10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2012

Commission File No. 001-34453

HUDSON VALLEY HOLDING CORP.

(Exact name of registrant as specified in its charter)

NEW YORK	13-3148745
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

21 Scarsdale Road, Yonkers, NY 10707

(Address of principal executive office with zip code)

914-961-6100

(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 and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

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

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

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

Class	Outstanding at November 1, 2012
Common stock, par value $0.20 per share	19,643,510

FORM 10-Q

TABLE OF CONTENTS

		Page No.
PART I:	FINANCIAL INFORMATION
ITEM 1	CONDENSED FINANCIAL STATEMENTS		2
ITEM 2	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		32
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		51
ITEM 4	CONTROLS AND PROCEDURES		52
PART II:	OTHER INFORMATION
ITEM 1	LEGAL PROCEEDINGS		53
ITEM 1A	RISK FACTORS		53
ITEM 6	EXHIBITS		53
SIGNATURES			54

1

PART 1 — FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Dollars in thousands, except per share amounts

	Three Months Ended September 30
	2012		2011
Interest Income:
Loans, including fees	$	21,619	$	28,641
Securities:
Taxable		2,902		2,778
Exempt from Federal income taxes		796		989
Federal funds sold		11		24
Deposits in banks		381		154
Total interest income		25,709		32,586
Interest Expense:
Deposits		1,393		2,226
Securities sold under repurchase agreements and other short-term borrowings		18		68
Other borrowings		183		254
Total interest expense		1,594		2,548
Net Interest Income		24,115		30,038
Provision for loan losses		3,723		2,536
Net interest income after provision for loan losses		20,392		27,502
Non Interest Income:
Service charges		1,454		1,671
Investment advisory fees		2,303		2,639
Recognized impairment charge on securities available for sale (includes $699 of total gains and $361 of total losses in 2012 and 2011, respectively, less $699 of gains and $242 of losses on securities available for sale, recognized in other comprehensive income in 2012 and 2011, respectively)		—		(119	)
Realized gains on securities available for sale, net		—		8
Gain on sales and revaluation of loans held for sale and other real estate owned, net		—		946
Other income		596		569
Total non interest income		4,353		5,714
Non Interest Expense:
Salaries and employee benefits		11,366		11,296
Occupancy		2,121		2,217
Professional services		1,739		1,700
Equipment		1,071		1,101
Business development		545		452
FDIC assessment		811		553
Other operating expenses		2,382		2,771
Total non interest expense		20,035		20,090
Income Before Income Taxes		4,710		13,126
Income Taxes		1,576		4,618
Net Income	$	3,134	$	8,508
Basic Earnings Per Common Share	$	0.16	$	0.44
Diluted Earnings Per Common Share	$	0.16	$	0.43

See notes to condensed consolidated financial statements

2

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Dollars in thousands, except per share amounts

	Nine Months Ended September 30
	2012			2011
Interest Income:
Loans, including fees	$	73,197		$	82,914
Securities:
Taxable		9,355			8,875
Exempt from Federal income taxes		2,792			3,300
Federal funds sold		28			73
Deposits in banks		735			519
Total interest income		86,107			95,681
Interest Expense:
Deposits		4,557			6,790
Securities sold under repurchase agreements and other short-term borrowings		85			172
Other borrowings		546			1,599
Total interest expense		5,188			8,561
Net Interest Income		80,919			87,120
Provision for loan losses		6,976			9,533
Net interest income after provision for loan losses		73,943			77,587
Non Interest Income:
Service charges		4,850			5,263
Investment advisory fees		7,213			7,998
Recognized impairment charge on securities available for sale (includes $594 of total gains and $1,318 of total losses in 2012 and 2011, respectively, less $1,122 of gains and $995 of losses on securities available for sale, recognized in other comprehensive income in 2012 and 2011, respectively)		(528	)		(323	)
Gains on sales and revaluation of loans held for sale and other real estate owned, net		15,920			73
Realized gains on securities available for sale, net		—			8
Other income		2,041			1,745
Total non interest income		29,496			14,764
Non Interest Expense:
Salaries and employee benefits		33,544			33,377
Occupancy		6,563			6,764
Professional services		5,646			4,902
Equipment		3,300			3,218
Business development		1,899			1,548
FDIC assessment		2,165			2,350
Other operating expenses		8,828			9,029
Total non interest expense		61,945			61,188
Income Before Income Taxes		41,494			31,163
Income Taxes		15,386			10,399
Net Income	$	26,108		$	20,764
Basic Earnings Per Common Share	$	1.33		$	1.07
Diluted Earnings Per Common Share	$	1.33		$	1.06

See notes to condensed consolidated financial statements

3

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

Dollars in thousands

	Three Months Ended Sep 30						Nine Months Ended Sep 30
	2012			2011			2012			2011
Net Income	$	3,134		$	8,508		$	26,108		$	20,764
Other comprehensive income (loss), net of tax:
Net change in unrealized gains (losses):
Other-than-temporarily impaired securities available for sale:
Total gains (losses)		699			(361	)		594			(1,318	)
Losses recognized in earnings		—			119			528			323
Gains (losses) recognized in comprehensive income		699			(242	)		1,122			(995	)
Income tax effect		(287	)		99			(460	)		408
Unrealized holding losses on other-than-temporarily impaired securities available for sale, net of tax		412			(143	)		662			(587	)
Securities available for sale not other-than-temporarily impaired:
Gains (losses) arising during the year		245			4,735			(2,320	)		2,535
Income tax effect		(105	)		(1,777	)		759			(907	)
		140			2,958			(1,561	)		1,628
(Gains) losses recognized in earnings		—			(8	)		—			(8	)
Income tax effect		—			3			—			3
		—			(5	)		—			(5	)
Unrealized holding gains (losses) on securities available for sale not other-than-temporarily-impaired , net of tax		140			2,953			(1,561	)		1,623
Unrealized holding gain (loss) on securities, net		552			2,810			(899	)		1,036
Accrued benefit liability adjustment		143			(78	)		431			77
Income tax effect		(58	)		31			(173	)		(31	)
		85			(47	)		258			46
Other comprehensive income (loss)		637			2,763			(641	)		1,082
Comprehensive Income	$	3,771		$	11,271		$	25,467		$	21,846

See notes to condensed consolidated financial statements

4

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Dollars in thousands, except share amounts

	Sep 30 2012			Dec 31 2011
ASSETS
Cash and non interest earning due from banks	$	53,349		$	43,743
Interest earning deposits in banks		778,025			34,361
Federal funds sold		12,517			16,425
Securities available for sale, at estimated fair value (amortized cost of $444,337 in 2012 and $503,584 in 2011)		447,453			507,897
Securities held to maturity, at amortized cost (estimated fair value of $11,627 in 2012 and $13,819 in 2011)		10,902			12,905
Federal Home Loan Bank of New York (FHLB) stock		4,827			3,831
Loans (net of allowance for loan losses of $28,107 in 2012 and $30,685 in 2011)		1,476,814			1,541,405
Loans held for sale		2,354			473,814
Accrued interest and other receivables		25,099			40,405
Premises and equipment, net		24,424			25,936
Other real estate owned		250			1,174
Deferred income tax, net		18,585			19,822
Bank owned life insurance		38,937			37,563
Goodwill		23,842			23,842
Other intangible assets		1,090			1,651
Other assets		10,574			12,896
TOTAL ASSETS	$	2,929,042		$	2,797,670
LIABILITIES
Deposits:
Non interest bearing	$	997,251		$	910,329
Interest bearing		1,551,359			1,514,953
Total deposits		2,548,610			2,425,282
Securities sold under repurchase agreements and other short-term borrowings		42,693			53,056
Other borrowings		16,438			16,466
Accrued interest and other liabilities		28,401			25,304
TOTAL LIABILITIES		2,636,142			2,520,108
STOCKHOLDERS’ EQUITY
Preferred Stock, $0.01 par value; authorized 15,000,000 shares; no shares outstanding in 2012 and 2011, respectively		—			—
Common stock, $0.20 par value; authorized 25,000,000 shares: outstanding 19,638,090 and 19,516,490 shares in 2012 and 2011, respectively		4,188			4,163
Additional paid-in capital		348,159			347,764
Retained earnings (deficit)		(2,968	)		(18,527	)
Accumulated other comprehensive income		1,085			1,726
Treasury stock, at cost; 1,299,414 shares in 2012 and 2011		(57,564	)		(57,564	)
TOTAL STOCKHOLDERS’ EQUITY		292,900			277,562
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,929,042		$	2,797,670

See notes to condensed consolidated financial statements

5

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

Nine Months Ended September 30, 2012 and 2011

Dollars in thousands, except share amounts

	Number of Shares Outstanding		Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)			Total
Balance at January 1, 2012		19,516,490	$	4,163	$	(57,564	)	$	347,764	$	(18,527	)	$	1,726		$	277,562
Net income											26,108						26,108
Comprehensive loss														(641	)		(641	)
Stock option expense and exercises of stock options, net of tax		16,166		3					285								288
Restricted stock awards		105,434		22					110								132
Cash dividends ($0.54 per share)											(10,549	)					(10,549	)
Balance at September 30, 2012		19,638,090	$	4,188	$	(57,564	)	$	348,159	$	(2,968	)	$	1,085		$	292,900

	Number of Shares Outstanding		Common Stock		Treasury Stock			Additional Paid-in Capital		Retained Earnings (Deficit)			Accumulated Other Comprehensive Income (Loss)		Total
Balance at January 1, 2011		17,665,908		3,793		(57,564	)		346,750		(3,989	)		927		289,917
Net income											20,764					20,764
Comprehensive income														1,081		1,081
Stock option expense and exercises of stock options, net of tax		28,389		6					587							593
Cash dividends ($0.45 per share)											(8,844	)				(8,844	)
Balance at September 30, 2011		17,694,297	$	3,799	$	(57,564	)	$	347,337	$	7,931		$	2,008	$	303,511

See notes to condensed consolidated financial statements

6

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Dollars in thousands

	Nine Months Ended September 30
	2012			2011
Operating Activities:
Net Income	$	26,108		$	20,764
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		6,976			9,533
Depreciation and amortization		2,882			2,969
Recognized impairment charge on securities available for sale		528			323
Realized gain on security transactions net		—			(8	)
Amortization of premiums on securities, net		1,492			2,468
Realized loss (gain) on sale and revaluation of OREO		15			(82	)
Increase in cash value of bank owned life insurance		(1,113	)		(869	)
Amortization of other intangible assets		561			616
Stock option expense		37			107
Loss on valuation of loans held for sale		—			8
Realized (gain) on sale of loans held-for-sale		(15,935	)		—
Deferred taxes (benefit)		1,363			(1,313	)
Increase in deferred loan fees, net		(1,095	)		(82	)
Decrease in accrued interest and other receivables		15,306			3,109
Decrease (increase) in other assets		2,443			(487	)
Excess tax benefits from share-based payment arrangements		—			(7	)
Increase in accrued interest and other liabilities		3,660			5,679
Net cash provided by Operating Activities		43,228			42,728
Investing Activities:
Net decrease in short term investments		3,908			35,671
(Increase) decrease in FHLB stock		(996	)		3,178
Proceeds from maturities of securities available for sale		191,136			164,096
Proceeds from maturities of securities held to maturity		2,006			2,596
Proceeds from sales of securities available for sale		—			1,284
Purchases of securities available for sale		(133,913	)		(209,072	)
Proceeds from sales and payments of loans held for sale		487,274			3,253
Net decrease (increase) decrease in loans		58,710			(309,204	)
Proceeds from sales of OREO		909			11,036
Premiums paid on bank owned life insurance		(261	)		(324	)
Net purchases of premises and equipment		(1,370	)		(868	)
Net cash provided by (used in) Investing Activities		607,403			(298,354	)
Financing Activities:
Proceeds from issuance of common stock		251			486
Excess tax benefits from share-based payment arrangements		—			7
Net increase in deposits		123,328			295,256
Cash dividends paid		(10,549	)		(8,844	)
Repayment of other borrowings		(28	)		(71,276	)
Net (decrease) increase in securities sold under repurchase agreements and short-term borrowings		(10,363	)		10,017
Net cash provided by Financing Activities		102,639			225,646
Increase (decrease) in Cash and Cash Equivalents		753,270			(29,980	)
Cash and Cash Equivalents, beginning of period		78,104			284,156
Cash and Cash Equivalents, end of period	$	831,374		$	254,176
Supplemental disclosures:
Interest paid	$	5,956		$	9,142
Income tax payments		924			7,262
Transfers from loans held for sale back to loan portfolio		121			2,305
Transfers to other real estate owned		—			850

See notes to condensed consolidated financial statements

7

HUDSON VALLEY HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Dollars in thousands, except per share and share amounts

1. Description of Operations

Hudson Valley Holding Corp. (the “Company”) is a New York corporation founded in 1982. The Company is registered as a bank holding company under the Bank Holding Company Act of 1956.

The Company provides financial services through its wholly-owned subsidiary, Hudson Valley Bank, N.A. (“HVB” or “the Bank”), a national banking association established in 1972, with operational headquarters in Westchester County, New York. The Bank has 18 branch offices in Westchester County, New York, 5 in Manhattan, New York, 4 in Bronx County, New York, 2 in Rockland County, New York, 1 in Kings County, New York, 5 in Fairfield County, Connecticut and 1 in New Haven County, Connecticut.

The Company provides investment management services through a wholly-owned subsidiary of HVB, A.R. Schmeidler & Co., Inc. (“ARS”), a Manhattan, New York based money management firm.

Our principal executive offices are located at 21 Scarsdale Road, Yonkers, New York 10707.

We derive substantially all of our revenue and income from providing banking and related services to businesses, professionals, municipalities, not-for-profit organizations and individuals within our market area, primarily Westchester County and Rockland County, New York, portions of New York City, Fairfield County and New Haven County, Connecticut. We are dedicated to providing personalized service to customers and focusing on products and services for selected segments of the market. We believe that our ability to attract and retain customers is due primarily to our focused approach to our markets, our personalized and professional services, our product offerings, our experienced staff, our knowledge of our local markets and our ability to provide responsive solutions to customer needs. We provide these products and services to a diverse range of customers and do not rely on a single large depositor for a significant percentage of deposits. We anticipate that we will continue to expand in our current market and surrounding area through various means which include acquiring other banks and related businesses, adding staff, opening loan production offices and continuing to open new branch offices.

2. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (comprising only normal recurring adjustments) necessary to present fairly the financial position of the Company at September 30, 2012 and December 31, 2011 and the results of its operations and comprehensive income for the three and nine month periods ended September 30, 2012 and 2011 and cash flows and changes in stockholders’ equity for the nine month periods ended September 30, 2012 and 2011. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results of operations to be expected for the remainder of the year.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and predominant practices used within the banking industry. Certain information and note disclosures normally included in annual financial statements have been omitted.

In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheets and statements of income for the periods reported. Actual results could differ significantly from those estimates.

Estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the determination of the fair value of securities available for sale, the determination of other-than-temporary impairment of investments and the carrying amounts of goodwill and deferred tax assets. In connection with the determination of the allowance for loan losses, management utilizes the work of professional appraisers for significant properties.

Intercompany items and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

8

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2011 and notes thereto.

Cash and Cash Equivalents – For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and interest bearing deposits in other banks (including the Federal Reserve Bank of New York).

Securities — Securities are classified as either available for sale, representing securities the Company may sell in the ordinary course of business, or as held to maturity, representing securities that the Company has determined that it is more likely than not that it would not be required to sell prior to maturity or recovery of cost. Securities available for sale are reported at fair value with unrealized gains and losses (net of tax) excluded from operations and reported in other comprehensive income. Securities held to maturity are stated at amortized cost. Interest income includes amortization of purchase premium and accretion of purchase discount. The amortization of premiums and accretion of discounts is determined by using the level yield method. Securities are not acquired for purposes of engaging in trading activities. Realized gains and losses from sales of securities are determined using the specific identification method. The Company regularly reviews declines in the fair value of securities below their costs for purposes of determining whether such declines are other-than-temporary in nature. In estimating other-than-temporary impairment (“OTTI”), management considers adverse changes in expected cash flows, the length of time and extent that fair value has been less than cost and the financial condition and near term prospects of the issuer. The Company also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

Loans Held for Sale – Loan sales occur in limited circumstances as part of strategic business or regulatory compliance initiatives. Loans held for sale, including deferred fees and costs, are reported at the lower of cost or fair value as determined by expected bid prices from potential investors. Loans held for sale are segregated into pools based on distinct criteria and the lower of cost or fair value analysis is performed at the pool level. Loans are sold without recourse and servicing released. When a loan is transferred from portfolio to held for sale and the fair value is less than cost, a charge off is recorded against the allowance for loan loss. Subsequent declines in fair value, if any, are recorded as a valuation allowance and charged against earnings.

Loans — Loans are reported at their outstanding principal balance, net of the allowance for loan losses, and deferred loan origination fees and costs. Loan origination fees and certain direct loan origination costs are deferred and recognized over the life of the related loan or commitment as an adjustment to yield, or taken directly into income when the related loan is sold or commitment expires.

Allowance for Loan Losses — The Company maintains an allowance for loan losses to absorb probable losses incurred in the loan portfolio based on ongoing quarterly assessments of the estimated losses. The Company’s methodology for assessing the appropriateness of the allowance consists of a specific component for identified problem loans, and a formula component which addresses historical loan loss experience together with other relevant risk factors affecting the portfolio. This methodology applies to all portfolio segments.

The specific component incorporates the Company’s analysis of impaired loans. These accounting standards prescribe the measurement methods, income recognition and disclosures related to impaired loans. A loan is recognized as impaired when it is probable that principal and/or interest are not collectible in accordance with the loan’s contractual terms. In addition, a loan which has been renegotiated with a borrower experiencing financial difficulties for which the terms of the loan have been modified with a concession that the Company would not otherwise have granted are considered troubled debt restructurings and are also recognized as impaired. Measurement of impairment can be 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 fair value of the collateral, taking into account estimated selling costs, if the loan is collateral dependent. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change. If the fair value of an impaired loan is less than the related recorded amount, a specific valuation component is established within the allowance for loan losses or, if the impairment is considered to be permanent, a full or partial charge-off is recorded against the allowance for loan losses. Triggering events that may impact the Company’s decision to record a specific reserve instead of a partial charge-off on impaired loans typically involve some uncertainty as to the amount of permanent loss to be recorded. Examples include ongoing negotiations with a borrower, new appraisals or other collateral evaluations not yet received or completed and other factors where the decision to record a charge-off is considered premature. The Company has groups of smaller balance homogenous loans which are collectively reviewed for impairment. These groups include residential 1-4 family loans, home equity lines of credit and consumer loans. These loans are not individually risk rated while performing. They are either charged off or evaluated for impairment after 90 days delinquency.

9

The formula component is calculated by first applying historical loss experience factors to outstanding loans by type. The Company uses a three year average loss experience as the starting base for the formula component. This component is then adjusted to reflect additional risk factors not addressed by historical loss experience. These factors include the evaluation of then-existing economic and business conditions affecting the key lending areas of the Company and other conditions, such as new loan products, credit quality trends (including trends in nonperforming loans expected to result from existing conditions), collateral values, loan volumes and concentrations, recent charge-off and delinquency experience, specific industry conditions within portfolio segments that existed as of the balance sheet date and the impact that such conditions were believed to have had on the collectability of the loan portfolio. Senior management reviews these conditions quarterly. Management’s evaluation of the loss related to each of these conditions is quantified by portfolio segment and reflected in the formula component. The evaluations of the inherent loss with respect to these conditions is subject to a higher degree of uncertainty due to the subjective nature of such evaluations and because they are not identified with specific problem credits.

Actual losses can vary significantly from the estimated amounts. The Company’s methodology permits adjustments to the allowance in the event that, in management’s judgment, significant factors which affect the collectability of the loan portfolio as of the evaluation date have changed.

Management believes the allowance for loan losses is the best estimate of probable losses which have been incurred as of September 30, 2012. There is no assurance that the Company will not be required to make future adjustments to the allowance for possible adverse effects on borrowers or collateral values that may result from widespread damage caused by the recent storm, or in response to changing economic conditions, particularly in the Company’s service area, since the majority of the Company’s loans are collateralized by real estate. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments at the time of their examinations.

Loan Charge-Offs – The Company’s charge-off policy covers all loan portfolio classes. Loans are generally fully or partially charged-off at the earlier of when it is determined that collection efforts are no longer productive or when they have been identified as permanent losses by management, internal loan review and/or bank examiners. Factors considered in determining whether collection efforts are no longer productive include any amounts currently being collected, the status of discussions or negotiations with the borrower, the principal and/or guarantors, the cost of continuing, efforts to collect, the status of any foreclosure or legal actions, the value of the collateral, and any other pertinent factors. For loans in groups that are collectively reviewed for impairment, certain actions are taken after 90 days delinquency. Consumer loans, loans and lines with balances of $100,000 or less and other unsecured loans are charged off after 90 days delinquency. Other larger balance residential 1-4 mortgages and home equity lines of credit are placed on nonaccrual status after 90 days delinquency and are immediately evaluated for collectability utilizing a collateral based impairment analysis. Full or partial charge-offs are taken for impairment shortfalls on these loans. The loans are then transferred to asset recovery or other legal channels for foreclosure or other resolution.

Income Recognition on Loans — Interest on loans is accrued monthly. Net loan origination and commitment fees are deferred and recognized as an adjustment of yield over the lives of the related loans. Loans, including impaired loans, are placed on a non-accrual status when management believes that interest or principal on such loans may not be collected in the normal course of business. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against interest income. Interest received on non-accrual loans generally is either applied against principal or reported as interest income, in accordance with management’s judgment as to the collectability of principal. Loans can be returned to accruing status when they become current as to principal and interest, demonstrate a period of performance under the contractual terms, and when, in management’s opinion, they are estimated to be fully collectible. This methodology applies to all loan classes.

Premises and Equipment — Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally 3 to 5 years for furniture, fixtures and equipment and 31.5 years for buildings. Leasehold improvements are amortized over the lesser of the term of the lease or the estimated useful life of the asset.

Other Real Estate Owned (“OREO”) — Real estate properties acquired through loan foreclosure are recorded at estimated fair value, net of estimated selling costs, at time of foreclosure establishing a new cost basis. Credit losses arising at the time of foreclosure are charged against the allowance for loan losses. Subsequent valuations are periodically performed by management and the carrying value is adjusted by a charge to expense to reflect any subsequent declines in the estimated fair value. Routine holding costs are charged to expense as incurred.

Goodwill and Other Intangible Assets — Goodwill and identified intangible assets with indefinite useful lives are not subject to amortization. Identified intangible assets that have finite useful lives are amortized over those lives by a method which reflects the pattern in which the economic benefits of the intangible asset are used up. Goodwill is subject to impairment testing on an annual basis, or more often if events or circumstances indicate that impairment may exist. Identifiable intangible assets are subject to impairment if events or circumstances indicate that impairment may exist. If such testing indicates impairment in the values and/or remaining amortization periods of the intangible assets, adjustments are made to reflect such impairment. The Company’s goodwill

10

impairment evaluations as of December 31, 2011 did not indicate any impairment. The Company is not aware of any events or circumstances that existed with the identified intangible assets that would indicate impairment as of September 30, 2012.

Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Legal fees associated with loss contingencies are included in loss contingency accruals.

Income Taxes — Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period the change is enacted.

Stock-Based Compensation — Compensation costs relating to share-based payment transactions are recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued. Compensation costs related to share based payment transactions are expensed over their respective vesting periods. The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 7 “Stock-Based Compensation” herein for additional discussion.

Earnings per Common Share — Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per common share is similar to the computation of basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares, consisting solely of stock options, had been issued.

Other — Certain 2011 amounts have been reclassified to conform to the 2012 presentation.

3. Securities

The following tables set forth the amortized cost, gross unrealized gains and losses and the estimated fair value of securities classified as available for sale and held to maturity at September 30, 2012 and December 31, 2011 (in thousands):

	($000’s)
	September 30, 2012								December 31, 2011
	Amortized		Gross Unrealized				Estimated		Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Available for Sale
U.S. Treasury and government agencies	$	33,201	$	8	$	12	$	33,197		—		—		—		—
Mortgage-backed securities - residential		306,996		7,189		264		313,921	$	385,206	$	8,430	$	218	$	393,418
Obligations of states and political subdivisions		81,007		3,402		—		84,409		96,091		4,508		—		100,599
Other debt securities		13,098		12		7,716		5,394		12,220		—		8,888		3,332
Total debt securities		434,302		10,611		7,992		436,921		493,517		12,938		9,106		497,349
Mutual funds and other equity securities		10,035		609		112		10,532		10,067		617		136		10,548
Total	$	444,337	$	11,220	$	8,104	$	447,453	$	503,584	$	13,555	$	9,242	$	507,897
	Amortized		Gross Unrecognized				Estimated		Amortized		Gross Unrecognized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Held to Maturity
Mortgage-backed securities - residential	$	5,762	$	498		—	$	6,260	$	7,767	$	607		—	$	8,374
Obligations of states and political subdivisions		5,140		227		—		5,367		5,138		307		—		5,445
Total	$	10,902	$	725		—	$	11,627	$	12,905	$	914		—	$	13,819

Included in other debt securities are investments in five pooled trust preferred securities with amortized costs and estimated fair values of $10,006 and $2,996 respectively, at September 30, 2012. These investments represent trust preferred obligations of banking industry companies. The value of these investments has been severely negatively affected by the continued downturn in the economy and increased investor concerns about recent and potential future losses in the financial services industry. These investments are rated below investment grade by both Moody’s Investor Services and Fitch Ratings, Ltd at September 30, 2012 with ratings ranging from Caa2 to C. All of the Company’s pooled trust preferred securities are mezzanine class issues, four of which are subordinate to certain other classes of securities within their pools. In light of these conditions, these investments were reviewed for other-than-temporary impairment.

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In estimating OTTI losses, the Company considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuers, (3) whether the Company intends to sell or whether it is more likely than not that the Company would be required to sell the investments prior to recovery of cost and (4) evaluation of cash flows to determine if they have been adversely affected.

The Company uses a discounted cash flow (“DCF”) analysis to provide an estimate of an OTTI loss. Inputs to the discount model included known defaults and interest deferrals, projected additional default rates, projected additional deferrals of interest, over-collateralization tests, interest coverage tests and other factors. Additional expected default and deferral rates were weighted toward the near future to reflect the current adverse economic environment affecting the banking industry. All known and projected defaults are applied a loss severity of 100%. All known and expected deferrals are assigned a loss severity between 25% and 100% based on an individual review of the related issuers’ financial information. The review is focused on capital adequacy, earnings performance and various asset quality measurements. An additional factor for potential defaults/deferrals is included in each DCF at 2% of performing collateral in year 1, 1% in year 2 and 0.25% annually thereafter, at a loss severity rate of 85%. A 1% annual prepayment factor is also applied to each DCF. The discount rate used in the DCF was based upon the original yield expected from the related securities.

Significant specific inputs to the cash flow models used in determining credit related OTTI losses on pooled trust preferred securities as of September 30, 2012 included the following:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Discount rate index		3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR
Discount rate spread		2.25	%		1.80	%		1.90	%		1.90	%		1.70	%		1.60	%
Projected specific defaults and deferrals as % of original Collateral		57	%		63	%		51	%		51	%		41	%		34	%
Projected severity of loss as % of specific defaults/deferrals		84	%		86	%		92	%		92	%		80	%		82	%
Projected additional defaults/deferrals as % of performing collateral:
Year 1		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%
Year 2		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Thereafter		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Severity of loss		85	%		85	%		85	%		85	%		85	%		85	%

Additional information related to the Company’s pooled trust preferred securities as of September 30, 2012 is presented below:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Class		Mezz			B			B-1			B-2			B-2			B-2
Seniority		Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine
Amortized cost	$	61		$	923		$	733		$	1,100		$	5,791		$	2,104
Fair value		14			437			167			250			1,739			389
Unrealized gain (loss)		(47	)		(486	)		(566	)		(850	)		(4,052	)		(1,715	)
OTTI recognized in earnings - nine months ended September 30, 2012		—			(2	)		(188	)		(281	)		(53	)		(4	)
OTTI recognized in earnings - life to date		—			(1,122	)		(1,418	)		(2,127	)		(4,863	)		(472	)
Moody’s / Fitch		Caa2/CCC			Ca/C			C/C			C/C			C/C			Ca/C
Number of institutions currently performing		4			9			16			16			33			41
Actual defaults/deferrals as % of original collateral		27	%		52	%		51	%		51	%		41	%		32	%
Excess subordination as % of performing collateral (1)		20	%		-91	%		-88	%		-88	%		-47	%		-31	%

(1) The excess subordination as % of performing collateral is calculated by taking total performing collateral and dividing it by the sum of all class balances with seniority senior to and equal to the class for which the measurement is applicable. A negative percentage is indicative of a cash flow shortfall which could result in credit component OTTI. The severity of a current negative excess subordination is not necessarily indicative of the severity of the credit component OTTI as actual cash flow results realized with respect to future defaults and deferrals, default and deferral timing, loss severities, recovery timing, redirections of payments in other classes and other factors could act to increase or decrease an indicated deficiency at a future date.

The following table summarizes the change in pretax OTTI credit related losses on securities available for sale for the periods indicated (in thousands):

	Nine Months Ended
	Sep 30 2012			Sep 30 2011
Balance at beginning of period:
Total OTTI credit related impairment charges beginning of period	$	9,478		$	9,110
Increase to the amount related to the credit loss for which other-than-temporary impairment was previously recognized		528			323
Credit related impairment dispositions		(4	)		—
Credit related impairment not previously recognized		—			—
Balance at end of period:	$	10,002		$	9,433

During the nine month periods ended September 30, 2012 and 2011, pretax OTTI losses of $528 and $323, respectively, were recognized on pooled trust preferred securities. These OTTI losses resulted from adverse changes in the expected cash flows of these securities which indicated that the Company may not recover the entire cost basis of these investments. Continuation or worsening of current adverse economic conditions may result in further impairment charges in the future.

At September 30, 2012 and December 31, 2011, securities having a stated value of approximately $313 and $365, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

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The following tables reflect the Company’s investment’s fair value and gross unrealized loss, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, as of the dates indicated (in thousands):

September 30, 2012	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
U.S. Treasuries and government agencies	$	8,990	$	12		—		—	$	8,990	$	12
Mortgage-backed securities - residential		40,396		264		—		—		40,396		264
Obligations of states and political subdivisions		—		—		—		—		—		—
Other debt securities		—		—	$	2,996	$	7,716		2,996		7,716
Total debt securities		49,386		276		2,996		7,716		52,382		7,992
Mutual funds and other equity securities		8		1		97		111		105		112
Total temporarily impaired securities	$	49,394	$	277	$	3,093	$	7,827	$	52,487	$	8,104

There were no securities classified as held to maturity in an unrealized loss position at September 30, 2012.

December 31, 2011	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
Mortgage-backed securities - residential	$	41,421	$	218		—		—	$	41,421	$	218
Other debt securities		460		50	$	2,816	$	8,838		3,276		8,888
Total debt securities		41,881		268		2,816		8,838		44,697		9,106
Mutual funds and other equity securities		—		—		92		136		92		136
Total temporarily impaired securities	$	41,881	$	268	$	2,908	$	8,974	$	44,789	$	9,242

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2011.

The total number of securities in the Company’s portfolio that were in an unrealized loss position was 79 at September 30, 2012 and 82 at December 31, 2011. The Company has determined that it does not intend to sell, or it is more likely than not that it will be required to sell, its securities that are in an unrealized loss position prior to the recovery of its amortized cost basis. With the exception of the investment in pooled trust preferred securities discussed above, the Company believes that its securities continue to have satisfactory ratings, are readily marketable and that current unrealized losses are primarily a result of changes in interest rates. Therefore, management does not consider these investments to be other-than-temporarily impaired at September 30, 2012. With regard to the investments in pooled trust preferred securities, the Company has decided to hold these securities as it believes that current market quotes for these securities are not necessarily indicative of their value. The Company has recognized impairment charges on five of the pooled trust preferred securities. Management believes that the remaining impairment in the value of these securities to be primarily related to illiquidity in the market and therefore not credit related at September 30, 2012.

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The contractual maturity of all debt securities held at September 30, 2012 is shown below. Actual maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Contractual Maturity
Within 1 year	$	22,563	$	22,081		—		—
After 1 year but within 5 years		64,681		66,738	$	5,140	$	5,367
After 5 year but within 10 years		29,350		31,185		—		—
After 10 years		10,712		2,996		—		—
Mortgage-backed securities - residential		306,996		313,921		5,762		6,260
Total	$	434,302	$	436,921	$	10,902	$	11,627

4. Loans

The loan portfolio, excluding loans held for sale, is comprised of the following:

	September 30 2012			December 31 2011
Real Estate:
Commercial	$	583,653		$	690,837
Construction		91,241			110,027
Residential Multi-Family		209,192			227,595
Residential Other		322,841			287,233
Commercial & Industrial		266,118			218,500
Individuals & lease financing		34,643			41,760
Total loans		1,507,688			1,575,952
Deferred loan fees		(2,767	)		(3,862	)
Allowance for loan losses		(28,107	)		(30,685	)
Loans, net	$	1,476,814		$	1,541,405

In March 2012, the Company purchased $65,795 of adjustable rate 1-4 family residential loans as a partial redeployment of proceeds from the loan sales completed during the first quarter of 2012.

Risk characteristics of the Company’s portfolio segments include the following:

Commercial Real Estate Loans — In underwriting commercial real estate loans, the Company evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loan. Repayment of such loans may be negatively impacted should the borrower default or should there be a substantial decline in the value of the property securing the loan, or a decline in general economic conditions. Where the owner occupies the property, the Company also evaluates the business’s ability to repay the loan on a timely basis. In addition, the Company may require personal guarantees, lease assignments and/or the guarantee of the operating company when the property is owner occupied. These types of loans may involve greater risks than other types of lending, because payments on such loans are often dependent upon the successful operation of the business involved, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions affecting the borrowers’ business.

