10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2017

OR

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

For the transition period from  to ____________

Commission File Number: 0-19065 

SANDY SPRING BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland52-1532952 

(State of incorporation)          (I.R.S. Employer Identification Number)

17801 Georgia Avenue, Olney, Maryland 20832

                                                     (Address of principal executive office)             (Zip Code)

301-774-6400

(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 filing requirements for the past 90 days.

Yes  X        No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes  X        No  

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

Large accelerated filer  Accelerated filer  X   Non-accelerated filer    Smaller reporting company x    Emerging growth company x 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes       No   X  

The number of outstanding shares of common stock outstanding as of November 3, 2017

Common stock, $1.00 par value – 23,993,562 shares

SANDY SPRING BANCORP, INC.
TABLE OF CONTENTS
		Page
PART I - FINANCIAL INFORMATION
Item1. FINANCIAL STATEMENTS
	Condensed Consolidated Statements of Condition - Unaudited at
	September 30, 2017 and December 31, 2016	4
	Condensed Consolidated Statements of Income - Unaudited for the Three and Nine  Months
	Ended September 30, 2017 and 2016	5
	Condensed Consolidated Statements of Comprehensive Income – Unaudited for
	the Three and Nine Months Ended September 30, 2017 and 2016	6
	Condensed Consolidated Statements of Cash Flows – Unaudited for the Nine
	Months Ended September 30, 2017	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity – Unaudited for the
	Three and Nine Months Ended September 30, 2017 and 2016	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
	FINANCIAL CONDITION AND RESULTS OF OPERATIONS	35
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
	ABOUT MARKET RISK	61
Item 4. CONTROLS AND PROCEDURES		61
PART II - OTHER INFORMATION
Item 1.LEGAL PROCEEDINGS		61
Item 1A. RISK FACTORS		61
Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		61
Item 3.    DEFAULTS UPON SENIOR SECURITIES		62
Item 4.    MINE SAFETY DISCLOSURES		62
Item 5.    OTHER INFORMATION		62
Item 6.    EXHIBITS		62
SIGNATURES		63

2

Forward-Looking Statements

This Quarterly Report on Form 10-Q, as well as other periodic reports filed with the Securities and Exchange Commission, and written or oral communications made from time to time by or on behalf of Sandy Spring Bancorp and its subsidiaries (the “Company”), may contain statements relating to future events or future results of the Company that are considered “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,”  “plan,” “estimate,” “intend” and “potential,” or words of similar meaning, or future or conditional verbs such as “should,” “could,” or “may.”  Forward-looking statements include statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits.

Forward-looking statements reflect our expectation or prediction of future conditions, events or results based on information currently available. These forward-looking statements are subject to significant risks and uncertainties that may cause actual results to differ materially from those in such statements.  These risks and uncertainties include, but are not limited to, the risks identified in Item 1A of the Company’s 2016 Annual Report on Form 10-K, Item 1A of Part II of this report and the following:

·general business and economic conditions nationally or in the markets that the Company serves could adversely affect, among other things, real estate prices, unemployment levels, and consumer and business confidence, which could lead to decreases in the demand for loans, deposits and other financial services that we provide and increases in loan delinquencies and defaults;

·changes or volatility in the capital markets and interest rates may adversely impact the value of securities, loans, deposits and other financial instruments and the interest rate sensitivity of our balance sheet as well as our liquidity;

·our liquidity requirements could be adversely affected by changes in our assets and liabilities;

·our investment securities portfolio is subject to credit risk, market risk, and liquidity risk as well as changes in the estimates we use to value certain of the securities in our portfolio;

·the effect of legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry;

·competitive factors among financial services companies, including product and pricing pressures and our ability to attract, develop and retain qualified banking professionals;

·the effect of changes in accounting policies and practices, as may be adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Public Company Accounting Oversight Board and other regulatory agencies; and

·the effect of fiscal and governmental policies of the United States federal government.

Forward-looking statements speak only as of the date of this report.  The Company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date of this report or to reflect the occurrence of unanticipated events except as required by federal securities laws.

3

Part I
Item 1. FINANCIAL STATEMENTS
Sandy Spring Bancorp, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED
			September 30,		December 31,
(Dollars in thousands)			2017		2016
Assets
	Cash and due from banks		$	50,076	$	53,190
	Federal funds sold			2,838		1,953
	Interest-bearing deposits with banks			49,267		78,982
		Cash and cash equivalents		102,181		134,125
	Residential mortgage loans held for sale (at fair value)			7,084		13,222
	Investments available-for-sale (at fair value)			756,069		733,554
	Other equity securities			39,853		46,094
	Total loans			4,194,118		3,927,808
		Less: allowance for loan losses		(44,924)		(44,067)
	Net loans			4,149,194		3,883,741
	Premises and equipment, net			54,108		53,562
	Other real estate owned			1,448		1,911
	Accrued interest receivable			16,045		14,589
	Goodwill			85,768		85,768
	Other intangible assets, net			604		680
	Other assets			122,434		124,137
Total assets			$	5,334,788	$	5,091,383
Liabilities
	Noninterest-bearing deposits		$	1,312,710	$	1,138,139
	Interest-bearing deposits			2,643,082		2,439,405
		Total deposits		3,955,792		3,577,544
	Securities sold under retail repurchase agreements and federal funds purchased			146,569		125,119
	Advances from FHLB			632,917		790,000
	Subordinated debentures			-		30,000
	Accrued interest payable and other liabilities			35,030		35,148
		Total liabilities		4,770,308		4,557,811
Stockholders' Equity
	Common stock -- par value $1.00; shares authorized 50,000,000; shares
		issued and outstanding 23,990,370 and 23,901,084 at September 30, 2017 and
		December 31, 2016, respectively		23,990		23,901
	Additional paid in capital			167,455		165,871
	Retained earnings			376,512		350,414
	Accumulated other comprehensive loss			(3,477)		(6,614)
		Total stockholders' equity		564,480		533,572
Total liabilities and stockholders' equity			$	5,334,788	$	5,091,383
The accompanying notes are an integral part of these statements

4

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
				Three Months Ended				Nine Months Ended
				September 30,				September 30,
(Dollars in thousands, except per share data)				2017		2016		2017		2016
Interest income:
	Interest and fees on loans and leases			$	43,891	$	38,224	$	126,861	$	111,358
	Interest on loans held for sale				119		96		273		294
	Interest on deposits with banks				108		49		289		156
	Interest and dividends on investment securities:
		Taxable			3,410		2,623		10,572		8,749
		Exempt from federal income taxes			2,053		1,864		6,110		5,753
	Interest on federal funds sold				8		1		18		3
			Total interest income		49,589		42,857		144,123		126,313
Interest expense:
Interest on deposits					3,701		2,128		9,212		6,006
Interest on retail repurchase agreements and federal funds purchased					83		74		238		212
Interest on advances from FHLB					3,108		2,699		9,385		8,812
Interest on subordinated debt					-		225		12		698
			Total interest expense		6,892		5,126		18,847		15,728
Net interest income					42,697		37,731		125,276		110,585
Provision for loan losses					934		781		2,450		4,974
			Net interest income after provision for loan losses		41,763		36,950		122,826		105,611
Non-interest income:
	Investment securities gains				-		-		1,275		1,919
	Service charges on deposit accounts				2,140		2,035		6,121		5,894
	Mortgage banking activities				632		1,129		2,080		2,770
	Wealth management income				4,864		4,347		14,092		13,200
	Insurance agency commissions				1,950		1,786		4,924		4,180
	Income from bank owned life insurance				609		616		1,808		1,846
	Bank card fees				1,211		1,189		3,609		3,498
	Other income				1,340		1,482		5,040		5,391
			Total non-interest income		12,746		12,584		38,949		38,698
Non-interest expense:
	Salaries and employee benefits				18,442		17,848		54,525		53,299
	Occupancy expense of premises				3,294		3,130		9,907		9,765
	Equipment expense				1,722		1,745		5,213		5,102
	Marketing				784		628		2,223		1,971
	Outside data services				1,286		1,349		4,045		4,067
	FDIC insurance				850		726		2,478		2,012
	Amortization of intangible assets				25		34		76		94
	Merger expenses				345		-		1,332		-
	Other expense				4,443		3,866		14,241		16,204
			Total non-interest expense		31,191		29,326		94,040		92,514
Income before income taxes					23,318		20,208		67,735		51,795
Income tax expense					8,229		6,734		22,793		16,861
			Net income	$	15,089	$	13,474	$	44,942	$	34,934
Per share information:
Basic net income per share				$	0.62	$	0.56	$	1.86	$	1.45
Diluted net income per share				$	0.62	$	0.56	$	1.86	$	1.45
Dividends declared per common share				$	0.26	$	0.24	$	0.78	$	0.72
The accompanying notes are an integral part of these statements

5

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED
				Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)				2017		2016		2017		2016
Net income				$	15,089	$	13,474	$	44,942	$	34,934
	Other comprehensive income:
	Investments available-for-sale:
		Net change in unrealized gains/(losses) on investments available-for-sale			113		(2,641)		5,618		10,612
			Related income tax (expense)/benefit		(45)		1,036		(2,236)		(4,227)
		Net investment gains reclassified into earnings			-		-		(1,275)		(1,919)
			Related income tax expense		-		-		508		765
			Net effect on other comprehensive income for the period		68		(1,605)		2,615		5,231
	Defined benefit pension plan:
		Recognition of unrealized loss			296		295		886		870
			Related income tax benefit		(129)		(111)		(364)		(339)
			Net effect on other comprehensive income for the period		167		184		522		531
	Total other comprehensive income				235		(1,421)		3,137		5,762
Comprehensive income				$	15,324	$	12,053	$	48,079	$	40,696
The accompanying notes are an integral part of these statements

6

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
			Nine Months Ended September 30,
(Dollars in thousands)			2017		2016
Operating activities:
Net income			$	44,942	$	34,934
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			5,939		5,940
	Provision for loan losses			2,450		4,974
	Share based compensation expense			1,611		1,341
	Tax benefits associated with share based compensation			700		287
	Deferred income tax expense			163		646
	Origination of loans held for sale			(105,970)		(130,409)
	Proceeds from sales of loans held for sale			114,474		151,077
	Gains on sales of loans held for sale			(2,653)		(2,461)
	(Gains) losses on sales of other real estate owned			(82)		48
	Investment securities gains			(1,275)		(1,919)
	Net (increase) decrease in accrued interest receivable			(1,456)		320
	Net decrease in other assets			(5,314)		(1,731)
	Net increase (decrease) in accrued expenses and other liabilities			19		(5,999)
	Other – net			3,521		(731)
		Net cash provided by operating activities		57,069		56,317
Investing activities:
	Proceeds of other equity securities			6,241		5,507
	Purchases of investments available-for-sale			(125,028)		(120,273)
	Proceeds from sales of investment available-for-sale			2,251		40,863
	Proceeds from maturities, calls and principal payments of investments held-to-maturity			-		5,004
	Proceeds from maturities, calls and principal payments of investments available-for-sale			103,775		227,419
	Net increase in loans			(306,755)		(303,709)
	Proceeds from the sales of other real estate owned			1,228		1,393
	Proceeds from sales of loans previously held for investment			40,031		-
	Acquisition of business activity, net of cash acquired			-		(1,347)
	Expenditures for premises and equipment			(4,589)		(4,250)
		Net cash (used) in investing activities		(282,846)		(149,393)
Financing activities:
	Net increase in deposits			378,248		273,427
	Net increase in retail repurchase agreements and federal funds purchased			21,450		15,060
	Proceeds from advances from FHLB			3,080,000		1,805,000
	Repayment of advances from FHLB			(3,237,083)		(1,940,000)
	Retirement of subordinated debt			(30,000)		(5,000)
	Proceeds from issuance of common stock			1,015		1,268
	Stock tendered for payment of withholding taxes			(953)		(683)
	Repurchase of common stock			-		(13,273)
	Dividends paid			(18,844)		(17,408)
		Net cash provided by financing activities		193,833		118,391
Net increase (decrease) in cash and cash equivalents				(31,944)		25,315
Cash and cash equivalents at beginning of period				134,125		72,882
Cash and cash equivalents at end of period			$	102,181	$	98,197
Supplemental disclosures:
	Interest payments		$	19,244	$	16,193
	Income tax payments			22,927		16,825
	Transfer of investments held-to-maturity to available-for-sale			-		203,118
	Transfer from loans to residential mortgage loans held for sale			39,744		18,752
	Transfer from loans to other real estate owned			700		-
The accompanying notes are an integral part of these statements

7

SANDY SPRING BANCORP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
`								Accumulated
				Additional				Other		Total
		Common		Paid-In		Retained		Comprehensive		Stockholders’
(Dollars in thousands, except per share data)		Stock		Capital		Earnings		Income (Loss)		Equity
Balances at January 1, 2017		$	23,901	$	165,871	$	350,414	$	(6,614)	$	533,572
	Net income		-		-		44,942		-		44,942
	Other comprehensive income, net of tax		-		-		-		3,137		3,137
Common stock dividends -  $0.78 per share			-		-		(18,844)		-		(18,844)
Stock compensation expense			-		1,611		-		-		1,611
Common stock issued pursuant to:
	Stock option plan - 28,736 shares		29		521		-		-		550
	Employee stock purchase plan - 13,486 shares		13		452		-		-		465
	Restricted stock - 47,064 shares		47		(1,000)		-		-		(953)
Balances at September 30, 2017		$	23,990	$	167,455	$	376,512	$	(3,477)	$	564,480
Balance at January 1, 2016		$	24,296	$	175,588	$	325,840	$	(1,297)	$	524,427
	Net income		-		-		34,934		-		34,934
	Other comprehensive income, net of tax		-		-		-		5,762		5,762
Common stock dividends -  $0.72 per share			-		-		(17,408)		-		(17,408)
Stock compensation expense			-		1,628		-		-		1,628
Common stock issued pursuant to:
	Stock option plan - 34,646 shares		35		500		-		-		535
	Employee stock purchase plan - 18,767 shares		19		433		-		-		452
	Director's stock purchase plan - 258 shares		-		15		-		-		15
	Restricted stock - 49,648 shares		49		(466)		-		-		(417)
Purchase of treasury shares - 512,459 shares			(512)		(12,761)		-		-		(13,273)
Balances at September 30, 2016		$	23,887	$	164,937	$	343,366	$	4,465	$	536,655
The accompanying notes are an integral part of these statements

8

Sandy Spring Bancorp, Inc. and Subsidiaries

Notes to the CONDENSED Consolidated Financial Statements - UNAUDITED

Note 1 – Significant Accounting Policies

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “Bank”). The Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia and the greater Washington D.C. market through its operation of 44 community offices and six financial centers across the region. The Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.  

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry.  The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report.  Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2017. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation.  The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 3, 2017.  There have been no significant changes to the Company’s accounting policies as disclosed in the 2016 Annual Report on Form 10-K.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions. 

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and affect the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, prepayment rates, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

9

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20):  Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value.  The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business, in January 2017. The objective of this guidance is to clarify the definition of a business to provide entities with assistance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update provides a screen to determine when an integrated set of assets and activities (a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable assets or a group of similar identifiable assets, the set is not a business. The screen thus reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for an asset to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs. This guidance is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-15, Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments, in August 2016. This guidance is intended to reduce the diversity in practice with respect to the presentation and classification of items in the statement of cash flows. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2017. The standard’s provisions will be applied using a retrospective transition method to each period presented. An entity may elect early adoption but must adopt all of the amendments in the same period. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

10

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current condition and reasonable and supportable forecasts.  This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset.  Entities are also required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in March 2016. This guidance is intended to clarify a potential implementation issue with respect to determining whether an entity is a principal or an agent in an arrangement. The guidance provides indicators to assist in this evaluation when another party is involved in the arrangement to identify which party is the principal and which party is the agent. The effective date for this guidance is the same as the effective date of Update 2014-09, Revenue from Contracts with Customers. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for lessees. The guidance also eliminates the current real estate-specific provision and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs. With respect to lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. In applying this guidance entities will also need to determine whether an arrangement contains a lease or service agreement. Disclosures are required by lessees and lessors to meet the objective of enabling users of financials statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For public entities, this guidance is effective for the first interim or annual period beginning after December 15, 2018. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-01, Financial Instruments - Overall, in January 2016.  This guidance requires entities to measure equity investments at fair value and recognize changes on fair value in net income. The guidance also provides a new measurement alternative for equity investments that do not have readily determinable fair values and don’t qualify for the net asset value practical expedient. Entities will have to record changes in instrument –specific credit risk for financial liabilities measured under the fair value option in other comprehensive income, except for certain financial liabilities of consolidated collateralized financing entities. Entities will also have to reassess the realizability of a deferred tax asset related to an available-for-sale debt security in combination with their other deferred tax assets. This simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. For public entities, the guidance in this update is effective for the first interim or annual period beginning after December 15, 2017. Early adoption by public entities is permitted as of the beginning of the year of adoption for selected amendments by a cumulative effect adjustment to the balance sheet. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

11

The FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic  606), in May 2014 that provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to customers. The guidance also provides for a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The guidance is effective for the first interim or annual period beginning after December 15, 2017. The guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The guidance does not apply to revenue associated with financial instruments, net interest income, mortgage origination and servicing activities, and gains and losses from securities. Accordingly, the majority of the Company’s revenues will not be affected. The following revenue streams were identified to be in scope of ASC 606: 1) wealth management income; 2) insurance agency commissions; 3) bank card fees; and 4) service charges on deposit accounts. The Company has completed an assessment of the revenue contracts for the revenue streams identified to be in scope as well as worked with industry participants on matters of interpretation and application. The Company’s accounting policies and revenue recognition principles will not change materially as the principles of ASC 606 are largely consistent with the current revenue recognition practices. The Company plans to expand qualitative disclosures of non-interest income at adoption date in the first quarter of 2018.

Note 2 – Investments

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at the dates indicated are presented in the following table:

			September 30, 2017								December 31, 2016
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. government agencies			$	109,348	$	-	$	(2,008)	$	107,340	$	124,314	$	32	$	(2,556)	$	121,790
State and municipal				312,656		8,534		(63)		321,127		281,090		7,180		(586)		287,684
Mortgage-backed				316,770		2,724		(2,615)		316,879		314,029		2,851		(4,169)		312,711
Corporate debt				9,100		422		-		9,522		9,100		34		-		9,134
Trust preferred				931		58		-		989		1,089		-		(77)		1,012
	Total debt securities			748,805		11,738		(4,686)		755,857		729,622		10,097		(7,388)		732,331
Marketable equity securities				212		-		-		212		1,223		-		-		1,223
		Total investments available-for-sale	$	749,017	$	11,738	$	(4,686)	$	756,069	$	730,845	$	10,097	$	(7,388)	$	733,554

Any unrealized losses in the U.S. government agencies, state and municipal, mortgage-backed or corporate debt investment securities at September 30, 2017 are not the result of credit related events but due to changes in interest rates.   These declines in fair market value are considered temporary in nature and are expected to recover over time as these securities approach maturity.

The mortgage-backed securities portfolio at September 30, 2017 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($108.5 million), or GNMA, FNMA or FHLMC mortgage-backed securities ($208.4 million).  The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time to allow for any anticipated recovery in fair value. 

At September 30, 2017 the trust preferred portfolio consisted of one pooled trust preferred security.  The pooled trust preferred security, which is backed by debt issued by banks and thrifts, totaled $0.9 million with a fair value of $1.0 million.  The fair value of this security was determined by management through the use of a third party valuation specialist due to the limited trading activity for this security. 

As a result of this evaluation, it was determined that the pooled trust preferred security had not incurred any credit-related other-than-temporary impairment (“OTTI”) for the quarter ended September 30, 2017.  The security had an insignificant unrealized gain at September 30, 2017 recognized in other comprehensive income (“OCI”).  The security is not expected to be sold and the Company has the ability to hold it until maturity.

The following table provides the activity of OTTI on investment securities due to credit losses recognized in earnings for the period indicated:

12

(In thousands)		OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2016	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities through September 30, 2017	$	531

13

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in an unrealized loss position at the dates indicated are presented in the following table:

		September 30, 2017
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	102,340	$	2,008	$	-	$	2,008
State and municipal			14		11,076		37		26		63
Mortgage-backed			34		171,833		2,012		603		2,615
	Total		60	$	285,249	$	4,057	$	629	$	4,686

		December 31, 2016
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	96,788	$	2,556	$	-	$	2,556
State and municipal			53		48,010		516		70		586
Mortgage-backed			37		212,844		3,971		198		4,169
Trust preferred			1		1,012		-		77		77
	Total		103	$	358,654	$	7,043	$	345	$	7,388

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at the dates indicated are provided in the following table.  The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources.  Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		September 30, 2017				December 31, 2016
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	10,821	$	10,934	$	7,493	$	7,541
Due after one year through five years			173,513		179,386		156,953		162,233
Due after five years through ten years			244,098		245,324		282,468		282,713
Due after ten years			320,373		320,213		282,708		279,844
	Total debt securities available for sale	$	748,805	$	755,857	$	729,622	$	732,331

At September 30, 2017 and December 31, 2016, investments available-for-sale with a book value of $448.2 million and $453.0 million, respectively, were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. Agencies securities, exceeded ten percent of stockholders' equity at September 30, 2017 and December 31, 2016.

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Federal Reserve Bank stock		$	8,382	$	8,334
Federal Home Loan Bank of Atlanta stock			31,471		37,760
	Total equity securities	$	39,853	$	46,094

Note 3 – LOANS

14

Outstanding loan balances at September 30, 2017 and December 31, 2016 are net of unearned income including net deferred loan costs of $2.1 million and $1.4 million, respectively.  The loan portfolio segment balances at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Residential real estate:
	Residential mortgage	$	882,890	$	841,692
	Residential construction		171,814		150,229
Commercial real estate:
	Commercial owner occupied real estate		831,461		775,552
	Commercial investor real estate		1,104,669		928,113
	Commercial AD&C		295,222		308,279
Commercial business			451,667		467,286
Consumer			456,395		456,657
	Total loans	$	4,194,118	$	3,927,808

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan Losses

Summary information on the allowance for loan loss activity for the period indicated is provided in the following table:

			Nine Months Ended September 30,
(In thousands)			2017		2016
Balance at beginning of year			$	44,067	$	40,895
	Provision for loan losses			2,450		4,974
	Loan charge-offs			(2,044)		(2,586)
	Loan recoveries			451		659
		Net charge-offs		(1,593)		(1,927)
Balance at period end			$	44,924	$	43,942

15

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Provision (credit)			2,552		(829)		1,230		(481)		147		(241)		72		2,450
Charge-offs			(1,469)		-		-		(5)		(560)		(10)		-		(2,044)
Recoveries			73		103		93		-		101		61		20		451
	Net recoveries (charge-offs)		(1,396)		103		93		(5)		(459)		51		20		(1,593)
Balance at end of period		$	8,695	$	3,926	$	14,262	$	7,399	$	2,516	$	7,071	$	1,055	$	44,924
Total loans and leases		$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118
Allowance for loans losses to total loans ratio			1.93%		1.33%		1.29%		0.89%		0.55%		0.80%		0.61%		1.07%
Balance of loans specifically evaluated for impairment		$	8,403	$	137	$	5,589	$	5,517	$	na.	$	2,867	$	-	$	22,513
Allowance for loans specifically evaluated for impairment		$	3,841	$	-	$	589	$	340	$	na.	$	-	$	-	$	4,770
Specific allowance to specific loans ratio			45.71%		-		10.54%		6.16%		na.		-		-		21.19%
Balance of loans collectively evaluated		$	443,264	$	295,085	$	1,099,080	$	825,944	$	456,395	$	880,023	$	171,814	$	4,171,605
Allowance for loans collectively evaluated		$	4,854	$	3,926	$	13,673	$	7,059	$	2,516	$	7,071	$	1,055	$	40,154
Collective allowance to collective loans ratio			1.10%		1.33%		1.24%		0.85%		0.55%		0.80%		0.61%		0.96%

		For the Year Ended December 31,2016
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	6,529	$	4,691	$	10,440	$	7,984	$	3,456	$	6,901	$	894	$	40,895
Provision (credit)			1,563		(31)		2,563		(104)		112		1,406		37		5,546
Charge-offs			(597)		(48)		(197)		-		(888)		(1,404)		-		(3,134)
Recoveries			44		40		133		5		148		358		32		760
	Net recoveries (charge-offs)		(553)		(8)		(64)		5		(740)		(1,046)		32		(2,374)
Balance at end of period		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Total loans and leases		$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808
Allowance for loan losses to total loans ratio			1.61%		1.51%		1.39%		1.02%		0.62%		0.86%		0.64%		1.12%
Balance of loans specifically evaluated for impairment		$	7,018	$	137	$	8,107	$	5,567	$	na.	$	3,263	$	-	$	24,092
Allowance for loans  specifically evaluated for impairment		$	2,604	$	-	$	1,736	$	485	$	na.	$	-	$	-	$	4,825
Specific allowance to specific loans ratio			37.10%		-		21.41%		8.71%		na.		-		-		20.03%
Balance of loans collectively evaluated		$	460,268	$	308,142	$	920,006	$	769,985	$	456,657	$	838,429	$	150,229	$	3,903,716
Allowance for loans collectively evaluated		$	4,935	$	4,652	$	11,203	$	7,400	$	2,828	$	7,261	$	963	$	39,242
Collective allowance to collective loans ratio			1.07%		1.51%		1.22%		0.96%		0.62%		0.87%		0.64%		1.01%

16

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		September 30, 2017		December 31, 2016
Impaired loans with a specific allowance		$	13,436	$	13,563
Impaired loans without a specific allowance			9,077		10,529
	Total impaired loans	$	22,513	$	24,092
Allowance for loan losses related to impaired loans		$	4,770	$	4,825
Allowance for loan losses related to loans collectively evaluated			40,154		39,242
	Total allowance for loan losses	$	44,924	$	44,067
Average impaired loans for the period		$	23,772	$	26,382
Contractual interest income due on impaired loans during the period		$	1,813	$	2,082
Interest income on impaired loans recognized on a cash basis		$	462	$	511
Interest income on impaired loans recognized on an accrual basis		$	215	$	186

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

			September 30, 2017
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,355		-		5,177		1,223		-		10,755
		Restructured accruing		1,138		-		-		-		-		1,138
		Restructured non-accruing		8		-		-		639		-		647
	Balance		$	6,397	$	-	$	5,177	$	1,862	$	-	$	13,436
	Allowance		$	3,841	$	-	$	589	$	340	$	-	$	4,770
Impaired loans without a specific allowance
		Non-accruing	$	556	$	-	$	412	$	1,629	$	-	$	2,597
		Restructured accruing		278		-		-		505		550		1,333
		Restructured non-accruing		1,172		137		-		1,521		2,317		5,147
	Balance		$	2,006	$	137	$	412	$	3,655	$	2,867	$	9,077
Total impaired loans
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,911		-		5,589		2,852		-		13,352
		Restructured accruing		1,416		-		-		505		550		2,471
		Restructured non-accruing		1,180		137		-		2,160		2,317		5,794
	Balance		$	8,403	$	137	$	5,589	$	5,517	$	2,867	$	22,513
Unpaid principal balance in total impaired loans			$	11,331	$	4,398	$	10,173	$	7,707	$	3,699	$	37,308

17

	September 30, 2017
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,853	$	137	$	7,150	$	5,650	$	2,982	$	23,772
Contractual interest income due on impaired loans during the period	$	668	$	245	$	485	$	355	$	60
Interest income on impaired loans recognized on a cash basis	$	182	$	-	$	17	$	138	$	125
Interest income on impaired loans recognized on an accrual basis	$	167	$	-	$	-	$	19	$	29

			December 31, 2016
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	2,807	$	-	$	7,029	$	1,884	$	-	$	11,720
		Restructured accruing		1,140		-		-		-		-		1,140
		Restructured non-accruing		64		-		-		639		-		703
	Balance		$	4,011	$	-	$	7,029	$	2,523	$	-	$	13,563
	Allowance		$	2,604	$	-	$	1,736	$	485	$	-	$	4,825
Impaired loans without a specific allowance
		Non-accruing	$	1,562	$	-	$	562	$	1,083	$	-	$	3,207
		Restructured accruing		45		-		-		744		560		1,349
		Restructured non-accruing		1,400		137		516		1,217		2,703		5,973
	Balance		$	3,007	$	137	$	1,078	$	3,044	$	3,263	$	10,529
Total impaired loans
		Non-accruing	$	4,369	$	-	$	7,591	$	2,967	$	-	$	14,927
		Restructured accruing		1,185		-		-		744		560		2,489
		Restructured non-accruing		1,464		137		516		1,856		2,703		6,676
	Balance		$	7,018	$	137	$	8,107	$	5,567	$	3,263	$	24,092
Unpaid principal balance in total impaired loans			$	10,082	$	4,398	$	12,805	$	7,760	$	3,971	$	39,016

	December 31, 2016
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	5,646	$	150	$	9,480	$	6,561	$	4,545	$	26,382
Contractual interest income due on impaired loans during the period	$	570	$	294	$	718	$	310	$	190
Interest income on impaired loans recognized on a cash basis	$	153	$	-	$	43	$	266	$	49
Interest income on impaired loans recognized on an accrual basis	$	107	$	-	$	-	$	37	$	42

18

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	6,091	$	137	$	5,589	$	5,012	$	3,152	$	7,345	$	182	$	27,508
	Loans 90 days past due		-		-		-		-		1		225		-		226
	Restructured loans		1,416		-		-		505		-		550		-		2,471
Total non-performing loans			7,507		137		5,589		5,517		3,153		8,120		182		30,205
	Other real estate owned		39		365		-		-		-		1,044		-		1,448
Total non-performing assets		$	7,546	$	502	$	5,589	$	5,517	$	3,153	$	9,164	$	182	$	31,653

		December 31, 2016
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	5,833	$	137	$	8,107	$	4,823	$	2,859	$	7,257	$	195	$	29,211
	Loans 90 days past due		-		-		-		-		-		232		-		232
	Restructured loans		1,185		-		-		744		-		560		-		2,489
Total non-performing loans			7,018		137		8,107		5,567		2,859		8,049		195		31,932
	Other real estate owned		39		365		395		637		-		475		-		1,911
Total non-performing assets		$	7,057	$	502	$	8,502	$	6,204	$	2,859	$	8,524	$	195	$	33,843

			September 30, 2017
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	1,442	$	-	$	-	$	1,137	$	820	$	4,627	$	-	$	8,026
	61-90 days			776		-		-		-		656		4,172		-		5,604
	> 90 days			-		-		-		-		1		225		-		226
		Total past due		2,218		-		-		1,137		1,477		9,024		-		13,856
	Non-accrual loans			6,091		137		5,589		5,012		3,152		7,345		182		27,508
	Current loans			443,358		295,085		1,099,080		825,312		451,766		866,521		171,632		4,152,754
		Total loans	$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118

			December 31, 2016
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	663	$	896	$	850	$	1,479	$	808	$	3,969	$	-	$	8,665
	61-90 days			672		-		1,206		744		1,104		2,139		-		5,865
	> 90 days			-		-		-		-		-		232		-		232
		Total past due		1,335		896		2,056		2,223		1,912		6,340		-		14,762
	Non-accrual loans			5,833		137		8,107		4,823		2,859		7,257		195		29,211
	Current loans			460,118		307,246		917,950		768,506		451,886		828,095		150,034		3,883,835
		Total loans	$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

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		September 30, 2017
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	435,183	$	295,085	$	1,096,591	$	817,605	$	2,644,464
	Special Mention		1,929		-		2,342		5,652		9,923
	Substandard		14,555		137		5,736		8,204		28,632
	Doubtful		-		-		-		-		-
Total		$	451,667	$	295,222	$	1,104,669	$	831,461	$	2,683,019

		December 31, 2016
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	442,725	$	308,142	$	917,255	$	758,651	$	2,426,773
	Special Mention		10,010		-		2,395		9,255		21,660
	Substandard		14,551		137		8,463		7,646		30,797
	Doubtful		-		-		-		-		-
Total		$	467,286	$	308,279	$	928,113	$	775,552	$	2,479,230

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			September 30, 2017
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,242	$	874,770	$	171,632	$	1,499,644
	Non-performing:
		90 days past due		1		225		-		226
		Non-accruing		3,152		7,345		182		10,679
		Restructured loans		-		550		-		550
Total			$	456,395	$	882,890	$	171,814	$	1,511,099

			December 31, 2016
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,798	$	833,643	$	150,034	$	1,437,475
	Non-performing:
		90 days past due		-		232		-		232
		Non-accruing		2,859		7,257		195		10,311
		Restructured loans		-		560		-		560
Total			$	456,657	$	841,692	$	150,229	$	1,448,578

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During the nine months ended September 30, 2017, the Company restructured $1.3 million in loans.  No modifications resulted in the reduction of the principal in the associated loan balances.  Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan.  Loans restructured during 2017 did not have any specific reserves.  For the year ended December 31, 2016, the Company restructured $0.6 million in loans.  Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances.  Loans restructured during 2016 did not have significant specific reserves at December 31, 2016.  The commitments to lend additional funds on loans that have been restructured at September 30, 2017 and December 31, 2016 were not significant.

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	492	$	-	$	-	$	-	$	-	$	492
	Restructured non-accruing		387		-		-		396		-		783
Balance		$	879	$	-	$	-	$	396	$	-	$	1,275
Specific allowance		$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2016
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	42	$	-	$	-	$	508	$	-	$	550
	Restructured non-accruing		-		-		-		-		-		-
Balance		$	42	$	-	$	-	$	508	$	-	$	550
Specific allowance		$	39	$	-	$	-	$	-	$	-	$	39
Restructured and subsequently defaulted		$	-	$	-	$	479	$	-	$	-	$	479

Other Real Estate Owned

Other real estate owned totaled $1.5 million and $1.9 million at September 30, 2017 and December 31, 2016, respectively. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process as of September 30, 2017 totaled $0.5 million.

