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, 2014

OR

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

For the transition period from ____________ to ____________

Commission File Number: 0-19065

SANDY SPRING BANCORP, INC.

 (Exact name of registrant as specified in its charter)

Maryland	52-1532952
(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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨        Accelerated filer x        Non-accelerated filer ¨       Smaller reporting company ¨

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

Yes ¨         No x

The number of outstanding shares of common stock outstanding as of October 31, 2014

Common stock, $1.00 par value – 25,040,890 shares

SANDY SPRING BANCORP, INC.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Statements of Condition at September 30, 2014 and December 31, 2013	4
	Condensed Consolidated Statements of Income - Unaudited for the Three and Nine Months Ended September 30, 2014 and 2013	5
	Condensed Consolidated Statements of Comprehensive Income – Unaudited for   the Three and Nine Months Ended September 30, 2014 and 2013	6
	Condensed Consolidated Statements of Cash Flows – Unaudited for the Nine Months Ended September 30, 2014 and 2013	7
	Condensed Consolidated Statements of Changes in Stockholders’ Equity – Unaudited for the   Nine Months Ended September 30, 2014 and 2013	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	58
Item 4.	CONTROLS AND PROCEDURES	58
PART II - OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	59
Item 1A.	RISK FACTORS	59
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	59
Item 3.	DEFAULTS UPON SENIOR SECURITIES	59
Item 4.	MINE SAFETY DISCLOSURES	59
Item 5.	OTHER INFORMATION	59
Item 6	EXHIBITS	59
SIGNATURES		60

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 Company 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 the Company’s 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 risk and uncertainties include, but are not limited to, the risks identified in Item 1A of the Company’s 2013 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 the Company’s liquidity;

· the Company’s liquidity requirements could be adversely affected by changes in our assets and liabilities;

· the Company’s investment securities portfolio is subject to credit risk, market risk, and liquidity risk as well as changes in the estimates the Company uses to value certain of the securities in the 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 the Company’s 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

	September 30,			December 31,
(Dollars in thousands)	2014			2013
Assets
Cash and due from banks	$	48,665		$	46,755
Federal funds sold		474			475
Interest-bearing deposits with banks		42,820			27,197
Cash and cash equivalents		91,959			74,427
Residential mortgage loans held for sale (at fair value)		6,656			8,365
Investments available-for-sale (at fair value)		692,107			751,284
Investments held-to-maturity -- fair value of $223,130 and $216,007 at September 30, 2014 and December 31, 2013, respectively		221,690			224,638
Other equity securities		37,072			40,687
Total loans and leases		2,975,912			2,784,266
Less: allowance for loan and lease losses		(37,574	)		(38,766	)
Net loans and leases		2,938,338			2,745,500
Premises and equipment, net		45,841			45,916
Other real estate owned		1,762			1,338
Accrued interest receivable		12,277			12,532
Goodwill		84,171			84,171
Other intangible assets, net		622			1,330
Other assets		116,236			115,912
Total assets	$	4,248,731		$	4,106,100
Liabilities
Noninterest-bearing deposits	$	986,549		$	836,198
Interest-bearing deposits		2,042,239			2,041,027
Total deposits		3,028,788			2,877,225
Securities sold under retail repurchase agreements and federal funds purchased		71,384			53,842
Advances from FHLB		558,000			615,000
Subordinated debentures		35,000			35,000
Accrued interest payable and other liabilities		33,155			25,670
Total liabilities		3,726,327			3,606,737
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,076,794 and 24,990,021 at September 30, 2014 and December 31, 2013, respectively		25,077			24,990
Additional paid in capital		194,899			193,445
Retained earnings		298,796			283,898
Accumulated other comprehensive income (loss)		3,632			(2,970	)
Total stockholders' equity		522,404			499,363
Total liabilities and stockholders' equity	$	4,248,731		$	4,106,100

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)	2014			2013			2014			2013
Interest Income:
Interest and fees on loans and leases	$	31,030		$	33,079		$	91,470		$	91,937
Interest on loans held for sale		81			176			211			838
Interest on deposits with banks		24			22			66			65
Interest and dividends on investment securities:
Taxable		3,712			4,558			11,704			12,411
Exempt from federal income taxes		2,303			2,345			6,940			6,987
Total interest income		37,150			40,180			110,391			112,238
Interest Expense:
Interest on deposits		1,208			1,358			3,585			4,209
Interest on retail repurchase agreements and federal funds purchased		42			39			117			126
Interest on advances from FHLB		3,258			3,255			9,709			9,667
Interest on subordinated debt		222			222			659			672
Total interest expense		4,730			4,874			14,070			14,674
Net interest income		32,420			35,306			96,321			97,564
Provision (credit) for loan and lease losses		(192	)		1,128			(1,016	)		(1,670	)
Net interest income after provision (credit) for loan      and lease losses		32,612			34,178			97,337			99,234
Non-interest Income:
Investment securities gains		8			-			8			118
Service charges on deposit accounts		2,226			2,171			6,287			6,390
Mortgage banking activities		596			(26	)		1,482			2,738
Wealth management income		4,974			4,503			14,181			13,077
Insurance agency commissions		1,410			1,193			4,011			3,578
Income from bank owned life insurance		611			629			1,817			1,864
Bank card fees		1,148			1,077			3,295			3,113
Other income		1,617			1,676			4,452			4,979
Total non-interest income		12,590			11,223			35,533			35,857
Non-interest Expenses:
Salaries and employee benefits		16,765			16,382			49,594			48,891
Occupancy expense of premises		3,032			3,149			9,778			9,327
Equipment expenses		1,337			1,200			3,855			3,676
Marketing		744			713			2,088			1,983
Outside data services		1,231			1,152			3,663			3,418
FDIC insurance		594			678			1,687			1,855
Amortization of intangible assets		115			462			709			1,384
Litigation expenses		236			-			6,364			-
Other expenses		4,578			3,157			12,584			11,690
Total non-interest expenses		28,632			26,893			90,322			82,224
Income before income taxes		16,570			18,508			42,548			52,867
Income tax expense		5,428			6,419			13,496			18,058
Net income	$	11,142		$	12,089		$	29,052		$	34,809
Net Income Per Share Amounts:
Basic net income per share	$	0.44		$	0.48		$	1.16		$	1.40
Diluted net income per share	$	0.44		$	0.48		$	1.16		$	1.39
Dividends declared per share	$	0.20		$	0.16		$	0.56		$	0.46

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)	2014			2013			2014			2013
Net income	$	11,142		$	12,089		$	29,052		$	34,809
Other comprehensive income (loss):
Investments available-for-sale:
Net change in unrealized gains (losses) on      investments available-for-sale		(2,714	)		(1,032	)		10,779			(24,925	)
Related income tax (expense) benefit		1,061			407			(4,284	)		9,935
Net investment gains reclassified into earnings		8			-			8			118
Related income tax expense		(3	)		-			(3	)		(47	)
Net effect on other comprehensive income (loss)        for the period		(1,648	)		(625	)		6,500			(14,919	)
Defined benefit pension plan:
Recognition of unrealized gain		67			249			183			1,176
Related income tax benefit		(20	)		(91	)		(81	)		(461	)
Net effect on other comprehensive income (loss)      for the period		48			158			102			715
Total other comprehensive income (loss)		(1,600	)		(467	)		6,602			(14,204	)
Comprehensive income	$	9,541		$	11,622		$	35,654		$	20,605

 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)		2014			2013
Operating activities:
Net income	$	29,052		$	34,809
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,415			6,033
Credit for loan and lease losses		(1,016	)		(1,670	)
Share based compensation expense		1,101			1,307
Deferred income tax expense		1,119			2,945
Origination of loans held for sale		(90,531	)		(219,153	)
Proceeds from sales of loans held for sale		93,554			248,907
Gains on sales of loans held for sale		(1,314	)		(4,147	)
Loss on sales of other real estate owned		162			1,072
Investment securities gains		(8	)		(118	)
Net decrease (increase) in accrued interest receivable		255			(72	)
Net (increase) decrease in other assets		(7,319	)		6,441
Net increase in accrued expenses and other liabilities		7,683			2,010
Other – net		3,256			3,706
Net cash provided by operating activities		41,409			82,070
Investing activities:
Purchases of other equity securities		-			(2,776	)
Purchases of investments held-to-maturity		-			(20,666	)
Purchases of investments available-for-sale		-			(161,379	)
Proceeds from other equity securities		3,615			-
Proceeds from maturities, calls and principal payments of investments held-to-maturity		2,293			9,959
Proceeds from maturities, calls and principal payments of investments available-for-sale		67,700			143,220
Net increase in loans and leases		(192,794	)		(135,100	)
Proceeds from the sales of other real estate owned		465			7,137
Expenditures for premises and equipment		(3,547	)		(1,883	)
Net cash used in investing activities		(122,268	)		(161,488	)
Financing activities:
Net increase in deposits		151,563			3,432
Net increase (decrease) in retail repurchase agreements and federal funds purchased		17,542			(33,752	)
Proceeds from advances from FHLB		1,330,000			745,000
Repayment of advances from FHLB		(1,387,000	)		(630,058	)
Proceeds from issuance of common stock		440			48
Dividends paid		(14,154	)		(11,590	)
Net cash provided by financing activities		98,391			73,080
Net increase (decrease) in cash and cash equivalents		17,532			(6,338	)
Cash and cash equivalents at beginning of period		74,427			86,406
Cash and cash equivalents at end of period	$	91,959		$	80,068
Supplemental Disclosures:
Interest payments	$	14,066		$	15,031
Income tax payments		11,908			12,470
Transfers from loans to other real estate owned		971			2,353

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, 2014	$	24,990	$	193,445		$	283,898		$	(2,970	)	$	499,363
Net income							29,052						29,052
Other comprehensive income, net of tax										6,602			6,602
Common stock dividends -  $0.56 per share							(14,154	)					(14,154	)
Stock compensation expense				1,318									1,318
Common stock issued pursuant to:													-
Stock option plan - 13,834 shares		14		176									190
Employee stock purchase plan - 18,404 shares		18		365									383
Restricted stock - 54,535 shares		55		(405	)								(350	)
Balances at September 30, 2014	$	25,077	$	194,899			298,796		$	3,632		$	522,404
Balances at January 1, 2013	$	24,905	$	191,689		$	255,606		$	11,312		$	483,512
Net income							34,809						34,809
Other comprehensive loss, net of tax										(14,204	)		(14,204	)
Common stock dividends -  $0.46 per share							(11,590	)					(11,590	)
Stock compensation expense				1,307									1,307
Common stock issued pursuant to:													-
Stock option plan - 10,964 shares		11		128									139
Employee stock purchase plan - 19,971 shares		20		336									356
Restricted stock - 48,819 shares		49		(496	)								(447	)
Balances at September 30, 2013	$	24,985	$	192,964		$	278,825		$	(2,892	)	$	493,882

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”), which conducts a full-service commercial banking, mortgage banking and trust business. Services to individuals and businesses include accepting deposits, extending real estate, consumer and commercial loans and lines of credit, equipment leasing, general insurance, personal trust, and investment and wealth management services. The Company operates in the Maryland counties of Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's, and in Arlington, Fairfax and Loudoun counties in Virginia. The Company offers investment and wealth management services through the Bank’s subsidiary, West Financial Services. Insurance products are available to clients through Sandy Spring Insurance, and Neff & Associates, which are agencies of Sandy Spring Insurance Corporation.

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, 2014 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2014. 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 2013 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 14, 2014. There have been no significant changes to the Company’s accounting policies as disclosed in the 2013 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 and lease 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).

Loans Acquired with Deteriorated Credit Quality

Acquired loans are evaluated for evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value. Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments. The historical allowance for loan and lease losses related to the purchased loans is not carried over to the Company. The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values. For loans acquired with no evidence of credit deterioration, the fair value discount or premium is amortized over the contractual life of the loan as an adjustment to yield. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). The present value of any decreases in expected cash flows after the purchase date is recognized as an impairment through a charge to the provision for loan losses. Increases in the present value of expected cash flows after the purchase date are recognized as an adjustment to the accretable yield. Subsequent to the purchase date, the methods utilized to estimate the required allowance for loan and lease losses (“ALLL”) are similar to originated loans. Loans carried at fair value, mortgage loans held for sale and loans under revolving credit agreements are excluded from the scope of this guidance on loans acquired with deteriorated credit quality.

9

Pending Accounting Pronouncements

The FASB issued a standard 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. This standard may affect an entity’s financial statements, business processes and internal control over financial reporting. The guidance is effective for the first interim or annual period beginning after December 15, 2016. 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 is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

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, 2014									December 31, 2013
			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	$	144,473	$	-	$	(3,757	)	$	140,716	$	147,688	$	-	$	(8,222	)	$	139,466
State and municipal		157,854		9,731		-			167,585		159,524		6,060		(156	)		165,428
Mortgage-backed		374,326		9,995		(4,417	)		379,904		439,054		10,188		(6,992	)		442,250
Corporate debt		2,000		2		-			2,002		2,000		4		-			2,004
Trust preferred		1,349		-		(172	)		1,177		1,701		-		(288	)		1,413
Total debt securities		680,002		19,728		(8,346	)		691,384		749,967		16,252		(15,658	)		750,561
Marketable equity securities		723		-		-			723		723		-		-			723
Total investments available-for-sale	$	680,725	$	19,728	$	(8,346	)	$	692,107	$	750,690	$	16,252	$	(15,658	)	$	751,284

Any unrealized losses in the U.S. government agencies, state and municipal, mortgage-backed or corporate debt investment securities at September 30, 2014 are not the result of credit related events but due to changes in interest rates. These declines are considered temporary in nature and are expected to decline over time and recover as these securities approach maturity.

The mortgage-backed securities portfolio at September 30, 2014 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($176.2 million), or GNMA, FNMA or FHLMC mortgage-backed securities ($203.7 million). The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time, which may be maturity, to allow for any anticipated recovery in fair value.

At September 30, 2014, 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, totals $1.3 million with a fair value of $1.2 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.

10

The income valuation approach technique (present value) used maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. The methodology and significant assumptions employed by the specialist to determine fair value included:

· Evaluation of the structural terms as established in the indenture;

· Detailed credit and structural evaluation for each piece of issuer collateral in the pool;

· Overall default (.52%), recovery and prepayment (2%)/amortization probabilities by issuers in the pool;

· Identification of adverse conditions specifically related to the security, industry and geographical area;

· Projection of estimated cash flows that incorporate default expectations and loss severities;

· Review of historical and implied volatility of the fair value of the security;

· Evaluation of credit risk concentrations;

· Evaluation of the length of time and the extent to which the fair value has been less than the amortized cost; and

· A discount rate of 11.8% was established using credit adjusted financial institution spreads for comparably rated institutions and a liquidity adjustment that considered the previously noted characteristics.

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, 2014. Non-credit related decline in fair value on this security, which is not expected to be sold and which the Company has the ability to hold until maturity, was $0.2 million at September 30, 2014. This non-credit related decline in fair value was recognized in other comprehensive income (“OCI”) at September 30, 2014.

The methodology and significant inputs used to measure the amount related to credit loss consisted of the following:

· Default rates were developed based on the financial condition of the trust preferred issuers in the pool and the payment or deferral status. Conditional default rates were estimated based on the payment characteristics of the security and the financial condition of the issuers in the pool. Near term and future defaults are estimated using third party industry data in addition to a review of key financial ratios and other pertinent data on the financial stability of the underlying issuer;

· Loss severity is forecasted based on the type of impairment using research performed by third parties;

· The security contains one level of subordination below the senior tranche, with the senior tranche receiving the spread from the subordinate bonds;

· Credit ratings of the underlying issuers are reviewed in conjunction with the development of the default rates applied to determine the credit amounts related to the credit loss; and

· Potential prepayments are estimated based on terms and rates of the underlying trust preferred securities to determine the impact of excess spread on the credit enhancement, the removal of the strongest institutions from the underlying pool and any impact that prepayments might have on diversity and concentration.

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, 2013	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities, through September 30, 2014	$	531

11

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, 2014
					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		14	$	140,716	$	-	$	3,757	$	3,757
Mortgage-backed		26		140,189		341		4,076		4,417
Trust preferred		1		1,177		-		172		172
Total		41	$	282,082	$	341	$	8,005	$	8,346
	December 31, 2013
					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		15	$	139,466	$	8,222	$	-	$	8,222
State and municipal		12		11,680		156		-		156
Mortgage-backed		30		169,377		6,865		127		6,992
Trust preferred		1		1,413		-		288		288
Total		58	$	321,936	$	15,243	$	415	$	15,658

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, 2014				December 31, 2013
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Due in one year or less	$	2,000	$	2,002	$	2,080	$	2,085
Due after one year through five years		43,148		44,500		12,766		13,285
Due after five years through ten years		341,678		348,934		392,389		392,339
Due after ten years		293,176		295,948		342,732		342,852
Total debt securities available for sale	$	680,002	$	691,384	$	749,967	$	750,561

At September 30, 2014 and December 31, 2013, investments available-for-sale with a book value of $200.2 million and $186.6 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, 2014 and December 31, 2013.

12

Investments held-to-maturity

The amortized cost and estimated fair values of investments held-to-maturity at the dates indicated are presented in the following table:

	September 30, 2014									December 31, 2013
			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	$	64,510	$	-	$	(1,984	)	$	62,526	$	64,505	$	-	$	(4,827	)	$	59,678
State and municipal		156,971		4,121		(724	)		160,368		159,889		1,920		(5,753	)		156,056
Mortgage-backed		209		27		-			236		244		29		-			273
Total investments held-to-maturity	$	221,690	$	4,148	$	(2,708	)	$	223,130	$	224,638	$	1,949	$	(10,580	)	$	216,007

Gross unrealized losses and fair value by length of time that the individual held-to-maturity securities have been in a continuous unrealized loss position at the dates indicated are presented in the following tables: 

	September 30, 2014
					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		8	$	62,526	$	-	$	1,984	$	1,984
State and municipal		57		52,941		55		669		724
Total		65	$	115,467	$	55	$	2,653	$	2,708
	December 31, 2013
					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		8	$	59,678	$	4,827	$	-	$	4,827
State and municipal		113		94,243		5,366		387		5,753
Total		121	$	153,921	$	10,193	$	387	$	10,580

The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time, which may be maturity, to allow for any anticipated recovery in fair value, and considers the unrealized losses in the held-to-maturity portfolio temporary in nature.

The amortized cost and estimated fair values of debt securities held-to-maturity by contractual maturity at the dates indicated are reflected in the following table. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

13

	September 30, 2014				December 31, 2013
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Due in one year or less	$	3,099	$	3,112	$	1,720	$	1,725
Due after one year through five years		4,563		4,618		3,249		3,269
Due after five years through ten years		154,865		163,345		139,033		135,074
Due after ten years		59,163		52,055		80,636		75,939
Total debt securities held-to-maturity	$	221,690	$	223,130	$	224,638	$	216,007

At September 30, 2014 and December 31, 2013, investments held-to-maturity with a book value of $206.6 million and $165.8 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. Agency securities, exceeded ten percent of stockholders' equity at September 30, 2014 and December 31, 2013.

Equity securities

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

(In thousands)	September 30, 2014		December 31, 2013
Federal Reserve Bank stock	$	8,269	$	8,269
Federal Home Loan Bank of Atlanta stock		28,803		32,418
Total equity securities	$	37,072	$	40,687

Note 3 – Loans and Leases

Outstanding loan balances at September 30, 2014 and December 31, 2013 are net of unearned income including net deferred loan costs of $0.1 million and $0.7 million, respectively. The loan portfolio segment balances at the dates indicated are presented in the following table: 

(In thousands)	September 30, 2014		December 31, 2013
Residential real estate:
Residential mortgage	$	698,925	$	618,381
Residential construction		141,883		129,177
Commercial real estate:
Commercial owner occupied real estate		584,964		592,823
Commercial investor real estate		575,984		552,178
Commercial acquisition, development and construction		194,666		160,696
Commercial Business		368,611		356,651
Leases		156		703
Consumer		410,723		373,657
Total loans and leases	$	2,975,912	$	2,784,266

14

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan and Lease Losses

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

	Nine Months Ended September 30,
(In thousands)	2014			2013
Balance at beginning of year	$	38,766		$	42,957
Provision (credit) for loan and lease losses		(1,016	)		(1,670	)
Loan and lease charge-offs		(1,541	)		(9,639	)
Loan and lease recoveries		1,365			7,774
Net charge-offs		(176	)		(1,865	)
Balance at period end	$	37,574		$	39,422

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

	For the Nine Months Ended September 30, 2014
				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			Leasing			Consumer			Mortgage			Construction			Total
Balance at beginning of year	$	6,308		$	3,754		$	9,263		$	6,308		$	16		$	4,142		$	7,819		$	1,156		$	38,766
Provision (credit)		(1,119	)		799			(681	)		630			(6	)		41			(355	)		(325	)		(1,016	)
Charge-offs		(225	)		-			(4	)		(265	)		-			(720	)		(324	)		(3	)		(1,541	)
Recoveries		1,023			-			34			-			-			134			105			69			1,365
Net recoveries (charge-offs)		798			-			30			(265	)		-			(586	)		(219	)		66			(176	)
Balance at end of period	$	5,987		$	4,553		$	8,612		$	6,673		$	10		$	3,597		$	7,245		$	897		$	37,574
Total loans and leases	$	368,611		$	194,666		$	575,984		$	584,964		$	156		$	410,723		$	698,925		$	141,883		$	2,975,912
Allowance for loans and leases to total loans and leases ratio		1.62	%		2.34	%		1.50	%		1.14	%		6.42	%		0.88	%		1.04	%		0.63	%		1.26	%
Balance of loans specifically evaluated for impairment	$	5,943		$	3,792		$	10,352		$	10,742			na.		$	27		$	6,039		$	1,689		$	38,584
Allowance for loans specifically evaluated for impairment	$	1,406		$	1,188		$	399		$	794			na.			na.		$	557		$	-		$	4,344
Specific allowance to specific loans ratio		23.66	%		31.33	%		3.85	%		7.39	%		na.			na.			9.22	%		na.			11.26	%
Balance of loans collectively evaluated	$	362,668		$	190,874		$	565,632		$	574,222		$	156		$	410,696		$	692,886		$	140,194		$	2,937,328
Allowance for loans collectively evaluated	$	4,581		$	3,365		$	8,213		$	5,879		$	10		$	3,597		$	6,688		$	897		$	33,230
Collective allowance to collective loans ratio		1.26	%		1.76	%		1.45	%		1.02	%		6.42	%		0.88	%		0.97	%		0.64	%		1.13	%

15

	For the Year Ended December 31, 2013
				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			Leasing			Consumer			Mortgage			Construction			Total
Balance at beginning of year	$	6,495		$	4,737		$	9,583		$	6,997		$	332		$	3,846		$	8,522		$	2,445		$	42,957
Provision (credit)		1,910			(3,978	)		1,100			(874	)		(326	)		1,951			329			(1,196	)		(1,084	)
Charge-offs		(2,915	)		(85	)		(4,774	)		(240	)		-			(1,853	)		(1,194	)		(104	)		(11,165	)
Recoveries		818			3,080			3,354			425			10			198			162			11			8,058
Net recoveries (charge-offs )		(2,097	)		2,995			(1,420	)		185			10			(1,655	)		(1,032	)		(93	)		(3,107	)
Balance at end of period	$	6,308		$	3,754		$	9,263		$	6,308		$	16		$	4,142		$	7,819		$	1,156		$	38,766
Total loans and leases	$	356,651		$	160,696		$	552,178		$	592,823		$	703		$	373,657		$	618,381		$	129,177		$	2,784,266
Allowance for loans and leases to total loans and leases ratio		1.77	%		2.34	%		1.68	%		1.06	%		2.28	%		1.11	%		1.26	%		0.89	%		1.39	%
Balance of loans specifically evaluated for impairment	$	5,608		$	4,128		$	7,654		$	7,111		$	na.		$	29		$	6,141		$	1,852		$	32,523
Allowance for loans specifically evaluated for impairment	$	849		$	1,031		$	126		$	426		$	na.		$	na.		$	626		$	-		$	3,058
Specific allowance to specific loans ratio		15.14	%		24.98	%		1.65	%		5.99	%	$	na.			na.			10.19	%		na.			9.40	%
Balance of loans collectively evaluated	$	351,043		$	156,568		$	544,524		$	585,712		$	703		$	373,628		$	612,240		$	127,325		$	2,751,743
Allowance for loans collectively evaluated	$	5,459		$	2,723		$	9,137		$	5,882		$	16		$	4,142		$	7,193		$	1,156		$	35,708
Collective allowance to collective loans ratio		1.56	%		1.74	%		1.68	%		1.00	%		2.28	%		1.11	%		1.17	%		0.91	%		1.30	%

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

(In thousands)	September 30, 2014		December 31, 2013
Impaired loans with a specific allowance	$	15,608	$	12,217
Impaired loans without a specific allowance		22,976		20,306
Total impaired loans	$	38,584	$	32,523
Allowance for loan and lease losses related to impaired loans	$	4,344	$	3,058
Allowance for loan and lease losses related to loans collectively evaluated		33,230		35,708
Total allowance for loan and lease losses	$	37,574	$	38,766
Average impaired loans for the period	$	35,559	$	38,379
Contractual interest income due on impaired loans during the period	$	2,217	$	2,612
Interest income on impaired loans recognized on a cash basis	$	665	$	1,374
Interest income on impaired loans recognized on an accrual basis	$	281	$	473

16

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, 2014
			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	$	1,182	$	1,437	$	2,044	$	5,051	$	947	$	10,661
Restructured accruing		793		-		-		-		779		1,572
Restructured non-accruing		230		1,211		78		1,245		611		3,375
Balance	$	2,205	$	2,648	$	2,122	$	6,296	$	2,337	$	15,608
Allowance	$	1,406	$	1,188	$	399	$	794	$	557	$	4,344
Impaired loans without a specific allowance
Non-accruing	$	1,745	$	-	$	6,088	$	1,808	$	784	$	10,425
Restructured accruing		999		-		2,142		-		2,669		5,810
Restructured non-accruing		994		1,144		-		2,638		1,965		6,741
Balance	$	3,738	$	1,144	$	8,230	$	4,446	$	5,418	$	22,976
Total impaired loans
Non-accruing	$	2,927	$	1,437	$	8,132	$	6,859	$	1,731	$	21,086
Restructured accruing		1,792		-		2,142		-		3,448		7,382
Restructured non-accruing		1,224		2,355		78		3,883		2,576		10,116
Balance	$	5,943	$	3,792	$	10,352	$	10,742	$	7,755	$	38,584
Unpaid principal balance in total impaired loans	$	7,752	$	13,245	$	14,998	$	12,725	$	7,908	$	56,628

			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	$	5,662	$	3,948	$	9,089	$	8,968	$	7,892	$	35,559
Contractual interest income due on impaired loans during the period	$	319	$	512	$	553	$	694	$	139
Interest income on impaired loans recognized on a cash basis	$	232	$	68	$	76	$	250	$	39
Interest income on impaired loans recognized on an accrual basis	$	98	$	-	$	83	$	-	$	100

17

	December 31, 2013
			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	$	374	$	1,360	$	749	$	2,022	$	-	$	4,505
Restructured accruing		790		-		-		1,174		2,365		4,329
Restructured non-accruing		349		1,122		-		1,274		638		3,383
Balance	$	1,513	$	2,482	$	749	$	4,470	$	3,003	$	12,217
Allowance	$	849	$	1,031	$	126	$	426	$	626	$	3,058
Impaired loans without a specific allowance
Non-accruing	$	1,532	$	382	$	5,440	$	646	$	-	$	8,000
Restructured accruing		1,417		-		852		-		2,861		5,130
Restructured non-accruing		1,146		1,264		613		1,995		2,158		7,176
Balance	$	4,095	$	1,646	$	6,905	$	2,641	$	5,019	$	20,306
Total impaired loans
Non-accruing	$	1,906	$	1,742	$	6,189	$	2,668	$	-	$	12,505
Restructured accruing		2,207		-		852		1,174		5,226		9,459
Restructured non-accruing		1,495		2,386		613		3,269		2,796		10,559
Balance	$	5,608	$	4,128	$	7,654	$	7,111	$	8,022	$	32,523
Unpaid principal balance in total impaired loans	$	7,943	$	10,318	$	12,351	$	8,684	$	8,650	$	47,946

	December 31, 2013
			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	$	7,153	$	5,451	$	10,605	$	8,386	$	6,784	$	38,379
Contractual interest income due on impaired loans during the period	$	452	$	654	$	587	$	692	$	227
Interest income on impaired loans recognized on a cash basis	$	238	$	253	$	75	$	725	$	83
Interest income on impaired loans recognized on an accrual basis	$	133	$	-	$	30	$	77	$	233

