10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For quarterly period ended September 30, 2012

¨ 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 001-35021

EVANS BANCORP, INC.

(Exact name of registrant as specified in its charter)

New York	16-1332767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

14 -16 North Main Street, Angola, New York	14006
(Address of principal executive offices)	(Zip Code)

(716) 926-2000 .

(Registrant’s telephone number, including area code)

Not applicable .

(Former name, former address and former fiscal year, if changed since last report)

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

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

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

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

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

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

Common Stock, $.50 par value: 4,157,422 shares as of October 30, 2012

INDEX

EVANS BANCORP, INC. AND SUBSIDIARIES

		PAGE
PART 1. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets — September 30, 2012 and December 31, 2011		1
	Unaudited Consolidated Statements of Income — Three months ended September 30, 2012 and 2011		2
	Unaudited Consolidated Statements of Income — Nine months ended September 30, 2012 and 2011		3
	Unaudited Statements of Consolidated Comprehensive Income — Three months ended September 30, 2012 and 2011		4
	Unaudited Statements of Consolidated Comprehensive Income — Nine months ended September 30, 2012 and 2011		5
	Unaudited Consolidated Statements of Stockholders’ Equity — Nine months ended September 30, 2012 and 2011		6
	Unaudited Consolidated Statements of Cash Flows — Nine months ended September 30, 2012 and 2011		7
	Notes to Unaudited Consolidated Financial Statements		9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		50
Item 4.	Controls and Procedures		51
PART II. OTHER INFORMATION
Item 6. Exhibits			51
SIGNATURES			52

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

(in thousands, except share and per share amounts)

	September 30,		December 31,
	2012		2011
ASSETS
Cash and due from banks	$	12,232	$	11,486
Interest-bearing deposits at banks		52,748		3,192
Securities:
Available for sale, at fair value (cost: $87,330 at September 30, 2012; $95,848 at December 31, 2011)		91,878		99,981
Held to maturity, at amortized cost (fair value: $4,022 at September 30, 2012; $3,811 at December 31, 2011)		4,034		3,802
Federal Home Loan Bank common stock, at amortized cost		1,804		1,830
Federal Reserve Bank common stock, at amortized cost		1,445		1,425
Loans and leases, net of allowance for loan and lease losses of $10,208 at September 30, 2012 and $11,495 at December 31, 2011		588,408		571,910
Properties and equipment, net of depreciation of $13,961 at September 30, 2012 and $13,145 at December 31, 2011		11,117		10,477
Goodwill		8,101		8,101
Intangible assets		391		678
Bank-owned life insurance		15,213		14,843
Other assets		11,937		13,177
TOTAL ASSETS	$	799,308	$	740,902
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Demand	$	126,251	$	118,037
NOW		62,946		50,761
Regular savings		375,859		333,938
Time		107,674		113,467
Total deposits		672,730		616,203
Securities sold under agreement to repurchase		9,081		9,010
Other borrowings		19,000		22,000
Other liabilities		13,186		13,371
Junior subordinated debentures		11,330		11,330
Total liabilities		725,327		671,914
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS’ EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,153,332 and 4,125,272 shares issued at September 30, 2012 and December 31, 2011, respectively, and 4,151,985 and 4,124,892 shares outstanding, at September 30, 2012 and December 31, 2011, respectively		2,077		2,063
Capital surplus		41,693		41,275
Retained earnings		29,491		25,304
Accumulated other comprehensive gain, net of tax		720		346
Total stockholders’ equity		73,981		68,988
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	799,308	$	740,902

See Notes to Unaudited Consolidated Financial Statements

1

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except share and per share amounts)

	Three Months Ended September 30,
	2012		2011
INTEREST INCOME
Loans and leases	$	7,567	$	7,254
Interest bearing deposits at banks		15		7
Securities:
Taxable		450		571
Non-taxable		277		337
Total interest income		8,309		8,169
INTEREST EXPENSE
Deposits		1,106		1,386
Other borrowings		170		187
Junior subordinated debentures		88		82
Total interest expense		1,364		1,655
NET INTEREST INCOME		6,945		6,514
PROVISION FOR LOAN AND LEASE LOSSES		9		159
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES		6,936		6,355
NON-INTEREST INCOME
Bank charges		487		498
Insurance service and fees		1,774		1,849
Data center income		103		127
Net gain on sales of securities		—		26
Gain on loans sold		129		33
Bank-owned life insurance		118		117
Other		605		534
Total non-interest income		3,216		3,184
NON-INTEREST EXPENSE
Salaries and employee benefits		4,778		4,073
Occupancy		679		777
Repairs and maintenance		210		184
Advertising and public relations		119		188
Professional services		356		510
Technology and communications		320		212
Amortization of intangibles		77		120
FDIC insurance		118		135
Other		699		604
Total non-interest expense		7,356		6,803
INCOME BEFORE INCOME TAXES		2,796		2,736
INCOME TAX PROVISION		660		810
NET INCOME	$	2,136	$	1,926
Net income per common share-basic	$	0.51	$	0.47
Net income per common share-diluted	$	0.51	$	0.47
Cash dividends per common share	$	0.22	$	0.20
Weighted average number of common shares outstanding		4,153,246		4,107,414
Weighted average number of diluted shares outstanding		4,177,567		4,109,181

See Notes to Unaudited Consolidated Financial Statements

2

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except share and per share amounts)

