for-sale	$	323,070	$	19,530	$	303,540	$	—

The fair values used by the Corporation are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1 inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2).

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 The following tables present the changes in investment securities available-for-sale with significant unobservable inputs (Level 3) for the three months ended March 31, 2014 and 2013.

	Three Months Ended
	March 31,
	2014		2013
(in thousands)
Balance, beginning of the period	$	—	$	36
Interest payment deferrals		—		14
Total net unrealized gains		—		(6	)
Balance, end of the period	$	—	$	44

For the three months ended March 31, 2014, there were no transfers of investment securities available-for-sale into or out of Level 1, Level 2, or Level 3 assets.

Assets Measured at Fair Value on a Non-Recurring Basis

For assets measured at fair value on a non-recurring basis, the unobservable inputs used to derive fair value measurements at March 31, 2014 and December 31, 2013 were as follows:

Impaired Loans	Valuation Techniques	Range of Unobservable Inputs
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25%
Commercial	Discounted cash flow model	Discount rate from 0% to 6%
Commercial real estate	Appraisals of collateral value	Market capitalization rates between 8% to 12%. Market rental rates for similar properties
Construction	Appraisals of collateral value	Adjustment for age comparable sales. Generally a decline of 5% to no change
Other Real Estate Owned
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25% and estimated selling costs of 6-8%
Commercial	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 15% to no change and estimated selling costs of 6-8%

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans	$	4,443	$	—	$	—	$	4,443

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis	December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans	$	4,601	$	—	$	—	$	4,601
Other real estate owned		220		—		—		220

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following methods and assumptions were used to estimate the fair values of the Corporation’s assets measured at fair value on a non-recurring basis at March 31, 2014 and December 31, 2013.

Impaired Loans. The value of an impaired loan is measured based upon 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. Smaller balance homogeneous loans that are collectively evaluated for impairment, such as residential mortgage loans and installment loans, are specifically excluded from the impaired loan portfolio. The Corporation’s impaired loans are primarily collateral dependent. Impaired loans are individually assessed to determine that each loan’s carrying value is not in excess of the fair value of the related collateral or the present value of the expected future cash flows. Impaired loans at March 31, 2014 that required a valuation allowance during 2014 were $4.3 million with a related valuation allowance of $227,000 and $337,000 with no related valuation allowance compared to $5.0 million with a related valuation allowance of $415,000 at December 31, 2013.

 Other Real Estate Owned.  Other real estate owned (“OREO”) is measured at fair value less costs to sell, generally a decline of 0-25% for residential OREO and a decline of 15% to no change for commercial OREO. The Corporation believes that the fair value component in its valuation follows the provisions of FASB ASC 820-10-05. The fair value of OREO is determined by sales agreements or appraisals by qualified licensed appraisers approved and hired by the Corporation. Costs to sell associated with OREO is based on estimation per the terms and conditions of the sales agreements or appraisals.

Fair Value of Financial Instruments

FASB ASC 825-10 requires all entities to disclose the estimated fair value of their financial instrument assets and liabilities. For the Corporation, as for most financial institutions, the majority of its assets and liabilities are considered financial instruments as defined in FASB ASC 825-10. Many of the Corporation’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. It is also the Corporation’s general practice and intent to hold its financial instruments to maturity and not to engage in trading or sales activities except for loans held-for-sale and investment securities available-for-sale. Therefore, significant estimations and assumptions, as well as present value calculations, were used by the Corporation for the purposes of this disclosure.

Investment Securities Held-to-Maturity. The fair value of the Corporation’s investment securities held-to-maturity was primarily measured using information from a third-party pricing service. If quoted prices were not available, fair values were estimated primarily by obtaining quoted prices for similar assets in active markets or through the use of pricing models. In cases where there may be limited or less transparent information provided by the Corporation’s third-party pricing service, fair value may be estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes.

Loans Held-for-Sale. Fair value is estimated using the prices of the Corporation’s existing commitments to sell such loans and/or the quoted market price for commitments to sell similar loans.

Loans. The fair value of the Corporation’s loans was estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans were segregated by types such as commercial, residential and consumer loans. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Non Interest-Bearing Deposits. The fair value for non interest-bearing deposits is equal to the amount payable on demand at the reporting date.

Interest-Bearing Deposits. The fair values of the Corporation’s interest-bearing deposits were estimated using discounted cash flow analyses. The discounted rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the Corporation’s interest-bearing deposits do not take into consideration the value of the Corporation’s long-term relationships with depositors, which may have significant value.

Term Borrowings and Subordinated Debentures. The fair value of the Corporation’s long-term borrowings and subordinated debentures were calculated using a discounted cash flow approach and applying discount rates currently offered based on weighted remaining maturities.

Accrued Interest Receivable/Payable. The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Corporation’s financial instruments as of March 31, 2014 and December 31, 2013.

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
March 31, 2014
Financial assets
Cash and due from banks	$	106,282	$	106,282	$	106,282	$	—	$	—
Investment securities available-for-sale		287,471		287,471		20,160		267,311		—
Investment securities held-to-maturity		214,191		214,952		27,793		168,230		18,929
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		976,896		975,016		—		—		975,016
Accrued interest receivable		6,341		6,341		—		3,654		2,687
Financial liabilities
Non interest-bearing deposits		223,332		223,332		—		223,332		—
Interest-bearing deposits		1,116,553		1,117,677		—		1,117,677		—
Long-term borrowings		146,000		158,306		—		158,306		—
Subordinated debentures		5,155		4,923		—		4,923		—
Accrued interest payable		967		967		—		967		—
December 31, 2013
Financial assets
Cash and due from banks	$	82,692	$	82,692	$	82,692	$	—	$	—
Investment securities available-for-sale		323,070		323,070		19,530		303,540		—
Investment securities held-to-maturity		215,286		210,958		27,037		164,940		18,981
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		950,610		948,606		—		—		948,606
Accrued interest receivable		6,802		6,802		—		4,136		2,666
Financial liabilities
Non interest-bearing deposits		227,370		227,370		—		227,370		—
Interest-bearing deposits		1,114,635		1,115,781		—		1,115,781		—
Long-term borrowings		146,000		157,440		—		157,440		—
Subordinated debentures		5,155		5,143		—		5,143		—
Accrued interest payable		963		963		—		963		—

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 9.  Net Investment in Direct Financing Lease

During the second quarter of 2010, the Corporation entered into a lease of its former operations facility under a direct financing lease. The lease has a 15 year term with no renewal options. According to the terms of the lease, the lessee has an obligation to purchase the property underlying the lease in either year seven (7), ten (10) or fifteen (15) at predetermined prices for those years as provided in the lease. The structure of the minimum lease payments and the purchase prices as provided in the lease provide an inducement to the lessee to purchase the property in year seven (7).

At March 31, 2014 and December 31, 2013, the net investment in direct financing lease consists of a minimum lease receivable of $4,429,000 and $4,483,000, respectively, and unearned interest income of $684,000 and $733,000, respectively, for a net investment in direct financing lease of $3,745,000 and $3,750,000, respectively. The net investment in direct financing lease is carried as a component of loans in the Corporation’s consolidated statements of condition.

Minimum future lease receipts of the direct financing lease are as follows:

	March 31, 2014
For years ending December 31,	(in thousands)
2014	$	162
2015		228
2016		265
2017		265
2018		265
Thereafter		2,560
Total minimum future lease receipts	$	3,745

Note 10.  Components of Net Periodic Pension Cost

The Corporation maintained a non-contributory defined benefit pension plan for substantially all of its employees until September 30, 2007, at which time the Corporation froze the plan. The following table sets forth the net periodic pension cost of the Corporation’s pension plan for the periods indicated.

	Three Months Ended   March 31,
	2014			2013
Interest cost	$	144		$	132
Expected return on plan assets		(149	)		(96	)
Net amortization		56			94
Net periodic pension cost	$	51		$	130

Contributions

The Corporation presently estimates that it will contribute $400,000 to its Pension Trust for 2014. The trust is established to provide retirement and other benefits for eligible employees and their beneficiaries. No part of the trust assets may be applied to any purpose other than providing benefits under the plan and for defraying expenses of administering the plan and the trust.

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 11.  Income Taxes

For the three months ended March 31, 2014, the Corporation recorded income tax expense of $1.6 million, compared with a $1.8 million income tax expense for the three months ended March 31, 2013.

Note 12.  Borrowed Funds

Short-Term Borrowings

Short-term borrowings, which consist primarily of securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances and federal funds purchased, generally have maturities of less than one year. The details of these short-term borrowings are presented in the following table.

	March 31, 2014			December 31, 2013
	(dollars in thousands)
Interest rate:
At quarter end		—	%		—	%
Average for the quarter		0.38	%		—	%
Average amount outstanding during the quarter	$	500		$	—
Maximum amount outstanding at any month end in the quarter	$	—		$	—
Amount outstanding at quarter end	$	—		$	—

Long-Term Borrowings

Long-term borrowings, which consist primarily of FHLB advances and securities sold under agreements to repurchase, totaled $146.0 million at March 31, 2014 and mature within four to eight years. The FHLB advances are secured by pledges of certain collateral, including but not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgages and commercial real estate loans.

At March 31, 2014 and December 31, 2013, FHLB advances had a weighted average interest rate of 3.26 and 3.26 percent, respectively, and are contractually scheduled for repayment as follows: 

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		35,000
2018		40,000
2020		40,000
Total	$	115,000

The Corporation has entered into agreements under which it has sold securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. The obligation to repurchase the securities is reflected as a liability in the Corporation’s consolidated statement of condition, while the securities underlying the securities sold under agreements to repurchase remain in the respective asset accounts and are delivered to and held as collateral by third party trustees. At March 31, 2014 and December 31, 2013, securities sold under agreements to repurchase had a weighted average interest rate of 5.90 percent and 5.90 percent, respectively, and are contractually scheduled for repayment as follows:

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		15,000
2018		16,000
Total	$	31,000

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 13.  Subordinated Debentures

During 2003, the Corporation formed a statutory business trust, which exists for the exclusive purpose of (i) issuing trust securities representing undivided beneficial interests in the assets of the trust; (ii) investing the gross proceeds of the trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Corporation; and (iii) engaging in only those activities necessary or incidental thereto. These subordinated debentures and the related income effects are not eliminated in the consolidated financial statements as the statutory business trust is not consolidated in accordance with FASB ASC 810-10. Distributions on the subordinated debentures owned by the subsidiary trusts below have been classified as interest expense in the Consolidated Statements of Income.

The characteristics of the business trust and capital securities have not changed with the deconsolidation of the trust. The capital securities provide an attractive source of funds since they constitute Tier 1 capital for regulatory purposes and have the same tax advantages as debt for Federal income tax purposes.

The subordinated debentures are redeemable in whole or part prior to maturity on January 23, 2034. The floating interest rate on the subordinated debentures is three-month LIBOR plus 2.85 percent and resets quarterly. The rate at March 31, 2014 was 3.09 percent.

Note 14.  Stockholders’ Equity

On January 12, 2009, the Corporation issued $10 million in nonvoting fixed rate cumulative perpetual preferred stock, Series A to the U.S. Department of Treasury (“Treasury”) under its Capital Purchase Program. As part of the transaction, the Corporation also issued warrants to the Treasury to purchase 173,410 shares of common stock of the Corporation at an exercise price of $8.65 per share. As a result of the successful completion of the Corporation’s rights offering in October 2009, the number of shares underlying the warrants held by the U.S. Treasury was reduced to 86,705 shares, or 50 percent of the original 173,410 shares, as outlined by the provisions of the Capital Purchase Program.

On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”). Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation’s Senior non-cumulative perpetual preferred stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the Series B Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its fixed rate cumulative perpetual preferred stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provided the Corporation with approximately $1.25 million additional Tier 1 capital. The capital received under the program enables the Corporation to continue to serve its small business clients through the commercial lending program.

On December 7, 2011, the Corporation repurchased the warrants issued on January 12, 2009 to the Treasury as part of its participation in the Treasury’s TARP Capital Purchase Program. In the repurchase, the Corporation paid the Treasury $245,000 for the warrants.

Note 15. Pending Merger

On January 20, 2014, the Parent Corporation entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ConnectOne Bancorp, Inc., a New Jersey corporation (“ConnectOne Bancorp”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, ConnectOne Bancorp will merge with and into the Parent Corporation, with the Parent Corporation continuing as the surviving corporation (the “Merger”), and the Parent Corporation will change its name to ConnectOne Bancorp. The Merger Agreement also provides that immediately following the consummation of the Merger, the Bank will merge with and into ConnectOne Bank (the “Bank Merger”), a New Jersey-chartered commercial bank (“ConnectOne Bank”) and a wholly-owned subsidiary of ConnectOne Bancorp, with ConnectOne Bank continuing as the surviving bank. Subject to the terms and conditions of the Merger Agreement, upon completion of the Merger (the “Effective Time”), each share of common stock, no par value per share, of ConnectOne Bancorp (“ConnectOne Common Stock”), issued and outstanding immediately prior to the Effective Time will be converted into and become the right to receive 2.6 shares of the Parent’s Corporation’s common stock. The Merger and the Bank Merger are subject to the receipt of all necessary regulatory approvals, the approvals of the shareholders of the Parent Corporation and ConnectOne Bancorp and other conditions. The parties contemplate that the merger will be consummated during the second or third quarters of 2014, provided that all conditions are satisfied or, where permitted, waived.  

Merger-related expenses increased $1,060,000 for the three months March 31, 2014 compared to March 31, 2013, consisting of investment banking, legal, consulting, accounting fees and vendor contract termination fees. It included professional and consulting expenses of $462,000, computer expense of $116,000 and other expense of $482,000.

36

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

The purpose of this analysis is to provide the reader with information relevant to understanding and assessing the Corporation’s results of operations for the periods presented herein and financial condition as of March 31, 2014 and December 31, 2013. In order to fully understand this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing elsewhere in this report.

Cautionary Statement Concerning Forward-Looking Statements

This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of Center Bancorp Inc. and its subsidiaries, including statements preceded by, followed by or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions may increase significantly; (2) changes in the interest rate environment may reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions may vary substantially from period to period; (4) general economic conditions may be less favorable than expected; (5) political developments, sovereign debt problems, wars or other hostilities may disrupt or increase volatility in securities markets or other economic conditions; (6) legislative or regulatory changes or actions may adversely affect the businesses in which Center Bancorp is engaged, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; (7) changes and trends in the securities markets may adversely impact Center Bancorp; (8) a delayed or incomplete resolution of regulatory issues could adversely impact planning by Center Bancorp; (9) the impact on reputation risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity could be significant; and (10)the outcome of regulatory and legal investigations and proceedings may not be anticipated. Further information on other factors that could affect the financial results of Center Bancorp is included in Item 1A. of Center Bancorp’s Annual Report on Form 10-K and in Center Bancorp’s other filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.sec.gov and/or from Center Bancorp, Inc.

Critical Accounting Policies and Estimates

The accounting and reporting policies followed by Center Bancorp, Inc. and its subsidiaries (collectively, the “Corporation”) conform, in all material respects, to U.S. generally accepted accounting principles. In preparing the consolidated financial statements, management has made estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and for the periods indicated in the consolidated statements of operations. Actual results could differ significantly from those estimates.

The Corporation’s accounting policies are fundamental to understanding Management’s Discussion and Analysis (“MD&A”) of financial condition and results of operations. The Corporation has identified the determination of the allowance for loan losses, the other-than-temporary impairment evaluation of securities, the evaluation of the impairment of goodwill and the evaluation of deferred tax assets to be critical because management must make subjective and/or complex judgments about matters that are inherently uncertain and could be most subject to revision as new information becomes available. Additional information on these policies is provided below.

Allowance for Loan Losses and Related Provision

The allowance for loan losses represents management’s estimate of probable credit losses inherent in the loan portfolio. Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, individual credit situation and consideration of current economic trends and conditions, all of which may be susceptible to significant change. The loan portfolio also represents the largest asset type on the consolidated statements of condition.

37

 The evaluation of the adequacy of the allowance for loan losses includes, among other factors, an analysis of historical loss rates by loan category applied to current loan totals. However, actual loan losses may be higher or lower than historical trends, which vary. Actual losses on specified problem loans, which also are provided for in the evaluation, may vary from estimated loss percentages, which are established based upon a limited number of potential loss classifications.

The allowance for loan losses is established through a provision for loan losses charged to expense. Management believes that the current allowance for loan losses will be adequate to absorb loan losses on existing loans that may become uncollectible based on the evaluation of known and inherent risks in the loan portfolio. The evaluation takes into consideration such factors as changes in the nature and size of the portfolio, overall portfolio quality, and specific problem loans and current economic conditions which may affect the borrowers’ ability to pay. The evaluation also details historical losses by loan category and the resulting loan loss rates which are projected for current loan total amounts. Loss estimates for specified problem loans are also detailed. All of the factors considered in the analysis of the adequacy of the allowance for loan losses may be subject to change. To the extent actual outcomes differ from management estimates, additional provisions for loan losses may be required that could materially adversely impact earnings in future periods. Additional information can be found in Note 1 of the Notes to Consolidated Financial Statements.

Other-Than-Temporary Impairment of Investment Securities

Investment securities are evaluated on at least a quarterly basis, and more frequently when market conditions warrant such an evaluation, to determine whether a decline in their value is other-than-temporary. FASB ASC 320-10-65 clarifies the interaction of the factors that should be considered when determining whether a debt security is other–than-temporarily impaired. For debt securities, management assesses whether (a) it has the intent to sell the security and (b) it is more likely than not that it will be required to sell the security prior to its anticipated recovery.

In instances when a determination is made that an other-than-temporary impairment exists but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

Fair Value of Investment Securities

FASB ASC 820-10-35 clarifies the application of the provisions of FASB ASC 820-10-05 in an inactive market and how an entity would determine fair value in an inactive market. The Corporation applies the guidance in FASB ASC 820-10-35 when determining fair value for the Corporation’s private label collateralized mortgage obligations, pooled trust preferred securities and single name corporate trust preferred securities. See Note 8 of the Notes to Consolidated Financial Statements for further discussion.

FASB ASC 820-10-65 provides additional guidance for estimating fair value in accordance with FASB ASC 820-10-05 when the volume and level of activity for the asset or liability have significantly decreased. This ASC also includes guidance on identifying circumstances that indicate a transaction is not orderly.

Goodwill

The Corporation adopted the provisions of FASB ASC 350-10, which requires that goodwill be reported separate from other intangible assets in the Consolidated Statements of Condition and not be amortized but rather tested for impairment annually or more frequently if impairment indicators arise. No impairment charge was deemed necessary for the three months ended March 31, 2014 and 2013.

Income Taxes

The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in the Corporation’s consolidated financial statements or tax returns.

Fluctuations in the actual outcome of these future tax consequences could impact the Corporation’s consolidated financial condition or results of operations.  Note 11 of the 2013 form 10-K of the Notes to Consolidated Financial Statements includes additional discussion on the accounting for income taxes.

38

Earnings

Net income available to common stockholders for the three months ended March 31, 2014 amounted to $4,370,000 compared to $4,868,000 for the comparable three-month period ended March 31, 2013. The Corporation recorded earnings per diluted common share of $0.27 for the three months ended March 31, 2014 as compared with earnings of $0.30 per diluted common share for the same three months in 2013. Dividends relating to the preferred stock issued to the U.S. Treasury reduced earnings per share by approximately $0.002 and $0.003 per fully diluted common share for the three month periods ended March 31, 2014 and 2013, respectively. The annualized return on average assets was 1.05 percent for the three months ended March 31, 2014, compared to 1.23 percent for the three months ended March 31, 2013. The annualized return on average stockholders’ equity was 10.16 percent for the three-month period ended March 31, 2014, compared to 12.09 percent for the three months ended March 31, 2013.

Net Interest Income and Margin

Net interest income is the difference between the interest earned on the portfolio of earning assets (principally loans and investments) and the interest paid for deposits and borrowings, which support these assets. Net interest income is presented on a tax-equivalent basis by adjusting tax-exempt income (primarily interest earned on obligations of state and political subdivisions) by the amount of income tax which would have been paid had the assets been invested in taxable issues. Net interest margin is defined as net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

The following table presents the components of net interest income on a tax-equivalent basis for the periods indicated.

Net Interest Income

(tax-equivalent basis)

	Three Months Ended  March 31,
							Increase			Percent
(dollars in thousands)	2014			2013			(Decrease)			Change
Interest income:
Investment securities (available for sale)	$	2,669		$	3,889		$	(1,220	)		(31.37	)%
Investment securities (held to maturity)		2,013			762			1,251			164.17
Loans, including net costs		10,214			9,923			291			2.93
Restricted investment in bank stocks, at cost		113			108			5			4.63
Other interest-bearing deposits		—			2			(2	)		((100.00	)
Total interest income		15,009			14,684			325			2.21
Interest expense:
Time deposits $100 or more		207			239			(32	)		(13.39	)%
All other deposits		1,109			1,045			64			6.12
Borrowings		1,411			1,450			(39	)		(2.69	)
Total interest expense		2,727			2,734			(7	)		(0.26	)
Net interest income on a tax-equivalent basis		12,282			11,950			332			2.78
Tax-equivalent adjustment (1)		(672	)		(580	)		(92	)		15.86
Net interest income	$	11,610		$	11,370		$	240			2.11

(1) Computed using a federal income tax rate of 35 percent for 2014 and 2013.

39

Net interest income on a tax-equivalent basis increased $332,000 or 2.78 percent to $12.3 million for the three months ended March 31, 2014 as compared to the same period in 2013. For the three months ended March 31, 2014, the net interest margin contracted by 3 basis points to 3.28 percent from 3.31 percent during the three months ended March 31, 2013. For the three months ended March 31, 2014, a decrease in the average yield on interest-earning assets of 6 basis points was partially offset by a decrease in the average cost of interest-bearing liabilities of 4 basis points, resulting in a stabilization of the Corporation’s net interest spread for the periods. Net interest margin contracting during the first quarter period of 2014 occurred primarily as result of a higher liquidity pool carried during the quarter.

For the three-month period ended March 31, 2014, interest income on a tax-equivalent basis increased by $325,000 or 2.21 percent compared to the same three-month period in 2013. This increase in interest income was due primarily to a volume increase in loans of $89.2 million partially offset by $33.1 million decrease in investment securities and a decline in yields on loans due to the lower interest rate environment. Average investment securities volume decreased during the current three-month period by $33.1 million, to $526.5 million, compared to the first quarter of 2013. The loan portfolio increased on average $89.2 million, to $963.1 million, from an average of $873.9 million in the same quarter in 2013, reflecting net increases in commercial loans and commercial real estate related sectors of the loan portfolio. Average loans represented approximately 64.3 percent of average interest-earning assets during the first quarter of 2014 compared to 60.5 percent in the same quarter in 2013.

For the three months ended March 31, 2014, interest expense decreased $7,000, or 0.26 percent from the same period in 2013. The average rate of interest-bearing liabilities decreased 4 basis points to 0.86 percent for the three months ended March 31, 2014, from 0.90 percent for the three months ended March 31, 2013. At the same time, the volume of average interest-bearing liabilities increased by $52.1 million. This increase was primarily in money market, and other interest-bearing deposits of $46.9 million and $46.7 million, respectively, and was partially offset by decreases in savings deposits of $34.2 million and time deposits of $7.5 million. Since 2009 steps have been taken to improve the Corporation’s net interest margin by allowing the runoff of certain high rate deposits and to position the Corporation for further high-costing cash outflows. The result of these actions, together with the reduction in market interest rates, has been a decline in the Corporation’s average cost of funds. For the three months ended March 31, 2014 and 2013, the Corporation’s net interest spread on a tax-equivalent basis was 3.15 percent and 3.17 percent, respectively.

40

The following table quantifies the impact on net interest income on a tax-equivalent basis resulting from changes in average balances and average rates during the three month periods presented. Any change in interest income or expense attributable to both changes in volume and changes in rate has been allocated in proportion to the relationship of the absolute dollar amount of change in each category.

Analysis of Variance in Net Interest Income Due to Changes in Volume and Rates

	Three Months Ended March 31, 2014 and 2013 Increase (Decrease) Due to Change in:
(tax-equivalent basis, in thousands)	Average Volume			Average Rate			Net Change
Interest-earning assets:
Investment securities:
Available-for-sale
Taxable	$	(872	)	$	369		$	(503	)
Tax-exempt		(922	)		205			(717	)
Held-to-maturity
Taxable		601			(36	)		565
Tax-exempt		766			(80	)		686
Total investment securities		(427	)		458			31
Loans		972			(681	)		291
Restricted investment in bank stocks		—			5			5
Other interest bearing deposits		(2	)		—			(2	)
Total interest-earning assets		543			(218	)		325
Interest-bearing liabilities:
Money market deposits		52			69			121
Savings deposits		(27	)		(9	)		(36	)
Time deposits		18			(80	)		(62	)
Other interest-bearing deposits		42			(33	)		9
Total interest-bearing deposits		85			(53	)		32
Borrowings and subordinated debentures		2			(41	)		(39	)
Total interest-bearing liabilities		87			(94	)		(7	)
Change in net interest income	$	456		$	(124	)	$	332

41

The following tables, “Average Statements of Condition with Interest and Average Rates”, present for the three months ended March 31, 2014 and 2013, the Corporation’s average assets, liabilities and stockholders’ equity. The Corporation’s net interest income, net interest spread and net interest margin are also reflected.

Average Statements of Condition with Interest and Average Rates

	Three Months Ended March 31,
	2014									2013
(tax-equivalent basis)	Average Balance			Interest Income/ Expense			Average Rate			Average Balance			Interest Income/ Expense			Average Rate
	(dollars in thousands)
Assets
Interest-earning assets:
Investment securities (1) :
Available-for-sale
Taxable	$	286,902		$	2,324			3.24	%	$	399,356		$	2,827			2.83	%
Tax-exempt		24,945			345			5.53			94,903			1,062			4.48
Held-to-maturity
Taxable		100,782			733			2.91			18,871			168			3.56
Tax-exempt		113,897			1,280			4.50			46,507			594			5.11
Total investment securities		526,526			4,682			3.56			559,637			4,651			3.32
Loans (2)		963,098			10,214			4.24			873,916			9,923			4.54
Restricted investment in bank stocks		8,986			113			5.03			8,964			108			4.82
Other interest-bearing deposits		—			—			—			1,425			2			0.56
Total interest-earning assets		1,498,610			15,009			4.01			1,443,942			14,684			4.07
Non interest-earning assets:
Cash and due from banks		103,628									88,263
Bank-owned life insurance		35,839									34,896
Intangible assets		16,825									16,855
Other assets		32,392									30,264
Allowance for loan losses		(10,358	)								(10,229	)
Total non interest-earning assets		178,326									160,049
Total assets	$	1,676,936								$	1,603,991
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits	$	430,086		$	519			0.48	%	$	383,176		$	398			0.42	%
Savings deposits		162,621			127			0.31			196,803			163			0.33
Time deposits		171,145			368			0.86			178,650			430			0.96
Other interest-bearing deposits		349,361			302			0.35			302,632			293			0.39
Total interest-bearing deposits		1,113,213			1,316			0.47			1,061,261			1,284			0.48
Short-term and long-term borrowings		146,500			1,372			3.75			146,333			1,411			3.86
Subordinated debentures		5,155			39			3.03			5,155			39			3.03
Total interest-bearing liabilities		1,264,868			2,727			0.86			1,212,749			2,734			0.90
Non interest-bearing liabilities:
Demand deposits		225,407									212,860
Other liabilities		13,477									15,529
Total non interest-bearing liabilities		238,884									228,389
Stockholders’ equity		173,184									162,853
Total liabilities and stockholders’ equity	$	1,676,936								$	1,603,991
Net interest income (tax-equivalent basis)					12,282									11,950
Net interest spread								3.15	%								3.17	%
Net interest margin (3)								3.28	%								3.31	%
Tax-equivalent adjustment (4)					(672	)								(580	)
Net interest income				$	11,610								$	11,370

(1)	Average balances are based on amortized cost.
(2)	Average balances include loans on non-accrual status.
(3)	Represents net interest income as a percentage of total average interest-earning assets.
(4)	Computed using a federal income tax rate of 35 percent for 2014 and 2013.

