10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________________________________________

FORM 10-Q

___________________________________________________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

Commission File Number: 1-9047

___________________________________________________

Independent Bank Corp.

(Exact name of registrant as specified in its charter)

___________________________________________________

Massachusetts	04-2870273
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Office Address: 2036 Washington Street, Hanover Massachusetts 02339

Mailing Address: 288 Union Street, Rockland, Massachusetts 02370

(Address of principal executive offices, including zip code)

(781) 878-6100

(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

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

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

Large Accelerated Filer	o	Accelerated Filer	x
Non-accelerated Filer	o	Smaller Reporting Company	o

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

As of August 1, 2013, there were 22,583,713 shares of the issuer’s common stock outstanding, par value $0.01 per share.

INDEX

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - June 30, 2013 and December 31, 2012	4
Consolidated Statements of Income - Three and six months ended June 30, 2013 and 2012	6
Consolidated Statements of Comprehensive Income -Three and six months ended June 30, 2013 and 2012	7
Consolidated Statements of Stockholders’ Equity - Six months ended June 30, 2013 and 2012	8
Consolidated Statements of Cash Flows - Six months ended June 30, 2013 and 2012	9
Notes to Consolidated Financial Statements - June 30, 2013
Note 1 - Basis of Presentation	11
Note 2 - Recent Accounting Standards Updates	11
Note 3 - Securities	12
Note 4 - Loans, Allowance for Loan Losses, and Credit Quality	16
Note 5 - Earnings Per Share	29
Note 6 - Stock Based Compensation	29
Note 7 - Derivative and Hedging Activities	30
Note 8 - Fair Value Measurements	36
Note 9 - Comprehensive Income/(Loss)	44
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Table 1 - Nonperforming Assets	57
Table 2 - Activity in Nonperforming Assets	58
Table 3 - Troubled Debt Restructurings	58
Table 4 - Activity in Troubled Debt Restructurings	59
Table 5 - Interest Income on Nonaccrual Loans And Troubled Debt Restructurings	59
Table 6 - Potential Problem Commercial Loans	60
Table 7 - Summary of Changes in the Allowance for Loan Losses	61
Table 8 - Summary of Allocation of the Allowance for Loan Losses	62
Table 9 - Borrowings	63
Table 10 - Company and Bank’s Capital Amounts and Ratios	64
Table 11 - Closed Residential Real Estate Loans	66
Table 12 - Mortgage Servicing Asset	66
Table 13 - Summary of Results of Operations	67
Table 14 - Average Balance, Interest Earned/Paid & Average Yields – Three Months Ended	67
Table 15 - Average Balance, Interest Earned/Paid & Average Yields – Six Months Ended	69
Table 16 - Volume Rate Analysis	71

2

Table 17 - Noninterest Income – Three and Six Months Ended	74
Table 18 - Noninterest Expense – Three and six Months Ended	75
Table 19 - Tax Provision and Applicable Tax Rates	76
Table 20 - New Markets Tax Credit Recognition Schedule	76
Table 21 - Interest Rate Sensitivity	78
Table 22 - Sources of Liquidity	80

Item 3. Quantitative and Qualitative Disclosures About Market Risk	81
Item 4. Controls and Procedures	81
PART II. OTHER INFORMATION	81
Item 1. Legal Proceedings	81
Item 1A. Risk Factors	81
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 3. Defaults Upon Senior Securities	82
Item 4. Mine Safety Disclosures	82
Item 5. Other Information	82
Item 6. Exhibits	83
Signatures	86
Exhibit 31.1 – Certification 302
Exhibit 31.2 – Certification 302
Exhibit 32.1 – Certification 906
Exhibit 32.2 – Certification 906

3

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

INDEPENDENT BANK CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited—Dollars in thousands)

	June 30, 2013			December 31, 2012
Assets
Cash and due from banks	$	139,672		$	98,144
Interest earning deposits with banks	197,266			117,330
Securities
Securities available for sale	303,855			329,286
Securities held to maturity (fair value $225,851 and $185,824)	225,278			178,318
Total securities	529,133			507,604
Loans held for sale (at fair value)	32,497			48,187
Loans
Commercial and industrial	742,343			687,511
Commercial real estate	2,150,833			2,122,153
Commercial construction	231,719			188,768
Small business	77,283			78,594
Residential real estate	509,185			604,668
Residential construction	4,366			8,213
Home equity—1st position	481,542			487,246
Home equity—2nd position	310,908			314,903
Other consumer	21,932			26,955
Total loans	4,530,111			4,519,011
Less: allowance for loan losses	(52,976		)	(51,834		)
Net loans	4,477,135			4,467,177
Federal Home Loan Bank stock	38,674			41,767
Bank premises and equipment, net	56,344			55,227
Goodwill	150,391			150,391
Identifiable intangible assets	10,698			11,753
Cash surrender value of life insurance policies	98,893			97,261
Other real estate owned & other foreclosed assets	9,387			12,150
Other assets	112,505			149,994
Total assets	$	5,852,595		$	5,756,985
Liabilities and Stockholders' Equity
Deposits
Demand deposits	$	1,283,301		$	1,248,394
Savings and interest checking accounts	1,798,495			1,691,187
Money market	884,696			853,971
Time certificates of deposit of $100,000 and over	292,046			317,438
Other time certificates of deposits	417,925			435,687
Total deposits	4,676,463			4,546,677
Borrowings
Federal Home Loan Bank and other borrowings	261,456			283,569
Wholesale repurchase agreements	50,000			50,000

4

Customer repurchase agreements	141,826			153,359
Junior subordinated debentures	74,018			74,127
Subordinated debentures	30,000			30,000
Total borrowings	557,300			591,055
Other liabilities	75,227			89,933
Total liabilities	5,308,990			5,227,665
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value. authorized: 1,000,000 shares, outstanding: none	—			—
Common stock, $.01 par value. authorized: 75,000,000 shares,
issued and outstanding: 22,904,284 shares at June 30, 2013 and 22,774,009 shares at December 31, 2012 (includes 271,390 and 264,124 shares of unvested participating restricted stock awards, respectively)	226			225
Shares held in rabbi trust at cost 175,618 shares at June 30, 2013 and 179,814 shares at December 31, 2012	(3,294		)	(3,179		)
Deferred compensation obligation	3,294			3,179
Additional paid in capital	272,165			269,950
Retained earnings	278,611			263,671
Accumulated other comprehensive loss, net of tax	(7,397		)	(4,526		)
Total stockholders’ equity	543,605			529,320
Total liabilities and stockholders' equity	$	5,852,595		$	5,756,985

The accompanying notes are an integral part of these consolidated financial statements.

5

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited—Dollars in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
Interest income
Interest on loans	$	47,720	$	43,813	$	94,699	$	86,891
Taxable interest and dividends on securities	3,506		4,415		7,035		8,942
Nontaxable interest and dividends on securities	11		23		22		52
Interest on loans held for sale	237		156		505		286
Interest on federal funds sold	21		19		55		51
Total interest and dividend income	51,495		48,426		102,316		96,222
Interest expense
Interest on deposits	2,543		2,687		5,208		5,426
Interest on borrowings	3,337		3,111		6,630		6,316
Total interest expense	5,880		5,798		11,838		11,742
Net interest income	45,615		42,628		90,478		84,480
Provision for loan losses	3,100		8,500		4,400		10,100
Net interest income after provision for loan losses	42,515		34,128		86,078		74,380
Noninterest income
Deposit account fees	4,343		3,923		8,559		7,812
Interchange and ATM fees	2,761		2,399		5,089		4,767
Investment management	4,357		3,827		8,242		7,390
Mortgage banking income	1,669		1,463		3,951		2,793
Increase in cash surrender value of life insurance policies	786		741		1,531		1,454
Loan level derivative income	816		1,371		1,348		1,699
Other noninterest income	1,960		1,259		3,694		2,978
Total noninterest income	16,692		14,983		32,414		28,893
Noninterest expenses
Salaries and employee benefits	21,594		19,775		44,309		41,211
Occupancy and equipment expenses	4,919		4,234		10,169		8,534
Advertising expense	1,479		1,473		2,652		2,210
Data processing & facilities management	1,201		1,099		2,385		2,274
FDIC assessment	934		830		1,755		1,579
Debit card expense	773		637		1,443		1,196
Merger and acquisition expense	754		672		2,099		672
Mortgage operations expense	715		60		1,059		102
Consulting expense	666		583		1,377		1,209
Telecommunication expense	548		666		1,203		1,284
Other noninterest expenses	8,581		6,970		16,632		14,085
Total noninterest expenses	42,164		36,999		85,083		74,356
Income before income taxes	17,043		12,112		33,409		28,917
Provision for income taxes	4,285		3,238		8,399		7,860
Net income	$	12,758	$	8,874	$	25,010	$	21,057
Basic earnings per share	0.56		0.41		1.09		0.98
Diluted earnings per share	0.56		0.41		1.09		0.97
Weighted average common shares (basic)	22,888,155		21,623,827		22,856,132		21,592,416
Common shares equivalents	52,144		20,377		49,104		22,251
Weighted average common shares (diluted)	22,940,299		21,644,204		22,905,236		21,614,667
Cash dividends declared per common share	0.22		0.21		0.44		0.42

The accompanying notes are an integral part of these consolidated financial statements.

6

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited—Dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
Net income	$	12,758		$	8,874		$	25,010		$	21,057
Other comprehensive income (loss), net of tax
Unrealized losses on securities
Change in fair value of securities available for sale	(4,592		)	(139		)	(5,371		)	(300		)
Less: net security losses reclassified into earnings	3			45			3			45
Net change in fair value of securities available for sale	(4,589		)	(94		)	(5,368		)	(255		)
Unrealized gains (losses) on cash flow hedges
Change in fair value of cash flow hedges	765			(1,227		)	763			(1,196		)
Less: net cash flow hedge gains (losses) reclassified into earnings	854			796			1,691			1,561
Net change in fair value of cash flow hedges	1,619			(431		)	2,454			365
Amortization of certain costs included in net periodic retirement costs	42			23			43			46
Total other comprehensive (loss) income	(2,928		)	(502		)	(2,871		)	156
Total comprehensive income	$	9,830		$	8,372		$	22,139		$	21,213

The accompanying notes are an integral part of these consolidated financial statements

7

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited—Dollars in thousands, except per share data)

	Common Stock Outstanding	Common Stock		Value of Shares Held in Rabbi Trust at Cost			Deferred Compensation Obligation		Additional Paid in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total
Balance at December 31, 2012	22,774,009	$	225	$	(3,179	)	$	3,179	$	269,950		$	263,671		$	(4,526	)	$	529,320
Net income	—	—		—			—		—			25,010			—			25,010
Other comprehensive loss	—	—		—			—		—			—			(2,871		)	(2,871		)
Common dividend declared ($0.44 per share)	—	—		—			—		—			(10,070		)	—			(10,070		)
Proceeds from exercise of stock options	30,029	—		—			—		744			—			—			744
Tax benefit related to equity award activity	—	—		—			—		312			—			—			312
Equity based compensation	—	—		—			—		1,389			—			—			1,389
Restricted stock awards issued, net of awards surrendered	89,431	1		—			—		(669		)	—			—			(668		)
Shares issued under direct stock purchase plan	10,815	—		—			—		339			—			—			339
Deferred compensation obligation	—	—		(115		)	115		—			—			—			—
Tax benefit related to deferred compensation distributions	—	—		—			—		100			—			—			100
Balance at June 30, 2013	22,904,284	$	226	$	(3,294	)	$	3,294	$	272,165		$	278,611		$	(7,397	)	$	543,605
Balance at December 31, 2011	21,499,768	$	213	$	(2,980	)	$	2,980	$	233,878		$	239,452		$	(4,486	)	$	469,057
Net income	—	—		—			—		—			21,057			—			21,057
Other comprehensive income	—	—		—			—		—			—			156			156
Common dividend declared ($0.42 per share)	—	—		—			—		—			(9,080		)	—			(9,080		)
Proceeds from exercise of stock options	21,658	—		—			—		459			—			—			459
Tax benefit related to equity award activity	—	—		—			—		59			—			—			59
Equity based compensation	—	—		—			—		1,551			—			—			1,551
Restricted stock awards issued, net of awards surrendered	85,254	1		—			—		(345		)	—			—			(344		)
Shares issued under direct stock purchase plan	21,030	—		—			—		591			—			—			591
Deferred compensation obligation	—	—		(98		)	98		—			—			—			—
Tax benefit related to deferred compensation distributions	—	—		—			—		86			—			—			86
Balance June 30, 2012	21,627,710	$	214	$	(3,078	)	$	3,078	$	236,279		$	251,429		$	(4,330	)	$	483,592

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements

8

INDEPENDENT BANK CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited—Dollars in thousands)

	Six Months Ended
	June 30
	2013			2012
Cash flow from operating activities
Net income	$	25,010		$	21,057
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	4,141			5,346
Provision for loan losses	4,400			10,100
Deferred income tax expense (benefit)	5			(19		)
Net loss on sale of investments	4			—
Loss on write-down of investments in securities available for sale	—			76
Loss (gain) on sale of fixed assets	28			(16		)
Loss on sale of other real estate owned and foreclosed assets	127			290
Gain realized from early termination of hedging relationship	—			(22		)
Realized gain on sale leaseback transaction	(517		)	(517		)
Stock based compensation	1,389			1,551
Excess tax benefit related to equity award activity	(312		)	(59		)
Increase in cash surrender value of life insurance policies	(1,531		)	(1,451		)
Change in fair value on loans held for sale	1,335			(112		)
Net change in:
Trading assets	—			(265		)
Loans held for sale	14,355			(1,698		)
Other assets	37,689			(4,975		)
Other liabilities	(14,885		)	831
Total adjustments	46,228			9,060
Net cash provided by operating activities	71,238			30,117
Cash flows used in investing activities
Proceeds from sales of securities available for sale	169			—
Proceeds from maturities and principal repayments of securities available for sale	50,709			46,434
Purchase of securities available for sale	(34,878		)	(71,699		)
Proceeds from maturities and principal repayments of securities held to maturity	27,535			25,944
Purchase of securities held to maturity	(74,834		)	(9,975		)
Redemption of Federal Home Loan Bank stock	3,093			2,290
Proceeds from (purchase of) life insurance policies	(101		)	63
Net increase in loans	(15,713		)	(202,505		)
Purchase of bank premises and equipment	(4,221		)	(3,889		)
Proceeds from the sale of bank premises and equipment	—			30
Proceeds resulting from early termination of hedging relationship	—			22
Proceeds from the sale of other real estate owned and foreclosed assets	5,237			1,801
Net cash used in investing activities	(43,004		)	(211,484		)
Cash flows provided by financing activities
Net increase (decrease) in time deposits	(43,154		)	9,373
Net increase in other deposits	172,940			191,931

9

Net decrease in wholesale and customer repurchase agreements	(11,533		)	(21,290		)
Net advance of short term Federal Home Loan Bank advances	(11,695		)	(40,000		)
Net repayment of long term Federal Home Loan Bank advances	(9,123		)	—
Proceeds from exercise of stock options	744			459
Tax benefit related to equity award activity	312			59
Restricted stock awards issued, net of awards surrendered	(668		)	(344		)
Tax benefit from deferred compensation distribution	100			86
Shares issued under direct stock purchase plan	339			591
Common dividends paid	(5,032		)	(8,623		)
Net cash provided by financing activities	93,230			132,242
Net increase (decrease) in cash and cash equivalents	121,464			(49,125		)
Cash and cash equivalents at beginning of year	215,474			237,504
Cash and cash equivalents at end of period	$	336,938		$	188,379
Supplemental schedule of noncash investing and financing activities
Transfer of loans to foreclosed assets	$	1,138		$	5,136
Transfer of securities from trading to available for sale	$	—		$	8,505

The accompanying condensed notes are an integral part of these unaudited consolidated financial statements.

10

CONDENSED NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION

Independent Bank Corp. (the “Company”) is a state chartered, federally registered bank holding company, incorporated in 1985. The Company is the sole stockholder of Rockland Trust Company (“Rockland Trust” or the “Bank”), a Massachusetts trust company chartered in 1907.

All material intercompany balances and transactions have been eliminated in consolidation. Certain previously reported amounts may have been reclassified to conform to the current year’s presentation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. Operating results for the quarter ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other interim period.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

NOTE 2 – RECENT ACCOUNTING STANDARDS UPDATES

FASB ASC Topic No. 815 "Derivatives and Hedging" Update No. 2013-10. Update No. 2013-10 was issued in July 2013 to provide guidance on the risks that are permitted to be hedged in a fair value or cash flow hedge. Among those risks for financial assets and financial liabilities is the risk of changes in a hedged item's fair value or a hedged transaction's cash flows attributable to changes in the designated benchmark interest rate (referred to as interest rate risk). In the United States, currently only the interest rates on direct Treasury obligations of the U.S. government (UST) and, for practical reasons, the London Interbank Offered Rate (LIBOR) swap rate are considered benchmark interest rates. The amendments in this update permit the Fed Funds Effective Swap Rate (OIS)to now be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to UST and LIBOR. The amendments also remove the restriction on using benchmark rates for similar hedges. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial position.

FASB ASC Topic No. 220 "Comprehensive Income" Update No. 2013-02. Update No. 2013-02 was issued in February 2013, stating that the amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this standard did not have a material impact on the Company's consolidated financial position.

FASB ASC Topic No. 210 "Balance Sheet" Update No. 2013-01. Update No. 2013-01 was issued in January of 2013, the amendments in this update affect entities that have derivatives accounted for in accordance with Topic 815 "Derivatives and Hedges," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. As a result of these amendments, entities with other types of financial assets and financial liabilities subject to a master netting arrangement or similar agreement are no longer subject to the disclosure requirements in Update No. 2011-11. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The amendments are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those periods. The adoption of this standard did not have a material impact on the Company's consolidated financial position.

11

NOTE 3 – SECURITIES

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses, other-than-temporary impairment recorded in other comprehensive income and fair value of securities available for sale and securities held to maturity for the periods below:

	June 30, 2013												December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value		Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. Government agency securities	$	20,050	$	—	$	(457	)	$	—		$	19,593	$	20,053	$	769	$	—		$	—		$	20,822
Agency mortgage-backed securities	193,741		7,425		(2,865		)	—			198,301		209,381		12,158		(114		)	—			221,425
Agency collateralized mortgage obligations	66,087		612		(603		)	—			66,096		67,412		1,001		(37		)	—			68,376
Private mortgage-backed securities	2,820		—		—			216			3,036		3,227		—		—			305			3,532
Single issuer trust preferred securities issued by banks	2,233		11		—			—			2,244		2,255		—		(15		)	—			2,240
Pooled trust preferred securities issued by banks and insurers	8,158		—		(2,044		)	(2,497		)	3,617		8,353		—		(2,415		)	(2,957		)	2,981
Marketable securities	10,771		464		(267		)	—			10,968		9,875		92		(57		)	—			9,910
Total available for sale securities	$	303,860	$	8,512	$	(6,236	)	$	(2,281	)	$	303,855	$	320,556	$	14,020	$	(2,638	)	$	(2,652	)	$	329,286
Held to maturity securities
U.S. Treasury securities	$	1,012	$	62	$	—		$	—		$	1,074	$	1,013	$	121	$	—		$	—		$	1,134
Agency mortgage-backed securities	56,889		1,980		—			—			58,869		72,360		4,233		—			—			76,593
Agency collateralized mortgage obligations	159,945		1,632		(3,366		)	—			158,211		97,507		2,875		(2		)	—			100,380
State, county, and municipal securities	916		10		—			—			926		915		11		—			—			926
Single issuer trust preferred securities issued by banks	1,510		20		—			—			1,530		1,516		10		—			—			1,526
Corporate debt securities	5,006		235		—			—			5,241		5,007		258		—			—			5,265
Total held to maturity securities	$	225,278	$	3,939	$	(3,366	)	$	—		$	225,851	$	178,318	$	7,508	$	(2	)	$	—		$	185,824
Total	$	529,138	$	12,451	$	(9,602	)	$	(2,281	)	$	529,706	$	498,874	$	21,528	$	(2,640	)	$	(2,652	)	$	515,110

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company realized a gain of $4,000 and a net loss of $4,000 of marketable securities classified as available for sale during the three and six month periods ended June 30, 2013.

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity as of June 30, 2013 is presented below:

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	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	63	$	65	$	240	$	241
Due after one year to five years	10,495		11,038		6,318		6,597
Due after five years to ten years	81,294		80,377		1,012		1,074
Due after ten years	201,237		201,407		217,708		217,939
Total debt securities	$	293,089	$	292,887	$	225,278	$	225,851
Marketable securities	$	10,771	$	10,968	$	—	$	—
Total	$	303,860	$	303,855	$	225,278	$	225,851

The securities portfolio includes $8.0 million and $7.7 million, respectively, of callable securities in the Company’s investment portfolio at June 30, 2013 and December 31, 2012.

At June 30, 2013 and December 31, 2012, investment securities carried at $353.4 million and $365.8 million, respectively, were pledged to secure public deposits, assets sold under repurchase agreements, letters of credit, and for other purposes.

At June 30, 2013 and December 31, 2012, the Company had no investments in obligations of individual states, counties, or municipalities, which exceeded 10% of Stockholders’ Equity.

Other-Than-Temporary Impairment ("OTTI")

The Company continually reviews investment securities for the existence of OTTI, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, the credit worthiness of the obligor of the security, volatility of earnings, current analysts’ evaluations, the Company’s intent to sell the security, or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment.

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2013
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agency securities	2	19,593		(457		)	—		—			19,593		(457		)
Agency mortgage-backed securities	33	$	76,840	$	(2,865	)	$	—	$	—		$	76,840	$	(2,865	)
Agency collateralized mortgage obligations	13	132,729		(3,969		)	—		—			132,729		(3,969		)
Pooled trust preferred securities issued by banks and insurers	2	—		—			2,244		(2,044		)	2,244		(2,044		)
Marketable securities	26	$	6,258	$	(267	)	$	—	$	—		$	6,258	$	(267	)
Total temporarily impaired securities	76	$	235,420	$	(7,558	)	$	2,244	$	(2,044	)	$	237,664	$	(9,602	)

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	December 31, 2012
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
Agency mortgage-backed securities	17	$	23,814	$	(114	)	$	—	$	—		$	23,814	$	(114	)
Agency collateralized mortgage obligations	2	17,677		(39		)	—		—			17,677		(39		)
Single issuer trust preferred securities issued by banks and insurers	2	$	2,240	$	(15	)	$	—	$	—		$	2,240	$	(15	)
Pooled trust preferred securities issued by banks and insurers	2	$	—	$	—		$	2,069	$	(2,415	)	$	2,069	$	(2,415	)
Marketable securities	15	$	6,613	$	(57	)	$	—	$	—		$	6,613	$	(57	)
Total temporarily impaired securities	38	$	50,344	$	(225	)	$	2,069	$	(2,415	)	$	52,413	$	(2,640	)

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category are as follows at June 30, 2013:

• U.S. Government Agency Securities: Government Agency bonds have historically been considered to be of high credit quality. The bonds in the bank's portfolio consist of debt obligations of the Federal Home Loan Bank and the Federal Farm Credit Banks. Because these firms are owned by shareholders and not part of the federal government, these bonds are not backed by the government's “full faith and credit” guarantee and are therefore subject to credit and default risk. The risk of default on these entities are considered low and the credit quality is currently well above investment grade. As such, the decline in market value of these securities is attributable to changes in interest rates and not credit quality.

• Agency Mortgage-Backed Securities and Collateralized Mortgage Obligations:This portfolio has contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.

• Single Issuer Trust Preferred Securities: This portfolio consist of two securities, both of which are below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for each of the issuers, including regulatory capital ratios of issuers.

• Pooled Trust Preferred Securities: This portfolio consists of two securities, both of which are below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market and the significant risk premiums required in the current economic environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

• Marketable Securities: This portfolio consists of mutual funds and other equity investments. During some periods, the mutual funds in the Company’s investment portfolio may have unrealized losses resulting from market fluctuations as well as the risk premium associated with that particular asset class. For example, emerging market equities tend to trade at a higher risk premium than U.S. government bonds and thus, will fluctuate to a greater degree on both the upside and the downside. In the context of a well-diversified portfolio, however, the correlation amongst the various asset classes represented by the funds serves to minimize downside risk. The Company evaluates each mutual fund in the portfolio regularly and measures performance on both an absolute and relative basis. A reasonable recovery period for positions with an unrealized loss is based on management’s assessment of general economic data, trends within a particular asset class, valuations, earnings forecasts and bond durations.

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Management monitors the following issuances closely for impairment due to the history of OTTI losses recorded within these classes of securities. Management has determined that these securities possess characteristics which in the current economic environment could lead to further credit related OTTI charges. The following tables summarize pertinent information as of June 30, 2013, that was considered by management in determining if OTTI existed:

	Class	Amortized Cost (1)		Gross Unrealized Gain/(Loss)			Non-Credit Related  Other- Than-Temporary (Impairment)/Recovery			Fair Value		Total Cumulative Credit Related Other-Than- Temporary Impairment			Total Cumulative Other-Than- Temporary (Impairment)/Recovery to Date
	(Dollars in thousands)
Pooled trust preferred securities
Pooled trust preferred security A	C1	$	1,283	$	—		$	(851	)	$	432	$	(3,676	)	$	(4,527	)
Pooled trust preferred security B	D	—		—			—			—		(3,481		)	(3,481		)
Pooled trust preferred security C	C1	506		—			(319		)	187		(482		)	(801		)
Pooled trust preferred security D	D	—		—			—			—		(990		)	(990		)
Pooled trust preferred security E	C1	2,081		—			(1,327		)	754		(1,368		)	(2,695		)
Pooled trust preferred security F	B	1,878		(1,082		)	—			796		—			—
Pooled trust preferred security G	A1	2,410		(962		)	—			1,448		—			—
Total pooled trust preferred securities		$	8,158	$	(2,044	)	$	(2,497	)	$	3,617	$	(9,997	)	$	(12,494	)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	$	1,974	$	—		$	125		$	2,099	$	(766	)	$	(641	)
Private mortgage-backed securities-two	A19	846		—			91			937		(85		)	6
Total private mortgage-backed securities		$	2,820	$	—		$	216		$	3,036	$	(851	)	$	(635	)
Total		$	10,978	$	(2,044	)	$	(2,281	)	$	6,653	$	(10,848	)	$	(13,129	)

(1) The amortized cost reflects previously recorded OTTI charges recognized in earnings for the applicable securities.

	Class	Number of Performing Banks and Insurance Cos. in Issuances (Unique)	Current Deferrals/ Defaults/Losses (As a % of Original  Collateral)	Total Projected Defaults/Losses (as a % of Performing Collateral)	Excess  Subordination (After Taking  into Account Best  Estimate of Future Deferrals/ Defaults/Losses) (1)	Lowest credit Ratings to date (2)
Pooled trust preferred securities
Trust preferred security A	C1	56	33.08%	20.64%	—%	C (Fitch & Moody's)
Trust preferred security B	D	56	33.08%	20.64%	—%	C (Fitch)
Trust preferred security C	C1	47	29.29%	15.20%	—%	C (Fitch & Moody's)
Trust preferred security D	D	47	29.29%	15.20%	—%	C (Fitch)
Trust preferred security E	C1	46	26.86%	16.73%	0.66%	C (Fitch & Moody's)
Trust preferred security F	B	32	25.08%	18.83%	30.90%	CC (Fitch)
Trust preferred security G	A1	32	25.08%	18.83%	55.89%	CCC+ (S&P)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	N/A	6.53%	13.12%	—%	D (Fitch)
Private mortgage-backed securities-two	A19	N/A	4.18%	7.32%	—%	C (Fitch)

(1) Excess subordination represents the additional default/losses in excess of both current and projected defaults/losses that the security can absorb before the security experiences any credit impairment.

(2) The Company reviewed credit ratings provided by S&P, Moody’s and Fitch in its evaluation of issuers.

Per review of the factors outlined above, seven of the securities shown in the table above were deemed to be OTTI. The remaining securities were not deemed to be OTTI as the Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis.

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The following table shows the total OTTI that the Company recorded for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Gross change in OTTI recorded on certain investments (gain/(losses))	$	90		$	(106	)	$	371		$	168
Portion of OTTI gains (losses) recognized in OCI	(90		)	30			(371		)	(244		)
Total credit related OTTI losses recognized in earnings	$	—		$	(76	)	—			$	(76	)

The following table shows the cumulative credit related component of OTTI for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Balance at beginning of period	$	(10,847	)	$	(10,771	)	$	(10,847	)	$	(10,771	)
Add
Incurred on securities not previously impaired	—			—			—			—
Incurred on securities previously impaired	—			(76		)	—			(76		)
Less
Realized gain/loss on sale of securities	—			—			—			—
Reclassification due to changes in Company’s intent	—			—			—			—
Increases in cash flow expected to be collected	—			—			—			—
Balance at end of period	$	(10,847	)	$	(10,847	)	$	(10,847	)	$	(10,847	)

NOTE 4 – LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables bifurcates the amount of allowance allocated to each loan category based on the type of impairment analysis as of the periods indicated:

	June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	742,343	$	2,150,833	$	231,719	$	77,283	$	513,551	$	792,450	$	21,932	$	4,530,111	(1	)
Ending balance: individually evaluated for impairment	$	9,759	$	36,439	$	1,608	$	2,039	$	15,883	$	4,069	$	1,584	$	71,381
Ending balance: purchase credit impaired loans	$	—	$	18,304	$	—	$	—	$	8,991	$	380	$	—	$	27,675
Ending balance: collectively evaluated for impairment	$	732,584	$	2,096,090	$	230,111	$	75,244	$	488,677	$	788,001	$	20,348	$	4,431,055

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	December 31, 2012
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	687,511	$	2,122,153	$	188,768	$	78,594	$	612,881	$	802,149	$	26,955	$	4,519,011	(1	)
Ending balance: individually evaluated for impairment	$	8,575	$	33,868	$	—	$	2,279	$	15,373	$	4,435	$	2,129	$	66,659
Ending Balance: purchase credit impaired loans	$	—	$	21,853	$	—	$	—	$	9,821	$	380	$	—	$	32,054
Ending balance: collectively evaluated for impairment	$	678,936	$	2,066,432	$	188,768	$	76,315	$	587,687	$	797,334	$	24,826	$	4,420,298

(1) The amount of deferred fees included in the ending balance was $2.6 million and $3.1 million at June 30, 2013 and December 31, 2012, respectively.

The following tables summarize changes in allowance for loan losses by loan category for the periods indicated:

	Three Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,443		$	22,569		$	3,139	$	1,244		$	3,048		$	7,716		$	747		$	51,906
Charge-offs	(1,302		)	(196		)	—		(276		)	(186		)	(257		)	(260		)	(2,477		)
Recoveries	103			8			—		37			86			30			183			447
Provision	2,081			648			283		290			11			(222		)	9			3,100
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976

	Three Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,454		$	22,829		$	2,233		$	1,459		$	3,072		$	6,077		$	1,216		$	48,340
Charge-offs	(4,707		)	(2,133		)	—			(136		)	(105		)	(1,391		)	(296		)	(8,768		)
Recoveries	113			—			—			46			—			18			154			331
Provision	4,698			680			(13		)	(49		)	14			3,150			20			8,500
Ending balance	$	11,558		$	21,376		$	2,220		$	1,320		$	2,981		$	7,854		$	1,094		$	48,403

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	Six Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,461		$	22,598		$	2,811	$	1,524		$	2,930		$	7,703		$	807		$	51,834
Charge-offs	(1,725		)	(603		)	—		(421		)	(247		)	(534		)	(521		)	(4,051		)
Recoveries	239			8			—		76			86			51			333			793
Provision	2,350			1,026			611		116			190			47			60			4,400
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976
Ending balance: Individually evaluated for impairment	$	775		$	410		$	—	$	153		$	1,670		$	52		$	92		$	3,152
Ending balance: Collectively evaluated for impairment	$	13,550		$	22,619		$	3,422	$	1,142		$	1,289		$	7,215		$	587		$	49,824
	Six Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,682		$	23,514		$	2,076	$	1,896		$	3,113		$	4,597		$	1,382		$	48,260
Charge-offs	(4,722		)	(2,737		)	—		(306		)	(214		)	(2,141		)	(593		)	(10,713		)
Recoveries	313			—			—		98			—			31			314			756
Provision	4,285			599			144		(368		)	82			5,367			(9		)	10,100
Ending balance	$	11,558		$	21,376		$	2,220	$	1,320		$	2,981		$	7,854		$	1,094		$	48,403
Ending balance: Individually evaluated for impairment	$	278		$	445		$	—	$	140		$	1,209		$	30		$	178		$	2,280
Ending balance: Collectively evaluated for impairment	$	11,280		$	20,931		$	2,220	$	1,180		$	1,772		$	7,824		$	916		$	46,123

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables. Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. Some of the risk characteristics unique to each loan category include:

Commercial Portfolio:

Commercial & Industrial—Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate, if applicable. Repayment sources consist of: primarily, operating cash flow, and secondarily, liquidation of assets.

Commercial Real Estate—Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of: primarily, cash flow from operating leases and rents, and secondarily, liquidation of assets.

Commercial Construction—Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property. Project types include: residential 1-4 family condominium and multi-family homes, commercial/retail, office, industrial,

18

hotels, educational and healthcare facilities and other specific use properties. Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources vary depending upon the type of project and may consist of: sale or lease of units, operating cash flows or liquidation of other assets.

Small Business—Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate if applicable. Repayment sources consist of: primarily, operating cash flows, and secondarily, liquidation of assets.

For the commercial portfolio it is the Bank’s policy to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities.

Consumer Portfolio:

Residential Real Estate—Residential mortgage loans held in the Bank’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on 1-4 family residential properties. The Company does not originate sub-prime loans.

Home Equity — Home equity loans and lines are made to qualified individuals for legitimate purposes secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes or on nonowner occupied 1-4 family homes with more restrictive loan to value requirements. The home equity loan has a fixed rate and is billed equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

Other Consumer—Other consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. These loans may be secured or unsecured.

Credit Quality:

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”).

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point commercial risk-rating system, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows:

1- 6 Rating — Pass

Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average or below average asset quality, margins and market share. Collateral coverage is protective.

7 Rating — Potential Weakness

Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Bank’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

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8 Rating — Definite Weakness

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

9 Rating — Partial Loss Probable

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

10 Rating — Definite Loss

Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Bank is not warranted.

The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan.

The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		June 30, 2013
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	704,065	$	1,976,410	$	217,096	$	70,108	$	2,967,679
Potential weakness	7	17,088		74,143		6,955		3,036		101,222
Definite weakness-loss unlikely	8	20,410		98,818		7,668		4,106		131,002
Partial loss probable	9	780		1,462		—		33		2,275
Definite loss	10	—		—		—		—		—
Total		$	742,343	$	2,150,833	$	231,719	$	77,283	$	3,202,178

		December 31, 2012
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	647,984	$	1,928,148	$	177,693	$	71,231	$	2,825,056
Potential weakness	7	16,420		92,651		6,195		3,213		118,479
Definite weakness-loss unlikely	8	21,979		98,688		4,880		4,080		129,627
Partial loss probable	9	1,128		2,666		—		70		3,864
Definite loss	10	—		—		—		—		—
Total		$	687,511	$	2,122,153	$	188,768	$	78,594	$	3,077,026

20

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a quarterly basis and automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically. In addition, for all second position home equity loans, management reviews the performance of the first position lien, which is often held at another institution, when determining the accrual status of the loan. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	June 30, 2013		December 31, 2012
Residential portfolio
FICO score (re-scored) (1)	739		727
LTV (re-valued) (2)	70.0	%	67.0	%
Home equity portfolio
FICO score (re-scored) (1)	763		763
LTV (re-valued) (2)	55.0	%	54.0	%

(1) The average FICO scores for June 30, 2013 are based upon rescores available from May 2013 and actual score data for loans booked between June 1 and June 30, 2013. The average FICO scores for December 31, 2012 are based upon rescores available from November 2012 and actual score data for loans booked between December 1 and December 31, 2012.

(2) The combined LTV ratios for June 30, 2013 are based upon updated automated valuations as of February 2013. The combined LTV ratios for December 31, 2012 are based upon updated automated valuations as of November 30, 2011. For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. As permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company also may use discretion regarding other loans over 90 days delinquent if the loan is well secured and in process of collection. Set forth is information regarding the Company’s nonperforming loans at the period shown.

The following table shows nonaccrual loans at the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Commercial and industrial	$	3,009	$	2,666
Commercial real estate	8,526		6,574
Commercial construction	1,608		—
Small business	698		570
Residential real estate	12,496		11,472
Home equity (1)	10,024		7,311
Other consumer	134		121
Total nonaccrual loans (2)	$	36,495	$	28,714

(1) Includes home equity loans which are currently performing but have been placed on nonaccrual as a result of delinquency with respect to the first position, which is held by another financial institution.

(2) Included in these amounts were $9.8 million and $6.6 million of nonaccruing TDRs at June 30, 2013 and December 31, 2012, respectively.

21

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	June 30, 2013
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	15	$	1,481	13	$	1,821	22	$	2,407	50	$	5,709	$	736,634	$	742,343	$	—
Commercial real estate	51	5,454		10	9,581		27	6,529		88	21,564		2,129,269		2,150,833		—
Commercial construction	—	—		—	—		1	1,608		1	1,608		230,111		231,719		—
Small business	25	717		11	149		13	359		49	1,225		76,058		77,283		—
Residential real estate	15	3,359		4	1,768		38	6,982		57	12,109		501,442		513,551		—
Home equity	16	592		12	1,174		23	2,009		51	3,775		788,675		792,450		—
Other consumer	112	559		14	39		28	180		154	778		21,154		21,932		54
Total	234	$	12,162	64	$	14,532	152	$	20,074	450	$	46,768	$	4,483,343	$	4,530,111	$	54

	December 31, 2012
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	14	$	1,305	7	$	336	23	$	1,875	44	$	3,516	$	683,995	$	687,511	$	—
Commercial real estate	19	5,028		8	2,316		31	6,054		58	13,398		2,108,755		2,122,153		—
Commercial construction	—	—		—	—		—	—		—	—		188,768		188,768		—
Small business	20	750		8	94		10	320		38	1,164		77,430		78,594		—
Residential real estate	17	3,053		7	1,848		40	7,501		64	12,402		600,479		612,881		—
Home equity	32	2,756		10	632		17	1,392		59	4,780		797,369		802,149		—
Other consumer	208	1,217		32	224		28	153		268	1,594		25,361		26,955		52
Total	310	$	14,109	72	$	5,450	149	$	17,295	531	$	36,854	$	4,482,157	$	4,519,011	$	52

In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

22

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
TDRs on accrual status	$	38,898	$	46,764
TDRs on nonaccrual	9,777		6,554
Total TDRs	$	48,675	$	53,318
Amount of specific reserves included in the allowance for loan losses associated with TDRs:	$	2,796	$	3,049
Additional commitments to lend to a borrower who has been a party to a TDR:	$	1,921	$	1,847

The Bank’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Three Months Ended					Six Months Ended
	June 30, 2013					June 30, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	2	$	282	$	282	2	$	282	$	282
Commercial real estate	1	664		664		2	1,063		1,063
Small business	1	$	18	$	18	5	282		282
Residential real estate	2	744		744		6	1,900		1,926
Home equity	1	29		29		3	194		194
Other consumer	—	—		—		2	11		11
Total	7	$	1,737	$	1,737	20	$	3,732	$	3,758

23

	Three Months Ended					Six Months Ended
	June 30, 2012					June 30, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	7	$	1,115	$	1,115	11	$	1,273	$	1,273
Commercial real estate	7	3,839		3,839		9	4,907		4,907
Small business	1	17		17		8	360		360
Residential real estate	1	261		261		2	378		378
Home equity	1	64		66		1	64		66
Other consumer	2	65		65		4	150		150
Total	19	$	5,361	$	5,363	35	$	7,132	$	7,134

(1) The post-modification balances represent the balance of the loan on the date of modifications. These amounts may show an increase when modifications include a capitalization of interest.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Extended maturity	$	329	$	313	$	991	$	354
Adjusted interest rate	—		2,119		—		3,557
Combination rate & maturity	1,408		2,931		2,756		3,223
Court ordered concession	—		—		11		—
Total	$	1,737	$	5,363	$	3,758	$	7,134

The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due.

24

	Three Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		—	—
Small business	2	22		—	—
Total	5	$	2,187	—	$	—
	Six Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		1	250
Small business	3	253		—	—
Other consumer	—	—		1	6
Total	6	$	2,418	2	$	256

All TDR loans are considered impaired and therefore are subject to a specific review for impairment. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans), residential loans, and home equity loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less estimated costs to sell. The Bank charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed for performance to determine when a charge-off is appropriate.

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

25

The tables below set forth information regarding the Company’s impaired loans by loan portfolio as of the dates indicated:

	June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,780	$	8,577	$	—
Commercial real estate	18,252		18,928		—
Commercial construction	1,608		1,608		—
Small business	1,297		1,455		—
Residential real estate	2,221		2,330		—
Home equity	3,664		3,717		—
Other consumer	541		542		—
Subtotal	34,363		37,157		—
With an allowance recorded
Commercial & industrial	$	2,979	$	3,751	$	775
Commercial real estate	18,187		18,330		410
Commercial construction	—		—		—
Small business	742		778		153
Residential real estate	13,662		14,502		1,670
Home equity	405		457		52
Other consumer	1,043		1,069		92
Subtotal	37,018		38,887		3,152
Total	$	71,381	$	76,044	$	3,152

	December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	5,849	$	7,343	$	—
Commercial real estate	12,999		13,698		—
Commercial construction	—		—		—
Small business	1,085		1,147		—
Residential real estate	2,545		2,630		—
Home equity	4,119		4,166		—
Other consumer	700		705		—
Subtotal	27,297		29,689		—
With an allowance recorded
Commercial & industrial	$	2,726	$	2,851	$	1,084
Commercial real estate	20,869		21,438		516
Commercial construction	—		—		—
Small business	1,194		1,228		353
Residential real estate	12,828		13,601		1,302
Home equity	316		389		35
Other consumer	1,429		1,453		130
Subtotal	39,362		40,960		3,420
Total	$	66,659	$	70,649	$	3,420

26

The following tables set forth information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	8,396	$	114	$	8,836	$	230
Commercial real estate	18,392		312		18,448		628
Commercial construction	1,608		13		1,608		26
Small business	1,393		22		1,454		46
Residential real estate	2,236		25		2,253		44
Home equity	3,674		43		3,691		85
Other consumer	560		10		585		23
Subtotal	36,259		539		36,875		1,082
With an allowance recorded
Commercial & industrial	$	3,076	$	43	$	3,221	$	89
Commercial real estate	18,242		263		18,235		526
Commercial construction	—		—		—		—
Small business	748		12		760		23
Residential real estate	13,688		127		13,732		255
Home equity	407		5		410		10
Other consumer	1,074		10		1,113		20
Subtotal	37,235		460		37,471		923
Total	$	73,494	$	999	$	74,346	$	2,005

27

	Three Months Ended				Six Months Ended
	June 30, 2012				June 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,401	$	85	$	6,490	$	172
Commercial real estate	20,214		350		20,407		707
Commercial construction	—		—		—		—
Small business	1,474		25		1,517		52
Residential real estate	—		—		—		—
Home equity	100		2		100		3
Other consumer	72		1		56		1
Subtotal	28,261		463		28,570		935
With an allowance recorded
Commercial & industrial	$	1,343	$	28	$	1,398	$	60
Commercial real estate	15,685		229		16,432		473
Commercial construction	—		—		—		—
Small business	1,043		16		1,082		32
Residential real estate	12,958		157		13,053		296
Home equity	240		4		241		8
Other consumer	1,781		16		1,822		34
Subtotal	33,050		450		34,028		903
Total	$	61,311	$	913	$	62,598	$	1,838

Certain loans acquired by the Company may have shown evidence of deterioration of credit quality since origination and it was therefore deemed unlikely that the Bank would be able to collect all contractually required payments. As such, these loans were deemed to be Purchase Credit Impaired (“PCI”) loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following table displays certain information pertaining to purchased credit impaired loans at the dated indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Outstanding balance	$	30,705	$	36,278
Carrying amount	$	27,675	$	32,054

28

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

	(Dollars in thousands)
Balance at January 1, 2012	$	—
Acquisition	3,095
Accretion	(903		)
Reclassification from nonaccretable difference for loans with improved cash flows (1)	272
Balance at December 31, 2012	2,464
Balance at January 1, 2013	$	2,464
Accretion	(1,142		)
Other change in expected cash flows (2)	439
Reclassification from nonaccretable difference for loans with improved cash flows (1)	335
Balance at June 30, 2013	$	2,096

(1) Results in increased interest income during the period in which the loan paid off.