	Nine Months Ended September 30,
	2012		2011
INTEREST INCOME
Loans and leases	$	22,596	$	21,486
Interest bearing deposits at banks		39		19
Securities:
Taxable		1,452		1,596
Non-taxable		879		1,096
Total interest income		24,966		24,197
INTEREST EXPENSE
Deposits		3,494		4,268
Other borrowings		533		587
Junior subordinated debentures		261		245
Total interest expense		4,288		5,100
NET INTEREST INCOME		20,678		19,097
PROVISION FOR LOAN AND LEASE LOSSES		62		1,656
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES		20,616		17,441
NON-INTEREST INCOME
Bank charges		1,360		1,301
Insurance service and fees		5,363		5,539
Data center income		347		558
Net gain on sales and calls of securities		—		26
Gain on loans sold		257		105
Bank-owned life insurance		370		331
Other		1,846		1,710
Total non-interest income		9,543		9,570
NON-INTEREST EXPENSE
Salaries and employee benefits		13,221		11,889
Occupancy		2,009		2,370
Repairs and maintenance		556		498
Advertising and public relations		600		565
Professional services		1,462		1,319
Technology and communications		860		710
Amortization of intangibles		287		376
FDIC Insurance		392		500
Other		2,201		1,942
Total non-interest expense		21,588		20,169
INCOME BEFORE INCOME TAXES		8,571		6,842
INCOME TAX PROVISION		2,562		2,069
NET INCOME	$	6,009	$	4,773
Net income per common share-basic	$	1.45	$	1.16
Net income per common share-diluted	$	1.45	$	1.16
Cash dividends per common share	$	0.44	$	0.40
Weighted average number of common shares outstanding		4,139,951		4,097,788
Weighted average number of diluted shares outstanding		4,153,387		4,104,119

See Notes to Unaudited Consolidated Financial Statements

3

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

THREE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except share and per share amounts)

	Three Months Ended September 30,
	2012		2011
NET INCOME	$	2,136	$	1,926
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on available-for-sale securities:
Unrealized gain on available-for-sale securities		357		706
Reclassification of gain on sale of securities		—		(16	)
		357		690
Defined benefit pension plans:
Amortization of prior service cost		13		14
Amortization of actuarial loss		26		5
Total		39		19
OTHER COMPREHENSIVE INCOME, NET OF TAX		396		709
COMPREHENSIVE INCOME	$	2,532	$	2,635

See Notes to Unaudited Consolidated Financial Statements

4

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except share and per share amounts)

	Nine Months Ended September 30,
	2012		2011
NET INCOME	$	6,009	$	4,773
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on available-for-sale securities:
Unrealized gain on available-for-sale securities:		256		1,571
Reclassification of gain on sale of securities		—		(16	)
Total		256		1,555
Defined benefit pension plans:
Amortization of prior service cost		40		41
Amortization of actuarial loss		78		17
Total		118		58
OTHER COMPREHENSIVE INCOME, NET OF TAX		374		1,613
COMPREHENSIVE INCOME	$	6,383	$	6,386

See Notes to Unaudited Consolidated Financial Statements

5

PART 1—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands, except share and per share amounts)

	Common Stock		Capital Surplus			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Total
Balance, December 31, 2010	$	2,041	$	40,660		$	20,836		($	473	)	$	63,064
Net Income							4,773						4,773
Other comprehensive gain										1,613			1,613
Cash dividends ($0.40 per common share)							(1,638	)					(1,638	)
Stock options expense				200									200
Excess tax benefit from stock-based compensation				9									9
Issued 11,090 restricted shares, net of forffeitures of 1,388 shares		6		(6	)								—
Issued 7,784 shares under ESPP		4		87									91
Issued 6,172 shares in DRIP		3		84									87
Balance, September 30, 2011	$	2,054	$	41,034		$	23,971		$	1,140		$	68,199
Balance, December 31, 2011	$	2,063	$	41,275		$	25,304		$	346		$	68,988
Net Income							6,009						6,009
Other comprehensive gain										374			374
Cash dividends ($0.44 per common share)							(1,822	)					(1,822	)
Stock options expense				233									233
Issued 11,493 restricted shares		6		(6	)								—
Issued 10,267 shares under ESPP		5		99									104
Issued 6,680 shares in DRIP		3		92									95
Balance, September 30, 2012	$	2,077	$	41,693		$	29,491		$	720		$	73,981

See Notes to Unaudited Consolidated Financial Statements

6

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands)

	Nine Months Ended
	September 30,
	2012			2011
OPERATING ACTIVITIES:
Interest received	$	24,648		$	23,607
Fees received		8,794			9,352
Interest paid		(4,326	)		(5,364	)
Cash paid to employees and vendors		(18,976	)		(17,359	)
Cash contributed to pension plan		(340	)		(120	)
Income taxes paid		(2,274	)		(1,983	)
Proceeds from sale of loans held for resale		17,407			15,751
Originations of loans held for resale		(16,242	)		(18,192	)
Net cash provided by operating activities		8,691			5,692
INVESTING ACTIVITIES:
Available for sales securities:
Purchases		(25,957	)		(15,626	)
Proceeds from sales		—			770
Proceeds from maturities, calls, and payments		34,409			13,654
Held to maturity securities:
Purchases		(1,567	)		(679	)
Proceeds from maturities, calls, and payments		1,335			396
Cash paid for bank owned life insurance		—			(2,000	)
Additions to properties and equipment		(1,453	)		(541	)
Net increase in loans		(18,045	)		(40,097	)
Net cash used in investing activities		(11,278	)		(44,123	)
FINANCING ACTIVITIES:
Repayments of borrowings		(2,929	)		(13,065	)
Net increase in deposits		56,528			68,781
Dividends paid		(909	)		(816	)
Issuance of common stock		199			178
Net cash provided by financing activities		52,889			55,078
Net increase in cash and equivalents		50,302			16,647
CASH AND CASH EQUIVALENTS:
Beginning of period		14,678			13,722
End of period	$	64,980		$	30,369