42

Investment Portfolio

At March 31, 2014, the principal components of the investment securities portfolio were corporate bonds and notes, U.S. Treasury and agency obligations, federal agency obligations, mortgage-backed securities, obligations of U.S. states and political subdivisions, trust preferred securities, asset backed securities and equity securities.

During the three months ended March 31, 2014, approximately $42.1 million in investment securities were sold from the available-for-sale portfolio. The cash flow from the sale of investment securities was primarily used to purchase new securities. The Corporation’s sales from its available-for-sale investment portfolio reflect continued volatility present in the market. Given the historic low interest rates prevalent in the market, it is necessary for the Corporation to protect itself from interest rate exposure. Securities that once appeared to be sound investments can, after changes in the market, become securities that the Corporation must sell in order to avoid losses and mismatches of interest-earning assets and interest-bearing liabilities.

For the three months ended March 31, 2014, average investment securities decreased $33.1 million to approximately $526.5 million, or 35.1 percent of average interest-earning assets, from $559.6 million on average, or 38.8 percent of average interest-earning assets, for the comparable period in 2013.

During the three month period ended March 31, 2014, the volume-related factors applicable to the investment portfolio decreased interest income by approximately $427,000 while rate-related changes resulted in an increase in interest income of approximately $458,000 from the same period in 2013. The tax-equivalent yield on investments increased by 24 basis points to 3.56 percent from a yield of 3.32 percent during the comparable period in 2013. A decrease in the volume of taxable securities of $30.5 million and tax exempt municipal securities during the period of $2.6 million was offset by an increase of 28 basis points in the yield on the taxable portfolio while the yield on the tax exempt portfolio remained consisted at 4.68 percent.

At March 31, 2014, net unrealized gains on investment securities available-for-sale, which are carried as a component of accumulated other comprehensive income and included in stockholders’ equity, net of tax, amounted to $3.7 million as compared with net unrealized gains of $2.4 million at December 31, 2013. At March 31, 2014, the net unrealized gains on investment securities held-to-maturity that were transferred from securities available-for-sale, are carried, net of tax, as a component of accumulated other comprehensive income and included in stockholders’ equity. The gross unrealized losses associated with agency securities and federal agency obligations, mortgage-backed securities, corporate bonds and tax-exempt securities are not considered to be other-than-temporary because their unrealized losses are related to changes in interest rates and do not affect the expected cash flows of the underlying collateral or issuer.

43

Loan Portfolio

Lending is one of the Corporation’s primary business activities. The Corporation’s loan portfolio consists of commercial, residential and retail loans, serving the diverse customer base in its market area. The composition of the Corporation’s portfolio continues to change due to the local economy. Factors such as the economic climate, interest rates, real estate values and employment all contribute to these changes. Growth is generated through business development efforts, repeat customer requests for new financings, penetration into existing markets and entry into new markets.

The Corporation seeks to create growth in commercial lending by offering customer-focused products and competitive pricing and by capitalizing on the positive trends in its market area. Products offered are designed to meet the financial requirements of the Corporation’s customers. It is the objective of the Corporation’s credit policies to diversify the commercial loan portfolio to limit concentrations in any single industry.

At March 31, 2014, total loans amounted to $987.5 million, an increase of $26.6 million or 2.77 percent as compared to December 31, 2013. For the three-month period ended March 31, 2014, growth of $50.2 million and $58.6 million in the commercial and industrial and commercial real estate portfolios, $4.1 million in the construction portfolio was partially offset by a decrease of $5.2 million in residential mortgage loans and $123,000 in the installment loan portfolio compared to March 31, 2013. Total gross loans recorded in the quarter included $81.5 million of new loans and advances, offset by payoffs and principal payments of $54.6 million.

At March 31, 2014, the Corporation had $33.2 million in outstanding loan commitments which are expected to fund over the next 90 days.

Average total loans increased $89.2 million or 10.20 percent for the three months ended March 31, 2014 as compared to the same period in 2013, while the average yield on loans decreased by 30 basis points as compared with the same period in 2013. The decrease in the average yield on loans was primarily the result of lower market interest rates on the repricing of existing loans and the origination of new loans. The increase in average total loan volume was due primarily to increased customer activity and new lending relationships. The volume-related factors during the three month period contributed increased interest income of $972,000, while the rate-related changes decreased interest income by $681,000.

Allowance for Loan Losses and Related Provision

The purpose of the allowance for loan losses (the “allowance”) is to absorb the impact of losses inherent in the loan portfolio. Additions to the allowance are made through provisions charged against current operations and through recoveries made on loans previously charged-off. The allowance for loan losses is maintained at an amount considered adequate by management to provide for probable credit losses inherent in the loan portfolio based upon a periodic evaluation of the portfolio’s risk characteristics. In establishing an appropriate allowance, an assessment of the individual borrowers, a determination of the value of the underlying collateral, a review of historical loss experience and an analysis of the levels and trends of loan categories, delinquencies and problem loans are considered. Such factors as the level and trend of interest rates and current economic conditions and peer group statistics are also reviewed. Given the extraordinary economic volatility impacting national, regional and local markets, the Corporation’s analysis of its allowance for loan losses takes into consideration the potential impact that current trends may have on the Corporation’s borrower base.

Although management uses the best information available, the level of the allowance for loan losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to increase the allowance based on their analysis of information available to them at the time of their examination. Furthermore, the majority of the Corporation’s loans are secured by real estate in the State of New Jersey. Future adjustments to the allowance may be necessary due to economic factors impacting New Jersey real estate and the economy in general, as well as operating, regulatory and other conditions beyond the Corporation’s control.

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At March 31, 2014, the level of the allowance was $10,633,000 as compared to $10,333,000 at December 31, 2013. Provisions to the allowance for the three-month period ended March 31, 2014 totaled $625,000 compared to $0 for the same period in 2013. The net charge offs were $325,000 for the three months ended March 31, 2014 compared to $5,000 in net charge offs for the three months ended March 31, 2013. The allowance for loan losses as a percentage of total loans amounted to 1.08 percent at March 31, 2014 compared to 1.08 percent at December 31, 2013.

The level of the allowance for the respective periods of 2014 and 2013 reflects the credit quality within the loan portfolio, the loan volume recorded during the periods, the changing composition of the commercial and residential real estate loan portfolios and other related factors. In management’s view, the level of the allowance at March 31, 2014 is adequate to cover losses inherent in the loan portfolio. Management’s judgment regarding the adequacy of the allowance constitutes a “Forward-Looking Statement” under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from management’s analysis, based principally upon the factors considered by management in establishing the allowance.

Changes in the allowance for loan losses are presented in the following table for the periods indicated.

	Three Months Ended March 31,
	2014			2013
	(dollars in thousands)
Average loans for the period	$	963,098		$	873,916
Total loans at end of period		987,529			879,387
Analysis of the Allowance for Loan Losses:
Balance — beginning of year	$	10,333		$	10,237
Charge-offs:
Commercial and industrial		(333	)		—
Installment loans		(3	)		(6	)
Total charge-offs		(336	)		(6	)
Recoveries:
Residential mortgage loans		10			—
Installment loans		1			1
Total recoveries		11			1
Net charge-offs		(325	)		(5	)
Provision for loan losses		625			—
Balance — end of period	$	10,633		$	10,232
Ratio of net charge-offs during the period to average loans during the period (1)		0.13	%		N/M %
Allowance for loan losses as a percentage of total loans		1.08	%		1.16	%

(1)  Annualized.  

N/M – not meaningful.

Asset Quality

The Corporation manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans, delinquencies, and potential problem loans, with particular attention to portfolio dynamics and mix. The Corporation strives to identify loans experiencing difficulty early enough to correct the problems, to record charge-offs promptly based on realistic assessments of current collateral values and cash flows, and to maintain an adequate allowance for loan losses at all times.

It is generally the Corporation’s policy to discontinue interest accruals once a loan is past due as to interest or principal payments for a period of ninety days. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income. Payments received on non-accrual loans are applied against principal. A loan may be restored to an accruing basis when it again becomes well-secured, all past due amounts have been collected and the borrower continues to make payments for the next six months on a timely basis. Accruing loans past due 90 days or more are generally well-secured and in the process of collection.

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Non-Performing Assets and Troubled Debt Restructured Loans

Non-performing loans include non-accrual loans and accruing loans past due 90 days or more. Non-accrual loans represent loans on which interest accruals have been suspended. In general, it is the policy of management to consider the charge-off of loans at the point they become past due in excess of 90 days, with the exception of loans that are both well-secured and in the process of collection. Non-performing assets include non-performing loans and other real estate owned. Performing troubled debt restructured loans represent loans to borrowers experiencing financial difficulties on which a concession was granted, such as a reduction in interest rate below the current market rate for new debt with similar risks, or modified repayment terms, and are performing under the restructured terms. Such loans, as restructured, are not included within the Corporation’s non-performing loans.

The following table sets forth, as of the dates indicated, the amount of the Corporation’s non-accrual loans, accruing loans past due 90 days or more, other real estate owned and troubled debt restructured loans.

	March 31, 2014		December 31, 2013
	(in thousands)
Non-accrual loans	$	3,423	$	3,137
Accruing loans past due 90 days or more		237		—
Total non-performing loans		3,660		3,137
Other real estate owned		220		220
Total non-performing assets	$	3,880	$	3,357
Troubled debt restructured loans — performing	$	5,706	$	5,746

At March 31, 2014, non-performing assets totaled $3.9 million, or 0.23 percent of total assets, as compared with $4.2 million, or 0.26 percent of total assets, at March 31, 2013 and $3.4 million, or 0.20 percent, at December 31, 2013. The decrease from March 31, 2013 reflects the ability to satisfactorily work out the problem loans that exist. The largest component of the remaining non-accrual loans is comprised of one relationship totaling $737,000, or 19.0 percent of the total non-performing assets, secured by a senior lien on a mixed use commercial property, located in Bergen County, New Jersey.

The Corporation held $220,000 in other real estate owned at March 31, 2014 and December 31, 2013.

Troubled debt restructured loans totaled $6.9 million at March 31, 2014 and $6.6 million at December 31, 2013. A total of $5.7 million and $5.7 million of troubled debt restructured loans were performing pursuant to the terms of their respective modifications at March 31, 2014 and December 31, 2013, respectively.

46

Overall credit quality in the Bank’s loan portfolio at March 31, 2014 remained relatively strong. Other known “potential problem loans” (as defined by SEC regulations), some of which are non-performing loans and are included in the table above, as of March 31, 2014 have been identified and internally risk-rated as assets specially mentioned, substandard or doubtful. Such loans amounted to $35.5 million and $35.1 million at March 31, 2014 and December 31, 2013, respectively. The improvement in credit quality occurred as the commercial and industrial loans increased $77,000 in special mention, decreased $172,000 in the substandard category and decreased $345,000 in doubtful. Commercial real estate loans increased $2.9 million in special mention and decreased $2.2 million in the substandard category. Residential mortgage loans decreased in special mention by $8,000 and increased in the substandard category by $204,000. Installment loans decreased $5,000 in the substandard category. These loans are considered potential problem loans due to a variety of changing conditions affecting the credits, including general economic conditions and/or conditions applicable to the specific borrowers. The Corporation has no foreign loans.

 At March 31, 2014, other than the loans set forth above, the Corporation is not aware of any loans which present serious doubts as to the ability of its borrowers to comply with present loan repayment terms and which are expected to fall into one of the categories set forth in the tables or descriptions above.

Other Income

The following table presents the principal categories of other income for the periods indicated.

	Three Months Ended March 31,
					Increase			Percent
(dollars in thousands)	2014		2013		(Decrease)			Change
Service charges, commissions and fees	$	497	$	406	$	91			22.41	%
Annuities and insurance commission		100		100		—			—
Bank-owned life insurance		255		565		(310	)		(54.87	)
Net investment securities gains		1,415		319		1,096			343.57
Loan related fees		181		227		(46	)		(20.26	)
Net gains on sales of loans held for sale		36		138		(102	)		(73.91	)
All other		37		90		(53	)		(58.89	)
Total other income	$	2,521	$	1,845	$	676			36.64	%

For the three months ended March 31, 2014, total other income amounted to $2.5 million, compared to total other income of $1.8 million for the same period in 2013. The increase of $676,000 for the three months ended March 31, 2014 was primarily the result of higher net investment securities gains (increasing to $1,415,000 for the three months ended March 31, 2014 from net investment gains of $319,000 for the same period last year). Excluding net investment securities gains, the Corporation recorded total other income of $1.1 million for the three months ended March 31, 2014, compared to $1.5 million for the three months ended March 31, 2013. This decrease reflected decreases of $310,000 in bank-owned life insurance, loan related fees of $46,000, a $102,000 decrease in net gains on sales of loans held for sale and $53,000 in all other income offset in part by increased service charge income of $91,000.

47

Other Expense

The following table presents the principal categories of other expense for the periods indicated.

	Three Months Ended March 31,
					Increase			Percent
(dollars in thousands)	2014		2013		(Decrease)			Change
Salaries and employee benefits	$	3,332	$	3,490	$	(158	)		(4.53	)%
Occupancy and equipment		1,080		906		174			19.21
FDIC insurance		300		313		(13	)		(4.15	)
Professional and consulting		255		219		36			16.44
Stationery and printing		84		85		(1	)		(1.18	)
Marketing and advertising		40		101		(61	)		(60.40	)
Computer expense		345		353		(8	)		(2.27	)
Other real estate owned, net		2		19		(17	)		(89.47	)
Merger-related expenses		1,060		—		1,060			100.00
All other		998		1,052		(54	)		(5.13	)
Total other expense	$	7,496	$	6,538		$ X958			14.65	%

For the three months ended March 31, 2014, total other expense increased $958,000, or 14.65 percent, from the comparable three months ended March 31, 2013 primarily due to the recognition in the current quarter of $1.1 million in merger expense. Adjusting other expense for the merger expense, other expense declined $102,000 or 1.56 percent compared to March 31, 2013. This was primarily attributable to decreases in salaries and employee benefits of $158,000, marketing and advertising of $61,000, FDIC insurance of $13,000, computer expense of $8,000 and other real estate owned expense of $17,000 and all other of $54,000. These decreases were offset by an increase in occupancy and equipment of $174,000.

Salaries and employee benefits expense for the quarter ended March 31, 2014 decreased $158,000 or 4.53 percent from the comparable period in the prior year. Full-time equivalent staffing levels were 166 at March 31, 2014 and 173 at March 31, 2013.

Occupancy and equipment expense for the quarter ended March 31, 2014 increased $174,000, or 19.21 percent, from the comparable three-month period in 2013. The increase for the quarter was primarily attributable to higher building and equipment expenses of $190,000 due to snow removal and related activities.

FDIC insurance expense decreased $13,000, or 4.15 percent, for the three months ended March 31, 2014 compared to the same period in 2013.

Marketing and advertising expense decreased $61,000 or 60.40 percent for the three months ended March 31, 2014 compared to the same period in 2013. The decrease was caused by decreased print and other media expense associated with the Corporation’s Englewood Banking Center, loan product promotion and private banking wealth management promotion.

 Professional and consulting expense for the three months ended March 31, 2014 increased $36,000, or 16.44 percent, compared to the comparable quarter of 2013, reflecting higher expenses related to loan workout.

Stationery and printing expense decreased $1,000 or 1.18 percent for the three months ended March 31, 2014 compared to the same period in 2013.

Computer expense decreased $8,000 or 2.27 percent for the three months ended March 31, 2014.

Other real estate owned expense decreased $17,000 or 89.47 percent for the three months ended March 31, 2014 compared to the same quarter of 2013.

All other expense for the three months ended March 31, 2014 decreased $54,000, or 5.13 percent, compared to the same quarter of 2013. 

Merger-related expenses increased $1,060,000 for the three months March 31, 2014 compared to March 31, 2013, consisting of investment banking, legal, consulting, accounting fees and vendor contract termination fees. It included professional and consulting expenses of $462,000, computer expense of $116,000 and other expense of $482,000.

48

Provision for Income Taxes

For the quarter ended March 31, 2014, the Corporation recorded income tax expense of $1.6 million, compared with $1.8 million of income tax expense for the quarter ended March 31, 2013. The effective tax rates for the quarterly periods ended March 31, 2014 and 2013 were 26.8 percent and 26.3 percent, respectively.

Recent Accounting Pronouncements

Note 4 of the Notes to Consolidated Financial Statements discusses the expected impact of accounting pronouncements recently issued or proposed and adopted or not yet required to be adopted.

Asset and Liability Management

Asset and liability management encompasses an analysis of market risk, the control of interest rate risk (interest sensitivity management) and the ongoing maintenance and planning of liquidity and capital. The composition of the Corporation’s statement of condition is planned and monitored by the Bank’s Asset and Liability Committee (“ALCO”). In general, management’s objective is to optimize net interest income and minimize market risk and interest rate risk by monitoring the components of the statement of condition and the interaction of interest rates.

Short-term interest rate exposure analysis is supplemented with an interest sensitivity gap model. The Corporation utilizes interest sensitivity analysis to measure the responsiveness of net interest income to changes in interest rate levels. Interest rate risk arises when an earning asset matures or when its interest rate changes in a time period different than that of a supporting interest-bearing liability, or when an interest-bearing liability matures or when its interest rate changes in a time period different than that of an earning asset that it supports. While the Corporation matches only a small portion of specific assets and liabilities, total earning assets and interest-bearing liabilities are grouped to determine the overall interest rate risk within a number of specific time frames. The difference between interest-sensitive assets and interest-sensitive liabilities is referred to as the interest sensitivity gap. At any given point in time, the Corporation may be in an asset-sensitive position, whereby its interest-sensitive assets exceed its interest-sensitive liabilities, or in a liability-sensitive position, whereby its interest-sensitive liabilities exceed its interest-sensitive assets, depending in part on management’s judgment as to projected interest rate trends.

The Corporation’s interest rate sensitivity position in each time frame may be expressed as assets less liabilities, as liabilities less assets, or as the ratio between rate sensitive assets (“RSA”) and rate sensitive liabilities (“RSL”). For example, a short-funded position (liabilities repricing before assets) would be expressed as a net negative position, when period gaps are computed by subtracting repricing liabilities from repricing assets. When using the ratio method, a RSA/RSL ratio of 1 indicates a balanced position, a ratio greater than 1 indicates an asset-sensitive position and a ratio less than 1 indicates a liability-sensitive position.

A negative gap and/or a rate sensitivity ratio less than 1 tends to expand net interest margins in a falling rate environment and reduce net interest margins in a rising rate environment. Conversely, when a positive gap occurs, generally margins expand in a rising rate environment and contract in a falling rate environment. From time to time, the Corporation may elect to deliberately mismatch liabilities and assets in a strategic gap position.

At March 31, 2014, the Corporation reflected a positive interest sensitivity gap with an interest sensitivity ratio of 1.41:1.00 at the cumulative one-year position. Based on management’s perception of interest rates remaining low through 2014, emphasis has been, and is expected to continue to be, placed on controlling liability costs while extending the maturities of liabilities in order to minimize the impact on the net interest spread of rising interest rates in the future. However, no assurance can be given that this objective will be met.  

49

Estimates of Fair Value

The estimation of fair value is significant to a number of the Corporation’s assets, including loans held for sale and investment securities available-for-sale. These are all recorded at either fair value or the lower of cost or fair value. Fair values are volatile and may be influenced by a number of factors. Circumstances that could cause estimates of the fair value of certain assets and liabilities to change include a change in prepayment speeds, discount rates, or market interest rates. Fair values for most available-for-sale investment securities are based on quoted market prices. If quoted market prices are not available, fair values are based on judgments regarding future expected loss experience, current economic condition risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Impact of Inflation and Changing Prices

The financial statements and notes thereto presented elsewhere herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations; unlike most industrial companies, nearly all of the Corporation’s assets and liabilities are monetary. As a result, interest rates have a greater impact on performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Liquidity

The liquidity position of the Corporation is dependent primarily on successful management of the Bank’s assets and liabilities so as to meet the needs of both deposit and credit customers. Liquidity needs arise principally to accommodate possible deposit outflows and to meet customers’ requests for loans. Scheduled principal loan repayments, maturing investments, short-term liquid assets and deposit inflows, can satisfy such needs. The objective of liquidity management is to enable the Corporation to maintain sufficient liquidity to meet its obligations in a timely and cost-effective manner.

Management monitors current and projected cash flows, and adjusts positions as necessary to maintain adequate levels of liquidity. Under its liquidity risk management program, the Corporation regularly monitors correspondent bank funding exposure and credit exposure in accordance with guidelines issued by the banking regulatory authorities. Management uses a variety of potential funding sources and staggering maturities to reduce the risk of potential funding pressure. Management also maintains a detailed contingency funding plan designed to respond adequately to situations which could lead to stresses on liquidity. Management believes that the Corporation has the funding capacity to meet the liquidity needs arising from potential events. In addition to pledgeable investment securities, the Corporation also maintains borrowing capacity through the Federal Reserve Bank Discount Window and the Federal Home Loan Bank of New York secured with loans and marketable securities.

The Corporation’s primary sources of short-term liquidity consist of cash and cash equivalents and unpledged investment securities available-for-sale.

At March 31, 2014, the Parent Corporation had $119,000 in cash and short-term investments compared to $285,000 at December 31, 2013. Expenses at the Parent Corporation are moderate and management believes that the Parent Corporation presently has adequate liquidity to fund its obligations.

Certain provisions of long-term debt agreements, primarily subordinated debt, prevent the Corporation from creating liens on, disposing of or issuing voting stock of subsidiaries. As of March 31, 2014, the Corporation was in compliance with all covenants and provisions of these agreements.

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Deposits

Total deposits decreased to $1.339 billion at March 31, 2014 from $1.342 billion at December 31, 2013. Total non interest-bearing deposits decreased from $227.4 million at December 31, 2013 to $223.3 million at March 31, 2014, a decrease of $4.0 million or 1.78 percent. Interest-bearing demand, savings and time deposits under $100,000 decreased $9.0 million to a total of $1.006 million at March 31, 2014 as compared to $1.015 billion at December 31, 2013. Time deposits $100,000 and over increased $10.9 million as compared to year-end 2013, primarily due to an inflow of municipal certificates of deposit. Time deposits $100,000 and over represented 8.24 percent of total deposits at March 31, 2014 compared to 7.41 percent at December 31, 2013.

Core Deposits

The Corporation derives a significant proportion of its liquidity from its core deposit base. Total demand deposits, savings and money market accounts of $1.183 billion at March 31, 2014 increased by $12.0 million, or 1.00 percent, from December 31, 2013. At March 31, 2014, total demand deposits, savings and money market accounts were 87.6 percent of total deposits compared to 89.1 percent at year-end 2013. Alternatively, the Corporation uses a more stringent calculation for the management of its liquidity positions internally, which calculation consists of total demand, savings accounts and money market accounts (excluding money market accounts greater than $100,000 and time deposits) as a percentage of total deposits. This number decreased by $19.2 million, or 2.55 percent, from $750.2 million at December 31, 2013 to $731.0 million at March 31, 2014 and represented 54.6 percent of total deposits at March 31, 2014 as compared with 55.9 percent at December 31, 2013.

The Corporation continues to place the main focus of its deposit gathering efforts in the maintenance, development, and expansion of its core deposit base. Management believes that the emphasis on serving the needs of our communities will provide a long term relationship base that will allow the Corporation to efficiently compete for business in its market. The success of this strategy is reflected in the growth of the demand, savings and money market balances during the first quarter of 2014.

The following table depicts the Corporation’s core deposit mix at March 31, 2014 and December 31, 2013 based on the Corporation’s alternative calculation:

	March 31, 2014					December 31, 2013					Dollar Change
	Amount		Percentage			Amount		Percentage			2014 vs. 2013
	(dollars in thousands)
Non interest-bearing demand	$	223,332		30.5	%	$	227,370		30.3	%	$	(4,038	)
Interest-bearing demand		260,064		35.6			266,613		35.5			(6,549	)
Regular savings		107,836		14.8			102,721		13.7			5,115
Money market deposits under $100		139,814		19.1			153,502		20.5			(13,688	)
Total core deposits	$	731,046		100.0	%	$	750,206		100.0	%	$	(19,160	)
Total deposits	$	1,339,885				$	1,342,005				$	(2,120	)
Core deposits to total deposits				54.6	%				55.9	%

Borrowings

Short-Term Borrowings

Short-term borrowings, which consist primarily of securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances and federal funds purchased, generally have maturities of less than one year. The details of these short-term borrowings are presented in the following table.

51

	March 31, 2014
	(dollars in thousands)
Interest rate:
At quarter end		—	%
Average for the quarter		0.38	%
Average amount outstanding during the quarter	$	500
Maximum amount outstanding at any month end in the quarter	$	—
Amount outstanding at quarter end	$	—

Long-Term Borrowings

Long-term borrowings, which consist primarily of FHLB advances and securities sold under agreements to repurchase, totaled $146.0 million at March 31, 2014 and December 31, 2013, and mature within three to eight years. The FHLB advances are secured by pledges of certain collateral, including but not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgages and commercial real estate loans. At March 31, 2014, FHLB advances and securities sold under agreements to repurchase had weighted average interest rates of 3.26 percent and 5.90 percent, respectively.

Subordinated Debentures

On December 19, 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly-owned subsidiary of Center Bancorp, Inc., issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Corporation and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part. The floating interest rate on the subordinated debentures is three-month LIBOR plus 2.85 percent and reprices quarterly. The rate at March 31, 2014 was 3.09 percent.