18

Credit Quality

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

	September 30, 2014
			Commercial Real Estate										Residential Real Estate
							Commercial
			Commercial		Commercial		Owner						Residential		Residential
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	4,151	$	3,792	$	8,210	$	10,742	$	-	$	1,830	$	4,417	$	2,497	$	35,639
Loans and leases 90 days past due		-		-		-		649		-		6		-		-		655
Restructured loans and leases		1,792		-		2,142		-		-		-		3,448		-		7,382
Total non-performing loans and leases		5,943		3,792		10,352		11,391		-		1,836		7,865		2,497		43,676
Other real estate owned		39		365		-		-		-		-		1,358		-		1,762
Total non-performing assets	$	5,982	$	4,157	$	10,352	$	11,391	$	-	$	1,836	$	9,223	$	2,497	$	45,438

	December 31, 2013
			Commercial Real Estate										Residential Real Estate
							Commercial
			Commercial		Commercial		Owner						Residential		Residential
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	3,400	$	4,127	$	6,802	$	5,936	$	-	$	2,259	$	5,735	$	2,315	$	30,574
Loans and leases 90 days past due		-		-		-		-		-		1		-		-		1
Restructured loans and leases		2,207		-		852		1,174		-		29		5,197		-		9,459
Total non-performing loans and leases		5,607		4,127		7,654		7,110		-		2,289		10,932		2,315		40,034
Other real estate owned		54		365		-		-		-		-		919		-		1,338
Total non-performing assets	$	5,661	$	4,492	$	7,654	$	7,110	$	-	$	2,289	$	11,851	$	2,315	$	41,372

	September 30, 2014
			Commercial Real Estate										Residential Real Estate
							Commercial
			Commercial		Commercial		Owner						Residential		Residential
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	564	$	948	$	169	$	839	$	-	$	732	$	4,014	$	-	$	7,266
61-90 days		403		-		2,009		-		-		20		162		-		2,594
> 90 days		-		-		-		649		-		6		-		-		655
Total past due		967		948		2,178		1,488		-		758		4,176		-		10,515
Non-accrual loans and leases		4,151		3,792		8,210		10,742		-		1,830		4,417		2,497		35,639
Loans aquired with deteriorated credit quality		1,267		-		53		1,814		-		-		-		-		3,134
Current loans		362,226		189,926		565,543		570,920		156		408,135		690,332		139,386		2,926,624
Total loans and leases	$	368,611	$	194,666	$	575,984	$	584,964	$	156	$	410,723	$	698,925	$	141,883	$	2,975,912

19

	December 31, 2013
			Commercial Real Estate										Residential Real Estate
							Commercial
			Commercial		Commercial		Owner						Residential		Residential
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	382	$	-	$	5,826	$	876	$	4	$	716	$	4,119	$	-	$	11,923
61-90 days		1,142		-		-		2,540		-		176		208		-		4,066
> 90 days		-		-		-		-		-		1		-		-		1
Total past due		1,524		-		5,826		3,416		4		893		4,327		-		15,990
Non-accrual loans and leases		3,400		4,127		6,802		5,936		-		2,259		5,735		2,315		30,574
Loans aquired with deteriorated credit quality		1,363		-		571		2,366		-		-		-		-		4,300
Current loans		350,364		156,569		538,979		581,105		699		370,505		608,319		126,862		2,733,402
Total loans and leases	$	356,651	$	160,696	$	552,178	$	592,823	$	703	$	373,657	$	618,381	$	129,177	$	2,784,266

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

	September 30, 2014
			Commercial Real Estate
							Commercial
			Commercial		Commercial		Owner
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	344,076	$	189,604	$	557,036	$	553,795	$	1,644,511
Special Mention		14,752		-		3,882		9,799		28,433
Substandard		9,783		5,062		15,066		21,370		51,281
Doubtful		-		-		-		-		-
Total	$	368,611	$	194,666	$	575,984	$	584,964	$	1,724,225

	December 31, 2013
			Commercial Real Estate
							Commercial
			Commercial		Commercial		Owner
(In thousands)	Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	324,941	$	154,869	$	523,901	$	553,604	$	1,557,315
Special Mention		16,166		-		2,944		15,702		34,812
Substandard		15,274		5,827		25,333		23,517		69,951
Doubtful		270		-		-		-		270
Total	$	356,651	$	160,696	$	552,178	$	592,823	$	1,662,348

20

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, 2014
					Residential Real Estate
					Residential		Residential
(In thousands)	Leasing		Consumer		Mortgage		Construction		Total
Performing	$	156	$	408,887	$	691,060	$	139,386	$	1,239,489
Non-performing:
90 days past due		-		6		-		-		6
Non-accruing		-		1,830		4,417		2,497		8,744
Restructured loans and leases		-		-		3,448		-		3,448
Total	$	156	$	410,723	$	698,925	$	141,883	$	1,251,687

	December 31, 2013
					Residential Real Estate
					Residential		Residential
(In thousands)	Leasing		Consumer		Mortgage		Construction		Total
Performing	$	703	$	371,368	$	607,449	$	126,862	$	1,106,382
Non-performing:
90 days past due		-		1		-		-		1
Non-accruing		-		2,259		5,735		2,315		10,309
Restructured loans and leases		-		29		5,197		-		5,226
Total	$	703	$	373,657	$	618,381	$	129,177	$	1,121,918

During the nine months ended September 30, 2014, the Company restructured $1.7 million in loans that were designated as troubled debt restructurings. Modifications consisted principally of interest rate concessions. No modifications resulted in the reduction of the recorded 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 principal in the restructured loan. Loans restructured during 2014 did not require significant specific reserves at September 30, 2014. For the year ended December 31, 2013, the Company restructured $3.4 million in loans. Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded principal in the associated loan balances. Loans restructured during 2013 had specific reserves of $0.1 million at December 31, 2013. Commitments to lend additional funds on loans that have been restructured at September 30, 2014 and December 31, 2013 amounted to $5.4 million and $5.5 million, respectively.

21

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, 2014
			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	$	185	$	-	$	1,290	$	-	$	-	$	1,475
Restructured non-accruing		-		192		-		-		-		192
Balance	$	185	$	192	$	1,290	$	-	$	-	$	1,667
Specific allowance	$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted	$	-	$	-	$	-	$	720	$	-	$	720

	For the Year Ended December 31, 2013
			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	$	87	$	-	$	852	$	-	$	2,064	$	3,003
Restructured non-accruing		425		-		-		-		-		425
Balance	$	512	$	-	$	852	$	-	$	2,064	$	3,428
Specific allowance	$	141	$	-	$	-	$	-	$	-	$	141
Restructured and subsequently defaulted	$	-	$	-	$	-	$	-	$	-	$	-

Other Real Estate Owned

Other real estate owned totaled $1.8 million and $1.3 million at September 30, 2014 and December 31, 2013.

22

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, 2014							Weighted		December 31, 2013							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:
Core deposit intangibles	$	9,716	$	(9,716	)	$	-		-	$	9,716	$	(9,352	)	$	364		0.3 years
Other identifiable intangibles		8,623		(8,001	)		622		1.4 years		8,623		(7,657	)		966		2.1 years
Total amortizing intangible assets	$	18,339	$	(17,717	)	$	622			$	18,339	$	(17,009	)	$	1,330
Goodwill	$	84,171				$	84,171			$	84,171				$	84,171

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

(In thousands)	Amount
2014		112
2015		372
2016		94
2017		16
Thereafter		28
Total amortizing intangible assets	$	622

Note 6 – Deposits

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

(In thousands)	September 30, 2014		December 31, 2013
Noninterest-bearing deposits	$	986,549	$	836,198
Interest-bearing deposits:
Demand		485,112		460,824
Money market savings		846,625		870,653
Regular savings		259,848		243,813
Time deposits of less than $100,000		244,085		263,636
Time deposits of $100,000 or more		206,569		202,101
Total interest-bearing deposits		2,042,239		2,041,027
Total deposits	$	3,028,788	$	2,877,225

Note 7 – Stockholders’ Equity

The Company re-approved a stock repurchase program in August 2013 that permits the repurchase of up to 5% of the Company’s outstanding shares of common stock or approximately 1,260,000 shares. Repurchases, which will be conducted through open market purchases or privately negotiated transactions, will be made depending on market conditions and other factors. No shares were repurchased during the first nine months of 2014.

23

Note 8 – Share Based Compensation

At September 30, 2014, the Company had two share based compensation plans in existence, the 1999 Stock Option Plan (expired but having outstanding options that may still be exercised) and the 2005 Omnibus Stock Plan, which is described below.

The Company’s 2005 Omnibus Stock Plan (“Omnibus Plan”) provides for the granting of non-qualifying stock options to the Company’s directors, and incentive and non-qualifying stock options, stock appreciation rights and restricted stock grants to selected key employees on a periodic basis at the discretion of the board. The Omnibus Plan authorizes the issuance of up to 1,800,000 shares of common stock of which 1,015,421 are available for issuance at September 30, 2014, 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. Options granted under the expired 1999 Stock Option Plan remain outstanding until exercised or they expire. 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 with the weighted-average assumptions for the periods shown are presented in the following table: 

	Nine Months Ended September 30,
	2014			2013
Dividend yield		3.04	%		2.80	%
Weighted average expected volatility		46.78	%		53.87	%
Weighted average risk-free interest rate		1.56	%		0.83	%
Weighted average expected lives (in years)		5.08			5.34
Weighted average grant-date fair value	$	8.05		$	7.99

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 $0.4 million and $0.4 million for the three months ended September 30, 2014 and 2013, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.3 million and $1.2 million was recognized for the nine months ended September 30, 2014 and 2013, respectively. Stock options exercised were 13,834 and 10,964 for the nine months ended September 30, 2014 and 2013, respectively. The intrinsic value for the stock options exercised amounted to $0.1 million and $0.1 million for the nine months ended September 30, 2014 and 2013, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.2 million as of September 30, 2014. 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 $4.0 million as of September 30, 2014. That cost is expected to be recognized over a weighted average period of approximately 3.3 years. The fair value of the options vested during the nine months ended September 30, 2014 and 2013, was $0.2 million and $0.2 million, respectively.

In the first quarter of 2014, 21,251 stock options were granted, subject to a three year vesting schedule with one third of the options vesting each year on the anniversary date of the grant. Additionally, 79,416 shares of restricted stock were granted, subject to a five year vesting schedule with one fifth of the shares vesting each year on the grant date anniversary. No shares were granted during the second or third quarter of 2014.

24

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, 2014		307,800		$	25.23			$	1,768
Granted		21,251		$	24.75
Exercised		(13,834	)	$	13.72			$	147
Forfeited or expired		(2,500	)		28.59
Balance at September 30, 2014		312,717		$	25.68		2.0	$	848
Exercisable at September 30, 2014		271,580		$	26.18		1.4	$	787
Weighted average fair value of options
granted during the year				$	8.05

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, 2014		227,064		$	18.61
Granted		79,416		$	24.75
Vested		(76,037	)	$	17.53
Forfieted		(2,885	)	$	21.95
Restricted stock at September 30, 2014		227,558		$	21.07

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”) covering substantially all employees. 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 future salary increases and additional years of service will 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.

25

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)	2014			2013			2014			2013
Interest cost on projected benefit obligation	$	403		$	390		$	1,197		$	1,163
Expected return on plan assets		(493	)		(425	)		(1,480	)		(1,259	)
Recognized net actuarial loss		67			249			183			1,176
Net periodic benefit cost	$	(23	)	$	214		$	(100	)	$	1,080

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. Given these uncertainties, management continues to monitor the funding level of the pension plan and may make contributions as necessary during 2014.

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)	2014		2013		2014		2013
Net income	$	11,142	$	12,089	$	29,052	$	34,809
Basic:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Basic net income per share	$	0.44	$	0.48	$	1.16	$	1.40
Diluted:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Dilutive common stock equivalents		78		92		90		97
Dilutive EPS shares		25,152		25,071		25,135		25,049
Diluted net income per share	$	0.44	$	0.48	$	1.16	$	1.39
Anti-dilutive shares		64		146		59		195

NOTE 11 – OTHER COMPREHENSIVE INCOME

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-equity changes are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments. These do not have an impact on the Company’s net income. The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated: 

(In thousands)	Unrealized Gains (Losses) on Investments Available-for-Sale			Defined Benefit Pension Plan			Total
Balance at January 1, 2014	$	358		$	(3,328	)	$	(2,970	)
Other comprehensive income before reclassification, net of tax		6,495			-			6,495
Reclassifications from accumulated other comprehensive income, net of tax		5			102			107
Current period change in other comprehensive income, net of tax		6,500			102			6,602
Balance at September 30, 2014	$	6,858		$	(3,226	)	$	3,632
(In thousands)		Unrealized Gains (Losses) on Investments Available-for-Sale			Defined Benefit Pension Plan			Total
Balance at January 1, 2013	$	20,258		$	(8,946	)	$	11,312
Other comprehensive income before reclassification, net of tax		(14,990	)		-			(14,990	)
Reclassifications from accumulated other comprehensive income, net of tax		71			715			786
Current period change in other comprehensive income, net of tax		(14,919	)		715			(14,204	)
Balance at September 30, 2013	$	5,339		$	(8,231	)	$	(2,892	)

26

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)	2014		2013
Unrealized gains/(losses) on investments available-for-sale
Affected line item in the Statements of Income:
Investment securities gains	$	8	$	118
Income before taxes		8		118
Tax expense		3		47
Net income	$	5	$	71
Amortization of defined benefit pension plan items
Affected line item in the Statements of Income:
Recognized actuarial loss 1	$	183	$	1,176
Income before taxes		183		1,176
Tax expense		81		461
Net income	$	102	$	715

1  This amount is included in the computation of net periodic pension 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 $21.1 million with a fair value of $1.4 million as of September 30, 2014 compared to $46.4 million with a fair value of $1.6 million as of December 31, 2013. The offsetting nature of the swaps results in a neutral effect on the Company’s operations. 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

For the nine months ended September 30, 2014, the Company accrued $6.4 million for litigation expenses as a result of an adverse jury verdict rendered in the second quarter associated with the actions of a former employee of CommerceFirst Bank, which was acquired in 2012. The Company is currently in the process of appealing the decision.

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.

27

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 on the following page.

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, which 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, mortgage-backed securities and corporate debt

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

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. For further information, refer to Note 2 – Investments. Positions that are not traded in active markets or are subject to transfer restrictions are classified within Level 3 of the fair value hierarchy. 

28

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, 2014
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
Assets
Residential mortgage loans held for sale	$	-	$	6,656		$	-	$	6,656
Investments available-for-sale:
U.S. government agencies		-		140,716			-		140,716
State and municipal		-		167,585			-		167,585
Mortgage-backed		-		379,904			-		379,904
Corporate debt		-		2,002			-		2,002
Trust preferred		-		-			1,177		1,177
Marketable equity securities		-		723			-		723
Interest rate swap agreements		-		1,446			-		1,446
Liabilities
Interest rate swap agreements	$	-	$	(1,446	)	$	-	$	(1,446	)
		December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
Assets
Residential mortgage loans held for sale	$	-	$	8,365		$	-	$	8,365
Investments available-for-sale:
U.S. government agencies		-		139,466			-		139,466
State and municipal		-		165,428			-		165,428
Mortgage-backed		-		442,250			-		442,250
Corporate debt		-		2,004			-		2,004
Trust preferred		-		-			1,413		1,413
Marketable equity securities		-		723			-		723
Interest rate swap agreements		-		1,608			-		1,608
Liabilities
Interest rate swap agreements	$	-	$	(1,608	)	$	-	$	(1,608	)

29

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, 2014	$	1,413
Total OTTI included in earnings		-
Principal redemption		(352	)
Total unrealized losses included in other comprehensive income (loss)		116
Balance at September 30, 2014	$	1,177

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, 2014
(In thousands)	Quoted Prices in Active Markets for Identical Assets   (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,220	$	11,220	$	21,384
Other real estate owned		-		-		1,762		1,762		(227	)
Total	$	-	$	-	$	12,982	$	12,982	$	21,157
	December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets   (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,011	$	11,011	$	17,655
Other real estate owned		-		-		1,338		1,338		(309	)
Total	$	-	$	-	$	12,349	$	12,349	$	17,346

30

At September 30, 2014, impaired loans totaling $38.6 million were written down to fair value of $34.3 million as a result of specific loan loss allowances of $4.3 million associated with the impaired loans which was included in the allowance for loan losses. Impaired loans totaling $32.5 million were written down to fair value of $29.5 million at December 31, 2013 as a result of specific loan loss allowances of $3.0 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.

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.

31

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, 2014				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
Investments held-to-maturity and other equity securities	$	258,762	$	260,202	$	-	$	260,202	$	-
Loans, net of allowance		2,938,338		2,882,093		-		-		2,882,093
Other assets		88,031		88,031		-		88,031		-
Financial Liabilities
Time Deposits	$	450,654	$	450,323	$	-	$	450,323	$	-
Securities sold under retail repurchase agreements and federal funds purchased		71,384		71,384		-		71,384		-
Advances from FHLB		558,000		580,738		-		580,738		-
Subordinated debentures		35,000		12,652		-		-		12,652
					Fair Value Measurements
	December 31, 2013				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
Investments held-to-maturity and other equity securities	$	265,325	$	256,694	$	-	$	256,694	$	-
Loans, net of allowance		2,784,266		2,692,877		-		-		2,692,877
Other assets		86,213		86,213		-		86,213		-
Financial Liabilities
Time Deposits	$	465,737	$	465,392	$	-	$	465,392	$	-
Securities sold under retail repurchase agreements and federal funds purchased		53,842		53,842		-		53,842		-
Advances from FHLB		615,000		641,901		-		641,901		-
Subordinated debentures		35,000		11,376		-		-		11,376

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:

Investments held-to-maturity and other equity securities: 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. These amounts are presented net of the allowance for loan losses.

Other assets: The investment in bank-owned life insurance represents the cash surrender value of the policies at September 30, 2014 and December 31, 2013 as determined by the each insurance carrier.

32

Time Deposits: The fair value of time deposits is estimated by discounting their cash flows based on their future maturities.

Securities sold under agreements to repurchase and federal funds purchased: The fair value and the carrying value are the same due to the short maturities of those instruments.

Advances from FHLB: The fair value of the Federal Home Loan Bank of Atlanta (“FHLB”) advances is 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: The fair value is estimated by computing the discounted value of contractual cash flows payable at current interest rates for obligations with similar remaining terms. The subordinated debentures are classified as Level 3 in the fair value hierarchy due to the lack of market activity of such instruments.

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 acquisition 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 on sales of investment products and service charges on deposit accounts. Expenses include personnel, occupancy, marketing, equipment and other expenses. Amortization of intangibles related to the acquired entities was not significant for the three months ended September 30, 2014 was not significant. Non-cash charges associated with amortization of intangibles related to the acquired entities amounted to $0.3 million for the three months ended September 30, 2013. These non-cash charges amounted to $0.4 million and $1.1 million for the nine months ended September 30, 2014 and 2013.

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 related to the acquired entities was not significant for the three and nine months ended September 30, 2014 and 2013, 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 $1.0 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 related to the acquired entities was not significant for the three and nine months ended September 30, 2014 and 2013, respectively.

33

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, 2014
	Community					Investment		Inter-Segment
(In thousands)	Banking			Insurance		Mgmt.		Elimination			Total
Interest income	$	37,150		$	1	$	1	$	(2	)	$	37,150
Interest expense		4,732			-		-		(2	)		4,730
Provision for loan and lease losses		(192	)		-		-		-			(192	)
Noninterest income		9,545			1,498		1,722		(175	)		12,590
Noninterest expenses		26,632			1,226		949		(175	)		28,632
Income before income taxes		15,523			273		774		-			16,570
Income tax expense		5,014			110		304		-			5,428
Net income	$	10,509		$	163	$	470	$	-		$	11,142
Assets	$	4,250,103		$	6,053	$	11,409	$	(18,834	)	$	4,248,731
		Three Months Ended September 30, 2013
		Community					Investment		Inter-Segment
(In thousands)		Banking			Insurance		Mgmt.		Elimination			Total
Interest income	$	40,180		$	1	$	4	$	(5	)	$	40,180
Interest expense		4,879			-		-		(5	)		4,874
Provision (credit) for loan and lease losses		1,128			-		-		-			1,128
Noninterest income		8,453			1,271		1,573		(74	)		11,223
Noninterest expenses		24,939			1,135		893		(74	)		26,893
Income before income taxes		17,687			137		684		-			18,508
Income tax expense		6,094			55		270		-			6,419
Net income	$	11,593		$	82	$	414	$	-		$	12,089
Assets	$	4,088,617		$	13,907	$	18,350	$	(67,905	)	$	4,052,969
		Nine Months Ended September 30, 2014
		Community					Investment		Inter-Segment
(In thousands)		Banking			Insurance		Mgmt.		Elimination			Total
Interest income	$	110,391		$	6	$	10	$	(16	)	$	110,391
Interest expense		14,086			-		-		(16	)		14,070
Provision (credit) for loan and lease losses		(1,016	)		-		-		-			(1,016	)
Noninterest income		29,669			4,273		5,117		(3,526	)		35,533
Noninterest expenses		87,550			3,542		2,756		(3,526	)		90,322
Income before income taxes		39,440			737		2,371		-			42,548
Income tax expense		12,272			298		926		-			13,496
Net income	$	27,168		$	439	$	1,445	$	-		$	29,052
Assets	$	4,250,103		$	6,053	$	11,409	$	(18,834	)	$	4,248,731

		Nine Months Ended September 30, 2013
		Community					Investment		Inter-Segment
(In thousands)		Banking			Insurance		Mgmt.		Elimination			Total
Interest income	$	112,238		$	6	$	11	$	(17	)	$	112,238
Interest expense		14,691			-		-		(17	)		14,674
Provision (credit) for loan and lease losses		(1,670	)		-		-		-			(1,670	)
Noninterest income		27,748			3,968		4,622		(481	)		35,857
Noninterest expenses		76,893			3,270		2,542		(481	)		82,224
Income before income taxes		50,072			704		2,091		-			52,867
Income tax expense		16,955			285		818		-			18,058
Net income	$	33,117		$	419	$	1,273	$	-		$	34,809
Assets	$	4,088,617		$	13,907	$	18,350	$	(67,905	)	$	4,052,969

34

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 was founded in 1868 and is the oldest banking business based in Maryland. The Bank is independent, community oriented, and conducts a full-service commercial banking business through 46 community offices located in Anne Arundel, Carroll, Frederick, Howard, Montgomery and Prince George's counties in Maryland, and Arlington, Fairfax and Loudoun counties in Virginia. 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.

Overview

Net income for the Company for the third quarter of 2014 totaled $11.1 million ($0.44 per diluted share) as compared to net income of $12.1 million ($0.48 per diluted share) for the third quarter of 2013. For the first nine months of 2014, net income totaled $29.1 million ($1.16 per diluted share), compared to net income of $34.8 million ($1.39 per diluted share) for the first nine months of 2013. During the third quarter of 2013, the Company recognized interest income of $3.7 million, non-interest income of $0.4 million and a credit to non-interest expenses of $0.5 million due to the resolution of two previously non-performing commercial real estate loans. These results reflect the following events:

· Average total loans for the third quarter of 2014 increased 12% compared to the third quarter of 2013 due primarily to organic growth in the residential mortgage, commercial investor real estate and consumer loan portfolios.

· The provision for loan and lease losses was a credit of $0.2 million for the third quarter of 2014 compared to a charge of $1.1 million for the third quarter of 2013 and a charge of $0.2 million for the second quarter of 2014. The decrease in the provision for the third quarter of 2014 compared to the prior year quarter was due primarily to a decrease in historical losses which offset the growth in the loan portfolio.

· The net interest margin was 3.42% for the third quarter of 2014, compared to 3.88% for the third quarter of 2013 and 3.48% for the second quarter of 2014. The decline from the prior year was the result of lower loan yields, primarily in the commercial loan portfolio, combined with the impact of interest recoveries in 2013 on two non-performing commercial real estate loans. Excluding the effect of the loan recoveries, the net interest margin was 3.49% for the third quarter of 2013.

· Non-interest income increased $1.4 million or 12% for the third quarter of 2014 compared to the third quarter of 2013 due primarily to increases in income from wealth management, insurance agency commissions and mortgage banking activities.

· For the year-to-date, the Company recorded litigation-related expenses in 2014 of $6.4 million before taxes for damages resulting from claims against the Company based on the actions of a former employee of CommerceFirst Bank, which was acquired by the Company in 2012.

35

In the first nine months of 2014, the Mid-Atlantic region continued to experience moderate economic improvement. Concerns over the growth of the national economy and consumer and business uncertainty continued to impede both the regional and national economic outlook. A declining unemployment rate has been somewhat offset by uneven trends in housing and consumer spending and concerns over the current status of the job market together with the possibility of higher interest rates in the coming year. The effect of geopolitical events in Europe and the Middle East and slower growth abroad, particularly in China, also continue to provide underlying volatility. These factors have caused uncertainty, particularly among both individual consumers and small and large businesses and have continued to suppress confidence and thus constrain the pace of economic growth and lending. Despite this challenging business environment, the Company has emphasized the fundamentals of community banking as it has maintained strong levels of liquidity, capital and credit quality.

During 2014, lower rates on average interest-earning assets and a slowing decline in funding costs served to offset the effect of loan growth. Average loans increased 12% for the third quarter of 2014 compared to the prior year quarter, while average total deposits increased 5% for the quarter compared to 2013.

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.

Non-performing assets increased to $45.4 million at September 30, 2014 from $39.9 million at September 30, 2013. This increase was due primarily to several loans in the owner-occupied commercial real estate portfolio that were placed on non-accrual status. Non-performing assets represented 1.07% of total assets at September 30, 2014 compared to 0.98% at September 30, 2013. The ratio of net charge-offs to average loans and leases was 0.03% for the third quarter of 2014 compared to 0.11% for the prior year quarter.

Non-interest income increased 12% in the third quarter of 2014 compared to the third quarter of 2013. This increase was driven by an 10% increase in wealth management income due primarily to growth in assets under management. In addition, insurance agency commissions increased 18% for the quarter due to an increase in commissions on physicians’ liability lines while mortgage banking income increased over the prior year quarter due to higher accrued gains on loans held for sale and related interest rate lock commitments.

Non-interest expenses increased 6% in the third quarter of 2014 compared to the third quarter of 2013 due primarily to higher salaries and benefits, professional fees and other non-interest expenses. Excluding the credits to non-interest expense from the loan recoveries mentioned above, non-interest expenses increased 4% over the prior year quarter.

Total assets at September 30, 2014 increased 3% compared to December 31, 2013 primarily due to organic loan growth which was funded by a 5% increase in deposits. Loan balances increased 7% compared to the prior year end due primarily to increases of 12% in residential mortgage and construction loans, 10% in consumer loans and 21% in commercial ADC loans. Customer funding sources, which include deposits plus other short-term borrowings from core customers, increased 5% compared to balances at December 31, 2013. The increase in customer funding sources was driven primarily by a combined increase of 13% in interest-bearing and noninterest-bearing checking accounts and an increase of 7% in regular savings accounts. The Company continued to manage its net interest margin, primarily by managing rates on certificates of deposit and by utilizing short-term FHLB borrowings during this extended period of historically low interest rates. During the same period, stockholders’ equity increased $23 million due to net income in the first nine months of 2014.