(2) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

NOTE 5 – EARNINGS PER SHARE

Earnings per share consisted of the following components for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Net income	$	12,758	$	8,874	$	25,010	$	21,057
Weighted Average Shares
Basic shares	22,888,155		21,623,827		22,856,132		21,592,416
Effect of diluted securities	52,144		20,377		49,104		22,251
Dilutive shares	22,940,299		21,644,204		22,905,236		21,614,667
Net income per share
Basic EPS	$	0.56	$	0.41	$	1.09	$	0.98
Effect of diluted securities	—		—		—		(0.01		)
Dilutive EPS	$	0.56	$	0.41	$	1.09	$	0.97

The following table illustrates the options to purchase common stock that were excluded from the calculation of diluted earnings per share because they were anti-dilutive:

	Three Months Ended		Six Months Ended
	June 30		June 30
	2013	2012	2013	2012
Stock options	241,268	804,249	245,312	807,147

29

NOTE 6 – STOCK BASED COMPENSATION

During 2013, the Company made the following awards of restricted stock:

Date	Shares Granted	Plan	Fair Value		Vesting Period
1/16/2013	2,000	2005 Employee Stock Plan	$	30.48	Ratably over 3 years from grant date
2/14/2013	93,800	2005 Employee Stock Plan	$	31.51	Ratably over 5 years from grant date
5/21/2013	14,700	2010 Non-Employee Director Stock Plan	$	33.17	At the end of 5 years from grant date

The fair value of the restricted stock awards is based upon the average of the high and low price at which the Company’s common stock traded on the date of grant. The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights.

The Company has not issued any awards of options to purchase shares of common stock during 2013.

NOTE 7 – DERIVATIVES AND HEDGING ACTIVITIES

The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally to manage the Company’s interest rate risk. Additionally, the Company enters into interest rate derivatives and foreign exchange contracts to accommodate the business requirements of its customers (“customer related positions”). The Company minimizes the market and liquidity risks of customer related positions by entering into similar offsetting positions with broker-dealers. Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

The Company does not enter into proprietary trading positions for any derivatives.

Interest Rate Positions

The Company currently utilizes interest rate swap agreements as hedging instruments against interest rate risk associated with the Company’s borrowings. An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is six years.

30

The following table reflects the Company’s derivative positions for the periods indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes:

June 30, 2013
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	$	(3,562	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	(3,563		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.65	%	(264		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.59	%	(258		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.27	%	2.94	%	(1,719		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.27	%	3.04	%	(1,955		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.27	%	1.71	%	(600		)
$	200,000									$	(11,921	)
December 31, 2012
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
				(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	$	(4,416	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	(4,417		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.65	%	(553		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.59	%	(539		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.31	%	2.94	%	(2,819		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.31	%	3.04	%	(2,647		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.31	%	1.71	%	(798		)
$	200,000									$	(16,189	)

For derivative instruments that are designated and qualify as hedging instruments, the effective portion of the gains or losses is reported as a component of OCI, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company expects approximately $5.0 million (pre-tax), to be reclassified to interest expense from OCI, related to the Company’s cash flow hedges in the next twelve months. This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve as of June 30, 2013.

The Company had no fair value hedges as of June 30, 2013 or December 31, 2012.

The table below presents the net amortization income recognized as an offset to interest expense related to previously terminated swaps for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Net amortization income	$	61	$	61	$	122	$	122

Customer Related Positions

Interest rate derivatives, primarily interest rate swaps, offered to commercial borrowers through the Bank’s loan level derivative program do not qualify as hedges for accounting purposes. The Bank believes that its exposure to commercial customer derivatives is limited because these contracts are simultaneously matched at inception with an offsetting dealer transaction. The commercial customer derivative program allows the Bank to retain variable-rate commercial loans while allowing the customer to synthetically fix the loan rate by entering into a variable-to-fixed interest rate swap.

31

Foreign exchange contracts offered to commercial borrowers through the Bank’s derivative program do not qualify as hedges for accounting purposes. The Bank acts as a seller and buyer of foreign exchange contracts to accommodate its customers. To mitigate the market and liquidity risk associated with these derivatives, the Bank enters into similar offsetting positions.

The following table reflects the Company’s customer related derivative positions for the periods indicated below for those derivatives not designated as hedging:

		Notional Amount Maturing
	# of Positions (1)	2013		2014	2015	2016	Thereafter	Total		Fair Value
	June 30, 2013
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	158	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	13,519
Pay fixed, receive variable	152	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	(13,543	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	13	$	25,073	7,221	—	—	—	$	32,294	$	(64	)
Buys US currency, sells foreign exchange	13	$	25,073	7,221	—	—	—	$	32,294	$	78
	December 31, 2012
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	143	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	28,678
Pay fixed, receive variable	137	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	(28,663	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	16	$	42,516	—	—	—	—	$	42,516	$	1,748
Buys US currency, sells foreign exchange	16	$	42,516	—	—	—	—	$	42,516	$	(1,718	)

(1) The Company may enter into one swap agreement which offsets multiple reverse swap agreements. The positions will offset and the terms will be identical.

32

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet at the periods indicated:

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012		Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012
	(Dollars in thousands)
Derivatives designated as hedges
Interest rate swaps	Other assets	$	—	$	—	Other liabilities	$	11,921	$	16,189
Derivatives not designated as hedges
Customer Related Positions:
Loan level swaps	Other assets	$	18,413	$	28,678	Other liabilities	$	18,437	$	28,663
Foreign exchange contracts	Other assets	291		1,748		Other liabilities	277		1,718
Total		$	18,704	$	30,426		$	18,714	$	30,381

The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Derivatives designated as hedges
Gain (loss) in OCI on derivatives (effective portion), net of tax	$	765		$	(1,227	)	$	763		$	(1,196	)
Loss reclassified from OCI into interest expense (effective portion)	$	(1,443	)	$	(1,346	)	$	(2,859	)	$	(2,638	)
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Interest expense	$	—		$	—		$	—		$	—
Other expense	—			—			—			—
Total	$	—		$	—		$	—		$	—
Derivatives not designated as hedges
Changes in fair value of customer related positions
Other income	$	14		$	51		$	26		$	73
Other expense	(56		)	(9		)	(81		)	(19		)
Total	$	(42	)	$	42		$	(55	)	$	54

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company's credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company's Board of Directors. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote and losses, if any, would be immaterial. The Company had no exposure relating to interest rate swaps with institutional counterparties at June 30, 2013 and December 31, 2012, as all such swaps were in a liability position. The Company’s exposure relating to customer related positions was approximately $16.7 million and $31.0 million at June 30, 2013 and December 31, 2012, respectively. Credit exposure may be reduced by the amount of collateral pledged by the counterparty.

33

The Company does not offset fair value amounts recognized for derivative instruments. The Company does net the amount recognized for the right to reclaim cash collateral against the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. Collateral legally required to be maintained at dealer banks by the Company is monitored and adjusted as necessary. Per a review completed by management of these instruments at June 30, 2013 it was determined that no additional collateral would have to be posted to immediately settle these instruments.

The following table presents the Company's asset derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Received		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	18,413		—		18,413		1,735		—		16,678
Customer foreign exchange contracts	291		—		291		108		—		183
	$	18,704	$	—	$	18,704	$	1,843	$	—	$	16,861
	December 31, 2012
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	28,678		—		28,678		—		—		28,678
Customer foreign exchange contracts	1,748		—		1,748		—		—		1,748
	$	30,426	$	—	$	30,426	$	—	$	—	$	30,426

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

The following table presents the Company's liability derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Pledged		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	11,921	$	—	$	11,921	$	—	$	15,774	$	(3,853	)
Loan level swaps	18,437		—		18,437		1,735		15,797		905
Customer foreign exchange contracts	277		—		277		108		—		169
	$	30,635	$	—	$	30,635	$	1,843	$	31,571	$	(2,779	)
	December 31, 2012
Interest rate swaps	$	16,189	$	—	$	16,189	$	—	$	19,185	$	(2,996	)
Loan level swaps	28,663		—		28,663		—		31,772		(3,109		)
Customer foreign exchange contracts	1,718		—		1,718		—		—		1,718
	$	46,570	$	—	$	46,570	$	—	$	50,957	$	(4,387	)

34

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well capitalized institution, then the Company could be required to terminate any outstanding derivatives with the counterparty. Included in the table above are derivative instruments that contain credit-risk related contingent features that are in a net liability position, which require the Company to assign collateral. All liability position interest rate swap and customer loan level swap counterparties have credit-risk contingent instruments as of the dates indicated in the table above.

Mortgage Derivatives

Forward sale contracts of residential mortgage loans, considered derivative instruments for accounting purposes, are utilized by the Company in its efforts to manage risk of loss associated with its mortgage loan commitments and mortgage loans intended for sale. Prior to closing and funding certain one-to-four family residential mortgage loans, an interest rate lock commitment is generally extended to the borrower. During the period from commitment date to closing date, the Company is subject to the risk that market rates of interest may change. If market rates rise, investors generally will pay less to purchase such loans resulting in a reduction in the gain on sale of the loans or, possibly, a loss. In an effort to mitigate such risk, forward delivery sales commitments are executed, under which the Company agrees to deliver whole mortgage loans to various investors. The interest rate lock commitments and forward sales commitments are recorded at fair value, with changes in fair value recorded in current period earnings as a component of mortgage banking income. The Company has elected the fair value option to carry these instruments at fair value. Changes in the fair value marks on loans held for sale offset changes in interest rate lock and forward sales commitments. The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company's fair value election.

The table below summarizes the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Interest rate lock commitments	$	(866	)	$	102
Forward sales agreements	$	2,092		$	(223	)
Loans held for sale fair value adjustments	$	(1,214	)	$	121

The table below summarizes the changes in the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Interest rate lock commitments	$	(997	)	$	385		$	(968	)	$	101
Forward sales agreements	2,204			(766		)	2,315			(213		)
Loans held for sale fair value adjustments	(1,195		)	381			(1,335		)	112
Total change in fair value	$	12		$	—		$	12		$	—

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NOTE 8 – FAIR VALUE MEASUREMENTS

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. If there has been a significant decrease in the volume and level of activity for the asset or liability, regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from one level to another.

The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the Fair Value Measurements and Disclosures Topic of the FASB ASC are described below:

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuation Techniques

There have been no changes in the valuation techniques used during the current period.

Securities:

U.S. Government Agency Securities

Fair value is estimated using either multi-dimensional spread tables or benchmarks. The inputs used include benchmark yields, reported trades, and broker/dealer quotes. These securities are classified as Level 2.

Agency Mortgage-Backed Securities

Fair value is estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities are categorized as Level 2.

Agency Collateralized Mortgage Obligations and Private Mortgage-Backed Securities

The valuation model for these securities is volatility-driven and ratings based, and uses multi-dimensional spread tables. The inputs used include benchmark yields, recent reported trades, new issue data, broker and dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Single and Pooled Issuer Trust Preferred Securities

The fair value of trust preferred securities, including pooled and single issuer preferred securities, is estimated using external pricing models, discounted cash flow methodologies or similar techniques. The inputs used in these valuations include benchmark yields, recent reported trades, new issue data, broker and dealer quotes and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Marketable Securities

These equity and fixed income securities are valued based on market quoted prices. These securities are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied.

36

Loans Held for Sale

The Company elects to account for new originations of loans held for sale at fair value, which is measured using quoted market prices when available. If quoted market prices are not available, comparable market values or discounted cash flow analysis may be utilized. These assets are typically categorized as Level 2.

Derivative Instruments

Derivatives

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings. Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2013 and December 31, 2012, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. Additionally, in conjunction with fair value measurement guidance, the Company has made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2.

Residential Mortgage Loan Commitments and Forward Sales Agreements

The fair value of the commitments and agreements are estimated using the anticipated market price based on pricing indications provided from syndicate banks. These commitments and agreements are categorized as Level 2.

Impaired Loans

Loans that are deemed to be impaired are valued based upon the lower of cost or fair value of the underlying collateral. The inputs used in the appraisals of the collateral are not always observable, and therefore the loans may be categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Other Real Estate Owned

The fair values are estimated based upon recent appraisal values of the property less costs to sell the property. Certain inputs used in appraisals are not always observable, and therefore Other Real Estate Owned may be categorized as Level 3 within the fair value hierarchy. When inputs in appraisals are observable, they are classified as Level 2.

Goodwill and Other Intangible Assets

Goodwill and identified intangible assets are subject to impairment testing. The Company conducts an annual impairment test of goodwill in the third quarter of each year and more frequently, if necessary. To estimate the fair value of goodwill and other intangible assets the Company utilizes both a comparable analysis of relevant price multiples in recent market transactions and discounted cash flow analysis. Both valuation models require a significant degree of management judgment. In the event the fair value as determined by the valuation model is less than the carrying value, the intangibles may be impaired. If the impairment testing resulted in impairment, the Company would classify the impaired goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3.

37

Assets and liabilities measured at fair value at the periods indicated were as follows:

			Fair Value Measurements at Reporting Date Using
	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. Government agency securities	$	19,593	$	—	$	19,593	$	—
Agency mortgage-backed securities	198,301		—		198,301		—
Agency collateralized mortgage obligations	66,096		—		66,096		—
Private mortgage-backed securities	3,036		—		—		3,036
Single issuer trust preferred securities issued by banks	2,244		—		2,244		—
Pooled trust preferred securities issued by banks and insurers	3,617		—		—		3,617
Marketable securities	10,968		10,968		—		—
Loans held for sale	32,497		—		32,497		—
Derivative instruments	20,796		—		20,796		—
Liabilities
Derivative instruments	31,501		—		31,501		—
Total recurring fair value measurements	$	325,647	$	10,968	$	308,026	$	6,653
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	10,105	$	—	$	—	$	10,105
Other real estate owned	9,211		—		—		9,211
Total nonrecurring fair value measurements	$	19,316	$	—	$	—	$	19,316

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	December 31, 2012
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. government agency securities	$	20,822	$	—	$	20,822	$	—
Agency mortgage-backed securities	221,425		—		221,425		—
Agency collateralized mortgage obligations	68,376		—		68,376		—
Private mortgage-backed securities	3,532		—		—		3,532
Single issuer trust preferred securities issued by banks	2,240		—		2,240		—
Pooled trust preferred securities issued by banks and insurers	2,981		—		—		2,981
Marketable securities	9,910		9,910		—		—
Loans held for sale	48,187		—		48,187		—
Derivative instruments	30,528		—		30,528		—
Liabilities
Derivative instruments	46,793		—		46,793		—
Total recurring fair value measurements	$	361,208	$	9,910	$	344,785	$	6,513
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	7,817	$	—	$	—	$	7,817
Other real estate owned	11,974		—		—		11,974
Total nonrecurring fair value measurements	$	19,791	$	—	$	—	$	19,791

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). These instruments were valued using pricing models and discounted cash flow methodologies.

39

	Securities Available for Sale:
	Pooled Trust Preferred Securities			Single Trust Preferred Securities			Private Mortgage- Backed Securities			Total
	(Dollars in thousands)
Balance at March 31, 2013	$	3,292		$	—		$	3,370		$	6,662
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	351			—			(51		)	300
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(26		)	—			(283		)	(309		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653
Balance at January 1, 2012	$	2,820		$	4,210		$	6,110		$	13,140
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			(76		)	(76		)
Included in other comprehensive income	313			703			411			1,427
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(152		)	—			(2,913		)	(3,065		)
Transfers into (out of) level 3	—			(4,913		)	—			(4,913		)
Balance at December 31, 2012	$	2,981		$	—		$	3,532		$	6,513
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	831			—			(89		)	742
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(195		)	—			(407		)	(602		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653

During the first quarter of 2012 the Company transferred the Single Issuer Trust Preferred Security from Level 3 to Level 2. The reason for this transfer was increased trading of the security, enabling the use of more observable inputs. It is the Company’s policy to recognize the transfers as of the end of the reporting period. There were no transfers between the Levels of the fair value hierarchy for any assets or liabilities measured at fair value on a recurring basis during the second quarter of 2013.

40

The following table sets forth certain unobservable inputs regarding the Company’s investment in securities that are classified as Level 3 for the periods indicated:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
	(Dollars in thousands)
	June 30, 2013
Pooled trust preferred securities	$	3,617	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.2	%
				Cumulative Default	2.0%-100.0%	18.6	%
				Loss Given Default	85.0% - 100.0%	95.4	%
				Cure Given Default	0% - 75.0%	36.6	%
Private mortgage-backed securities	$	3,036	Multi-dimensional spread tables	Cumulative Prepayment Rate	14.4%-14.5%	14.5	%
				Constant Default Rate	0.8% -20.3%	4.0	%
				Severity	21.0% -52.0%	34.1	%
Impaired loans	$	10,105	Appraisals of collateral (1)
Other real estate owned	$	9,211	Appraisals of collateral (1)
	December 31, 2012
Pooled trust preferred securities	$	2,981	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.5	%
				Cumulative Default	3.0%-100.0%	19.6	%
				Loss Given Default	85.0% - 100.0%	94.9	%
				Cure Given Default	0% - 75.0%	33.8	%
Private mortgage-backed securities	$	3,532	Multi-dimensional spread tables	Cumulative Prepayment Rate	10.3%-14.5%	13.9	%
				Constant Default Rate	0.9% -20.4%	4.0	%
				Severity	20.0% -55.0%	33.6	%
Impaired loans	$	7,817	Appraisals of collateral (1)
Other real estate owned	$	11,974	Appraisals of collateral (1)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary.

For the fair value measurements in the table above, which are classified as Level 3 within the fair value hierarchy, the Company’s Treasury and Finance groups determine the valuation policies and procedures. For the pricing of the securities, the Company uses third-party pricing information, without adjustment. Depending on the type of the security, management employs various techniques to analyze the pricing it receives from third-parties, such as analyzing changes in market yields and in certain instances reviewing the underlying collateral of the security. Management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with their expectation of the market. For the securities categorized as Level 3, the market is deemed to be inactive, the fair value models are calibrated and to the extent possible, significant inputs are back tested on a quarterly basis. This testing is done by the third party service provider, who performs this testing by comparing anticipated inputs to actual results. For example, modeled default and prepayment rates for private mortgage-backed securities will be compared to actual rates for the previous period. Significant changes in fair value from period to period are closely scrutinized to ensure fair value models are not flawed. The driver(s) of the respective change in fair value and the method for forecasting the driver(s) is closely considered by management.

41

The significant unobservable inputs used in the fair value measurement of the Company’s pooled trust preferred securities are cumulative prepayment rates, cumulative defaults, loss given defaults and cure given defaults. Significant increases (decreases) in deferrals or defaults, in isolation would result in a significantly lower (higher) fair value measurement. Alternatively, significant increases (decreases) in cure rates, in isolation would result in a significantly higher (lower) fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s private mortgage-backed securities are constant prepayment rates, constant default rates, and loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

Additionally, the Company has financial instruments which are marked to fair value on a nonrecurring basis which are categorized within Level 3. These instruments include collateral dependent impaired loans and OREO. The determination of the fair value amount is derived from the use of independent third party appraisals and evaluations, prepared by firms from a predetermined list of qualified and approved appraisers or evaluators. Upon receipt of an appraisal or evaluation, the internal Commercial Real Estate Appraisal Department will review the report for compliance with regulatory and Bank standards, as well as reasonableness and acceptance of the value conclusions. Any issues or concerns regarding compliance or value conclusions will be addressed with the engaged firm and the report may be adjusted or revised. If a disagreement cannot be resolved, the Commercial Real Estate Appraisal Department will either address the key issues and modify the report for acceptance or reject the report and re-order a new report. Ultimately the Company’s Commercial Real Estate Appraisal Department will confirm the collateral value as part of its review process.

42

The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the periods indicated:

					Fair Value Measurements at Reporting Date Using
	Book Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,012	$	1,074	—		$	1,074	—
Agency mortgage-backed securities	56,889		58,869		—		58,869		—
Agency collateralized mortgage obligations	159,945		158,211		—		158,211		—
State, county, and municipal securities	916		926		—		926		—
Single issuer trust preferred securities issued by banks	1,510		1,530		—		1,530		—
Corporate debt securities	5,006		5,241		—		5,241		—
Loans, net of allowance for loan losses (b)	4,477,135		4,433,316		—		—		4,433,316
Financial liabilities
Time certificates of deposits (c)	$	709,971	$	713,800	—		$	713,800	—
Federal home loan bank advances and other borrowings (c)	261,456		268,993		—		268,993		—
Wholesale and customer repurchase agreements (c)	191,826		193,497		—		—		193,497
Junior subordinated debentures (d)	74,018		75,805		—		75,805		—
Subordinated debentures (c)	30,000		20,758		—		—		20,758
	December 31, 2012
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,013	$	1,134	$	—	$	1,134	$	—
Agency mortgage-backed securities	72,360		76,593		—		76,593		—
Agency collateralized mortgage obligations	97,507		100,380		—		100,380		—
State, county, and municipal securities	915		926		—		926		—
Single issuer trust preferred securities issued by banks	1,516		1,526		—		1,526		—
Corporate debt securities	5,007		5,265		—		5,265		—
Loans, net of allowance for loan losses (b)	4,467,177		4,462,580		—		—		4,462,580
Financial liabilities
Time certificates of deposits (c)	$	753,125	$	759,516	$	—	$	759,516	$	—
Federal home loan bank advances and other borrowings (c)	283,569		293,580		—		293,580		—
Wholesale and customer repurchase agreements (c)	203,359		201,189		—		—		201,189
Junior subordinated debentures (d)	74,127		74,416		—		74,416		—
Subordinated debentures (c)	30,000		22,762		—		—		22,762

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(a) The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analyses.

(b) Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows.

(c) Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.

(d) Fair value was determined based upon market prices of securities with similar terms and maturities.

This summary excludes financial assets and liabilities for which the carrying value approximates fair value. For financial assets, these include cash and due from banks, federal funds sold, short-term investments, Federal Home Loan Bank stock, and cash surrender value of life insurance policies. For financial liabilities, these include demand, savings, money market deposits, and federal funds purchased. The estimated fair value of demand, savings and money market deposits is the amount payable at the reporting date. These instruments would all be considered to be classified within Level 1 of the fair value hierarchy. Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described.

The Company believes its financial instruments current use is considered to be the highest and best use of the instruments.

NOTE 9 – COMPREHENSIVE INCOME/LOSS

Information on the Company’s comprehensive income, presented net of taxes, is set forth below for the periods indicated:

	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(7,502	)	$	2,910		$	(4,592	)	$	(8,736	)	$	3,365		$	(5,371	)
Less: net security losses reclassified into other noninterest income (1)	4			(1		)	3			4			(1		)	3			(4	)
Change in fair value of securities available for sale	(7,498		)	2,909			(4,589		)	(8,732		)	3,364			(5,368		)
Change in fair value of cash flow hedges	1,294			(529		)	765			1,289			(526		)	763
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,443			(589		)	854			2,859			(1,168		)	1,691			(4	)
Net change in fair value of cash flow hedges	2,737			(1,118		)	1,619			4,148			(1,694		)	2,454
Amortization of certain costs included in net periodic retirement costs (3)	51			(9		)	42			73			(30		)	43			(4	)
Total other comprehensive income (loss)	$	(4,710	)	$	1,782		$	(2,928	)	$	(4,511	)	$	1,640		$	(2,871	)

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	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(186	)	$	47		$	(139	)	$	(432	)	$	132		$	(300	)
Less: net security losses reclassified into other noninterest income (1)	76			(31		)	45			76			(31		)	45			(4	)
Change in fair value of securities available for sale	(110		)	16			(94		)	(356		)	101			(255		)
Change in fair value of cash flow hedges	(2,074		)	847			(1,227		)	(2,021		)	825			(1,196		)
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,346			(550		)	796			2,638			(1,077		)	1,561			(4	)
Net change in fair value of cash flow hedges	(728		)	297			(431		)	617			(252		)	365
Amortization of certain costs included in net periodic retirement costs (3)	39			(16		)	23			77			(31		)	46			(4	)
Total other comprehensive income	$	(799	)	$	297		$	(502	)	$	338		$	(182	)	$	156

(1) Net security losses includes pre-tax OTTI credit related losses of $0 for the three and six month ended June 30, 2013 and $76,000 for the three and six months ended June 30, 2012.

(2) Includes the remaining balance of a realized but unrecognized gain, net of tax, from the termination of interest rate swaps in June 2009. The original gain of $1.4 million, net of tax, will be recognized in earnings through December 2018, the original maturity date of the swap. The balance of this gain has amortized to $787,000 and $931,000 at June 30, 2013 and 2012, respectively.

(3) The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in the Employee Benefit Plans footnote in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

(4) Total reclassifications into income for the period were $899,000 and $1,737,000 for the three and six months ending June 30, 2013 and $864,000 and $1,652,000 for the three and six months ending June 30, 2012, respectively.

Information on the Company’s accumulated other comprehensive income (loss), net of tax is comprised of the following components as of the periods indicated:

	Unrealized Gain on Securities			Unrealized Loss on Cash Flow Hedge			Deferred Gain on Hedge Transactions			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	2013
	(Dollars in thousands)
Beginning balance January 1, 2013	$	5,478		$	(9,577	)	$	859		$	(1,286	)	$	(4,526	)
Net change in other comprehensive income (loss)	$	(5,368	)	$	2,526		$	(72	)	$	43		$	(2,871	)
Ending balance June 30, 2013	110			(7,051		)	787			(1,243		)	(7,397		)
	2012
Beginning balance January 1, 2012	$	6,574		$	(10,804	)	$	1,004		$	(1,260	)	$	(4,486	)
Net change in other comprehensive income (loss)	$	(255	)	$	438		$	(73	)	$	46		$	156
Ending balance June 30, 2012	6,319			(10,366		)	931			(1,214		)	(4,330		)

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

The following discussion should be read in conjunction with the consolidated financial statements, notes and tables included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the Securities and Exchange Commission.

Cautionary Statement Regarding Forward-Looking Statements

A number of the presentations and disclosures in this Form 10-Q, including, without limitation, statements regarding the level of allowance for loan losses, the rate of delinquencies and amounts of charge-offs, and the rates of loan growth, and any statements preceded by, followed by, or which include the words “may,” “could,” “should,” “will,” “would,” “hope,” “might,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “assume” or similar expressions constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements, implicitly and explicitly, include the assumptions underlying the statements and other information with respect to the beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, financial condition, results of operations, future performance and business, of the Company including the Company’s expectations and estimates with respect to the Company’s revenues, expenses, earnings, return on average equity, return on average assets, asset quality and other financial data and capital and performance ratios.

Although the Company believes that the expectations reflected in the Company’s forward-looking statements are reasonable, these statements involve risks and uncertainties that are subject to change based on various important factors (some of which are beyond the Company’s control). The following factors, among others, could cause the Company’s financial performance to differ materially from the Company’s goals, plans, objectives, intentions, expectations and other forward-looking statements:

• a weakening in the United States economy in general and the regional and local economies within the New England region and the Company’s market area, which could result in a deterioration of credit quality, a change in the allowance for loan losses, or a reduced demand for the Company’s credit or fee-based products and services;

• adverse changes in the local real estate market could result in a deterioration of credit quality and an increase in the allowance for loan losses, as most of the Company’s loans are concentrated within the Bank’s primary market area, and a substantial portion of these loans have real estate as collateral;

• a further deterioration of the credit rating for U.S. long-term sovereign debt could adversely impact the Company. Although the 2011 downgrade by Standard and Poor’s of U.S. long-term sovereign debt did not directly impact the financial position of the Company, an inability by the federal government to raise the U.S. debt limit or otherwise could result in further downgrades which in turn could cause a re-evaluation of the ‘risk-free’ rate used in many accounting models, other-than-temporary-impairment of securities and/or impairment of goodwill and other intangibles;

• acquisitions may not produce results at levels or within time frames originally anticipated and may result in unforeseen integration issues or impairment of goodwill and/or other intangibles;

• changes in trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System could affect the Company’s business environment or affect the Company’s operations;

• changes in, and any failure by the Company to comply with, tax laws generally and requirements of the federal New Markets Tax Credit program in particular could adversely affect the Company’s tax provision and its financial results;

• inflation, interest rate, market and monetary fluctuations could reduce net interest income and could increase credit losses;

• adverse changes in asset quality could result in increasing credit risk-related losses and expenses;

• competitive pressures could intensify and affect the Company’s profitability, including continued industry consolidation, the increased financial services provided by nonbanks and banking reform;

• a deterioration in the conditions of the securities markets could adversely affect the value or credit quality of the Company’s assets, the availability and terms of funding necessary to meet the Company’s liquidity needs, and the Company’s ability to originate loans and could lead to impairment in the value of securities in the Company’s investment portfolios, having an adverse effect on the Company’s earnings;

• the potential need to adapt to changes in information technology could adversely impact the Company’s operations and require increased capital spending;

46

• the risk of electronic fraudulent activity within the financial services industry, especially in the commercial banking sector due to cyber criminals targeting bank accounts and other customer information, which could adversely impact the Company’s operations, damage its reputation and require increased capital spending;

• changes in consumer spending and savings habits could negatively impact the Company’s financial results;

• new laws and regulations regarding the financial services industry including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act, may have a significant effect on the financial services industry in general, and/or the Company in particular, the exact nature and extent of which is uncertain;

• changes in laws and regulations (including laws and regulations concerning taxes, banking, securities and insurance) generally applicable to the Company’s business could adversely affect the Company’s operations; and

• changes in accounting policies, practices and standards, as may be adopted by the regulatory agencies as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters, could negatively impact the Company’s financial results.

If one or more of the factors affecting the Company’s forward-looking information and statements proves incorrect, then the Company’s actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Form 10-Q. Therefore, the Company cautions you not to place undue reliance on the Company’s forward-looking information and statements.

The Company does not intend to update the Company’s forward-looking information and statements, whether written or oral, to reflect change. All forward-looking statements attributable to the Company are expressly qualified by these cautionary statements.

Selected Quarterly Financial Data

The selected consolidated financial and other data of the Company set forth below does not purport to be complete and should be read in conjunction with, and is qualified in its entirety by, the more detailed information, including the Consolidated Financial Statements and related notes, appearing elsewhere herein.

				Three Months Ended
	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
	(Dollars in thousands, except per share data)
Financial condition data
Securities available for sale	$	303,855		$	335,693		$	329,286		$	323,156		$	338,331
Securities held to maturity	225,278			209,090			178,318			186,842			188,450
Loans	4,530,111			4,487,478			4,519,011			4,056,135			3,980,789
Allowance for loan losses	(52,976		)	(51,906		)	(51,834		)	(49,746		)	(48,403		)
Goodwill and core deposit intangibles	161,089			161,616			162,144			137,293			139,924
Total assets	5,852,595			5,721,120			5,756,985			5,192,094			5,124,564
Total deposits	4,676,463			4,551,410			4,546,677			4,117,847			4,078,133
Total borrowings	557,300			550,782			591,055			489,899			476,217
Stockholders’ equity	543,605			537,575			529,320			492,965			483,592
Income statement
Interest income	$	51,495		$	50,820		$	51,414		$	48,555		$	48,426
Interest expense	5,880			5,958			5,935			5,717			5,798
Net interest income	45,615			44,862			45,479			42,838			42,628
Provision for loan losses	3,100			1,300			4,350			3,606			8,500
Noninterest income	16,692			15,724			17,016			16,108			14,983
Noninterest expenses	42,164			42,920			45,050			40,052			36,999
Net income	12,758			12,252			9,968			11,601			8,874

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Per share date
Net income—basic	$	0.56		$	0.54		$	0.45		$	0.54		$	0.41
Net income—diluted	0.56			0.54			0.45			0.53			0.41
Cash dividends declared	0.22			0.22			0.21			0.21			0.21
Book value	23.73			23.50			23.24			22.75			22.36
Performance ratios
Return on average assets	0.89		%	0.88		%	0.73		%	0.91		%	0.71		%
Return on average common equity	9.40		%	9.25		%	7.68		%	9.39		%	7.34		%
Net interest margin (on a fully tax equivalent basis)	3.57		%	3.58		%	3.68		%	3.72		%	3.80		%
Equity to assets	9.29		%	9.40		%	9.19		%	9.49		%	9.44		%
Dividend payout ratio	39.50		%	—		%	93.60		%	39.23		%	51.19		%
Asset quality
Nonperforming loans	36,549			33,091			28,766			31,081			31,322
Nonperforming assets	48,105			46,815			42,427			41,529			43,857
Nonperforming loans as a percent of gross loans	0.81		%	0.74		%	0.64		%	0.77		%	0.79		%
Nonperforming assets as a percent of total assets	0.82		%	0.82		%	0.74		%	0.80		%	0.86		%
Allowance for loan losses as a percent of total loans	1.17		%	1.16		%	1.15		%	1.23		%	1.22		%
Allowance for loan losses as a percent of nonperforming loans	144.95		%	156.86		%	180.19		%	160.05		%	154.53		%
Capital ratios
Tier 1 leverage capital ratio	8.56		%	8.51		%	8.65		%	8.73		%	8.68		%
Tier 1 risk-based capital ratio	10.62		%	10.57		%	10.36		%	10.72		%	10.64		%
Total risk-based capital ratio	12.49		%	12.43		%	12.23		%	12.71		%	12.63		%

Executive Level Overview

During the second quarter of 2013 the Company experienced continued business volume growth, as indicated by the growth in the commercial portfolio as the pipeline continues rebuilding nicely following the high level of closings experienced during the fourth quarter of 2012. Offsetting the growth in the commercial portfolio was a decrease in the residential portfolio due to high prepayment activity combined with management's ongoing decision to not retain long-term fixed rated mortgages on the balance sheet. Deposit balances increased during the second quarter, with core deposits now comprising 84.6% of total deposits. The cost of total deposits continued its decline, helping the Company mitigate the strong pressure on earning asset yields from the low rate environment.

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The following table illustrates key performance measures for the periods indicated, however the year to year comparison is somewhat affected by the loan fraud of $4.0 million, or $0.11 per share recorded in the second quarter of 2012.

	Three Months Ended June 30						Six Months Ended June 30
	2013			2012			2013			2012
	(Dollars in thousands, except per share data)
Net income	$	12,758		$	8,874		$	25,010		$	21,057
Net income on an operating basis	$	13,216		$	9,271		$	26,516		$	21,454
Noninterest income	$	16,692		$	14,983		$	32,414		$	28,893
Diluted earnings per share	$	0.56		$	0.41		$	1.09		$	0.97
Return on average assets on an operating basis	0.93		%	0.74		%	0.94		%	0.87		%
Return on common average equity on an operating basis	9.74		%	7.67		%	9.89		%	8.97		%
Net interest margin	3.57		%	3.80		%	3.58		%	3.81		%

The Company is focused on growing noninterest income as management continues to emphasize the importance of noninterest income in this prolonged low interest rate environment. The following chart shows the steady increase in noninterest income as a percentage of total revenue over the past five years.

The Company's focus on core checking accounts on both a personal and business level, as well as increased debit card usage, has led to increased interchange revenues. Deposit account fees have also increased, as has loan level derivative income. Investment management income also continues to be a large contributor to the noninterest income category as assets under administration have increased.

The net interest margin for the quarter decreased to 3.57%, down 1 basis point from the prior quarter. Although a decrease in the net interest margin was anticipated due to the prolonged low rate environment, it was countered slightly by the benefit of increased yields on purchased loans, as well as an improved balance sheet mix. Also, countering the pressure from this interest rate environment, the Company was successful in growing its interest earning assets, driven by its commercial loan portfolio, which grew by $86.7 million during the second quarter of 2013, or 11.2% on an annualized basis. The Company is focused on maintaining a relatively stable net interest margin while positioning itself to take advantage of future rate increases as noted in the chart below, which reflects the estimated impact on the Company's net interest income, assuming a static balance sheet, under the following four gradual (12 to 24 month) shifts in interest rates:

1.Down 100 basis points over 12 months (parallel yield curve shift)

2.Up 200 basis points over 12 months (parallel yield curve shift)

3.Up 400 basis points over 24 months (parallel yield curve shift)

4. Flat up 500 basis points over 12 months (asymmetrical yield curve shift with short-term rates rising

49

500 basis points and overall flatting of the yield curve)

As noted in the chart above, the Company is fundamentally positioned for a rising rate environment. The increase in market rates, combined with the Company's asset sensitive balance sheet, should continue to provide modest relief for the remainder of 2013. Management's approach to balance sheet strategy and the net interest margin continues to emphasize growth in the commercial portfolio, funding by core deposits, and continued disciplined asset quality. Management will work to ensure that asset generation is structured with a keen view toward interest-rate sensitivity and expects to avoid significant security purchases in this low rate environment. The following tables show the trends over the past five years in the Company's interest-earning assets and funding mixes based on these principles:

50

Asset quality remains strong, as net charge-offs decreased to $3.3 million during the first half of 2013, or 0.15% on an annualized basis of average loans, as compared to $10.0 million, or 0.52% annualized, for the first half of 2012. The prior year was negatively impacted by an isolated loan fraud of $4.0 million, inflating the prior year metrics. Accordingly, the provision for loan losses decreased to $4.4 million as compared to $10.1 million in the first six months of 2012. The allowance for loan losses as a percentage of loans was 1.17% and 1.15% as of June 30, 2013 and December 31, 2012, respectively. Nonperforming loans increased by $7.8 million to $36.5 million, or 0.81% of total loans at June 30, 2013, from $28.8 million, or 0.64% of total loans at March 31, 2013. The increase in nonperforming loans is partially driven by an increase in the home equity portfolio, relating to performing junior lien mortgages. While these loans are currently performing they are placed on nonaccrual as a result of delinquency with respect to the first position, which is held by other financial institutions. Delinquency as a percentage of loans remains low at 1.03% at June 30, 2013, an increase when compared to 0.82% at June 30, 2012.

2013 Outlook

Despite the industry-wide challenges of a modestly improving economy, increased competition, continued pressure on the net interest margin, management anticipates that its strategy to grow solid core banking relationships with existing customers, while continually adding new relationships in the attractive markets of Eastern Massachusetts and Rhode Island, will result in diluted earnings per share for 2013 in a range of $2.28 to $2.38, on an operating basis.

Non-GAAP Measures

When management assesses the Company’s financial performance for purposes of making day-to-day and strategic decisions, it does so based upon the performance of its core banking business, which is primarily derived from the combination of net interest income and noninterest or fee income, reduced by operating expenses, the provision for loan losses, and the impact of income taxes. The Company’s financial performance is determined in accordance with Generally Accepted Accounting Principles (“GAAP”) which sometimes includes gains or losses due to items that management believes are unrelated to its core banking business and will not have a material financial impact on operating results in future periods, such as gains or losses on the sales of securities, merger and acquisition expenses, and other items. Management, therefore, also computes the Company’s non-GAAP operating earnings, which excludes these items, to measure the strength of the Company’s core banking business and to identify trends that may to some extent be obscured by such gains or losses.

Management’s computation of the Company’s non-GAAP operating earnings information is set forth because management believes it may be useful for investors to have access to the same analytical tool used by management to evaluate the Company’s core operational performance so that investors may assess the Company’s overall financial health and identify business and performance trends that may be more difficult to identify and evaluate when noncore items are included. Management also believes that the computation of non-GAAP operating earnings may facilitate the comparison of the Company to other companies in the financial services industry.

Non-GAAP operating earnings should not be considered a substitute for GAAP results. An item which management deems to be noncore and excludes when computing non-GAAP operating earnings can be of substantial importance to the Company’s

51

results for any particular quarter or year. The Company’s non-GAAP operating earning information set forth is not necessarily comparable to non-GAAP information which may be presented by other companies.

The following tables summarizes the impact of noncore items recorded for the time periods indicated below and reconciles them in accordance with GAAP:

	Three Months Ended June 30
	Net Income				Diluted Earnings Per Share
	2013		2012		2013		2012
	(Dollars in thousands)
As reported (GAAP)
Net income available to common shareholders (GAAP)	$	12,758	$	8,874	$	0.56	$	0.41
Non-GAAP measures
Noninterest expense components
Merger and acquisition expenses, net of tax	458		397		0.02		0.02
Severance, net of tax	—		—		—		—
Total impact of noncore items	458		397		0.02		0.02
As adjusted (NON-GAAP)	$	13,216	$	9,271	$	0.58	$	0.43
	Six Months Ended June 30
	Net Income				Diluted Earnings Per Share
	2013		2012		2013		2012
	(Dollars in thousands)
As reported (GAAP)
Net income available to common shareholders (GAAP)	$	25,010	$	21,057	1.09		$	0.97
Non-GAAP measures
Noninterest expense components
Merger and acquisition expenses, net of tax	1,314		397		0.06		0.02
Severance, net of tax	192		—		0.01		—
Total impact of noncore items	1,506		397		0.07		0.02
As adjusted (NON-GAAP)	$	26,516	$	21,454	1.16		$	0.99

Critical Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. The Company believes that the Company’s most critical accounting policies are those which the Company’s financial condition depends upon, and which involve the most complex or subjective decisions or assessments.

There have been no material changes in critical accounting policies during the first six months of 2013. Please refer to the 2012 Form 10-K for a complete listing of critical accounting policies.

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FINANCIAL POSITION

Securities Portfolio The Company’s securities portfolio consists of securities available for sale and securities which management intends to hold until maturity. Securities increased by $21.5 million, or 4.2%, at June 30, 2013 as compared to December 31, 2012 due principal paydowns. The ratio of securities to total assets as of June 30, 2013 was 9.0%, compared to 8.8% at December 31, 2012.

The Company continually reviews investment securities for the presence of other-than-temporary impairment (“OTTI”). Further analysis of the Company’s OTTI can be found in Note 3 “Securities” within Notes to Consolidated Financial Statements included in Item 1 hereof.

Residential Mortgage Loan Sales The Company’s primary loan sale activity arises from the sale of government sponsored enterprise eligible residential mortgage loans to other financial institutions. During 2013 and 2012, the Bank originated residential loans with the intention of selling them in the secondary market. Loans may be sold with servicing rights released or with servicing rights retained. A mortgage servicing asset is recognized when a loan is sold with servicing rights retained. During the three and six months ended June 30, 2013 the Company sold $83.6 million and $187.5 million of mortgage loans compared to $76.2 million and $139.3 million for the three and six months ended June 30, 2012.

When a loan is sold, the Company enters into agreements that contain representations and warranties about the characteristics of the loans sold and their origination. The Company may be required to either repurchase mortgage loans or to indemnify the purchaser from losses if representations and warranties are breached. During the three and six months ended June 30, 2013 and 2012 the Company incurred an immaterial amount of losses on loans that were agreed to be repurchased. The Company has not at this time established a reserve for loan repurchases as it believes future material losses are not probable.

Forward sale contracts of mortgage loans, considered derivative instruments for accounting purposes, are utilized by the Company in its efforts to manage risk of loss associated with its mortgage loan commitments and mortgage loans held for sale. See Note 7, “Derivative and Hedging Activities” within Notes to Consolidated Financial statements included in Item 1 hereof for more information on mortgage loan commitments and forward sales agreements.

Loan Portfolio Management continues to focus on growth in the commercial and home equity lending categories, while placing less emphasis on the other lending categories. Management believes this emphasis is prudent, given the prevailing interest rate and economic environment, as well as strategic priorities. At June 30, 2013, the Bank’s loan portfolio remained relatively flat at $4.5 billion. Loans grew in the commercial portfolio by $125.2 million for the first half of 2013, or 8.2% on an annualized basis. Offsetting the growth in commercial, the residential portfolio decreased by $99.3 million in the first half of 2013, or 32.7% on an annualized basis, due to continued high prepayment activity combined with management's ongoing decision to not retain long-term fixed rate mortgages on the balance sheet.

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The Bank’s commercial and industrial portfolio has shown growth of 8.0% for the six months ended June 30, 2013. This portfolio is well-diversified with loans to various types of industries. The following pie chart shows the diversification of the commercial and industrial portfolio as of June 30, 2013:

	(Dollars in thousands)
Average loan size	$	212
Largest individual commercial and industrial loan	$	13,743
Commercial and industrial nonperforming loans/commercial and industrial loans	0.41		%

The Bank’s commercial real estate portfolio, inclusive of commercial construction, is the Bank’s largest loan type concentration and has grown by 3.1% for the six months ended June 30, 2013. This portfolio is also well-diversified with loans secured by a variety of property types, such as owner-occupied and nonowner-occupied commercial, retail, office, industrial, warehouse, industrial development bonds, and other special purpose properties, such as hotels, motels, nursing homes, restaurants, churches, recreational facilities, marinas, and golf courses. Commercial real estate also includes loans secured by certain residential-related property types including multi-family apartment buildings, residential development tracts and condominiums. The following pie chart shows the diversification of the commercial real estate portfolio as of June 30, 2013:

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	(Dollars in thousands)
Average loan size	$	721
Largest individual commercial real estate mortgage	$	18,000
Commercial real estate nonperforming loans/commercial real estate loans	0.45		%
Owner occupied commercial real estate loans/commercial real estate loans	17.9		%

In addition to the commercial portfolios, the Bank also originates both fixed-rate and adjustable-rate residential real estate loans as well as residential construction lending related to single-home residential development within the Bank's market area. The Bank also provides home equity loans and lines that may be made as a fixed rate term loan or under a variable rate revolving line of credit secured by a first or second mortgage on the borrower's residence or second home. Additionally, the Bank makes loans for a wide variety of other personal needs. Consumer loans primarily consist of installment loans and overdraft protections. The residential and consumer portfolios have decreased by $115.1 million for the six months ended June 30, 2013.