Cash Flows

The Consolidated Statements of Cash Flows present the changes in cash and cash equivalents resulting from the Corporation’s operating, investing and financing activities. During the three months ended March 31, 2014, cash and cash equivalents increased by $23.6 million over the balance at December 31, 2013. Net cash of $6.1 million was provided by operating activities, primarily, net income as adjusted to net cash. Net cash provided by investing activities amounted to approximately $20.8 million, primarily reflecting a net increase in loans of $26.9 million offset by a net decrease in investment securities of $47.2 million. Net cash of $3.4 million was used in financing activities, primarily from the decrease in deposits of $2.1 million and the funding of dividends.

Stockholders’ Equity

Total stockholders’ equity amounted to $173.8 million, or 10.4 percent of total assets, at March 31, 2014, compared to $168.6 million or 10.1 percent of total assets at December 31, 2013. Book value per common share was $9.93 at March 31, 2014, compared to $9.61 at December 31, 2013. Tangible book value (i.e., total stockholders’ equity less preferred stock, goodwill and other intangible assets) per common share was $8.90 at March 31, 2014, compared to $8.58 at December 31, 2013.

Tangible book value per share is a non-GAAP financial measure and represents tangible stockholders’ equity (or tangible book value) calculated on a per common share basis. The Corporation believes that a disclosure of tangible book value per share may be helpful for those investors who seek to evaluate the Corporation’s book value per share without giving effect to goodwill and other intangible assets. The following table presents a reconciliation of total book value per share to tangible book value per share as of March 31, 2014 and December 31, 2013.

52

	March 31,		December 31,
	2014		2013
	(in thousands, except for share data)
Stockholders’ equity	$	173,813	$	168,584
Less: Preferred stock		11,250		11,250
Less: Goodwill and other intangible assets		16,821		16,828
Tangible common stockholders’ equity	$	145,742	$	140,506
Book value per common share	$	9.93	$	9.61
Less: Goodwill and other intangible assets		1.03		1.03
Tangible book value per common share	$	8.90	$	8.58

On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the SBLF Program. Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation’s Senior non-cumulative perpetual preferred stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the SBLF Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its fixed rate cumulative perpetual preferred stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provided the Corporation with approximately $1.25 million additional Tier 1 capital. The capital that the Corporation received under the program enabled it to continue to serve small business clients through the commercial lending program.

On December 7, 2011, the Corporation repurchased the warrants issued on January 12, 2009 to the Treasury as part of its participation in the Treasury’s TARP Capital Purchase Program. In the repurchase, the Corporation paid the Treasury $245,000 for the warrants.

During the three months ended March 31, 2014, the Corporation had no purchases of common stock associated with its stock buyback programs. At March 31, 2014, there were 652,868 shares available for repurchase under the Corporation’s stock buyback programs.

Regulatory Capital and Capital Adequacy

The maintenance of a solid capital foundation is a primary goal for the Corporation. Accordingly, capital plans and dividend policies are monitored on an ongoing basis. The Corporation’s objective with respect to the capital planning process is to effectively balance the retention of capital to support future growth with the goal of providing stockholders with an attractive long-term return on their investment.

The Corporation and the Bank are subject to regulatory guidelines establishing minimum capital standards that involve quantitative measures of assets, and certain off-balance sheet items, as risk-adjusted assets under regulatory accounting practices.

The following is a summary of regulatory capital amounts and ratios as of March 31, 2014 for the Corporation and the Bank, compared with minimum capital adequacy requirements and the regulatory requirements for classification as a well-capitalized depository institution.

53

	Center Bancorp, Inc.					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
At March 31, 2014	Amount		Ratio			Amount		Ratio			Amount	Ratio
	(dollars in thousands)
Tier 1 leverage capital	$	162,453		9.79	%	$	66,375		4.00	%	N/A	N/A
Tier 1 risk-based capital		162,453		12.39	%		52,446		4.00	%	N/A	N/A
Total  risk-based capital		173,296		13.21	%		104,948		8.00	%	N/A	N/A

	Union Center National Bank					For Capital Adequacy Purposes					To Be Well-Capitalized Under Prompt Corrective Action Provisions
At March 31, 2014	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(dollars in thousands)
Tier 1 leverage capital	$	162,506		9.79	%	$	66,397		4.00	%	$	82,996		5.00	%
Tier 1 risk-based capital		162,506		12.40	%		52,421		4.00	%		78,632		6.00	%
Total  risk-based capital		173,349		13.22	%		104,901		8.00	%		131,126		10.00	%

N/A - not applicable

The Office of the Comptroller of the Currency (“OCC”) had established higher minimum capital ratios for the Bank effective as of December 31, 2009; however, those higher capital ratios were removed during the second quarter of 2012. As of March 31, 2014, management believes that each of the Bank and the Corporation meet all capital adequacy requirements to which they are subject.

Basel III

The Basel Committee on Banking Supervision (the “Basel Committee”) provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.

The Basel Committee released a comprehensive list of proposals for changes to capital, leverage, and liquidity requirements for banks in December 2009 (commonly referred to as “Basel III”).  In July 2010, the Basel Committee announced the design for its capital and liquidity reform proposals and in September 2010, the oversight body of the Basel Committee announced minimum capital ratios and transition periods.

In December 2010 and January 2011, the Basel Committee published the final texts of reforms on capital and liquidity generally referred to as “Basel III.” Although Basel III is intended to be implemented by participating countries for large, internationally active banks, its provisions have also been considered by United States banking regulators in developing new regulations applicable to other banks in the United States, including Union Center National Bank.

On July 9, 2013, the Office of the Comptroller of the Currency approved a final rule revising regulatory capital rules applicable to national banks, implementing Basel III. This rule redefines Tier 1 capital as two components (Common Equity Tier 1 and Additional Tier 1), creates a new capital ratio (Common Equity Tier 1 Risk-based Capital Ratio) and implements a capital conservation buffer. It also revises the prompt corrective action thresholds and makes changes to risk weighs for certain assets and off-balance-sheet exposures. Banks are required to transition into the new rule beginning on January 1, 2015, although, based on the Corporation’s capital levels and balance sheet composition at March 31, 2014, the Corporation does not believe implementation of the new rule will have a material impact on the Corporation’s capital needs; however, due to the complexity of the rules, the Corporation will continue to evaluate the impact of these changes to our regulatory capital of Center Bancorp and Union Center National Bank. This statement regarding the impact of the new regulations constitutes a forward-looking statement under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from this statement as a result of various factors, including modifications to the new regulations that may be adopted prior to the effective dates of the new regulations.

54

Looking Forward

One of the Corporation’s primary objectives is to achieve balanced asset and revenue growth, and at the same time expand market presence and diversify its financial products. However, it is recognized that objectives, no matter how focused, are subject to factors beyond the control of the Corporation, which can impede its ability to achieve these goals. The following factors should be considered when evaluating the Corporation’s ability to achieve its objectives:

The financial marketplace is rapidly changing and currently is in flux. The Treasury and banking regulators have implemented, and may continue to implement, a number of programs under new legislation to address capital and liquidity issues in the banking system. In addition, new financial system reform legislation may affect banks’ abilities to compete in the marketplace. It is difficult to assess whether these programs and actions will have short-term and/or long-term positive effects.

Banks are not the only place to obtain loans, nor the only place to keep financial assets. The banking industry has lost market share to other financial service providers. The future is predicated on the Corporation’s ability to adapt its products, provide superior customer service and compete in an ever-changing marketplace.

Net interest income, the primary source of earnings, is impacted favorably or unfavorably by changes in interest rates. Although the impact of interest rate fluctuations can be mitigated by appropriate asset/liability management strategies, significant changes in interest rates can have a material adverse impact on profitability.

The ability of customers to repay their obligations is often impacted by changes in the regional and local economy. Although the Corporation sets aside loan loss provisions toward the allowance for loan losses when the Board determines such action to be appropriate, significant unfavorable changes in the economy could impact the assumptions used in the determination of the adequacy of the allowance.

Technological changes will have a material impact on how financial service companies compete for and deliver services. It is recognized that these changes will have a direct impact on how the marketplace is approached and ultimately on profitability. The Corporation has taken steps to improve its traditional delivery channels. However, continued success will likely be measured by the ability to anticipate and react to future technological changes.

This “Looking Forward” description constitutes a forward-looking statement under the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the Corporation’s forward-looking statements due to numerous known and unknown risks and uncertainties, including the factors referred to in this quarterly report and in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

55

Item 3. Qualitative and Quantitative Disclosures about Market Risks

Market Risk

The Corporation’s profitability is affected by fluctuations in interest rates. A sudden and substantial increase or decrease in interest rates may adversely affect the Corporation’s earnings to the extent that the interest rates borne by assets and liabilities do not similarly adjust. The Corporation’s primary objective in managing interest rate risk is to minimize the adverse impact of changes in interest rates on the Corporation’s net interest income and capital, while structuring the Corporation’s asset-liability structure to obtain the maximum yield-cost spread on that structure. The Corporation relies primarily on its asset-liability structure to control interest rate risk. The Corporation continually evaluates interest rate risk management opportunities and has been focusing its efforts on increasing the Corporation’s yield-cost spread through wholesale and retail growth opportunities.

The Corporation monitors the impact of changes in interest rates on its net interest income using several tools. One measure of the Corporation’s exposure to differential changes in interest rates between assets and liabilities is the Corporation’s analysis of its interest rate sensitivity. This test measures the impact on net interest income and on net portfolio value of an immediate change in interest rates in 100 basis point increments. Net portfolio value is defined as the net present value of assets, liabilities and off-balance sheet contracts.

The primary tool used by management to measure and manage interest rate exposure is a simulation model. Use of the model to perform simulations reflecting changes in interest rates over multiple-year time horizons enables management to develop and initiate strategies for managing exposure to interest rate risk. In its simulations, management estimates the impact on net interest income of various changes in interest rates. Projected net interest income sensitivity to movements in interest rates is modeled based on a ramped rise and fall in interest rates based on a parallel yield curve shift over a twelve month time horizon and then maintained at those levels over the remainder of the model time horizon, which provides a rate shock to the two-year period and beyond. The model is based on the actual maturity and repricing characteristics of interest rate-sensitive assets and liabilities. The model incorporates assumptions regarding earning asset and deposit growth, prepayments, interest rates and other factors.

Management believes that both individually and taken together, these assumptions are reasonable, but the complexity of the simulation modeling process results in a sophisticated estimate, not an absolutely precise calculation of exposure. For example, estimates of future cash flows must be made for instruments without contractual maturities or payment schedules.

Based on the results of the interest simulation model as of March 31, 2014, and assuming that management does not take action to alter the outcome, the Corporation would expect a decrease of 1.03 percent in net interest income if interest rates increased by 200 basis points from current rates in a gradual and parallel rate ramp over a twelve month period. These results and other analyses indicate to management that the Corporation’s net interest income is presently minimally sensitive to rising interest rates.

Based on management’s perception that financial markets will continue to be volatile, interest rates that are projected to continue at low levels will generate increased downward repricing of earning assets. Emphasis has been, and is expected to continue to be, placed on interest-sensitivity matching with an overall objective of improving the net interest spread and margin over the next twelve months. However, no assurance can be given that this objective will be met.

Equity Price Risk

The Corporation is exposed to equity price risk inherent in its portfolio of publicly traded equity securities, which had an estimated fair value of approximately $292,000 and $287,000 at March 31, 2014 and December 31, 2013, respectively. We monitor equity investment holdings for impairment on a quarterly basis. In the event that the carrying value of the equity investment exceeds its fair value, and the decline in value is determined to be to be other than temporary, the carrying value is reduced to its current fair value by recording a charge to current operations. For the three months ended March 31, 2014 and 2013, the Corporation recorded no other-than-temporary impairment charges on its equity security holdings.

56

Item 4. Controls and Procedures

a) Disclosure controls and procedures. As of the end of the Corporation’s most recently completed fiscal quarter covered by this report, the Corporation carried out an evaluation, with the participation of the Corporation’s management, including the Corporation’s chief executive officer and chief financial officer, of the effectiveness of the Corporation’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Corporation’s chief executive officer and chief financial officer concluded that the Corporation’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Corporation in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and are operating in an effective manner and that such information is accumulated and communicated to management, including the Corporation’s chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

b) Changes in internal controls over financial reporting : There have been no changes in the Corporation’s internal controls over financial reporting that occurred during the Corporation’s last fiscal quarter to which this report relates that have materially affected, or are reasonable likely to materially affect, the Corporation’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Complaints were filed against ConnectOne, the members of its Board of Directors and Center in the Superior Court of New Jersey, seeking class action status and asserting that ConnectOne and the members of its Board violated their duties to ConnectOne’s shareholders in connection with the proposed merger. The asserted factual bases for the allegations of breach of duty included (i) that the exchange ratio undervalues ConnectOne, (ii) that the terms of the merger agreement and certain related documents impermissibly locked up the proposed transaction, inhibiting other offers for ConnectOne, and (iii) that the proposed transaction provides benefits to insiders of ConnectOne. In addition, in their amended complaint, the plaintiffs raised claims that this joint proxy statement and prospectus failed to disclose material information. Certain of the complaints also alleged that Center has aided and abetted the individual defendants in their alleged breaches of fiduciary duties. On April 25, 2014, the plantiffs dismissed each of these legal proceedings.

57

Item 6. Exhibits

Exhibit No.	Description
31.1	Certification of the Chief Executive Officer of the Parent Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer of the Parent Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Chief Executive Officer of the Parent Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Chief Financial Officer of the Parent Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Definition Taxonomy Extension Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Furnished and not filed.

58

SIGNATURES

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

CENTER BANCORP, INC.

(Registrant)

By:	/s/ Anthony C. Weagley	By:	/s/ Francis R. Patryn
	Anthony C. Weagley		Francis R. Patryn
	President and Chief Executive Officer		Vice President, Treasurer and Chief Financial Officer
	Date: May 12, 2014		Date: May 12, 2014

59

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Anthony C. Weagley, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Center Bancorp, Inc.;

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

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

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period on 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: May 12, 2014	/s/ Anthony C. Weagley
	Anthony C. Weagley
	President and Chief Executive Officer

EX-31.2

  EXHIBIT 31.2

CERTIFICATION

I, Francis R. Patryn, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Center Bancorp, Inc.;

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

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

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

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period on 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 my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

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

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

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

Date: May 12, 2014	/s/ Francis R. Patryn
	Francis R. Patryn
	Vice President,  Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Center Bancorp, Inc. (the “Corporation”) on Form 10-Q for the quarter ended March 31, 2014 filed with the Securities and Exchange Commission (the “Report”), I, Anthony C. Weagley, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Corporation as of the dates presented and the consolidated results of operations of the Corporation for the periods presented.

Date: May 12, 2014	/s/ Anthony C. Weagley
	Anthony C. Weagley
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with this Quarterly Report of Center Bancorp, Inc. (the “Corporation”) on Form 10-Q for the quarter ended March 31, 2014 filed with the Securities and Exchange Commission (the “Report”), I, Francis R. Patryn, Vice President, Treasurer and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

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

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition of the Corporation as of the dates presented and the consolidated results of operations of the Corporation for the periods presented.

Date: May 12, 2014	/s/ Francis R. Patryn
	Francis R. Patryn
	Vice President, Treasurer and Chief Financial Officer

XML

Comprehensive Income (Schedule of Components of Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Comprehensive Income [Line Items]
Reclassification adjustment of OTTI losses included in income	$ 0	$ (24)
Reclassification adjustment of OTTI losses included in income, Tax effect	0	6
Unrealized (losses) gains on available for sale securities	(3,516)	(548)
Unrealized (losses) gains on available for sale securities, Tax effect	1,190	200
Other comprehensive income	2,074	104
Reclassification out of Accumulated Other Comprehensive Income [Member]
Comprehensive Income [Line Items]
Reclassification adjustment of OTTI losses included in income	0	(24)
Reclassification adjustment of OTTI losses included in income, Tax effect	0	6
Other Comprehensive Income Loss Reclassification Adjustment For Write down Of Securities Included In Net Income Net Of Tax Amount	0	(18)
Unrealized (losses) gains on available for sale securities	1,415	343
Unrealized (losses) gains on available for sale securities, Tax effect	(380)	(90)
Other Comprehensive Income Unrealized Holding Gain Loss On Securities Arising During Period Net Of Tax Amount	1,035	253
Amortization of unrealized holding gains on securities transferred from available-for-sale to held-to-maturity	(45)	14
Amortization of unrealized holding gains on securities transferred from available-for-sale to held-to-maturity, Tax effect	20	(5)
Unrealized gains and losses on securities available-for-sale: Unrealized holding losses / gains on securities transferred from available-for-sale to held-to-maturity securities	(25)	9
Other comprehensive income	$ 1,010	$ 244

XML

Loans and the Allowance for Loan Losses (Allowance for Loan and Lease Losses) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	$ 227	$ 415
Allowance for loan and lease losses: Collectively evaluated for impairment	10,406	9,918
Allowance for loan and lease losses: Total	10,633	10,333	10,232	10,237
Loans Receivable: Individually evaluated for impairment	15,446	17,925
Loans Receivable: Collectively evaluated for impairment	940,150	909,174
Loans receivable: Loans acquired with discounts related to credit quality	31,610	33,505
Total Loans Receivable	987,206	960,604
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	0	300
Allowance for loan and lease losses: Collectively evaluated for impairment	2,225	1,398
Allowance for loan and lease losses: Total	2,225	1,698	2,083	2,424
Loans Receivable: Individually evaluated for impairment	642	1,121
Loans Receivable: Collectively evaluated for impairment	246,657	226,450
Loans receivable: Loans acquired with discounts related to credit quality	2,066	2,117
Total Loans Receivable	249,365	229,688
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	227	115
Allowance for loan and lease losses: Collectively evaluated for impairment	5,157	5,631
Allowance for loan and lease losses: Total	5,384	5,746	5,353	5,323
Loans Receivable: Individually evaluated for impairment	12,577	14,826
Loans Receivable: Collectively evaluated for impairment	520,729	505,361
Loans receivable: Loans acquired with discounts related to credit quality	14,827	16,352
Total Loans Receivable	548,133	536,539
Construction [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	0	0
Allowance for loan and lease losses: Collectively evaluated for impairment	434	362
Allowance for loan and lease losses: Total	434	362	284	313
Loans Receivable: Individually evaluated for impairment	0	0
Loans Receivable: Collectively evaluated for impairment	38,078	41,493
Loans receivable: Loans acquired with discounts related to credit quality	1,230	1,229
Total Loans Receivable	39,308	42,722
Residential mortgage [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	0	0
Allowance for loan and lease losses: Collectively evaluated for impairment	1,004	990
Allowance for loan and lease losses: Total	1,004	990	1,378	1,532
Loans Receivable: Individually evaluated for impairment	2,112	1,858
Loans Receivable: Collectively evaluated for impairment	134,175	135,031
Loans receivable: Loans acquired with discounts related to credit quality	13,366	13,682
Total Loans Receivable	149,653	150,571
Installment [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	0	0
Allowance for loan and lease losses: Collectively evaluated for impairment	79	146
Allowance for loan and lease losses: Total	79	146	103	113
Loans Receivable: Individually evaluated for impairment	115	120
Loans Receivable: Collectively evaluated for impairment	511	839
Loans receivable: Loans acquired with discounts related to credit quality	121	125
Total Loans Receivable	747	1,084
Unallocated [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loan and lease losses: Individually evaluated for impairment	0	0
Allowance for loan and lease losses: Collectively evaluated for impairment	1,507	1,391
Allowance for loan and lease losses: Total	1,507	1,391	1,031	532
Loans Receivable: Individually evaluated for impairment	0	0
Loans Receivable: Collectively evaluated for impairment	0	0
Loans receivable: Loans acquired with discounts related to credit quality	0	0
Total Loans Receivable	$ 0	$ 0

XML

Investment Securities (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended	1 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Apr. 28, 2014 Subsequent Event [Member]
Schedule of Investments [Line Items]
Proceeds from Sale of Available-for-sale Securities, Total	$ 50,611,000	$ 45,006,000
Available-for-sale Securities Pledged as Collateral	110,400,000		109,300,000
Gross unrealized losses	7,727,000		6,960,000
Available-for-sale Securities, Gross Realized Gain (Loss)				$ 35,000

XML

Borrowed Funds (Schedule of Securities Sold Under Agreement for Repurchase) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Short-term Debt [Line Items]
2015	$ 0
2016	0
2017	15,000
2018	16,000
Total	$ 31,000

XML

Loans and the Allowance for Loan Losses (Summary of Activity in Allowance for Loan Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Financing Receivable, Impaired [Line Items]
Beginning Balance	$ 10,333	$ 10,237
Charge offs	(336)	(6)
Recoveries	11	1
Provision	625	0
Ending Balance	10,633	10,232
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	1,698	2,424
Charge offs	(333)	0
Recoveries	0	0
Provision	860	(341)
Ending Balance	2,225	2,083
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	5,746	5,323
Charge offs	0	0
Recoveries	0	0
Provision	(362)	30
Ending Balance	5,384	5,353
Construction [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	362	313
Charge offs	0	0
Recoveries	0	0
Provision	72	(29)
Ending Balance	434	284
Residential mortgage [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	990	1,532
Charge offs	0	0
Recoveries	10	0
Provision	4	(154)
Ending Balance	1,004	1,378
Installment [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	146	113
Charge offs	(3)	(6)
Recoveries	1	1
Provision	(65)	(5)
Ending Balance	79	103
Unallocated [Member]
Financing Receivable, Impaired [Line Items]
Beginning Balance	1,391	532
Charge offs	0	0
Recoveries	0	0
Provision	116	499
Ending Balance	$ 1,507	$ 1,031

XML

Investment Securities (Credit Loss Portion of OTTI Recognized in Earnings on Debt Securities) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Balance of credit-related OTTI at January 1	$ 0	$ 4,450
Addition: Credit losses on investment securities for which other-than-temporary impairment was not previously recognized	0	652
Reduction: credit losses on investment securities sold during the period	0	(5,102)
Balance of credit-related OTTI at period end	$ 0	$ 0

XML

Borrowed Funds (Tables)

3 Months Ended

Mar. 31, 2014

Borrowed Funds [Abstract]

Schedule of Short-Term Borrowings

The details of these short-term borrowings are presented in the following table.

	March 31, 2014			December 31, 2013
	(dollars in thousands)
Interest rate:
At quarter end		—	%		—	%
Average for the quarter		0.38	%		—	%
Average amount outstanding during the quarter	$	500		$	—
Maximum amount outstanding at any month end in the quarter	$	—		$	—
Amount outstanding at quarter end	$	—		$	—

Schedule of Long-Term Borrowings

At March 31, 2014 and December 31, 2013, FHLB advances had a weighted average interest rate of 3.26 and 3.26 percent, respectively, and are contractually scheduled for repayment as follows: 

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		35,000
2018		40,000
2020		40,000
Total	$	115,000

Schedule of Securities Sold Under Agreement to Repurchase

contractually scheduled for repayment as follows:

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		15,000
2018		16,000
Total	$	31,000

XML

Stockholders' Equity (Narrative) (Details) (USD $)	0 Months Ended	3 Months Ended
	Dec. 07, 2011	Mar. 31, 2014	Dec. 31, 2013	Sep. 15, 2011	Jan. 12, 2009
Nonvoting senior preferred stock issued, value				$ 11,250,000	$ 10,000,000
Warrants issued to treasury for purchase of common stock, shares					173,410
Exercise price of warrants issued for common stock					$ 8.65
Number of shares underlying the warrants held by Treasury		86,705
Percentage of original amount of warrants left		50
Preferred Stock, Redemption Amount		10,041,667
Tier One Leverage Capital		1.25
Payments for Repurchase of Warrants	$ 245,000
Preferred Stock, Liquidation Preference Per Share		$ 1,000	$ 1,000
Series A [Member]
Convertible Preferred Stock, Shares Issued upon Conversion		10,000
Series B [Member]
Convertible Preferred Stock, Shares Issued upon Conversion		11,250

XML

Fair Value Measurements and Fair Value of Financial Instruments (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	$ 287,471	$ 323,070
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	20,160	19,530
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	267,311	303,540
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
U.S. treasury notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	13,896	13,519
U.S. treasury notes [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	13,896	13,519
U.S. treasury notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
U.S. treasury notes [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Federal agency obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	23,090	19,941
Federal agency obligations [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Federal agency obligations [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	23,090	19,941
Federal agency obligations [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Residential mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	47,188	48,874
Residential mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Residential mortgage-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	47,188	48,874
Residential mortgage-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Commercial mortgage-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	2,963	6,991
Commercial mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Commercial mortgage-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	2,963	6,991
Commercial mortgage-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Obligations of U.S. states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	14,939	31,460
Obligations of U.S. states and political subdivisions [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Obligations of U.S. states and political subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	14,939	31,460
Obligations of U.S. states and political subdivisions [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Trust preferred securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	19,797	19,403
Trust preferred securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Trust preferred securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	19,797	19,403
Trust preferred securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Corporate bonds and notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	141,651	158,630
Corporate bonds and notes [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Corporate bonds and notes [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	141,651	158,630
Corporate bonds and notes [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Asset-backed securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	15,554	15,979
Asset-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Asset-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	15,554	15,979
Asset-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	2,129	2,262
Certificates of Deposit [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Certificates of Deposit [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	2,129	2,262
Certificates of Deposit [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Equity securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	292	287
Equity securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	292	287
Equity securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Equity securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Mutual funds and money market funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	5,972	5,724
Mutual funds and money market funds [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	5,972	5,724
Mutual funds and money market funds [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	0	0
Mutual funds and money market funds [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment securities: Available-for-sale, Fair Value	$ 0	$ 0

XML

Borrowed Funds (Narrative) (Details) (USD $) In Millions, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Maximum [Member]	Mar. 31, 2014 Minimum [Member]
Debt Instrument [Line Items]
Federal Home Loan Bank, Advances, General Debt Obligations, Maximum Amount Available	$ 146.0
Long-term Debt, Weighted Average Interest Rate	5.90%	5.90%
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Weighted Average Interest Rate	3.26%	3.26%
FHLB Advance Maturity Range In Years			8 years	4 years

XML

Earnings per Common Share (Tables)

3 Months Ended

Mar. 31, 2014

Earnings per Common Share [Abstract]

Schedule of computation of earnings per common share

Earnings per common share have been computed based on the following:

	Three Months Ended March 31,
(in thousands, except per share amounts)	2014		2013
Net income	$	4,398	$	4,924
Preferred stock dividends		(28)		(56)
Net income available to common shareholders	$	4,370	$	4,868
Basic weighted average common shares outstanding		16,350		16,348
Plus: effect of dilutive options		56		26
Diluted weighted average common shares outstanding		16,406		16,374
Earnings per common share:
Basic	$	0.27	$	0.30
Diluted	$	0.27	$	0.30