Note 5 – Goodwill and Other Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets and goodwill are presented at the dates indicated in the following table:

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		September 30, 2017						Weighted		December 31, 2016						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Other identifiable intangibles		$	786	$	(182)	$	604		13.2 years	$	786	$	(106)	$	680		13.8 years
	Total amortizing intangible assets	$	786	$	(182)	$	604			$	786	$	(106)	$	680
Goodwill		$	85,768			$	85,768			$	85,768			$	85,768

The following table presents the estimated future amortization expense for amortizing intangible assets within the years ending December 31:

(In thousands)		Amount
2017		$	24
2018			95
2019			83
2020			66
Thereafter			336
	Total amortizing intangible assets	$	604

Note 6 – Deposits

The following table presents the composition of deposits at the dates indicated:

(In thousands)				September 30, 2017		December 31, 2016
Noninterest-bearing deposits				$	1,312,710	$	1,138,139
Interest-bearing deposits:
	Demand				608,527		615,058
	Money market savings				1,023,153		927,837
	Regular savings				321,194		310,471
	Time deposits of less than $100,000				292,395		258,621
	Time deposits of $100,000 or more				397,813		327,418
		Total interest-bearing deposits			2,643,082		2,439,405
			Total deposits	$	3,955,792	$	3,577,544

Note 7 – Stockholders’ Equity

The Company’s 2015 stock repurchase program expired on August 31, 2017.  Under the recently expired repurchase program a total of 736,139 shares of common stock were repurchased.

Note 8 – Share Based Compensation

At September 30, 2017, the Company had two share based compensation plans in existence, the 2005 Omnibus Stock Plan (“Omnibus Stock Plan”) and the 2015 Omnibus Incentive Plan (“Omnibus Incentive Plan”). The Omnibus Stock Plan expired during the second quarter of 2015 but has outstanding options that may still be exercised. The Omnibus Incentive Plan is described in the following paragraph.

The Company’s Omnibus Incentive Plan was approved on May 6, 2015 and provides for the granting of incentive stock options, non-qualifying stock options, stock appreciation rights, restricted stock grants, restricted stock units and performance awards to selected employees on a periodic basis at the discretion of the board. The Omnibus Incentive Plan authorizes the issuance of up to 1,500,000 shares of common stock, of which 1,339,989 are available for issuance at September 30, 2017, has a term of ten years, and is administered by a committee of at least three directors appointed by the board of directors.  Options granted under the plan have an exercise price which may not be less than 100% of the fair market value of the common stock on the date of the grant and must be exercised within seven to ten years from the date of grant.  The exercise price of stock options must be paid for in full in cash or shares of common stock, or a combination of both.  The board committee has the discretion when making a grant of stock options to impose restrictions on the shares to be purchased upon the exercise of such options.  The Company generally issues authorized but previously unissued shares to satisfy option exercises.

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The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing model. The weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2017		2016
Dividend yield	2.45	%	3.48	%
Weighted average expected volatility	40.27	%	41.54	%
Weighted average risk-free interest rate	2.14	%	1.42	%
Weighted average expected lives (in years)	5.67		5.71
Weighted average grant-date fair value	$13.42		$7.75

The dividend yield is based on estimated future dividend yields.  The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of the grant.  Expected volatilities are generally based on historical volatilities.  The expected term of share options granted is generally derived from historical experience.

Compensation expense is recognized on a straight-line basis over the vesting period of the respective stock option or restricted stock grant. The Company recognized compensation expense of $0.5 million and $0.5 million for the three months ended September 30, 2017 and 2016, respectively, related to the awards of stock options and restricted stock grants.  Compensation expense of $1.5 million and $1.4 million was recognized for the nine months ended September 30, 2017 and 2016, respectively.  The intrinsic value of stock options exercised in the nine months ended September 30, 2017 and 2016 was $0.6 million and $0.4 million, respectively.  The total of unrecognized compensation cost related to stock options was approximately $0.2 million as of September 30, 2017.  That cost is expected to be recognized over a weighted average period of approximately 2.0 years.  The total of unrecognized compensation cost related to restricted stock was approximately $4.8 million as of September 30, 2017.  That cost is expected to be recognized over a weighted average period of approximately 3.2 years.  The fair value of the options vested during the nine months ended September 30, 2017 and 2016, was not significant.

In the first quarter of 2017, 12,941 stock options were granted, subject to a three year vesting schedule with one third of the options vesting on April 1^st of each year.  The Company granted 55,211 shares of restricted stock in the first quarter of 2017, 6,479 shares are subject to a three year vesting schedule with one third of the shares vesting each year and 41,859 shares are subject to a five year vesting schedule with one fifth of the shares vesting each year.  All of these restricted shares will vest on April 1^st of each year. An additional 6,873 shares of performance based restricted stock grants were also approved as part of the restricted shares granted in the first quarter.  The performance shares are subject to cliff vesting after three years based on the relative performance of the Company’s stock price in comparison to a selected peer group.  Vesting can vary from 0-150% of the initial grant based on the results of the Company’s stock performance. 

A summary of share option activity for the period indicated is reflected in the following table:

					Weighted
		Number	Weighted		Average	Aggregate
		of	Average		Contractual	Intrinsic
		Common	Exercise		Remaining	Value
		Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2017		108,503	$	22.46		$	1,902
Granted		12,941	$	42.48
Exercised		(28,736)	$	19.11		$	638
Forfeited or expired		(3,577)	$	30.07
Balance at September 30, 2017		89,131	$	24.16	3.8	$	1,374
Exercisable at September 30, 2017		58,646	$	22.46	2.8	$	1,113
Weighted average fair value of options
	granted during the year		$	13.42

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

23

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock  at January 1, 2017	212,646	$	25.19
Granted	55,211	$	42.48
Vested	(70,382)	$	23.82
Forfeited	(7,800)	$	27.21
Restricted stock at September 30, 2017	189,675	$	30.67

Note 9 – Pension, Profit Sharing, and Other Employee Benefit Plans

Defined Benefit Pension Plan

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”). Benefits after January 1, 2005, are based on the benefit earned as of December 31, 2004, plus benefits earned in future years of service based on the employee’s compensation during each such year. All benefit accruals for employees were frozen as of December 31, 2007 based on past service and thus salary increases and additional years of service after such date  no longer affect the defined benefit provided by the plan although additional vesting may continue to occur.

The Company's funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. In addition, the Company contributes additional amounts as it deems appropriate based on benefits attributed to service prior to the date of the plan freeze. The Plan invests primarily in a diversified portfolio of managed fixed income and equity funds.

The components of net periodic benefit cost for the periods indicated are presented in the following table:

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)		2017		2016		2017		2016
Interest cost on projected benefit obligation		$	410	$	416	$	1,230	$	1,242
Expected return on plan assets			(497)		(404)		(1,489)		(1,151)
Recognized net actuarial loss			296		295		886		870
	Net periodic benefit cost	$	209	$	307	$	627	$	961

Contributions

The decision as to whether or not to make a plan contribution and the amount of any such contribution is dependent on a number of factors. Such factors include the investment performance of the plan assets in the current economy and, since the plan is currently frozen, the remaining investment horizon of the plan.  After consideration of these factors, the Company made a contribution of $2.2 million to the plan during the third quarter of 2017.

Note 10 – Net Income per Common Share

The calculation of net income per common share for the periods indicated is presented in the following table:

24

			Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars and amounts in thousands, except per share data)			2017		2016		2017		2016
Net income			$	15,089	$	13,474	$	44,942	$	34,934
Basic:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
		Basic net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Diluted:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
Dilutive common stock equivalents				23		27		30		27
	Dilutive EPS shares			24,223		24,123		24,201		24,151
		Diluted net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Anti-dilutive shares				5		3		3		5

NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income is defined as net income plus transactions and other occurrences that are the result of non-owner changes in equity.  For condensed financial statements presented for the Company, non-owner changes in equity are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments.  The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2017		$	1,642	$	(8,256)	$	(6,614)
	Other comprehensive income before reclassification, net of tax		3,382		-		3,382
	Reclassifications from accumulated other comprehensive income, net of tax		(767)		522		(245)
Current period change in other comprehensive income, net of tax			2,615		522		3,137
Balance at September 30, 2017		$	4,257	$	(7,734)	$	(3,477)

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2016		$	6,566	$	(7,863)	$	(1,297)
	Other comprehensive income before reclassification, net of tax		6,385		-		6,385
	Reclassifications from accumulated other comprehensive income, net of tax		(1,154)		531		(623)
Current period change in other comprehensive income, net of tax			5,231		531		5,762
Balance at September 30, 2016		$	11,797	$	(7,332)	$	4,465

The following table provides the information on the reclassification adjustments out of accumulated other comprehensive income for the periods indicated:

25

				Nine Months Ended September 30,
(In thousands)				2017		2016
Unrealized gains/(losses) on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	1,275		$	1,919
	Income before taxes				1,275			1,919
	Tax expense				(508)			(765)
	Net income			$	767		$	1,154
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(886)		$	(870)
			Income before taxes		(886)			(870)
			Tax benefit		364			339
			Net loss	$	(522)		$	(531)
(1)  This amount is included in the computation of net periodic benefit cost, see Note 9

Note 12 – Financial Instruments with Off-balance Sheet Risk and Derivatives

The Company has entered into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the customer or counterparty and therefore, has no credit risk.  The notional value of commercial loan swaps outstanding was $18.1 million with a fair value of $0.8 million as of September 30, 2017 compared to $18.9 million with a fair value of $1.0 million as of December 31, 2016.  The swap positions are offset to minimize the potential impact on the Company’s financial statements.Fair values of the swaps are carried as both gross assets and gross liabilities in the condensed consolidated statements of condition.  The associated net gains and losses on the swaps are recorded in other non-interest income.

Note 13 – Litigation

The Company and its subsidiaries are subject in the ordinary course of business to various pending or threatened legal proceedings in which claims for monetary damages are asserted.  After consultation with legal counsel, management does not anticipate that the ultimate liability, if any, arising out of these legal matters will have a material adverse effect on the Company's financial condition, operating results or liquidity.

Note 14 – Fair Value

Generally accepted accounting principles provide entities the option to measure eligible financial assets, financial liabilities and commitments at fair value (i.e. the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards.  The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a commitment.  Subsequent changes in fair value must be recorded in earnings.  The Company applies the fair value option on residential mortgage loans held for sale.  The fair value option on residential mortgage loans allows the recognition of gains on sale of mortgage loans to more accurately reflect the timing and economics of the transaction.

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

Basis of Fair Value Measurement:

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

26

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

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

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. 

Changes to interest rates may result in changes in the cash flows due to prepayments or extinguishments.  Accordingly, this could result in higher or lower measurements of the fair values.

Assets and Liabilities

Mortgage loans held for sale

Mortgage loans held for sale are valued based on quotations from the secondary market for similar instruments and are classified as Level 2 of the fair value hierarchy. 

Investments available-for-sale

U.S. government agencies and mortgage-backed securities

Valuations are based on active market data and use of evaluated broker pricing models that vary based by asset class and includes available trade, bid, and other market information.  Generally, the methodology includes broker quotes, proprietary models, descriptive terms and conditions databases coupled with extensive quality control programs.  Multiple quality control evaluation processes review available market, credit and deal level information to support the evaluation of the security.  If there is a lack of objectively verifiable information available to support the valuation, the evaluation of the security is discontinued.  Additionally, proprietary models and pricing systems, mathematical tools, actual transacted prices, integration of market developments and experienced evaluators are used to determine the value of a security based on a hierarchy of market information regarding a security or securities with similar characteristics.  The Company does not adjust the quoted price for such securities.  Such instruments are generally classified within Level 2 of the fair value hierarchy.

State and municipal securities

Proprietary valuation matrices are used for valuing all tax-exempt municipals that can incorporate changes in the municipal market as they occur.  Market evaluation models include the ability to value bank qualified municipals and general market municipals that can be broken down further according to insurer, credit support, state of issuance and rating to incorporate additional spreads and municipal curves.  Taxable municipals are valued using a third party model that incorporates a methodology that captures the trading nuances associated with these bonds.  Such instruments are generally classified within Level 2 of the fair value hierarchy.

Trust preferred securities and corporate debt

In active markets, these types of instruments are valued based on quoted market prices that are readily accessible at the measurement date and are classified within Level 1 of the fair value hierarchy. Positions that are not traded in active markets or are subject to transfer restrictions are valued or adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence.  In the absence of such evidence, management uses a process that employs certain assumptions to determine the present value. Positions that are not traded in active markets or are subject to transfer restrictions are classified within Level 3 of the fair value hierarchy. 

Interest rate swap agreements

Interest rate swap agreements are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active.  Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets.  These markets do however have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value.  These characteristics classify interest rate swap agreements as Level 2.

27

Assets Measured at Fair Value on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities at the dates indicated that were accounted for or disclosed at fair value.  Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

			September 30, 2017
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	7,084	$	-	$	7,084
	Investments available-for-sale:
		U.S. government agencies		-		107,340		-		107,340
		State and municipal		-		321,127		-		321,127
		Mortgage-backed		-		316,879		-		316,879
		Corporate debt		-		-		9,522		9,522
		Trust preferred		-		-		989		989
		Marketable equity securities		-		212		-		212
	Interest rate swap agreements			-		816		-		816
Liabilities
	Interest rate swap agreements		$	-	$	(816)	$	-	$	(816)

			December 31, 2016
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	13,222	$	-	$	13,222
	Investments available-for-sale:
		U.S. government agencies		-		121,790		-		121,790
		State and municipal		-		287,684		-		287,684
		Mortgage-backed		-		312,711		-		312,711
		Corporate debt		-		-		9,134		9,134
		Trust preferred		-		-		1,012		1,012
		Marketable equity securities		-		1,223		-		1,223
	Interest rate swap agreements			-		1,010		-		1,010
Liabilities
	Interest rate swap agreements		$	-	$	(1,010)	$	-	$	(1,010)

28

The following table provides unrealized losses included in assets measured in the Condensed Consolidated Statements of Condition at fair value on a recurring basis for the period indicated:

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2017		$	10,146
		Principal redemption		(159)
		Total unrealized gains included in other comprehensive loss		524
	Balance at September 30, 2017		$	10,511

Assets Measured at Fair Value on a Nonrecurring Basis

The following table sets forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at the date indicated that are valued at the lower of cost or market.  Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

		September 30, 2017
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets  (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,521	$	8,521	$	(11,806)
Other real estate owned			-		-		1,448		1,448		(136)
	Total	$	-	$	-	$	9,969	$	9,969	$	(11,942)

		December 31, 2016
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets  (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,981	$	8,981	$	(10,600)
Other real estate owned			-		-		1,911		1,911		(107)
	Total	$	-	$	-	$	10,892	$	10,892	$	(10,707)

At September 30, 2017, impaired loans totaling $22.5 million were written down to fair value of $17.7 million as a result of specific loan loss allowances of $4.8 million associated with the impaired loans which was included in the allowance for loan losses.  Impaired loans totaling $24.1 million were written down to fair value of $19.3 million at December 31, 2016 as a result of specific loan loss allowances of $4.8 million associated with the impaired loans.

Loan impairment is measured using the present value of expected cash flows, the loan’s observable market price or the fair value of the collateral (less selling costs) if the loans are collateral dependent.  Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable.  The value of business equipment, inventory and accounts receivable collateral is based on net book value on the business’ financial statements and, if necessary, discounted based on management’s review and analysis. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business.  Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the factors identified above. Valuation techniques are consistent with those techniques applied in prior periods.

29

Other real estate owned (“OREO”) is adjusted to fair value upon transfer of the loans to OREO.  Subsequently, OREO is carried at the lower of carrying value or fair value.  The estimated fair value for other real estate owned included in Level 3 is determined by independent market based appraisals and other available market information, less cost to sell, that may be reduced further based on market expectations or an executed sales agreement.  If the fair value of the collateral deteriorates subsequent to initial recognition, the Company records the OREO as a non-recurring Level 3 adjustment.  Valuation techniques are consistent with those techniques applied in prior periods.

Fair Value of Financial Instruments

The Company discloses fair value information about financial instruments for which it is practicable to estimate the value, whether or not such financial instruments are recognized on the balance sheet.  Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.

Quoted market prices, where available, are shown as estimates of fair market values. Because no quoted market prices are available for a significant portion of the Company's financial instruments, the fair value of such instruments has been derived based on the amount and timing of future cash flows and estimated discount rates based on observable inputs (“Level 2”) or unobservable inputs (“Level 3”).

Present value techniques used in estimating the fair value of many of the Company's financial instruments are significantly affected by the assumptions used. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate cash settlement of the instrument. Additionally, the accompanying estimates of fair values are only representative of the fair values of the individual financial assets and liabilities, and should not be considered an indication of the fair value of the Company.

30

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented in the following table:

					Fair Value Measurements
	September 30, 2017				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	39,853	$	39,853	$	-	$	39,853	$	-
Loans, net of allowance		4,149,194		4,200,409		-		-		4,200,409
Other assets		95,136		95,136		-		95,136		-
Financial Liabilities
Time deposits	$	690,208	$	688,271	$	-	$	688,271	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		146,569		146,569		-		146,569		-
Advances from FHLB		632,917		639,022		-		639,022		-

					Fair Value Measurements
	December 31, 2016				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	46,094	$	46,094	$	-	$	46,094	$	-
Loans, net of allowance		3,883,741		3,933,700		-		-		3,933,700
Other assets		93,328		93,328		-		93,328		-
Financial Liabilities
Time deposits	$	586,039	$	584,868	$	-	$	584,868	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		125,119		125,119		-		125,119		-
Advances from FHLB		790,000		800,756		-		800,756		-
Subordinated debentures		30,000		29,985		-		-		29,985

The following methods and assumptions were used to estimate the fair value of each category of financial instruments for which it is practicable to estimate that value:

Cash and Temporary Investments:  The carrying amounts of cash and cash equivalents approximate their fair value and have been excluded from the table above.

Investments:The fair value of marketable securities is based on quoted market prices, prices quoted for similar instruments, and prices obtained from independent pricing services.

Loans:For certain categories of loans, such as mortgage, installment and commercial loans, the fair value is estimated by discounting the expected future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and similar remaining maturities.  Expected cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Accrued interest receivable:  The carrying value of accrued interest receivable approximates fair value due to the short-term duration and has been excluded from the table above.

Other assets:The investment in bank-owned life insurance represents the cash surrender value of the policies at September 30, 2017 and December 31, 2016 as determined by each insurance carrier. 

31

Deposits:  The fair value of demand, money market savings and regular savings deposits, which have no stated maturity, were considered equal to their carrying amount, representing the amount payable on demand. While management believes that the Bank’s core deposit relationships provide a relatively stable, low-cost funding source that has a substantial intangible value separate from the value of the deposit balances, these estimated fair values do not include the intangible value of core deposit relationships, which comprise a significant portion of the Bank’s deposit base.

Short-term borrowings:The carrying values of short-term borrowings, including overnight, securities sold under agreements to repurchase and federal funds purchased approximates the fair values due to the short maturities of those instruments.

Long-term borrowings: The fair value of the Federal Home Loan Bank of Atlanta (“FHLB”) advances and subordinated debentures was estimated by computing the discounted value of contractual cash flows payable at current interest rates for obligations with similar remaining terms.  The Company's credit risk is not material to calculation of fair value because the FHLB borrowings are collateralized. The Company classifies advances from the Federal Home Loan Bank of Atlanta within Level 2 of the fair value hierarchy since the fair value of such borrowings is based on rates currently available for borrowings with similar terms and remaining maturities. Subordinated debentures are classified as Level 3 in the fair value hierarchy due to the lack of market activity of such instruments.

Accrued interest payable: The carrying value of accrued interest payable approximates fair value due to the short-term duration and has been excluded from the previous table.

Note 15 - Segment Reporting

Currently, the Company conducts business in three operating segments—Community Banking, Insurance and Investment Management.  Each of the operating segments is a strategic business unit that offers different products and services.  The Insurance and Investment Management segments were businesses that were acquired in separate transactions where management of the acquired business was retained.  The accounting policies of the segments are the same as those of the Company.  However, the segment data reflect inter-segment transactions and balances.

The Community Banking segment is conducted through Sandy Spring Bank and involves delivering a broad range of financial products and services, including various loan and deposit products to both individuals and businesses.  Parent company income is included in the Community Banking segment, as the majority of effort of these functions is related to this segment.  Major revenue sources include net interest income, gains on sales of mortgage loans, trust income fees and service charges on deposit accounts.  Expenses include personnel, occupancy, marketing, equipment and other expenses.  Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively.

The Insurance segment is conducted through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts.  Sandy Spring Insurance Corporation operates Sandy Spring Insurance, a general insurance agency located in Annapolis, Maryland, and Neff and Associates, located in Ocean City, Maryland.  Major sources of revenue are insurance commissions from commercial lines, personal lines, and medical liability lines.  Expenses include personnel and support charges.  Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively. 

The Investment Management segment is conducted through West Financial Services, Inc., a subsidiary of the Bank.  This asset management and financial planning firm, located in McLean, Virginia, provides comprehensive investment management and financial planning to individuals, families, small businesses and associations including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning.  West Financial currently has approximately $1.3 billion in assets under management.  Major revenue sources include non-interest income earned on the above services.  Expenses include personnel and support charges.  Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively.

32

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	49,590	$	-	$	2	$	(3)	$	49,589
Interest expense		6,895		-		-		(3)		6,892
Provision for loan losses		934		-		-		-		934
Noninterest income		8,915		1,948		2,092		(209)		12,746
Noninterest expense		28,634		1,559		1,207		(209)		31,191
Income before income taxes		22,042		389		887		-		23,318
Income tax expense		7,725		158		346		-		8,229
Net income	$	14,317	$	231	$	541	$	-	$	15,089
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

	Three Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	42,856	$	1	$	2	$	(2)	$	42,857
Interest expense		5,128		-		-		(2)		5,126
Provision for loan losses		781		-		-		-		781
Non-interest income		9,071		1,783		1,909		(179)		12,584
Non-interest expense		26,822		1,510		1,173		(179)		29,326
Income before income taxes		19,196		274		738		-		20,208
Income tax expense		6,339		108		287		-		6,734
Net income	$	12,857	$	166	$	451	$	-	$	13,474
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

	Nine Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	144,123	$	1	$	6	$	(7)	$	144,123
Interest expense		18,854		-		-		(7)		18,847
Provision for loan losses		2,450		-		-		-		2,450
Noninterest income		28,545		4,923		6,109		(628)		38,949
Noninterest expense		87,035		4,238		3,395		(628)		94,040
Income before income taxes		64,329		686		2,720		-		67,735
Income tax expense		21,454		279		1,060		-		22,793
Net income	$	42,875	$	407	$	1,660	$	-	$	44,942
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

33

	Nine Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	126,313	$	2	$	4	$	(6)	$	126,313
Interest expense		15,734		-		-		(6)		15,728
Provision for loan losses		4,974		-		-		-		4,974
Non-interest income		29,426		4,186		5,621		(535)		38,698
Non-interest expense		86,201		3,711		3,137		(535)		92,514
Income before income taxes		48,830		477		2,488		-		51,795
Income tax expense		15,701		191		969		-		16,861
Net income	$	33,129	$	286	$	1,519	$	-	$	34,934
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

Note 16 – PENDING AQUISITION

On May 15, 2017, the Company and WashingtonFirst Bankshares, Inc., a Virginia corporation (“WashingtonFirst”) and parent company for WashingtonFirst Bank, entered into a definitive agreement and plan of merger that provides for WashingtonFirst to merge with and into the Company (the “Merger”). At the effective time of the Merger, the combined entity shall exist as a Maryland corporation.

Subsequent to the effective date of the Merger, WashingtonFirst Bank, a Virginia state-chartered bank and a wholly-owned subsidiary of WashingtonFirst, will merge with and into the Bank (the “Bank Merger”). The Bank will survive the Bank Merger and continue to exist as a Maryland banking corporation.

Under the terms of the agreement, WashingtonFirst shareholders are expected to receive 0.8713 shares of Company common stock for each share owned of WashingtonFirst common stock, subject to adjustment if the Company’s average stock price during a specified measurement period prior to closing is more than $50.15 or less than $37.07 per share. The transaction, which is expected to close in the fourth quarter of 2017, has a value of approximately $498 million in the aggregate, based on the Company’s closing price of $42.72 on May 15, 2017. Upon closing, Sandy Spring shareholders will own approximately 67.8% of the combined company and WashingtonFirst’s shareholders will own approximately 32.2% of the combined company.

As of June 30, 2017, WashingtonFirst had $2.1 billion in assets with 19 full-service community banking offices throughout the Washington D.C. metropolitan region. In addition, WashingtonFirst also provides wealth management services through its subsidiary, 1st Portfolio Wealth Advisors, and mortgage banking services through the bank’s subsidiary, WashingtonFirst Mortgage Corporation.

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

The Company

Sandy Spring Bancorp, Inc. (the “Company") is the bank holding company for Sandy Spring Bank (the "Bank"). The Company is registered as a bank holding company pursuant to the Bank Holding Company Act of 1956, as amended (the "Holding Company Act"). As such, the Company is subject to supervision and regulation by the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company began operating in 1988. The Bank traces its origin to 1868, making it among the oldest institutions in the region. The Bank is an independent, community oriented commercial banking business that conducts full-service banking through 44 community offices located in Central Maryland, Northern Virginia and Washington D.C. The Bank is a state chartered bank subject to supervision and regulation by the Federal Reserve and the State of Maryland. The Bank's deposit accounts are insured by the Deposit Insurance Fund administered by the Federal Deposit Insurance Corporation (the "FDIC") to the maximum permitted by law. The Bank is a member of the Federal Reserve System and is an Equal Housing Lender. The Company, the Bank, and its other subsidiaries are Affirmative Action/Equal Opportunity Employers.

The Company is a $5.3 billion community banking organization that focuses its lending and other services on businesses and consumers in the local market area. Through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc., Sandy Spring Bank offers a comprehensive menu of insurance and investment management services.

On May 16, 2017, the Company announced it had entered into a definitive agreement and plan of merger pursuant to which WashingtonFirst Bankshares, Inc., the parent company for WashingtonFirst Bank, will merge with and into the Company in a transaction valued at approximately $498 million. WashingtonFirst, headquartered in Reston, Virginia, has 19 community banking offices and more than $2.1 billion in assets (as of June 30, 2017).

Overview

Net income for the Company for the third quarter of 2017 totaled $15.1 million ($0.62 per diluted share) as compared to net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016. These results reflect the following events:

·Average total loans for the third quarter of 2017 increased 11% compared to the third quarter of 2016 due primarily to organic growth of 15% in the commercial loan portfolio. Overall, the entire portfolio grew $414 million over the prior year period.

·Average total deposits grew 12% to $4.0 billion for the third quarter of 2017 as compared to $3.5 billion for the third quarter of 2016.

·The net interest margin was 3.54% for the third quarter of 2017, compared to 3.50% for the third quarter of 2016. 

·The return on average equity for the third quarter of 2017 increased to 10.74% as compared to 10.11% from the prior year.

·The Non-GAAP efficiency ratio was 53.76% for the current quarter as compared to 56.33% for the third quarter of 2016.

The local economy continues to exhibit positive trends such as low unemployment and increased housing starts; however, these trends have been tempered by other concerns such as the impact of recent weather related events, lack of wage growth and the strength of the dollar. These factors in concert have acted to restrict the pace of economic expansion.  Volatility in global economic markets and geo-political unrest continues to cause some concern.  Additionally, the prospect of rising interest rates has acted to restrain confidence among individual consumers and small and mid-sized businesses. Despite this mixed economic environment, management is optimistic that the regional economy will continue to present further growth opportunities for the Company.

Total assets at September 30, 2017 increased 5% compared to December 31, 2016 driven by loan balances that increased 7% during this period due to growth in commercial loans. Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 11% compared to balances at December 31, 2016. The increase in customer funding sources was driven primarily by increases of 10% in noninterest-bearing and interest-bearing transaction accounts and 10% in money market savings accounts.  Additionally, certificates of deposit increased 18% compared to the balances at December 31, 2016 as the Company increased rates to fund loan growth.  Liquidity remained strong due to the borrowing lines with the Federal Home Loan Bank of Atlanta and the Federal Reserve and the size and composition of the investment portfolio.  During the first nine months of 2017, stockholders’ equity increased $31 million to $564 million due to the increase in retained earnings during the period. 

35

Non-performing loans represented 0.72% of total loans at September 30, 2017 compared to 0.85% at September 30, 2016 due to asset growth.  The Company’s non-performing loans were $30.2 million at September 30, 2017 compared to $32.0 million at September 30, 2016.  The ratio of net charge-offs to average loans was 0.10% for the third quarter of 2017 compared to 0.02% for the prior year quarter. 

The net interest margin was 3.54% for the third quarter of 2017, compared to 3.50% for the third quarter of 2016.  The margin improvement reflects the impact of loan growth, increase yields in the investment portfolio and the cumulative benefits associated with the previous execution of funding strategies.

The provision for loan losses was $0.9 million for the third quarter of 2017 compared to $0.8 million for the third quarter of 2016.  The current quarter’s provision as compared to the prior year quarter was the driven by qualitative adjustments related to the composition and concentration of loan credits that offset the impact of lower quarterly loan growth in 2017 versus 2016.

Non-interest income increased marginally to $12.7 million for the third quarter of 2017 compared to $12.6 million for the third quarter of 2016.  The current quarter reflected increases in wealth management and insurance agency commissions compared to the same period of the prior year that were offset by a decline in mortgage banking income.

Non-interest expenses increased 6% to $31.2 million for the third quarter of 2017 compared to $29.3 million in the third quarter of 2016.  The increase in the current quarter was driven by performance incentives and volume driven compensation costs, merger costs and other miscellaneous expenses.  The non-GAAP efficiency ratio was 53.76% for the third quarter of 2017 compared to 56.33% for the third quarter of 2016 as a result of the growth in net interest income. 

36

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
		Nine Months Ended September 30,
				2017						2016
					Annualized						Annualized
	Average		(1)		Average		Average		(1)		Average
(Dollars in thousands and tax-equivalent)	Balances		Interest		Yield/Rate		Balances		Interest		Yield/Rate
Assets
Residential mortgage loans	$	863,040	$	22,651	3.50	%	$	818,599	$	21,010	3.42	%
Residential construction loans		166,459		4,656	3.74			141,743		3,804	3.59
Total mortgage loans		1,029,499		27,307	3.54			960,342		24,814	3.45
Commercial AD&C loans		301,537		11,126	4.93			273,922		9,511	4.64
Commercial investor real estate loans		1,015,903		33,978	4.47			790,864		27,087	4.57
Commercial owner occupied real estate loans		786,805		28,501	4.84			693,442		24,946	4.81
Commercial business loans		458,973		15,321	4.46			453,468		14,819	4.37
Total commercial loans		2,563,218		88,926	4.64			2,211,696		76,363	4.61
Consumer loans		459,118		12,496	3.67			450,280		11,691	3.49
Total loans (2)		4,051,835		128,729	4.25			3,622,318		112,868	4.16
Loans held for sale		7,189		273	5.06			10,854		294	3.61
Taxable securities		526,931		10,944	2.77			470,987		9,073	2.57
Tax-exempt securities (3)		297,818		9,455	4.23			281,938		8,912	4.21
Total investment securities		824,749		20,399	3.30			752,925		17,985	3.19
Interest-bearing deposits with banks		38,006		289	1.02			41,433		156	0.50
Federal funds sold		2,493		18	0.97			688		3	0.48
Total interest-earning assets		4,924,272		149,708	4.06			4,428,218		131,306	3.96
Less:  allowance for loan losses		(44,324)						(42,215)
Cash and due from banks		48,184						46,255
Premises and equipment, net		53,680						53,318
Other assets		222,682						214,284
Total assets	$	5,204,494					$	4,699,860
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	613,498		372	0.08	%	$	578,473		335	0.08	%
Regular savings deposits		322,683		163	0.07			297,944		137	0.06
Money market savings deposits		992,069		3,333	0.45			914,499		1,446	0.21
Time deposits		637,478		5,344	1.12			550,195		4,088	0.99
Total interest-bearing deposits		2,565,728		9,212	0.48			2,341,111		6,006	0.34
Other borrowings		131,412		238	0.24			118,105		212	0.24
Advances from FHLB		683,231		9,385	1.84			565,493		8,812	2.08
Subordinated debentures		549		12	2.93			31,989		698	2.91
Total interest-bearing liabilities		3,380,920		18,847	0.75			3,056,698		15,728	0.69
Noninterest-bearing demand deposits		1,235,350						1,078,851
Other liabilities		41,537						38,981
Stockholders' equity		546,687						525,330
Total liabilities and stockholders' equity	$	5,204,494					$	4,699,860
Net interest income and spread				130,861	3.31	%				115,578	3.27	%
Less: tax-equivalent adjustment				5,585						4,993
Net interest income			$	125,276					$	110,585
Interest income/earning assets					4.06	%					3.96	%
Interest expense/earning assets					0.51						0.47
Net interest margin					3.55	%					3.49	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and  2016. The annualized taxable-equivalent
adjustments utilized in the above table to compute yields aggregated to $5.6 million and $5.0 million in 2017 and 2016, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

37

Results of Operations

For the Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016

Net income for the Company for the first nine months of 2017 totaled $44.9 million ($1.86 per diluted share) compared to net income of $34.9 million ($1.45 per diluted share) for the first nine months of 2016.

Net Interest Income

The largest source of the Company’s operating revenue is net interest income, which is the difference between the interest earned on interest-earning assets and the interest paid on interest-bearing liabilities. For purposes of this discussion and analysis, the interest earned on tax-exempt loans and investment securities has been adjusted to an amount comparable to interest subject to normal income taxes. The result is referred to as tax-equivalent interest income and tax-equivalent net interest income. The following discussion of net interest income should be considered in conjunction with the review of the information provided in the preceding table.

Net interest income for the first nine months of 2017 was $125.3 million compared to $110.6 million for the first nine months of 2016. On a tax-equivalent basis, net interest income for the first nine months of 2017 was $130.9 million compared to $115.6 million for the first nine months of 2016, a 13% increase. The preceding table provides an analysis of net interest income performance that reflects a net interest margin that has increased to 3.55% for the first nine months of 2017 compared to 3.49% for the first nine months of 2016.

The higher net interest margin was driven by an increase in the yield on interest-earning assets as a result of loan growth.  Additionally, the yields associated with the investment portfolio also increased compared to the prior year period.  Average interest-earning assets increased by 11% while average interest-bearing liabilities increased 11% in the first nine months of 2017 compared to the first nine months of 2016.  Average noninterest-bearing deposits increased 15% in the first nine months of 2017.  Percentage of average noninterest-bearing deposits to total deposits remained at 32% in the first nine months of 2017 compared to the first nine months of 2016.