(continued)            

7

PART I—FINANCIAL INFORMATION

ITEM I—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(in thousands)

	Nine Months Ended
	September 30,
	2012			2011
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income	$	6,009		$	4,773
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,175			1,065
Deferred tax expense		476			36
Provision for loan and lease losses		62			1,656
Net gain on sales of securities		—			(26	)
Premium on loans sold		(257	)		(105	)
Stock options expense		233			200
Proceeds from sale of loans held for resale		17,407			15,751
Originations of loans held for resale		(16,242	)		(18,192	)
Cash contributed to pension plan		(340	)		(120	)
Changes in assets and liabilities affecting cash flow:
Other assets		1,717			(562	)
Other liabilities		(1,549	)		1,216
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	8,691		$	5,692

See Notes to Unaudited Consolidated Financial Statements

8

PART 1—FINANCIAL INFORMATION

ITEM 1—FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by Evans Bancorp, Inc. (the “Company”), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the “Bank”), and the Bank’s subsidiaries, Evans National Leasing, Inc. (“ENL”), Evans National Holding Corp. (“ENHC”) and Suchak Data Systems, LLC (“SDS”); and (ii) Evans National Financial Services, LLC (“ENFS”), and ENFS’s subsidiary, The Evans Agency, LLC (“TEA”), and TEA’s subsidiaries, Frontier Claims Services, Inc. (“FCS”) and ENB Associates Inc. (“ENBA”), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles (“GAAP”) and with general practice within the industries in which it operates. Except as the context otherwise requires, the Company and its direct and indirect subsidiaries are collectively referred to in this report as the “Company.”

The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods have been made. Certain reclassifications have been made to the 2011 unaudited consolidated financial statements to conform to the presentation used in 2012.

The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011. The Company has evaluated subsequent events for potential recognition and/or disclosure through the date of filing.

9

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2012 and December 31, 2011 were as follows:

	September 30, 2012
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. government agencies	$	23,244	$	1,270	$	0		$	24,514
States and political subdivisions		30,072		1,705		(3	)		31,774
Total debt securities	$	53,316	$	2,975		($3	)	$	56,288
Mortgage-backed securities:
FNMA	$	16,807	$	1,023	$	0		$	17,830
FHLMC		6,961		233		(13	)		7,181
GNMA		8,450		304		—			8,754
CMO		1,796		29		—			1,825
Total mortgage-backed securities	$	34,014	$	1,589		($13	)	$	35,590
Total securities designated as available for sale	$	87,330	$	4,564		($16	)	$	91,878
Held to Maturity:
Debt securities
States and political subdivisions		4,034		—		(12	)		4,022
Total securities designated as held to maturity	$	4,034	$	0		($12	)	$	4,022
Total securities	$	91,364	$	4,564		($28	)	$	95,900

	December 31, 2011
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	29,002	$	1,250	$	—		$	30,252
States and political subdivisions		30,632		1,698		(4	)		32,326
Total debt securities	$	59,634	$	2,948		($4	)	$	62,578
Mortgage-backed securities:
FNMA	$	20,071	$	647		—		$	20,718
FHLMC		8,052		269		—			8,321
GNMA		5,895		248		—			6,143
CMO		2,196		25		—			2,221
Total mortgage-backed securities	$	36,214	$	1,189		—		$	37,403
Total securities designated as available for sale	$	95,848	$	4,137		($4	)	$	99,981
Held to Maturity:
Debt securities
States and political subdivisions		3,802		24		(15	)		3,811
Total securities designated as held to maturity	$	3,802	$	24		($15	)	$	3,811
Total securities	$	99,650	$	4,161		($19	)	$	103,792

Available for sale securities with a total fair value of $74.9 million and $76.7 million at September 30, 2012 and December 31, 2011, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

10

The Company uses the Federal Home Loan Bank of New York (“FHLBNY”) as its primary source of overnight funds and also has several long-term advances with FHLBNY. The Company had a total of $19.0 million and $22.0 million in borrowed funds with FHLBNY at September 30, 2012 and December 31, 2011, respectively. The Company has placed sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meet FHLB collateral requirements. As a member of the Federal Home Loan Bank (“FHLB”) System, the Bank is required to hold stock in FHLBNY. The Bank held $1.8 million in FHLBNY stock as of September 30, 2012 and December 31, 2011 at amortized cost.

The scheduled maturities of debt and mortgage-backed securities at September 30, 2012 and December 31, 2011 are summarized below. All maturity amounts are contractual maturities. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.

	September 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
	(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,270	$	2,286	$	2,426	$	2,453
Due after one year through five years		16,247		17,018		18,454		19,231
Due after five years through ten years		26,697		28,042		24,995		26,238
Due after ten years		8,102		8,942		13,759		14,656
		53,316		56,288		59,634		62,578
Mortgage-backed securities available for sale		34,014		35,590		36,214		37,403
Total available for sale securities	$	87,330	$	91,878	$	95,848	$	99,981
Debt securities held to maturity:
Due in one year or less	$	2,435	$	2,428	$	2,656	$	2,644
Due after one year through five years		400		406		518		529
Due after five years through ten years		516		489		40		42
Due after ten years		683		699		588		596
Total held to maturity securities	$	4,034	$	4,022	$	3,802	$	3,811

Information regarding unrealized losses within the Company’s available for sale securities at September 30, 2012 and December 31, 2011, is summarized below. The securities are primarily U.S. government-guaranteed agency securities or municipal securities. All unrealized losses are considered temporary and related to market interest rate fluctuations.