XML

Loans and the Allowance for Loan Losses (Loans Receivable on Non-Accrual Status) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 3,423	$ 3,137
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	404	753
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	1,413	744
Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status	$ 1,606	$ 1,640

XML

Investment Securities (Investments Classified by Maturity Date) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Due in one year or less, amortized cost	$ 5,569
Investment Securities Available-for-Sale: Due in one year or less, fair value	5,596
Investment Securities Available-for-Sale: Due after one year through five years, amortized cost	50,584
Investment Securities Available-for-Sale: Due after on eyear through five years, fair value	51,839
Investment Securities Available-for-Sale: Due after five years through ten years, amortized cost	121,166
Investment Securities Available-for-Sale: Dur after five years through ten years, fair value	125,250
Investment Securities Available-for-Sale: Due after ten years, amortized cost	48,178
Investment Securities Available-for-Sale: Due after ten years, fair value	48,371
Investment Securities Available-for-Sale: Total, amortized cost	281,447
Investment securities: Available-for-sale: Total, fair Value	287,471	323,070
Investment Securities Held-to-Maturity: Due in one year or less, amortized cost	2,056
Investment Securities Held-to-Maturity: Due in one year or less, fair value	2,060
Investment Securities Held-to-Maturity: Due after one year through five years, amortized cost	12,946
Investment Securities Held-to-Maturity: Due after one year through five years, fair value	13,204
Investment Securities Held-to-Maturity: Due after five years through ten years, amortized cost	68,449
Investment Securities Held-to-Maturity: Due after five years through ten years, fair value	68,440
Investment Securities Held-to-Maturity: Due after ten years, amortized cost	124,201
Investment Securities Held-to-Maturity: Due after ten years, fair value	124,724
Investment Securities Held-to-Maturity: Total, amortized cost	214,191	215,286
Investment Securities Held-to-Maturity: Total fair Value	214,952	210,958
Investment Securities: Amortized Cost	495,638
Investment Securities: Fair Value	502,423
Residential mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: amortized cost	46,354
Investment Securities Available-for-Sale: fair value	47,188
Investment securities: Available-for-sale: Total, fair Value	47,188	48,874
Investment Securities Held-to-Maturity: amoritzed cost	2,160
Investment Securities Held-to-Maturity: fair value	2,125
Investment Securities Held-to-Maturity: Total fair Value	2,125	2,182
Commercial mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: amortized cost	3,079
Investment Securities Available-for-Sale: fair value	2,963
Investment securities: Available-for-sale: Total, fair Value	2,963	6,991
Investment Securities Held-to-Maturity: amoritzed cost	4,379
Investment Securities Held-to-Maturity: fair value	4,399
Investment Securities Held-to-Maturity: Total fair Value	4,399	4,396
Equity securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: amortized cost	376
Investment Securities Available-for-Sale: fair value	292
Investment securities: Available-for-sale: Total, fair Value	292	287
Mutual funds and money market funds [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: amortized cost	6,141
Investment Securities Available-for-Sale: fair value	5,972
Investment securities: Available-for-sale: Total, fair Value	$ 5,972	$ 5,724

XML

Stock-Based Compensation (Disclosure of Share-based Compensation Arrangements by Share-based Payment Award) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding Begninng Balance- shares	214,263
Outstanding Beginning Balance- weighted average exercise price	$ 10.59
Granted - options- shares	0
Granted - options - weighted average exercise price	$ 0
Exercised- shares	0
Exercised- Weighted Average Exercise Price	$ 0
Canceled/expired-shares	0
Canceled/expired - weighted average exercise price	$ 0
Forfeited - shares	0
Forfeited- weighted average exercise price	$ 0
Outstaning Ending Balance- shares	214,263
Outstanding Ending Balance- weighted average exercise price	$ 10.59
Outstanding Ending Balance- weighted average remaining contractual term (years)	5 years 5 months 16 days
Outstanding Ending Balance- aggregate intrinsic value	$ 1,801,405
Exercisable- shares	164,821
Exercisable- weighted average exercise price	$ 10.24
Exercisable- weighed average remaining contractual term (years)	4 years 6 months 18 days
Exercisable- aggregate intrinsic value	$ 1,443,161

XML

Loans and the Allowance for Loan Losses (Analysis of Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
No Related Allowance: Recorded Invesment	$ 11,113		$ 12,909
No Related Allowance: Unpaid Principal Balance	11,889		13,352
With An Allowance Recorded: Recorded Investment	4,333		5,016
With An Allowance Recorded: Unpaid Principal Balance	4,333		5,016
With An Allowance Recorded: Related Allowance	227		415
Total Impaired: Recorded Investment	15,446		17,925
Total Impaired: Unpaid Principal Balance	16,222		18,368
Total Impaired: Related Allowance	227		415
No Related Allowance: Average Recorded Investment	11,324	10,232
No Related Allowance: Interest Income Recognized	112	134
With An Allowance Recorded: Average Recorded Investment	4,337	5,429
With An Allowance Recorded: Interest Income Recognized	53	44
Total Impaired: Average Recorded Investment	15,661	15,661
Total Impaired: Interest Income Recognized	165	178
Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
No Related Allowance: Recorded Invesment	642		449
No Related Allowance: Unpaid Principal Balance	975		449
With An Allowance Recorded: Recorded Investment			672
With An Allowance Recorded: Unpaid Principal Balance			672
With An Allowance Recorded: Related Allowance	0		300
Total Impaired: Recorded Investment	642		1,121
Total Impaired: Unpaid Principal Balance	975		1,121
Total Impaired: Related Allowance	0		300
No Related Allowance: Average Recorded Investment	659	726
No Related Allowance: Interest Income Recognized	14	10
Total Impaired: Average Recorded Investment	659	726
Total Impaired: Interest Income Recognized	14	10
Commercial real estate [Member]
Financing Receivable, Impaired [Line Items]
No Related Allowance: Recorded Invesment	8,244		10,482
No Related Allowance: Unpaid Principal Balance	8,545		10,783
With An Allowance Recorded: Recorded Investment	4,333		4,344
With An Allowance Recorded: Unpaid Principal Balance	4,333		4,344
With An Allowance Recorded: Related Allowance	227		115
Total Impaired: Recorded Investment	12,577		14,826
Total Impaired: Unpaid Principal Balance	12,878		15,127
Total Impaired: Related Allowance	227		115
No Related Allowance: Average Recorded Investment	8,278	9,086
No Related Allowance: Interest Income Recognized	78	119
With An Allowance Recorded: Average Recorded Investment	4,337	4,180
With An Allowance Recorded: Interest Income Recognized	53	34
Total Impaired: Average Recorded Investment	12,615	13,266
Total Impaired: Interest Income Recognized	131	153
Residential mortgage [Member]
Financing Receivable, Impaired [Line Items]
No Related Allowance: Recorded Invesment	2,112		1,858
No Related Allowance: Unpaid Principal Balance	2,254		2,000
With An Allowance Recorded: Related Allowance	0		0
Total Impaired: Recorded Investment	2,112		1,858
Total Impaired: Unpaid Principal Balance	2,254		2,000
Total Impaired: Related Allowance	0		0
No Related Allowance: Average Recorded Investment	2,270	420
No Related Allowance: Interest Income Recognized	19	5
With An Allowance Recorded: Average Recorded Investment	0	1,249
With An Allowance Recorded: Interest Income Recognized	0	10
Total Impaired: Average Recorded Investment	2,270	1,669
Total Impaired: Interest Income Recognized	19	15
Installment [Member]
Financing Receivable, Impaired [Line Items]
No Related Allowance: Recorded Invesment	115		120
No Related Allowance: Unpaid Principal Balance	115		120
With An Allowance Recorded: Related Allowance	0		0
Total Impaired: Recorded Investment	115		120
Total Impaired: Unpaid Principal Balance	115		120
Total Impaired: Related Allowance	0		0
No Related Allowance: Average Recorded Investment	117	0
No Related Allowance: Interest Income Recognized	1	0
Total Impaired: Average Recorded Investment	117	0
Total Impaired: Interest Income Recognized	$ 1	$ 0

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Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Tax Expense (Benefit)	$ 1,612	$ 1,753

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Fair Value Measurements and Fair Value of Financial Instruments (Schedule of Placement of Carrying Amount and Fair Value in Hierarchy) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks, Fair Value	$ 106,282	$ 82,692
Cash and due from banks, Carrying Amount	106,282	82,692
Investment securities available-for-sale, Carrying Amount	287,471	323,070
Investment securities: Available-for-sale, Fair Value	287,471	323,070
Investment securities held-to-maturity, Carrying Amount	214,191	215,286
Investment securities held-to-maturity, Fair Value	214,952	210,958
Restricted investment in bank stocks, Carrying Amount	8,986	8,986
Restricted investment in bank stocks, Fair Value	8,986	8,986
Loans held for sale, Carrying Amount	976,896	950,610
Net Loans, Fair Value	975,016	948,606
Accrued interest receivable, Carrying Amount	6,341	6,802
Accrued interest receivable, Fair Value	6,341	6,802
Non interest-bearing deposits, Carrying Amount	223,332	227,370
Non interest-bearing deposits, Fair Value	223,332	227,370
Interest-bearing deposits, Carrying Amount	1,116,553	1,114,635
Interest-bearing deposits, Fair Value	1,117,677	1,115,781
Long-term borrowings, Carrying Amount	146,000	146,000
Long-term borrowings, Fair Value	158,306	157,440
Subordinated debentures, Carrying Amount	5,155	5,155
Subordinated debentures, Fair Value	4,923	5,143
Accrued interest payable, Carrying Amount	967	963
Accrued interest payable, Fair Value	967	963
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks, Fair Value	106,282	82,692
Investment securities: Available-for-sale, Fair Value	20,160	19,530
Investment securities held-to-maturity, Fair Value	27,793	27,037
Restricted investment in bank stocks, Fair Value	0	0
Net Loans, Fair Value	0	0
Accrued interest receivable, Fair Value	0	0
Non interest-bearing deposits, Fair Value	0	0
Interest-bearing deposits, Fair Value	0	0
Long-term borrowings, Fair Value	0	0
Subordinated debentures, Fair Value	0	0
Accrued interest payable, Fair Value	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks, Fair Value	0	0
Investment securities: Available-for-sale, Fair Value	267,311	303,540
Investment securities held-to-maturity, Fair Value	168,230	164,940
Restricted investment in bank stocks, Fair Value	8,986	8,986
Net Loans, Fair Value	0	0
Accrued interest receivable, Fair Value	3,654	4,136
Non interest-bearing deposits, Fair Value	223,332	227,370
Interest-bearing deposits, Fair Value	1,117,677	1,115,781
Long-term borrowings, Fair Value	158,306	157,440
Subordinated debentures, Fair Value	4,923	5,143
Accrued interest payable, Fair Value	967	963
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and due from banks, Fair Value	0	0
Investment securities: Available-for-sale, Fair Value	0	0
Investment securities held-to-maturity, Fair Value	18,929	18,981
Restricted investment in bank stocks, Fair Value	0	0
Net Loans, Fair Value	975,016	948,606
Accrued interest receivable, Fair Value	2,687	2,666
Non interest-bearing deposits, Fair Value	0	0
Interest-bearing deposits, Fair Value	0	0
Long-term borrowings, Fair Value	0	0
Subordinated debentures, Fair Value	0	0
Accrued interest payable, Fair Value	$ 0	$ 0

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Investment Securities (Schedule of Unrealized Losses Not Recognized in Income) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	$ 57,445	$ 91,251
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(1,224)	(2,600)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	4,968	4,512
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(479)	(437)
Investment Securities Available-for-Sale: Total, fair value	62,413	95,763
Investment Securities Available-for-Sale: Total, unrealized losses	(1,703)	(3,037)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	87,941	128,093
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(1,478)	(5,112)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	17,543	9,257
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	(725)	(732)
Investment Securities Held-to-Maturity: Total, fair value	105,484	137,350
Investment Securities Held-to-Maturity: Total, unrealized losses	(2,203)	(5,844)
Temporarily Impaired Securities, Total Fair Value	167,897	233,113
Temporarily Impaired Securities, Total Unrealized Losses	(3,906)	(8,881)
Temporarily Impaired Securities, Less than 12 Months, Fair Value	145,386	219,344
Temporarily Impaired Securities, Less than 12 Months, unrealized losses	(2,702)	(7,712)
Temporarily Impaired Securities, 12 months or longer, Fair Value	22,511	13,769
Temporarily Impaired Securities, 12 months or longer, unrealized losses	(1,204)	(1,169)
U.S. treasury notes [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	13,896	13,519
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(465)	(825)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	0	0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	0	0
Investment Securities Available-for-Sale: Total, fair value	13,896	13,519
Investment Securities Available-for-Sale: Total, unrealized losses	(465)	(825)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	27,793	27,037
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(315)	(1,019)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	0	0
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	0	0
Investment Securities Held-to-Maturity: Total, fair value	27,793	27,037
Investment Securities Held-to-Maturity: Total, unrealized losses	(315)	(1,019)
Federal agency obligations [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	19,032	17,200
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(275)	(655)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	476	0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(39)	0
Investment Securities Available-for-Sale: Total, fair value	19,508	17,200
Investment Securities Available-for-Sale: Total, unrealized losses	(314)	(655)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	5,751	13,197
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(71)	(388)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	0	295
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	0	(1)
Investment Securities Held-to-Maturity: Total, fair value	5,751	13,492
Investment Securities Held-to-Maturity: Total, unrealized losses	(71)	(389)
Commercial mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	2,963	2,924
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(116)	(157)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	0	0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	0	0
Investment Securities Available-for-Sale: Total, fair value	2,963	2,924
Investment Securities Available-for-Sale: Total, unrealized losses	(116)	(157)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	1,402	1,395
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(39)	(62)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	0	0
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	0	0
Investment Securities Held-to-Maturity: Total, fair value	1,402	1,395
Investment Securities Held-to-Maturity: Total, unrealized losses	(39)	(62)
Residential mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	5,344	18,293
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(102)	(229)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	0	0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	0	0
Investment Securities Available-for-Sale: Total, fair value	5,344	18,293
Investment Securities Available-for-Sale: Total, unrealized losses	(102)	(229)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	2,125	2,182
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(35)	(64)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	0	0
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	0	0
Investment Securities Held-to-Maturity: Total, fair value	2,125	2,182
Investment Securities Held-to-Maturity: Total, unrealized losses	(35)	(64)
Obligations of U.S. states and political subdivisions [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value		4,199
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses		(55)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value		0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses		0
Investment Securities Available-for-Sale: Total, fair value		4,199
Investment Securities Available-for-Sale: Total, unrealized losses		(55)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	39,474	57,072
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(960)	(2,957)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	17,543	8,962
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	(725)	(731)
Investment Securities Held-to-Maturity: Total, fair value	57,017	66,034
Investment Securities Held-to-Maturity: Total, unrealized losses	(1,685)	(3,688)
Trust preferred securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	0	4,031
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	0	(211)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	1,278	1,275
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(296)	(299)
Investment Securities Available-for-Sale: Total, fair value	1,278	5,306
Investment Securities Available-for-Sale: Total, unrealized losses	(296)	(510)
Corporate bonds and notes [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	11,440	30,533
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(112)	(448)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	1,947	1,965
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(36)	(34)
Investment Securities Available-for-Sale: Total, fair value	13,387	32,498
Investment Securities Available-for-Sale: Total, unrealized losses	(148)	(482)
Investment Securities Held-to-Maturity: Less than 12 months, fair value	11,396	27,210
Investment Securities Held-to-Maturity: Less than 12 months, unrealized losses	(58)	(622)
Investment Securities Held-to-Maturity: 12 months or longer, fair value	0	0
Investment Securities Held-to-Maturity: 12 months or longer, unrealized losses	0	0
Investment Securities Held-to-Maturity: Total, fair value	11,396	27,210
Investment Securities Held-to-Maturity: Total, unrealized losses	(58)	(622)
Certificates of Deposit [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	415	552
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(9)	(20)
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	0	0
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	0	0
Investment Securities Available-for-Sale: Total, fair value	415	552
Investment Securities Available-for-Sale: Total, unrealized losses	(9)	(20)
Equity securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	0	0
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	0	0
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	292	287
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(84)	(89)
Investment Securities Available-for-Sale: Total, fair value	292	287
Investment Securities Available-for-Sale: Total, unrealized losses	(84)	(89)
Mutual funds and money market funds [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Less than 12 months, fair value	4,355	0
Investment Securities Available-for-Sale: Less than 12 months, unrealized losses	(145)	0
Investment Securities Available-for-Sale: 12 Months or Longer, fair value	975	985
Investment Securities Available-for-Sale: 12 months or longer, unrealized losses	(24)	(15)
Investment Securities Available-for-Sale: Total, fair value	5,330	985
Investment Securities Available-for-Sale: Total, unrealized losses	$ (169)	$ (15)

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

Basis of Presentation [Abstract]

Basis of Presentation

Note 1.   Basis of Presentation

The consolidated financial statements of Center Bancorp, Inc. (the “Parent Corporation”) are prepared on the accrual basis and include the accounts of the Parent Corporation and its wholly-owned subsidiary, Union Center National Bank (the “Bank” and, collectively with the Parent Corporation and the Parent Corporation’s other direct and indirect subsidiaries, the “Corporation”). All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements.

In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to change in the near term relate to the determination of the allowance for loan losses, the other-than-temporary impairment evaluation of securities, the evaluation of the impairment of goodwill and the evaluation of deferred tax assets.

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”).

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Fair Value Measurement and Fair Value of Financial Instruments (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	$ 4,333	$ 5,016
Impaired Financing Receivable, Related Allowance	227	415
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	$ 11,113	$ 12,909

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Investment Securities (Schedule of Realized Gains and Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Investments [Line Items]
Gross gains on sales of investment securities	$ 1,432	$ 432
Gross losses on sales of investment securities	(17)	(89)
Net gains on sales of investment securities	$ 1,415	$ 343

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Loans and the Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2014

Loans and the Allowance for Loan Losses [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

The following table sets forth the composition of the Corporation’s loan portfolio, including net deferred fees and costs, at March 31, 2014 and December 31, 2013:

	March 31,		December 31,
	2014		2013
	(in thousands)
Commercial and industrial	$	249,365	$	229,688
Commercial real estate		548,133		536,539
Construction		39,308		42,722
Residential mortgage		149,653		150,571
Installment		747		1,084
Subtotal		987,206		960,604
Net deferred loan costs		323		339
Total loans	$	987,529	$	960,943

Loans Receivable on Non-Accrual Status

The following table presents information about loan receivables on non-accrual status at March 31, 2014 and December 31, 2013:

Loans Receivable on Non-Accrual Status
	March 31, 2014		December 31, 2013
	(in thousands)
Commercial and industrial	$	404	$	753
Commercial real estate		1,413		744
Residential mortgage		1,606		1,640
Total loans receivable on non-accrual status	$	3,423	$	3,137

Credit Quality Indicators

The following table presents information, excluding net deferred costs, about the Corporation’s loan credit quality at March 31, 2014 and December 31, 2013:

Credit Quality Indicators
	March 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	246,130	$	1,796	$	1,112	$	327	$	249,365
Commercial real estate		520,626		17,419		10,088		—		548,133
Construction		38,078		—		1,230		—		39,308
Residential mortgage		146,265		970		2,418		—		149,653
Installment		632		—		115		—		747
Total loans	$	951,731	$	20,185	$	14,963	$	327	$	987,206

	December 31, 2013
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	226,013	$	1,719	$	1,284	$	672	$	229,688
Commercial real estate		509,679		14,544		12,316		—		536,539
Construction		41,492		—		1,230		—		42,722
Residential mortgage		147,379		978		2,214		—		150,571
Installment		964		—		120		—		1,084
Total loans	$	925,527	$	17,241	$	17,164	$	672	$	960,604

Analysis of Impaired Loans

The following table provides an analysis of the impaired loans at March 31, 2014 and December 31, 2013:

	March 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(in thousands)
No Related Allowance Recorded
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		8,244		8,545		—
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total	$	11,113	$	11,889	$	—
With An Allowance Recorded
Commercial real estate	$	4,333	$	4,333	$	227
Total	$	4,333	$	4,333	$	227
Total
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		12,577		12,878		227
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total (including related allowance)	$	15,446	$	16,222	$	227

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(in thousands)
No Related Allowance Recorded
Commercial and industrial	$	449	$	449	$	—
Commercial real estate		10,482		10,783		—
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total	$	12,909	$	13,352	$	—
With An Allowance Recorded
Commercial and industrial	$	672	$	672	$	300
Commercial real estate		4,344		4,344		115
Total	$	5,016	$	5,016	$	415
Total
Commercial and industrial	$	1,121	$	1,121	$	300
Commercial real estate		14,826		15,127		115
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total (including related allowance)	$	17,925	$	18,368	$	415

The following table provides an analysis related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2014 and 2013.

	Three Months Ended March 31,
	2014				2013
	Average Recorded Investment		Interest Income Recognized		Average  Recorded Investment		Interest Income Recognized
(in thousands)
Impaired loans with no related allowance recorded:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		8,278		78		9,086		119
Residential mortgage		2,270		19		420		5
Installment		117		1		—		—
Total	$	11,324	$	112	$	10,232	$	134
Impaired loans with an allowance recorded:
Commercial real estate	$	4,337	$	53	$	4,180	$	34
Residential mortgage		—		—		1,249		10
Total	$	4,337	$	53	$	5,429	$	44
Total impaired loans:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		12,615		131		13,266		153
Residential mortgage		2,270		19		1,669		15
Installment		117		1		—		—
Total	$	15,661	$	165	$	15,661	$	178

Aging Analysis

The following table provides an analysis of the aging of loans, excluding net deferred costs that are past due at March 31, 2014 and December 31, 2013:

Aging Analysis
	March 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	400	$	94	$	404	$	898	$	248,467	$	249,365	$	—
Commercial Real Estate		2,348		5,915		1,413		9,676		538,457		548,133		—
Construction		—		—		—		—		39,308		39,308		—
Residential Mortgage		1,248		43		1,843		3,134		146,519		149,653		237
Installment		7		—		—		7		740		747		—
Total	$	4,003	$	6,052	$	3,660	$	13,715	$	973,491	$	987,206	$	237

	December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	18	$	—	$	753	$	771	$	228,917	$	229,688	$	—
Commercial Real Estate		221		—		744		965		535,574		536,539		—
Construction		—		—		—		—		42,722		42,722		—
Residential Mortgage		990		258		1,640		2,888		147,683		150,571		—
Installment		5		—		—		5		1,079		1,084		—
Total	$	1,234	$	258	$	3,137	$	4,629	$	955,975	$	960,604	$	—

Allowance for Loan and Lease Losses

The following table details the amount of loans receivable that are evaluated individually, and collectively, for impairment (excluding net deferred costs), and the related portion of the allowance for loan loss that is allocated to each loan portfolio segment:

Allowance for loan and lease losses
	March 31, 2014
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment	$	—	$	227	$	—	$	—	$	—	$	—	$	227
Collectively evaluated for impairment		2,225		5,157		434		1,004		79		1,507		10,406
Total	$	2,225	$	5,384	$	434	$	1,004	$	79	$	1,507	$	10,633
Loans Receivable
Individually evaluated for impairment	$	642	$	12,577	$	—	$	2,112	$	115	$	—	$	15,446
Collectively evaluated for impairment		246,657		520,729		38,078		134,175		511		—		940,150
Loans acquired with discounts related to credit quality		2,066		14,827		1,230		13,366		121		—		31,610
Total	$	249,365	$	548,133	$	39,308	$	149,653	$	747	$	—	$	987,206

Allowance for loan and lease losses
	December 31, 2013
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment	$	300	$	115	$	—	$	—	$	—	$	—	$	415
Collectively evaluated for impairment		1,398		5,631		362		990		146		1,391		9,918
Total	$	1,698	$	5,746	$	362	$	990	$	146	$	1,391	$	10,333
Loans Receivable
Individually evaluated for impairment	$	1,121	$	14,826	$	—	$	1,858	$	120	$	—	$	17,925
Collectively evaluated for impairment		226,450		505,361		41,493		135,031		839		—		909,174
Loans acquired with discounts related to credit quality		2,117		16,352		1,229		13,682		125		—		33,505
Total	$	229,688	$	536,539	$	42,722	$	150,571	$	1,084	$	—	$	960,604

The Corporation’s allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan loss methodology as disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

 A summary of the activity in the allowance for loan losses is as follows:

	Three Months Ended March 31, 2014
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Balance at January 1,	$	1,698	$	5,746	$	362	$	990	$	146	$	1,391	$	10,333
Charge offs		(333)		—		—		—		(3)		—		(336)
Recoveries		—		—		—		10		1		—		11
Provision		860		(362)		72		4		(65)		116		625
Balance at March 31,	$	2,225	$	5,384	$	434	$	1,004	$	79	$	1,507	$	10,633

	Three Months Ended March 31, 2013
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Balance at January 1,	$	2,424	$	5,323	$	313	$	1,532	$	113	$	532	$	10,237
Charge offs		—		—		—		—		(6)		—		(6)
Recoveries		—		—		—		—		1		—		1
Provision		(341)		30		(29)		(154)		(5)		499		—
Balance at March 31,	$	2,083	$	5,353	$	284	$	1,378	$	103	$	1,031	$	10,232

XML

Investment Securities (Tables)

3 Months Ended

Mar. 31, 2014

Investment Securities [Abstract]

Unrealized gains on investment securities

The following tables present information related to the Corporation’s investment securities at March 31, 2014 and December 31, 2013.