Construction Loans — Construction loans are short-term loans (generally up to 18 months) secured by land for both residential and commercial development. The loans are generally made for acquisition and improvements. Funds are disbursed as phases of construction are completed. Most non-residential construction loans require pre-approved permanent financing or pre-leasing by the Company or another bank providing the permanent financing. The Company funds construction of single family homes and commercial real estate, when no contract of sale exists, based upon the experience of the builder, the financial strength of the owner, the type and location of the property and other factors. Construction loans are generally personally guaranteed by the

14

principal(s). Repayment of such loans may be negatively impacted by the builders’ inability to complete construction, by a downturn in the new construction market, by a significant increase in interest rates or by a decline in general economic conditions. The Bank’s primary regulator considers construction loans to be part of commercial real estate for concentration risk measurement purposes.

Residential Real Estate Loans — Various loans secured by residential real estate properties are offered by the Company, including 1-4 family residential mortgages, multi-family residential loans and a variety of home equity line of credit products. Repayment of such loans may be negatively impacted should the borrower default, should there be a significant decline in the value of the property securing the loan or should there be decline in general economic conditions. The Company offers multi-family loans up to $7,500,000 per transaction. These loans are available for 7 or 10 year terms with one 5 year extension option. A 7 year term with no extension option is also offered. Pricing is typically based on a spread over the corresponding FHLBNY rate. Amortization of up to 30 years, a maximum loan to value ratio of 75% and a debt service coverage ratio of 1.2 to 1 are generally required. The Bank’s primary regulator considers multi-family residential loans to be part of commercial real estate for concentration risk measurement purposes.

Commercial and Industrial Loans — The Company’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses, not-for-profit organizations and professionals. These loans are usually made to finance the purchase of inventory, new or used equipment or other short or long-term working capital purposes. These loans are generally secured by corporate assets, often with real estate as secondary collateral, but are also offered on an unsecured basis. In granting this type of loan, the Company primarily looks to the borrower’s cash flow as the source of repayment with collateral and personal guarantees, where obtained, as a secondary source. Commercial loans are often larger and may involve greater risks than other types of loans offered by the Company. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, management’s inability to effectively manage the business, claims of others against the borrower’s assets which may take priority over the Company’s claims against assets, death or disability of the borrower or loss of market for the borrower’s products or services.

Lease Financing and Other Loans — The Company originates lease financing transactions which are primarily conducted with businesses, professionals and not-for-profit organizations and provide financing principally for office equipment, telephone systems, computer systems, energy saving improvements and other special use equipment. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, and management’s inability to effectively manage the business. The Company also offers installment loans and cash reserve lines of credit to individuals. Repayment of such loans is often dependent on the personal income of the borrower which may be negatively impacted by adverse changes in economic conditions. The Company does not place an emphasis on originating these types of loans.

15

The following tables presents the allowance for loan losses by portfolio segment for the periods indicated (in thousands):

	Three Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	28,733		$	11,592		$	4,496		$	8,789		$	3,420		$	436
Charge-offs		(5,628	)		(4,372	)		1			(1,171	)		(128	)		42
Recoveries		1,279			563			178			70			464			4
Net Charge-offs		(4,349	)		(3,809	)		179			(1,101	)		336			46
Provision for loan losses		3,723			3,467			(383	)		625			76			(62	)
Net change during the period		(626	)		(342	)		(204	)		(476	)		412			(16	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Nine Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	30,685		$	12,776		$	6,470		$	8,093		$	2,650		$	696
Charge-offs		(12,537	)		(4,770	)		(1,579	)		(2,999	)		(2,625	)		(564	)
Recoveries		2,983			861			179			396			1,029			518
Net Charge-offs		(9,554	)		(3,909	)		(1,400	)		(2,603	)		(1,596	)		(46	)
Provision for loan losses		6,976			2,383			(778	)		2,823			2,778			(230	)
Net change during the period		(2,578	)		(1,526	)		(2,178	)		220			1,182			(276	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Three Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	41,889		$	17,112		$	6,440		$	13,161		$	4,246		$	930
Charge-offs		(2,802	)		(69	)		(11	)		(2,263	)		(453	)		(6	)
Recoveries		527			44			28			336			112			7
Net Charge-offs		(2,275	)		(25	)		17			(1,927	)		(341	)		1
Provision for loan losses		2,536			(716	)		(231	)		3,115			387			(19	)
Net change during the period		261			(741	)		(214	)		1,188			46			(18	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

	Nine Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	38,949		$	16,736		$	7,140		$	9,851		$	4,290		$	932
Charge-offs		(9,429	)		(225	)		(867	)		(5,276	)		(2,997	)		(64	)
Recoveries		3,097			730			603			1,355			388			21
Net Charge-offs		(6,332	)		505			(264	)		(3,921	)		(2,609	)		(43	)
Provision for loan losses		9,533			(870	)		(650	)		8,419			2,611			23
Net change during the period		3,201			(365	)		(914	)		4,498			2			(20	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

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The following table presents the unpaid principal balance of impaired loans, including troubled debt restructurings, and the related recorded investment and allocated allowance for loan losses by class of loans, as of the dates indicated (in thousands):

	September 30, 2012						December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial Real Estate:
Owner occupied	$	27,551	$	22,947		—	$	21,115	$	21,039		—
Non owner occupied		3,103		2,063		—		10,762		9,723		—
Construction:
Commercial		—		—		—		2,690		1,723		—
Residential		3,201		2,201		—		—		—		—
Residential:
Multifamily		2,993		2,993		—		—		—		—
1-4 family		9,583		8,345		—		1,930		1,898		—
Home equity		2,220		1,212		—		2,669		1,926		—
Commercial & industrial		13,440		12,367		—		8,560		7,803		—
With an allowance recorded:
Construction:
Commercial		—		—		—		3,758		3,758	$	2,374
Total loans	$	62,091	$	52,128		—	$	51,484	$	47,870	$	2,374

The carrying value of impaired loans was determined using either the fair value of the underlying collateral of the loan taking into account estimated selling costs or by an analysis of the expected cash flows related to the loan. There were no allocations of specific reserves during the nine month period ended September 30, 2012. The Company typically records partial charge-offs for impairment as opposed to establishing specific reserves except in situations where estimated losses are in process of being finalized. The $2,374 specific reserve allocated to impaired loans as of December 31, 2011 was charged off in June 2012 upon completion of the TDR for which the specific reserve was originally established. The above tables as of September 30, 2012 and December 31, 2011 include $27,540 and $28,256, respectively, of loans considered to be troubled debt restructurings (“TDRs”). There were two additional loan modifications classified as TDRs during the nine month period ended September 30, 2012 with pre-modification balances of $14,604 for which charge-offs of $2,595 were recorded. An additional partial charge-off of $4,132 was recorded in the third quarter of 2012 on a prior performing TDR based on a significant reduction in the appraised value of the underlying collateral. The Company is not committed to extend any additional credit to borrowers whose loans are classified as TDRs. As of September 30, 2012, six TDRs with carrying amounts of $9,823 were on accrual status and six loans with carrying amounts of $17,717 on nonaccrual status that were performing in accordance with their modified terms.

The following table presents the average recorded investment in impaired loans including, troubled debt restructurings, and interest recognized on impaired loans by class of loans for the periods indicated (in thousands):

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	Three Months Ended September 30								Nine Months Ended September 30
	2012				2011				2012				2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Loans:
Commercial Real Estate:
Owner occupied	$	25,067	$	168	$	28,234	$	239	$	23,179	$	434	$	16,810	$	357
Non owner occupied		2,114		96		15,292		—		5,448		275		16,835		—
Construction:
Commercial		290		—		9,345		—		2,546		—		9,665		—
Residential		2,929		—		6,457		—		1,586		—		5,616		—
Residential:
Multifamily		2,156		48		4,586		—		1,386		69		4,453		—
1-4 family		8,869		—		5,005		32		5,475		—		4,940		32
Home equity		1,419		—		3,989		—		1,607		—		3,299		—
Commercial & industrial		12,323		—		8,623		—		10,032		—		7,081		—
Lease financing and other		128		—		245		—		85		—		318		—
Total	$	55,295	$	312	$	81,776	$	271	$	51,344	$	778	$	69,017	$	389

The difference between interest income recognized and interest income collected on impaired loans for the three and nine month periods ended September 30, 2012 and 2011 was not significant. Gross interest income that would have been recorded if these borrowers had been current in accordance with their original loan terms was $452 and $1,320, respectively, for the three and nine month periods ended September 30, 2012 and $1,630 and $2,466, respectively, for the three and nine month periods ended September 30, 2011.

The following tables present the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of the dates indicated (in thousands):

	September 30, 2012
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Individually evaluated for impairment		—		—		—		—		—		—
Total ending balance of allowance	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,455,560	$	558,643	$	89,040	$	519,483	$	253,751	$	34,643
Individually evaluated for impairment		52,128		25,010		2,201		12,550		12,367		—
Total ending balance of loans		$1,507,688		$583,653		$91,241		$532,033		$266,118		$34,643

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	December 31, 2011
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,311	$	12,776	$	4,096	$	8,093	$	2,650	$	696
Individually evaluated for impairment		2,374		—		2,374		—		—		—
Total ending balance of allowance	$	30,685	$	12,776	$	6,470	$	8,093	$	2,650	$	696
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,528,082	$	660,075	$	104,546	$	511,004	$	210,697	$	41,760
Individually evaluated for impairment		47,870		30,762		5,481		3,824		7,803		—
Total ending balance of loans	$	1,575,952	$	690,837	$	110,027	$	514,828	$	218,500	$	41,760

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The following table presents the recorded investment in non-accrual loans and loans past due 90 days and still accruing by class of loans as of the dates indicated (in thousands):

	September 30, 2012				December 31, 2011
	Non-Accrual		Past Due 90 Days  and Still Accruing		Non-Accrual		Past Due 90 Days  and Still Accruing
Loans:
Commercial Real Estate:
Owner occupied	$	16,575		—	$	3,856		—
Non owner occupied		1,605		—		9,356		—
Construction:
Commercial		—		—		5,481		—
Residential		2,201		—		—		—
Residential:
Multifamily		—		—		—		—
1-4 family		8,345		—		1,470		—
Home equity		1,212		—		1,926		—
Commercial & industrial		12,367		—		7,803		—
Other:
Lease financing and other		—		—		—		—
Overdrafts		—		—		—		—
Total	$	42,305		—	$	29,892		—

The following tables present the aging of loans (including past due and non-accrual loans) by class of loans as of the dates indicated (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or  More Past Due		Total Past  Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	194,782		—	$	1,821	$	9,746	$	11,567	$	183,215
Non owner occupied		388,871		—		927		1,605		2,532		386,339
Construction:
Commercial		43,377		—		—		—		—		43,377
Residential		47,864		—		—		2,201		2,201		45,663
Residential:
Multifamily		209,192		—		—		—		—		209,192
1-4 family		214,102	$	145		809		8,345		9,299		204,803
Home equity		108,739		2,735		178		1,212		4,125		104,614
Commercial & industrial		266,118		76		1,442		1,479		2,997		263,121
Other:
Lease financing and other		33,136		1		—		—		1		33,135
Overdrafts		1,507		—		—		—		—		1,507
Total	$	1,507,688	$	2,957	$	5,177	$	24,588	$	32,722	$	1,474,966

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	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	243,862	$	1,801		—	$	3,489	$	5,290	$	238,572
Non owner occupied		446,975		1,917		—		5,108		7,025		439,950
Construction:
Commercial		56,933		—		—		4,883		4,883		52,050
Residential		53,094		900		—		—		900		52,194
Residential:
Multifamily		227,595		—		—		—		—		227,595
1-4 family		174,714		—		—		1,470		1,470		173,244
Home equity		112,519		—	$	97		1,926		2,023		110,496
Commercial & industrial		218,500		197		50		4,403		4,650		213,850
Other:
Lease financing and other		39,898		1		10		—		11		39,887
Overdrafts		1,862		—		—		—		—		1,862
Total	$	1,575,952	$	4,816	$	157	$	21,279	$	26,252	$	1,549,700

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: value of underlying collateral, current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes non-homogeneous loans individually and classifies them as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention — Loans classified as special mention have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the asset or in the institution’s credit position at some future date.

Substandard — Loans classified as substandard asset are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful — Loans classified as doubtful have all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loans not meeting the above criteria that are analyzed individually as part of the above described process are considered to be pass rated loans.

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The following table presents the risk category by class of loans of non-homogeneous loans individually classified as to credit risk as of the most recent analysis performed for the dates indicated (in thousands):

	September 30, 2012
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	194,782	$	148,047	$	3,062	$	43,673		—
Non owner occupied		388,871		377,586		4,926		6,359		—
Construction:
Commercial		43,377		31,974		5,349		6,054		—
Residential		47,864		42,813		900		4,151		—
Residential:
Multifamily		209,192		205,999		—		3,193		—
1-4 family		83,234		53,611		20,856		8,767		—
Home equity		1,411		—		—		1,411		—
Commercial & Industrial		266,118		246,199		4,081		15,838		—
Lease Financing & Other		31,931		30,699		847		385		—
Total loans	$	1,266,780	$	1,136,928	$	40,021	$	89,831		—

	December 31, 2011
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	243,862	$	177,921	$	32,144	$	33,797		—
Non owner occupied		446,975		422,402		14,924		9,649		—
Construction:
Commercial		56,933		42,641		5,382		8,910		—
Residential		53,094		38,956		7,274		6,864		—
Residential:
Multifamily		227,595		226,224		—		1,371		—
1-4 family		90,033		72,594		15,109		2,330		—
Home equity		2,174		—		—		2,174		—
Commercial & Industrial		218,500		204,305		5,410		8,785		—
Lease Financing & Other		38,441		37,619		523		299		—
Total loans	$	1,377,607	$	1,222,662	$	80,766	$	74,179		—

Loans not individually rated, primarily consisting of certain 1-4 family residential mortgages and home equity lines of credit, are evaluated for risk in groups of homogeneous loans. The primary risk characteristic evaluated on these pools is delinquency.

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The following table presents, as of the dates indicated, the delinquency categories by class of loans for loans evaluated for risk in groups of homogeneous loans (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	130,868	$	145	$	91		—	$	236	$	130,632
Home equity		107,328		2,734		178		—		2,912		104,416
Other:
Other loans		1,205		1		—		—		1		1,204
Overdrafts		1,507		—		—		—		—		1,507
Total loans	$	240,908	$	2,880	$	269		—	$	3,149	$	237,759
	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	84,681		—		—		—		—	$	84,681
Home equity		110,345		—	$	97		—	$	97		110,248
Other:
Other loans		1,457	$	1		10		—		11		1,446
Overdrafts		1,862		—		—		—		—		1,862
Total loans	$	198,345	$	1	$	107		—	$	108	$	198,237

Loans Held for Sale

On February 1, 2012, the Company announced plans to sell a total of $474 million in performing and non-performing loans in two tranches by mid-2012, as a significant step toward reducing the bank's concentrations of commercial real estate loans and classified assets. These loans were transferred to loans held-for-sale at December 31, 2011 and both tranche sales were completed in March 2012.

The first tranche included $200 million in performing and non-performing loans. The carrying value of these commercial real estate loans was reduced by $60 million at December 31, 2011. These loans were primarily all commercial real estate credits, including classified assets totaling $53 million net of the market value adjustment. The recorded sales price, net of broker fees and expenses, exceeded the carrying value of this portfolio, resulting in a pre-tax gain of approximately $7.9 million.

The second tranche included $274 million in performing, non-classified multifamily loans. No market value adjustment was recorded when this portfolio was transferred to held-for-sale at December 31, 2011, as they were expected to be sold at or above par value. The sale of these loans in March 2012 resulted in a pre-tax gain of approximately $8.0 million.

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5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share for each of the periods indicated:

	Three Months Ended Sep 30				Nine Months Ended Sep 30
	2012		2011		2012		2011
			(000’s except share data)
Numerator:
Net income (loss) available to common shareholders for basic and diluted earnings per share	$	3,134	$	8,508	$	26,108	$	20,764
Denominator:
Denominator for basic earnings per common share - weighted average shares		19,636,014		19,462,158		19,602,815		19,455,553
Effect of diluted securities:
Stock options		6,676		16,172		9,784		50,666
Denominator for diluted earnings per common share - adjusted weighted average shares		19,642,690		19,478,329		19,612,599		19,506,219
Basic earnings per common share	$	0.16	$	0.44	$	1.33	$	1.07
Diluted earnings per common share	$	0.16	$	0.43	$	1.33	$	1.06
Dividends declared per share	$	0.18	$	0.18	$	0.54	$	0.46

Stock options of 465,304 and 259,271 were not considered in computing diluted earnings per share at September 30, 2012 and 2011, respectively, because they were anti dilutive. In November 2011, the Company declared a 10% stock dividend. Share and per share amounts for 2011 have been retroactively restated to reflect the issuance of the additional shares.

6. Benefit Plans

In addition to defined contribution pension and savings plans which cover substantially all employees, the Company provides additional retirement benefits to certain officers and directors pursuant to unfunded supplemental defined benefit plans. The following table summarizes the components of the net periodic pension cost of the defined benefit plans (in thousands).

	Three Months Ended Sep 30						Nine Months Ended Sep 30
	2012			2011			2012			2011
Service cost	$	110		$	103		$	329		$	294
Interest cost		164			155			476			449
Amortization of prior service cost		(58	)		(58	)		(175	)		(174	)
Amortization of net loss		168			139			503			418
Net periodic pension cost	$	384		$	339		$	1,133		$	987

The Company makes contributions to the unfunded defined benefit plans only as benefit payments become due. The Company disclosed in its 2011 Annual Report on Form 10-K that it expected to contribute $813 to the unfunded defined benefit plans during 2012. For the three and nine month periods ended September 30, 2012, the Company contributed $172 and $484, respectively, to these plans.

7. Stock-Based Compensation

In accordance with the provisions of the Hudson Valley Holding Corp. 2010 Omnibus Incentive Plan, approved by the Company’s shareholders on May 27, 2010, the Company may grant eligible employees, including directors, consultants and advisors, incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other types of awards. The 2010 Plan provides for the issuance of up to 1,331,000 shares of the Company’s common stock. Prior to the 2010 Plan, the Company had stock option plans that provided for the granting of options to directors, officers, eligible employees, and certain advisors, based upon eligibility as determined by the Compensation Committee. Under the prior plans, options were granted for the purchase of shares of the Company’s common stock at an exercise price not less than the market value of

24

the stock on the date of grant, vested over various periods ranging from immediate to five years from date of grant, and had expiration dates up to ten years from the date of grant.

Compensation costs relating to stock-based payment transactions are recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued. Stock-based payments are expensed over their respective vesting periods.

The following table summarizes stock-based compensation activity for the nine month period ended September 30, 2012:

Prior Option Plans:	Shares			Weighted Average Grant or Exercise Price		Aggregate Intrinsic Value (1) ($000’s)		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2011		625,256		$	22.81
Granted		—			—
Exercised		(7,757	)		16.54
Cancelled or Expired		(21,550	)		24.64
Outstanding at September 30, 2012		595,949		$	22.83	$	106		1.8
Exercisable at September 30, 2012		587,639		$	22.64	$	106		1.8
Nonvested at September 30, 2012		8,310		$	35.94
2010 Omnibus Incentive Plan:
Outstanding at December 31, 2011		—			—
Granted at fair value		114,586		$	16.69
Restriction released		(7,673	)		17.10
Cancelled		(9,152	)		16.74
Nonvested at September 30, 2012		97,761		$	16.65
Available for grant at December 31, 2011		1,331,000
Restricted stock awards		(114,586	)	$	16.69
Cancelled		9,152			16.74
Available for future grant		1,225,566

1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2012. This amount changes based on changes in the fair value of the Company’s stock.

The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were no stock options granted in the nine month period ended September 30, 2012 or the year ended December 31, 2011. The restricted stock awards granted during the nine month period ended September 30, 2012 were the initial awards under the 2010 Plan.

Net compensation expense of $37 and $100 related to the Company’s stock option plans was included in net income for the nine month periods ended September 30, 2012 and 2011, respectively. The total tax effect related thereto was $(2) and $4, respectively. Unrecognized compensation expense related to non-vested share-based compensation granted under the Company’s stock option plans totaled $14 at September 30, 2012. This expense is expected to be recognized over a remaining weighted average period of 0.4 years. Unrecognized compensation expense related to restricted stock awards totaled $1,628 at September 30, 2012. This expense is expected to be recognized over a remaining weighted average period of 2.3 years.

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8. Fair Value

Fair Value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. While management believes the Company’s valuation methodologies are appropriate and consistent with other financial institutions, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Investment Securities - The fair values of investment securities are determined by obtaining quoted prices on nationally recognized securities exchanges, if available (Level 1), or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities, which is a Level 2 input. The Company’s available for sale securities at September 30, 2012 and December 31, 2011 include several pooled trust preferred instruments. The recent severe downturn in the overall economy and, in particular, in the financial services industry has created a situation where significant observable inputs (Level 2) are not readily available for these instruments. As an alternative, the Company combined Level 2 input of market yield requirements of similar instruments together with certain Level 3 assumptions addressing the impact of current market illiquidity to estimate the fair value of these instruments. The fair values of Level 3 investment securities are determined by the Controller and Investment Officer who report to the Chief Financial Officer. See Note 3 “Securities” for further discussion of pooled trust preferred securities.

Impaired Loans – At the time a loan is considered impaired, it is valued at lower of cost or fair value. Impaired loans carried at fair value generally are partially charged off or receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value in commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraiser to adjust for differences between the comparable sales and the income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining value. Non real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and the client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned (“OREO”) — Real estate properties acquired through loan foreclosure are recorded at estimated fair value, net of estimated selling costs, at time of foreclosure establishing a new cost basis. Fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a level 3 classification of the inputs used in determining fair value.

Loans Held for Sale - Loans held for sale are carried at lower of cost or fair value. The fair value of loans held for sale is determined using average bid indicators from third parties expected to participate in the loan sales, in some cases adjusted for specific attributes of that loan or other observable market data. Such bids and adjustments often vary significantly and typically result in level 3 classification of the inputs used in determining fair value.

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The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Impaired loans	$	15,559	Sales comparison and income based appraisals	Capitalization rates	7.00% - 7.75%
				Management adjustment for for dated appraisal	0% - 20%
				Management adjustment for costs to sell	0% - 30%
Other real estate owned	$	250	Sales comparison and income based appraisals	Management adjustment for costs to sell	30%
Loans held for sale	$	2,354	Third party bids	Bids from interested third parties	64% - 65%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments at fair value on a recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Trust preferred securities	$	2,996	Discounted cash flow	Specific issuer default rates	33%-63%
				Specific issuer default severity	80%-92%
				Annual prepayment rate	1%
				Projected annual nonspecific issuer default rates	0.25%-2.00%
				Projected annual nonspecific issuer default severity	85%
				Present value discount rate	22.5%

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Assets and liabilities measured at fair value as of the dates indicated are summarized below:

	Fair Value Measurements at
	September 30, 2012
	Quoted Prices in		Significant		Significant
	Active Markets		Other		Unobservable
	for Identical Assets		Observable Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—	$	33,197		—	$	33,197
Mortgage-backed securities - residential		—		313,921		—		313,921
Obligations of states and political subdivisions		—		84,409		—		84,409
Other debt securities		—		2,398	$	2,996		5,394
Mutual funds and other equity securities		—		10,532		—		10,532
Total assets at fair value		—	$	444,457	$	2,996	$	447,453
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	6,529	$	6,529
Construction		—		—		2,201		2,201
Residential		—		—		5,057		5,057
Commercial & Industrial		—		—		1,772		1,772
Other		—		—		—		—
Loans held for sale		—		—		2,354		2,354
Other real estate owned		—		—		250		250
Total assets at fair value		—		—	$	18,163	$	18,163

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	Fair Value Measurements at
	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—		—		—		—
Mortgage-backed securities - residential		—	$	393,418		—	$	393,418
Obligations of states and political subdivisions		—		100,599		—		100,599
Other debt securities		—		516	$	2,816		3,332
Mutual funds and other equity securities		—		10,548		—		10,548
Total assets at fair value		—	$	505,081	$	2,816	$	507,897
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	1,410	$	1,410
Construction		—		—		3,107		3,107
Residential		—		—		1,529		1,529
Commercial & Industrial		—		—		2,145		2,145
Other		—		—		—		—
Loans held for sale		—		—		473,814		473,814
Other real estate owned		—		—		1,174		1,174
Total assets at fair value		—		—	$	483,179	$	483,179

(1) The recorded investments in impaired loans subject to fair value reporting at September 30, 2012 and December 31, 2011 were $12,407 and $10,565, respectively. Specific allowances of $0 and $2,374 had been established within the allowance for loan losses as of September 30, 2012 and December 31, 2011, respectively.

The table below presents a reconciliation and income statement classification of gains and losses for securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine month periods ended September 30, 2012 and 2011:

	Level 3 Assets Measured on a Recurring Basis
	Three Months Ended						Nine Months Ended
	Sep 30						Sep 30
	2012			2011			2012			2011
	(000’s)						(000’s)
Balance at beginning of period	$	2,768		$	2,923		$	2,816		$	3,687
Additions to Level 3		49			93			257			289
Net unrealized gain (loss) included in other comprehensive income		699			(242	)		1,122			(995	)
Principal payments		(520	)		—			(671	)		(3	)
Recognized impairment charge included in the statement of income		—			(119	)		(528	)		(323	)
Balance at end of period	$	2,996		$	2,655		$	2,996		$	2,655

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9. Fair Value of Financial Instruments

The Company follows the “Financial Instruments” topic of the FASB Accounting Standards Codification which requires the disclosure of the estimated fair value of certain financial instruments. These estimated fair values as of September 30, 2012 and December 31, 2011 have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on these estimates of fair value.

Carrying amount and estimated fair value of financial instruments not previously presented as of the dates indicated were as follows:

September 30, 2012					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	843.9	$	843.9	$	843.9
Held to maturity securities and accrued interest		10.9		11.6			$	11.6
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,495.7		1,536.3					$	1,536.3
Liabilities:
Deposits with no stated maturity and accrued interest		2,414.5		2,414.5		2,414.5
Time deposits and accrued interest		134.4		134.8				134.8
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		42.7		42.7				42.7
Other borrowings and accrued interest		16.6		14.0				14.0

December 31, 2011					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	94.5	$	94.5	$	94.5
Held to maturity securities and accrued interest		13.0		13.9			$	13.9
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,571.3		1,609.2					$	1,609.2
Liabilities:
Deposits with no stated maturity and accrued interest		2,274.7		2,274.7		2,274.7
Time deposits and accrued interest		151.7		152.1				152.1
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		53.1		53.1				53.1
Other borrowings and accrued interest		16.6		14.0				14.0

The estimated fair value of the indicated items was determined as follows:

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Financial assets for which carrying value approximates fair value — The estimated fair value approximates carrying amount because of the immediate availability of these funds or based on the short maturities and current rates for similar deposits. Cash and due from banks as well as Federal funds sold are reported in this line item.

Held to maturity securities and accrued interest — The fair value of securities held to maturity was estimated based on quoted market prices or dealer quotations. Accrued interest is stated at its carrying amounts which approximates fair value.

FHLB Stock — It is not practicable to determine its fair value due to restrictions placed on its transferability.

Loans and accrued interest — The fair value of loans was estimated by discounting projected cash flows at the reporting date using current rates for similar loans. Accrued interest is stated at its carrying amount which approximates fair value. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits with no stated maturity and accrued interest — The estimated fair value of deposits with no stated maturity and accrued interest, as applicable, are considered to be equal to their carrying amounts.

Time deposits and accrued interest — The fair value of time deposits has been estimated by discounting projected cash flows at the reporting date using current rates for similar deposits. Accrued interest is stated at its carrying amount which approximates fair value.

Securities sold under repurchase agreements and other short-term borrowings and accrued interest — The estimated fair value of these instruments approximate carrying amount because of their short maturities and variable rates. Accrued interest is stated at its carrying amount which approximates fair value.

Other borrowings and accrued interest — The fair value of callable FHLB advances was estimated by discounting projected cash flows at the reporting date using the rate applicable to the projected call date option. Accrued interest is stated at its carrying amount which approximates fair value.

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

This section presents discussion and analysis of the Company’s consolidated financial condition at September 30, 2012 and December 31, 2011, and the consolidated results of operations for the three and nine month periods ended September 30, 2012 and 2011. The Company is consolidated with its wholly owned subsidiaries Hudson Valley Bank, N.A. and its subsidiaries (collectively “HVB” or “the Bank”) and HVHC Risk Management Corp. This discussion and analysis should be read in conjunction with the financial statements and supplementary financial information contained in the Company’s 2011 Annual Report on Form 10-K.

Overview of Management’s Discussion and Analysis

This overview is intended to highlight selected information included in this Quarterly Report on Form 10-Q. It does not contain sufficient information for a complete understanding of the Company’s financial condition and operating results and, therefore, should be read in conjunction with this entire Quarterly Report on Form 10-Q and the Company’s 2011 Annual Report on Form 10-K.

The Company derives substantially all of its revenue from providing banking and related services to businesses, professionals, municipalities, not-for profit organizations and individuals within its market area, primarily Westchester County and Rockland County, New York, portions of New York City and Fairfield County and New Haven County, Connecticut. The Company’s assets consist primarily of loans and investment securities, which are funded by deposits, borrowings and capital. The primary source of revenue is net interest income, the difference between interest income on loans and investments, and interest expense on deposits and borrowed funds. The Company’s basic strategy is to grow net interest income and non interest income by the retention of its existing customer base and the expansion of its core businesses and branch offices within its current market and surrounding areas. Considering current economic conditions, the Company’s primary market risk exposures are interest rate risk, the risk of deterioration of market values of collateral supporting the Company’s loan portfolio, particularly commercial and residential real estate and potential risks associated with the impact of regulatory changes that may take place in reaction to the current crisis in the financial system. Interest rate risk is the exposure of net interest income to changes in interest rates. Commercial and residential real estate are the primary collateral for the majority of the Company’s loans.

The Company recorded net income for the three month period ended September 30, 2012 of $3.1 million or $0.16 per diluted share, a decrease of $5.4 million compared to net income of $8.5 million or $0.43 per diluted share for the same period in the prior year. Net income for the nine month period ended September 30, 2012 was $26.1 million or $1.33 per diluted share, an increase of $5.3 million compared to net income of $20.8 million or $1.06 per diluted share for the same period in the prior year. Per share amounts for the 2011 periods have been adjusted to reflect the effects of the 10 percent stock dividend issued in December 2011.

The decrease in earnings for the three month period ended September 30, 2012, compared to the same period in the prior year, was primarily due to a $5.9 million decrease in net interest income, the anticipated result of excess liquidity remaining from the proceeds of the loan sales conducted in the first and second quarters of 2012. The loan sales were conducted as part of the company’s efforts to reduce the levels of nonperforming and other classified loans, and also to reduce the overall concentration in commercial real estate loans. In addition to the decrease in net interest income, net income for the third quarter of 2012 was lower, compared to the same period in the prior year, as a result of a higher provision for loan losses and lower fee income, partially offset by lower losses on sales and revaluations of loans and other real estate owned and slightly lower non interest expenses. The increase in earnings for the nine month period ended September 30, 2012, compared to the same period in the prior year, resulted primarily from pretax gain of $15.9 million resulting from the successful completion of $474 million of loan sales announced in the fourth quarter of 2011 and completed at the end of the first quarter of 2012. In addition to the gains on the loan sales, income for the nine month period ended September 30, 2012 was higher, compared to the same period in the prior year, due to a lower provision for loan losses, partially offset by lower net interest income, higher impairment charges on securities available for sale and slightly higher non interest expenses.

Total loans, excluding loans held for sale, decreased $47.9 million and $68.3 million during the three and nine month periods ended September 30, 2012 compared to the prior year end. The overall decrease was primarily the result of pay downs and payoffs of existing loans exceeding new production and additional loan sales conducted in the second quarter of 2012, partially offset by the purchase of adjustable rate residential loans in the first quarter of 2012, which were purchased as partial redeployment of proceeds from sales of loans held for sale. The Company continues to provide lending availability to both new and existing customers.

Nonperforming assets decreased to $42.6 million at September 30, 2012, compared to $58.9 million at December 31, 2011. Overall asset quality continued to be adversely affected by the current state of the economy and the real estate market. Although there is evidence that the current economic downturn may have begun to slowly turn around, higher than normal levels of delinquent and nonperforming loans, slowdowns in repayments and declines in the loan-to-value ratios on existing loans continued during the first three quarters of 2012. Despite overall reductions in classified and nonperforming loans, the Company’s loan portfolio continued to be

32

adversely impacted by the effects of declines in the demand for and values of virtually all commercial and residential real estate properties. These declines, together with the limited availability of residential mortgage financing, resulted in some continuing weakness in the overall asset quality of the company’s loan portfolio. As a result of these factors, the Company has continued to follow aggressive strategies for resolving problem assets and has maintained the allowance for loan loss at a higher than normal level. The provision for loan losses totaled $3.7 million and $7.0 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $2.5 million and $9.5 million, respectively, for the same periods in the prior year. The 2012 provision is lower than in 2011 reflecting improvements achieved in the resolutions of classified and nonperforming loans, however, the provisions in both 2012 and 2011 are reflective of continued weakness in the overall economy, and the related effects of this weakness on the company’s overall asset quality.

Total deposits increased by $123.3 million during the nine month period ended September 30, 2012, compared to the prior year end. The Company continued to emphasize its core deposit growth, while placing less emphasis on non core deposits including deposits which are obtained on a bid basis.

Liquidity from deposit growth and excess loan and investment repayments over new production was retained in the Company’s short-term liquidity portfolios, available to fund future loan growth. With interest rates remaining at historical low levels, this increase in liquidity contributed to significant margin compression. The net interest margin was 3.60 percent and 4.09 percent, respectively, for the three and nine month periods ended September 30, 2012, compared to 4.47 percent and 4.47 percent, respectively, for the same periods in the prior year. The Company expects some additional net interest margin compression in future quarters due to maturing loans and investments being reinvested at lower interest rates and until redeployment of the excess proceeds from the recent loan sales and other maturing assets can be completed in a manner consistent with both the Company’s risk management policies and the requirements of the OCC. The Company is in the process of implementing new lending initiatives designed to address both near and long term redeployment of available liquidity and diversification of the balance sheet. These initiatives include asset purchases, loan participations with other institutions and the development of internal ability to originate, underwrite and service leasing and other non commercial real estate credits. Regardless of the timing of the aforementioned redeployment, if interest rates continue at current levels, we expect that additional downward pressure on net interest margin will continue.