Asset Quality   The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this assessment, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (TDR).

DelinquencyThe Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. The Bank considers a loan to have defaulted when it reaches 90 days past due. The Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. Generally, the Bank requires that a delinquency notice be mailed to a borrower upon expiration of a grace period (typically no longer than 15 days beyond the due date). Reminder notices may be sent and telephone calls may be made prior to the expiration of the grace period. If the delinquent status is not resolved within a reasonable time frame following the mailing of a delinquency notice, the Bank’s personnel charged with managing its loan portfolios contact the borrower to ascertain the reasons for delinquency and the prospects for payment. Any subsequent actions taken to resolve the delinquency will depend upon the nature of the loan and the length of time that the loan has been delinquent. The borrower’s needs are considered as much as reasonably possible without jeopardizing the Bank’s position. A late charge is usually assessed on loans upon expiration of the grace period.

55

Nonaccrual Loans    As a general rule, within commercial real estate or home equity categories, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. As permitted by banking regulations, certain consumer loans past due 90 days or more continue to accrue interest. Certain commercial and real estate loans that are more than 90 days past due may be kept on an accruing status if the loans are well secured and in the process of collection. Additionally, a junior lien mortgage may be placed on nonaccrual as a result of delinquency with respect to the first position, which is held by another financial institution, while the loan in second position is currently performing. Income accruals are suspended on all nonaccrual loans and all previously accrued and uncollected interest is reversed against current income. A loan remains on nonaccrual status until it becomes current with respect to principal and interest (and in certain instances remains current for up to six months), when the loan is liquidated, or when the loan is determined to be uncollectible and is charged-off against the allowance for loan losses.

Troubled Debt RestructuringsIn the course of resolving problem loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid or cure a default. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include adjustments to interest rates, extensions of maturity, consumer loans where the borrower's obligations have been effectively discharged through Chapter 7 Bankruptcy and the borrower has not reaffirmed the debt to the Bank, and other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral. If such efforts by the Bank do not result in satisfactory performance, the loan is referred to legal counsel, at which time foreclosure proceedings are initiated. At any time prior to a sale of the property at foreclosure, the Bank may terminate foreclosure proceedings if the borrower is able to work-out a satisfactory payment plan.

It is the Bank’s policy to have any restructured loans which are on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Loans that are considered TDRs are classified as performing, unless they are on nonaccrual status or greater than 90 days delinquent. Loans classified as TDRs remain classified as such for the life of the loan, except in limited circumstances, when it may be determined that the borrower is performing under modified terms and the restructuring agreement specified an interest rate greater than or equal to an acceptable market rate for a comparable new loan at the time of the restructuring.

Purchased Credit Impaired Loans Purchased Credit Impaired (“PCI”) loans are acquired loans which had evidence of deterioration in credit quality since origination and for which it is probable that all contractually required payments will not be collected. The PCI loans are recorded at fair value without any carryover of the allowance for loan losses. The excess cash flows expected to be collected over the carrying amount of the loans, referred to as the "accretable yield", is accreted into interest income over the life of the loans using the effective yield method. Accordingly, PCI loans are not subject to classification as nonaccrual in the same manner as originated loans, rather they are generally considered to be accruing loans to the extent there is a reasonable expectation about the timing and amount of cash flows expected to be collected, however, PCI loans can be placed on nonaccrual in limited circumstances. The carrying amount of these purchased credit impaired loans was $27.7 as of June 30, 2013 as compared to $32.1 million as of December 31, 2012. See Note 4, "Loans, Allowance for Loan Losses and Credit Quality" within Notes to Consolidated Financial Statements included in Item 1 hereof for more information.

Nonperforming Assets    Nonperforming assets are comprised of nonperforming loans, nonperforming securities, other real estate owned (“OREO”), and other assets in possession. Nonperforming loans consist of nonaccrual loans and loans that are more than 90 days past due but still accruing interest.

Nonperforming securities consist of securities that are on nonaccrual status. The Company holds six collateralized debt obligation securities (“CDOs”) comprised of pools of trust preferred securities issued by banks and insurance companies, which are currently deferring interest payments on certain tranches within the bonds’ structures including the tranches held by the Company. The bonds are anticipated to continue to defer interest until cash flows are sufficient to satisfy certain collateralization levels designed to protect more senior tranches. As a result the Company has placed the six securities on nonaccrual status and has reversed any previously accrued income related to these securities.

OREO consists of real estate properties, which have served as collateral to secure loans, that are controlled or owned by the Bank. These properties are recorded at fair value less estimated costs to sell at the date control is established, resulting in a new cost basis. The amount by which the recorded investment in the loan exceeds the fair value (net of estimated costs to sell) of the foreclosed asset is charged to the allowance for loan losses. Subsequent declines in the fair value of the foreclosed asset below the new cost basis are recorded through the use of a valuation allowance. Subsequent increases in the fair value are recorded as

reductions in the allowance, but not below zero. All costs incurred thereafter in maintaining the property are charged to noninterest expense. In the event the real estate is utilized as a rental property, rental income and expenses are recorded as incurred and included in noninterest income and noninterest expense, respectively.

Other assets in possession primarily consist of foreclosed assets and other non real estate assets deemed to be in control of the Company.

The following table sets forth information regarding nonperforming assets held by the Bank at the dates indicated:

Table 1—Nonperforming Assets

	June 30, 2013			December 31, 2012			June 30, 2012
	(Dollars in thousands)
Loans Accounted for on a nonaccrual basis
Commercial and industrial	$	3,009		$	2,666		$	4,404
Commercial real estate	10,134			6,574			9,371
Small business	698			570			588
Residential real estate	12,496			11,472			9,939
Home equity	10,024			7,311			6,730
Other consumer	134			121			211
Total (1)	$	36,495		$	28,714		$	31,243
Loans past due 90 days or more but still accruing
Home equity	—			—			38
Other consumer	54			52			41
Total	$	54		$	52		$	79
Total nonperforming loans	$	36,549		$	28,766		$	31,322
Nonaccrual securities (2)	2,169			1,511			1,259
Other real estate owned	9,211			11,974			2,062
Other assets in possession	176			176			9,214
Total nonperforming assets	$	48,105		$	42,427		$	43,857
Nonperforming loans as a percent of gross loans	0.81		%	0.64		%	0.79		%
Nonperforming assets as a percent of total assets	0.82		%	0.74		%	0.86		%

(1) Inclusive of TDRs on nonaccrual of $9.8 million, $6.6 million, and $4.6 million, at June 30, 2013, December 31, 2012, and June 30, 2012, respectively.

(2) Amounts represent the fair value of six nonaccrual securities.

The following table shows the roll-forward of nonperforming assets for the periods indicated:

Table 2—Activity in Nonperforming Assets

	Three Months Ended						Six Months Ended
	June 30, 2013						June 30, 2013
	(Dollars in thousands)
Nonperforming assets beginning balance				$	46,815					$	42,427
New to nonperforming				11,907						22,150
Loans charged-off				(2,479		)				(4,053		)
Loans paid-off				(4,543		)				(6,945		)
Loans transferred to other real estate owned and foreclosed assets				(368		)				(1,139		)
Loans restored to accrual status				(1,087		)				(2,183		)
Change to other real estate owned
New to other real estate owned	$	368					$	1,139
Valuation write down	(167		)				(653		)
Sale of Other Real Estate Owned	(3,793		)				(4,711		)
Development of other real estate owned	1,158						1,462
Total change to other real estate owned	(2,434		)	(2,434		)	(2,763		)	(2,763		)
Change in fair value on nonaccrual securities				266						658
Other				28						(47		)
Nonperforming assets ending balance				$	48,105					$	48,105

The following table sets forth information regarding troubled debt restructured loans as of the dates indicated:

Table 3—Troubled Debt Restructurings

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Performing troubled debt restructurings	$	38,898		$	46,764
Nonaccrual troubled debt restructurings	9,777			6,554
Total	$	48,675		$	53,318
Performing troubled debt restructurings as a % of total loans	0.85		%	1.03		%
Nonaccrual troubled debt restructurings as a % of total loans	0.22		%	0.15		%
Total troubled debt restructurings as a % of total loans	1.07		%	1.18		%

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The following table shows the roll-forward of TDRs for the periods indicated:

Table 4—Activity in Troubled Debt Restructurings

	Three Months Ended June 30, 2013			Six Months Ended June 30, 2013
	(Dollars in thousands)
TDRs beginning balance	$	50,430		$	53,318
New to TDR status	1,782			3,267
Paydowns	(3,190		)	(7,234		)
Charge-offs	(347		)	(676		)
TDRs ending balance	$	48,675		$	48,675

The table below shows interest income on all nonaccrual loans and performing TDRs as of the dates indicated:

Table 5 - Interest Income on

Nonaccrual Loans and Troubled Debt Restructurings

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(Dollars in thousands)
The amount of gross interest income that would have been recorded if nonaccrual loans had been current in accordance with their original terms	$	467	$	352	$	855	$	790
The amount of interest income on those loans that was included in net income	$	605	$	828	$	1,128	$	1,481

A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Impairment is measured on a loan by loan basis for commercial and industrial, commercial real estate, commercial construction, and small business categories and for all loans identified as a troubled debt restructuring by comparing the loan’s value to either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. For impaired loans deemed collateral dependent, where impairment is measured using the fair value of the collateral, the Bank will either order a new appraisal or use another available source of collateral assessment such as a broker’s opinion of value to determine a reasonable estimate of the fair value of the collateral.

At June 30, 2013, impaired loans included all commercial and industrial loans, commercial real estate loans, commercial construction, and small business loans that are on nonaccrual status, TDRs, and other loans that have been categorized as impaired. Total impaired loans at June 30, 2013 and December 31, 2012 were $71.4 million and $66.7 million, respectively. For additional information regarding the Bank’s asset quality, including delinquent loans, nonaccruals, TDRs, and impaired loans, see Note 4, “Loans, Allowance for Loan Losses, and Credit Quality” within Notes to Consolidated Financial Statements included in Item 1 hereof.

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Potential problem loans are any loans which are not included in nonaccrual or nonperforming loans, where known information about possible credit problems of the borrowers causes management to have concerns as to the ability of such borrowers to comply with present loan repayment terms. The table below shows the potential problem commercial loans at the time periods indicated:

Table 6 - Potential Problem Commercial Loans

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Number of loan relationships	68		70
Aggregate outstanding balance	$	93,947	$	110,624

At June 30, 2013, these potential problem loans continued to perform with respect to payments. Management actively monitors these loans and strives to minimize any possible adverse impact to the Bank.

Allowance for Loan Losses The allowance for loan losses is maintained at a level that management considers adequate to provide for probable loan losses based upon evaluation of known and inherent risks in the loan portfolio. The allowance is increased by providing for loan losses through a charge to expense and by recoveries of loans previously charged-off and is reduced by loans being charged-off.

While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on increases in nonperforming loans, changes in economic conditions, or for other reasons. Additionally, various regulatory agencies, as an integral part of the Bank's examination process, periodically assess the adequacy of the allowance for loan losses and may require it to increase its provision for loan losses or recognize further loan charge-offs.

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The following table summarizes changes in the allowance for loan losses and other selected statistics for the periods presented:

Table 7—Summary of Changes in the Allowance for Loan Losses

	Three Months Ended
	June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
	(Dollars in thousands)
Average loans	$	4,540,997		$	4,495,804		$	4,303,254		$	4,008,238		$	3,947,785
Allowance for loan losses, beginning of period	$	51,906		$	51,834		$	49,746		$	48,403		$	48,340
Charged-off loans
Commercial and industrial	1,302			423			202			1,267			4,707
Commercial real estate	196			407			990			621			2,133
Commercial construction	—			—			—			—			—
Small business	276			145			212			98			136
Residential real estate	186			61			653			227			105
Home equity	257			277			672			365			1,391
Other consumer	260			261			325			247			296
Total charged-off loans	2,477			1,574			3,054			2,825			8,768
Recoveries on loans previously charged-off
Commercial and industrial	103			136			528			122			113
Commercial real estate	8			—			—			188			—
Commercial construction	—			—			—			—			—
Small business	37			39			15			21			46
Residential real estate	86			—			72			79			—
Home equity	30			21			26			36			18
Other consumer	183			150			151			116			154
Total recoveries	447			346			792			562			331
Net loans Charged-off
Commercial and industrial	1,199			287			(326		)	1,145			4,594
Commercial real estate	188			407			990			433			2,133
Commercial construction	—			—			—			—			—
Small business	239			106			197			77			90
Residential real estate	100			61			581			148			105
Home equity	227			256			646			329			1,373
Other consumer	77			111			174			131			142
Total net loans charged-off	2,030			1,228			2,262			2,263			8,437
Provision for loan losses	3,100			1,300			4,350			3,606			8,500
Total allowances for loan losses end of period	$	52,976		$	51,906		$	51,834		$	49,746		$	48,403
Net loans charged-off as a percent of average total loans (annualized)	0.18		%	0.11		%	0.21		%	0.22		%	0.86		%
Total allowance for loan losses as a percent of total loans	1.17		%	1.16		%	1.15		%	1.23		%	1.22		%
Total allowance for loan losses as a percent of nonperforming loans	144.95		%	156.86		%	180.19		%	160.05		%	154.53		%
Net loans charged-off as a percent of allowance for loan losses (annualized)	15.37		%	9.59		%	17.36		%	18.10		%	70.11		%
Recoveries as a percent of charge-offs	18.05		%	21.98		%	25.93		%	19.89		%	3.78		%

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For purposes of the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the table below. The allocation of the allowance for loan losses is made to each loan category using the analytical techniques and estimation methods described herein. While these amounts represent management’s best estimate of the distribution of probable losses at the evaluation dates, they are not necessarily indicative of either the categories in which actual losses may occur or the extent of such actual losses that may be recognized within each category. Each of these loan categories possess unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. The total allowance is available to absorb losses from any segment of the loan portfolio.

The following table sets forth the allocation of the allowance for loan losses by loan category at the dates indicated:

Table 8—Summary of Allocation of Allowance for Loan Losses

	June 30, 2013				December 31, 2012
	Allowance Amount		Percent of Loans In  Category To Total Loans		Allowance Amount		Percent of Loans In  Category To Total Loans
	(Dollars in thousands)
Commercial and industrial	$	14,325	16.4	%	$	13,461	15.2	%
Commercial real estate	23,029		47.5	%	22,598		46.9	%
Commercial construction	3,422		5.1	%	2,811		4.2	%
Small business	1,295		1.7	%	1,524		1.7	%
Residential real estate	2,959		11.3	%	2,930		13.6	%
Home equity	7,267		17.5	%	7,703		17.8	%
Other consumer	679		0.5	%	807		0.6	%
Total allowance for loan losses	$	52,976	100.0	%	$	51,834	100.0	%

To determine if a loan should be charged-off, all possible sources of repayment are analyzed. Possible sources of repayment include the potential for future cash flows, the value of the Bank’s collateral, and the strength of co-makers or guarantors. When available information confirms that specific loans or portions thereof are uncollectible, these amounts are promptly charged-off against the allowance for loan losses and any recoveries of such previously charged-off amounts are credited to the allowance.

Regardless of whether a loan is unsecured or collateralized, the Company charges off the amount of any confirmed loan loss in the period when the loans, or portions of loans, are deemed uncollectible. For troubled, collateral-dependent loans, loss-confirming events may include an appraisal or other valuation that reflects a shortfall between the value of the collateral and the book value of the loan or receivable, or a deficiency balance following the sale of the collateral.

For additional information regarding the Bank’s allowance for loan losses, see Note 4, “Loans, Allowance for Loan Losses, and Credit Quality” within Notes to Consolidated Financial Statements included in Item 1hereof.

Federal Home Loan Bank Stock The Bank held an investment in Federal Home Loan Bank (“FHLB”) of Boston of $38.7 million and $41.8 million at June 30, 2013 and December 31, 2012, respectively. The FHLB is a cooperative that provides services to its member banking institutions. The primary reason for the FHLB of Boston membership is to gain access to a reliable source of wholesale funding, particularly term funding, as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. The Company purchases FHLB stock proportional to the volume of funding received and views the purchases as a necessary long-term investment for the purposes of balance sheet liquidity and not for investment return.

Goodwill and Identifiable Intangible Assets Goodwill and identifiable intangible assets were $161.1 million and $162.1 million at June 30, 2013 and December 31, 2012, respectively.

The Company typically performs its annual goodwill impairment testing during the third quarter of the year, unless certain indicators suggest earlier testing to be warranted. The Company plans on performing the 2013 testing during the upcoming third quarter.

Cash Surrender Value of Life Insurance Policies The Bank holds life insurance policies for the purpose of offsetting its future obligations to its employees under its retirement and benefits plans. The cash surrender value of life insurance policies was

62

$98.9 million and $97.3 million at June 30, 2013 and December 31, 2012, respectively. The Bank recorded tax exempt income from the life insurance policies of $786,000 and $1.5 million for the three and six months ended June 30, 2013, respectively, an increase of 6.1% and 5.3%, respectively, compared to the year ago periods.

Deposits As of June 30, 2013, deposits increased by 2.9% to $4.7 billion when compared to $4.5 billion at December 31, 2012, with core deposits representing 84.6% of total deposits. Total cost of deposits was 0.23% for the quarter, reflecting management's continued emphasis on core deposits and profitable relationships.

The Bank also participates in the Certificate of Deposit Registry Service (“CDARS”) program, allowing the Bank to provide easy access to multi-million dollar FDIC deposit insurance protection on certificate of deposits investments for consumers, businesses and public entities. The economic downturn and subsequent flight to safety makes CDARS an attractive product for customers. In addition, the Bank may occasionally raise funds through brokered certificates of deposit. This channel allows the Bank to seek additional funding in potentially large quantities by attracting deposits from outside the Bank’s core market. At June 30, 2013 and December 31, 2012, the Company had $81.1 million and $96.0 million, respectively, of brokered deposits of which $57.3 million and $72.2 million, respectively, were CDARS.

Borrowings The Company’s borrowings consist of both short-term and long-term borrowings and provide the Bank with one of its primary sources of funding. The borrowings also serve the Bank by providing a contingent source of liquidity.

The Company’s borrowings consisted of the following as of the periods indicated:

Table 9—Borrowings

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Short-term borrowings - one year and under (1)
Federal Home Loan Bank and other borrowings (2)	$	150,305	$	175,245
Customer repurchase agreements	141,826		153,359
Total short-term borrowings	$	292,131	$	328,604
Long-term borrowings - over one year (1)
Federal Home Loan Bank borrowings	$	111,151	$	108,324
Wholesale repurchase agreements	50,000		50,000
Junior subordinated debentures:
Capital Trust V	51,547		51,547
Slades Ferry Trust I	10,310		10,310
Central Trust I	5,258		5,258
Central Trust II	6,903		7,012
Subordinated debentures	30,000		30,000
Total long-term borrowings	$	265,169	$	262,451
Total borrowings	$	557,300	$	591,055

(1) Classification is based upon duration at origination and not predicated upon remaining time to maturity.

(2) Includes a $12.0 million, at December 31, 2012, Parent Company outstanding line of credit.

As of June 30, 2013 and December 31, 2012, the Bank had $2.8 billion and $3.0 billion, respectively, of assets pledged as collateral against borrowings. These assets are primarily pledged to the FHLB of Boston, the Federal Reserve Bank of Boston, and serve as collateral for customer repurchase agreements.

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Capital Resources On June 20, 2013, the Company’s Board of Directors declared a cash dividend of $0.22 per share to stockholders of record as of the close of business on July 1, 2013. This dividend was paid on July 12, 2013.

The Federal Reserve, the FDIC, and other regulatory agencies have established capital guidelines for banks and bank holding companies. Risk-based capital guidelines issued by the federal regulatory agencies require banks to meet a minimum Tier 1 risk-based capital ratio of 4.0% and a total risk-based capital ratio of 8.0%. A minimum requirement of 4.0% Tier 1 leverage capital is also mandated. At June 30, 2013, the Company and the Bank exceeded the minimum requirements for Tier 1 risk-based, total risk-based capital, and Tier 1 leverage capital.

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The Company’s and the Bank’s actual capital amounts and ratios are also presented in the following table:

Table 10—Company and Bank's Capital Amounts and Ratios

	Actual				For Capital Adequacy Purposes					To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount			Ratio		Amount			Ratio
	June 30, 2013
	(Dollars in thousands)
Company (consolidated)
Total capital (to risk weighted assets)	$	560,859	12.49	%	359,347		≥	8.00	%	N/A			N/A
Tier 1 capital (to risk weighted assets)	477,118		10.62	%	179,673		≥	4.00	%	N/A			N/A
Tier 1 capital (to average assets)	477,118		8.56	%	222,914		≥	4.00	%	N/A			N/A
Bank
Total capital (to risk weighted assets)	$	548,969	12.23	%	$	359,189	≥	8.00	%	$	448,987	≥	10.00	%
Tier 1 capital (to risk weighted assets)	465,229		10.36	%	179,595		≥	4.00	%	269,392		≥	6.00	%
Tier 1 capital (to average assets)	465,229		8.35	%	222,961		≥	4.00	%	278,702		≥	5.00	%
	December 31, 2012
	(Dollars in thousands)
Company (consolidated)
Total capital (to risk weighted assets)	$	541,119	12.23	%	$	354,086	≥	8.00	%	N/A			N/A
Tier 1 capital (to risk weighted assets)	458,638		10.36	%	177,043		≥	4.00	%	N/A			N/A
Tier 1 capital (to average assets)	458,638		8.65	%	212,015		≥	4.00	%	N/A			N/A
Bank
Total capital (to risk weighted assets)	$	534,182	12.07	%	$	353,965	≥	8.00	%	$	442,456	≥	10.00	%
Tier 1 capital (to risk weighted assets)	451,701		10.21	%	176,983		≥	4.00	%	265,474		≥	6.00	%
Tier 1 capital (to average assets)	451,701		8.52	%	212,074		≥	4.00	%	265,093		≥	5.00	%

In July 2013, the U.S. federal banking agencies approved an interim final rule which consolidates and adopts, with revisions, the three Notices of Proposed Rulemaking (“NPR's”) that were previously issued to implement the Basel III capital standards, along with changes required by the Dodd-Frank Act. The Basel III standards are now scheduled to be phased-in beginning January 1, 2014 for advanced approaches FDIC-supervised institutions, and beginning on January 1, 2015 for all other institutions, including the Company.

The interim final rule will strengthen both the quality and quantity of risk-based capital for all banks, including placing greater emphasis on tier 1 common equity capital, and creates a new regulatory minimum capital level for common equity tier 1 ("CET1"). The new rules redefine regulatory capital, increase existing minimum amounts, and introduce a capital conservation buffer to be held in excess of minimum amounts. Additionally, the rules attempt to harmonize the agencies' rules for calculating risk-weighted assets to enhance risk sensitivity and address weaknesses identified over recent years, by incorporating certain international capital standards of the Basel Committee of Banking Supervision. The revisions to the originally issued NPRs do not change the current risk-weighting approach for residential mortgages, include an opt-out option from the recognition of accumulated other comprehensive income as regulatory capital, and grandfather the treatment of Trust Preferred Securities as regulatory capital. Based on preliminary assessments of the proposed framework, management believes that the Company will continue to exceed all estimated well-capitalized regulatory requirements over the course of the proposed phase-in period.

Investment Management As of June 30, 2013, the Rockland Trust Investment Management Group had assets under administration of $2.3 billion, representing approximately 4,266 trust, fiduciary, and agency accounts. At December 31, 2012, assets under administration were $2.2 billion, representing approximately 4,051 trust, fiduciary, and agency accounts. Included in these amounts as of June 30, 2013 and December 31, 2012 are assets under administration of $164.3 million and $139.8 million, respectively, relating to the Company’s registered investment advisor, Bright Rock Capital Management, LLC, which provides

65

institutional quality investment management services to institutional and high net worth clients. Revenue from the Investment Management Group amounted to $4.0 million and $7.5 million for the three and six months ended June 30, 2013,respectively compared to $3.4 million and $6.6 million for the three and six months ended June 30, 2012, respectively.

Additionally, for the three and six months ended June 30, 2013 retail investments and insurance revenue was $403,000 and $751,000 respectively, compared to $401,000 and $832,000 for the three and six months ended June 30, 2012, respectively. Retail investments and insurance includes revenue from LPL Financial and its affiliates, LPL Insurance Associates, Inc., Savings Bank Life Insurance of Massachusetts, and Smith Companies LTD, a division of Capitas Financial, LLC.

Mortgage Banking The Bank originates residential loans for both its portfolio and with the intention of selling them in the secondary market. The Bank’s mortgage banking income consists primarily of revenue from premiums received on loans sold with servicing released, origination fees, and gains and losses on sold mortgages less related commission expense. The gains and losses resulting from the sales of loans with servicing retained are adjusted to recognize the present value of future servicing fee income over the estimated lives of the related loans. The following table shows the total residential loans that were closed and the amounts which were held in the portfolio and sold or held for sale in the secondary market during the periods indicated:

Table 11—Closed Residential Real Estate Loans

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(Dollars in thousands)
Held in portfolio	$	8,109	$	19,485	$	12,147	$	32,590
Sold/held for sale in secondary market	77,381		76,217		171,464		141,870
Total closed loans	$	85,490	$	95,702	183,611		174,460

Included in mortgage banking income is the impact of the Bank’s mortgage servicing assets. Servicing assets are recognized as separate assets when rights are acquired through sale of loans with servicing rights retained. The principal balance of loans serviced by the Bank on behalf of investors amounted to $212.8 million at June 30, 2013 and $198.8 million at December 31, 2012. Upon sale, the mortgage servicing asset is established, which represents the then current estimated fair value based on market prices for comparable mortgage servicing contracts, when available, or alternatively is based on a valuation model that calculates the present value of estimated future net servicing income. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, an inflation rate, ancillary income, prepayment speeds and default rates and losses. Impairment is determined by stratifying the rights based on predominant characteristics, such as interest rate, loan type and investor type. Impairment is recognized through a valuation allowance, to the extent that fair value is less than the capitalized amount. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the allowance may be recorded as an increase to income. Servicing rights are recorded in other assets in the consolidated balance sheets, are amortized in proportion to and over the period of estimated net servicing income, and are assessed for impairment based on fair value at each reporting date. The following table shows the adjusted cost of the servicing rights associated with these loans and the changes for the periods indicated:

Table 12—Mortgage Servicing Asset

	Three Months Ended June 30						Six Months Ended June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Balance at beginning of period	$	1,014		$	1,034		$	899		$	1,098
Additions	171			48			348			77
Amortization	(106		)	(132		)	(230		)	(256		)
Change in valuation allowance	185			(46		)	247			(15		)
Balance at end of period	$	1,264		$	904		$	1,264		$	904

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RESULTS OF OPERATIONS

The Company’s results of operations are largely dependent on net interest income, which is the difference between the interest earned on loans and securities and the interest paid on deposits and borrowings. The results of operations are also affected by the level of income/fees from loans, deposits, mortgage banking and investment management, as well as the level of operating expenses, provision for loan losses, provision for income taxes, and the relative levels of interest rates and economic activity. The following table provides a summary of results of operations:

Table 13—Summary of Results of Operations

	Three Months Ended June 30						Six Months Ended June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Net Income	$	12,758		$	8,874		$	25,010		$	21,057
Diluted earnings per share	$	0.56		$	0.41		$	1.09		$	0.97
Return on average assets	0.89		%	0.71		%	0.89		%	0.86		%
Return on average equity	9.40		%	7.34		%	9.33		%	8.81		%
Net interest margin	3.57		%	3.80		%	3.58		%	3.81		%

The variances between these periods are impacted by the Central Bancorp, Inc. ("Central") acquisition which took place in the fourth quarter of 2012.

Net Interest Income The amount of net interest income is affected by changes in interest rates and by the volume and mix of interest earning assets and interest bearing liabilities.

On a fully tax equivalent basis, net interest income for the second quarter of 2013 increased $3.0 million, or 6.9%, to $45.9 million, when compared to the second quarter of 2012. The Company’s net interest margin was 3.57% for the quarter ended June 30, 2013 as compared to 3.80% for the quarter ended June 30, 2012. The Company’s interest rate spread was 3.42% and 3.63% for the second quarters of 2013 and 2012, respectively. The decline in the net interest margin is primarily the result of assets re-pricing in a lower rate environment without the ability to fully offset this impact through further reductions in funding costs.

The following tables present the Company’s daily average balances, net interest income, interest rate spread, and net interest margin for the three and six months ending June 30, 2013 and 2012. For purposes of the table and the following discussion, income from interest-earning assets and net interest income are presented on a fully-taxable equivalent basis by adjusting income and yields earned on tax-exempt interest received on securities and loans, to make them equivalent to income and yields on fully-taxable earning assets. The fully-taxable equivalent ("FTE") was calculated using the blended federal and state statutory tax rate.

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Table 14—Average Balance, Interest Earned/Paid & Average Yields

	Three Months Ended June 30
	2013						2012
	Average Balance		Interest Earned/ Paid		Yield/ Rate		Average Balance		Interest Earned/ Paid		Yield/ Rate
	(Dollars in thousands)
Interest-earning assets
Interest earning deposits with banks, federal funds sold, and short term investments	$	34,379	$	21	0.25	%	$	30,890	$	19	0.25	%
Securities
Taxable investment securities	533,823		3,506		2.63	%	544,822		4,415		3.26	%
Nontaxable investment securities (1)	916		18		7.88	%	1,938		39		8.09	%
Total securities	534,739		3,524		2.64	%	546,760		4,454		3.28	%
Loans held for sale	35,945		237		2.64	%	20,079		156		3.12	%
Loans (2)
Commercial and industrial	735,517		7,338		4.00	%	620,364		6,294		4.08	%
Commercial real estate (1)	2,149,662		24,242		4.52	%	1,896,941		22,973		4.87	%
Commercial construction	224,453		2,307		4.12	%	149,627		1,578		4.24	%
Small business	77,747		1,092		5.63	%	80,324		1,132		5.67	%
Total commercial	3,187,379		34,979		4.40	%	2,747,256		31,977		4.68	%
Residential real estate	531,322		5,338		4.03	%	393,377		4,267		4.36	%
Residential construction	5,816		51		3.52	%	15,041		161		4.31	%
Home equity	793,381		7,069		3.57	%	757,850		6,939		3.68	%
Total consumer real estate	1,330,519		12,458		3.76	%	1,166,268		11,367		3.92	%
Other consumer	23,099		517		8.98	%	34,261		728		8.55	%
Total loans	4,540,997		47,954		4.24	%	3,947,785		44,072		4.49	%
Total interest-earning assets	$	5,146,060	$	51,736	4.03	%	$	4,545,514	$	48,701	4.31	%
Cash and due from banks	131,214						63,703
Federal Home Loan Bank stock	38,674						33,564
Other assets	405,721						362,746
Total assets	$	5,721,669					$	5,005,527
Interest-bearing liabilities
Deposits
Savings and interest checking accounts	$	1,681,666	$	674	0.16	%	$	1,482,889	$	687	0.19	%
Money market	873,412		550		0.25	%	799,831		621		0.31	%
Time deposits	722,486		1,319		0.73	%	627,250		1,379		0.88	%
Total interest-bearing deposits	$	3,277,564	$	2,543	0.31	%	$	2,909,970	$	2,687	0.37	%
Borrowings
Federal Home Loan Bank and other borrowings	$	306,291	$	1,453	1.90	%	$	219,846	$	1,280	2.34	%
Wholesale repurchase agreements	50,000		289		2.32	%	50,000		289		2.32	%
Customer repurchase agreements	135,107		45		0.13	%	145,963		83		0.23	%
Junior subordinated debentures	74,045		1,009		5.47	%	61,857		918		5.97	%

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Subordinated debentures	30,000		541		7.23	%	30,000		541		7.25	%
Total borrowings	$	595,443	$	3,337	2.25	%	$	507,666	$	3,111	2.46	%
Total interest-bearing liabilities	$	3,873,007	$	5,880	0.61	%	$	3,417,636	$	5,798	0.68	%
Demand deposits	1,227,294						1,023,048
Other liabilities	77,177						78,430
Total liabilities	$	5,177,478					$	4,519,114
Stockholders' equity	544,191						486,413
Total liabilities and stockholders' equity	$	5,721,669					$	5,005,527
Net interest income (1)			$	45,856					$	42,903
Interest rate spread (3)					3.42	%					3.63	%
Net interest margin (4)					3.57	%					3.80	%
Supplemental information
Total deposits, including demand deposits	$	4,504,858	$	2,543			$	3,933,018	$	2,687
Cost of total deposits					0.23	%					0.27	%
Total funding liabilities, including demand deposits	$	5,100,301	$	5,880			$	4,440,684	$	5,798
Cost of total funding liabilities					0.46	%					0.53	%

(1) The total amount of adjustment to present interest income and yield on a FTE basis is $241,000 and $275,000 for the three months ended June 30, 2013 and 2012, respectively. The FTE adjustment relates to nontaxable investment securities of $7,000 and $16,000 and the nontaxable industrial development bonds recorded within commercial real estate of $234,000 and $259,000, for the three months ended June 30, 2013 and 2012, respectively.

(2) Average nonaccruing loans are included in loans.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

Table 15—Average Balance, Interest Earned/Paid & Average Yields

	Six Months Ended June 30
	2013						2012
	Average Balance		Interest Earned/ Paid		Yield/ Rate		Average Balance		Interest Earned/ Paid		Yield/ Rate
	(Dollars in Thousands)
Interest-earning assets
Interest earning deposits with banks, federal funds sold, and short-term investments	$	43,712	$	55	0.25	%	$	42,059	$	51	0.24	%
Securities
Trading assets	—		—		—		2,745		38		2.78	%
Taxable investment securities	528,715		7,035		2.68	%	537,572		8,904		3.33	%
Nontaxable investment securities (1)	916		37		8.15	%	2,216		88		7.99	%
Total securities	529,631		7,072		2.69	%	542,533		9,030		3.35	%
Loans held for sale	38,901		505		2.62	%	18,634		286		3.09	%
Loans (2)
Commercial and industrial	714,517		14,176		4.00	%	599,726		12,196		4.09	%
Commercial real estate (1)	2,135,820		47,968		4.53	%	1,872,531		45,706		4.91	%
Commercial construction	211,947		4,323		4.11	%	146,178		3,121		4.29	%
Small business	77,717		2,152		5.58	%	79,515		2,268		5.74	%
Total commercial	3,140,001		68,619		4.41	%	2,697,950		63,291		4.72	%
Residential real estate	551,904		11,175		4.08	%	401,991		8,733		4.37	%

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Residential construction	6,853		132		3.88	%	13,331		291		4.39	%
Home equity	795,282		14,163		3.59	%	737,735		13,599		3.71	%
Total consumer real estate	1,354,039		25,470		3.79	%	1,153,057		22,623		3.95	%
Other consumer	24,485		1,081		8.90	%	36,479		1,500		8.27	%
Total loans	4,518,525		95,170		4.25	%	3,887,486		87,414		4.52	%
Total interest-earning assets	$	5,130,769	$	102,802	4.04	%	$	4,490,712	$	96,781	4.33	%
Cash and due from banks	100,106						60,965
Federal home loan bank stock	39,853						34,420
Other assets	413,055						365,073
Total assets	$	5,683,783					$	4,951,170
Interest-bearing liabilities
Deposits
Savings and interest checking accounts	$	1,647,222	$	1,380	0.17	%	$	1,453,672	$	1,384	0.19	%
Money market	870,922		1,129		0.26	%	784,861		1,260		0.32	%
Time deposits	740,396		2,700		0.74	%	626,864		2,782		0.89	%
Total interest-bearing deposits	$	3,258,540	$	5,209	0.32	%	$	2,865,397	$	5,426	0.38	%
Borrowings
Federal home loan bank and other borrowings	$	292,849	$	2,872	1.98	%	$	223,105	$	2,624	2.37	%
Wholesale repurchase agreements	50,000		574		2.32	%	50,000		578		2.32	%
Customer repurchase agreements	141,501		94		0.13	%	152,226		193		0.25	%
Junior subordinated debentures	74,074		2,009		5.47	%	61,857		1,838		5.98	%
Subordinated debentures	30,000		1,080		7.26	%	30,000		1,083		7.26	%
Total borrowings	$	588,424	$	6,629	2.27	%	$	517,188	$	6,316	2.46	%
Total interest-bearing liabilities	$	3,846,964	$	11,838	0.62	%	$	3,382,585	$	11,742	0.70	%
Demand Deposits	1,214,126						1,004,251
Other liabilities	81,945						83,516
Total liabilities	$	5,143,035					$	4,470,352
Stockholders' equity	540,748						480,818
Total liabilities and stockholders' equity	$	5,683,783					$	4,951,170
Net interest income (1)			$	90,964					$	85,039
Interest rate spread (3)					3.42	%					3.64	%
Net interest margin (4)					3.58	%					3.81	%
Supplemental information
Total deposit, including demand deposits	$	4,472,666	$	5,209			$	3,869,648	$	5,426
Cost of total deposits					0.23	%					0.28	%
Total funding liabilities, including demand deposits	$	5,061,090	$	11,838			$	4,386,836	$	11,742
Cost of total funding liabilities					0.47	%					0.54	%

(1) The total amount of adjustment to present interest income and yield on a FTE basis is $486,000 and $559,000 for the six months ended June 30, 2013 and 2012, respectively. The FTE adjustment relates to nontaxable investment securities of $15,000 and 36,000 and the nontaxable industrial development bonds recorded within commercial real estate of $471,000 and $523,000 for the six months ended June 30, 2013 and 2012, respectively.

(2) Average nonaccruing loans are included in loans.

(3) Interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(4) Net interest margin represents annualized net interest income as a percentage of average interest-earning assets.

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The following table presents certain information on a fully tax-equivalent basis regarding changes in the Company’s interest income and interest expense for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes attributable to: (1) changes in rate (change in rate multiplied by old volume), (2) changes in volume (change in volume multiplied by old rate), and (3) changes in volume/rate (change in volume multiplied by change in rate) which is allocated to the change due to rate column:

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Table 16—Volume Rate Analysis

	Three Months Ended June 30									Six Months Ended June 30
	2013 Compared To 2012									2013 Compared To 2012
	Change Due to Rate (1)			Change Due to Volume			Total Change			Change Due to Rate (1)			Change Due to Volume			Total Change
	(Dollars in thousands)
Income on interest-earning assets
Interest earning deposit, federal funds sold and short term investments	$	—		$	2		$	2		$	2		$	2		$	4
Securities
Trading assets	—			—			—			—			(38		)	(38		)
Taxable securities	(820		)	(89		)	(909		)	(1,722		)	(147		)	(1,869		)
Nontaxable securities (2)	—			(21		)	(21		)	1			(52		)	(51		)
Total securities							(930		)							(1,958		)
Loans held for sale	(42		)	123			81			(92		)	311			219
Loans
Commercial and industrial	(124		)	1,168			1,044			(354		)	2,334			1,980
Commercial real estate (2)	(1,792		)	3,061			1,269			(4,164		)	6,426			2,262
Commercial construction	(60		)	789			729			(202		)	1,404			1,202
Small business	(4		)	(36		)	(40		)	(65		)	(51		)	(116		)
Total commercial							3,002									5,328
Residential real estate	(425		)	1,496			1,071			(815		)	3,257			2,442
Residential construction	(11		)	(99		)	(110		)	(18		)	(141		)	(159		)
Home equity	(195		)	325			130			(497		)	1,061			564
Total consumer real estate							1,091									2,847
Other consumer	26			(237		)	(211		)	74			(493		)	(419		)
Total loans (2)(3)							3,882									7,756
Total income of interest-earning assets							3,035									6,021
Expense of interest-bearing liabilities
Deposits
Savings and interest checking accounts	$	(105	)	$	92		$	(13	)	$	(188	)	$	184		$	(4	)
Money market	(128		)	57			(71		)	(269		)	138			(131		)
Time certificates of deposits	(269		)	209			(60		)	(586		)	504			(82		)
Total interest bearing deposits							(144		)							(217		)
Borrowings
Federal Home Loan Bank and other borrowings	(330		)	503			173			(572		)	820			248
Wholesale repurchase agreements	—			—			—			(4		)	—			(4		)
Customer repurchase agreements	(32		)	(6		)	(38		)	(85		)	(14		)	(99		)
Junior subordinated debentures	(90		)	181			91			(192		)	363			171
Subordinated debt	—			—			—			(3		)	—			(3		)
Total borrowings							226									313
Total expense of interest-bearing liabilities							82									96
Change in net interest income							$	2,953								$	5,925

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(1) The changes for each category of interest income and expense are divided between the portion of change attributable to the variance in volume and the portion of the change attributable to the variances in rate for that category. The unallocated change in rate or volume variance has been allocated to the rate variances.

(2) The total amount of adjustment to present interest income and yield on a FTE basis is $241,000 and $275,000 for the three months ended June 30, 2013 and 2012, respectively, and $486,000 and $559,000 for the six months ended June 30, 2013 and 2012, respectively. The FTE adjustment relates to nontaxable investment securities of $7,000 and $16,000 and the nontaxable industrial development bonds recorded within commercial real estate of $234,000 and $259,000, for the three months ended June 30, 2013 and 2012, respectively. The FTE adjustment relates to nontaxable investment securities of $15,000 and $36,000 and the nontaxable industrial development bonds recorded within commercial real estate of $471,000 and $523,000, for the six months ended June 30, 2013 and 2012, respectively.

(3) Loans include portfolio loans and nonaccrual loans, however unpaid interest on nonaccrual loans has not been included for purposes of determining interest income.

Provision For Loan Losses The provision for loan losses represents the charge to expense that is required to maintain an adequate level of allowance for loan losses. The provision for loan losses totaled $3.1 million and $4.4 million for the three and six months ended June 30, 2013, compared with $8.5 million and $10.1 million for the comparable year-ago period. The Company’s allowance for loan losses, as a percentage of total loans, was 1.17% at June 30, 2013, as compared to 1.15% at December 31, 2012 and 1.22% at June 30, 2012. For the three and six months endedJune 30, 2013, net loan charge-offs totaled $2.0 million and $3.3 million, a decrease of $6.4 million and $6.7 million from the year ago comparative period. The fluctuations in the provision and net charge offs from the year ago periods are mainly driven by a $4.0 million fraud related loan loss that was recognized in the second quarter of 2012. Aside from the prior year fraud loss, the decrease is also a result of an improved economic outlook.

Regional and local general economic conditions continued to show improvement during the first half of 2013, as measured in terms of employment levels, statewide economic activity, and other regional economic indicators. Local residential real estate market fundamentals continued to improve during the second quarter of 2013 characterized by a higher level of home sales, lower inventory levels, and higher prices compared to the same period in 2012. Additionally, foreclosure activity continued to decline during the first six months of 2013. Regional commercial real estate market conditions were improved during the first half of 2013 in most sub-markets, experiencing improving vacancy, absorption, and leasing rates; however, some lagging sub-markets remained stagnant. Leading economic indicators signal continued economic improvement through the second half of 2013; however, economic uncertainty persists, both domestically and abroad.

Management’s periodic evaluation of the adequacy of the allowance for loan losses considers past loan loss experience, known and inherent risks in the loan portfolio, adverse situations which may affect the borrowers’ ability to repay, the estimated value of the underlying collateral, if any, and current economic conditions. Substantial portions of the Bank’s loans are secured by real estate in Massachusetts and Rhode Island. Accordingly, the ultimate collectability of a substantial portion of the Bank’s loan portfolio is susceptible to changes in property values within those states.

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Noninterest Income The following table sets forth information regarding noninterest income for the periods shown:

Table 17—Noninterest Income - Three and Six Months Ended

	Three Months Ended
	June 30				Change
	2013		2012		Amount			%
	(Dollars in thousands)
Deposit account fees	$	4,343	$	3,923	$	420		10.71	%
Interchange and ATM fees	2,761		2,399		362			15.09	%
Investment management	4,357		3,827		530			13.85	%
Mortgage banking	1,669		1,463		206			14.08	%
Increase in cash surrender value of life insurance policies	786		741		45			6.07	%
Loan level derivative income	816		1,371		(555		)	(40.48	)%
Other noninterest income	1,960		1,259		701			55.68	%
Total	$	16,692	$	14,983	$	1,709		11.41	%
	Six Months Ended
	June 30				Change
	2013		2012		Amount			%
	(Dollars in thousands)
Deposit account fees	$	8,559	$	7,812	$	747		9.56	%
Interchange and ATM fees	5,089		4,767		322			6.75	%
Investment management	8,242		7,390		852			11.53	%
Mortgage banking	3,951		2,793		1,158			41.46	%
Increase in cash surrender value of life insurance policies	1,531		1,454		77			5.30	%
Loan level derivative income	1,348		1,699		(351		)	(20.66	)%
Other noninterest income	3,694		2,978		716			24.04	%
Total	$	32,414	$	28,893	$	3,521		12.19	%

Noninterest income amounted to $16.7 million and $32.4 million during the three and six months ended June 30, 2013, respectively, a $1.7 million, or 11.4%, increase and a $3.5 million, or 12.2%, increase, respectively, from the same periods in the prior year. Fluctuations in these categories shown in the preceding table are noted below:

Deposit account fees increased for both periods primarily due to increased overdraft fees.