38

Interest Income

The Company's total tax-equivalent interest income increased 14% for the first nine months of 2017 compared to the prior year period. The previous and following table reflects that the increase in interest income has been driven predominantly by loan growth and to a lesser extent by the performance of the investment portfolio.

The average balance of the loan portfolio increased 12% for the first nine months of 2017 compared to the first nine months of 2016. This growth occurred in all segments of the loan portfolio with the most significant growth in the commercial portfolio. The increases were driven by organic loan growth as the regional economy improved. Excluding the $0.7 million interest recovery from the full payoff of a previously acquired credit impaired loan, the yield on average loans increased by 6 basis points to 4.22% from the prior year’s 4.16%.  The rise in the portfolio yield was driven primarily by an increase in the yields in most of the major segments of the loan portfolio as loan volumes had a greater impact than their associated rates on the increase in the overall yield.

The average yield on total investment securities increased 11 basis points as the average balance of the portfolio increased 10% for the first nine months of 2017 compared to the first nine months of 2016. The increase in the yield on investments was due primarily to securities purchased in early 2017 at favorable yields in addition to the decline in the size of the lower-yielding mortgage-backed securities portfolio due sales of such securities that occurred in early 2016. The effect of these transactions was to increase the relative size of the higher yielding state and municipal portfolio as part of the total investment securities portfolio.

Interest Expense

Interest expense increased 20% in the first nine months of 2017 compared to the first nine months of 2016. The cost of interest-bearing deposits increased as the Company increased rates to maintain deposit relationships and to provide funding for loan growth. The average rate paid on Federal Home Loan Bank advances decreased due to the prepayments of high rate advances over the past year. Average interest-bearing deposits increased 10% in the first nine months of 2017 compared to the first nine months of 2016. This increase was primarily due to increases of $192 million or 12% in average noninterest-bearing and interest-bearing checking accounts together with increases of $87 million or 16% in certificates of deposit and $78 million or 8% in money market accounts as the Company increased rates on the deposit products.

Effect of Volume and Rate Changes on Net Interest Income

The following table analyzes the reasons for the changes from year-to-year in the principal elements that comprise net interest income:

39

			2017 vs. 2016							2016 vs. 2015
			Increase						Increase
			Or		Due to Change In Average:*				Or		Due to Change In Average:*
(Dollars in thousands and tax equivalent)			(Decrease)		Volume		Rate		(Decrease)		Volume		Rate
Interest income from earning assets:
	Residential mortgage loans		$	1,641	$	1,147	$	494	$	2,385	$	2,101	$	284
	Residential construction loans			852		688		164		75		189		(114)
	Commercial AD&C loans			1,615		997		618		2,047		1,965		82
	Commercial investor real estate loans			6,891		7,497		(606)		3,384		4,099		(715)
	Commercial owner occupied real estate loans			3,555		3,398		157		1,680		2,258		(578)
	Commercial business loans			502		186		316		1,712		1,802		(90)
	Leasing			-		-		-		(1)		(1)		-
	Consumer loans			805		230		575		884		420		464
	Loans held for sale			(21)		(117)		96		(128)		(91)		(37)
	Taxable securities			1,871		1,130		741		(2,391)		(2,612)		221
	Tax exempt securities			543		501		42		(484)		(313)		(171)
	Interest-bearing deposits with banks			133		(14)		147		87		10		77
	Federal funds sold			15		10		5		2		1		1
Total interest income				18,402		15,653		2,749		9,252		9,828		(576)
Interest expense on funding of earning assets:
	Interest-bearing demand deposits			37		37		-		23		23		-
	Regular savings deposits			26		8		18		29		8		21
	Money market savings deposits			1,887		129		1,758		463		74		389
	Time deposits			1,256		687		569		1,298		513		785
	Other borrowings			26		26		-		33		24		9
	Advances from FHLB			573		1,675		(1,102)		(962)		(420)		(542)
	Subordinated debentures			(686)		(686)		-		28		(61)		89
Total interest expense				3,119		1,876		1,243		912		161		751
		Net interest income	$	15,283	$	13,777	$	1,506	$	8,340	$	9,667	$	(1,327)
* Variances that are the combined effect of volume and rate, but cannot be separately identified,  are allocated to the volume and rate variances
	based on their respective relative amounts.

Non-interest Income 

Non-interest income amounts and trends are presented in the following table for the periods indicated:

			Nine Months Ended September 30,				2017/2016		2017/2016
(Dollars in thousands)			2017		2016		$ Change			% Change
	Securities gains		$	1,275	$	1,919	$	(644)		(33.6)	%
	Service charges on deposit accounts			6,121		5,894		227		3.9
	Mortgage banking activities			2,080		2,770		(690)		(24.9)
	Wealth management income			14,092		13,200		892		6.8
	Insurance agency commissions			4,924		4,180		744		17.8
	Income from bank owned life insurance			1,808		1,846		(38)		(2.1)
	Bank card fees			3,609		3,498		111		3.2
	Other income			5,040		5,391		(351)		(6.5)
		Total non-interest income	$	38,949	$	38,698	$	251		0.6

40

Total non-interest income was $38.9 million for the first nine months of 2017 compared to $38.7 million for the first nine months of 2016. The first nine months of 2017 includes $1.3 million in gains on sales of investment securities.   The prior year period included a $1.2 million gain on the extinguishment of subordinated debentures and $1.9 million in gains on the sales of investment securities.  Excluding these gains, non-interest income increased 8% compared to the prior year period.Further detail by type of non-interest income follows:

·Gains on the sales of investment securities declined to $1.3 million for the first nine months of 2017 compared to $1.9 million for the first nine months of 2016.  During the first nine months of 2017 the Company sold specific equity securities for gains that were applied to offset the impact of prepayment penalties incurred on FHLB advances during the second quarter of 2017.   A similar strategy was executed for the same period of the prior year.

·Income from mortgage banking activities decreased in the first nine months of 2017 compared to the first nine months of 2016 due primarily due to lower volumes of loan originations compared to the prior year period.

·Wealth management income is comprised of income from trust and estate services and investment management fees earned by the Company’s investment management subsidiary.   Overall, wealth management income increased 7% for the first nine months of 2017 compared to the same period of the prior year.   The prior year’s wealth management income included $0.4 million in fees on sales of investment products.  The portfolio responsible for these fees was sold in early 2016.  Excluding these fees from the prior year period, wealth management income grew 10% from prior year levels.  Trust services fees increased 10% for the first nine months of 2017 compared to the prior year period.  Investment management fees increased 10% for the first nine months of 2017 compared to the same period of 2016, due to an increase in assets under management.  Overall total assets under management increased to $2.7 billion at September 30, 2017 compared to $2.4 billion at September 30, 2016 primarily as a result of positive trends occurring in the financial markets and increased sales efforts.

·Insurance agency commissions increased for the first nine months of 2017 compared to the same period of 2016 primarily due to the increased commission income resulting from the agency acquisition that occurred during the third quarter of the prior year.

·Other non-interest income decreased mainly due to a $1.2 million gain realized on the extinguishment of subordinated debentures in the first nine months of 2016. Excluding this gain, other non-interest income increased 20% for the first nine months of 2017 as compared to the first nine months of 2016 due to prepayment fees, commissions and incentives.

Non-interest Expense

Non-interest expense amounts and trends are presented in the following table for the periods indicated:

		Nine Months Ended September 30,				2017/2016		2017/2016
(Dollars in thousands)		2017		2016		$ Change			% Change
Salaries and employee benefits		$	54,525	$	53,299	$	1,226		2.3	%
Occupancy expense of premises			9,907		9,765		142		1.5
Equipment expenses			5,213		5,102		111		2.2
Marketing			2,223		1,971		252		12.8
Outside data services			4,045		4,067		(22)		(0.5)
FDIC insurance			2,478		2,012		466		23.2
Amortization of intangible assets			76		94		(18)		(19.1)
Merger expenses			1,332		-		1,332		100.0
Professional fees			3,053		3,572		(519)		(14.5)
Other real estate owned			3		17		(14)		(82.4)
Other expense			11,185		12,615		(1,430)		(11.3)
	Total non-interest expense	$	94,040	$	92,514	$	1,526		1.6

Non-interest expenses totaled $94.0 million in the first nine months of 2017 compared to $92.5 million in the first nine months of 2016, a 2% increase. The non-interest expenses for nine months ended September 30, 2017, included $1.3 million in prepayment penalties for the early payoff of high-rate FHLB advances as compared to $3.2 million in prepayment penalties included for the nine months ended September 30, 2016.  The current period also included $1.3 million in merger expenses.  Excluding the impact of prepayment penalties and merger expenses, non-interest expenses increased 2% over the prior year period.  Further detail by category of non-interest expense follows:

41

·Salaries and employee benefits, the largest component of non-interest expenses, increased in the first nine months of 2017 due to higher compensation expense as a result of merit increases, performance incentives and volume based compensation costs.  The increased compensation costs were partially offset by a decrease in healthcare and pension expense.  The average number of full-time equivalent employees remained at 727 for the first nine months of 2017 compared to the first nine months of 2016.

·Occupancy expenses increased 1% compared to the prior year as rental expense associated with relocated facilities increased.

·Equipment expenses increased 2% in 2017 compared to 2016 due to increases in software and general maintenance expense.

·Marketing expense increased 13% as a result of focused marketing initiatives.

·FDIC insurance experienced a 23% increase directly associated with the asset growth of the Company over the past twelve months.

·Merger expense is the direct result of costs associated with the prospective WashingtonFirst acquisition.

·Outside data services and intangible amortization expense levels remained comparable to the prior year period.

·Other non-interest expenses decreased in the first nine months of 2017 compared to the prior year period.  The current year included $1.3 million in penalties related to the prepayment of FHLB advances as compared to the previous year which included $3.2 million in prepayment penalties.  Excluding these expenses, other non-interest expenses increased 4% for the first nine months compared to the prior year period.

Operating Expense Performance

Management views the GAAP efficiency ratio as an important financial measure of expense performance and cost management.  The ratio expresses the level of non-interest expenses as a percentage of total revenue (net interest income plus total non-interest income).  Lower ratios indicate improved productivity.

Non-GAAP Financial Measures

The Company also uses a traditional efficiency ratio that is a non-GAAP financial measure of operating expense control and efficiency of operations.  Management believes that its traditional ratio better focuses attention on the operating performance of the Company over time than does a GAAP ratio, and is highly useful in comparing period-to-period operating performance of the Company’s core business operations.  It is used by management as part of its assessment of its performance in managing non-interest expenses.  However, this measure is supplemental, and is not a substitute for an analysis of performance based on GAAP measures.  The reader is cautioned that the non-GAAP efficiency ratio used by the Company may not be comparable to GAAP or non-GAAP efficiency ratios reported by other financial institutions.

In general, the efficiency ratio is non-interest expenses as a percentage of net interest income plus non-interest income.  Non-interest expenses used in the calculation of the non-GAAP efficiency ratio exclude goodwill impairment losses, the amortization of intangibles, and non-recurring expenses.  Income for the non-GAAP ratio includes the favorable effect of tax-exempt income, and excludes securities gains and losses, which vary widely from period to period without appreciably affecting operating expenses, and non-recurring gains.  The measure is different from the GAAP efficiency ratio, which also is presented in this report.  The GAAP measure is calculated using non-interest expense and income amounts as shown on the face of the Condensed Consolidated Statements of Income.  The GAAP and non-GAAP efficiency ratios are reconciled and provided in the following table. The GAAP efficiency ratio improved in the first nine months of 2017 compared to the first nine months of 2016 due primarily to the increase in net interest income discussed previously.

In addition, the Company uses pre-tax, pre-provision income as a measure of the level of recurring income before taxes. Management believes this provides financial statement users with a useful metric of the run-rate of revenues and expenses which is readily comparable to other financial institutions. This measure is calculated by adding the provision for loan losses, and the provision for income taxes back to net income. This metric increased in the first nine months of 2017 compared to the first nine months of 2016 due primarily to the increase in net interest income.

42

				Three Months Ended				Nine Months Ended
				September 30,				September 30,
(Dollars in thousands)				2017		2016		2017		2016
Pre-tax pre-provision income:
Net income				$	15,089	$	13,474	$	44,942	$	34,934
	Plus non-GAAP adjustment:
		Merger expenses			345		-		1,332		-
		Income taxes			8,229		6,734		22,793		16,861
		Provision for loan losses			934		781		2,450		4,974
Pre-tax pre-provision income				$	24,597	$	20,989	$	71,517	$	56,769
Efficiency ratio - GAAP basis:
Non-interest expense				$	31,191	$	29,326	$	94,040	$	92,514
Net interest income plus non-interest income				$	55,443	$	50,315	$	164,225	$	149,283
Efficiency ratio - GAAP basis					56.26%		58.28%		57.26%		61.97%
Efficiency ratio - Non-GAAP basis:
Non-interest expense				$	31,191	$	29,326	$	94,040	$	92,514
	Less non-GAAP adjustment:
		Amortization of intangible assets			25		34		76		94
		Loss on FHLB redemption			-		-		1,275		3,167
		Merger expenses			345		-		1,332		-
Non-interest expenses -  as adjusted				$	30,821	$	29,292	$	91,357	$	89,253
Net interest income plus non-interest income				$	55,443	$	50,315	$	164,225	$	149,283
	Plus non-GAAP adjustment:
		Tax-equivalent income			1,888		1,688		5,585		4,993
	Less non-GAAP adjustments:
			Securities gains		-		-		1,275		1,919
			Gain on redemption of subordinated debentures		-		-		-		1,200
	Net interest income plus non-interest income - as adjusted			$	57,331	$	52,003	$	168,535	$	151,157
	Efficiency ratio - Non-GAAP basis				53.76%		56.33%		54.21%		59.05%

Income Taxes

The Company had income tax expense of $22.8 million in the first nine months of 2017, compared to income tax expense of $16.9 million in the first nine months of 2016. The resulting effective tax rates were 33.7% for the first nine months of 2017 and 32.6% for the first nine months of 2016.This rate increase was due to the decline in tax-advantaged interest income in proportion to total interest income.

43

Results of Operations

For the Three Months Ended September 30, 2017 Compared to the Three Months Ended September 30, 2016

Net income for the Company for the third quarter of 2017 totaled $15.1 million ($0.62 per diluted share) compared to net income of $13.5 million ($0.56 per diluted share) for the third quarter of 2016.

Net Interest Income

Net interest income for the third quarter of 2017 was $42.7 million compared to $37.7 million for the third quarter of 2016. On a tax-equivalent basis, net interest income for the third quarter of 2017 was $44.6 million compared to $39.4 million for the third quarter of 2016, an increase of 13%. The following table provides an analysis of net interest income performance that reflects a net interest margin that has increased to 3.54% for the third quarter of 2017 compared to 3.50% for the third quarter of 2016. 

Average interest-earning assets and average interest-bearing liabilities increased by 12% in the third quarter of 2017 compared to the third quarter of 2016.  Average noninterest-bearing deposits increased 14% in the third quarter of 2017 while the percentage of average noninterest-bearing deposits to total deposits increased to 33% in the current quarter compared to 32% in the third quarter of 2016. During the quarter the increase in the net interest margin was driven by an increase in the yield on interest-earning assets, loan and investment portfolio growth, and a reduced borrowing costs resulting from the prepayment of FHLB advances over the previous twelve months and the extinguishment of subordinated debentures early in the first quarter of 2017. The impact of these factors were partially offset by an increase in the cost of deposits as the Company increased rates to maintain deposit relationships and fund loan growth.

44

Sandy Spring Bancorp, Inc. and Subsidiaries
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES
		Three Months Ended September 30,
				2017						2016
					Annualized						Annualized
	Average		(1)		Average		Average		(1)		Average
(Dollars in thousands and tax-equivalent)	Balances		Interest		Yield/Rate		Balances		Interest		Yield/Rate
Assets
Residential mortgage loans	$	880,782	$	7,772	3.53	%	$	836,452	$	7,208	3.45	%
Residential construction loans		172,921		1,641	3.77			147,602		1,341	3.62
Total mortgage loans		1,053,703		9,413	3.57			984,054		8,549	3.47
Commercial AD&C loans		291,569		3,705	5.04			287,836		3,398	4.70
Commercial investor real estate loans		1,090,641		12,279	4.47			832,529		9,487	4.53
Commercial owner occupied real estate loans		808,802		9,492	4.66			717,371		8,581	4.76
Commercial business loans		459,779		5,252	4.53			446,123		4,863	4.34
Total commercial loans		2,650,791		30,728	4.60			2,283,859		26,329	4.59
Consumer loans		457,526		4,395	3.84			450,171		3,916	3.48
Total loans (2)		4,162,020		44,536	4.25			3,718,084		38,794	4.16
Loans held for sale		7,093		119	6.69			10,207		96	3.75
Taxable securities		512,420		3,531	2.76			432,706		2,717	2.51
Tax-exempt securities (3)		300,759		3,175	4.22			276,821		2,888	4.17
Total investment securities		813,179		6,706	3.30			709,527		5,605	3.16
Interest-bearing deposits with banks		34,007		108	1.26			38,773		49	0.51
Federal funds sold		2,834		8	1.16			847		1	0.49
Total interest-earning assets		5,019,133		51,477	4.08			4,477,438		44,545	3.96
Less:  allowance for loan losses		(45,546)						(43,498)
Cash and due from banks		48,221						45,210
Premises and equipment, net		53,938						53,162
Other assets		221,622						214,708
Total assets	$	5,297,368					$	4,747,020
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	615,250		135	0.09	%	$	579,863		112	0.08	%
Regular savings deposits		326,827		57	0.07			305,077		48	0.06
Money market savings deposits		1,002,779		1,479	0.59			938,528		514	0.22
Time deposits		678,331		2,030	1.19			573,458		1,454	1.01
Total interest-bearing deposits		2,623,187		3,701	0.56			2,396,926		2,128	0.35
Other borrowings		133,145		83	0.25			120,702		74	0.24
Advances from FHLB		650,947		3,108	1.89			498,370		2,699	2.15
Subordinated debentures		-		-	-			30,000		225	3.00
Total interest-bearing liabilities		3,407,279		6,892	0.80			3,045,998		5,126	0.67
Noninterest-bearing demand deposits		1,293,470						1,131,739
Other liabilities		39,337						39,042
Stockholders' equity		557,282						530,241
Total liabilities and stockholders' equity	$	5,297,368					$	4,747,020
Net interest income and spread				44,585	3.28	%				39,419	3.29	%
Less: tax-equivalent adjustment				1,888						1,688
Net interest income			$	42,697					$	37,731
Interest income/earning assets					4.08	%					3.96	%
Interest expense/earning assets					0.54						0.46
Net interest margin					3.54	%					3.50	%
(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2017 and  2016. The annualized taxable-equivalent
adjustments utilized in the above table to compute yields aggregated to $1.9 million and $1.7 million in 2017 and 2016, respectively.
(2) Non-accrual loans are included in the average balances.
(3) Includes only investments that are exempt from federal taxes.

45

Interest Income

The Company's total tax-equivalent interest income increased 16% for the third quarter of 2017 compared to the prior year quarter. The previous table shows that this increase was driven primarily by loan growth and to a lesser degree by an increase in the investment portfolio during the previous twelve months.

The average balance of the loan portfolio increased 12% for the third quarter of 2017 compared to the prior year period. The increase has been driven by organic loan growth due to the strength of the regional economy.  The majority of growth was concentrated in the commercial real estate loan portfolios. The yield on average loans increased by 9 basis points compared to the prior year quarter. 

The average yield on total investment securities increased 14 basis points while the average balance of the investment portfolio increased 15% for the third quarter of 2017 compared to the third quarter of 2016. The increase in the yield on investments was due to the addition of relatively higher-yielding tax-exempt municipal securities in 2017.

Average deposits increased 11% in the third quarter of 2017 compared to the third quarter of 2016. This increase was primarily due to increases of $197 million or 12% in average noninterest-bearing and interest-bearing checking accounts together with increases of $105 million or 18% in certificates of deposit and $64 million or 7% in money market accounts as the Company increased rates on these products to maintain deposit relationships and fund loan growth. This increase was partially offset by the lower average rates paid on FHLB advances due in part to the prepayment of such advances during the previous twelve months.

Non-interest Income

Non-interest income amounts and trends are presented in the following table for the periods indicated:

			Three Months Ended September 30,				2017/2016		2017/2016
(Dollars in thousands)			2017		2016		$ Change			% Change
	Service charges on deposit accounts		$	2,140	$	2,035	$	105		5.2	%
	Mortgage banking activities			632		1,129		(497)		(44.0)
	Wealth management income			4,864		4,347		517		11.9
	Insurance agency commissions			1,950		1,786		164		9.2
	Income from bank owned life insurance			609		616		(7)		(1.1)
	Bank card fees			1,211		1,189		22		1.9
	Other income			1,340		1,482		(142)		(9.6)
		Total non-interest income	$	12,746	$	12,584	$	162		1.3

46

Total non-interest income was $12.7 million for the third quarter of 2017 compared to $12.6 million for the third quarter of 2016, an increase of 1%.  Further detail by type of non-interest income follows:

·Income from mortgage banking activities decreased in the third quarter of 2017 compared to the third quarter of 2016 due to reduced lending volumes in the third quarter.

·Wealth management income is comprised of income from trust and estate services and investment management fees earned by the Company’s investment management subsidiary.   Overall, wealth management income increased 12% for the quarter ended September 30, 2017 compared to the same quarter of the prior year.   Trust services fees increased 14% for the third quarter of 2017 compared to the prior year period.  Investment management fees increased 10% for the third quarter of 2017 compared to the same period of 2016, due to an increase in assets under management.  Overall total assets under management increased to $2.7 billion at September 30, 2017 compared to $2.4 billion at September 30, 2016.

·Insurance agency commissions increased 9% during the third quarter of 2017 compared to the third quarter of 2016 due primarily to commission income from the agency acquisition in the third quarter of the prior year.

·Other income for the three months ended September 30, 2017 compared to the same period of 2016 decreased 10%.   The decrease for the third quarter of 2017 compared to the third quarter of 2016 was due to a decline in gains resulting from asset sales and letter of credit fees.

Non-interest Expense

Non-interest expense amounts and trends are presented in the following table for the periods indicated:

		Three Months Ended September 30,				2017/2016		2017/2016
(Dollars in thousands)		2017		2016		$ Change			% Change
Salaries and employee benefits		$	18,442	$	17,848	$	594		3.3	%
Occupancy expense of premises			3,294		3,130		164		5.2
Equipment expenses			1,722		1,745		(23)		(1.3)
Marketing			784		628		156		24.8
Outside data services			1,286		1,349		(63)		(4.7)
FDIC insurance			850		726		124		17.1
Amortization of intangible assets			25		34		(9)		(26.5)
Merger expenses			345		-		345		100.0
Professional fees			1,053		987		66		6.7
Other real estate owned			4		5		(1)		(20.0)
Other expense			3,386		2,874		512		17.8
	Total non-interest expense	$	31,191	$	29,326	$	1,865		6.4

Non-interest expenses totaled $31.2 million in the third quarter of 2017 compared to $29.3 million in the third quarter of 2016 and increase of 6%.  Further detail by category of non-interest expense follows:

·Salaries and employee benefits, the largest component of non-interest expenses, increased in the third quarter of 2017 due primarily to an increase in compensation expenses as a result of performance incentives and volume driven compensation costs.  The average number of full-time equivalent employees was 725 in the third quarter of 2017 compared to 729 in the third quarter of 2016.

·Occupancy expense increased due to higher rental expense associated with relocated facilities.

·Marketing expense increased 25% from the prior year quarter due to an increase in focused advertising campaigns.

·FDIC insurance expense increased due to asset growth.

·Merger expense is the direct result of costs associated with the prospective Washington First acquisition.

·Professional fees increased in the third quarter of 2017 due to increases in various professional and consulting fees.

·Other expenses for the third quarter of 2017 increased $0.5 million from the prior year quarter due to the use of various third party vendors to provide specific services.

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Income Taxes

The Company had income tax expense of $8.2 million in the third quarter of 2017, compared to income tax expense of $6.7 million in the third quarter of 2016. The resulting effective tax rate was 35.3% for the third quarter of 2017 compared to 33.3% for the third quarter of 2016.  The effective tax rate for the current quarter increased compared to the prior year quarter as tax-advantaged interest income declined in proportion to total interest income.

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Non-GAAP Financial Measures

The Company also uses a traditional efficiency ratio that is a non-GAAP financial measure of operating expense control and efficiency of operations.  Management believes that its traditional ratio better focuses attention on the operating performance of the Company over time than does a GAAP ratio, and is highly useful in comparing period-to-period operating performance of the Company’s core business operations.  It is used by management as part of its assessment of its performance in managing non-interest expenses.  However, this measure is supplemental, and is not a substitute for an analysis of performance based on GAAP measures.  The reader is cautioned that the non-GAAP efficiency ratio used by the Company may not be comparable to GAAP or non-GAAP efficiency ratios reported by other financial institutions.

In general, the efficiency ratio is non-interest expenses as a percentage of net interest income plus non-interest income.  Non-interest expenses used in the calculation of the non-GAAP efficiency ratio exclude goodwill impairment losses, the amortization of intangibles, and non-recurring expenses.  Income for the non-GAAP ratio includes the favorable effect of tax-exempt income, and excludes securities gains and losses, which vary widely from period to period without appreciably affecting operating expenses, and non-recurring gains.  The measure is different from the GAAP efficiency ratio, which also is presented in this report.  The GAAP measure is calculated using non-interest expense and income amounts as shown on the face of the Condensed Consolidated Statements of Income.  The GAAP and non-GAAP efficiency ratios are reconciled and provided in the table on page 43. The GAAP efficiency ratio improved in the third quarter of 2017 compared to the third quarter of 2016 as a direct result of the growth in net interest income.

In addition, the Company uses pre-tax, pre-provision income as a measure of the level of recurring income before taxes. Management believes this provides financial statement users with a useful metric of the run-rate of revenues and expenses which is readily comparable to other financial institutions. This measure is calculated by adding the provision for loan losses, and the provision for income taxes back to net income. This metric increased in the third quarter of 2017 compared to the third quarter of 2016 primarily due to an increase in net interest income.

FINANCIAL CONDITION

The Company's total assets were $5.3 billion at September 30, 2017, an increase of $243 million or 5% compared to December 31, 2016. The increase was primarily due to the growth in total loans, which increased 7% compared to the previous year end.

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Analysis of Loans

A comparison of the loan portfolio at the dates indicated is presented in the following table:

		September 30, 2017				December 31, 2016				Period-to-Period Change
(Dollars in thousands)		Amount		%		Amount		%		$		%
Residential real estate:
	Residential mortgage	$	882,890	21.1	%	$	841,692	21.4	%	$	41,198	4.9	%
	Residential construction		171,814	4.1			150,229	3.8			21,585	14.4
Commercial real estate:
	Commercial owner occupied real estate		831,461	19.8			775,552	19.8			55,909	7.2
	Commercial investor real estate		1,104,669	26.3			928,113	23.6			176,556	19.0
	Commercial AD&C		295,222	7.0			308,279	7.9			(13,057)	(4.2)
Commercial business			451,667	10.8			467,286	11.9			(15,619)	(3.3)
Consumer			456,395	10.9			456,657	11.6			(262)	(0.1)
	Total loans	$	4,194,118	100.0	%	$	3,927,808	100.0	%	$	266,310	6.8

Total loans, excluding loans held for sale, increased 7% at September 30, 2017 compared to December 31, 2016. The commercial loan portfolio increased 8% at September 30, 2017 driven by an increase of 19% in investor real estate loans. The owner occupied real estate portfolio increased 7% which was partially offset by decreases of 3% in the commercial business and 4% in the AD&C loan portfolios.  The residential real estate portfolio, which is comprised of residential construction and permanent residential mortgage loans, increased 6% at September 30, 2017 compared to December 31, 2016. This increase was driven by a 14% increase in residential construction loans during the third quarter.  The consumer loan portfolio remained stable at September 30, 2017 compared to December 31, 2016.

Analysis of Investment Securities

The composition of investment securities at the periods indicated is presented in the following table:

			September 30, 2017				December 31, 2016				Period-to-Period Change
(Dollars in thousands)			Amount		%		Amount		%		$		%
Investments available-for-sale:
	U.S. government agencies and corporations		$	107,340	13.5	%	$	121,790	15.6	%	$	(14,450)	(11.9)	%
	State and municipal			321,127	40.3			287,684	36.9			33,443	11.6
	Mortgage-backed			316,879	39.9			312,711	40.1			4,168	1.3
	Corporate debt			9,522	1.2			9,134	1.2			388	4.2
	Trust preferred			989	0.1			1,012	0.1			(23)	(2.3)
	Marketable equity securities			212	-			1,223	0.2			(1,011)	(82.7)
		Total available-for-sale securities		756,069	95.0			733,554	94.1			22,515	3.1
Investments held-to-maturity and other equity:
	Other equity securities			39,853	5.0			46,094	5.9			(6,241)	(13.5)
		Total held-to-maturity and other equity		39,853	5.0			46,094	5.9			(6,241)	(13.5)
Total securities			$	795,922	100.0	%	$	779,648	100.0	%	$	16,274	2.1

The investment portfolio increased 2% at September 30, 2017 compared to December 31, 2016 as funds from increased deposits were invested at favorable rates.  

The investment portfolio consists primarily of U.S. Agency securities, U.S. Agency mortgage-backed securities, U.S. Agency collateralized mortgage obligations and state and municipal securities. The duration of the portfolio was 3.4 years at September 30, 2017 and 3.3 years at December 31, 2016. The Company considers the duration of the portfolio to be adequate for liquidity purposes. This investment strategy has resulted in a portfolio with low credit risk that would provide the liquidity necessary to meet loan demand. The portfolio is monitored on a continuing basis with consideration given to interest rate trends and the structure of the yield curve and with constant assessment of economic projections and analysis.

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Other Earning Assets

Residential mortgage loans held for sale were $7 million at September 30, 2017 compared to $13 million at December 31, 2016 due to the effect of the timing of loan sales on the amounts held for sale at quarter end.  The aggregate of federal funds sold and interest-bearing deposits with banks decreased by $29 million to $52 million at September 30, 2017 compared to December 31, 2016 due to the timing of cash flows.

Deposits

The composition of deposits at the periods indicated is presented in the following table:

			September 30, 2017				December 31, 2016				Period-to-Period Change
(Dollars in thousands)			Amount		%		Amount		%		$		%
Noninterest-bearing deposits			$	1,312,710	33.2	%	$	1,138,139	31.8	%	$	174,571	15.3	%
Interest-bearing deposits:
	Demand			608,527	15.4			615,058	17.2			(6,531)	(1.1)
	Money market savings			1,023,153	25.9			927,837	25.9			95,316	10.3
	Regular savings			321,194	8.1			310,471	8.7			10,723	3.5
	Time deposits of less than $100,000			292,395	7.4			258,621	7.2			33,774	13.1
	Time deposits of $100,000 or more			397,813	10.0			327,418	9.2			70,395	21.5
		Total interest-bearing deposits		2,643,082	66.8			2,439,405	68.2			203,677	8.3
Total deposits			$	3,955,792	100.0	%	$	3,577,544	100.0	%	$	378,248	10.6

Deposits and Borrowings

Total deposits increased $378 million or 11% at September 30, 2017 compared to December 31, 2016. This increase was due primarily to increases of 15% in noninterest-bearing checking accounts and 10% in money market savings accounts. In addition, regular savings accounts increased 3% and certificates of deposit increased 18% compared to December 31, 2016. The increase in interest-bearing products occurred as the Company raised rates to maintain client relationships and to fund loan growth. Total borrowings decreased 18% at September 30, 2017 compared to December 31, 2016 due to the reduced dependence on borrowings as a result of the growth in deposits and the extinguishment of $30 million in subordinated debentures during the first three months of 2017.

Capital Management

Management monitors historical and projected earnings, dividends and asset growth, as well as risks associated with the various types of on and off-balance sheet assets and liabilities, in order to determine appropriate capital levels. Total stockholders' equity was $564 million at September 30, 2017 compared to $534 million at December 31, 2016 as net income during the period exceeded the payment of dividends.  The ratio of average equity to average assets was 10.50% for the nine months ended September 30, 2017, as compared to 11.18% for the first nine months of 2016 as the ratio was affected by the growth of average assets.

Bank holding companies and banks are required to maintain capital ratios in accordance with guidelines adopted by the federal bank regulators. These guidelines are commonly known as Risk-Based Capital guidelines. The actual regulatory ratios and required ratios for capital adequacy are summarized for the Company in the following table.

Risk-Based Capital Ratios

			Minimum
	Ratios at		Regulatory
	September 30, 2017	December 31, 2016	Requirements
Total capital to risk-weighted assets	12.01%	12.80%	8.00%
Tier 1 capital to risk-weighted assets	10.99%	11.74%	6.00%
Common equity tier 1 capital	10.99%	11.01%	4.50%
Tier 1 leverage	9.28%	10.14%	4.00%

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As of September 30, 2017, the most recent notification from the Bank’s primary regulator categorized the Bank as a "well-capitalized" institution under the prompt corrective action rules of the Federal Deposit Insurance Act.  Designation as a well-capitalized institution under these regulations is not a recommendation or endorsement of the Company or the Bank by federal bank regulators.

In July 2013, the Federal Reserve Board approved revisions to its capital adequacy guidelines and prompt corrective action rules that implement the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of the Dodd-Frank Act. The rules include new risk-based capital and leverage ratios, which were effective January 1, 2015, and revise the definition of what constitutes “capital” for calculating those ratios. The minimum capital level requirements applicable to the Company and the Bank are: (1) a common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6%; (3) a total capital ratio of 8%; and (4) a Tier 1 leverage ratio of 4%.  The rules eliminate the inclusion of certain instruments, such as trust preferred securities, from Tier 1 capital. Instruments issued prior to May 19, 2010 have been grandfathered for companies with consolidated assets of $15 billion or less. The rules also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital. The new capital conservation buffer requirement began to phase in beginning in January 2016 at 0.625% of risk-weighted assets and will increase by that amount each year until fully implemented in January 2019. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses to executive officers if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

Tangible Common Equity

Tangible equity, tangible assets and tangible book value per share are non-GAAP financial measures calculated using GAAP amounts. Tangible common equity and tangible assets exclude the balances of goodwill and other intangible assets from stockholder’s equity and total assets, respectively. Management believes that this non-GAAP financial measure provides information to investors that may be useful in understanding our financial condition.  Because not all companies use the same calculation of tangible equity and tangible assets, this presentation may not be comparable to other similarly titled measures calculated by other companies.  A reconciliation of the non-GAAP ratio of tangible equity to tangible assets and tangible book value per share are provided in the following table.