36

Consolidated Average Balances, Yields and Rates

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED    

		Nine Months Ended September 30
		2014						2013
(Dollars in thousands and tax-equivalent)		Average Balances			(1) Interest	Annualized Average Yield/Rate			Average Balances			(1) Interest	Annualized Average Yield/Rate
Assets
Residential mortgage loans (2)	$	660,828			17,085	3.45	%	$	583,105			16,001	3.66	%
Residential construction loans		142,709			3,988	3.74			120,053			3,142	3.50
Commercial ADC loans		170,365			6,450	5.06			155,965			7,540	6.46
Commercial investor real estate loans		570,176			20,881	4.90			486,624			20,927	5.75
Commercial owner occupied real estate loans		583,044			21,304	5.05			565,108			22,464	5.45
Commercial business loans		355,242			12,268	4.62			338,869			13,288	5.10
Leasing		374			16	5.54			1,764			88	6.67
Consumer loans		390,749			9,689	3.34			361,624			9,325	3.47
Total loans and leases (3)		2,873,487			91,681	4.30			2,613,112			92,775	4.77
Taxable securities		687,359			12,786	2.48			765,054			13,536	2.36
Tax-exempt securities (4)		302,148			9,767	4.31			300,826			9,829	4.36
Interest-bearing deposits with banks		35,004			66	0.25			34,379			65	0.25
Federal funds sold		474			-	0.22			475			-	0.22
Total interest-earning assets		3,898,472			114,300	3.94			3,713,846			116,205	4.19
Less: allowance for loan and lease losses		(38,645	)						(42,223	)
Cash and due from banks		45,380							45,932
Premises and equipment, net		45,845							47,479
Other assets		210,325							216,958
Total assets	$	4,161,377						$	3,981,992
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	475,459			306	0.09	%	$	436,236			280	0.09	%
Regular savings deposits		258,224			131	0.07			238,627			159	0.09
Money market savings deposits		871,399			839	0.13			880,794			1,131	0.17
Time deposits		460,548			2,309	0.67			497,136			2,639	0.71
Total interest-bearing deposits		2,065,630			3,585	0.23			2,052,793			4,209	0.27
Other borrowings		68,301			117	0.23			59,734			126	0.28
Advances from FHLB		556,663			9,709	2.33			482,679			9,667	2.68
Subordinated debentures		35,000			659	2.51			35,000			672	2.56
Total interest-bearing liabilities		2,725,594			14,070	0.69			2,630,206			14,674	0.75
Noninterest-bearing demand deposits		894,508							833,059
Other liabilities		30,184							33,230
Stockholders' equity		511,091							485,497
Total liabilities and stockholders' equity	$	4,161,377						$	3,981,992
Net interest income and spread				$	100,230	3.25	%				$	101,531	3.44	%
Less: tax-equivalent adjustment					3,909							3,967
Net interest income				$	96,321						$	97,564
Interest income/earning assets						3.94	%						4.19	%
Interest expense/earning assets						0.48							0.53
Net interest margin						3.46	%						3.66	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $3.9 million and $4.0 million in 2014 and 2013, respectively .

(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(3) Non-accrual loans are included in the average balances.

(4) Includes only investments that are exempt from federal taxes.

37

Results of Operations

For the Nine Months Ended September 30, 2014 Compared to the Nine Months Ended September 30, 2013

Net income for the Company for the first nine months of 2014 totaled $29.1 million ($1.16 per diluted share) compared to net income of $34.8 million ($1.39 per diluted share) for the first nine months of 2013. Excluding the effect of the loan recoveries mentioned previously, net income for the first nine months of 2013 was $32.1 million ($1.28 per diluted share).

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 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 2014 was $96.3 million compared to $97.6 million for the first nine months of 2013. On a tax-equivalent basis, net interest income for the nine months ended September 30, 2014 was $100.2 million compared to $101.5 million for the nine months ended September 30, 2013, a decrease of 1%. The preceding table provides an analysis of net interest income performance that reflects a net interest margin that decreased to 3.46% for the first nine months of 2014 compared to 3.66% for the first nine months of 2013. Excluding interest recoveries of $3.7 million on non-performing commercial real estate loans, the net interest margin was 3.53% for the first nine months of 2013. Average interest-earning assets increased by 5% while average interest-bearing liabilities increased 4% in the first nine months of 2014. Average noninterest-bearing deposits increased 7% in the first nine months of 2014 while the percentage of average noninterest-bearing deposits to total deposits increased to 30% for the first nine months of 2014 compared to 29% for the first nine months of 2013.The decrease in the net interest margin was caused by the effect of lower rates on interest-earning assets that exceeded the benefit of lower rates on interest-bearing deposits and borrowings. 

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:

	2014 vs. 2013									2013 vs. 2012
	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:
Loans and leases	$	(1,094	)	$	8,718		$	(9,812	)	$	6,024		$	8,054		$	(2,030	)
Securities		(812	)		(1,706	)		894			(1,508	)		160			(1,668	)
Other earning assets		1			1			-			(19	)		(14	)		(5	)
Total interest income		(1,905	)		7,013			(8,918	)		4,497			8,200			(3,703	)
Interest expense on funding of earning assets:
Interest-bearing demand deposits		26			35			(9	)		24			28			(4	)
Regular savings deposits		(28	)		13			(41	)		4			21			(17	)
Money market savings deposits		(292	)		(12	)		(280	)		(340	)		20			(360	)
Time deposits		(330	)		(188	)		(142	)		(1,186	)		(472	)		(714	)
Total borrowings		20			1,401			(1,381	)		(1,197	)		1,353			(2,550	)
Total interest expense		(604	)		1,249			(1,853	)		(2,695	)		950			(3,645	)
Net interest income	$	(1,301	)	$	5,764		$	(7,065	)	$	7,192		$	7,250		$	(58	)

* 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.

38

Interest Income

The Company's total tax-equivalent interest income for the first nine months of 2014 decreased 2% compared to the prior year period. The previous table shows that, in 2014, the increase in average loans and leases was offset by a continued decline in earning asset yields with respect to the loan portfolio.

In the first nine months of 2014, the average balance of the loan portfolio increased 10% compared to the prior year period. This growth was primarily in the commercial investor real estate, residential mortgage and consumer loan portfolios. These increases were driven by organic loan growth as the regional economy improved. The yield on average loans and leases decreased by 47 basis points due to the continued prevailing low interest rate environment as relatively higher rate loans were paid off and new loans were originated at comparatively lower rates. The decline in the portfolio yield was driven primarily by a decrease of 15 basis points in the yield in the combined residential mortgage portfolio, a decrease of 66 basis points in the commercial loan portfolio and a decrease of 13 basis points in the yield on the overall consumer loan portfolio. The decrease in the yield on the mortgage loan portfolio was due to declining rates on both new and existing adjustable rate mortgage loans, which the Company does not sell but maintains in the portfolio. Excluding the interest recoveries mentioned previously, the yield on the commercial loan portfolio declined 35 basis points. This decrease was due to the continuing low interest rate environment and competition for quality loans.

The average yield on total investment securities increased 12 basis points while the average balance of the portfolio declined 7% for the first nine months of 2014 compared to the first nine months of 2013. The increase in the yield on investments was due primarily to lower amortization of mortgage-backed securities. The decrease in the average balance of the portfolio was necessary to fund loan growth during the period.

Interest Expense

Interest expense decreased by $0.6 million or 4% in the first nine months of 2014 compared to the first nine months of 2013, primarily as a result of a 6 basis point decrease in the average rate paid on interest-bearing liabilities. Average deposits increased 3% during the first nine months of 2014 compared to the first nine months of 2013. Average noninterest -bearing and interest-bearing checking accounts increased $101 million or 8% and regular savings accounts increased $20 million or 8% as clients kept funds in short-term instruments to preserve liquidity. This growth was partially offset by a decrease in average certificates of deposit of $37 million or 7% in the first nine months of 2014 compared to the prior year period. This decrease was primarily due to the Company’s management of rates offered on certificates in an effort to preserve the Company’s net interest margin during this extended period of historically low interest rates. Average balances of money market accounts decreased $9 million or 1% in the first nine months of 2014 compared to the first nine months of 2013. In addition, the average rate paid on advances from the Federal Home Loan Bank of Atlanta decreased 35 basis points for the first nine months of 2014 compared to the first nine months of 2013 due to an increase in short-term advances to take advantage of current low interest rates and the restructuring of $50 million of such advances into longer term, lower rate instruments during the first six months of 2013.

Non-interest Income

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

		Nine Months Ended September 30, 2014				2014/2013
(Dollars in thousands)		2014		2013		$ Change		% Change
Securities gains	$	8	$	118	$	(110	)	(93.2	)%
Service charges on deposit accounts		6,287		6,390		(103	)	(1.6	)
M ortgage banking activities		1,482		2,738		(1,256	)	(45.9	)
Wealth management income		14,181		13,077		1,104		8.4
Insurance agency commissions		4,011		3,578		433		12.1
Income from bank owned life insurance		1,817		1,864		(47	)	(2.5	)
Visa check fees		3,295		3,113		182		5.8
Other income		4,452		4,979		(527	)	(10.6	)
Total non-interest income	$	35,533	$	35,857	$	(324	)	(0.9	)

39

Total non-interest income was $35.5 million for the first nine months of 2014 compared to $35.9 million for the first nine months of 2013. The primary drivers of non-interest income for the first nine months of 2014 were declines in mortgage banking income and other non-interest income which were somewhat offset by increases in wealth management income and income from insurance agency commissions. Further detail by type of non-interest income follows:

· Wealth management income is comprised of income from trust and estate services, investment management fees earned by West Financial Services, the Company’s investment management subsidiary, and fees on sales on investment products and services. Trust services fees increased 15% compared to the prior year period, due to an increase in assets under management. Investment management fees in West Financial Services increased 11% for the first nine months of 2014 compared to the first nine months of 2013, also due to higher assets under management. Fees on sales of investment products and services decreased 9% for the first half of 2014, due to one-time sales of insurance policies in 2013 and lower sales of securities products in the third quarter of 2014. Overall total assets under management increased to $2.7 billion at September 30, 2014 compared to $2.5 billion at September 30, 2013 as a result of positive market movements and additions from new clients.

· Insurance agency commissions increased in 2014 compared to 2013 due primarily to higher annual contingency commissions in the first quarter based on annual policy performance and an increase in commissions from physicians’ liability lines.

· Income from mortgage banking activities decreased in 2014 compared to 2013 due primarily to significantly reduced loan origination volumes from refinancing activity.

· Other non-interest income decreased during the first nine months of 2014 compared to the prior year period due mainly to gains on sales and dispositions of loans and fixed assets and a non-recurring legal settlement, all of which occurred in the first quarter of 2013.

· Service charges on deposits decreased in 2014 compared to 2013 due primarily to a decline in overdraft fees.

· Income from bank owned life insurance decreased in the first nine months of 2014 compared to the first nine months of 2013 due to the decline in the interest rates paid on these policies. The Company invests in bank owned life insurance products in order to manage the cost of employee benefit plans. Investments totaled $88.0 million at September 30, 2014 and $85.6 million at September 30, 2013 and were well diversified by carrier in accordance with defined policies and practices. The average tax-equivalent yield on these insurance contract assets was 4.62% for the first nine months of 2014 compared to 4.90% for the prior year period.

· No net OTTI losses were recognized in earnings in either the first nine months of 2014 or 2013.

40

Non-interest Expense

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

		Nine Months Ended September 30, 2014				2014/2013
(Dollars in thousands)		2014		2013		$ Change		% Change
Salaries and employee benefits	$	49,594	$	48,891		703		1.4	%
Occupancy expense of premises		9,778		9,327		451		4.8
Equipment expenses		3,855		3,676		179		4.9
M arketing		2,088		1,983		105		5.3
Outside data services		3,663		3,418		245		7.2
FDIC insurance		1,687		1,855		(168	)	(9.1	)
Amortization of intangible assets		709		1,384		(675	)	(48.8	)
Litigation settlement and associated costs		6,364		-		6,364		-
Professional fees		3,298		3,093		205		6.6
Other real estate owned		49		(394	)	443		(112.4	)
Other expenses		9,237		8,991		246		2.7
Total non-interest expense	$	90,322	$	82,224		8,098		9.8

Non-interest expenses totaled $90.3 million in 2014 compared to $82.2 million in 2013. This increase in expenses was driven primarily by nonrecurring litigation expenses mentioned previously. Excluding the litigation expenses, non-interest expenses remained virtually level with the prior year period.

Further detail by category of non-interest expense follows:

· Salaries and employee benefits, the largest component of non-interest expenses, remained virtually level compared to the prior year period. Salaries increased 4% compared to the prior year period due to a larger staff and merit increases which were offset by decreases in commission and incentive compensation due largely to lower mortgage origination volumes. Benefits expense decreased 7% in 2014 compared to 2013 due primarily to a decrease in pension expense resulting from a higher discount rate assumption and higher projected returns on plan assets. This decrease was partially offset by an increase in health insurance expenses due to higher claims. The average number of full-time equivalent employees was 718 in the first nine months of 2014 compared to 712 in the first nine months of 2013.

· Occupancy expenses increased in 2014 compared to 2013 due primarily to a significant increase in weather-related expenses in the first nine months of 2014. Equipment expenses increased due to higher software costs.

· Marketing expenses increased in 2014 compared to 2013 due to higher advertising and public relations expenses.

· The growth in outside data services expenses was due to contractual increases by providers and higher bankcard account activity.

· FDIC insurance expense decreased in 2014 compared to 2013 as the Company’s growth in assets was more than offset by a lower assessment rate due to improved financial ratios.

· Intangibles amortization decreased in 2014 due to the costs of prior acquisitions that were fully amortized during the period.

· Professional fees increased due to the recovery of $0.5 million in legal fees in 2013 associated with two commercial loan workouts mentioned previously.

· Other real estate owned expenses increased compared to the prior year period due to a gain on the sale of one property in the third quarter of 2013.

· Other non-interest expenses increased 3% in 2014 compared to 2013 due mainly to accrued expenses on performance letters of credit and losses from fraudulent bankcard charges.

Income Taxes

The Company had income tax expense of $13.5 million in the first nine months of 2014, compared to expense of $18.1 million in the first nine months of 2013. The resulting effective rate was 32% for the first nine months of 2014 and 34% for the first nine months of 2013. The effective rate decreased in 2014 compared to 2013 due to tax exempt income comprising a greater proportion of income before taxes.

41

Results of Operations

For the Three Months Ended September 30, 2014 Compared to the Three Months Ended September 30, 2013

Net income for the Company for the third quarter of 2014 totaled $11.1 million ($0.44 per diluted share) compared to net income of $12.1 million ($0.48 per diluted share) for the third quarter of 2013.

Consolidated Average Balances, Yields and Rates 

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES - UNAUDITED                  

		Three Months Ended September 30
	2014								2013
(Dollars in thousands and tax equivalent)		Average Balances			(1) Interest	Annualized Average Yield/Rate			Average Balances			(1) Interest	Annualized Average Yield/Rate
Assets
Residential mortgage loans (2)	$	689,531		$	5,894	3.42	%	$	593,335		$	5,315	3.57	%
Residential construction loans		147,750			1,376	3.69			120,676			1,106	3.63
Commercial ADC loans		180,293			2,196	4.83			158,557			3,438	8.60
Commercial investor real estate loans		577,851			7,009	4.81			499,896			8,608	6.83
Commercial owner occupied real estate loans		585,014			7,091	4.98			566,366			7,361	5.30
Commercial business loans		367,203			4,177	4.53			331,374			4,246	4.94
Leasing		206			4	6.91			1,152			20	7.11
Consumer loans		404,062			3,364	3.32			366,562			3,161	3.45
Total loans and leases (3)		2,951,910			31,111	4.22			2,637,918			33,255	5.03
Taxable securities		663,550			4,071	2.43			794,344			4,942	2.49
Tax-exempt securities (4)		301,656			3,240	4.26			303,299			3,305	4.36
Interest-bearing deposits with banks		37,268			24	0.25			34,819			22	0.25
Federal funds sold		474			-	0.22			475			-	0.22
Total interest-earning assets		3,954,858			38,446	3.89			3,770,855			41,524	4.39
Less: allowance for loan and lease losses		(38,213	)						(41,385	)
Cash and due from banks		45,600							45,322
Premises and equipment, net		45,959							46,784
Other assets		211,880							217,493
Total assets	$	4,220,084						$	4,039,069
Liabilities and Stockholders' Equity
Interest-bearing demand deposits	$	488,800			112	0.09	%	$	442,210			97	0.09	%
Regular savings deposits		263,255			34	0.05			240,910			53	0.09
Money market savings deposits		871,271			293	0.13			874,946			342	0.16
Time deposits		456,530			769	0.67			483,814			866	0.71
Total interest-bearing deposits		2,079,856			1,208	0.23			2,041,880			1,358	0.26
Other borrowings		73,046			42	0.23			56,983			39	0.27
Advances from FHLB		523,304			3,258	2.47			525,543			3,255	2.46
Subordinated debentures		35,000			222	2.54			35,000			222	2.55
Total interest-bearing liabilities		2,711,206			4,730	0.69			2,659,406			4,874	0.73
Noninterest-bearing demand deposits		956,830							862,046
Other liabilities		34,514							33,806
Stockholders' equity		517,534							483,811
Total liabilities and stockholders' equity	$	4,220,084						$	4,039,069
Net interest income and spread				$	33,716	3.20	%				$	36,650	3.66	%
Less: tax-equivalent adjustment					1,296							1,344
Net interest income				$	32,420						$	35,306
Interest income/earning assets						3.89	%						4.39	%
Interest expense/earning assets						0.47	%						0.51	$
Net interest margin						3.42	%						3.88	%

(1) Tax-equivalent income has been adjusted using the combined marginal federal and state rate of 39.88% for 2014 and 2013. The annualized taxable-equivalent adjustments utilized in the above table to compute yields aggregated to $1.3 million and $1.3 million in 2014 and 2013, respectively .

(2) Includes residential mortgage loans held for sale. Home equity loans and lines are classified as consumer loans.

(3) Non-accrual loans are included in the average balances.

(4) Includes only investments that are exempt from federal taxes.

42

Net Interest Income

Net interest income for the third quarter of 2014 was $32.4 million compared to $35.3 million for the third quarter of 2013. On a tax-equivalent basis, net interest income for the third quarter of 2014 was $33.7 million compared to $36.7 million for the third quarter of 2013, a decrease of 8%. The preceding table provides an analysis of net interest income that reflects a net interest margin that decreased to 3.42% for the third quarter of 2014 compared to 3.88% for the third quarter of 2013. Excluding interest recoveries of $3.7 million on non-performing commercial real estate loans, the net interest margin was 3.49% for the third quarter of 2013. Average interest-earning assets increased by 5% while average interest-bearing liabilities increased 2% in the third quarter of 2014. Average noninterest-bearing deposits increased 11% in the third quarter of 2014 while the percentage of average noninterest-bearing deposits to total deposits increased to 32% for the third quarter of 2014 compared to 30% for the third quarter of 2013. The decrease in the net interest margin was caused by the effect of lower rates on interest-earning assets that exceeded the benefit of lower rates on interest-bearing deposits and borrowings.

Interest Income

The Company's tax-equivalent interest income for the third quarter of 2014 totaled $38.4 million compared to $41.5 million for the third quarter of 2013, a decrease of 7%. Excluding interest recoveries on previously non-performing commercial real estate loans in the third quarter of 2013, total tax-equivalent interest income would have increased 2% over the prior year quarter. In the third quarter of 2014, the average balance of the loan portfolio increased 12% compared to the prior year period. This growth was primarily in the commercial investor real estate, residential mortgage and construction and consumer loan portfolios. These increases were driven by organic loan growth as the regional economy improved. The yield on average loans and leases decreased by 81 basis points compared to the prior year quarter. Excluding the interest recoveries mentioned above, the yield on average loans and leases decreased 25 basis points for the quarter as compared to the prior year quarter. The decline in the portfolio yield was driven primarily by a decrease of 13 basis points in the yield in the combined residential mortgage portfolio and a decrease of 12 basis points in the yield on the overall consumer loan portfolio. The yield on the commercial loan portfolio decreased 124 basis points compared to the prior year quarter. Excluding the interest recoveries the yield declined 31basis points. The decrease in the yield on the mortgage loan portfolio was due to declining rates on both new and existing adjustable rate mortgage loans, which the Company does not sell but maintains in the portfolio, while the decline in the yield on the commercial and consumer loan portfolios was due to the continuing low interest rate environment and competition for quality loans.

The average yield on total investment securities remained relatively even while the average balance of the portfolio decreased 12% for the third quarter of 2014 compared to the third quarter of 2013. The increase in the yield on investments was due primarily to amortization of mortgage-backed securities. The decrease in the portfolio was due to calls and maturities, the proceeds of which were used to fund loan growth.

Interest Expense

Interest expense decreased by $0.1 million or 3% in the third quarter of 2014 compared to the third quarter of 2013, primarily as a result of a 4 basis point decrease in the average rate paid on interest-bearing liabilities. Deposit activity during the third quarter was driven primarily by growth in regular savings and demand deposit accounts. Average noninterest-bearing and interest-bearing checking accounts increased $141 million or 11% and regular savings accounts increased $22 million or 9% as clients kept funds in short-term instruments to preserve liquidity. This growth was partially offset by a decrease in average certificates of deposit of $27 million or 6% in the third quarter of 2014 compared to the prior year period. This decrease was primarily due to the Company’s management of rates offered on certificates in an effort to preserve the Company’s net interest margin during this extended period of historically low interest rates. Average balances of money market accounts remained relatively level in the third quarter of 2014 compared to the third quarter of 2013. In addition, the average rate paid on advances from the Federal Home Loan Bank of Atlanta also remained comparatively level for the third quarter of 2014 compared to the third quarter of 2013 as the Company continued to take advantage of comparatively low interest rates on short-term advances.

43

Non-interest Income

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

		Three Months Ended September 30,					2014/2013
(Dollars in thousands)		2014		2013			$ Change		% Change
Securities gains	$	8	$	-		$	8		-	%
Service charges on deposit accounts		2,226		2,171			55		2.5
Mortgage banking activities		596		(26	)		622		-
Wealth management income		4,974		4,503			471		10.5
Insurance agency commissions		1,410		1,193			217		18.2
Income from bank owned life insurance		611		629			(18	)	(2.9	)
Bank card fees		1,148		1,077			71		6.6
Other income		1,617		1,676			(59	)	(3.5	)
Total non-interest income	$	12,590	$	11,223		$	1,367		12.2

Total non-interest income was $12.6 million for the third quarter of 2014 compared to $11.2 million for the third quarter of 2013. The primary drivers of non-interest income for the third quarter of 2014 were increases in wealth management income, insurance agency commissions and income from mortgage banking activities. Further detail by type of non-interest income follows:

· Wealth management income is comprised of income from trust and estate services, investment management fees earned by West Financial Services, the Company’s investment management subsidiary, and fees on sales on investment products and services. Trust services fees increased 17% compared to the prior year period, due to one-time fees and an increase in assets under management. Investment management fees in West Financial Services increased 10% for the third quarter of 2014 compared to the third quarter of 2013, also due to higher assets under management. Overall total assets under management increased to $2.7 billion at September 30, 2014 compared to $2.5 billion at September 30, 2013 as a result of positive market movements and additions from new clients.

· Insurance agency commissions increased in 2014 compared to 2013 due primarily to an increase in sales of physicians’ liability insurance.

· Income from mortgage banking activities increased in 2014 compared to 2013 due to higher accrued gains on loans held for sale and related interest rate lock commitments.

· Service charges on deposits increased in 2014 compared to 2013 due primarily to a decline in overdraft fees.

· Income from bank owned life insurance decreased in the third quarter of 2014 compared to the third quarter of 2013 due to the decline in the interest rates paid on these policies.

· Other non-interest income decreased during the third quarter of 2014 compared to the prior year period due mainly to gains on sales and dispositions of loans and fixed assets and a non-recurring legal settlement, all of which occurred in the third quarter of 2013.

· No net OTTI losses were recognized in earnings in either the third quarter of 2014 or 2013.

44

Non-interest Expense

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

		Three Months Ended September					2014/2013
(Dollars in thousands)		2014		2013			$ Change		% Change
Salaries and employee benefits	$	16,765	$	16,382		$	383		2.3	%
Occupancy expense of premises		3,032		3,149			(117	)	(3.7	)
Equipment expenses		1,337		1,200			137		11.4
Marketing		744		713			31		4.3
Outside data services		1,231		1,152			79		6.9
FDIC insurance		594		678			(84	)	(12.4	)
Amortization of intangible assets		115		462			(347	)	(75.1	)
Litigation settlement and associated costs		236		-			236		-
Professional fees		1,092		511			581		113.7
Other real estate owned		40		(150	)		190		126.7
Other expenses		3,446		2,796			650		23.2
Total non-interest expense	$	28,632	$	26,893		$	1,739		6.5

Non-interest expenses totaled $28.6 million in 2014 compared to $26.9 million in 2013. This increase in expenses was driven primarily by increases in professional fees, salaries and benefits and other noninterest expenses. Further detail by category of non-interest expense follows:

· Salaries and benefits increased compared to the prior year quarter due to merit increases which were somewhat offset by decreases in commission and incentive compensation. Benefits expenses increased 5% due primarily to higher health insurance expense due to increased claims. This was somewhat offset by a decrease in pension expense resulting from a higher discount rate assumption and higher projected returns on plan assets. The average number of full-time equivalent employees was 712 in the third quarter of 2014 compared to 722 in the third quarter of 2013.

· Occupancy expenses decreased in 2014 compared to 2013 due primarily to lower maintenance and utilities costs in the quarter. Equipment increased during the quarter due to higher amortization of software costs.

· Marketing expenses remained level in the third quarter of 2014 compared to the prior year quarter.

· Outside data services expenses increased compared to the prior year quarter due to growth in electronic transactions.

· FDIC insurance expense decreased for the third quarter of 2014 compared to the third quarter of 2013 due to a lower assessment rate from improved financial ratios.

· Intangibles amortization decreased in 2014 due to the costs of prior year acquisitions which were fully amortized during the period.

· Professional fees increased in the third quarter of 2014 compared to the prior year quarter due to recovery of $0.5 million in legal fees in the third quarter of 2013 related to previously non-performing commercial loans.

· Other real estate owned expenses increased compared to the prior year period due to a gain on the sale of one property in the third quarter of 2013.

· Other non-interest expenses increased in 2014 compared to the prior year quarter due to accrued expense related to performance letters of credit and losses incurred due to fraudulent bankcard charges.

Income Taxes

The Company had income tax expense of $5.4 million in the third quarter of 2014, compared to expense of $6.4 million in the third quarter of 2013. The resulting effective rate was 33% for the third quarter of 2014 compared to 35% for the third quarter of 2013. The effective rate decreased in 2014 compared to 2013 due to tax exempt income comprising a greater proportion of income before taxes.

45

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 Consolidated Statements of Income. The GAAP and non-GAAP efficiency ratios are reconciled and provided in the following table. Both ratios increased during the third quarter of 2014 compared to the prior year quarter and during the first nine months of 2014 compared to the prior year period. The GAAP efficiency ratio increased for the year-to-date compared to the prior year period due primarily to the litigation expenses mentioned previously. This ratio increased for the third quarter of 2014 compared to the third quarter of 2013 due to the commercial loan recoveries in the third quarter of 2013. The non-GAAP efficiency ratio increased for both the quarter and year-to-date compared to the respective prior year periods due primarily to the loan recoveries mentioned above.

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 (subtracting) the provision (credit) for loan and lease losses, and the provision for income taxes back to net income. This metric decreased in the third quarter of 2014 compared to the prior year period due primarily to recoveries of interest, late fees and legal fees, totaling $4.5 million in the third quarter of 2013, related to previously non-performing commercial loans.

46

GAAP and Non-GAAP Financial Measures

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2014			2013			2014			2013
Pre-tax pre-provision income:
Net income	$	11,142		$	12,089		$	29,052		$	34,809
Plus non-GAAP adjustment:
Litigation expenses		236			-			6,364			-
Income taxes		5,428			6,419			13,496			18,058
Provision (credit) for loan and lease losses		(192	)		1,128			(1,016	)		(1,670	)
Pre-tax pre-provision income	$	16,614		$	19,636		$	47,896		$	51,197
Efficiency ratio - GAAP basis:
Non-interest expenses	$	28,632		$	26,893		$	90,322		$	82,224
Net interest income plus non-interest income	$	45,010		$	46,529		$	131,854		$	133,421
Efficiency ratio - GAAP basis		63.61	%		57.80	%		68.50	%		61.63	%
Efficiency ratio - Non-GAAP basis:
Non-interest expenses	$	28,632		$	26,893		$	90,322		$	82,224
Less non-GAAP adjustment:
Amortization of intangible assets		115			462			709			1,384
Litigation expenses		236			-			6,364			-
Non-interest expenses -  as adjusted	$	28,281		$	26,431		$	83,249		$	80,840
Net interest income plus non-interest income	$	45,010		$	46,529		$	131,854		$	133,421
Plus non-GAAP adjustment:
Tax-equivalent income		1,296			1,344			3,909			3,967
Less non-GAAP adjustments:
Securities gains		8			-			8			118
Net interest income plus non-interest income - as adjusted	$	46,298		$	47,873		$	135,755		$	137,270
Efficiency ratio - Non-GAAP basis		61.09	%		55.21	%		61.32	%		58.89	%

FINANCIAL CONDITION

The Company's total assets were $4.2 billion at September 30, 2014, an increase of $143 million or 3% compared to $4.1 billion at December 31, 2013. Interest-earning assets increased $140 million to $4.0 billion at September 30, 2014 compared to December 31, 2013. The increase in interest-earning assets was primarily due to organic growth in the loan portfolio which was funded by deposit growth.