Interchange and ATM fees for both periods increased due to the Company's focus on core checking accounts and increased debit card usage.

Investment management revenue increase is mainly due to an increase in assets under administration, which were $2.3 billion at June 30, 2013, an increase of $255.9 million, or 12.8%, as compared to the same period in the prior year. The increases for both periods are due to the general increases in the stock market and additional asset flows from new and existing clients.

Loan level derivative income decreased driven by a lower utilization of the loan level derivative program by the Company's commercial customers in 2013.

Other noninterest income increased by $701,000, or 55.7%, and increased by $716,000, or 24.0% for the three and six months ended June 30, 2013, respectively. The increases are mainly due to the gain on sale of other real estate owned which increased by $253,000 and $495,000 for the three ands six month periods, respectively, and asset based lending fee income which increased by $106,000 and $196,000 for the three and six months ended June 30, 2013, respectively.

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Noninterest Expense The following table sets forth information regarding non-interest expense for the periods shown:

Table 18—Noninterest Expense - Three and Six Months Ended

	Three Months Ended
	June 30				Change
	2013		2012		Amount			%
	(Dollars in thousands)
Salaries and employee benefits	$	21,594	$	19,775	$	1,819		9.20	%
Occupancy and equipment expense	4,919		4,234		$	685		16.18	%
Advertising expense	1,479		1,473		$	6		0.41	%
Data processing & facilities management	1,201		1,099		$	102		9.28	%
FDIC Assessment	934		830		$	104		12.53	%
Debit card expense	773		637		$	136		21.35	%
Merger and acquisition expense	754		672		$	82		12.20	%
Mortgage operations expense	715		60		$	655		1,091.67	%
Consulting expense	666		583		$	83		14.24	%
Telecommunication expense	548		666		$	(118	)	(17.72	)%
Other noninterest expenses	8,581		6,970		$	1,611		23.11	%
Total	$	42,164	$	36,999	$	5,165		13.96	%
	Six Months Ended
	June 30				Change
	2013		2012		Amount			%
	(Dollars in thousands)
Salaries and employee benefits	$	44,309	$	41,211	$	3,098		7.52	%
Occupancy and equipment expense	10,169		8,534		1,635			19.16	%
Advertising expense	2,652		2,210		442			20.00	%
Data processing & facilities management	2,385		2,274		111			4.88	%
FDIC assessment	1,755		1,579		176			11.15	%
Debit card expense	1,443		1,196		247			20.65	%
Merger and acquisition expense	2,099		672		1,427			212.35	%
Mortgage operations expense	1,059		102		957			938.24	%
Consulting expenses	1,377		1,209		168			13.90	%
Telecommunication expense	1,203		1,284		(81		)	(6.31	)%
Other noninterest expenses	16,632		14,085		2,547			18.08	%
Total	$	85,083	$	74,356	$	10,727		14.43	%

Noninterest expense increased by $5.2 million, or 14.0%, and $10.7 million, or 14.4%, during the three and six months ended June 30, 2013, respectively, as compared to the same period in the prior year. Fluctuations in these categories shown in the preceding table are noted below:

Salaries and employee benefits increased, attributable to salary and incentive increases and the inclusion of Central's employee base following the acquisition of Central, offset somewhat by a decrease in the pension expense.

Occupancy and equipment expense increased by $685,000, or 16.2%, due to the acquired Central facilities combined with an increase snow removal costs incurred in 2013.

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Merger and acquisition expense increased compared to the prior year periods and relates to the Central and Mayflower acquisitions. As previously announced the Company has reached a definitive agreement to acquire Mayflower Bancorp, Inc. which is expected to close in the fourth quarter of 2013.

Mortgage operations expense increased due to the Company's transition to an outsourced provider in 2013.

Other noninterest expense increased by $1.6 million, or 23.1%, for the three months ended June 30, 2013, driven primarily by increases in other losses and charge-offs of $366,000, legal fees of $294,000, foreclosure expenses of $178,000, exams and audit fees of $175,000, internet banking expense of $136,000, and recruitment expense of $121,000. The other noninterest expense increased by $2.5 million, or 18.1%, during the six months ended June 30, 2013, due to an increase of; OREO valuation allowances of $454,000, internet banking expense of $326,000 due to the Company's conversion to a new platform, software maintenance of $303,000, other losses and charge-offs of $268,000, and intangible amortization of $249,000.

Income Taxes The tax effect of all income and expense transactions is recognized by the Company in each year’s consolidated statements of income, regardless of the year in which the transactions are reported for income tax purposes. The following table sets forth information regarding the Company’s tax provision and applicable tax rates for the periods indicated:

Table 19 - Tax Provision and Applicable Tax Rates

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Combined federal and state income tax provisions	$	4,285		$	3,238		$	8,399		$	7,860
Effective income tax rates	25.14		%	26.73		%	25.14		%	27.18		%
Blended federal and state statutory tax rate	40.85		%	40.85		%	40.85		%	40.85		%

The effective income tax rates are lower than the blended statutory tax rates, due to certain tax preference assets such as life insurance policies and tax exempt bonds, as well as federal tax credits recognized primarily in connection with the New Markets Tax Credit (“NMTC”) program.

As of June 30, 2013, the Company has been awarded a total of $191.0 million in tax credit allocation authority under the federal New Markets Tax Credit Program. Tax credits are eligible to be recognized over a seven year period totaling 39.0% of the total award, as capital is invested into a subsidiary which will lend to qualifying businesses in low income communities. The Company anticipates investing $44.6 million in 2013 which will bring the entire investment to $191.0 million by the end of 2013 and, accordingly, recognizing tax credits totaling $74.5 million. The following table details the tax credit recognition by year associated with this program:

Table 20—New Markets Tax Credit Recognition Schedule

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Investment		Prior Years		2013		2014		2015		2016		2017		Thereafter		Total Credits
		(Dollars in thousands)
2004	$15.0 M	$	5,850	$	—	$	—	$	—	$	—	$	—	$	—	$	5,850
2005	15.0 M	5,850		—		—		—		—		—		—		5,850
2007	38.2 M	12,606		2,292		—		—		—		—		—		14,898
2008	6.8 M	1,836		408		408		—		—		—		—		2,652
2009	10.0 M	2,100		600		600		600		—		—		—		3,900
2010	40.0 M	6,000		2,400		2,400		2,400		2,400		—		—		15,600
2012	21.4 M	1,071		1,071		1,071		1,285		1,285		1,285		1,285		8,353
2013*	44.6 M	—		2,229		2,229		2,229		2,675		2,675		5,350		17,387
Total	191.0 M	$	35,313	$	9,000	$	6,708	$	6,514	$	6,360	$	3,960	$	6,635	$	74,490

* $14.8 million has been invested through June 30, 2013 and $29.8 million is anticipated to be invested in the second half of 2013.

Deferred tax assets generally represent items that can be used as a tax deduction or credit in future income tax returns, for which a financial statement tax benefit has already been recognized. The realization of the net deferred tax asset generally depends upon future levels of taxable income and the existence of prior years’ taxable income to which “carry-back” refund claims could be made. If current available information raises doubt as to the realization of the deferred tax assets, a valuation allowance is established. Deferred tax assets are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect of a change in enacted tax rates on the deferred tax assets is recognized in income in the period that includes the enactment date. The Company had no recorded tax valuation allowance as of June 30, 2013 and 2012.

Risk Management

The Company’s Board of Directors and Executive Management have identified significant risk categories which affect the Company. The risk categories include: credit risk, operations risk, compliance risk, reputation risk, strategic risk, market risk and liquidity risk. The Board of Directors has approved a Risk Management Policy that addresses each category of risk. The Chief Executive Officer, Chief Financial Officer, Chief Technology, Residential Lending and Operations Officer, Executive Vice President of Commercial Lending and other members of management provide regular reports to the Board of Directors, identifying key risk issues and plans to address these issues. The Board of Directors will ensure the level of risk is within limits established by both the Risk Management Policy and other previously approved policies.

Credit Risk Credit risk represents the possibility that customers may not repay loans or other contractual obligations according to their terms due to a decline in their credit quality. In some cases, the collateral securing the payment of the loans may be sufficient to assure repayment, but in other cases the Company may experience significant credit losses which could have an adverse effect on its operating results. The Company makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans. For further discussion regarding the credit risk and the credit quality of the Company’s loan portfolio, see Note 4, “Loans, Allowance for Loan Losses, and Credit Quality” within Notes to Consolidated Financial Statements included in Item 1 hereof.

Operations Risk  Operations risk is the risk of loss due to human behavior, inadequate or failed internal systems and controls, and external influences such as market conditions, fraudulent activities, disasters and security risks. The Company continuously strives to strengthen its system of internal controls, operating processes and employee awareness. The Bank has an Operations Risk Management Committee that meets monthly and reports to the Board quarterly or more frequently if events occur that warrant reporting to the Board more frequently. The committee is chaired by the Chief Technology and Operations Officer and members of the Committee include representatives from Audit, Finance, Technology, Compliance, Information Security and periodic attendance from business units throughout the organization. An operations risk management dashboard is updated quarterly and reviewed with the Board.

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Compliance Risk Compliance risk represents the risk of regulatory sanctions or financial loss resulting from the Company’s failure to comply with rules and regulations issued by the various banking agencies, the U.S. Securities and Exchange Commission, and the NASDAQ Stock Market, and standards of good banking practice. Activities which may expose the Company to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy and data protection, adherence to all applicable laws and regulations, community reinvestment initiatives and employment and tax matters. Compliance risk is mitigated through the use of written policies and procedures, training of staff, and monitoring of activities for adherence to those procedures.

Strategic and Reputation Risk Strategic and reputation risk represent the risk of loss due to impairment of reputation, failure to fully develop and execute business plans, and failure to assess current and new opportunities in business, markets and products. Mitigation of strategic and/or reputational risk is achieved through robust annual strategic planning and frequent executive strategic reviews, ongoing competitive and technological observation, rigorous assessment processes of new product, new branch, and new business initiatives, adherence to ethical standards and a philosophy of customer advocacy, a structured process of customer complaint resolution, and ongoing reputational monitoring and management tools.

Market Risk Market risk is the sensitivity of income to changes in interest rates, foreign exchange rates, commodity prices and other market-driven rates or prices. Interest rate sensitivity is the most significant market risk to which the Company is exposed.

Interest rate risk is the sensitivity of income to changes in interest rates. Changes in interest rates, as well as fluctuations in the level and duration of assets and liabilities, affect net interest income, the Company’s primary source of revenue. Interest rate risk arises directly from the Company’s core banking activities. In addition to directly impacting net interest income, changes in the level of interest rates can also affect the amount of loans originated, the timing of cash flows on loans and securities, and the fair value of securities and derivatives, as well as other effects.

The primary goal of interest rate risk management is to control this risk within limits approved by the Board of Directors. These limits reflect the Company’s tolerance for interest rate risk over both short-term and long-term horizons. The Company attempts to control interest rate risk by identifying, quantifying, and where appropriate, hedging its exposure. If assets and liabilities do not re-price simultaneously and in equal volume, the potential for interest rate exposure exists. It is management’s objective to maintain stability in the growth of net interest income through the maintenance of an appropriate mix of interest-earning assets and interest-bearing liabilities and, when necessary, within prudent limits, through the use of off-balance sheet hedging instruments such as interest rate swaps, floors and caps.

The Company quantifies its interest rate exposures using net interest income simulation models, as well as simpler gap analysis, and Economic Value of Equity analysis. Key assumptions in these simulation analyses relate to behavior of interest rates and behavior of the Company’s deposit and loan customers. The most material assumptions relate to the prepayment of mortgage assets (including mortgage loans and mortgage-backed securities) and the life and sensitivity of nonmaturity deposits (e.g. DDA, NOW, savings and money market). In the case of prepayment of mortgage assets, assumptions are derived from published dealer median prepayment estimates for comparable mortgage loans. The risk of prepayment tends to increase when interest rates fall. Since future prepayment behavior of loan customers is uncertain, the resultant interest rate sensitivity of loans cannot be determined exactly.

The Company’s policy on interest-rate risk simulation specifies that for all "core" interest rate scenarios, estimated net interest income for the subsequent one-year period should not decline by more than 10%. The Company's core scenarios for June 30, 2013 included five instantaneous parallel shifts (“shocks”) to market interest rates and four gradual shifts (12 to 24 months):

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Table 21—Interest Rate Sensitivity

	June 30
	2013		2012
Parallel rate shocks (basis points)
-100	(0.4	)%	(0.2	)%
+100	4.3	%	3.3	%
+200	8.6	%	6.9	%
+300	13.0	%	10.6	%
+400	17.2	%	14.3	%
Gradual rate shifts (basis points)
-100 over 12 months	0.1	%	0.4	%
+200 over 12 months	3.9	%	2.8	%
+400 over 24 months	3.9	%	2.8	%
Flat +500 over 12 months	4.7	%	3.5	%

The Company's policy on interest rate risk simulation also specifies that estimated net interest income for the second year of all “core scenarios” should decline by less than 15.0%. The Company was within policy limits at June 30, 2013 and 2012. It should be emphasized, however, that the results are dependent on material assumptions such as those discussed above. For instance, asymmetrical rate behavior can have a material impact on the simulation results. If competition for deposits forced the Company to raise rates on those liabilities quicker than is assumed in the simulation analysis without a corresponding increase in asset yields, net interest income may be negatively impacted. Alternatively, if the Company is able to lag increases in deposit rates as loans re-price upward, net interest income would be positively impacted.

The most significant factors affecting market risk exposure of the Company’s net interest income during the six months ended June 30, 2013 were (i) the shape of the U.S. Government securities and interest rate swap yield curve, (ii) the level of U.S. prime interest rate and LIBOR rates, and (iii) the level of interest rates being offered on long-term fixed rate loans.

The Company manages the interest rate risk inherent in both its loan and borrowing portfolios by utilizing interest rate swap agreements and interest rate caps and floors. An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount for a predetermined period of time from a second party. Interest rate caps and floors are agreements whereby one party agrees to pay a floating rate of interest on a notional principal amount for a predetermined period of time to a second party if certain market interest rate thresholds are realized. The amounts relating to the notional principal amount are not actually exchanged. See Note 8, “Derivatives and Hedging Activities” within Notes to Consolidated Financial Statements included in Item 1 hereof for additional information regarding the Company’s Derivative Financial Instruments.

The Company manages the interest rate risk inherent in its mortgage banking operations by entering into forward sales contracts. An increase in market interest rates between the time the Company commits to terms on a loan and the time the Company ultimately sells the loan in the secondary market will have the effect of reducing the gain (or increasing the loss) the Company records on the sale. The Company attempts to mitigate this risk by entering into forward sales commitments in amounts sufficient to cover loans anticipated to close and interest rate-locked loan commitments.

The Company’s earnings are not directly or materially impacted by movements in foreign currency rates or commodity prices. Movements in equity prices may have a modest impact on earnings by affecting the volume of activity or the amount of fees from investment-related business lines, as well as changes in the fair value of trading securities, if any. (See Note 3, “Securities” within the Notes to the Consolidated Financial Statements included in Item 1 hereof).

Liquidity Risk Liquidity risk is the risk that the Company will not have the ability to generate adequate amounts of cash in the most economical way for the institution to meet its ongoing obligations to pay deposit withdrawals, service borrowings, and to fund loan commitments. The Company’s primary sources of funds are deposits, borrowings, and the amortization, prepayment and maturities of loans and securities. The Bank utilizes its extensive branch network to access retail customers who provide a stable base of in-market core deposits. These funds are principally comprised of demand deposits, interest checking accounts, savings accounts, and money market accounts. Deposit levels are greatly influenced by interest rates, economic conditions, and competitive factors.

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The Company actively manages its liquidity position under the direction of the Asset/ Liability Committee (ALCO). The Company’s primary measure of short-term liquidity is the Basic Surplus/Deficit as a percentage of assets. This ratio, which is an analysis of the relationship between liquid assets and short-term liabilities relative to total assets, was within policy limits at June 30, 2013. The Basic Surplus measure is affected primarily by changes in deposits, securities and short-term investments, loans and borrowings. An increase in deposits, without a corresponding increase in nonliquid assets, will improve the Basic Surplus measure, whereas, an increase in loans, with no increase in deposits, will decrease the measure. Other factors affecting the Basic Surplus measure include collateral requirements at the FHLB, changes in the securities portfolio, and the mix of deposits.

The Bank is careful to increase deposits without adversely impacting the weighted average cost of those funds. As part of a prudent liquidity risk management practice, the Company maintains various liquidity sources, some of which are only accessed on a contingency basis. Accordingly, management has implemented funding strategies that include FHLB advances, Federal Reserve Bank borrowing capacity and repurchase agreement lines. These nondeposit funds are also viewed as a contingent source of liquidity and, when profitable lending and investment opportunities exist, access to such funds provides a means to grow the balance sheet.

Borrowing capacity at the FHLB and the Federal Reserve is impacted by the amount and type of assets available to be pledged. For example, a prime, one-to-four family, residential loan, may provide 75 cents of borrowing capacity for every $1.00 pledged, whereas, a commercial loan may provide a lower amount. As a result, the Company’s strategic lending decisions can also affect its liquidity position.

The Company can raise additional liquidity through the issuance of equity or unsecured debt privately or publicly. Additionally, the Company is able to enter into additional repurchase agreements or acquire brokered deposits at its discretion. The availability and cost of equity or debt on an unsecured basis is dependent on many factors. Some factors that will impact this source of liquidity are the Company’s financial position, the market environment, and the Company’s credit rating. As such, the Company is careful to monitor the various factors that could impact its ability to raise liquidity through these channels.

The table below shows current and unused liquidity capacity from various sources as of the dated indicated:

Table 22—Sources of Liquidity

	June 30, 2013						December 31, 2012
	Outstanding		Additional Borrowing Capacity				Outstanding		Additional Borrowing  Capacity
	(Dollars in thousands)
Federal Home Loan Bank of Boston	$	261,456	$	583,541			$	271,569	$	661,922
Federal Reserve Bank of Boston	—		827,498				—		766,195
Unpledged Securities	—		90,509				—		114,953
Wholesale repurchase agreements	50,000		—		(1	)	50,000		—		(1	)
Customer repurchase agreements	141,826		—		(1	)	153,359		—		(1	)
Junior subordinated debentures	74,018		—		(1	)	74,127		—		(1	)
Subordinated debt	30,000		—		(1	)	30,000		—		(1	)
Parent Company line of credit	—		20,000				12,000		8,000
Brokered deposits (2)	81,094		—		(1	)	96,033		—		(1	)
	$	638,394	1,521,548				$	687,088	$	1,551,070

(1) The additional borrowing capacity has not been assessed for these categories.

(2) Inclusive of $57.3 million and $72.2 million of brokered deposits acquired through participation in the Certificate of Deposit Account Registry Service program as of June 30, 2013 and December 31, 2012, respectively.

In addition to policies used for managing operational liquidity, the Board of Directors and the Asset/Liability Committee of the Bank recognize the need to establish reasonable guidelines for managing through an environment of heightened liquidity risk. Catalysts for elevated liquidity risk can be Bank-specific issues and/or systemic industry-wide events. It is therefore, the

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responsibility of the Board and ALCO to institute systems and controls to provide advanced detection of potentially significant funding shortages, establish methods for assessing and monitoring risk levels, and institute prompt responses that may alleviate/circumvent a potential liquidity crisis. As such, the Board of Directors and the ALCO have put a Liquidity Contingency Plan in place. The overall goal of this plan is to provide a framework for the Bank to help detect liquidity problems promptly and appropriately address potential liquidity problems in a timely manner. In a period of perceived heightened liquidity risk, the Liquidity Contingency Plan provides for the establishment of a Liquidity Crisis Task Force. The Liquidity Crisis Task Force is responsible for monitoring the potential for a liquidity crisis and for establishing and executing an appropriate response.

Off-Balance Sheet Arrangements There have been no material changes in off-balance sheet financial instruments during the three months ended June 30, 2013. Please refer to the 2012 Form 10-K for a complete table of contractual obligations, commitments, contingencies and off-balance sheet financial instruments.

Contractual Obligations, Commitments, and Contingencies There have been no material changes in contractual obligations, commitments, or contingencies during the three months ended June 30, 2013. Please refer to the 2012 Form 10-K for a complete table of contractual obligations, commitments, contingencies, and off-balance sheet financial instruments.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Information required by this Item 3 is included in Item 2 of Part I of this Form 10-Q, entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based upon that evaluation, the Company’s Chief Executive Officer along with the Company’s Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by this quarterly report.

Changes in Internal Controls over Financial Reporting. There were no changes in our internal control over financial reporting that occurred through the second quarter of 2013 that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

Item  1. Legal Proceedings

The Company is not involved in any legal proceedings other than routine legal proceedings occurring in the ordinary course of business or other matters not considered to be material. Management believes that those legal proceedings involve, in the aggregate, amounts that are immaterial to the Company’s financial condition and results of operations.

Item 1A. Risk Factors

As of the date of this report, there have been no material changes with regard to the Risk Factors disclosed in Item 1A of our 2012 Annual Report on Form 10-K, which are incorporated herein by reference.

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

(a) Not applicable.

(b) Not applicable.

(c) The following table sets forth information regarding the Company’s repurchases of its common stock during the three months ended June 30, 2013:

81

	Issuer Purchases of Equity Securities
	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program (2)	Maximum Number of Shares That May Yet Be Purchased Under the Plan or Program
Period
April 1 to April 30, 2013	—	$	—	—	—
May 1 to May 31, 2013	2,411	$	32.66	—	—
June 1 to June 30, 2013	13,554	$	34.13	—	—
Total	15,965			—

(1) Shares repurchased relate to the surrendering of mature shares for the exercise of stock compensation grants.

(2) The Company does not currently have a stock repurchase program or plan in place.

Item  3. Defaults Upon Senior Securities—None

Item 4. Mine Safety Disclosures—None

Item 5. Other Information—None

82

Item 6. Exhibits

Exhibits Index

No.	Exhibit
2.1	Agreement and Plan of Merger dated April 30, 2012 with Central Bancorp, Inc. is incorporated by reference to Form 8-K filed on May 3, 2012.
2.2	Agreement and Plan of Merger dated May 14, 2013 with Mayflower Bancorp, Inc. is incorporated by reference to Form 8-K filed on May 20, 2013.
3.(i)	Restated Articles of Organization, as adopted May 20, 2010, incorporated by reference to Form 8-K filed on May 24, 2010.

3.(ii)	Amended and Restated Bylaws of the Company, incorporated by reference to Form 8-K filed on May 24, 2010.
4.1	Specimen Common Stock Certificate, incorporated by reference to Form 10-K for the year ended December 31, 1992.
4.2	Specimen preferred Stock Purchase Rights Certificate, incorporated by reference to Form 8-A Registration Statement filed on November 5, 2001.
4.3	Indenture of Registrant relating the Junior Subordinated Debt Securities issued to Independent Capital Trust V is incorporated by reference to Form 10-K for the year ended December 31, 2006 filed on February 28, 2007.
4.4	Form of Certificate of Junior Subordinated Debt Security for Independent Capital Trust V (included as Exhibit A to Exhibit 4.9)
4.5	Amended and Restated Declaration of Trust for Independent Capital Trust V is incorporated by reference to Form 10-K for the year ended December 31, 2006 filed on February 28, 2007.
4.6	Form of Capital Security Certificate for Independent Capital Trust V (included as Exhibit A-1 to Exhibit 4.9).
4.7	Guarantee Agreement relating to Independent Capital Trust V is incorporated by reference to Form 10-K for the year ended December 31, 2006 filed on February 28, 2007.
4.8	Forms of Capital Securities Purchase Agreements for Independent Capital Trust V is incorporated by reference to Form 10-K for the year ended December 31, 2006 filed on February 28, 2007.
4.9	Subordinated Debt Purchase Agreement between USB Capital Resources and Rockland Trust Company dated as of August 27, 2008 is incorporated by reference to Form 8-K filed on September 2, 2008.
4.10	Rockland Trust Company Employee Savings, Profit Sharing and Stock Ownership Plan incorporated by reference to Form S-8 filed on April 16, 2010.
4.11	Independent Bank Corp. 2010 Dividend Reinvestment and Stock Purchase Plan incorporated by reference to Form S-3 filed on August 24, 2010.
10.1	Independent Bank Corp. 1996 Nonemployee Directors’ Stock Option Plan incorporated by reference to Definitive Proxy Statement for the 1996 Annual Meeting of Stockholders filed on March 19, 1996.
10.2	Independent Bank Corp. 1997 Employee Stock Option Plan incorporated by reference to the Definitive Proxy Statement for the 1997 Annual Meeting of Stockholders filed on March 20, 1997.

83

10.3	Independent Bank Corp. Amended and Restated 2005 Employee Stock Plan incorporated by reference to Form S-8 filed on June 17, 2011.
10.4	Renewal Rights Agreement dated as of September 14, 2000 by and between the Company and Rockland Trust, as Rights Agent, is incorporated by reference to Form 8-K filed on October 23, 2000.
10.5	Independent Bank Corp. Deferred Compensation Program for Directors (restated as amended as of December 1, 2000) is incorporated by reference to Form 10-K for the year ended December 31, 2000.
10.6	Master Securities Repurchase Agreement, incorporated by reference to Form S-1 Registration Statement filed on September 18, 1992.
10.7	Revised employment agreements between Christopher Oddleifson, Raymond G. Fuerschbach, Edward F. Jankowski, Jane L. Lundquist, Gerard F. Nadeau, Edward H. Seksay, and Denis K. Sheahan and the Company and/or Rockland Trust and a Rockland Trust Company amended and restated Supplemental Executive Retirement Plan dated November 20, 2008 are incorporated by reference to Form 8-K filed on November 21, 2008.
10.8	Specimen forms of stock option agreements for the Company’s Chief Executive and other executive officers are incorporated by reference to Form 8-K filed on December 20, 2005.
10.9	On-Site Outsourcing Agreement by and between Fidelity Information Services, Inc. and Independent Bank Corp., effective as of November 1, 2004 is incorporated by reference to Form 10-K for the year ended December 31, 2004 filed on March 4, 2005. Amendment to On-Site Outsourcing Agreement incorporated by reference to Form 8-K filed on May 7, 2008.
10.10	Independent Bank Corp. entered into a revolving credit facility with PNC Bank NA allowing the Company to borrow, repay and reborrow up to $20 million on or prior to October 18, 2013. The letter agreement is incorporated by reference to Form 8-K filed on October 25, 2012.
10.11	Independent Bank Corp. 2006 Nonemployee Director Stock Plan incorporated by reference to Form S-8 filed on April 17, 2006.
10.12	Independent Bank Corp. 2006 Stock Option Agreement for Nonemployee Director is incorporated by reference to Form 10-Q filed on May 9, 2006.
10.13	Independent Bank Corp. 2006 Restricted Stock Agreement for Nonemployee Director is incorporated by reference to Form 10-Q filed on May 9, 2006.

84

10.14	New Markets Tax Credit program Allocation Agreement between the Community Development Financial Institutions Fund of the United States Department of the Treasury and Rockland Community Development with an Allocation Effective Date of September 22, 2004 is incorporated by reference to Form 8-K filed on October 14, 2004.
10.15	New Markets Tax Credit program Allocation Agreement between the Community Development Financial Institutions Fund of the United States Department of the Treasury and Rockland Community Development with an Allocation Effective Date of January 9, 2007 is incorporated by reference to Form 10-K for the year ended December 31, 2006 filed on February 28, 2007.
10.16	New Markets Tax Credit program Allocation Agreement between the Community Development Financial Institutions Fund of the United States Department of the Treasury and Rockland Community Development with an Allocation Effective Date of June 18, 2009 is incorporated by reference to the third quarter 2009 Form 10-Q.
10.17	New Markets Tax Credit program Allocation Agreement between the Community Development Financial Institutions Fund of the United States Department of the Treasury and Rockland Community Development with an Allocation Effective Date of April 17, 2012 is incorporated by reference to form 8-K filed on April 26, 2012.
10.18	Item Processing and Other Services Agreement dated and effective as of May 11, 2012 by and between Fidelity Information Services, Inc. and Independent Bank Corp. is incorporated by reference to Form 8-K/A filed on July 24, 2012.
10.19	Independent Bank Corp. 2010 Nonemployee Director Stock Plan, incorporated by reference to Form 8-K filed May 24, 2010.
10.2	Independent Bank Corp. 2010 Stock Option Agreement for Nonemployee Director, incorporated by reference to Form 8-K filed May 24, 2010.
10.21	Independent Bank Corp. 2010 Restricted Stock Agreement for Nonemployee Director, incorporated by reference to Form 8-K filed May 24, 2010.
10.22	Master Data Processing Services Agreement dated and effective as of May 15, 2012 between Rockland Trust Company and Q2 Software, Inc., incorporated by reference to Form 8-K/A filed July 18, 2012.
31.1	Section 302 Certification of Sarbanes-Oxley Act of 2002 is attached hereto.*
31.2	Section 302 Certification of Sarbanes-Oxley Act of 2002 is attached hereto.*
32.1	Section 906 Certification of Sarbanes-Oxley Act of 2002 is attached hereto.+
32.2	Section 906 Certification of Sarbanes-Oxley Act of 2002 is attached hereto.+
101.INS	XBRL Instance Document +
101.SCH	XBRL Taxonomy Extension Schema Document +
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document +

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document +
101. LAB	XBRL Taxonomy Extension Label Linkbase Documents +
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document +

* Filed herewith

+ Furnished herewith

85

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.

INDEPENDENT BANK CORP.

(registrant)

Date: August 7, 2013	/s/ Christopher Oddleifson
	Christopher Oddleifson President and Chief Executive Officer (Principal Executive Officer)

Date: August 7, 2013	/s/ Denis K. Sheahan
	Denis K. Sheahan Chief Financial Officer (Principal Financial Officer)

INDEPENDENT BANK CORP.

(registrant)

86

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED

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

I, Christopher Oddleifson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independent Bank 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 controls 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 the periodic report is being prepared;

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

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

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

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

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

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

Date: August 7, 2013
	/s/Christopher Oddleifson
		Christopher Oddleifson
		Chief Executive Officer

1

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED

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

I, Denis K. Sheahan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Independent Bank 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 controls 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 the periodic report is being prepared;

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

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

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

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

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

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

Date: August 7, 2013
	/s/Denis K. Sheahan
		Denis K. Sheahan
		Chief Financial Officer

1

EX-32.1

Exhibit 32.1

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Independent Bank Corp. (the “Company”) on Form 10-Q for the quarter ending June 30, 2013, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the undersigned’s best knowledge and belief:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

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

Dated this 7th day of August 2013.

Independent Bank Corp.

("Company")

/s/Christopher Oddleifson

Christopher Oddleifson

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Independent Bank Corp. and will be retained by Independent Bank Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

1

EX-32.2

Exhibit 32.2

CERTIFICATION

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Independent Bank Corp. (the “Company”) on Form 10-Q for the quarter ending June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the undersigned’s best knowledge and belief:

(a) the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 as amended; and

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

Dated this 7th day of August 2013.

Independent Bank Corp.

("Company")

/s/Denis K. Sheahan

Denis K. Sheahan

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Independent Bank Corp. and will be retained by Independent Bank Corp. and furnished to the Securities and Exchange Commission or its staff upon request.

1

XML

Comprehensive Income/Loss

6 Months Ended

Jun. 30, 2013

Comprehensive Income Loss [Abstract]

COMPREHENSIVE INCOME/LOSS

COMPREHENSIVE INCOME/LOSS

Information on the Company’s comprehensive income, presented net of taxes, is set forth below for the periods indicated:

	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(7,502	)	$	2,910		$	(4,592	)	$	(8,736	)	$	3,365		$	(5,371	)
Less: net security losses reclassified into other noninterest income (1)	4			(1		)	3			4			(1		)	3			(4	)
Change in fair value of securities available for sale	(7,498		)	2,909			(4,589		)	(8,732		)	3,364			(5,368		)
Change in fair value of cash flow hedges	1,294			(529		)	765			1,289			(526		)	763
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,443			(589		)	854			2,859			(1,168		)	1,691			(4	)
Net change in fair value of cash flow hedges	2,737			(1,118		)	1,619			4,148			(1,694		)	2,454
Amortization of certain costs included in net periodic retirement costs (3)	51			(9		)	42			73			(30		)	43			(4	)
Total other comprehensive income (loss)	$	(4,710	)	$	1,782		$	(2,928	)	$	(4,511	)	$	1,640		$	(2,871	)

	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(186	)	$	47		$	(139	)	$	(432	)	$	132		$	(300	)
Less: net security losses reclassified into other noninterest income (1)	76			(31		)	45			76			(31		)	45			(4	)
Change in fair value of securities available for sale	(110		)	16			(94		)	(356		)	101			(255		)
Change in fair value of cash flow hedges	(2,074		)	847			(1,227		)	(2,021		)	825			(1,196		)
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,346			(550		)	796			2,638			(1,077		)	1,561			(4	)
Net change in fair value of cash flow hedges	(728		)	297			(431		)	617			(252		)	365
Amortization of certain costs included in net periodic retirement costs (3)	39			(16		)	23			77			(31		)	46			(4	)
Total other comprehensive income	$	(799	)	$	297		$	(502	)	$	338		$	(182	)	$	156

(1) Net security losses includes pre-tax OTTI credit related losses of $0 for the three and six month ended June 30, 2013 and $76,000 for the three and six months ended June 30, 2012.

(2) Includes the remaining balance of a realized but unrecognized gain, net of tax, from the termination of interest rate swaps in June 2009. The original gain of $1.4 million, net of tax, will be recognized in earnings through December 2018, the original maturity date of the swap. The balance of this gain has amortized to $787,000 and $931,000 at June 30, 2013 and 2012, respectively.

(3) The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in the Employee Benefit Plans footnote in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

(4) Total reclassifications into income for the period were $899,000 and $1,737,000 for the three and six months ending June 30, 2013 and $864,000 and $1,652,000 for the three and six months ending June 30, 2012, respectively.

Information on the Company’s accumulated other comprehensive income (loss), net of tax is comprised of the following components as of the periods indicated:

	Unrealized Gain on Securities			Unrealized Loss on Cash Flow Hedge			Deferred Gain on Hedge Transactions			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	2013
	(Dollars in thousands)
Beginning balance January 1, 2013	$	5,478		$	(9,577	)	$	859		$	(1,286	)	$	(4,526	)
Net change in other comprehensive income (loss)	$	(5,368	)	$	2,526		$	(72	)	$	43		$	(2,871	)
Ending balance June 30, 2013	110			(7,051		)	787			(1,243		)	(7,397		)
	2012
Beginning balance January 1, 2012	$	6,574		$	(10,804	)	$	1,004		$	(1,260	)	$	(4,486	)
Net change in other comprehensive income (loss)	$	(255	)	$	438		$	(73	)	$	46		$	156
Ending balance June 30, 2012	6,319			(10,366		)	931			(1,214		)	(4,330		)

XML

Derivatives and Hedging Activities (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary of net amortization income recognized
Net amortization income	$ 61	$ 61	$ 122	$ 122

XML

Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest income
Interest on loans	$ 47,720	$ 43,813	$ 94,699	$ 86,891
Taxable interest and dividends on securities	3,506	4,415	7,035	8,942
Nontaxable interest and dividends on securities	11	23	22	52
Interest on loans held for sale	237	156	505	286
Interest on federal funds sold	21	19	55	51
Total interest and dividend income	51,495	48,426	102,316	96,222
Interest expense
Interest on deposits	2,543	2,687	5,208	5,426
Interest on borrowings	3,337	3,111	6,630	6,316
Total interest expense	5,880	5,798	11,838	11,742
Net interest income	45,615	42,628	90,478	84,480
Provision for loan losses	3,100	8,500	4,400	10,100
Net interest income after provision for loan losses	42,515	34,128	86,078	74,380
Noninterest income
Deposit account fees	4,343	3,923	8,559	7,812
Interchange and ATM fees	2,761	2,399	5,089	4,767
Investment management	4,357	3,827	8,242	7,390
Mortgage banking income	1,669	1,463	3,951	2,793
Increase in cash surrender value of life insurance policies	786	741	1,531	1,454
Loan level derivative income	816	1,371	1,348	1,699
Other noninterest income	1,960	1,259	3,694	2,978
Total noninterest income	16,692	14,983	32,414	28,893
Noninterest expenses
Salaries and employee benefits	21,594	19,775	44,309	41,211
Occupancy and equipment expenses	4,919	4,234	10,169	8,534
Advertising expense	1,479	1,473	2,652	2,210
Data processing & facilities management	1,201	1,099	2,385	2,274
FDIC assessment	934	830	1,755	1,579
Debit Card Expense	773	637	1,443	1,196
Merger and acquisition expense	754	672	2,099	672
Mortgage operations expense	715	60	1,059	102
Consulting expense	666	583	1,377	1,209
Telecommunication expense	548	666	1,203	1,284
Other noninterest expenses	8,581	6,970	16,632	14,085
Total noninterest expenses	42,164	36,999	85,083	74,356
Income before income taxes	17,043	12,112	33,409	28,917
Provision for income taxes	4,285	3,238	8,399	7,860
Net income	$ 12,758	$ 8,874	$ 25,010	$ 21,057
Basic earnings per share (in dollars per share)	$ 0.56	$ 0.41	$ 1.09	$ 0.98
Diluted earnings per share (in dollars per share)	$ 0.56	$ 0.41	$ 1.09	$ 0.97
Weighted average common shares (basic) (in shares)	22,888,155	21,623,827	22,856,132	21,592,416
Common shares equivalents (in shares)	52,144	20,377	49,104	22,251
Weighted average common shares (diluted) (in shares)	22,940,299	21,644,204	22,905,236	21,614,667
Cash dividends declared per common share (in dollars per share)	$ 0.22	$ 0.21	$ 0.44	$ 0.42

XML

Recent Accounting Standards

6 Months Ended

Jun. 30, 2013

Recent Accounting Standards [Abstract]

RECENT ACCOUNTING STANDARDS

RECENT ACCOUNTING STANDARDS UPDATES

FASB ASC Topic No. 815 "Derivatives and Hedging" Update No. 2013-10. Update No. 2013-10 was issued in July 2013 to provide guidance on the risks that are permitted to be hedged in a fair value or cash flow hedge. Among those risks for financial assets and financial liabilities is the risk of changes in a hedged item's fair value or a hedged transaction's cash flows attributable to changes in the designated benchmark interest rate (referred to as interest rate risk). In the United States, currently only the interest rates on direct Treasury obligations of the U.S. government (UST) and, for practical reasons, the London Interbank Offered Rate (LIBOR) swap rate are considered benchmark interest rates. The amendments in this update permit the Fed Funds Effective Swap Rate (OIS)to now be used as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to UST and LIBOR. The amendments also remove the restriction on using benchmark rates for similar hedges. The amendments are effective prospectively for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial position.

FASB ASC Topic No. 220 "Comprehensive Income" Update No. 2013-02. Update No. 2013-02 was issued in February 2013, stating that the amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of this standard did not have a material impact on the Company's consolidated financial position.

FASB ASC Topic No. 210 "Balance Sheet" Update No. 2013-01. Update No. 2013-01 was issued in January of 2013, the amendments in this update affect entities that have derivatives accounted for in accordance with Topic 815 "Derivatives and Hedges," including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset or subject to an enforceable master netting arrangement or similar agreement. As a result of these amendments, entities with other types of financial assets and financial liabilities subject to a master netting arrangement or similar agreement are no longer subject to the disclosure requirements in Update No. 2011-11. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The amendments are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those periods. The adoption of this standard did not have a material impact on the Company's consolidated financial position.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value at the periods indicated were as follows:

			Fair Value Measurements at Reporting Date Using
	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. Government agency securities	$	19,593	$	—	$	19,593	$	—
Agency mortgage-backed securities	198,301		—		198,301		—
Agency collateralized mortgage obligations	66,096		—		66,096		—
Private mortgage-backed securities	3,036		—		—		3,036
Single issuer trust preferred securities issued by banks	2,244		—		2,244		—
Pooled trust preferred securities issued by banks and insurers	3,617		—		—		3,617
Marketable securities	10,968		10,968		—		—
Loans held for sale	32,497		—		32,497		—
Derivative instruments	20,796		—		20,796		—
Liabilities
Derivative instruments	31,501		—		31,501		—
Total recurring fair value measurements	$	325,647	$	10,968	$	308,026	$	6,653
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	10,105	$	—	$	—	$	10,105
Other real estate owned	9,211		—		—		9,211
Total nonrecurring fair value measurements	$	19,316	$	—	$	—	$	19,316

	December 31, 2012
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. government agency securities	$	20,822	$	—	$	20,822	$	—
Agency mortgage-backed securities	221,425		—		221,425		—
Agency collateralized mortgage obligations	68,376		—		68,376		—
Private mortgage-backed securities	3,532		—		—		3,532
Single issuer trust preferred securities issued by banks	2,240		—		2,240		—
Pooled trust preferred securities issued by banks and insurers	2,981		—		—		2,981
Marketable securities	9,910		9,910		—		—
Loans held for sale	48,187		—		48,187		—
Derivative instruments	30,528		—		30,528		—
Liabilities
Derivative instruments	46,793		—		46,793		—
Total recurring fair value measurements	$	361,208	$	9,910	$	344,785	$	6,513
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	7,817	$	—	$	—	$	7,817
Other real estate owned	11,974		—		—		11,974
Total nonrecurring fair value measurements	$	19,791	$	—	$	—	$	19,791

Reconciliation for all assets and liabilities measured at fair value on a recurring basis

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). These instruments were valued using pricing models and discounted cash flow methodologies.

	Securities Available for Sale:
	Pooled Trust Preferred Securities			Single Trust Preferred Securities			Private Mortgage- Backed Securities			Total
	(Dollars in thousands)
Balance at March 31, 2013	$	3,292		$	—		$	3,370		$	6,662
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	351			—			(51		)	300
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(26		)	—			(283		)	(309		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653
Balance at January 1, 2012	$	2,820		$	4,210		$	6,110		$	13,140
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			(76		)	(76		)
Included in other comprehensive income	313			703			411			1,427
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(152		)	—			(2,913		)	(3,065		)
Transfers into (out of) level 3	—			(4,913		)	—			(4,913		)
Balance at December 31, 2012	$	2,981		$	—		$	3,532		$	6,513
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	831			—			(89		)	742
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(195		)	—			(407		)	(602		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653

Investments in securities that are classified as level 3

The following table sets forth certain unobservable inputs regarding the Company’s investment in securities that are classified as Level 3 for the periods indicated:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
	(Dollars in thousands)
	June 30, 2013
Pooled trust preferred securities	$	3,617	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.2	%
				Cumulative Default	2.0%-100.0%	18.6	%
				Loss Given Default	85.0% - 100.0%	95.4	%
				Cure Given Default	0% - 75.0%	36.6	%
Private mortgage-backed securities	$	3,036	Multi-dimensional spread tables	Cumulative Prepayment Rate	14.4%-14.5%	14.5	%
				Constant Default Rate	0.8% -20.3%	4.0	%
				Severity	21.0% -52.0%	34.1	%
Impaired loans	$	10,105	Appraisals of collateral (1)
Other real estate owned	$	9,211	Appraisals of collateral (1)
	December 31, 2012
Pooled trust preferred securities	$	2,981	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.5	%
				Cumulative Default	3.0%-100.0%	19.6	%
				Loss Given Default	85.0% - 100.0%	94.9	%
				Cure Given Default	0% - 75.0%	33.8	%
Private mortgage-backed securities	$	3,532	Multi-dimensional spread tables	Cumulative Prepayment Rate	10.3%-14.5%	13.9	%
				Constant Default Rate	0.9% -20.4%	4.0	%
				Severity	20.0% -55.0%	33.6	%
Impaired loans	$	7,817	Appraisals of collateral (1)
Other real estate owned	$	11,974	Appraisals of collateral (1)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary.