	March 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,361	$	—	$	(465)	$	13,896
Federal agency obligations		23,381		23		(314)		23,090
Residential mortgage pass-through securities		46,354		936		(102)		47,188
Commercial mortgage pass-through securities		3,079		—		(116)		2,963
Obligations of U.S. states and political subdivisions		14,353		586		—		14,939
Trust preferred securities		19,764		329		(296)		19,797
Corporate bonds and notes		136,152		5,647		(148)		141,651
Asset-backed securities		15,386		168		—		15,554
Certificates of deposit		2,100		38		(9)		2,129
Equity securities		376		—		(84)		292
Mutual funds and money market funds		6,141		—		(169)		5,972
Total	$	281,447	$	7,727	$	(1,703)	$	287,471
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,108	$	—	$	(315)	$	27,793
Federal agency obligations		14,521		106		(71)		14,556
Residential mortgage pass-through securities		2,160		—		(35)		2,125
Commercial mortgage pass-through securities		4,379		59		(39)		4,399
Obligations of U.S. states and political subdivisions		127,111		2,389		(1,685)		127,815
Corporate bonds and notes		37,912		410		(58)		38,264
Total	$	214,191	$	2,964	$	(2,203)	$	214,952
Total investment securities	$	495,638	$	10,691	$	(3,906)	$	502,423

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	December 31, 2013
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,344	$	—	$	(825)	$	13,519
Federal agency obligations		20,567		29		(655)		19,941
Residential mortgage pass-through securities		48,312		791		(229)		48,874
Commercial mortgage pass-through securities		7,145		3		(157)		6,991
Obligations of U.S. states and political subdivisions		30,804		711		(55)		31,460
Trust preferred securities		19,763		150		(510)		19,403
Corporate bonds and notes		154,182		4,930		(482)		158,630
Asset-backed securities		15,733		246		—		15,979
Certificates of deposit		2,250		32		(20)		2,262
Equity securities		376		—		(89)		287
Mutual funds and money market funds		5,671		68		(15)		5,724
Total	$	319,147	$	6,960	$	(3,037)	$	323,070
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,056	$	—	$	(1,019)	$	27,037
Federal agency obligations		15,249		23		(389)		14,883
Residential mortgage-backed securities		2,246		—		(64)		2,182
Commercial mortgage-backed securities		4,417		41		(62)		4,396
Obligations of U.S. states and political subdivisions		127,418		1,303		(3,688)		125,033
Corporate bonds and notes		37,900		149		(622)		37,427
Total	$	215,286	$	1,516	$	(5,844)	$	210,958
Total investment securities	$	534,433	$	8,476	$	(8,881)	$	534,028

Investments classified by maturity date

The following table presents information for investment securities available-for-sale at March 31, 2014, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

	March 31, 2014
	Amortized Cost		Fair Value
	(in thousands)
Investment Securities Available-for-Sale :
Due in one year or less	$	5,569	$	5,596
Due after one year through five years		50,584		51,839
Due after five years through ten years		121,166		125,250
Due after ten years		48,178		48,371
Residential mortgage pass-through securities		46,354		47,188
Commercial mortgage pass-through securities		3,079		2,963
Equity securities		376		292
Mutual funds and money market funds		6,141		5,972
Total	$	281,447	$	287,471
Investment Securities Held-to-Maturity :
Due in one year or less	$	2,056	$	2,060
Due after one year through five years		12,946		13,204
Due after five years through ten years		68,449		68,440
Due after ten years		124,201		124,724
Residential mortgage-backed securities		2,160		2,125
Commercial mortgage pass-through securities		4,379		4,399
Total	$	214,191	$	214,952
Total investment securities	$	495,638	$	502,423

Schedule of Realized Gains and Losses

Gross gains and losses from the sales of investment securities for the three month periods ended March 31, 2014 and 2013 were as follows:

	Three Months Ended March 31,
(in thousands)	2014		2013
Gross gains on sales of investment securities	$	1,432	$	432
Gross losses on sales of investment securities		(17)		(89)
Net gains on sales of investment securities	$	1,415	$	343

Schedule of OTTI Charges for period

The following summarizes OTTI charges for the periods indicated.

	Three Months Ended
	March 31,
(in thousands)	2014		2013
Principal losses on a variable rate CMO	$	—	$	24
Total other-than-temporary impairment charges	$	—	$	24

Schedule of preferred security and associated ratings

The following table presents detailed information for each trust preferred security held by the Corporation at March 31, 2014 which has at least one rating below investment grade.

Deal Name	Single Issuer or Pooled	Class/ Tranche	Amortized Cost		Fair Value		Gross Unrealized Gain (Loss)		Lowest Credit Rating Assigned	Number of Banks Currently Performing	Deferrals and Defaults as % of Original Collateral	Expected Deferral/Defaults as % of Remaining Performing Collateral
	(dollars in thousands)
Countrywide Capital IV	Single	—	$	1,771	$	1,805	$	34	BB+	1	None	None
Countrywide Capital V	Single	—		2,747		2,803		56	BB+	1	None	None
Countrywide Capital V	Single	—		250		255		5	BB+	1	None	None
Citigroup Cap IX	Single	—		992		1,011		19	BB	1	None	None
Citigroup Cap IX	Single	—		1,907		1,952		45	BB	1	None	None
Citigroup Cap XI	Single	—		246		251		5	BB	1	None	None
Nationsbank Cap Trust III	Single	—		1,574		1,278		(296)	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		2,500		2,506		6	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		1,742		1,752		10	BB+	1	None	None
Saturns — GS 2004-04	Single	—		535		535		—	BB+	1	None	None
Goldman Sachs	Single	—		1,000		1,032		32	BB+	1	None	None
Stifel Financial	Single	—		4,500		4,617		117	BBB-	1	None	None
Total			$	19,764	$	19,797	$	33

Credit loss portion of OTTI recognized in earnings on debt securities

 Credit Loss Portion of OTTI Recognized in Earnings on Debt Securities

	Three Months Ended March 31, 2014		Year Ended December 31, 2013
	(in thousands)
Balance of credit-related OTTI at January 1,	$	—	$	4,450
Addition:
Credit losses on investment securities for which other-than-temporary impairment was not previously recognized		—		652
Reduction:
Credit losses on investment securities sold during the period		—		(5,102)
Balance of credit-related OTTI at period end	$	—	$	—

Schedule of unrealized losses not recognized in income

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013:

	March 31, 2014
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,896	$	(465)	$	13,896	$	(465)	$	—	$	—
Federal agency obligations		19,508		(314)		19,032		(275)		476		(39)
Residential mortgage pass-through securities		5,344		(102)		5,344		(102)		—		—
Commercial mortgage pass-through securities		2,963		(116)		2,963		(116)		—		—
Trust preferred securities		1,278		(296)		—		—		1,278		(296)
Corporate bonds and notes		13,387		(148)		11,440		(112)		1,947		(36)
Certificates of deposit		415		(9)		415		(9)		—		—
Equity securities		292		(84)		—		—		292		(84)
Mutual funds and money market funds		5,330		(169)		4,355		(145)		975		(24)
Total		62,413		(1,703)		57,445		(1,224)		4,968		(479)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities		27,793		(315)		27,793		(315)		—		—
Federal agency obligations		5,751		(71)		5,751		(71)		—		—
Residential mortgage pass-through securities		2,125		(35)		2,125		(35)		—		—
Commercial mortgage pass-through securities		1,402		(39)		1,402		(39)		—		—
Obligations of U.S. states and political subdivisions		57,017		(1,685)		39,474		(960)		17,543		(725)
Corporate bonds and notes		11,396		(58)		11,396		(58)		—		—
Total		105,484		(2,203)		87,941		(1,478)		17,543		(725)
Total Temporarily Impaired Securities	$	167,897	$	(3,906)	$	145,386	$	(2,702)	$	22,511	$	(1,204)

	December 31, 2013
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,519	$	(825)	$	13,519	$	(825)	$	—	$	—
Federal agency obligation		17,200		(655)		17,200		(655)		—		—
Residential mortgage pass-through securities		18,293		(229)		18,293		(229)		—		—
Commercial mortgage pass-through securities		2,924		(157)		2,924		(157)		—		—
Obligations of U.S. states and political subdivisions		4,199		(55)		4,199		(55)		—		—
Trust preferred securities		5,306		(510)		4,031		(211)		1,275		(299)
Corporate bonds and notes		32,498		(482)		30,533		(448)		1,965		(34)
Certificates of deposit		552		(20)		552		(20)		—		—
Equity securities		287		(89)		—		—		287		(89)
Mutual funds and money market funds		985		(15)		—		—		985		(15)
Total		95,763		(3,037)		91,251		(2,600)		4,512		(437)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	27,037	$	(1,019)	$	27,037	$	(1,019)	$	—	$	—
Federal agency obligation		13,492		(389)		13,197		(388)		295		(1)
Residential mortgage pass-through securities		2,182		(64)		2,182		(64)		—		—
Commercial mortgage pass-through securities		1,395		(62)		1,395		(62)		—		—
Obligations of U.S. states and political subdivisions		66,034		(3,688)		57,072		(2,957)		8,962		(731)
Corporate bonds and notes		27,210		(622)		27,210		(622)		—		—
Total		137,350		(5,844)		128,093		(5,112)		9,257		(732)
Total Temporarily Impaired Securities	$	233,113	$	(8,881)	$	219,344	$	(7,712)	$	13,769	$	(1,169)

XML

Loans and the Allowance for Loan Losses (Narrative) (Details) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Loans and Leases Receivable, Related Parties	$ 20,282,000		$ 20,365,000
Loans and Leases Receivable, Related Parties, Additions	465,000
Loans and Leases Receivable, Related Parties, Collections	548,000
Loans Pledged as Collateral	582,200,000		564,700,000
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	54,000	33,000	104,000
Financing Receivable, Modifications, Recorded Investment	6,900,000		6,600,000
Loans modified in troubled debt restructuring on non-accrual status	1,200,000		826,000
Loans on which concessions were made	1,500,000
Loans on which two or more concessions were made	5,400,000
Impairment Loans Threshold	200,000
Proceeds from sale of collateral securities reported as non-accrual	729,000
Performing subsequent default troubled debt restructuring upgrade to pass watch status	4,100,000
Fannie Mae [Member]
Financing Receivable, Impaired [Line Items]
Loans Sold On Nonrecourse Basis	8,200,000
Residential mortgage loans [Member]
Financing Receivable, Impaired [Line Items]
Financing Receivable, Modifications, Recorded Investment	$ 337,000

XML

Investment Securities (Schedule of OTTI Charges) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Schedule of Investments [Line Items]
Principal losses on a variable rate CMO	$ 0	$ 24
Total other-than-temporary impairment charges	$ 0	$ 24

XML

Fair Value Measurements and Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value Measurements and Fair Value of Financial Instruments [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2014 and December 31, 2013 are as follows:

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury & agency securities	$	13,896	$	13,896	$	—	$	—
Federal agency obligations		23,090		—		23,090		—
Residential mortgage pass-through securities		47,188		—		47,188		—
Commercial mortgage pass-through securities		2,963		—		2,963		—
Obligations of U.S. states and political subdivisions		14,939		—		14,939		—
Trust preferred securities		19,797		—		19,797		—
Corporate bonds and notes		141,651		—		141,651		—
Asset-backed securities		15,554		—		15,554		—
Certificates of deposit		2,129		—		2,129		—
Equity securities		292		292		—		—
Mutual funds and money market funds		5,972		5,972		—		—
Investment securities available-for-sale	$	287,471	$	20,160	$	267,311	$	—

				Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis		December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. treasury and agency securities		$	13,519	$	13,519	$	—	$	—
Federal agency obligations			19,941		—		19,941		—
Residential mortgage pass-through securities			48,874		—		48,874		—
Commercial mortgage pass-through securities			6,991		—		6,991		—
Obligations of U.S. states and political subdivisions			31,460		—		31,460		—
Trust preferred securities			19,403		—		19,403		—
Corporate bonds and notes			158,630		—		158,630		—
Asset-backed securities			15,979		—		15,979		—
Certificates of deposit			2,262		—		2,262		—
Equity securities			287		287		—		—
Mutual funds and money market funds			5,724		5,724		—		—
Securities available-for-sale		$	323,070	$	19,530	$	303,540	$	—

Schedule of Changes in Investment Securities Available-for-Sale

The following tables present the changes in investment securities available-for-sale with significant unobservable inputs (Level 3) for the three months ended March 31, 2014 and 2013.

	Three Months Ended
	March 31,
	2014		2013
(in thousands)
Balance, beginning of the period	$	—	$	36
Interest payment deferrals		—		14
Total net unrealized gains		—		(6)
Balance, end of the period	$	—	$	44

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

For assets measured at fair value on a non-recurring basis, the unobservable inputs used to derive fair value measurements at March 31, 2014 and December 31, 2013 were as follows:

Impaired Loans	Valuation Techniques	Range of Unobservable Inputs
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25%
Commercial	Discounted cash flow model	Discount rate from 0% to 6%
Commercial real estate	Appraisals of collateral value	Market capitalization rates between 8% to 12%. Market rental rates for similar properties
Construction	Appraisals of collateral value	Adjustment for age comparable sales. Generally a decline of 5% to no change
Other Real Estate Owned
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25% and estimated selling costs of 6-8%
Commercial	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 15% to no change and estimated selling costs of 6-8%

Schedule of Assets at Fair Value on a Non-recurring Basis

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans	$	4,443	$	—	$	—	$	4,443

				Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis		December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans		$	4,601	$	—	$	—	$	4,601
Other real estate owned			220		—		—		220

Schedule of Fair Value Hierarchy

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Corporation’s financial instruments as of March 31, 2014 and December 31, 2013.

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
March 31, 2014
Financial assets
Cash and due from banks	$	106,282	$	106,282	$	106,282	$	—	$	—
Investment securities available-for-sale		287,471		287,471		20,160		267,311		—
Investment securities held-to-maturity		214,191		214,952		27,793		168,230		18,929
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		976,896		975,016		—		—		975,016
Accrued interest receivable		6,341		6,341		—		3,654		2,687
Financial liabilities
Non interest-bearing deposits		223,332		223,332		—		223,332		—
Interest-bearing deposits		1,116,553		1,117,677		—		1,117,677		—
Long-term borrowings		146,000		158,306		—		158,306		—
Subordinated debentures		5,155		4,923		—		4,923		—
Accrued interest payable		967		967		—		967		—
December 31, 2013
Financial assets
Cash and due from banks	$	82,692	$	82,692	$	82,692	$	—	$	—
Investment securities available-for-sale		323,070		323,070		19,530		303,540		—
Investment securities held-to-maturity		215,286		210,958		27,037		164,940		18,981
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		950,610		948,606		—		—		948,606
Accrued interest receivable		6,802		6,802		—		4,136		2,666
Financial liabilities
Non interest-bearing deposits		227,370		227,370		—		227,370		—
Interest-bearing deposits		1,114,635		1,115,781		—		1,115,781		—
Long-term borrowings		146,000		157,440		—		157,440		—
Subordinated debentures		5,155		5,143		—		5,143		—
Accrued interest payable		963		963		—		963		—

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Net Investment in Direct Financing Lease (Tables)

3 Months Ended

Mar. 31, 2014

Net Investment in Direct Financing Lease [Abstract]

Schedule of Minimum Future Lease Receipts of the Direct Financing Lease

Minimum future lease receipts of the direct financing lease are as follows:

	March 31, 2014
For years ending December 31,	(in thousands)
2014	$	162
2015		228
2016		265
2017		265
2018		265
Thereafter		2,560
Total minimum future lease receipts	$	3,745

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 4,398	$ 4,924
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of premiums and accretion of discounts on investment securities, net	536	958
Depreciation and amortization	204	212
Stock-based compensation	16	11
Provision for loan losses	625	0
Net other-than-temporary impairment losses on investment securities	0	24
Gains on sales of investment securities, net	(1,415)	(343)
Loans originated for resale	(2,168)	(7,605)
Proceeds from sale of loans held for sale	2,204	8,460
Gains on sale of loans held for sale	(36)	(138)
Decrease in accrued interest receivable	461	426
Decrease in prepaid FDIC insurance assessments	0	286
Increase in cash surrender value of bank-owned life insurance	(255)	(274)
Life insurance death benefit	0	(291)
Decrease in other assets	1,588	909
(Decrease) increase in other liabilities	(31)	609
Net cash provided by operating activities	6,127	8,168
Cash flows from investing activities:
Investment securities available-for-sale: Purchases	(10,397)	(37,204)
Investment securities available-for-sale: Sales	50,611	45,006
Investment securities available-for-sale: Maturities, calls and principal repayments	6,999	14,121
Investment securities held-to-maturity: Purchases	0	(4,996)
Investment securities held-to-maturity: Maturities and principal repayments	890	689
Net redemption (purchases) of restricted investment in bank stocks	0	(2)
Net (increase) decrease in loans	(26,911)	10,044
Purchases of premises and equipment	(350)	(182)
Proceeds from bank-owned life insurance death benefits	0	592
Net cash provided by investing activities	20,842	28,068
Cash flows from financing activities:
Net decrease in deposits	(2,120)	(24,699)
Cash dividends on preferred stock	(28)	(28)
Cash dividends on common stock	(1,228)	(899)
Issuance cost of common stock	(3)	(3)
Proceeds from exercise of stock options	0	10
Net cash used in financing activities	(3,379)	(25,619)
Net increase in cash and cash equivalents	23,590	10,617
Cash and cash equivalents at beginning of period	82,692	106,138
Cash and cash equivalents at end of period	106,282	116,755
Supplemental disclosures of cash flow information:
Cash payments for: Interest paid on deposits and borrowings	2,723	2,727
Cash payments for: Income taxes	500	0
Supplemental disclosures of non-cash investing activities:
Trade date accounting settlements for investments, net	0	650
Transfer of loans to other real estate owned	0	236
Transfer from investment securities available-for-sale to investment securities held-to-maturity	$ 0	$ 15,936

XML

Components of Net Periodic Pension Cost (Tables)

3 Months Ended

Mar. 31, 2014

Components of Net Periodic Pension Cost [Abstract]

Schedule of Net Periodic Pension Cost

The following table sets forth the net periodic pension cost of the Corporation’s pension plan for the periods indicated.

	Three Months Ended March 31,
	2014		2013
Interest cost	$	144	$	132
Expected return on plan assets		(149)		(96)
Net amortization		56		94
Net periodic pension cost	$	51	$	130

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Comprehensive Income (Schedule of Accumulated Other Comprehensive Income) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Net unrealized gain on investment securities available-for-sale, net of tax	$ 3,665	$ 2,374
Unamortized component of securities transferred from available-for-sale to held-to-maturity, net of tax	(1,400)	(1,425)
Defined benefit pension and post-retirement plans, net of tax	(2,735)	(3,493)
Total accumulated other comprehensive loss	$ (470)	$ (2,544)

XML

Loans and the Allowance for Loan Losses (Aging Analysis) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	$ 4,003	$ 1,234
60-89 Days Past Due	6,052	258
Greater Than 90 Days	3,660	3,137
Total Past Due	13,715	4,629
Current	973,491	955,975
Total Loans Receivable	987,206	960,604
Loans Receivable >90 Days And Accruing	237	0
Commercial and industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	400	18
60-89 Days Past Due	94	0
Greater Than 90 Days	404	753
Total Past Due	898	771
Current	248,467	228,917
Total Loans Receivable	249,365	229,688
Loans Receivable >90 Days And Accruing	0	0
Commercial real estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	2,348	221
60-89 Days Past Due	5,915	0
Greater Than 90 Days	1,413	744
Total Past Due	9,676	965
Current	538,457	535,574
Total Loans Receivable	548,133	536,539
Loans Receivable >90 Days And Accruing	0	0
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater Than 90 Days	0	0
Total Past Due	0	0
Current	39,308	42,722
Total Loans Receivable	39,308	42,722
Loans Receivable >90 Days And Accruing	0	0
Residential mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	1,248	990
60-89 Days Past Due	43	258
Greater Than 90 Days	1,843	1,640
Total Past Due	3,134	2,888
Current	146,519	147,683
Total Loans Receivable	149,653	150,571
Loans Receivable >90 Days And Accruing	237	0
Installment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 Days Past Due	7	5
60-89 Days Past Due	0	0
Greater Than 90 Days	0	0
Total Past Due	7	5
Current	740	1,079
Total Loans Receivable	747	1,084
Loans Receivable >90 Days And Accruing	$ 0	$ 0

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Subordinated Debentures (Narrative) (Details)	3 Months Ended
	Mar. 31, 2014
Debt Instrument [Line Items]
Subordinated Borrowing, Due Date	Jan. 23, 2034
Rate added to LIBOR	2.85%
Subordinated Borrowing, Interest Rate	3.09%

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CONSOLIDATED STATEMENTS OF CONDITION (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 106,282	$ 82,692
Securities available-for-sale	287,471	323,070
Securities held-to-maturity (fair value of $ 214,952 and $210,958)	214,191	215,286
Loans	987,529	960,943
Less: Allowance for loan losses	10,633	10,333
Net loans	976,896	950,610
Restricted investment in bank stocks, at cost	8,986	8,986
Premises and equipment, net	13,833	13,681
Accrued interest receivable	6,341	6,802
Bank-owned life insurance	35,989	35,734
Goodwill and other intangible assets	16,821	16,828
Other real estate owned	220	220
Due from brokers for investment securities	0	8,759
Other assets	9,130	10,414
Total assets	1,676,160	1,673,082
LIABILITIES
Deposits: Non-interest bearing	223,332	227,370
Deposits: Interest-bearing: Time deposits $100 and over	110,353	99,444
Deposits: Interest-bearing transaction, savings and time deposits less than $100	1,006,200	1,015,191
Total deposits	1,339,885	1,342,005
Long-term borrowings	146,000	146,000
Subordinated debentures	5,155	5,155
Accounts payable and accrued liabilities	11,307	11,338
Total liabilities	1,502,347	1,504,498
STOCKHOLDERS' EQUITY
Preferred stock, $1,000 liquidation value per share, authorized 5,000,000 shares; issued and outstanding 11,250 shares of Series B preferred stock at March 31, 2014 and December 31, 2013; total liquidation value of $11,250,000 at March 31, 2014 and December 31, 2013	11,250	11,250
Common stock, no par value, authorized 25,000,000 shares; issued 18,477,412 shares at March 31, 2014 and December 31, 2013; outstanding 16,369,012 shares at March 31, 2014 and December 31, 2013	110,056	110,056
Additional paid-in capital	5,002	4,986
Retained earnings	65,053	61,914
Treasury stock, at cost (2,108,400 common shares at March 31, 2014 and December 31, 2013)	(17,078)	(17,078)
Accumulated other comprehensive loss	(470)	(2,544)
Total stockholders' equity	173,813	168,584
Total liabilities and stockholders' equity	$ 1,676,160	$ 1,673,082

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Investment Securities (Schedule of Preferred Security and Associated Ratings) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	$ 281,447	$ 319,147
Available-for-sale Securities, Gross Unrealized Gain (Loss)	7,727	6,960
Available-for-sale Securities, Fair Value	287,471	323,070
Trust Preferred Security [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	19,764
Available-for-sale Securities, Gross Unrealized Gain (Loss)	33
Available-for-sale Securities, Fair Value	19,797
Countrywide Capital IV [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,771
Available-for-sale Securities, Gross Unrealized Gain (Loss)	34
Available-for-sale Securities, Fair Value	1,805
Number Of Banks Currently Performing	1
Countrywide Capital IV [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Countrywide Capital V [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,747
Available-for-sale Securities, Gross Unrealized Gain (Loss)	56
Available-for-sale Securities, Fair Value	2,803
Number Of Banks Currently Performing	1
Countrywide Capital V [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Countrywide Capital V [Member] | Additional Deal Value [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	250
Available-for-sale Securities, Gross Unrealized Gain (Loss)	5
Available-for-sale Securities, Fair Value	255
Number Of Banks Currently Performing	1
Countrywide Capital V [Member] | Additional Deal Value [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Citigroup Cap IX [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	992
Available-for-sale Securities, Gross Unrealized Gain (Loss)	19
Available-for-sale Securities, Fair Value	1,011
Number Of Banks Currently Performing	1
Citigroup Cap IX [Member] | Standard & Poor's, BB Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB
Citigroup Cap IX [Member] | Additional Deal Value [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,907
Available-for-sale Securities, Gross Unrealized Gain (Loss)	45
Available-for-sale Securities, Fair Value	1,952
Number Of Banks Currently Performing	1
Citigroup Cap IX [Member] | Additional Deal Value [Member] | Standard & Poor's, BB Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB
Citigroup Cap XI [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	246
Available-for-sale Securities, Gross Unrealized Gain (Loss)	5
Available-for-sale Securities, Fair Value	251
Number Of Banks Currently Performing	1
Citigroup Cap XI [Member] | Standard & Poor's, BB Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB
Nationsbank Cap Trust III [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,574
Available-for-sale Securities, Gross Unrealized Gain (Loss)	(296)
Available-for-sale Securities, Fair Value	1,278
Number Of Banks Currently Performing	1
Nationsbank Cap Trust III [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Morgan Stanley Cap Trust IV [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	2,500
Available-for-sale Securities, Gross Unrealized Gain (Loss)	6
Available-for-sale Securities, Fair Value	2,506
Number Of Banks Currently Performing	1
Morgan Stanley Cap Trust IV [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Morgan Stanley Cap Trust IV [Member] | Additional Deal Value [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,742
Available-for-sale Securities, Gross Unrealized Gain (Loss)	10
Available-for-sale Securities, Fair Value	1,752
Number Of Banks Currently Performing	1
Morgan Stanley Cap Trust IV [Member] | Additional Deal Value [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Saturns - GS 2004-04 [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	535
Available-for-sale Securities, Gross Unrealized Gain (Loss)	0
Available-for-sale Securities, Fair Value	535
Number Of Banks Currently Performing	1
Saturns - GS 2004-04 [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Goldman Sachs [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	1,000
Available-for-sale Securities, Gross Unrealized Gain (Loss)	32
Available-for-sale Securities, Fair Value	1,032
Number Of Banks Currently Performing	1
Goldman Sachs [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BB+
Stifel Financial [Member]
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost Basis	4,500
Available-for-sale Securities, Gross Unrealized Gain (Loss)	117
Available-for-sale Securities, Fair Value	$ 4,617
Number Of Banks Currently Performing	1
Stifel Financial [Member] | Standard & Poor's, BB+ Rating [Member]
Schedule of Investments [Line Items]
Debt Instrument, Credit Rating	BBB-

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands	Total	Preferred Stock [Member]	Common Stock [Member]	Additional Paid in Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2012	$ 160,691	$ 11,250	$ 110,056	$ 4,801	$ 46,753	$ (17,232)	$ 5,063
Net income	4,924				4,924
Other comprehensive income, net of tax	104						104
Dividend on series B preferred stock	(85)				(85)
Issuance cost of common stock	(3)				(3)
Cash dividends declared on common stock	(899)				(899)
Stock issued for options exercise (1,000 shares)	10			8		2
Stock-based compensation expense	11			11
Balance at Mar. 31, 2013	164,753	11,250	110,056	4,820	50,690	(17,230)	5,167
Balance at Dec. 31, 2013	168,584	11,250	110,056	4,986	61,914	(17,078)	(2,544)
Net income	4,398				4,398
Other comprehensive income, net of tax	2,074						2,074
Dividend on series B preferred stock	(28)				(28)
Issuance cost of common stock	(3)				(3)
Cash dividends declared on common stock	(1,228)				(1,228)
Stock-based compensation expense	16			16
Balance at Mar. 31, 2014	$ 173,813	$ 11,250	$ 110,056	$ 5,002	$ 65,053	$ (17,078)	$ (470)

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Fair Value Measurements and Fair Value of Financial Instruments (Assets Measured at Fair Value on a Non-Recurring Basis) (Detail)	3 Months Ended
	Mar. 31, 2014
Impaired Loans [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Appraisals of collateral value
Impaired Loans [Member] | Residential [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	25.00%
Impaired Loans [Member] | Residential [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	0.00%
Impaired Loans [Member] | Commercial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Discounted cash flow model
Impaired Loans [Member] | Commercial [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	6.00%
Impaired Loans [Member] | Commercial [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	0.00%
Impaired Loans [Member] | Commercial real estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Appraisals of collateral value
Impaired Loans [Member] | Commercial real estate [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	12.00%
Impaired Loans [Member] | Commercial real estate [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	8.00%
Impaired Loans [Member] | Construction [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Appraisals of collateral value
Range of Unobservable Inputs	5.00%
Other Real Estate [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Appraisals of collateral value
Other Real Estate [Member] | Residential [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	25.00%
Estimated Selling Cost Percentage	8.00%
Other Real Estate [Member] | Residential [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Range of Unobservable Inputs	0.00%
Estimated Selling Cost Percentage	6.00%
Other Real Estate [Member] | Commercial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation Techniques	Appraisals of collateral value
Range of Unobservable Inputs	15.00%
Other Real Estate [Member] | Commercial [Member] | Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Selling Cost Percentage	8.00%
Other Real Estate [Member] | Commercial [Member] | Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated Selling Cost Percentage	6.00%

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Earnings per Common Share (Narrative) (Details)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	757	31,604

XML

Components of Net Periodic Pension Cost (Schedule Of Net Periodic Benefit Cost) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 144	$ 132
Expected return on plan assets	(149)	(96)
Net amortization	56	94
Net periodic pension cost	$ 51	$ 130

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Stockholders' Equity

3 Months Ended

Mar. 31, 2014

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 14.  Stockholders’ Equity

On January 12, 2009, the Corporation issued $10 million in nonvoting fixed rate cumulative perpetual preferred stock, Series A to the U.S. Department of Treasury (“Treasury”) under its Capital Purchase Program. As part of the transaction, the Corporation also issued warrants to the Treasury to purchase 173,410 shares of common stock of the Corporation at an exercise price of $8.65 per share. As a result of the successful completion of the Corporation’s rights offering in October 2009, the number of shares underlying the warrants held by the U.S. Treasury was reduced to 86,705 shares, or 50 percent of the original 173,410 shares, as outlined by the provisions of the Capital Purchase Program.