47

Analysis of Loans and Leases

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

	September 30, 2014					December 31, 2013					Period-to-Period Change
(Dollars in thousands)	Amount		%			Amount		%			$ Change			% Change
Residential real estate:
Residential mortgage	$	698,925		23.5	%	$	618,381		22.2	%	$	80,544			13.0	%
Residential construction		141,883		4.8			129,177		4.7			12,706			9.8
Commercial real estate:
Commercial owner occupied real estate		584,964		19.6			592,823		21.3			(7,859	)		(1.3	)
Commercial investor real estate		575,984		19.4			552,178		19.8			23,806			4.3
Commercial acquisition, development and construction		194,666		6.5			160,696		5.8			33,970			21.1
Commercial Business		368,611		12.4			356,651		12.8			11,960			3.4
Leases		156		-			703		-			(547	)		(77.8	)
Consumer		410,723		13.8			373,657		13.4			37,066			9.9
Total loans and leases	$	2,975,912		100.0	%	$	2,784,266		100.0	%	$	191,646			6.9

Total loans and leases, excluding loans held for sale, increased $192 million or 7% at September 30, 2014 compared to December 31, 2013. The commercial loan portfolio increased $62 million or 4% at September 30, 2014 compared to the prior year end largely due to increases in investor real estate and ADC loans. These trends reflect both an improving economy and increased competition in the Company’s marketplace for quality commercial loans.

The residential real estate portfolio, which is comprised of residential construction and permanent residential mortgage loans, reflected a 12% increase at September 30, 2014 compared to December 31, 2013. Permanent residential mortgages, most of which are 1-4 family, increased 13% due to higher loan origination volumes of adjustable rate and non-saleable mortgage loans which the Company elected to retain in its portfolio. The Company generally retains adjustable rate mortgages in its portfolio and sells the fixed rate mortgages that it originates in the secondary mortgage market whenever possible. Residential construction loans increased 10% at September 30, 2014 compared to the balance at December 31, 2013 due to increased construction activity as a result of a slowly improving economy.

The consumer loan portfolio increased 10% at September 30, 2014 compared to December 31, 2013 due to growth in home equity lines of credit as the Company continued to aggressively promote this product line.  

Analysis of Investment Securities

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

	September 30, 2014					December 31, 2013					Period-to-Period Change
(Dollars in thousands)	Amount		%			Amount		%			$ Change			% Change
U.S. government agencies and corporations	$	140,716		14.8	%	$	139,466		13.7	%	$	1,250			0.9	%
State and municipal		167,585		17.6			165,428		16.3			2,157			1.3
Mortgage-backed		379,904		40.1			442,250		43.5			(62,346	)		(14.1	)
Corporate debt		2,002		0.2			2,004		0.2			(2	)		(0.1	)
Trust preferred		1,177		0.1			1,413		0.1			(236	)		(16.7	)
Marketable equity securities		723		-			723		-			-			-
Total available-for-sale		692,107		72.8			751,284		73.8			(59,177	)		(7.9	)
Held-to-Maturity and Other Equity
U.S. government agencies and corporations		64,510		6.8			64,505		6.4			5			-
State and municipal		156,971		16.5			159,889		15.8			(2,918	)		(1.8	)
Mortgage-backed		209		-			244		-			(35	)		(14.3	)
Other equity securities		37,072		3.9			40,687		4.0			(3,615	)		(8.9	)
Total held-to-maturity and other equity		258,762		27.2			265,325		26.2			(6,563	)		(2.5	)
Total securities	$	950,869		100.0	%	$	1,016,609		100.0	%	$	(65,740	)		(6.5	)

48

Available-for-sale securities decreased 8% at September 30, 2014 compared to December 31, 2013 due to amortization of mortgage-backed securities and maturities of other investments, while held-to-maturity securities remained virtually level compared to the prior year-end.

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 3.5 years at September 30, 2014 and 3.9 years at December 31, 2013. 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 required liquidity needed to meet increased 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.

At September 30, 2014, the trust preferred portfolio included one pooled trust preferred security backed by debt issued by banks and thrifts, which totaled $1.3 million, with a fair value of $1.2 million. The fair value of this security was determined by a third party valuation specialist due to the limited trading activity for this security in the marketplace. The specialist used an income valuation approach technique (present value) that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. The methodology, observable inputs and significant assumptions employed by the specialist to determine fair value are provided in Note 2 – Investments in the Notes to the Condensed Consolidated Financial Statements.

As a result of this valuation, it was determined that the pooled trust preferred security had not incurred any credit-related OTTI for the three months ended September 30, 2014. Cumulative credit-related OTTI of $0.5 million has been recognized in earnings through September 30, 2014. Non-credit related OTTI on this security, which is not expected to be sold and which the Company has the ability to hold until maturity, was $0.2 million at September 30, 2014. This non-credit related

OTTI was recognized in accumulated other comprehensive income (“OCI”) at September 30, 2014.

Other Earning Assets

Residential mortgage loans held for sale at September 30, 2014 totaled $7 million compared to $8 million at December 31, 2013. The aggregate of federal funds sold and interest-bearing deposits with banks increased $16 million to $43 million at September 30, 2014 compared to December 31, 2013.

Deposits

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

	September 30, 2014					December 31, 2013					Period-to-Period Change
(Dollars in thousands)	Amount		%			Amount		%			$ Change			% Change
Noninterest-bearing deposits	$	986,549	32.6		%	$	836,198	29.1		%	$	150,351		18.0		%
Interest-bearing deposits:
Demand		485,112		16.0			460,824		16.0			24,288			5.3
Money market savings		846,625		28.0			870,653		30.2			(24,028	)		(2.8	)
Regular savings		259,848		8.5			243,813		8.5			16,035			6.6
Time deposits of less than $100,000		244,085		8.0			263,636		9.2			(19,551	)		(7.4	)
Time deposits of $100,000 or more		206,569		6.9			202,101		7.0			4,468			2.2
Total interest-bearing deposits		2,042,239		67.4			2,041,027		70.9			1,212			0.1
Total deposits	$	3,028,788		100.0	%	$	2,877,225		100.0	%	$	151,563			5.3

49

Total deposits increased $152 million or 5% at September 30, 2014 compared to December 31, 2013. This increase was due primarily to increases in combined noninterest-bearing and interest-bearing checking accounts together with regular savings. These increases were somewhat offset by a decline in certificates of deposit, as the Company managed its deposit mix. From a funding perspective, the overall increase in deposits enabled the Company to fund loan growth and decrease borrowings at September 30, 2014 compared to December 31, 2013.

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. During the third quarter of 2014, total stockholders' equity increased $23 million to $522 million at September 30, 2014, from $499 million at December 31, 2013. This increase was due primarily to net income during the year. The ratio of average equity to average assets was 12.28% for the first nine months of 2014, as compared to 12.19% for the first nine months of 2013.

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, in addition to the ratios required to be categorized as “well capitalized”, are summarized for the Company in the following table.

Risk-Based Capital Ratios

							Minimum
	Ratios at						Regulatory
	September 30, 2014			December 31, 2013			Requirements
Total Capital to risk-weighted assets		15.68	%		15.65	%		8.00	%
Tier 1 Capital to risk-weighted assets		14.52	%		14.42	%		4.00	%
Tier 1 Leverage		11.36	%		11.32	%		3.00	%

Tier 1 capital of $470 million and total qualifying capital of $508 million each included $35.0 million in trust preferred securities that are considered regulatory capital for purposes of determining the Company’s Tier 1 capital ratio. As of September 30, 2014, 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 are effective January 1, 2015, and revise the definition of what constitutes “capital” for calculating those ratios. The new minimum capital level requirements applicable to the Company and the Bank will be: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from current rules); 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 will be 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 will be phased 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 action.

50

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 is provided in the following table.

Tangible Common Equity Ratio – Non-GAAP

(Dollars in thousands, except per share data)	September 30, 2014			December 31, 2013
Tangible common equity ratio:
Total stockholders' equity	$	522,404		$	499,363
Accumulated other comprehensive income (loss)		(3,632	)		2,970
Goodwill		(84,171	)		(84,171	)
Other intangible assets, net		(622	)		(1,330	)
Tangible common equity	$	433,979		$	416,832
Total assets	$	4,248,731		$	4,106,100
Goodwill		(84,171	)		(84,171	)
Other intangible assets, net		(622	)		(1,330	)
Tangible assets	$	4,163,938		$	4,020,599
Tangible common equity ratio		10.42	%		10.37	%
Tangible book value per share	$	17.31		$	16.68
		25,076,794			24,990,021

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 and lease 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. Home 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.

Current economic data has shown that the Mid-Atlantic region remains one of the stronger markets in the nation. While the Company deals with the effects of a very slow and uneven economic recovery and its resulting effects on its borrowers, it continues to seek relationship opportunities, particularly in the real estate sector. Total non-performing loans increased 9% to $44 million at September 30, 2014 compared to the balance at December 31, 2013 due to several owner-occupied commercial real estate loans that moved to non-accrual status during the period. 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 economic activity being experienced in various business sectors on both a regional and national level.

51

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 aggressive management of problem credits. As part of the oversight and review process, the Company maintains an allowance for loan and lease losses (the “allowance”).

The allowance represents an estimation of the losses that are inherent in the loan and lease portfolio. The adequacy of the allowance is determined through careful and 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 and leases based on historical loss experience and consideration of current economic trends, which may be susceptible to significant change. Loans and leases 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 and lease 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 the section entitled “Critical Accounting Policies” and in “Note 1 – Significant Accounting Policies” of the Notes to the Consolidated Financial Statements. The amount of the allowance is reviewed monthly and approved quarterly by the Credit and Investment 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 leases, residential real estate and consumer loans. Typically, all payments received on non-accrual loans are applied to the remaining principal balance of the loans. 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 insure 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.

52

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.

· 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. In certain cases the Company may establish a larger reserve due to knowledge of current market conditions or the existence of an offer for the collateral that will facilitate a more timely resolution of the loan.

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 charge-off, 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 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 an impaired loan in the year subsequent to the 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.

53

The determination of the allowance requires significant judgment, and estimates of probable losses in the loan and lease 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 and lease 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 and lease 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 and lease losses was a credit of $1.0 million for the first nine months of 2014 compared to a credit of $1.7 million for the first nine months of 2013. Historical net charge-offs represent a principal component in the application of the Company’s allowance methodology. The timing of confirmed losses compared to that of the related historical period was the primary driver of the change in the provision for the first nine months of 2014 compared to the prior year period.

Substantially all of the fixed-rate residential mortgage loans originated by the Company are sold 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 three to nine 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 believes that this reserve is adequate.

Allowance for Loan and Lease Losses

During the third quarter of 2014, there were no changes in the Company’s methodology for assessing the appropriateness of the allowance for loan and lease losses from the prior year. Variations can occur over time in the estimation of the adequacy of the allowance as a result of the credit performance of borrowers. No portion of the allowance was unallocated at September 30, 2014 or December 31, 2013.

At September 30, 2014, total non-performing loans and leases were $43.7 million, or 1.47% of total loans and leases, compared to $40.0 million, or 1.44% of total loans and leases, at December 31, 2013. This increase was due to several owner-occupied commercial real estate loans that moved to non-accrual status during the period. Timely recognition and aggressive management of problem credits has enabled the Company to limit the migration of problem loans into non-accrual status. The allowance represented 86% of non-performing loans and leases at September 30, 2014 as compared to 97% at December 31, 2013. The decrease in this ratio was due primarily to the increase in non-performing loans and leases mentioned previously. The allowance for loan and lease losses as a percent of total loans and leases was 1.26% at September 30, 2014 as compared to 1.39% at December 31, 2013. This decrease was due to a combination of loan growth and the impact of the decline in historical losses on the allowance calculation at September 30, 2014 compared to the prior year end.

Continued analysis of the actual loss history on the problem credits in 2013 and 2014 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, the reduced inflow of non-accruals, lower inflow in criticized loans and the significant decline in early stage delinquencies. The improvement in these credit metrics supports management’s outlook for continued improved credit quality performance.

The balance of impaired loans was $38.6 million, with specific allowances of $4.3 million against those loans at September 30, 2014, as compared to $32.5 million with allowances of $3.1 million, at December 31, 2013.

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 76% of total loans and leases at September 30, 2014 and at December 31, 2013. 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.

54

Summary of Loan and Lease Loss Experience

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

	Nine Months Ended			Year Ended
(Dollars in thousands)	September 30, 2014			December 31, 2013
Analysis of Allowance for Loan Losses:
Balance, January 1	$	38,766		$	42,957
Provision (credit) for loan and lease losses		(1,016	)		(1,084	)
Charge-offs:
Commercial business		(225	)		(2,915	)
Commercial real estate:
Commercial acquisition, development and construction		-			(85	)
Commercial investor real estate		(4	)		(4,774	)
Commercial owner occupied real estate		(265	)		(240	)
Leasing		-			-
Consumer		(720	)		(1,853	)
Residential real estate:
Residential mortgage		(324	)		(1,194	)
Residential construction		(3	)		(104	)
Total charge-offs		(1,541	)		(11,165	)
Recoveries:
Commercial business		1,023			818
Commercial real estate:
Commercial acquisition, development and construction		-			3,080
Commercial investor real estate		34			3,354
Commercial owner occupied real estate		-			425
Leasing		-			10
Consumer		134			198
Residential real estate:
Residential mortgage		105			162
Residential construction		69			11
Total recoveries		1,365			8,058
Net charge-offs		(176	)		(3,107	)
Balance at end of period	$	37,574		$	38,766
Allowance for loan losses to loans		1.26	%		1.39	%
Annualized net charge-offs to average loans and leases		0.01	%		0.12	%

Analysis of Credit Risk

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

	September 30,		December 31,
(Dollars in thousands)	2014		2013
Non-Performing Assets:
Loans and leases 90 days past due:
Commercial business	$	-	$	-
Commercial real estate:
Commercial AD&C		-		-
Commercial investor real estate		-		-
Commercial owner occupied real estate		649		-
Leasing		-		-
Consumer		6		1
Residential real estate:
Residential mortgage		-		-
Residential construction		-		-
Total loans and leases 90 days past due		655		1
Non-accrual loans and leases:
Commercial business		4,151		3,400
Commercial real estate:
Commercial AD&C		3,792		4,127
Commercial investor real estate		8,210		6,802
Commercial owner occupied real estate		10,742		5,936
Leasing		-		-
Consumer		1,830		2,259
Residential real estate:
Residential mortgage		4,417		5,735
Residential construction		2,497		2,315
Total non-accrual loans and lease		35,639		30,574
Total restructured loans - accruing		7,382		9,459
Total non-performing loans and leases		43,676		40,034
Other assets and real estate owned (OREO)		1,762		1,338
Total non-performing assets	$	45,438	$	41,372

55

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.

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 imbedded 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.

56

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, 2014		(3.67	)%		(1.53	)%		(0.07	)%		(0.15	)%		N/A			N/A			N/A			N/A
December 31, 2013		(7.20	)%		(4.14	)%		(1.63	)%		(0.88	)%		N/A			N/A			N/A			N/A

As shown above, measures of net interest income at risk improved from December 31, 2013 at all rising interest rate 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, 2013 to September 30, 2014 was the result of an increase in interest-bearing deposits with banks, which will reprice immediately should rates rise in the future. Contributing to the decreased risk position is the decline in short-term FHLB borrowings which reduces the Company’s exposure to increases in interest rates, in addition to an increase in short-term loans, which is beneficial in a rising interest rate environment.

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.

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, 2014		(10.73	)%		(7.42	)%		(4.47	)%		(2.01	)%		N/A			N/A			N/A			N/A
December 31, 2013		(15.27	)%		(10.86	)%		(6.21	)%		(2.15	)%		N/A			N/A			N/A			N/A

Measures of the economic value of equity (“EVE”) at risk improved from December 31, 2013 to September 30, 2014 in all rising shock scenarios. The significant positive impact in EVE was driven by higher core deposit balances in noninterest-bearing and interest-bearing checking accounts and regular savings accounts resulting in increased premiums should rates increase. Shorter durations in the investment portfolio are also a contributing factor to the reduced risk in EVE.

Liquidity Management

Liquidity is measured by a financial institution's ability to raise funds through loan and lease 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, 2014. 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 71% of total interest-earning assets at September 30, 2014. In addition, loan and lease 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, 2014, show short-term investments exceeding short-term borrowings by $25 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.

57

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 $1.3 billion, of which $1.0 billion was available for borrowing based on pledged collateral, with $558 million borrowed against it as of September 30, 2014. The line of credit at the Federal Reserve totaled $333 million, all of which was available for borrowing based on pledged collateral, with no borrowings against it as of September 30, 2014. Other external sources of liquidity available to the Company in the form of unsecured lines of credit granted by correspondent banks totaled $55 million at September 30, 2014, 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, 2014. Based upon its liquidity analysis, including external sources of liquidity available, management believes the liquidity position was appropriate at September 30, 2014.

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, 2014, the Bank could have declared a dividend of $68 million to Bancorp. At September 30, 2014, Bancorp had liquid assets of $13 million.

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)	2014		2013
Commercial	$	194,388	$	184,083
Real estate-development and construction		102,176		100,826
Real estate-residential mortgage		14,778		13,908
Lines of credit, principally home equity and business lines		793,135		710,202
Standby letters of credit		58,877		59,745
Total Commitments to extend credit and available credit lines	$	1,163,354	$	1,068,764

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, 2014, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

58

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 2013 Annual Report on Form 10-K.

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

The Company re-approved a stock repurchase program in August 2013 that permits the repurchase of up to 5% of the Company’s outstanding shares of common stock or approximately 1,260,000 shares. Repurchases which will be conducted through open market purchases or privately negotiated transactions, will be made depending on market conditions and other factors. There were no repurchase transactions executed during the nine months ended September 30, 2014.

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, 2014 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.

59

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 6, 2014
By:	/s/ Philip J. Mantua
Philip J. Mantua
Executive Vice President and Chief Financial Officer
Date: November 6, 2014

60

EX-31.(A)

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

Exhibit 31 (a)

CERTIFICATION

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 6, 2014	/s/ Daniel J. Schrider
	Daniel J. Schrider
	Chief Executive Officer

EX-31.(B)

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 6, 2014	/s/ Philip J. Mantua
	Philip J. Mantua
	Executive Vice President and
	Chief Financial Officer

EX-32.(A)

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, 2014, 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 6, 2014

EX-32.(B)

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, 2014, 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
	Executive Vice President and Chief Financial Officer
	Date: November 6, 2014

XML

Investments (Gross Unrealized Losses and Fair Value by Length of Time of Available-For-Sale Securities) (Details) (Available-for-Sale Securities [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014 security	Dec. 31, 2013 security
Schedule of Available-for-sale Securities [Line Items]
Number of securities	41	58
Fair Value	$ 282,082	$ 321,936
Less than 12 months	341	15,243
More than 12 months	8,005	415
Total Unrealized Losses	8,346	15,658
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of securities	14	15
Fair Value	140,716	139,466
Less than 12 months		8,222
More than 12 months	3,757
Total Unrealized Losses	3,757	8,222
State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of securities		12
Fair Value		11,680
Less than 12 months		156
Total Unrealized Losses		156
Mortgage-Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of securities	26	30
Fair Value	140,189	169,377
Less than 12 months	341	6,865
More than 12 months	4,076	127
Total Unrealized Losses	4,417	6,992
Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Number of securities	1	1
Fair Value	1,177	1,413
More than 12 months	172	288
Total Unrealized Losses	$ 172	$ 288

XML

Credit Quality Assessment (Credit Quality of Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	$ 7,266	$ 11,923
61-90 days	2,594	4,066
> 90 days	655	1
Total past due	10,515	15,990
Non-accrual loans and leases	35,639	30,574
Loans aquired with deteriorated credit quality	3,134	4,300
Current loans	2,926,624	2,733,402
Total loans and leases	2,975,912	2,784,266
Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	564	382
61-90 days	403	1,142
Total past due	967	1,524
Non-accrual loans and leases	4,151	3,400
Loans aquired with deteriorated credit quality	1,267	1,363
Current loans	362,226	350,364
Total loans and leases	368,611	356,651
Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	194,666	160,696
Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	575,984	552,178
Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	584,964	592,823
Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days		4
Total past due		4
Current loans	156	699
Total loans and leases	156	703
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	732	716
61-90 days	20	176
> 90 days	6	1
Total past due	758	893
Non-accrual loans and leases	1,830	2,259
Current loans	408,135	370,505
Total loans and leases	410,723	373,657
Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	698,925	618,381
Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	141,883	129,177
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	1,724,225	1,662,348
Commercial Real Estate Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total loans and leases	368,611	356,651
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	948
Total past due	948
Non-accrual loans and leases	3,792	4,127
Current loans	189,926	156,569
Total loans and leases	194,666	160,696
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	169	5,826
61-90 days	2,009
Total past due	2,178	5,826
Non-accrual loans and leases	8,210	6,802
Loans aquired with deteriorated credit quality	53	571
Current loans	565,543	538,979
Total loans and leases	575,984	552,178
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	839	876
61-90 days		2,540
> 90 days	649
Total past due	1,488	3,416
Non-accrual loans and leases	10,742	5,936
Loans aquired with deteriorated credit quality	1,814	2,366
Current loans	570,920	581,105
Total loans and leases	584,964	592,823
Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
31-60 days	4,014	4,119
61-90 days	162	208
Total past due	4,176	4,327
Non-accrual loans and leases	4,417	5,735
Current loans	690,332	608,319
Total loans and leases	698,925	618,381
Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Non-accrual loans and leases	2,497	2,315
Current loans	139,386	126,862
Total loans and leases	$ 141,883	$ 129,177

XML

Credit Quality Assessment (Summary Information on Allowance for Loan and Lease Loss Activity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Credit Quality Assessment [Abstract]
Balance at beginning of year			$ 38,766	$ 42,957	$ 42,957
Provision (credit) for loan and lease losses	(192)	1,128	(1,016)	(1,670)
Loan and lease charge-offs			(1,541)	(9,639)
Loan and lease recoveries			1,365	7,774	8,058
Net charge-offs			(176)	(1,865)	(3,107)
Balance at period end	$ 37,574	$ 39,422	$ 37,574	$ 39,422	$ 38,766

XML

Financial Instruments with Off-Balance Sheet Risk and Derivatives (Narrative) (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financial Instruments With Off- Balance Sheet Risk and Derivatives [Abstract]
Interest Rate Swaps Notional Amount	$ 21.1	$ 46.4
Interest Rate Swap Contract At Fair Value	$ 1.4	$ 1.6

XML

Credit Quality Assessment (Credit Risk Rating Indicators for Each Segment of Commercial Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	$ 2,975,912	$ 2,784,266
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	368,611	356,651
Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	194,666	160,696
Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	575,984	552,178
Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	584,964	592,823
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	1,724,225	1,662,348
Commercial Real Estate Portfolio Segment [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	368,611	356,651
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	194,666	160,696
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	575,984	552,178
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	584,964	592,823
Commercial Real Estate Portfolio Segment [Member] | Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	1,644,511	1,557,315
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	344,076	324,941
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	189,604	154,869
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	557,036	523,901
Commercial Real Estate Portfolio Segment [Member] | Pass [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	553,795	553,604
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	28,433	34,812
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	14,752	16,166
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	3,882	2,944
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	9,799	15,702
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	51,281	69,951
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	9,783	15,274
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	5,062	5,827
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	15,066	25,333
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	21,370	23,517
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases		270
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases		$ 270

XML

Segment Reporting (Operating Segments and Reconciliation of Information to Condensed Consolidated Financial Statements) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Segment Reporting Information [Line Items]
Interest income	$ 37,150	$ 40,180	$ 110,391	$ 112,238
Interest expense	4,730	4,874	14,070	14,674
Provision (credit) for loan and lease losses	(192)	1,128	(1,016)	(1,670)
Noninterest income	12,590	11,223	35,533	35,857
Noninterest expenses	28,632	26,893	90,322	82,224
Income before income taxes	16,570	18,508	42,548	52,867
Income tax expense	5,428	6,419	13,496	18,058
Net income	11,142	12,089	29,052	34,809
Assets	4,248,731	4,052,969	4,248,731	4,052,969	4,106,100
Community Banking
Segment Reporting Information [Line Items]
Interest income	37,150	40,180	110,391	112,238
Interest expense	4,732	4,879	14,086	14,691
Provision (credit) for loan and lease losses	(192)	1,128	(1,016)	(1,670)
Noninterest income	9,545	8,453	29,669	27,748
Noninterest expenses	26,632	24,939	87,550	76,893
Income before income taxes	15,523	17,687	39,440	50,072
Income tax expense	5,014	6,094	12,272	16,955
Net income	10,509	11,593	27,168	33,117
Assets	4,250,103	4,088,617	4,250,103	4,088,617
Insurance
Segment Reporting Information [Line Items]
Interest income	1	1	6	6
Noninterest income	1,498	1,271	4,273	3,968
Noninterest expenses	1,226	1,135	3,542	3,270
Income before income taxes	273	137	737	704
Income tax expense	110	55	298	285
Net income	163	82	439	419
Assets	6,053	13,907	6,053	13,907
Investment Management
Segment Reporting Information [Line Items]
Interest income	1	4	10	11
Noninterest income	1,722	1,573	5,117	4,622
Noninterest expenses	949	893	2,756	2,542
Income before income taxes	774	684	2,371	2,091
Income tax expense	304	270	926	818
Net income	470	414	1,445	1,273
Assets	11,409	18,350	11,409	18,350
Intersegment Elimination
Segment Reporting Information [Line Items]
Interest income	(2)	(5)	(16)	(17)
Interest expense	(2)	(5)	(16)	(17)
Noninterest income	(175)	(74)	(3,526)	(481)
Noninterest expenses	(175)	(74)	(3,526)	(481)
Assets	$ (18,834)	$ (67,905)	$ (18,834)	$ (67,905)

XML

Loans and Leases (Loan Portfolio Segment Balances) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	$ 2,975,912	$ 2,784,266
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	698,925	618,381
Residential Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	141,883	129,177
Commercial Owner Occupied Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	584,964	592,823
Commercial Investor Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	575,984	552,178
Commercial Acquisition, Development and Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	194,666	160,696
Commercial Business [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	368,611	356,651
Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	156	703
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans and leases	$ 410,723	$ 373,657

XML

OTHER COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2014

Other Comprehensive Income [Abstract]

Net Accumulated Other Comprehensive Income (Loss)

(In thousands)		Unrealized Gains (Losses) on Investments Available-for-Sale		Defined Benefit Pension Plan		Total
Balance at January 1, 2014	$	358	$	(3,328)	$	(2,970)
Other comprehensive income before reclassification, net of tax		6,495		-		6,495
Reclassifications from accumulated other comprehensive income, net of tax		5		102		107
Current period change in other comprehensive income, net of tax		6,500		102		6,602
Balance at September 30, 2014	$	6,858	$	(3,226)	$	3,632
(In thousands)		Unrealized Gains (Losses) on Investments Available-for-Sale		Defined Benefit Pension Plan		Total
Balance at January 1, 2013	$	20,258	$	(8,946)	$	11,312
Other comprehensive income before reclassification, net of tax		(14,990)		-		(14,990)
Reclassifications from accumulated other comprehensive income, net of tax		71		715		786
Current period change in other comprehensive income, net of tax		(14,919)		715		(14,204)
Balance at September 30, 2013	$	5,339	$	(8,231)	$	(2,892)

Reclassification Adjustments Out of Accumulated Other Comprehensive Income

		Nine Months Ended September 30,
(In thousands)		2014		2013
Unrealized gains/(losses) on investments available-for-sale
Affected line item in the Statements of Income:
Investment securities gains	$	8	$	118
Income before taxes		8		118
Tax expense		3		47
Net income	$	5	$	71
Amortization of defined benefit pension plan items
Affected line item in the Statements of Income:
Recognized actuarial loss  1	$	183	$	1,176
Income before taxes		183		1,176
Tax expense		81		461
Net income	$	102	$	715
1  This amount is included in the computation of net periodic pension cost, see Note 9

XML

Fair Value (Financial Assets and Liabilities at Dates Indicated that were Accounted for or Disclosed at Fair Value) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Residential mortgage loans held for sale (at fair value)	$ 6,656	$ 8,365
Investments available-for-sale (at fair value)	692,107	751,284
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)	6,656	8,365
Fair Value, Measurements, Recurring | U.S. Government Agencies [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	140,716	139,466
Fair Value, Measurements, Recurring | State and Municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	167,585	165,428
Fair Value, Measurements, Recurring | Mortgage-Backed [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	379,904	442,250
Fair Value, Measurements, Recurring | Corporate Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	2,002	2,004
Fair Value, Measurements, Recurring | Trust Preferred [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	1,177	1,413
Fair Value, Measurements, Recurring | Marketable Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	723	723
Fair Value, Measurements, Recurring | Interest Rate Swap Agreements
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other assets	1,446	1,608
Other liabilities	(1,446)	(1,608)
Significant Other Observable Inputs (Level 2) [Member] | 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)	6,656	8,365
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | U.S. Government Agencies [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	140,716	139,466
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | State and Municipal
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	167,585	165,428
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | Mortgage-Backed [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	379,904	442,250
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | Corporate Debt [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	2,002	2,004
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | Marketable Equity Securities [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	723	723
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring | Interest Rate Swap Agreements
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Other assets	1,446	1,608
Other liabilities	(1,446)	(1,608)
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring | Trust Preferred [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Investments available-for-sale (at fair value)	$ 1,177	$ 1,413