The estimated fair values and related carrying amounts for assets and liabilities

The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the periods indicated:

					Fair Value Measurements at Reporting Date Using
	Book Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,012	$	1,074	—		$	1,074	—
Agency mortgage-backed securities	56,889		58,869		—		58,869		—
Agency collateralized mortgage obligations	159,945		158,211		—		158,211		—
State, county, and municipal securities	916		926		—		926		—
Single issuer trust preferred securities issued by banks	1,510		1,530		—		1,530		—
Corporate debt securities	5,006		5,241		—		5,241		—
Loans, net of allowance for loan losses (b)	4,477,135		4,433,316		—		—		4,433,316
Financial liabilities
Time certificates of deposits (c)	$	709,971	$	713,800	—		$	713,800	—
Federal home loan bank advances and other borrowings (c)	261,456		268,993		—		268,993		—
Wholesale and customer repurchase agreements (c)	191,826		193,497		—		—		193,497
Junior subordinated debentures (d)	74,018		75,805		—		75,805		—
Subordinated debentures (c)	30,000		20,758		—		—		20,758
	December 31, 2012
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,013	$	1,134	$	—	$	1,134	$	—
Agency mortgage-backed securities	72,360		76,593		—		76,593		—
Agency collateralized mortgage obligations	97,507		100,380		—		100,380		—
State, county, and municipal securities	915		926		—		926		—
Single issuer trust preferred securities issued by banks	1,516		1,526		—		1,526		—
Corporate debt securities	5,007		5,265		—		5,265		—
Loans, net of allowance for loan losses (b)	4,467,177		4,462,580		—		—		4,462,580
Financial liabilities
Time certificates of deposits (c)	$	753,125	$	759,516	$	—	$	759,516	$	—
Federal home loan bank advances and other borrowings (c)	283,569		293,580		—		293,580		—
Wholesale and customer repurchase agreements (c)	203,359		201,189		—		—		201,189
Junior subordinated debentures (d)	74,127		74,416		—		74,416		—
Subordinated debentures (c)	30,000		22,762		—		—		22,762

(a) The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analyses.

(b) Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows.

(c) Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.

(d) Fair value was determined based upon market prices of securities with similar terms and maturities.

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Comprehensive Income/Loss (Details1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Beginning Balance			$ (4,526)	$ (4,486)
Net change in other comprehensive income (loss)	(2,928)	(502)	(2,871)	156
Ending Balance	(7,397)	(4,330)	(7,397)	(4,330)
Deferred Gain on Hedge Transactions [Member]
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Beginning Balance			859	1,004
Net change in other comprehensive income (loss)			(72)	(73)
Ending Balance	787	931	787	931
Accumulated Net Unrealized Investment Gain (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Beginning Balance			5,478	6,574
Net change in other comprehensive income (loss)			(5,368)	(255)
Ending Balance	110	6,319	110	6,319
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Beginning Balance			(9,577)	(10,804)
Net change in other comprehensive income (loss)			2,526	438
Ending Balance	(7,051)	(10,366)	(7,051)	(10,366)
Accumulated Defined Benefit Plans Adjustment [Member]
Accumulated Other Comprehensive Income (Loss) [Rollforward]
Beginning Balance			(1,286)	(1,260)
Net change in other comprehensive income (loss)			43	46
Ending Balance	$ (1,243)	$ (1,214)	$ (1,243)	$ (1,214)

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Derivatives and Hedging Activities (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) in OCI on derivatives (effective portion), net of tax	$ 765	$ (1,227)	$ 763	$ (1,196)
Derivatives designated as hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (loss) in OCI on derivatives (effective portion), net of tax	765	(1,227)	763	(1,196)
Effect of derivative financial instruments included in OCI and current earnings
Loss reclassified from OCI into interest expense (effective portion)	(1,443)	(1,346)	(2,859)	(2,638)
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Derivatives not designated as hedges [Member]
Effect of derivative financial instruments included in OCI and current earnings
Changes in fair value of customer related positions	(42)	42	(55)	54
Other Income [Member] | Derivatives not designated as hedges [Member]
Effect of derivative financial instruments included in OCI and current earnings
Changes in fair value of customer related positions	14	51	26	73
Interest Expense [Member] | Derivatives designated as hedges [Member]
Effect of derivative financial instruments included in OCI and current earnings
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Other Expense [Member] | Derivatives designated as hedges [Member]
Effect of derivative financial instruments included in OCI and current earnings
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Other Expense [Member] | Derivatives not designated as hedges [Member]
Effect of derivative financial instruments included in OCI and current earnings
Changes in fair value of customer related positions	$ (56)	$ (9)	$ (81)	$ (19)

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Basis of Presentation Basis of Presentation (Policies)

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting Policy

Independent Bank Corp. (the “Company”) is a state chartered, federally registered bank holding company, incorporated in 1985. The Company is the sole stockholder of Rockland Trust Company (“Rockland Trust” or the “Bank”), a Massachusetts trust company chartered in 1907.

All material intercompany balances and transactions have been eliminated in consolidation. Certain previously reported amounts may have been reclassified to conform to the current year’s presentation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. Operating results for the quarter ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other interim period.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

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Loans, Allowance for Loan Losses and Credit Quality (Details Textual) (USD $)	3 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Accounts, Notes, Loans and Financing Receivable [Line Items]
Tdrs Recorded Investment On Nonaccrual Status	$ 9,777,000	$ 6,554,000
Loans Allowance for Loan Losses and Credit Quality (Textual) [Abstract]
The amount of deferred fees	2,600,000	3,100,000
Significant advanced considered for risk rating change	$ 50,000
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Days to be termed as non accrual loans	90 days

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Derivatives and Hedging Activities (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	$ 18,704	$ 30,426
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	18,704	30,426
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	1,843	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	0
Net Amount	16,861	30,426
Interest rate swaps [Member]
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	0	0
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	0
Net Amount	0	0
Loan level swaps [Member]
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	18,413	28,678
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	18,413	28,678
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	1,735	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	0
Net Amount	16,678	28,678
Foreign exchange contracts [Member]
Offsetting Assets [Line Items]
Gross Amounts of Recognized Assets	291	1,748
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Assets Presented in the Statement of Financial Position	291	1,748
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	108	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Received	0	0
Net Amount	$ 183	$ 1,748

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Loans, Allowance for Loan Losses and Credit Quality (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	$ 36,495	[1]	$ 28,714	[1]
Commercial and Industrial [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	3,009		2,666
Commercial Real Estate [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	8,526		6,574
Commercial Construction [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	1,608
Small Business [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	698		570
Residential Real Estate [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	12,496		11,472
Consumer Home Equity [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	10,024		7,311
Consumer - Other [Member]
Summary of Nonaccrual Loans
TOTAL NONACCRUAL LOANS	$ 134		$ 121

[1] (2)Included in these amounts were $9.8 million and $6.6 million of nonaccruing TDRs at June 30, 2013 and December 31, 2012, respectively.

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Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Available for Sale, Amortized Cost
Available for Sale, Amortized Cost, Due in one year or less	$ 63
Available for Sale, Amortized Cost, Due after one year to five years	10,495
Available for Sale, Amortized Cost, Due after five to ten years	81,294
Available for Sale, Amortized Cost, Due after ten years	201,237
Available for Sale, Amortized Cost, Total debt securities	293,089
Available for Sale, Amortized Cost, Marketable equity securities	10,771
Available for Sale, Amortized Cost, Total	303,860	320,556
Available for Sale, Fair Value
Available for Sale, Fair Value, Due in one year or less	65
Available for Sale, Fair Value, Due after one year to five years	11,038
Available for Sale, Fair Value, Due after five to ten years	80,377
Available for Sale, Fair Value, Due after ten years	201,407
Available for Sale, Fair Value, Net debt securities	292,887
Available for Sale, Fair Value, Marketable equity securities	10,968
Available for sale Securities, Fair Value, Total	303,855	329,286
Held to Maturity, Amortized Cost
Held to Maturity, Amortized Cost, Due in one year or less	240
Held to Maturity, Amortized Cost, Due after one year to five years	6,318
Held to Maturity, Amortized Cost, Due after five to ten years	1,012
Held to Maturity, Amortized Cost, Due after ten years	217,708
Held to Maturity, Amortized Cost, Net debt securities	225,278
Held to Maturity, Amortized Cost, Marketable equity securities
Held to Maturity, Amortized Cost, Net	225,278	178,318
Held to Maturity, Fair Value
Held to Maturity, Fair Value, Due in one year or less	241
Held to Maturity, Fair Value, Due after one year to five years	6,597
Held to Maturity, Fair Value, Due after five to ten years	1,074
Held to Maturity, Fair Value, Due after ten years	217,939
Held to Maturity, Fair Value, Net debt securities	225,851
Held to Maturity, Fair Value, Marketable equity securities
Held to Maturity, Fair Value, Total	$ 225,851	$ 185,824

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	$ 303,860	$ 320,556
Available for sale Securities, Gross Unrealized Gains	8,512	14,020
Available for sale Securities, Unrealized Losses Other	(6,236)	(2,638)
Available for sale Securities, Other Than Temporary Impairment	(2,281)	(2,652)
Available for sale Securities, Fair Value, Total	303,855	329,286
Held to maturity Securities, Amortized Cost	225,278	178,318
Held to maturity Securities, Gross Unrealized Gains	3,939	7,508
Held to maturity Securities, Unrealized Losses Other	(3,366)	(2)
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	225,851	185,824
Amortized Cost	529,138	498,874
Gross Unrealized Gains	12,451	21,528
Unrealized Losses Other	(9,602)	(2,640)
Other Than Temporary Impairment	(2,281)	(2,652)
Fair Value	529,706	515,110
U. S. Government Agency Securities [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	20,050	20,053
Available for sale Securities, Gross Unrealized Gains		769
Available for sale Securities, Unrealized Losses Other	(457)
Available for sale Securities, Other Than Temporary Impairment
Available for sale Securities, Fair Value, Total	19,593	20,822
U.S. Treasury Securities [Member]
Reconciliation of fair value of securities
Held to maturity Securities, Amortized Cost	1,012	1,013
Held to maturity Securities, Gross Unrealized Gains	62	121
Held to maturity Securities, Unrealized Losses Other
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	1,074	1,134
Agency Mortgage-Backed Securities [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	193,741	209,381
Available for sale Securities, Gross Unrealized Gains	7,425	12,158
Available for sale Securities, Unrealized Losses Other	(2,865)	(114)
Available for sale Securities, Other Than Temporary Impairment
Available for sale Securities, Fair Value, Total	198,301	221,425
Held to maturity Securities, Amortized Cost	56,889	72,360
Held to maturity Securities, Gross Unrealized Gains	1,980	4,233
Held to maturity Securities, Unrealized Losses Other
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	58,869	76,593
Agency Collateralized Mortgage Obligations [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	66,087	67,412
Available for sale Securities, Gross Unrealized Gains	612	1,001
Available for sale Securities, Unrealized Losses Other	(603)	(37)
Available for sale Securities, Other Than Temporary Impairment
Available for sale Securities, Fair Value, Total	66,096	68,376
Held to maturity Securities, Amortized Cost	159,945	97,507
Held to maturity Securities, Gross Unrealized Gains	1,632	2,875
Held to maturity Securities, Unrealized Losses Other	(3,366)	(2)
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	158,211	100,380
State, County, and Municipal Securities [Member]
Reconciliation of fair value of securities
Held to maturity Securities, Amortized Cost	916	915
Held to maturity Securities, Gross Unrealized Gains	10	11
Held to maturity Securities, Unrealized Losses Other
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	926	926
Private Mortgage-Backed Securities [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	2,820	3,227
Available for sale Securities, Gross Unrealized Gains
Available for sale Securities, Unrealized Losses Other
Available for sale Securities, Other Than Temporary Impairment	216	305
Available for sale Securities, Fair Value, Total	3,036	3,532
Single Issuer Trust Preferred Securities Issued by Banks and Insurers [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	2,233	2,255
Available for sale Securities, Gross Unrealized Gains	11
Available for sale Securities, Unrealized Losses Other		(15)
Available for sale Securities, Other Than Temporary Impairment
Available for sale Securities, Fair Value, Total	2,244	2,240
Held to maturity Securities, Amortized Cost	1,510	1,516
Held to maturity Securities, Gross Unrealized Gains	20	10
Held to maturity Securities, Unrealized Losses Other
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	1,530	1,526
Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	8,158	8,353
Available for sale Securities, Gross Unrealized Gains
Available for sale Securities, Unrealized Losses Other	(2,044)	(2,415)
Available for sale Securities, Other Than Temporary Impairment	(2,497)	(2,957)
Available for sale Securities, Fair Value, Total	3,617	2,981
Marketable Equity Securities [Member]
Reconciliation of fair value of securities
Available for sale Securities, Amortized Cost	10,771	9,875
Available for sale Securities, Gross Unrealized Gains	464	92
Available for sale Securities, Unrealized Losses Other	(267)	(57)
Available for sale Securities, Other Than Temporary Impairment
Available for sale Securities, Fair Value, Total	10,968	9,910
Corporate Debt Securities [Member]
Reconciliation of fair value of securities
Held to maturity Securities, Amortized Cost	5,006	5,007
Held to maturity Securities, Gross Unrealized Gains	235	258
Held to maturity Securities, Unrealized Losses Other
Held to maturity Securities, Other Than Temporary Impairment
Held to Maturity, Fair Value, Total	$ 5,241	$ 5,265

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Loans, Allowance for Loan Losses and Credit Quality (Details 12) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Outstanding balance	$ 30,705	$ 36,278
Carrying amount	$ 27,675	$ 32,054

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Loans, Allowance for Loan Losses and Credit Quality (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	$ 4,530,111	[1]	$ 4,519,011	[1]
Ending Balance: Individually Evaluated for Impairment	71,381		66,659
Financing Receivable, Acquired with Deteriorated Credit Quality	27,675		32,054
Ending Balance: Collectively Evaluated for Impairment	4,431,055		4,420,298
Commercial and Industrial [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	742,343		687,511
Ending Balance: Individually Evaluated for Impairment	9,759		8,575
Financing Receivable, Acquired with Deteriorated Credit Quality	0		0
Ending Balance: Collectively Evaluated for Impairment	732,584		678,936
Commercial Real Estate [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	2,150,833		2,122,153
Ending Balance: Individually Evaluated for Impairment	36,439		33,868
Financing Receivable, Acquired with Deteriorated Credit Quality	18,304		21,853
Ending Balance: Collectively Evaluated for Impairment	2,096,090		2,066,432
Commercial Construction [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	231,719		188,768
Ending Balance: Individually Evaluated for Impairment	1,608		0
Financing Receivable, Acquired with Deteriorated Credit Quality	0		0
Ending Balance: Collectively Evaluated for Impairment	230,111		188,768
Small Business [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	77,283		78,594
Ending Balance: Individually Evaluated for Impairment	2,039		2,279
Financing Receivable, Acquired with Deteriorated Credit Quality	0		0
Ending Balance: Collectively Evaluated for Impairment	75,244		76,315
Residential Real Estate [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	513,551		612,881
Ending Balance: Individually Evaluated for Impairment	15,883		15,373
Financing Receivable, Acquired with Deteriorated Credit Quality	8,991		9,821
Ending Balance: Collectively Evaluated for Impairment	488,677		587,687
Consumer Home Equity [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	792,450		802,149
Ending Balance: Individually Evaluated for Impairment	4,069		4,435
Financing Receivable, Acquired with Deteriorated Credit Quality	380		380
Ending Balance: Collectively Evaluated for Impairment	788,001		797,334
Consumer Other [Member]
Allowance for loans based on collective and individual evaluation of impairment by loan category
Ending Balance: Total Loans by Group	21,932		26,955
Ending Balance: Individually Evaluated for Impairment	1,584		2,129
Financing Receivable, Acquired with Deteriorated Credit Quality	0		0
Ending Balance: Collectively Evaluated for Impairment	$ 20,348		$ 24,826

[1] The amount of deferred fees included in the ending balance was $2.6 million and $3.1 million at June 30, 2013 and December 31, 2012, respectively.

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Loans, Allowance for Loan Losses and Credit Quality (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Summary of Troubled Debt Restructurings and other pertinent information
TDRS ON ACCRUAL STATUS	$ 38,898	$ 46,764
TDRS ON NONACCRUAL	9,777	6,554
TOTAL TDR'S	48,675	53,318
AMOUNT OF SPECIFIC RESERVES INCLUDED IN THE ALLOWANCE FOR LOAN LOSSES ASSOCIATED WITH TDRS:	2,796	3,049
ADDITIONAL COMMITMENTS TO LEND TO A BORROWER WHO HAS BEEN A PARTY TO A TDR:	$ 1,921	$ 1,847

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Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary of earnings per share
Net income	$ 12,758	$ 8,874	$ 25,010	$ 21,057
Weighted Average Shares (in shares)
BASIC SHARES	22,888,155	21,623,827	22,856,132	21,592,416
EFFECT OF DILUTIVE SECURITIES	52,144	20,377	49,104	22,251
DILUTIVE SHARES	22,940,299	21,644,204	22,905,236	21,614,667
NET INCOME PER SHARE (in dollars per share)
BASIC EPS	$ 0.56	$ 0.41	$ 1.09	$ 0.98
EFFECT OF DILUTIVE SECURITIES				$ (0.01)
DILUTIVE EPS	$ 0.56	$ 0.41	$ 1.09	$ 0.97

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Securities (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Investments, Debt and Equity Securities [Abstract]
Gross change in OTTI recorded on certain investments (gain/(losses))	$ 90	$ (106)	$ 371	$ 168
Portion of OTTI gains (losses) recognized in OCI	(90)	30	(371)	(244)
Total credit related OTTI losses recognized in earnings		$ (76)		$ (76)

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Fair Value Measurements (Details 2) (Significant Unobservable Inputs (Level 3) [Member], USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Pooled Trust Preferred Securities [Member]
Investments in securities that are classified as level 3
Fair Value	$ 3,617	$ 2,981
Pooled Trust Preferred Securities [Member] | Discounted cash flow methodology [Member] | Minimum [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	0.00%	0.00%
Cumulative Default	2.00%	3.00%
Loss Given Default	85.00%	85.00%
Cure Given Default	0.00%	0.00%
Pooled Trust Preferred Securities [Member] | Discounted cash flow methodology [Member] | Maximum [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	76.00%	76.00%
Cumulative Default	100.00%	100.00%
Loss Given Default	100.00%	100.00%
Cure Given Default	75.00%	75.00%
Pooled Trust Preferred Securities [Member] | Discounted cash flow methodology [Member] | Weighted Average [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	7.20%	7.50%
Cumulative Default	18.60%	19.60%
Loss Given Default	95.40%	94.90%
Cure Given Default	36.60%	33.80%
PRIVATIVE MORTGAGE-BACKED SECURITIES [Member]
Investments in securities that are classified as level 3
Fair Value	3,036	3,532
PRIVATIVE MORTGAGE-BACKED SECURITIES [Member] | Multi-dimensional spread tables [Member] | Minimum [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	14.40%	10.30%
Constant Default Rate	0.80%	9.00%
Loss Severity	21.00%	20.00%
PRIVATIVE MORTGAGE-BACKED SECURITIES [Member] | Multi-dimensional spread tables [Member] | Maximum [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	14.50%	14.50%
Constant Default Rate	20.30%	20.40%
Loss Severity	52.00%	55.00%
PRIVATIVE MORTGAGE-BACKED SECURITIES [Member] | Multi-dimensional spread tables [Member] | Weighted Average [Member]
Investments in securities that are classified as level 3
Cumulative Prepayment	14.50%	13.90%
Constant Default Rate	4.00%	4.00%
Loss Severity	34.10%	33.60%
IMPAIRED LOANS [Member]
Investments in securities that are classified as level 3
Fair Value	10,105	7,817
OTHER REAL ESTATE OWNED [Member]
Investments in securities that are classified as level 3
Fair Value	$ 9,211	$ 11,974

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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
GAINS AND LOSSES (REALIZED/UNREALIZED):
TRANSFERS INTO (OUT OF) OF LEVEL 3			$ (4,913)
Significant Unobservable Inputs (Level 3) [Member]
Reconciliation for all assets and liabilities measured at fair value on a recurring basis
Beginning Balance	6,662	6,513	13,140
GAINS AND LOSSES (REALIZED/UNREALIZED):
Included in Earnings	0		(76)
Included in Other Comprehensive Income	300	742	1,427
SETTLEMENTS	(309)	(602)	(3,065)
TRANSFERS INTO (OUT OF) OF LEVEL 3	0
Ending Balance	6,653	6,653	6,513
Pooled Trust Preferred Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Reconciliation for all assets and liabilities measured at fair value on a recurring basis
Beginning Balance	3,292	2,981	2,820
GAINS AND LOSSES (REALIZED/UNREALIZED):
Included in Earnings
Included in Other Comprehensive Income	351	831	313
SETTLEMENTS	(26)	(195)	(152)
TRANSFERS INTO (OUT OF) OF LEVEL 3
Ending Balance	3,617	3,617	2,981
Single Trust Preferred Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Reconciliation for all assets and liabilities measured at fair value on a recurring basis
Beginning Balance		0	4,210
GAINS AND LOSSES (REALIZED/UNREALIZED):
Included in Earnings
Included in Other Comprehensive Income			703
SETTLEMENTS			0
TRANSFERS INTO (OUT OF) OF LEVEL 3			(4,913)
Ending Balance	0	0	0
Private Mortgage-Backed Securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Reconciliation for all assets and liabilities measured at fair value on a recurring basis
Beginning Balance	3,370	3,532	6,110
GAINS AND LOSSES (REALIZED/UNREALIZED):
Included in Earnings			(76)
Included in Other Comprehensive Income	(51)	(89)	411
SETTLEMENTS	(283)	(407)	(2,913)
TRANSFERS INTO (OUT OF) OF LEVEL 3
Ending Balance	$ 3,036	$ 3,036	$ 3,532

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Loans, Allowance for Loan Losses and Credit Quality (Details 9) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013 contract	Jun. 30, 2012 contract	Jun. 30, 2013 contract	Jun. 30, 2012 contract
TROUBLED DEBT RESTRUCTURINGS THAT SUBSEQUENTLY DEFAULTED:
Number of Contracts	5		6	2
Recorded Investment	$ 2,187		$ 2,418	$ 256
Commercial and Industrial [Member]
TROUBLED DEBT RESTRUCTURINGS THAT SUBSEQUENTLY DEFAULTED:
Number of Contracts	2		2
Recorded Investment	1,767		1,767
Commercial Real Estate [Member]
TROUBLED DEBT RESTRUCTURINGS THAT SUBSEQUENTLY DEFAULTED:
Number of Contracts	1		1	1
Recorded Investment	398		398	250
Small Business [Member]
TROUBLED DEBT RESTRUCTURINGS THAT SUBSEQUENTLY DEFAULTED:
Number of Contracts	2		3
Recorded Investment	22		253
Consumer Loan [Member]
TROUBLED DEBT RESTRUCTURINGS THAT SUBSEQUENTLY DEFAULTED:
Number of Contracts				1
Recorded Investment				$ 6

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Comprehensive Income/Loss (Tables)

6 Months Ended

Jun. 30, 2013

Comprehensive Income Loss [Abstract]

Comprehensive income

Information on the Company’s comprehensive income, presented net of taxes, is set forth below for the periods indicated:

	Three Months Ended June 30, 2013									Six Months Ended June 30, 2013
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(7,502	)	$	2,910		$	(4,592	)	$	(8,736	)	$	3,365		$	(5,371	)
Less: net security losses reclassified into other noninterest income (1)	4			(1		)	3			4			(1		)	3			(4	)
Change in fair value of securities available for sale	(7,498		)	2,909			(4,589		)	(8,732		)	3,364			(5,368		)
Change in fair value of cash flow hedges	1,294			(529		)	765			1,289			(526		)	763
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,443			(589		)	854			2,859			(1,168		)	1,691			(4	)
Net change in fair value of cash flow hedges	2,737			(1,118		)	1,619			4,148			(1,694		)	2,454
Amortization of certain costs included in net periodic retirement costs (3)	51			(9		)	42			73			(30		)	43			(4	)
Total other comprehensive income (loss)	$	(4,710	)	$	1,782		$	(2,928	)	$	(4,511	)	$	1,640		$	(2,871	)

	Three Months Ended June 30, 2012									Six Months Ended June 30, 2012
	Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount			Pre Tax Amount			Tax (Expense) Benefit			After Tax Amount
	(Dollars in thousands)									(Dollars in thousands)
Change in fair value of securities available for sale	$	(186	)	$	47		$	(139	)	$	(432	)	$	132		$	(300	)
Less: net security losses reclassified into other noninterest income (1)	76			(31		)	45			76			(31		)	45			(4	)
Change in fair value of securities available for sale	(110		)	16			(94		)	(356		)	101			(255		)
Change in fair value of cash flow hedges	(2,074		)	847			(1,227		)	(2,021		)	825			(1,196		)
Less: net cash flow hedge losses reclassified into interest on borrowings expense (2)	1,346			(550		)	796			2,638			(1,077		)	1,561			(4	)
Net change in fair value of cash flow hedges	(728		)	297			(431		)	617			(252		)	365
Amortization of certain costs included in net periodic retirement costs (3)	39			(16		)	23			77			(31		)	46			(4	)
Total other comprehensive income	$	(799	)	$	297		$	(502	)	$	338		$	(182	)	$	156

(1) Net security losses includes pre-tax OTTI credit related losses of $0 for the three and six month ended June 30, 2013 and $76,000 for the three and six months ended June 30, 2012.

(2) Includes the remaining balance of a realized but unrecognized gain, net of tax, from the termination of interest rate swaps in June 2009. The original gain of $1.4 million, net of tax, will be recognized in earnings through December 2018, the original maturity date of the swap. The balance of this gain has amortized to $787,000 and $931,000 at June 30, 2013 and 2012, respectively.

(3) The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in the Employee Benefit Plans footnote in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

(4) Total reclassifications into income for the period were $899,000 and $1,737,000 for the three and six months ending June 30, 2013 and $864,000 and $1,652,000 for the three and six months ending June 30, 2012, respectively.

Company's accumulated other comprehensive loss, net of tax

Information on the Company’s accumulated other comprehensive income (loss), net of tax is comprised of the following components as of the periods indicated:

	Unrealized Gain on Securities			Unrealized Loss on Cash Flow Hedge			Deferred Gain on Hedge Transactions			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
	2013
	(Dollars in thousands)
Beginning balance January 1, 2013	$	5,478		$	(9,577	)	$	859		$	(1,286	)	$	(4,526	)
Net change in other comprehensive income (loss)	$	(5,368	)	$	2,526		$	(72	)	$	43		$	(2,871	)
Ending balance June 30, 2013	110			(7,051		)	787			(1,243		)	(7,397		)
	2012
Beginning balance January 1, 2012	$	6,574		$	(10,804	)	$	1,004		$	(1,260	)	$	(4,486	)
Net change in other comprehensive income (loss)	$	(255	)	$	438		$	(73	)	$	46		$	156
Ending balance June 30, 2012	6,319			(10,366		)	931			(1,214		)	(4,330		)

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Consolidated Statements of Stockholders' Equity (Unaudited) (USD $) In Thousands	Total	Common Stock Outstanding	Common Stock	Value of Shares Held in Rabbi Trust at Cost	Deferred Compensation Obligation	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2011	$ 469,057	$ 21,499,768	$ 213	$ (2,980)	$ 2,980	$ 233,878	$ 239,452	$ (4,486)
Net income	21,057						21,057
Other comprehensive income (loss)	156							156
Common dividend declared	(9,080)						(9,080)
Proceeds from exercise of stock options	459	21,658				459
Tax benefit related to equity award activity	59					59
Equity based compensation	1,551					1,551
Restricted stock awards issued, net of awards surrendered	(344)	85,254	1			(345)
Shares issued under direct stock purchase plan	591	21,030				591
Deferred compensation obligation				(98)	98
Tax benefit related to deferred compensation distributions	86					86
Ending balance at Jun. 30, 2012	483,592	21,627,710	214	(3,078)	3,078	236,279	251,429	(4,330)
Beginning balance at Dec. 31, 2012	529,320	22,774,009	225	(3,179)	3,179	269,950	263,671	(4,526)
Net income	25,010						25,010
Other comprehensive income (loss)	(2,871)							(2,871)
Common dividend declared	(10,070)						(10,070)
Proceeds from exercise of stock options	744	30,029				744
Tax benefit related to equity award activity	312					312
Equity based compensation	1,389					1,389
Restricted stock awards issued, net of awards surrendered	(668)	89,431	1			(669)
Shares issued under direct stock purchase plan	339	10,815				339
Deferred compensation obligation				(115)	115
Tax benefit related to deferred compensation distributions	100					100
Ending balance at Jun. 30, 2013	$ 543,605	$ 22,904,284	$ 226	$ (3,294)	$ 3,294	$ 272,165	$ 278,611	$ (7,397)

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 25,010	$ 21,057
Adjustments to reconcile net income to cash provided by operating activities
Depreciation and amortization	4,141	5,346
Provision for loan losses	4,400	10,100
Deferred income tax expense (benefit)	5	(19)
Net loss on sale of investments	4
Loss on write-down of investments in securities available for sale		76
Loss (gain) on sale of fixed assets	28	(16)
Loss on sale of other real estate owned and foreclosed assets	127	290
Gain realized from early termination of hedging relationship		(22)
Realized gain on sale leaseback transaction	(517)	(517)
Stock based compensation	1,389	1,551
Excess tax benefit related to equity award activity	(312)	(59)
Increase in cash surrender value of life insurance policies	(1,531)	(1,451)
Change in fair value on loans held for sale	1,335	(112)
Net change in:
Trading assets		(265)
Loans held for sale	14,355	(1,698)
Other assets	37,689	(4,975)
Other liabilities	(14,885)	831
Total adjustments	46,228	9,060
Net cash provided by operating activities	71,238	30,117
Cash flows used in investing activities
Proceeds from sales of securities available for sale	169
Proceeds from maturities and principal repayments of securities available for sale	50,709	46,434
Purchase of securities available for sale	(34,878)	(71,699)
Proceeds from maturities and principal repayments of securities held to maturity	27,535	25,944
Purchase of securities held to maturity	(74,834)	(9,975)
Redemption of Federal Home Loan Bank stock	3,093	2,290
Proceeds from (purchase of) life insurance policies	(101)	63
Net increase in loans	(15,713)	(202,505)
Purchase of bank premises and equipment	(4,221)	(3,889)
Proceeds from the sale of bank premises and equipment		30
Proceeds resulting from early termination of hedging relationship		22
Proceeds from the sale of other real estate owned and foreclosed assets	5,237	1,801
Net cash used in investing activities	(43,004)	(211,484)
Cash flows provided by financing activities
Net increase (decrease) in time deposits	(43,154)	9,373
Net increase in other deposits	172,940	191,931
Net decrease in wholesale and customer repurchase agreements	(11,533)	(21,290)
Net advance of short term Federal Home Loan Bank advances	(11,695)	(40,000)
Net repayment of long term Federal Home Loan Bank advances	(9,123)	0
Proceeds from exercise of stock options	744	459
Tax benefit related to equity award activity	312	59
Restricted stock awards issued, net of awards surrendered	(668)	(344)
Tax benefit from deferred compensation distribution	100	86
Shares issued under direct stock purchase plan	339	591
Common dividends paid	(5,032)	(8,623)
Net cash provided by financing activities	93,230	132,242
Net increase (decrease) in cash and cash equivalents	121,464	(49,125)
Cash and cash equivalents at beginning of year	215,474	237,504
Cash and cash equivalents at end of period	336,938	188,379
Supplemental schedule of noncash investing and financing activities
Transfer of loans to foreclosed assets	1,138	5,136
Transfer of securities from trading to available for sale		$ 8,505

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Securities

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses, other-than-temporary impairment recorded in other comprehensive income and fair value of securities available for sale and securities held to maturity for the periods below:

	June 30, 2013												December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value		Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. Government agency securities	$	20,050	$	—	$	(457	)	$	—		$	19,593	$	20,053	$	769	$	—		$	—		$	20,822
Agency mortgage-backed securities	193,741		7,425		(2,865		)	—			198,301		209,381		12,158		(114		)	—			221,425
Agency collateralized mortgage obligations	66,087		612		(603		)	—			66,096		67,412		1,001		(37		)	—			68,376
Private mortgage-backed securities	2,820		—		—			216			3,036		3,227		—		—			305			3,532
Single issuer trust preferred securities issued by banks	2,233		11		—			—			2,244		2,255		—		(15		)	—			2,240
Pooled trust preferred securities issued by banks and insurers	8,158		—		(2,044		)	(2,497		)	3,617		8,353		—		(2,415		)	(2,957		)	2,981
Marketable securities	10,771		464		(267		)	—			10,968		9,875		92		(57		)	—			9,910
Total available for sale securities	$	303,860	$	8,512	$	(6,236	)	$	(2,281	)	$	303,855	$	320,556	$	14,020	$	(2,638	)	$	(2,652	)	$	329,286
Held to maturity securities
U.S. Treasury securities	$	1,012	$	62	$	—		$	—		$	1,074	$	1,013	$	121	$	—		$	—		$	1,134
Agency mortgage-backed securities	56,889		1,980		—			—			58,869		72,360		4,233		—			—			76,593
Agency collateralized mortgage obligations	159,945		1,632		(3,366		)	—			158,211		97,507		2,875		(2		)	—			100,380
State, county, and municipal securities	916		10		—			—			926		915		11		—			—			926
Single issuer trust preferred securities issued by banks	1,510		20		—			—			1,530		1,516		10		—			—			1,526
Corporate debt securities	5,006		235		—			—			5,241		5,007		258		—			—			5,265
Total held to maturity securities	$	225,278	$	3,939	$	(3,366	)	$	—		$	225,851	$	178,318	$	7,508	$	(2	)	$	—		$	185,824
Total	$	529,138	$	12,451	$	(9,602	)	$	(2,281	)	$	529,706	$	498,874	$	21,528	$	(2,640	)	$	(2,652	)	$	515,110

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The Company realized a gain of $4,000 and a net loss of $4,000 of marketable securities classified as available for sale during the three and six month periods ended June 30, 2013.

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity as of June 30, 2013 is presented below:

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	63	$	65	$	240	$	241
Due after one year to five years	10,495		11,038		6,318		6,597
Due after five years to ten years	81,294		80,377		1,012		1,074
Due after ten years	201,237		201,407		217,708		217,939
Total debt securities	$	293,089	$	292,887	$	225,278	$	225,851
Marketable securities	$	10,771	$	10,968	$	—	$	—
Total	$	303,860	$	303,855	$	225,278	$	225,851

The securities portfolio includes $8.0 million and $7.7 million, respectively, of callable securities in the Company’s investment portfolio at June 30, 2013 and December 31, 2012.

At June 30, 2013 and December 31, 2012, investment securities carried at $353.4 million and $365.8 million, respectively, were pledged to secure public deposits, assets sold under repurchase agreements, letters of credit, and for other purposes.

At June 30, 2013 and December 31, 2012, the Company had no investments in obligations of individual states, counties, or municipalities, which exceeded 10% of Stockholders’ Equity.

Other-Than-Temporary Impairment ("OTTI")

The Company continually reviews investment securities for the existence of OTTI, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, the credit worthiness of the obligor of the security, volatility of earnings, current analysts’ evaluations, the Company’s intent to sell the security, or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment.

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2013
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agency securities	2	19,593		(457		)	—		—			19,593		(457		)
Agency mortgage-backed securities	33	$	76,840	$	(2,865	)	$	—	$	—		$	76,840	$	(2,865	)
Agency collateralized mortgage obligations	13	132,729		(3,969		)	—		—			132,729		(3,969		)
Pooled trust preferred securities issued by banks and insurers	2	—		—			2,244		(2,044		)	2,244		(2,044		)
Marketable securities	26	$	6,258	$	(267	)	$	—	$	—		$	6,258	$	(267	)
Total temporarily impaired securities	76	$	235,420	$	(7,558	)	$	2,244	$	(2,044	)	$	237,664	$	(9,602	)

	December 31, 2012
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
Agency mortgage-backed securities	17	$	23,814	$	(114	)	$	—	$	—		$	23,814	$	(114	)
Agency collateralized mortgage obligations	2	17,677		(39		)	—		—			17,677		(39		)
Single issuer trust preferred securities issued by banks and insurers	2	$	2,240	$	(15	)	$	—	$	—		$	2,240	$	(15	)
Pooled trust preferred securities issued by banks and insurers	2	$	—	$	—		$	2,069	$	(2,415	)	$	2,069	$	(2,415	)
Marketable securities	15	$	6,613	$	(57	)	$	—	$	—		$	6,613	$	(57	)
Total temporarily impaired securities	38	$	50,344	$	(225	)	$	2,069	$	(2,415	)	$	52,413	$	(2,640	)

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category are as follows at June 30, 2013:

• U.S. Government Agency Securities: Government Agency bonds have historically been considered to be of high credit quality. The bonds in the bank's portfolio consist of debt obligations of the Federal Home Loan Bank and the Federal Farm Credit Banks. Because these firms are owned by shareholders and not part of the federal government, these bonds are not backed by the government's “full faith and credit” guarantee and are therefore subject to credit and default risk. The risk of default on these entities are considered low and the credit quality is currently well above investment grade. As such, the decline in market value of these securities is attributable to changes in interest rates and not credit quality.

• Agency Mortgage-Backed Securities and Collateralized Mortgage Obligations:This portfolio has contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.

• Single Issuer Trust Preferred Securities: This portfolio consist of two securities, both of which are below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for each of the issuers, including regulatory capital ratios of issuers.

• Pooled Trust Preferred Securities: This portfolio consists of two securities, both of which are below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market and the significant risk premiums required in the current economic environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

• Marketable Securities: This portfolio consists of mutual funds and other equity investments. During some periods, the mutual funds in the Company’s investment portfolio may have unrealized losses resulting from market fluctuations as well as the risk premium associated with that particular asset class. For example, emerging market equities tend to trade at a higher risk premium than U.S. government bonds and thus, will fluctuate to a greater degree on both the upside and the downside. In the context of a well-diversified portfolio, however, the correlation amongst the various asset classes represented by the funds serves to minimize downside risk. The Company evaluates each mutual fund in the portfolio regularly and measures performance on both an absolute and relative basis. A reasonable recovery period for positions with an unrealized loss is based on management’s assessment of general economic data, trends within a particular asset class, valuations, earnings forecasts and bond durations.

Management monitors the following issuances closely for impairment due to the history of OTTI losses recorded within these classes of securities. Management has determined that these securities possess characteristics which in the current economic environment could lead to further credit related OTTI charges. The following tables summarize pertinent information as of June 30, 2013, that was considered by management in determining if OTTI existed:

	Class	Amortized Cost (1)		Gross Unrealized Gain/(Loss)			Non-Credit Related  Other- Than-Temporary (Impairment)/Recovery			Fair Value		Total Cumulative Credit Related Other-Than- Temporary Impairment			Total Cumulative Other-Than- Temporary (Impairment)/Recovery to Date
	(Dollars in thousands)
Pooled trust preferred securities
Pooled trust preferred security A	C1	$	1,283	$	—		$	(851	)	$	432	$	(3,676	)	$	(4,527	)
Pooled trust preferred security B	D	—		—			—			—		(3,481		)	(3,481		)
Pooled trust preferred security C	C1	506		—			(319		)	187		(482		)	(801		)
Pooled trust preferred security D	D	—		—			—			—		(990		)	(990		)
Pooled trust preferred security E	C1	2,081		—			(1,327		)	754		(1,368		)	(2,695		)
Pooled trust preferred security F	B	1,878		(1,082		)	—			796		—			—
Pooled trust preferred security G	A1	2,410		(962		)	—			1,448		—			—
Total pooled trust preferred securities		$	8,158	$	(2,044	)	$	(2,497	)	$	3,617	$	(9,997	)	$	(12,494	)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	$	1,974	$	—		$	125		$	2,099	$	(766	)	$	(641	)
Private mortgage-backed securities-two	A19	846		—			91			937		(85		)	6
Total private mortgage-backed securities		$	2,820	$	—		$	216		$	3,036	$	(851	)	$	(635	)
Total		$	10,978	$	(2,044	)	$	(2,281	)	$	6,653	$	(10,848	)	$	(13,129	)

(1) The amortized cost reflects previously recorded OTTI charges recognized in earnings for the applicable securities.

	Class	Number of Performing Banks and Insurance Cos. in Issuances (Unique)	Current Deferrals/ Defaults/Losses (As a % of Original  Collateral)	Total Projected Defaults/Losses (as a % of Performing Collateral)	Excess  Subordination (After Taking  into Account Best  Estimate of Future Deferrals/ Defaults/Losses) (1)	Lowest credit Ratings to date (2)
Pooled trust preferred securities
Trust preferred security A	C1	56	33.08%	20.64%	—%	C (Fitch & Moody's)
Trust preferred security B	D	56	33.08%	20.64%	—%	C (Fitch)
Trust preferred security C	C1	47	29.29%	15.20%	—%	C (Fitch & Moody's)
Trust preferred security D	D	47	29.29%	15.20%	—%	C (Fitch)
Trust preferred security E	C1	46	26.86%	16.73%	0.66%	C (Fitch & Moody's)
Trust preferred security F	B	32	25.08%	18.83%	30.90%	CC (Fitch)
Trust preferred security G	A1	32	25.08%	18.83%	55.89%	CCC+ (S&P)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	N/A	6.53%	13.12%	—%	D (Fitch)
Private mortgage-backed securities-two	A19	N/A	4.18%	7.32%	—%	C (Fitch)

(1) Excess subordination represents the additional default/losses in excess of both current and projected defaults/losses that the security can absorb before the security experiences any credit impairment.

(2) The Company reviewed credit ratings provided by S&P, Moody’s and Fitch in its evaluation of issuers.

Per review of the factors outlined above, seven of the securities shown in the table above were deemed to be OTTI. The remaining securities were not deemed to be OTTI as the Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis.

The following table shows the total OTTI that the Company recorded for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Gross change in OTTI recorded on certain investments (gain/(losses))	$	90		$	(106	)	$	371		$	168
Portion of OTTI gains (losses) recognized in OCI	(90		)	30			(371		)	(244		)
Total credit related OTTI losses recognized in earnings	$	—		$	(76	)	—			$	(76	)

The following table shows the cumulative credit related component of OTTI for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Balance at beginning of period	$	(10,847	)	$	(10,771	)	$	(10,847	)	$	(10,771	)
Add
Incurred on securities not previously impaired	—			—			—			—
Incurred on securities previously impaired	—			(76		)	—			(76		)
Less
Realized gain/loss on sale of securities	—			—			—			—
Reclassification due to changes in Company’s intent	—			—			—			—
Increases in cash flow expected to be collected	—			—			—			—
Balance at end of period	$	(10,847	)	$	(10,847	)	$	(10,847	)	$	(10,847	)

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Independent Bank Corp. (the “Company”) is a state chartered, federally registered bank holding company, incorporated in 1985. The Company is the sole stockholder of Rockland Trust Company (“Rockland Trust” or the “Bank”), a Massachusetts trust company chartered in 1907.

All material intercompany balances and transactions have been eliminated in consolidation. Certain previously reported amounts may have been reclassified to conform to the current year’s presentation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial statements, primarily consisting of normal recurring adjustments, have been included. Operating results for the quarter ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other interim period.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

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Loans, Allowance for Loan Losses and Credit Quality (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013	Jun. 30, 2012
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	7		19		20	35
Pre-Modification Outstanding Recorded Investment	$ 1,737		$ 5,361		$ 3,732	$ 7,132
Post-Modification Outstanding Recorded Investment(1)	1,737	[1]	5,363	[1]	3,758	7,134
Commercial and Industrial [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	2		7		2	11
Pre-Modification Outstanding Recorded Investment	282		1,115		282	1,273
Post-Modification Outstanding Recorded Investment(1)	282	[1]	1,115	[1]	282	1,273
Commercial Real Estate [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	1		7		2	9
Pre-Modification Outstanding Recorded Investment	664		3,839		1,063	4,907
Post-Modification Outstanding Recorded Investment(1)	664	[1]	3,839	[1]	1,063	4,907
Small Business [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	1		1		5	8
Pre-Modification Outstanding Recorded Investment	18		17		282	360
Post-Modification Outstanding Recorded Investment(1)	18	[1]	17	[1]	282	360
Residential Real Estate [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	2		1		6	2
Pre-Modification Outstanding Recorded Investment	744		261		1,900	378
Post-Modification Outstanding Recorded Investment(1)	744	[1]	261	[1]	1,926	378
Consumer - Home Equity [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	1		1		3	1
Pre-Modification Outstanding Recorded Investment	29		64		194	64
Post-Modification Outstanding Recorded Investment(1)	29	[1]	66	[1]	194	66
Consumer - Other [Member]
TROUBLED DEBT RESTRUCTURINGS:
Number of Contracts	0		2		2	4
Pre-Modification Outstanding Recorded Investment	0		65		11	150
Post-Modification Outstanding Recorded Investment(1)	$ 0	[1]	$ 65	[1]	$ 11	$ 150

[1] The post-modification balances represent the balance of the loan on the date of modifications. These amounts may show an increase when modifications include a capitalization of interest.