 On September 15, 2011, the Corporation issued $11.25 million in nonvoting senior preferred stock to the Treasury under the Small Business Lending Fund Program (“SBLF Program”). Under the Securities Purchase Agreement, the Corporation issued to the Treasury a total of 11,250 shares of the Corporation’s Senior non-cumulative perpetual preferred stock, Series B, having a liquidation value of $1,000 per share. Simultaneously, using the proceeds from the issuance of the Series B Preferred Stock, the Corporation redeemed from the Treasury, all 10,000 outstanding shares of its fixed rate cumulative perpetual preferred stock, Series A, liquidation amount $1,000 per share, for a redemption price of $10,041,667, including accrued but unpaid dividends up to the date of redemption. The investment in the SBLF program provided the Corporation with approximately $1.25 million additional Tier 1 capital. The capital received under the program enables the Corporation to continue to serve its small business clients through the commercial lending program.

On December 7, 2011, the Corporation repurchased the warrants issued on January 12, 2009 to the Treasury as part of its participation in the Treasury’s TARP Capital Purchase Program. In the repurchase, the Corporation paid the Treasury $245,000 for the warrants.

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Stock-Based Compensation (Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average fair value of grants	$ 0	$ 2.50
Risk-free interest rate	0.00%	1.86%
Dividend yield	0.00%	1.76%
Expected volatility	0.00%	23.21%
Expected life in months	0 months	69 months

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Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2014

Basis of Presentation [Abstract]

Consolidation

The consolidated financial statements of Center Bancorp, Inc. (the “Parent Corporation”) are prepared on the accrual basis and include the accounts of the Parent Corporation and its wholly-owned subsidiary, Union Center National Bank (the “Bank” and, collectively with the Parent Corporation and the Parent Corporation’s other direct and indirect subsidiaries, the “Corporation”). All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements.

Use of Estimates

In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to change in the near term relate to the determination of the allowance for loan losses, the other-than-temporary impairment evaluation of securities, the evaluation of the impairment of goodwill and the evaluation of deferred tax assets.

Basis of Accounting

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”).

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Borrowed Funds (Schedule of Short-Term Borrowings) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Average amount outstanding during the quarter	$ 500	$ 0
Maximum amount outstanding at any month end in the quarter	0	0
Amount outstanding at quarter end	$ 0	$ 0
For The Quarter [Member]
Short-term Debt [Line Items]
Average interest rate	0.38%	0.00%
At Quarter End [Member]
Short-term Debt [Line Items]
Average interest rate	0.00%	0.00%

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Common Stock, Dividends, Per Share, Declared	$ 0.075	$ 0.055
Exercise of Stock Options, Shares		1,000

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CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Held-to-maturity Securities, Fair Value	$ 214,952	$ 210,958
Perferred Stock, Liquidation Value Per Share	$ 1,000	$ 1,000
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Liquidation Preference, Value	$ 11,250,000	$ 11,250,000
Common Stock, No Par Value	$ 0	$ 0
Common Stock, Shares Authorized	25,000,000	25,000,000
Common Stock, Shares, Issued	18,477,412	18,477,412
Common Stock, Shares, Outstanding	16,369,012	16,369,012
Treasury Stock, Shares	2,108,400	2,108,400
Series B Preferred Stock [Member]
Preferred Stock, Shares Issued	11,250	11,250
Preferred Stock, Shares Outstanding	11,250	11,250

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Net Investment in Direct Financing Lease

3 Months Ended

Mar. 31, 2014

Net Investment in Direct Financing Lease [Abstract]

Net Investment in Direct Financing Lease

Note 9.  Net Investment in Direct Financing Lease

During the second quarter of 2010, the Corporation entered into a lease of its former operations facility under a direct financing lease. The lease has a 15 year term with no renewal options. According to the terms of the lease, the lessee has an obligation to purchase the property underlying the lease in either year seven (7), ten (10) or fifteen (15) at predetermined prices for those years as provided in the lease. The structure of the minimum lease payments and the purchase prices as provided in the lease provide an inducement to the lessee to purchase the property in year seven (7). 

At March 31, 2014 and December 31, 2013, the net investment in direct financing lease consists of a minimum lease receivable of $4,429,000 and $4,483,000, respectively, and unearned interest income of $684,000 and $733,000, respectively, for a net investment in direct financing lease of $3,745,000 and $3,750,000, respectively. The net investment in direct financing lease is carried as a component of loans in the Corporation’s consolidated statements of condition.

Minimum future lease receipts of the direct financing lease are as follows:

	March 31, 2014
For years ending December 31,	(in thousands)
2014	$	162
2015		228
2016		265
2017		265
2018		265
Thereafter		2,560
Total minimum future lease receipts	$	3,745

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	May 09, 2014
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2014
Entity Registrant Name	CENTER BANCORP INC
Trading Symbol	CNBC
Document Fiscal Period Focus	Q1
Entity Filer Category	Accelerated Filer
Entity Central Index Key	0000712771
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2014
Entity Common Stock, Shares Outstanding		16,401,762

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Components of Net Periodic Pension Cost

3 Months Ended

Mar. 31, 2014

Components of Net Periodic Pension Cost [Abstract]

Components of Net Periodic Pension Cost

Note 10.  Components of Net Periodic Pension Cost

The Corporation maintained a non-contributory defined benefit pension plan for substantially all of its employees until September 30, 2007, at which time the Corporation froze the plan. The following table sets forth the net periodic pension cost of the Corporation’s pension plan for the periods indicated.

	Three Months Ended March 31,
	2014		2013
Interest cost	$	144	$	132
Expected return on plan assets		(149)		(96)
Net amortization		56		94
Net periodic pension cost	$	51	$	130

Contributions

The Corporation presently estimates that it will contribute $400,000 to its Pension Trust for 2014. The trust is established to provide retirement and other benefits for eligible employees and their beneficiaries. No part of the trust assets may be applied to any purpose other than providing benefits under the plan and for defraying expenses of administering the plan and the trust.

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CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Interest income
Interest and fees on loans	$ 10,111	$ 9,923
Interest and dividends on investment securities:
Taxable	3,016	2,972
Tax-exempt	1,056	1,076
Dividends	154	131
Interest on federal funds sold and other short-term investment	0	2
Total interest income	14,337	14,104
Interest expense
Interest on certificates of deposit $100 or more	207	239
Interest on other deposits	1,109	1,045
Interest on borrowings	1,411	1,450
Total interest expense	2,727	2,734
Net interest income	11,610	11,370
Provision for loan losses	625	0
Net interest income after provision for loan losses	10,985	11,370
Other income
Service charges, commissions and fees	497	406
Annuities and insurance commissions	100	100
Bank-owned life insurance	255	565
Loan related fees	181	227
Net gains on sale of loans held for sale	36	138
Other	37	90
Other-than-temporary impairment losses on investment securities	0	(24)
Net gains on sale of investment securities	1,415	343
Net investment securities gains	1,415	319
Total other income	2,521	1,845
Other expense
Salaries and employee benefits	3,332	3,490
Occupancy and equipment	1,080	906
FDIC insurance	300	313
Professional and consulting	255	219
Stationery and printing	84	85
Marketing and advertising	40	101
Computer expense	345	353
Other real estate owned, net	2	19
Merger-related expenses	1,060	0
All other	998	1,052
Total other expense	7,496	6,538
Income before income tax expense	6,010	6,677
Income tax expense	1,612	1,753
Net Income	4,398	4,924
Preferred stock dividends	28	56
Net income available to common stockholders	$ 4,370	$ 4,868
Earnings per common share
Basic	$ 0.27	$ 0.30
Diluted	$ 0.27	$ 0.30
Weighted average common shares outstanding
Basic	16,350,183	16,348,215
Diluted	16,405,540	16,373,588
Dividend paid per common share	$ 0.075	$ 0.055

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2014

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Note 4.  Recent Accounting Pronouncements

FASB ASU 2014-04: Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans Upon Foreclosure. EITF Issue 13-E sought to define “in substance repossession or foreclosure” because of the diversity in practice regarding when entities were reclassifying loans receivable to other real estate owned instead of as a loan receivable. The timing of loan reclassifications to OREO may be qualitatively significant to regulators and other financial statement users. “In substance repossession or foreclosure” is clarified by the ASU. A creditor is considered to have received physical possession (resulting from an in substance repossession) of residential real estate property collateralizing a consumer mortgage loan only upon the occurrence of either of the following: a) The creditor obtains legal title to the residential real estate property upon completion of a foreclosure. A creditor may obtain legal title to the residential real estate property even if the borrower has redemption rights that provide the borrower with a legal right for a period of time after a foreclosure to reclaim the real estate property by paying certain amounts specified by law. b) The borrower conveys all interest in the residential real estate property to the creditor to satisfy the loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. The deed in lieu of foreclosure or similar legal agreement is completed when agreed-upon terms and conditions have been satisfied by both the borrower and the creditor. The ASU is effective for fiscal years beginning after December 15, 2014, and interim periods therein. Early adoption is permitted. The Corporation will adopt the methodologies prescribed by this ASU by the date required, and does not anticipate that the ASU will have a material effect on its financial position or results of operations.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 3.  Stock-Based Compensation

The Corporation maintains two stock-based compensation plans from which new grants could be issued. The Corporation’s stock-based compensation plans permit Parent Corporation common stock to be issued to key employees and directors of the Corporation and its subsidiaries. The options granted under the plans are intended to be either incentive stock options or non-qualified options. Under the 2009 Equity Incentive Plan, a total of 363,081 shares are available for grant and issuance as of March 31, 2014. Under the 2003 Non-Employee Director Stock Option Plan, a total of 380,644 shares remain available for grant and issuance under the plan as of March 31, 2014. Such shares may be treasury shares, newly issued shares or a combination thereof.

Options have been granted to purchase common stock principally at the fair market value of the stock at the date of grant. Options are exercisable over a three year vesting period starting one year after the date of grant and generally expire ten years from the date of grant.

Stock-based compensation expense for share-based payment awards is based on the grant date fair value estimated on the date of grant. The Corporation recognizes compensation costs for those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of three years. The Corporation estimates the forfeiture rate based on its historical experience during the preceding seven fiscal years.

For the three months ended March 31, 2014, the Corporation’s income before income taxes and net income were reduced by $29,000 and $17,000, respectively, as a result of the compensation expense related to stock options and restricted stock awards. For the three months ended March 31, 2013, the Corporation’s income before income taxes and net income were reduced by $11,000 and $7,000, respectively, as a result of the compensation expense related to stock options.

Under the principal stock-based compensation plans, the Corporation may also grant stock awards to certain employees. Stock awards are independent of option grants and are generally subject to forfeiture if employment terminates prior to the release of any applicable restrictions. Unless fully vested at the time of grant, such awards generally vest within 30 days to five years from the date of grant. During that period, ownership of the shares cannot be transferred. Restricted stock and stock awards that are fully vested at the time of grant have the same cash dividend and voting rights as other common stock and are considered to be currently issued and outstanding. The Corporation expenses the cost of stock awards, which is determined to be the fair market value of the shares at the date of grant, ratably over the period during which any restrictions lapse.

There were 18,829 restricted stock awards outstanding at March 31, 2014 and none at March 31, 2013. These awards were issued with an award price equal to the market price of the Corporation’s common stock on the award date and with a five year vesting period. Forfeiture provisions exist for personnel that separate employment before vesting period expires. During the three months of 2014, none of the shares of restricted stock were vested.

There were 0 and 31,257 shares of common stock underlying options that were granted during the three months ended March 31, 2014 and 2013, respectively. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values at the time the grants were awarded: 

	Three Months Ended March 31,
	2014			2013
Weighted average fair value of grants	$	—		$	2.50
Risk-free interest rate		—	%		1.86	%
Dividend yield		—	%		1.76	%
Expected volatility		—	%		23.21	%
Expected life in months		—			69

Activity under the stock-based compensation plans as of March 31, 2014 and changes during the three months ended March 31, 2014 were as follows:

	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	214,263	$	10.59
Granted – options	—		—
Exercised	—		—
Canceled/expired	—		—
Forfeited	—		—
Outstanding at March 31, 2014	214,263		10.59	5.46	$	1,801,405
Exercisable at March 31, 2014	164,821	$	10.24	4.55	$	1,443,161

The aggregate intrinsic value of options above represents the total pre-tax intrinsic value (the difference between the Corporation’s closing stock price on the last trading day of the first quarter of 2014 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on March 31, 2014. This amount changes based on the fair value of the Corporation’s stock.

As of March 31, 2014, there was approximately $130,000 of total unrecognized compensation expense relating to unvested stock options. These costs are expected to be recognized over a weighted average period of 2.74 years. As of March 31, 2014, there was approximately $207,000 of total unrecognized compensation expense relating to unvested restricted stock awards. These costs are expected to be recognized over a weighted average period of five years. 

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Pending Merger

3 Months Ended

Mar. 31, 2014

Business Combinations [Abstract]

Pending Merger

Note 15. Pending Merger

On January 20, 2014, the Parent Corporation entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ConnectOne Bancorp, Inc., a New Jersey corporation (“ConnectOne Bancorp”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, ConnectOne Bancorp will merge with and into the Parent Corporation, with the Parent Corporation continuing as the surviving corporation (the “Merger”), and the Parent Corporation will change its name to ConnectOne Bancorp. The Merger Agreement also provides that immediately following the consummation of the Merger, the Bank will merge with and into ConnectOne Bank (the “Bank Merger”), a New Jersey-chartered commercial bank (“ConnectOne Bank”) and a wholly-owned subsidiary of ConnectOne Bancorp, with ConnectOne Bank continuing as the surviving bank. Subject to the terms and conditions of the Merger Agreement, upon completion of the Merger (the “Effective Time”), each share of common stock, no par value per share, of ConnectOne Bancorp (“ConnectOne Common Stock”), issued and outstanding immediately prior to the Effective Time will be converted into and become the right to receive 2.6 shares of the Parent’s Corporation’s common stock. The Merger and the Bank Merger are subject to the receipt of all necessary regulatory approvals, the approvals of the shareholders of the Parent Corporation and ConnectOne Bancorp and other conditions. The parties contemplate that the merger will be consummated during the second or third quarters of 2014, provided that all conditions are satisfied or, where permitted, waived.

Merger-related expenses increased $1,060,000 for the three months March 31, 2014 compared to March 31, 2013, consisting of investment banking, legal, consulting, accounting fees and vendor contract termination fees. It included professional and consulting expenses of $462,000, computer expense of $116,000 and other expense of $482,000.

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes [Abstract]

Income Taxes

Note 11.  Income Taxes

For the three months ended March 31, 2014, the Corporation recorded income tax expense of $1.6 million, compared with a $1.8 million income tax expense for the three months ended March 31, 2013.

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Loans and the Allowance for Loan Losses

3 Months Ended

Mar. 31, 2014

Loans and the Allowance for Loan Losses [Abstract]

Loans and the Allowance for Loan Losses

Note 7. Loans and the Allowance for Loan Losses

Loans are stated at their principal amounts inclusive of net deferred loan origination fees. Interest income is credited as earned except when a loan becomes past due 90 days or more and doubt exists as to the ultimate collection of interest or principal; in those cases the recognition of income is discontinued. Loans that are past due 90 days or more that are both well secured and in the process of collection will remain on an accruing basis. When a loan is placed on non-accrual status, interest accruals cease and uncollected accrued interest is reversed and charged against current income.

Portfolio segments are defined as the level at which an entity develops and documents a systematic methodology to determine its allowance. Management has determined that the Corporation has two portfolio segments of loans and leases (commercial and consumer) in determining the allowance. Both quantitative and qualitative factors are used by management at the portfolio segment level in determining the adequacy of the allowance for the Corporation. Classes of loans and leases are a disaggregation of the Corporation's portfolio segments. Classes are defined as a group of loans and leases which share similar initial measurement attributes, risk characteristics, and methods for monitoring and assessing credit risk. Management has determined that the Corporation has five classes of loans and leases: commercial and industrial (including lease financing), commercial – real estate, construction, residential mortgage (including home equity) and installment.

Generally, all classes of commercial and consumer loans and leases are placed on non-accrual status upon becoming contractually past due 90 days or more as to principal or interest (unless loans and leases are adequately secured by collateral, are in the process of collection, and are reasonably expected to result in repayment), when terms are renegotiated below market levels, or where substantial doubt about full repayment of principal or interest is evident. For certain installment loans the entire outstanding balance on the loan is charged-off when the loan becomes 60 days past due.

Payments received on non-accrual loans are applied against principal. A loan may only be restored to an accruing basis when it again becomes well secured and in the process of collection or all past due amounts have been collected and six months of payments have been received to demonstrate that the borrower can continue to meet the loan terms. Loan origination fees and certain direct loan origination costs are deferred and recognized over the life of the loan as an adjustment to the loan’s yield using the level yield method.

 Impaired Loans

The Corporation accounts for impaired loans in accordance with FASB ASC 310-10-35. The value of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or, as a practical expedient, at the loan’s observable market price or at the fair value of the collateral if the loan is collateral dependent.

A loan is considered impaired when, based on current information and events, it is probable that the Corporation will not be able to collect all amounts due from the borrower in accordance with the contractual terms of the loan, including scheduled interest payments. The Corporation has defined its population of impaired loans to include all classes of non-accrual and troubled debt restructuring (“TDR”) loans. As part of the evaluation of impaired loans, the Corporation individually reviews for impairment all non-homogeneous loans (in each instance, above an established dollar threshold of $200,000) internally classified as substandard or below. Generally, smaller impaired non-homogeneous loans and impaired homogeneous loans are collectively evaluated for impairment.

When a loan has been identified as being impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price, or the estimated fair value of the collateral, less any selling costs, if the loan is collateral-dependent. If the measurement of the impaired loan is less than the recorded investment in the loan (including accrued interest, net of deferred loan fees or costs and unamortized premiums or discounts), an impairment is recognized by creating or adjusting an existing allocation of the allowance, or by recording a partial charge-off of the loan to its fair value. Interest payments made on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest income may be accrued or recognized on a cash basis.

Loans Modified in a Troubled Debt Restructuring

Loans are considered to have been modified in a TDR when due to a borrower's financial difficulties, the Corporation makes certain concessions to the borrower that it would not otherwise consider. Modifications may include interest rate reductions, principal or interest forgiveness, forbearance, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. Generally, a non-accrual loan that has been modified in a TDR remains on non-accrual status for a period of six months to demonstrate that the borrower is able to meet the terms of the modified loan. However, performance prior to the modification, or significant events that coincide with the modification, are included in assessing whether the borrower can meet the new terms and may result in the loan being returned to accrual status at the time of loan modification or after a shorter performance period. If the borrower's ability to meet the revised payment schedule is uncertain, the loan remains on non-accrual status.

Reserve for Credit Losses

The Corporation's reserve for credit losses is comprised of two components, the allowance for loan losses and the reserve for unfunded commitments (the "Unfunded Commitments").

Allowance for Loan Losses

The allowance for loan losses is maintained at a level determined adequate to provide for probable loan losses. The allowance is increased by provisions charged to operations and reduced by loan charge-offs, net of recoveries. The allowance is based on management’s evaluation of the loan portfolio considering economic conditions, the volume and nature of the loan portfolio, historical loan loss experience and individual credit situations.

Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses. In connection with the determination of the allowance for loan losses, management obtains independent appraisals for significant properties.

The ultimate collectability of a substantial portion of the Corporation’s loan portfolio is susceptible to changes in the real estate market and economic conditions in the State of New Jersey and the impact of such conditions on the creditworthiness of the borrowers.

Management believes that the allowance for loan losses is adequate. Management uses available information to recognize loan losses; however, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to recognize additions to the allowance based on their judgments about information available to them at the time of their examinations.

Reserve for Unfunded Commitments

The reserve for unfunded commitments is maintained at a level believed by management to be sufficient to absorb estimated probable losses related to unfunded credit facilities and is included in other liabilities in the consolidated statements of condition. The determination of the adequacy of the reserve is based upon an evaluation of the unfunded credit facilities, including an assessment of historical commitment utilization experience, and credit risk. Net adjustments to the reserve for unfunded commitments are included in other expense.

Risk Related to Representation and Warranty Provisions

The Corporation sells residential mortgage loans in the secondary market primarily to Fannie Mae. The Corporation sells residential mortgage loans to Fannie Mae that include various representations and warranties regarding the origination and characteristics of the residential mortgage loans. Although the specific representations and warranties vary, they typically cover ownership of the loan, validity of the lien securing the loan, the absence of delinquent taxes or liens against the property securing the loan, compliance with loan criteria set forth in the applicable agreement, compliance with applicable federal, state, and local laws, and other matters.

As of March 31, 2014, the unpaid principal balance of the Corporation’s portfolio of residential mortgage loans sold to Fannie Mae was $8.2 million. These loans are generally sold on a non-recourse basis. The agreements under which the Corporation sells residential mortgage loans require the Corporation to deliver various documents to the investor or its document custodian. Although these loans are primarily sold on a non-recourse basis, the Corporation may be obligated to repurchase residential mortgage loans where required documents are not delivered or are defective. Investors may require the immediate repurchase of a mortgage loan when an early payment default discovered in an underwriting review reveals significant underwriting deficiencies, even if the mortgage loan has subsequently been brought current. As of March 31, 2014, there were no pending repurchase requests related to representation and warranty provisions.

Composition of Loan Portfolio

The following table sets forth the composition of the Corporation’s loan portfolio, including net deferred fees and costs, at March 31, 2014 and December 31, 2013:

	March 31,		December 31,
	2014		2013
	(in thousands)
Commercial and industrial	$	249,365	$	229,688
Commercial real estate		548,133		536,539
Construction		39,308		42,722
Residential mortgage		149,653		150,571
Installment		747		1,084
Subtotal		987,206		960,604
Net deferred loan costs		323		339
Total loans	$	987,529	$	960,943

At March 31, 2014 and December 31, 2013, loans to executive officers and directors aggregated approximately $20,282,000 and $20,365,000, respectively. During the three months ended March 31, 2014, the Corporation made new loans and advances to executive officers and directors in the amount of $465,000. Payments and payoffs by such persons during the three months ended March 31, 2014 aggregated $548,000. Management is of the opinion that the above loans were made on the same terms and conditions as those prevailing for comparable transactions with non-related borrowers.

At March 31, 2014 and December 31, 2013, loan balances of approximately $582.2 million and $564.7 million, respectively, were pledged to secure borrowings from the Federal Reserve Bank of New York and the Federal Home Loan Bank of New York.

The following table presents information about loan receivables on non-accrual status at March 31, 2014 and December 31, 2013:

Loans Receivable on Non-Accrual Status
	March 31, 2014		December 31, 2013
	(in thousands)
Commercial and industrial	$	404	$	753
Commercial real estate		1,413		744
Residential mortgage		1,606		1,640
Total loans receivable on non-accrual status	$	3,423	$	3,137

The amount of interest income that would have been recorded on non-accrual loans during the three months ended March 31, 2014,the year ended December 31, 2013 and three months ended March 31, 2013, had payments remained in accordance with the original contractual terms, was $54,000, $104,000 and $33,000, respectively.

On April 4, 2014 the Corporation received on contract of sale for collateral securing $729,000 loan reported as non-accrual at March 31, 2014.

The Corporation continuously monitors the credit quality of its loans receivable. In addition to its internal staff, the Corporation utilizes the services of a third party loan review firm to rate the credit quality of its loans receivable. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the loan quality or inadequately protect the Corporation’s credit position at some future date. Assets are classified “Substandard” if the asset has a well defined weakness that requires management’s attention to a greater degree than for loans classified special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected. All loans past due 90 days or more and all impaired loans are included in the appropriate category below. The following table presents information, excluding net deferred costs, about the Corporation’s loan credit quality at March 31, 2014 and December 31, 2013:

Credit Quality Indicators
	March 31, 2014
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	246,130	$	1,796	$	1,112	$	327	$	249,365
Commercial real estate		520,626		17,419		10,088		—		548,133
Construction		38,078		—		1,230		—		39,308
Residential mortgage		146,265		970		2,418		—		149,653
Installment		632		—		115		—		747
Total loans	$	951,731	$	20,185	$	14,963	$	327	$	987,206

	December 31, 2013
	Pass		Special Mention		Substandard		Doubtful		Total
	(in thousands)
Commercial and industrial	$	226,013	$	1,719	$	1,284	$	672	$	229,688
Commercial real estate		509,679		14,544		12,316		—		536,539
Construction		41,492		—		1,230		—		42,722
Residential mortgage		147,379		978		2,214		—		150,571
Installment		964		—		120		—		1,084
Total loans	$	925,527	$	17,241	$	17,164	$	672	$	960,604

The following table provides an analysis of the impaired loans at March 31, 2014 and December 31, 2013:

	March 31, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(in thousands)
No Related Allowance Recorded
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		8,244		8,545		—
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total	$	11,113	$	11,889	$	—
With An Allowance Recorded
Commercial real estate	$	4,333	$	4,333	$	227
Total	$	4,333	$	4,333	$	227
Total
Commercial and industrial	$	642	$	975	$	—
Commercial real estate		12,577		12,878		227
Residential mortgage		2,112		2,254		—
Installment		115		115		—
Total (including related allowance)	$	15,446	$	16,222	$	227

	December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(in thousands)
No Related Allowance Recorded
Commercial and industrial	$	449	$	449	$	—
Commercial real estate		10,482		10,783		—
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total	$	12,909	$	13,352	$	—
With An Allowance Recorded
Commercial and industrial	$	672	$	672	$	300
Commercial real estate		4,344		4,344		115
Total	$	5,016	$	5,016	$	415
Total
Commercial and industrial	$	1,121	$	1,121	$	300
Commercial real estate		14,826		15,127		115
Residential mortgage		1,858		2,000		—
Installment		120		120		—
Total (including related allowance)	$	17,925	$	18,368	$	415

The following table provides an analysis related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2014 and 2013.