11

	September 30, 2012
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		272		(3	)		—		—			272		(3	)
Total debt securities	$	272		($3	)	$	0	$	0		$	272		($3	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		1,992		(13	)		—		—			1,992		(13	)
GNMA		—		—			—		—			—		—
CMO’S		—		—			—		—			—		—
Total mortgage-backed securities	$	1,992		($13	)	$	—	$	—		$	1,992		($13	)
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,428		($7	)	$	1,594		($5	)	$	4,022		($12	)
Total temporarily impaired securities	$	4,692		($23	)	$	1,594		($5	)	$	6,286		($28	)

	December 31, 2011
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		401		(1	)		304		(3	)		705		(4	)
Total debt securities	$	401		($1	)	$	304		($3	)	$	705		($4	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		—		—			—		—			—		—
GNMA		—		—			—		—			—		—
CMO’S		—		—			—		—			—		—
Total mortgage-backed securities	$	—	$	—		$	—	$	—		$	—	$	—
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,239		($12	)	$	1,006		($3	)	$	3,245		($15	)
Total temporarily impaired securities	$	2,640		($13	)	$	1,310		($6	)	$	3,950		($19	)

In regard to municipal securities, the Company’s general investment policy is that in-state securities must be rated at least Moody’s Baa (or equivalent) at the time of purchase. The Company reviews the ratings report and municipality financial statements and prepares a pre-purchase analysis report before the purchase of any municipal securities. Out-of-state issues must be rated by Moody’s at least Aa (or equivalent) at the time of purchase. The Company did not own any out-of-state municipal bonds at September 30, 2012 or December 31, 2011. Bonds rated below A are reviewed periodically to ensure their continued credit worthiness. While purchase of non-rated municipal securities is permitted under the Company’s investment policy, such purchases are limited to bonds issued by municipalities in the Company’s general market area. Those municipalities are typically customers of the Bank whose financial situation is familiar to management. The financial statements of the issuers of non-rated securities are reviewed by the Bank and a credit file of the issuers is kept on each non-rated municipal security with relevant financial information.

12

Although concerns have been raised in the marketplace recently about the health of municipal bonds, the Company has not experienced any significant credit troubles in this portfolio and does not believe any credit troubles are imminent with respect to its portfolio. Aside from the non-rated municipal securities to local municipalities discussed above that are considered held-to-maturity, all of the Company’s available-for-sale municipal bonds are investment-grade government obligation (“G.O.”) bonds. G.O. bonds are generally considered safer than revenue bonds because they are backed by the full faith and credit of the government while revenue bonds rely on the revenue produced by a particular project. All of the Company’s municipal bonds are issued by municipalities in New York State. To the Company’s knowledge, there has never been a default of a NY G.O. in the history of the state. The Company believes that its risk of loss on default of a G.O. municipal bond for the Company is relatively low. However, historical performance does not guarantee future performance.

Management has assessed the securities available for sale in an unrealized loss position at September 30, 2012 and December 31, 2011 and determined the decline in fair value below amortized cost to be temporary. In making this determination, management considered the period of time the securities were in a loss position, the percentage decline in comparison to the securities’ amortized cost, and the financial condition of the issuer (primarily government or government-sponsored enterprises). In addition, management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost. Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers.

The Company has not recorded any other-than-temporary impairment charges in 2012 or 2011, with the gross unrealized losses at an immaterial level, amounting to less than 0.1% of the total fair value of the securities portfolio at September 30, 2012 and December 31, 2011. Nevertheless, it remains possible that there could be deterioration in the asset quality of the securities portfolio in the future. The credit worthiness of the Company’s portfolio is largely reliant on the ability of U.S. government sponsored agencies such as FHLB, Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”), and municipalities throughout New York State to meet their obligations. In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio. The relatively stable past performance is not a guarantee for similar performance of the Company’s securities portfolio going forward.

3. FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures.” Those provisions relate to financial assets and liabilities carried at fair value and fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

There are three levels of inputs to fair value measurements:

• Level 1, meaning the use of quoted prices for identical instruments in active markets;

• Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; and

• Level 3, meaning the use of unobservable inputs.

Observable market data should be used when available.

13

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011:

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Securities available-for-sale:
U.S. government agencies	$	—	$	24,514	$	—	$	24,514
States and political subdivisions		—		31,774		—		31,774
Mortgage-backed securities		—		35,590		—		35,590
Mortgage servicing rights		—		—		429		429
December 31, 2011
Securities available-for-sale:
U.S. Treasury and other U.S. government agencies	$	—	$	30,252	$	—	$	30,252
States and political subdivisions		—		32,326		—		32,326
Mortgage-backed securities		—		37,403		—		37,403
Mortgage servicing rights		—		—		407		407

Securities available for sale

Fair values for securities are determined using independent pricing services and market-participating brokers. The Company’s independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, the evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations. In addition, model processes, such as the Option Adjusted Spread model, are used to assess interest rate impact and develop prepayment scenarios. The models and the process take into account market convention. For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The company’s service provider may occasionally determine that it does have not sufficient verifiable information to value a particular security. In these cases the Company will utilize valuations from another pricing service.