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 holding	Dec. 31, 2012 holding
Summary of gross unrealized losses and fair value of investments
No of holdings	76	38
Fair value, less than 12 months	$ 235,420	$ 50,344
Unrealized losses, less than 12 months	(7,558)	(225)
Fair value, 12 months or longer	2,244	2,069
Unrealized losses, 12 months or longer	(2,044)	(2,415)
Fair value, Total	237,664	52,413
Unrealized losses, Total	(9,602)	(2,640)
U. S. Government Agency Securities [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings	2
Fair value, less than 12 months	19,593
Unrealized losses, less than 12 months	(457)
Fair value, 12 months or longer
Unrealized losses, 12 months or longer
Fair value, Total	19,593
Unrealized losses, Total	(457)
Agency Mortgage-Backed Securities [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings	33	17
Fair value, less than 12 months	76,840	23,814
Unrealized losses, less than 12 months	(2,865)	(114)
Fair value, 12 months or longer		0
Unrealized losses, 12 months or longer		0
Fair value, Total	76,840	23,814
Unrealized losses, Total	(2,865)	(114)
Single Issuer Trust Preferred Securities Issued by Banks and Insurers [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings		2
Fair value, less than 12 months		2,240
Unrealized losses, less than 12 months		(15)
Fair value, 12 months or longer
Unrealized losses, 12 months or longer
Fair value, Total		2,240
Unrealized losses, Total		(15)
Agency Collateralized Mortgage Obligations [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings	13	2
Fair value, less than 12 months	132,729	17,677
Unrealized losses, less than 12 months	(3,969)	(39)
Fair value, 12 months or longer		0
Unrealized losses, 12 months or longer		0
Fair value, Total	132,729	17,677
Unrealized losses, Total	(3,969)	(39)
Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings	2	2
Fair value, less than 12 months	0
Unrealized losses, less than 12 months	0
Fair value, 12 months or longer	2,244	2,069
Unrealized losses, 12 months or longer	(2,044)	(2,415)
Fair value, Total	2,244	2,069
Unrealized losses, Total	(2,044)	(2,415)
Marketable Equity Securities [Member]
Summary of gross unrealized losses and fair value of investments
No of holdings	26	15
Fair value, less than 12 months	6,258	6,613
Unrealized losses, less than 12 months	(267)	(57)
Fair value, 12 months or longer
Unrealized losses, 12 months or longer
Fair value, Total	6,258	6,613
Unrealized losses, Total	$ (267)	$ (57)

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Securities (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary of cumulative credit related component of OTTI
Balance at beginning of period	$ (10,847)	$ (10,771)	$ (10,847)	$ (10,771)
Add
Incurred on securities not previously impaired
Incurred on securities previously impaired		(76)		(76)
Less
Realized gain/loss on sale of securities
Reclassification due to changes in Company’s intent
Increases in cash flow expected to be collected
Balance at end of period	$ (10,847)	$ (10,847)	$ (10,847)	$ (10,847)

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Loans, Allowance for Loan Losses and Credit Quality (Details 3)	Jun. 30, 2013 score		Dec. 31, 2012 score
Residential Portfolio Segment [Member]
Weighted average FICO scores and the weighted average combined LTV Ratio
FICO Score (re-scored) (1)	739	[1]	727	[1]
Combined LTV (re-valued) (2)	70.00%	[2]	67.00%	[2]
Consumer Home Equity [Member]
Weighted average FICO scores and the weighted average combined LTV Ratio
FICO Score (re-scored) (1)	763	[1]	763	[1]
Combined LTV (re-valued) (2)	55.00%	[2]	54.00%	[2]

[1] The average FICO scores for June 30, 2013 are based upon rescores available from May 2013 and actual score data for loans booked between June 1 and June 30, 2013. The average FICO scores for December 31, 2012 are based upon rescores available from November 2012 and actual score data for loans booked between December 1 and December 31, 2012.

[2] The combined LTV ratios for June 30, 2013 are based upon updated automated valuations as of February 2013. The combined LTV ratios for December 31, 2012 are based upon updated automated valuations as of November 30, 2011.

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Derivatives and Hedging Activities (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	$ 18,704	$ 30,426
Liability Derivatives	30,635	46,570
Other Assets [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	18,704	30,426
Other Liabilities [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Liability Derivatives	18,714	30,381
Interest rate swaps [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	0	0
Liability Derivatives	11,921	16,189
Interest rate swaps [Member] | Derivatives designated as hedges [Member] | Other Assets [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives
Interest rate swaps [Member] | Derivatives designated as hedges [Member] | Other Liabilities [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Liability Derivatives	11,921	16,189
Loan level swaps [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	18,413	28,678
Liability Derivatives	18,437	28,663
Loan level swaps [Member] | Derivatives not designated as hedges [Member] | Other Liabilities [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Liability Derivatives	18,437	28,663
Foreign exchange contracts [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	291	1,748
Liability Derivatives	277	1,718
Foreign exchange contracts [Member] | Derivatives not designated as hedges [Member] | Other Assets [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Asset Derivatives	291	1,748
Foreign exchange contracts [Member] | Derivatives not designated as hedges [Member] | Other Liabilities [Member]
Fair value of derivative financial instruments as well as their classification on the balance sheet
Liability Derivatives	$ 277	$ 1,718

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Earnings Per Share (Details 1)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Details of anti dilutive options to purchase common stock
STOCK OPTIONS	241,268	804,249	245,312	807,147

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Loans, Allowance for Loan Losses and Credit Quality (Details 11) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Interest income recognized on impaired loans
Average Recorded Investment	$ 73,494	$ 61,311	$ 74,346	$ 62,598
Interest Income Recognized	999	913	2,005	1,838
WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	36,259	28,261	36,875	28,570
Interest Income Recognized	539	463	1,082	935
WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	37,235	33,050	37,471	34,028
Interest Income Recognized	460	450	923	903
Commercial and Industrial [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	8,396	6,401	8,836	6,490
Interest Income Recognized	114	85	230	172
Commercial and Industrial [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	3,076	1,343	3,221	1,398
Interest Income Recognized	43	28	89	60
Commercial Real Estate [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	18,392	20,214	18,448	20,407
Interest Income Recognized	312	350	628	707
Commercial Real Estate [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	18,242	15,685	18,235	16,432
Interest Income Recognized	263	229	526	473
Commercial Construction [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	1,608		1,608
Interest Income Recognized	13		26
Commercial Construction [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment
Interest Income Recognized
Small Business [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	1,393	1,474	1,454	1,517
Interest Income Recognized	22	25	46	52
Small Business [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	748	1,043	760	1,082
Interest Income Recognized	12	16	23	32
Residential Real Estate [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	2,236		2,253
Interest Income Recognized	25		44
Residential Real Estate [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	13,688	12,958	13,732	13,053
Interest Income Recognized	127	157	255	296
Consumer - Home Equity [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	3,674	100	3,691	100
Interest Income Recognized	43	2	85	3
Consumer - Home Equity [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	407	240	410	241
Interest Income Recognized	5	4	10	8
Consumer - Other [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	560	72	585	56
Interest Income Recognized	10	1	23	1
Consumer - Other [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Interest income recognized on impaired loans
Average Recorded Investment	1,074	1,781	1,113	1,822
Interest Income Recognized	$ 10	$ 16	$ 20	$ 34

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Time certificates of deposit least amount	$ 100,000	$ 100,000
Securities Held to Maturity, fair value	$ 225,851,000	$ 185,824,000
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares authorized	1,000,000	1,000,000
Preferred Stock, shares outstanding
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	75,000,000	75,000,000
Common Stock, shares issued	22,904,284	22,774,009
Common Stock, shares outstanding	22,904,284	22,774,009
Common Stock, unvested restricted Stock awards	271,390	264,124
Shares Held in Rabbi Trust	175,618	179,814

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Stock Based Compensation

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

During 2013, the Company made the following awards of restricted stock:

Date	Shares Granted	Plan	Fair Value		Vesting Period
1/16/2013	2,000	2005 Employee Stock Plan	$	30.48	Ratably over 3 years from grant date
2/14/2013	93,800	2005 Employee Stock Plan	$	31.51	Ratably over 5 years from grant date
5/21/2013	14,700	2010 Non-Employee Director Stock Plan	$	33.17	At the end of 5 years from grant date

The fair value of the restricted stock awards is based upon the average of the high and low price at which the Company’s common stock traded on the date of grant. The holders of restricted stock awards participate fully in the rewards of stock ownership of the Company, including voting and dividend rights.

The Company has not issued any awards of options to purchase shares of common stock during 2013.

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Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 12,758		$ 8,874		$ 25,010		$ 21,057
Unrealized losses on securities
Change in fair value of securities available for sale	(4,592)		(139)		(5,371)		(300)
Less: net security losses reclassified into earnings	3		45		3		45
Net change in fair value of securities available for sale	(4,589)		(94)		(5,368)		(255)
Unrealized gains (losses) on cash flow hedges
Change in fair value of cash flow hedges	765		(1,227)		763		(1,196)
Less: net cash flow hedge gains (losses) reclassified into earnings	854	[1]	796	[1]	1,691	[1],[2]	1,561	[1],[2]
Net change in fair value of cash flow hedges	1,619		(431)		2,454		365
Amortization of certain costs included in net periodic retirement costs	42	[3]	23	[3]	43		46
Total other comprehensive (loss) income	(2,928)		(502)		(2,871)		156
Total comprehensive income	$ 9,830		$ 8,372		$ 22,139		$ 21,213

[1] Includes the remaining balance of a realized but unrecognized gain, net of tax, from the termination of interest rate swaps in June 2009. The original gain of $1.4 million, net of tax, will be recognized in earnings through December 2018, the original maturity date of the swap. The balance of this gain has amortized to $787,000 and $931,000 at June 30, 2013 and 2012, respectively.

[2] Total reclassifications into income for the period were $899,000 and $1,737,000 for the three and six months ending June 30, 2013 and $864,000 and $1,652,000 for the three and six months ending June 30, 2012, respectively.

[3] The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in the Employee Benefit Plans footnote in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

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Derivatives and Hedging Activities (Details 7) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	$ 30,635	$ 46,570
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	30,635	46,570
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	1,843	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	31,571	50,957
Net Amount	(2,779)	(4,387)
Interest rate swaps [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	11,921	16,189
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	11,921	16,189
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	0	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	15,774	19,185
Net Amount	(3,853)	(2,996)
Loan level swaps [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	18,437	28,663
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	18,437	28,663
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	1,735	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	15,797	31,772
Net Amount	905	(3,109)
Foreign exchange contracts [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	277	1,718
Gross Amounts Offset in the Statement of Financial Position	0	0
Net Amounts of Liabilities Presented in the Statement of Financial Position	277	1,718
Gross Amounts Not Offset in the Statement of Financial Position, Financial Instruments	108	0
Gross Amounts Not Offset in the Statement of Financial Position, Cash Collateral Pledged	0	0
Net Amount	$ 169	$ 1,718

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Assets
Cash and due from banks	$ 139,672		$ 98,144
Interest earning deposits with banks	197,266		117,330
Securities
Securities available for sale	303,855		329,286
Securities held to maturity (fair value $225,851 and $185,824)	225,278		178,318
Total securities	529,133		507,604
Loans held for sale (at fair value)	32,497		48,187
Loans
Commercial and industrial	742,343		687,511
Commercial real estate	2,150,833		2,122,153
Commercial construction	231,719		188,768
Small business	77,283		78,594
Residential real estate	509,185		604,668
Residential construction	4,366		8,213
Home equity—1st position	481,542		487,246
Home equity—2nd position	310,908		314,903
Other consumer	21,932		26,955
Total loans	4,530,111	[1]	4,519,011	[1]
Less: allowance for loan losses	(52,976)		(51,834)
Net loans	4,477,135		4,467,177
Federal Home Loan Bank stock	38,674		41,767
Bank premises and equipment, net	56,344		55,227
Goodwill	150,391		150,391
Identifiable intangible assets	10,698		11,753
Cash surrender value of life insurance policies	98,893		97,261
Other real estate owned & other foreclosed assets	9,387		12,150
Other assets	112,505		149,994
Total assets	5,852,595		5,756,985
Deposits
Demand deposits	1,283,301		1,248,394
Savings and interest checking accounts	1,798,495		1,691,187
Money market	884,696		853,971
Time certificates of deposit of $100,000 and over	292,046		317,438
Other time certificates of deposits	417,925		435,687
Total deposits	4,676,463		4,546,677
Borrowings
Federal Home Loan Bank and other borrowings	261,456		283,569
Wholesale repurchase agreements	50,000		50,000
Customer repurchase agreements	141,826		153,359
Junior subordinated debentures	74,018		74,127
Subordinated debentures	30,000		30,000
Total borrowings	557,300		591,055
Other liabilities	75,227		89,933
Total liabilities	5,308,990		5,227,665
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value. authorized: 1,000,000 shares, outstanding: none
Common Stock, $.01 par value. Authorized: 75,000,000; Issued and Outstanding : 22,904,284 shares at June 30, 2013 and 22,774,009 Shares at December 31, 2012 (includes 271,390 and 264,124 shares of unvested participating restricted stock awards, respectively)	226		225
Shares held in rabbi trust at cost 175,618 shares at June 30, 2013 and 179,814 shares at December 31, 2012	(3,294)		(3,179)
Deferred compensation obligation	3,294		3,179
Additional paid in capital	272,165		269,950
Retained earnings	278,611		263,671
Accumulated other comprehensive loss, net of tax	(7,397)		(4,526)
Total stockholders’ equity	543,605		529,320
Total liabilities and stockholders' equity	$ 5,852,595		$ 5,756,985

[1] The amount of deferred fees included in the ending balance was $2.6 million and $3.1 million at June 30, 2013 and December 31, 2012, respectively.

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Stock Based Compensation (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013
1/16/2013 [Member] | 2005 Employee Stock Plan [Member]
Restricted stock compensation footnote
Shares Granted		2,000
Fair Value		$ 30.48
Vesting Period	Ratably over 3 years from grant date
2/14/2013 [Member] | 2005 Employee Stock Plan [Member]
Restricted stock compensation footnote
Shares Granted		93,800
Fair Value		$ 31.51
Vesting Period	Ratably over 5 years from grant date
5/21/2013 [Member] | 2010 Non-Employee Director Stock Plan [Member]
Restricted stock compensation footnote
Shares Granted		14,700
Fair Value		$ 33.17
Vesting Period	At the end of 5 years from grant date

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Securities (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2013
Summary of pertinent information
Amortized Cost	$ 10,978	[1]
Gross Unrealized Gain/(Loss)	(2,044)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	(2,281)
Fair Value	6,653
Total Cumulative Credit Related Other- Than- Temporary Impairment	(10,848)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(13,129)
Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Amortized Cost	8,158	[1]
Gross Unrealized Gain/(Loss)	(2,044)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	(2,497)
Fair Value	3,617
Total Cumulative Credit Related Other- Than- Temporary Impairment	(9,997)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(12,494)
Private mortgage-backed securities [Member]
Summary of pertinent information
Amortized Cost	2,820	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	216
Fair Value	3,036
Total Cumulative Credit Related Other- Than- Temporary Impairment	(851)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(635)
Trust Preferred Security A [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	C1
Amortized Cost	1,283	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	(851)
Fair Value	432
Total Cumulative Credit Related Other- Than- Temporary Impairment	(3,676)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(4,527)
Trust Preferred Security B [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	D
Amortized Cost		[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery
Fair Value
Total Cumulative Credit Related Other- Than- Temporary Impairment	(3,481)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(3,481)
Trust Preferred Security C [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	C1
Amortized Cost	506	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	(319)
Fair Value	187
Total Cumulative Credit Related Other- Than- Temporary Impairment	(482)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(801)
Trust Preferred Security D [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	D
Amortized Cost		[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery
Fair Value
Total Cumulative Credit Related Other- Than- Temporary Impairment	(990)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(990)
Trust Preferred Security E [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	C1
Amortized Cost	2,081	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	(1,327)
Fair Value	754
Total Cumulative Credit Related Other- Than- Temporary Impairment	(1,368)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(2,695)
Trust Preferred Security F [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	B
Amortized Cost	1,878	[1]
Gross Unrealized Gain/(Loss)	(1,082)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery
Fair Value	796
Total Cumulative Credit Related Other- Than- Temporary Impairment
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date
Trust Preferred Security G [Member] | Pooled Trust Preferred Securities [Member]
Summary of pertinent information
Class	A1
Amortized Cost	2,410	[1]
Gross Unrealized Gain/(Loss)	(962)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery
Fair Value	1,448
Total Cumulative Credit Related Other- Than- Temporary Impairment
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date
Private Mortgage Backed-Securities-One [Member] | Private mortgage-backed securities [Member]
Summary of pertinent information
Class	2A1
Amortized Cost	1,974	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	125
Fair Value	2,099
Total Cumulative Credit Related Other- Than- Temporary Impairment	(766)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	(641)
Private Mortgage-Backed Securities-Two [Member] | Private mortgage-backed securities [Member]
Summary of pertinent information
Class	A19
Amortized Cost	846	[1]
Gross Unrealized Gain/(Loss)
Non-Credit Related Other-Than Temporary (Impairment)/Recovery	91
Fair Value	937
Total Cumulative Credit Related Other- Than- Temporary Impairment	(85)
Total Cumulative Other- Than- Temporary (Impairment)/Recovery to Date	$ 6

[1] The amortized cost reflects previously recorded OTTI charges recognized in earnings for the applicable securities.

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Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes

The following table reflects the Company’s derivative positions for the periods indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes:

June 30, 2013
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	$	(3,562	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	(3,563		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.65	%	(264		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.59	%	(258		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.27	%	2.94	%	(1,719		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.27	%	3.04	%	(1,955		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.27	%	1.71	%	(600		)
$	200,000									$	(11,921	)
December 31, 2012
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
				(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	$	(4,416	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	(4,417		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.65	%	(553		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.59	%	(539		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.31	%	2.94	%	(2,819		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.31	%	3.04	%	(2,647		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.31	%	1.71	%	(798		)
$	200,000									$	(16,189	)

Summary of net amortization income recognized

The table below presents the net amortization income recognized as an offset to interest expense related to previously terminated swaps for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Net amortization income	$	61	$	61	$	122	$	122

Summary of customer related derivative positions, not designated as hedging

The following table reflects the Company’s customer related derivative positions for the periods indicated below for those derivatives not designated as hedging:

		Notional Amount Maturing
	# of Positions (1)	2013		2014	2015	2016	Thereafter	Total		Fair Value
	June 30, 2013
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	158	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	13,519
Pay fixed, receive variable	152	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	(13,543	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	13	$	25,073	7,221	—	—	—	$	32,294	$	(64	)
Buys US currency, sells foreign exchange	13	$	25,073	7,221	—	—	—	$	32,294	$	78
	December 31, 2012
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	143	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	28,678
Pay fixed, receive variable	137	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	(28,663	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	16	$	42,516	—	—	—	—	$	42,516	$	1,748
Buys US currency, sells foreign exchange	16	$	42,516	—	—	—	—	$	42,516	$	(1,718	)

(1) The Company may enter into one swap agreement which offsets multiple reverse swap agreements. The positions will offset and the terms will be identical.

Fair value of derivative financial instruments as well as their classification on the balance sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet at the periods indicated:

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012		Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012
	(Dollars in thousands)
Derivatives designated as hedges
Interest rate swaps	Other assets	$	—	$	—	Other liabilities	$	11,921	$	16,189
Derivatives not designated as hedges
Customer Related Positions:
Loan level swaps	Other assets	$	18,413	$	28,678	Other liabilities	$	18,437	$	28,663
Foreign exchange contracts	Other assets	291		1,748		Other liabilities	277		1,718
Total		$	18,704	$	30,426		$	18,714	$	30,381

Effect of derivative financial instruments included in OCI and current earnings

The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Derivatives designated as hedges
Gain (loss) in OCI on derivatives (effective portion), net of tax	$	765		$	(1,227	)	$	763		$	(1,196	)
Loss reclassified from OCI into interest expense (effective portion)	$	(1,443	)	$	(1,346	)	$	(2,859	)	$	(2,638	)
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Interest expense	$	—		$	—		$	—		$	—
Other expense	—			—			—			—
Total	$	—		$	—		$	—		$	—
Derivatives not designated as hedges
Changes in fair value of customer related positions
Other income	$	14		$	51		$	26		$	73
Other expense	(56		)	(9		)	(81		)	(19		)
Total	$	(42	)	$	42		$	(55	)	$	54

Offsetting Assets

The following table presents the Company's asset derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Received		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	18,413		—		18,413		1,735		—		16,678
Customer foreign exchange contracts	291		—		291		108		—		183
	$	18,704	$	—	$	18,704	$	1,843	$	—	$	16,861
	December 31, 2012
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	28,678		—		28,678		—		—		28,678
Customer foreign exchange contracts	1,748		—		1,748		—		—		1,748
	$	30,426	$	—	$	30,426	$	—	$	—	$	30,426

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

Offsetting Liabilities

The following table presents the Company's liability derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Pledged		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	11,921	$	—	$	11,921	$	—	$	15,774	$	(3,853	)
Loan level swaps	18,437		—		18,437		1,735		15,797		905
Customer foreign exchange contracts	277		—		277		108		—		169
	$	30,635	$	—	$	30,635	$	1,843	$	31,571	$	(2,779	)
	December 31, 2012
Interest rate swaps	$	16,189	$	—	$	16,189	$	—	$	19,185	$	(2,996	)
Loan level swaps	28,663		—		28,663		—		31,772		(3,109		)
Customer foreign exchange contracts	1,718		—		1,718		—		—		1,718
	$	46,570	$	—	$	46,570	$	—	$	50,957	$	(4,387	)

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

Summary of fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale

The table below summarizes the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Interest rate lock commitments	$	(866	)	$	102
Forward sales agreements	$	2,092		$	(223	)
Loans held for sale fair value adjustments	$	(1,214	)	$	121

Summary of changes in fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale

The table below summarizes the changes in the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Interest rate lock commitments	$	(997	)	$	385		$	(968	)	$	101
Forward sales agreements	2,204			(766		)	2,315			(213		)
Loans held for sale fair value adjustments	(1,195		)	381			(1,335		)	112
Total change in fair value	$	12		$	—		$	12		$	—

XML

Loans, Allowance for Loan Losses and Credit Quality (Details 10) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Impaired loans by loan portfolio
Related Allowance	$ 3,152	$ 3,420
Impaired Financing Receivable, Recorded Investment, Total	71,381	66,659
Impaired Financing Receivable, Unpaid Principal Balance	76,044	70,649
WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	34,363	27,297
Unpaid Principal Balance	37,157	29,689
Related Allowance
WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	37,018	39,362
Unpaid Principal Balance	38,887	40,960
Related Allowance	3,152	3,420
Commercial and Industrial [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	6,780	5,849
Unpaid Principal Balance	8,577	7,343
Related Allowance
Commercial and Industrial [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	2,979	2,726
Unpaid Principal Balance	3,751	2,851
Related Allowance	775	1,084
Commercial Real Estate [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	18,252	12,999
Unpaid Principal Balance	18,928	13,698
Related Allowance
Commercial Real Estate [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	18,187	20,869
Unpaid Principal Balance	18,330	21,438
Related Allowance	410	516
Commercial Construction [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	1,608
Unpaid Principal Balance	1,608
Related Allowance
Commercial Construction [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment
Unpaid Principal Balance
Related Allowance
Small Business [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	1,297	1,085
Unpaid Principal Balance	1,455	1,147
Related Allowance
Small Business [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	742	1,194
Unpaid Principal Balance	778	1,228
Related Allowance	153	353
Residential Real Estate [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	2,221	2,545
Unpaid Principal Balance	2,330	2,630
Related Allowance
Residential Real Estate [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	13,662	12,828
Unpaid Principal Balance	14,502	13,601
Related Allowance	1,670	1,302
Consumer - Home Equity [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	3,664	4,119
Unpaid Principal Balance	3,717	4,166
Related Allowance
Consumer - Home Equity [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	405	316
Unpaid Principal Balance	457	389
Related Allowance	52	35
Consumer - Other [Member] | WITH NO RELATED ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	541	700
Unpaid Principal Balance	542	705
Related Allowance
Consumer - Other [Member] | WITH AN ALLOWANCE RECORDED: [Member]
Impaired loans by loan portfolio
Recorded Investment	1,043	1,429
Unpaid Principal Balance	1,069	1,453
Related Allowance	$ 92	$ 130

XML

Derivatives and Hedging Activities (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
Summary of customer related derivative positions, not designated as hedging
Fair Value	$ (11,921)		$ (16,189)
Receive fixed, pay variable [Member] | Loan level swaps [Member] | Notional Amount Maturing [Member]
Summary of customer related derivative positions, not designated as hedging
Number of Positions	158	[1]	143	[1]
2013	4,058		16,766
2014	55,271		65,344
2015	100,565		105,939
2016	43,966		45,267
Thereafter	327,855		268,932
Total	531,715		502,248
Fair Value	13,519		28,678
Pay fixed, receive variable [Member] | Loan level swaps [Member] | Notional Amount Maturing [Member]
Summary of customer related derivative positions, not designated as hedging
Number of Positions	152	[1]	137	[1]
2013	4,058		16,766
2014	55,271		65,344
2015	100,565		105,939
2016	43,966		45,267
Thereafter	327,855		268,932
Total	531,715		502,248
Fair Value	(13,543)		(28,663)
Buys foreign exchange, sells US currency [Member] | Foreign exchange contracts [Member] | Notional Amount Maturing [Member]
Summary of customer related derivative positions, not designated as hedging
Number of Positions	13	[1]	16	[1]
2013	25,073		42,516
2014	7,221
2015
2016
Thereafter
Total	32,294		42,516
Fair Value	(64)		1,748
Buys US currency, sells foreign exchange [Member] | Foreign exchange contracts [Member] | Notional Amount Maturing [Member]
Summary of customer related derivative positions, not designated as hedging
Number of Positions	13	[1]	16	[1]
2013	25,073		42,516
2014	7,221
2015
2016
Thereafter
Total	32,294		42,516
Fair Value	$ 78		$ (1,718)

[1] The Company may enter into one swap agreement which offsets multiple reverse swap agreements. The positions will offset and the terms will be identical.

XML

Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013		Dec. 31, 2012
ASSETS
SECURITIES HELD TO MATURITY	$ 225,278		$ 178,318
Held to Maturity, Fair Value, Total	225,851		185,824
LOANS, NET OF ALLOWANCE FOR LOAN LOSSES	4,477,135		4,467,177
TIME CERTIFICATES OF DEPOSITS [Member]
LIABILITIES
Financial Liabilities, Book Value	709,971	[1]	753,125	[1]
Accrued Liabilities, Fair Value Disclosure	713,800	[1]	759,516	[1]
FEDERAL HOME LOAN BANK ADVANCES [Member]
LIABILITIES
Financial Liabilities, Book Value	261,456	[1]	283,569	[1]
Accrued Liabilities, Fair Value Disclosure	268,993	[1]	293,580	[1]
WHOLESALE AND CUSTOMER REPURCHASE AGREEMENTS [Member]
LIABILITIES
Financial Liabilities, Book Value	191,826	[1]	203,359	[1]
Accrued Liabilities, Fair Value Disclosure	193,497	[1]	201,189	[1]
JUNIOR SUBORDINATED DEBENTURES [Member]
LIABILITIES
Financial Liabilities, Book Value	74,018	[2]	74,127	[2]
Accrued Liabilities, Fair Value Disclosure	75,805	[2]	74,416	[2]
SUBORDINATED DEBENTURES [Member]
LIABILITIES
Financial Liabilities, Book Value	30,000	[1]	30,000	[1]
Accrued Liabilities, Fair Value Disclosure	20,758	[1]	22,762	[1]
U.S. Treasury Securities [Member]
ASSETS
SECURITIES HELD TO MATURITY	1,012	[3]	1,013	[3]
Held to Maturity, Fair Value, Total	1,074	[3]	1,134	[3]
Agency Mortgage-Backed Securities [Member]
ASSETS
SECURITIES HELD TO MATURITY	56,889	[3]	72,360	[3]
Held to Maturity, Fair Value, Total	58,869	[3]	76,593	[3]
Agency Collateralized Mortgage Obligations [Member]
ASSETS
SECURITIES HELD TO MATURITY	159,945	[3]	97,507	[3]
Held to Maturity, Fair Value, Total	158,211	[3]	100,380	[3]
State County and Municipal Securities [Member]
ASSETS
SECURITIES HELD TO MATURITY	916	[3]	915	[3]
Held to Maturity, Fair Value, Total	926	[3]	926	[3]
Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
SECURITIES HELD TO MATURITY	1,510	[3]	1,516	[3]
Held to Maturity, Fair Value, Total	1,530	[3]	1,526	[3]
Corporate Debt Securities [Member]
ASSETS
SECURITIES HELD TO MATURITY	5,006	[3]	5,007	[3]
Held to Maturity, Fair Value, Total	5,241	[3]	5,265	[3]
Loans Net Of Allowance For Loan Loses [Member]
ASSETS
LOANS, NET OF ALLOWANCE FOR LOAN LOSSES	4,477,135	[4]	4,467,177	[4]
Loans Receivable, Fair Value Disclosure	4,433,316	[4]	4,462,580	[4]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | TIME CERTIFICATES OF DEPOSITS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | FEDERAL HOME LOAN BANK ADVANCES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | WHOLESALE AND CUSTOMER REPURCHASE AGREEMENTS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | JUNIOR SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[2]		[2]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Treasury Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | State County and Municipal Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Corporate Debt Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Loans Net Of Allowance For Loan Loses [Member]
ASSETS
Loans Receivable, Fair Value Disclosure		[4]		[4]
Significant Other Observable Inputs (Level 2) [Member] | TIME CERTIFICATES OF DEPOSITS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure	713,800	[1]	759,516	[1]
Significant Other Observable Inputs (Level 2) [Member] | FEDERAL HOME LOAN BANK ADVANCES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure	268,993	[1]	293,580	[1]
Significant Other Observable Inputs (Level 2) [Member] | WHOLESALE AND CUSTOMER REPURCHASE AGREEMENTS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | JUNIOR SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure	75,805	[2]	74,416	[2]
Significant Other Observable Inputs (Level 2) [Member] | SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Significant Other Observable Inputs (Level 2) [Member] | U.S. Treasury Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total	1,074	[3]	1,134	[3]
Significant Other Observable Inputs (Level 2) [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total	58,869	[3]	76,593	[3]
Significant Other Observable Inputs (Level 2) [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Held to Maturity, Fair Value, Total	158,211	[3]	100,380	[3]
Significant Other Observable Inputs (Level 2) [Member] | State County and Municipal Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total	926	[3]	926	[3]
Significant Other Observable Inputs (Level 2) [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Held to Maturity, Fair Value, Total	1,530	[3]	1,526	[3]
Significant Other Observable Inputs (Level 2) [Member] | Corporate Debt Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total	5,241	[3]	5,265	[3]
Significant Other Observable Inputs (Level 2) [Member] | Loans Net Of Allowance For Loan Loses [Member]
ASSETS
Loans Receivable, Fair Value Disclosure		[4]		[4]
Significant Unobservable Inputs (Level 3) [Member] | TIME CERTIFICATES OF DEPOSITS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Significant Unobservable Inputs (Level 3) [Member] | FEDERAL HOME LOAN BANK ADVANCES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[1]		[1]
Significant Unobservable Inputs (Level 3) [Member] | WHOLESALE AND CUSTOMER REPURCHASE AGREEMENTS [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure	193,497	[1]	201,189	[1]
Significant Unobservable Inputs (Level 3) [Member] | JUNIOR SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure		[2]		[2]
Significant Unobservable Inputs (Level 3) [Member] | SUBORDINATED DEBENTURES [Member]
LIABILITIES
Accrued Liabilities, Fair Value Disclosure	20,758	[1]	22,762	[1]
Significant Unobservable Inputs (Level 3) [Member] | U.S. Treasury Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | State County and Municipal Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | Corporate Debt Securities [Member]
ASSETS
Held to Maturity, Fair Value, Total		[3]		[3]
Significant Unobservable Inputs (Level 3) [Member] | Loans Net Of Allowance For Loan Loses [Member]
ASSETS
Loans Receivable, Fair Value Disclosure	$ 4,433,316	[4]	$ 4,462,580	[4]

[1] Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.

[2] Fair value was determined based upon market prices of securities with similar terms and maturities.

[3] The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analyses.

[4] Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows.

XML

Loans, Allowance for Loan Losses and Credit Quality (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013 loan	Dec. 31, 2012 loan
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	234	310
Principal Balance 30-59 Days	$ 12,162	$ 14,109
Number of Loans 60-89 Days	64	72
Principal Balance 60-89 Days	14,532	5,450
Number of Loans 90 Days or More	152	149
Principal Balance 90 Days or More	20,074	17,295
Number of Loans Total Past Due	450	531
Principal Balance Total Past Due	46,768	36,854
Current	4,483,343	4,482,157
Total Financing Receivables	4,530,111	4,519,011
Recorded Investment >90 Days and Accruing	54	52
Commercial and Industrial [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	15	14
Principal Balance 30-59 Days	1,481	1,305
Number of Loans 60-89 Days	13	7
Principal Balance 60-89 Days	1,821	336
Number of Loans 90 Days or More	22	23
Principal Balance 90 Days or More	2,407	1,875
Number of Loans Total Past Due	50	44
Principal Balance Total Past Due	5,709	3,516
Current	736,634	683,995
Total Financing Receivables	742,343	687,511
Recorded Investment >90 Days and Accruing
Commercial Real Estate [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	51	19
Principal Balance 30-59 Days	5,454	5,028
Number of Loans 60-89 Days	10	8
Principal Balance 60-89 Days	9,581	2,316
Number of Loans 90 Days or More	27	31
Principal Balance 90 Days or More	6,529	6,054
Number of Loans Total Past Due	88	58
Principal Balance Total Past Due	21,564	13,398
Current	2,129,269	2,108,755
Total Financing Receivables	2,150,833	2,122,153
Recorded Investment >90 Days and Accruing
Commercial Construction [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days
Principal Balance 30-59 Days
Number of Loans 60-89 Days
Principal Balance 60-89 Days
Number of Loans 90 Days or More	1
Principal Balance 90 Days or More	1,608
Number of Loans Total Past Due	1
Principal Balance Total Past Due	1,608
Current	230,111	188,768
Total Financing Receivables	231,719	188,768
Recorded Investment >90 Days and Accruing
Small Business [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	25	20
Principal Balance 30-59 Days	717	750
Number of Loans 60-89 Days	11	8
Principal Balance 60-89 Days	149	94
Number of Loans 90 Days or More	13	10
Principal Balance 90 Days or More	359	320
Number of Loans Total Past Due	49	38
Principal Balance Total Past Due	1,225	1,164
Current	76,058	77,430
Total Financing Receivables	77,283	78,594
Recorded Investment >90 Days and Accruing
Residential Real Estate [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	15	17
Principal Balance 30-59 Days	3,359	3,053
Number of Loans 60-89 Days	4	7
Principal Balance 60-89 Days	1,768	1,848
Number of Loans 90 Days or More	38	40
Principal Balance 90 Days or More	6,982	7,501
Number of Loans Total Past Due	57	64
Principal Balance Total Past Due	12,109	12,402
Current	501,442	600,479
Total Financing Receivables	513,551	612,881
Recorded Investment >90 Days and Accruing
Consumer Home Equity [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	16	32
Principal Balance 30-59 Days	592	2,756
Number of Loans 60-89 Days	12	10
Principal Balance 60-89 Days	1,174	632
Number of Loans 90 Days or More	23	17
Principal Balance 90 Days or More	2,009	1,392
Number of Loans Total Past Due	51	59
Principal Balance Total Past Due	3,775	4,780
Current	788,675	797,369
Total Financing Receivables	792,450	802,149
Recorded Investment >90 Days and Accruing
Consumer - Other [Member]
Age Analysis of Past Due Financing Receivables
Number of Loans 30-59 Days	112	208
Principal Balance 30-59 Days	559	1,217
Number of Loans 60-89 Days	14	32
Principal Balance 60-89 Days	39	224
Number of Loans 90 Days or More	28	28
Principal Balance 90 Days or More	180	153
Number of Loans Total Past Due	154	268
Principal Balance Total Past Due	778	1,594
Current	21,154	25,361
Total Financing Receivables	21,932	26,955
Recorded Investment >90 Days and Accruing	$ 54	$ 52

XML

Loans, Allowance for Loan Losses and Credit Quality (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary of changes in allowance for loan losses
Beginning Balance	$ 51,906	$ 48,340	$ 51,834	$ 48,260
Charge-offs	(2,477)	(8,768)	(4,051)	(10,713)
Recoveries	447	331	793	756
Provision	3,100	8,500	4,400	10,100
Ending Balance	52,976	48,403	52,976	48,403
Ending Balance: Individually Evaluated for Impairment	3,152	2,280	3,152	2,280
Ending Balance: Collectively Evaluated for Impairment	49,824	46,123	49,824	46,123
Commercial and Industrial [Member]
Summary of changes in allowance for loan losses
Beginning Balance	13,443	11,454	13,461	11,682
Charge-offs	(1,302)	(4,707)	(1,725)	(4,722)
Recoveries	103	113	239	313
Provision	2,081	4,698	2,350	4,285
Ending Balance	14,325	11,558	14,325	11,558
Ending Balance: Individually Evaluated for Impairment	775	278	775	278
Ending Balance: Collectively Evaluated for Impairment	13,550	11,280	13,550	11,280
Commercial Real Estate [Member]
Summary of changes in allowance for loan losses
Beginning Balance	22,569	22,829	22,598	23,514
Charge-offs	(196)	(2,133)	(603)	(2,737)
Recoveries	8		8
Provision	648	680	1,026	599
Ending Balance	23,029	21,376	23,029	21,376
Ending Balance: Individually Evaluated for Impairment	410	445	410	445
Ending Balance: Collectively Evaluated for Impairment	22,619	20,931	22,619	20,931
Commercial Construction [Member]
Summary of changes in allowance for loan losses
Beginning Balance	3,139	2,233	2,811	2,076
Charge-offs
Recoveries
Provision	283	(13)	611	144
Ending Balance	3,422	2,220	3,422	2,220
Ending Balance: Individually Evaluated for Impairment	0	0	0	0
Ending Balance: Collectively Evaluated for Impairment	3,422	2,220	3,422	2,220
Small Business [Member]
Summary of changes in allowance for loan losses
Beginning Balance	1,244	1,459	1,524	1,896
Charge-offs	(276)	(136)	(421)	(306)
Recoveries	37	46	76	98
Provision	290	(49)	116	(368)
Ending Balance	1,295	1,320	1,295	1,320
Ending Balance: Individually Evaluated for Impairment	153	140	153	140
Ending Balance: Collectively Evaluated for Impairment	1,142	1,180	1,142	1,180
Residential Real Estate [Member]
Summary of changes in allowance for loan losses
Beginning Balance	3,048	3,072	2,930	3,113
Charge-offs	(186)	(105)	(247)	(214)
Recoveries	86		86
Provision	11	14	190	82
Ending Balance	2,959	2,981	2,959	2,981
Ending Balance: Individually Evaluated for Impairment	1,670	1,209	1,670	1,209
Ending Balance: Collectively Evaluated for Impairment	1,289	1,772	1,289	1,772
Consumer Home Equity [Member]
Summary of changes in allowance for loan losses
Beginning Balance	7,716	6,077	7,703	4,597
Charge-offs	(257)	(1,391)	(534)	(2,141)
Recoveries	30	18	51	31
Provision	(222)	3,150	47	5,367
Ending Balance	7,267	7,854	7,267	7,854
Ending Balance: Individually Evaluated for Impairment	52	30	52	30
Ending Balance: Collectively Evaluated for Impairment	7,215	7,824	7,215	7,824
Consumer Other [Member]
Summary of changes in allowance for loan losses
Beginning Balance	747	1,216	807	1,382
Charge-offs	(260)	(296)	(521)	(593)
Recoveries	183	154	333	314
Provision	9	20	60	(9)
Ending Balance	679	1,094	679	1,094
Ending Balance: Individually Evaluated for Impairment	92	178	92	178
Ending Balance: Collectively Evaluated for Impairment	$ 587	$ 916	$ 587	$ 916

XML

Loans, Allowance for Loan Losses and Credit Quality (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	$ 3,202,178	$ 3,077,026
PASS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	2,967,679	2,825,056
POTENTIAL WEAKNESS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	101,222	118,479
DEFINITE WEAKNESS-LOSS UNLIKELY [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	131,002	129,627
PARTIAL LOSS PROBABLE [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	2,275	3,864
DEFINITE LOSS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL
Commercial and Industrial [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	742,343	687,511
Commercial and Industrial [Member] | PASS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	704,065	647,984
Commercial and Industrial [Member] | POTENTIAL WEAKNESS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	17,088	16,420
Commercial and Industrial [Member] | DEFINITE WEAKNESS-LOSS UNLIKELY [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	20,410	21,979
Commercial and Industrial [Member] | PARTIAL LOSS PROBABLE [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	780	1,128
Commercial and Industrial [Member] | DEFINITE LOSS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL
Commercial Real Estate [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	2,150,833	2,122,153
Commercial Real Estate [Member] | PASS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	1,976,410	1,928,148
Commercial Real Estate [Member] | POTENTIAL WEAKNESS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	74,143	92,651
Commercial Real Estate [Member] | DEFINITE WEAKNESS-LOSS UNLIKELY [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	98,818	98,688
Commercial Real Estate [Member] | PARTIAL LOSS PROBABLE [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	1,462	2,666
Commercial Real Estate [Member] | DEFINITE LOSS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL
Commercial Construction [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	231,719	188,768
Commercial Construction [Member] | PASS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	217,096	177,693
Commercial Construction [Member] | POTENTIAL WEAKNESS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	6,955	6,195
Commercial Construction [Member] | DEFINITE WEAKNESS-LOSS UNLIKELY [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	7,668	4,880
Commercial Construction [Member] | PARTIAL LOSS PROBABLE [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL
Commercial Construction [Member] | DEFINITE LOSS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL
Small Business [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	77,283	78,594
Small Business [Member] | PASS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	70,108	71,231
Small Business [Member] | POTENTIAL WEAKNESS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	3,036	3,213
Small Business [Member] | DEFINITE WEAKNESS-LOSS UNLIKELY [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	4,106	4,080
Small Business [Member] | PARTIAL LOSS PROBABLE [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL	33	70
Small Business [Member] | DEFINITE LOSS [Member]
Internal risk-rating categories for the Company's commercial portfolio
TOTAL

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Earnings per share consisted of the following components for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Net income	$	12,758	$	8,874	$	25,010	$	21,057
Weighted Average Shares
Basic shares	22,888,155		21,623,827		22,856,132		21,592,416
Effect of diluted securities	52,144		20,377		49,104		22,251
Dilutive shares	22,940,299		21,644,204		22,905,236		21,614,667
Net income per share
Basic EPS	$	0.56	$	0.41	$	1.09	$	0.98
Effect of diluted securities	—		—		—		(0.01		)
Dilutive EPS	$	0.56	$	0.41	$	1.09	$	0.97

The following table illustrates the options to purchase common stock that were excluded from the calculation of diluted earnings per share because they were anti-dilutive:

	Three Months Ended		Six Months Ended
	June 30		June 30
	2013	2012	2013	2012
Stock options	241,268	804,249	245,312	807,147

XML

Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
RECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL RECURRING FAIR VALUE MEASUREMENTS	$ 325,647	$ 361,208
RECURRING FAIR VALUE MEASUREMENTS: [Member] | U.S. Government Agency Securities [Member]
ASSETS
Securities available for sale	19,593	20,822
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale	198,301	221,425
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Securities available for sale	66,096	68,376
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Private Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale	3,036	3,532
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Securities available for sale	2,244	2,240
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
ASSETS
Securities available for sale	3,617	2,981
RECURRING FAIR VALUE MEASUREMENTS: [Member] | Marketable Equity Securities [Member]
ASSETS
Securities available for sale	10,968	9,910
RECURRING FAIR VALUE MEASUREMENTS: [Member] | LOANS HELD FOR SALE [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	32,497	48,187
RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	20,796	30,528
RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
LIABILITIES
Liabilities, Fair Value Disclosure, Recurring	31,501	46,793
NONRECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL NONRECURRING FAIR VALUE MEASUREMENTS	19,316	19,791
NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | COLLATERAL DEPENDENT IMPAIRED LOANS [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring	10,105	7,817
NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | OTHER REAL ESTATE OWNED [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring	9,211	11,974
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL RECURRING FAIR VALUE MEASUREMENTS	10,968	9,910
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | U.S. Government Agency Securities [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Private Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
ASSETS
Securities available for sale
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Marketable Equity Securities [Member]
ASSETS
Securities available for sale	10,968	9,910
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | LOANS HELD FOR SALE [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
LIABILITIES
Liabilities, Fair Value Disclosure, Recurring
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL NONRECURRING FAIR VALUE MEASUREMENTS
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | COLLATERAL DEPENDENT IMPAIRED LOANS [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | OTHER REAL ESTATE OWNED [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL RECURRING FAIR VALUE MEASUREMENTS	308,026	344,785
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | U.S. Government Agency Securities [Member]
ASSETS
Securities available for sale	19,593	20,822
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale	198,301	221,425
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Securities available for sale	66,096	68,376
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Private Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Securities available for sale	2,244	2,240
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
ASSETS
Securities available for sale
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Marketable Equity Securities [Member]
ASSETS
Securities available for sale
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | LOANS HELD FOR SALE [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	32,497	48,187
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	20,796	30,528
Significant Other Observable Inputs (Level 2) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
LIABILITIES
Liabilities, Fair Value Disclosure, Recurring	31,501	46,793
Significant Other Observable Inputs (Level 2) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL NONRECURRING FAIR VALUE MEASUREMENTS
Significant Other Observable Inputs (Level 2) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | COLLATERAL DEPENDENT IMPAIRED LOANS [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring
Significant Other Observable Inputs (Level 2) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | OTHER REAL ESTATE OWNED [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring
Significant Unobservable Inputs (Level 3) [Member] | Private Mortgage-Backed Securities [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	3,036	3,532
Significant Unobservable Inputs (Level 3) [Member] | OTHER REAL ESTATE OWNED [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring	9,211	11,974
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL RECURRING FAIR VALUE MEASUREMENTS	6,653	6,513
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | U.S. Government Agency Securities [Member]
ASSETS
Securities available for sale
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Agency Collateralized Mortgage Obligations [Member]
ASSETS
Securities available for sale
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Private Mortgage-Backed Securities [Member]
ASSETS
Securities available for sale	3,036	3,532
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Single Issuer Trust Preferred Securities Issued by Banks [Member]
ASSETS
Securities available for sale
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Pooled Trust Preferred Securities Issued by Banks and Insurers [Member]
ASSETS
Securities available for sale	3,617	2,981
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | Marketable Equity Securities [Member]
ASSETS
Securities available for sale
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | LOANS HELD FOR SALE [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
ASSETS
Assets, Fair Value Disclosure, Recurring
Significant Unobservable Inputs (Level 3) [Member] | RECURRING FAIR VALUE MEASUREMENTS: [Member] | DERIVATIVE INSTRUMENTS [Member]
LIABILITIES
Liabilities, Fair Value Disclosure, Recurring
Significant Unobservable Inputs (Level 3) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member]
ASSETS
TOTAL NONRECURRING FAIR VALUE MEASUREMENTS	19,316	19,791
Significant Unobservable Inputs (Level 3) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | COLLATERAL DEPENDENT IMPAIRED LOANS [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring	10,105	7,817
Significant Unobservable Inputs (Level 3) [Member] | NONRECURRING FAIR VALUE MEASUREMENTS: [Member] | OTHER REAL ESTATE OWNED [Member]
ASSETS
Assets, Fair Value Disclosure, Nonrecurring	$ 9,211	$ 11,974

XML

Securities (Details 4)	3 Months Ended
	Jun. 30, 2013 bank_insurancecompany
Trust Preferred Security A [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	C1
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	56
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	33.08%
Total Projected Defaults/Losses (as a % of Performing Collateral)	20.64%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	C (Fitch & Moody's)	[2]
Trust Preferred Security B [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	D
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	56
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	33.08%
Total Projected Defaults/Losses (as a % of Performing Collateral)	20.64%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	C (Fitch)	[2]
Trust Preferred Security C [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	C1
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	47
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	29.29%
Total Projected Defaults/Losses (as a % of Performing Collateral)	15.20%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	C (Fitch & Moody's)	[2]
Trust Preferred Security D [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	D
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	47
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	29.29%
Total Projected Defaults/Losses (as a % of Performing Collateral)	15.20%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	C (Fitch)	[2]
Trust Preferred Security E [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	C1
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	46
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	26.86%
Total Projected Defaults/Losses (as a % of Performing Collateral)	16.73%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)	0.66%	[1]
Lowest credit Ratings to date	C (Fitch & Moody's)	[2]
Trust Preferred Security F [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	B
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	32
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	25.08%
Total Projected Defaults/Losses (as a % of Performing Collateral)	18.83%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)	30.90%	[1]
Lowest credit Ratings to date	CC (Fitch)	[2]
Trust Preferred Security G [Member] | Pooled Trust Preferred Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	A1
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)	32
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	25.08%
Total Projected Defaults/Losses (as a % of Performing Collateral)	18.83%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)	55.89%	[1]
Lowest credit Ratings to date	CCC+ (S&P)	[2]
Private Mortgage Backed-Securities-One [Member] | Private mortgage-backed securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	2A1
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	6.53%
Total Projected Defaults/Losses (as a % of Performing Collateral)	13.12%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	D (Fitch)	[2]
Private Mortgage-Backed Securities-Two [Member] | Private mortgage-backed securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Class	A19
Summary of percentage of pertinent information
Number of Performing Banks and Insurance Cos. in Issuances (Unique)
Current Deferrals/Defaults/Losses (As a % of Original Collateral)	4.18%
Total Projected Defaults/Losses (as a % of Performing Collateral)	7.32%
Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/Defaults/Losses)		[1]
Lowest credit Ratings to date	C (Fitch)	[2]

[1] Excess subordination represents the additional default/losses in excess of both current and projected defaults/losses that the security can absorb before the security experiences any credit impairment.