As a result of the aforementioned activity in the Company’s core businesses of loans and deposits and other asset/liability management activities, tax equivalent basis net interest income decreased by $6.1 million or 19.9 percent to $24.5 million for the three month period ended September 30, 2012, compared to $30.6 million for the same period in the prior year. Tax equivalent basis net interest income decreased by $6.5 million or 7.3 percent to $82.4 million for the nine month period ended September 30, 2012, compared to $88.9 million for the same period in the prior year. The effect of the adjustment to a tax equivalent basis was $0.4 million and $1.5 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $0.6 million and $1.8 million, respectively, for the same periods in the prior year.

The Company’s non interest income was $4.4 million and $29.5 million, respectively, for the three and nine month periods ended September 30, 2012. This represented a decrease of $1.3 million and an increase of $14.7 million, respectively, compared to $5.7 million and $14.8 million, respectively, for the same periods in the prior year. The decrease in the three month period ended September 30, 2012, compared to the same period in the prior year, resulted from lower service fees, lower investment advisory fees and lower net gains on sales and revaluations of assets. The increase in the nine month period ended September 30, 2012, compared to the same period in the prior year, resulted from a $15.9 million pretax gain on sales of loans completed in the first quarter of 2012 and higher other income, partially offset by lower service fees, lower investment advisory fees and higher impairment charges on securities available-for-sale. Investment advisory fee income was lower in 2012 primarily as a result of the effects of continued fluctuation in both domestic and international equity markets. Service charges decreased due to decreased activity. Pre-tax impairment charges on securities available for sale were $0.5 million for the nine month period ended September 30, 2012 and $0.3 million for the same period in the prior year. The impairment charges were related to the company’s investments in pooled trust preferred securities. Non interest income also included other gains of $0.9 million and $0.1 million, respectively, for the three and nine month periods ended September 30, 2011. These gains related to sales and revaluations of other real estate owned and loans held for sale.

Non interest expense was $20.0 million and $61.9 million, respectively, for the three and nine month periods ended September 30, 2012. This represented a decrease of $0.1 million or 0.5 percent and an increase of $0.7 million or 1.1 percent, respectively, compared to $20.1 million and $61.2 million, respectively, for the same periods in the prior year. The overall increase in non interest expense resulted primarily from an additional provision of $1.3 million related to the previously announced ongoing investigations by the Securities and Exchange Commission (“SEC”) and the Department of Labor (“DOL”) relating to issues surrounding the brokerage practices and policies and disclosures about such practices of the Company’s investment advisory subsidiary, A.R. Schmeidler & Co., Inc. Based on ongoing discussions with the SEC and the DOL, the Company believes it has substantially accrued for any penalties and related costs anticipated in the final resolution of this matter although, until final agreement is reached, the exact result cannot be determined. Other changes in non interest expense included decreases in costs associated with problem loan resolution and decreases in FDIC insurance, partially offset by increases in investments in technology and personnel to accommodate expanding risk management requirements and growth and the expansion of services and products available to new and existing customers.

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The Office of Comptroller of the Currency (“OCC”) has directed greater scrutiny to banks with higher levels of commercial real estate loans. During the fourth quarter of 2009, the OCC required HVB to maintain, by December 31, 2009, a total risk-based capital ratio of at least 12.0%, a Tier 1 risk-based capital ratio of at least 10.0%, and a Tier 1 leverage ratio of at least 8.0%. These capital levels are in excess of “well capitalized” levels generally applicable to banks under current regulations. The Company and HVB have continuously exceeded all required regulatory capital ratios.

On February 1, 2012, Hudson Valley announced that during a routine exam and discussions with the OCC, HVB was made aware that it would be required to reduce its concentration in commercial real estate loans, including multi-family lending, as well as classified loans. As previously disclosed, the Company’s response to these discussions with the OCC included a commitment to reduce concentrations of CRE loans and classified assets to less than 400 percent and 25 percent of risk-based capital, respectively, in the near term.

As a result of the loan sales completed in the first quarter of 2012, and other resolution efforts, the Company reduced CRE loans to 313 percent of risk-based capital from 558 percent at the end of last year, while lowering classified assets to 31.9 percent of risk-based capital. Classified assets ranged between 56 percent and 67 percent of risk-based capital in 2011, before the impact of loan marks at December 31, 2011.

Also on February 1, Hudson Valley announced its new dividend policy capping dividend payments at no more than 50 percent of net income in 2012, and in future periods if CRE loans and classified assets exceed 400 percent and 25 percent of risk-based capital, respectively.

On April 24, 2012, the Board of Directors of Hudson Valley Bank signed a formal written agreement with the OCC. With this agreement, Hudson Valley is committing to adopt best practices modeled on those of the nation’s larger financial institutions, as well as evolving expectations of regulatory agencies on community banks. Included in the agreed-upon commitments are enhancements to the HVB’s procedures, systems, policies, programs, plans, training and resources. The agreement is consistent with the CRE lending and classified asset concentration commitments Hudson Valley announced on February 1. The written agreement imposes no specific capital ratio mandates or other quantitative conditions or obligations on Hudson Valley and does not impose any limit on the HVB board’s ability to pay dividends to its parent, except those imposed by the law. During the second quarter of 2012, the Bank submitted a capital plan to the OCC, which included provisions regarding the payment of dividend by HVB, as required under the written agreement. The Bank is operating in accordance with its capital plan without supervisory objection from the OCC.

Critical Accounting Policies

Application of Critical Accounting Policies — The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Company’s significant accounting policies are more fully described in Note 2 to the Consolidated Financial Statements. Certain accounting policies require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. On an on-going basis, management evaluates its estimates and assumptions, and the effects of revisions are reflected in the financial statements in the period in which they are determined to be necessary. The accounting policies described below are those that most frequently require management to make estimates and judgments, and therefore, are critical to understanding the Company’s results of operations. Senior management has discussed the development and selection of these accounting estimates and the related disclosures with the Audit Committee of the Company’s Board of Directors.

Results of Operations for the Three and Nine Month Periods Ended September 30, 2012 and 2011

Summary of Results

The Company recorded net income of $3.1 million or $0.16 per diluted share and $26.1 million or $1.33 per diluted share for the three and nine month periods ended September 30, 2012, compared to $8.5 million or $0.43 per diluted share and $20.8 million or $1.06 per diluted share for the same periods in the prior year. Per share amounts for the 2011 periods have been adjusted to reflect the effects of the 10% stock dividend issued in December 2011. The decrease in earnings for the three month period ended September 30, 2012, compared to the same period in the prior year, was primarily due to a $5.9 million decrease in net interest income, the anticipated result of excess liquidity remaining from the proceeds of the loan sales conducted in the first and second quarters of 2012. In addition to the decrease in net interest income, income from the second quarter of 2012 was lower, compared to the same period in the prior year, as a result of higher provision for loan losses and lower fee income, partially offset by lower loss on sales and revaluations of loans and other real estate owned and slightly higher non interest expenses. The increase in earnings for the nine month period ended

34

September 30, 2012, compared to the same period in the prior year, resulted primarily from pretax gain of $15.9 million resulting from the successful completion of $474 million of loan sales announced in the fourth quarter of 2011 and completed at the end of the first quarter of 2012. In addition to the gains on the loan sales, income for the nine month period ended September 30, 2012 was higher, compared to the same period in the prior year, due to a lower provision for loan losses, partially offset by lower net interest income, higher impairment charges on securities available for sale and slightly higher non interest expenses. The provision for loan losses totaled $3.7 million and $7.0 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $2.5 million and $9.5 million, respectively, for the same periods in the prior year. The 2012 provision for the first nine months is significantly lower than the comprable 2011 period reflecting improvements achieved in the resolutions of classified and nonperforming loans, however, the provisions in both 2012 and 2011 are reflective of continued weakness in the overall economy, and the related effects of this weakness on the Company’s overall asset quality.

Annualized returns on average stockholders’ equity and average assets were 4.3 percent and 0.4 percent for the three month period ended September 30, 2012, compared to 11.3 percent and 1.2 percent for the same period in the prior year. Annualized returns on average stockholders’ equity and average assets were 12.0 percent and 1.2 percent for the nine month period ended September 30, 2012, compared to 9.4 percent and 1.0 percent for the same period in the prior year. Returns on adjusted average stockholders’ equity were 4.3 percent and 12.2 percent for the three and nine month periods ended September 30, 2012, compared to 11.5 percent and 9.5 percent for the same periods in the prior year. Adjusted average stockholders’ equity excludes the effects of average net unrealized gains (losses) on securities available for sale, net of tax, of $(0.5) million and $1.5 million for the three and nine month periods ended September 30, 2012, and $1.7 million and $0.8 million for the same period in the prior year. The annualized return on adjusted average stockholders’ equity is, under SEC regulations, a non-GAAP financial measure. Management believes that this non-GAAP financial measure more closely reflects actual performance, as it is more consistent with the Company’s stated asset/liability management strategies, which do not contemplate significant realization of market gains or losses on securities available for sale which were primarily related to changes in interest rates or illiquidity in the marketplace.

35

Average Balances and Interest Rates:

The following tables set forth the average balances of interest earning assets and interest bearing liabilities for the periods indicated, as well as total interest and corresponding yields and rates (dollars in thousands).

	Three Months Ended September 30,
	2012							2011
	Average Balance		Interest (3)		Yield/ Rate			Average Balance		Interest (3)		Yield/ Rate
	(Unaudited)
ASSETS
Interest earning assets:
Deposits in Banks	$	696,798	$	381		0.22	%	$	234,589	$	154		0.26	%
Federal funds sold		22,782		11		0.19	%		39,971		24		0.24	%
Securities: (1)
Taxable		367,206		2,902		3.16	%		378,157		2,778		2.94	%
Exempt from federal income taxes		86,429		1,224		5.66	%		103,638		1,522		5.87	%
Loans, net (2)		1,505,942		21,619		5.74	%		1,928,888		28,641		5.94	%
Total interest earning assets		2,679,157		26,137		3.90	%		2,685,243		33,119		4.93	%
Non interest earning assets:
Cash and due from banks		50,526							48,290
Other assets		146,062							135,965
Total non interest earning assets		196,588							184,255
Total assets	$	2,875,745						$	2,869,498
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Money market	$	874,877	$	841		0.38	%	$	999,130	$	1,557		0.62	%
Savings		125,759		146		0.46	%		111,358		116		0.42	%
Time		136,459		194		0.57	%		163,830		357		0.87	%
Checking with interest		383,258		212		0.22	%		309,694		196		0.25	%
Securities sold under repo & other s/t borrowings		48,082		18		0.15	%		53,100		68		0.51	%
Other borrowings		16,441		183		4.45	%		23,652		254		4.30	%
Total interest bearing liabilities		1,584,876		1,594		0.40	%		1,660,764		2,548		0.61	%
Non interest bearing liabilities:
Demand deposits		969,025							884,347
Other liabilities		31,204							25,770
Total non interest bearing liabilities		1,000,229							910,117
Stockholders’ equity (1)		290,640							298,617
Total liabilities and stockholders’ equity	$	2,875,745						$	2,869,498
Net interest earnings			$	24,543						$	30,571
Net yield on interest earning assets						3.66	%						4.55	%

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	Nine Months Ended September 30,
	2012							2011
	Average Balance		Interest (3)		Yield/ Rate			Average Balance		Interest (3)		Yield/ Rate
	(Unaudited)
ASSETS
Interest earning assets:
Deposits in Banks	$	451,380	$	735		0.22	%	$	253,829	$	519		0.27	%
Federal funds sold		18,707		28		0.20	%		42,190		73		0.23	%
Securities: (1)
Taxable		378,363		9,355		3.30	%		359,008		8,875		3.30	%
Exempt from federal income taxes		94,650		4,295		6.05	%		109,837		5,077		6.16	%
Loans, net (2)		1,692,823		73,197		5.77	%		1,832,866		82,914		6.03	%
Total interest earning assets		2,635,923		87,610		4.43	%		2,597,730		97,458		5.00	%
Non interest earning assets:
Cash and due from banks		48,748							46,501
Other assets		151,766							143,107
Total non interest earning assets		200,514							189,608
Total assets	$	2,836,437						$	2,787,338
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest bearing liabilities:
Deposits:
Money market	$	904,794	$	2,997		0.44	%	$	946,616	$	4,699		0.66	%
Savings		122,711		407		0.44	%		112,907		358		0.42	%
Time		140,774		659		0.62	%		172,634		1,176		0.91	%
Checking with interest		347,664		494		0.19	%		293,660		557		0.25	%
Securities sold under repo & other s/t borrowings		48,791		85		0.23	%		46,102		172		0.50	%
Other borrowings		16,450		546		4.43	%		48,176		1,599		4.43	%
Total interest bearing liabilities		1,581,184		5,188		0.44	%		1,620,095		8,561		0.70	%
Non interest bearing liabilities:
Demand deposits		938,938							848,834
Other liabilities		28,421							24,106
Total non interest bearing liabilities		967,359							872,940
Stockholders’ equity (1)		287,894							294,303
Total liabilities and stockholders’ equity	$	2,836,437						$	2,787,338
Net interest earnings			$	82,422						$	88,897
Net yield on interest earning assets						4.17	%						4.56	%

(1) Excludes unrealized gains (losses) on securities available for sale. Management believes that this presentation more closely reflects actual performance, as it is more consistent with the Company’s stated asset/liability management strategies, which have not resulted in significant realization of temporary market gains or losses on securities available for sale which were primarily related to changes in interest rates. Effects of these adjustments are presented in the table below.

(2) Includes loans classified as non-accrual and loans held-for-sale.

(3) The data contained in the table has been adjusted to a tax equivalent basis, based on the Company’s federal statutory rate of 35 percent. Management believes that this presentation provides comparability of net interest income and net interest margin arising from both taxable and tax-exempt sources and is consistent with industry practice and SEC rules. Effects of these adjustments are presented in the table below.

Non-GAAP Reconciliation to GAAP

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	Three Months Ended						Nine Months Ended
	Sep 30						Sep 30
	2012			2011			2012			2011
	(000’s)						(000’s)
Total interest earning assets:
As reported	$	2,678,046		$	2,687,904		$	2,637,934		$	2,598,798
Unrealized gain on securities available for sale (1)		(1,111	)		2,661			2,011			1,068
Adjusted total interest earning assets	$	2,679,157		$	2,685,243		$	2,635,923		$	2,597,730
Net interest earnings:
As reported	$	24,115		$	30,038		$	80,919		$	87,120
Adjustment to tax equivalency basis (2)		428			533			1,503			1,777
Adjusted net interest earnings	$	24,543		$	30,571		$	82,422		$	88,897
Net yield on interest earning assets:
As reported		3.60	%		4.47	%		4.09	%		4.47	%
Effects of (1) and (2) above		0.06	%		0.08	%		0.08	%		0.09	%
Adjusted net yield on interest earning assets		3.66	%		4.55	%		4.17	%		4.56	%
Average stockholders’ equity:
As reported	$	290,189		$	300,338		$	289,345		$	295,084
Effects of (1) and (2) above		(451	)		1,721			1,451			781
Adjusted average stockholders’ equity	$	290,640		$	298,617		$	287,894		$	294,303

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Interest Differential

The following table sets forth the dollar amount of changes in interest income, interest expense and net interest income between the three and nine month periods ended September 30, 2012 and 2011:

	(000’s)									(000’s)
	Three Month Period Increase									Nine Month Period Increase
	(Decrease) Due to Change in									(Decrease) Due to Change in
	Volume			Rate			Total (1)			Volume			Rate			Total (1)
Interest income:
Deposits in Banks	$	303		$	(76	)	$	227		$	404		$	(188	)	$	216
Federal funds sold		(10	)		(3	)		(13	)		(41	)		(4	)		(45	)
Securities:
Taxable		(80	)		204			124			478			2			480
Exempt from federal income taxes		(253	)		(45	)		(298	)		(702	)		(80	)		(782	)
Loans, net		(6,280	)		(742	)		(7,022	)		(6,335	)		(3,382	)		(9,717	)
Total interest income		(6,320	)		(662	)		(6,982	)		(6,196	)		(3,652	)		(9,848	)
Interest expense:
Deposits:
Money market		(194	)		(522	)		(716	)		(208	)		(1,494	)		(1,702	)
Savings		15			15			30			31			18			49
Time		(60	)		(103	)		(163	)		(217	)		(300	)		(517	)
Checking with interest		47			(31	)		16			102			(165	)		(63	)
Securities sold under repo & other s/t borrowings		(6	)		(44	)		(50	)		10			(97	)		(87	)
Other borrowings		(77	)		6			(71	)		(1,053	)		—			(1,053	)
Total interest expense		(275	)		(679	)		(954	)		(1,335	)		(2,038	)		(3,373	)
(Decrease) increase in interest differential	$	(6,045	)	$	17		$	(6,028	)	$	(4,861	)	$	(1,614	)	$	(6,475	)

(1) Changes attributable to both rate and volume are allocated between the rate and volume variances based upon their absolute relative weight to the total change.

(2) Equivalent yields on securities exempt from federal income taxes are based on a federal statutory rate of 35 percent in 2012 and 2011.

Net Interest Income

For purposes of the financial information included in this section, the Company adjusts average interest earning assets to exclude the effects of unrealized gains and losses on securities available for sale and adjusts net interest income to a tax equivalent basis. Management believes that this alternate presentation more closely reflects actual performance, as it is consistent with the Company’s stated asset/liability management strategies. The effects of these non-GAAP adjustments to tax equivalent basis net interest income and adjusted average assets are included in the table presented in “Average Balances and Interest Rates” section herein.

Net interest income, the difference between interest income and interest expense, is the most significant component of the Company’s consolidated earnings. As previously noted in the Company’s 2011 Annual Report on Form 10-K, the Company has experienced an extended period of severe negative economic conditions and historically low interest rates. These conditions have resulted in sharp declines in the value of collateral securing many of the Company’s loans, elevated levels of classified and nonperforming loans, weak loan demand and declining margins. In addition, a dynamically changing regulatory landscape has resulted in greater scrutiny of the historic business models of smaller community-based institutions. This has resulted in greater pressure on many community banks to reduce loan concentrations, particularly commercial real estate loans, and to accelerate the reduction of levels of nonperforming and classified loans. During this period of economic difficulty and low interest rates, the Company took various steps to address these issues. These steps included repositioning its securities portfolio, reducing higher cost term borrowings and, during the first half of 2012, executing significant loan sales for the purpose of reducing commercial real estate concentrations and overall levels of classified and nonperforming loans. These actions have resulted in significant margin compression, particularly in the second and third quarters of 2012, as a result of the impact of only partial redeployment of proceeds from loan sales completed in the first quarter of 2012 together with the continuation of historically low interest rate levels. As a result of these differentials in redeployment

39

and average yields, together with the current historically low interest rate environment, the Company expects additional margin compression will result in the near term, particularly during the period of redeployment of the remaining proceeds from the loan sales. The Company is in the process of implementing new lending initiatives designed to address both near and long term redeployment of available liquidity and diversification of the balance sheet. These initiatives include asset purchases, loan participations with other institutions and the development of internal ability to originate, underwrite and service leasing and other non commercial real estate credits. Management believes that the results of these efforts will enable the Company, given the difficulties encountered during the recent financial crisis, to maximize its net interest income, address regulatory concerns, and effectively reposition its portfolios from both asset composition and interest rate risk perspectives.

Net interest income, on a tax equivalent basis, decreased by $6.1 million or 19.9 percent to $24.5 million and by $6.5 million or 7.3 percent to $82.4 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $30.6 million and $88.9 million, respectively, for the same periods in the prior year. Net interest income for the 2012 periods was lower primarily due to decreases in the tax equivalent basis net interest margin to 3.66 percent and 4.17 percent, respectively, for the three and nine month periods ended September 30, 2012, compared to 4.55 percent and 4.56 percent, respectively, for the same periods in the prior year. The declines in the 2012 net interest margins were primarily caused by significant increases in short term liquidity balances resulting from the proceeds of loan sales, together with the continuing effects of the current low interest rates on the redeployment of maturing loans and investments. The decreases in 2012 net interest income were partially offset by increases in the excess of adjusted average interest earning assets over average interest bearing liabilities of $69.8 million or 6.8 percent to $1,094.3 million, and $77.1 million or 7.9 percent to $1,054.7 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $1,024.5 million and $977.6 million, respectively, for the same periods in the prior year.

The Company’s overall asset quality has improved as a result of actions taken by management to reduce concentrations and classified assets. However, asset quality has continued to be adversely affected by the current state of the economy and has continued to experience elevated levels of delinquent and nonperforming loans, and declines in the loan-to-value ratios on existing loans. Changes in the levels of nonperforming loans have a direct impact on net interest income.

The Company’s short-term liquidity remains at elevated levels, resulting from continued deposit growth, soft loan demand and proceeds from recent loan sales which have not as yet been redeployed. This excess liquidity contributed to margin compression. The Company has made efforts throughout the extended period of severe economic uncertainty and fluctuating interest rates to minimize the impact on its net interest income by appropriately repositioning its securities portfolio and funding sources while maintaining prudence and awareness of the potential consequences that the current economic crisis could have on its asset quality and interest rate risk profiles. The Company continues to increase the number of loans originated with interest rate floors and exercise caution in reinvestment of excess liquidity provided from continued strong deposit growth and proceeds from loan sales. These actions are being conducted partially to maintain flexibility in reaction to the continuation of historically low interest rates. The Company’s ability to make changes in its asset mix allows management to capitalize on more desirable yields, as available, on various interest earning assets. Management believes that the result of these efforts has enabled the Company, given the difficulties being encountered in the current economic crisis, to maximize the effective repositioning of its portfolios from both asset and interest rate risk perspectives.

Interest income is determined by the volume of, and related rates earned on, interest earning assets. Average volume decreases in loan and federal funds sold and lower average yield on interest earning assets, partially offset by average volume increases in interest bearing deposits and investments, resulted in lower interest income for the three month period ended September 30, 2012, compared to the same period in the prior year. Average volume decreases in federal funds sold and lower average yield on interest earning assets, partially offset by volume increases in interest bearing deposits and investments and a slight increase in the average volume of loans, resulted in lower interest income for the nine month period ended September 30, 2012, compared to the same period in the prior year. Adjusted average interest earning assets for the three and nine month periods ended September 30, 2012 decreased $6.0 million or 0.2 percent to $2,679.2 million and increased $38.2 million or 1.5 percent to $2,635.9, respectively, from $2,685.2 million and $2,597.7 million, respectively, for the same periods in the prior year.

Loans are the largest component of interest earning assets. Average net loans decreased $423.0 million or 21.9 percent to $1,505.9 million, for the three month period ended September 30, 2012, compared to $1,928.9 million for the same period in the prior year. The average yield on loans was 5.74 percent for the three month period ended September 30, 2012, compared to 5.94 percent for the same period in the prior year. As a result, interest income on loans was lower for the three month period ended September 30, 2012, compared to the same period in the prior year, due to lower average volume and lower average interest rates. Average net loans decreased by $140.1 million or 7.6 percent to $1,692.8 million, for the nine month period ended September 30, 2012, compared to $1,832.9 million for the same period in the prior year. The average yield on loans was 5.77 percent for the nine month period ended September 30, 2012, compared to 6.03 percent for the same period in the prior year. As a result, interest income on loans was lower for the nine month period ended September 30, 2012, compared to the same period in the prior year, due to lower average interest rates, partially offset by slightly higher average volume.

Average total securities, including Federal Home Loan Bank (“FHLB”) stock and excluding net unrealized gains and losses, decreased $45.4 million or 8.7 percent to $476.4 million for the three month period ended September 30, 2012, compared to $521.8 million for the same period in the prior year. The average tax equivalent basis yield on securities was 3.64 percent for the three month period ended September 30, 2012, compared to 3.57 percent for the same period in the prior year. As a result, tax equivalent

40

basis interest income on securities decreased slightly for the three month period ended September 30, 2012, compared to the same period in the prior year, due to lower average volume partially offset by slightly higher average interest rates. Average total securities, including Federal Home Loan Bank (“FHLB”) stock and excluding net unrealized gains and losses, decreased $19.3 million or 3.8 percent to $491.7 million for the nine month period ended September 30, 2012, compared to $511.0 million for the same period in the prior year. The average tax equivalent basis yield on securities was 3.85 percent for the nine month period ended September 30, 2012, compared to 3.97 percent for the same period in the prior year. As a result, tax equivalent basis interest income on securities decreased for the nine month period ended September 30, 2012, compared to the same period in the prior year, due to lower average interest rates, partially offset by slightly higher average volume. Increases or decreases in average FHLB stock result from purchases or redemptions of stock in order to maintain required levels to support FHLB borrowings.

Interest expense is a function of the volume of, and rates paid for, interest bearing liabilities, comprised of deposits and borrowings. Interest expense decreased $0.9 million or 36.0 percent to $1.6 million for the three month period ended September 30, 2012, compared to $2.5 million for the same period in the prior year. Average interest bearing liabilities decreased $75.9 million or 4.6 percent to $1,584.9 million for the three month period ended September 30, 2012, compared to $1,660.9 million for the same period in the prior year. The decrease in average interest bearing liabilities for the three month period ended September 30, 2012, compared to the same period in the prior year, was due to average volume decreases in interest bearing demand deposits, time deposits, securities sold under repurchase agreements and other short-term borrowings and other borrowings. The average interest rate paid on interest bearing liabilities was 0.40 percent for the three month period ended September 30, 2012, compared to 0.61 percent for the same period in the prior year. As a result of these factors, interest expense on average interest bearing liabilities was lower for the three month period ended September 30, 2012, compared to the same period in the prior year due to lower average volume and lower average interest rates. Interest expense decreased $3.4 million or 39.5 percent to $5.2 million for the nine month period ended September 30, 2012, compared to $8.6 million for the same period in the prior year. Average interest bearing liabilities decreased $38.9 million or 2.4 percent to $1,581.2 million for the nine month period ended September 30, 2012, compared to $1,620.1 million for the same period in the prior year. The decrease in average interest bearing liabilities for the nine month period ended September 30, 2012, compared to the same period in the prior year, was due to average volume decreases in time deposits and other borrowings, partially offset by volume increases in interest bearing demand deposits and securities sold under agreements to repurchase and other short-term borrowings. The average interest rate paid on interest bearing liabilities was 0.44 percent for the nine month period ended September 30, 2012, compared to 0.70 percent for the same period in the prior year. As a result of these factors, interest expense on average interest bearing liabilities was lower for the nine month period ended September 30, 2012, compared to the same period in the prior year due to lower average volume and lower average interest rates. The decrease in other borrowings for the three and nine month periods ended September 30, 2012, compared to the same periods in the prior year, resulted from management’s decision to utilize cash flow from deposit growth and maturing investment securities to reduce borrowings as part of the Company’s ongoing asset/liability management efforts.

Average non interest bearing demand deposits increased $84.7 million or 9.6 percent to $969.0 million, and $90.1 million or 10.6 percent to $938.9 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $884.3 million and $848.8 million, respectively for the same periods in the prior year. Non interest bearing demand deposits are an important component of the Company’s ongoing asset liability management, and also have a direct impact on the determination of net interest income.

The following table presents the interest rate spread on a tax equivalent basis for the periods indicated:

	Three Months						Nine Months
	Ended						Ended
	September 30						September 30
	2012			2011			2012			2011
Average interest rate on:
Total average interest earning assets		3.90	%		4.93	%		4.43	%		5.00	%
Total average interest bearing liabilities		0.40	%		0.61	%		0.44	%		0.70	%
Total interest rate spread		3.50	%		4.32	%		3.99	%		4.30	%

Interest rate spreads increase or decrease as a result of the relative change in average interest rates on interest earning assets compared to the change in average interest rates on interest bearing liabilities. Management cannot predict what impact market conditions will have on its interest rate spread and future compression of net interest spread may occur.

Provision for Loan Losses

41

The Company recorded provisions for loan losses of $3.7 million and $7.0 million for the three and nine month periods ended September 30, 2012, compared to $2.5 million and $9.5 million for the same periods in the prior year. The provision for loan losses is charged to income to bring the Company’s allowance for loan losses to a level deemed appropriate by management. See “Allowance for Loan Losses” for further discussion.

Non Interest Income

The Company’s non interest income was $4.4 million and $29.5 million, respectively, for the three and nine month periods ended September 30, 2012. This represented a decrease of $1.3 million and an increase of $14.7 million, respectively, compared to $5.7 million and $14.8 million, respectively, for the same periods in the prior year. The decrease in the three month period ended September 30, 2012, compared to the same period in the prior year, resulted from lower service fees, lower investment advisory fees and lower net gains on sales and revaluations of assets. The increase in the nine month period ended September 30, 2012, compared to the same period in the prior year, resulted from a $15.9 million pretax gain on sales of loans completed in the first quarter of 2012 and higher other income, partially offset by lower service fees, lower investment advisory fees and higher impairment charges on securities available-for-sale. Investment advisory fee income was lower in 2012 primarily as a result of the effects of continued fluctuation in both domestic and international equity markets. Service charges decreased due to decreased activity. Pre-tax impairment charges on securities available for sale were $0.5 million for the nine month period ended September 30, 2012 and $0.3 million for the same period in the prior year. The impairment charges were related to the company’s investments in pooled trust preferred securities. Non interest income also included other gains of $0.9 million and $0.1 million, respectively, for the three and nine month periods ended September 30, 2011. These gains related to sales and revaluations of other real estate owned and loans held for sale.

Non Interest Expense

Non interest expense was $20.0 million and $61.9 million, respectively, for the three and nine month periods ended September 30, 2012. This represented a decrease of $0.1 million or 0.5 percent and an increase of $0.7 million or 1.1 percent, respectively, compared to $20.1 million and $61.2 million, respectively, for the same periods in the prior year. The overall increase in non interest expense for the nine month period resulted primarily from an additional provision of $1.3 million related to the previously announced ongoing investigations by the SEC and the DOL relating to issues surrounding the brokerage practices and policies and disclosures about such practices of the Company’s investment advisory subsidiary, A.R. Schmeidler & Co., Inc. Other changes in non interest expense included decreases in costs associated with problem loan resolution and decreases in FDIC insurance, partially offset by increases in investments in technology and personnel to accommodate expanding risk management requirements and growth and the expansion of services and products available to new and existing customers.

Salaries and employee benefits expense, the largest component of non interest expense, for the three and nine month periods ended September 30, 2012 increased $0.1 million or 0.9 percent to $11.4 million and $0.1 million or 0.3 percent to $33.5 million, respectively, compared to $11.3 million and $33.4 million for the same periods in the prior year. Increases in salaries in 2012 were offset by the partial reduction of previously accrued officers’ incentive compensation in March 2012.

Occupancy expense for the three and nine month periods ended September 30, 2012 decreased $0.1 million or 4.5 percent to $2.1 million and $0.2 million or 2.9 percent to $6.6 million, respectively, compared to $2.2 million and $6.8 million for the same periods in the prior years. The slight decrease reflected lower maintenance costs.

Professional services expense for the three month period ended September 30, 2012 was unchanged compared to the same period in the prior year. Professional services expense for the nine month period ended September 30, 2012 increased $0.7 million or 14.3 percent to $5.6 million compared to $4.9 million in the same period in the prior year. The increases was primarily due to costs related to the engagement of consultants to assist with new systems implementations and legal costs related to the aforementioned SEC and DOL investigations of A.R. Schmeidler & Co., Inc.

Equipment expense for the three month period ended September 30, 2012 was unchanged compared to the same period in the prior year. Equipment expense for the nine month period ended September 30, 2012 increased $0.1 million or 3.1 percent to $3.3 million compared to $3.2 million for the same period in the prior year. The slight increase was due to increased equipment and software maintenance costs.

Business development expense for the three month period ended September 30, 2012 was unchanged compared to the same period in the prior year. Business development expense for the nine month period ended September 30, 2012 increased $0.4 million or $26.7

42

percent to $1.9 million compared to $1.5 million for the same period in the prior year. The increase for the nine month period was due to increased business development efforts and expenses related to the celebration of the Bank’s 40^th anniversary.

The FDIC assessment for the three month period ended September 30, 2012 increased $0.2 million or 33.3 percent to $0.8 million compared to $0.6 million in the same period in the prior year. The FDIC assessment for the nine month period ended September 30, 2012 decreased $0.2 million or 8.3 percent to $2.2 million compared to $2.4 million for the same period in the prior years. The increase in the three month period was due to changes in the assessment rate. The decrease in the nine month period was due to the change in the premium calculation base by the FDIC.

Significant changes in other components of non interest expense for the three and nine month periods ended September 30, 2012 compared to the same periods in the prior year were due to the following:

• Decreases of $161,000 (167.7 %) and $58,000 (70.7%), respectively, in other insurance expense, resulting from reductions in the estimates of the net cost of certain life insurance policies partially offset by increases in blanket bond insurance costs,

• Increases of $52,000 (30.4%) and $35,000 (6.2%), respectively, in stationery and printing costs due to the systems implementation,

• Decreases of $139,000 (43.0%) and $549,000 (40.3%), respectively, in other loan expenses, due to lower expenses related to OREO and loans in the asset recovery portfolio,

• Decreases of $123,000 (10.5%) and $271,000 (7.9%), respectively, in outside services due to the outsourcing of several data processing functions

• Decreases of $66,000 (52.8%) and $153,000 (39.52%), respectively, in meetings and seminars, reflecting reduced participation in such events in 2012,

• Increases of $31,000 (6.4%) and $800,000 (39.9 %) in other expenses, resulting from the additional contingency provision of $1.3 million, recorded during the first quarter of 2012, related to the aforementioned SEC investigation of A.R. Schmeidler & Co., Inc.

Income Taxes

Income taxes of $1.6 million and $15.4 million, respectively, were recorded in the three and nine month periods ended September 30, 2012, compared to $4.6 million and $10.4 million, respectively, for the same periods in the prior year. The overall effective tax rate of 37.1 percent for the nine month period ended September 30, 2012 was higher compared to 33.4 percent for the same period in the prior year. The 2012 effective rate was higher primarily due to the fact that the tax effect of the $15.9 million gain on loan sales resulted in tax-exempt income representing a lower percentage of pretax income in 2012 compared to 2011. The Company is subject to a Federal statutory rate of 35 percent, a New York State tax rate of 7.1 percent plus a 17 percent surcharge, a Connecticut State tax rate of 7.5 percent and a New York City tax rate of 9 percent.