Management believes that it has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of securities to enable management to maintain an appropriate system of internal control. On a quarterly basis the Company reviews changes in the market value of its security portfolio. Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities. Additionally, on an annual basis the Company has its entire security portfolio priced by a second pricing service to determine consistency with another market evaluator. If, on the Company’s review or in comparing with another servicer, a material difference between pricing evaluations were to exist, the Company may submit an inquiry to the service provider regarding the data used to value a particular security. If the Company determines it has market information that would support a different valuation than the initial evaluation it can submit a challenge for a change to that security’s valuation. There were no material differences in valuations noted in 2012 or 2011.

Securities available for sale are classified as Level 2 in the fair value hierarchy as the valuation provided by the third-party provider uses observable market data.

Mortgage servicing rights

Mortgage servicing rights (“MSRs”) do not trade in an active, open market with readily observable prices. Accordingly, the Company obtains the fair value of the MSRs using a third-party pricing provider. The provider determines the fair value by discounting projected net servicing cash flows of the remaining servicing portfolio. The valuation model used by the provider considers market loan prepayment predictions and other economic factors which management considers to be significant unobservable inputs. The fair value of MSRs is mostly affected by changes in mortgage interest rates since rate changes cause the loan prepayment acceleration factors to increase or decrease. All assumptions are market driven. Management has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of MSRs to enable management to maintain an appropriate system of internal control. Mortgage servicing rights are classified within Level 3 of the fair value hierarchy as the valuation is model driven and primarily based on unobservable inputs.

14

The following table summarizes the changes in fair value for mortgage servicing rights during the three and nine month periods ended September 30, 2012 and 2011, respectively:

	Three months ended September 30,
	2012			2011
Beginning balance, June 30	$	448		$	442
Losses included in earnings		(67	)		(108	)
Additions from loan sales		48			19
Ending balance, September 30	$	429		$	353

	Nine months ended September 30,
	2012			2011
Beginning balance, December 31	$	407		$	388
Losses included in earnings		(121	)		(145	)
Additions from loan sales		143			110
Ending balance, September 30	$	429		$	353

Quantitative information about the significant unobservable inputs used in the fair value measurement of MSRs at the respective dates is as follows:

	9/30/2012			9/30/2011
Servicing fees		0.25	%		0.25	%
Discount rate		10.08	%		10.14	%
Prepayment rate (CPR)		17.66	%		18.49	%

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a nonrecurring basis at September 30, 2012 and December 31, 2011:

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Impaired loans	$	—	$	—	$	11,525	$	11,525
December 31, 2011
Impaired loans	$	—	$	—	$	10,311	$	10,311

Impaired loans

The Company evaluates and values impaired loans at the time the loan is identified as impaired, and the fair values of such loans are estimated using Level 3 inputs in the fair value hierarchy. Each loan’s collateral has a unique appraisal and management’s discount of the value is based on factors unique to each impaired loan. The significant unobservable input in determining the fair value is management’s subjective discount on appraisals of the collateral securing the loan, which ranges from 10%-50%. Collateral may consist of real estate and/or business assets including equipment, inventory and/or accounts receivable and the value of these assets is determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, estimated costs to sell, and/or management’s expertise and knowledge of the client and the client’s business.

15

The Company has an appraisal policy in which appraisals are obtained upon a commercial loan being downgraded on the Company internal loan rating scale to a 5 (special mention) or a 6 (substandard) depending on the amount of the loan, the type of loan and the type of collateral. All impaired commercial loans are either graded a 6 or 7 on the internal loan rating scale. For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be impaired, whichever occurs first. Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and impaired for at least one year more, management may require another follow-up appraisal. Between receipts of updated appraisals, if necessary, management may perform an internal valuation based on any known changing conditions in the marketplace such as sales of similar properties, a change in the condition of the collateral, or feedback from local appraisers. Impaired loans had a gross value of $12.9 million, with a valuation allowance of $1.4 million, at September 30, 2012, compared to a gross value for impaired loans of $11.9 million, with a valuation allowance of $1.6 million, at December 31, 2011.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At September 30, 2012 and December 31, 2011, the estimated fair values of the Company’s financial instruments, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows:

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	64,980	$	64,980	$	14,678	$	14,678
Level 2:
Available for sale securities		91,878		91,878		99,981		99,981
FHLB and FRB stock		3,249		3,249		3,255		3,255
Level 3:
Held to maturity securities		4,034		4,022		3,802		3,811
Loans and leases, net		588,408		623,825		571,910		602,534
Mortgage servicing rights		429		429		407		407
Financial liabilities:
Level 1:
Demand deposits	$	126,251	$	126,251	$	118,037	$	118,037
NOW deposits		62,946		62,946		50,761		50,761
Regular savings deposits		375,859		375,859		333,938		333,938
Junior subordinated debentures		11,330		11,330		11,330		11,330
Commitments to extend credit		76		76		161		161
Securities sold under agreement to repurchase		9,081		9,081		9,010		9,010
Level 2:
Other borrowed funds		19,000		19,641		22,000		22,988
Level 3:
Time deposits		107,674		110,925		113,467		116,666

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value.

Cash and Cash Equivalents. For these short-term instruments, the carrying amount is a reasonable estimate of fair value. “Cash and Cash Equivalents” includes interest-bearing deposits at other banks.

FHLB and FRB stock. The carrying value of FHLB and FRB stock approximate fair value.

16

Securities held to maturity. The Company holds certain municipal bonds as held-to-maturity. These bonds are generally small in dollar amount and are issued only by certain local municipalities within the Company’s market area. The original terms are negotiated directly and on an individual basis consistent with our loan and credit guidelines. These bonds are not traded on the open market and management intends to hold the bonds to maturity. The fair value of held-to-maturity securities is estimated by discounting the future cash flows using the current rates at which similar agreements would be made with municipalities with similar credit ratings and for the same remaining maturities.