[2] The Company reviewed credit ratings provided by S&P, Moody’s and Fitch in its evaluation of issuers.

XML

Loans, Allowance for Loan Losses and Credit Quality (Details 8) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Post modification balance of Troubled Debt Restructuring
EXTENDED MATURITY	$ 329	$ 313	$ 991	$ 354
ADJUSTED INTEREST RATE		2,119		3,557
COMBINATION RATE & MATURITY	1,408	2,931	2,756	3,223
COURT ORDERED CONCESSION			11
TOTAL	$ 1,737	$ 5,363	$ 3,758	$ 7,134

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. If there has been a significant decrease in the volume and level of activity for the asset or liability, regardless of the valuation technique(s) used, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from one level to another.

The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under the Fair Value Measurements and Disclosures Topic of the FASB ASC are described below:

Level 1 – Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuation Techniques

There have been no changes in the valuation techniques used during the current period.

Securities:

U.S. Government Agency Securities

Fair value is estimated using either multi-dimensional spread tables or benchmarks. The inputs used include benchmark yields, reported trades, and broker/dealer quotes. These securities are classified as Level 2.

Agency Mortgage-Backed Securities

Fair value is estimated using either a matrix or benchmarks. The inputs used include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. These securities are categorized as Level 2.

Agency Collateralized Mortgage Obligations and Private Mortgage-Backed Securities

The valuation model for these securities is volatility-driven and ratings based, and uses multi-dimensional spread tables. The inputs used include benchmark yields, recent reported trades, new issue data, broker and dealer quotes, and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Single and Pooled Issuer Trust Preferred Securities

The fair value of trust preferred securities, including pooled and single issuer preferred securities, is estimated using external pricing models, discounted cash flow methodologies or similar techniques. The inputs used in these valuations include benchmark yields, recent reported trades, new issue data, broker and dealer quotes and collateral performance. If there is at least one significant model assumption or input that is not observable, these securities are categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Marketable Securities

These equity and fixed income securities are valued based on market quoted prices. These securities are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied.

Loans Held for Sale

The Company elects to account for new originations of loans held for sale at fair value, which is measured using quoted market prices when available. If quoted market prices are not available, comparable market values or discounted cash flow analysis may be utilized. These assets are typically categorized as Level 2.

Derivative Instruments

Derivatives

The valuation of these instruments is determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The Company incorporates credit valuation adjustments to appropriately reflect nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings. Although the Company has determined that the majority of the inputs used to value its interest rate derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. However, as of June 30, 2013 and December 31, 2012, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. Additionally, in conjunction with fair value measurement guidance, the Company has made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2.

Residential Mortgage Loan Commitments and Forward Sales Agreements

The fair value of the commitments and agreements are estimated using the anticipated market price based on pricing indications provided from syndicate banks. These commitments and agreements are categorized as Level 2.

Impaired Loans

Loans that are deemed to be impaired are valued based upon the lower of cost or fair value of the underlying collateral. The inputs used in the appraisals of the collateral are not always observable, and therefore the loans may be categorized as Level 3 within the fair value hierarchy; otherwise, they are classified as Level 2.

Other Real Estate Owned

The fair values are estimated based upon recent appraisal values of the property less costs to sell the property. Certain inputs used in appraisals are not always observable, and therefore Other Real Estate Owned may be categorized as Level 3 within the fair value hierarchy. When inputs in appraisals are observable, they are classified as Level 2.

Goodwill and Other Intangible Assets

Goodwill and identified intangible assets are subject to impairment testing. The Company conducts an annual impairment test of goodwill in the third quarter of each year and more frequently, if necessary. To estimate the fair value of goodwill and other intangible assets the Company utilizes both a comparable analysis of relevant price multiples in recent market transactions and discounted cash flow analysis. Both valuation models require a significant degree of management judgment. In the event the fair value as determined by the valuation model is less than the carrying value, the intangibles may be impaired. If the impairment testing resulted in impairment, the Company would classify the impaired goodwill and other intangible assets subjected to nonrecurring fair value adjustments as Level 3.

Assets and liabilities measured at fair value at the periods indicated were as follows:

			Fair Value Measurements at Reporting Date Using
	Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. Government agency securities	$	19,593	$	—	$	19,593	$	—
Agency mortgage-backed securities	198,301		—		198,301		—
Agency collateralized mortgage obligations	66,096		—		66,096		—
Private mortgage-backed securities	3,036		—		—		3,036
Single issuer trust preferred securities issued by banks	2,244		—		2,244		—
Pooled trust preferred securities issued by banks and insurers	3,617		—		—		3,617
Marketable securities	10,968		10,968		—		—
Loans held for sale	32,497		—		32,497		—
Derivative instruments	20,796		—		20,796		—
Liabilities
Derivative instruments	31,501		—		31,501		—
Total recurring fair value measurements	$	325,647	$	10,968	$	308,026	$	6,653
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	10,105	$	—	$	—	$	10,105
Other real estate owned	9,211		—		—		9,211
Total nonrecurring fair value measurements	$	19,316	$	—	$	—	$	19,316

	December 31, 2012
	(Dollars in thousands)
Recurring fair value measurements
Assets
Securities available for sale
U.S. government agency securities	$	20,822	$	—	$	20,822	$	—
Agency mortgage-backed securities	221,425		—		221,425		—
Agency collateralized mortgage obligations	68,376		—		68,376		—
Private mortgage-backed securities	3,532		—		—		3,532
Single issuer trust preferred securities issued by banks	2,240		—		2,240		—
Pooled trust preferred securities issued by banks and insurers	2,981		—		—		2,981
Marketable securities	9,910		9,910		—		—
Loans held for sale	48,187		—		48,187		—
Derivative instruments	30,528		—		30,528		—
Liabilities
Derivative instruments	46,793		—		46,793		—
Total recurring fair value measurements	$	361,208	$	9,910	$	344,785	$	6,513
Nonrecurring fair value measurements
Assets
Collateral dependent impaired loans	$	7,817	$	—	$	—	$	7,817
Other real estate owned	11,974		—		—		11,974
Total nonrecurring fair value measurements	$	19,791	$	—	$	—	$	19,791

The table below presents a reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3). These instruments were valued using pricing models and discounted cash flow methodologies.

	Securities Available for Sale:
	Pooled Trust Preferred Securities			Single Trust Preferred Securities			Private Mortgage- Backed Securities			Total
	(Dollars in thousands)
Balance at March 31, 2013	$	3,292		$	—		$	3,370		$	6,662
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	351			—			(51		)	300
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(26		)	—			(283		)	(309		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653
Balance at January 1, 2012	$	2,820		$	4,210		$	6,110		$	13,140
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			(76		)	(76		)
Included in other comprehensive income	313			703			411			1,427
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(152		)	—			(2,913		)	(3,065		)
Transfers into (out of) level 3	—			(4,913		)	—			(4,913		)
Balance at December 31, 2012	$	2,981		$	—		$	3,532		$	6,513
Gains and (losses) (realized/unrealized)
Included in earnings	—			—			—			—
Included in other comprehensive income	831			—			(89		)	742
Purchases	—			—			—			—
Sales	—			—			—			—
Issuances	—			—			—			—
Settlements	(195		)	—			(407		)	(602		)
Transfers into (out of) level 3	—			—			—			—
Balance at June 30, 2013	$	3,617		$	—		$	3,036		$	6,653

During the first quarter of 2012 the Company transferred the Single Issuer Trust Preferred Security from Level 3 to Level 2. The reason for this transfer was increased trading of the security, enabling the use of more observable inputs. It is the Company’s policy to recognize the transfers as of the end of the reporting period. There were no transfers between the Levels of the fair value hierarchy for any assets or liabilities measured at fair value on a recurring basis during the second quarter of 2013.

The following table sets forth certain unobservable inputs regarding the Company’s investment in securities that are classified as Level 3 for the periods indicated:

	Fair Value		Valuation Technique(s)	Unobservable Inputs	Range	Weighted Average
	(Dollars in thousands)
	June 30, 2013
Pooled trust preferred securities	$	3,617	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.2	%
				Cumulative Default	2.0%-100.0%	18.6	%
				Loss Given Default	85.0% - 100.0%	95.4	%
				Cure Given Default	0% - 75.0%	36.6	%
Private mortgage-backed securities	$	3,036	Multi-dimensional spread tables	Cumulative Prepayment Rate	14.4%-14.5%	14.5	%
				Constant Default Rate	0.8% -20.3%	4.0	%
				Severity	21.0% -52.0%	34.1	%
Impaired loans	$	10,105	Appraisals of collateral (1)
Other real estate owned	$	9,211	Appraisals of collateral (1)
	December 31, 2012
Pooled trust preferred securities	$	2,981	Discounted cash flow methodology	Cumulative Prepayment	0%-76.0%	7.5	%
				Cumulative Default	3.0%-100.0%	19.6	%
				Loss Given Default	85.0% - 100.0%	94.9	%
				Cure Given Default	0% - 75.0%	33.8	%
Private mortgage-backed securities	$	3,532	Multi-dimensional spread tables	Cumulative Prepayment Rate	10.3%-14.5%	13.9	%
				Constant Default Rate	0.9% -20.4%	4.0	%
				Severity	20.0% -55.0%	33.6	%
Impaired loans	$	7,817	Appraisals of collateral (1)
Other real estate owned	$	11,974	Appraisals of collateral (1)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary.

For the fair value measurements in the table above, which are classified as Level 3 within the fair value hierarchy, the Company’s Treasury and Finance groups determine the valuation policies and procedures. For the pricing of the securities, the Company uses third-party pricing information, without adjustment. Depending on the type of the security, management employs various techniques to analyze the pricing it receives from third-parties, such as analyzing changes in market yields and in certain instances reviewing the underlying collateral of the security. Management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with their expectation of the market. For the securities categorized as Level 3, the market is deemed to be inactive, the fair value models are calibrated and to the extent possible, significant inputs are back tested on a quarterly basis. This testing is done by the third party service provider, who performs this testing by comparing anticipated inputs to actual results. For example, modeled default and prepayment rates for private mortgage-backed securities will be compared to actual rates for the previous period. Significant changes in fair value from period to period are closely scrutinized to ensure fair value models are not flawed. The driver(s) of the respective change in fair value and the method for forecasting the driver(s) is closely considered by management.

The significant unobservable inputs used in the fair value measurement of the Company’s pooled trust preferred securities are cumulative prepayment rates, cumulative defaults, loss given defaults and cure given defaults. Significant increases (decreases) in deferrals or defaults, in isolation would result in a significantly lower (higher) fair value measurement. Alternatively, significant increases (decreases) in cure rates, in isolation would result in a significantly higher (lower) fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s private mortgage-backed securities are constant prepayment rates, constant default rates, and loss severity in the event of default. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment rates.

Additionally, the Company has financial instruments which are marked to fair value on a nonrecurring basis which are categorized within Level 3. These instruments include collateral dependent impaired loans and OREO. The determination of the fair value amount is derived from the use of independent third party appraisals and evaluations, prepared by firms from a predetermined list of qualified and approved appraisers or evaluators. Upon receipt of an appraisal or evaluation, the internal Commercial Real Estate Appraisal Department will review the report for compliance with regulatory and Bank standards, as well as reasonableness and acceptance of the value conclusions. Any issues or concerns regarding compliance or value conclusions will be addressed with the engaged firm and the report may be adjusted or revised. If a disagreement cannot be resolved, the Commercial Real Estate Appraisal Department will either address the key issues and modify the report for acceptance or reject the report and re-order a new report. Ultimately the Company’s Commercial Real Estate Appraisal Department will confirm the collateral value as part of its review process.

The estimated fair values and related carrying amounts for assets and liabilities for which fair value is only disclosed are shown below as of the periods indicated:

					Fair Value Measurements at Reporting Date Using
	Book Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	June 30, 2013
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,012	$	1,074	—		$	1,074	—
Agency mortgage-backed securities	56,889		58,869		—		58,869		—
Agency collateralized mortgage obligations	159,945		158,211		—		158,211		—
State, county, and municipal securities	916		926		—		926		—
Single issuer trust preferred securities issued by banks	1,510		1,530		—		1,530		—
Corporate debt securities	5,006		5,241		—		5,241		—
Loans, net of allowance for loan losses (b)	4,477,135		4,433,316		—		—		4,433,316
Financial liabilities
Time certificates of deposits (c)	$	709,971	$	713,800	—		$	713,800	—
Federal home loan bank advances and other borrowings (c)	261,456		268,993		—		268,993		—
Wholesale and customer repurchase agreements (c)	191,826		193,497		—		—		193,497
Junior subordinated debentures (d)	74,018		75,805		—		75,805		—
Subordinated debentures (c)	30,000		20,758		—		—		20,758
	December 31, 2012
	(Dollars in thousands)
Financial assets
Securities held to maturity (a)
U.S. Treasury securities	$	1,013	$	1,134	$	—	$	1,134	$	—
Agency mortgage-backed securities	72,360		76,593		—		76,593		—
Agency collateralized mortgage obligations	97,507		100,380		—		100,380		—
State, county, and municipal securities	915		926		—		926		—
Single issuer trust preferred securities issued by banks	1,516		1,526		—		1,526		—
Corporate debt securities	5,007		5,265		—		5,265		—
Loans, net of allowance for loan losses (b)	4,467,177		4,462,580		—		—		4,462,580
Financial liabilities
Time certificates of deposits (c)	$	753,125	$	759,516	$	—	$	759,516	$	—
Federal home loan bank advances and other borrowings (c)	283,569		293,580		—		293,580		—
Wholesale and customer repurchase agreements (c)	203,359		201,189		—		—		201,189
Junior subordinated debentures (d)	74,127		74,416		—		74,416		—
Subordinated debentures (c)	30,000		22,762		—		—		22,762

(a) The fair values presented are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments and/or discounted cash flow analyses.

(b) Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities or cash flows.

(c) Fair value was determined by discounting anticipated future cash payments using rates currently available for instruments with similar remaining maturities.

(d) Fair value was determined based upon market prices of securities with similar terms and maturities.

This summary excludes financial assets and liabilities for which the carrying value approximates fair value. For financial assets, these include cash and due from banks, federal funds sold, short-term investments, Federal Home Loan Bank stock, and cash surrender value of life insurance policies. For financial liabilities, these include demand, savings, money market deposits, and federal funds purchased. The estimated fair value of demand, savings and money market deposits is the amount payable at the reporting date. These instruments would all be considered to be classified within Level 1 of the fair value hierarchy. Also excluded from the summary are financial instruments measured at fair value on a recurring and nonrecurring basis, as previously described.

The Company believes its financial instruments current use is considered to be the highest and best use of the instruments.

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Loans, Allowance for Loan Losses and Credit Quality

6 Months Ended

Jun. 30, 2013

Loans, Allowance for Loan Losses and Credit Quality [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

LOANS, ALLOWANCE FOR LOAN LOSSES AND CREDIT QUALITY

The following tables bifurcates the amount of allowance allocated to each loan category based on the type of impairment analysis as of the periods indicated:

	June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	742,343	$	2,150,833	$	231,719	$	77,283	$	513,551	$	792,450	$	21,932	$	4,530,111	(1	)
Ending balance: individually evaluated for impairment	$	9,759	$	36,439	$	1,608	$	2,039	$	15,883	$	4,069	$	1,584	$	71,381
Ending balance: purchase credit impaired loans	$	—	$	18,304	$	—	$	—	$	8,991	$	380	$	—	$	27,675
Ending balance: collectively evaluated for impairment	$	732,584	$	2,096,090	$	230,111	$	75,244	$	488,677	$	788,001	$	20,348	$	4,431,055

	December 31, 2012
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	687,511	$	2,122,153	$	188,768	$	78,594	$	612,881	$	802,149	$	26,955	$	4,519,011	(1	)
Ending balance: individually evaluated for impairment	$	8,575	$	33,868	$	—	$	2,279	$	15,373	$	4,435	$	2,129	$	66,659
Ending Balance: purchase credit impaired loans	$	—	$	21,853	$	—	$	—	$	9,821	$	380	$	—	$	32,054
Ending balance: collectively evaluated for impairment	$	678,936	$	2,066,432	$	188,768	$	76,315	$	587,687	$	797,334	$	24,826	$	4,420,298

(1) The amount of deferred fees included in the ending balance was $2.6 million and $3.1 million at June 30, 2013 and December 31, 2012, respectively.

The following tables summarize changes in allowance for loan losses by loan category for the periods indicated:

	Three Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,443		$	22,569		$	3,139	$	1,244		$	3,048		$	7,716		$	747		$	51,906
Charge-offs	(1,302		)	(196		)	—		(276		)	(186		)	(257		)	(260		)	(2,477		)
Recoveries	103			8			—		37			86			30			183			447
Provision	2,081			648			283		290			11			(222		)	9			3,100
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976

	Three Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,454		$	22,829		$	2,233		$	1,459		$	3,072		$	6,077		$	1,216		$	48,340
Charge-offs	(4,707		)	(2,133		)	—			(136		)	(105		)	(1,391		)	(296		)	(8,768		)
Recoveries	113			—			—			46			—			18			154			331
Provision	4,698			680			(13		)	(49		)	14			3,150			20			8,500
Ending balance	$	11,558		$	21,376		$	2,220		$	1,320		$	2,981		$	7,854		$	1,094		$	48,403

	Six Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,461		$	22,598		$	2,811	$	1,524		$	2,930		$	7,703		$	807		$	51,834
Charge-offs	(1,725		)	(603		)	—		(421		)	(247		)	(534		)	(521		)	(4,051		)
Recoveries	239			8			—		76			86			51			333			793
Provision	2,350			1,026			611		116			190			47			60			4,400
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976
Ending balance: Individually evaluated for impairment	$	775		$	410		$	—	$	153		$	1,670		$	52		$	92		$	3,152
Ending balance: Collectively evaluated for impairment	$	13,550		$	22,619		$	3,422	$	1,142		$	1,289		$	7,215		$	587		$	49,824
	Six Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,682		$	23,514		$	2,076	$	1,896		$	3,113		$	4,597		$	1,382		$	48,260
Charge-offs	(4,722		)	(2,737		)	—		(306		)	(214		)	(2,141		)	(593		)	(10,713		)
Recoveries	313			—			—		98			—			31			314			756
Provision	4,285			599			144		(368		)	82			5,367			(9		)	10,100
Ending balance	$	11,558		$	21,376		$	2,220	$	1,320		$	2,981		$	7,854		$	1,094		$	48,403
Ending balance: Individually evaluated for impairment	$	278		$	445		$	—	$	140		$	1,209		$	30		$	178		$	2,280
Ending balance: Collectively evaluated for impairment	$	11,280		$	20,931		$	2,220	$	1,180		$	1,772		$	7,824		$	916		$	46,123

For the purpose of estimating the allowance for loan losses, management segregates the loan portfolio into the portfolio segments detailed in the above tables. Each of these loan categories possesses unique risk characteristics that are considered when determining the appropriate level of allowance for each segment. Some of the risk characteristics unique to each loan category include:

Commercial Portfolio:

Commercial & Industrial—Loans in this category consist of revolving and term loan obligations extended to business and corporate enterprises for the purpose of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate, if applicable. Repayment sources consist of: primarily, operating cash flow, and secondarily, liquidation of assets.

Commercial Real Estate—Loans in this category consist of mortgage loans to finance investment in real property such as multi-family residential, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans are typically written with amortizing payment structures. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources consist of: primarily, cash flow from operating leases and rents, and secondarily, liquidation of assets.

Commercial Construction—Loans in this category consist of short-term construction loans, revolving and nonrevolving credit lines and construction/permanent loans to finance the acquisition, development and construction or rehabilitation of real property. Project types include: residential 1-4 family condominium and multi-family homes, commercial/retail, office, industrial, hotels, educational and healthcare facilities and other specific use properties. Loans may be written with nonamortizing or hybrid payment structures depending upon the type of project. Collateral values are determined based upon third party appraisals and evaluations. Loan to value ratios at origination are governed by established policy and regulatory guidelines. Repayment sources vary depending upon the type of project and may consist of: sale or lease of units, operating cash flows or liquidation of other assets.

Small Business—Loans in this category consist of revolving, term loan and mortgage obligations extended to sole proprietors and small businesses for purposes of financing working capital and/or capital investment. Collateral generally consists of pledges of business assets including, but not limited to: accounts receivable, inventory, plant & equipment, or real estate if applicable. Repayment sources consist of: primarily, operating cash flows, and secondarily, liquidation of assets.

For the commercial portfolio it is the Bank’s policy to obtain personal guarantees for payment from individuals holding material ownership interests of the borrowing entities.

Consumer Portfolio:

Residential Real Estate—Residential mortgage loans held in the Bank’s portfolio are made to borrowers who demonstrate the ability to make scheduled payments with full consideration to underwriting factors such as current and expected income, employment status, current assets, other financial resources, credit history and the value of the collateral. Collateral consists of mortgage liens on 1-4 family residential properties. The Company does not originate sub-prime loans.

Home Equity — Home equity loans and lines are made to qualified individuals for legitimate purposes secured by senior or junior mortgage liens on owner-occupied 1-4 family homes, condominiums or vacation homes or on nonowner occupied 1-4 family homes with more restrictive loan to value requirements. The home equity loan has a fixed rate and is billed equal payments comprised of principal and interest. The home equity line of credit has a variable rate and is billed in interest-only payments during the draw period. At the end of the draw period, the home equity line of credit is billed as a percentage of the principal balance plus all accrued interest. Borrower qualifications include favorable credit history combined with supportive income requirements and combined loan to value ratios within established policy guidelines.

Other Consumer—Other consumer loan products including personal lines of credit and amortizing loans made to qualified individuals for various purposes such as education, auto loans, debt consolidation, personal expenses or overdraft protection. Borrower qualifications include favorable credit history combined with supportive income and collateral requirements within established policy guidelines. These loans may be secured or unsecured.

Credit Quality:

The Company continually monitors the asset quality of the loan portfolio using all available information. Based on this information, loans demonstrating certain payment issues or other weaknesses may be categorized as delinquent, impaired, nonperforming and/or put on nonaccrual status. Additionally, in the course of resolving such loans, the Company may choose to restructure the contractual terms of certain loans to match the borrower’s ability to repay the loan based on their current financial condition. If a restructured loan meets certain criteria, it may be categorized as a troubled debt restructuring (“TDR”).

The Company reviews numerous credit quality indicators when assessing the risk in its loan portfolio. For the commercial portfolio, the Company utilizes a 10-point commercial risk-rating system, which assigns a risk-grade to each borrower based on a number of quantitative and qualitative factors associated with a commercial loan transaction. Factors considered include industry and market conditions, position within the industry, earnings trends, operating cash flow, asset/liability values, debt capacity, guarantor strength, management and controls, financial reporting, collateral, and other considerations. The risk-ratings categories are defined as follows:

1- 6 Rating — Pass

Risk-rating grades “1” through “6” comprise those loans ranging from ‘Substantially Risk Free’ which indicates borrowers are of unquestioned credit standing and the pinnacle of credit quality, well established companies with a very strong financial condition, and loans fully secured by cash collateral, through ‘Acceptable Risk’, which indicates borrowers may exhibit declining earnings, strained cash flow, increasing leverage and/or weakening market fundamentals that indicate above average or below average asset quality, margins and market share. Collateral coverage is protective.

7 Rating — Potential Weakness

Borrowers exhibit potential credit weaknesses or downward trends deserving management’s close attention. If not checked or corrected, these trends will weaken the Bank’s asset and position. While potentially weak, currently these borrowers are marginally acceptable; no loss of principal or interest is envisioned.

8 Rating — Definite Weakness

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt. Loan may be inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Normal repayment from the borrower is in jeopardy, although no loss of principal is envisioned. However, there is a distinct possibility that a partial loss of interest and/or principal will occur if the deficiencies are not corrected. Collateral coverage may be inadequate to cover the principal obligation.

9 Rating — Partial Loss Probable

Borrowers exhibit well defined weaknesses that jeopardize the orderly liquidation of debt with the added provision that the weaknesses make collection of the debt in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Serious problems exist to the point where partial loss of principal is likely.

10 Rating — Definite Loss

Borrowers deemed incapable of repayment. Loans to such borrowers are considered uncollectible and of such little value that continuation as active assets of the Bank is not warranted.

The credit quality of the commercial loan portfolio is actively monitored and any changes in credit quality are reflected in risk-rating changes. Risk-ratings are assigned or reviewed for all new loans, when advancing significant additions to existing relationships (over $50,000), at least quarterly for all actively managed loans, and any time a significant event occurs, including at renewal of the loan.

The Company utilizes a comprehensive strategy for monitoring commercial credit quality. Borrowers are required to provide updated financial information at least annually which is carefully evaluated for any changes in credit quality. Larger loan relationships are subject to a full annual credit review by an experienced credit analysis group. Additionally, the Company retains an independent loan review firm to evaluate the credit quality of the commercial loan portfolio. The independent loan review process achieves significant penetration into the commercial loan portfolio and reports the results of these reviews to the Audit Committee of the Board of Directors on a quarterly basis.

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		June 30, 2013
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	704,065	$	1,976,410	$	217,096	$	70,108	$	2,967,679
Potential weakness	7	17,088		74,143		6,955		3,036		101,222
Definite weakness-loss unlikely	8	20,410		98,818		7,668		4,106		131,002
Partial loss probable	9	780		1,462		—		33		2,275
Definite loss	10	—		—		—		—		—
Total		$	742,343	$	2,150,833	$	231,719	$	77,283	$	3,202,178

		December 31, 2012
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	647,984	$	1,928,148	$	177,693	$	71,231	$	2,825,056
Potential weakness	7	16,420		92,651		6,195		3,213		118,479
Definite weakness-loss unlikely	8	21,979		98,688		4,880		4,080		129,627
Partial loss probable	9	1,128		2,666		—		70		3,864
Definite loss	10	—		—		—		—		—
Total		$	687,511	$	2,122,153	$	188,768	$	78,594	$	3,077,026

For the Company’s consumer portfolio, the quality of the loan is best indicated by the repayment performance of an individual borrower. However, the Company does supplement performance data with current Fair Isaac Corporation (“FICO”) and Loan to Value (“LTV”) estimates. Current FICO data is purchased and appended to all consumer loans on a quarterly basis and automated valuation services and broker opinions of value are used to supplement original value data for the residential and home equity portfolios, periodically. In addition, for all second position home equity loans, management reviews the performance of the first position lien, which is often held at another institution, when determining the accrual status of the loan. The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	June 30, 2013		December 31, 2012
Residential portfolio
FICO score (re-scored) (1)	739		727
LTV (re-valued) (2)	70.0	%	67.0	%
Home equity portfolio
FICO score (re-scored) (1)	763		763
LTV (re-valued) (2)	55.0	%	54.0	%

(1) The average FICO scores for June 30, 2013 are based upon rescores available from May 2013 and actual score data for loans booked between June 1 and June 30, 2013. The average FICO scores for December 31, 2012 are based upon rescores available from November 2012 and actual score data for loans booked between December 1 and December 31, 2012.

(2) The combined LTV ratios for June 30, 2013 are based upon updated automated valuations as of February 2013. The combined LTV ratios for December 31, 2012 are based upon updated automated valuations as of November 30, 2011. For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

The Bank’s philosophy toward managing its loan portfolios is predicated upon careful monitoring, which stresses early detection and response to delinquent and default situations. Delinquent loans are managed by a team of seasoned collection specialists and the Bank seeks to make arrangements to resolve any delinquent or default situation over the shortest possible time frame. As a general rule, loans more than 90 days past due with respect to principal or interest are classified as nonaccrual loans. As permitted by banking regulations, certain consumer loans past due 90 days or more may continue to accrue interest. The Company also may use discretion regarding other loans over 90 days delinquent if the loan is well secured and in process of collection. Set forth is information regarding the Company’s nonperforming loans at the period shown.

The following table shows nonaccrual loans at the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Commercial and industrial	$	3,009	$	2,666
Commercial real estate	8,526		6,574
Commercial construction	1,608		—
Small business	698		570
Residential real estate	12,496		11,472
Home equity (1)	10,024		7,311
Other consumer	134		121
Total nonaccrual loans (2)	$	36,495	$	28,714

(1) Includes home equity loans which are currently performing but have been placed on nonaccrual as a result of delinquency with respect to the first position, which is held by another financial institution.

(2) Included in these amounts were $9.8 million and $6.6 million of nonaccruing TDRs at June 30, 2013 and December 31, 2012, respectively.

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	June 30, 2013
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	15	$	1,481	13	$	1,821	22	$	2,407	50	$	5,709	$	736,634	$	742,343	$	—
Commercial real estate	51	5,454		10	9,581		27	6,529		88	21,564		2,129,269		2,150,833		—
Commercial construction	—	—		—	—		1	1,608		1	1,608		230,111		231,719		—
Small business	25	717		11	149		13	359		49	1,225		76,058		77,283		—
Residential real estate	15	3,359		4	1,768		38	6,982		57	12,109		501,442		513,551		—
Home equity	16	592		12	1,174		23	2,009		51	3,775		788,675		792,450		—
Other consumer	112	559		14	39		28	180		154	778		21,154		21,932		54
Total	234	$	12,162	64	$	14,532	152	$	20,074	450	$	46,768	$	4,483,343	$	4,530,111	$	54

	December 31, 2012
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	14	$	1,305	7	$	336	23	$	1,875	44	$	3,516	$	683,995	$	687,511	$	—
Commercial real estate	19	5,028		8	2,316		31	6,054		58	13,398		2,108,755		2,122,153		—
Commercial construction	—	—		—	—		—	—		—	—		188,768		188,768		—
Small business	20	750		8	94		10	320		38	1,164		77,430		78,594		—
Residential real estate	17	3,053		7	1,848		40	7,501		64	12,402		600,479		612,881		—
Home equity	32	2,756		10	632		17	1,392		59	4,780		797,369		802,149		—
Other consumer	208	1,217		32	224		28	153		268	1,594		25,361		26,955		52
Total	310	$	14,109	72	$	5,450	149	$	17,295	531	$	36,854	$	4,482,157	$	4,519,011	$	52

In the course of resolving nonperforming loans, the Bank may choose to restructure the contractual terms of certain loans. The Bank attempts to work out an alternative payment schedule with the borrower in order to avoid foreclosure actions. Any loans that are modified are reviewed by the Bank to identify if a TDR has occurred, which is when, for economic or legal reasons related to a borrower’s financial difficulties, the Bank grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
TDRs on accrual status	$	38,898	$	46,764
TDRs on nonaccrual	9,777		6,554
Total TDRs	$	48,675	$	53,318
Amount of specific reserves included in the allowance for loan losses associated with TDRs:	$	2,796	$	3,049
Additional commitments to lend to a borrower who has been a party to a TDR:	$	1,921	$	1,847

The Bank’s policy is to have any restructured loan which is on nonaccrual status prior to being modified remain on nonaccrual status for six months, subsequent to being modified, before management considers its return to accrual status. If the restructured loan is on accrual status prior to being modified, it is reviewed to determine if the modified loan should remain on accrual status. Additionally, loans classified as TDRs are adjusted to reflect the changes in value of the recorded investment in the loan, if any, resulting from the granting of a concession. For all residential loan modifications, the borrower must perform during a 90 day trial period before the modification is finalized.

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Three Months Ended					Six Months Ended
	June 30, 2013					June 30, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	2	$	282	$	282	2	$	282	$	282
Commercial real estate	1	664		664		2	1,063		1,063
Small business	1	$	18	$	18	5	282		282
Residential real estate	2	744		744		6	1,900		1,926
Home equity	1	29		29		3	194		194
Other consumer	—	—		—		2	11		11
Total	7	$	1,737	$	1,737	20	$	3,732	$	3,758

	Three Months Ended					Six Months Ended
	June 30, 2012					June 30, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	7	$	1,115	$	1,115	11	$	1,273	$	1,273
Commercial real estate	7	3,839		3,839		9	4,907		4,907
Small business	1	17		17		8	360		360
Residential real estate	1	261		261		2	378		378
Home equity	1	64		66		1	64		66
Other consumer	2	65		65		4	150		150
Total	19	$	5,361	$	5,363	35	$	7,132	$	7,134

(1) The post-modification balances represent the balance of the loan on the date of modifications. These amounts may show an increase when modifications include a capitalization of interest.

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Extended maturity	$	329	$	313	$	991	$	354
Adjusted interest rate	—		2,119		—		3,557
Combination rate & maturity	1,408		2,931		2,756		3,223
Court ordered concession	—		—		11		—
Total	$	1,737	$	5,363	$	3,758	$	7,134

The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due.

	Three Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		—	—
Small business	2	22		—	—
Total	5	$	2,187	—	$	—
	Six Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		1	250
Small business	3	253		—	—
Other consumer	—	—		1	6
Total	6	$	2,418	2	$	256

All TDR loans are considered impaired and therefore are subject to a specific review for impairment. The impairment analysis appropriately discounts the present value of the anticipated cash flows by the loan’s contractual rate of interest in effect prior to the loan’s modification. The amount of impairment, if any, is recorded as a specific loss allocation to each individual loan in the allowance for loan losses. Commercial loans (commercial and industrial, commercial construction, commercial real estate and small business loans), residential loans, and home equity loans that have been classified as TDRs and which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In such an instance, any shortfall between the value of the collateral and the book value of the loan is determined by measuring the recorded investment in the loan against the fair value of the collateral less estimated costs to sell. The Bank charges off the amount of any confirmed loan loss in the period when the loans, or portion of loans, are deemed uncollectible. Smaller balance consumer TDR loans are reviewed for performance to determine when a charge-off is appropriate.

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

The tables below set forth information regarding the Company’s impaired loans by loan portfolio as of the dates indicated:

	June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,780	$	8,577	$	—
Commercial real estate	18,252		18,928		—
Commercial construction	1,608		1,608		—
Small business	1,297		1,455		—
Residential real estate	2,221		2,330		—
Home equity	3,664		3,717		—
Other consumer	541		542		—
Subtotal	34,363		37,157		—
With an allowance recorded
Commercial & industrial	$	2,979	$	3,751	$	775
Commercial real estate	18,187		18,330		410
Commercial construction	—		—		—
Small business	742		778		153
Residential real estate	13,662		14,502		1,670
Home equity	405		457		52
Other consumer	1,043		1,069		92
Subtotal	37,018		38,887		3,152
Total	$	71,381	$	76,044	$	3,152

	December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	5,849	$	7,343	$	—
Commercial real estate	12,999		13,698		—
Commercial construction	—		—		—
Small business	1,085		1,147		—
Residential real estate	2,545		2,630		—
Home equity	4,119		4,166		—
Other consumer	700		705		—
Subtotal	27,297		29,689		—
With an allowance recorded
Commercial & industrial	$	2,726	$	2,851	$	1,084
Commercial real estate	20,869		21,438		516
Commercial construction	—		—		—
Small business	1,194		1,228		353
Residential real estate	12,828		13,601		1,302
Home equity	316		389		35
Other consumer	1,429		1,453		130
Subtotal	39,362		40,960		3,420
Total	$	66,659	$	70,649	$	3,420

The following tables set forth information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	8,396	$	114	$	8,836	$	230
Commercial real estate	18,392		312		18,448		628
Commercial construction	1,608		13		1,608		26
Small business	1,393		22		1,454		46
Residential real estate	2,236		25		2,253		44
Home equity	3,674		43		3,691		85
Other consumer	560		10		585		23
Subtotal	36,259		539		36,875		1,082
With an allowance recorded
Commercial & industrial	$	3,076	$	43	$	3,221	$	89
Commercial real estate	18,242		263		18,235		526
Commercial construction	—		—		—		—
Small business	748		12		760		23
Residential real estate	13,688		127		13,732		255
Home equity	407		5		410		10
Other consumer	1,074		10		1,113		20
Subtotal	37,235		460		37,471		923
Total	$	73,494	$	999	$	74,346	$	2,005

	Three Months Ended				Six Months Ended
	June 30, 2012				June 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,401	$	85	$	6,490	$	172
Commercial real estate	20,214		350		20,407		707
Commercial construction	—		—		—		—
Small business	1,474		25		1,517		52
Residential real estate	—		—		—		—
Home equity	100		2		100		3
Other consumer	72		1		56		1
Subtotal	28,261		463		28,570		935
With an allowance recorded
Commercial & industrial	$	1,343	$	28	$	1,398	$	60
Commercial real estate	15,685		229		16,432		473
Commercial construction	—		—		—		—
Small business	1,043		16		1,082		32
Residential real estate	12,958		157		13,053		296
Home equity	240		4		241		8
Other consumer	1,781		16		1,822		34
Subtotal	33,050		450		34,028		903
Total	$	61,311	$	913	$	62,598	$	1,838

Certain loans acquired by the Company may have shown evidence of deterioration of credit quality since origination and it was therefore deemed unlikely that the Bank would be able to collect all contractually required payments. As such, these loans were deemed to be Purchase Credit Impaired (“PCI”) loans and the carrying value and prospective income recognition are predicated upon future cash flows expected to be collected. The following table displays certain information pertaining to purchased credit impaired loans at the dated indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Outstanding balance	$	30,705	$	36,278
Carrying amount	$	27,675	$	32,054

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

	(Dollars in thousands)
Balance at January 1, 2012	$	—
Acquisition	3,095
Accretion	(903		)
Reclassification from nonaccretable difference for loans with improved cash flows (1)	272
Balance at December 31, 2012	2,464
Balance at January 1, 2013	$	2,464
Accretion	(1,142		)
Other change in expected cash flows (2)	439
Reclassification from nonaccretable difference for loans with improved cash flows (1)	335
Balance at June 30, 2013	$	2,096

(1) Results in increased interest income during the period in which the loan paid off.

(2) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

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Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
CASH DIVIDENDS DECLARED PER COMMON SHARE	$ 0.44	$ 0.42
Retained Earnings
CASH DIVIDENDS DECLARED PER COMMON SHARE	$ 0.44	$ 0.42

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Derivatives and Hedging Activities (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	$ 200,000	$ 200,000
Fair Value	(11,921)	(16,189)
Positions One [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	Feb. 16, 2006	Feb. 16, 2006
Effective Date	Dec. 28, 2006	Dec. 28, 2006
Maturity Date	Dec. 28, 2016	Dec. 28, 2016
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	5.04%	5.04%
Fair Value	(3,562)	(4,416)
Positions Two [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	Feb. 16, 2006	Feb. 16, 2006
Effective Date	Dec. 28, 2006	Dec. 28, 2006
Maturity Date	Dec. 28, 2016	Dec. 28, 2016
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	5.04%	5.04%
Fair Value	(3,563)	(4,417)
Positions Three [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	Dec. 08, 2008	Dec. 08, 2008
Effective Date	Dec. 10, 2008	Dec. 10, 2008
Maturity Date	Dec. 10, 2013	Dec. 10, 2013
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	2.65%	2.65%
Fair Value	(264)	(553)
Positions Four [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	Dec. 09, 2008	Dec. 09, 2008
Effective Date	Dec. 10, 2008	Dec. 10, 2008
Maturity Date	Dec. 10, 2013	Dec. 10, 2013
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	2.59%	2.59%
Fair Value	(258)	(539)
Positions Five [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	Dec. 09, 2008	Dec. 09, 2008
Effective Date	Dec. 10, 2008	Dec. 10, 2008
Maturity Date	Dec. 10, 2018	Dec. 10, 2018
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	2.94%	2.94%
Fair Value	(1,719)	(2,819)
Positions Six [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	50,000	50,000
Trade Date	Nov. 17, 2009	Nov. 17, 2009
Effective Date	Dec. 20, 2010	Dec. 20, 2010
Maturity Date	Dec. 20, 2014	Dec. 20, 2014
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	3.04%	3.04%
Fair Value	(1,955)	(2,647)
Positions Seven [Member]
Details of derivative positions for interest rate swaps which qualify as hedges for accounting purposes
Notional Amount	25,000	25,000
Trade Date	May 05, 2011	May 05, 2011
Effective Date	Jun. 10, 2011	Jun. 10, 2011
Maturity Date	Jun. 10, 2015	Jun. 10, 2015
Receive (Variable) Index	3 Month LIBOR	3 Month LIBOR
Current Rate Received	0.27%	0.31%
Pay Fixed Swap Rate	1.71%	1.71%
Fair Value	$ (600)	$ (798)

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Loans, Allowance for Loan Losses and Credit Quality (Details 13) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013		Dec. 31, 2012		Nov. 09, 2012
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield, Beginning of Period	$ 2,464		$ 0		$ 3,095
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Accretion	(1,142)		(903)
Certain loans acquired in transfer not accounted for as debt securities accretable yield adjustment changes in expected cash flow	439	[1]
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	335	[2]	272	[2]
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield, End of Period	$ 2,096		$ 2,464		$ 3,095

[1] (2) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

[2] (1) Results in increased interest income during the period in which the loan paid off.