Financial Condition

Assets

The Company had total assets of $2,929.0 million at September 30, 2012, an increase of $131.3 million or 4.7 percent from $2,797.7 million at December 31, 2011.

Cash and Due from Banks

Cash and due from banks was $831.4 million at September 30, 2012, an increase of $753.3 million or 964.51 percent from $78.1 million at December 31, 2011. Included in cash and due from banks is interest earning deposits of $778.0 million at September 30, 2012 and $34.4 million at December 31, 2011. The increase was due to the proceeds from the sale of loans held for sale not being fully deployed.

Federal Funds Sold

43

Federal funds sold totaled $12.5 million at September 30, 2012, a decrease of $3.9 million or 23.8 percent from $16.4 million at December 31, 2011.

Securities Portfolio

Securities are selected to provide safety of principal, liquidity, pledging capabilities (to collateralize certain deposits and borrowings), income and to leverage capital. The Company’s investment strategy focuses on maximizing income while providing for safety of principal, maintaining appropriate utilization of capital, providing adequate liquidity to meet loan demand or deposit outflows and to manage overall interest rate risk. The Company selects individual securities whose credit, cash flow, maturity and interest rate characteristics, in the aggregate, affect the stated strategies.

Securities are classified as either available for sale, representing securities the Company may sell in the ordinary course of business, or as held to maturity, representing securities the Company has the ability and positive intent to hold until maturity. Securities available for sale are reported at fair value with unrealized gains and losses (net of tax) excluded from operations and reported in other comprehensive income. Securities held to maturity are stated at amortized cost.

The available for sale portfolio totaled $447.5 million at September 30, 2012 which was a decrease of $60.4 million or 11.9 percent from $507.9 million at December 31, 2011. The decrease resulted from a $79.5 million decrease in mortgage-backed securities and a decrease of $16.2 million of obligations of state political subdivisions which was partially offset by increases of $33.2 million in U.S. Treasury and government agency securities and $2.1 million in other debt securities. Included in other debt securities are pooled trust preferred securities, which had an aggregate cost basis of $10.7 million at September 30, 2012 and $11.6 million at December 31, 2011. These pooled trust preferred securities have suffered severe declines in the prior periods in estimated fair value primarily as a result of both illiquidity in the marketplace and declines in the credit ratings of a number of issuing banks underlying these securities. Management cannot predict what effect that continuation of such conditions could have on potential future value or whether there will be additional impairment charges related to these securities.

The held to maturity portfolio totaled $10.9 million at September 30, 2012, which was a decrease of $2.0 million or 15.5 percent from $12.9 million at December 31, 2011. The decrease was due to a decrease in mortgage-backed securities.

The Bank, as a member of the FHLB, invests in stock of the FHLB as a prerequisite to obtaining funding under various programs offered by the FHLB. The Bank must purchase additional shares of FHLB stock to obtain increases in such borrowings. Shares in excess of required amounts for outstanding borrowings are generally redeemed by the FHLB. The investment in FHLB stock totaled $4.8 million and $3.8 million, respectively, at September 30, 2012 and December 31, 2011.

The Company continues to exercise a conservative approach to investing by purchasing high credit quality investments with various maturities and cash flows to provide for liquidity needs and prudent asset liability management. The Company’s securities portfolio provides for a significant source of income, liquidity and is utilized in managing Company-wide interest rate risk. These securities are used to collateralize borrowings and deposits to the extent required or permitted by law. Therefore, the securities portfolio is an integral part of the Company’s funding strategy.

There were no obligations of any single issuer which exceeded ten percent of stockholders’ equity at September 30, 2012 or December 31, 2011.

Loan Portfolio

Net loans totaled $1,476.8 million at September 30, 2012, a decrease of $64.6 million or 4.2 percent from $1,541.4 million at December 31, 2011. The decrease resulted principally from a $10.7 million decrease in commercial real estate loans, a $18.8 million decrease in construction loans, a $18.4 million decrease in multifamily loans and a $7.1 million decrease in lease financing and other loans, These decreases were partially offset by a $47.6 million increase in commercial and industrial loans and $35.6 increase in residential real estate loans. The increase in commercial and industrial loans reflects the Company’s strategic plan to diversify its commercial loan base among new and existing customers in its metro New York markets. The increase in residential loans was primarily the result of the purchase of adjustable rate residential loans, which were purchased as partial redeployment of proceeds from sales of loans held for sale.

44

The loan portfolio, excluding loans held for sale, is comprised of the following:

	September 30			December 31
	2012			2011
Real Estate:
Commercial	$	583,653		$	690,837
Construction		91,241			110,027
Residential Multi-Family		209,192			227,595
Residential Other		322,841			287,233
Commercial & Industrial		266,118			218,500
Individuals & lease financing		34,643			41,760
Total loans		1,507,688			1,575,952
Deferred loan fees		(2,767	)		(3,862	)
Allowance for loan losses		(28,107	)		(30,685	)
Loans, net	$	1,476,814		$	1,541,405

The following table illustrates the trend in nonperforming assets, delinquency and net charge-offs from September 2011 to September 2012 (in thousands):

	Sep 30			Jun 30			Mar 31			Dec 31			Sep 30
	2012			2012			2012			2011			2011
Non-Accrual Loans:
Real Estate:
Commercial	$	18,180		$	12,222		$	11,372		$	13,212		$	20,614
Construction		2,201			2,659			4,317			5,481			17,237
Residential		9,557			11,888			4,440			3,396			12,248
Total Real Estate		29,938			26,769			20,129			22,089			50,099
Commercial & Industrial		12,367			12,535			7,730			7,803			8,196
Lease Financing and Other		—			—			—			—			241
Total Non-Accrual Loans		42,305			39,304			27,859			29,892			58,536
Other Real Estate Owned		250			250			1,174			1,174			924
Nonperforming Assets excluding loans held for sale		42,555			39,554			29,033			31,066			59,460
Nonperforming loans held for sale		—			—			—			27,848			2,244
Total Nonperforming Assets including loans held for sale	$	42,555		$	39,554		$	29,033		$	58,914		$	61,704
Net charge-offs (recoveries) during quarter	$	4,349		$	5,017		$	188		$	66,086		$	2,276
Nonperforming assets to total assets:
Excluding loans held for sale		1.45	%		1.40	%		1.03	%		1.11	%		2.03	%
Including loans held for sale		1.45	%		1.40	%		1.03	%		2.11	%		2.11	%

Non-accrual loans increased $12.4 million to $42.3 million at September 30, 2012 from $29.9 million at December 31, 2011. There was no interest income on non-accrual loans included in net income for the nine month period ended September 30, 2012 and the year ended December 31, 2011. Gross interest income that would have been recorded if these borrowers had been current in accordance with their original loan terms was $1.3 million and $1.1 million for the nine month period ended September 30, 2012 and the year ended December 31, 2011, respectively.

Net income is adversely impacted by the level of nonperforming assets caused by the deterioration of the borrowers’ ability to meet scheduled interest and principal payments. In addition to forgone revenue, the Company must increase the level of provision for loan losses, incur higher collection costs and other costs associated with the management and disposition of foreclosed properties.

The high level of nonperforming assets has primarily resulted from the current severe economic slowdown, which has had negative effects on real estate values, sales and available financing, particularly in the commercial and residential real estate sectors. Continuation of this condition could result in additional increases in nonperforming assets and charge-offs in the future.

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During the nine month period ended September 30, 2012:

• Non-accrual commercial real estate loans increased $5.0 million resulting from the addition of eighteen loans totaling $21.6 million which was partially offset by the transfer of two loans totaling $4.8 million to non-accrual residential loans due to changes in the underlying collateral securing those loans, the charge-off of four loans totaling $4.8 million, the payoffs of six loans totaling $3.8 million, and principal payments of $3.2 million

• Non-accrual construction loans decreased $3.3 million, resulting from the payoff of four loans totaling $7.3 million, a partial charge-off of one loan totaling $1.0 million, a charge-off of one loan totaling $0.6 million, and principal payments of $0.1 million which was partially offset by the addition of three loans totaling $5.7 million

• Non-accrual residential loans increased $6.2 million resulting from the addition of seven loans totaling $8.9 million and transfer of two loans totaling $1.5 million from non-accrual commercial real estate loans and one loan totaling $0.1 million from non-accrual commercial and industrial loans due to changes in the underlying collateral securing those loans million which was partially offset by the charge off of eleven loans totaling $1.8 million, the transfer back to accrual of one loan totaling $1.3 million and the partial charge-off of two loans totaling $1.2 million.

• Non-accrual commercial and industrial loans increased $4.6 million resulting from the addition of eighteen loans totaling $7.5 million and the transfer of one loan totaling $0.1 million from non-accrual commercial and industrial loans due to changes in the underlying collateral securing that loan which was partially offset by charge-offs of $2.6 million and principal payments of $0.4 million.

There were no loans past due 90 days or more and still accruing at September 30, 2012 and December 31, 2011. In addition, the Company had $7.6 million and $5.0 million of loans that were 31-89 days delinquent and still accruing at September 30, 2012 and December 31, 2011, respectively.

Loans considered by the Company to be impaired totaled $52.1 million and $47.9 million at September 30, 2012 and December 31, 2011, respectively, for which no specific reserve and specific reserves of $2.4 million, respectively, had been established.

There were twelve loans totaling $27.5 million at September 30, 2012 and sixteen loans totaling $29.0 million at December 31, 2011 that were considered troubled debt restructurings (TDRs). Of the September 30, 2012 TDRs, six loans totaling $9.8 million on accrual status and six loans totaling $17.7 million on non-accrual status were performing in accordance with their restructured terms. Of the December 2011 TDRs, seven loans totaling $18.0 were on accrual status and nine loans totaling $11.0 million were on non-accrual status. At December 31, 2011 all TDRs were performing in accordance with their restructured terms. At September 30, 2012, the Company had no commitments to lend additional funds to non-accrual loans or TDRs.

The Company performs extensive ongoing asset quality monitoring by both internal and independent loan review functions. In addition, the Company conducts timely remediation and collection activities through a network of internal and external resources which include an internal asset recovery department, real estate and other loan workout attorneys and external collection agencies. In addition, during the second quarter of 2010, the Company decided to implement a more aggressive workout strategy for the resolution of problem assets in light of a sluggish economic recovery, continued weakness in local real estate activity and market values and growing difficulty in resolving problem loans in a timely fashion through traditional foreclosure proceedings due to increased bankruptcy filings and overcrowded court systems. See “Allowance for Loan Losses” below for further discussion of this strategy. Management believes that these efforts are appropriate for accomplishing either successful remediation or maximizing collections related to nonperforming assets.

Allowance for Loan Losses

The Company maintains an allowance for loan losses to absorb probable losses incurred in the loan portfolio based on ongoing quarterly assessments of the estimated losses. The Company’s methodology for assessing the appropriateness of the allowance consists of a specific component for identified problem loans and a formula component to consider historical loan loss experience and additional risk factors affecting the portfolio.

See Note 2 to the Company’s condensed consolidated financial statements presented in this Form 10-Q for a detailed description of the methodology employed by the Company in determining the specific and formula components of the allowance for loan losses.

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A summary of the components of the allowance for loan losses, changes in the components and the impact of charge-offs/recoveries on the resulting provision for loan losses for the dates indicated is as follows:

	(000's)									(000's)
	Sep 30 2012			Change During 2012			Dec 31 2011			Sep 30 2011			Change During 2011			Dec 31 2010
Components
Specific:
Real Estate:
Commercial		—			—			—			—			—			—
Construction		—		$	(2,374	)	$	2,374		$	863		$	13		$	850
Residential		—			—			—			—			(17	)		17
Commercial and Industrial		—			—			—			25			—			25
Lease Financing and other		—			—			—			—			—			—
Total Specific Component		—			(2,374	)		2,374			888			40			892
Formula:
Real Estate:
Commercial	$	11,250			(1,526	)		12,776			16,371			(365	)		16,736
Construction		4,292			196			4,096			5,363			(927	)		6,290
Residential		8,313			220			8,093			14,349			4,515			9,834
Commercial and Industrial		3,832			1,182			2,650			4,267			2			4,265
Lease Financing and other		420			(276	)		696			912			(20	)		932
Total Formula Component		28,107			(204	)		28,311			41,262			3,205			38,057
Total Allowance	$	28,107					$	30,685		$	42,150					$	38,949
Net Change					(2,578	)								3,201
Net Charge-offs (1)					9,554									6,332
Provision for loan losses				$	6,976								$	9,533
Coverage Ratio (2)		66	%					103	%		72	%					86	%
Coverage Ratio excluding partial chargeoffs		73	%					102	%		76	%					89	%

(1) Net charge-offs include partial charge-offs of $7,317 and $2,586 related non-performing and impaired loans for the nine month periods ended September 30, 2012 and 2011, respectively.

(2) The Coverage Ratio is the allowance for loan losses divided by total non-performing loans.

The specific component of the allowance for loan losses is the result of our analysis of impaired loans and our determination of the amount required to reduce the carrying amount of such loans to estimated fair value. Accordingly, such allowance is dependent on the particular loans and their characteristics at each measurement date, not necessarily the total amount of such loans. The Company usually records partial charge-offs as opposed to specific reserves for impaired loans that are real estate collateral dependent and for which independent appraisals have determined the fair value of the collateral to be less than the carrying amount of the loan. Partial charge-offs can significantly impact the allowance for loan losses as a percentage of nonperforming loans (coverage ratio) and other credit loss statistics and trends due to the fact that, in this situation, the allowance for loan loss is reduced and the remaining loan balance continues to be carried in nonperforming loans. At September 30, 2012 and December 31, 2011, the Company had $15.6 million and $10.6 million, respectively, of impaired loans for which $10.0 million and $1.3 million of partial charge-offs, respectively, had been recorded. At September 30, 2012, the Company had no specific reserves allocated as partial charge-offs were recorded for all identified impairments. There was a $2.4 million specific reserve allocated to one impaired loan as of December 31, 2011. This reserve was charged off in the second quarter of 2012 upon completion of the restructure of the related loan for which it was established. The Company’s analyses as of September 30, 2012 and December 31, 2011 indicated that impaired loans were principally real estate collateral dependent and that, with the exception of those loans for which specific reserves were assigned, there was sufficient underlying collateral value or guarantees to indicate expected recovery of the carrying amount of the loans.

The changes in the formula component of the allowance for loan losses are the result of the application of historical loss experience to outstanding loans by type. Loss experience for each year is based upon average charge-off experience for the prior three year period by loan type. The formula component is then adjusted to reflect changes in other relevant factors affecting loan collectability. Loss experience factors for new products, such as the residential multi-family program implemented in 2010 and 2011, were supplemented with additional factors such as industry loss experience and add-ons for new product and concentration risk. Management periodically adjusted the formula component to an amount that, when considered with the specific component, represented its best estimate of probable losses in the loan portfolio as of each balance sheet date.

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Actual losses can vary significantly from the estimated amounts. The Company’s methodology permits adjustments to the allowance in the event that, in management’s judgment, significant factors which affect the collectability of the loan portfolio as of the evaluation date have changed. By assessing the estimated losses inherent in the loan portfolio on a quarterly basis, the Bank is able to adjust specific and inherent loss estimates based upon any more recent information that has become available. Additional information related to the Company’s allowance for loan losses is contained in Note 4 to the Company’s condensed consolidated financial statements presented in this Form 10-Q.

Management believes the allowance for loan losses is the best estimate of probable losses which have been incurred as of September 30, 2012. There is no assurance that the Company will not be required to make future adjustments to the allowance in response to changing economic conditions or regulatory examinations.

Deposits

Deposits totaled $2,548.6 million at September 30, 2012, an increase of $123.3 million or 5.1 percent from $2,425.3 million at December 31, 2011. The following table presents a summary of deposits as of the dates indicated:

	(000's)
	Sep 30 2012		Dec 31 2011		Increase (Decrease)
Demand deposits	$	997,251	$	910,329	$	86,922
Money market accounts		859,887		963,390		(103,503	)
Savings accounts		127,120		114,371		12,749
Time deposits of $100,000 or more		98,366		110,967		(12,601	)
Time deposits of less than $100,000		36,012		40,634		(4,622	)
Checking with interest		429,974		285,591		144,383
Total Deposits	$	2,548,610	$	2,425,282	$	123,328

The Company experienced growth in both new and existing customers, including growth from new branches added during 2010 and 2011 which was partially offset by seasonal decreases in municipal deposits. This growth was partially offset by planned reductions in certain deposits, primarily higher cost municipal demand deposits.

Borrowings

Total borrowings were $59.1 million at September 30, 2012, a decrease of $10.4 million or 15.0 percent from $69.5 million at December 31, 2011. The decrease resulted from a $10.4 million decrease in short-term repurchase agreements. Borrowings are utilized as part of the Company’s continuing efforts to effectively leverage its capital and to manage interest rate risk.

Stockholders’ Equity

Stockholders’ equity totaled $292.9 million at September 30, 2012, an increase of $15.3 million or 5.5 percent from $277.6 million at December 31, 2011. The increase in stockholders’ equity resulted from net income of $26.1 million and a net increase related to exercises of stock options of $0.4 million, which was partially offset by cash dividends paid on common stock of $10.6 million and a decrease in accumulated other comprehensive income of $0.6 million.

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The following table presents the Company’s and the Bank’s capital ratios as of the dates indicated:

	Sep 30 2012			Dec 31 2011			Minimum to be Considered Well Capitalized			Enhanced Capital Requirements Effective as of December 31,  2009
Leverage ratio:
Company		9.4	%		8.8	%		5.0	%		N / A
HVB		9.2	%		8.4	%		5.0	%		8.0	%
Tier 1 capital:
Company		16.1	%		11.3	%		6.0	%		N / A
HVB		15.9	%		10.8	%		6.0	%		10.0	%
Total capital:
Company		17.4	%		12.6	%		10.0	%		N / A
HVB		17.2	%		12.1	%		10.0	%		12.0	%

Since the fourth quarter of 2009, the Office of the Comptroller of the Currency (“’OCC”) required HVB to maintain a total risk-based capital ratio of at least 12.0%, a Tier 1 risk-based capital ratio of at least 10.0%, and a Tier 1 leverage ratio of at least 8.0%. These capital levels are in excess of “well capitalized” levels generally applicable to banks under current regulations. In addition, The Bank has established internal minimum capital ratios under its capital plan of a total risk-based capital ratio of 13.0%, a Tier 1 risk-based capital ratio of 10.0% and a Tier 1 leverage ratio of 8.5%.

Liquidity

The Asset/Liability Strategic Committee (“ALSC”) of the Board of Directors of HVB establishes specific policies and operating procedures governing the Company’s liquidity levels and develops plans to address future liquidity needs, including contingent sources of liquidity. The primary functions of asset liability management are to provide safety of depositor and investor funds, assure adequate liquidity and maintain an appropriate balance between interest earning assets and interest bearing liabilities. Liquidity management involves the ability to meet the cash flow requirement of depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Interest rate sensitivity management seeks to manage fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates.

The Company’s liquid assets at September 30, 2012 include cash and due from banks of $53.3 million, $778.0 million of interest earning deposits and Federal funds sold of $12.5 million. Interest earning deposits and Federal funds sold represent the Company’s excess liquid funds which are invested with other financial institutions and are available daily.

Other sources of liquidity include maturities and principal and interest payments on loans and securities. The loan and securities portfolios are of high credit quality and of mixed maturity, providing a constant stream of maturing and re-investable assets, which can be converted into cash should the need arise. The ability to redeploy these funds is an important source of medium to long term liquidity. The amortized cost of securities having contractual maturities, expected call dates or average lives of one year or less amounted to $240.8 million at September 30, 2012. This represented 52.9 percent of the amortized cost of the securities portfolio. Excluding installment loans to individuals, real estate loans other than construction loans and lease financing, $407.7 million, or 40.9 percent of these loans at September 30, 2012, mature in one year or less. The Company may increase liquidity by selling certain residential mortgages, or exchanging them for mortgage-backed securities that may be sold in the secondary market.

Non interest bearing demand deposits and interest bearing deposits from businesses, professionals, not-for-profit organizations and individuals are relatively stable, low-cost sources of funds. The deposits of the Bank generally have shown a steady growth trend as well as a generally consistent deposit mix. However, there can be no assurance that deposit growth will continue or that the deposit mix will not shift to higher rate products.

HVB is a member of the FHLB. As a member, HVB is able to participate in various FHLB borrowing programs which require certain investments in FHLB common stock as a prerequisite to obtaining funds. As of September 30, 2012, HVB had short-term borrowing lines with the FHLB of $200 million with no amounts outstanding. These and various other FHLB borrowing programs available to members are subject to availability of qualifying loan and/or investment securities collateral and other terms and conditions.

HVB also has unsecured overnight borrowing lines totaling $70 million with three major financial institutions which were all unused and available at September 30, 2012. In addition, HVB has approved lines under Retail Certificate of Deposit Agreements with three major financial institutions totaling $1.0 billion of which no balances were outstanding as at September 30, 2012. Utilization of these lines are subject to product availability and other restrictions.

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Additional liquidity is also provided by the Company’s ability to borrow from the Federal Reserve Bank’s discount window. In response to the current economic crisis, the Federal Reserve Bank has increased the ability of banks to borrow from this source through its Borrower-in-Custody (“BIC”) program, which expanded the types of collateral which qualify as security for such borrowings. HVB has been approved to participate in the BIC program. There were no balances outstanding with the Federal Reserve at September 30, 2012.

As of September 30, 2012, the Company had qualifying loan and investment securities totaling approximately $295 million which could be utilized under available borrowing programs thereby increasing liquidity.

Management considers the Company’s sources of liquidity to be adequate to meet any expected funding needs and to be responsive to changing interest rate markets.

Contractual Obligations and Off-Balance Sheet Arrangements

The Company has outstanding, at any time, a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject to strict credit control assessments. Guarantees specify limits to the Company’s obligations. Because many commitments and almost all guarantees expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. The Company is also obligated under leases or license agreements for certain of its branches and equipment. There have been no material changes to those obligations or arrangements outside the ordinary course of business since the most recent fiscal year end.

Forward-Looking Statements

The Company has made, and may continue to make, various forward-looking statements with respect to earnings, credit quality and other financial and business matters for periods subsequent to December 31, 2011. The Company cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, and that statements relating to subsequent periods increasingly are subject to greater uncertainty because of the increased likelihood of changes in underlying factors and assumptions. Actual results could differ materially from forward-looking statements.

Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, in addition to those risk factors disclosed in the Hudson Valley’s Annual Report on Form 10-K for the year ended December 31, 2011 include, but are not limited to, statements regarding:

• our ability to comply with the formal agreement entered into with the Office of the Comptroller of the Currency (the“OCC”) and any additional restrictions placed on us as a result of future regulatory exams or changes in regulatory policy implemented by the OCC or other bank regulators;

• the OCC and other bank regulators may require us to further modify or change our mix of assets, including our concentration in certain types of loans, or require us to take further remedial actions;

• the results of the investigation of A.R. Schmeidler & Co., Inc. by the Securities and Exchange Commission (the“SEC”) and the Department of Labor (the “DOL”) and the possibility that our management’s attention will be diverted to the SEC and DOL investigations and settlement discussions and we will incur further costs and legal expenses;

• the adverse affects on the business of A.R. Schmeidler & Co., Inc. and our trust department arising from a settlement with the SEC and DOL investigations;

• our inability to pay quarterly cash dividends to shareholders in light of our earnings, the current and future economic environment, Federal Reserve Board guidance, our Bank’s capital plan and other regulatory requirements applicable to Hudson Valley or Hudson Valley Bank ;

• the possibility that we may need to raise additional capital in the future and our ability to raise such capital on terms that are favorable to us;

• further increases in our non-performing loans and allowance for loan losses;

• ineffectiveness in managing our commercial real estate portfolio;

• lower than expected future performance of our investment portfolio;

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• a lack of opportunities for growth, plans for expansion (including opening new branches) and increased or unexpected competition in attracting and retaining customers;

• continued poor economic conditions generally and in our market area in particular, which may adversely affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans;

• the possible adverse effects that unprecedented damage in the Company’s primary market area, which resulted from the recent storm, may have on the operations of the Company and its service providers, or on the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans;

• lower than expected demand for our products and services;

• possible impairment of our goodwill and other intangible assets;

• our inability to manage interest rate risk;

• increased expense and burdens resulting from the regulatory environment in which we operate and our inability to comply with existing and future regulatory requirements;

• our inability to maintain regulatory capital above the minimum levels Hudson Valley Bank has set as its minimum capital levels in its capital plan provided to the OCC, or such higher capital levels as may be required;

• proposed legislative and regulatory action may adversely affect us and the financial services industry;

• future increased Federal Deposit Insurance Corporation, or FDIC, special assessments or changes to regular assessments;

• potential liabilities under federal and state environmental laws;

• regulatory limitations on dividends payable by Hudson Valley or Hudson Valley Bank.

Hudson Valley does not undertake to update or revise any of its forward-looking statements even if experience shows that the indicated results or events will not be realized.

Impact of Inflation and Changing Prices

The Condensed Consolidated Financial Statements and Notes thereto presented herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollar amounts or estimated fair value without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of the Company’s operations. Unlike industrial companies, nearly all of the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company’s 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 price of goods and services.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Quantitative and qualitative disclosures about market risk at December 31, 2011 were previously reported in the Company’s 2011 Annual Report on Form 10-K. There have been no material changes in the Company’s market risk exposure at September 30, 2012 compared to December 31, 2011.

The Company’s primary market risk exposure is interest rate risk since substantially all transactions are denominated in U.S. dollars with no direct foreign exchange or changes in commodity price exposure.

All market risk sensitive instruments are classified either as available for sale or held to maturity with no financial instruments entered into for trading purposes. The Company from time to time uses derivative financial instruments to manage risk. The Company did not enter into any new derivative financial instruments during the three month period ended September 30, 2012. The Company had no derivative financial instruments in place at September 30, 2012 and December 31, 2011.

The Company uses a simulation analysis to evaluate market risk to changes in interest rates. The simulation analysis at September 30, 2012 shows the Company’s net interest income increasing slightly if interest rates rise and decreasing slightly if interest rates fall, considering a continuation of the current yield curve. A change in the shape or steepness of the yield curve will impact our market risk to change in interest rates.

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The Company also prepares a static gap analysis which, at September 30, 2012, shows a positive cumulative static gap of $698.8 million in the one year time frame.

The following table illustrates the estimated exposure under a rising rate scenario and a declining rate scenario calculated as a percentage change in estimated net interest income assuming a gradual shift in interest rates for the next 12 month measurement period, beginning September 30, 2012.

Gradual Change in Interest Rates	Percentage Change Percentage Change in Estimated Net Interest Income from September 30, 2012			Policy Limit
+200 basis points		6.6	%		(5.0	)%
-100 basis points		(2.1	)%		(5.0	)%

Beginning on March 31, 2008, a 100 basis point downward change was substituted for the 200 basis point downward scenario previously used, as management believes that a 200 basis point downward change is not a meaningful analysis in light of current interest rate levels. The percentage change in estimated net income in the +200 and -100 basis points scenario is within the Company’s policy limits.

Item 4.  Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information the Company must disclose in its reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported on a timely basis. Any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives. We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of September 30, 2012. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2012, the Company’s disclosure controls and procedures were effective in bringing to their attention on a timely basis information required to be disclosed by the Company in reports that the Company files or submits under the Exchange Act. Also, during the quarter ended September 30, 2012, there has not been any change that has materially affected or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

As previously announced, the Securities and Exchange Commission (SEC) and the Department of Labor (DOL) are conducting ongoing investigations related to issues surrounding the brokerage practices and policies and disclosures about such practices of the Company’s investment advisory subsidiary, A.R. Schmeidler & Co., Inc.(ARS). To date the Company and ARS have accrued $2.9 million of legal and other expenses related to this matter, $1.2 million of which was accrued in the first quarter 2012 and the remainder in the fourth quarter of 2011. Based on ongoing discussions with the SEC and the DOL, the Company believes it has substantially accrued for any penalties and related costs anticipated in the final resolution of this matter although, until final agreement is reached, the exact result cannot be determined.

Various other claims and lawsuits are pending against the Company and its subsidiaries in the ordinary course of business. In the opinion of management, resolution of each of these other matters is not expected to have a material effect on the financial condition or results of operations of the Company and its subsidiaries.

Item 1A. Risk Factors

Our business is subject to various risks. These risks are included in our 2011 Annual Report on Form 10-K under “Risk Factors”.

There have been no material changes in such risk factors since the date of such report.

Item 6. Exhibits

(A) Exhibits

3.1	Restated Certificate of Incorporation of Hudson Valley Holding Corp.(1)
3.2	Amended and Restated By-Laws of Hudson Valley Holding Corp.(2)
13.16	Hudson Valley Bank 2011 Senior Officer Incentive Program (filed herewith)
31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS	XBRL Instance Document(3)
101.SCH	XBRL Taxonomy Extension Schema(3)
101.CAL	XBRL Taxonomy Extension Calculation Linkbase(3)
101.LAB	XBRL Taxonomy Extension Label Linkbase(3)
101.PRE	XBRL Taxonomy Extension Presentation Linkbase(3)
101.DEF	XBRL Taxonomy Extension Definition Linkbase(3)

(1) Incorporated herein by reference in this document to the Form 10-Q filed on October 20, 2009.

(2) Incorporated herein by reference in this document to the Form 8-K filed on April 28, 2010.

(3) Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, or section 34(b) of the Investment Company Act of 1940, as amended, and otherwise is not subject to liability under these sections.

53

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.

HUDSON VALLEY HOLDING CORP.
By:	/S/ STEPHEN R. BROWN
	Stephen R. Brown
	President and Chief Executive Officer

November 9, 2012

54

EX-13.16

EXHIBIT 13.16

HUDSON VALLEY BANK

2011 Senior Officer Incentive Program

Objectives

Hudson Valley Bank is seeking to achieve the following objectives through its incentive compensation program:

• Motivate and reward superior performance

• Provide market competitive compensation

• Encourage long-term retention of our high performers

• Create a meaningful ownership stake among key employees

• Ensure rewards do not motivate inappropriate risk taking

• Align management’s incentives with the long-term interests of shareholders

• Align incentives with Hudson Valley’s profitability

Performance Period

Incentive awards will be made based on calendar year performance and in line with specific business goals and objectives set for the year (i.e. January 1, 2011 – December 31, 2011).

Eligibility

First VP and above (e.g., key executive officers, officers, relationship managers and branch managers) will be eligible to participate in the incentive program with overall performance evaluations of Above Standard or Outstanding. Participants are defined by management and approved by the Compensation Committee.

Participants must be hired by September 30^th of the performance period to be eligible for an award for that year. Participants with less than a year’s service will receive prorated awards based on length of service.

Participants who terminate employment during the Plan year (other than the case of death, disability or retirement or as the Committee may otherwise determine in its sole discretion), will not be eligible to receive an award.

Components

The Program consists of two Plan awards: 1) an annual cash award and 2) an equity grant with longer term vesting. Although participants are eligible to receive both components, awards will be determined based on an assessment of Company, Department and Individual performance and all awards are subject to the discretion of the Compensation Committee.

Program Gate/Trigger

In order for the Plans to “activate” awards, Hudson Valley must achieve a predetermined threshold level of net income/earnings. This is the minimal level of earnings needed for awards to be granted under the Plan. However, the Committee reserves the discretion to make awards outside the plan on a discretionary basis, as may be required to reward certain, select high performing employees.

1

Funding

Once threshold earnings are achieved, the funding for incentive awards will increase incrementally. The funding will be accrued at target budget ($2.8 million) if target earnings are achieved. The funding can increase to 150% of target budget (or $4.2 million) if earnings increase substantially.

Funding (continued)

Below is an illustration for varying the incentive budget to align with overall Bank earnings/profitability:

	Threshold		Target		Stretch
Performance (earnings)		75% of target		100% of target		120% of target
Incentive Budget		$1.4 million		$2.8 million		$4.2 million
Budget Percentage		50%		100%		150%

Once earnings and incentive pool funding are determined, actual awards will be paid based on each participant’s performance achievement relative to goals (combination of Company, Department and/or Individual).

Total Incentive Opportunity (Target Award as % of base salary)

Attached is your individual incentive award opportunity.

SHORT-TERM (CASH) INCENTIVE

Performance Measures

Awards will be based on a combination of Bank, Department and/or Individual performance. Each year, the Committee will approve performance goals for each Executive Group participant that support Hudson Valley’s strategic and business plans, the CEO shall approve all other participant’s goals.

Goals may reflect a combination of Bank, Department and/or Individual performance as appropriate for each role (weights and measures to be determined). The key is to ensure awards are aligned with overall contribution to the Bank’s success.

Each participant should have a “performance scorecard” or summary of the performance expectations for the year.

To receive an award, a participant must receive an overall performance evaluation of Above Standard or Outstanding, irrespective of attainment of Company and Individual Goals.

2

Below is summary of goal categories for each participant tier by management. Specific goals and weights are determined specifically for each participant. Attached are your individual goals and their weights.

Tier	Performance Categories
Executives	Net Income Regulatory             Compliance, including CAMELS ratings Performance Relative to Peers (e.g. ROA and EPS)
RM	Portfolio Profitability Asset Quality Portfolio Management - Loan - Deposit - Fee
Dept. Mgr.	Efficiency Review Rating of Dept. Operation New products/programs
Branch Mgr.	Deposit Growth General Management Loan Referrals Fee Income

Award Determination

At the end of each performance year, the incentive funding and individual awards will be recommended by management and approved by the Compensation Committee. The funding pool will be determined and each participant’s incentive opportunity will be adjusted accordingly. Once adjusted incentive opportunities are known, the actual payout will be determined based on performance relative to each participant’s goals (e.g. a guideline is to vary awards from 50% - 150% of the adjusted target) and an overall performance rating of Above Standard or Outstanding. Given the focus on a defined pool, the total of all payouts cannot exceed the funded pool (i.e. participants receiving 150% awards need to be offset by participants receiving 50% in a zero sum allocation).