Loans and Leases, net. The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, net of the appropriate portion of the allowance for loan losses. For variable rate loans, the carrying amount is a reasonable estimate of fair value. This fair value calculation is not necessarily indicative of the exit price, as defined in ASC 820.

Deposits. The fair value of demand deposits, NOW accounts, muni-vest accounts and regular savings accounts is the amount payable on demand at the reporting date. The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.

Junior Subordinated Debentures. The carrying amount of Junior Subordinated Debentures is a reasonable estimate of fair value due to the fact that they bear a floating interest rate that adjusts on a quarterly basis.

Commitments to extend credit and standby letters of credit. As described in Note 8—“Contingent Liabilities and Commitments” to these Unaudited Consolidated Financial Statements, the Company was a party to financial instruments with off-balance sheet risk at September 30, 2012 and December 31, 2011. Such financial instruments consist of commitments to extend permanent financing and letters of credit. If the options are exercised by the prospective borrowers, these financial instruments will become interest-earning assets of the Company. If the options expire, the Company retains any fees paid by the counterparty in order to obtain the commitment or guarantee. The fees collected for these commitments are recorded as “unearned commitment fees” in Other Liabilities. The carrying value approximates the fair value.

Securities Sold Under Agreement to Repurchase. The fair value of the securities sold under agreement to repurchase approximates its carrying value.

Other Borrowed Funds. The fair value of the short-term portion of other borrowed funds approximates its carrying value. The fair value of the long-term portion of other borrowed funds is estimated using a discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

17

4. LOANS, LEASES, AND THE ALLOWANCE FOR LOAN AND LEASE LOSSES

Loan and Lease Portfolio Composition

The following table presents selected information on the composition of the Company’s loan and lease portfolio as of the dates indicated:

	September 30, 2012			December 31, 2011
	(in thousands)
Mortgage loans on real estate:
Residential Mortgages	$	70,430		$	73,579
Commercial and multi-family		320,860			306,683
Construction-Residential		2,008			2,392
Construction-Commercial		35,581			27,887
Home equities		56,466			54,673
Total real estate loans		485,345			465,214
Direct financing leases		2,440			6,021
Commercial and industrial loans		106,794			109,513
Consumer loans		1,359			1,677
Other		2,155			586
Net deferred loan origination costs		523			394
Total gross loans		598,616			583,405
Allowance for loan losses		(10,208	)		(11,495	)
Loans, net	$	588,408		$	571,910

18

The Bank sells certain fixed rate residential mortgages to FNMA, while maintaining the servicing rights for those mortgages. During the three and nine month periods ended September 30, 2012, the Bank sold mortgages to FNMA totaling $6.0 million and $17.1 million, respectively as compared with $2.6 million and $15.8 million sold during the three and nine month periods ended September 30, 2011, respectively. At September 30, 2012, the Bank had a loan servicing portfolio principal balance of $70.5 million upon which it earns servicing fees, as compared with $62.4 million at December 31, 2011. The value of the mortgage servicing rights for that portfolio was $0.4 million at September 30, 2012 and December 31, 2011. Residential mortgage loans held-for-sale were $2.7 million at September 30, 2012, compared with $3.6 million at December 31, 2011. The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.

As noted in Note 1, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011. Disclosures related to the basis for accounting for loans and leases, the method for recognizing interest income on loans and leases, the policy for placing loans and leases on nonaccrual status and the subsequent recording of payments and resuming accrual of interest, the policy for determining past due status, a description of the Company’s accounting policies and methodology used to estimate the allowance for loan and lease losses, the policy for charging off loans and leases, the accounting policies for impaired loans, and more descriptive information on the Company’s credit risk ratings are all contained in the Notes to the Audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2011. Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2011 are consistent with those utilized in the nine months ended September 30, 2012.

Credit Quality Indicators

The Bank monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators (“CQI”). The primary CQI for its commercial mortgage and commercial and industrial (“C&I”) portfolios is the individual loan’s credit risk rating. The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for loan and lease losses:

• 1-3-Pass

• 4-Watch

• 5-O.A.E.M. (Other Assets Especially Mentioned) or Special Mention

• 6-Substandard

• 7-Doubtful

• 8-Loss

The Company’s consumer loans, including residential mortgages and home equities, and commercial leases are not individually risk rated or reviewed in the Company’s loan review process. Consumers are not required to provide the Company with updated financial information as is a commercial customer. Consumer loans also carry smaller balances. Given the lack of updated information since the initial underwriting of the loan and small size of individual loans, the Company uses delinquency status as the credit quality indicator for consumer loans.

In the first quarter of 2012, the Company changed its methodology for reserving for non-accruing residential mortgages and home equities in response to the Interagency Supervisory Guidance issued by federal banking regulators in January 2012. Previously, estimated loss percentages were applied to pools of non-accruing residential mortgages and home equity loans. The Company now evaluates required loss reserves on an individual loan basis. This change resulted from the Company’s successful efforts to obtain more information about the financial status of borrowers and the fair value of loan collateral. The change from reserving for non-accruing residential mortgages and home equities on an individual basis versus a pooled approach resulted in a reduction of allowance for loan and lease losses of $0.1 million.

There were no other changes in the Company’s allowance for loan and lease loss methodology in the nine month period ended September 30, 2012.