XML

Credit Quality Assessment (Troubled Debt Restructured Loans for Specific Segments of the Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Modifications [Line Items]
Restructured accruing	$ 1,475	$ 3,003
Restructured non-accruing	192	425
Balance	1,667	3,428
Specific allowance		141
Restructured and subsequently defaulted	720
Commercial [Member]
Financing Receivable, Modifications [Line Items]
Restructured accruing	185	87
Restructured non-accruing		425
Balance	185	512
Specific allowance		141
All Other [Member]
Financing Receivable, Modifications [Line Items]
Restructured accruing		2,064
Balance		2,064
Commercial Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Modifications [Line Items]
Restructured non-accruing	192
Balance	192
Commercial Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Restructured accruing	1,290	852
Balance	1,290	852
Commercial Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Restructured and subsequently defaulted	$ 720

XML

Fair Value (Carrying Amounts and Fair Values of Company's Financial Instruments) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financial Assets
Investments held-to-maturity and other equity securities	$ 258,762	$ 265,325
Loans, net of allowance	2,938,338	2,784,266
Other assets	88,031	86,213
Financial Liabilities
Time deposits	450,654	465,737
Securities sold under retail repurchase agreements and federal funds purchased	71,384	53,842
Advances from FHLB	558,000	615,000
Subordinated debentures	35,000	35,000
Financial Assets
Investments held-to-maturity and other equity securities	223,130	216,007
Fair Value, Measurements, Recurring
Financial Assets
Investments held-to-maturity and other equity securities	260,202	256,694
Loans, net of allowance	2,882,093	2,692,877
Other assets	88,031	86,213
Financial Liabilities
Time deposits	450,323	465,392
Securities sold under retail repurchase agreements and federal funds purchased	71,384	53,842
Advances from FHLB	580,738	641,901
Subordinated debentures	12,652	11,376
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring
Financial Assets
Investments held-to-maturity and other equity securities	260,202	256,694
Other assets	88,031	86,213
Financial Liabilities
Time deposits	450,323	465,392
Securities sold under retail repurchase agreements and federal funds purchased	71,384	53,842
Advances from FHLB	580,738	641,901
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring
Financial Assets
Loans, net of allowance	2,882,093	2,692,877
Financial Liabilities
Subordinated debentures	$ 12,652	$ 11,376

XML

Segment Reporting (Narrative) (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 segment	Sep. 30, 2013
Segment Reporting Information [Line Items]
Number of operating segments			3
Amortization of intangible assets	$ 115,000	$ 462,000	$ 709,000	$ 1,384,000
Assets under management	1,000,000,000		1,000,000,000
Community Banking
Segment Reporting Information [Line Items]
Amortization of intangible assets		$ 300,000	$ 400,000	$ 1,100,000

XML

Litigation (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Litigation [Abstract]
Litigation expenses	$ 236	$ 6,364

XML

INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Schedule of Investments [Line Items]

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, 2013	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities, through September 30, 2014	$	531

Amortized Cost and Estimated Fair Values of Investments Held-To-Maturity

The amortized cost and estimated fair values of investments held-to-maturity at the dates indicated are presented in the following table:

		September 30, 2014								December 31, 2013
				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	$	64,510	$	-	$	(1,984)	$	62,526	$	64,505	$	-	$	(4,827)	$	59,678
State and municipal		156,971		4,121		(724)		160,368		159,889		1,920		(5,753)		156,056
Mortgage-backed		209		27		-		236		244		29		-		273
Total investments held-to-maturity	$	221,690	$	4,148	$	(2,708)	$	223,130	$	224,638	$	1,949	$	(10,580)	$	216,007

Other Equity Securities

Equity securities

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

(In thousands)		September 30, 2014		December 31, 2013
Federal Reserve Bank stock	$	8,269	$	8,269
Federal Home Loan Bank of Atlanta stock		28,803		32,418
Total equity securities	$	37,072	$	40,687

Available-for-Sale Securities [Member]

Schedule of Investments [Line Items]

Amortized Cost and Estimated Fair Values of 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, 2014								December 31, 2013
				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	$	144,473	$	-	$	(3,757)	$	140,716	$	147,688	$	-	$	(8,222)	$	139,466
State and municipal		157,854		9,731		-		167,585		159,524		6,060		(156)		165,428
Mortgage-backed		374,326		9,995		(4,417)		379,904		439,054		10,188		(6,992)		442,250
Corporate debt		2,000		2		-		2,002		2,000		4		-		2,004
Trust preferred		1,349		-		(172)		1,177		1,701		-		(288)		1,413
Total debt securities		680,002		19,728		(8,346)		691,384		749,967		16,252		(15,658)		750,561
Marketable equity securities		723		-		-		723		723		-		-		723
Total investments available-for-sale	$	680,725	$	19,728	$	(8,346)	$	692,107	$	750,690	$	16,252	$	(15,658)	$	751,284

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, 2014
					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	14	$	140,716	$	-	$	3,757	$	3,757
Mortgage-backed	26		140,189		341		4,076		4,417
Trust preferred	1		1,177		-		172		172
Total	41	$	282,082	$	341	$	8,005	$	8,346
	December 31, 2013
					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	15	$	139,466	$	8,222	$	-	$	8,222
State and municipal	12		11,680		156		-		156
Mortgage-backed	30		169,377		6,865		127		6,992
Trust preferred	1		1,413		-		288		288
Total	58	$	321,936	$	15,243	$	415	$	15,658

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, 2014				December 31, 2013
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less	$	2,000	$	2,002	$	2,080	$	2,085
Due after one year through five years		43,148		44,500		12,766		13,285
Due after five years through ten years		341,678		348,934		392,389		392,339
Due after ten years		293,176		295,948		342,732		342,852
Total debt securities available for sale	$	680,002	$	691,384	$	749,967	$	750,561

Held-to-Maturity Securities [Member]

Schedule of Investments [Line Items]

Gross Unrealized Losses and Fair Value by Length of Time

Gross unrealized losses and fair value by length of time that the individual held-to-maturity securities have been in a continuous unrealized loss position at the dates indicated are presented in the following tables:

	September 30, 2014
					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	8	$	62,526	$	-	$	1,984	$	1,984
State and municipal	57		52,941		55		669		724
Total	65	$	115,467	$	55	$	2,653	$	2,708
	December 31, 2013
					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	8	$	59,678	$	4,827	$	-	$	4,827
State and municipal	113		94,243		5,366		387		5,753
Total	121	$	153,921	$	10,193	$	387	$	10,580

Amortized Cost and Estimated Fair Values of Investment Securities

The amortized cost and estimated fair values of debt securities held-to-maturity by contractual maturity at the dates indicated are reflected in the following table. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		September 30, 2014				December 31, 2013
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less	$	3,099	$	3,112	$	1,720	$	1,725
Due after one year through five years		4,563		4,618		3,249		3,269
Due after five years through ten years		154,865		163,345		139,033		135,074
Due after ten years		59,163		52,055		80,636		75,939
Total debt securities held-to-maturity	$	221,690	$	223,130	$	224,638	$	216,007

XML

Credit Quality Assessment (Summary of Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Credit Quality Assessment [Abstract]
Impaired loans with a specific allowance	$ 15,608	$ 12,217
Impaired loans without a specific allowance	22,976	20,306
Total impaired loans	38,584	32,523
Allowance for loan and lease losses related to impaired loans	4,344	3,058
Allowance for loan and lease losses related to loans collectively evaluated	33,230	35,708
Total allowance for loan and lease losses	37,574	38,766
Average impaired loans for the period	35,559	38,379
Contractual interest income due on impaired loans during the period	2,217	2,612
Interest income on impaired loans recognized on a cash basis	665	1,374
Interest income on impaired loans recognized on an accrual basis	$ 281	$ 473

XML

Investments (Gross Unrealized Losses and Fair Value by Length of Time for Held-To-Maturity Securities) (Details) (Held-to-Maturity Securities [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014 security	Dec. 31, 2013 security
Gain (Loss) on Investments [Line Items]
Number of securities	65	121
Fair Value	$ 115,467	$ 153,921
Less than 12 months	55	10,193
More than 12 months	2,653	387
Total Unrealized Losses	2,708	10,580
U.S. Government Agency [Member]
Gain (Loss) on Investments [Line Items]
Number of securities	8	8
Fair Value	62,526	59,678
Less than 12 months		4,827
More than 12 months	1,984
Total Unrealized Losses	1,984	4,827
State and Municipal [Member]
Gain (Loss) on Investments [Line Items]
Number of securities	57	113
Fair Value	52,941	94,243
Less than 12 months	55	5,366
More than 12 months	669	387
Total Unrealized Losses	$ 724	$ 5,753

XML

Fair Value (Assets Measured at Fair Value on Nonrecurring Basis) (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 12,982	$ 12,349
Fair value measured on nonrecurring basis losses	21,157	17,346
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	11,220	11,011
Fair value measured on nonrecurring basis losses	21,384	17,655
Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	1,762	1,338
Fair value measured on nonrecurring basis losses	(227)	(309)
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	12,982	12,349
Fair Value, Inputs, Level 3 [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	11,220	11,011
Fair Value, Inputs, Level 3 [Member] | Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value disclosure, nonrecurring	$ 1,762	$ 1,338

XML

Investments (Amortized Cost and Estimated Fair Values of Investments Available-for-sale) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 680,725	$ 750,690
Gross Unrealized Gains	19,728	16,252
Gross Unrealized Losses	(8,346)	(15,658)
Estimated Fair Value	692,107	751,284
Available-for-Sale Securities [Member] | Marketable Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	723	723
Estimated Fair Value	723	723
Available-for-Sale Securities [Member] | Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	680,002	749,967
Gross Unrealized Gains	19,728	16,252
Gross Unrealized Losses	(8,346)	(15,658)
Estimated Fair Value	691,384	750,561
Available-for-Sale Securities [Member] | Debt Securities [Member] | U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	144,473	147,688
Gross Unrealized Losses	(3,757)	(8,222)
Estimated Fair Value	140,716	139,466
Available-for-Sale Securities [Member] | Debt Securities [Member] | State and Municipal [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	157,854	159,524
Gross Unrealized Gains	9,731	6,060
Gross Unrealized Losses		(156)
Estimated Fair Value	167,585	165,428
Available-for-Sale Securities [Member] | Debt Securities [Member] | Mortgage-Backed [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	374,326	439,054
Gross Unrealized Gains	9,995	10,188
Gross Unrealized Losses	(4,417)	(6,992)
Estimated Fair Value	379,904	442,250
Available-for-Sale Securities [Member] | Debt Securities [Member] | Corporate Debt [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	2,000	2,000
Gross Unrealized Gains	2	4
Estimated Fair Value	2,002	2,004
Available-for-Sale Securities [Member] | Debt Securities [Member] | Trust Preferred [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	1,349	1,701
Gross Unrealized Losses	(172)	(288)
Estimated Fair Value	$ 1,177	$ 1,413

XML

Credit Quality Assessment (Impaired Loans by Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	$ 35,559	$ 38,379
Contractual interest income due on impaired loans during the period	2,217	2,612
Interest income on impaired loans recognized on a cash basis	665	1,374
Interest income on impaired loans recognized on an accrual basis	281	473
Commercial [Member]
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	5,662	7,153
Contractual interest income due on impaired loans during the period	319	452
Interest income on impaired loans recognized on a cash basis	232	238
Interest income on impaired loans recognized on an accrual basis	98	133
All Other [Member]
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	7,892	6,784
Contractual interest income due on impaired loans during the period	139	227
Interest income on impaired loans recognized on a cash basis	39	83
Interest income on impaired loans recognized on an accrual basis	100	233
Commercial Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	3,948	5,451
Contractual interest income due on impaired loans during the period	512	654
Interest income on impaired loans recognized on a cash basis	68	253
Commercial Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	9,089	10,605
Contractual interest income due on impaired loans during the period	553	587
Interest income on impaired loans recognized on a cash basis	76	75
Interest income on impaired loans recognized on an accrual basis	83	30
Commercial Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Average impaired loans for the period	8,968	8,386
Contractual interest income due on impaired loans during the period	694	692
Interest income on impaired loans recognized on a cash basis	250	725
Interest income on impaired loans recognized on an accrual basis		$ 77

XML

Net Income Per Common Share (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Disclosure Calculation Of Net Income Per Common Share [Abstract]
Net income	$ 11,142	$ 12,089	$ 29,052	$ 34,809
Basic:
Basic weighted average EPS shares	25,074	24,979	25,045	24,952
Basic net income per share	$ 0.44	$ 0.48	$ 1.16	$ 1.40
Diluted:
Basic weighted average EPS shares	25,074	24,979	25,045	24,952
Dilutive common stock equivalents	78	92	90	97
Dilutive EPS shares	25,152	25,071	25,135	25,049
Diluted net income per share	$ 0.44	$ 0.48	$ 1.16	$ 1.39
Anti-dilutive shares	64	146	59	195

XML

Stockholders' Equity (Narrative) (Detail)	9 Months Ended
	Sep. 30, 2014	Aug. 31, 2013 Repurchase Program [Member]
Stockholders Equity Note [Line Items]
Repurchase of outstanding shares of common stock, maximum percent		5.00%
Repurchase of outstanding shares of common stock under Stock Repurchase Program, shares		1,260,000
Stock repurchased during period, shares	0

XML

Credit Quality Assessment (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Credit Quality Assessment [Abstract]
Restructured accuring loan	$ 1.7	$ 3.4
Specific allowance		0.1
Commitments to lend additional funds on loans that have been restructured	5.4	5.5
Other real estate owned	$ 1.8	$ 1.3

XML

SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2014

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”), which conducts a full-service commercial banking, mortgage banking and trust business. Services to individuals and businesses include accepting deposits, extending real estate, consumer and commercial loans and lines of credit, equipment leasing, general insurance, personal trust, and investment and wealth management services. The Company operates in the Maryland counties of Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's, and in Arlington, Fairfax and Loudoun counties in Virginia. The Company offers investment and wealth management services through the Bank’s subsidiary, West Financial Services.  Insurance products are available to clients through Sandy Spring Insurance, and Neff & Associates, which are agencies of Sandy Spring Insurance Corporation.

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, 2014 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2014. 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 2013 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 14, 2014.  There have been no significant changes to the Company’s accounting policies as disclosed in the 2013 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 and lease 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).

Loans Acquired with Deteriorated Credit Quality

Acquired loans are evaluated for evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value.  Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments.  The historical allowance for loan and lease losses related to the purchased loans is not carried over to the Company.  The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values.  For loans acquired with no evidence of credit deterioration, the fair value discount or premium is amortized over the contractual life of the loan as an adjustment to yield. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). The present value of any decreases in expected cash flows after the purchase date is recognized as an impairment through a charge to the provision for loan losses. Increases in the present value of expected cash flows after the purchase date are recognized as an adjustment to the accretable yield. Subsequent to the purchase date, the methods utilized to estimate the required allowance for loan and lease losses (“ALLL”) are similar to originated loans. Loans carried at fair value, mortgage loans held for sale and loans under revolving credit agreements are excluded from the scope of this guidance on loans acquired with deteriorated credit quality.

Pending Accounting Pronouncements

The FASB issued a standard 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.  This standard may affect an entity’s financial statements, business processes and internal control over financial reporting.  The guidance is effective for the first interim or annual period beginning after December 15, 2016.  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 is assessing this guidance to determine its impact on the Company’s financial position, results of operations and cash flows.

XML

Share Based Compensation (Narrative) (Detail) (USD $)	3 Months Ended			9 Months Ended					3 Months Ended	9 Months Ended		3 Months Ended	9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 2005 Omnibus Stock Plan [Member]	Sep. 30, 2014 2005 Omnibus Stock Plan [Member] Minimum [Member]	Sep. 30, 2014 2005 Omnibus Stock Plan [Member] Maximum [Member]	Mar. 31, 2014 Stock Option [Member]	Sep. 30, 2014 Stock Option [Member]	Sep. 30, 2013 Stock Option [Member]	Mar. 31, 2014 Restricted Stock [Member]	Sep. 30, 2014 Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares authorized						1,800,000
Common stock, shares available for issuance						1,015,421
Term of share based compensation plan						10 years	7 years	10 years
Minimum grant price percentage						100.00%
Recognized compensation expense	$ 400,000		$ 400,000	$ 1,300,000	$ 1,200,000
Unrecognized compensation expense										200,000			4,000,000
Expected cost recognition weighted average period										2 years			3 years 3 months 18 days
Options exercised				13,834	10,964					13,834	10,964
Options exercised intrinsic value				147,000						100,000	100,000
Fair value of shares vested										$ 200,000	$ 200,000
Stock granted	0	0		21,251					21,251			79,416
Vesting period										3 years			5 years

XML

Investments (Amortized Cost and Estimated Fair Values of Debt Securities Held-To-Maturity by Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Amortized Cost
Due in one year or less	$ 3,099	$ 1,720
Due after one year through five years	4,563	3,249
Due after five years through ten years	154,865	139,033
Due after ten years	59,163	80,636
Total debt securities held-to-maturity	221,690	224,638
Estimated Fair Value
Due in one year or less	3,112	1,725
Due after one year through five years	4,618	3,269
Due after five years through ten years	163,345	135,074
Due after ten years	52,055	75,939
Total debt securities held-to-maturity	$ 223,130	$ 216,007

XML

DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2014

Deposits [Abstract]

Composition of Deposits

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

(In thousands)		September 30, 2014		December 31, 2013
Noninterest-bearing deposits	$	986,549	$	836,198
Interest-bearing deposits:
Demand		485,112		460,824
Money market savings		846,625		870,653
Regular savings		259,848		243,813
Time deposits of less than $100,000		244,085		263,636
Time deposits of $100,000 or more		206,569		202,101
Total interest-bearing deposits		2,042,239		2,041,027
Total deposits	$	3,028,788	$	2,877,225

XML

GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Other Intangible Assets [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, 2014					Weighted		December 31, 2013					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:
Core deposit intangibles	$	9,716	$	(9,716)	$	-	-	$	9,716	$	(9,352)	$	364	0.3 years
Other identifiable intangibles		8,623		(8,001)		622	1.4 years		8,623		(7,657)		966	2.1 years
Total amortizing intangible assets	$	18,339	$	(17,717)	$	622		$	18,339	$	(17,009)	$	1,330
Goodwill	$	84,171			$	84,171		$	84,171			$	84,171

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
2014		112
2015		372
2016		94
2017		16
Thereafter		28
Total amortizing intangible assets	$	622

XML

Credit Quality Assessment (Information by Credit Risk Rating Indicators for Those Remaining Segments of Loan Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	$ 2,975,912	$ 2,784,266
Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	156	703
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	410,723	373,657
Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	698,925	618,381
Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	141,883	129,177
Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	698,925	618,381
Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	141,883	129,177
Performing Financing Receivable [Member] | Leases [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	156	703
Performing Financing Receivable [Member] | Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	408,887	371,368
Performing Financing Receivable [Member] | Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	691,060	607,449
Performing Financing Receivable [Member] | Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	139,386	126,862
Nonperforming Financing Receivable [Member] | Consumer [Member] | Loans 90 Days Or More Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	6	1
Nonperforming Financing Receivable [Member] | Consumer [Member] | Non Accrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	1,830	2,259
Nonperforming Financing Receivable [Member] | Consumer [Member] | Restructured Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases		29
Nonperforming Financing Receivable [Member] | Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member] | Non Accrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	4,417	5,735
Nonperforming Financing Receivable [Member] | Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member] | Restructured Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	3,448	5,197
Nonperforming Financing Receivable [Member] | Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member] | Non Accrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	2,497	2,315
Homogeneous Loan Pools [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	1,251,687	1,121,918
Homogeneous Loan Pools [Member] | Performing Financing Receivable [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	1,239,489	1,106,382
Homogeneous Loan Pools [Member] | Nonperforming Financing Receivable [Member] | Loans 90 Days Or More Past Due [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	6	1
Homogeneous Loan Pools [Member] | Nonperforming Financing Receivable [Member] | Non Accrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	8,744	10,309
Homogeneous Loan Pools [Member] | Nonperforming Financing Receivable [Member] | Restructured Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total loans and leases	$ 3,448	$ 5,226

XML

Investments (Other Equity Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Investments [Abstract]
Federal Reserve Bank stock	$ 8,269	$ 8,269
Federal Home Loan Bank of Atlanta stock	28,803	32,418
Total equity securities	$ 37,072	$ 40,687

XML

SHARE BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2014

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 with the weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2014		2013
Dividend yield	3.04	%	2.80	%
Weighted average expected volatility	46.78	%	53.87	%
Weighted average risk-free interest rate	1.56	%	0.83	%
Weighted average expected lives (in years)	5.08		5.34
Weighted average grant-date fair value	$ 8.05		$ 7.99

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, 2014	307,800	$	25.23		$	1,768
Granted	21,251	$	24.75
Exercised	(13,834)	$	13.72		$	147
Forfeited or expired	(2,500)		28.59
Balance at September 30, 2014	312,717	$	25.68	2.0	$	848
Exercisable at September 30, 2014	271,580	$	26.18	1.4	$	787
Weighted average fair value of options
granted during the year		$	8.05

Summary of Activity for Company's Restricted Stock

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, 2014	227,064	$	18.61
Granted	79,416	$	24.75
Vested	(76,037)	$	17.53
Forfieted	(2,885)	$	21.95
Restricted stock at September 30, 2014	227,558	$	21.07

XML

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

9 Months Ended

Sep. 30, 2014

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

Net Periodic Benefit Cost

		Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)		2014		2013		2014		2013
Interest cost on projected benefit obligation	$	403	$	390	$	1,197	$	1,163
Expected return on plan assets		(493)		(425)		(1,480)		(1,259)
Recognized net actuarial loss		67		249		183		1,176
Net periodic benefit cost	$	(23)	$	214	$	(100)	$	1,080

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement Of Stockholders Equity [Abstract]
Common stock dividends, per share	$ 0.56	$ 0.46
Stock option plan, shares	13,834	10,964
Employee stock purchase plan, shares	18,404	19,971
Restricted stock, shares	54,535	48,819

XML

NET INCOME PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2014

Net Income Per Common Share [Abstract]

Calculation of Net Income Per Common Share

		Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars and amounts in thousands, except per share data)		2014		2013		2014		2013
Net income	$	11,142	$	12,089	$	29,052	$	34,809
Basic:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Basic net income per share	$	0.44	$	0.48	$	1.16	$	1.40
Diluted:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Dilutive common stock equivalents		78		92		90		97
Dilutive EPS shares		25,152		25,071		25,135		25,049
Diluted net income per share	$	0.44	$	0.48	$	1.16	$	1.39
Anti-dilutive shares		64		146		59		195

XML

Investments (Amortized Cost and Estimated Fair Values of Investment Securities Available-For-Sale by Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Amortized Cost
Due in one year or less	$ 2,000	$ 2,080
Due after one year through five years	43,148	12,766
Due after five years through ten years	341,678	392,389
Due after ten years	293,176	342,732
Total debt securities available for sale	680,002	749,967
Estimated Fair Value
Due in one year or less	2,002	2,085
Due after one year through five years	44,500	13,285
Due after five years through ten years	348,934	392,339
Due after ten years	295,948	342,852
Total debt securities available for sale	$ 691,384	$ 750,561

XML

Credit Quality Assessment (Credit Quality of Loan Portfolio by Segment) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	$ 35,639	$ 30,574
Loans and leases 90 days past due	655	1
Restructured loans and leases	7,382	9,459
Total non-performing loans and leases	43,676	40,034
Other real estate owned	1,762	1,338
Total non-performing assets	45,438	41,372
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	4,151	3,400
Restructured loans and leases	1,792	2,207
Total non-performing loans and leases	5,943	5,607
Other real estate owned	39	54
Total non-performing assets	5,982	5,661
Consumer Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	1,830	2,259
Loans and leases 90 days past due	6	1
Restructured loans and leases		29
Total non-performing loans and leases	1,836	2,289
Total non-performing assets	1,836	2,289
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	3,792	4,127
Total non-performing loans and leases	3,792	4,127
Other real estate owned	365	365
Total non-performing assets	4,157	4,492
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	8,210	6,802
Restructured loans and leases	2,142	852
Total non-performing loans and leases	10,352	7,654
Total non-performing assets	10,352	7,654
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	10,742	5,936
Loans and leases 90 days past due	649
Restructured loans and leases		1,174
Total non-performing loans and leases	11,391	7,110
Total non-performing assets	11,391	7,110
Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	4,417	5,735
Restructured loans and leases	3,448	5,197
Total non-performing loans and leases	7,865	10,932
Other real estate owned	1,358	919
Total non-performing assets	9,223	11,851
Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Non-accrual loans and leases	2,497	2,315
Total non-performing loans and leases	2,497	2,315
Total non-performing assets	$ 2,497	$ 2,315

XML

Fair Value (Narrative) (Detail) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Disclosure Fair Value Additional Information [Abstract]
Impaired loans	$ 38,584,000	$ 32,523,000
Impaired loans fair value	34,300,000	29,500,000
Specific loan loss reserves	$ 4,300,000	$ 3,000,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 48,665	$ 46,755
Federal funds sold	474	475
Interest-bearing deposits with banks	42,820	27,197
Cash and cash equivalents	91,959	74,427
Residential mortgage loans held for sale (at fair value)	6,656	8,365
Investments available-for-sale (at fair value)	692,107	751,284
Investments held-to-maturity -- fair value of $223,130 and $216,007 at September 30, 2014 and December 31, 2013, respectively	221,690	224,638
Other equity securities	37,072	40,687
Total loans and leases	2,975,912	2,784,266
Less: allowance for loan and lease losses	(37,574)	(38,766)
Net loans and leases	2,938,338	2,745,500
Premises and equipment, net	45,841	45,916
Other real estate owned	1,762	1,338
Accrued interest receivable	12,277	12,532
Goodwill	84,171	84,171
Other intangible assets, net	622	1,330
Other assets	116,236	115,912
Total assets	4,248,731	4,106,100
Liabilities
Noninterest-bearing deposits	986,549	836,198
Interest-bearing deposits	2,042,239	2,041,027
Total deposits	3,028,788	2,877,225
Securities sold under retail repurchase agreements and federal funds purchased	71,384	53,842
Advances from FHLB	558,000	615,000
Subordinated debentures	35,000	35,000
Accrued interest payable and other liabilities	33,155	25,670
Total liabilities	3,726,327	3,606,737
Stockholders' Equity
Common stock -- par value $1.00; shares authorized 50,000,000; shares issued and outstanding 25,076,794 and 24,990,021 at September 30, 2014 and December 31, 2013, respectively	25,077	24,990
Additional paid in capital	194,899	193,445
Retained earnings	298,796	283,898
Accumulated other comprehensive income (loss)	3,632	(2,970)
Total stockholders' equity	522,404	499,363
Total liabilities and stockholders' equity	$ 4,248,731	$ 4,106,100

XML

Loans and Leases (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Loans and Leases [Abstract]
Unearned income and deferred fees	$ 0.1	$ 0.7

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:
Net income	$ 29,052	$ 34,809
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,415	6,033
Credit for loan and lease losses	(1,016)	(1,670)
Share based compensation expense	1,101	1,307
Deferred income tax expense	1,119	2,945
Origination of loans held for sale	(90,531)	(219,153)
Proceeds from sales of loans held for sale	93,554	248,907
Gains on sales of loans held for sale	(1,314)	(4,147)
Loss on sales of other real estate owned	162	1,072
Investment securities gains	(8)	(118)
Net decrease (increase) in accrued interest receivable	255	(72)
Net (increase) decrease in other assets	(7,319)	6,441
Net increase in accrued expenses and other liabilities	7,683	2,010
Other - net	3,256	3,706
Net cash provided by operating activities	41,409	82,070
Investing activities:
Purchases of other equity securities		(2,776)
Purchases of investments held-to-maturity		(20,666)
Purchases of investments available-for-sale		(161,379)
Proceeds from other equity securities	3,615
Proceeds from maturities, calls and principal payments of investments held-to-maturity	2,293	9,959
Proceeds from maturities, calls and principal payments of investments available-for-sale	67,700	143,220
Net increase in loans and leases	(192,794)	(135,100)
Proceeds from the sales of other real estate owned	465	7,137
Expenditures for premises and equipment	(3,547)	(1,883)
Net cash used in investing activities	(122,268)	(161,488)
Financing activities:
Net increase in deposits	151,563	3,432
Net increase (decrease) in retail repurchase agreements and federal funds purchased	17,542	(33,752)
Proceeds from advances from FHLB	1,330,000	745,000
Repayment of advances from FHLB	(1,387,000)	(630,058)
Proceeds from issuance of common stock	440	48
Dividends paid	(14,154)	(11,590)
Net cash provided by financing activities	98,391	73,080
Net increase (decrease) in cash and cash equivalents	17,532	(6,338)
Cash and cash equivalents at beginning of period	74,427	86,406
Cash and cash equivalents at end of period	91,959	80,068
Supplemental Disclosures:
Interest payments	14,066	15,031
Income tax payments	11,908	12,470
Transfers from loans to other real estate owned	$ 971	$ 2,353

XML

Goodwill and Other Intangible Assets (Estimated Future Amortization Expense for Amortizing Intangibles) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Disclosure Estimated Future Amortization Expense For Amortizing Intangibles [Abstract]
2014	$ 112
2015	372
2016	94
2017	16
Thereafter	28
Total amortizing intangible assets	$ 622

XML

SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2014

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, 2014
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	37,150	$	1	$	1	$	(2)	$	37,150
Interest expense		4,732		-		-		(2)		4,730
Provision for loan and lease losses		(192)		-		-		-		(192)
Noninterest income		9,545		1,498		1,722		(175)		12,590
Noninterest expenses		26,632		1,226		949		(175)		28,632
Income before income taxes		15,523		273		774		-		16,570
Income tax expense		5,014		110		304		-		5,428
Net income	$	10,509	$	163	$	470	$	-	$	11,142
Assets	$	4,250,103	$	6,053	$	11,409	$	(18,834)	$	4,248,731
		Three Months Ended September 30, 2013
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	40,180	$	1	$	4	$	(5)	$	40,180
Interest expense		4,879		-		-		(5)		4,874
Provision (credit) for loan and lease losses		1,128		-		-		-		1,128
Noninterest income		8,453		1,271		1,573		(74)		11,223
Noninterest expenses		24,939		1,135		893		(74)		26,893
Income before income taxes		17,687		137		684		-		18,508
Income tax expense		6,094		55		270		-		6,419
Net income	$	11,593	$	82	$	414	$	-	$	12,089
Assets	$	4,088,617	$	13,907	$	18,350	$	(67,905)	$	4,052,969
		Nine Months Ended September 30, 2014
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	110,391	$	6	$	10	$	(16)	$	110,391
Interest expense		14,086		-		-		(16)		14,070
Provision (credit) for loan and lease losses		(1,016)		-		-		-		(1,016)
Noninterest income		29,669		4,273		5,117		(3,526)		35,533
Noninterest expenses		87,550		3,542		2,756		(3,526)		90,322
Income before income taxes		39,440		737		2,371		-		42,548
Income tax expense		12,272		298		926		-		13,496
Net income	$	27,168	$	439	$	1,445	$	-	$	29,052
Assets	$	4,250,103	$	6,053	$	11,409	$	(18,834)	$	4,248,731
		Nine Months Ended September 30, 2013
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	112,238	$	6	$	11	$	(17)	$	112,238
Interest expense		14,691		-		-		(17)		14,674
Provision (credit) for loan and lease losses		(1,670)		-		-		-		(1,670)
Noninterest income		27,748		3,968		4,622		(481)		35,857
Noninterest expenses		76,893		3,270		2,542		(481)		82,224
Income before income taxes		50,072		704		2,091		-		52,867
Income tax expense		16,955		285		818		-		18,058
Net income	$	33,117	$	419	$	1,273	$	-	$	34,809
Assets	$	4,088,617	$	13,907	$	18,350	$	(67,905)	$	4,052,969

XML

Share Based Compensation (Summary of Activity for Company's Restricted Stock) (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Weighted Average Grant-Date Fair Value
Granted	$ 8.05	$ 7.99
Restricted Stock [Member]
Number of Shares
Restricted stock beginning balance	227,064
Granted	79,416
Vested	(76,037)
Forfeited	(2,885)
Restricted stock ending balance	227,558
Weighted Average Grant-Date Fair Value
Restricted stock beginning balance	$ 18.61
Granted	$ 24.75
Vested	$ 17.53
Forfeited	$ 21.95
Restricted stock ending balance	$ 21.07

XML

FAIR VALUE

9 Months Ended

Sep. 30, 2014

Fair Value [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 on the following page.