For example, assume an executive with 30% of base salary incentive opportunity and threshold earnings are achieved.

1) Funding Multiplier = $1.25M/$2.5M = 0.5.

2) Incentive Opportunity Adjustment = 30% x 0.5 = 15%. This is the adjusted/funded incentive opportunity.

3) Actual awards to this participant will be made based on performance goals and discretion of the Compensation Committee. The combination of all awards cannot exceed the total pool (in this

3

case $1.25 million). Individual awards can vary from 50% - 150% of their adjusted target award, but the total of awards must still be within the pool).

LONG-TERM INCENTIVE (STOCK AWARDS)

Equity awards to participants in the 2011 incentive plan will be determined in the first quarter of 2012 based upon an assessment of both company and individual performance. Awards are subject to the same funding pool approach described earlier and overall performance rating. Actual grants will be made at the discretion of the Compensation Committee.

Grants will be made in the first quarter of 2012 after performance results are known and overall performance evaluation is completed. Equity awards should consider how well Hudson Valley Bank performed in 2011 relative to target performance, industry performance and individual performance.

The equity awards will be vested over a four year period (25% upon grant, 25% each year thereafter for three years).

Clawback

In the event the Bank is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, as a result of misconduct (as determined by the members of the Board of Directors who are considered “independent” for purposes of the listing standards of the NASDAQ) each of the Company’s “participants” of the incentive program shall reimburse Bank for part or the entire incentive award made to such participants on the basis of having met or exceeded specific goals for performance periods. For purposes of this policy, (i) the term “incentive awards” means awards under the Company’s 2011 Incentive Program, the amount of which is determined in whole or in part upon specific performance goals relating to the financial results of the Company; and (ii) the term “participants” means key executive officers, officers, relationship managers and branch managers who are eligible to participate in the Company’s 2011 Incentive Program.

Ownership Guidelines

The incentive plan supports our belief that every participant should be an equity holder in the company to demonstrate commitment and alignment with shareholder interests. Newly hired participants would have 5 years to achieve the minimum requirements. There are 3 categories of required ownership levels for participants:

i. CEO & CFO:	2.5x annual salary value in stock ownership
ii. EVPs:	1.0x annual salary value in stock ownership
iii. All others:	$25,000 value in stock ownership

Ownership is defined as shares owned.

4

Examples; Below are illustrations of how this program might work.

Example 1 - A high performer RM; Bank achieves threshold earnings

Base Salary	Total Opportunity	Cash Incentive Opportunity	Equity Award Opportunity
$150,000	45%	25%	20%
	$67,500	$37,500	$30,000

1) Cash Incentive Funding Multiplier = $1.25M/$2.5M = 0.5.

2) Cash Incentive Adjusted Opportunity = 25% x 0.5 = 12.5%; range potential 6.25% - 18.75% (50% - 150%). This is the adjusted/funded incentive opportunity.

3) Cash Incentive Actual Award = 12.5% x 150% x $150,000 = $28,125 (payout at max)

4) Equity Incentive Adjusted Opportunity = 20% x 0.5 = 10%; range potential 5% - 15% (50% - 150%).

5) Equity Incentive Actual Award; granted at max (150% of adjusted opportunity) to recognize star performer; award $22,500 worth of restricted stock grants.

6) As a result, the RM received total incentives worth $50,625 which is below the target of $67,500 but reflects Company achieving threshold performance.

Example 2 - A lower performer EVP; Bank achieves between target and stretch earnings

Base Salary	Total Opportunity	Cash Incentive Opportunity	Equity Award Opportunity
$250,000	70%	35%	35%
	$175,000	$87,500	$87,500

1) Cash Incentive Funding Multiplier = $3.5M/$2.5M = 1.4.

2) Cash Incentive Opportunity Adjustment = 35% x 1.4 = 49%; range potential 24.5% - 73.5%. This is the adjusted/funded incentive opportunity.

3) Cash Incentive Actual Award = 49% x 50% x $250,000 = $61,250 (for achieving threshold individual performance)

4) Equity Incentive Adjusted Opportunity = 35% x 1.4 = 49%; range potential 24.5% - 73.5% (50% - 150%).

5) Equity Incentive Actual Award; due to lower level performance, award $61,250 worth of restricted stock grants (i.e. threshold grant of 50% of adjusted target).

6) As a result, the EVP’s actual award is $122,500 compared to target of $175,000.

5

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen R. Brown, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hudson Valley Holding Corp.;

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

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

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

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

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

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

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

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

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

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

/S/ STEPHEN R. BROWN

Stephen R. Brown

President and Chief Executive Officer

Dated: November 9, 2012

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew J. Reinhart, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Hudson Valley Holding Corp.;

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

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

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

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

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

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

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

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

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

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

/S/ ANDREW J. REINHART

Andrew J. Reinhart

First Senior Vice President,

Controller and Interim Chief Financial Officer

Dated: November 9, 2012

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Hudson Valley Holding Corp. (the “Company”) for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen R. Brown, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/S/ STEPHEN R. BROWN

Stephen R. Brown

President and Chief Executive Officer

Dated: November 9, 2012

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Hudson Valley Holding Corp. (the “Company”) for the period ending September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Andrew J. Reinhart, First Senior Vice President, Controller and interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

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

/S/ ANDREW J. REINHART

Andrew J. Reinhart

First Senior Vice President,

Controller and Interim Chief Financial Officer

Dated: November 9, 2012

XML

Loans - Average Recorded Investment in Impaired Loans by Class of Loans and Interest Recognized on Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	$ 55,295	$ 81,776	$ 51,344	$ 69,017
Interest Income	312	271	778	389
Owner occupied [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	25,067	28,234	23,179	16,810
Interest Income	168	239	434	357
Non owner occupied [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	2,114	15,292	5,448	16,835
Interest Income	96		275
Commercial [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	290	9,345	2,546	9,665
Interest Income
Residential [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	2,929	6,457	1,586	5,616
Interest Income
Multifamily [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	2,156	4,586	1,386	4,453
Interest Income	48		69
1-4 family [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	8,869	5,005	5,475	4,940
Interest Income		32		32
Home equity [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	1,419	3,989	1,607	3,299
Interest Income
Commercial & Industrial [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	12,323	8,623	10,032	7,081
Interest Income
Lease Financing & Other [Member]
Average recorded investment in impaired loans by class of loans and interest recognized on impaired loans
Average Recorded Investment	128	245	85	318
Interest Income

XML

Fair Value - Reconciliation and Income Statement Classification of Gains and Losses for Securities Available for Sale Measure at Fair Value on Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Balance at beginning of period	$ 2,768	$ 2,923	$ 2,816	$ 3,687
Additions to Level 3	49	93	257	289
Net unrealized gain (loss) included in other comprehensive income	699	(242)	1,122	(995)
Principal payments	(520)		(671)	(3)
Recognized impairment charge included in the statement of income		(119)	(528)	(323)
Balance at end of period	$ 2,996	$ 2,655	$ 2,996	$ 2,655

XML

Benefit Plans - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Amount expected to contribute in unfunded defined benefit plans		$ 813
Defined benefit plans contributed by employer	$ 172	$ 484

XML

Fair Value of Financial Instruments - Carrying Amount and Estimated Fair Value of Financial Instruments (Detail) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Carrying Amount [Member]
Assets:
Financial assets for which carrying value approximates fair value	$ 843,900	$ 94,500
Held to maturity securities and accrued interest	10,900	13,000
FHLB Stock	4,800	4,800
Loans and accrued interest	1,495,700	1,571,300
Liabilities:
Deposits with no stated maturity and accrued interest	2,414,500	2,274,700
Time deposits and accrued interest	134,400	151,700
Securities sold under repurchase agreements and other short-term borrowing and accrued interest	42,700	53,100
Other borrowings and accrued interest	16,600	16,600
Total Fair Value [Member]
Assets:
Financial assets for which carrying value approximates fair value	843,900	94,500
Held to maturity securities and accrued interest	11,600	13,900
FHLB Stock
Loans and accrued interest	1,536,300	1,609,200
Liabilities:
Deposits with no stated maturity and accrued interest	2,414,500	2,274,700
Time deposits and accrued interest	134,800	152,100
Securities sold under repurchase agreements and other short-term borrowing and accrued interest	42,700	53,100
Other borrowings and accrued interest	14,000	14,000
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets:
Financial assets for which carrying value approximates fair value	843,900	94,500
FHLB Stock
Liabilities:
Deposits with no stated maturity and accrued interest	2,414,500	2,274,700
Significant Other Observable Inputs (Level 2) [Member]
Assets:
Held to maturity securities and accrued interest	11,600	13,900
Liabilities:
Time deposits and accrued interest	134,800	152,100
Securities sold under repurchase agreements and other short-term borrowing and accrued interest	42,700	53,100
Other borrowings and accrued interest	14,000	14,000
Significant Unobservable Inputs (Level 3) [Member]
Assets:
Loans and accrued interest	$ 1,536,300	$ 1,609,200

XML

Earnings Per Share - Additional Information (Detail)	1 Months Ended	9 Months Ended
	Nov. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options not considered in computing diluted earnings per share		465,304	259,271
Percentage of stock dividend declared	10.00%

XML

Securities - Fair Value and Gross Unrealized Loss, Aggregated by Investment Category and Length of Time Individual Securities (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
US Treasury and Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	$ 8,990
Less than 12 Months, Gross Unrealized Loss	12
Fair Value	8,990
Gross Unrealized Loss	12
Mortgage-Backed Securities - Residential [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	40,396	41,421
Less than 12 Months, Gross Unrealized Loss	264	218
Fair Value	40,396	41,421
Gross Unrealized Loss	264	218
Other Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value		460
Less than 12 Months, Gross Unrealized Loss		50
Greater than 12 Months, Fair Value	2,996	2,816
Greater than 12 Months, Gross Unrealized Loss	7,716	8,838
Fair Value	2,996	3,276
Gross Unrealized Loss	7,716	8,888
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	49,386	41,881
Less than 12 Months, Gross Unrealized Loss	276	268
Greater than 12 Months, Fair Value	2,996	2,816
Greater than 12 Months, Gross Unrealized Loss	7,716	8,838
Fair Value	52,382	44,697
Gross Unrealized Loss	7,992	9,106
Mutual Funds and Other Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	8
Less than 12 Months, Gross Unrealized Loss	1
Greater than 12 Months, Fair Value	97	92
Greater than 12 Months, Gross Unrealized Loss	111	136
Fair Value	105	92
Gross Unrealized Loss	112	136
Temporarily Impaired Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than 12 Months, Fair Value	49,394	41,881
Less than 12 Months, Gross Unrealized Loss	277	268
Greater than 12 Months, Fair Value	3,093	2,908
Greater than 12 Months, Gross Unrealized Loss	7,827	8,974
Fair Value	52,487	44,789
Gross Unrealized Loss	$ 8,104	$ 9,242

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Carrying Amount and Estimated Fair Value of Financial Instruments

Carrying amount and estimated fair value of financial instruments not previously presented as of the dates indicated were as follows:

September 30, 2012					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	843.9	$	843.9	$	843.9
Held to maturity securities and accrued interest		10.9		11.6			$	11.6
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,495.7		1,536.3					$	1,536.3
Liabilities:
Deposits with no stated maturity and accrued interest		2,414.5		2,414.5		2,414.5
Time deposits and accrued interest		134.4		134.8				134.8
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		42.7		42.7				42.7
Other borrowings and accrued interest		16.6		14.0				14.0

December 31, 2011					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	94.5	$	94.5	$	94.5
Held to maturity securities and accrued interest		13.0		13.9			$	13.9
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,571.3		1,609.2					$	1,609.2
Liabilities:
Deposits with no stated maturity and accrued interest		2,274.7		2,274.7		2,274.7
Time deposits and accrued interest		151.7		152.1				152.1
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		53.1		53.1				53.1
Other borrowings and accrued interest		16.6		14.0				14.0

XML

Stock-Based Compensation - Summary of Stock-Based Compensation Activity (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012		Dec. 31, 2011
Prior Option Plans [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Outstanding Shares	625,256
Granted at fair value, Shares
Exercised, Shares	(7,757)
Cancelled or Expired, Shares	21,550
Ending Balance, Outstanding Shares	595,949
Exercisable, Shares	587,639
Nonvested, Shares	8,310
Beginning Balance, Weighted Average Grant or Exercise Price Outstanding	$ 22.81
Weighted Average Grant or Exercise Price, Granted
Weighted Average Grant or Exercise Price, Exercised	$ 16.54
Weighted Average Grant or Exercise Price, Cancelled or Expired	$ 24.64
Ending Balance, Weighted Average Grant or Exercise Price Outstanding	$ 22.83
Weighted Average Grant or Exercise Price, Exercisable	$ 22.64
Weighted Average Grant or Exercise Price, Nonvested	$ 35.94
Outstanding, Aggregate Intrinsic Value	$ 106	[1]
Exercisable, Aggregate Intrinsic Value	$ 106	[1]
Outstanding, Weighted Average Remaining Contractual Term	1 year 9 months 18 days
Exercisable, Weighted Average Remaining Contractual Term	1 year 9 months 18 days
2010 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Outstanding Shares
Granted at fair value, Shares	114,586		0
Restriction released, Shares	(7,673)
Cancelled or Expired, Shares	9,152
Ending Balance, Outstanding Shares
Nonvested, Shares	97,761
Beginning Balance, Weighted Average Grant or Exercise Price Outstanding
Weighted Average Grant or Exercise Price, Granted	$ 16.69
Weighted Average Grant or Exercise Price, Restrictions Released	$ 17.10
Weighted Average Grant or Exercise Price, Cancelled or Expired	$ 16.74
Ending Balance, Weighted Average Grant or Exercise Price Outstanding
Weighted Average Grant or Exercise Price, Nonvested	$ 16.65
Shares Available For Future Grants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Beginning Balance, Available for grant	1,331,000
Cancelled or Expired, Shares	9,152
Ending Balance, Available for grant	1,225,566
Weighted Average Grant or Exercise Price, Cancelled or Expired	$ 16.74
Shares Available For Future Grants [Member] | Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awards, Shares	(114,586)
Restricted Stock Awards Weighted Average Grant Or Exercise Price	$ 16.69

[1] The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2012. This amount changes based on changes in the fair value of the Company's stock.

XML

Loans - Aging of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	$ 1,507,688	$ 1,575,952
31-59 Days Past Due	2,957	4,816
60-89 Days Past Due	5,177	157
90 Days Or More Past Due	24,588	21,279
Total Past Due	32,722	26,252
Current	1,474,966	1,549,700
Owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	194,782	243,862
31-59 Days Past Due		1,801
60-89 Days Past Due	1,821
90 Days Or More Past Due	9,746	3,489
Total Past Due	11,567	5,290
Current	183,215	238,572
Non owner occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	388,871	446,975
31-59 Days Past Due		1,917
60-89 Days Past Due	927
90 Days Or More Past Due	1,605	5,108
Total Past Due	2,532	7,025
Current	386,339	439,950
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	43,377	56,933
31-59 Days Past Due
60-89 Days Past Due
90 Days Or More Past Due		4,883
Total Past Due		4,883
Current	43,377	52,050
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	47,864	53,094
31-59 Days Past Due		900
60-89 Days Past Due
90 Days Or More Past Due	2,201
Total Past Due	2,201	900
Current	45,663	52,194
Multifamily [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	209,192	227,595
31-59 Days Past Due
60-89 Days Past Due
90 Days Or More Past Due
Total Past Due
Current	209,192	227,595
1-4 family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	214,102	174,714
31-59 Days Past Due	145
60-89 Days Past Due	809
90 Days Or More Past Due	8,345	1,470
Total Past Due	9,299	1,470
Current	204,803	173,244
Home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	108,739	112,519
31-59 Days Past Due	2,735
60-89 Days Past Due	178	97
90 Days Or More Past Due	1,212	1,926
Total Past Due	4,125	2,023
Current	104,614	110,496
Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	1,507	1,862
31-59 Days Past Due
60-89 Days Past Due
90 Days Or More Past Due
Total Past Due
Current	1,507	1,862
Commercial & Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	266,118	218,500
31-59 Days Past Due	76	197
60-89 Days Past Due	1,442	50
90 Days Or More Past Due	1,479	4,403
Total Past Due	2,997	4,650
Current	263,121	213,850
Lease Financing & Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Net, Total	33,136	39,898
31-59 Days Past Due	1	1
60-89 Days Past Due		10
90 Days Or More Past Due
Total Past Due	1	11
Current	$ 33,135	$ 39,887

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Loans - Allowance for Loan Losses by Portfolio Segment (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	$ 28,733	$ 41,889	$ 30,685	$ 38,949
Charge-offs	(5,628)	(2,802)	(12,537)	(9,429)
Recoveries	1,279	527	2,983	3,097
Net Charge-offs	(4,349)	(2,275)	(9,554)	(6,332)
Provision for loan losses	3,723	2,536	6,976	9,533
Net change during the period	(626)	261	(2,578)	3,201
Balance at end of period	28,107	42,150	28,107	42,150
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	11,592	17,112	12,776	16,736
Charge-offs	(4,372)	(69)	(4,770)	(225)
Recoveries	563	44	861	730
Net Charge-offs	(3,809)	(25)	(3,909)	505
Provision for loan losses	3,467	(716)	2,383	(870)
Net change during the period	(342)	(741)	(1,526)	(365)
Balance at end of period	11,250	16,371	11,250	16,371
Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	4,496	6,440	6,470	7,140
Charge-offs	1	(11)	(1,579)	(867)
Recoveries	178	28	179	603
Net Charge-offs	179	17	(1,400)	(264)
Provision for loan losses	(383)	(231)	(778)	(650)
Net change during the period	(204)	(214)	(2,178)	(914)
Balance at end of period	4,292	6,226	4,292	6,226
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	8,789	13,161	8,093	9,851
Charge-offs	(1,171)	(2,263)	(2,999)	(5,276)
Recoveries	70	336	396	1,355
Net Charge-offs	(1,101)	(1,927)	(2,603)	(3,921)
Provision for loan losses	625	3,115	2,823	8,419
Net change during the period	(476)	1,188	220	4,498
Balance at end of period	8,313	14,349	8,313	14,349
Commercial & Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	3,420	4,246	2,650	4,290
Charge-offs	(128)	(453)	(2,625)	(2,997)
Recoveries	464	112	1,029	388
Net Charge-offs	336	(341)	(1,596)	(2,609)
Provision for loan losses	76	387	2,778	2,611
Net change during the period	412	46	1,182	2
Balance at end of period	3,832	4,292	3,832	4,292
Lease Financing & Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Balance at beginning of period	436	930	696	932
Charge-offs	42	(6)	(564)	(64)
Recoveries	4	7	518	21
Net Charge-offs	46	1	(46)	(43)
Provision for loan losses	(62)	(19)	(230)	23
Net change during the period	(16)	(18)	(276)	(20)
Balance at end of period	$ 420	$ 912	$ 420	$ 912

XML

Fair Value - Assets and Liabilities Measured at Fair Value (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012		Dec. 31, 2011
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	$ 447,453		$ 507,897
Fair Value, Measurements, Recurring [Member] | US Treasury and Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	33,197
Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	313,921		393,418
Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	84,409		100,599
Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	5,394		3,332
Fair Value, Measurements, Recurring [Member] | Mutual Funds and Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	10,532		10,548
Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	18,163		483,179
Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	6,529	[1]	1,410	[1]
Fair Value, Measurements, Nonrecurring [Member] | Construction [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	2,201	[1]	3,107	[1]
Fair Value, Measurements, Nonrecurring [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	5,057	[1]	1,529	[1]
Fair Value, Measurements, Nonrecurring [Member] | Commercial & Industrial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	1,772	[1]	2,145	[1]
Fair Value, Measurements, Nonrecurring [Member] | Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Fair Value, Measurements, Nonrecurring [Member] | Loans Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	2,354		473,814
Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	250		1,174
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | US Treasury and Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds and Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial & Industrial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Loans Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	444,457		505,081
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | US Treasury and Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	33,197
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	313,921		393,418
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	84,409		100,599
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	2,398		516
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds and Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	10,532		10,548
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial & Industrial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Loans Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	2,996		2,816
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | US Treasury and Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Mortgage-backed securities residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Obligations of states and political subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Other Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis	2,996		2,816
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Mutual Funds and Other Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value measured on a recurring basis
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	18,163		483,179
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial Real Estate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	6,529	[1]	1,410	[1]
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Construction [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	2,201	[1]	3,107	[1]
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Residential [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	5,057	[1]	1,529	[1]
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Commercial & Industrial [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	1,772	[1]	2,145	[1]
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis		[1]		[1]
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Loans Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	2,354		473,814
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans measured on a non-recurring basis	$ 250		$ 1,174

[1] The recorded investments in impaired loans subject to fair value reporting at September 30, 2012 and December 31, 2011 were $12,407 and $10,565, respectively. Specific allowances of $0 and $2,374 had been established within the allowance for loan losses as of September 30, 2012 and December 31, 2011, respectively.

XML

Benefit Plans - Components of Net Periodic Pension Cost (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Service cost	$ 110	$ 103	$ 329	$ 294
Interest cost	164	155	476	449
Amortization of prior service cost	(58)	(58)	(175)	(174)
Amortization of net loss	168	139	503	418
Net periodic pension cost	$ 384	$ 339	$ 1,133	$ 987

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities:
Net Income	$ 26,108	$ 20,764
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	6,976	9,533
Depreciation and amortization	2,882	2,969
Recognized impairment charge on securities available for sale	528	323
Realized gain on security transactions net		(8)
Amortization of premiums on securities, net	1,492	2,468
Realized loss (gain) on sale and revaluation of OREO	15	(82)
Increase in cash value of bank owned life insurance	(1,113)	(869)
Amortization of other intangible assets	561	616
Stock option expense	37	107
Loss on valuation of loans held for sale		8
Realized (gain) on sale of loans held-for-sale	(15,935)
Deferred taxes (benefit)	1,363	(1,313)
Increase in deferred loan fees, net	(1,095)	(82)
Decrease in accrued interest and other receivables	15,306	3,109
Decrease (increase) in other assets	2,443	(487)
Excess tax benefits from share-based payment arrangements		(7)
Increase in accrued interest and other liabilities	3,660	5,679
Net cash provided by Operating Activities	43,228	42,728
Investing Activities:
Net decrease in short term investments	3,908	35,671
(Increase) decrease in FHLB stock	(996)	3,178
Proceeds from maturities of securities available for sale	191,136	164,096
Proceeds from maturities of securities held to maturity	2,006	2,596
Proceeds from sales of securities available for sale		1,284
Purchases of securities available for sale	(133,913)	(209,072)
Proceeds from sales and payments of loans held for sale	487,274	3,253
Net decrease (increase) decrease in loans	58,710	(309,204)
Proceeds from sales of OREO	909	11,036
Premiums paid on bank owned life insurance	(261)	(324)
Net purchases of premises and equipment	(1,370)	(868)
Net cash provided by (used in) Investing Activities	607,403	(298,354)
Financing Activities:
Proceeds from issuance of common stock	251	486
Excess tax benefits from share-based payment arrangements		7
Net increase in deposits	123,328	295,256
Cash dividends paid	(10,549)	(8,844)
Repayment of other borrowings	(28)	(71,276)
Net (decrease) increase in securities sold under repurchase agreements and short-term borrowings	(10,363)	10,017
Net cash provided by Financing Activities	102,639	225,646
Increase (decrease) in Cash and Cash Equivalents	753,270	(29,980)
Cash and Cash Equivalents, beginning of period	78,104	284,156
Cash and Cash Equivalents, end of period	831,374	254,176
Supplemental disclosures:
Interest paid	5,956	9,142
Income tax payments	924	7,262
Transfers from loans held for sale back to loan portfolio	121	2,305
Transfers to other real estate owned		$ 850

XML

Loans - Risk Category by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Risk category by class of loans
Financing Receivable Risk Category	$ 1,266,780	$ 1,377,607
Owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	194,782	243,862
Non owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	388,871	446,975
Commercial [Member]
Risk category by class of loans
Financing Receivable Risk Category	43,377	56,933
Residential [Member]
Risk category by class of loans
Financing Receivable Risk Category	47,864	53,094
Multifamily [Member]
Risk category by class of loans
Financing Receivable Risk Category	209,192	227,595
1-4 family [Member]
Risk category by class of loans
Financing Receivable Risk Category	83,234	90,033
Home equity [Member]
Risk category by class of loans
Financing Receivable Risk Category	1,411	2,174
Pass [Member]
Risk category by class of loans
Financing Receivable Risk Category	1,136,928	1,222,662
Pass [Member] | Owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	148,047	177,921
Pass [Member] | Non owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	377,586	422,402
Pass [Member] | Commercial [Member]
Risk category by class of loans
Financing Receivable Risk Category	31,974	42,641
Pass [Member] | Residential [Member]
Risk category by class of loans
Financing Receivable Risk Category	42,813	38,956
Pass [Member] | Multifamily [Member]
Risk category by class of loans
Financing Receivable Risk Category	205,999	226,224
Pass [Member] | 1-4 family [Member]
Risk category by class of loans
Financing Receivable Risk Category	53,611	72,594
Pass [Member] | Home equity [Member]
Risk category by class of loans
Financing Receivable Risk Category
Special Mention [Member]
Risk category by class of loans
Financing Receivable Risk Category	40,021	80,766
Special Mention [Member] | Owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	3,062	32,144
Special Mention [Member] | Non owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	4,926	14,924
Special Mention [Member] | Commercial [Member]
Risk category by class of loans
Financing Receivable Risk Category	5,349	5,382
Special Mention [Member] | Residential [Member]
Risk category by class of loans
Financing Receivable Risk Category	900	7,274
Special Mention [Member] | Multifamily [Member]
Risk category by class of loans
Financing Receivable Risk Category
Special Mention [Member] | 1-4 family [Member]
Risk category by class of loans
Financing Receivable Risk Category	20,856	15,109
Special Mention [Member] | Home equity [Member]
Risk category by class of loans
Financing Receivable Risk Category
Substandard [Member]
Risk category by class of loans
Financing Receivable Risk Category	89,831	74,179
Substandard [Member] | Owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	43,673	33,797
Substandard [Member] | Non owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category	6,359	9,649
Substandard [Member] | Commercial [Member]
Risk category by class of loans
Financing Receivable Risk Category	6,054	8,910
Substandard [Member] | Residential [Member]
Risk category by class of loans
Financing Receivable Risk Category	4,151	6,864
Substandard [Member] | Multifamily [Member]
Risk category by class of loans
Financing Receivable Risk Category	3,193	1,371
Substandard [Member] | 1-4 family [Member]
Risk category by class of loans
Financing Receivable Risk Category	8,767	2,330
Substandard [Member] | Home equity [Member]
Risk category by class of loans
Financing Receivable Risk Category	1,411	2,174
Doubtful [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Non owner occupied [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Commercial [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Residential [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Multifamily [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | 1-4 family [Member]
Risk category by class of loans
Financing Receivable Risk Category
Doubtful [Member] | Home equity [Member]
Risk category by class of loans
Financing Receivable Risk Category
Commercial & Industrial [Member]
Risk category by class of loans
Financing Receivable Risk Category	266,118	218,500
Commercial & Industrial [Member] | Pass [Member]
Risk category by class of loans
Financing Receivable Risk Category	246,199	204,305
Commercial & Industrial [Member] | Special Mention [Member]
Risk category by class of loans
Financing Receivable Risk Category	4,081	5,410
Commercial & Industrial [Member] | Substandard [Member]
Risk category by class of loans
Financing Receivable Risk Category	15,838	8,785
Commercial & Industrial [Member] | Doubtful [Member]
Risk category by class of loans
Financing Receivable Risk Category
Lease Financing & Other [Member]
Risk category by class of loans
Financing Receivable Risk Category	31,931	38,441
Lease Financing & Other [Member] | Pass [Member]
Risk category by class of loans
Financing Receivable Risk Category	30,699	37,619
Lease Financing & Other [Member] | Special Mention [Member]
Risk category by class of loans
Financing Receivable Risk Category	847	523
Lease Financing & Other [Member] | Substandard [Member]
Risk category by class of loans
Financing Receivable Risk Category	385	299
Lease Financing & Other [Member] | Doubtful [Member]
Risk category by class of loans
Financing Receivable Risk Category

XML

Securities - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 Securities	Sep. 30, 2011	Dec. 31, 2011 Securities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available-for-Sale Securities, Amortized Cost	$ 444,337		$ 503,584
Projected specific defaults/deferrals	100.00%
Projected severity of loss on additional defaults, year 1	2.00%
Projected severity of loss on additional defaults, year 2	1.00%
Projected severity of loss on additional defaults, thereafter	0.25%
Projected severity of loss on additional defaults	85.00%
Annual prepayment	1.00%
Other than temporary impairment loss
Carrying value of investment securities which are pledged	313		365
Number of securities in unrealized loss position	79		82
Minimum [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Projected severity of loss on specific defaults/deferrals	25.00%
Maximum [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Projected severity of loss on specific defaults/deferrals	100.00%
Pooled Trust Preferred Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available-for-Sale Securities, Amortized Cost	10,006
Available-for-Sale Securities, Estimated Fair Value	2,996
Other than temporary impairment loss	$ 528	$ 323

XML

Securities - Amortized Cost, Gross Unrealized Gains and Losses and Estimated Fair Value of Securities Classified as Available for Sale and Held to Maturity (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	$ 444,337	$ 503,584
Available for Sale Securities, Gross Unrealized Gains	11,220	13,555
Available for Sale Securities, Gross Unrealized Losses	8,104	9,242
Available for Sale Securities, Estimated Fair Value	447,453	507,897
Held to Maturity Securities, Amortized Cost	10,902	12,905
Held to Maturity Securities, Gross Unrealized Gains	725	914
Held to Maturity Securities, Gross Unrealized Loss
Held to Maturity Securities, Estimated Fair Value	11,627	13,819
Mortgage-Backed Securities - Residential [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	306,996	385,206
Available for Sale Securities, Gross Unrealized Gains	7,189	8,430
Available for Sale Securities, Gross Unrealized Losses	264	218
Available for Sale Securities, Estimated Fair Value	313,921	393,418
Held to Maturity Securities, Amortized Cost	5,762	7,767
Held to Maturity Securities, Gross Unrealized Gains	498	607
Held to Maturity Securities, Gross Unrealized Loss
Held to Maturity Securities, Estimated Fair Value	6,260	8,374
Obligations of States and Political Subdivisions [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	81,007	96,091
Available for Sale Securities, Gross Unrealized Gains	3,402	4,508
Available for Sale Securities, Estimated Fair Value	84,409	100,599
Held to Maturity Securities, Amortized Cost	5,140	5,138
Held to Maturity Securities, Gross Unrealized Gains	227	307
Held to Maturity Securities, Gross Unrealized Loss
Held to Maturity Securities, Estimated Fair Value	5,367	5,445
US Treasury and Government Agencies [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	33,201
Available for Sale Securities, Gross Unrealized Gains	8
Available for Sale Securities, Gross Unrealized Losses	12
Available for Sale Securities, Estimated Fair Value	33,197
Other Debt Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	13,098	12,220
Available for Sale Securities, Gross Unrealized Gains	12
Available for Sale Securities, Gross Unrealized Losses	7,716	8,888
Available for Sale Securities, Estimated Fair Value	5,394	3,332
Debt Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	434,302	493,517
Available for Sale Securities, Gross Unrealized Gains	10,611	12,938
Available for Sale Securities, Gross Unrealized Losses	7,992	9,106
Available for Sale Securities, Estimated Fair Value	436,921	497,349
Mutual Funds and Other Equity Securities [Member]
Schedule of Trading Securities and Other Trading Assets [Line Items]
Available for Sale Securities, Amortized cost	10,035	10,067
Available for Sale Securities, Gross Unrealized Gains	609	617
Available for Sale Securities, Gross Unrealized Losses	112	136
Available for Sale Securities, Estimated Fair Value	$ 10,532	$ 10,548

XML

Loans - Delinquency Categories by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	$ 42,305	$ 29,892
31-59 Days Past Due	2,957	4,816
60-89 Days Past Due	5,177	157
90 Days Or More Past Due	24,588	21,279
Total Past Due	32,722	26,252
Current	1,474,966	1,549,700
1-4 family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	8,345	1,470
31-59 Days Past Due	145
60-89 Days Past Due	809
90 Days Or More Past Due	8,345	1,470
Total Past Due	9,299	1,470
Current	204,803	173,244
Home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,212	1,926
31-59 Days Past Due	2,735
60-89 Days Past Due	178	97
90 Days Or More Past Due	1,212	1,926
Total Past Due	4,125	2,023
Current	104,614	110,496
Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total
31-59 Days Past Due
60-89 Days Past Due
90 Days Or More Past Due
Total Past Due
Current	1,507	1,862
Delinquency categories [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	240,908	198,345
31-59 Days Past Due	2,880	1
60-89 Days Past Due	269	107
90 Days Or More Past Due
Total Past Due	3,149	108
Current	237,759	198,237
Delinquency categories [Member] | 1-4 family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	130,868	84,681
31-59 Days Past Due	145
60-89 Days Past Due	91
90 Days Or More Past Due
Total Past Due	236
Current	130,632	84,681
Delinquency categories [Member] | Home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	107,328	110,345
31-59 Days Past Due	2,734
60-89 Days Past Due	178	97
90 Days Or More Past Due
Total Past Due	2,912	97
Current	104,416	110,248
Delinquency categories [Member] | Other loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,205	1,457
31-59 Days Past Due	1	1
60-89 Days Past Due		10
90 Days Or More Past Due
Total Past Due	1	11
Current	1,204	1,446
Delinquency categories [Member] | Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,507	1,862
31-59 Days Past Due
60-89 Days Past Due
90 Days Or More Past Due
Total Past Due
Current	$ 1,507	$ 1,862