19

The following tables provide data, at the class level, of credit quality indicators of certain loans and leases for the dates specified:

September 30, 2012
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	31,580	$	274,012	$	305,592	$	77,030
4		1,538		36,020		37,558		22,288
5		1,728		3,946		5,674		3,742
6		735		3,576		4,311		3,000
7		—		3,306		—		734
Total	$	35,581	$	320,860	$	353,135	$	106,794

December 31, 2011
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	21,607	$	250,575	$	272,182	$	77,017
4		4,421		45,505		49,926		21,448
5		362		1,758		2,120		5,939
6		1,497		8,845		10,342		4,761
7		—		—		—		348
Total	$	27,887	$	306,683	$	334,570	$	109,513

20

Past Due Loans and Leases

The following tables provide an analysis of the age of the recorded investment in loans and leases that are past due as of the dates indicated:

September 30, 2012
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	175	$	2	$	571	$	748	$	106,046	$	106,794	$	0	$	1,452
Residential real estate:
Residential		108		68		941		1,117		69,313		70,430		209		1,251
Construction		—		—		—		—		2,008		2,008		—		—
Commercial real estate:
Commercial		625		1,113		1,375		3,113		317,747		320,860		—		4,829
Construction		—		—		735		735		34,846		35,581		—		735
Home equities		288		122		515		925		55,541		56,466		71		552
Direct financing leases		13		10		184		207		2,233		2,440		—		255
Consumer		4		3		34		41		1,318		1,359		—		61
Other		—		—		—		—		2,678		2,678		—		—
Total Loans	$	1,213	$	1,318	$	4,355	$	6,886	$	591,730	$	598,616	$	280	$	9,135

December 31, 2011
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	279	$	94	$	1,702	$	2,075	$	107,438	$	109,513	$	—	$	2,180
Residential real estate:
Residential		735		55		1,062		1,852		71,727		73,579		73		1,048
Construction		—		—		167		167		2,225		2,392		—		167
Commercial real estate:
Commercial		3,086		64		2,686		5,836		300,847		306,683		59		6,858
Construction		—		—		2,609		2,609		25,278		27,887		1,167		1,442
Home equities		481		110		683		1,274		53,399		54,673		—		946
Direct financing leases		327		26		754		1,107		4,914		6,021		—		1,160
Consumer		56		5		4		65		1,612		1,677		—		76
Other		—		—		—		—		980		980		—		—
Total Loans	$	4,964	$	354	$	9,667	$	14,985	$	568,420	$	583,405	$	1,299	$	13,877

21

Allowance for loan and lease losses

The following tables present the activity in the allowance for loan and lease losses according to portfolio segment, for the nine month periods ended September 30, 2012 and September 30, 2011:

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,085		$	4,670		$	36		$	793		$	768		$	994		$	149	$	11,495
Charge-offs		(831	)		(546	)		(19	)		(12	)		(115	)		—			—		(1,523	)
Recoveries		137			15			16			0			6			—			—		174
Provision		302			546			(2	)		(94	)		69			(759	)		—		62
Ending balance	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Allowance for loan and lease losses:
Individually evaluated for impairment	$	493		$	359		$	14		$	0		$	0		$	72		$	—	$	938
Collectively evaluated for impairment		3,200			4,326			17			687			728			163			149		9,270
Loans acquired with deteriorated credit quality		—			—			—			—			—			—			—		—
Total	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	1,472		$	6,367		$	37		$	1,251		$	875		$	233		$	—	$	10,235
Collectively evaluated for impairment		105,322			350,074			3,453			71,188			55,590			2,207			—		587,834
Loans acquired with deteriorated credit quality		—			—			24			—			—			—			—		24
Total	$	106,794		$	356,441		$	3,514		$	72,439		$	56,465		$	2,440		$	—	$	598,093

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $523 thousand in net deferred loan and lease origination costs as of September 30, 2012.

22

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,435		$	4,252		$	29		$	548	$	540	$	1,471		$	149	$	10,424
Charge-offs		(1,225	)		($174	)		($17	)		—		—		—			—		(1,416	)
Recoveries		28			7			8			—		1		—			—		44
Provision	$	1,427		$	159		$	39		$	148	$	125	($	242	)	$	0		1,656
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Allowance for loan and lease losses:
Individually evaluated for impairment	$	48		$	574		$	10		$	—	$	—	$	462		$	—	$	1,094
Collectively evaluated for impairment		3,617		$	3,670		$	49			696		666		767			149		9,614
Loans acquired with deteriorated credit quality		—			—			—			—		—		—			—		—
Total	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	2,504		$	8,566		$	52		$	—	$	327	$	1,135		$	—	$	12,584
Collectively evaluated for impairment		107,543		$	310,723		$	3,344			73,002		54,291		6,648			—		555,551
Loans acquired with deteriorated credit quality		—			—			79			—		—		—			—		79
Total	$	110,047		$	319,289		$	3,475		$	73,002	$	54,618	$	7,783		$	—	$	568,214

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $361 thousand in net deferred loan and lease origination costs as of September 30, 2011.