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Tangible Common Equity Ratio – Non-GAAP

(Dollars in thousands, except per share data)		September 30, 2017		December 31, 2016
Tangible common equity ratio:
Total stockholders' equity		$	564,480	$	533,572
	Accumulated other comprehensive loss		3,477		6,614
	Goodwill		(85,768)		(85,768)
	Other intangible assets, net		(604)		(680)
Tangible common equity		$	481,585	$	453,738
Total assets		$	5,334,788	$	5,091,383
	Goodwill		(85,768)		(85,768)
	Other intangible assets, net		(604)		(680)
Tangible assets		$	5,248,416	$	5,004,935
Tangible common equity ratio			9.18%		9.07%
Tangible book value per share		$	20.07	$	18.98

Credit Risk

The fundamental lending business of the Company is based on understanding, measuring and controlling the credit risk inherent in the loan portfolio.  The Company’s loan portfolio is subject to varying degrees of credit risk.  Credit risk entails both general risks, which are inherent in the process of lending, and risk specific to individual borrowers.  The Company’s credit risk is mitigated through portfolio diversification, which limits exposure to any single customer, industry or collateral type.  Typically, each consumer and residential lending product has a generally predictable level of credit losses based on historical loss experience.  Residential mortgage and home equity loans and lines generally have the lowest credit loss experience.  Loans secured by personal property, such as auto loans, generally experience medium credit losses.  Unsecured loan products, such as personal revolving credit, have the highest credit loss experience and for that reason, the Company has chosen not to engage in a significant amount of this type of lending.  Credit risk in commercial lending can vary significantly, as losses as a percentage of outstanding loans can shift widely during economic cycles and are particularly sensitive to changing economic conditions.  Generally, improving economic conditions result in improved operating results on the part of commercial customers, enhancing their ability to meet their particular debt service requirements.  Improvements, if any, in operating cash flows can be offset by the impact of rising interest rates that may occur during improved economic times.  Inconsistent economic conditions may have an adverse effect on the operating results of commercial customers, reducing their ability to meet debt service obligations. 

Total non-performing loans decreased 5% to $30.2 million at September 30, 2017 compared to the balance at December 31, 2016. While the diversification of the lending portfolio among different commercial, residential and consumer product lines along with different market conditions of the D.C. suburbs, Northern Virginia and Baltimore metropolitan area has mitigated some of the risks in the portfolio, local economic conditions and levels of non-performing loans may continue to be influenced by the conditions being experienced in various business sectors of the economy on both a regional and national level.

To control and manage credit risk, management has a credit process in place to reasonably ensure that credit standards are maintained along with an in-house loan administration accompanied by oversight and review procedures.  The primary purpose of loan underwriting is the evaluation of specific lending risks and involves the analysis of the borrower’s ability to service the debt as well as the assessment of the value of the underlying collateral.  Oversight and review procedures include the monitoring of portfolio credit quality, early identification of potential problem credits and the proactive management of problem credits.  As part of the oversight and review process, the Company maintains an allowance for loan losses (the “allowance”).

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The allowance represents an estimation of the losses that are inherent in the loan portfolio.  The adequacy of the allowance is determined through the ongoing evaluation of the credit portfolio, and involves consideration of a number of factors, as outlined below, to establish an adequate allowance for loan losses.  Determination of the allowance is inherently subjective and requires significant estimates, including estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, which may be susceptible to significant change.  Loans deemed uncollectible are charged against the allowance, while recoveries are credited to the allowance.  Management adjusts the level of the allowance through the provision for loan losses, which is recorded as a current period operating expense.

The methodology for assessing the appropriateness of the allowance includes:  (1) a general allowance that reflects historical losses, as adjusted, by credit category, and (2) a specific allowance for impaired credits on an individual or portfolio basis.  This methodology is further described in “Note 1 – Significant Accounting Policies” of the Notes to the Consolidated Financial Statements. The amount of the allowance is reviewed and approved quarterly by the Risk Committee of the board of directors.

The Company recognizes a collateral dependent lending relationship as non-performing when either the loan becomes 90 days delinquent or as a result of factors (such as bankruptcy, interruption of cash flows, etc.) considered at the monthly credit committee meeting. When a commercial loan is placed on non-accrual status, it is considered to be impaired and all accrued but unpaid interest is reversed.  Classification as an impaired loan is based on a determination that the Company may not collect all principal and interest payments according to contractual terms. Impaired loans exclude large groups of smaller-balance homogeneous loans that are collectively evaluated for impairment such as residential real estate and consumer loans.  Typically, all payments received on non-accrual loans are first applied to the remaining principal balance of the loans. Any additional recoveries are credited to the allowance.  Integral to the assessment of the allowance process is an evaluation that is performed to determine whether a specific allowance on an impaired loan is warranted and, when losses are confirmed, a charge-off is taken to reduce the loan to its net realizable value. Any further collateral deterioration results in either further specific allowances being established or additional charge-offs.  At such time an action plan is agreed upon for the particular loan and an appraisal will be ordered depending on the time elapsed since the prior appraisal, the loan balance and/or the result of the internal evaluation.  A current appraisal on large loans is usually obtained if the appraisal on file is more than 12 months old and there has been a material change in market conditions, zoning, physical use or the adequacy of the collateral based on an internal evaluation.  The Company’s policy is to strictly adhere to regulatory appraisal standards.  If an appraisal is ordered, no more than a 30 day turnaround is requested from the appraiser, who is selected by Credit Administration from an approved appraiser list. After receipt of the updated appraisal, the assigned credit officer will recommend to the Chief Credit Officer whether a specific allowance or a charge-off should be taken. The Chief Credit Officer has the authority to approve a specific allowance or charge-off between monthly credit committee meetings to ensure that there are no significant time lapses during this process.

The Company’s methodology for evaluating whether a loan is impaired begins with risk-rating credits on an individual basis and includes consideration of the borrower’s overall financial condition, payment record and available cash resources that may include the sufficiency of collateral value and, in a select few cases, verifiable support from financial guarantors.  In measuring impairment, the Company looks primarily to the discounted cash flows of the project itself or to the value of the collateral as the primary sources of repayment of the loan.  The Company may consider the existence of guarantees and the financial strength and wherewithal of the guarantors involved in any loan relationship. Guarantees may be considered as a source of repayment based on the guarantor’s financial condition and respective payment capacity.  Accordingly, absent a verifiable payment capacity, a guarantee alone would not be sufficient to avoid classifying the loan as impaired.

Management has established a credit process that dictates that structured procedures be performed to monitor these loans between the receipt of an original appraisal and the updated appraisal.  These procedures include the following:

·An internal evaluation is updated quarterly to include borrower financial statements and/or cash flow projections.

·The borrower may be contacted for a meeting to discuss an updated or revised action plan which may include a request for additional collateral.

·Re-verification of the documentation supporting the Company’s position with respect to the collateral securing the loan.

·At the monthly credit committee meeting the loan may be downgraded and a specific allowance may be decided upon in advance of the receipt of the appraisal.

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·Upon receipt of the updated appraisal (or based on an updated internal financial evaluation) the loan balance is compared to the appraisal and a specific allowance is decided upon for the particular loan, typically for the amount of the difference between the appraisal and the loan balance.

·The Company will specifically reserve for or charge-off the excess of the loan amount over the amount of the appraisal net of closing costs.

If an updated appraisal is received subsequent to the preliminary determination of a specific allowance or partial charge-off, and it is less than the initial appraisal used in the initial assessment, an additional specific allowance or charge-off is taken on the related credit. Partially charged-off loans are not written back up based on updated appraisals and always remain on non-accrual with any and all subsequent payments first applied to the remaining balance of the loan as principal reductions. No interest income is recognized on loans that have been partially charged-off.

Loans that have their terms restructured (e.g., interest rates, loan maturity date, payment and amortization period, etc.) in circumstances that provide payment relief or other concessions, to a borrower experiencing financial difficulty are considered troubled debt restructured loans (TDR’s). All restructurings that constitute concessions to a borrower experiencing financial difficulties are considered impaired loans and may either be in accruing status or non-accruing status.  Non-accruing restructured loans may return to accruing status provided there is a sufficient period of payment performance in accordance with the restructure terms.  Loans may be removed from disclosure as a troubled debt restructuring if their revised loans terms are considered to be consistent with terms that can be obtained in the credit market for loans with comparable risk. 

The Company may extend the maturity of a performing or current loan that may have some inherent weakness associated with the loan. However, the Company generally follows a policy of not extending maturities on non-performing loans under existing terms. Maturity date extensions only occur under revised terms that clearly place the Company in a position to increase the likelihood of or assure full collection of the loan under the contractual terms and /or terms at the time of the extension that may eliminate or mitigate the inherent weakness in the loan.  These terms may incorporate, but are not limited to additional assignment of collateral, significant balance curtailments/liquidations and assignments of additional project cash flows.  Guarantees may be a consideration in the extension of loan maturities.  As a general matter, the Company does not view extension of a loan to be a satisfactory approach to resolving non-performing credits.  On an exception basis, certain performing loans that have displayed some inherent weakness in the underlying collateral values, an inability to comply with certain loan covenants which are not affecting the performance of the credit or other identified weakness may be extended.

Collateral values or estimates of discounted cash flows (inclusive of any potential cash flow from guarantees) are evaluated to estimate the probability and severity of potential losses. The actual occurrence and severity of losses involving impaired credits can differ substantially from estimates.

The determination of the allowance requires significant judgment, and estimates of probable losses in the loan portfolio can vary significantly from the amounts actually observed.  While management uses available information to recognize probable losses, future additions to the allowance may be necessary based on changes in the credits comprising the portfolio and changes in the financial condition of borrowers, such as may result from changes in economic conditions. In addition, federal and state regulatory agencies, as an integral part of their examination process, and independent consultants engaged by the Bank, periodically review the loan portfolio and the allowance.  Such reviews may result in adjustments to the allowance based upon their analysis of the information available at the time of each examination.

The Company makes provisions for loan losses in amounts necessary to maintain the allowance at an appropriate level, as established by use of the allowance methodology previously discussed. The provision for loan losses was $2.5 million in the first nine months of 2017 compared to $5.0 million in the first nine months of 2016.   The decrease in the provision in the first nine months of 2017 reflects the continuation of  improved loan portfolio credit quality as evidenced in the declining ratio of non-performing loans to total loans over the past year.

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The Company typically sells a substantial portion of its fixed-rate residential mortgage originations in the secondary mortgage market. Concurrent with such sales, the Company is required to make customary representations and warranties to the purchasers about the mortgage loans and the manner in which they were originated. The related sale agreements grant the purchasers recourse back to the Company, which could require the Company to repurchase loans or to share in any losses incurred by the purchasers. This recourse exposure typically extends for a period of six to twelve months after the sale of the loan although the time frame for repurchase requests can extend for an indefinite period.  Such transactions could be due to a number of causes including borrower fraud or early payment default. The Company has seen a very limited number of repurchase and indemnity demands from purchasers for such events and routinely monitors its exposure in this regard. The Company maintains a liability of $0.5 million for probable losses due to repurchases.

The Company periodically engages in whole loan sale transactions of its residential mortgage loans as a part its interest rate risk management strategy. The Company sold $39.7 million of loans on a servicing-retained basis during the nine months ended September 30, 2017, and realized a total gain on sale of $422 thousand. Servicing asset associated with these sales during the nine months ended September 30, 2017, was $346 thousand. Income earned by the Company on its loan servicing rights is derived primarily from contractually specified servicing fees and other ancillary fees. Such income earned for the three and nine months ended September 30, 2017, was not significant.

Mortgage loan servicing rights are accounted for at amortized cost and are monitored for impairment on an ongoing basis. At September 30, 2017, and December 31, 2016, the amortized cost of the Company's mortgage loan servicing rights was $723 thousand and $418 thousand, respectively. The Company did not incur any impairment losses during the nine months ended September 30, 2017.

Allowance for Loan Losses

During the third quarter of 2017, there were no changes in the Company’s methodology for assessing the appropriateness of the allowance for loan losses from the prior year. Variations can occur over time in the estimation of the allowance as a result of the credit performance of borrowers.

At September 30, 2017, total non-performing loans were $30.2 million, or 0.72% of total loans, compared to $31.9 million, or 0.81% of total loans, at December 31, 2016.  The allowance represented 149% of non-performing loans at September 30, 2017 as compared to 138% at December 31, 2016. The allowance for loan losses as a percent of total loans was 1.07% at September 30, 2017 as compared to 1.12% at December 31, 2016. 

Continued analysis of the actual loss history on the problem credits in 2016 and 2017 provided an indication that the coverage of the inherent losses on the problem credits was adequate. The Company continues to monitor the impact of the economic conditions on our commercial customers together with the reduced inflow of non-accruals and criticized loans.  The improvement in these credit metrics supports management’s outlook for continued improved credit quality performance.

The balance of impaired loans was $22.5 million, with specific allowances of $4.8 million against those loans at September 30, 2017, as compared to $24.1 million with specific allowances of $4.8 million, at December 31, 2016.

The Company's borrowers are concentrated in nine counties in Maryland, three counties in Virginia and in Washington D.C.  Commercial and residential mortgages, including home equity loans and lines, represented 78% of total loans at both September 30, 2017 and December 31, 2016.  Certain loan terms may create concentrations of credit risk and increase the Company’s exposure to loss. These include terms that permit the deferral of principal payments or payments that are smaller than normal interest accruals (negative amortization); loans with high loan-to-value ratios; loans, such as option adjustable-rate mortgages, that may expose the borrower to future increases in repayments that are in excess of increases that would result solely from increases in market interest rates; and interest-only loans.  The Company does not make loans that provide for negative amortization or option adjustable-rate mortgages.

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Summary of Loan Loss Experience

The following table presents the activity in the allowance for loan losses for the periods indicated:

			Nine Months Ended		Year Ended
(Dollars in thousands)			September 30, 2017		December 31, 2016
Balance, January 1			$	44,067	$	40,895
Provision for loan losses				2,450		5,546
Loan charge-offs:
Residential real estate:
	Residential mortgage			(10)		(1,404)
	Residential construction			-		-
Commercial real estate:
	Commercial investor			-		(197)
	Commercial owner occupied			(5)		-
	Commercial AD&C			-		(48)
Commercial business				(1,469)		(597)
Consumer				(560)		(888)
	Total charge-offs			(2,044)		(3,134)
Loan recoveries:
Residential real estate:
	Residential mortgage			61		358
	Residential construction			20		32
Commercial real estate:
	Commercial investor			93		133
	Commercial owner occupied			-		5
	Commercial AD&C			103		40
Commercial business				73		44
Consumer				101		148
	Total recoveries			451		760
	Net charge-offs			(1,593)		(2,374)
		Balance, period end	$	44,924	$	44,067
Net charge-offs to average loans				0.05%		0.06%
Allowance for loan losses to loans				1.07%		1.12%

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Analysis of Credit Risk

The following table presents information with respect to non-performing assets and 90-day delinquencies for the periods indicated:

(Dollars in thousands)			September 30, 2017		December 31, 2016
Non-accrual loans:
Residential real estate:
	Residential mortgage		$	7,345	$	7,257
	Residential construction			182		195
Commercial real estate:
	Commercial investor			5,589		8,107
	Commercial owner occupied			5,012		4,823
	Commercial AD&C			137		137
Commercial business				6,091		5,833
Consumer				3,152		2,859
		Total non-accrual loans		27,508		29,211
Loans 90 days past due
Residential real estate:
	Residential mortgage			225		232
	Residential construction			-		-
Commercial real estate:
	Commercial investor			-		-
	Commercial owner occupied			-		-
	Commercial AD&C			-		-
Commercial business				-		-
Consumer				1		-
	Total 90 days past due loans			226		232
Restructured loans (accruing)				2,471		2,489
	Total non-performing loans			30,205		31,932
Other real estate owned, net				1,448		1,911
	Total non-performing assets		$	31,653	$	33,843
Non-performing loans to total loans				0.72%		0.81%
Non-performing assets to total assets				0.59%		0.66%
Allowance for loan to non-performing loans				148.73%		138.00%

Market Risk Management

The Company's net income is largely dependent on its net interest income.  Net interest income is susceptible to interest rate risk to the extent that interest-bearing liabilities mature or re-price on a different basis than interest-earning assets.  When interest-bearing liabilities mature or re-price more quickly than interest-earning assets in a given period, a significant increase in market rates of interest could adversely affect net interest income.  Similarly, when interest-earning assets mature or re-price more quickly than interest-bearing liabilities, falling interest rates could result in a decrease in net interest income. Net interest income is also affected by changes in the portion of interest-earning assets that are funded by interest-bearing liabilities rather than by other sources of funds, such as noninterest-bearing deposits and stockholders' equity.

The Company’s interest rate risk management goals are (1) to increase net interest income at a growth rate consistent with the growth rate of total assets, and (2) to minimize fluctuations in net interest margin as a percentage of interest-earning assets.  Management attempts to achieve these goals by balancing, within policy limits, the volume of floating-rate liabilities with a similar volume of floating-rate assets; by keeping the average maturity of fixed-rate asset and liability contracts reasonably matched; by maintaining a pool of administered core deposits; and by adjusting pricing rates to market conditions on a continuing basis.

58

The Company’s board of directors has established a comprehensive interest rate risk management policy, which is administered by management’s Asset Liability Management Committee (“ALCO”). The policy establishes limits on risk, which are quantitative measures of the percentage change in net interest income (a measure of net interest income at risk) and the fair value of equity capital (a measure of economic value of equity or “EVE” at risk) resulting from a hypothetical change in U.S. Treasury interest rates for maturities from one day to thirty years. The Company measures the potential adverse impacts that changing interest rates may have on its short-term earnings, long-term value, and liquidity by employing simulation analysis through the use of computer modeling. The simulation model captures optionality factors such as call features and interest rate caps and floors embedded in investment and loan portfolio contracts. As with any method of gauging interest rate risk, there are certain shortcomings inherent in the interest rate modeling methodology used by the Company. When interest rates change, actual movements in different categories of interest-earning assets and interest-bearing liabilities, loan prepayments, and withdrawals of time and other deposits, may deviate significantly from assumptions used in the model.  As an example, certain money market deposit accounts are assumed to reprice at 100% of the interest rate change in each of the up rate shock scenarios even though this is not a contractual requirement.  As a practical matter, management would likely lag the impact of any upward movement in market rates on these accounts as a mechanism to manage the bank’s net interest margin.  Finally, the methodology does not measure or reflect the impact that higher rates may have on adjustable-rate loan customers’ ability to service their debts, or the impact of rate changes on demand for loan, lease, and deposit products.

The Company prepares a current base case and eight alternative simulations at least once a quarter and reports the analysis to the board of directors.  In addition, more frequent forecasts are produced when interest rates are particularly uncertain or when other business conditions so dictate.

The statement of condition is subject to quarterly testing for eight alternative interest rate shock possibilities to indicate the inherent interest rate risk.  Average interest rates are shocked by +/- 100, 200, 300, and 400 basis points (“bp”), although the Company may elect not to use particular scenarios that it determines are impractical in a current rate environment.  It is management’s goal to structure the balance sheet so that net interest earnings at risk over a twelve-month period and the economic value of equity at risk do not exceed policy guidelines at the various interest rate shock levels.

The Company augments its quarterly interest rate shock analysis with alternative external interest rate scenarios on a monthly basis. These alternative interest rate scenarios may include non-parallel rate ramps and non-parallel yield curve twists.  If a measure of risk produced by the alternative simulations of the entire balance sheet violates policy guidelines, ALCO is required to develop a plan to restore the measure of risk to a level that complies with policy limits within two quarters.

Measures of net interest income at risk produced by simulation analysis are indicators of an institution’s short-term performance in alternative rate environments.  These measures are typically based upon a relatively brief period, usually one year.  They do not necessarily indicate the long-term prospects or economic value of the institution.

Estimated Changes in Net Interest Income
Change in Interest Rates:	+ 400 bp	+ 300 bp	+ 200 bp	+ 100 bp	- 100 bp	- 200 bp	-300 bp	400 bp
Policy Limit	23.50%	17.50%	15.00%	10.00%	10.00%	15.00%	17.50%	23.50%
September 30, 2017	(5.34%)	(3.59%)	(1.88%)	(0.67%)	(2.50%)	N/A	N/A	N/A
December 31, 2016	(8.55%)	(5.76%)	(2.84%)	(1.20%)	N/A	N/A	N/A	N/A

As shown above, measures of net interest income at risk improved from December 31, 2016 at all shock levels. All measures remained well within prescribed policy limits.

The decrease in the risk position with respect to net interest income from December 31, 2016 to September 30, 2017 at all shock levels was the result of restructuring of FHLB advances in 2017 and the elimination of subordinated debt in January.  The elimination of the optionality associated with the related interest rates reduces the Company’s exposure to potential future increases in interest rates.

The measures of equity value at risk indicate the ongoing economic value of the Company by considering the effects of changes in interest rates on all of the Company’s cash flows, and by discounting the cash flows to estimate the present value of assets and liabilities.  The difference between these discounted values of the assets and liabilities is the economic value of equity, which, in theory, approximates the fair value of the Company’s net assets.

59

Estimated Changes in Economic Value of Equity (EVE)
Change in Interest Rates:	+ 400 bp	+ 300 bp	+ 200 bp	+ 100 bp	- 100 bp	- 200 bp	-300 bp	-400 bp
Policy Limit	35.00%	25.00%	20.00%	10.00%	10.00%	20.00%	25.00%	35.00%
September 30, 2017	(18.36%)	(12.82%)	(7.72%)	(3.15%)	(1.93%)	N/A	N/A	N/A
December 31, 2016	(14.83%)	(10.72%)	(6.42%)	(2.86%)	N/A	N/A	N/A	N/A

Measures of the economic value of equity (“EVE”) at risk increased from December 31, 2016 to September 30, 2017 in all of the shock scenarios. The increase in EVE’s exposure position is the result of the lengthening duration of loans as a result of rising interest rates.

Liquidity Management

Liquidity is measured by a financial institution's ability to raise funds through loan repayments, maturing investments, deposit growth, borrowed funds, capital and the sale of highly marketable assets such as investment securities and residential mortgage loans. The Company's liquidity position, considering both internal and external sources available, exceeded anticipated short-term and long-term needs at September 30, 2017.  Management considers core deposits, defined to include all deposits other than time deposits of $100 thousand or more, to be a relatively stable funding source. Core deposits equaled 70% of total interest-earning assets at September 30, 2017. In addition, loan payments, maturities, calls and pay downs of securities, deposit growth and earnings contribute a flow of funds available to meet liquidity requirements. In assessing liquidity, management considers operating requirements, the seasonality of deposit flows, investment, loan and deposit maturities and calls, expected funding of loans and deposit withdrawals, and the market values of available-for-sale investments, so that sufficient funds are available on short notice to meet obligations as they arise and to ensure that the Company is able to pursue new business opportunities.

Liquidity is measured using an approach designed to take into account, in addition to factors already discussed above, the Company’s growth and mortgage banking activities.  Also considered are changes in the liquidity of the investment portfolio due to fluctuations in interest rates.  Under this approach, implemented by the Funds Management Subcommittee of ALCO under formal policy guidelines, the Company’s liquidity position is measured weekly, looking forward at thirty day intervals from thirty (30) to three hundred sixty (360) days.  The measurement is based upon the projection of funds sold or purchased position, along with ratios and trends developed to measure dependence on purchased funds and core growth.  Resulting projections as of September 30, 2017, show short-term investments exceeding short-term borrowings by $21 million over the subsequent 360 days.  This projected excess of liquidity versus requirements provides the Company with flexibility in how it funds loans and other earning assets. 

The Company also has external sources of funds, which can be drawn upon when required.  The main sources of external liquidity are available lines of credit with the Federal Home Loan Bank of Atlanta and the Federal Reserve. The line of credit with the Federal Home Loan Bank of Atlanta totaled $1.6 billion, of which $1.6 billion was available for borrowing based on pledged collateral, with $633 million borrowed against it as of September 30, 2017. The line of credit at the Federal Reserve totaled $343 million, all of which was available for borrowing based on pledged collateral, with no borrowings against it as of September 30, 2017.  Other external sources of liquidity available to the Company in the form of unsecured lines of credit granted by correspondent banks totaled $70 million at September 30, 2017, against which there were no outstanding borrowings.  In addition, the Company had a secured line of credit with a correspondent bank of $20 million as of September 30, 2017. Based upon its liquidity analysis, including external sources of liquidity available, management believes the liquidity position was appropriate at September 30, 2017.

The parent company (“Bancorp”) is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, Bancorp is responsible for paying any dividends declared to its common shareholders and interest and principal on outstanding debt. Bancorp’s primary source of income is dividends received from the Bank. The amount of dividends that the Bank may declare and pay to Bancorp in any calendar year, without the receipt of prior approval from the Federal Reserve, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. Based on this requirement, as of September 30, 2017, the Bank could have declared a dividend of $32 million to Bancorp. At September 30, 2017, Bancorp had liquid assets of $13 million.

60

Arrangements to fund credit products or guarantee financing take the form of loan commitments (including lines of credit on revolving credit structures) and letters of credit.  Approvals for these arrangements are obtained in the same manner as loans.  Generally, cash flows, collateral value and risk assessment are considered when determining the amount and structure of credit arrangements.

Commitments to extend credit in the form of consumer, commercial real estate and business at the dates indicated were as follows:

			September 30,	December 31,
(In thousands)		2017		2016
Commercial		$	427,597	$	334,552
Real estate-development and construction			131,144		97,524
Real estate-residential mortgage			16,651		22,970
Lines of credit, principally home equity and business lines			1,047,227		949,939
Standby letters of credit			68,607		68,748
	Total commitments to extend credit and available credit lines	$	1,691,226	$	1,473,733

Commitments to extend credit are agreements to provide financing to a customer with the provision that there are no violations of any condition established in the agreement.  Commitments generally have interest rates determined by current market rates, expirations dates or other termination clauses and may require payment of a fee.  Lines of credit typically represent unused portions of lines of credit that were provided and remain available as long as there is no violation of any contractual condition.  Commitments to extend credit are evaluated on a case by case basis periodically. Many of the commitments are expected to expire without being drawn upon.  It would be highly unlikely that all customers would draw on their lines of credit in full at any time and, therefore, the total commitment amount or line of credit amounts do not necessarily represent future cash requirements. 

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Financial Condition - Market Risk and Interest Rate Sensitivity” in Management’s Discussion and Analysis of Financial Condition and Results of Operations, above, which is incorporated herein by reference. 

Item 4.  CONTROLS AND PROCEDURES

The Company’s management, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, evaluated as of the last day of the period covered by this report, the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15 under the Securities Exchange Act of 1934. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective. There were no changes in the Company’s internal controls over financial reporting (as defined in Rule 13a-15 under the Securities Act of 1934) during the three months ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, the Company becomes involved in litigation arising from the banking, financial and other activities it conducts.  Management, after consultation with legal counsel, does not anticipate that the ultimate liability, if any, arising from these matters will have a material effect on the Company’s financial condition, operating results or liquidity.

Item 1A. Risk Factors

There have been no material changes in the risk factors as discussed in the 2016 Annual Report on Form 10-K.

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

The Company’s 2015 stock repurchase program expired on August 31, 2017.  Under the recently expired repurchase program a total of 736,139 shares of common stock were repurchased.   Those repurchases were conducted through open market purchases or privately negotiated transactions.  The following table provides information regarding repurchase transactions executed during the quarter ended September 30, 2017.

61

			Total number of shares	Maximum number that
			purchased as part of	may yet be purchased
	Total number of	Average price paid	publicly announced plans	under the plans or
Period	shares purchased	per share	or programs	programs
July 1, 2017 through
July 31, 2017	-	N/A	-	463,861
August 1, 2017 through
August 31, 2017	-	N/A	-	463,861
September 1, 2017 through
September 30, 2017	-	N/A	-	-

Item 3. Defaults Upon Senior Securities – None

Item 4.  Mine Safety Disclosures – Not applicable

Item 5. Other Information - None

Item 6. Exhibits

               Exhibit 31(a)                      Certification of Chief Executive Officer

               Exhibit 31(b)                      Certification of Chief Financial Officer

               Exhibit 32(a)                      Certification of Chief Executive Officer pursuant to 18 U.S. Section 1350

               Exhibit 32(b)                      Certification of Chief Financial Officer pursuant to 18 U.S. Section 1350

               Exhibit 101                         The following materials from the Sandy Spring Bancorp, Inc. Quarterly Report on Form 10-Q for the quarter end September 30, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Condition; (ii) The Condensed Consolidated Statements of Income; (iii) The Condensed Consolidated Statements of Comprehensive Income; (iv) The Condensed Consolidated Statements of Cash Flows; (v) The Condensed Consolidated Statements of Changes in Stockholders’ Equity; (vi) related notes.

62

Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this quarterly report to be signed on its behalf by the undersigned, thereunto duly authorized.

SANDY SPRING BANCORP, INC.

(Registrant)

By: /s/ Daniel J. Schrider               

Daniel J. Schrider

President and Chief Executive Officer

Date: November 3, 2017

By: /s/ Philip J. Mantua                  

Philip J. Mantua

Executive Vice President and Chief Financial Officer

Date: November 3, 2017

63

EX-31

 

Exhibit 31 (a)

                                                                                                         CERTIFICATION

Rule 13a-14(a) / 15d-14(a) Certifications

I, Daniel J. Schrider, Chief Executive Officer of Sandy Spring Bancorp, Inc. (“Bancorp”), certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sandy Spring Bancorp, Inc.

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

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

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

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

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

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon 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: November 3, 2017                                                                             /s/Daniel J. Schrider

Daniel J. Schrider

Chief Executive Officer

EX-31

 

Exhibit 31 (b)

                                                                                                         CERTIFICATION

I, Philip J. Mantua, Executive Vice President and Chief Financial Officer of Sandy Spring Bancorp, Inc. (“Bancorp”), certify that:

1.I have reviewed this quarterly report on Form 10-Q of Sandy Spring Bancorp, Inc.

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

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

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

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

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

c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based upon 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: November 3, 2017                                                                             /s/Philip J. Mantua

Philip J. Mantua

Executive Vice President and

Chief Financial Officer

EX-32

 

Exhibit 32(a)

18 U.S.C. Section 1350 Certification

I hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Sandy Spring Bancorp, Inc. (“Bancorp”) for the quarterly period ended September 30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Bancorp.

By:       /s/ Daniel J. Schrider___________ 

             Daniel J. Schrider

             Chief Executive Officer

             Date: November 3, 2017

EX-32

 

Exhibit 32(b)

18 U.S.C. Section 1350 Certification

I hereby certify pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge and belief, that the accompanying Form 10-Q of Sandy Spring Bancorp, Inc. (“Bancorp”) for the quarterly period ended September 30, 2017, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934(15 U.S.C. 78m or 78o(d)); and that the information contained in this Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Bancorp.