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, which 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, mortgage-backed securities and corporate debt

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

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. For further information, refer to Note 2 – Investments. 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, 2014
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs		Total
						(Level 3)
Assets
Residential mortgage loans held for sale	$	-	$	6,656	$	-	$	6,656
Investments available-for-sale:
U.S. government agencies		-		140,716		-		140,716
State and municipal		-		167,585		-		167,585
Mortgage-backed		-		379,904		-		379,904
Corporate debt		-		2,002		-		2,002
Trust preferred		-		-		1,177		1,177
Marketable equity securities		-		723		-		723
Interest rate swap agreements		-		1,446		-		1,446
Liabilities
Interest rate swap agreements	$	-	$	(1,446)	$	-	$	(1,446)
		December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs		Total
						(Level 3)
Assets
Residential mortgage loans held for sale	$	-	$	8,365	$	-	$	8,365
Investments available-for-sale:
U.S. government agencies		-		139,466		-		139,466
State and municipal		-		165,428		-		165,428
Mortgage-backed		-		442,250		-		442,250
Corporate debt		-		2,004		-		2,004
Trust preferred		-		-		1,413		1,413
Marketable equity securities		-		723		-		723
Interest rate swap agreements		-		1,608		-		1,608
Liabilities
Interest rate swap agreements	$	-	$	(1,608)	$	-	$	(1,608)

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, 2014	$	1,413
Total OTTI included in earnings		-
Principal redemption		(352)
Total unrealized losses included in other comprehensive income (loss)		116
Balance at September 30, 2014	$	1,177

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, 2014
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,220	$	11,220	$	21,384
Other real estate owned		-		-		1,762		1,762		(227)
Total	$	-	$	-	$	12,982	$	12,982	$	21,157
		December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,011	$	11,011	$	17,655
Other real estate owned		-		-		1,338		1,338		(309)
Total	$	-	$	-	$	12,349	$	12,349	$	17,346

At September 30, 2014, impaired loans totaling $38.6 million were written down to fair value of $34.3 million as a result of specific loan loss allowances of $4.3 million associated with the impaired loans which was included in the allowance for loan losses.  Impaired loans totaling $32.5 million were written down to fair value of $29.5 million at December 31, 2013 as a result of specific loan loss allowances of $3.0 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.

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, 2014				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
Investments held-to-maturity and other equity securities	$	258,762	$	260,202	$	-	$	260,202	$	-
Loans, net of allowance		2,938,338		2,882,093		-		-		2,882,093
Other assets		88,031		88,031		-		88,031		-
Financial Liabilities
Time Deposits	$	450,654	$	450,323	$	-	$	450,323	$	-
Securities sold under retail repurchase agreements and federal funds purchased		71,384		71,384		-		71,384		-
Advances from FHLB		558,000		580,738		-		580,738		-
Subordinated debentures		35,000		12,652		-		-		12,652
						Fair Value Measurements
		December 31, 2013				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
Investments held-to-maturity and other equity securities	$	265,325	$	256,694	$	-	$	256,694	$	-
Loans, net of allowance		2,784,266		2,692,877		-		-		2,692,877
Other assets		86,213		86,213		-		86,213		-
Financial Liabilities
Time Deposits	$	465,737	$	465,392	$	-	$	465,392	$	-
Securities sold under retail repurchase agreements and federal funds purchased		53,842		53,842		-		53,842		-
Advances from FHLB		615,000		641,901		-		641,901		-
Subordinated debentures		35,000		11,376		-		-		11,376

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:

Investments held-to-maturity and other equity securities: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. These amounts are presented net of the allowance for loan losses.

Other assets:The investment in bank-owned life insurance represents the cash surrender value of the policies at September 30, 2014 and December 31, 2013 as determined by the each insurance carrier.

Time Deposits: The fair value of time deposits is estimated by discounting their cash flows based on their future maturities.

Securities sold under agreements to repurchase and federal funds purchased:   The fair value and the carrying value are the same due to the short maturities of those instruments.

Advances from FHLB:  The fair value of the Federal Home Loan Bank of Atlanta (“FHLB”) advances is 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:  The fair value is estimated by computing the discounted value of contractual cash flows payable at current interest rates for obligations with similar remaining terms.  The subordinated debentures are classified as Level 3 in the fair value hierarchy due to the lack of market activity of such instruments.

XML

Investments (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Investment [Line Items]
Overall default probabilities percentage	0.52%
Recovery and prepayment probabilities percentage	2.00%
Discount rate assumption	11.80%
Non-credit related OTTI recognized in other comprehensive income ("OCI")	$ 0.2
Investments available-for-sale book value	200.2	186.6
Investments held-to-maturity book value	206.6	165.8
Banks and Financial Institutions [Member]
Investment [Line Items]
Trust preferred portfolio fair value	1.2
Trust preferred portfolio	1.3
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | Federal Home Loan Mortgage and Federal National Mortgage Association [Member]
Investment [Line Items]
Mortgage-backed portfolio	176.2
Government National Mortgage Association Certificates and Obligations (GNMA) [Member] | Federal Home Loan Mortgage and Federal National Mortgage Association [Member] | Federal Home Loan Mortgage Corporation [Member]
Investment [Line Items]
Mortgage-backed portfolio	$ 203.7

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2014

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”), which conducts a full-service commercial banking, mortgage banking and trust business. Services to individuals and businesses include accepting deposits, extending real estate, consumer and commercial loans and lines of credit, equipment leasing, general insurance, personal trust, and investment and wealth management services. The Company operates in the Maryland counties of Anne Arundel, Carroll, Frederick, Howard, Montgomery, and Prince George's, and in Arlington, Fairfax and Loudoun counties in Virginia. The Company offers investment and wealth management services through the Bank’s subsidiary, West Financial Services.  Insurance products are available to clients through Sandy Spring Insurance, and Neff & Associates, which are agencies of Sandy Spring Insurance Corporation.

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, 2014 are not necessarily indicative of the results that may be expected for any future periods or for the year ending December 31, 2014. 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 2013 Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 14, 2014.  There have been no significant changes to the Company’s accounting policies as disclosed in the 2013 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 and lease 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).

Loans Acquired with Deteriorated Credit Quality

Loans Acquired with Deteriorated Credit Quality

Acquired loans are evaluated for evidence of credit deterioration since their origination as of the date of the acquisition are recorded at their initial fair value.  Credit deterioration is determined based on the probability of collection of all contractually required principal and interest payments.  The historical allowance for loan and lease losses related to the purchased loans is not carried over to the Company.  The determination of credit quality deterioration as of the purchase date may include parameters such as past due and non-accrual status, commercial risk ratings, cash flow projections, type of loan and collateral, collateral value and recent loan-to-value ratios or appraised values.  For loans acquired with no evidence of credit deterioration, the fair value discount or premium is amortized over the contractual life of the loan as an adjustment to yield. For loans acquired with evidence of credit deterioration, the Company determines at the acquisition date the excess of the loan’s contractually required payments over all cash flows expected to be collected as an amount that should not be accreted into interest income (nonaccretable difference). The remaining amount representing the difference in the expected cash flows of acquired loans and the initial investment in the acquired loans is accreted into interest income over the remaining life of the loan or pool of loans (accretable yield). The present value of any decreases in expected cash flows after the purchase date is recognized as an impairment through a charge to the provision for loan losses. Increases in the present value of expected cash flows after the purchase date are recognized as an adjustment to the accretable yield. Subsequent to the purchase date, the methods utilized to estimate the required allowance for loan and lease losses (“ALLL”) are similar to originated loans. Loans carried at fair value, mortgage loans held for sale and loans under revolving credit agreements are excluded from the scope of this guidance on loans acquired with deteriorated credit quality.

XML

Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Comprehensive Income [Line Items]
Reclassifications from accumulated other comprehensive income, net of tax			$ (5)	$ (71)
Current period change in other comprehensive income, net of tax	(1,648)	(625)	6,500	(14,919)
Reclassifications from accumulated other comprehensive income, net of tax			(102)	(715)
Current period change in other comprehensive income, net of tax	(48)	(158)	(102)	(715)
Beginning Balance			(2,970)	11,312
Other comprehensive income before reclassification, net of tax			6,495	(14,990)
Reclassifications from accumulated other comprehensive income, net of tax			107	786
Current period change in other comprehensive income, net of tax			6,602	(14,204)
Ending Balance	3,632	(2,892)	3,632	(2,892)
Unrealized Gains (Losses) on Investments Available-for-Sale
Comprehensive Income [Line Items]
Beginning Balance			358	20,258
Other comprehensive income before reclassification, net of tax			6,495	(14,990)
Reclassifications from accumulated other comprehensive income, net of tax			5	71
Current period change in other comprehensive income, net of tax			6,500	(14,919)
Ending Balance	6,858	5,339	6,858	5,339
Accumulated Defined Benefit Plans Adjustment [Member]
Comprehensive Income [Line Items]
Beginning Balance			(3,328)	(8,946)
Reclassifications from accumulated other comprehensive income, net of tax			102	715
Current period change in other comprehensive income, net of tax			102	715
Ending Balance	$ (3,226)	$ (8,231)	$ (3,226)	$ (8,231)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balances at Dec. 31, 2012	$ 24,905	$ 191,689	$ 255,606	$ 11,312	$ 483,512
Net income			34,809		34,809
Other comprehensive income (loss), net of tax				(14,204)	(14,204)
Common stock dividends			(11,590)		(11,590)
Stock compensation expense		1,307			1,307
Common stock issued pursuant to:
Stock option plan	11	128			139
Employee stock purchase plan	20	336			356
Restricted stock	49	(496)			(447)
Balances at Sep. 30, 2013	24,985	192,964	278,825	(2,892)	493,882
Balances at Dec. 31, 2013	24,990	193,445	283,898	(2,970)	499,363
Net income			29,052		29,052
Other comprehensive income (loss), net of tax				6,602	6,602
Common stock dividends			(14,154)		(14,154)
Stock compensation expense		1,318			1,318
Common stock issued pursuant to:
Stock option plan	14	176			190
Employee stock purchase plan	18	365			383
Restricted stock	55	(405)			(350)
Balances at Sep. 30, 2014	$ 25,077	$ 194,899	$ 298,796	$ 3,632	$ 522,404

XML

CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Investments held-to-maturity, fair value	$ 223,130	$ 216,007
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	25,076,794	24,990,021
Common stock, shares outstanding	25,076,794	24,990,021

XML

PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2014

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”) covering substantially all employees. 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 future salary increases and additional years of service will 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)		2014		2013		2014		2013
Interest cost on projected benefit obligation	$	403	$	390	$	1,197	$	1,163
Expected return on plan assets		(493)		(425)		(1,480)		(1,259)
Recognized net actuarial loss		67		249		183		1,176
Net periodic benefit cost	$	(23)	$	214	$	(100)	$	1,080

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.  Given these uncertainties, management continues to monitor the funding level of the pension plan and may make contributions as necessary during 2014.

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Oct. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Trading Symbol	sasr
Entity Common Stock, Shares Outstanding		25,040,890
Entity Registrant Name	SANDY SPRING BANCORP INC
Entity Central Index Key	0000824410
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer

XML

NET INCOME PER COMMON SHARE

9 Months Ended

Sep. 30, 2014

Net Income Per Common 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)		2014		2013		2014		2013
Net income	$	11,142	$	12,089	$	29,052	$	34,809
Basic:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Basic net income per share	$	0.44	$	0.48	$	1.16	$	1.40
Diluted:
Basic weighted average EPS shares		25,074		24,979		25,045		24,952
Dilutive common stock equivalents		78		92		90		97
Dilutive EPS shares		25,152		25,071		25,135		25,049
Diluted net income per share	$	0.44	$	0.48	$	1.16	$	1.39
Anti-dilutive shares		64		146		59		195

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest Income:
Interest and fees on loans and leases	$ 31,030	$ 33,079	$ 91,470	$ 91,937
Interest on loans held for sale	81	176	211	838
Interest on deposits with banks	24	22	66	65
Interest and dividends on investment securities:
Taxable	3,712	4,558	11,704	12,411
Exempt from federal income taxes	2,303	2,345	6,940	6,987
Total interest income	37,150	40,180	110,391	112,238
Interest Expense:
Interest on deposits	1,208	1,358	3,585	4,209
Interest on retail repurchase agreements and federal funds purchased	42	39	117	126
Interest on advances from FHLB	3,258	3,255	9,709	9,667
Interest on subordinated debt	222	222	659	672
Total interest expense	4,730	4,874	14,070	14,674
Net interest income	32,420	35,306	96,321	97,564
Provision (credit) for loan and lease losses	(192)	1,128	(1,016)	(1,670)
Net interest income after provision (credit) for loan and lease losses	32,612	34,178	97,337	99,234
Non-interest Income:
Investment securities gains	8		8	118
Service charges on deposit accounts	2,226	2,171	6,287	6,390
Mortgage banking activities	596	(26)	1,482	2,738
Wealth management income	4,974	4,503	14,181	13,077
Insurance agency commissions	1,410	1,193	4,011	3,578
Income from bank owned life insurance	611	629	1,817	1,864
Bank card fees	1,148	1,077	3,295	3,113
Other income	1,617	1,676	4,452	4,979
Total non-interest income	12,590	11,223	35,533	35,857
Non-interest Expenses:
Salaries and employee benefits	16,765	16,382	49,594	48,891
Occupancy expense of premises	3,032	3,149	9,778	9,327
Equipment expenses	1,337	1,200	3,855	3,676
Marketing	744	713	2,088	1,983
Outside data services	1,231	1,152	3,663	3,418
FDIC insurance	594	678	1,687	1,855
Amortization of intangible assets	115	462	709	1,384
Litigation expenses	236		6,364
Other expenses	4,578	3,157	12,584	11,690
Total non-interest expenses	28,632	26,893	90,322	82,224
Income before income taxes	16,570	18,508	42,548	52,867
Income tax expense	5,428	6,419	13,496	18,058
Net income	$ 11,142	$ 12,089	$ 29,052	$ 34,809
Net Income Per Share Amounts:
Basic net income per share	$ 0.44	$ 0.48	$ 1.16	$ 1.40
Diluted net income per share	$ 0.44	$ 0.48	$ 1.16	$ 1.39
Dividends declared per common share	$ 0.20	$ 0.16	$ 0.56	$ 0.46

XML

CREDIT QUALITY ASSESSMENT

9 Months Ended

Sep. 30, 2014

Credit Quality Assessment [Abstract]

CREDIT QUALITY ASSESSMENT

Note 4 – CREDIT QUALITY ASSESSMENT

Allowance for Loan and Lease Losses

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

		Nine Months Ended September 30,
(In thousands)		2014		2013
Balance at beginning of year	$	38,766	$	42,957
Provision (credit) for loan and lease losses		(1,016)		(1,670)
Loan and lease charge-offs		(1,541)		(9,639)
Loan and lease recoveries		1,365		7,774
Net charge-offs		(176)		(1,865)
Balance at period end	$	37,574	$	39,422

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

		For the Nine Months Ended September 30, 2014
				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			Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year	$	6,308	$	3,754	$	9,263	$	6,308		$	16	$	4,142	$	7,819	$	1,156	$	38,766
Provision (credit)		(1,119)		799		(681)		630			(6)		41		(355)		(325)		(1,016)
Charge-offs		(225)		-		(4)		(265)	-		-		(720)		(324)		(3)		(1,541)
Recoveries		1,023		-		34		-			-		134		105		69		1,365
Net recoveries (charge-offs)		798		-		30		(265)			-		(586)		(219)		66		(176)
Balance at end of period	$	5,987	$	4,553	$	8,612	$	6,673		$	10	$	3,597	$	7,245	$	897	$	37,574
Total loans and leases	$	368,611	$	194,666	$	575,984	$	584,964		$	156	$	410,723	$	698,925	$	141,883	$	2,975,912
Allowance for loans and leases to total loans and leases ratio		1.62%		2.34%		1.50%		1.14%			6.42%		0.88%		1.04%		0.63%		1.26%
Balance of loans specifically evaluated for impairment	$	5,943	$	3,792	$	10,352	$	10,742			na.	$	27	$	6,039	$	1,689	$	38,584
Allowance for loans specifically evaluated for impairment	$	1,406	$	1,188	$	399	$	794			na.		na.	$	557	$	-	$	4,344
Specific allowance to specific loans ratio		23.66%		31.33%		3.85%		7.39%			na.		na.		9.22%		na.		11.26%
Balance of loans collectively evaluated	$	362,668	$	190,874	$	565,632	$	574,222		$	156	$	410,696	$	692,886	$	140,194	$	2,937,328
Allowance for loans collectively evaluated	$	4,581	$	3,365	$	8,213	$	5,879		$	10	$	3,597	$	6,688	$	897	$	33,230
Collective allowance to collective loans ratio		1.26%		1.76%		1.45%		1.02%			6.42%		0.88%		0.97%		0.64%		1.13%

		For the Year Ended December 31, 2013
				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			Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year	$	6,495	$	4,737	$	9,583	$	6,997		$	332	$	3,846	$	8,522	$	2,445	$	42,957
Provision (credit)		1,910		(3,978)		1,100		(874)			(326)		1,951		329		(1,196)		(1,084)
Charge-offs		(2,915)		(85)		(4,774)		(240)	-		-		(1,853)		(1,194)		(104)		(11,165)
Recoveries		818		3,080		3,354		425			10		198		162		11		8,058
Net recoveries (charge-offs )		(2,097)		2,995		(1,420)		185			10		(1,655)		(1,032)		(93)		(3,107)
Balance at end of period	$	6,308	$	3,754	$	9,263	$	6,308		$	16	$	4,142	$	7,819	$	1,156	$	38,766
Total loans and leases	$	356,651	$	160,696	$	552,178	$	592,823		$	703	$	373,657	$	618,381	$	129,177	$	2,784,266
Allowance for loans and leases to total loans and leases ratio		1.77%		2.34%		1.68%		1.06%			2.28%		1.11%		1.26%		0.89%		1.39%
Balance of loans specifically evaluated for impairment	$	5,608	$	4,128	$	7,654	$	7,111		$	na.	$	29	$	6,141	$	1,852	$	32,523
Allowance for loans specifically evaluated for impairment	$	849	$	1,031	$	126	$	426		$	na.	$	na.	$	626	$	-	$	3,058
Specific allowance to specific loans ratio		15.14%		24.98%		1.65%		5.99%			na.		na.		10.19%		na.		9.40%
Balance of loans collectively evaluated	$	351,043	$	156,568	$	544,524	$	585,712		$	703	$	373,628	$	612,240	$	127,325	$	2,751,743
Allowance for loans collectively evaluated	$	5,459	$	2,723	$	9,137	$	5,882		$	16	$	4,142	$	7,193	$	1,156	$	35,708
Collective allowance to collective loans ratio		1.56%		1.74%		1.68%		1.00%			2.28%		1.11%		1.17%		0.91%		1.30%

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

(In thousands)		September 30, 2014		December 31, 2013
Impaired loans with a specific allowance	$	15,608	$	12,217
Impaired loans without a specific allowance		22,976		20,306
Total impaired loans	$	38,584	$	32,523
Allowance for loan and lease losses related to impaired loans	$	4,344	$	3,058
Allowance for loan and lease losses related to loans collectively evaluated		33,230		35,708
Total allowance for loan and lease losses	$	37,574	$	38,766
Average impaired loans for the period	$	35,559	$	38,379
Contractual interest income due on impaired loans during the period	$	2,217	$	2,612
Interest income on impaired loans recognized on a cash basis	$	665	$	1,374
Interest income on impaired loans recognized on an accrual basis	$	281	$	473

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, 2014
				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	$	1,182	$	1,437	$	2,044	$	5,051	$	947	$	10,661
Restructured accruing		793		-		-		-		779		1,572
Restructured non-accruing		230		1,211		78		1,245		611		3,375
Balance	$	2,205	$	2,648	$	2,122	$	6,296	$	2,337	$	15,608
Allowance	$	1,406	$	1,188	$	399	$	794	$	557	$	4,344
Impaired loans without a specific allowance
Non-accruing	$	1,745	$	-	$	6,088	$	1,808	$	784	$	10,425
Restructured accruing		999		-		2,142		-		2,669		5,810
Restructured non-accruing		994		1,144		-		2,638		1,965		6,741
Balance	$	3,738	$	1,144	$	8,230	$	4,446	$	5,418	$	22,976
Total impaired loans
Non-accruing	$	2,927	$	1,437	$	8,132	$	6,859	$	1,731	$	21,086
Restructured accruing		1,792		-		2,142		-		3,448		7,382
Restructured non-accruing		1,224		2,355		78		3,883		2,576		10,116
Balance	$	5,943	$	3,792	$	10,352	$	10,742	$	7,755	$	38,584
Unpaid principal balance in total impaired loans	$	7,752	$	13,245	$	14,998	$	12,725	$	7,908	$	56,628

				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	$	5,662	$	3,948	$	9,089	$	8,968	$	7,892	$	35,559
Contractual interest income due on impaired loans during the period	$	319	$	512	$	553	$	694	$	139
Interest income on impaired loans recognized on a cash basis	$	232	$	68	$	76	$	250	$	39
Interest income on impaired loans recognized on an accrual basis	$	98	$	-	$	83	$	-	$	100

		December 31, 2013
				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	$	374	$	1,360	$	749	$	2,022	$	-	$	4,505
Restructured accruing		790		-		-		1,174		2,365		4,329
Restructured non-accruing		349		1,122		-		1,274		638		3,383
Balance	$	1,513	$	2,482	$	749	$	4,470	$	3,003	$	12,217
Allowance	$	849	$	1,031	$	126	$	426	$	626	$	3,058
Impaired loans without a specific allowance
Non-accruing	$	1,532	$	382	$	5,440	$	646	$	-	$	8,000
Restructured accruing		1,417		-		852		-		2,861		5,130
Restructured non-accruing		1,146		1,264		613		1,995		2,158		7,176
Balance	$	4,095	$	1,646	$	6,905	$	2,641	$	5,019	$	20,306
Total impaired loans
Non-accruing	$	1,906	$	1,742	$	6,189	$	2,668	$	-	$	12,505
Restructured accruing		2,207		-		852		1,174		5,226		9,459
Restructured non-accruing		1,495		2,386		613		3,269		2,796		10,559
Balance	$	5,608	$	4,128	$	7,654	$	7,111	$	8,022	$	32,523
Unpaid principal balance in total impaired loans	$	7,943	$	10,318	$	12,351	$	8,684	$	8,650	$	47,946

		December 31, 2013
				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	$	7,153	$	5,451	$	10,605	$	8,386	$	6,784	$	38,379
Contractual interest income due on impaired loans during the period	$	452	$	654	$	587	$	692	$	227
Interest income on impaired loans recognized on a cash basis	$	238	$	253	$	75	$	725	$	83
Interest income on impaired loans recognized on an accrual basis	$	133	$	-	$	30	$	77	$	233

Credit Quality

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

		September 30, 2014
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	4,151	$	3,792	$	8,210	$	10,742	$	-	$	1,830	$	4,417	$	2,497	$	35,639
Loans and leases 90 days past due		-		-		-		649		-		6		-		-		655
Restructured loans and leases		1,792		-		2,142		-		-		-		3,448		-		7,382
Total non-performing loans and leases		5,943		3,792		10,352		11,391		-		1,836		7,865		2,497		43,676
Other real estate owned		39		365		-		-		-		-		1,358		-		1,762
Total non-performing assets	$	5,982	$	4,157	$	10,352	$	11,391	$	-	$	1,836	$	9,223	$	2,497	$	45,438

		December 31, 2013
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	3,400	$	4,127	$	6,802	$	5,936	$	-	$	2,259	$	5,735	$	2,315	$	30,574
Loans and leases 90 days past due		-		-		-		-		-		1		-		-		1
Restructured loans and leases		2,207		-		852		1,174		-		29		5,197		-		9,459
Total non-performing loans and leases		5,607		4,127		7,654		7,110		-		2,289		10,932		2,315		40,034
Other real estate owned		54		365		-		-		-		-		919		-		1,338
Total non-performing assets	$	5,661	$	4,492	$	7,654	$	7,110	$	-	$	2,289	$	11,851	$	2,315	$	41,372

		September 30, 2014
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	564	$	948	$	169	$	839	$	-	$	732	$	4,014	$	-	$	7,266
61-90 days		403		-		2,009		-		-		20		162		-		2,594
> 90 days		-		-		-		649		-		6		-		-		655
Total past due		967		948		2,178		1,488		-		758		4,176		-		10,515
Non-accrual loans and leases		4,151		3,792		8,210		10,742		-		1,830		4,417		2,497		35,639
Loans aquired with deteriorated credit quality		1,267		-		53		1,814		-		-		-		-		3,134
Current loans		362,226		189,926		565,543		570,920		156		408,135		690,332		139,386		2,926,624
Total loans and leases	$	368,611	$	194,666	$	575,984	$	584,964	$	156	$	410,723	$	698,925	$	141,883	$	2,975,912

		December 31, 2013
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	382	$	-	$	5,826	$	876	$	4	$	716	$	4,119	$	-	$	11,923
61-90 days		1,142		-		-		2,540		-		176		208		-		4,066
> 90 days		-		-		-		-		-		1		-		-		1
Total past due		1,524		-		5,826		3,416		4		893		4,327		-		15,990
Non-accrual loans and leases		3,400		4,127		6,802		5,936		-		2,259		5,735		2,315		30,574
Loans aquired with deteriorated credit quality		1,363		-		571		2,366		-		-		-		-		4,300
Current loans		350,364		156,569		538,979		581,105		699		370,505		608,319		126,862		2,733,402
Total loans and leases	$	356,651	$	160,696	$	552,178	$	592,823	$	703	$	373,657	$	618,381	$	129,177	$	2,784,266

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

		September 30, 2014
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	344,076	$	189,604	$	557,036	$	553,795	$	1,644,511
Special Mention		14,752		-		3,882		9,799		28,433
Substandard		9,783		5,062		15,066		21,370		51,281
Doubtful		-		-		-		-		-
Total	$	368,611	$	194,666	$	575,984	$	584,964	$	1,724,225

		December 31, 2013
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	324,941	$	154,869	$	523,901	$	553,604	$	1,557,315
Special Mention		16,166		-		2,944		15,702		34,812
Substandard		15,274		5,827		25,333		23,517		69,951
Doubtful		270		-		-		-		270
Total	$	356,651	$	160,696	$	552,178	$	592,823	$	1,662,348

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, 2014
						Residential Real Estate
						Residential		Residential
(In thousands)		Leasing		Consumer		Mortgage		Construction		Total
Performing	$	156	$	408,887	$	691,060	$	139,386	$	1,239,489
Non-performing:
90 days past due		-		6		-		-		6
Non-accruing		-		1,830		4,417		2,497		8,744
Restructured loans and leases		-		-		3,448		-		3,448
Total	$	156	$	410,723	$	698,925	$	141,883	$	1,251,687

		December 31, 2013
						Residential Real Estate
						Residential		Residential
(In thousands)		Leasing		Consumer		Mortgage		Construction		Total
Performing	$	703	$	371,368	$	607,449	$	126,862	$	1,106,382
Non-performing:
90 days past due		-		1		-		-		1
Non-accruing		-		2,259		5,735		2,315		10,309
Restructured loans and leases		-		29		5,197		-		5,226
Total	$	703	$	373,657	$	618,381	$	129,177	$	1,121,918

During the nine months ended September 30, 2014, the Company restructured $1.7 million in loans that were designated as troubled debt restructurings.  Modifications consisted principally of interest rate concessions.  No modifications resulted in the reduction of the recorded 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 principal in the restructured loan.  Loans restructured during 2014 did not require significant specific reserves at September 30, 2014.  For the year ended December 31, 2013, the Company restructured $3.4 million in loans.  Modifications consisted principally of interest rate concessions and no modifications resulted in the reduction of the recorded principal in the associated loan balances.  Loans restructured during 2013 had specific reserves of $0.1 million at December 31, 2013.  Commitments to lend additional funds on loans that have been restructured at September 30, 2014 and December 31, 2013 amounted to $5.4 million and $5.5 million, respectively.