XML

Securities - Cash Flow Models Used in Determining Credit Related OTTI Losses on Pooled Trust Preferred Securities (Detail)	Sep. 30, 2012
Trust Preferred Securities [Line Items]
Projected specific defaults and deferrals as % of original Collateral	100.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities 1 [Member] | Pre TSL IV [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	2.25%
Projected specific defaults and deferrals as % of original Collateral	57.00%
Projected severity of loss as % of specific defaults/deferrals	84.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities 2 [Member] | Pre TSL VII [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	1.80%
Projected specific defaults and deferrals as % of original Collateral	63.00%
Projected severity of loss as % of specific defaults/deferrals	86.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities 3 [Member] | Pre TSL VIII [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	1.90%
Projected specific defaults and deferrals as % of original Collateral	51.00%
Projected severity of loss as % of specific defaults/deferrals	92.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities 4 [Member] | Pre TSL VIII [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	1.90%
Projected specific defaults and deferrals as % of original Collateral	51.00%
Projected severity of loss as % of specific defaults/deferrals	92.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities P Five [Member] | Pre TSL X [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	1.70%
Projected specific defaults and deferrals as % of original Collateral	41.00%
Projected severity of loss as % of specific defaults/deferrals	80.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%
Pooled Trust Preferred Securities P Six [Member] | Pre TsSL XI [Member]
Trust Preferred Securities [Line Items]
Discount rate index	3m LIBOR
Discount rate spread	1.60%
Projected specific defaults and deferrals as % of original Collateral	34.00%
Projected severity of loss as % of specific defaults/deferrals	82.00%
Projected additional defaults/deferrals as % of performing collateral:
Year 1	2.00%
Year 2	1.00%
Thereafter	0.25%
Severity of loss	85.00%

XML

Securities - Additional Information Related to Company's Pooled Trust Preferred Securities (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Pooled Trust Preferred Securities 1 [Member] | Pre TSL IV [Member]
Trust Preferred Securities [Line Items]
Class	Mezz
Seniority	Mezzanine
Amortized cost	$ 61
Fair value	14
Unrealized gain (loss)	(47)
Moody's / Fitch	Caa2/CCC
Number of institutions currently performing	4
Actual defaults/deferrals as % of original collateral	27.00%
Excess subordination as % of performing collateral	20.00%
Pooled Trust Preferred Securities 2 [Member] | Pre TSL VII [Member]
Trust Preferred Securities [Line Items]
Class	B
Seniority	Mezzanine
Amortized cost	923
Fair value	437
Unrealized gain (loss)	(486)
OTTI recognized in earnings - nine months ended September 30, 2012	(2)
OTTI recognized in earnings - life to date	(1,122)
Moody's / Fitch	Ca/C
Number of institutions currently performing	9
Actual defaults/deferrals as % of original collateral	52.00%
Excess subordination as % of performing collateral	(91.00%)
Pooled Trust Preferred Securities 3 [Member] | Pre TSL VIII [Member]
Trust Preferred Securities [Line Items]
Class	B-1
Seniority	Mezzanine
Amortized cost	733
Fair value	167
Unrealized gain (loss)	(566)
OTTI recognized in earnings - nine months ended September 30, 2012	(188)
OTTI recognized in earnings - life to date	(1,418)
Moody's / Fitch	C/C
Number of institutions currently performing	16
Actual defaults/deferrals as % of original collateral	51.00%
Excess subordination as % of performing collateral	(88.00%)
Pooled Trust Preferred Securities 4 [Member] | Pre TSL VIII [Member]
Trust Preferred Securities [Line Items]
Class	B-2
Seniority	Mezzanine
Amortized cost	1,100
Fair value	250
Unrealized gain (loss)	(850)
OTTI recognized in earnings - nine months ended September 30, 2012	(281)
OTTI recognized in earnings - life to date	(2,127)
Moody's / Fitch	C/C
Number of institutions currently performing	16
Actual defaults/deferrals as % of original collateral	51.00%
Excess subordination as % of performing collateral	(88.00%)
Pooled Trust Preferred Securities Five [Member] | Pre TSL X [Member]
Trust Preferred Securities [Line Items]
Class	B-2
Seniority	Mezzanine
Amortized cost	5,791
Fair value	1,739
Unrealized gain (loss)	(4,052)
OTTI recognized in earnings - nine months ended September 30, 2012	(53)
OTTI recognized in earnings - life to date	(4,863)
Moody's / Fitch	C/C
Number of institutions currently performing	33
Actual defaults/deferrals as % of original collateral	41.00%
Excess subordination as % of performing collateral	(47.00%)
Pooled Trust Preferred Securities Six [Member] | Pre TsSL XI [Member]
Trust Preferred Securities [Line Items]
Class	B-2
Seniority	Mezzanine
Amortized cost	2,104
Fair value	389
Unrealized gain (loss)	(1,715)
OTTI recognized in earnings - nine months ended September 30, 2012	(4)
OTTI recognized in earnings - life to date	$ (472)
Moody's / Fitch	Ca/C
Number of institutions currently performing	41
Actual defaults/deferrals as % of original collateral	32.00%
Excess subordination as % of performing collateral	(31.00%)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash dividends per share	$ 0.54	$ 0.45
Retained Earnings (Deficit) [Member]
Cash dividends per share	$ 0.54	$ 0.45

XML

Securities - Change in Pretax OTTI Credit Related Losses on Securities Available for Sale (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Balance at beginning of period:
Total OTTI credit related impairment charges beginning of period	$ 9,478	$ 9,110
Increase to the amount related to the credit loss for which other-than-temporary impairment was previously recognized	528	323
Credit related impairment dispositions	(4)
Credit related impairment not previously recognized
Balance at end of period:	$ 10,002	$ 9,433

XML

Loans - Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Ending balance attributed to loans:
Collectively evaluated for impairment	$ 28,107	$ 28,311
Individually evaluated for impairment		2,374
Total ending balance of allowance	28,107	30,685
Ending balance of loans:
Collectively evaluated for impairment	1,455,560	1,528,082
Individually evaluated for impairment	52,128	47,870
Total ending balance of loans	1,507,688	1,575,952
Commercial Real Estate [Member]
Ending balance attributed to loans:
Collectively evaluated for impairment	11,250	12,776
Individually evaluated for impairment
Total ending balance of allowance	11,250	12,776
Ending balance of loans:
Collectively evaluated for impairment	558,643	660,075
Individually evaluated for impairment	25,010	30,762
Total ending balance of loans	583,653	690,837
Construction [Member]
Ending balance attributed to loans:
Collectively evaluated for impairment	4,292	4,096
Individually evaluated for impairment		2,374
Total ending balance of allowance	4,292	6,470
Ending balance of loans:
Collectively evaluated for impairment	89,040	104,546
Individually evaluated for impairment	2,201	5,481
Total ending balance of loans	91,241	110,027
Residential Real Estate [Member]
Ending balance attributed to loans:
Collectively evaluated for impairment	8,313	8,093
Individually evaluated for impairment
Total ending balance of allowance	8,313	8,093
Ending balance of loans:
Collectively evaluated for impairment	519,483	511,004
Individually evaluated for impairment	12,550	3,824
Total ending balance of loans	532,033	514,828
Commercial & Industrial [Member]
Ending balance attributed to loans:
Collectively evaluated for impairment	3,832	2,650
Individually evaluated for impairment
Total ending balance of allowance	3,832	2,650
Ending balance of loans:
Collectively evaluated for impairment	253,751	210,697
Individually evaluated for impairment	12,367	7,803
Total ending balance of loans	266,118	218,500
Lease Financing & Other [Member]
Ending balance attributed to loans:
Collectively evaluated for impairment	420	696
Individually evaluated for impairment
Total ending balance of allowance	420	696
Ending balance of loans:
Collectively evaluated for impairment	34,643	41,760
Individually evaluated for impairment
Total ending balance of loans	$ 34,643	$ 41,760

XML

Fair Value - Assets and Liabilities Measured at Fair Value (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Specific allowance within the allowance for loan losses	$ 0	$ 2,374
Investments in impaired loans subject to fair value	52,128	47,870
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investments in impaired loans subject to fair value	$ 12,407	$ 10,565

XML

CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest Income:
Loans, including fees	$ 21,619	$ 28,641	$ 73,197	$ 82,914
Securities:
Taxable	2,902	2,778	9,355	8,875
Exempt from Federal income taxes	796	989	2,792	3,300
Federal funds sold	11	24	28	73
Deposits in banks	381	154	735	519
Total interest income	25,709	32,586	86,107	95,681
Interest Expense:
Deposits	1,393	2,226	4,557	6,790
Securities sold under repurchase agreements and other short-term borrowings	18	68	85	172
Other borrowings	183	254	546	1,599
Total interest expense	1,594	2,548	5,188	8,561
Net Interest Income	24,115	30,038	80,919	87,120
Provision for loan losses	3,723	2,536	6,976	9,533
Net interest income after provision for loan losses	20,392	27,502	73,943	77,587
Non Interest Income:
Service charges	1,454	1,671	4,850	5,263
Investment advisory fees	2,303	2,639	7,213	7,998
Recognized impairment charge on securities available for sale		(119)	(528)	(323)
Realized gains on securities available for sale, net		8		8
Gain on sales and revaluation of loans held for sale and other real estate owned, net		946	15,920	73
Other income	596	569	2,041	1,745
Total non interest income	4,353	5,714	29,496	14,764
Non Interest Expense:
Salaries and employee benefits	11,366	11,296	33,544	33,377
Occupancy	2,121	2,217	6,563	6,764
Professional services	1,739	1,700	5,646	4,902
Equipment	1,071	1,101	3,300	3,218
Business development	545	452	1,899	1,548
FDIC assessment	811	553	2,165	2,350
Other operating expenses	2,382	2,771	8,828	9,029
Total non interest expense	20,035	20,090	61,945	61,188
Income Before Income Taxes	4,710	13,126	41,494	31,163
Income Taxes	1,576	4,618	15,386	10,399
Net Income	$ 3,134	$ 8,508	$ 26,108	$ 20,764
Basic Earnings Per Common Share	$ 0.16	$ 0.44	$ 1.33	$ 1.07
Diluted Earnings Per Common Share	$ 0.16	$ 0.43	$ 1.33	$ 1.06

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Earnings Per Share - Computation of Basic and Diluted Earnings Per Common Share (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Numerator:
Net income (loss) available to common shareholders for basic and diluted earnings per share	$ 3,134	$ 8,508	$ 26,108	$ 20,764
Denominator:
Denominator for basic earnings per common share - weighted average shares	19,636,014	19,462,158	19,602,815	19,455,553
Effect of diluted securities:
Stock options	6,676	16,172	9,784	50,666
Denominator for diluted earnings per common share - adjusted weighted average shares	19,642,690	19,478,329	19,612,599	19,506,219
Basic Earnings Per Common Share	$ 0.16	$ 0.44	$ 1.33	$ 1.07
Diluted Earnings Per Common Share	$ 0.16	$ 0.43	$ 1.33	$ 1.06
Dividends declared per share	$ 0.18	$ 0.18	$ 0.54	$ 0.46

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Amortized cost of securities available for sale at estimated fair value	$ 444,337	$ 503,584
Fair value of securities held to maturity at amortized cost	11,627	13,819
Allowance for loan losses	$ 28,107	$ 30,685
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	15,000,000	15,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.20	$ 0.20
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares outstanding	19,638,090	19,516,490
Treasury stock, shares	1,299,414	1,299,414

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Loans - Loan Portfolio Excluding Loans Held for Sale (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 1,507,688	$ 1,575,952
Deferred loan fees	(2,767)	(3,862)
Allowance for loan losses	(28,107)	(30,685)
Loans, net	1,476,814	1,541,405
Real Estate [Member] | Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	583,653	690,837
Real Estate [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	91,241	110,027
Real Estate [Member] | Multifamily [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	209,192	227,595
Real Estate [Member] | Residential Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	322,841	287,233
Commercial & Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	266,118	218,500
Individual & Lease Financing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 34,643	$ 41,760

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Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2012

Components of Net Periodic Pension Cost

The following table summarizes the components of the net periodic pension cost of the defined benefit plans (in thousands).

	Three Months Ended Sep 30						Nine Months Ended Sep 30
	2012			2011			2012			2011
Service cost	$	110		$	103		$	329		$	294
Interest cost		164			155			476			449
Amortization of prior service cost		(58	)		(58	)		(175	)		(174	)
Amortization of net loss		168			139			503			418
Net periodic pension cost	$	384		$	339		$	1,133		$	987

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Loans - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended					3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended			12 Months Ended	3 Months Ended
	Sep. 30, 2012 TDRs	Sep. 30, 2011	Sep. 30, 2012 TDRs	Sep. 30, 2011	Feb. 01, 2012	Dec. 31, 2011	Sep. 30, 2012 Performing Financing Receivable [Member]	Sep. 30, 2012 Troubled Debt Restructuring [Member]	Sep. 30, 2012 Troubled Debt Restructuring [Member]	Mar. 31, 2012 Residential [Member]	Sep. 30, 2012 Residential [Member]	Sep. 30, 2012 Residential [Member] Maximum [Member]	Sep. 30, 2012 Residential [Member] Minimum [Member]	Dec. 31, 2011 First tranche [Member]	Mar. 31, 2012 Second tranche [Member]	Dec. 31, 2011 Second tranche [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Adjustable rate loans										$ 65,795,000
Maximum multi family loans per transaction											7,500,000
Maturity terms of available loans, minimum											7 years
Maturity terms of available loans, maximum											10 years
Maturity terms of available loans, extension option											5 years
Debt amortization period											30 years
Maximum loan to value ratio											75.00%
Debt service coverage ratio												1.2	1.0
Specific reserve for impaired loans	0		0			2,374,000
Troubled debt restructurings impaired loans	27,540,000		27,540,000			28,256,000
Number of additional loans modifications	2		2
Pre-modification TDRs								14,604,000	14,604,000
Additional partial charge-off	5,628,000	2,802,000	12,537,000	9,429,000				4,132,000	2,595,000
Number of TDRs on accrual status			6
Troubled debt restructurings carrying amount accrual status			9,823,000
Number of loans on nonaccrual status			6
Non-Accrual	42,305,000		42,305,000			29,892,000	17,717,000
Gross income that would have been recorded if nonperforming loans at period end had been performing	452,000	1,630,000	1,320,000	2,466,000
Performing and non performing loan held for sale					474,000,000									200,000,000		274,000,000
Reduction in carrying value of commercial real estate loans														60,000,000		0
Classified assets net of market value adjustment														53,000,000
Pre-Tax Gain														$ 7,900,000	$ 8,000,000

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Fair Value (Tables)

9 Months Ended

Sep. 30, 2012

Quantitative Information About Level 3 Fair Value Measurements

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Impaired loans	$	15,559	Sales comparison and income based appraisals	Capitalization rates	7.00% - 7.75%
				Management adjustment for for dated appraisal	0% - 20%
				Management adjustment for costs to sell	0% - 30%
Other real estate owned	$	250	Sales comparison and income based appraisals	Management adjustment for costs to sell	30%
Loans held for sale	$	2,354	Third party bids	Bids from interested third parties	64% - 65%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments at fair value on a recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Trust preferred securities	$	2,996	Discounted cash flow	Specific issuer default rates	33%-63%
				Specific issuer default severity	80%-92%
				Annual prepayment rate	1%
				Projected annual nonspecific issuer default rates	0.25%-2.00%
				Projected annual nonspecific issuer default severity	85%
				Present value discount rate	22.5%

Assets and Liabilities Measured at Fair Value

Assets and liabilities measured at fair value as of the dates indicated are summarized below:

	Fair Value Measurements at
	September 30, 2012
	Quoted Prices in		Significant		Significant
	Active Markets		Other		Unobservable
	for Identical Assets		Observable Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—	$	33,197		—	$	33,197
Mortgage-backed securities - residential		—		313,921		—		313,921
Obligations of states and political subdivisions		—		84,409		—		84,409
Other debt securities		—		2,398	$	2,996		5,394
Mutual funds and other equity securities		—		10,532		—		10,532
Total assets at fair value		—	$	444,457	$	2,996	$	447,453
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	6,529	$	6,529
Construction		—		—		2,201		2,201
Residential		—		—		5,057		5,057
Commercial & Industrial		—		—		1,772		1,772
Other		—		—		—		—
Loans held for sale		—		—		2,354		2,354
Other real estate owned		—		—		250		250
Total assets at fair value		—		—	$	18,163	$	18,163

	Fair Value Measurements at
	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—		—		—		—
Mortgage-backed securities - residential		—	$	393,418		—	$	393,418
Obligations of states and political subdivisions		—		100,599		—		100,599
Other debt securities		—		516	$	2,816		3,332
Mutual funds and other equity securities		—		10,548		—		10,548
Total assets at fair value		—	$	505,081	$	2,816	$	507,897
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	1,410	$	1,410
Construction		—		—		3,107		3,107
Residential		—		—		1,529		1,529
Commercial & Industrial		—		—		2,145		2,145
Other		—		—		—		—
Loans held for sale		—		—		473,814		473,814
Other real estate owned		—		—		1,174		1,174
Total assets at fair value		—		—	$	483,179	$	483,179

(1) The recorded investments in impaired loans subject to fair value reporting at September 30, 2012 and December 31, 2011 were $12,407 and $10,565, respectively. Specific allowances of $0 and $2,374 had been established within the allowance for loan losses as of September 30, 2012 and December 31, 2011, respectively.

Reconciliation and Income Statement Classification of Gains and Losses for Securities Available for Sale Measure at Fair Value on Recurring Basis

The table below presents a reconciliation and income statement classification of gains and losses for securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine month periods ended September 30, 2012 and 2011:

	Level 3 Assets Measured on a Recurring Basis
	Three Months Ended						Nine Months Ended
	Sep 30						Sep 30
	2012			2011			2012			2011
	(000’s)						(000’s)
Balance at beginning of period	$	2,768		$	2,923		$	2,816		$	3,687
Additions to Level 3		49			93			257			289
Net unrealized gain (loss) included in other comprehensive income		699			(242	)		1,122			(995	)
Principal payments		(520	)		—			(671	)		(3	)
Recognized impairment charge included in the statement of income		—			(119	)		(528	)		(323	)
Balance at end of period	$	2,996		$	2,655		$	2,996		$	2,655

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings (Deficit) [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning balance at Dec. 31, 2010	$ 289,917	$ 3,793	$ (57,564)	$ 346,750	$ (3,989)	$ 927
Beginning balance, shares at Dec. 31, 2010		17,665,908
Net Income	20,764				20,764
Comprehensive income/loss	1,081					1,081
Stock option expense and exercises of stock options, net of tax	593	6		587
Stock option expense and exercises of stock options, net of tax, shares		28,389
Cash dividends	(8,844)				(8,844)
Ending balance at Sep. 30, 2011	303,511	3,799	(57,564)	347,337	7,931	2,008
Ending balance, shares at Sep. 30, 2011		17,694,297
Beginning balance at Dec. 31, 2011	277,562	4,163	(57,564)	347,764	(18,527)	1,726
Beginning balance, shares at Dec. 31, 2011	19,516,490	19,516,490
Net Income	26,108				26,108
Comprehensive income/loss	(641)					(641)
Stock option expense and exercises of stock options, net of tax	288	3		285
Stock option expense and exercises of stock options, net of tax, shares		16,166
Restricted stock awards	132	22		110
Restricted stock awards, shares		105,434
Cash dividends	(10,549)				(10,549)
Ending balance at Sep. 30, 2012	$ 292,900	$ 4,188	$ (57,564)	$ 348,159	$ (2,968)	$ 1,085
Ending balance, shares at Sep. 30, 2012	19,638,090	19,638,090

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CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Recognized impairment charge on securities available for sale, total gains (losses)	$ 699	$ (361)	$ 594	$ (1,318)
Gains (losses) on securities available for sale	$ 699	$ (242)	$ 1,122	$ (995)

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Fair Value

9 Months Ended

Sep. 30, 2012

Fair Value

8. Fair Value

Fair Value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. While management believes the Company’s valuation methodologies are appropriate and consistent with other financial institutions, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Investment Securities - The fair values of investment securities are determined by obtaining quoted prices on nationally recognized securities exchanges, if available (Level 1), or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities, which is a Level 2 input. The Company’s available for sale securities at September 30, 2012 and December 31, 2011 include several pooled trust preferred instruments. The recent severe downturn in the overall economy and, in particular, in the financial services industry has created a situation where significant observable inputs (Level 2) are not readily available for these instruments. As an alternative, the Company combined Level 2 input of market yield requirements of similar instruments together with certain Level 3 assumptions addressing the impact of current market illiquidity to estimate the fair value of these instruments. The fair values of Level 3 investment securities are determined by the Controller and Investment Officer who report to the Chief Financial Officer. See Note 3 “Securities” for further discussion of pooled trust preferred securities.

Impaired Loans – At the time a loan is considered impaired, it is valued at lower of cost or fair value. Impaired loans carried at fair value generally are partially charged off or receive specific allocations of the allowance for loan losses. For collateral dependent loans, fair value in commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraiser to adjust for differences between the comparable sales and the income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining value. Non real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and the client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned (“OREO”) — Real estate properties acquired through loan foreclosure are recorded at estimated fair value, net of estimated selling costs, at time of foreclosure establishing a new cost basis. Fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a level 3 classification of the inputs used in determining fair value.

Loans Held for Sale - Loans held for sale are carried at lower of cost or fair value. The fair value of loans held for sale is determined using average bid indicators from third parties expected to participate in the loan sales, in some cases adjusted for specific attributes of that loan or other observable market data. Such bids and adjustments often vary significantly and typically result in level 3 classification of the inputs used in determining fair value.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Impaired loans	$	15,559	Sales comparison and income based appraisals	Capitalization rates	7.00% - 7.75%
				Management adjustment for for dated appraisal	0% - 20%
				Management adjustment for costs to sell	0% - 30%
Other real estate owned	$	250	Sales comparison and income based appraisals	Management adjustment for costs to sell	30%
Loans held for sale	$	2,354	Third party bids	Bids from interested third parties	64% - 65%

The following table presents quantitative information about Level 3 fair value measurements for financial instruments at fair value on a recurring basis at September 30, 2012:

Asset	Fair Value		Valuation Technique	Unobservable Inputs	Range of Inputs
Trust preferred securities	$	2,996	Discounted cash flow	Specific issuer default rates	33%-63%
				Specific issuer default severity	80%-92%
				Annual prepayment rate	1%
				Projected annual nonspecific issuer default rates	0.25%-2.00%
				Projected annual nonspecific issuer default severity	85%
				Present value discount rate	22.5%

Assets and liabilities measured at fair value as of the dates indicated are summarized below:

	Fair Value Measurements at
	September 30, 2012
	Quoted Prices in		Significant		Significant
	Active Markets		Other		Unobservable
	for Identical Assets		Observable Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—	$	33,197		—	$	33,197
Mortgage-backed securities - residential		—		313,921		—		313,921
Obligations of states and political subdivisions		—		84,409		—		84,409
Other debt securities		—		2,398	$	2,996		5,394
Mutual funds and other equity securities		—		10,532		—		10,532
Total assets at fair value		—	$	444,457	$	2,996	$	447,453
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	6,529	$	6,529
Construction		—		—		2,201		2,201
Residential		—		—		5,057		5,057
Commercial & Industrial		—		—		1,772		1,772
Other		—		—		—		—
Loans held for sale		—		—		2,354		2,354
Other real estate owned		—		—		250		250
Total assets at fair value		—		—	$	18,163	$	18,163

	Fair Value Measurements at
	December 31, 2011
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(000’s)
Measured on a recurring basis:
Available for sale securities:
U.S. Treasury and government agencies		—		—		—		—
Mortgage-backed securities - residential		—	$	393,418		—	$	393,418
Obligations of states and political subdivisions		—		100,599		—		100,599
Other debt securities		—		516	$	2,816		3,332
Mutual funds and other equity securities		—		10,548		—		10,548
Total assets at fair value		—	$	505,081	$	2,816	$	507,897
Measured on a non-recurring basis:
Impaired loans: (1)
Commercial Real Estate		—		—	$	1,410	$	1,410
Construction		—		—		3,107		3,107
Residential		—		—		1,529		1,529
Commercial & Industrial		—		—		2,145		2,145
Other		—		—		—		—
Loans held for sale		—		—		473,814		473,814
Other real estate owned		—		—		1,174		1,174
Total assets at fair value		—		—	$	483,179	$	483,179

(1) The recorded investments in impaired loans subject to fair value reporting at September 30, 2012 and December 31, 2011 were $12,407 and $10,565, respectively. Specific allowances of $0 and $2,374 had been established within the allowance for loan losses as of September 30, 2012 and December 31, 2011, respectively.

The table below presents a reconciliation and income statement classification of gains and losses for securities available for sale measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and nine month periods ended September 30, 2012 and 2011:

	Level 3 Assets Measured on a Recurring Basis
	Three Months Ended						Nine Months Ended
	Sep 30						Sep 30
	2012			2011			2012			2011
	(000’s)						(000’s)
Balance at beginning of period	$	2,768		$	2,923		$	2,816		$	3,687
Additions to Level 3		49			93			257			289
Net unrealized gain (loss) included in other comprehensive income		699			(242	)		1,122			(995	)
Principal payments		(520	)		—			(671	)		(3	)
Recognized impairment charge included in the statement of income		—			(119	)		(528	)		(323	)
Balance at end of period	$	2,996		$	2,655		$	2,996		$	2,655

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 01, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	HVB
Entity Registrant Name	HUDSON VALLEY HOLDING CORP
Entity Central Index Key	0000722256
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		19,643,510

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments

9. Fair Value of Financial Instruments

The Company follows the “Financial Instruments” topic of the FASB Accounting Standards Codification which requires the disclosure of the estimated fair value of certain financial instruments. These estimated fair values as of September 30, 2012 and December 31, 2011 have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on these estimates of fair value.

Carrying amount and estimated fair value of financial instruments not previously presented as of the dates indicated were as follows:

September 30, 2012					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	843.9	$	843.9	$	843.9
Held to maturity securities and accrued interest		10.9		11.6			$	11.6
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,495.7		1,536.3					$	1,536.3
Liabilities:
Deposits with no stated maturity and accrued interest		2,414.5		2,414.5		2,414.5
Time deposits and accrued interest		134.4		134.8				134.8
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		42.7		42.7				42.7
Other borrowings and accrued interest		16.6		14.0				14.0

December 31, 2011					Fair Value Measurements
					Quoted Prices in		Significant		Significant
			Total		Active Markets		Other		Unobservable
	Carrying		Fair		for Identical Assets		Observable Inputs		Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Assets:
Financial assets for which carrying value approximates fair value	$	94.5	$	94.5	$	94.5
Held to maturity securities and accrued interest		13.0		13.9			$	13.9
FHLB Stock		4.8		N/A		N/A
Loans and accrued interest		1,571.3		1,609.2					$	1,609.2
Liabilities:
Deposits with no stated maturity and accrued interest		2,274.7		2,274.7		2,274.7
Time deposits and accrued interest		151.7		152.1				152.1
Securities sold under repurchase agreements and other short-term borrowing and accrued interest		53.1		53.1				53.1
Other borrowings and accrued interest		16.6		14.0				14.0

The estimated fair value of the indicated items was determined as follows:

Financial assets for which carrying value approximates fair value — The estimated fair value approximates carrying amount because of the immediate availability of these funds or based on the short maturities and current rates for similar deposits. Cash and due from banks as well as Federal funds sold are reported in this line item.

Held to maturity securities and accrued interest — The fair value of securities held to maturity was estimated based on quoted market prices or dealer quotations. Accrued interest is stated at its carrying amounts which approximates fair value.

FHLB Stock — It is not practicable to determine its fair value due to restrictions placed on its transferability.

Loans and accrued interest — The fair value of loans was estimated by discounting projected cash flows at the reporting date using current rates for similar loans. Accrued interest is stated at its carrying amount which approximates fair value. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposits with no stated maturity and accrued interest — The estimated fair value of deposits with no stated maturity and accrued interest, as applicable, are considered to be equal to their carrying amounts.

Time deposits and accrued interest — The fair value of time deposits has been estimated by discounting projected cash flows at the reporting date using current rates for similar deposits. Accrued interest is stated at its carrying amount which approximates fair value.

Securities sold under repurchase agreements and other short-term borrowings and accrued interest — The estimated fair value of these instruments approximate carrying amount because of their short maturities and variable rates. Accrued interest is stated at its carrying amount which approximates fair value.

Other borrowings and accrued interest — The fair value of callable FHLB advances was estimated by discounting projected cash flows at the reporting date using the rate applicable to the projected call date option. Accrued interest is stated at its carrying amount which approximates fair value.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Net Income	$ 3,134	$ 8,508	$ 26,108	$ 20,764
Other-than-temporarily impaired securities available for sale:
Total gains (losses)	699	(361)	594	(1,318)
Losses recognized in earnings		119	528	323
Gains (losses) recognized in comprehensive income	699	(242)	1,122	(995)
Income tax effect	(287)	99	(460)	408
Unrealized holding losses on other-than-temporarily impaired securities available for sale, net of tax	412	(143)	662	(587)
Securities available for sale not other-than-temporarily impaired:
Gains (losses) arising during the year	245	4,735	(2,320)	2,535
Income tax effect	(105)	(1,777)	759	(907)
Securities available for sale not other-than-temporarily impaired, net of tax	140	2,958	(1,561)	1,628
(Gains) losses recognized in earnings		(8)		(8)
Income tax effect		3		3
Total securities available for sale not other-than-temporarily impaired		(5)		(5)
Unrealized holding gains (losses) on securities available for sale not other-than-temporarily-impaired, net of tax	140	2,953	(1,561)	1,623
Unrealized holding gain (loss) on securities, net	552	2,810	(899)	1,036
Accrued benefit liability adjustment	143	(78)	431	77
Income tax effect	(58)	31	(173)	(31)
Total securities available for sale not other-than-temporarily impaired	85	(47)	258	46
Other comprehensive income (loss)	637	2,763	(641)	1,082
Comprehensive Income	$ 3,771	$ 11,271	$ 25,467	$ 21,846

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Securities

9 Months Ended

Sep. 30, 2012

Securities

3. Securities

The following tables set forth the amortized cost, gross unrealized gains and losses and the estimated fair value of securities classified as available for sale and held to maturity at September 30, 2012 and December 31, 2011 (in thousands):

	($000’s)
	September 30, 2012								December 31, 2011
	Amortized		Gross Unrealized				Estimated		Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Available for Sale
U.S. Treasury and government agencies	$	33,201	$	8	$	12	$	33,197		—		—		—		—
Mortgage-backed securities - residential		306,996		7,189		264		313,921	$	385,206	$	8,430	$	218	$	393,418
Obligations of states and political subdivisions		81,007		3,402		—		84,409		96,091		4,508		—		100,599
Other debt securities		13,098		12		7,716		5,394		12,220		—		8,888		3,332
Total debt securities		434,302		10,611		7,992		436,921		493,517		12,938		9,106		497,349
Mutual funds and other equity securities		10,035		609		112		10,532		10,067		617		136		10,548
Total	$	444,337	$	11,220	$	8,104	$	447,453	$	503,584	$	13,555	$	9,242	$	507,897
	Amortized		Gross Unrecognized				Estimated		Amortized		Gross Unrecognized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Held to Maturity
Mortgage-backed securities - residential	$	5,762	$	498		—	$	6,260	$	7,767	$	607		—	$	8,374
Obligations of states and political subdivisions		5,140		227		—		5,367		5,138		307		—		5,445
Total	$	10,902	$	725		—	$	11,627	$	12,905	$	914		—	$	13,819

Included in other debt securities are investments in five pooled trust preferred securities with amortized costs and estimated fair values of $10,006 and $2,996 respectively, at September 30, 2012. These investments represent trust preferred obligations of banking industry companies. The value of these investments has been severely negatively affected by the continued downturn in the economy and increased investor concerns about recent and potential future losses in the financial services industry. These investments are rated below investment grade by both Moody’s Investor Services and Fitch Ratings, Ltd at September 30, 2012 with ratings ranging from Caa2 to C. All of the Company’s pooled trust preferred securities are mezzanine class issues, four of which are subordinate to certain other classes of securities within their pools. In light of these conditions, these investments were reviewed for other-than-temporary impairment.

In estimating OTTI losses, the Company considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuers, (3) whether the Company intends to sell or whether it is more likely than not that the Company would be required to sell the investments prior to recovery of cost and (4) evaluation of cash flows to determine if they have been adversely affected.

The Company uses a discounted cash flow (“DCF”) analysis to provide an estimate of an OTTI loss. Inputs to the discount model included known defaults and interest deferrals, projected additional default rates, projected additional deferrals of interest, over-collateralization tests, interest coverage tests and other factors. Additional expected default and deferral rates were weighted toward the near future to reflect the current adverse economic environment affecting the banking industry. All known and projected defaults are applied a loss severity of 100%. All known and expected deferrals are assigned a loss severity between 25% and 100% based on an individual review of the related issuers’ financial information. The review is focused on capital adequacy, earnings performance and various asset quality measurements. An additional factor for potential defaults/deferrals is included in each DCF at 2% of performing collateral in year 1, 1% in year 2 and 0.25% annually thereafter, at a loss severity rate of 85%. A 1% annual prepayment factor is also applied to each DCF. The discount rate used in the DCF was based upon the original yield expected from the related securities.

Significant specific inputs to the cash flow models used in determining credit related OTTI losses on pooled trust preferred securities as of September 30, 2012 included the following:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Discount rate index		3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR
Discount rate spread		2.25	%		1.80	%		1.90	%		1.90	%		1.70	%		1.60	%
Projected specific defaults and deferrals as % of original Collateral		57	%		63	%		51	%		51	%		41	%		34	%
Projected severity of loss as % of specific defaults/deferrals		84	%		86	%		92	%		92	%		80	%		82	%
Projected additional defaults/deferrals as % of performing collateral:
Year 1		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%
Year 2		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Thereafter		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Severity of loss		85	%		85	%		85	%		85	%		85	%		85	%

Additional information related to the Company’s pooled trust preferred securities as of September 30, 2012 is presented below:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Class		Mezz			B			B-1			B-2			B-2			B-2
Seniority		Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine
Amortized cost	$	61		$	923		$	733		$	1,100		$	5,791		$	2,104
Fair value		14			437			167			250			1,739			389
Unrealized gain (loss)		(47	)		(486	)		(566	)		(850	)		(4,052	)		(1,715	)
OTTI recognized in earnings - nine months ended September 30, 2012		—			(2	)		(188	)		(281	)		(53	)		(4	)
OTTI recognized in earnings - life to date		—			(1,122	)		(1,418	)		(2,127	)		(4,863	)		(472	)
Moody’s / Fitch		Caa2/CCC			Ca/C			C/C			C/C			C/C			Ca/C
Number of institutions currently performing		4			9			16			16			33			41
Actual defaults/deferrals as % of original collateral		27	%		52	%		51	%		51	%		41	%		32	%
Excess subordination as % of performing collateral (1)		20	%		-91	%		-88	%		-88	%		-47	%		-31	%

(1) The excess subordination as % of performing collateral is calculated by taking total performing collateral and dividing it by the sum of all class balances with seniority senior to and equal to the class for which the measurement is applicable. A negative percentage is indicative of a cash flow shortfall which could result in credit component OTTI. The severity of a current negative excess subordination is not necessarily indicative of the severity of the credit component OTTI as actual cash flow results realized with respect to future defaults and deferrals, default and deferral timing, loss severities, recovery timing, redirections of payments in other classes and other factors could act to increase or decrease an indicated deficiency at a future date.