	Three Months Ended March 31,
	2014				2013
	Average Recorded Investment		Interest Income Recognized		Average  Recorded Investment		Interest Income Recognized
(in thousands)
Impaired loans with no related allowance recorded:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		8,278		78		9,086		119
Residential mortgage		2,270		19		420		5
Installment		117		1		—		—
Total	$	11,324	$	112	$	10,232	$	134
Impaired loans with an allowance recorded:
Commercial real estate	$	4,337	$	53	$	4,180	$	34
Residential mortgage		—		—		1,249		10
Total	$	4,337	$	53	$	5,429	$	44
Total impaired loans:
Commercial and industrial	$	659	$	14	$	726	$	10
Commercial real estate		12,615		131		13,266		153
Residential mortgage		2,270		19		1,669		15
Installment		117		1		—		—
Total	$	15,661	$	165	$	15,661	$	178

Included in impaired loans at March 31, 2014 and 2013 are loans that are deemed troubled debt restructurings.

The following table provides an analysis of the aging of loans, excluding net deferred costs that are past due at March 31, 2014 and December 31, 2013:

Aging Analysis
	March 31, 2014
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	400	$	94	$	404	$	898	$	248,467	$	249,365	$	—
Commercial Real Estate		2,348		5,915		1,413		9,676		538,457		548,133		—
Construction		—		—		—		—		39,308		39,308		—
Residential Mortgage		1,248		43		1,843		3,134		146,519		149,653		237
Installment		7		—		—		7		740		747		—
Total	$	4,003	$	6,052	$	3,660	$	13,715	$	973,491	$	987,206	$	237

	December 31, 2013
	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable > 90 Days And Accruing
	(in thousands)
Commercial and Industrial	$	18	$	—	$	753	$	771	$	228,917	$	229,688	$	—
Commercial Real Estate		221		—		744		965		535,574		536,539		—
Construction		—		—		—		—		42,722		42,722		—
Residential Mortgage		990		258		1,640		2,888		147,683		150,571		—
Installment		5		—		—		5		1,079		1,084		—
Total	$	1,234	$	258	$	3,137	$	4,629	$	955,975	$	960,604	$	—

The following table details the amount of loans receivable that are evaluated individually, and collectively, for impairment (excluding net deferred costs), and the related portion of the allowance for loan loss that is allocated to each loan portfolio segment:

Allowance for loan and lease losses
	March 31, 2014
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment	$	—	$	227	$	—	$	—	$	—	$	—	$	227
Collectively evaluated for impairment		2,225		5,157		434		1,004		79		1,507		10,406
Total	$	2,225	$	5,384	$	434	$	1,004	$	79	$	1,507	$	10,633
Loans Receivable
Individually evaluated for impairment	$	642	$	12,577	$	—	$	2,112	$	115	$	—	$	15,446
Collectively evaluated for impairment		246,657		520,729		38,078		134,175		511		—		940,150
Loans acquired with discounts related to credit quality		2,066		14,827		1,230		13,366		121		—		31,610
Total	$	249,365	$	548,133	$	39,308	$	149,653	$	747	$	—	$	987,206

Allowance for loan and lease losses
	December 31, 2013
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Allowance for loan and lease losses:
Individually evaluated for impairment	$	300	$	115	$	—	$	—	$	—	$	—	$	415
Collectively evaluated for impairment		1,398		5,631		362		990		146		1,391		9,918
Total	$	1,698	$	5,746	$	362	$	990	$	146	$	1,391	$	10,333
Loans Receivable
Individually evaluated for impairment	$	1,121	$	14,826	$	—	$	1,858	$	120	$	—	$	17,925
Collectively evaluated for impairment		226,450		505,361		41,493		135,031		839		—		909,174
Loans acquired with discounts related to credit quality		2,117		16,352		1,229		13,682		125		—		33,505
Total	$	229,688	$	536,539	$	42,722	$	150,571	$	1,084	$	—	$	960,604

The Corporation’s allowance for loan losses is analyzed quarterly. Many factors are considered, including growth in the portfolio, delinquencies, nonaccrual loan levels, and other factors inherent in the extension of credit. There have been no material changes to the allowance for loan loss methodology as disclosed in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013.

 A summary of the activity in the allowance for loan losses is as follows:

	Three Months Ended March 31, 2014
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Balance at January 1,	$	1,698	$	5,746	$	362	$	990	$	146	$	1,391	$	10,333
Charge offs		(333)		—		—		—		(3)		—		(336)
Recoveries		—		—		—		10		1		—		11
Provision		860		(362)		72		4		(65)		116		625
Balance at March 31,	$	2,225	$	5,384	$	434	$	1,004	$	79	$	1,507	$	10,633

	Three Months Ended March 31, 2013
	C & I		Comm R/E		Construction		Res Mtge		Installment		Unallocated		Total
	(in thousands)
Balance at January 1,	$	2,424	$	5,323	$	313	$	1,532	$	113	$	532	$	10,237
Charge offs		—		—		—		—		(6)		—		(6)
Recoveries		—		—		—		—		1		—		1
Provision		(341)		30		(29)		(154)		(5)		499		—
Balance at March 31,	$	2,083	$	5,353	$	284	$	1,378	$	103	$	1,031	$	10,232

At March 31, 2014, there were no commitments to lend additional funds to borrowers whose loans were on non-accrual status or were contractually past due in excess of 90 days and still accruing interest, or whose terms have been modified in troubled debt restructurings.

The policy of the Corporation generally is to grant commercial, mortgage and installment loans to New Jersey residents and businesses within its market area. The borrowers’ abilities to repay their obligations are dependent upon various factors, including the borrowers’ income and net worth, cash flows generated by the borrowers’ underlying collateral, value of the underlying collateral, and priority of the lender’s lien on the property. Such factors are dependent upon various economic conditions and individual circumstances beyond the control of the Corporation. The Corporation is therefore subject to risk of loss. The Corporation believes its lending policies and procedures adequately minimize the potential exposure to such risks and that adequate provisions for loan losses are provided for all known and inherent risks. Collateral and/or personal guarantees are required for virtually all loans.

The Corporation added one new troubled debt restructuring during the three months ended March 31, 2014. The increase to troubled debt restructuring was a commercial and industrial loan amounting to $337,000 located in Morris County, New Jersey.

Loans modified in a troubled debt restructuring totaled $6.9 million at March 31, 2014, of which $1.2 million were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement. At December 31, 2013, loans modified in a troubled debt restructuring totaled $6.6 million, of which $826,000 were on non-accrual status. The remaining loans modified were current at the time of the restructuring and have complied with the terms of their restructure agreement.

On April 30, 2014, a $4.1 million performing troubled debt restructuring was upgrade to pass watch status.

In an effort to proactively manage delinquent loans, the Corporation has selectively extended to certain borrowers concessions such as rate reductions, extension of maturity dates, principal or interest forgiveness, adjusted repayment terms, forbearance agreements, or combinations of two or more of these concessions. As of March 31, 2014, loans on which concessions were made with respect to adjusted repayment terms amounted to $1.5 million. Loans on which combinations of two or more concessions were made amounted to $5.4 million. The concessions granted included principal concessions, rate reduction, adjusted repayment, extended maturity and payment deferral. 

XML

Fair Value Measurements and Fair Value of Financial Instruments (Assets Measured at Fair Value on a Non-Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Impaired loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	$ 4,443	$ 4,601
Other real estate owned [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		220
Significant Unobservable Inputs (Level 3) [Member] | Impaired loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	4,443	4,601
Significant Unobservable Inputs (Level 3) [Member] | Other real estate owned [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 220

XML

Comprehensive Income

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Comprehensive Income

Note 5.  Comprehensive Income

Total comprehensive income includes all changes in equity during a period arising from transactions and other events and circumstances from non-owner sources. The Corporation’s other comprehensive income is comprised of unrealized holding gains and losses on investment securities available-for-sale, and actuarial gains of defined benefit plans, net of taxes.

Details about Accumulated Other	Amounts Reclassified from Accumulated				Affected Line Item in the Statement Where Net
Comprehensive Income Components	Other Comprehensive Income				Income is Presented
	Three Months Ended March 31,
(Dollars in thousands)	2014		2013
OTTI losses	$	—	$	(24)	Net investment securities gains
		—		6	Tax benefit
		—		(18)	Net of tax
Sale of investment securities available-for-sale		1,415		343	Net investment securities gains
		(380)		(90)	Tax expense
		1,035		253	Net of tax
Amortization of unrealized holding (losses) gains on securities transferred from available-for-sale to held-to-maturity		(45)		14	Interest income
		20		(5)	Tax benefit (expense)
		(25)		9	Net of tax
Total reclassification	$	1,010	$	244	Net of tax

Accumulated other comprehensive loss at March 31, 2014 and December 31, 2013 consisted of the following:

	March 31, 2014		December 31, 2013
	(Dollars in thousands)
Net unrealized gain on investment securities available-for-sale, net of tax	$	3,665	$	2,374
Unamortized component of securities transferred from available-for-sale to held-to-maturity, net of tax		(1,400)		(1,425)
Defined benefit pension and post-retirement plans, net of tax		(2,735)		(3,493)
Total accumulated other comprehensive loss	$	(470)	$	(2,544)

XML

Investment Securities

3 Months Ended

Mar. 31, 2014

Investment Securities [Abstract]

Investment Securities

Note 6.  Investment Securities

The Corporation’s investment securities are classified as available-for-sale and held-to-maturity at March 31, 2014 and December 31, 2013. Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in equity, net of tax. Accordingly, the carrying value of such securities reflects their fair value at the balance sheet date. Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value. See Note 8 of the Notes to Consolidated Financial Statements for a further discussion.

Transfers of debt securities from the available-for-sale category to the held-to-maturity category are made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer remains in accumulated other comprehensive income and in the carrying value of the held-to-maturity investment security. Premiums or discounts on investment securities are amortized or accreted using the effective interest method over the life of the security as an adjustment of yield. Unrealized holding gains or losses that remain in accumulated other comprehensive income are amortized or accreted over the remaining life of the security as an adjustment of yield, offsetting the related amortization of the premium or accretion of the discount.

The following tables present information related to the Corporation’s investment securities at March 31, 2014 and December 31, 2013.

	March 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,361	$	—	$	(465)	$	13,896
Federal agency obligations		23,381		23		(314)		23,090
Residential mortgage pass-through securities		46,354		936		(102)		47,188
Commercial mortgage pass-through securities		3,079		—		(116)		2,963
Obligations of U.S. states and political subdivisions		14,353		586		—		14,939
Trust preferred securities		19,764		329		(296)		19,797
Corporate bonds and notes		136,152		5,647		(148)		141,651
Asset-backed securities		15,386		168		—		15,554
Certificates of deposit		2,100		38		(9)		2,129
Equity securities		376		—		(84)		292
Mutual funds and money market funds		6,141		—		(169)		5,972
Total	$	281,447	$	7,727	$	(1,703)	$	287,471
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,108	$	—	$	(315)	$	27,793
Federal agency obligations		14,521		106		(71)		14,556
Residential mortgage pass-through securities		2,160		—		(35)		2,125
Commercial mortgage pass-through securities		4,379		59		(39)		4,399
Obligations of U.S. states and political subdivisions		127,111		2,389		(1,685)		127,815
Corporate bonds and notes		37,912		410		(58)		38,264
Total	$	214,191	$	2,964	$	(2,203)	$	214,952
Total investment securities	$	495,638	$	10,691	$	(3,906)	$	502,423

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	December 31, 2013
	(dollars in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	14,344	$	—	$	(825)	$	13,519
Federal agency obligations		20,567		29		(655)		19,941
Residential mortgage pass-through securities		48,312		791		(229)		48,874
Commercial mortgage pass-through securities		7,145		3		(157)		6,991
Obligations of U.S. states and political subdivisions		30,804		711		(55)		31,460
Trust preferred securities		19,763		150		(510)		19,403
Corporate bonds and notes		154,182		4,930		(482)		158,630
Asset-backed securities		15,733		246		—		15,979
Certificates of deposit		2,250		32		(20)		2,262
Equity securities		376		—		(89)		287
Mutual funds and money market funds		5,671		68		(15)		5,724
Total	$	319,147	$	6,960	$	(3,037)	$	323,070
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	28,056	$	—	$	(1,019)	$	27,037
Federal agency obligations		15,249		23		(389)		14,883
Residential mortgage-backed securities		2,246		—		(64)		2,182
Commercial mortgage-backed securities		4,417		41		(62)		4,396
Obligations of U.S. states and political subdivisions		127,418		1,303		(3,688)		125,033
Corporate bonds and notes		37,900		149		(622)		37,427
Total	$	215,286	$	1,516	$	(5,844)	$	210,958
Total investment securities	$	534,433	$	8,476	$	(8,881)	$	534,028

The following table presents information for investment securities available-for-sale at March 31, 2014, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

	March 31, 2014
	Amortized Cost		Fair Value
Investment Securities Available-for-Sale :	(in thousands)
Due in one year or less	$	5,569	$	5,596
Due after one year through five years		50,584		51,839
Due after five years through ten years		121,166		125,250
Due after ten years		48,178		48,371
Residential mortgage pass-through securities		46,354		47,188
Commercial mortgage pass-through securities		3,079		2,963
Equity securities		376		292
Mutual funds and money market funds		6,141		5,972
Total	$	281,447	$	287,471
Investment Securities Held-to-Maturity :
Due in one year or less	$	2,056	$	2,060
Due after one year through five years		12,946		13,204
Due after five years through ten years		68,449		68,440
Due after ten years		124,201		124,724
Residential mortgage-backed securities		2,160		2,125
Commercial mortgage pass-through securities		4,379		4,399
Total	$	214,191	$	214,952
Total investment securities	$	495,638	$	502,423

For the three months ended March 31, 2014, proceeds of available-for-sale investment securities sold amounted to approximately $50.6 million.

The varying amount of sales from the available-for-sale portfolio over the past few years reflect the significant volatility present in the market. Given the historic low interest rates prevalent in the market, it is necessary for the Corporation to protect itself from interest rate exposure. Securities    that once appeared to be sound investments can, after changes in the market, become securities that the Corporation has the flexibility to sell to avoid losses and mismatches of interest-earning assets and interest-bearing liabilities at a later time

Gross gains and losses from the sales of investment securities for the three month periods ended March 31, 2014 and 2013 were as follows:

	Three Months Ended March 31,
(in thousands)	2014		2013
Gross gains on sales of investment securities	$	1,432	$	432
Gross losses on sales of investment securities		(17)		(89)
Net gains on sales of investment securities	$	1,415	$	343

The following summarizes OTTI charges for the periods indicated.

	Three Months Ended
	March 31,
(in thousands)	2014		2013
Principal losses on a variable rate CMO	$	—	$	24
Total other-than-temporary impairment charges	$	—	$	24

The Corporation performs regular analysis on all its investment securities to determine whether a decline in fair value indicates that an investment is other-than-temporarily impaired in accordance with FASB ASC 320-10. FASB ASC 320-10 requires companies to record OTTI charges, through earnings, if they have the intent to sell, or if it is more likely than not that they will be required to sell, an impaired debt security before recovery of its amortized cost basis. If the Corporation intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI is recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its estimated fair value at the balance sheet date. If the Corporation does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI is separated into the amount representing the credit loss and the amount related to all other factors. The amount of the OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

The Corporation’s assessment of whether an impairment is other than temporary includes factors such as whether the issuer has defaulted on scheduled payments, announced a restructuring and/or filed for bankruptcy, has disclosed severe liquidity problems that cannot be resolved, disclosed a deteriorating financial condition or sustained significant losses. The Corporation maintains a watch list for the identification and monitoring of securities experiencing problems that require a heightened level of review. This could result from credit rating downgrades.

The following table presents detailed information for each trust preferred security held by the Corporation at March 31, 2014 which has at least one rating below investment grade.

Deal Name	Single Issuer or Pooled	Class/ Tranche	Amortized Cost		Fair Value		Gross Unrealized Gain (Loss)		Lowest Credit Rating Assigned	Number of Banks Currently Performing	Deferrals and Defaults as % of Original Collateral	Expected Deferral/Defaults as % of Remaining Performing Collateral
	(dollars in thousands)
Countrywide Capital IV	Single	—	$	1,771	$	1,805	$	34	BB+	1	None	None
Countrywide Capital V	Single	—		2,747		2,803		56	BB+	1	None	None
Countrywide Capital V	Single	—		250		255		5	BB+	1	None	None
Citigroup Cap IX	Single	—		992		1,011		19	BB	1	None	None
Citigroup Cap IX	Single	—		1,907		1,952		45	BB	1	None	None
Citigroup Cap XI	Single	—		246		251		5	BB	1	None	None
Nationsbank Cap Trust III	Single	—		1,574		1,278		(296)	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		2,500		2,506		6	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		1,742		1,752		10	BB+	1	None	None
Saturns — GS 2004-04	Single	—		535		535		—	BB+	1	None	None
Goldman Sachs	Single	—		1,000		1,032		32	BB+	1	None	None
Stifel Financial	Single	—		4,500		4,617		117	BBB-	1	None	None
Total			$	19,764	$	19,797	$	33

  On April 28, 2014, the two Citigroup Cap IX and one Citigroup XI securities referenced in the table above were called at par and resulted in a realized gain of $35,000 at that date.

 Credit Loss Portion of OTTI Recognized in Earnings on Debt Securities

	Three Months Ended March 31, 2014		Year Ended December 31, 2013
	(in thousands)
Balance of credit-related OTTI at January 1,	$	—	$	4,450
Addition:
Credit losses on investment securities for which other-than-temporary impairment was not previously recognized		—		652
Reduction:
Credit losses on investment securities sold during the period		—		(5,102)
Balance of credit-related OTTI at period end	$	—	$	—

Temporarily Impaired Investments

For all securities, the Corporation does not believe that the unrealized losses, which were comprised of 130 investment securities as of March 31, 2014, represent an other-than-temporary impairment. The gross unrealized losses of $3.9 million associated with U.S. Treasury and agency securities, federal agency obligations, mortgage-backed securities, corporate bonds, tax-exempt securities, mutual funds and equity securities are not considered to be other than temporary because these unrealized losses are related to changes in interest rates and do not affect the expected cash flows of the underlying collateral or issuer.

Factors affecting the market price include credit risk, market risk, interest rates, economic cycles, and liquidity risk. The magnitude of any unrealized loss may be affected by the relative concentration of the Corporation’s investment in any one issuer or industry. The Corporation has established policies to reduce exposure through diversification of concentration of the investment portfolio including limits on concentrations to any one issuer. The Corporation believes the investment portfolio is prudently diversified.

The decline in value is related to a change in interest rates and subsequent change in credit spreads required for these issues affecting market price. All issues are performing and are expected to continue to perform in accordance with their respective contractual terms and conditions. Short to intermediate average durations and in certain cases monthly principal payments should reduce further market value exposure to increases in rates.  

The Corporation evaluates all securities with unrealized losses quarterly to determine whether the loss is other than temporary. Unrealized losses in the collateralized mortgage obligations category consist primarily of private issue collateralized mortgage obligations. Unrealized losses in the corporate debt securities category consist of losses on single issuer corporate trust preferred securities, and corporate debt securities issued by large financial institutions, insurance companies and other corporate issuers. The unrealized loss in equity securities consists of losses on other bank equities. The decline in fair value is due in large part to the lack of an active trading market for these securities, changes in market credit spreads and rating agency downgrades. For collateralized mortgage obligations, management reviewed expected cash flows and credit support to determine if it was probable that all principal and interest would be repaid. None of the corporate issuers have defaulted on interest payments. Management concluded that these securities were not other-than-temporarily impaired at March 31, 2014. Future deterioration in the cash flow on collateralized mortgage obligations or the credit quality of these large financial institution issuers of TRUP debt securities could result in impairment charges in the future.

In determining that the securities giving rise to the previously mentioned unrealized losses were not other-than-temporary, the Corporation evaluated the factors cited above, which the Corporation considers when assessing whether a security is other-than-temporarily impaired. In making these evaluations the Corporation must exercise considerable judgment. Accordingly there can be no assurance that the actual results will not differ from the Corporation’s judgments and that such differences may not require the future recognition of other-than-temporary impairment charges that could have a material effect on the Corporation’s financial position and results of operations. In addition, the value of, and the realization of any loss on an investment security are subject to numerous risks as cited above.

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position at March 31, 2014 and December 31, 2013:

	March 31, 2014
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,896	$	(465)	$	13,896	$	(465)	$	—	$	—
Federal agency obligations		19,508		(314)		19,032		(275)		476		(39)
Residential mortgage pass-through securities		5,344		(102)		5,344		(102)		—		—
Commercial mortgage pass-through securities		2,963		(116)		2,963		(116)		—		—
Trust preferred securities		1,278		(296)		—		—		1,278		(296)
Corporate bonds and notes		13,387		(148)		11,440		(112)		1,947		(36)
Certificates of deposit		415		(9)		415		(9)		—		—
Equity securities		292		(84)		—		—		292		(84)
Mutual funds and money market funds		5,330		(169)		4,355		(145)		975		(24)
Total		62,413		(1,703)		57,445		(1,224)		4,968		(479)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities		27,793		(315)		27,793		(315)		—		—
Federal agency obligations		5,751		(71)		5,751		(71)		—		—
Residential mortgage pass-through securities		2,125		(35)		2,125		(35)		—		—
Commercial mortgage pass-through securities		1,402		(39)		1,402		(39)		—		—
Obligations of U.S. states and political subdivisions		57,017		(1,685)		39,474		(960)		17,543		(725)
Corporate bonds and notes		11,396		(58)		11,396		(58)		—		—
Total		105,484		(2,203)		87,941		(1,478)		17,543		(725)
Total Temporarily Impaired Securities	$	167,897	$	(3,906)	$	145,386	$	(2,702)	$	22,511	$	(1,204)

	December 31, 2013
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	13,519	$	(825)	$	13,519	$	(825)	$	—	$	—
Federal agency obligation		17,200		(655)		17,200		(655)		—		—
Residential mortgage pass-through securities		18,293		(229)		18,293		(229)		—		—
Commercial mortgage pass-through securities		2,924		(157)		2,924		(157)		—		—
Obligations of U.S. states and political subdivisions		4,199		(55)		4,199		(55)		—		—
Trust preferred securities		5,306		(510)		4,031		(211)		1,275		(299)
Corporate bonds and notes		32,498		(482)		30,533		(448)		1,965		(34)
Certificates of deposit		552		(20)		552		(20)		—		—
Equity securities		287		(89)		—		—		287		(89)
Mutual funds and money market funds		985		(15)		—		—		985		(15)
Total		95,763		(3,037)		91,251		(2,600)		4,512		(437)
Investment Securities Held-to-Maturity:
U.S. Treasury and agency securities	$	27,037	$	(1,019)	$	27,037	$	(1,019)	$	—	$	—
Federal agency obligation		13,492		(389)		13,197		(388)		295		(1)
Residential mortgage pass-through securities		2,182		(64)		2,182		(64)		—		—
Commercial mortgage pass-through securities		1,395		(62)		1,395		(62)		—		—
Obligations of U.S. states and political subdivisions		66,034		(3,688)		57,072		(2,957)		8,962		(731)
Corporate bonds and notes		27,210		(622)		27,210		(622)		—		—
Total		137,350		(5,844)		128,093		(5,112)		9,257		(732)
Total Temporarily Impaired Securities	$	233,113	$	(8,881)	$	219,344	$	(7,712)	$	13,769	$	(1,169)

Investment securities having a carrying value of approximately $110.4 million and $109.3 million at March 31, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, borrowings, and Federal Home Loan Bank advances and for other purposes required or permitted by law.

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Fair Value Measurements and Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2014

Fair Value Measurements and Fair Value of Financial Instruments [Abstract]

Fair Value Measurements and Fair Value of Financial Instruments

Note 8.  Fair Value Measurements and Fair Value of Financial Instruments

Fair Value Measurements

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

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

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

· Level 2: Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (for example, 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.

The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’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 Corporation’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 Corporation’s assets measured at fair value on a recurring basis at March 31, 2014 and December 31, 2013.

Investment Securities Available-for-Sale

Where quoted prices are available in an active market, investment securities are classified in Level 1 of the valuation hierarchy. Level 1 inputs include investment securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of instruments, which would generally be classified within Level 2 of the valuation hierarchy, include municipal bonds and certain agency collateralized mortgage obligations. In certain cases where there is limited activity in the market for a particular instrument, assumptions must be made to determine their fair value and are classified as Level 3. Due to the inactive condition of the markets amidst the financial crisis, the Corporation treated certain investment securities as Level 3 assets in order to provide more appropriate valuations. For assets in an inactive market, the infrequent trades that do occur are not a true indication of fair value. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. The Corporation’s evaluations are based on market data and the Corporation employs combinations of these approaches for its valuation methods depending on the asset class. In certain cases where there were limited or less transparent information provided by the Corporation’s third-party pricing service, fair value was estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes.

On a quarterly basis, management reviews the pricing information received from the Corporation’s third-party pricing service. This review process includes a comparison to non-binding third-party broker quotes, as well as a review of market-related conditions impacting the information provided by the Corporation’s third-party pricing service.

Management primarily identifies investment securities which may have traded in illiquid or inactive markets by identifying instances of a significant decrease in the volume and frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. Investment securities that are deemed to have been trading in illiquid or inactive markets may require the use of significant unobservable inputs. For example, management may use quoted prices for similar investment securities in the absence of a liquid and active market for the securities being valued. As of March 31, 2014 and December 31, 2013, management made no adjustments to prices provided by the third-party pricing service as a result of illiquid or inactive markets.