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, 2014
				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	$	185	$	-	$	1,290	$	-	$	-	$	1,475
Restructured non-accruing		-		192		-		-		-		192
Balance	$	185	$	192	$	1,290	$	-	$	-	$	1,667
Specific allowance	$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted	$	-	$	-	$	-	$	720	$	-	$	720

		For the Year Ended December 31, 2013
				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	$	87	$	-	$	852	$	-	$	2,064	$	3,003
Restructured non-accruing		425		-		-		-		-		425
Balance	$	512	$	-	$	852	$	-	$	2,064	$	3,428
Specific allowance	$	141	$	-	$	-	$	-	$	-	$	141
Restructured and subsequently defaulted	$	-	$	-	$	-	$	-	$	-	$	-

Other Real Estate Owned

Other real estate owned totaled $1.8 million and $1.3 million at September 30, 2014 and December 31, 2013.

XML

LOANS AND LEASES

9 Months Ended

Sep. 30, 2014

Loans and Leases [Abstract]

LOANS AND LEASES

Note 3 – Loans and Leases

Outstanding loan balances at September 30, 2014 and December 31, 2013 are net of unearned income including net deferred loan costs of $0.1 million and $0.7 million, respectively.  The loan portfolio segment balances at the dates indicated are presented in the following table: 

(In thousands)		September 30, 2014		December 31, 2013
Residential real estate:
Residential mortgage	$	698,925	$	618,381
Residential construction		141,883		129,177
Commercial real estate:
Commercial owner occupied real estate		584,964		592,823
Commercial investor real estate		575,984		552,178
Commercial acquisition, development and construction		194,666		160,696
Commercial Business		368,611		356,651
Leases		156		703
Consumer		410,723		373,657
Total loans and leases	$	2,975,912	$	2,784,266

XML

SEGMENT REPORTING

9 Months Ended

Sep. 30, 2014

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 acquisition 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 on sales of investment products and service charges on deposit accounts.  Expenses include personnel, occupancy, marketing, equipment and other expenses. Amortization of intangibles related to the acquired entities was not significant for the three months ended September 30, 2014 was not significant. Non-cash charges associated with amortization of intangibles related to the acquired entities amounted to $0.3 million for the three months ended September 30, 2013.  These non-cash charges amounted to $0.4 million and $1.1 million for the nine months ended September 30, 2014 and 2013.

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 related to the acquired entities was not significant for the three and nine months ended September 30, 2014 and 2013, 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 $1.0 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 related to the acquired entities was not significant for the three and nine months ended September 30, 2014 and 2013, 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, 2014
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	37,150	$	1	$	1	$	(2)	$	37,150
Interest expense		4,732		-		-		(2)		4,730
Provision for loan and lease losses		(192)		-		-		-		(192)
Noninterest income		9,545		1,498		1,722		(175)		12,590
Noninterest expenses		26,632		1,226		949		(175)		28,632
Income before income taxes		15,523		273		774		-		16,570
Income tax expense		5,014		110		304		-		5,428
Net income	$	10,509	$	163	$	470	$	-	$	11,142
Assets	$	4,250,103	$	6,053	$	11,409	$	(18,834)	$	4,248,731
		Three Months Ended September 30, 2013
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	40,180	$	1	$	4	$	(5)	$	40,180
Interest expense		4,879		-		-		(5)		4,874
Provision (credit) for loan and lease losses		1,128		-		-		-		1,128
Noninterest income		8,453		1,271		1,573		(74)		11,223
Noninterest expenses		24,939		1,135		893		(74)		26,893
Income before income taxes		17,687		137		684		-		18,508
Income tax expense		6,094		55		270		-		6,419
Net income	$	11,593	$	82	$	414	$	-	$	12,089
Assets	$	4,088,617	$	13,907	$	18,350	$	(67,905)	$	4,052,969
		Nine Months Ended September 30, 2014
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	110,391	$	6	$	10	$	(16)	$	110,391
Interest expense		14,086		-		-		(16)		14,070
Provision (credit) for loan and lease losses		(1,016)		-		-		-		(1,016)
Noninterest income		29,669		4,273		5,117		(3,526)		35,533
Noninterest expenses		87,550		3,542		2,756		(3,526)		90,322
Income before income taxes		39,440		737		2,371		-		42,548
Income tax expense		12,272		298		926		-		13,496
Net income	$	27,168	$	439	$	1,445	$	-	$	29,052
Assets	$	4,250,103	$	6,053	$	11,409	$	(18,834)	$	4,248,731
		Nine Months Ended September 30, 2013
		Community				Investment		Inter-Segment
(In thousands)		Banking		Insurance		Mgmt.		Elimination		Total
Interest income	$	112,238	$	6	$	11	$	(17)	$	112,238
Interest expense		14,691		-		-		(17)		14,674
Provision (credit) for loan and lease losses		(1,670)		-		-		-		(1,670)
Noninterest income		27,748		3,968		4,622		(481)		35,857
Noninterest expenses		76,893		3,270		2,542		(481)		82,224
Income before income taxes		50,072		704		2,091		-		52,867
Income tax expense		16,955		285		818		-		18,058
Net income	$	33,117	$	419	$	1,273	$	-	$	34,809
Assets	$	4,088,617	$	13,907	$	18,350	$	(67,905)	$	4,052,969

XML

OTHER COMPREHENSIVE INCOME

9 Months Ended

Sep. 30, 2014

Other Comprehensive Income [Abstract]

OTHER COMPREHENSIVE INCOME

NOTE 11 – OTHER COMPREHENSIVE INCOME

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-equity changes are comprised of unrealized gains or losses on available-for-sale debt securities and any minimum pension liability adjustments.  These do not have an impact on the Company’s net income.  The following table presents the activity in net accumulated other comprehensive income (loss) and the components of the activity for the periods indicated:

(In thousands)		Unrealized Gains (Losses) on Investments Available-for-Sale		Defined Benefit Pension Plan		Total
Balance at January 1, 2014	$	358	$	(3,328)	$	(2,970)
Other comprehensive income before reclassification, net of tax		6,495		-		6,495
Reclassifications from accumulated other comprehensive income, net of tax		5		102		107
Current period change in other comprehensive income, net of tax		6,500		102		6,602
Balance at September 30, 2014	$	6,858	$	(3,226)	$	3,632
(In thousands)		Unrealized Gains (Losses) on Investments Available-for-Sale		Defined Benefit Pension Plan		Total
Balance at January 1, 2013	$	20,258	$	(8,946)	$	11,312
Other comprehensive income before reclassification, net of tax		(14,990)		-		(14,990)
Reclassifications from accumulated other comprehensive income, net of tax		71		715		786
Current period change in other comprehensive income, net of tax		(14,919)		715		(14,204)
Balance at September 30, 2013	$	5,339	$	(8,231)	$	(2,892)

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)		2014		2013
Unrealized gains/(losses) on investments available-for-sale
Affected line item in the Statements of Income:
Investment securities gains	$	8	$	118
Income before taxes		8		118
Tax expense		3		47
Net income	$	5	$	71
Amortization of defined benefit pension plan items
Affected line item in the Statements of Income:
Recognized actuarial loss  1	$	183	$	1,176
Income before taxes		183		1,176
Tax expense		81		461
Net income	$	102	$	715
1  This amount is included in the computation of net periodic pension cost, see Note 9

XML

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2014

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

Note 7 – Stockholders’ Equity

The Company re-approved a stock repurchase program in August 2013 that permits the repurchase of up to 5% of the Company’s outstanding shares of common stock or approximately 1,260,000 shares.  Repurchases, which will be conducted through open market purchases or privately negotiated transactions, will be made depending on market conditions and other factors.  No shares were repurchased during the first nine months of 2014.

XML

Deposits (Composition of Deposits) (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Disclosure Composition Of Deposits [Abstract]
Noninterest-bearing deposits	$ 986,549	$ 836,198
Interest-bearing deposits:
Demand	485,112	460,824
Money market savings	846,625	870,653
Regular savings	259,848	243,813
Time deposits of less than $100,000	244,085	263,636
Time deposits of $100,000 or more	206,569	202,101
Total interest-bearing deposits	2,042,239	2,041,027
Total deposits	$ 3,028,788	$ 2,877,225

XML

GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2014

Goodwill and Other Intangible Assets [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, 2014					Weighted		December 31, 2013					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:
Core deposit intangibles	$	9,716	$	(9,716)	$	-	-	$	9,716	$	(9,352)	$	364	0.3 years
Other identifiable intangibles		8,623		(8,001)		622	1.4 years		8,623		(7,657)		966	2.1 years
Total amortizing intangible assets	$	18,339	$	(17,717)	$	622		$	18,339	$	(17,009)	$	1,330
Goodwill	$	84,171			$	84,171		$	84,171			$	84,171

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

(In thousands)		Amount
2014		112
2015		372
2016		94
2017		16
Thereafter		28
Total amortizing intangible assets	$	622

XML

DEPOSITS

9 Months Ended

Sep. 30, 2014

Deposits [Abstract]

DEPOSITS

Note 6 – Deposits

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

(In thousands)		September 30, 2014		December 31, 2013
Noninterest-bearing deposits	$	986,549	$	836,198
Interest-bearing deposits:
Demand		485,112		460,824
Money market savings		846,625		870,653
Regular savings		259,848		243,813
Time deposits of less than $100,000		244,085		263,636
Time deposits of $100,000 or more		206,569		202,101
Total interest-bearing deposits		2,042,239		2,041,027
Total deposits	$	3,028,788	$	2,877,225

XML

SHARE BASED COMPENSATION

9 Months Ended

Sep. 30, 2014

Share Based Compensation [Abstract]

SHARE BASED COMPENSATION

Note 8 – Share Based Compensation

At September 30, 2014, the Company had two share based compensation plans in existence, the 1999 Stock Option Plan (expired but having outstanding options that may still be exercised) and the 2005 Omnibus Stock Plan, which is described below. 

The Company’s 2005 Omnibus Stock Plan (“Omnibus Plan”) provides for the granting of non-qualifying stock options to the Company’s directors, and incentive and non-qualifying stock options, stock appreciation rights and restricted stock grants to selected key employees on a periodic basis at the discretion of the board.  The Omnibus Plan authorizes the issuance of up to 1,800,000 shares of common stock of which 1,015,421 are available for issuance at September 30, 2014, 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.  Options granted under the expired 1999 Stock Option Plan remain outstanding until exercised or they expire.  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 with the weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2014		2013
Dividend yield	3.04	%	2.80	%
Weighted average expected volatility	46.78	%	53.87	%
Weighted average risk-free interest rate	1.56	%	0.83	%
Weighted average expected lives (in years)	5.08		5.34
Weighted average grant-date fair value	$ 8.05		$ 7.99

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 $0.4 million and $0.4 million for the three months ended September 30, 2014 and 2013, respectively, related to the awards of stock options and restricted stock grants.  Compensation expense of $1.3 million and $1.2 million was recognized for the nine months ended September 30, 2014 and 2013, respectively. Stock options exercised were 13,834 and 10,964 for the nine months ended September 30, 2014 and 2013, respectively. The intrinsic value for the stock options exercised amounted to $0.1 million and $0.1 million for the nine months ended September 30, 2014 and 2013, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.2 million as of September 30, 2014.  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 $4.0 million as of September 30, 2014.  That cost is expected to be recognized over a weighted average period of approximately 3.3 years.  The fair value of the options vested during the nine months ended September 30, 2014 and 2013, was $0.2 million and $0.2 million, respectively.

In the first quarter of 2014, 21,251 stock options were granted, subject to a three year vesting schedule with one third of the options vesting each year on the anniversary date of the grant.  Additionally, 79,416 shares of restricted stock were granted, subject to a five year vesting schedule with one fifth of the shares vesting each year on the grant date anniversary.  No shares were granted during the second or third quarter of 2014.

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, 2014	307,800	$	25.23		$	1,768
Granted	21,251	$	24.75
Exercised	(13,834)	$	13.72		$	147
Forfeited or expired	(2,500)		28.59
Balance at September 30, 2014	312,717	$	25.68	2.0	$	848
Exercisable at September 30, 2014	271,580	$	26.18	1.4	$	787
Weighted average fair value of options
granted during the year		$	8.05

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, 2014	227,064	$	18.61
Granted	79,416	$	24.75
Vested	(76,037)	$	17.53
Forfieted	(2,885)	$	21.95
Restricted stock at September 30, 2014	227,558	$	21.07

XML

Share Based Compensation (Summary of Share Option Activity) (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2014	Sep. 30, 2013
Number of Common Shares
Beginning balance			307,800
Granted	0	0	21,251
Exercised			(13,834)	(10,964)
Forfeited or expired			(2,500)
Ending balance	312,717		312,717
Exercisable at December 31, 2013	271,580		271,580
Weighted Average Exercise Share Price
Beginning balance			$ 25.23
Granted			$ 24.75
Exercised			$ 13.72
Forfeited or expired			$ 28.59
Ending balance	$ 25.68		$ 25.68
Exercisable at June 30, 2014	$ 26.18		$ 26.18
Weighted average fair value of options granted during the year			$ 8.05	$ 7.99
Weighted Average Contractual Remaining Life (Years)
Balance at end of period			2 years
Exercisable at end of period			1 year 4 months 24 days
Aggregate Intrinsic Value
Beginning balance			$ 1,768
Exercised			147
Ending balance	848		848
Exercisable at June 30, 2014	$ 787		$ 787

XML

Pension, Profit Sharing, and Other Employee Benefit Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Disclosure Net Periodic Benefit Cost [Abstract]
Interest cost on projected benefit obligation	$ 403	$ 390	$ 1,197	$ 1,163
Expected return on plan assets	(493)	(425)	(1,480)	(1,259)
Recognized net actuarial loss	67	249	183	1,176
Net periodic benefit cost	$ (23)	$ 214	$ (100)	$ 1,080

XML

Share Based Compensation (Fair Values of All Options Granted Estimated Using Binomial Option-Pricing Model with Weighted-average Assumptions) (Detail) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Disclosure Fair Values Of All Options Granted Estimated Using Binomial Option Pricing Model With Weightedaverage Assumptions [Abstract]
Dividend yield	3.04%	2.80%
Weighted average expected volatility	46.78%	53.87%
Weighted average risk-free interest rate	1.56%	0.83%
Weighted average expected lives (in years)	5 years 29 days	5 years 4 months 2 days
Weighted average grant-date fair value	$ 8.05	$ 7.99

XML

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value [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, 2014
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs		Total
						(Level 3)
Assets
Residential mortgage loans held for sale	$	-	$	6,656	$	-	$	6,656
Investments available-for-sale:
U.S. government agencies		-		140,716		-		140,716
State and municipal		-		167,585		-		167,585
Mortgage-backed		-		379,904		-		379,904
Corporate debt		-		2,002		-		2,002
Trust preferred		-		-		1,177		1,177
Marketable equity securities		-		723		-		723
Interest rate swap agreements		-		1,446		-		1,446
Liabilities
Interest rate swap agreements	$	-	$	(1,446)	$	-	$	(1,446)
		December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs		Total
						(Level 3)
Assets
Residential mortgage loans held for sale	$	-	$	8,365	$	-	$	8,365
Investments available-for-sale:
U.S. government agencies		-		139,466		-		139,466
State and municipal		-		165,428		-		165,428
Mortgage-backed		-		442,250		-		442,250
Corporate debt		-		2,004		-		2,004
Trust preferred		-		-		1,413		1,413
Marketable equity securities		-		723		-		723
Interest rate swap agreements		-		1,608		-		1,608
Liabilities
Interest rate swap agreements	$	-	$	(1,608)	$	-	$	(1,608)

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, 2014	$	1,413
Total OTTI included in earnings		-
Principal redemption		(352)
Total unrealized losses included in other comprehensive income (loss)		116
Balance at September 30, 2014	$	1,177

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, 2014
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,220	$	11,220	$	21,384
Other real estate owned		-		-		1,762		1,762		(227)
Total	$	-	$	-	$	12,982	$	12,982	$	21,157
		December 31, 2013
(In thousands)		Quoted Prices in Active Markets for Identical Assets  (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Total Losses
Impaired loans	$	-	$	-	$	11,011	$	11,011	$	17,655
Other real estate owned		-		-		1,338		1,338		(309)
Total	$	-	$	-	$	12,349	$	12,349	$	17,346

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, 2014				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
Investments held-to-maturity and other equity securities	$	258,762	$	260,202	$	-	$	260,202	$	-
Loans, net of allowance		2,938,338		2,882,093		-		-		2,882,093
Other assets		88,031		88,031		-		88,031		-
Financial Liabilities
Time Deposits	$	450,654	$	450,323	$	-	$	450,323	$	-
Securities sold under retail repurchase agreements and federal funds purchased		71,384		71,384		-		71,384		-
Advances from FHLB		558,000		580,738		-		580,738		-
Subordinated debentures		35,000		12,652		-		-		12,652
						Fair Value Measurements
		December 31, 2013				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
Investments held-to-maturity and other equity securities	$	265,325	$	256,694	$	-	$	256,694	$	-
Loans, net of allowance		2,784,266		2,692,877		-		-		2,692,877
Other assets		86,213		86,213		-		86,213		-
Financial Liabilities
Time Deposits	$	465,737	$	465,392	$	-	$	465,392	$	-
Securities sold under retail repurchase agreements and federal funds purchased		53,842		53,842		-		53,842		-
Advances from FHLB		615,000		641,901		-		641,901		-
Subordinated debentures		35,000		11,376		-		-		11,376

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) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable Impaired [Line Items]
Impaired loans	$ 38,584	$ 32,523
Unpaid principal balance in total impaired loans	56,628	47,946
Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	21,086	12,505
Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	7,382	9,459
Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	10,116	10,559
Commercial [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	5,943	5,608
Unpaid principal balance in total impaired loans	7,752	7,943
Commercial [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,927	1,906
Commercial [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,792	2,207
Commercial [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,224	1,495
All Other [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	7,755	8,022
Unpaid principal balance in total impaired loans	7,908	8,650
All Other [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,731
All Other [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	3,448	5,226
All Other [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,576	2,796
Impaired Financing Receivables with Related Allowance [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	15,608	12,217
Allowance	4,344	3,058
Impaired Financing Receivables with Related Allowance [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	10,661	4,505
Impaired Financing Receivables with Related Allowance [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,572	4,329
Impaired Financing Receivables with Related Allowance [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	3,375	3,383
Impaired Financing Receivables with Related Allowance [Member] | Commercial [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,205	1,513
Allowance	1,406	849
Impaired Financing Receivables with Related Allowance [Member] | Commercial [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,182	374
Impaired Financing Receivables with Related Allowance [Member] | Commercial [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	793	790
Impaired Financing Receivables with Related Allowance [Member] | Commercial [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	230	349
Impaired Financing Receivables with Related Allowance [Member] | All Other [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,337	3,003
Allowance	557	626
Impaired Financing Receivables with Related Allowance [Member] | All Other [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	947
Impaired Financing Receivables with Related Allowance [Member] | All Other [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	779	2,365
Impaired Financing Receivables with Related Allowance [Member] | All Other [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	611	638
Impaired Financing Receivables with No Related Allowance [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	22,976	20,306
Impaired Financing Receivables with No Related Allowance [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	10,425	8,000
Impaired Financing Receivables with No Related Allowance [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	5,810	5,130
Impaired Financing Receivables with No Related Allowance [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	6,741	7,176
Impaired Financing Receivables with No Related Allowance [Member] | Commercial [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	3,738	4,095
Impaired Financing Receivables with No Related Allowance [Member] | Commercial [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,745	1,532
Impaired Financing Receivables with No Related Allowance [Member] | Commercial [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	999	1,417
Impaired Financing Receivables with No Related Allowance [Member] | Commercial [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	994	1,146
Impaired Financing Receivables with No Related Allowance [Member] | All Other [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	5,418	5,019
Impaired Financing Receivables with No Related Allowance [Member] | All Other [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	784
Impaired Financing Receivables with No Related Allowance [Member] | All Other [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,669	2,861
Impaired Financing Receivables with No Related Allowance [Member] | All Other [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,965	2,158
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	3,792	4,128
Unpaid principal balance in total impaired loans	13,245	10,318
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,437	1,742
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,355	2,386
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	10,352	7,654
Unpaid principal balance in total impaired loans	14,998	12,351
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	8,132	6,189
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,142	852
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	78	613
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	10,742	7,111
Unpaid principal balance in total impaired loans	12,725	8,684
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	6,859	2,668
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans		1,174
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	3,883	3,269
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,648	2,482
Allowance	1,188	1,031
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,437	1,360
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,211	1,122
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Investor Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,122	749
Allowance	399	126
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Investor Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,044	749
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Investor Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	78
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	6,296	4,470
Allowance	794	426
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	5,051	2,022
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans		1,174
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,245	1,274
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,144	1,646
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans		382
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Acquisition, Development and Construction [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,144	1,264
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Investor Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	8,230	6,905
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Investor Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	6,088	5,440
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Investor Real Estate [Member] | Restructuring [Member] | Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	2,142	852
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Investor Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans		613
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	4,446	2,641
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	1,808	646
Commercial Real Estate Portfolio Segment [Member] | Impaired Financing Receivables with No Related Allowance [Member] | Commercial Owner Occupied Real Estate [Member] | Restructuring [Member] | Non Accrual Loans [Member]
Financing Receivable Impaired [Line Items]
Impaired loans	$ 2,638	$ 1,995

XML

LITIGATION

9 Months Ended

Sep. 30, 2014

Litigation [Abstract]

LITIGATION

Note 13 – LITIGATION

For the nine months ended September 30, 2014, the Company accrued $6.4 million for litigation expenses as a result of an adverse jury verdict rendered in the second quarter associated with the actions of a former employee of CommerceFirst Bank, which was acquired in 2012.  The Company is currently in the process of appealing the decision. 