The following table summarizes the change in pretax OTTI credit related losses on securities available for sale for the periods indicated (in thousands):

	Nine Months Ended
	Sep 30 2012			Sep 30 2011
Balance at beginning of period:
Total OTTI credit related impairment charges beginning of period	$	9,478		$	9,110
Increase to the amount related to the credit loss for which other-than-temporary impairment was previously recognized		528			323
Credit related impairment dispositions		(4	)		—
Credit related impairment not previously recognized		—			—
Balance at end of period:	$	10,002		$	9,433

During the nine month periods ended September 30, 2012 and 2011, pretax OTTI losses of $528 and $323, respectively, were recognized on pooled trust preferred securities. These OTTI losses resulted from adverse changes in the expected cash flows of these securities which indicated that the Company may not recover the entire cost basis of these investments. Continuation or worsening of current adverse economic conditions may result in further impairment charges in the future.

At September 30, 2012 and December 31, 2011, securities having a stated value of approximately $313 and $365, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

The following tables reflect the Company’s investment’s fair value and gross unrealized loss, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, as of the dates indicated (in thousands):

September 30, 2012	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
U.S. Treasuries and government agencies	$	8,990	$	12		—		—	$	8,990	$	12
Mortgage-backed securities - residential		40,396		264		—		—		40,396		264
Obligations of states and political subdivisions		—		—		—		—		—		—
Other debt securities		—		—	$	2,996	$	7,716		2,996		7,716
Total debt securities		49,386		276		2,996		7,716		52,382		7,992
Mutual funds and other equity securities		8		1		97		111		105		112
Total temporarily impaired securities	$	49,394	$	277	$	3,093	$	7,827	$	52,487	$	8,104

There were no securities classified as held to maturity in an unrealized loss position at September 30, 2012.

December 31, 2011	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
Mortgage-backed securities - residential	$	41,421	$	218		—		—	$	41,421	$	218
Other debt securities		460		50	$	2,816	$	8,838		3,276		8,888
Total debt securities		41,881		268		2,816		8,838		44,697		9,106
Mutual funds and other equity securities		—		—		92		136		92		136
Total temporarily impaired securities	$	41,881	$	268	$	2,908	$	8,974	$	44,789	$	9,242

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2011.

The total number of securities in the Company’s portfolio that were in an unrealized loss position was 79 at September 30, 2012 and 82 at December 31, 2011. The Company has determined that it does not intend to sell, or it is more likely than not that it will be required to sell, its securities that are in an unrealized loss position prior to the recovery of its amortized cost basis. With the exception of the investment in pooled trust preferred securities discussed above, the Company believes that its securities continue to have satisfactory ratings, are readily marketable and that current unrealized losses are primarily a result of changes in interest rates. Therefore, management does not consider these investments to be other-than-temporarily impaired at September 30, 2012. With regard to the investments in pooled trust preferred securities, the Company has decided to hold these securities as it believes that current market quotes for these securities are not necessarily indicative of their value. The Company has recognized impairment charges on five of the pooled trust preferred securities. Management believes that the remaining impairment in the value of these securities to be primarily related to illiquidity in the market and therefore not credit related at September 30, 2012.

The contractual maturity of all debt securities held at September 30, 2012 is shown below. Actual maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Contractual Maturity
Within 1 year	$	22,563	$	22,081		—		—
After 1 year but within 5 years		64,681		66,738	$	5,140	$	5,367
After 5 year but within 10 years		29,350		31,185		—		—
After 10 years		10,712		2,996		—		—
Mortgage-backed securities - residential		306,996		313,921		5,762		6,260
Total	$	434,302	$	436,921	$	10,902	$	11,627

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Basis of Presentation

9 Months Ended

Sep. 30, 2012

Basis of Presentation

2. Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments (comprising only normal recurring adjustments) necessary to present fairly the financial position of the Company at September 30, 2012 and December 31, 2011 and the results of its operations and comprehensive income for the three and nine month periods ended September 30, 2012 and 2011 and cash flows and changes in stockholders’ equity for the nine month periods ended September 30, 2012 and 2011. The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results of operations to be expected for the remainder of the year.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and predominant practices used within the banking industry. Certain information and note disclosures normally included in annual financial statements have been omitted.

In preparing such financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated balance sheets and statements of income for the periods reported. Actual results could differ significantly from those estimates.

Estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the determination of the fair value of securities available for sale, the determination of other-than-temporary impairment of investments and the carrying amounts of goodwill and deferred tax assets. In connection with the determination of the allowance for loan losses, management utilizes the work of professional appraisers for significant properties.

Intercompany items and transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the current period’s presentation.

These unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2011 and notes thereto.

Cash and Cash Equivalents – For purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts due from banks and interest bearing deposits in other banks (including the Federal Reserve Bank of New York).

Securities — Securities are classified as either available for sale, representing securities the Company may sell in the ordinary course of business, or as held to maturity, representing securities that the Company has determined that it is more likely than not that it would not be required to sell prior to maturity or recovery of cost. Securities available for sale are reported at fair value with unrealized gains and losses (net of tax) excluded from operations and reported in other comprehensive income. Securities held to maturity are stated at amortized cost. Interest income includes amortization of purchase premium and accretion of purchase discount. The amortization of premiums and accretion of discounts is determined by using the level yield method. Securities are not acquired for purposes of engaging in trading activities. Realized gains and losses from sales of securities are determined using the specific identification method. The Company regularly reviews declines in the fair value of securities below their costs for purposes of determining whether such declines are other-than-temporary in nature. In estimating other-than-temporary impairment (“OTTI”), management considers adverse changes in expected cash flows, the length of time and extent that fair value has been less than cost and the financial condition and near term prospects of the issuer. The Company also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis.

Loans Held for Sale – Loan sales occur in limited circumstances as part of strategic business or regulatory compliance initiatives. Loans held for sale, including deferred fees and costs, are reported at the lower of cost or fair value as determined by expected bid prices from potential investors. Loans held for sale are segregated into pools based on distinct criteria and the lower of cost or fair value analysis is performed at the pool level. Loans are sold without recourse and servicing released. When a loan is transferred from portfolio to held for sale and the fair value is less than cost, a charge off is recorded against the allowance for loan loss. Subsequent declines in fair value, if any, are recorded as a valuation allowance and charged against earnings.

Loans — Loans are reported at their outstanding principal balance, net of the allowance for loan losses, and deferred loan origination fees and costs. Loan origination fees and certain direct loan origination costs are deferred and recognized over the life of the related loan or commitment as an adjustment to yield, or taken directly into income when the related loan is sold or commitment expires.

Allowance for Loan Losses — The Company maintains an allowance for loan losses to absorb probable losses incurred in the loan portfolio based on ongoing quarterly assessments of the estimated losses. The Company’s methodology for assessing the appropriateness of the allowance consists of a specific component for identified problem loans, and a formula component which addresses historical loan loss experience together with other relevant risk factors affecting the portfolio. This methodology applies to all portfolio segments.

The specific component incorporates the Company’s analysis of impaired loans. These accounting standards prescribe the measurement methods, income recognition and disclosures related to impaired loans. A loan is recognized as impaired when it is probable that principal and/or interest are not collectible in accordance with the loan’s contractual terms. In addition, a loan which has been renegotiated with a borrower experiencing financial difficulties for which the terms of the loan have been modified with a concession that the Company would not otherwise have granted are considered troubled debt restructurings and are also recognized as impaired. Measurement of impairment can be 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 fair value of the collateral, taking into account estimated selling costs, if the loan is collateral dependent. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change. If the fair value of an impaired loan is less than the related recorded amount, a specific valuation component is established within the allowance for loan losses or, if the impairment is considered to be permanent, a full or partial charge-off is recorded against the allowance for loan losses. Triggering events that may impact the Company’s decision to record a specific reserve instead of a partial charge-off on impaired loans typically involve some uncertainty as to the amount of permanent loss to be recorded. Examples include ongoing negotiations with a borrower, new appraisals or other collateral evaluations not yet received or completed and other factors where the decision to record a charge-off is considered premature. The Company has groups of smaller balance homogenous loans which are collectively reviewed for impairment. These groups include residential 1-4 family loans, home equity lines of credit and consumer loans. These loans are not individually risk rated while performing. They are either charged off or evaluated for impairment after 90 days delinquency.

The formula component is calculated by first applying historical loss experience factors to outstanding loans by type. The Company uses a three year average loss experience as the starting base for the formula component. This component is then adjusted to reflect additional risk factors not addressed by historical loss experience. These factors include the evaluation of then-existing economic and business conditions affecting the key lending areas of the Company and other conditions, such as new loan products, credit quality trends (including trends in nonperforming loans expected to result from existing conditions), collateral values, loan volumes and concentrations, recent charge-off and delinquency experience, specific industry conditions within portfolio segments that existed as of the balance sheet date and the impact that such conditions were believed to have had on the collectability of the loan portfolio. Senior management reviews these conditions quarterly. Management’s evaluation of the loss related to each of these conditions is quantified by portfolio segment and reflected in the formula component. The evaluations of the inherent loss with respect to these conditions is subject to a higher degree of uncertainty due to the subjective nature of such evaluations and because they are not identified with specific problem credits.

Actual losses can vary significantly from the estimated amounts. The Company’s methodology permits adjustments to the allowance in the event that, in management’s judgment, significant factors which affect the collectability of the loan portfolio as of the evaluation date have changed.

Management believes the allowance for loan losses is the best estimate of probable losses which have been incurred as of September 30, 2012. There is no assurance that the Company will not be required to make future adjustments to the allowance for possible adverse effects on borrowers or collateral values that may result from widespread damage caused by the recent storm, or in response to changing economic conditions, particularly in the Company’s service area, since the majority of the Company’s loans are collateralized by real estate. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments at the time of their examinations.

Loan Charge-Offs – The Company’s charge-off policy covers all loan portfolio classes. Loans are generally fully or partially charged-off at the earlier of when it is determined that collection efforts are no longer productive or when they have been identified as permanent losses by management, internal loan review and/or bank examiners. Factors considered in determining whether collection efforts are no longer productive include any amounts currently being collected, the status of discussions or negotiations with the borrower, the principal and/or guarantors, the cost of continuing, efforts to collect, the status of any foreclosure or legal actions, the value of the collateral, and any other pertinent factors. For loans in groups that are collectively reviewed for impairment, certain actions are taken after 90 days delinquency. Consumer loans, loans and lines with balances of $100,000 or less and other unsecured loans are charged off after 90 days delinquency. Other larger balance residential 1-4 mortgages and home equity lines of credit are placed on nonaccrual status after 90 days delinquency and are immediately evaluated for collectability utilizing a collateral based impairment analysis. Full or partial charge-offs are taken for impairment shortfalls on these loans. The loans are then transferred to asset recovery or other legal channels for foreclosure or other resolution.

Income Recognition on Loans — Interest on loans is accrued monthly. Net loan origination and commitment fees are deferred and recognized as an adjustment of yield over the lives of the related loans. Loans, including impaired loans, are placed on a non-accrual status when management believes that interest or principal on such loans may not be collected in the normal course of business. When a loan is placed on non-accrual status, all interest previously accrued, but not collected, is reversed against interest income. Interest received on non-accrual loans generally is either applied against principal or reported as interest income, in accordance with management’s judgment as to the collectability of principal. Loans can be returned to accruing status when they become current as to principal and interest, demonstrate a period of performance under the contractual terms, and when, in management’s opinion, they are estimated to be fully collectible. This methodology applies to all loan classes.

Premises and Equipment — Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, generally 3 to 5 years for furniture, fixtures and equipment and 31.5 years for buildings. Leasehold improvements are amortized over the lesser of the term of the lease or the estimated useful life of the asset.

Other Real Estate Owned (“OREO”) — Real estate properties acquired through loan foreclosure are recorded at estimated fair value, net of estimated selling costs, at time of foreclosure establishing a new cost basis. Credit losses arising at the time of foreclosure are charged against the allowance for loan losses. Subsequent valuations are periodically performed by management and the carrying value is adjusted by a charge to expense to reflect any subsequent declines in the estimated fair value. Routine holding costs are charged to expense as incurred.

Goodwill and Other Intangible Assets — Goodwill and identified intangible assets with indefinite useful lives are not subject to amortization. Identified intangible assets that have finite useful lives are amortized over those lives by a method which reflects the pattern in which the economic benefits of the intangible asset are used up. Goodwill is subject to impairment testing on an annual basis, or more often if events or circumstances indicate that impairment may exist. Identifiable intangible assets are subject to impairment if events or circumstances indicate that impairment may exist. If such testing indicates impairment in the values and/or remaining amortization periods of the intangible assets, adjustments are made to reflect such impairment. The Company’s goodwill impairment evaluations as of December 31, 2011 did not indicate any impairment. The Company is not aware of any events or circumstances that existed with the identified intangible assets that would indicate impairment as of September 30, 2012.

Loss Contingencies – Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Legal fees associated with loss contingencies are included in loss contingency accruals.

Income Taxes — Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period the change is enacted.

Stock-Based Compensation — Compensation costs relating to share-based payment transactions are recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued. Compensation costs related to share based payment transactions are expensed over their respective vesting periods. The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. See Note 7 “Stock-Based Compensation” herein for additional discussion.

Earnings per Common Share — Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per common share is similar to the computation of basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares, consisting solely of stock options, had been issued.

Other — Certain 2011 amounts have been reclassified to conform to the 2012 presentation.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Stock Based Compensation Activity

The following table summarizes stock-based compensation activity for the nine month period ended September 30, 2012:

Prior Option Plans:	Shares			Weighted Average Grant or Exercise Price		Aggregate Intrinsic Value (1) ($000’s)		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2011		625,256		$	22.81
Granted		—			—
Exercised		(7,757	)		16.54
Cancelled or Expired		(21,550	)		24.64
Outstanding at September 30, 2012		595,949		$	22.83	$	106		1.8
Exercisable at September 30, 2012		587,639		$	22.64	$	106		1.8
Nonvested at September 30, 2012		8,310		$	35.94
2010 Omnibus Incentive Plan:
Outstanding at December 31, 2011		—			—
Granted at fair value		114,586		$	16.69
Restriction released		(7,673	)		17.10
Cancelled		(9,152	)		16.74
Nonvested at September 30, 2012		97,761		$	16.65
Available for grant at December 31, 2011		1,331,000
Restricted stock awards		(114,586	)	$	16.69
Cancelled		9,152			16.74
Available for future grant		1,225,566

1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2012. This amount changes based on changes in the fair value of the Company’s stock.

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Securities (Tables)

9 Months Ended

Sep. 30, 2012

Amortized Cost, Gross Unrealized Gains and Losses and Estimated Fair Value of Securities Classified as Available for Sale and Held to Maturity

The following tables set forth the amortized cost, gross unrealized gains and losses and the estimated fair value of securities classified as available for sale and held to maturity at September 30, 2012 and December 31, 2011 (in thousands):

	($000’s)
	September 30, 2012								December 31, 2011
	Amortized		Gross Unrealized				Estimated		Amortized		Gross Unrealized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Available for Sale
U.S. Treasury and government agencies	$	33,201	$	8	$	12	$	33,197		—		—		—		—
Mortgage-backed securities - residential		306,996		7,189		264		313,921	$	385,206	$	8,430	$	218	$	393,418
Obligations of states and political subdivisions		81,007		3,402		—		84,409		96,091		4,508		—		100,599
Other debt securities		13,098		12		7,716		5,394		12,220		—		8,888		3,332
Total debt securities		434,302		10,611		7,992		436,921		493,517		12,938		9,106		497,349
Mutual funds and other equity securities		10,035		609		112		10,532		10,067		617		136		10,548
Total	$	444,337	$	11,220	$	8,104	$	447,453	$	503,584	$	13,555	$	9,242	$	507,897
	Amortized		Gross Unrecognized				Estimated		Amortized		Gross Unrecognized				Estimated
	Cost		Gains		Losses		Fair Value		Cost		Gains		Losses		Fair Value
Classified as Held to Maturity
Mortgage-backed securities - residential	$	5,762	$	498		—	$	6,260	$	7,767	$	607		—	$	8,374
Obligations of states and political subdivisions		5,140		227		—		5,367		5,138		307		—		5,445
Total	$	10,902	$	725		—	$	11,627	$	12,905	$	914		—	$	13,819

Cash Flow Models Used in Determining Credit Related OTTI Losses on Pooled Trust Preferred Securities

Significant specific inputs to the cash flow models used in determining credit related OTTI losses on pooled trust preferred securities as of September 30, 2012 included the following:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Discount rate index		3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR			3m LIBOR
Discount rate spread		2.25	%		1.80	%		1.90	%		1.90	%		1.70	%		1.60	%
Projected specific defaults and deferrals as % of original Collateral		57	%		63	%		51	%		51	%		41	%		34	%
Projected severity of loss as % of specific defaults/deferrals		84	%		86	%		92	%		92	%		80	%		82	%
Projected additional defaults/deferrals as % of performing collateral:
Year 1		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%		2.00	%
Year 2		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%		1.00	%
Thereafter		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%		0.25	%
Severity of loss		85	%		85	%		85	%		85	%		85	%		85	%

Additional Information Related to Company's Pooled Trust Preferred Securities

Additional information related to the Company’s pooled trust preferred securities as of September 30, 2012 is presented below:

	PreTSL IV			PreTSL VII			PreTSL VIII			PreTSL VIII			PreTSL X			PreTSL XI
Class		Mezz			B			B-1			B-2			B-2			B-2
Seniority		Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine			Mezzanine
Amortized cost	$	61		$	923		$	733		$	1,100		$	5,791		$	2,104
Fair value		14			437			167			250			1,739			389
Unrealized gain (loss)		(47	)		(486	)		(566	)		(850	)		(4,052	)		(1,715	)
OTTI recognized in earnings - nine months ended September 30, 2012		—			(2	)		(188	)		(281	)		(53	)		(4	)
OTTI recognized in earnings - life to date		—			(1,122	)		(1,418	)		(2,127	)		(4,863	)		(472	)
Moody’s / Fitch		Caa2/CCC			Ca/C			C/C			C/C			C/C			Ca/C
Number of institutions currently performing		4			9			16			16			33			41
Actual defaults/deferrals as % of original collateral		27	%		52	%		51	%		51	%		41	%		32	%
Excess subordination as % of performing collateral (1)		20	%		-91	%		-88	%		-88	%		-47	%		-31	%

(1) The excess subordination as % of performing collateral is calculated by taking total performing collateral and dividing it by the sum of all class balances with seniority senior to and equal to the class for which the measurement is applicable. A negative percentage is indicative of a cash flow shortfall which could result in credit component OTTI. The severity of a current negative excess subordination is not necessarily indicative of the severity of the credit component OTTI as actual cash flow results realized with respect to future defaults and deferrals, default and deferral timing, loss severities, recovery timing, redirections of payments in other classes and other factors could act to increase or decrease an indicated deficiency at a future date.

Change in Pretax OTTI Credit Related Losses on Securities Available for Sale

The following table summarizes the change in pretax OTTI credit related losses on securities available for sale for the periods indicated (in thousands):

	Nine Months Ended
	Sep 30 2012			Sep 30 2011
Balance at beginning of period:
Total OTTI credit related impairment charges beginning of period	$	9,478		$	9,110
Increase to the amount related to the credit loss for which other-than-temporary impairment was previously recognized		528			323
Credit related impairment dispositions		(4	)		—
Credit related impairment not previously recognized		—			—
Balance at end of period:	$	10,002		$	9,433

Fair Value and Gross Unrealized Loss, Aggregated by Investment Category and Length of Time Individual Securities

The following tables reflect the Company’s investment’s fair value and gross unrealized loss, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position, as of the dates indicated (in thousands):

September 30, 2012	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
U.S. Treasuries and government agencies	$	8,990	$	12		—		—	$	8,990	$	12
Mortgage-backed securities - residential		40,396		264		—		—		40,396		264
Obligations of states and political subdivisions		—		—		—		—		—		—
Other debt securities		—		—	$	2,996	$	7,716		2,996		7,716
Total debt securities		49,386		276		2,996		7,716		52,382		7,992
Mutual funds and other equity securities		8		1		97		111		105		112
Total temporarily impaired securities	$	49,394	$	277	$	3,093	$	7,827	$	52,487	$	8,104

December 31, 2011	Duration of Unrealized Loss
					Greater than
	Less Than 12 Months				12 Months				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
Classified as Available for Sale
Mortgage-backed securities - residential	$	41,421	$	218		—		—	$	41,421	$	218
Other debt securities		460		50	$	2,816	$	8,838		3,276		8,888
Total debt securities		41,881		268		2,816		8,838		44,697		9,106
Mutual funds and other equity securities		—		—		92		136		92		136
Total temporarily impaired securities	$	41,881	$	268	$	2,908	$	8,974	$	44,789	$	9,242

Contractual Maturity of All Debt Securities

The contractual maturity of all debt securities held at September 30, 2012 is shown below. Actual maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Contractual Maturity
Within 1 year	$	22,563	$	22,081		—		—
After 1 year but within 5 years		64,681		66,738	$	5,140	$	5,367
After 5 year but within 10 years		29,350		31,185		—		—
After 10 years		10,712		2,996		—		—
Mortgage-backed securities - residential		306,996		313,921		5,762		6,260
Total	$	434,302	$	436,921	$	10,902	$	11,627

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Benefit Plans

9 Months Ended

Sep. 30, 2012

Benefit Plans

6. Benefit Plans

In addition to defined contribution pension and savings plans which cover substantially all employees, the Company provides additional retirement benefits to certain officers and directors pursuant to unfunded supplemental defined benefit plans. The following table summarizes the components of the net periodic pension cost of the defined benefit plans (in thousands).

	Three Months Ended Sep 30						Nine Months Ended Sep 30
	2012			2011			2012			2011
Service cost	$	110		$	103		$	329		$	294
Interest cost		164			155			476			449
Amortization of prior service cost		(58	)		(58	)		(175	)		(174	)
Amortization of net loss		168			139			503			418
Net periodic pension cost	$	384		$	339		$	1,133		$	987

The Company makes contributions to the unfunded defined benefit plans only as benefit payments become due. The Company disclosed in its 2011 Annual Report on Form 10-K that it expected to contribute $813 to the unfunded defined benefit plans during 2012. For the three and nine month periods ended September 30, 2012, the Company contributed $172 and $484, respectively, to these plans.

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Loans

9 Months Ended

Sep. 30, 2012

Loans

4. Loans

The loan portfolio, excluding loans held for sale, is comprised of the following:

	September 30 2012			December 31 2011
Real Estate:
Commercial	$	583,653		$	690,837
Construction		91,241			110,027
Residential Multi-Family		209,192			227,595
Residential Other		322,841			287,233
Commercial & Industrial		266,118			218,500
Individuals & lease financing		34,643			41,760
Total loans		1,507,688			1,575,952
Deferred loan fees		(2,767	)		(3,862	)
Allowance for loan losses		(28,107	)		(30,685	)
Loans, net	$	1,476,814		$	1,541,405

In March 2012, the Company purchased $65,795 of adjustable rate 1-4 family residential loans as a partial redeployment of proceeds from the loan sales completed during the first quarter of 2012.

Risk characteristics of the Company’s portfolio segments include the following:

Commercial Real Estate Loans — In underwriting commercial real estate loans, the Company evaluates both the prospective borrower’s ability to make timely payments on the loan and the value of the property securing the loan. Repayment of such loans may be negatively impacted should the borrower default or should there be a substantial decline in the value of the property securing the loan, or a decline in general economic conditions. Where the owner occupies the property, the Company also evaluates the business’s ability to repay the loan on a timely basis. In addition, the Company may require personal guarantees, lease assignments and/or the guarantee of the operating company when the property is owner occupied. These types of loans may involve greater risks than other types of lending, because payments on such loans are often dependent upon the successful operation of the business involved, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions affecting the borrowers’ business.

Construction Loans — Construction loans are short-term loans (generally up to 18 months) secured by land for both residential and commercial development. The loans are generally made for acquisition and improvements. Funds are disbursed as phases of construction are completed. Most non-residential construction loans require pre-approved permanent financing or pre-leasing by the Company or another bank providing the permanent financing. The Company funds construction of single family homes and commercial real estate, when no contract of sale exists, based upon the experience of the builder, the financial strength of the owner, the type and location of the property and other factors. Construction loans are generally personally guaranteed by the principal(s). Repayment of such loans may be negatively impacted by the builders’ inability to complete construction, by a downturn in the new construction market, by a significant increase in interest rates or by a decline in general economic conditions. The Bank’s primary regulator considers construction loans to be part of commercial real estate for concentration risk measurement purposes.

Residential Real Estate Loans — Various loans secured by residential real estate properties are offered by the Company, including 1-4 family residential mortgages, multi-family residential loans and a variety of home equity line of credit products. Repayment of such loans may be negatively impacted should the borrower default, should there be a significant decline in the value of the property securing the loan or should there be decline in general economic conditions. The Company offers multi-family loans up to $7,500,000 per transaction. These loans are available for 7 or 10 year terms with one 5 year extension option. A 7 year term with no extension option is also offered. Pricing is typically based on a spread over the corresponding FHLBNY rate. Amortization of up to 30 years, a maximum loan to value ratio of 75% and a debt service coverage ratio of 1.2 to 1 are generally required. The Bank’s primary regulator considers multi-family residential loans to be part of commercial real estate for concentration risk measurement purposes.

Commercial and Industrial Loans — The Company’s commercial and industrial loan portfolio consists primarily of commercial business loans and lines of credit to businesses, not-for-profit organizations and professionals. These loans are usually made to finance the purchase of inventory, new or used equipment or other short or long-term working capital purposes. These loans are generally secured by corporate assets, often with real estate as secondary collateral, but are also offered on an unsecured basis. In granting this type of loan, the Company primarily looks to the borrower’s cash flow as the source of repayment with collateral and personal guarantees, where obtained, as a secondary source. Commercial loans are often larger and may involve greater risks than other types of loans offered by the Company. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, management’s inability to effectively manage the business, claims of others against the borrower’s assets which may take priority over the Company’s claims against assets, death or disability of the borrower or loss of market for the borrower’s products or services.

Lease Financing and Other Loans — The Company originates lease financing transactions which are primarily conducted with businesses, professionals and not-for-profit organizations and provide financing principally for office equipment, telephone systems, computer systems, energy saving improvements and other special use equipment. Payments on such loans are often dependent upon the successful operation of the underlying business involved and, therefore, repayment of such loans may be negatively impacted by adverse changes in economic conditions, and management’s inability to effectively manage the business. The Company also offers installment loans and cash reserve lines of credit to individuals. Repayment of such loans is often dependent on the personal income of the borrower which may be negatively impacted by adverse changes in economic conditions. The Company does not place an emphasis on originating these types of loans.

The following tables presents the allowance for loan losses by portfolio segment for the periods indicated (in thousands):

	Three Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	28,733		$	11,592		$	4,496		$	8,789		$	3,420		$	436
Charge-offs		(5,628	)		(4,372	)		1			(1,171	)		(128	)		42
Recoveries		1,279			563			178			70			464			4
Net Charge-offs		(4,349	)		(3,809	)		179			(1,101	)		336			46
Provision for loan losses		3,723			3,467			(383	)		625			76			(62	)
Net change during the period		(626	)		(342	)		(204	)		(476	)		412			(16	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Nine Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	30,685		$	12,776		$	6,470		$	8,093		$	2,650		$	696
Charge-offs		(12,537	)		(4,770	)		(1,579	)		(2,999	)		(2,625	)		(564	)
Recoveries		2,983			861			179			396			1,029			518
Net Charge-offs		(9,554	)		(3,909	)		(1,400	)		(2,603	)		(1,596	)		(46	)
Provision for loan losses		6,976			2,383			(778	)		2,823			2,778			(230	)
Net change during the period		(2,578	)		(1,526	)		(2,178	)		220			1,182			(276	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Three Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	41,889		$	17,112		$	6,440		$	13,161		$	4,246		$	930
Charge-offs		(2,802	)		(69	)		(11	)		(2,263	)		(453	)		(6	)
Recoveries		527			44			28			336			112			7
Net Charge-offs		(2,275	)		(25	)		17			(1,927	)		(341	)		1
Provision for loan losses		2,536			(716	)		(231	)		3,115			387			(19	)
Net change during the period		261			(741	)		(214	)		1,188			46			(18	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

	Nine Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	38,949		$	16,736		$	7,140		$	9,851		$	4,290		$	932
Charge-offs		(9,429	)		(225	)		(867	)		(5,276	)		(2,997	)		(64	)
Recoveries		3,097			730			603			1,355			388			21
Net Charge-offs		(6,332	)		505			(264	)		(3,921	)		(2,609	)		(43	)
Provision for loan losses		9,533			(870	)		(650	)		8,419			2,611			23
Net change during the period		3,201			(365	)		(914	)		4,498			2			(20	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

The following table presents the unpaid principal balance of impaired loans, including troubled debt restructurings, and the related recorded investment and allocated allowance for loan losses by class of loans, as of the dates indicated (in thousands):

	September 30, 2012						December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial Real Estate:
Owner occupied	$	27,551	$	22,947		—	$	21,115	$	21,039		—
Non owner occupied		3,103		2,063		—		10,762		9,723		—
Construction:
Commercial		—		—		—		2,690		1,723		—
Residential		3,201		2,201		—		—		—		—
Residential:
Multifamily		2,993		2,993		—		—		—		—
1-4 family		9,583		8,345		—		1,930		1,898		—
Home equity		2,220		1,212		—		2,669		1,926		—
Commercial & industrial		13,440		12,367		—		8,560		7,803		—
With an allowance recorded:
Construction:
Commercial		—		—		—		3,758		3,758	$	2,374
Total loans	$	62,091	$	52,128		—	$	51,484	$	47,870	$	2,374

The carrying value of impaired loans was determined using either the fair value of the underlying collateral of the loan taking into account estimated selling costs or by an analysis of the expected cash flows related to the loan. There were no allocations of specific reserves during the nine month period ended September 30, 2012. The Company typically records partial charge-offs for impairment as opposed to establishing specific reserves except in situations where estimated losses are in process of being finalized. The $2,374 specific reserve allocated to impaired loans as of December 31, 2011 was charged off in June 2012 upon completion of the TDR for which the specific reserve was originally established. The above tables as of September 30, 2012 and December 31, 2011 include $27,540 and $28,256, respectively, of loans considered to be troubled debt restructurings (“TDRs”). There were two additional loan modifications classified as TDRs during the nine month period ended September 30, 2012 with pre-modification balances of $14,604 for which charge-offs of $2,595 were recorded. An additional partial charge-off of $4,132 was recorded in the third quarter of 2012 on a prior performing TDR based on a significant reduction in the appraised value of the underlying collateral. The Company is not committed to extend any additional credit to borrowers whose loans are classified as TDRs. As of September 30, 2012, six TDRs with carrying amounts of $9,823 were on accrual status and six loans with carrying amounts of $17,717 on nonaccrual status that were performing in accordance with their modified terms.

The following table presents the average recorded investment in impaired loans including, troubled debt restructurings, and interest recognized on impaired loans by class of loans for the periods indicated (in thousands):

	Three Months Ended September 30								Nine Months Ended September 30
	2012				2011				2012				2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Loans:
Commercial Real Estate:
Owner occupied	$	25,067	$	168	$	28,234	$	239	$	23,179	$	434	$	16,810	$	357
Non owner occupied		2,114		96		15,292		—		5,448		275		16,835		—
Construction:
Commercial		290		—		9,345		—		2,546		—		9,665		—
Residential		2,929		—		6,457		—		1,586		—		5,616		—
Residential:
Multifamily		2,156		48		4,586		—		1,386		69		4,453		—
1-4 family		8,869		—		5,005		32		5,475		—		4,940		32
Home equity		1,419		—		3,989		—		1,607		—		3,299		—
Commercial & industrial		12,323		—		8,623		—		10,032		—		7,081		—
Lease financing and other		128		—		245		—		85		—		318		—
Total	$	55,295	$	312	$	81,776	$	271	$	51,344	$	778	$	69,017	$	389

The difference between interest income recognized and interest income collected on impaired loans for the three and nine month periods ended September 30, 2012 and 2011 was not significant. Gross interest income that would have been recorded if these borrowers had been current in accordance with their original loan terms was $452 and $1,320, respectively, for the three and nine month periods ended September 30, 2012 and $1,630 and $2,466, respectively, for the three and nine month periods ended September 30, 2011.