By:       /s/ Philip J. Mantua___________ 

             Philip J. Mantua

             Chief Executive Officer

             Date: November 3, 2017

XML

DOCUMENT AND ENTITY INFORMATION - $ / shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Trading Symbol	SASR
Entity Common Stock, Shares Outstanding		23,974,299
Entity Listing, Par Value Per Share	$ 1
Entity Registrant Name	SANDY SPRING BANCORP INC
Entity Central Index Key	0000824410
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets
Cash and due from banks	$ 50,076	$ 53,190
Federal funds sold	2,838	1,953
Interest-bearing deposits with banks	49,267	78,982
Cash and cash equivalents	102,181	134,125
Residential mortgage loans held for sale (at fair value)	7,084	13,222
Investments available-for-sale (at fair value)	756,069	733,554
Other equity securities	39,853	46,094
Total loans	4,194,118	3,927,808
Less: allowance for loan losses	(44,924)	(44,067)
Net loans	4,149,194	3,883,741
Premises and equipment, net	54,108	53,562
Other real estate owned	1,448	1,911
Accrued interest receivable	16,045	14,589
Goodwill	85,768	85,768
Other intangible assets, net	604	680
Other assets	122,434	124,137
Total assets	5,334,788	5,091,383
Liabilities
Noninterest-bearing deposits	1,312,710	1,138,139
Interest-bearing deposits	2,643,082	2,439,405
Total deposits	3,955,792	3,577,544
Securities sold under retail repurchase agreements and federal funds purchased	146,569	125,119
Advances from FHLB	632,917	790,000
Subordinated debentures	0	30,000
Accrued interest payable and other liabilities	35,030	35,148
Total liabilities	4,770,308	4,557,811
Stockholders Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 23,990,370 and 23,901,084 at September 30, 2017 and December 31, 2016, respectively	23,990	23,901
Additional paid in capital	167,455	165,871
Retained earnings	376,512	350,414
Accumulated other comprehensive loss	(3,477)	(6,614)
Total stockholders equity	564,480	533,572
Total liabilities and stockholders equity	$ 5,334,788	$ 5,091,383

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION -UNAUDITED (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Common stock, par value	$ 1	$ 1
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	23,990,370	23,901,084
Common stock, shares outstanding	23,990,370	23,901,084

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest Income:
Interest and fees on loans and leases	$ 43,891	$ 38,224	$ 126,861	$ 111,358
Interest on loans held for sale	119	96	273	294
Interest on deposits with banks	108	49	289	156
Interest and dividends on investment securities:
Taxable	3,410	2,623	10,572	8,749
Exempt from federal income taxes	2,053	1,864	6,110	5,753
Interest on federal funds sold	8	1	18	3
Total interest income	49,589	42,857	144,123	126,313
Interest Expense:
Interest on deposits	3,701	2,128	9,212	6,006
Interest on retail repurchase agreements and federal funds purchased	83	74	238	212
Interest on advances from FHLB	3,108	2,699	9,385	8,812
Interest on subordinated debt	0	225	12	698
Total interest expense	6,892	5,126	18,847	15,728
Net interest income	42,697	37,731	125,276	110,585
Provision for loan losses	934	781	2,450	4,974
Net interest income after provision for loan losses	41,763	36,950	122,826	105,611
Non-interest Income:
Investment securities gains	0	0	1,275	1,919
Service charges on deposit accounts	2,140	2,035	6,121	5,894
Mortgage banking activities	632	1,129	2,080	2,770
Wealth management income	4,864	4,347	14,092	13,200
Insurance agency commissions	1,950	1,786	4,924	4,180
Income from bank owned life insurance	609	616	1,808	1,846
Bank card fees	1,211	1,189	3,609	3,498
Other income	1,340	1,482	5,040	5,391
Total non-interest income	12,746	12,584	38,949	38,698
Non-interest Expenses:
Salaries and employee benefits	18,442	17,848	54,525	53,299
Occupancy expense of premises	3,294	3,130	9,907	9,765
Equipment expenses	1,722	1,745	5,213	5,102
Marketing	784	628	2,223	1,971
Outside data services	1,286	1,349	4,045	4,067
FDIC insurance	850	726	2,478	2,012
Amortization of intangible assets	25	34	76	94
Merger expenses	345	0	1,332	0
Other Expense	4,443	3,866	14,241	16,204
Total non-interest expenses	31,191	29,326	94,040	92,514
Income before income taxes	23,318	20,208	67,735	51,795
Income tax expense	8,229	6,734	22,793	16,861
Net income	$ 15,089	$ 13,474	$ 44,942	$ 34,934
Per share information:
Basic net income per share	$ 0.62	$ 0.56	$ 1.86	$ 1.45
Diluted net income per share	0.62	0.56	1.86	1.45
Dividends declared per common share	$ 0.26	$ 0.24	$ 0.78	$ 0.72

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income		$ 15,089	$ 13,474	$ 44,942	$ 34,934
Investments available-for-sale:
Net change in unrealized gains on investments available-for-sale		113	(2,641)	5,618	10,612
Related income tax expense		(45)	1,036	(2,236)	(4,227)
Net investment gains reclassified into earnings		0	0	(1,275)	(1,919)
Related income tax expense		0	0	508	765
Net effect on other comprehensive income (loss)		68	(1,605)	2,615	5,231
Defined benefit pension plan:
Recognition of unrealized gain (loss)	[1]	296	295
Related income tax benefit		(129)	(111)	(364)	(339)
Net effect on other comprehensive income for the period		167	184	522	531
Total other comprehensive income		235	(1,421)	3,137	5,762
Comprehensive income		$ 15,324	$ 12,053	$ 48,079	$ 40,696

[1] This amount is included in the computation of net periodic benefit cost, see Note 9.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Operating activities:
Net income	$ 15,089	$ 13,474	$ 44,942	$ 34,934
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			5,939	5,940
Provision for loan losses	934	781	2,450	4,974	$ 5,546
Share based compensation expense			1,611	1,341
Tax benefits associated with share based compensation			700	287
Deferred income tax expense			163	646
Origination of loans held for sale			(105,970)	(130,409)
Proceeds from sales of loans held for sale			114,474	151,077
Gains on sales of loans held for sale			(2,653)	(2,461)
(Gains) losses on sales of other real estate owned			(82)	48
Investment securities gains	0	0	(1,275)	(1,919)
Increase (Decrease) in Operating Capital [Abstract]
Net (increase) decrease in accrued interest receivable			(1,456)	320
Net decrease in other assets			(5,314)	(1,731)
Net increase (decrease) in accrued expenses and other liabilities			19	(5,999)
Other - net			3,521	(731)
Net cash provided by operating activities			57,069	56,317
Investing activities:
Proceeds of other equity securities			6,241	5,507
Purchases of investments available-for-sale			(125,028)	(120,273)
Proceeds from sales of investment available-for-sale			2,251	40,863
Proceeds from maturities, calls and principal payments of investments held-to-maturity			0	5,004
Proceeds from maturities, calls and principal payments of investments available-for-sale			103,775	227,419
Net increase in loans and leases			(306,755)	(303,709)
Proceeds from the sales of other real estate owned			1,228	1,393
Proceeds from sales of loans previously held for investment			40,031	0
Acquisition of business activity, net of cash acquired			0	(1,347)
Expenditures for premises and equipment			(4,589)	(4,250)
Net cash (used) in investing activities			(282,846)	(149,393)
Financing activities:
Net increase in deposits			378,248	273,427
Net increase in retail repurchase agreements and federal funds purchased			21,450	15,060
Proceeds from advances from FHLB			3,080,000	1,805,000
Repayment of advances from FHLB			(3,237,083)	(1,940,000)
Retirement of subordinated debt			(30,000)	(5,000)
Proceeds from issuance of common stock			1,015	1,268
Stock tendered for payment of withholding taxes			(953)	(683)
Repurchase of common stock			0	(13,273)
Dividends paid			(18,844)	(17,408)
Net cash provided by financing activities			193,833	118,391
Net increase (decrease) in cash and cash equivalents			(31,944)	25,315
Cash and cash equivalents at beginning of period			134,125	72,882	72,882
Cash and cash equivalents at end of period	$ 102,181	$ 98,197	102,181	98,197	$ 134,125
Supplemental Disclosures:
Interest payments			19,244	16,193
Income tax payments			22,927	16,825
Transfer of Investments Held-to-maturity to Available For Sale Securities			0	203,118
Transfer from loans to residential mortgage loans held for sale			39,744	18,752
Transfers from loans to other real estate owned			$ 700	$ 0

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands	Total	Common Stock Outstanding [Member]	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at at Dec. 31, 2015	$ 524,427		$ 24,296	$ 175,588	$ 325,840	$ (1,297)
Net income	34,934		0	0	34,934	0
Other comprehensive income, net of tax	5,762		0	0	0	5,762
Common stock dividends - $0.78 and $0.72 per share at September 30, 2017 and 2016 respectively.	(17,408)		0	0	(17,408)	0
Stock compensation expense	1,628		0	1,628	0	0
Common stock issued pursuant to:
Stock option plan - 28,736 and 34,646 shares at September 30, 2017 and 2016, respectively	535		35	500	0	0
Employee stock purchase plan - 13,486 and 18,767 shares at September 30, 2017 and 2016, respectively	452		19	433
Director's stock purchase plan - 258 shares at September 30, 2016	15		0	15
Restricted stock - 47,064 and 49, 648 shares at September 30, 2017 and 2016, respectively	(417)		49	(466)	0	0
Purchase of treasury shares - 512,459 shares at September 30, 2016	(13,273)	$ (512)		(12,761)	0	0
Balance at at Sep. 30, 2016	536,655		23,887	164,937	343,366	4,465
Balance at at Dec. 31, 2016	533,572		23,901	165,871	350,414	(6,614)
Net income	44,942		0	0	44,942	0
Other comprehensive income, net of tax	3,137		0	0	0	3,137
Common stock dividends - $0.78 and $0.72 per share at September 30, 2017 and 2016 respectively.	(18,844)		0	0	(18,844)	0
Stock compensation expense	1,611		0	1,611	0	0
Common stock issued pursuant to:
Stock option plan - 28,736 and 34,646 shares at September 30, 2017 and 2016, respectively	550		29	521	0	0
Employee stock purchase plan - 13,486 and 18,767 shares at September 30, 2017 and 2016, respectively	465		13	452	0	0
Restricted stock - 47,064 and 49, 648 shares at September 30, 2017 and 2016, respectively	(953)		47	(1,000)	0	0
Balance at at Sep. 30, 2017	$ 564,480		$ 23,990	$ 167,455	$ 376,512	$ (3,477)

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Statement Of Stockholders Equity [Abstract]
Common stock dividends, per share	$ 0.78	$ 0.72
Stock option plan, shares	28,736	34,646
Employee stock purchase plan, shares	13,486	18,767
Restricted stock, shares	47,064	49,648
Treasury Stock, Shares, Retired		512,459
Director stock purchase plan, shares		258

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SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

Significant Accounting Policies [Abstract]

Significant Accounting Policies

Note 1 – Significant Accounting Policies

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “Bank”). The Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia and the greater Washington D.C. market through its operation of 44 community offices and six financial centers across the region. The Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry. The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2017. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 3, 2017. There have been no significant changes to the Company’s accounting policies as disclosed in the 2016 Annual Report on Form 10-K.

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and affect the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, prepayment rates, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business, in January 2017. The objective of this guidance is to clarify the definition of a business to provide entities with assistance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update provides a screen to determine when an integrated set of assets and activities (a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable assets or a group of similar identifiable assets, the set is not a business. The screen thus reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for an asset to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs. This guidance is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-15, Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments, in August 2016. This guidance is intended to reduce the diversity in practice with respect to the presentation and classification of items in the statement of cash flows. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2017. The standard’s provisions will be applied using a retrospective transition method to each period presented. An entity may elect early adoption but must adopt all of the amendments in the same period. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current condition and reasonable and supportable forecasts. This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset. Entities are also required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in March 2016. This guidance is intended to clarify a potential implementation issue with respect to determining whether an entity is a principal or an agent in an arrangement. The guidance provides indicators to assist in this evaluation when another party is involved in the arrangement to identify which party is the principal and which party is the agent. The effective date for this guidance is the same as the effective date of Update 2014-09, Revenue from Contracts with Customers. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for lessees. The guidance also eliminates the current real estate-specific provision and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs. With respect to lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. In applying this guidance entities will also need to determine whether an arrangement contains a lease or service agreement. Disclosures are required by lessees and lessors to meet the objective of enabling users of financials statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For public entities, this guidance is effective for the first interim or annual period beginning after December 15, 2018. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-01, Financial Instruments - Overall,in January 2016. This guidance requires entities to measure equity investments at fair value and recognize changes on fair value in net income. The guidance also provides a new measurement alternative for equity investments that do not have readily determinable fair values and don’t qualify for the net asset value practical expedient. Entities will have to record changes in instrument –specific credit risk for financial liabilities measured under the fair value option in other comprehensive income, except for certain financial liabilities of consolidated collateralized financing entities. Entities will also have to reassess the realizability of a deferred tax asset related to an available-for-sale debt security in combination with their other deferred tax assets. This simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. For public entities, the guidance in this update is effective for the first interim or annual period beginning after December 15, 2017. Early adoption by public entities is permitted as of the beginning of the year of adoption for selected amendments by a cumulative effect adjustment to the balance sheet. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), in May 2014 that provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to customers. The guidance also provides for a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The guidance is effective for the first interim or annual period beginning after December 15, 2017. The guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The guidance does not apply to revenue associated with financial instruments, net interest income, mortgage origination and servicing activities, and gains and losses from securities. Accordingly, the majority of the Company’s revenues will not be affected. The following revenue streams were identified to be in scope of ASC 606: 1) wealth management income; 2) insurance agency commissions; 3) bank card fees; and 4) service charges on deposit accounts. The Company has completed an assessment of the revenue contracts for the revenue streams identified to be in scope as well as worked with industry participants on matters of interpretation and application. The Company’s accounting policies and revenue recognition principles will not change materially as the principles of ASC 606 are largely consistent with the current revenue recognition practices. The Company plans to expand qualitative disclosures of non-interest income at adoption date in the first quarter of 2018.

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INVESTMENTS

9 Months Ended

Sep. 30, 2017

Investments [Abstract]

INVESTMENTS

Note 2 – Investments

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at the dates indicated are presented in the following table:

			September 30, 2017								December 31, 2016
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. government agencies			$	109,348	$	-	$	(2,008)	$	107,340	$	124,314	$	32	$	(2,556)	$	121,790
State and municipal				312,656		8,534		(63)		321,127		281,090		7,180		(586)		287,684
Mortgage-backed				316,770		2,724		(2,615)		316,879		314,029		2,851		(4,169)		312,711
Corporate debt				9,100		422		-		9,522		9,100		34		-		9,134
Trust preferred				931		58		-		989		1,089		-		(77)		1,012
	Total debt securities			748,805		11,738		(4,686)		755,857		729,622		10,097		(7,388)		732,331
Marketable equity securities				212		-		-		212		1,223		-		-		1,223
		Total investments available-for-sale	$	749,017	$	11,738	$	(4,686)	$	756,069	$	730,845	$	10,097	$	(7,388)	$	733,554

Any unrealized losses in the U.S. government agencies, state and municipal, mortgage-backed or corporate debt investment securities at September 30, 2017 are not the result of credit related events but due to changes in interest rates. These declines in fair market value are considered temporary in nature and are expected to recover over time as these securities approach maturity.

The mortgage-backed securities portfolio at September 30, 2017 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($108.5 million), or GNMA, FNMA or FHLMC mortgage-backed securities ($208.4 million). The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of timeto allow for any anticipated recovery in fair value.

At September 30, 2017 the trust preferred portfolio consisted of one pooled trust preferred security. The pooled trust preferred security, which is backed by debt issued by banks and thrifts, totaled $0.9 million with a fair value of $1.0 million. The fair value of this security was determined by management through the use of a third party valuation specialist due to the limited trading activity for this security.

As a result of this evaluation, it was determined that the pooled trust preferred security had not incurred any credit-related other-than-temporary impairment (“OTTI”) for the quarter ended September 30, 2017. The security had an insignificant unrealized gain at September 30, 2017recognized in other comprehensive income (“OCI”). The security is not expected to be sold and the Company has the ability to hold it until maturity.

The following table provides the activity of OTTI on investment securities due to credit losses recognized in earnings for the period indicated:

(In thousands)		OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2016	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities through September 30, 2017	$	531

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in an unrealized loss position at the dates indicated are presented in the following table:

		September 30, 2017
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	102,340	$	2,008	$	-	$	2,008
State and municipal			14		11,076		37		26		63
Mortgage-backed			34		171,833		2,012		603		2,615
	Total		60	$	285,249	$	4,057	$	629	$	4,686

		December 31, 2016
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	96,788	$	2,556	$	-	$	2,556
State and municipal			53		48,010		516		70		586
Mortgage-backed			37		212,844		3,971		198		4,169
Trust preferred			1		1,012		-		77		77
	Total		103	$	358,654	$	7,043	$	345	$	7,388

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at the dates indicated are provided in the following table. The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		September 30, 2017				December 31, 2016
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	10,821	$	10,934	$	7,493	$	7,541
Due after one year through five years			173,513		179,386		156,953		162,233
Due after five years through ten years			244,098		245,324		282,468		282,713
Due after ten years			320,373		320,213		282,708		279,844
	Total debt securities available for sale	$	748,805	$	755,857	$	729,622	$	732,331

At September 30, 2017 and December 31, 2016, investments available-for-sale with a book value of $448.2million and $453.0 million, respectively, were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. Agencies securities, exceeded ten percent of stockholders' equity at September 30, 2017 and December 31, 2016.

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Federal Reserve Bank stock		$	8,382	$	8,334
Federal Home Loan Bank of Atlanta stock			31,471		37,760
	Total equity securities	$	39,853	$	46,094

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LOANS AND LEASES

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

LOANS AND LEASES

Note 3 – LOANS

Outstanding loan balances at September 30, 2017 and December 31, 2016 are net of unearned income including net deferred loan costs of $2.1 million and $1.4 million, respectively. The loan portfolio segment balances at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Residential real estate:
	Residential mortgage	$	882,890	$	841,692
	Residential construction		171,814		150,229
Commercial real estate:
	Commercial owner occupied real estate		831,461		775,552
	Commercial investor real estate		1,104,669		928,113
	Commercial AD&C		295,222		308,279
Commercial business			451,667		467,286
Consumer			456,395		456,657
	Total loans	$	4,194,118	$	3,927,808

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CREDIT QUALITY ASSESSMENT

9 Months Ended

Sep. 30, 2017

Credit Quality Assessment [Abstract]

CREDIT QUALITY ASSESSMENT

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan Losses

Summary information on the allowance for loan loss activity for the period indicated is provided in the following table:

			Nine Months Ended September 30,
(In thousands)			2017		2016
Balance at beginning of year			$	44,067	$	40,895
	Provision for loan losses			2,450		4,974
	Loan charge-offs			(2,044)		(2,586)
	Loan recoveries			451		659
		Net charge-offs		(1,593)		(1,927)
Balance at period end			$	44,924	$	43,942

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Provision (credit)			2,552		(829)		1,230		(481)		147		(241)		72		2,450
Charge-offs			(1,469)		-		-		(5)		(560)		(10)		-		(2,044)
Recoveries			73		103		93		-		101		61		20		451
	Net recoveries (charge-offs)		(1,396)		103		93		(5)		(459)		51		20		(1,593)
Balance at end of period		$	8,695	$	3,926	$	14,262	$	7,399	$	2,516	$	7,071	$	1,055	$	44,924
Total loans and leases		$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118
Allowance for loans losses to total loans ratio			1.93%		1.33%		1.29%		0.89%		0.55%		0.80%		0.61%		1.07%
Balance of loans specifically evaluated for impairment		$	8,403	$	137	$	5,589	$	5,517	$	na.	$	2,867	$	-	$	22,513
Allowance for loans specifically evaluated for impairment		$	3,841	$	-	$	589	$	340	$	na.	$	-	$	-	$	4,770
Specific allowance to specific loans ratio			45.71%		-		10.54%		6.16%		na.		-		-		21.19%
Balance of loans collectively evaluated		$	443,264	$	295,085	$	1,099,080	$	825,944	$	456,395	$	880,023	$	171,814	$	4,171,605
Allowance for loans collectively evaluated		$	4,854	$	3,926	$	13,673	$	7,059	$	2,516	$	7,071	$	1,055	$	40,154
Collective allowance to collective loans ratio			1.10%		1.33%		1.24%		0.85%		0.55%		0.80%		0.61%		0.96%

		For the Year Ended December 31,2016
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	6,529	$	4,691	$	10,440	$	7,984	$	3,456	$	6,901	$	894	$	40,895
Provision (credit)			1,563		(31)		2,563		(104)		112		1,406		37		5,546
Charge-offs			(597)		(48)		(197)		-		(888)		(1,404)		-		(3,134)
Recoveries			44		40		133		5		148		358		32		760
	Net recoveries (charge-offs)		(553)		(8)		(64)		5		(740)		(1,046)		32		(2,374)
Balance at end of period		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Total loans and leases		$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808
Allowance for loan losses to total loans ratio			1.61%		1.51%		1.39%		1.02%		0.62%		0.86%		0.64%		1.12%
Balance of loans specifically evaluated for impairment		$	7,018	$	137	$	8,107	$	5,567	$	na.	$	3,263	$	-	$	24,092
Allowance for loans specifically evaluated for impairment		$	2,604	$	-	$	1,736	$	485	$	na.	$	-	$	-	$	4,825
Specific allowance to specific loans ratio			37.10%		-		21.41%		8.71%		na.		-		-		20.03%
Balance of loans collectively evaluated		$	460,268	$	308,142	$	920,006	$	769,985	$	456,657	$	838,429	$	150,229	$	3,903,716
Allowance for loans collectively evaluated		$	4,935	$	4,652	$	11,203	$	7,400	$	2,828	$	7,261	$	963	$	39,242
Collective allowance to collective loans ratio			1.07%		1.51%		1.22%		0.96%		0.62%		0.87%		0.64%		1.01%

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		September 30, 2017		December 31, 2016
Impaired loans with a specific allowance		$	13,436	$	13,563
Impaired loans without a specific allowance			9,077		10,529
	Total impaired loans	$	22,513	$	24,092
Allowance for loan losses related to impaired loans		$	4,770	$	4,825
Allowance for loan losses related to loans collectively evaluated			40,154		39,242
	Total allowance for loan losses	$	44,924	$	44,067
Average impaired loans for the period		$	23,772	$	26,382
Contractual interest income due on impaired loans during the period		$	1,813	$	2,082
Interest income on impaired loans recognized on a cash basis		$	462	$	511
Interest income on impaired loans recognized on an accrual basis		$	215	$	186

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

			September 30, 2017
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,355		-		5,177		1,223		-		10,755
		Restructured accruing		1,138		-		-		-		-		1,138
		Restructured non-accruing		8		-		-		639		-		647
	Balance		$	6,397	$	-	$	5,177	$	1,862	$	-	$	13,436
	Allowance		$	3,841	$	-	$	589	$	340	$	-	$	4,770
Impaired loans without a specific allowance
		Non-accruing	$	556	$	-	$	412	$	1,629	$	-	$	2,597
		Restructured accruing		278		-		-		505		550		1,333
		Restructured non-accruing		1,172		137		-		1,521		2,317		5,147
	Balance		$	2,006	$	137	$	412	$	3,655	$	2,867	$	9,077
Total impaired loans
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,911		-		5,589		2,852		-		13,352
		Restructured accruing		1,416		-		-		505		550		2,471
		Restructured non-accruing		1,180		137		-		2,160		2,317		5,794
	Balance		$	8,403	$	137	$	5,589	$	5,517	$	2,867	$	22,513
Unpaid principal balance in total impaired loans			$	11,331	$	4,398	$	10,173	$	7,707	$	3,699	$	37,308

	September 30, 2017
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,853	$	137	$	7,150	$	5,650	$	2,982	$	23,772
Contractual interest income due on impaired loans during the period	$	668	$	245	$	485	$	355	$	60
Interest income on impaired loans recognized on a cash basis	$	182	$	-	$	17	$	138	$	125
Interest income on impaired loans recognized on an accrual basis	$	167	$	-	$	-	$	19	$	29

			December 31, 2016
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	2,807	$	-	$	7,029	$	1,884	$	-	$	11,720
		Restructured accruing		1,140		-		-		-		-		1,140
		Restructured non-accruing		64		-		-		639		-		703
	Balance		$	4,011	$	-	$	7,029	$	2,523	$	-	$	13,563
	Allowance		$	2,604	$	-	$	1,736	$	485	$	-	$	4,825
Impaired loans without a specific allowance
		Non-accruing	$	1,562	$	-	$	562	$	1,083	$	-	$	3,207
		Restructured accruing		45		-		-		744		560		1,349
		Restructured non-accruing		1,400		137		516		1,217		2,703		5,973
	Balance		$	3,007	$	137	$	1,078	$	3,044	$	3,263	$	10,529
Total impaired loans
		Non-accruing	$	4,369	$	-	$	7,591	$	2,967	$	-	$	14,927
		Restructured accruing		1,185		-		-		744		560		2,489
		Restructured non-accruing		1,464		137		516		1,856		2,703		6,676
	Balance		$	7,018	$	137	$	8,107	$	5,567	$	3,263	$	24,092
Unpaid principal balance in total impaired loans			$	10,082	$	4,398	$	12,805	$	7,760	$	3,971	$	39,016

	December 31, 2016
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	5,646	$	150	$	9,480	$	6,561	$	4,545	$	26,382
Contractual interest income due on impaired loans during the period	$	570	$	294	$	718	$	310	$	190
Interest income on impaired loans recognized on a cash basis	$	153	$	-	$	43	$	266	$	49
Interest income on impaired loans recognized on an accrual basis	$	107	$	-	$	-	$	37	$	42

Credit Quality

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	6,091	$	137	$	5,589	$	5,012	$	3,152	$	7,345	$	182	$	27,508
	Loans 90 days past due		-		-		-		-		1		225		-		226
	Restructured loans		1,416		-		-		505		-		550		-		2,471
Total non-performing loans			7,507		137		5,589		5,517		3,153		8,120		182		30,205
	Other real estate owned		39		365		-		-		-		1,044		-		1,448
Total non-performing assets		$	7,546	$	502	$	5,589	$	5,517	$	3,153	$	9,164	$	182	$	31,653

		December 31, 2016
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	5,833	$	137	$	8,107	$	4,823	$	2,859	$	7,257	$	195	$	29,211
	Loans 90 days past due		-		-		-		-		-		232		-		232
	Restructured loans		1,185		-		-		744		-		560		-		2,489
Total non-performing loans			7,018		137		8,107		5,567		2,859		8,049		195		31,932
	Other real estate owned		39		365		395		637		-		475		-		1,911
Total non-performing assets		$	7,057	$	502	$	8,502	$	6,204	$	2,859	$	8,524	$	195	$	33,843

			September 30, 2017
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	1,442	$	-	$	-	$	1,137	$	820	$	4,627	$	-	$	8,026
	61-90 days			776		-		-		-		656		4,172		-		5,604
	> 90 days			-		-		-		-		1		225		-		226
		Total past due		2,218		-		-		1,137		1,477		9,024		-		13,856
	Non-accrual loans			6,091		137		5,589		5,012		3,152		7,345		182		27,508
	Current loans			443,358		295,085		1,099,080		825,312		451,766		866,521		171,632		4,152,754
		Total loans	$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118

			December 31, 2016
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	663	$	896	$	850	$	1,479	$	808	$	3,969	$	-	$	8,665
	61-90 days			672		-		1,206		744		1,104		2,139		-		5,865
	> 90 days			-		-		-		-		-		232		-		232
		Total past due		1,335		896		2,056		2,223		1,912		6,340		-		14,762
	Non-accrual loans			5,833		137		8,107		4,823		2,859		7,257		195		29,211
	Current loans			460,118		307,246		917,950		768,506		451,886		828,095		150,034		3,883,835
		Total loans	$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		September 30, 2017
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	435,183	$	295,085	$	1,096,591	$	817,605	$	2,644,464
	Special Mention		1,929		-		2,342		5,652		9,923
	Substandard		14,555		137		5,736		8,204		28,632
	Doubtful		-		-		-		-		-
Total		$	451,667	$	295,222	$	1,104,669	$	831,461	$	2,683,019

		December 31, 2016
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	442,725	$	308,142	$	917,255	$	758,651	$	2,426,773
	Special Mention		10,010		-		2,395		9,255		21,660
	Substandard		14,551		137		8,463		7,646		30,797
	Doubtful		-		-		-		-		-
Total		$	467,286	$	308,279	$	928,113	$	775,552	$	2,479,230

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			September 30, 2017
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,242	$	874,770	$	171,632	$	1,499,644
	Non-performing:
		90 days past due		1		225		-		226
		Non-accruing		3,152		7,345		182		10,679
		Restructured loans		-		550		-		550
Total			$	456,395	$	882,890	$	171,814	$	1,511,099

			December 31, 2016
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,798	$	833,643	$	150,034	$	1,437,475
	Non-performing:
		90 days past due		-		232		-		232
		Non-accruing		2,859		7,257		195		10,311
		Restructured loans		-		560		-		560
Total			$	456,657	$	841,692	$	150,229	$	1,448,578

During the nine months ended September 30, 2017, the Company restructured $1.3 millionin loans. No modifications resulted in the reduction of the principal in the associated loan balances. Restructured loans are subject to periodic credit reviews to determine the necessity and adequacy of a specific loan loss allowance based on the collectability of the recorded investment in the restructured loan. Loans restructured during 2017did not have any specific reserves. For the year ended December 31, 2016, the Company restructured $0.6 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded investment in the associated loan balances. Loans restructured during 2016 did not have significant specific reserves at December 31, 2016. The commitments to lend additional funds on loans that have been restructured at September 30, 2017 and December 31, 2016 were not significant.

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	492	$	-	$	-	$	-	$	-	$	492
	Restructured non-accruing		387		-		-		396		-		783
Balance		$	879	$	-	$	-	$	396	$	-	$	1,275
Specific allowance		$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2016
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	42	$	-	$	-	$	508	$	-	$	550
	Restructured non-accruing		-		-		-		-		-		-
Balance		$	42	$	-	$	-	$	508	$	-	$	550
Specific allowance		$	39	$	-	$	-	$	-	$	-	$	39
Restructured and subsequently defaulted		$	-	$	-	$	479	$	-	$	-	$	479

Other Real Estate Owned

Other real estate owned totaled $1.5 million and $1.9 million at September 30, 2017 and December 31, 2016, respectively. The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings are in process as of September 30, 2017 totaled $0.5 million.

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Note 5 – Goodwill and Other Intangible Assets

The gross carrying amounts and accumulated amortization of intangible assets and goodwill are presented at the dates indicated in the following table:

		September 30, 2017						Weighted		December 31, 2016						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Other identifiable intangibles		$	786	$	(182)	$	604		13.2 years	$	786	$	(106)	$	680		13.8 years
	Total amortizing intangible assets	$	786	$	(182)	$	604			$	786	$	(106)	$	680
Goodwill		$	85,768			$	85,768			$	85,768			$	85,768

The following table presents the estimated future amortization expense for amortizing intangible assets within the years ending December 31:

(In thousands)		Amount
2017		$	24
2018			95
2019			83
2020			66
Thereafter			336
	Total amortizing intangible assets	$	604

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DEPOSITS

9 Months Ended

Sep. 30, 2017

Deposits [Abstract]

DEPOSITS

Note 6 – Deposits

The following table presents the composition of deposits at the dates indicated:

(In thousands)				September 30, 2017		December 31, 2016
Noninterest-bearing deposits				$	1,312,710	$	1,138,139
Interest-bearing deposits:
	Demand				608,527		615,058
	Money market savings				1,023,153		927,837
	Regular savings				321,194		310,471
	Time deposits of less than $100,000				292,395		258,621
	Time deposits of $100,000 or more				397,813		327,418
		Total interest-bearing deposits			2,643,082		2,439,405
			Total deposits	$	3,955,792	$	3,577,544

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STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

STOCKHOLDERS EQUITY

Note 7 – Stockholders’ Equity

The Company’s 2015 stock repurchase program expired on August 31, 2017. Under the recently expired repurchase program a total of 736,139 shares of common stock were repurchased.

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SHARE BASED COMPENSATION

9 Months Ended

Sep. 30, 2017

Share Based Compensation [Abstract]

SHARE BASED COMPENSATION

Note 8 – Share Based Compensation

At September 30, 2017, the Company had two share based compensation plans in existence, the 2005 Omnibus Stock Plan (“Omnibus Stock Plan”) and the 2015 Omnibus Incentive Plan (“Omnibus Incentive Plan”). The Omnibus Stock Plan expired during the second quarter of 2015 but has outstanding options that may still be exercised. The Omnibus Incentive Plan is described in the following paragraph.

The Company’s Omnibus Incentive Plan was approved on May 6, 2015 and provides for the granting of incentive stock options, non-qualifying stock options, stock appreciation rights, restricted stock grants, restricted stock units and performance awards to selected employees on a periodic basis at the discretion of the board. The Omnibus Incentive Plan authorizes the issuance of up to 1,500,000 shares of common stock, of which 1,339,989 are available for issuance at September 30, 2017, has a term of ten years, and is administered by a committee of at least three directors appointed by the board of directors. Options granted under the plan have an exercise price which may not be less than 100% of the fair market value of the common stock on the date of the grant and must be exercised within seven to ten years from the date of grant. The exercise price of stock options must be paid for in full in cash or shares of common stock, or a combination of both. The board committee has the discretion when making a grant of stock options to impose restrictions on the shares to be purchased upon the exercise of such options. The Company generally issues authorized but previously unissued shares to satisfy option exercises.

The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing model. The weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2017		2016
Dividend yield	2.45	%	3.48	%
Weighted average expected volatility	40.27	%	41.54	%
Weighted average risk-free interest rate	2.14	%	1.42	%
Weighted average expected lives (in years)	5.67		5.71
Weighted average grant-date fair value	$13.42		$7.75

The dividend yield is based on estimated future dividend yields. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatilities are generally based on historical volatilities. The expected term of share options granted is generally derived from historical experience.

Compensation expense is recognized on a straight-line basis over the vesting period of the respective stock option or restricted stock grant. The Company recognized compensation expense of $0.5 million and $0.5 million for the three months ended September 30, 2017 and 2016, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.5 million and $1.4 million was recognized for the nine months ended September 30, 2017and 2016, respectively. The intrinsic value of stock options exercised in the nine months ended September 30, 2017and 2016was $0.6 million and $0.4 million, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.2 million as of September 30, 2017. That cost is expected to be recognized over a weighted average period of approximately 2.0 years. The total of unrecognized compensation cost related to restricted stock was approximately $4.8 million as of September 30, 2017. That cost is expected to be recognized over a weighted average period of approximately 3.2 years. The fair value of the options vested during the nine months ended September 30, 2017 and 2016, was not significant.

In the first quarter of 2017, 12,941 stock options were granted, subject to a three year vesting schedule with one third of the options vesting on April 1^st of each year. The Company granted 55,211 shares of restricted stock in the first quarter of 2017, 6,479 shares are subject to a three year vesting schedule with one third of the shares vesting each year and 41,859 shares are subject to a five year vesting schedule with one fifth of the shares vesting each year. All of these restricted shares will veston April 1^st of each year. An additional 6,873 shares of performance based restricted stock grants were also approved as part of the restricted shares granted in the first quarter. The performance shares are subject to cliff vesting after three years based on the relative performance of the Company’s stock price in comparison to a selected peer group. Vesting can vary from 0-150% of the initial grant based on the results of the Company’s stock performance.

A summary of share option activity for the period indicated is reflected in the following table:

					Weighted
		Number	Weighted		Average	Aggregate
		of	Average		Contractual	Intrinsic
		Common	Exercise		Remaining	Value
		Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2017		108,503	$	22.46		$	1,902
Granted		12,941	$	42.48
Exercised		(28,736)	$	19.11		$	638
Forfeited or expired		(3,577)	$	30.07
Balance at September 30, 2017		89,131	$	24.16	3.8	$	1,374
Exercisable at September 30, 2017		58,646	$	22.46	2.8	$	1,113
Weighted average fair value of options
	granted during the year		$	13.42

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2017	212,646	$	25.19
Granted	55,211	$	42.48
Vested	(70,382)	$	23.82
Forfeited	(7,800)	$	27.21
Restricted stock at September 30, 2017	189,675	$	30.67

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PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2017

Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]

PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

Note 9 – Pension, Profit Sharing, and Other Employee Benefit Plans

Defined Benefit Pension Plan

The Company has a qualified, noncontributory, defined benefit pension plan (the “Plan”). Benefits after January 1, 2005, are based on the benefit earned as of December 31, 2004, plus benefits earned in future years of service based on the employee’s compensation during each such year. All benefit accruals for employees were frozen as of December 31, 2007 based on past service and thus salary increases and additional years of service after such date no longer affect the defined benefit provided by the plan although additional vesting may continue to occur.

The Company's funding policy is to contribute amounts to the plan sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended. In addition, the Company contributes additional amounts as it deems appropriate based on benefits attributed to service prior to the date of the plan freeze. The Plan invests primarily in a diversified portfolio of managed fixed income and equity funds.

The components of net periodic benefit cost for the periods indicated are presented in the following table:

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)		2017		2016		2017		2016
Interest cost on projected benefit obligation		$	410	$	416	$	1,230	$	1,242
Expected return on plan assets			(497)		(404)		(1,489)		(1,151)
Recognized net actuarial loss			296		295		886		870
	Net periodic benefit cost	$	209	$	307	$	627	$	961

Contributions

The decision as to whether or not to make a plan contribution and the amount of any such contribution is dependent on a number of factors. Such factors include the investment performance of the plan assets in the current economy and, since the plan is currently frozen, the remaining investment horizon of the plan. After consideration of these factors, the Company made a contribution of $2.2 million to the plan during the third quarter of 2017.