The Corporation determined that an income approach valuation technique (present value technique) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs will be equally or more representative of fair value than the market approach valuation technique used at the prior measurement dates. As a result, the Corporation used the discount rate adjustment technique to determine fair value.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2014 and December 31, 2013 are as follows:

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. Treasury & agency securities	$	13,896	$	13,896	$	—	$	—
Federal agency obligations		23,090		—		23,090		—
Residential mortgage pass-through securities		47,188		—		47,188		—
Commercial mortgage pass-through securities		2,963		—		2,963		—
Obligations of U.S. states and political subdivisions		14,939		—		14,939		—
Trust preferred securities		19,797		—		19,797		—
Corporate bonds and notes		141,651		—		141,651		—
Asset-backed securities		15,554		—		15,554		—
Certificates of deposit		2,129		—		2,129		—
Equity securities		292		292		—		—
Mutual funds and money market funds		5,972		5,972		—		—
Investment securities available-for-sale	$	287,471	$	20,160	$	267,311	$	—

				Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Recurring Basis		December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
U.S. treasury and agency securities		$	13,519	$	13,519	$	—	$	—
Federal agency obligations			19,941		—		19,941		—
Residential mortgage pass-through securities			48,874		—		48,874		—
Commercial mortgage pass-through securities			6,991		—		6,991		—
Obligations of U.S. states and political subdivisions			31,460		—		31,460		—
Trust preferred securities			19,403		—		19,403		—
Corporate bonds and notes			158,630		—		158,630		—
Asset-backed securities			15,979		—		15,979		—
Certificates of deposit			2,262		—		2,262		—
Equity securities			287		287		—		—
Mutual funds and money market funds			5,724		5,724		—		—
Securities available-for-sale		$	323,070	$	19,530	$	303,540	$	—

The fair values used by the Corporation are obtained from an independent pricing service and represent either quoted market prices for the identical securities (Level 1 inputs) or fair values determined by pricing models using a market approach that considers observable market data, such as interest rate volatilities, LIBOR yield curve, credit spreads and prices from market makers and live trading systems (Level 2).

The following tables present the changes in investment securities available-for-sale with significant unobservable inputs (Level 3) for the three months ended March 31, 2014 and 2013.

	Three Months Ended
	March 31,
	2014		2013
(in thousands)
Balance, beginning of the period	$	—	$	36
Interest payment deferrals		—		14
Total net unrealized gains		—		(6)
Balance, end of the period	$	—	$	44

For the three months ended March 31, 2014, there were no transfers of investment securities available-for-sale into or out of Level 1, Level 2, or Level 3 assets.

Assets Measured at Fair Value on a Non-Recurring Basis

For assets measured at fair value on a non-recurring basis, the unobservable inputs used to derive fair value measurements at March 31, 2014 and December 31, 2013 were as follows:

Impaired Loans	Valuation Techniques	Range of Unobservable Inputs
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25%
Commercial	Discounted cash flow model	Discount rate from 0% to 6%
Commercial real estate	Appraisals of collateral value	Market capitalization rates between 8% to 12%. Market rental rates for similar properties
Construction	Appraisals of collateral value	Adjustment for age comparable sales. Generally a decline of 5% to no change
Other Real Estate Owned
Residential	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 0-25% and estimated selling costs of 6-8%
Commercial	Appraisals of collateral value	Adjustment for age of comparable sales, generally a decline of 15% to no change and estimated selling costs of 6-8%

			Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis	March 31, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans	$	4,443	$	—	$	—	$	4,443

				Fair Value Measurements at Reporting Date Using
Assets Measured at Fair Value on a Non-Recurring Basis		December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Impaired loans		$	4,601	$	—	$	—	$	4,601
Other real estate owned			220		—		—		220

The following methods and assumptions were used to estimate the fair values of the Corporation’s assets measured at fair value on a non-recurring basis at March 31, 2014 and December 31, 2013.

Impaired Loans. The value of an impaired loan is measured based upon 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. Smaller balance homogeneous loans that are collectively evaluated for impairment, such as residential mortgage loans and installment loans, are specifically excluded from the impaired loan portfolio. The Corporation’s impaired loans are primarily collateral dependent. Impaired loans are individually assessed to determine that each loan’s carrying value is not in excess of the fair value of the related collateral or the present value of the expected future cash flows. Impaired loans at March 31, 2014 that required a valuation allowance during 2014 were $4.3 million with a related valuation allowance of $227,000 and $337,000 with no related valuation allowance compared to $5.0 million with a related valuation allowance of $415,000 at December 31, 2013.

 Other Real Estate Owned.  Other real estate owned (“OREO”) is measured at fair value less costs to sell, generally a decline of 0-25% for residential OREO and a decline of 15% to no change for commercial OREO. The Corporation believes that the fair value component in its valuation follows the provisions of FASB ASC 820-10-05. The fair value of OREO is determined by sales agreements or appraisals by qualified licensed appraisers approved and hired by the Corporation. Costs to sell associated with OREO is based on estimation per the terms and conditions of the sales agreements or appraisals.

Fair Value of Financial Instruments

FASB ASC 825-10 requires all entities to disclose the estimated fair value of their financial instrument assets and liabilities. For the Corporation, as for most financial institutions, the majority of its assets and liabilities are considered financial instruments as defined in FASB ASC 825-10. Many of the Corporation’s financial instruments, however, lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. It is also the Corporation’s general practice and intent to hold its financial instruments to maturity and not to engage in trading or sales activities except for loans held-for-sale and investment securities available-for-sale. Therefore, significant estimations and assumptions, as well as present value calculations, were used by the Corporation for the purposes of this disclosure.

Investment Securities Held-to-Maturity. The fair value of the Corporation’s investment securities held-to-maturity was primarily measured using information from a third-party pricing service. If quoted prices were not available, fair values were estimated primarily by obtaining quoted prices for similar assets in active markets or through the use of pricing models. In cases where there may be limited or less transparent information provided by the Corporation’s third-party pricing service, fair value may be estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes.

Loans Held-for-Sale. Fair value is estimated using the prices of the Corporation’s existing commitments to sell such loans and/or the quoted market price for commitments to sell similar loans.

Loans. The fair value of the Corporation’s loans was estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans were segregated by types such as commercial, residential and consumer loans. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Non Interest-Bearing Deposits. The fair value for non interest-bearing deposits is equal to the amount payable on demand at the reporting date.

Interest-Bearing Deposits. The fair values of the Corporation’s interest-bearing deposits were estimated using discounted cash flow analyses. The discounted rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the Corporation’s interest-bearing deposits do not take into consideration the value of the Corporation’s long-term relationships with depositors, which may have significant value.

Term Borrowings and Subordinated Debentures. The fair value of the Corporation’s long-term borrowings and subordinated debentures were calculated using a discounted cash flow approach and applying discount rates currently offered based on weighted remaining maturities.

Accrued Interest Receivable/Payable. The carrying amounts of accrued interest approximate fair value resulting in a Level 2 or Level 3 classification based on the level of the asset or liability with which the accrual is associated.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Corporation’s financial instruments as of March 31, 2014 and December 31, 2013.

					Fair Value Measurements
	Carrying Amount		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
March 31, 2014
Financial assets
Cash and due from banks	$	106,282	$	106,282	$	106,282	$	—	$	—
Investment securities available-for-sale		287,471		287,471		20,160		267,311		—
Investment securities held-to-maturity		214,191		214,952		27,793		168,230		18,929
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		976,896		975,016		—		—		975,016
Accrued interest receivable		6,341		6,341		—		3,654		2,687
Financial liabilities
Non interest-bearing deposits		223,332		223,332		—		223,332		—
Interest-bearing deposits		1,116,553		1,117,677		—		1,117,677		—
Long-term borrowings		146,000		158,306		—		158,306		—
Subordinated debentures		5,155		4,923		—		4,923		—
Accrued interest payable		967		967		—		967		—
December 31, 2013
Financial assets
Cash and due from banks	$	82,692	$	82,692	$	82,692	$	—	$	—
Investment securities available-for-sale		323,070		323,070		19,530		303,540		—
Investment securities held-to-maturity		215,286		210,958		27,037		164,940		18,981
Restricted investment in bank stocks		8,986		8,986		—		8,986		—
Net loans		950,610		948,606		—		—		948,606
Accrued interest receivable		6,802		6,802		—		4,136		2,666
Financial liabilities
Non interest-bearing deposits		227,370		227,370		—		227,370		—
Interest-bearing deposits		1,114,635		1,115,781		—		1,115,781		—
Long-term borrowings		146,000		157,440		—		157,440		—
Subordinated debentures		5,155		5,143		—		5,143		—
Accrued interest payable		963		963		—		963		—

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Net Investment in Direct Financing Lease (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Sale Leaseback Transaction [Line Items]
Sale Leaseback Transaction, Lease Terms	The lease has a 15 year term with no renewal options. According to the terms of the lease, the lessee has an obligation to purchase the property underlying the lease in either year seven (7), ten (10) or fifteen (15) at predetermined prices for those years as provided in the lease. The structure of the minimum lease payments and the purchase prices as provided in the lease provide an inducement to the lessee to purchase the property in year seven (7).
Sale Leaseback Transaction, Amount Due under Financing Arrangement	$ 4,429,000	$ 4,483,000
Interest Portion of Minimum Lease Payments, Sale Leaseback Transactions	684,000	733,000
Minimum Lease Payments, Sale Leaseback Transactions	$ 3,745,000	$ 3,750,000

XML

Components of Net Periodic Pension Cost (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Employer Discretionary Contribution Amount	$ 400,000

XML

Net Investment in Direct Financing Lease (Schedule of Minimum Future Direct Financing Lease Receipts) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Sale Leaseback Transaction [Line Items]
2014	$ 162
2015	228
2016	265
2017	265
2018	265
Thereafter	2,560
Total minimum future lease receipts	$ 3,745	$ 3,750

XML

Earnings per Common Share (Schedule of Computation of Earnings per Common Share) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Net income	$ 4,398	$ 4,924
Preferred stock dividends	(28)	(56)
Net income available to common stockholders	$ 4,370	$ 4,868
Basic weighted average common shares outstanding	16,350,183	16,348,215
Plus: effect of dilutive options	56	26
Diluted weighted average common shares outstanding	16,405,540	16,373,588
Earnings per Common Share: Basic	$ 0.27	$ 0.30
Earnings per Common Share: Diluted	$ 0.27	$ 0.30

XML

Loans and the Allowance for Loan Losses (Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 987,206	$ 960,604
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	249,365	229,688
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	548,133	536,539
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	39,308	42,722
Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	149,653	150,571
Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	747	1,084
Pass [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	951,731	925,527
Pass [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	246,130	226,013
Pass [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	520,626	509,679
Pass [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	38,078	41,492
Pass [Member] | Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	146,265	147,379
Pass [Member] | Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	632	964
Special Mention [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	20,185	17,241
Special Mention [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,796	1,719
Special Mention [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	17,419	14,544
Special Mention [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Special Mention [Member] | Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	970	978
Special Mention [Member] | Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Substandard [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	14,963	17,164
Substandard [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,112	1,284
Substandard [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	10,088	12,316
Substandard [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	1,230	1,230
Substandard [Member] | Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	2,418	2,214
Substandard [Member] | Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	115	120
Doubtful [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	327	672
Doubtful [Member] | Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	327	672
Doubtful [Member] | Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	0	0
Doubtful [Member] | Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans and Leases Receivable, Gross, Carrying Amount	$ 0	$ 0

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Subordinated Debentures

3 Months Ended

Mar. 31, 2014

Subordinated Debentures [Abstract]

Subordinated Debentures

Note 13.  Subordinated Debentures

During 2003, the Corporation formed a statutory business trust, which exists for the exclusive purpose of (i) issuing trust securities representing undivided beneficial interests in the assets of the trust; (ii) investing the gross proceeds of the trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Corporation; and (iii) engaging in only those activities necessary or incidental thereto. These subordinated debentures and the related income effects are not eliminated in the consolidated financial statements as the statutory business trust is not consolidated in accordance with FASB ASC 810-10. Distributions on the subordinated debentures owned by the subsidiary trusts below have been classified as interest expense in the Consolidated Statements of Income.

The characteristics of the business trust and capital securities have not changed with the deconsolidation of the trust. The capital securities provide an attractive source of funds since they constitute Tier 1 capital for regulatory purposes and have the same tax advantages as debt for Federal income tax purposes.

The subordinated debentures are redeemable in whole or part prior to maturity on January 23, 2034. The floating interest rate on the subordinated debentures is three-month LIBOR plus 2.85 percent and resets quarterly. The rate at March 31, 2014 was 3.09 percent.

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

Stock-Based Compensation [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model with the following assumptions and weighted average fair values at the time the grants were awarded: 

	Three Months Ended March 31,
	2014			2013
Weighted average fair value of grants	$	—		$	2.50
Risk-free interest rate		—	%		1.86	%
Dividend yield		—	%		1.76	%
Expected volatility		—	%		23.21	%
Expected life in months		—			69

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

Activity under the stock-based compensation plans as of March 31, 2014 and changes during the three months ended March 31, 2014 were as follows:

	Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	214,263	$	10.59
Granted – options	—		—
Exercised	—		—
Canceled/expired	—		—
Forfeited	—		—
Outstanding at March 31, 2014	214,263		10.59	5.46	$	1,801,405
Exercisable at March 31, 2014	164,821	$	10.24	4.55	$	1,443,161

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Loans and the Allowance for Loan Losses (Composition of Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 987,206	$ 960,604
Net deferred loan costs	323	339
Total loans	987,529	960,943
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	249,365	229,688
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	548,133	536,539
Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	39,308	42,722
Residential mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	149,653	150,571
Installment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Loans	$ 747	$ 1,084

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Investment Securities (Unrealized Gains) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	$ 281,447	$ 319,147
Investment Securities Available-for-Sale: Unrealized Gains	7,727	6,960
Investment Securities Available-for-Sale: Unrealized Losses	(1,703)	(3,037)
Investment securities: Available-for-sale, Fair Value	287,471	323,070
Investment Securities Held-to-Maturity: Amortized Cost	214,191	215,286
Investment Securities Held-to-Maturity: Unrealized Gains	2,964	1,516
Investment Securities Held-to-Maturity: Unrealized Losses	(2,203)	(5,844)
Investment Securities Held-to-Maturity: Fair Value	214,952	210,958
Total investment securities, amortized cost	495,638	534,433
Total investment securities, gross unrealized gains	10,691	8,476
Total investment securities, gross unrealized losses	(3,906)	(8,881)
Total investment securities, fair value	502,423	534,028
U.S. treasury notes [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	14,361	14,344
Investment Securities Available-for-Sale: Unrealized Gains	0	0
Investment Securities Available-for-Sale: Unrealized Losses	(465)	(825)
Investment securities: Available-for-sale, Fair Value	13,896	13,519
Investment Securities Held-to-Maturity: Amortized Cost	28,108	28,056
Investment Securities Held-to-Maturity: Unrealized Gains	0	0
Investment Securities Held-to-Maturity: Unrealized Losses	(315)	(1,019)
Investment Securities Held-to-Maturity: Fair Value	27,793	27,037
Federal agency obligations [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	23,381	20,567
Investment Securities Available-for-Sale: Unrealized Gains	23	29
Investment Securities Available-for-Sale: Unrealized Losses	(314)	(655)
Investment securities: Available-for-sale, Fair Value	23,090	19,941
Investment Securities Held-to-Maturity: Amortized Cost	14,521	15,249
Investment Securities Held-to-Maturity: Unrealized Gains	106	23
Investment Securities Held-to-Maturity: Unrealized Losses	(71)	(389)
Investment Securities Held-to-Maturity: Fair Value	14,556	14,883
Residential mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	46,354	48,312
Investment Securities Available-for-Sale: Unrealized Gains	936	791
Investment Securities Available-for-Sale: Unrealized Losses	(102)	(229)
Investment securities: Available-for-sale, Fair Value	47,188	48,874
Investment Securities Held-to-Maturity: Amortized Cost	2,160	2,246
Investment Securities Held-to-Maturity: Unrealized Gains	0	0
Investment Securities Held-to-Maturity: Unrealized Losses	(35)	(64)
Investment Securities Held-to-Maturity: Fair Value	2,125	2,182
Commercial mortgage-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	3,079	7,145
Investment Securities Available-for-Sale: Unrealized Gains	0	3
Investment Securities Available-for-Sale: Unrealized Losses	(116)	(157)
Investment securities: Available-for-sale, Fair Value	2,963	6,991
Investment Securities Held-to-Maturity: Amortized Cost	4,379	4,417
Investment Securities Held-to-Maturity: Unrealized Gains	59	41
Investment Securities Held-to-Maturity: Unrealized Losses	(39)	(62)
Investment Securities Held-to-Maturity: Fair Value	4,399	4,396
Obligations of U.S. states and political subdivisions [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	14,353	30,804
Investment Securities Available-for-Sale: Unrealized Gains	586	711
Investment Securities Available-for-Sale: Unrealized Losses	0	(55)
Investment securities: Available-for-sale, Fair Value	14,939	31,460
Investment Securities Held-to-Maturity: Amortized Cost	127,111	127,418
Investment Securities Held-to-Maturity: Unrealized Gains	2,389	1,303
Investment Securities Held-to-Maturity: Unrealized Losses	(1,685)	(3,688)
Investment Securities Held-to-Maturity: Fair Value	127,815	125,033
Trust preferred securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	19,764	19,763
Investment Securities Available-for-Sale: Unrealized Gains	329	150
Investment Securities Available-for-Sale: Unrealized Losses	(296)	(510)
Investment securities: Available-for-sale, Fair Value	19,797	19,403
Corporate bonds and notes [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	136,152	154,182
Investment Securities Available-for-Sale: Unrealized Gains	5,647	4,930
Investment Securities Available-for-Sale: Unrealized Losses	(148)	(482)
Investment securities: Available-for-sale, Fair Value	141,651	158,630
Investment Securities Held-to-Maturity: Amortized Cost	37,912	37,900
Investment Securities Held-to-Maturity: Unrealized Gains	410	149
Investment Securities Held-to-Maturity: Unrealized Losses	(58)	(622)
Investment Securities Held-to-Maturity: Fair Value	38,264	37,427
Asset-backed securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	15,386	15,733
Investment Securities Available-for-Sale: Unrealized Gains	168	246
Investment Securities Available-for-Sale: Unrealized Losses	0	0
Investment securities: Available-for-sale, Fair Value	15,554	15,979
Certificates of Deposit [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	2,100	2,250
Investment Securities Available-for-Sale: Unrealized Gains	38	32
Investment Securities Available-for-Sale: Unrealized Losses	(9)	(20)
Investment securities: Available-for-sale, Fair Value	2,129	2,262
Equity securities [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	376	376
Investment Securities Available-for-Sale: Unrealized Gains	0	0
Investment Securities Available-for-Sale: Unrealized Losses	(84)	(89)
Investment securities: Available-for-sale, Fair Value	292	287
Mutual funds and money market funds [Member]
Schedule of Investments [Line Items]
Investment Securities Available-for-Sale: Amortized cost	6,141	5,671
Investment Securities Available-for-Sale: Unrealized Gains	0	68
Investment Securities Available-for-Sale: Unrealized Losses	(169)	(15)
Investment securities: Available-for-sale, Fair Value	$ 5,972	$ 5,724

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Net income	$ 4,398	$ 4,924
Other comprehensive income, net of tax:
Unrealized holding gains on available-for-sale securities	3,516	548
Tax effect	(1,190)	(200)
Net of tax amount	2,326	348
Reclassification adjustment of OTTI losses	0	24
Tax effect	0	(6)
Net of tax amount	0	18
Reclassification adjustment for net gains arising during the period	(1,415)	(343)
Tax effect	380	90
Net of tax amount	(1,035)	(253)
Amortization of unrealized holding gains (losses) on securities transferred from available-for-sale to held-to-maturity	45	(14)
Tax effect	(20)	5
Net of tax amount	25	(9)
Pension Plan:
Actuarial gains	1,281	0
Tax effect	(523)	0
Net of tax amount	758	0
Total other comprehensive income	2,074	104
Total comprehensive income	$ 6,472	$ 5,028

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Earnings per Common Share

3 Months Ended

Mar. 31, 2014

Earnings per Common Share [Abstract]

Earnings per Common Share

Note 2.  Earnings per Common Share

Basic earnings per common share (“EPS”) is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding. Diluted EPS includes any additional common shares as if all potentially dilutive common shares were issued (e.g., stock options). The Corporation’s weighted average common shares outstanding for diluted EPS include the effect of stock options and restricted stock awards outstanding using the Treasury Stock Method, which are not included in the calculation of basic EPS. Anti-dilutive stock option and restricted stock award shares outstanding were 757 for the three months ended March 31, 2014, and anti-dilutive stock option shares outstanding were 31,604, for the three months ended March 31, 2013.

Earnings per common share have been computed based on the following:

	Three Months Ended March 31,
(in thousands, except per share amounts)	2014		2013
Net income	$	4,398	$	4,924
Preferred stock dividends		(28)		(56)
Net income available to common shareholders	$	4,370	$	4,868
Basic weighted average common shares outstanding		16,350		16,348
Plus: effect of dilutive options		56		26
Diluted weighted average common shares outstanding		16,406		16,374
Earnings per common share:
Basic	$	0.27	$	0.30
Diluted	$	0.27	$	0.30

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Fair Value Measurements and Fair Value of Financial Instruments (Schedule of Changes in Investment Securities Available-For-Sale) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Balance, beginning of the period	$ 0	$ 36
Interest payment deferrals	0	14
Total net unrealized gains	0	(6)
Balance, end of the period	$ 0	$ 44

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Borrowed Funds (Schedule Of Repayment For Federal Advances) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
2015	$ 0
2016	0
2017	35,000
2018	40,000
2020	40,000
Total	$ 115,000

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Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2014

Comprehensive Income [Abstract]

Comprehensive Income (Loss)

The Corporation’s other comprehensive income is comprised of unrealized holding gains and losses on investment securities available-for-sale, and actuarial gains of defined benefit plans, net of taxes.

Details about Accumulated Other	Amounts Reclassified from Accumulated				Affected Line Item in the Statement Where Net
Comprehensive Income Components	Other Comprehensive Income				Income is Presented
	Three Months Ended March 31,
(Dollars in thousands)	2014		2013
OTTI losses	$	—	$	(24)	Net investment securities gains
		—		6	Tax benefit
		—		(18)	Net of tax
Sale of investment securities available-for-sale		1,415		343	Net investment securities gains
		(380)		(90)	Tax expense
		1,035		253	Net of tax
Amortization of unrealized holding (losses) gains on securities transferred from available-for-sale to held-to-maturity		(45)		14	Interest income
		20		(5)	Tax benefit (expense)
		(25)		9	Net of tax
Total reclassification	$	1,010	$	244	Net of tax

Schedule of Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive loss at March 31, 2014 and December 31, 2013 consisted of the following:

	March 31, 2014		December 31, 2013
	(Dollars in thousands)
Net unrealized gain on investment securities available-for-sale, net of tax	$	3,665	$	2,374
Unamortized component of securities transferred from available-for-sale to held-to-maturity, net of tax		(1,400)		(1,425)
Defined benefit pension and post-retirement plans, net of tax		(2,735)		(3,493)
Total accumulated other comprehensive loss	$	(470)	$	(2,544)

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Pending Merger (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014
Stock Issued During Period, Shares, Stock Splits	2.6
Merger related expenses	$ 1,060,000
Consulting Expenses [Member]
Merger related expenses	462,000
Computer Expense [Member]
Merger related expenses	116,000
Other Expense [Member]
Merger related expenses	$ 482,000

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Stock-Based Compensation (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	2 years 8 months 26 days
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights	The Corporation maintains two stock-based compensation plans from which new grants could be issued. The Corporation’s stock-based compensation plans permit Parent Corporation common stock to be issued to key employees and directors of the Corporation and its subsidiaries. The options granted under the plans are intended to be either incentive stock options or non-qualified options. Under the 2009 Equity Incentive Plan, a total of 363,081 shares are available for grant and issuance as of March 31, 2014. Under the 2003 Non-Employee Director Stock Option Plan, a total of 380,644 shares remain available for grant and issuance under the plan as of March 31, 2014. Such shares may be treasury shares, newly issued shares or a combination thereof. Options have been granted to purchase common stock principally at the fair market value of the stock at the date of grant. Options are exercisable over a three year vesting period starting one year after the date of grant and generally expire ten years from the date of grant. Stock-based compensation expense for share-based payment awards is based on the grant date fair value estimated on the date of grant. The Corporation recognizes compensation costs for those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the option vesting term of three years. The Corporation estimates the forfeiture rate based on its historical experience during the preceding seven fiscal years.
Compensation expense related to stock options	$ 29,000	$ 11,000
Compensation expense related to stock options, Net of tax	17,000	7,000
Common Stock Underlying Grant Options	0	31,257
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	130,000
Stock Issued During Period, Shares, Restricted Stock Award, Gross	18,829	0
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	5 years
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 207,000
Employee Director Stock Option Plan 2003 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	406,527
2009 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	363,081

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Borrowed Funds

3 Months Ended

Mar. 31, 2014

Borrowed Funds [Abstract]

Borrowed Funds

Note 12.  Borrowed Funds

Short-Term Borrowings

Short-term borrowings, which consist primarily of securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances and federal funds purchased, generally have maturities of less than one year. The details of these short-term borrowings are presented in the following table.

	March 31, 2014			December 31, 2013
	(dollars in thousands)
Interest rate:
At quarter end		—	%		—	%
Average for the quarter		0.38	%		—	%
Average amount outstanding during the quarter	$	500		$	—
Maximum amount outstanding at any month end in the quarter	$	—		$	—
Amount outstanding at quarter end	$	—		$	—

Long-Term Borrowings

Long-term borrowings, which consist primarily of FHLB advances and securities sold under agreements to repurchase, totaled $146.0 million at March 31, 2014 and mature within four to eight years. The FHLB advances are secured by pledges of certain collateral, including but not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgages and commercial real estate loans.

At March 31, 2014 and December 31, 2013, FHLB advances had a weighted average interest rate of 3.26 and 3.26 percent, respectively, and are contractually scheduled for repayment as follows: 

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		35,000
2018		40,000
2020		40,000
Total	$	115,000

The Corporation has entered into agreements under which it has sold securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. The obligation to repurchase the securities is reflected as a liability in the Corporation’s consolidated statement of condition, while the securities underlying the securities sold under agreements to repurchase remain in the respective asset accounts and are delivered to and held as collateral by third party trustees. At March 31, 2014 and December 31, 2013, securities sold under agreements to repurchase had a weighted average interest rate of 5.90 percent and 5.90 percent, respectively, and are contractually scheduled for repayment as follows:

	March 31, 2014
	(in thousands)
2015	$	—
2016		—
2017		15,000
2018		16,000
Total	$	31,000