XML

LOANS AND LEASES (Tables)

9 Months Ended

Sep. 30, 2014

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, 2014		December 31, 2013
Residential real estate:
Residential mortgage	$	698,925	$	618,381
Residential construction		141,883		129,177
Commercial real estate:
Commercial owner occupied real estate		584,964		592,823
Commercial investor real estate		575,984		552,178
Commercial acquisition, development and construction		194,666		160,696
Commercial Business		368,611		356,651
Leases		156		703
Consumer		410,723		373,657
Total loans and leases	$	2,975,912	$	2,784,266

XML

Credit Quality Assessment (Activity in Allowance for Loan and Lease Losses by Respective Loan Portfolio Segment) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	$ 38,766	$ 42,957	$ 42,957
Provision (credit)	(1,016)		(1,084)
Charge-offs	(1,541)		(11,165)
Recoveries	1,365	7,774	8,058
Net recoveries (charge-offs)	(176)	(1,865)	(3,107)
Balance at period end	37,574	39,422	38,766
Total loans and leases	2,975,912		2,784,266
Allowance for loans and leases to total loans and leases ratio	1.26%		1.39%
Balance of loans specifically evaluated for impairment	38,584		32,523
Allowance for loans specifically evaluated for impairment	4,344		3,058
Specific allowance to specific loans ratio	11.26%		9.40%
Balance of loans collectively evaluated	2,937,328		2,751,743
Allowance for loans collectively evaluated	33,230		35,708
Collective allowance to collective loans ratio	1.13%		1.30%
Commercial Business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	6,308	6,495	6,495
Provision (credit)	(1,119)		1,910
Charge-offs	(225)		(2,915)
Recoveries	1,023		818
Net recoveries (charge-offs)	798		(2,097)
Balance at period end	5,987		6,308
Total loans and leases	368,611		356,651
Allowance for loans and leases to total loans and leases ratio	1.62%		1.77%
Balance of loans specifically evaluated for impairment	5,943		5,608
Allowance for loans specifically evaluated for impairment	1,406		849
Specific allowance to specific loans ratio	23.66%		15.14%
Balance of loans collectively evaluated	362,668		351,043
Allowance for loans collectively evaluated	4,581		5,459
Collective allowance to collective loans ratio	1.26%		1.56%
Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	3,754	4,737	4,737
Provision (credit)	799		(3,978)
Charge-offs			(85)
Recoveries			3,080
Net recoveries (charge-offs)			2,995
Balance at period end	4,553		3,754
Total loans and leases	194,666		160,696
Allowance for loans and leases to total loans and leases ratio	2.34%		2.34%
Balance of loans specifically evaluated for impairment	3,792		4,128
Allowance for loans specifically evaluated for impairment	1,188		1,031
Specific allowance to specific loans ratio	31.33%		24.98%
Balance of loans collectively evaluated	190,874		156,568
Allowance for loans collectively evaluated	3,365		2,723
Collective allowance to collective loans ratio	1.76%		1.74%
Commercial Investor Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	9,263	9,583	9,583
Provision (credit)	(681)		1,100
Charge-offs	(4)		(4,774)
Recoveries	34		3,354
Net recoveries (charge-offs)	30		(1,420)
Balance at period end	8,612		9,263
Total loans and leases	575,984		552,178
Allowance for loans and leases to total loans and leases ratio	1.50%		1.68%
Balance of loans specifically evaluated for impairment	10,352		7,654
Allowance for loans specifically evaluated for impairment	399		126
Specific allowance to specific loans ratio	3.85%		1.65%
Balance of loans collectively evaluated	565,632		544,524
Allowance for loans collectively evaluated	8,213		9,137
Collective allowance to collective loans ratio	1.45%		1.68%
Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	584,964		592,823
Leases [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	16	332	332
Provision (credit)	(6)		(326)
Recoveries			10
Net recoveries (charge-offs)			10
Balance at period end	10		16
Total loans and leases	156		703
Allowance for loans and leases to total loans and leases ratio	6.42%		2.28%
Balance of loans collectively evaluated	156		703
Allowance for loans collectively evaluated	10		16
Collective allowance to collective loans ratio	6.42%		2.28%
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	4,142	3,846	3,846
Provision (credit)	41		1,951
Charge-offs	(720)		(1,853)
Recoveries	134		198
Net recoveries (charge-offs)	(586)		(1,655)
Balance at period end	3,597		4,142
Total loans and leases	410,723		373,657
Allowance for loans and leases to total loans and leases ratio	0.88%		1.11%
Balance of loans specifically evaluated for impairment	27		29
Balance of loans collectively evaluated	410,696		373,628
Allowance for loans collectively evaluated	3,597		4,142
Collective allowance to collective loans ratio	0.88%		1.11%
Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	698,925		618,381
Residential Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	141,883		129,177
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	1,724,225		1,662,348
Commercial Real Estate Portfolio Segment [Member] | Commercial Acquisition, Development and Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	194,666		160,696
Commercial Real Estate Portfolio Segment [Member] | Commercial Investor Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total loans and leases	575,984		552,178
Commercial Real Estate Portfolio Segment [Member] | Commercial Owner Occupied Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	6,308	6,997	6,997
Provision (credit)	630		(874)
Charge-offs	(265)		(240)
Recoveries			425
Net recoveries (charge-offs)	(265)		185
Balance at period end	6,673		6,308
Total loans and leases	584,964		592,823
Allowance for loans and leases to total loans and leases ratio	1.14%		1.06%
Balance of loans specifically evaluated for impairment	10,742		7,111
Allowance for loans specifically evaluated for impairment	794		426
Specific allowance to specific loans ratio	7.39%		5.99%
Balance of loans collectively evaluated	574,222		585,712
Allowance for loans collectively evaluated	5,879		5,882
Collective allowance to collective loans ratio	1.02%		1.00%
Residential Real Estate Portfolio Segment [Member] | Residential Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	7,819	8,522	8,522
Provision (credit)	(355)		329
Charge-offs	(324)		(1,194)
Recoveries	105		162
Net recoveries (charge-offs)	(219)		(1,032)
Balance at period end	7,245		7,819
Total loans and leases	698,925		618,381
Allowance for loans and leases to total loans and leases ratio	1.04%		1.26%
Balance of loans specifically evaluated for impairment	6,039		6,141
Allowance for loans specifically evaluated for impairment	557		626
Specific allowance to specific loans ratio	9.22%		10.19%
Balance of loans collectively evaluated	692,886		612,240
Allowance for loans collectively evaluated	6,688		7,193
Collective allowance to collective loans ratio	0.97%		1.17%
Residential Real Estate Portfolio Segment [Member] | Residential Construction [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of year	1,156	2,445	2,445
Provision (credit)	(325)		(1,196)
Charge-offs	(3)		(104)
Recoveries	69		11
Net recoveries (charge-offs)	66		(93)
Balance at period end	897		1,156
Total loans and leases	141,883		129,177
Allowance for loans and leases to total loans and leases ratio	0.63%		0.89%
Balance of loans specifically evaluated for impairment	1,689		1,852
Balance of loans collectively evaluated	140,194		127,325
Allowance for loans collectively evaluated	$ 897		$ 1,156
Collective allowance to collective loans ratio	0.64%		0.91%

XML

Investments (Amortized Cost and Estimated Fair Values of Investments Held-To-Maturity) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 221,690	$ 224,638
Gross Unrealized Gains	4,148	1,949
Gross Unrealized Losses	(2,708)	(10,580)
Estimated Fair Value	223,130	216,007
U.S. Government Agencies [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	64,510	64,505
Gross Unrealized Losses	(1,984)	(4,827)
Estimated Fair Value	62,526	59,678
State and Municipal [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	156,971	159,889
Gross Unrealized Gains	4,121	1,920
Gross Unrealized Losses	(724)	(5,753)
Estimated Fair Value	160,368	156,056
Mortgage-Backed [Member]
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	209	244
Gross Unrealized Gains	27	29
Estimated Fair Value	$ 236	$ 273

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Statement of Comprehensive Income [Abstract]
Net income	$ 11,142	$ 12,089	$ 29,052	$ 34,809
Investments available-for-sale:
Net change in unrealized gains (losses) on investments available-for-sale	(2,714)	(1,032)	10,779	(24,925)
Related income tax (expense) benefit	1,061	407	(4,284)	9,935
Net investment gains reclassified into earnings	8		8	118
Related income tax expense	(3)		(3)	(47)
Net effect on other comprehensive income (loss) for the period	(1,648)	(625)	6,500	(14,919)
Defined benefit pension plan:
Recognition of unrealized gain	67	249	183	1,176
Related income tax benefit	(20)	(91)	(81)	(461)
Net effect on other comprehensive income (loss) for the period	48	158	102	715
Total other comprehensive income (loss)	(1,600)	(467)	6,602	(14,204)
Comprehensive income	$ 9,541	$ 11,622	$ 35,654	$ 20,605

XML

INVESTMENTS

9 Months Ended

Sep. 30, 2014

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, 2014								December 31, 2013
				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	$	144,473	$	-	$	(3,757)	$	140,716	$	147,688	$	-	$	(8,222)	$	139,466
State and municipal		157,854		9,731		-		167,585		159,524		6,060		(156)		165,428
Mortgage-backed		374,326		9,995		(4,417)		379,904		439,054		10,188		(6,992)		442,250
Corporate debt		2,000		2		-		2,002		2,000		4		-		2,004
Trust preferred		1,349		-		(172)		1,177		1,701		-		(288)		1,413
Total debt securities		680,002		19,728		(8,346)		691,384		749,967		16,252		(15,658)		750,561
Marketable equity securities		723		-		-		723		723		-		-		723
Total investments available-for-sale	$	680,725	$	19,728	$	(8,346)	$	692,107	$	750,690	$	16,252	$	(15,658)	$	751,284

Any unrealized losses in the U.S. government agencies, state and municipal, mortgage-backed or corporate debt investment securities at September  30, 2014 are not the result of credit related events but due to changes in interest rates.   These declines are considered temporary in nature and are expected to decline over time and recover as these securities approach maturity.

The mortgage-backed securities portfolio at September  30, 2014 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($176.2 million), or GNMA, FNMA or FHLMC mortgage-backed securities ($203.7 million).  The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time, which may be maturity, to allow for any anticipated recovery in fair value. 

At September 30, 2014, 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, totals $1.3 million with a fair value of $1.2 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. 

The income valuation approach technique (present value) used maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs. The methodology and significant assumptions employed by the specialist to determine fair value included:

· Evaluation of the structural terms as established in the indenture;

· Detailed credit and structural evaluation for each piece of issuer collateral in the pool;

· Overall default (.52%), recovery and prepayment (2%)/amortization probabilities by issuers in the pool;

· Identification  of adverse conditions specifically related to the security, industry and geographical area;

· Projection of estimated cash flows that incorporate default expectations and loss severities;

· Review of  historical and implied volatility of the fair value of the security;

· Evaluation of credit risk concentrations;

· Evaluation of the length of time and the extent to which the fair value has been less than the amortized cost; and

· A discount rate of 11.8% was established using credit adjusted financial institution spreads for comparably rated institutions and a liquidity adjustment that considered the previously noted characteristics.

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, 2014.  Non-credit related decline in fair value on this security, which is not expected to be sold and which the Company has the ability to hold until maturity, was $0.2 million at September 30, 2014.  This non-credit related decline in fair value was recognized in other comprehensive income (“OCI”) at September 30, 2014. 

The methodology and significant inputs used to measure the amount related to credit loss consisted of the following:

· Default rates were developed based on the financial condition of the trust preferred issuers in the pool and the payment or deferral status.  Conditional default rates were estimated based on the payment characteristics of the security and the financial condition of the issuers in the pool.  Near term and future defaults are estimated using third party industry data in addition to a review of key financial ratios and other pertinent data on the financial stability of the underlying issuer;

· Loss severity is forecasted based on the type of impairment using research performed by third parties; 

· The security contains one level of subordination below the senior tranche, with the senior tranche receiving the spread from the subordinate bonds;

· Credit ratings of the underlying issuers are reviewed in conjunction with the development of the default rates applied to determine the credit amounts related to the credit loss; and

· Potential prepayments are estimated based on terms and rates of the underlying trust preferred securities to determine the impact of excess spread on the credit enhancement, the removal of the strongest institutions from the underlying pool and any impact that prepayments might have on diversity and concentration.

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, 2013	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities, through September 30, 2014	$	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, 2014
					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	14	$	140,716	$	-	$	3,757	$	3,757
Mortgage-backed	26		140,189		341		4,076		4,417
Trust preferred	1		1,177		-		172		172
Total	41	$	282,082	$	341	$	8,005	$	8,346
	December 31, 2013
					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	15	$	139,466	$	8,222	$	-	$	8,222
State and municipal	12		11,680		156		-		156
Mortgage-backed	30		169,377		6,865		127		6,992
Trust preferred	1		1,413		-		288		288
Total	58	$	321,936	$	15,243	$	415	$	15,658

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, 2014				December 31, 2013
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less	$	2,000	$	2,002	$	2,080	$	2,085
Due after one year through five years		43,148		44,500		12,766		13,285
Due after five years through ten years		341,678		348,934		392,389		392,339
Due after ten years		293,176		295,948		342,732		342,852
Total debt securities available for sale	$	680,002	$	691,384	$	749,967	$	750,561

At September 30, 2014 and December 31, 2013, investments available-for-sale with a book value of $200.2 million and $186.6 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, 2014 and December 31, 2013.

Investments held-to-maturity

The amortized cost and estimated fair values of investments held-to-maturity at the dates indicated are presented in the following table:

		September 30, 2014								December 31, 2013
				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	$	64,510	$	-	$	(1,984)	$	62,526	$	64,505	$	-	$	(4,827)	$	59,678
State and municipal		156,971		4,121		(724)		160,368		159,889		1,920		(5,753)		156,056
Mortgage-backed		209		27		-		236		244		29		-		273
Total investments held-to-maturity	$	221,690	$	4,148	$	(2,708)	$	223,130	$	224,638	$	1,949	$	(10,580)	$	216,007

Gross unrealized losses and fair value by length of time that the individual held-to-maturity securities have been in a continuous unrealized loss position at the dates indicated are presented in the following tables:

	September 30, 2014
					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	8	$	62,526	$	-	$	1,984	$	1,984
State and municipal	57		52,941		55		669		724
Total	65	$	115,467	$	55	$	2,653	$	2,708
	December 31, 2013
					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	8	$	59,678	$	4,827	$	-	$	4,827
State and municipal	113		94,243		5,366		387		5,753
Total	121	$	153,921	$	10,193	$	387	$	10,580

The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time, which may be maturity, to allow for any anticipated recovery in fair value, and considers the unrealized losses in the held-to-maturity portfolio temporary in nature.

The amortized cost and estimated fair values of debt securities held-to-maturity by contractual maturity at the dates indicated are reflected in the following table. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		September 30, 2014				December 31, 2013
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less	$	3,099	$	3,112	$	1,720	$	1,725
Due after one year through five years		4,563		4,618		3,249		3,269
Due after five years through ten years		154,865		163,345		139,033		135,074
Due after ten years		59,163		52,055		80,636		75,939
Total debt securities held-to-maturity	$	221,690	$	223,130	$	224,638	$	216,007

At September 30, 2014 and December 31, 2013, investments held-to-maturity with a book value of $206.6 million and $165.8 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. Agency securities, exceeded ten percent of stockholders' equity at September 30, 2014 and December 31, 2013.

Equity securities

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

(In thousands)		September 30, 2014		December 31, 2013
Federal Reserve Bank stock	$	8,269	$	8,269
Federal Home Loan Bank of Atlanta stock		28,803		32,418
Total equity securities	$	37,072	$	40,687

XML

Goodwill and Other Intangible Assets (Gross Carrying Amounts and Accumulated Amortization of Intangible Assets and Goodwill) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	$ 18,339	$ 18,339
Accumulated amortization	(17,717)	(17,009)
Net carrying amount	622	1,330
Goodwill gross	84,171	84,171
Goodwill	84,171	84,171
Core Deposits [Member]
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	9,716	9,716
Accumulated amortization	(9,716)	(9,352)
Net carrying amount		364
Weighted average useful life		3 months 18 days
Other Intangible Assets [Member]
Goodwill And Intangible Assets [Line Items]
Gross carrying amount	8,623	8,623
Accumulated amortization	(8,001)	(7,657)
Net carrying amount	$ 622	$ 966
Weighted average useful life	1 year 4 months 24 days	2 years 1 month 6 days

XML

Other Comprehensive Income (Reclassification Adjustments Out of AOCI) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Unrealized gains/(losses) on investments available-for-sale Affected line item in the Statements of Income:
Investment securities gains	$ 8		$ 8	$ 118
Income before taxes			8	118
Tax expense			3	47
Net income			5	71
Amortization of defined benefit pension plan items Affected line item in the Statements of Income:
Recognized actuarial loss	67	249	183	1,176
Income before taxes			183	1,176
Tax expense			81	461
Net income			$ 102	$ 715

XML

CREDIT QUALITY ASSESSMENT (Tables)

9 Months Ended

Sep. 30, 2014

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 and lease loss activity for the period indicated is provided in the following table:

		Nine Months Ended September 30,
(In thousands)		2014		2013
Balance at beginning of year	$	38,766	$	42,957
Provision (credit) for loan and lease losses		(1,016)		(1,670)
Loan and lease charge-offs		(1,541)		(9,639)
Loan and lease recoveries		1,365		7,774
Net charge-offs		(176)		(1,865)
Balance at period end	$	37,574	$	39,422

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 and lease losses by the respective loan portfolio segment for the period indicated:

		For the Nine Months Ended September 30, 2014
				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			Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year	$	6,308	$	3,754	$	9,263	$	6,308		$	16	$	4,142	$	7,819	$	1,156	$	38,766
Provision (credit)		(1,119)		799		(681)		630			(6)		41		(355)		(325)		(1,016)
Charge-offs		(225)		-		(4)		(265)	-		-		(720)		(324)		(3)		(1,541)
Recoveries		1,023		-		34		-			-		134		105		69		1,365
Net recoveries (charge-offs)		798		-		30		(265)			-		(586)		(219)		66		(176)
Balance at end of period	$	5,987	$	4,553	$	8,612	$	6,673		$	10	$	3,597	$	7,245	$	897	$	37,574
Total loans and leases	$	368,611	$	194,666	$	575,984	$	584,964		$	156	$	410,723	$	698,925	$	141,883	$	2,975,912
Allowance for loans and leases to total loans and leases ratio		1.62%		2.34%		1.50%		1.14%			6.42%		0.88%		1.04%		0.63%		1.26%
Balance of loans specifically evaluated for impairment	$	5,943	$	3,792	$	10,352	$	10,742			na.	$	27	$	6,039	$	1,689	$	38,584
Allowance for loans specifically evaluated for impairment	$	1,406	$	1,188	$	399	$	794			na.		na.	$	557	$	-	$	4,344
Specific allowance to specific loans ratio		23.66%		31.33%		3.85%		7.39%			na.		na.		9.22%		na.		11.26%
Balance of loans collectively evaluated	$	362,668	$	190,874	$	565,632	$	574,222		$	156	$	410,696	$	692,886	$	140,194	$	2,937,328
Allowance for loans collectively evaluated	$	4,581	$	3,365	$	8,213	$	5,879		$	10	$	3,597	$	6,688	$	897	$	33,230
Collective allowance to collective loans ratio		1.26%		1.76%		1.45%		1.02%			6.42%		0.88%		0.97%		0.64%		1.13%

		For the Year Ended December 31, 2013
				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			Leasing		Consumer		Mortgage		Construction		Total
Balance at beginning of year	$	6,495	$	4,737	$	9,583	$	6,997		$	332	$	3,846	$	8,522	$	2,445	$	42,957
Provision (credit)		1,910		(3,978)		1,100		(874)			(326)		1,951		329		(1,196)		(1,084)
Charge-offs		(2,915)		(85)		(4,774)		(240)	-		-		(1,853)		(1,194)		(104)		(11,165)
Recoveries		818		3,080		3,354		425			10		198		162		11		8,058
Net recoveries (charge-offs )		(2,097)		2,995		(1,420)		185			10		(1,655)		(1,032)		(93)		(3,107)
Balance at end of period	$	6,308	$	3,754	$	9,263	$	6,308		$	16	$	4,142	$	7,819	$	1,156	$	38,766
Total loans and leases	$	356,651	$	160,696	$	552,178	$	592,823		$	703	$	373,657	$	618,381	$	129,177	$	2,784,266
Allowance for loans and leases to total loans and leases ratio		1.77%		2.34%		1.68%		1.06%			2.28%		1.11%		1.26%		0.89%		1.39%
Balance of loans specifically evaluated for impairment	$	5,608	$	4,128	$	7,654	$	7,111		$	na.	$	29	$	6,141	$	1,852	$	32,523
Allowance for loans specifically evaluated for impairment	$	849	$	1,031	$	126	$	426		$	na.	$	na.	$	626	$	-	$	3,058
Specific allowance to specific loans ratio		15.14%		24.98%		1.65%		5.99%			na.		na.		10.19%		na.		9.40%
Balance of loans collectively evaluated	$	351,043	$	156,568	$	544,524	$	585,712		$	703	$	373,628	$	612,240	$	127,325	$	2,751,743
Allowance for loans collectively evaluated	$	5,459	$	2,723	$	9,137	$	5,882		$	16	$	4,142	$	7,193	$	1,156	$	35,708
Collective allowance to collective loans ratio		1.56%		1.74%		1.68%		1.00%			2.28%		1.11%		1.17%		0.91%		1.30%

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, 2014		December 31, 2013
Impaired loans with a specific allowance	$	15,608	$	12,217
Impaired loans without a specific allowance		22,976		20,306
Total impaired loans	$	38,584	$	32,523
Allowance for loan and lease losses related to impaired loans	$	4,344	$	3,058
Allowance for loan and lease losses related to loans collectively evaluated		33,230		35,708
Total allowance for loan and lease losses	$	37,574	$	38,766
Average impaired loans for the period	$	35,559	$	38,379
Contractual interest income due on impaired loans during the period	$	2,217	$	2,612
Interest income on impaired loans recognized on a cash basis	$	665	$	1,374
Interest income on impaired loans recognized on an accrual basis	$	281	$	473

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, 2014
				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	$	1,182	$	1,437	$	2,044	$	5,051	$	947	$	10,661
Restructured accruing		793		-		-		-		779		1,572
Restructured non-accruing		230		1,211		78		1,245		611		3,375
Balance	$	2,205	$	2,648	$	2,122	$	6,296	$	2,337	$	15,608
Allowance	$	1,406	$	1,188	$	399	$	794	$	557	$	4,344
Impaired loans without a specific allowance
Non-accruing	$	1,745	$	-	$	6,088	$	1,808	$	784	$	10,425
Restructured accruing		999		-		2,142		-		2,669		5,810
Restructured non-accruing		994		1,144		-		2,638		1,965		6,741
Balance	$	3,738	$	1,144	$	8,230	$	4,446	$	5,418	$	22,976
Total impaired loans
Non-accruing	$	2,927	$	1,437	$	8,132	$	6,859	$	1,731	$	21,086
Restructured accruing		1,792		-		2,142		-		3,448		7,382
Restructured non-accruing		1,224		2,355		78		3,883		2,576		10,116
Balance	$	5,943	$	3,792	$	10,352	$	10,742	$	7,755	$	38,584
Unpaid principal balance in total impaired loans	$	7,752	$	13,245	$	14,998	$	12,725	$	7,908	$	56,628

				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	$	5,662	$	3,948	$	9,089	$	8,968	$	7,892	$	35,559
Contractual interest income due on impaired loans during the period	$	319	$	512	$	553	$	694	$	139
Interest income on impaired loans recognized on a cash basis	$	232	$	68	$	76	$	250	$	39
Interest income on impaired loans recognized on an accrual basis	$	98	$	-	$	83	$	-	$	100

		December 31, 2013
				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	$	374	$	1,360	$	749	$	2,022	$	-	$	4,505
Restructured accruing		790		-		-		1,174		2,365		4,329
Restructured non-accruing		349		1,122		-		1,274		638		3,383
Balance	$	1,513	$	2,482	$	749	$	4,470	$	3,003	$	12,217
Allowance	$	849	$	1,031	$	126	$	426	$	626	$	3,058
Impaired loans without a specific allowance
Non-accruing	$	1,532	$	382	$	5,440	$	646	$	-	$	8,000
Restructured accruing		1,417		-		852		-		2,861		5,130
Restructured non-accruing		1,146		1,264		613		1,995		2,158		7,176
Balance	$	4,095	$	1,646	$	6,905	$	2,641	$	5,019	$	20,306
Total impaired loans
Non-accruing	$	1,906	$	1,742	$	6,189	$	2,668	$	-	$	12,505
Restructured accruing		2,207		-		852		1,174		5,226		9,459
Restructured non-accruing		1,495		2,386		613		3,269		2,796		10,559
Balance	$	5,608	$	4,128	$	7,654	$	7,111	$	8,022	$	32,523
Unpaid principal balance in total impaired loans	$	7,943	$	10,318	$	12,351	$	8,684	$	8,650	$	47,946

		December 31, 2013
				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	$	7,153	$	5,451	$	10,605	$	8,386	$	6,784	$	38,379
Contractual interest income due on impaired loans during the period	$	452	$	654	$	587	$	692	$	227
Interest income on impaired loans recognized on a cash basis	$	238	$	253	$	75	$	725	$	83
Interest income on impaired loans recognized on an accrual basis	$	133	$	-	$	30	$	77	$	233

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, 2014
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	4,151	$	3,792	$	8,210	$	10,742	$	-	$	1,830	$	4,417	$	2,497	$	35,639
Loans and leases 90 days past due		-		-		-		649		-		6		-		-		655
Restructured loans and leases		1,792		-		2,142		-		-		-		3,448		-		7,382
Total non-performing loans and leases		5,943		3,792		10,352		11,391		-		1,836		7,865		2,497		43,676
Other real estate owned		39		365		-		-		-		-		1,358		-		1,762
Total non-performing assets	$	5,982	$	4,157	$	10,352	$	11,391	$	-	$	1,836	$	9,223	$	2,497	$	45,438

		December 31, 2013
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Non-performing loans and assets:
Non-accrual loans and leases	$	3,400	$	4,127	$	6,802	$	5,936	$	-	$	2,259	$	5,735	$	2,315	$	30,574
Loans and leases 90 days past due		-		-		-		-		-		1		-		-		1
Restructured loans and leases		2,207		-		852		1,174		-		29		5,197		-		9,459
Total non-performing loans and leases		5,607		4,127		7,654		7,110		-		2,289		10,932		2,315		40,034
Other real estate owned		54		365		-		-		-		-		919		-		1,338
Total non-performing assets	$	5,661	$	4,492	$	7,654	$	7,110	$	-	$	2,289	$	11,851	$	2,315	$	41,372

		September 30, 2014
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	564	$	948	$	169	$	839	$	-	$	732	$	4,014	$	-	$	7,266
61-90 days		403		-		2,009		-		-		20		162		-		2,594
> 90 days		-		-		-		649		-		6		-		-		655
Total past due		967		948		2,178		1,488		-		758		4,176		-		10,515
Non-accrual loans and leases		4,151		3,792		8,210		10,742		-		1,830		4,417		2,497		35,639
Loans aquired with deteriorated credit quality		1,267		-		53		1,814		-		-		-		-		3,134
Current loans		362,226		189,926		565,543		570,920		156		408,135		690,332		139,386		2,926,624
Total loans and leases	$	368,611	$	194,666	$	575,984	$	584,964	$	156	$	410,723	$	698,925	$	141,883	$	2,975,912

		December 31, 2013
				Commercial Real Estate										Residential Real Estate
								Commercial
				Commercial		Commercial		Owner						Residential		Residential
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Leasing		Consumer		Mortgage		Construction		Total
Past due loans and leases
31-60 days	$	382	$	-	$	5,826	$	876	$	4	$	716	$	4,119	$	-	$	11,923
61-90 days		1,142		-		-		2,540		-		176		208		-		4,066
> 90 days		-		-		-		-		-		1		-		-		1
Total past due		1,524		-		5,826		3,416		4		893		4,327		-		15,990
Non-accrual loans and leases		3,400		4,127		6,802		5,936		-		2,259		5,735		2,315		30,574
Loans aquired with deteriorated credit quality		1,363		-		571		2,366		-		-		-		-		4,300
Current loans		350,364		156,569		538,979		581,105		699		370,505		608,319		126,862		2,733,402
Total loans and leases	$	356,651	$	160,696	$	552,178	$	592,823	$	703	$	373,657	$	618,381	$	129,177	$	2,784,266

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, 2014
				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	$	185	$	-	$	1,290	$	-	$	-	$	1,475
Restructured non-accruing		-		192		-		-		-		192
Balance	$	185	$	192	$	1,290	$	-	$	-	$	1,667
Specific allowance	$	-	$	-	$	-	$	-	$	-	$	-
Restructured and subsequently defaulted	$	-	$	-	$	-	$	720	$	-	$	720

		For the Year Ended December 31, 2013
				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	$	87	$	-	$	852	$	-	$	2,064	$	3,003
Restructured non-accruing		425		-		-		-		-		425
Balance	$	512	$	-	$	852	$	-	$	2,064	$	3,428
Specific allowance	$	141	$	-	$	-	$	-	$	-	$	141
Restructured and subsequently defaulted	$	-	$	-	$	-	$	-	$	-	$	-

Commercial [Member]

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, 2014
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	344,076	$	189,604	$	557,036	$	553,795	$	1,644,511
Special Mention		14,752		-		3,882		9,799		28,433
Substandard		9,783		5,062		15,066		21,370		51,281
Doubtful		-		-		-		-		-
Total	$	368,611	$	194,666	$	575,984	$	584,964	$	1,724,225

		December 31, 2013
				Commercial Real Estate
								Commercial
				Commercial		Commercial		Owner
(In thousands)		Commercial		AD&C		Investor R/E		Occupied R/E		Total
Pass	$	324,941	$	154,869	$	523,901	$	553,604	$	1,557,315
Special Mention		16,166		-		2,944		15,702		34,812
Substandard		15,274		5,827		25,333		23,517		69,951
Doubtful		270		-		-		-		270
Total	$	356,651	$	160,696	$	552,178	$	592,823	$	1,662,348

Non Commercial Loan [Member]

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, 2014
						Residential Real Estate
						Residential		Residential
(In thousands)		Leasing		Consumer		Mortgage		Construction		Total
Performing	$	156	$	408,887	$	691,060	$	139,386	$	1,239,489
Non-performing:
90 days past due		-		6		-		-		6
Non-accruing		-		1,830		4,417		2,497		8,744
Restructured loans and leases		-		-		3,448		-		3,448
Total	$	156	$	410,723	$	698,925	$	141,883	$	1,251,687

		December 31, 2013
						Residential Real Estate
						Residential		Residential
(In thousands)		Leasing		Consumer		Mortgage		Construction		Total
Performing	$	703	$	371,368	$	607,449	$	126,862	$	1,106,382
Non-performing:
90 days past due		-		1		-		-		1
Non-accruing		-		2,259		5,735		2,315		10,309
Restructured loans and leases		-		29		5,197		-		5,226
Total	$	703	$	373,657	$	618,381	$	129,177	$	1,121,918

XML

Fair Value (Unrealized Losses Included in Assets Measured in Condensed Consolidated Statements of Condition at Fair Value on Recurring Basis) (Detail) (Fair Value, Inputs, Level 3 [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at January 1, 2014	$ 1,413
Principal redemption	(352)
Total unrealized losses included in other comprehensive income (loss)	116
Balance at September 30, 2014	$ 1,177

XML

Investments (Activity of OTTI on Investment Securities Due to Credit Losses Recognized in Earnings) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Investments [Abstract]
Cumulative credit losses on investment securities, through December 31, 2013	$ 531
Additions for credit losses not previously recognized
Cumulative credit losses on investment securities, through September 30, 2014	$ 531

XML

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND DERIVATIVES

9 Months Ended

Sep. 30, 2014

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 $21.1 million with a fair value of $1.4 million as of September 30, 2014 compared to $46.4 million with a fair value of $1.6  million as of December 31, 2013. The offsetting nature of the swaps results in a neutral effect on the Company’s operations.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.