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NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

NET INCOME PER COMMON SHARE

Note 10 – Net Income per Common Share

The calculation of net income per common share for the periods indicated is presented in the following table:

			Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars and amounts in thousands, except per share data)			2017		2016		2017		2016
Net income			$	15,089	$	13,474	$	44,942	$	34,934
Basic:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
		Basic net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Diluted:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
Dilutive common stock equivalents				23		27		30		27
	Dilutive EPS shares			24,223		24,123		24,201		24,151
		Diluted net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Anti-dilutive shares				5		3		3		5

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OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2017

Other Comprehensive Income Loss [Abstract]

OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 11 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income is defined as net income plus transactions and other occurrences that are the result of non-owner changes in equity. For condensed financial statements presented for the Company, non-owner changes in equity are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments. The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2017		$	1,642	$	(8,256)	$	(6,614)
	Other comprehensive income before reclassification, net of tax		3,382		-		3,382
	Reclassifications from accumulated other comprehensive income, net of tax		(767)		522		(245)
Current period change in other comprehensive income, net of tax			2,615		522		3,137
Balance at September 30, 2017		$	4,257	$	(7,734)	$	(3,477)

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2016		$	6,566	$	(7,863)	$	(1,297)
	Other comprehensive income before reclassification, net of tax		6,385		-		6,385
	Reclassifications from accumulated other comprehensive income, net of tax		(1,154)		531		(623)
Current period change in other comprehensive income, net of tax			5,231		531		5,762
Balance at September 30, 2016		$	11,797	$	(7,332)	$	4,465

The following table provides the information on the reclassification adjustments out of accumulated other comprehensive income for the periods indicated:

				Nine Months Ended September 30,
(In thousands)				2017		2016
Unrealized gains/(losses) on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	1,275		$	1,919
	Income before taxes				1,275			1,919
	Tax expense				(508)			(765)
	Net income			$	767		$	1,154
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(886)		$	(870)
			Income before taxes		(886)			(870)
			Tax benefit		364			339
			Net loss	$	(522)		$	(531)
(1) This amount is included in the computation of net periodic benefit cost, see Note 9

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

9 Months Ended

Sep. 30, 2017

Financial Instruments With Off- Balance Sheet Risk and Derivatives [Abstract]

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

Note 12– Financial Instruments with Off-balance Sheet Risk and Derivatives

The Company has entered into interest rate swaps (“swaps”) to facilitate customer transactions and meet their financing needs. These swaps qualify as derivatives, but are not designated as hedging instruments. Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms. When the fair value of a derivative instrument contract is positive, this generally indicates that the counterparty or customer owes the Company, and results in credit risk to the Company. When the fair value of a derivative instrument contract is negative, the Company owes the customer or counterparty and therefore, has no credit risk. The notional value of commercial loan swaps outstanding was $18.1 million with a fair value of $0.8million as of September 30, 2017 compared to $18.9 million with a fair value of $1.0 million as of December 31, 2016. The swap positions are offset to minimize the potential impact on the Company’s financial statements.Fair values of the swaps are carried as both gross assets and gross liabilities in the condensed consolidated statements of condition. The associated net gains and losses on the swaps are recorded in other non-interest income.

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LITIGATION

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

LITIGATION

Note 13 – Litigation

The Company and its subsidiaries are subject in the ordinary course of business to various pending or threatened legal proceedings in which claims for monetary damages are asserted. After consultation with legal counsel, management does not anticipate that the ultimate liability, if any, arising out of these legal matters will have a material adverse effect on the Company's financial condition, operating results or liquidity.

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FAIR VALUE

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE

Note 14 – Fair Value

Generally accepted accounting principles provide entities the option to measure eligible financial assets, financial liabilities and commitments at fair value (i.e. the fair value option), on an instrument-by-instrument basis, that are otherwise not permitted to be accounted for at fair value under other accounting standards. The election to use the fair value option is available when an entity first recognizes a financial asset or financial liability or upon entering into a commitment. Subsequent changes in fair value must be recorded in earnings. The Company applies the fair value option on residential mortgage loans held for sale. The fair value option on residential mortgage loans allows the recognition of gains on sale of mortgage loans to more accurately reflect the timing and economics of the transaction.

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

Basis of Fair Value Measurement:

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

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

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

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Changes to interest rates may result in changes in the cash flows due to prepayments or extinguishments. Accordingly, this could result in higher or lower measurements of the fair values.

Assets and Liabilities

Mortgage loans held for sale

Mortgage loans held for sale are valued based on quotations from the secondary market for similar instruments and are classified as Level 2 of the fair value hierarchy.

Investments available-for-sale

U.S. government agencies and mortgage-backed securities

Valuations are based on active market data and use of evaluated broker pricing models that vary based by asset class and includes available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, descriptive terms and conditions databases coupled with extensive quality control programs. Multiple quality control evaluation processes review available market, credit and deal level information to support the evaluation of the security. If there is a lack of objectively verifiable information available to support the valuation, the evaluation of the security is discontinued. Additionally, proprietary models and pricing systems, mathematical tools, actual transacted prices, integration of market developments and experienced evaluators are used to determine the value of a security based on a hierarchy of market information regarding a security or securities with similar characteristics. The Company does not adjust the quoted price for such securities. Such instruments are generally classified within Level 2 of the fair value hierarchy.

State and municipal securities

Proprietary valuation matrices are used for valuing all tax-exempt municipals that can incorporate changes in the municipal market as they occur. Market evaluation models include the ability to value bank qualified municipals and general market municipals that can be broken down further according to insurer, credit support, state of issuance and rating to incorporate additional spreads and municipal curves. Taxable municipals are valued using a third party model that incorporates a methodology that captures the trading nuances associated with these bonds. Such instruments are generally classified within Level 2 of the fair value hierarchy.

Trust preferred securities and corporate debt

In active markets, these types of instruments are valued based on quoted market prices that are readily accessible at the measurement date and are classified within Level 1 of the fair value hierarchy. Positions that are not traded in active markets or are subject to transfer restrictions are valued or adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management uses a process that employs certain assumptions to determine the present value. Positions that are not traded in active markets or are subject to transfer restrictions are classified within Level 3 of the fair value hierarchy.

Interest rate swap agreements

Interest rate swap agreements are measured by alternative pricing sources with reasonable levels of price transparency in markets that are not active. Based on the complex nature of interest rate swap agreements, the markets these instruments trade in are not as efficient and are less liquid than that of the more mature Level 1 markets. These markets do however have comparable, observable inputs in which an alternative pricing source values these assets in order to arrive at a fair market value. These characteristics classify interest rate swap agreements as Level 2.

Assets Measured at Fair Value on a Recurring Basis

The following tables set forth the Company’s financial assets and liabilities at the dates indicated that were accounted for or disclosed at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

			September 30, 2017
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	7,084	$	-	$	7,084
	Investments available-for-sale:
		U.S. government agencies		-		107,340		-		107,340
		State and municipal		-		321,127		-		321,127
		Mortgage-backed		-		316,879		-		316,879
		Corporate debt		-		-		9,522		9,522
		Trust preferred		-		-		989		989
		Marketable equity securities		-		212		-		212
	Interest rate swap agreements			-		816		-		816
Liabilities
	Interest rate swap agreements		$	-	$	(816)	$	-	$	(816)

			December 31, 2016
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	13,222	$	-	$	13,222
	Investments available-for-sale:
		U.S. government agencies		-		121,790		-		121,790
		State and municipal		-		287,684		-		287,684
		Mortgage-backed		-		312,711		-		312,711
		Corporate debt		-		-		9,134		9,134
		Trust preferred		-		-		1,012		1,012
		Marketable equity securities		-		1,223		-		1,223
	Interest rate swap agreements			-		1,010		-		1,010
Liabilities
	Interest rate swap agreements		$	-	$	(1,010)	$	-	$	(1,010)

The following table provides unrealized losses included in assets measured in the Condensed Consolidated Statements of Condition at fair value on a recurring basis for the period indicated:

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2017		$	10,146
		Principal redemption		(159)
		Total unrealized gains included in other comprehensive loss		524
	Balance at September 30, 2017		$	10,511

Assets Measured at Fair Value on a Nonrecurring Basis

The following table sets forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at the date indicated that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

		September 30, 2017
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,521	$	8,521	$	(11,806)
Other real estate owned			-		-		1,448		1,448		(136)
	Total	$	-	$	-	$	9,969	$	9,969	$	(11,942)

		December 31, 2016
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,981	$	8,981	$	(10,600)
Other real estate owned			-		-		1,911		1,911		(107)
	Total	$	-	$	-	$	10,892	$	10,892	$	(10,707)

At September 30, 2017, impaired loans totaling $22.5 million were written down to fair value of $17.7 million as a result of specific loan loss allowances of $4.8 million associated with the impaired loans which was included in the allowance for loan losses. Impaired loans totaling $24.1 million were written down to fair value of $19.3 million at December 31, 2016 as a result of specific loan loss allowances of $4.8 million associated with the impaired loans.

Loan impairment is measured using the present value of expected cash flows, the loan’s observable market price or the fair value of the collateral (less selling costs) if the loans are collateral dependent. Collateral may be real estate and/or business assets including equipment, inventory and/or accounts receivable. The value of business equipment, inventory and accounts receivable collateral is based on net book value on the business’ financial statements and, if necessary, discounted based on management’s review and analysis. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, and/or management’s expertise and knowledge of the client and client’s business. Impaired loans are reviewed and evaluated on at least a quarterly basis for additional impairment and adjusted accordingly, based on the factors identified above. Valuation techniques are consistent with those techniques applied in prior periods.

Other real estate owned (“OREO”) is adjusted to fair value upon transfer of the loans to OREO. Subsequently, OREO is carried at the lower of carrying value or fair value. The estimated fair value for other real estate owned included in Level 3 is determined by independent market based appraisals and other available market information, less cost to sell, that may be reduced further based on market expectations or an executed sales agreement. If the fair value of the collateral deteriorates subsequent to initial recognition, the Company records the OREO as a non-recurring Level 3 adjustment. Valuation techniques are consistent with those techniques applied in prior periods.

Fair Value of Financial Instruments

The Company discloses fair value information about financial instruments for which it is practicable to estimate the value, whether or not such financial instruments are recognized on the balance sheet. Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by a quoted market price, if one exists.

Quoted market prices, where available, are shown as estimates of fair market values. Because no quoted market prices are available for a significant portion of the Company's financial instruments, the fair value of such instruments has been derived based on the amount and timing of future cash flows and estimated discount rates based on observable inputs (“Level 2”) or unobservable inputs (“Level 3”).

Present value techniques used in estimating the fair value of many of the Company's financial instruments are significantly affected by the assumptions used. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate cash settlement of the instrument. Additionally, the accompanying estimates of fair values are only representative of the fair values of the individual financial assets and liabilities, and should not be considered an indication of the fair value of the Company.

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented in the following table:

					Fair Value Measurements
	September 30, 2017				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	39,853	$	39,853	$	-	$	39,853	$	-
Loans, net of allowance		4,149,194		4,200,409		-		-		4,200,409
Other assets		95,136		95,136		-		95,136		-
Financial Liabilities
Time deposits	$	690,208	$	688,271	$	-	$	688,271	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		146,569		146,569		-		146,569		-
Advances from FHLB		632,917		639,022		-		639,022		-

					Fair Value Measurements
	December 31, 2016				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	46,094	$	46,094	$	-	$	46,094	$	-
Loans, net of allowance		3,883,741		3,933,700		-		-		3,933,700
Other assets		93,328		93,328		-		93,328		-
Financial Liabilities
Time deposits	$	586,039	$	584,868	$	-	$	584,868	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		125,119		125,119		-		125,119		-
Advances from FHLB		790,000		800,756		-		800,756		-
Subordinated debentures		30,000		29,985		-		-		29,985

The following methods and assumptions were used to estimate the fair value of each category of financial instruments for which it is practicable to estimate that value:

Cash and Temporary Investments: The carrying amounts of cash and cash equivalents approximate their fair value and have been excluded from the table above.

Investments:The fair value of marketable securities is based on quoted market prices, prices quoted for similar instruments, and prices obtained from independent pricing services.

Loans:For certain categories of loans, such as mortgage, installment and commercial loans, the fair value is estimated by discounting the expected future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and similar remaining maturities. Expected cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Accrued interest receivable: The carrying value of accrued interest receivable approximates fair value due to the short-term duration and has been excluded from the table above.

Other assets:The investment in bank-owned life insurance represents the cash surrender value of the policies at September 30, 2017 and December 31, 2016 as determined by each insurance carrier.

Deposits: The fair value of demand, money market savings and regular savings deposits, which have no stated maturity, were considered equal to their carrying amount, representing the amount payable on demand. While management believes that the Bank’s core deposit relationships provide a relatively stable, low-cost funding source that has a substantial intangible value separate from the value of the deposit balances, these estimated fair values do not include the intangible value of core deposit relationships, which comprise a significant portion of the Bank’s deposit base.

Short-term borrowings:The carrying values of short-term borrowings, including overnight, securities sold under agreements to repurchase and federal funds purchased approximates the fair values due to the short maturities of those instruments.

Long-term borrowings: The fair value of the Federal Home Loan Bank of Atlanta (“FHLB”) advances and subordinated debentures was estimated by computing the discounted value of contractual cash flows payable at current interest rates for obligations with similar remaining terms. The Company's credit risk is not material to calculation of fair value because the FHLB borrowings are collateralized. The Company classifies advances from the Federal Home Loan Bank of Atlanta within Level 2 of the fair value hierarchy since the fair value of such borrowings is based on rates currently available for borrowings with similar terms and remaining maturities. Subordinated debentures are classified as Level 3 in the fair value hierarchy due to the lack of market activity of such instruments.

Accrued interest payable: The carrying value of accrued interest payable approximates fair value due to the short-term duration and has been excluded from the previous table.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

SEGMENT REPORTING

Note 15 - Segment Reporting

Currently, the Company conducts business in three operating segments—Community Banking, Insurance and Investment Management. Each of the operating segments is a strategic business unit that offers different products and services. The Insurance and Investment Management segments were businesses that were acquired in separate transactions where management of the acquired business was retained. The accounting policies of the segments are the same as those of the Company. However, the segment data reflect inter-segment transactions and balances.

The Community Banking segment is conducted through Sandy Spring Bank and involves delivering a broad range of financial products and services, including various loan and deposit products to both individuals and businesses. Parent company income is included in the Community Banking segment, as the majority of effort of these functions is related to this segment. Major revenue sources include net interest income, gains on sales of mortgage loans, trust income fees and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment and other expenses. Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively.

The Insurance segment is conducted through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts. Sandy Spring Insurance Corporation operates Sandy Spring Insurance, a general insurance agency located in Annapolis, Maryland, and Neff and Associates, located in Ocean City, Maryland. Major sources of revenue are insurance commissions from commercial lines, personal lines, and medical liability lines. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively.

The Investment Management segment is conducted through West Financial Services, Inc., a subsidiary of the Bank. This asset management and financial planning firm, located in McLean, Virginia, provides comprehensive investment management and financial planning to individuals, families, small businesses and associations including cash flow analysis, investment review, tax planning, retirement planning, insurance analysis and estate planning. West Financial currently has approximately $1.3 billion in assets under management. Major revenue sources include non-interest income earned on the above services. Expenses include personnel and support charges. Non-cash charges associated with amortization of intangibles was not significant for the three and nine months ended September 30, 2017 and 2016, respectively.

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	49,590	$	-	$	2	$	(3)	$	49,589
Interest expense		6,895		-		-		(3)		6,892
Provision for loan losses		934		-		-		-		934
Noninterest income		8,915		1,948		2,092		(209)		12,746
Noninterest expense		28,634		1,559		1,207		(209)		31,191
Income before income taxes		22,042		389		887		-		23,318
Income tax expense		7,725		158		346		-		8,229
Net income	$	14,317	$	231	$	541	$	-	$	15,089
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

	Three Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	42,856	$	1	$	2	$	(2)	$	42,857
Interest expense		5,128		-		-		(2)		5,126
Provision for loan losses		781		-		-		-		781
Non-interest income		9,071		1,783		1,909		(179)		12,584
Non-interest expense		26,822		1,510		1,173		(179)		29,326
Income before income taxes		19,196		274		738		-		20,208
Income tax expense		6,339		108		287		-		6,734
Net income	$	12,857	$	166	$	451	$	-	$	13,474
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

	Nine Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	144,123	$	1	$	6	$	(7)	$	144,123
Interest expense		18,854		-		-		(7)		18,847
Provision for loan losses		2,450		-		-		-		2,450
Noninterest income		28,545		4,923		6,109		(628)		38,949
Noninterest expense		87,035		4,238		3,395		(628)		94,040
Income before income taxes		64,329		686		2,720		-		67,735
Income tax expense		21,454		279		1,060		-		22,793
Net income	$	42,875	$	407	$	1,660	$	-	$	44,942
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

	Nine Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	126,313	$	2	$	4	$	(6)	$	126,313
Interest expense		15,734		-		-		(6)		15,728
Provision for loan losses		4,974		-		-		-		4,974
Non-interest income		29,426		4,186		5,621		(535)		38,698
Non-interest expense		86,201		3,711		3,137		(535)		92,514
Income before income taxes		48,830		477		2,488		-		51,795
Income tax expense		15,701		191		969		-		16,861
Net income	$	33,129	$	286	$	1,519	$	-	$	34,934
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

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PENDING ACQUISITION

9 Months Ended

Sep. 30, 2017

Pending Business Combination [Abstract]

Business Combination Pending [Text Block]

Note 16 – PENDING AQUISITION

On May 15, 2017, the Company and WashingtonFirst Bankshares, Inc., a Virginia corporation (“WashingtonFirst”) and parent company for WashingtonFirst Bank, entered into a definitive agreement and plan of merger that provides for WashingtonFirst to merge with and into the Company (the “Merger”). At the effective time of the Merger, the combined entity shall exist as a Maryland corporation.

Subsequent to the effective date of the Merger, WashingtonFirst Bank, a Virginia state-chartered bank and a wholly-owned subsidiary of WashingtonFirst, will merge with and into the Bank, (the “Bank Merger”). The Bank will survive the Bank Merger and continue to exist as a Maryland banking corporation.

Under the terms of the agreement, WashingtonFirst shareholders are expected to receive 0.8713 shares of Company common stock for each share owned of WashingtonFirst common stock, subject to adjustment if the Company’s average stock price during a specified measurement period prior to closing is more than $50.15 or less than $37.07 per share.The transaction, which is expected to close in the fourth quarter of 2017, has a value of approximately $498 million in the aggregate, based on the Company’s closing price of $42.72 on May 15, 2017. Upon closing, Sandy Spring shareholders will own approximately 67.8% of the combined company and WashingtonFirst’s shareholders will own approximately 32.2% of the combined company.

As of June 30, 2017, WashingtonFirst had $2.1 billion in assets with 19full-service community banking offices throughout the Washington D.C. Metropolitan region. In addition, WashingtonFirst also provides wealth management services through its subsidiary, 1st Portfolio Wealth Advisors, and mortgage banking services through the Bank’s subsidiary, WashingtonFirst Mortgage Corporation.

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SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

Significant Accounting Policies [Abstract]

Nature of Operations

Nature of Operations

Sandy Spring Bancorp (the “Company”), a Maryland corporation, is the bank holding company for Sandy Spring Bank (the “Bank”). The Bank offers a broad range of commercial banking, retail banking, mortgage and trust services throughout central Maryland, Northern Virginia and the greater Washington D.C. market through its operation of 44 community offices and six financial centers across the region. The Bank also offers a comprehensive menu of insurance and wealth management services through its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc.

Basis of Presentation

Basis of Presentation

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the financial services industry for interim financial information and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements and prevailing practices within the banking industry. The following summary of significant accounting policies of the Company is presented to assist the reader in understanding the financial and other data presented in this report. Operating results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2017. In the opinion of management, all adjustments (comprising only normal recurring accruals) necessary for a fair presentation of the results of the interim periods have been included. Certain reclassifications have been made to prior period amounts, as necessary, to conform to the current period presentation. The Company has evaluated subsequent events through the date of the issuance of its financial statements.

These statements should be read in conjunction with the financial statements and accompanying notes included in the Company’s 2016 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 3, 2017. There have been no significant changes to the Company’s accounting policies as disclosed in the 2016 Annual Report on Form 10-K.

Principles of Consolidation

Principles of Consolidation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sandy Spring Bank and its subsidiaries, Sandy Spring Insurance Corporation and West Financial Services, Inc. Consolidation has resulted in the elimination of all intercompany accounts and transactions.

Use of Estimates

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and affect the reported amounts of revenues earned and expenses incurred during the reporting period. Actual results could differ from those estimates. Estimates that could change significantly relate to the provision for loan losses and the related allowance, determination of impaired loans and the related measurement of impairment, potential impairment of goodwill or other intangible assets, valuation of investment securities and the determination of whether impaired securities are other-than-temporarily impaired, valuation of other real estate owned, prepayment rates, valuation of share-based compensation, the assessment that a liability should be recognized with respect to any matters under litigation, the calculation of current and deferred income taxes and the actuarial projections related to pension expense and the related liability.

Cash Flows

Cash Flows

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits with banks (items with stated original maturity of three months or less).

Pending Accounting Pronouncements

Pending Accounting Pronouncements

The FASB issued Update No. 2017-08, Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities, in March 2017. This guidance is intended to eliminate the current diversity in practice with respect to the amortization period for certain purchased callable debt securities held at a premium. Under current generally accepted accounting principles (GAAP), entities generally amortize the premium as an adjustment of yield over the contractual life. As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings. The amendments in this update shorten the amortization period for such callable debt securities held at a premium requiring the premium to be amortized to the earliest call date. This guidance is effective for a public business entity that is a U.S. Securities and Exchange Commission (SEC) filer for its fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in January 2017. The objective of this guidance is to simplify an entity’s required test for impairment of goodwill by eliminating Step 2 from the goodwill impairment test. In Step 2 an entity measured a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. In computing the implied fair value of goodwill, an entity had to determine the fair value at the impairment date of its assets and liabilities, including any unrecognized assets and liabilities, following a procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Under this Update, an entity should perform its annual or quarterly goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount and record an impairment charge for the excess of the carrying amount over the reporting unit’s fair value. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit and the entity must consider the income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. This guidance is effective for a public business entity that is an SEC filer for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update 2017-1, Business Combinations (Topic 805): Clarifying the Definition of a Business, in January 2017. The objective of this guidance is to clarify the definition of a business to provide entities with assistance in evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update provides a screen to determine when an integrated set of assets and activities (a “set”) is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable assets or a group of similar identifiable assets, the set is not a business. The screen thus reduces the number of transactions that need to be further evaluated. If the screen is not met, the amendments in this Update (1) require that to be considered a business, a set must include, at a minimum, an input and substantive process that together significantly contribute to the ability to create output and (2) remove the evaluation of whether a market participant could replace missing elements. The amendments provide a framework to assist entities in evaluating whether both an input and a substantive process are present. The framework includes two sets of criteria to consider that depend on whether a set has outputs. Although outputs are not required for an asset to be a business, outputs generally are a key element of a business; therefore, the Board has developed more stringent criteria for sets without outputs. This guidance is effective for public business entities for annual periods beginning after December 15, 2017, including interim periods within those periods.The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-15, Statement of Cash Flow (Topic 230): Classification of Certain Cash Receipts and Cash Payments, in August 2016. This guidance is intended to reduce the diversity in practice with respect to the presentation and classification of items in the statement of cash flows. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2017. The standard’s provisions will be applied using a retrospective transition method to each period presented. An entity may elect early adoption but must adopt all of the amendments in the same period. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-13, Current Expected Credit Losses (CECL), in June 2016. This guidance changes the impairment model for most financial assets measured at amortized cost and certain other instruments. Entities will be required to use an expected loss model, replacing the incurred loss model that is currently in use. Under the new guidance, an entity will measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current condition and reasonable and supportable forecasts. This will result in earlier recognition of loss allowances in most instances. Credit losses related to available-for-sale debt securities (regardless of whether the impairment is considered to be other-than-temporary) will be measured in a manner similar to the present, except that such losses will be recorded as allowances rather than as reductions in the amortized cost of the related securities. With respect to trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures, the guidance requires that an entity estimate its lifetime expected credit loss and record an allowance resulting in the net amount expected to be collected to be reflected as the financial asset. Entities are also required to provide significantly more disclosures, including information used to track credit quality by year of origination for most financing receivables. This guidance is effective for public business entities for the first interim or annual period beginning after December 15, 2019. The standard’s provisions will be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. Early adoption by public business entities is permitted for the first interim or annual period beginning after December 15, 2018. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), in March 2016. This guidance is intended to clarify a potential implementation issue with respect to determining whether an entity is a principal or an agent in an arrangement. The guidance provides indicators to assist in this evaluation when another party is involved in the arrangement to identify which party is the principal and which party is the agent. The effective date for this guidance is the same as the effective date of Update 2014-09, Revenue from Contracts with Customers. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2016-02, Leases, in February 2016. From the lessee’s perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for lessees. The guidance also eliminates the current real estate-specific provision and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs. With respect to lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. All entities will classify leases to determine how to recognize lease-related revenue and expense. In applying this guidance entities will also need to determine whether an arrangement contains a lease or service agreement. Disclosures are required by lessees and lessors to meet the objective of enabling users of financials statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For public entities, this guidance is effective for the first interim or annual period beginning after December 15, 2018. Early adoption is permitted. Entities are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

The FASB issued Update No. 2016-01, Financial Instruments - Overall,in January 2016. This guidance requires entities to measure equity investments at fair value and recognize changes on fair value in net income. The guidance also provides a new measurement alternative for equity investments that do not have readily determinable fair values and don’t qualify for the net asset value practical expedient. Entities will have to record changes in instrument –specific credit risk for financial liabilities measured under the fair value option in other comprehensive income, except for certain financial liabilities of consolidated collateralized financing entities. Entities will also have to reassess the realizability of a deferred tax asset related to an available-for-sale debt security in combination with their other deferred tax assets. This simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. For public entities, the guidance in this update is effective for the first interim or annual period beginning after December 15, 2017. Early adoption by public entities is permitted as of the beginning of the year of adoption for selected amendments by a cumulative effect adjustment to the balance sheet. The adoption of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

The FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), in May 2014 that provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts to provide goods or services to customers. The guidance also provides for a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The guidance is effective for the first interim or annual period beginning after December 15, 2017. The guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. The Company’s revenue is comprised of net interest income and noninterest income. The guidance does not apply to revenue associated with financial instruments, net interest income, mortgage origination and servicing activities, and gains and losses from securities. Accordingly, the majority of the Company’s revenues will not be affected. The following revenue streams were identified to be in scope of ASC 606: 1) wealth management income; 2) insurance agency commissions; 3) bank card fees; and 4) service charges on deposit accounts. The Company has completed an assessment of the revenue contracts for the revenue streams identified to be in scope as well as worked with industry participants on matters of interpretation and application. The Company’s accounting policies and revenue recognition principles will not change materially as the principles of ASC 606 are largely consistent with the current revenue recognition practices. The Company plans to expand qualitative disclosures of non-interest income at adoption date in the first quarter of 2018.

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INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2017

Amortized cost and Estimated fair values of Investments Available-for-sale

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at the dates indicated are presented in the following table:

			September 30, 2017								December 31, 2016
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. government agencies			$	109,348	$	-	$	(2,008)	$	107,340	$	124,314	$	32	$	(2,556)	$	121,790
State and municipal				312,656		8,534		(63)		321,127		281,090		7,180		(586)		287,684
Mortgage-backed				316,770		2,724		(2,615)		316,879		314,029		2,851		(4,169)		312,711
Corporate debt				9,100		422		-		9,522		9,100		34		-		9,134
Trust preferred				931		58		-		989		1,089		-		(77)		1,012
	Total debt securities			748,805		11,738		(4,686)		755,857		729,622		10,097		(7,388)		732,331
Marketable equity securities				212		-		-		212		1,223		-		-		1,223
		Total investments available-for-sale	$	749,017	$	11,738	$	(4,686)	$	756,069	$	730,845	$	10,097	$	(7,388)	$	733,554

Activity of OTTI on investment Securities Due to Credit Losses Recognized in Earnings

The following table provides the activity of OTTI on investment securities due to credit losses recognized in earnings for the period indicated:

(In thousands)		OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2016	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities through September 30, 2017	$	531

Other Equity Securities

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Federal Reserve Bank stock		$	8,382	$	8,334
Federal Home Loan Bank of Atlanta stock			31,471		37,760
	Total equity securities	$	39,853	$	46,094

Available-for-Sale Securities

Gross Unrealized Losses and Fair Value by Length of Time

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in an unrealized loss position at the dates indicated are presented in the following table:

		September 30, 2017
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	102,340	$	2,008	$	-	$	2,008
State and municipal			14		11,076		37		26		63
Mortgage-backed			34		171,833		2,012		603		2,615
	Total		60	$	285,249	$	4,057	$	629	$	4,686

		December 31, 2016
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		Securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	96,788	$	2,556	$	-	$	2,556
State and municipal			53		48,010		516		70		586
Mortgage-backed			37		212,844		3,971		198		4,169
Trust preferred			1		1,012		-		77		77
	Total		103	$	358,654	$	7,043	$	345	$	7,388

Amortized Cost and Estimated Fair Values of Investment Securities

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at the dates indicated are provided in the following table. The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		September 30, 2017				December 31, 2016
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	10,821	$	10,934	$	7,493	$	7,541
Due after one year through five years			173,513		179,386		156,953		162,233
Due after five years through ten years			244,098		245,324		282,468		282,713
Due after ten years			320,373		320,213		282,708		279,844
	Total debt securities available for sale	$	748,805	$	755,857	$	729,622	$	732,331

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LOANS AND LEASES (Tables)

9 Months Ended

Sep. 30, 2017

Loans and Leases [Abstract]

Loan Portfolio Segment Balances

The loan portfolio segment balances at the dates indicated are presented in the following table:

(In thousands)		September 30, 2017		December 31, 2016
Residential real estate:
	Residential mortgage	$	882,890	$	841,692
	Residential construction		171,814		150,229
Commercial real estate:
	Commercial owner occupied real estate		831,461		775,552
	Commercial investor real estate		1,104,669		928,113
	Commercial AD&C		295,222		308,279
Commercial business			451,667		467,286
Consumer			456,395		456,657
	Total loans	$	4,194,118	$	3,927,808

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CREDIT QUALITY ASSESSMENT (Tables)

9 Months Ended

Sep. 30, 2017

Accounts, Notes, Loans and Financing Receivable [Line Items]

Summary Information on Allowance for Loan and Lease Loss Activity

Summary information on the allowance for loan loss activity for the period indicated is provided in the following table:

			Nine Months Ended September 30,
(In thousands)			2017		2016
Balance at beginning of year			$	44,067	$	40,895
	Provision for loan losses			2,450		4,974
	Loan charge-offs			(2,044)		(2,586)
	Loan recoveries			451		659
		Net charge-offs		(1,593)		(1,927)
Balance at period end			$	44,924	$	43,942

Activity in Allowance for Loan and Lease Losses by Respective Loan Portfolio Segment

The following tables provide information on the activity in the allowance for loan losses by the respective loan portfolio segment for the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Provision (credit)			2,552		(829)		1,230		(481)		147		(241)		72		2,450
Charge-offs			(1,469)		-		-		(5)		(560)		(10)		-		(2,044)
Recoveries			73		103		93		-		101		61		20		451
	Net recoveries (charge-offs)		(1,396)		103		93		(5)		(459)		51		20		(1,593)
Balance at end of period		$	8,695	$	3,926	$	14,262	$	7,399	$	2,516	$	7,071	$	1,055	$	44,924
Total loans and leases		$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118
Allowance for loans losses to total loans ratio			1.93%		1.33%		1.29%		0.89%		0.55%		0.80%		0.61%		1.07%
Balance of loans specifically evaluated for impairment		$	8,403	$	137	$	5,589	$	5,517	$	na.	$	2,867	$	-	$	22,513
Allowance for loans specifically evaluated for impairment		$	3,841	$	-	$	589	$	340	$	na.	$	-	$	-	$	4,770
Specific allowance to specific loans ratio			45.71%		-		10.54%		6.16%		na.		-		-		21.19%
Balance of loans collectively evaluated		$	443,264	$	295,085	$	1,099,080	$	825,944	$	456,395	$	880,023	$	171,814	$	4,171,605
Allowance for loans collectively evaluated		$	4,854	$	3,926	$	13,673	$	7,059	$	2,516	$	7,071	$	1,055	$	40,154
Collective allowance to collective loans ratio			1.10%		1.33%		1.24%		0.85%		0.55%		0.80%		0.61%		0.96%

		For the Year Ended December 31,2016
				Commercial Real Estate								Residential Real Estate
								Commercial
		Commercial		Commercial		Commercial		Owner				Residential		Residential
(Dollars in thousands)		Business		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Balance at beginning of year		$	6,529	$	4,691	$	10,440	$	7,984	$	3,456	$	6,901	$	894	$	40,895
Provision (credit)			1,563		(31)		2,563		(104)		112		1,406		37		5,546
Charge-offs			(597)		(48)		(197)		-		(888)		(1,404)		-		(3,134)
Recoveries			44		40		133		5		148		358		32		760
	Net recoveries (charge-offs)		(553)		(8)		(64)		5		(740)		(1,046)		32		(2,374)
Balance at end of period		$	7,539	$	4,652	$	12,939	$	7,885	$	2,828	$	7,261	$	963	$	44,067
Total loans and leases		$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808
Allowance for loan losses to total loans ratio			1.61%		1.51%		1.39%		1.02%		0.62%		0.86%		0.64%		1.12%
Balance of loans specifically evaluated for impairment		$	7,018	$	137	$	8,107	$	5,567	$	na.	$	3,263	$	-	$	24,092
Allowance for loans specifically evaluated for impairment		$	2,604	$	-	$	1,736	$	485	$	na.	$	-	$	-	$	4,825
Specific allowance to specific loans ratio			37.10%		-		21.41%		8.71%		na.		-		-		20.03%
Balance of loans collectively evaluated		$	460,268	$	308,142	$	920,006	$	769,985	$	456,657	$	838,429	$	150,229	$	3,903,716
Allowance for loans collectively evaluated		$	4,935	$	4,652	$	11,203	$	7,400	$	2,828	$	7,261	$	963	$	39,242
Collective allowance to collective loans ratio			1.07%		1.51%		1.22%		0.96%		0.62%		0.87%		0.64%		1.01%