The following tables present the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of the dates indicated (in thousands):

	September 30, 2012
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Individually evaluated for impairment		—		—		—		—		—		—
Total ending balance of allowance	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,455,560	$	558,643	$	89,040	$	519,483	$	253,751	$	34,643
Individually evaluated for impairment		52,128		25,010		2,201		12,550		12,367		—
Total ending balance of loans		$1,507,688		$583,653		$91,241		$532,033		$266,118		$34,643

	December 31, 2011
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,311	$	12,776	$	4,096	$	8,093	$	2,650	$	696
Individually evaluated for impairment		2,374		—		2,374		—		—		—
Total ending balance of allowance	$	30,685	$	12,776	$	6,470	$	8,093	$	2,650	$	696
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,528,082	$	660,075	$	104,546	$	511,004	$	210,697	$	41,760
Individually evaluated for impairment		47,870		30,762		5,481		3,824		7,803		—
Total ending balance of loans	$	1,575,952	$	690,837	$	110,027	$	514,828	$	218,500	$	41,760

The following table presents the recorded investment in non-accrual loans and loans past due 90 days and still accruing by class of loans as of the dates indicated (in thousands):

	September 30, 2012				December 31, 2011
	Non-Accrual		Past Due 90 Days  and Still Accruing		Non-Accrual		Past Due 90 Days  and Still Accruing
Loans:
Commercial Real Estate:
Owner occupied	$	16,575		—	$	3,856		—
Non owner occupied		1,605		—		9,356		—
Construction:
Commercial		—		—		5,481		—
Residential		2,201		—		—		—
Residential:
Multifamily		—		—		—		—
1-4 family		8,345		—		1,470		—
Home equity		1,212		—		1,926		—
Commercial & industrial		12,367		—		7,803		—
Other:
Lease financing and other		—		—		—		—
Overdrafts		—		—		—		—
Total	$	42,305		—	$	29,892		—

The following tables present the aging of loans (including past due and non-accrual loans) by class of loans as of the dates indicated (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or  More Past Due		Total Past  Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	194,782		—	$	1,821	$	9,746	$	11,567	$	183,215
Non owner occupied		388,871		—		927		1,605		2,532		386,339
Construction:
Commercial		43,377		—		—		—		—		43,377
Residential		47,864		—		—		2,201		2,201		45,663
Residential:
Multifamily		209,192		—		—		—		—		209,192
1-4 family		214,102	$	145		809		8,345		9,299		204,803
Home equity		108,739		2,735		178		1,212		4,125		104,614
Commercial & industrial		266,118		76		1,442		1,479		2,997		263,121
Other:
Lease financing and other		33,136		1		—		—		1		33,135
Overdrafts		1,507		—		—		—		—		1,507
Total	$	1,507,688	$	2,957	$	5,177	$	24,588	$	32,722	$	1,474,966

	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	243,862	$	1,801		—	$	3,489	$	5,290	$	238,572
Non owner occupied		446,975		1,917		—		5,108		7,025		439,950
Construction:
Commercial		56,933		—		—		4,883		4,883		52,050
Residential		53,094		900		—		—		900		52,194
Residential:
Multifamily		227,595		—		—		—		—		227,595
1-4 family		174,714		—		—		1,470		1,470		173,244
Home equity		112,519		—	$	97		1,926		2,023		110,496
Commercial & industrial		218,500		197		50		4,403		4,650		213,850
Other:
Lease financing and other		39,898		1		10		—		11		39,887
Overdrafts		1,862		—		—		—		—		1,862
Total	$	1,575,952	$	4,816	$	157	$	21,279	$	26,252	$	1,549,700

The Company categorizes loans into risk categories based on relevant information about the ability of the borrowers to service their debt such as: value of underlying collateral, current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes non-homogeneous loans individually and classifies them as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention — Loans classified as special mention have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of repayment prospects for the asset or in the institution’s credit position at some future date.

Substandard — Loans classified as substandard asset are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful — Loans classified as doubtful have all the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loans not meeting the above criteria that are analyzed individually as part of the above described process are considered to be pass rated loans.

The following table presents the risk category by class of loans of non-homogeneous loans individually classified as to credit risk as of the most recent analysis performed for the dates indicated (in thousands):

	September 30, 2012
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	194,782	$	148,047	$	3,062	$	43,673		—
Non owner occupied		388,871		377,586		4,926		6,359		—
Construction:
Commercial		43,377		31,974		5,349		6,054		—
Residential		47,864		42,813		900		4,151		—
Residential:
Multifamily		209,192		205,999		—		3,193		—
1-4 family		83,234		53,611		20,856		8,767		—
Home equity		1,411		—		—		1,411		—
Commercial & Industrial		266,118		246,199		4,081		15,838		—
Lease Financing & Other		31,931		30,699		847		385		—
Total loans	$	1,266,780	$	1,136,928	$	40,021	$	89,831		—

	December 31, 2011
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	243,862	$	177,921	$	32,144	$	33,797		—
Non owner occupied		446,975		422,402		14,924		9,649		—
Construction:
Commercial		56,933		42,641		5,382		8,910		—
Residential		53,094		38,956		7,274		6,864		—
Residential:
Multifamily		227,595		226,224		—		1,371		—
1-4 family		90,033		72,594		15,109		2,330		—
Home equity		2,174		—		—		2,174		—
Commercial & Industrial		218,500		204,305		5,410		8,785		—
Lease Financing & Other		38,441		37,619		523		299		—
Total loans	$	1,377,607	$	1,222,662	$	80,766	$	74,179		—

Loans not individually rated, primarily consisting of certain 1-4 family residential mortgages and home equity lines of credit, are evaluated for risk in groups of homogeneous loans. The primary risk characteristic evaluated on these pools is delinquency.

The following table presents, as of the dates indicated, the delinquency categories by class of loans for loans evaluated for risk in groups of homogeneous loans (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	130,868	$	145	$	91		—	$	236	$	130,632
Home equity		107,328		2,734		178		—		2,912		104,416
Other:
Other loans		1,205		1		—		—		1		1,204
Overdrafts		1,507		—		—		—		—		1,507
Total loans	$	240,908	$	2,880	$	269		—	$	3,149	$	237,759
	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	84,681		—		—		—		—	$	84,681
Home equity		110,345		—	$	97		—	$	97		110,248
Other:
Other loans		1,457	$	1		10		—		11		1,446
Overdrafts		1,862		—		—		—		—		1,862
Total loans	$	198,345	$	1	$	107		—	$	108	$	198,237

Loans Held for Sale

On February 1, 2012, the Company announced plans to sell a total of $474 million in performing and non-performing loans in two tranches by mid-2012, as a significant step toward reducing the bank's concentrations of commercial real estate loans and classified assets. These loans were transferred to loans held-for-sale at December 31, 2011 and both tranche sales were completed in March 2012.

The first tranche included $200 million in performing and non-performing loans. The carrying value of these commercial real estate loans was reduced by $60 million at December 31, 2011. These loans were primarily all commercial real estate credits, including classified assets totaling $53 million net of the market value adjustment. The recorded sales price, net of broker fees and expenses, exceeded the carrying value of this portfolio, resulting in a pre-tax gain of approximately $7.9 million.

The second tranche included $274 million in performing, non-classified multifamily loans. No market value adjustment was recorded when this portfolio was transferred to held-for-sale at December 31, 2011, as they were expected to be sold at or above par value. The sale of these loans in March 2012 resulted in

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share

5. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per common share for each of the periods indicated:

	Three Months Ended Sep 30				Nine Months Ended Sep 30
	2012		2011		2012		2011
			(000’s except share data)
Numerator:
Net income (loss) available to common shareholders for basic and diluted earnings per share	$	3,134	$	8,508	$	26,108	$	20,764
Denominator:
Denominator for basic earnings per common share - weighted average shares		19,636,014		19,462,158		19,602,815		19,455,553
Effect of diluted securities:
Stock options		6,676		16,172		9,784		50,666
Denominator for diluted earnings per common share - adjusted weighted average shares		19,642,690		19,478,329		19,612,599		19,506,219
Basic earnings per common share	$	0.16	$	0.44	$	1.33	$	1.07
Diluted earnings per common share	$	0.16	$	0.43	$	1.33	$	1.06
Dividends declared per share	$	0.18	$	0.18	$	0.54	$	0.46

Stock options of 465,304 and 259,271 were not considered in computing diluted earnings per share at September 30, 2012 and 2011, respectively, because they were anti dilutive. In November 2011, the Company declared a 10% stock dividend. Share and per share amounts for 2011 have been retroactively restated to reflect the issuance of the additional shares.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation

7. Stock-Based Compensation

In accordance with the provisions of the Hudson Valley Holding Corp. 2010 Omnibus Incentive Plan, approved by the Company’s shareholders on May 27, 2010, the Company may grant eligible employees, including directors, consultants and advisors, incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards and other types of awards. The 2010 Plan provides for the issuance of up to 1,331,000 shares of the Company’s common stock. Prior to the 2010 Plan, the Company had stock option plans that provided for the granting of options to directors, officers, eligible employees, and certain advisors, based upon eligibility as determined by the Compensation Committee. Under the prior plans, options were granted for the purchase of shares of the Company’s common stock at an exercise price not less than the market value of the stock on the date of grant, vested over various periods ranging from immediate to five years from date of grant, and had expiration dates up to ten years from the date of grant.

Compensation costs relating to stock-based payment transactions are recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued. Stock-based payments are expensed over their respective vesting periods.

The following table summarizes stock-based compensation activity for the nine month period ended September 30, 2012:

Prior Option Plans:	Shares			Weighted Average Grant or Exercise Price		Aggregate Intrinsic Value (1) ($000’s)		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2011		625,256		$	22.81
Granted		—			—
Exercised		(7,757	)		16.54
Cancelled or Expired		(21,550	)		24.64
Outstanding at September 30, 2012		595,949		$	22.83	$	106		1.8
Exercisable at September 30, 2012		587,639		$	22.64	$	106		1.8
Nonvested at September 30, 2012		8,310		$	35.94
2010 Omnibus Incentive Plan:
Outstanding at December 31, 2011		—			—
Granted at fair value		114,586		$	16.69
Restriction released		(7,673	)		17.10
Cancelled		(9,152	)		16.74
Nonvested at September 30, 2012		97,761		$	16.65
Available for grant at December 31, 2011		1,331,000
Restricted stock awards		(114,586	)	$	16.69
Cancelled		9,152			16.74
Available for future grant		1,225,566

1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on September 30, 2012. This amount changes based on changes in the fair value of the Company’s stock.

The fair value (present value of the estimated future benefit to the option holder) of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were no stock options granted in the nine month period ended September 30, 2012 or the year ended December 31, 2011. The restricted stock awards granted during the nine month period ended September 30, 2012 were the initial awards under the 2010 Plan.

Net compensation expense of $37 and $100 related to the Company’s stock option plans was included in net income for the nine month periods ended September 30, 2012 and 2011, respectively. The total tax effect related thereto was $(2) and $4, respectively. Unrecognized compensation expense related to non-vested share-based compensation granted under the Company’s stock option plans totaled $14 at September 30, 2012. This expense is expected to be recognized over a remaining weighted average period of 0.4 years. Unrecognized compensation expense related to restricted stock awards totaled $1,628 at September 30, 2012. This expense is expected to be recognized over a remaining weighted average period of 2.3 years.

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Securities - Contractual Maturity of All Debt Securities (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Within 1 year, Amortized Cost	$ 22,563
After 1 year but within 5 years, Amortized Cost	64,681
After 5 year but within 10 years, Amortized Cost	29,350
After 10 years, Amortized Cost	10,712
Mortgage-backed securities - residential, Amortized Cost	306,996
Total, Amortized Cost	434,302
Within 1 year, Fair Value	22,081
After 1 year but within 5 years, Fair Value	66,738
After 5 year but within 10 years, Fair Value	31,185
After 10 years, Fair Value	2,996
Mortgage-backed securities - residential, Fair Value	313,921
Total, Fair Value	436,921
Within 1 year, Amortized Cost
After 1 year but within 5 years, Amortized Cost	5,140
After 5 year but within 10 years, Amortized Cost
After 10 years, Amortized Cost
Mortgage-backed securities - residential, Amortized Cost	5,762
Total, Amortized Cost	10,902
Within 1 year, Fair Value
After 1 year but within 5 years, Fair Value	5,367
Held-to-Maturity Securities, Estimated Fair Value
After 10 years, Fair Value
Mortgage-backed securities - residential, Fair Value	6,260
Held to Maturity Securities, Estimated Fair Value	$ 11,627	$ 13,819

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Fair Value - Quantitative Information About Level 3 Fair Value Measurements (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Loans Held for Sale [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Bids from interested third parties	64.00%
Loans Held for Sale [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Bids from interested third parties	65.00%
Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	15,559
Valuation Technique	Sales comparison and income based appraisals
Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Capitalization rates	7.00%
Management adjustment for costs to sell	0.00%
Management adjustment for for dated appraisal	0.00%
Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Capitalization rates	7.75%
Management adjustment for costs to sell	30.00%
Management adjustment for for dated appraisal	20.00%
Other Real Estate Owned [Member] | Fair Value, Measurements, Nonrecurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	250
Valuation Technique	Sales comparison and income based appraisals
Management adjustment for costs to sell	30.00%
Trust Preferred Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Fair Value	2,996
Valuation Technique	Discounted cash flow
Annual prepayment rate	1.00%
Projected annual nonspecific issuer default severity	85.00%
Present value discount rate	22.50%
Trust Preferred Securities [Member] | Fair Value, Measurements, Recurring [Member] | Minimum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Specific issuer default rates	33.00%
Specific issuer default severity	80.00%
Projected annual nonspecific issuer default rates	0.25%
Trust Preferred Securities [Member] | Fair Value, Measurements, Recurring [Member] | Maximum [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Specific issuer default rates	63.00%
Specific issuer default severity	92.00%
Projected annual nonspecific issuer default rates	2.00%

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Computation of Basic and Diluted Earnings Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share for each of the periods indicated:

	Three Months Ended Sep 30				Nine Months Ended Sep 30
	2012		2011		2012		2011
			(000’s except share data)
Numerator:
Net income (loss) available to common shareholders for basic and diluted earnings per share	$	3,134	$	8,508	$	26,108	$	20,764
Denominator:
Denominator for basic earnings per common share - weighted average shares		19,636,014		19,462,158		19,602,815		19,455,553
Effect of diluted securities:
Stock options		6,676		16,172		9,784		50,666
Denominator for diluted earnings per common share - adjusted weighted average shares		19,642,690		19,478,329		19,612,599		19,506,219
Basic earnings per common share	$	0.16	$	0.44	$	1.33	$	1.07
Diluted earnings per common share	$	0.16	$	0.43	$	1.33	$	1.06
Dividends declared per share	$	0.18	$	0.18	$	0.54	$	0.46

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Description of Operations - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2012 Branch_office
Westchester County, New York [Member]
Operating Statistics [Line Items]
Number of branch offices	18
Manhattan, New York [Member]
Operating Statistics [Line Items]
Number of branch offices	5
Bronx County, New York [Member]
Operating Statistics [Line Items]
Number of branch offices	4
Rockland County, New York [Member]
Operating Statistics [Line Items]
Number of branch offices	2
Kings County, New York [Member]
Operating Statistics [Line Items]
Number of branch offices	1
Fairfield County, Connecticut [Member]
Operating Statistics [Line Items]
Number of branch offices	5
New Haven County, Connecticut [Member]
Operating Statistics [Line Items]
Number of branch offices	1

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Stock-Based Compensation - Additional Information (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended				12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Restricted Stock [Member]	Sep. 30, 2012 2010 Omnibus Incentive Plan [Member]	Dec. 31, 2011 2010 Omnibus Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock				1,331,000
Stock option vested period	5 years
Stock option expiration period	10 years
Stock options granted				114,586	0
Net compensation expense	$ 37	$ 100
Tax effect	(2)	4
Unrecognized compensation expense related to non vested	14
Remaining weighted period	4 months 24 days
Unrecognized compensation expense			$ 1,628
Unrecognized compensation expense, period of recognition			2 years 3 months 18 days

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Loans - Recorded Investment in Non-Accrual Loans and Loans Past Due 90 Days and Still Accruing by Class of Loans (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	$ 42,305	$ 29,892
Past Due 90 Days and Still Accruing
Owner occupied [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	16,575	3,856
Past Due 90 Days and Still Accruing
Non owner occupied [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	1,605	9,356
Past Due 90 Days and Still Accruing
Commercial [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual		5,481
Past Due 90 Days and Still Accruing
Residential [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	2,201
Past Due 90 Days and Still Accruing
Multifamily [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual
Past Due 90 Days and Still Accruing
1-4 family [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	8,345	1,470
Past Due 90 Days and Still Accruing
Home equity [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	1,212	1,926
Past Due 90 Days and Still Accruing
Overdrafts [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual
Past Due 90 Days and Still Accruing
Commercial & Industrial [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual	12,367	7,803
Past Due 90 Days and Still Accruing
Lease Financing & Other [Member]
Recorded investment in nonaccrual loans and loans past due ninety days and still accruing by class of loans
Non-Accrual
Past Due 90 Days and Still Accruing

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and non interest earning due from banks	$ 53,349	$ 43,743
Interest earning deposits in banks	778,025	34,361
Federal funds sold	12,517	16,425
Securities available for sale, at estimated fair value (amortized cost of $444,337 in 2012 and $503,584 in 2011)	447,453	507,897
Securities held to maturity, at amortized cost (estimated fair value of $11,627 in 2012 and $13,819 in 2011)	10,902	12,905
Federal Home Loan Bank of New York (FHLB) stock	4,827	3,831
Loans (net of allowance for loan losses of $28,107 in 2012 and $30,685 in 2011)	1,476,814	1,541,405
Loans held for sale	2,354	473,814
Accrued interest and other receivables	25,099	40,405
Premises and equipment, net	24,424	25,936
Other real estate owned	250	1,174
Deferred income tax, net	18,585	19,822
Bank owned life insurance	38,937	37,563
Goodwill	23,842	23,842
Other intangible assets	1,090	1,651
Other assets	10,574	12,896
TOTAL ASSETS	2,929,042	2,797,670
Deposits:
Non interest bearing	997,251	910,329
Interest bearing	1,551,359	1,514,953
Total deposits	2,548,610	2,425,282
Securities sold under repurchase agreements and other short-term borrowings	42,693	53,056
Other borrowings	16,438	16,466
Accrued interest and other liabilities	28,401	25,304
TOTAL LIABILITIES	2,636,142	2,520,108
STOCKHOLDERS' EQUITY
Preferred Stock, $0.01 par value; authorized 15,000,000 shares; no shares outstanding in 2012 and 2011, respectively
Common stock, $0.20 par value; authorized 25,000,000 shares: outstanding 19,638,090 and 19,516,490 shares in 2012 and 2011, respectively	4,188	4,163
Additional paid-in capital	348,159	347,764
Retained earnings (deficit)	(2,968)	(18,527)
Accumulated other comprehensive income	1,085	1,726
Treasury stock, at cost; 1,299,414 shares in 2012 and 2011	(57,564)	(57,564)
TOTAL STOCKHOLDERS' EQUITY	292,900	277,562
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 2,929,042	$ 2,797,670

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Description of Operations

9 Months Ended

Sep. 30, 2012

Description of Operations

1. Description of Operations

Hudson Valley Holding Corp. (the “Company”) is a New York corporation founded in 1982. The Company is registered as a bank holding company under the Bank Holding Company Act of 1956.

The Company provides financial services through its wholly-owned subsidiary, Hudson Valley Bank, N.A. (“HVB” or “the Bank”), a national banking association established in 1972, with operational headquarters in Westchester County, New York. The Bank has 18 branch offices in Westchester County, New York, 5 in Manhattan, New York, 4 in Bronx County, New York, 2 in Rockland County, New York, 1 in Kings County, New York, 5 in Fairfield County, Connecticut and 1 in New Haven County, Connecticut.

The Company provides investment management services through a wholly-owned subsidiary of HVB, A.R. Schmeidler & Co., Inc. (“ARS”), a Manhattan, New York based money management firm.

Our principal executive offices are located at 21 Scarsdale Road, Yonkers, New York 10707.

We derive substantially all of our revenue and income from providing banking and related services to businesses, professionals, municipalities, not-for-profit organizations and individuals within our market area, primarily Westchester County and Rockland County, New York, portions of New York City, Fairfield County and New Haven County, Connecticut. We are dedicated to providing personalized service to customers and focusing on products and services for selected segments of the market. We believe that our ability to attract and retain customers is due primarily to our focused approach to our markets, our personalized and professional services, our product offerings, our experienced staff, our knowledge of our local markets and our ability to provide responsive solutions to customer needs. We provide these products and services to a diverse range of customers and do not rely on a single large depositor for a significant percentage of deposits. We anticipate that we will continue to expand in our current market and surrounding area through various means which include acquiring other banks and related businesses, adding staff, opening loan production offices and continuing to open new branch offices.

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Basis of Presentation - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Property, Plant and Equipment [Line Items]
Period for average loss experience	3 years
Loans charge off delinquent period	90 days
Consumer loans, loans and lines	$ 100,000
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	3 years
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	5 years
Buildings [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives of assets	31 years 6 months

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Loans - Impaired Loans and Recorded Investment in Impaired Loans (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
With an allowance recorded:
Unpaid Principal Balance, Total	$ 62,091	$ 51,484
Recorded Investment, Total	52,128	47,870
Allowance for loan losses allocated, Total		2,374
Commercial & Industrial [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	13,440	8,560
Recorded investment with no related allowance recorded	12,367	7,803
Allowance for loan losses allocated with no related allowance recorded
Commercial [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded		2,690
Recorded investment with no related allowance recorded		1,723
Allowance for loan losses allocated with no related allowance recorded
With an allowance recorded:
Unpaid principal balance with an allowance recorded		3,758
Recorded investment with an allowance recorded		3,758
Allowance for loan losses allocated with an allowance recorded		2,374
Owner occupied [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	27,551	21,115
Recorded investment with no related allowance recorded	22,947	21,039
Allowance for loan losses allocated with no related allowance recorded
Non owner occupied [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	3,103	10,762
Recorded investment with no related allowance recorded	2,063	9,723
Allowance for loan losses allocated with no related allowance recorded
Residential [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	3,201
Recorded investment with no related allowance recorded	2,201
Allowance for loan losses allocated with no related allowance recorded
Multifamily [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	2,993
Recorded investment with no related allowance recorded	2,993
Allowance for loan losses allocated with no related allowance recorded
1-4 family [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	9,583	1,930
Recorded investment with no related allowance recorded	8,345	1,898
Allowance for loan losses allocated with no related allowance recorded
Home equity [Member]
With no related allowance recorded:
Unpaid principal balance with no related allowance recorded	2,220	2,669
Recorded investment with no related allowance recorded	1,212	1,926
Allowance for loan losses allocated with no related allowance recorded

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Loans (Tables)

9 Months Ended

Sep. 30, 2012

Loan Portfolio Excluding Loans Held For Sale

The loan portfolio, excluding loans held for sale, is comprised of the following:

	September 30 2012			December 31 2011
Real Estate:
Commercial	$	583,653		$	690,837
Construction		91,241			110,027
Residential Multi-Family		209,192			227,595
Residential Other		322,841			287,233
Commercial & Industrial		266,118			218,500
Individuals & lease financing		34,643			41,760
Total loans		1,507,688			1,575,952
Deferred loan fees		(2,767	)		(3,862	)
Allowance for loan losses		(28,107	)		(30,685	)
Loans, net	$	1,476,814		$	1,541,405

Allowance For Loan Losses by Portfolio Segment

The following tables presents the allowance for loan losses by portfolio segment for the periods indicated (in thousands):

	Three Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	28,733		$	11,592		$	4,496		$	8,789		$	3,420		$	436
Charge-offs		(5,628	)		(4,372	)		1			(1,171	)		(128	)		42
Recoveries		1,279			563			178			70			464			4
Net Charge-offs		(4,349	)		(3,809	)		179			(1,101	)		336			46
Provision for loan losses		3,723			3,467			(383	)		625			76			(62	)
Net change during the period		(626	)		(342	)		(204	)		(476	)		412			(16	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Nine Months Ended September 30, 2012
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	30,685		$	12,776		$	6,470		$	8,093		$	2,650		$	696
Charge-offs		(12,537	)		(4,770	)		(1,579	)		(2,999	)		(2,625	)		(564	)
Recoveries		2,983			861			179			396			1,029			518
Net Charge-offs		(9,554	)		(3,909	)		(1,400	)		(2,603	)		(1,596	)		(46	)
Provision for loan losses		6,976			2,383			(778	)		2,823			2,778			(230	)
Net change during the period		(2,578	)		(1,526	)		(2,178	)		220			1,182			(276	)
Balance at end of period	$	28,107		$	11,250		$	4,292		$	8,313		$	3,832		$	420

	Three Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	41,889		$	17,112		$	6,440		$	13,161		$	4,246		$	930
Charge-offs		(2,802	)		(69	)		(11	)		(2,263	)		(453	)		(6	)
Recoveries		527			44			28			336			112			7
Net Charge-offs		(2,275	)		(25	)		17			(1,927	)		(341	)		1
Provision for loan losses		2,536			(716	)		(231	)		3,115			387			(19	)
Net change during the period		261			(741	)		(214	)		1,188			46			(18	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

	Nine Months Ended September 30, 2011
																Lease
				Commercial						Residential			Commercial &			Financing
	Total			Real Estate			Construction			Real Estate			Industrial			& Other
Balance at beginning of period	$	38,949		$	16,736		$	7,140		$	9,851		$	4,290		$	932
Charge-offs		(9,429	)		(225	)		(867	)		(5,276	)		(2,997	)		(64	)
Recoveries		3,097			730			603			1,355			388			21
Net Charge-offs		(6,332	)		505			(264	)		(3,921	)		(2,609	)		(43	)
Provision for loan losses		9,533			(870	)		(650	)		8,419			2,611			23
Net change during the period		3,201			(365	)		(914	)		4,498			2			(20	)
Balance at end of period	$	42,150		$	16,371		$	6,226		$	14,349		$	4,292		$	912

Impaired Loans and Recorded Investment in Impaired Loans

The following table presents the unpaid principal balance of impaired loans, including troubled debt restructurings, and the related recorded investment and allocated allowance for loan losses by class of loans, as of the dates indicated (in thousands):

	September 30, 2012						December 31, 2011
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
With no related allowance recorded:
Commercial Real Estate:
Owner occupied	$	27,551	$	22,947		—	$	21,115	$	21,039		—
Non owner occupied		3,103		2,063		—		10,762		9,723		—
Construction:
Commercial		—		—		—		2,690		1,723		—
Residential		3,201		2,201		—		—		—		—
Residential:
Multifamily		2,993		2,993		—		—		—		—
1-4 family		9,583		8,345		—		1,930		1,898		—
Home equity		2,220		1,212		—		2,669		1,926		—
Commercial & industrial		13,440		12,367		—		8,560		7,803		—
With an allowance recorded:
Construction:
Commercial		—		—		—		3,758		3,758	$	2,374
Total loans	$	62,091	$	52,128		—	$	51,484	$	47,870	$	2,374

Average Recorded Investment in Impaired Loans by Class of Loans and Interest Recognized on Impaired Loans

The following table presents the average recorded investment in impaired loans including, troubled debt restructurings, and interest recognized on impaired loans by class of loans for the periods indicated (in thousands):

	Three Months Ended September 30								Nine Months Ended September 30
	2012				2011				2012				2011
	Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income		Average Recorded Investment		Interest Income
Loans:
Commercial Real Estate:
Owner occupied	$	25,067	$	168	$	28,234	$	239	$	23,179	$	434	$	16,810	$	357
Non owner occupied		2,114		96		15,292		—		5,448		275		16,835		—
Construction:
Commercial		290		—		9,345		—		2,546		—		9,665		—
Residential		2,929		—		6,457		—		1,586		—		5,616		—
Residential:
Multifamily		2,156		48		4,586		—		1,386		69		4,453		—
1-4 family		8,869		—		5,005		32		5,475		—		4,940		32
Home equity		1,419		—		3,989		—		1,607		—		3,299		—
Commercial & industrial		12,323		—		8,623		—		10,032		—		7,081		—
Lease financing and other		128		—		245		—		85		—		318		—
Total	$	55,295	$	312	$	81,776	$	271	$	51,344	$	778	$	69,017	$	389

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment Based on Impairment

The following tables present the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of the dates indicated (in thousands):

	September 30, 2012
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Individually evaluated for impairment		—		—		—		—		—		—
Total ending balance of allowance	$	28,107	$	11,250	$	4,292	$	8,313	$	3,832	$	420
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,455,560	$	558,643	$	89,040	$	519,483	$	253,751	$	34,643
Individually evaluated for impairment		52,128		25,010		2,201		12,550		12,367		—
Total ending balance of loans		$1,507,688		$583,653		$91,241		$532,033		$266,118		$34,643

	December 31, 2011
	Total		Commercial Real Estate		Construction		Residential Real  Estate		Commercial & Industrial		Lease Financing & Other
Allowance for loan losses:
Ending balance attributed to loans:
Collectively evaluated for impairment	$	28,311	$	12,776	$	4,096	$	8,093	$	2,650	$	696
Individually evaluated for impairment		2,374		—		2,374		—		—		—
Total ending balance of allowance	$	30,685	$	12,776	$	6,470	$	8,093	$	2,650	$	696
Total loans:
Ending balance of loans:
Collectively evaluated for impairment	$	1,528,082	$	660,075	$	104,546	$	511,004	$	210,697	$	41,760
Individually evaluated for impairment		47,870		30,762		5,481		3,824		7,803		—
Total ending balance of loans	$	1,575,952	$	690,837	$	110,027	$	514,828	$	218,500	$	41,760

Recorded Investment in Non-Accrual Loans and Loans Past Due 90 Days and Still Accruing by Class of Loans

The following table presents the recorded investment in non-accrual loans and loans past due 90 days and still accruing by class of loans as of the dates indicated (in thousands):

	September 30, 2012				December 31, 2011
	Non-Accrual		Past Due 90 Days  and Still Accruing		Non-Accrual		Past Due 90 Days  and Still Accruing
Loans:
Commercial Real Estate:
Owner occupied	$	16,575		—	$	3,856		—
Non owner occupied		1,605		—		9,356		—
Construction:
Commercial		—		—		5,481		—
Residential		2,201		—		—		—
Residential:
Multifamily		—		—		—		—
1-4 family		8,345		—		1,470		—
Home equity		1,212		—		1,926		—
Commercial & industrial		12,367		—		7,803		—
Other:
Lease financing and other		—		—		—		—
Overdrafts		—		—		—		—
Total	$	42,305		—	$	29,892		—

Aging of Loans

The following tables present the aging of loans (including past due and non-accrual loans) by class of loans as of the dates indicated (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or  More Past Due		Total Past  Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	194,782		—	$	1,821	$	9,746	$	11,567	$	183,215
Non owner occupied		388,871		—		927		1,605		2,532		386,339
Construction:
Commercial		43,377		—		—		—		—		43,377
Residential		47,864		—		—		2,201		2,201		45,663
Residential:
Multifamily		209,192		—		—		—		—		209,192
1-4 family		214,102	$	145		809		8,345		9,299		204,803
Home equity		108,739		2,735		178		1,212		4,125		104,614
Commercial & industrial		266,118		76		1,442		1,479		2,997		263,121
Other:
Lease financing and other		33,136		1		—		—		1		33,135
Overdrafts		1,507		—		—		—		—		1,507
Total	$	1,507,688	$	2,957	$	5,177	$	24,588	$	32,722	$	1,474,966

	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Loans:
Commercial Real Estate:
Owner occupied	$	243,862	$	1,801		—	$	3,489	$	5,290	$	238,572
Non owner occupied		446,975		1,917		—		5,108		7,025		439,950
Construction:
Commercial		56,933		—		—		4,883		4,883		52,050
Residential		53,094		900		—		—		900		52,194
Residential:
Multifamily		227,595		—		—		—		—		227,595
1-4 family		174,714		—		—		1,470		1,470		173,244
Home equity		112,519		—	$	97		1,926		2,023		110,496
Commercial & industrial		218,500		197		50		4,403		4,650		213,850
Other:
Lease financing and other		39,898		1		10		—		11		39,887
Overdrafts		1,862		—		—		—		—		1,862
Total	$	1,575,952	$	4,816	$	157	$	21,279	$	26,252	$	1,549,700

Risk Category by Class of Loans

The following table presents the risk category by class of loans of non-homogeneous loans individually classified as to credit risk as of the most recent analysis performed for the dates indicated (in thousands):

	September 30, 2012
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	194,782	$	148,047	$	3,062	$	43,673		—
Non owner occupied		388,871		377,586		4,926		6,359		—
Construction:
Commercial		43,377		31,974		5,349		6,054		—
Residential		47,864		42,813		900		4,151		—
Residential:
Multifamily		209,192		205,999		—		3,193		—
1-4 family		83,234		53,611		20,856		8,767		—
Home equity		1,411		—		—		1,411		—
Commercial & Industrial		266,118		246,199		4,081		15,838		—
Lease Financing & Other		31,931		30,699		847		385		—
Total loans	$	1,266,780	$	1,136,928	$	40,021	$	89,831		—

	December 31, 2011
	Total		Pass		Special Mention		Substandard		Doubtful
Commercial Real Estate:
Owner occupied	$	243,862	$	177,921	$	32,144	$	33,797		—
Non owner occupied		446,975		422,402		14,924		9,649		—
Construction:
Commercial		56,933		42,641		5,382		8,910		—
Residential		53,094		38,956		7,274		6,864		—
Residential:
Multifamily		227,595		226,224		—		1,371		—
1-4 family		90,033		72,594		15,109		2,330		—
Home equity		2,174		—		—		2,174		—
Commercial & Industrial		218,500		204,305		5,410		8,785		—
Lease Financing & Other		38,441		37,619		523		299		—
Total loans	$	1,377,607	$	1,222,662	$	80,766	$	74,179		—

Delinquency Categories by Class of Loans

The following table presents, as of the dates indicated, the delinquency categories by class of loans for loans evaluated for risk in groups of homogeneous loans (in thousands):

	September 30, 2012
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	130,868	$	145	$	91		—	$	236	$	130,632
Home equity		107,328		2,734		178		—		2,912		104,416
Other:
Other loans		1,205		1		—		—		1		1,204
Overdrafts		1,507		—		—		—		—		1,507
Total loans	$	240,908	$	2,880	$	269		—	$	3,149	$	237,759
	December 31, 2011
	Total		31-59 Days Past Due		60-89 Days Past Due		90 Days Or More Past Due		Total Past Due		Current
Residential:
1-4 family	$	84,681		—		—		—		—	$	84,681
Home equity		110,345		—	$	97		—	$	97		110,248
Other:
Other loans		1,457	$	1		10		—		11		1,446
Overdrafts		1,862		—		—		—		—		1,862
Total loans	$	198,345	$	1	$	107		—	$	108	$	198,237