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Securities (Details Textual) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Investments, Debt and Equity Securities [Abstract]
Marketable Securities, Gain (Loss)	$ 4,000	$ (4,000)
Securities (Textual) [Abstract]
Callable Securities in Investment Portfolio	8,000,000	8,000,000	7,700,000
Investment Securities Pledged	$ 353,400,000	$ 353,400,000	$ 365,800,000

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Comprehensive Income/Loss (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended				6 Months Ended
	Jun. 30, 2013		Jun. 30, 2012		Jun. 30, 2013		Jun. 30, 2012
COMPREHENSIVE INCOME
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, before Tax	$ (7,502)		$ (186)		$ (8,736)		$ (432)
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	2,910		47		3,365		132
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax	(4,592)		(139)		(5,371)		(300)
Net Security Gains Losses Reclassified Into Earnings Before Tax Amount	4	[1]	76	[1]	4	[1]	76	[1]
Net Security Gains Losses Reclassified Into Earnings Tax Amount	(1)	[1]	(31)	[1]	(1)	[1]	(31)	[1]
Net Security Gains Losses Reclassified Into Earnings Net Of Tax Amount	3	[1]	45	[1]	3	[1],[2]	45	[1],[2]
Change in fair value of securities available for sale, pre tax amount	(7,498)		(110)		(8,732)		(356)
Change in fair value of securities available for sale, tax (expense) benefit	2,909		16		3,364		101
Change in fair value of securities available for sale, after tax amount	(4,589)		(94)		(5,368)		(255)
Change in fair value of cash flow hedges, pre tax amount	1,294		(2,074)		1,289		(2,021)	[1]
Change in fair value of cash flow hedges, tax (expense) benefit	(529)		847		(526)		825
Change in fair value of cash flow hedges, after tax amount	765		(1,227)		763		(1,196)
Less: net cash flow hedge losses reclassified into earnings, pre tax amount	1,443	[3]	1,346	[3]	2,859	[3]	2,638	[3]
Less: net cash flow hedge losses reclassified into earnings, tax (expense) benefit	(589)	[3]	(550)	[3]	(1,168)	[3]	(1,077)	[3]
Less: net cash flow hedge losses reclassified into earnings, after tax amount	854	[3]	796	[3]	1,691	[2],[3]	1,561	[2],[3]
Net change in fair value of cash flow hedges, pre tax amount	2,737		(728)		4,148		617
Net change in fair value of cash flow hedges, tax (expense) benefit	(1,118)		297		(1,694)		(252)
Net change in fair value of cash flow hedges	1,619		(431)		2,454		365
Amortization of certain costs included in net periodic retirement costs, pre tax amount	51	[4]	39	[4]	73	[4]	77	[4]
Amortization of certain costs included in net periodic retirement costs, tax (expense) benefit	(9)	[4]	(16)	[4]	(30)	[4]	(31)	[4]
Amortization of certain costs included in net periodic retirement costs, after tax amount	42	[4]	23	[4]	43		46
Total other comprehensive income, pre tax amount	(4,710)		(799)		(4,511)		338
Total other comprehensive income, tax (expense) benefit	1,782		297		1,640		(182)
Total other comprehensive (loss) income	$ (2,928)		$ (502)		$ (2,871)		$ 156

[1] Net security losses includes pre-tax OTTI credit related losses of $0 for the three and six month ended June 30, 2013 and $76,000 for the three and six months ended June 30, 2012.

[2] Total reclassifications into income for the period were $899,000 and $1,737,000 for the three and six months ending June 30, 2013 and $864,000 and $1,652,000 for the three and six months ending June 30, 2012, respectively.

[3] Includes the remaining balance of a realized but unrecognized gain, net of tax, from the termination of interest rate swaps in June 2009. The original gain of $1.4 million, net of tax, will be recognized in earnings through December 2018, the original maturity date of the swap. The balance of this gain has amortized to $787,000 and $931,000 at June 30, 2013 and 2012, respectively.

[4] The amortization of prior service costs is included in the computation of net periodic pension cost as disclosed in the Employee Benefit Plans footnote in the Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed with the Securities and Exchange Commission.

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Derivatives and Hedging Activities (Details 8) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Summary of fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale
INTEREST RATE LOCK COMMITMENTS	$ (866)	$ 102
FORWARD SALES AGREEMENTS	2,092	(223)
LOANS HELD FOR SALE FAIR VALUE ADJUSTMENTS	$ (1,214)	$ 121

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Securities (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Reconciliation of fair value of securities

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses, other-than-temporary impairment recorded in other comprehensive income and fair value of securities available for sale and securities held to maturity for the periods below:

	June 30, 2013												December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value		Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary (Impairment)/Recovery			Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. Government agency securities	$	20,050	$	—	$	(457	)	$	—		$	19,593	$	20,053	$	769	$	—		$	—		$	20,822
Agency mortgage-backed securities	193,741		7,425		(2,865		)	—			198,301		209,381		12,158		(114		)	—			221,425
Agency collateralized mortgage obligations	66,087		612		(603		)	—			66,096		67,412		1,001		(37		)	—			68,376
Private mortgage-backed securities	2,820		—		—			216			3,036		3,227		—		—			305			3,532
Single issuer trust preferred securities issued by banks	2,233		11		—			—			2,244		2,255		—		(15		)	—			2,240
Pooled trust preferred securities issued by banks and insurers	8,158		—		(2,044		)	(2,497		)	3,617		8,353		—		(2,415		)	(2,957		)	2,981
Marketable securities	10,771		464		(267		)	—			10,968		9,875		92		(57		)	—			9,910
Total available for sale securities	$	303,860	$	8,512	$	(6,236	)	$	(2,281	)	$	303,855	$	320,556	$	14,020	$	(2,638	)	$	(2,652	)	$	329,286
Held to maturity securities
U.S. Treasury securities	$	1,012	$	62	$	—		$	—		$	1,074	$	1,013	$	121	$	—		$	—		$	1,134
Agency mortgage-backed securities	56,889		1,980		—			—			58,869		72,360		4,233		—			—			76,593
Agency collateralized mortgage obligations	159,945		1,632		(3,366		)	—			158,211		97,507		2,875		(2		)	—			100,380
State, county, and municipal securities	916		10		—			—			926		915		11		—			—			926
Single issuer trust preferred securities issued by banks	1,510		20		—			—			1,530		1,516		10		—			—			1,526
Corporate debt securities	5,006		235		—			—			5,241		5,007		258		—			—			5,265
Total held to maturity securities	$	225,278	$	3,939	$	(3,366	)	$	—		$	225,851	$	178,318	$	7,508	$	(2	)	$	—		$	185,824
Total	$	529,138	$	12,451	$	(9,602	)	$	(2,281	)	$	529,706	$	498,874	$	21,528	$	(2,640	)	$	(2,652	)	$	515,110

Schedule of contractual maturities of securities

A schedule of the contractual maturities of securities available for sale and securities held to maturity as of June 30, 2013 is presented below:

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	63	$	65	$	240	$	241
Due after one year to five years	10,495		11,038		6,318		6,597
Due after five years to ten years	81,294		80,377		1,012		1,074
Due after ten years	201,237		201,407		217,708		217,939
Total debt securities	$	293,089	$	292,887	$	225,278	$	225,851
Marketable securities	$	10,771	$	10,968	$	—	$	—
Total	$	303,860	$	303,855	$	225,278	$	225,851

Schedule of gross unrealized losses and fair value of investments

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2013
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agency securities	2	19,593		(457		)	—		—			19,593		(457		)
Agency mortgage-backed securities	33	$	76,840	$	(2,865	)	$	—	$	—		$	76,840	$	(2,865	)
Agency collateralized mortgage obligations	13	132,729		(3,969		)	—		—			132,729		(3,969		)
Pooled trust preferred securities issued by banks and insurers	2	—		—			2,244		(2,044		)	2,244		(2,044		)
Marketable securities	26	$	6,258	$	(267	)	$	—	$	—		$	6,258	$	(267	)
Total temporarily impaired securities	76	$	235,420	$	(7,558	)	$	2,244	$	(2,044	)	$	237,664	$	(9,602	)

	December 31, 2012
		Less than 12 months					12 months or longer					Total
	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
Agency mortgage-backed securities	17	$	23,814	$	(114	)	$	—	$	—		$	23,814	$	(114	)
Agency collateralized mortgage obligations	2	17,677		(39		)	—		—			17,677		(39		)
Single issuer trust preferred securities issued by banks and insurers	2	$	2,240	$	(15	)	$	—	$	—		$	2,240	$	(15	)
Pooled trust preferred securities issued by banks and insurers	2	$	—	$	—		$	2,069	$	(2,415	)	$	2,069	$	(2,415	)
Marketable securities	15	$	6,613	$	(57	)	$	—	$	—		$	6,613	$	(57	)
Total temporarily impaired securities	38	$	50,344	$	(225	)	$	2,069	$	(2,415	)	$	52,413	$	(2,640	)

Schedule of pertinent information

The following tables summarize pertinent information as of June 30, 2013, that was considered by management in determining if OTTI existed:

	Class	Amortized Cost (1)		Gross Unrealized Gain/(Loss)			Non-Credit Related  Other- Than-Temporary (Impairment)/Recovery			Fair Value		Total Cumulative Credit Related Other-Than- Temporary Impairment			Total Cumulative Other-Than- Temporary (Impairment)/Recovery to Date
	(Dollars in thousands)
Pooled trust preferred securities
Pooled trust preferred security A	C1	$	1,283	$	—		$	(851	)	$	432	$	(3,676	)	$	(4,527	)
Pooled trust preferred security B	D	—		—			—			—		(3,481		)	(3,481		)
Pooled trust preferred security C	C1	506		—			(319		)	187		(482		)	(801		)
Pooled trust preferred security D	D	—		—			—			—		(990		)	(990		)
Pooled trust preferred security E	C1	2,081		—			(1,327		)	754		(1,368		)	(2,695		)
Pooled trust preferred security F	B	1,878		(1,082		)	—			796		—			—
Pooled trust preferred security G	A1	2,410		(962		)	—			1,448		—			—
Total pooled trust preferred securities		$	8,158	$	(2,044	)	$	(2,497	)	$	3,617	$	(9,997	)	$	(12,494	)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	$	1,974	$	—		$	125		$	2,099	$	(766	)	$	(641	)
Private mortgage-backed securities-two	A19	846		—			91			937		(85		)	6
Total private mortgage-backed securities		$	2,820	$	—		$	216		$	3,036	$	(851	)	$	(635	)
Total		$	10,978	$	(2,044	)	$	(2,281	)	$	6,653	$	(10,848	)	$	(13,129	)

(1) The amortized cost reflects previously recorded OTTI charges recognized in earnings for the applicable securities.

Summary of percentage of pertinent information

	Class	Number of Performing Banks and Insurance Cos. in Issuances (Unique)	Current Deferrals/ Defaults/Losses (As a % of Original  Collateral)	Total Projected Defaults/Losses (as a % of Performing Collateral)	Excess  Subordination (After Taking  into Account Best  Estimate of Future Deferrals/ Defaults/Losses) (1)	Lowest credit Ratings to date (2)
Pooled trust preferred securities
Trust preferred security A	C1	56	33.08%	20.64%	—%	C (Fitch & Moody's)
Trust preferred security B	D	56	33.08%	20.64%	—%	C (Fitch)
Trust preferred security C	C1	47	29.29%	15.20%	—%	C (Fitch & Moody's)
Trust preferred security D	D	47	29.29%	15.20%	—%	C (Fitch)
Trust preferred security E	C1	46	26.86%	16.73%	0.66%	C (Fitch & Moody's)
Trust preferred security F	B	32	25.08%	18.83%	30.90%	CC (Fitch)
Trust preferred security G	A1	32	25.08%	18.83%	55.89%	CCC+ (S&P)
Private mortgage-backed securities
Private mortgage-backed securities-one	2A1	N/A	6.53%	13.12%	—%	D (Fitch)
Private mortgage-backed securities-two	A19	N/A	4.18%	7.32%	—%	C (Fitch)

(1) Excess subordination represents the additional default/losses in excess of both current and projected defaults/losses that the security can absorb before the security experiences any credit impairment.

(2) The Company reviewed credit ratings provided by S&P, Moody’s and Fitch in its evaluation of issuers.

Schedule of Other Than Temorary Impairment [Table Text Block]

The following table shows the total OTTI that the Company recorded for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Gross change in OTTI recorded on certain investments (gain/(losses))	$	90		$	(106	)	$	371		$	168
Portion of OTTI gains (losses) recognized in OCI	(90		)	30			(371		)	(244		)
Total credit related OTTI losses recognized in earnings	$	—		$	(76	)	—			$	(76	)

Summary of cumulative credit related component of OTTI

The following table shows the cumulative credit related component of OTTI for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)
Balance at beginning of period	$	(10,847	)	$	(10,771	)	$	(10,847	)	$	(10,771	)
Add
Incurred on securities not previously impaired	—			—			—			—
Incurred on securities previously impaired	—			(76		)	—			(76		)
Less
Realized gain/loss on sale of securities	—			—			—			—
Reclassification due to changes in Company’s intent	—			—			—			—
Increases in cash flow expected to be collected	—			—			—			—
Balance at end of period	$	(10,847	)	$	(10,847	)	$	(10,847	)	$	(10,847	)

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Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally to manage the Company’s interest rate risk. Additionally, the Company enters into interest rate derivatives and foreign exchange contracts to accommodate the business requirements of its customers (“customer related positions”). The Company minimizes the market and liquidity risks of customer related positions by entering into similar offsetting positions with broker-dealers. Derivative instruments are carried at fair value in the Company’s financial statements. The accounting for changes in the fair value of a derivative instrument is dependent upon whether or not it qualifies as a hedge for accounting purposes, and further, by the type of hedging relationship.

The Company does not enter into proprietary trading positions for any derivatives.

Interest Rate Positions

The Company currently utilizes interest rate swap agreements as hedging instruments against interest rate risk associated with the Company’s borrowings. An interest rate swap is an agreement whereby one party agrees to pay a floating rate of interest on a notional principal amount in exchange for receiving a fixed rate of interest on the same notional amount, for a predetermined period of time, from a second party. The amounts relating to the notional principal amount are not actually exchanged. The maximum length of time over which the Company is currently hedging its exposure to the variability in future cash flows for forecasted transactions related to the payment of variable interest on existing financial instruments is six years.

The following table reflects the Company’s derivative positions for the periods indicated below for interest rate swaps which qualify as cash flow hedges for accounting purposes:

June 30, 2013
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	$	(3,562	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.27	%	5.04	%	(3,563		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.65	%	(264		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.27	%	2.59	%	(258		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.27	%	2.94	%	(1,719		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.27	%	3.04	%	(1,955		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.27	%	1.71	%	(600		)
$	200,000									$	(11,921	)
December 31, 2012
Notional Amount		Trade Date	Effective Date	Maturity Date	Receive (Variable) Index	Current  Rate Received		Pay Fixed Swap Rate		Fair Value
				(Dollars in thousands)
$	25,000	16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	$	(4,416	)
25,000		16-Feb-06	28-Dec-06	28-Dec-16	3 Month LIBOR	0.31	%	5.04	%	(4,417		)
25,000		8-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.65	%	(553		)
25,000		9-Dec-08	10-Dec-08	10-Dec-13	3 Month LIBOR	0.31	%	2.59	%	(539		)
25,000		9-Dec-08	10-Dec-08	10-Dec-18	3 Month LIBOR	0.31	%	2.94	%	(2,819		)
50,000		17-Nov-09	20-Dec-10	20-Dec-14	3 Month LIBOR	0.31	%	3.04	%	(2,647		)
25,000		5-May-11	10-Jun-11	10-Jun-15	3 Month LIBOR	0.31	%	1.71	%	(798		)
$	200,000									$	(16,189	)

For derivative instruments that are designated and qualify as hedging instruments, the effective portion of the gains or losses is reported as a component of OCI, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The Company expects approximately $5.0 million (pre-tax), to be reclassified to interest expense from OCI, related to the Company’s cash flow hedges in the next twelve months. This reclassification is due to anticipated payments that will be made and/or received on the swaps based upon the forward curve as of June 30, 2013.

The Company had no fair value hedges as of June 30, 2013 or December 31, 2012.

The table below presents the net amortization income recognized as an offset to interest expense related to previously terminated swaps for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Net amortization income	$	61	$	61	$	122	$	122

Customer Related Positions

Interest rate derivatives, primarily interest rate swaps, offered to commercial borrowers through the Bank’s loan level derivative program do not qualify as hedges for accounting purposes. The Bank believes that its exposure to commercial customer derivatives is limited because these contracts are simultaneously matched at inception with an offsetting dealer transaction. The commercial customer derivative program allows the Bank to retain variable-rate commercial loans while allowing the customer to synthetically fix the loan rate by entering into a variable-to-fixed interest rate swap.

Foreign exchange contracts offered to commercial borrowers through the Bank’s derivative program do not qualify as hedges for accounting purposes. The Bank acts as a seller and buyer of foreign exchange contracts to accommodate its customers. To mitigate the market and liquidity risk associated with these derivatives, the Bank enters into similar offsetting positions.

The following table reflects the Company’s customer related derivative positions for the periods indicated below for those derivatives not designated as hedging:

		Notional Amount Maturing
	# of Positions (1)	2013		2014	2015	2016	Thereafter	Total		Fair Value
	June 30, 2013
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	158	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	13,519
Pay fixed, receive variable	152	$	4,058	55,271	100,565	43,966	327,855	$	531,715	$	(13,543	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	13	$	25,073	7,221	—	—	—	$	32,294	$	(64	)
Buys US currency, sells foreign exchange	13	$	25,073	7,221	—	—	—	$	32,294	$	78
	December 31, 2012
	(Dollars in thousands)
Loan level swaps
Receive fixed, pay variable	143	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	28,678
Pay fixed, receive variable	137	$	16,766	65,344	105,939	45,267	268,932	$	502,248	$	(28,663	)
Foreign exchange contracts
Buys foreign exchange, sells US currency	16	$	42,516	—	—	—	—	$	42,516	$	1,748
Buys US currency, sells foreign exchange	16	$	42,516	—	—	—	—	$	42,516	$	(1,718	)

(1) The Company may enter into one swap agreement which offsets multiple reverse swap agreements. The positions will offset and the terms will be identical.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the balance sheet at the periods indicated:

	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012		Balance Sheet Location	Fair Value at June 30,  2013		Fair Value at December 31, 2012
	(Dollars in thousands)
Derivatives designated as hedges
Interest rate swaps	Other assets	$	—	$	—	Other liabilities	$	11,921	$	16,189
Derivatives not designated as hedges
Customer Related Positions:
Loan level swaps	Other assets	$	18,413	$	28,678	Other liabilities	$	18,437	$	28,663
Foreign exchange contracts	Other assets	291		1,748		Other liabilities	277		1,718
Total		$	18,704	$	30,426		$	18,714	$	30,381

The table below presents the effect of the Company’s derivative financial instruments included in OCI and current earnings for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Derivatives designated as hedges
Gain (loss) in OCI on derivatives (effective portion), net of tax	$	765		$	(1,227	)	$	763		$	(1,196	)
Loss reclassified from OCI into interest expense (effective portion)	$	(1,443	)	$	(1,346	)	$	(2,859	)	$	(2,638	)
Loss recognized in income on derivatives (ineffective portion & amount excluded from effectiveness testing)
Interest expense	$	—		$	—		$	—		$	—
Other expense	—			—			—			—
Total	$	—		$	—		$	—		$	—
Derivatives not designated as hedges
Changes in fair value of customer related positions
Other income	$	14		$	51		$	26		$	73
Other expense	(56		)	(9		)	(81		)	(19		)
Total	$	(42	)	$	42		$	(55	)	$	54

By using derivatives, the Company is exposed to credit risk to the extent that counterparties to the derivative contracts do not perform as required. Should a counterparty fail to perform under the terms of a derivative contract, the Company's credit exposure on interest rate swaps is limited to the net positive fair value and accrued interest of all swaps with each counterparty. The Company seeks to minimize counterparty credit risk through credit approvals, limits, monitoring procedures, and obtaining collateral, where appropriate. Institutional counterparties must have an investment grade credit rating and be approved by the Company's Board of Directors. As such, management believes the risk of incurring credit losses on derivative contracts with those counterparties is remote and losses, if any, would be immaterial. The Company had no exposure relating to interest rate swaps with institutional counterparties at June 30, 2013 and December 31, 2012, as all such swaps were in a liability position. The Company’s exposure relating to customer related positions was approximately $16.7 million and $31.0 million at June 30, 2013 and December 31, 2012, respectively. Credit exposure may be reduced by the amount of collateral pledged by the counterparty.

The Company does not offset fair value amounts recognized for derivative instruments. The Company does net the amount recognized for the right to reclaim cash collateral against the obligation to return cash collateral arising from derivative instruments executed with the same counterparty under a master netting arrangement. Collateral legally required to be maintained at dealer banks by the Company is monitored and adjusted as necessary. Per a review completed by management of these instruments at June 30, 2013 it was determined that no additional collateral would have to be posted to immediately settle these instruments.

The following table presents the Company's asset derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Assets Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Received		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	18,413		—		18,413		1,735		—		16,678
Customer foreign exchange contracts	291		—		291		108		—		183
	$	18,704	$	—	$	18,704	$	1,843	$	—	$	16,861
	December 31, 2012
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	—
Loan level swaps	28,678		—		28,678		—		—		28,678
Customer foreign exchange contracts	1,748		—		1,748		—		—		1,748
	$	30,426	$	—	$	30,426	$	—	$	—	$	30,426

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

The following table presents the Company's liability derivative positions and the potential effect of netting arrangements on its financial position, as of the periods indicated:

							Gross Amounts Not Offset in the Statement of Financial Position
Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position		Net Amounts of Liabilities Presented in the Statement of Financial Position		Financial Instruments (1)		Cash Collateral Pledged		Net Amount
	(Dollars in thousands)
	June 30, 2013
Interest rate swaps	$	11,921	$	—	$	11,921	$	—	$	15,774	$	(3,853	)
Loan level swaps	18,437		—		18,437		1,735		15,797		905
Customer foreign exchange contracts	277		—		277		108		—		169
	$	30,635	$	—	$	30,635	$	1,843	$	31,571	$	(2,779	)
	December 31, 2012
Interest rate swaps	$	16,189	$	—	$	16,189	$	—	$	19,185	$	(2,996	)
Loan level swaps	28,663		—		28,663		—		31,772		(3,109		)
Customer foreign exchange contracts	1,718		—		1,718		—		—		1,718
	$	46,570	$	—	$	46,570	$	—	$	50,957	$	(4,387	)

(1) Includes loan level swaps with customers which are not subject to a master netting arrangement and thus are not offset in the statement of financial position.

The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company fails to maintain its status as a well capitalized institution, then the Company could be required to terminate any outstanding derivatives with the counterparty. Included in the table above are derivative instruments that contain credit-risk related contingent features that are in a net liability position, which require the Company to assign collateral. All liability position interest rate swap and customer loan level swap counterparties have credit-risk contingent instruments as of the dates indicated in the table above.

Mortgage Derivatives

Forward sale contracts of residential mortgage loans, considered derivative instruments for accounting purposes, are utilized by the Company in its efforts to manage risk of loss associated with its mortgage loan commitments and mortgage loans intended for sale. Prior to closing and funding certain one-to-four family residential mortgage loans, an interest rate lock commitment is generally extended to the borrower. During the period from commitment date to closing date, the Company is subject to the risk that market rates of interest may change. If market rates rise, investors generally will pay less to purchase such loans resulting in a reduction in the gain on sale of the loans or, possibly, a loss. In an effort to mitigate such risk, forward delivery sales commitments are executed, under which the Company agrees to deliver whole mortgage loans to various investors. The interest rate lock commitments and forward sales commitments are recorded at fair value, with changes in fair value recorded in current period earnings as a component of mortgage banking income. The Company has elected the fair value option to carry these instruments at fair value. Changes in the fair value marks on loans held for sale offset changes in interest rate lock and forward sales commitments. The change in fair value of loans held for sale is recorded in current period earnings as a component of mortgage banking income in accordance with the Company's fair value election.

The table below summarizes the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	June 30, 2013			December 31, 2012
	(Dollars in thousands)
Interest rate lock commitments	$	(866	)	$	102
Forward sales agreements	$	2,092		$	(223	)
Loans held for sale fair value adjustments	$	(1,214	)	$	121

The table below summarizes the changes in the fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale at the periods indicated:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2013			2012			2013			2012
	(Dollars in thousands)						(Dollars in thousands)
Interest rate lock commitments	$	(997	)	$	385		$	(968	)	$	101
Forward sales agreements	2,204			(766		)	2,315			(213		)
Loans held for sale fair value adjustments	(1,195		)	381			(1,335		)	112
Total change in fair value	$	12		$	—		$	12		$	—

XML

Comprehensive Income/Loss (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Sep. 30, 2009
Comprehensive Income (Textual) [Abstract]
Total credit related OTTI losses recognized in earnings		$ (76,000)		$ (76,000)
Gain on sales of securities			(4,000)
Gain on interest rate swaps	787,000	931,000	787,000	931,000	1,400,000
reclassification out of accumulated other comprehensive income, total	$ 899,000	$ 864,000	$ 1,737,000	$ 1,652,000

XML

Stock Based Compensation (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Restricted stock compensation footnote

During 2013, the Company made the following awards of restricted stock:

Date	Shares Granted	Plan	Fair Value		Vesting Period
1/16/2013	2,000	2005 Employee Stock Plan	$	30.48	Ratably over 3 years from grant date
2/14/2013	93,800	2005 Employee Stock Plan	$	31.51	Ratably over 5 years from grant date
5/21/2013	14,700	2010 Non-Employee Director Stock Plan	$	33.17	At the end of 5 years from grant date

XML

Loans, Allowance for Loan Losses and Credit Quality (Tables)

6 Months Ended

Jun. 30, 2013

Loans, Allowance for Loan Losses and Credit Quality [Abstract]

Allowance for loans based on collective and individual evaluation of impairment by loan category

The following tables bifurcates the amount of allowance allocated to each loan category based on the type of impairment analysis as of the periods indicated:

	June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	742,343	$	2,150,833	$	231,719	$	77,283	$	513,551	$	792,450	$	21,932	$	4,530,111	(1	)
Ending balance: individually evaluated for impairment	$	9,759	$	36,439	$	1,608	$	2,039	$	15,883	$	4,069	$	1,584	$	71,381
Ending balance: purchase credit impaired loans	$	—	$	18,304	$	—	$	—	$	8,991	$	380	$	—	$	27,675
Ending balance: collectively evaluated for impairment	$	732,584	$	2,096,090	$	230,111	$	75,244	$	488,677	$	788,001	$	20,348	$	4,431,055

	December 31, 2012
	(Dollars in thousands)
	Commercial and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Residential Real Estate		Home Equity		Other Consumer		Total
Financing receivables
Ending balance: total loans by group	$	687,511	$	2,122,153	$	188,768	$	78,594	$	612,881	$	802,149	$	26,955	$	4,519,011	(1	)
Ending balance: individually evaluated for impairment	$	8,575	$	33,868	$	—	$	2,279	$	15,373	$	4,435	$	2,129	$	66,659
Ending Balance: purchase credit impaired loans	$	—	$	21,853	$	—	$	—	$	9,821	$	380	$	—	$	32,054
Ending balance: collectively evaluated for impairment	$	678,936	$	2,066,432	$	188,768	$	76,315	$	587,687	$	797,334	$	24,826	$	4,420,298

(1) The amount of deferred fees included in the ending balance was $2.6 million and $3.1 million at June 30, 2013 and December 31, 2012, respectively.

Summary of changes in allowance for loan losses

The following tables summarize changes in allowance for loan losses by loan category for the periods indicated:

	Three Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,443		$	22,569		$	3,139	$	1,244		$	3,048		$	7,716		$	747		$	51,906
Charge-offs	(1,302		)	(196		)	—		(276		)	(186		)	(257		)	(260		)	(2,477		)
Recoveries	103			8			—		37			86			30			183			447
Provision	2,081			648			283		290			11			(222		)	9			3,100
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976

	Three Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction			Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,454		$	22,829		$	2,233		$	1,459		$	3,072		$	6,077		$	1,216		$	48,340
Charge-offs	(4,707		)	(2,133		)	—			(136		)	(105		)	(1,391		)	(296		)	(8,768		)
Recoveries	113			—			—			46			—			18			154			331
Provision	4,698			680			(13		)	(49		)	14			3,150			20			8,500
Ending balance	$	11,558		$	21,376		$	2,220		$	1,320		$	2,981		$	7,854		$	1,094		$	48,403

	Six Months Ended June 30, 2013
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	13,461		$	22,598		$	2,811	$	1,524		$	2,930		$	7,703		$	807		$	51,834
Charge-offs	(1,725		)	(603		)	—		(421		)	(247		)	(534		)	(521		)	(4,051		)
Recoveries	239			8			—		76			86			51			333			793
Provision	2,350			1,026			611		116			190			47			60			4,400
Ending balance	$	14,325		$	23,029		$	3,422	$	1,295		$	2,959		$	7,267		$	679		$	52,976
Ending balance: Individually evaluated for impairment	$	775		$	410		$	—	$	153		$	1,670		$	52		$	92		$	3,152
Ending balance: Collectively evaluated for impairment	$	13,550		$	22,619		$	3,422	$	1,142		$	1,289		$	7,215		$	587		$	49,824
	Six Months Ended June 30, 2012
	(Dollars in thousands)
	Commercial and Industrial			Commercial Real Estate			Commercial Construction		Small Business			Residential Real Estate			Home Equity			Other Consumer			Total
Allowance for loan losses
Beginning balance	$	11,682		$	23,514		$	2,076	$	1,896		$	3,113		$	4,597		$	1,382		$	48,260
Charge-offs	(4,722		)	(2,737		)	—		(306		)	(214		)	(2,141		)	(593		)	(10,713		)
Recoveries	313			—			—		98			—			31			314			756
Provision	4,285			599			144		(368		)	82			5,367			(9		)	10,100
Ending balance	$	11,558		$	21,376		$	2,220	$	1,320		$	2,981		$	7,854		$	1,094		$	48,403
Ending balance: Individually evaluated for impairment	$	278		$	445		$	—	$	140		$	1,209		$	30		$	178		$	2,280
Ending balance: Collectively evaluated for impairment	$	11,280		$	20,931		$	2,220	$	1,180		$	1,772		$	7,824		$	916		$	46,123

Internal risk-rating categories for the Company's commercial portfolio

The following table details the internal risk-rating categories for the Company’s commercial portfolio:

		June 30, 2013
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	704,065	$	1,976,410	$	217,096	$	70,108	$	2,967,679
Potential weakness	7	17,088		74,143		6,955		3,036		101,222
Definite weakness-loss unlikely	8	20,410		98,818		7,668		4,106		131,002
Partial loss probable	9	780		1,462		—		33		2,275
Definite loss	10	—		—		—		—		—
Total		$	742,343	$	2,150,833	$	231,719	$	77,283	$	3,202,178

		December 31, 2012
Category	Risk Rating	Commercial  and Industrial		Commercial Real Estate		Commercial Construction		Small Business		Total
		(Dollars in thousands)
Pass	1 - 6	$	647,984	$	1,928,148	$	177,693	$	71,231	$	2,825,056
Potential weakness	7	16,420		92,651		6,195		3,213		118,479
Definite weakness-loss unlikely	8	21,979		98,688		4,880		4,080		129,627
Partial loss probable	9	1,128		2,666		—		70		3,864
Definite loss	10	—		—		—		—		—
Total		$	687,511	$	2,122,153	$	188,768	$	78,594	$	3,077,026

Weighted average FICO scores and the weighted average combined LTV ratio

The following table shows the weighted average FICO scores and the weighted average combined LTV ratios as of the periods indicated below:

	June 30, 2013		December 31, 2012
Residential portfolio
FICO score (re-scored) (1)	739		727
LTV (re-valued) (2)	70.0	%	67.0	%
Home equity portfolio
FICO score (re-scored) (1)	763		763
LTV (re-valued) (2)	55.0	%	54.0	%

(1) The average FICO scores for June 30, 2013 are based upon rescores available from May 2013 and actual score data for loans booked between June 1 and June 30, 2013. The average FICO scores for December 31, 2012 are based upon rescores available from November 2012 and actual score data for loans booked between December 1 and December 31, 2012.

(2) The combined LTV ratios for June 30, 2013 are based upon updated automated valuations as of February 2013. The combined LTV ratios for December 31, 2012 are based upon updated automated valuations as of November 30, 2011. For home equity loans and lines in a subordinate lien, the LTV data represents a combined LTV, taking into account the senior lien data for loans and lines.

Summary of nonaccrual loans

The following table shows nonaccrual loans at the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Commercial and industrial	$	3,009	$	2,666
Commercial real estate	8,526		6,574
Commercial construction	1,608		—
Small business	698		570
Residential real estate	12,496		11,472
Home equity (1)	10,024		7,311
Other consumer	134		121
Total nonaccrual loans (2)	$	36,495	$	28,714

(1) Includes home equity loans which are currently performing but have been placed on nonaccrual as a result of delinquency with respect to the first position, which is held by another financial institution.

(2) Included in these amounts were $9.8 million and $6.6 million of nonaccruing TDRs at June 30, 2013 and December 31, 2012, respectively.

Age analysis of past due financing receivables

The following table shows the age analysis of past due financing receivables as of the dates indicated:

	June 30, 2013
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	15	$	1,481	13	$	1,821	22	$	2,407	50	$	5,709	$	736,634	$	742,343	$	—
Commercial real estate	51	5,454		10	9,581		27	6,529		88	21,564		2,129,269		2,150,833		—
Commercial construction	—	—		—	—		1	1,608		1	1,608		230,111		231,719		—
Small business	25	717		11	149		13	359		49	1,225		76,058		77,283		—
Residential real estate	15	3,359		4	1,768		38	6,982		57	12,109		501,442		513,551		—
Home equity	16	592		12	1,174		23	2,009		51	3,775		788,675		792,450		—
Other consumer	112	559		14	39		28	180		154	778		21,154		21,932		54
Total	234	$	12,162	64	$	14,532	152	$	20,074	450	$	46,768	$	4,483,343	$	4,530,111	$	54

	December 31, 2012
	30-59 days			60-89 days			90 days or more			Total Past Due					Total Financing Receivables		Recorded Investment >90 Days and Accruing
	Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Number of Loans	Principal Balance		Current
	(Dollars in thousands)
Loan Portfolio
Commercial and industrial	14	$	1,305	7	$	336	23	$	1,875	44	$	3,516	$	683,995	$	687,511	$	—
Commercial real estate	19	5,028		8	2,316		31	6,054		58	13,398		2,108,755		2,122,153		—
Commercial construction	—	—		—	—		—	—		—	—		188,768		188,768		—
Small business	20	750		8	94		10	320		38	1,164		77,430		78,594		—
Residential real estate	17	3,053		7	1,848		40	7,501		64	12,402		600,479		612,881		—
Home equity	32	2,756		10	632		17	1,392		59	4,780		797,369		802,149		—
Other consumer	208	1,217		32	224		28	153		268	1,594		25,361		26,955		52
Total	310	$	14,109	72	$	5,450	149	$	17,295	531	$	36,854	$	4,482,157	$	4,519,011	$	52

Summary of Troubled Debt Restructuring and other pertinent information

The following table shows the Company’s total TDRs and other pertinent information as of the dates indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
TDRs on accrual status	$	38,898	$	46,764
TDRs on nonaccrual	9,777		6,554
Total TDRs	$	48,675	$	53,318
Amount of specific reserves included in the allowance for loan losses associated with TDRs:	$	2,796	$	3,049
Additional commitments to lend to a borrower who has been a party to a TDR:	$	1,921	$	1,847

Change in investment recorded subsequent to modifications

The following table shows the modifications which occurred during the periods indicated and the change in the recorded investment subsequent to the modifications occurring:

	Three Months Ended					Six Months Ended
	June 30, 2013					June 30, 2013
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	2	$	282	$	282	2	$	282	$	282
Commercial real estate	1	664		664		2	1,063		1,063
Small business	1	$	18	$	18	5	282		282
Residential real estate	2	744		744		6	1,900		1,926
Home equity	1	29		29		3	194		194
Other consumer	—	—		—		2	11		11
Total	7	$	1,737	$	1,737	20	$	3,732	$	3,758

	Three Months Ended					Six Months Ended
	June 30, 2012					June 30, 2012
	Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)		Number of Contracts	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment (1)
	(Dollars in thousands)
Troubled debt restructurings
Commercial & industrial	7	$	1,115	$	1,115	11	$	1,273	$	1,273
Commercial real estate	7	3,839		3,839		9	4,907		4,907
Small business	1	17		17		8	360		360
Residential real estate	1	261		261		2	378		378
Home equity	1	64		66		1	64		66
Other consumer	2	65		65		4	150		150
Total	19	$	5,361	$	5,363	35	$	7,132	$	7,134

(1) The post-modification balances represent the balance of the loan on the date of modifications. These amounts may show an increase when modifications include a capitalization of interest.

Post modification balance of Troubled Debt Restructuring

The following table shows the Company’s post-modification balance of TDRs listed by type of modification as of the periods indicated:

	Three Months Ended June 30				Six Months Ended June 30
	2013		2012		2013		2012
	(Dollars in thousands)				(Dollars in thousands)
Extended maturity	$	329	$	313	$	991	$	354
Adjusted interest rate	—		2,119		—		3,557
Combination rate & maturity	1,408		2,931		2,756		3,223
Court ordered concession	—		—		11		—
Total	$	1,737	$	5,363	$	3,758	$	7,134

Troubled Debt Restructurings that subsequently defaulted

The following table shows the loans that have been modified during the past twelve months which have subsequently defaulted during the periods indicated. The Company considers a loan to have defaulted when it reaches 90 days past due.

	Three Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		—	—
Small business	2	22		—	—
Total	5	$	2,187	—	$	—
	Six Months Ended June 30
	2013			2012
	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
	(Dollars in thousands)
Troubled debt restructurings that subsequently defaulted
Commercial & industrial	2	$	1,767	—	$	—
Commercial real estate	1	398		1	250
Small business	3	253		—	—
Other consumer	—	—		1	6
Total	6	$	2,418	2	$	256

Impaired loans by loan portfolio

The tables below set forth information regarding the Company’s impaired loans by loan portfolio as of the dates indicated:

	June 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,780	$	8,577	$	—
Commercial real estate	18,252		18,928		—
Commercial construction	1,608		1,608		—
Small business	1,297		1,455		—
Residential real estate	2,221		2,330		—
Home equity	3,664		3,717		—
Other consumer	541		542		—
Subtotal	34,363		37,157		—
With an allowance recorded
Commercial & industrial	$	2,979	$	3,751	$	775
Commercial real estate	18,187		18,330		410
Commercial construction	—		—		—
Small business	742		778		153
Residential real estate	13,662		14,502		1,670
Home equity	405		457		52
Other consumer	1,043		1,069		92
Subtotal	37,018		38,887		3,152
Total	$	71,381	$	76,044	$	3,152

	December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	5,849	$	7,343	$	—
Commercial real estate	12,999		13,698		—
Commercial construction	—		—		—
Small business	1,085		1,147		—
Residential real estate	2,545		2,630		—
Home equity	4,119		4,166		—
Other consumer	700		705		—
Subtotal	27,297		29,689		—
With an allowance recorded
Commercial & industrial	$	2,726	$	2,851	$	1,084
Commercial real estate	20,869		21,438		516
Commercial construction	—		—		—
Small business	1,194		1,228		353
Residential real estate	12,828		13,601		1,302
Home equity	316		389		35
Other consumer	1,429		1,453		130
Subtotal	39,362		40,960		3,420
Total	$	66,659	$	70,649	$	3,420

Interest income recognized on impaired loans

The following tables set forth information regarding interest income recognized on impaired loans, by portfolio, for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30, 2013				June 30, 2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	8,396	$	114	$	8,836	$	230
Commercial real estate	18,392		312		18,448		628
Commercial construction	1,608		13		1,608		26
Small business	1,393		22		1,454		46
Residential real estate	2,236		25		2,253		44
Home equity	3,674		43		3,691		85
Other consumer	560		10		585		23
Subtotal	36,259		539		36,875		1,082
With an allowance recorded
Commercial & industrial	$	3,076	$	43	$	3,221	$	89
Commercial real estate	18,242		263		18,235		526
Commercial construction	—		—		—		—
Small business	748		12		760		23
Residential real estate	13,688		127		13,732		255
Home equity	407		5		410		10
Other consumer	1,074		10		1,113		20
Subtotal	37,235		460		37,471		923
Total	$	73,494	$	999	$	74,346	$	2,005

	Three Months Ended				Six Months Ended
	June 30, 2012				June 30, 2012
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(Dollars in thousands)
With no related allowance recorded
Commercial & industrial	$	6,401	$	85	$	6,490	$	172
Commercial real estate	20,214		350		20,407		707
Commercial construction	—		—		—		—
Small business	1,474		25		1,517		52
Residential real estate	—		—		—		—
Home equity	100		2		100		3
Other consumer	72		1		56		1
Subtotal	28,261		463		28,570		935
With an allowance recorded
Commercial & industrial	$	1,343	$	28	$	1,398	$	60
Commercial real estate	15,685		229		16,432		473
Commercial construction	—		—		—		—
Small business	1,043		16		1,082		32
Residential real estate	12,958		157		13,053		296
Home equity	240		4		241		8
Other consumer	1,781		16		1,822		34
Subtotal	33,050		450		34,028		903
Total	$	61,311	$	913	$	62,598	$	1,838

Certain Loans Acquired In Transfer Accounted For As Debt Securities Acquired During Period

The following table displays certain information pertaining to purchased credit impaired loans at the dated indicated:

	June 30, 2013		December 31, 2012
	(Dollars in thousands)
Outstanding balance	$	30,705	$	36,278
Carrying amount	$	27,675	$	32,054

Certain Loans Acquired in Transfer Accounted for as Debt Securities, Accretable Yield Movement Schedule

The following table summarizes activity in the accretable yield for the PCI loan portfolio:

	(Dollars in thousands)
Balance at January 1, 2012	$	—
Acquisition	3,095
Accretion	(903		)
Reclassification from nonaccretable difference for loans with improved cash flows (1)	272
Balance at December 31, 2012	2,464
Balance at January 1, 2013	$	2,464
Accretion	(1,142		)
Other change in expected cash flows (2)	439
Reclassification from nonaccretable difference for loans with improved cash flows (1)	335
Balance at June 30, 2013	$	2,096

(1) Results in increased interest income during the period in which the loan paid off.

(2) Represents changes in cash flows expected to be collected and resulting in increased interest income as a prospective yield adjustment over the remaining life of the loan(s).

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Independent Bank Corp
Entity Central Index Key	0000776901
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		22,583,713

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2013

Earnings Per Share [Abstract]

Summary of earnings per share

Earnings per share consisted of the following components for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2013		2012		2013		2012
	(Dollars in thousands, except per share data)
Net income	$	12,758	$	8,874	$	25,010	$	21,057
Weighted Average Shares
Basic shares	22,888,155		21,623,827		22,856,132		21,592,416
Effect of diluted securities	52,144		20,377		49,104		22,251
Dilutive shares	22,940,299		21,644,204		22,905,236		21,614,667
Net income per share
Basic EPS	$	0.56	$	0.41	$	1.09	$	0.98
Effect of diluted securities	—		—		—		(0.01		)
Dilutive EPS	$	0.56	$	0.41	$	1.09	$	0.97

Details of anti dilutive options to purchase common stock

The following table illustrates the options to purchase common stock that were excluded from the calculation of diluted earnings per share because they were anti-dilutive:

	Three Months Ended		Six Months Ended
	June 30		June 30
	2013	2012	2013	2012
Stock options	241,268	804,249	245,312	807,147

XML

Derivatives and Hedging Activities (Details Textual) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Maximum length of time Company is currently hedging its exposure	6 years
Interest expense from OCI, related to cash flow hedges before tax	$ 5.0
Notional amount of fair value hedged derivative	0
Customer related positions	$ 16.7	$ 31.0

XML

Derivatives and Hedging Activities (Details 9) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Summary of changes in fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale
TOTAL CHANGE IN FAIR VALUE	$ 12		$ 12
INTEREST RATE LOCK COMMITMENTS [Member]
Summary of changes in fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale
TOTAL CHANGE IN FAIR VALUE	(997)	385	(968)	101
FORWARD SALES AGREEMENTS [Member]
Summary of changes in fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale
TOTAL CHANGE IN FAIR VALUE	2,204	(766)	2,315	(213)
LOANS HELD FOR SALE FAIR VALUE ADJUSTMENT [Member]
Summary of changes in fair value of residential mortgage loans commitments, forward sales agreements, and loans held for sale
TOTAL CHANGE IN FAIR VALUE	$ (1,195)	$ 381	$ (1,335)	$ 112