Summary of Impaired Loans

The following table provides summary information regarding impaired loans at the dates indicated and for the periods then ended:

(In thousands)		September 30, 2017		December 31, 2016
Impaired loans with a specific allowance		$	13,436	$	13,563
Impaired loans without a specific allowance			9,077		10,529
	Total impaired loans	$	22,513	$	24,092
Allowance for loan losses related to impaired loans		$	4,770	$	4,825
Allowance for loan losses related to loans collectively evaluated			40,154		39,242
	Total allowance for loan losses	$	44,924	$	44,067
Average impaired loans for the period		$	23,772	$	26,382
Contractual interest income due on impaired loans during the period		$	1,813	$	2,082
Interest income on impaired loans recognized on a cash basis		$	462	$	511
Interest income on impaired loans recognized on an accrual basis		$	215	$	186

Recorded Investment with Respect to Impaired loans, Associated Allowance by Applicable Portfolio Segment and Principal Balance of Impaired Loans Prior to Amounts Charged-Off

The following tables present the recorded investment with respect to impaired loans, the associated allowance by the applicable portfolio segment and the principal balance of the impaired loans prior to amounts charged-off at the dates indicated:

			September 30, 2017
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,355		-		5,177		1,223		-		10,755
		Restructured accruing		1,138		-		-		-		-		1,138
		Restructured non-accruing		8		-		-		639		-		647
	Balance		$	6,397	$	-	$	5,177	$	1,862	$	-	$	13,436
	Allowance		$	3,841	$	-	$	589	$	340	$	-	$	4,770
Impaired loans without a specific allowance
		Non-accruing	$	556	$	-	$	412	$	1,629	$	-	$	2,597
		Restructured accruing		278		-		-		505		550		1,333
		Restructured non-accruing		1,172		137		-		1,521		2,317		5,147
	Balance		$	2,006	$	137	$	412	$	3,655	$	2,867	$	9,077
Total impaired loans
		Accruing	$	896	$	-	$	-	$	-	$	-	$	896
		Non-accruing		4,911		-		5,589		2,852		-		13,352
		Restructured accruing		1,416		-		-		505		550		2,471
		Restructured non-accruing		1,180		137		-		2,160		2,317		5,794
	Balance		$	8,403	$	137	$	5,589	$	5,517	$	2,867	$	22,513
Unpaid principal balance in total impaired loans			$	11,331	$	4,398	$	10,173	$	7,707	$	3,699	$	37,308

	September 30, 2017
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	7,853	$	137	$	7,150	$	5,650	$	2,982	$	23,772
Contractual interest income due on impaired loans during the period	$	668	$	245	$	485	$	355	$	60
Interest income on impaired loans recognized on a cash basis	$	182	$	-	$	17	$	138	$	125
Interest income on impaired loans recognized on an accrual basis	$	167	$	-	$	-	$	19	$	29

			December 31, 2016
					Commercial Real Estate								Total Recorded
									Commercial		All		Investment in
					Commercial		Commercial		Owner		Other		Impaired
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Impaired loans with a specific allowance
		Non-accruing	$	2,807	$	-	$	7,029	$	1,884	$	-	$	11,720
		Restructured accruing		1,140		-		-		-		-		1,140
		Restructured non-accruing		64		-		-		639		-		703
	Balance		$	4,011	$	-	$	7,029	$	2,523	$	-	$	13,563
	Allowance		$	2,604	$	-	$	1,736	$	485	$	-	$	4,825
Impaired loans without a specific allowance
		Non-accruing	$	1,562	$	-	$	562	$	1,083	$	-	$	3,207
		Restructured accruing		45		-		-		744		560		1,349
		Restructured non-accruing		1,400		137		516		1,217		2,703		5,973
	Balance		$	3,007	$	137	$	1,078	$	3,044	$	3,263	$	10,529
Total impaired loans
		Non-accruing	$	4,369	$	-	$	7,591	$	2,967	$	-	$	14,927
		Restructured accruing		1,185		-		-		744		560		2,489
		Restructured non-accruing		1,464		137		516		1,856		2,703		6,676
	Balance		$	7,018	$	137	$	8,107	$	5,567	$	3,263	$	24,092
Unpaid principal balance in total impaired loans			$	10,082	$	4,398	$	12,805	$	7,760	$	3,971	$	39,016

	December 31, 2016
			Commercial Real Estate								Total Recorded
							Commercial		All		Investment in
			Commercial		Commercial		Owner		Other		Impaired
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Loans
Average impaired loans for the period	$	5,646	$	150	$	9,480	$	6,561	$	4,545	$	26,382
Contractual interest income due on impaired loans during the period	$	570	$	294	$	718	$	310	$	190
Interest income on impaired loans recognized on a cash basis	$	153	$	-	$	43	$	266	$	49
Interest income on impaired loans recognized on an accrual basis	$	107	$	-	$	-	$	37	$	42

Credit Quality of Loan Portfolio by Segment

The following tables provide information on the credit quality of the loan portfolio by segment at the dates indicated:

		September 30, 2017
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	6,091	$	137	$	5,589	$	5,012	$	3,152	$	7,345	$	182	$	27,508
	Loans 90 days past due		-		-		-		-		1		225		-		226
	Restructured loans		1,416		-		-		505		-		550		-		2,471
Total non-performing loans			7,507		137		5,589		5,517		3,153		8,120		182		30,205
	Other real estate owned		39		365		-		-		-		1,044		-		1,448
Total non-performing assets		$	7,546	$	502	$	5,589	$	5,517	$	3,153	$	9,164	$	182	$	31,653

		December 31, 2016
				Commercial Real Estate								Residential Real Estate
								Commercial
				Commercial		Commercial		Owner				Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
	Non-accrual loans	$	5,833	$	137	$	8,107	$	4,823	$	2,859	$	7,257	$	195	$	29,211
	Loans 90 days past due		-		-		-		-		-		232		-		232
	Restructured loans		1,185		-		-		744		-		560		-		2,489
Total non-performing loans			7,018		137		8,107		5,567		2,859		8,049		195		31,932
	Other real estate owned		39		365		395		637		-		475		-		1,911
Total non-performing assets		$	7,057	$	502	$	8,502	$	6,204	$	2,859	$	8,524	$	195	$	33,843

			September 30, 2017
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	1,442	$	-	$	-	$	1,137	$	820	$	4,627	$	-	$	8,026
	61-90 days			776		-		-		-		656		4,172		-		5,604
	> 90 days			-		-		-		-		1		225		-		226
		Total past due		2,218		-		-		1,137		1,477		9,024		-		13,856
	Non-accrual loans			6,091		137		5,589		5,012		3,152		7,345		182		27,508
	Current loans			443,358		295,085		1,099,080		825,312		451,766		866,521		171,632		4,152,754
		Total loans	$	451,667	$	295,222	$	1,104,669	$	831,461	$	456,395	$	882,890	$	171,814	$	4,194,118

			December 31, 2016
					Commercial Real Estate								Residential Real Estate
									Commercial
					Commercial		Commercial		Owner				Residential		Residential
(In thousands)			Commercial		AD&C		Investor R/E		Occupied R/E		Consumer		Mortgage		Construction		Total
Past due loans
	31-60 days		$	663	$	896	$	850	$	1,479	$	808	$	3,969	$	-	$	8,665
	61-90 days			672		-		1,206		744		1,104		2,139		-		5,865
	> 90 days			-		-		-		-		-		232		-		232
		Total past due		1,335		896		2,056		2,223		1,912		6,340		-		14,762
	Non-accrual loans			5,833		137		8,107		4,823		2,859		7,257		195		29,211
	Current loans			460,118		307,246		917,950		768,506		451,886		828,095		150,034		3,883,835
		Total loans	$	467,286	$	308,279	$	928,113	$	775,552	$	456,657	$	841,692	$	150,229	$	3,927,808

Restructured Loans for Specific Segments of Loan Portfolio

The following table provides the amounts of the restructured loans at the date of restructuring for specific segments of the loan portfolio during the period indicated:

		For the Nine Months Ended September 30, 2017
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	492	$	-	$	-	$	-	$	-	$	492
	Restructured non-accruing		387		-		-		396		-		783
Balance		$	879	$	-	$	-	$	396	$	-	$	1,275
Specific allowance		$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted		$	-	$	-	$	-	$	-	$	-	$	-

		For the Year Ended December 31, 2016
				Commercial Real Estate
								Commercial		All
				Commercial		Commercial		Owner		Other
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Loans		Total
Troubled debt restructurings
	Restructured accruing	$	42	$	-	$	-	$	508	$	-	$	550
	Restructured non-accruing		-		-		-		-		-		-
Balance		$	42	$	-	$	-	$	508	$	-	$	550
Specific allowance		$	39	$	-	$	-	$	-	$	-	$	39
Restructured and subsequently defaulted		$	-	$	-	$	479	$	-	$	-	$	479

Commercial

Accounts, Notes, Loans and Financing Receivable [Line Items]

Credit Risk Rating Indicators

The following tables provide information by credit risk rating indicators for each segment of the commercial loan portfolio at the dates indicated:

		September 30, 2017
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	435,183	$	295,085	$	1,096,591	$	817,605	$	2,644,464
	Special Mention		1,929		-		2,342		5,652		9,923
	Substandard		14,555		137		5,736		8,204		28,632
	Doubtful		-		-		-		-		-
Total		$	451,667	$	295,222	$	1,104,669	$	831,461	$	2,683,019

		December 31, 2016
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
	Pass	$	442,725	$	308,142	$	917,255	$	758,651	$	2,426,773
	Special Mention		10,010		-		2,395		9,255		21,660
	Substandard		14,551		137		8,463		7,646		30,797
	Doubtful		-		-		-		-		-
Total		$	467,286	$	308,279	$	928,113	$	775,552	$	2,479,230

Non Commercial Loan

Accounts, Notes, Loans and Financing Receivable [Line Items]

Credit Risk Rating Indicators

Homogeneous loan pools do not have individual loans subjected to internal risk ratings therefore, the credit indicator applied to these pools is based on their delinquency status. The following tables provide information by credit risk rating indicators for those remaining segments of the loan portfolio at the dates indicated:

			September 30, 2017
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,242	$	874,770	$	171,632	$	1,499,644
	Non-performing:
		90 days past due		1		225		-		226
		Non-accruing		3,152		7,345		182		10,679
		Restructured loans		-		550		-		550
Total			$	456,395	$	882,890	$	171,814	$	1,511,099

			December 31, 2016
					Residential Real Estate
					Residential		Residential
(In thousands)			Consumer		Mortgage		Construction		Total
	Performing		$	453,798	$	833,643	$	150,034	$	1,437,475
	Non-performing:
		90 days past due		-		232		-		232
		Non-accruing		2,859		7,257		195		10,311
		Restructured loans		-		560		-		560
Total			$	456,657	$	841,692	$	150,229	$	1,448,578

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Gross Carrying Amounts and Accumulated Amortization of Intangible Assets and Goodwill

The gross carrying amounts and accumulated amortization of intangible assets and goodwill are presented at the dates indicated in the following table:

		September 30, 2017						Weighted		December 31, 2016						Weighted
		Gross				Net		Average		Gross				Net		Average
		Carrying		Accumulated		Carrying		Remaining		Carrying		Accumulated		Carrying		Remaining
(Dollars in thousands)		Amount		Amortization		Amount		Life		Amount		Amortization		Amount		Life
Amortizing intangible assets:
Other identifiable intangibles		$	786	$	(182)	$	604		13.2 years	$	786	$	(106)	$	680		13.8 years
	Total amortizing intangible assets	$	786	$	(182)	$	604			$	786	$	(106)	$	680
Goodwill		$	85,768			$	85,768			$	85,768			$	85,768

Estimated Future Amortization Expense for Amortizing Intangibles

The following table presents the estimated future amortization expense for amortizing intangible assets within the years ending December 31:

(In thousands)		Amount
2017		$	24
2018			95
2019			83
2020			66
Thereafter			336
	Total amortizing intangible assets	$	604

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2017

Deposits [Abstract]

Composition of Deposits

The following table presents the composition of deposits at the dates indicated:

(In thousands)				September 30, 2017		December 31, 2016
Noninterest-bearing deposits				$	1,312,710	$	1,138,139
Interest-bearing deposits:
	Demand				608,527		615,058
	Money market savings				1,023,153		927,837
	Regular savings				321,194		310,471
	Time deposits of less than $100,000				292,395		258,621
	Time deposits of $100,000 or more				397,813		327,418
		Total interest-bearing deposits			2,643,082		2,439,405
			Total deposits	$	3,955,792	$	3,577,544

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SHARE BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2017

Share Based Compensation [Abstract]

Fair Values of all Options Granted Estimated Using Binomial Option-Pricing Model with Weighted-average Assumptions

The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing model. The weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2017		2016
Dividend yield	2.45	%	3.48	%
Weighted average expected volatility	40.27	%	41.54	%
Weighted average risk-free interest rate	2.14	%	1.42	%
Weighted average expected lives (in years)	5.67		5.71
Weighted average grant-date fair value	$13.42		$7.75

Summary of Share Option Activity

A summary of share option activity for the period indicated is reflected in the following table:

					Weighted
		Number	Weighted		Average	Aggregate
		of	Average		Contractual	Intrinsic
		Common	Exercise		Remaining	Value
		Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2017		108,503	$	22.46		$	1,902
Granted		12,941	$	42.48
Exercised		(28,736)	$	19.11		$	638
Forfeited or expired		(3,577)	$	30.07
Balance at September 30, 2017		89,131	$	24.16	3.8	$	1,374
Exercisable at September 30, 2017		58,646	$	22.46	2.8	$	1,113
Weighted average fair value of options
	granted during the year		$	13.42

Summary of Activity for Company's Non-Vested Options

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2017	212,646	$	25.19
Granted	55,211	$	42.48
Vested	(70,382)	$	23.82
Forfeited	(7,800)	$	27.21
Restricted stock at September 30, 2017	189,675	$	30.67

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PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS (Tables)

9 Months Ended

Sep. 30, 2017

Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]

Net Periodic Benefit Cost

The components of net periodic benefit cost for the periods indicated are presented in the following table:

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)		2017		2016		2017		2016
Interest cost on projected benefit obligation		$	410	$	416	$	1,230	$	1,242
Expected return on plan assets			(497)		(404)		(1,489)		(1,151)
Recognized net actuarial loss			296		295		886		870
	Net periodic benefit cost	$	209	$	307	$	627	$	961

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NET INCOME PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Calculation of Net Income Per Common Share

The calculation of net income per common share for the periods indicated is presented in the following table:

			Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars and amounts in thousands, except per share data)			2017		2016		2017		2016
Net income			$	15,089	$	13,474	$	44,942	$	34,934
Basic:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
		Basic net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Diluted:
Basic weighted average EPS shares				24,200		24,096		24,171		24,124
Dilutive common stock equivalents				23		27		30		27
	Dilutive EPS shares			24,223		24,123		24,201		24,151
		Diluted net income per share	$	0.62	$	0.56	$	1.86	$	1.45
Anti-dilutive shares				5		3		3		5

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OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2017

Other Comprehensive Income Loss [Abstract]

Net Accumulated Other Comprehensive Income (Loss)

The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2017		$	1,642	$	(8,256)	$	(6,614)
	Other comprehensive income before reclassification, net of tax		3,382		-		3,382
	Reclassifications from accumulated other comprehensive income, net of tax		(767)		522		(245)
Current period change in other comprehensive income, net of tax			2,615		522		3,137
Balance at September 30, 2017		$	4,257	$	(7,734)	$	(3,477)

		Unrealized Gains
		(Losses) on
		Investments		Defined Benefit
(In thousands)		Available-for-Sale		Pension Plan		Total
Balance at January 1, 2016		$	6,566	$	(7,863)	$	(1,297)
	Other comprehensive income before reclassification, net of tax		6,385		-		6,385
	Reclassifications from accumulated other comprehensive income, net of tax		(1,154)		531		(623)
Current period change in other comprehensive income, net of tax			5,231		531		5,762
Balance at September 30, 2016		$	11,797	$	(7,332)	$	4,465

Schedule of Amounts Recognized in Other Comprehensive Income (Loss)

The following table provides the information on the reclassification adjustments out of accumulated other comprehensive income for the periods indicated:

				Nine Months Ended September 30,
(In thousands)				2017		2016
Unrealized gains/(losses) on investments available-for-sale
	Affected line item in the Statements of Income:
	Investment securities gains			$	1,275		$	1,919
	Income before taxes				1,275			1,919
	Tax expense				(508)			(765)
	Net income			$	767		$	1,154
Amortization of defined benefit pension plan items
	Affected line item in the Statements of Income:
		Recognized actuarial loss(1)		$	(886)		$	(870)
			Income before taxes		(886)			(870)
			Tax benefit		364			339
			Net loss	$	(522)		$	(531)
(1) This amount is included in the computation of net periodic benefit cost, see Note 9

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Financial assets and Liabilities at Dates Indicated that were Accounted for at Fair Value

The following tables set forth the Company’s financial assets and liabilities at the dates indicated that were accounted for or disclosed at fair value. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

			September 30, 2017
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	7,084	$	-	$	7,084
	Investments available-for-sale:
		U.S. government agencies		-		107,340		-		107,340
		State and municipal		-		321,127		-		321,127
		Mortgage-backed		-		316,879		-		316,879
		Corporate debt		-		-		9,522		9,522
		Trust preferred		-		-		989		989
		Marketable equity securities		-		212		-		212
	Interest rate swap agreements			-		816		-		816
Liabilities
	Interest rate swap agreements		$	-	$	(816)	$	-	$	(816)

			December 31, 2016
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
(In thousands)			(Level 1)		(Level 2)		(Level 3)		Total
Assets
	Residential mortgage loans held for sale		$	-	$	13,222	$	-	$	13,222
	Investments available-for-sale:
		U.S. government agencies		-		121,790		-		121,790
		State and municipal		-		287,684		-		287,684
		Mortgage-backed		-		312,711		-		312,711
		Corporate debt		-		-		9,134		9,134
		Trust preferred		-		-		1,012		1,012
		Marketable equity securities		-		1,223		-		1,223
	Interest rate swap agreements			-		1,010		-		1,010
Liabilities
	Interest rate swap agreements		$	-	$	(1,010)	$	-	$	(1,010)

Unrealized Losses Included in Assets Measured in Condensed Consolidated Statements of Condition at Fair Value on a Recurring Basis

The following table provides unrealized losses included in assets measured in the Condensed Consolidated Statements of Condition at fair value on a recurring basis for the period indicated:

			Significant
			Unobservable
			Inputs
(In thousands)			(Level 3)
Investments available-for-sale:
	Balance at January 1, 2017		$	10,146
		Principal redemption		(159)
		Total unrealized gains included in other comprehensive loss		524
	Balance at September 30, 2017		$	10,511

Assets Measured at Fair Value on Nonrecurring Basis

The following table sets forth the Company’s financial assets subject to fair value adjustments (impairment) on a nonrecurring basis at the date indicated that are valued at the lower of cost or market. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:

		September 30, 2017
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,521	$	8,521	$	(11,806)
Other real estate owned			-		-		1,448		1,448		(136)
	Total	$	-	$	-	$	9,969	$	9,969	$	(11,942)

		December 31, 2016
		Quoted Prices in		Significant
		Active Markets		Other		Significant
		for Identical		Observable		Unobservable
(In thousands)		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Total		Total Losses
Impaired loans		$	-	$	-	$	8,981	$	8,981	$	(10,600)
Other real estate owned			-		-		1,911		1,911		(107)
	Total	$	-	$	-	$	10,892	$	10,892	$	(10,707)

Carrying Amounts And Fair Values of Company's Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented in the following table:

					Fair Value Measurements
	September 30, 2017				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	39,853	$	39,853	$	-	$	39,853	$	-
Loans, net of allowance		4,149,194		4,200,409		-		-		4,200,409
Other assets		95,136		95,136		-		95,136		-
Financial Liabilities
Time deposits	$	690,208	$	688,271	$	-	$	688,271	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		146,569		146,569		-		146,569		-
Advances from FHLB		632,917		639,022		-		639,022		-

					Fair Value Measurements
	December 31, 2016				Quoted Prices in
			Estimated		Active Markets for		Significant Other		Significant
	Carrying		Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(In thousands)	Amount		Value		(Level 1)		(Level 2)		(Level 3)
Financial Assets
Other equity securities	$	46,094	$	46,094	$	-	$	46,094	$	-
Loans, net of allowance		3,883,741		3,933,700		-		-		3,933,700
Other assets		93,328		93,328		-		93,328		-
Financial Liabilities
Time deposits	$	586,039	$	584,868	$	-	$	584,868	$	-
Securities sold under retail repurchase agreements and
federal funds purchased		125,119		125,119		-		125,119		-
Advances from FHLB		790,000		800,756		-		800,756		-
Subordinated debentures		30,000		29,985		-		-		29,985

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Operating Segments and Reconciliation of Information to Condensed Consolidated Financial Statements

Information for the operating segments and reconciliation of the information to the condensed consolidated financial statements for the periods indicated is presented in the following tables:

	Three Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	49,590	$	-	$	2	$	(3)	$	49,589
Interest expense		6,895		-		-		(3)		6,892
Provision for loan losses		934		-		-		-		934
Noninterest income		8,915		1,948		2,092		(209)		12,746
Noninterest expense		28,634		1,559		1,207		(209)		31,191
Income before income taxes		22,042		389		887		-		23,318
Income tax expense		7,725		158		346		-		8,229
Net income	$	14,317	$	231	$	541	$	-	$	15,089
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

	Three Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	42,856	$	1	$	2	$	(2)	$	42,857
Interest expense		5,128		-		-		(2)		5,126
Provision for loan losses		781		-		-		-		781
Non-interest income		9,071		1,783		1,909		(179)		12,584
Non-interest expense		26,822		1,510		1,173		(179)		29,326
Income before income taxes		19,196		274		738		-		20,208
Income tax expense		6,339		108		287		-		6,734
Net income	$	12,857	$	166	$	451	$	-	$	13,474
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

	Nine Months Ended September 30, 2017
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	144,123	$	1	$	6	$	(7)	$	144,123
Interest expense		18,854		-		-		(7)		18,847
Provision for loan losses		2,450		-		-		-		2,450
Noninterest income		28,545		4,923		6,109		(628)		38,949
Noninterest expense		87,035		4,238		3,395		(628)		94,040
Income before income taxes		64,329		686		2,720		-		67,735
Income tax expense		21,454		279		1,060		-		22,793
Net income	$	42,875	$	407	$	1,660	$	-	$	44,942
Assets	$	5,333,539	$	7,499	$	11,807	$	(18,057)	$	5,334,788

	Nine Months Ended September 30, 2016
	Community				Investment		Inter-Segment
(In thousands)	Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	126,313	$	2	$	4	$	(6)	$	126,313
Interest expense		15,734		-		-		(6)		15,728
Provision for loan losses		4,974		-		-		-		4,974
Non-interest income		29,426		4,186		5,621		(535)		38,698
Non-interest expense		86,201		3,711		3,137		(535)		92,514
Income before income taxes		48,830		477		2,488		-		51,795
Income tax expense		15,701		191		969		-		16,861
Net income	$	33,129	$	286	$	1,519	$	-	$	34,934
Assets	$	4,811,948	$	7,986	$	12,064	$	(21,387)	$	4,810,611

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SIGNIFICANT ACCOUNTING POLICIES (Narrative) (Details)	Sep. 30, 2017 Number_Of_Offices Number_Of_Centres
Property, Plant and Equipment [Line Items]
Number Of Community Offices | Number_Of_Offices	44
Number of Financial Centres | Number_Of_Centres	6

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INVESTMENTS (Additional Information) (Detail) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Investment [Line Items]
Investments available-for-sale book value	$ 448.2	$ 453.0
Non Credit Portion Of Other Than Temporary Impairments Recognized In Other Comprehensive Income	0.0
Banks And Financial Institutions [Member]
Investment [Line Items]
Trust Preferred Securities Fair Value	1.0
Trust Preferred Securities	0.9
Government National Mortgage Association Certificates And Obligations Federal National Mortgage Association Certificates And Obligations And Federal Home Loan Mortgage Corporation Certificates And Obligations [Member] | Collateralized Mortgage Obligations [Member]
Investment [Line Items]
Financial Instruments, Owned, Mortgages, Mortgage-backed and Asset-backed Securities, at Fair Value	108.5
Government National Mortgage Association Certificates And Obligations Federal National Mortgage Association Certificates And Obligations And Federal Home Loan Mortgage Corporation Certificates And Obligations [Member] | Mortgage Backed Securities [Member]
Investment [Line Items]
Financial Instruments, Owned, Mortgages, Mortgage-backed and Asset-backed Securities, at Fair Value	$ 208.4

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INVESTMENTS (Amortized Cost and Estimated Fair Values of Investments Available-for-sale) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	$ 749,017	$ 730,845
Gross Unrealized Gains	11,738	10,097
Gross Unrealized Losses	(4,686)	(7,388)
Estimated Fair Value	756,069	733,554
Marketable Equity Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	212	1,223
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Estimated Fair Value	212	1,223
Debt Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	748,805	729,622
Gross Unrealized Gains	11,738	10,097
Gross Unrealized Losses	(4,686)	(7,388)
Estimated Fair Value	755,857	732,331
Debt Securities | U.S. Government Agencies
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	109,348	124,314
Gross Unrealized Gains	0	32
Gross Unrealized Losses	(2,008)	(2,556)
Estimated Fair Value	107,340	121,790
Debt Securities | State and municipal
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	312,656	281,090
Gross Unrealized Gains	8,534	7,180
Gross Unrealized Losses	(63)	(586)
Estimated Fair Value	321,127	287,684
Debt Securities | Mortgage-Backed
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	316,770	314,029
Gross Unrealized Gains	2,724	2,851
Gross Unrealized Losses	(2,615)	(4,169)
Estimated Fair Value	316,879	312,711
Debt Securities | Corporate Debt
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	9,100	9,100
Gross Unrealized Gains	422	34
Gross Unrealized Losses	0	0
Estimated Fair Value	9,522	9,134
Debt Securities | Trust Preferred
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	931	1,089
Gross Unrealized Gains	58	0
Gross Unrealized Losses	0	(77)
Estimated Fair Value	$ 989	$ 1,012

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INVESTMENTS (Activity of OTTI on Investment Securities Due to Credit Losses Recognized in Earnings) (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Investments [Abstract]
Cumulative credit losses on investment securities, through	$ 531
Additions for credit losses not previously recognized	0
Cumulative credit losses on investment securities, through	$ 531

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INVESTMENTS (Gross Unrealized Losses and Fair Value by Length of Time of Available-For-Sale Securities) (Detail) $ in Thousands	Sep. 30, 2017 USD ($) Securities	Dec. 31, 2016 USD ($) Securities
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	60	103
Fair Value	$ 285,249	$ 358,654
Less than 12 months	4,057	7,043
More than 12 months	629	345
Total Unrealized Losses	$ 4,686	$ 7,388
Us Government Agencies Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	12	12
Fair Value	$ 102,340	$ 96,788
Less than 12 months	2,008	2,556
More than 12 months	0	0
Total Unrealized Losses	$ 2,008	$ 2,556
U S States and Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	14	53
Fair Value	$ 11,076	$ 48,010
Less than 12 months	37	516
More than 12 months	26	70
Total Unrealized Losses	$ 63	$ 586
Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	34	37
Fair Value	$ 171,833	$ 212,844
Less than 12 months	2,012	3,971
More than 12 months	603	198
Total Unrealized Losses	$ 2,615	$ 4,169
Trust Preferred Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Number of Securities | Securities	0	1
Fair Value	$ 0	$ 1,012
Less than 12 months	0	0
More than 12 months	0	77
Total Unrealized Losses	$ 0	$ 77

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INVESTMENTS (Amortized Cost and Estimated Fair Values of investment securities Available-For-Sale by Contractual Maturity) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Amortized Cost
Due in one year or less	$ 10,821	$ 7,493
Due after one year through five years	173,513	156,953
Due after five years through ten years	244,098	282,468
Due after ten years	320,373	282,708
Total debt securities available for sale	748,805	729,622
Estimated Fair Value
Due in one year or less	10,934	7,541
Due after one year through five years	179,386	162,233
Due after five years through ten years	245,324	282,713
Due after ten years	320,213	279,844
Estimated Fair Value	$ 755,857	$ 732,331

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INVESTMENTS (Other Equity Securities) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Other Securities Owned [Line Items]
Federal Reserve Bank stock	$ 8,382	$ 8,334
Total equity securities	39,853	46,094
Atlantic Central Bankers Bank Stock
Other Securities Owned [Line Items]
Federal Home Loan Bank of Atlanta stock	$ 31,471	$ 37,760

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LOANS AND LEASES (Additional Information) (Detail) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Loans and Leases [Abstract]
Unearned income and deferred fees	$ 2.1	$ 1.4

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LOANS AND LEASES (Loan Portfolio Segment Balances) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 4,194,118	$ 3,927,808
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	451,667	467,286
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	456,395	456,657
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	831,461	775,552
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,104,669	928,113
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	295,222	308,279
Residential Portfolio Segment [Member] | Residential Mortgage
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	882,890	841,692
Residential Portfolio Segment [Member] | Residential Construction
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 171,814	$ 150,229

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CREDIT QUALITY ASSESSMENT (Additional Information) (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Other real estate owned	$ 1,448	$ 1,911
Additional Financing Receivable Troubled Debt Restructurings Restructured	1,300	600
Mortgage Loans in Process of Foreclosure, Amount	500
Restructured Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable Troubled Debt Restructurings Specific Allowance	$ 0	$ 0

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CREDIT QUALITY ASSESSMENT (Summary Information on Allowance for Loan and Lease Loss Activity) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Credit Quality Assessment [Abstract]
Balance at beginning of year			$ 44,067	$ 40,895	$ 40,895
Provision for loan losses	$ 934	$ 781	2,450	4,974	5,546
Loan and lease charge-offs			(2,044)	(2,586)	(3,134)
Loan and lease recoveries			451	659	760
Net charge-offs			(1,593)	(1,927)	(2,374)
Balance at period end	$ 44,924	$ 43,942	$ 44,924	$ 43,942	$ 44,067

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CREDIT QUALITY ASSESSMENT (Activity in Allowance for Loan and Lease Losses by Respective Loan Portfolio Segment) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 44,067	$ 40,895	$ 40,895
Provision (credit)	$ 934	$ 781	2,450	4,974	5,546
Charge-offs			(2,044)	(2,586)	(3,134)
Recoveries			451	659	760
Net charge-offs			(1,593)	(1,927)	(2,374)
Balance at period end	44,924	$ 43,942	44,924	43,942	44,067
Total loans and leases	$ 4,194,118		$ 4,194,118		$ 3,927,808
Allowance for loans and leases to total loans and leases ratio	1.07%		1.07%		1.12%
Balance of loans specifically evaluated for impairment	$ 22,513		$ 22,513		$ 24,092
Allowance for loans specifically evaluated for impairment	$ 4,770		$ 4,770		$ 4,825
Specific allowance to specific loans ratio	21.19%		21.19%		20.03%
Balance of loans collectively evaluated	$ 4,171,605		$ 4,171,605		$ 3,903,716
Allowance for loans collectively evaluated	40,154		$ 40,154		$ 39,242
Collective allowance to collective loans ratio			0.96%		1.01%
Commercial
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 7,539	6,529	$ 6,529
Provision (credit)			2,552		1,563
Charge-offs			(1,469)		(597)
Recoveries			73		44
Net charge-offs			(1,396)		(553)
Balance at period end	8,695		8,695		7,539
Total loans and leases	$ 451,667		$ 451,667		$ 467,286
Allowance for loans and leases to total loans and leases ratio	1.93%		1.93%		1.61%
Balance of loans specifically evaluated for impairment	$ 8,403		$ 8,403		$ 7,018
Allowance for loans specifically evaluated for impairment	$ 3,841		$ 3,841		$ 2,604
Specific allowance to specific loans ratio	45.71%		45.71%		37.10%
Balance of loans collectively evaluated	$ 443,264		$ 443,264		$ 460,268
Allowance for loans collectively evaluated	4,854		$ 4,854		$ 4,935
Collective allowance to collective loans ratio			1.10%		1.07%
Consumer
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 2,828	3,456	$ 3,456
Provision (credit)			147		112
Charge-offs			(560)		(888)
Recoveries			101		148
Net charge-offs			(459)		(740)
Balance at period end	2,516		2,516		2,828
Total loans and leases	$ 456,395		$ 456,395		$ 456,657
Allowance for loans and leases to total loans and leases ratio	0.55%		0.55%		0.62%
Balance of loans collectively evaluated	$ 456,395		$ 456,395		$ 456,657
Allowance for loans collectively evaluated	2,516		$ 2,516		$ 2,828
Collective allowance to collective loans ratio			0.55%		0.62%
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 4,652	4,691	$ 4,691
Provision (credit)			(829)		(31)
Charge-offs			0		(48)
Recoveries			103		40
Net charge-offs			103		(8)
Balance at period end	3,926		3,926		4,652
Total loans and leases	$ 295,222		$ 295,222		$ 308,279
Allowance for loans and leases to total loans and leases ratio	1.33%		1.33%		1.51%
Balance of loans specifically evaluated for impairment	$ 137		$ 137		$ 137
Allowance for loans specifically evaluated for impairment	$ 0		$ 0		$ 0
Specific allowance to specific loans ratio	0.00%		0.00%		0.00%
Balance of loans collectively evaluated	$ 295,085		$ 295,085		$ 308,142
Allowance for loans collectively evaluated	3,926		$ 3,926		$ 4,652
Collective allowance to collective loans ratio			1.33%		1.51%
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 12,939	10,440	$ 10,440
Provision (credit)			1,230		2,563
Charge-offs			0		(197)
Recoveries			93		133
Net charge-offs			93		(64)
Balance at period end	14,262		14,262		12,939
Total loans and leases	$ 1,104,669		$ 1,104,669		$ 928,113
Allowance for loans and leases to total loans and leases ratio	1.29%		1.29%		1.39%
Balance of loans specifically evaluated for impairment	$ 5,589		$ 5,589		$ 8,107
Allowance for loans specifically evaluated for impairment	$ 589		$ 589		$ 1,736
Specific allowance to specific loans ratio	10.54%		10.54%		21.41%
Balance of loans collectively evaluated	$ 1,099,080		$ 1,099,080		$ 920,006
Allowance for loans collectively evaluated	13,673		$ 13,673		$ 11,203
Collective allowance to collective loans ratio			1.24%		1.22%
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 7,885	7,984	$ 7,984
Provision (credit)			(481)		(104)
Charge-offs			(5)		0
Recoveries			0		5
Net charge-offs			(5)		5
Balance at period end	7,399		7,399		7,885
Total loans and leases	$ 831,461		$ 831,461		$ 775,552
Allowance for loans and leases to total loans and leases ratio	0.89%		0.89%		1.02%
Balance of loans specifically evaluated for impairment	$ 5,517		$ 5,517		$ 5,567
Allowance for loans specifically evaluated for impairment	$ 340		$ 340		$ 485
Specific allowance to specific loans ratio	6.16%		6.16%		8.71%
Balance of loans collectively evaluated	$ 825,944		$ 825,944		$ 769,985
Allowance for loans collectively evaluated	7,059		$ 7,059		$ 7,400
Collective allowance to collective loans ratio			0.85%		0.96%
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 7,261	6,901	$ 6,901
Provision (credit)			(241)		1,406
Charge-offs			(10)		(1,404)
Recoveries			61		358
Net charge-offs			51		(1,046)
Balance at period end	7,071		7,071		7,261
Total loans and leases	$ 882,890		$ 882,890		$ 841,692
Allowance for loans and leases to total loans and leases ratio	0.80%		0.80%		0.86%
Balance of loans specifically evaluated for impairment	$ 2,867		$ 2,867		$ 3,263
Allowance for loans specifically evaluated for impairment	0		0		0
Balance of loans collectively evaluated	880,023		880,023		838,429
Allowance for loans collectively evaluated	7,071		$ 7,071		$ 7,261
Collective allowance to collective loans ratio			0.80%		0.87%
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Allowance For Credit Losses [Line Items]
Balance at beginning of year			$ 963	$ 894	$ 894
Provision (credit)			72		37
Charge-offs			0		0
Recoveries			20		32
Net charge-offs			20		32
Balance at period end	1,055		1,055		963
Total loans and leases	$ 171,814		$ 171,814		$ 150,229
Allowance for loans and leases to total loans and leases ratio	0.61%		0.61%		0.64%
Balance of loans specifically evaluated for impairment	$ 0		$ 0		$ 0
Allowance for loans specifically evaluated for impairment	0		0		0
Balance of loans collectively evaluated	171,814		171,814		150,229
Allowance for loans collectively evaluated	$ 1,055		$ 1,055		$ 963
Collective allowance to collective loans ratio			0.61%		0.64%

XML

CREDIT QUALITY ASSESSMENT (Summary of Impaired Loans) (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Credit Quality Assessment [Abstract]
Impaired loans with a specific allowance	$ 13,436	$ 13,563
Impaired loans without a specific allowance	9,077	10,529
Total impaired loans	22,513	24,092
Allowance for loan and lease losses related to impaired loans	4,770	4,825
Allowance for loan and lease losses related to loans collectively evaluated	40,154	39,242
Total allowance for loan and lease losses	44,924	44,067
Average impaired loans for the period	23,772	26,382
Contractual interest income due on impaired loans during the period	1,813	2,082
Interest income on impaired loans recognized on a cash basis	462	511
Interest income on impaired loans recognized on an accrual basis	$ 215	$ 186

XML

CREDIT QUALITY ASSESSMENT (Recorded Investment with Respect to Impaired loans, Associated Allowance by Applicable Portfolio Segment and Principal Balance of Impaired Loans prior to Amounts Charged-off) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	$ 13,436	$ 13,563
Impaired loans without a specific allowance	9,077	10,529
Impaired loans	22,513	24,092
Impaired Financing Receivable, Related Allowance	4,770	4,825
Unpaid principal balance in total impaired loans	37,308	39,016
Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	896
Impaired loans	896
Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	10,755	11,720
Impaired loans without a specific allowance	2,597	3,207
Impaired loans	13,352	14,927
Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,138	1,140
Impaired loans without a specific allowance	1,333	1,349
Impaired loans	2,471	2,489
Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	647	703
Impaired loans without a specific allowance	5,147	5,973
Impaired loans	5,794	6,676
Commercial
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	6,397	4,011
Impaired loans without a specific allowance	2,006	3,007
Impaired loans	8,403	7,018
Impaired Financing Receivable, Related Allowance	3,841	2,604
Unpaid principal balance in total impaired loans	11,331	10,082
Commercial | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	896
Impaired loans	896
Commercial | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	4,355	2,807
Impaired loans without a specific allowance	556	1,562
Impaired loans	4,911	4,369
Commercial | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,138	1,140
Impaired loans without a specific allowance	278	45
Impaired loans	1,416	1,185
Commercial | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	8	64
Impaired loans without a specific allowance	1,172	1,400
Impaired loans	1,180	1,464
All Other
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	2,867	3,263
Impaired loans	2,867	3,263
Impaired Financing Receivable, Related Allowance	0	0
Unpaid principal balance in total impaired loans	3,699	3,971
All Other | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0
Impaired loans	0
All Other | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
All Other | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	550	560
Impaired loans	550	560
All Other | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	2,317	2,703
Impaired loans	2,317	2,703
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	137	137
Impaired loans	137	137
Impaired Financing Receivable, Related Allowance	0	0
Unpaid principal balance in total impaired loans	4,398	4,398
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0
Impaired loans	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	137	137
Impaired loans	137	137
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	5,177	7,029
Impaired loans without a specific allowance	412	1,078
Impaired loans	5,589	8,107
Impaired Financing Receivable, Related Allowance	589	1,736
Unpaid principal balance in total impaired loans	10,173	12,805
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0
Impaired loans	0
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	5,177	7,029
Impaired loans without a specific allowance	412	562
Impaired loans	5,589	7,591
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	0
Impaired loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	0	516
Impaired loans	0	516
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,862	2,523
Impaired loans without a specific allowance	3,655	3,044
Impaired loans	5,517	5,567
Impaired Financing Receivable, Related Allowance	340	485
Unpaid principal balance in total impaired loans	7,707	7,760
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0
Impaired loans	0
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	1,223	1,884
Impaired loans without a specific allowance	1,629	1,083
Impaired loans	2,852	2,967
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Restructuring | Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	0	0
Impaired loans without a specific allowance	505	744
Impaired loans	505	744
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate | Restructuring | Non Accrual Loans
Financing Receivable Impaired [Line Items]
Impaired loans with a specific allowance	639	639
Impaired loans without a specific allowance	1,521	1,217
Impaired loans	$ 2,160	$ 1,856

XML

CREDIT QUALITY ASSESSMENT (Impaired Loans by Portfolio) (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	$ 23,772	$ 26,382
Contractual interest income due on impaired loans during the period	1,813	2,082
Interest income on impaired loans recognized on a cash basis	462	511
Interest income on impaired loans recognized on an accrual basis	215	186
Commercial
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	7,853	5,646
Contractual interest income due on impaired loans during the period	668	570
Interest income on impaired loans recognized on a cash basis	182	153
Interest income on impaired loans recognized on an accrual basis	167	107
All Other
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	2,982	4,545
Contractual interest income due on impaired loans during the period	60	190
Interest income on impaired loans recognized on a cash basis	125	49
Interest income on impaired loans recognized on an accrual basis	29	42
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	137	150
Contractual interest income due on impaired loans during the period	245	294
Interest income on impaired loans recognized on a cash basis	0	0
Interest income on impaired loans recognized on an accrual basis	0	0
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	7,150	9,480
Contractual interest income due on impaired loans during the period	485	718
Interest income on impaired loans recognized on a cash basis	17	43
Interest income on impaired loans recognized on an accrual basis	0	0
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Impaired [Line Items]
Average impaired loans for the period	5,650	6,561
Contractual interest income due on impaired loans during the period	355	310
Interest income on impaired loans recognized on a cash basis	138	266
Interest income on impaired loans recognized on an accrual basis	$ 19	$ 37

XML

CREDIT QUALITY ASSESSMENT (Credit Quality of Loan Portfolio by Segment) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	$ 27,508	$ 29,211
Loans 90 days past due	226	232
Restructured loans	2,471	2,489
Total non-performing loans	30,205	31,932
Other real estate owned	1,448	1,911
Total non-performing assets	31,653	33,843
Commercial
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	6,091	5,833
Loans 90 days past due	0	0
Restructured loans	1,416	1,185
Total non-performing loans	7,507	7,018
Other real estate owned	39	39
Total non-performing assets	7,546	7,057
Consumer
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	3,152	2,859
Loans 90 days past due	1	0
Restructured loans	0	0
Total non-performing loans	3,153	2,859
Other real estate owned	0	0
Total non-performing assets	3,153	2,859
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	137	137
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	137	137
Other real estate owned	365	365
Total non-performing assets	502	502
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	5,589	8,107
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	5,589	8,107
Other real estate owned	0	395
Total non-performing assets	5,589	8,502
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	5,012	4,823
Loans 90 days past due	0	0
Restructured loans	505	744
Total non-performing loans	5,517	5,567
Other real estate owned	0	637
Total non-performing assets	5,517	6,204
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	7,345	7,257
Loans 90 days past due	225	232
Restructured loans	550	560
Total non-performing loans	8,120	8,049
Other real estate owned	1,044	475
Total non-performing assets	9,164	8,524
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Non-accrual loans	182	195
Loans 90 days past due	0	0
Restructured loans	0	0
Total non-performing loans	182	195
Other real estate owned	0	0
Total non-performing assets	$ 182	$ 195

XML

CREDIT QUALITY ASSESSMENT (Credit Quality of Loan Portfolio) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	$ 13,856	$ 14,762
Non-accrual loans	27,508	29,211
Current loans	4,152,754	3,883,835
Total loans	4,194,118	3,927,808
Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	2,218	1,335
Non-accrual loans	6,091	5,833
Current loans	443,358	460,118
Total loans	451,667	467,286
Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,477	1,912
Non-accrual loans	3,152	2,859
Current loans	451,766	451,886
Total loans	456,395	456,657
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	896
Non-accrual loans	137	137
Current loans	295,085	307,246
Total loans	295,222	308,279
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	2,056
Non-accrual loans	5,589	8,107
Current loans	1,099,080	917,950
Total loans	1,104,669	928,113
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,137	2,223
Non-accrual loans	5,012	4,823
Current loans	825,312	768,506
Total loans	831,461	775,552
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	9,024	6,340
Non-accrual loans	7,345	7,257
Current loans	866,521	828,095
Total loans	882,890	841,692
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
Non-accrual loans	182	195
Current loans	171,632	150,034
Total loans	171,814	150,229
31-60 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	8,026	8,665
31-60 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,442	663
31-60 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	820	808
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	896
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	850
31-60 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1,137	1,479
31-60 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	4,627	3,969
31-60 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
61-90 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	5,604	5,865
61-90 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	776	672
61-90 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	656	1,104
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	1,206
61-90 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	744
61-90 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	4,172	2,139
61-90 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	226	232
> 90 days | Commercial
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Consumer
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	1	0
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	0	0
> 90 days | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	225	232
> 90 days | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment Past Due [Line Items]
Total past due	$ 0	$ 0

XML

CREDIT QUALITY ASSESSMENT (Credit Risk Rating Indicators for Each Segment of Commercial Loan Portfolio) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 4,194,118	$ 3,927,808
Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	451,667	467,286
Commercial Portfolio Segment [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	2,683,019	2,479,230
Commercial Portfolio Segment [Member] | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	451,667	467,286
Commercial Portfolio Segment [Member] | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	295,222	308,279
Commercial Portfolio Segment [Member] | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,104,669	928,113
Commercial Portfolio Segment [Member] | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	831,461	775,552
Commercial Portfolio Segment [Member] | Pass
Financing Receivable Recorded Investment [Line Items]
Total loans	2,644,464	2,426,773
Commercial Portfolio Segment [Member] | Pass | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	435,183	442,725
Commercial Portfolio Segment [Member] | Pass | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	295,085	308,142
Commercial Portfolio Segment [Member] | Pass | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,096,591	917,255
Commercial Portfolio Segment [Member] | Pass | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	817,605	758,651
Commercial Portfolio Segment [Member] | Special Mention
Financing Receivable Recorded Investment [Line Items]
Total loans	9,923	21,660
Commercial Portfolio Segment [Member] | Special Mention | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	1,929	10,010
Commercial Portfolio Segment [Member] | Special Mention | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Special Mention | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	2,342	2,395
Commercial Portfolio Segment [Member] | Special Mention | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	5,652	9,255
Commercial Portfolio Segment [Member] | Substandard
Financing Receivable Recorded Investment [Line Items]
Total loans	28,632	30,797
Commercial Portfolio Segment [Member] | Substandard | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	14,555	14,551
Commercial Portfolio Segment [Member] | Substandard | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	137	137
Commercial Portfolio Segment [Member] | Substandard | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	5,736	8,463
Commercial Portfolio Segment [Member] | Substandard | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	8,204	7,646
Commercial Portfolio Segment [Member] | Doubtful
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Doubtful | Commercial
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Doubtful | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Doubtful | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Portfolio Segment [Member] | Doubtful | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Real Estate Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Recorded Investment [Line Items]
Total loans	295,222	308,279
Commercial Real Estate Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	1,104,669	928,113
Commercial Real Estate Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 831,461	$ 775,552

XML

CREDIT QUALITY ASSESSMENT (Information by Credit Risk Rating Indicators for Those Remaining Segments of Loan Portfolio) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	$ 4,194,118	$ 3,927,808
Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	456,395	456,657
Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	882,890	841,692
Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,814	150,229
Homogeneous Loan Pools
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,511,099	1,448,578
Homogeneous Loan Pools | Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	456,395	456,657
Homogeneous Loan Pools | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	882,890	841,692
Homogeneous Loan Pools | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,814	150,229
Homogeneous Loan Pools | Performing Financing Receivable
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1,499,644	1,437,475
Homogeneous Loan Pools | Performing Financing Receivable | Consumer
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	453,242	453,798
Homogeneous Loan Pools | Performing Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	874,770	833,643
Homogeneous Loan Pools | Performing Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	171,632	150,034
Homogeneous Loan Pools | Nonperforming Financing Receivable | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	226	232
Homogeneous Loan Pools | Nonperforming Financing Receivable | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	10,679	10,311
Homogeneous Loan Pools | Nonperforming Financing Receivable | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	550	560
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	1	0
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	3,152	2,859
Homogeneous Loan Pools | Nonperforming Financing Receivable | Consumer | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	0
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	225	232
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	7,345	7,257
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Mortgage | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	550	560
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Loans 90 Days Or More Past Due
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	0	0
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Non Accrual Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	182	195
Homogeneous Loan Pools | Nonperforming Financing Receivable | Residential Real Estate Portfolio Segment | Residential Construction | Restructured Loans
Financing Receivable Recorded Investment [Line Items]
Total loans and leases	$ 0	$ 0

XML

CREDIT QUALITY ASSESSMENT (Troubled Debt Restructured Loans for Specific Segments of the Loan Portfolio) (Detail) - Troubled Debt Restructuring - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable Modifications [Line Items]
Restructured accruing	$ 492	$ 550
Restructured non-accruing	783	0
Balance	1,275	550
Specific allowance	0	39
Restructured and subsequently defaulted	0	479
Commercial
Financing Receivable Modifications [Line Items]
Restructured accruing	492	42
Restructured non-accruing	387	0
Balance	879	42
Specific allowance	0	39
Restructured and subsequently defaulted	0	0
All Other
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	0
Balance	0	0
Specific allowance	0	0
Restructured and subsequently defaulted	0	0
Commercial Portfolio Segment | Commercial Acquisition, Development and Construction
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	0
Balance	0	0
Specific allowance	0	0
Restructured and subsequently defaulted	0	0
Commercial Portfolio Segment | Commercial Investor Real Estate
Financing Receivable Modifications [Line Items]
Restructured accruing	0	0
Restructured non-accruing	0	0
Balance	0	0
Specific allowance	0	0
Restructured and subsequently defaulted	0	479
Commercial Portfolio Segment | Commercial Owner Occupied Real Estate
Financing Receivable Modifications [Line Items]
Restructured accruing	0	508
Restructured non-accruing	396	0
Balance	396	508
Specific allowance	0	0
Restructured and subsequently defaulted	$ 0	$ 0

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Gross Carrying Amouns and Accumulated Amortization of Intangible Assets and Goodwill) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 786	$ 786
Accumulated Amortization	(182)	(106)
Net Carrying Amount	604	680
Goodwill	85,768	85,768
Other Identifiable Intangible Assets
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	786	786
Accumulated Amortization	(182)	(106)
Net Carrying Amount	$ 604	$ 680
Other Identifiable Intangible Assets | Weighted average [Member]
Finite Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	13 years 2 months 12 days	13 years 9 months 18 days

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GOODWILL AND OTHER INTANGIBLE ASSETS (Estimated Future Amortization Expense for Amortizing Intangibles) (Detail) $ in Thousands	Sep. 30, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2017	$ 24
2018	95
2019	83
2020	66
Thereafter	336
Total amortizing intangible assets	$ 604

XML

DEPOSITS (Composition of Deposits) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Disclosure Composition Of Deposits [Abstract]
Noninterest-bearing deposits	$ 1,312,710	$ 1,138,139
Interest-bearing deposits:
Demand	608,527	615,058
Money market savings	1,023,153	927,837
Regular savings	321,194	310,471
Time deposits of less than $100,000	292,395	258,621
Time deposits of $100,000 or more	397,813	327,418
Total interest-bearing deposits	2,643,082	2,439,405
Total deposits	$ 3,955,792	$ 3,577,544

XML

STOCKHOLDERS EQUITY (Additional Information) (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Stockholders Equity Note [Line Items]
Common Stock, Shares Authorized	50,000,000		50,000,000
Common Stock, Par or Stated Value Per Share	$ 1		$ 1
Treasury Stock, Shares, Retired		512,459
Treasury Stock Retired Cost Method Amount		$ 13,273
Repurchase Program
Stockholders Equity Note [Line Items]
tock Repurchase Program Expiration Date	Aug. 31, 2017
Common Stock | Repurchase Program
Stockholders Equity Note [Line Items]
Stock Repurchased During Period, Shares	736,139

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SHARE BASED COMPENSATION (Additional Information) (Detail) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise period				5 years 8 months 1 day	5 years 8 months 16 days
Options exercised intrinsic value				$ 638
Stock Options Granted, Net of Forfeitures				12,941
2015 Omnibus Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, shares authorizes	1,500,000			1,500,000
Common stock, shares available for issuance	1,339,989			1,339,989
Term of share based compensation plan				10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage				100.00%
2015 Omnibus Incentive Plan | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period				7 years
2015 Omnibus Incentive Plan | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period				10 years
2015 Omnibus Incentive Plan | Stock Options and Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Recognized Compensation expense	$ 500		$ 500	$ 1,500	$ 1,400
2015 Omnibus Incentive Plan | Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized Compensation expense	200			$ 200
Expected cost recognition weighted average period				2 years
Options exercised intrinsic value				$ 600	400
Stock Options Vested, Fair Value
Stock Options Granted		12,941
2015 Omnibus Incentive Plan | Restricted Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized Compensation expense	$ 4,800			$ 4,800
Expected cost recognition weighted average period				3 years 2 months 12 days
Stock Options Granted		55,211
2015 Omnibus Incentive Plan | Restricted Stock | 3 Year Vesting Period
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock Options Granted		6,479
Vesting period		3 years
2015 Omnibus Incentive Plan | Restricted Stock | 5 Year Vesting Period
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock Options Granted		41,859
Vesting period		5 years
2015 Omnibus Incentive Plan | Performance Restricted Stock Units (RSUs) [Member] | 3 Year Vesting Period
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock Options Granted		6,873
Vesting period		3 years
2015 Omnibus Incentive Plan | Performance Restricted Stock Units (RSUs) [Member] | 3 Year Vesting Period | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		0.00%
2015 Omnibus Incentive Plan | Performance Restricted Stock Units (RSUs) [Member] | 3 Year Vesting Period | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage		150.00%

XML

SHARE BASED COMPENSATION (Fair Values of all Options Granted Estimated Using Binomial Option-Pricing Model with Weighted-average Assumptions) (Detail) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Share Based Compensation [Abstract]
Dividend yield	2.45%	3.48%
Weighted average expected volatility	40.27%	41.54%
Weighted average risk-free interest rate	2.14%	1.42%
Weighted average expected lives (in years)	5 years 8 months 1 day	5 years 8 months 16 days
Weighted average grant-date fair value	$ 13.42	$ 7.75

XML

SHARE BASED COMPENSATION (Summary of Share Option Activity) (Detail) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Number of Common Shares
Beginning balance	108,503
Granted	12,941
Exercised	(28,736)	(34,646)
Forfeited or expired	(3,577)
Ending balance	89,131
Exercisable, Common Shares	58,646
Weighted Average Exercise Share Price
Beginning balance	$ 22.46
Granted	42.48
Exercised	19.11
Forfeited or expired	30.07
Ending balance	24.16
Exercisable Weighted Average Exercise Price	22.46
Weighted average fair value of options granted during the year	$ 13.42	$ 7.75
Weighted Average Contractual Remaining Life(Years)
Balance at end of period	3 years 9 months 24 days
Exercisable at end of period	2 years 9 months 24 days
Beginning balance	$ 1,902
Exercised	638
Ending balance	1,374
Exercisable, Intrinsic Value	$ 1,113

XML

SHARE BASED COMPENSATION (Summary of Activity for Company's Restricted Stock) (Detail) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Weighted Average Grant-Date Fair Value
Granted	$ 13.42	$ 7.75
Restricted Stock
Number of Shares
Restricted stock beginning balance	212,646
Granted	55,211
Vested	(70,382)
Forfeited	(7,800)
Restricted stock ending balance	189,675
Weighted Average Grant-Date Fair Value
Restricted stock beginning balance	$ 25.19
Granted	42.48
Vested	23.82
Forfeited	27.21
Restricted stock ending balance	$ 30.67

XML

PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS (Net Periodic Benefit Cost) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Pension, Profit Sharing, and Other Employee Benefit Plans [Abstract]
Interest cost on projected benefit obligation	$ 410	$ 416	$ 1,230	$ 1,242
Expected return on plan assets	(497)	(404)	(1,489)	(1,151)
Recognized net actuarial loss	296	295	886	870
Net periodic benefit cost	209	$ 307	$ 627	$ 961
Contribution	$ 2,200

XML

NET INCOME PER SHARE (Calculation of Net Income per Common Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Net income	$ 15,089	$ 13,474	$ 44,942	$ 34,934
Basic:
Basic weighted average EPS shares	24,200	24,096	24,171	24,124
Basic net income per share	$ 0.62	$ 0.56	$ 1.86	$ 1.45
Diluted:
Basic weighted average EPS shares	24,200	24,096	24,171	24,124
Dilutive common stock equivalents	23	27	30	27
Dilutive EPS shares	24,223	24,123	24,201	24,151
Diluted net income per share	$ 0.62	$ 0.56	$ 1.86	$ 1.45
Anti-dilutive shares	5	3	3	5

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Net Accumulated Other Comprehensive Income (Loss)) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ (6,614)	$ (1,297)
Other comprehensive income before reclassification, net of tax			3,382	6,385
Reclassifications from accumulated other comprehensive income, net of tax			(245)	(623)
Total other comprehensive income	$ 235	$ (1,421)	3,137	5,762
Ending Balance	(3,477)	4,465	(3,477)	4,465
Unrealized Gains (Losses) on Investments Available-for-Sale
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			1,642	6,566
Other comprehensive income before reclassification, net of tax			3,382	6,385
Reclassifications from accumulated other comprehensive income, net of tax			(767)	(1,154)
Total other comprehensive income			2,615	5,231
Ending Balance	4,257	11,797	4,257	11,797
Defined Benefit Pension Plan
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(8,256)	(7,863)
Other comprehensive income before reclassification, net of tax			0	0
Reclassifications from accumulated other comprehensive income, net of tax			522	531
Total other comprehensive income			522	531
Ending Balance	$ (7,734)	$ (7,332)	$ (7,734)	$ (7,332)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Reclassification Adjustments Out of Accumulated Other Comprehensive Income) (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Unrealized gains/(losses) on investments available-for-sale Affected line item in the Statements of Income:
Investment securities gains		$ 0	$ 0	$ 1,275	$ 1,919
Income before taxes		0	0	1,275	1,919
Tax expense		0	0	(508)	(765)
Net income				767	1,154
Amortization of defined benefit pension plan items Affected line item in the Statements of Income:
Recognition of unrealized loss	[1]	$ (296)	$ (295)
Income before taxes				(886)	(870)
Tax expense				364	339
Net income/ (Loss)				$ (522)	$ (531)

[1] This amount is included in the computation of net periodic benefit cost, see Note 9.

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FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES (Company's Interest Rate Swaps) (Detail) - Swap - Commercial Loan [Member] - Not Designated as Hedging Instrument [Member] - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Notional Amount	$ 18.1	$ 18.9
Estimated Fair Value	$ 0.8	$ 1.0

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FAIR VALUE (Additional Information) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Impaired loans	$ 22,513	$ 24,092
Impaired loans fair value	17,700	19,300
Specific loan loss reserves	$ 4,800	$ 4,800

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FAIR VALUE (Financial Assets and Liabilities at Dates Indicated that Were Accounted for or Disclosed at Fair Value) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	$ 7,084	$ 13,222
Investments available-for-sale (at fair value)	756,069	733,554
Fair Value, Measurements, Recurring | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	7,084	13,222
Fair Value, Measurements, Recurring | U.S. Government Agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	107,340	121,790
Fair Value, Measurements, Recurring | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	321,127	287,684
Fair Value, Measurements, Recurring | Mortgage-Backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	316,879	312,711
Fair Value, Measurements, Recurring | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	9,522	9,134
Fair Value, Measurements, Recurring | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	989	1,012
Fair Value, Measurements, Recurring | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	212	1,223
Fair Value, Measurements, Recurring | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	816	1,010
Other liabilities	(816)	(1,010)
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. Government Agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Mortgage-Backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	0	0
Other liabilities	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	7,084	13,222
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | U.S. Government Agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	107,340	121,790
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	321,127	287,684
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Mortgage-Backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	316,879	312,711
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	212	1,223
Fair Value, Measurements, Recurring | Significant Other Observable Inputs (Level 2) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	816	1,010
Other liabilities	(816)	(1,010)
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Residential Mortgage Loans Held For Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | U.S. Government Agencies
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | State and municipal
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Mortgage-Backed
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Corporate Debt
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	9,522	9,134
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Trust Preferred
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	989	1,012
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Marketable Equity Securities
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	0	0
Fair Value, Measurements, Recurring | Significant Unobservable Inputs (Level 3) | Interest Rate Swap Agreements
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Other assets	0	0
Other liabilities	$ 0	$ 0

XML

FAIR VALUE (Unrealized Losses Included in Assets Measured in Consolidated Statements of Condition at Fair Value on Recurring Basis) (Detail) - Fair Value, Inputs, Level 3 - Available-for-sale Securities [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning balance	$ 10,146
Principal redemption	(159)
Total unrealized gains (losses) included in other comprehensive income (loss)	524
Ending balance	$ 10,511

XML

FAIR VALUE (Assets Measured at Fair Value on Nonrecurring Basis) (Detail) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 9,969	$ 10,892
Fair value measured on nonrecurring basis losses	(11,942)	(10,707)
Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	8,521	8,981
Fair value measured on nonrecurring basis losses	(11,806)	(10,600)
Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	1,448	1,911
Fair value measured on nonrecurring basis losses	(136)	(107)
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Other Observable Inputs (Level 2) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	9,969	10,892
Significant Unobservable Inputs (Level 3) | Impaired loans
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	8,521	8,981
Significant Unobservable Inputs (Level 3) | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 1,448	$ 1,911

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FAIR VALUE (Carrying Amounts and Fair Values of Company's Financial Instruments) (Detail) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial Liabilities
Securities sold under retail repurchase agreements and federal funds purchased	$ 146,569	$ 125,119
Advances from FHLB	632,917	790,000
Subordinated debentures	0	30,000
Reported Value Measurement [Member]
Financial Assets
Other equity securities	39,853	46,094
Loans, net of allowance	4,149,194	3,883,741
Other assets	95,136	93,328
Financial Liabilities
Time Deposits	690,208	586,039
Securities sold under retail repurchase agreements and federal funds purchased	146,569	125,119
Advances from FHLB	632,917	790,000
Subordinated debentures		30,000
Estimate of Fair Value Measurement [Member]
Financial Assets
Other equity securities	39,853	46,094
Loans, net of allowance	4,200,409	3,933,700
Other assets	95,136	93,328
Financial Liabilities
Time Deposits	688,271	584,868
Securities sold under retail repurchase agreements and federal funds purchased	146,569	125,119
Advances from FHLB	639,022	800,756
Subordinated debentures		29,985
Quoted Prices in Active Markets for Identical Assets (Level 1)
Financial Assets
Other equity securities	0	0
Loans, net of allowance	0	0
Other assets	0	0
Financial Liabilities
Time Deposits	0	0
Securities sold under retail repurchase agreements and federal funds purchased	0	0
Advances from FHLB	0	0
Subordinated debentures		0
Significant Other Observable Inputs (Level 2)
Financial Assets
Other equity securities	39,853	46,094
Loans, net of allowance	0	0
Other assets	95,136	93,328
Financial Liabilities
Time Deposits	688,271	584,868
Securities sold under retail repurchase agreements and federal funds purchased	146,569	125,119
Advances from FHLB	639,022	800,756
Subordinated debentures		0
Significant Unobservable Inputs (Level 3)
Financial Assets
Other equity securities	0	0
Loans, net of allowance	4,200,409	3,933,700
Other assets	0	0
Financial Liabilities
Time Deposits	0	0
Securities sold under retail repurchase agreements and federal funds purchased	0	0
Advances from FHLB	$ 0	0
Subordinated debentures		$ 29,985

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SEGMENT REPORTING (Additional Information) (Detail) $ in Millions	Sep. 30, 2017 USD ($)
Investment Management
Segment Reporting Information [Line Items]
Assets under management	$ 1,300

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SEGMENT REPORTING (Operating Segments and Reconciliation of Information to Condensed Consolidated Financial Statements) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Interest income	$ 49,589	$ 42,857	$ 144,123	$ 126,313
Interest expense	6,892	5,126	18,847	15,728
Provision for loan losses	934	781	2,450	4,974	$ 5,546
Non-interest income	12,746	12,584	38,949	38,698
Non-interest Expense	31,191	29,326	94,040	92,514
Income before income taxes	23,318	20,208	67,735	51,795
Income tax expense	8,229	6,734	22,793	16,861
Net income	15,089	13,474	44,942	34,934
Assets	5,334,788	4,810,611	5,334,788	4,810,611	$ 5,091,383
Intersegment Elimination
Segment Reporting Information [Line Items]
Interest income	(3)	(2)	(7)	(6)
Interest expense	(3)	(2)	(7)	(6)
Provision for loan losses	0	0	0	0
Non-interest income	(209)	(179)	(628)	(535)
Non-interest Expense	(209)	(179)	(628)	(535)
Income before income taxes	0	0	0	0
Income tax expense	0	0	0	0
Net income	0	0	0	0
Assets	(18,057)	(21,387)	(18,057)	(21,387)
Community Banking
Segment Reporting Information [Line Items]
Interest income	49,590	42,856	144,123	126,313
Interest expense	6,895	5,128	18,854	15,734
Provision for loan losses	934	781	2,450	4,974
Non-interest income	8,915	9,071	28,545	29,426
Non-interest Expense	28,634	26,822	87,035	86,201
Income before income taxes	22,042	19,196	64,329	48,830
Income tax expense	7,725	6,339	21,454	15,701
Net income	14,317	12,857	42,875	33,129
Assets	5,333,539	4,811,948	5,333,539	4,811,948
Insurance
Segment Reporting Information [Line Items]
Interest income	0	1	1	2
Interest expense	0	0	0	0
Provision for loan losses	0	0	0	0
Non-interest income	1,948	1,783	4,923	4,186
Non-interest Expense	1,559	1,510	4,238	3,711
Income before income taxes	389	274	686	477
Income tax expense	158	108	279	191
Net income	231	166	407	286
Assets	7,499	7,986	7,499	7,986
Investment Management
Segment Reporting Information [Line Items]
Interest income	2	2	6	4
Interest expense	0	0	0	0
Provision for loan losses	0	0	0	0
Non-interest income	2,092	1,909	6,109	5,621
Non-interest Expense	1,207	1,173	3,395	3,137
Income before income taxes	887	738	2,720	2,488
Income tax expense	346	287	1,060	969
Net income	541	451	1,660	1,519
Assets	$ 11,807	$ 12,064	$ 11,807	$ 12,064

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PENDING ACQUISITION (Details) $ / shares in Units, $ in Millions		9 Months Ended
	May 15, 2017 USD ($) Banks $ / shares	Sep. 30, 2017
Business Acquisition [Line Items]
Common stock ratio of Parent and Acquiree stock	0.8713
The combined entity name		Maryland corporation
Expected period to close acquisition transaction		The transaction, which is expected to close in the fourth quarter of 2017
Contingent Consideration Arrangements Description		Under the terms of the agreement, WashingtonFirst shareholders are expected to receive 0.8713 shares of Company common stock for each share owned of WashingtonFirst common stock, subject to adjustment if the Company’s average stock price during a specified measurement period prior to closing is more than $50.15 or less than $37.07 per share.
Sandy Spring Bank [Member]
Business Acquisition [Line Items]
Share Price	$ 42.72
Percentage of Voting Interests Acquired	67.80%
Maximum [Member] | Sandy Spring Bank [Member]
Business Acquisition [Line Items]
Share Price	$ 50.15
Minimum [Member] | Sandy Spring Bank [Member]
Business Acquisition [Line Items]
Share Price	$ 37.07
WashingtonFirst Bank [Member]
Business Acquisition [Line Items]
Estimated Amount of Payment to Acquire Business, Gross | $	$ 498
Percentage of Voting Interests Acquired	32.20%
Assets of new acquisition | $	$ 2,100
Number of Banking Offices | Banks	19