The following tables present the activity in the allowance for loan and lease losses according to portfolio segment, for the three month periods ended September 30, 2012 and September 30, 2011:

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages		Consumer			Residential Mortgages			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,216		$	4,377	$	48		$	698		$	803		$	367		$	149	$	10,658
Charge-offs		(406	)		—		(9	)		(11	)		(102	)		—			—		(528	)
Recoveries		67			—		2			—			—			—			—		69
Provision		(184	)		308		(10	)		0			27			(132	)		—		9
Ending balance	$	3,693		$	4,685	$	31		$	687		$	728		$	235		$	149	$	10,208

23

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages			Consumer			Residential Mortgages		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,571		$	4,294		$	44		$	578	$	560	$	1,471		$	149	$	10,667
Charge-offs		(101	)		(32	)		(6	)		—		—		—			—		(139	)
Recoveries		12			7			2			—		—		—			—		21
Provision		183			(25	)		19			118		106		(242	)		—		159
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708

24

Impaired Loans and Leases

The following tables provide data, at the class level, of impaired loans and leases as of the dates indicated:

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	345	$	480	$	0	$	425	$	16	$	5
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		1,901		2,031		—		1,909		98		3
Construction		735		814		—		746		20		—
Home equities		875		1,009		—		978		24		9
Direct financing leases		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	5,107	$	5,697	$	—	$	5,311	$	188	$	23
	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	2,806	$	3,124	$	782	$	3,041	$	45	$	87
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		3,731		3,984		383		3,747		156		—
Construction		934		934		49		934		—		22
Home equities		—		—		—		—		—		—
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		0
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,765	$	8,424	$	1,347	$	8,107	$	222	$	109

25

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	3,151	$	3,604	$	782	$	3,466	$	61	$	92
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		5,632		6,015		383		5,656		254		3
Construction		1,669		1,748		49		1,680		20		22
Home equities		875		1,009		—		978		24		9
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	12,872	$	14,121	$	1,347	$	13,418	$	410	$	132
	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	261	$	270	$	—	$	371	$	9	$	7
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		2,723		2,916		—		2,503		215		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		327		327		—		331		—		9
Direct financing leases		—		—		—		—		—		—
Consumer		32		95		—		79		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	4,785	$	5,105	$	—	$	4,639	$	279	$	63

26

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	1,969	$	2,007	$	405	$	2,151	$	58	$	36
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		4,135		4,418		844		4,257		267		—
Construction		—		—		—		—		—		—
Home equities		170		170		31		170		4		2
Direct financing leases		847		907		350		1,214		60		1
Consumer		44		49		9		56		4		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,165	$	7,551	$	1,639	$	7,848	$	393	$	39

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	2,230	$	2,277	$	405	$	2,522	$	67	$	43
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		6,858		7,334		844		6,760		482		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		497		497		31		501		4		11
Direct financing leases		847		907		350		1,214		60		1
Consumer		76		144		9		135		11		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	11,950	$	12,656	$	1,639	$	12,487	$	672	$	102

27

Non-performing loans and leases

The following table sets forth information regarding non-performing loans and leases as of the dates specified:

	September 30, 2012			December 31, 2011
	(in thousands)
Non-accruing loans and leases:
Commercial and industrial loans	$	1,452		$	2,180
Residential real estate:
Residential		1,251			1,048
Construction		—			167
Commercial real estate:
Commercial and multi-family		4,829			6,858
Construction		735			1,442
Home equities		552			946
Direct financing leases		255			1,160
Consumer loans		61			76
Other		—			—
Total non-accruing loans and leases	$	9,135		$	13,877
Accruing loans 90+ days past due		280			1,299
Total non-performing loans and leases	$	9,415		$	15,176
Total non-performing loans and leases to total assets		1.18	%		2.05	%
Total non-performing loans and leases to total loans and leases		1.57	%		2.60	%

28

Troubled debt restructurings

The Company had $10.5 million in loans and leases that were restructured in a troubled debt restructuring (“TDR”) at September 30, 2012, compared with $7.7 million at December 31, 2011. $6.6 million and $7.1 million of those balances were in non-accrual status at September 30, 2012 and December 31, 2011, respectively. Any TDR that is placed on non-accrual is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months. Those loans and leases that are in accruing status have shown evidence of performance for at least six months as of September 30, 2012 and December 31, 2011. One of the restructurings was made under a government assistance program in the third quarter of 2012. Two commercial mortgages with a combined balance of $0.3 million restructured in 2011 and one residential mortgage with a balance of $44 thousand restructured in the second quarter of 2012 are covered under the Bank’s loss-sharing arrangement with the FDIC. All of the Company’s restructurings were allowed in an effort to maximize its ability to collect on loans and leases where borrowers were experiencing financial difficulty. Modifications made to loans in a troubled debt restructuring did not have a material impact on the Company’s net income for the three and nine month periods ended September 30, 2012 and 2011. The reserve for a TDR is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent. This reserve methodology is used because all TDR loans are considered impaired. As of September 30, 2012, there were no commitments to lend additional funds to debtors owing loans or leases whose terms have been modified in TDRs. The Company’s TDRs involve interest only payments and lengthening of terms as concessions to try and maximize the collectability of the loans.

The OCC recently clarified the categorization of loans of borrowers who are in Chapter 7 bankruptcy in which the bankruptcy court discharges the borrower’s obligation to the bank and the borrower does not reaffirm the debt. The release of the borrower’s personal liability as order by the court is considered a concession and the loan would become a TDR. This guidance did not cause any loans in the Company’s portfolio to become a TDR.

The following tables summarize the loans and leases that were classified as troubled debt restructurings as of the dates indicated:

	September 30, 2012
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	2,681	$	981	$	1,700	$	403
Residential real estate:
Residential		518		518		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,062		4,259		803		383
Construction		1,669		735		934		—
Home equities		323		—		323		—
Direct financing leases		233		107		126		72
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	10,486	$	6,600	$	3,886	$	858

29

	December 31, 2011
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,432	$	1,362	$	70	$	64
Residential real estate:
Residential		—		—		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,258		5,258		—		708
Construction		—		—		—		—
Home equities		327		—		327		—
Direct financing leases		714		439		275		330
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	7,731	$	7,059	$	672	$	1,102

The following table shows the data for TDR activity for the three and nine month periods ended September 30, 2012:

	Three Months Ended September 30, 2012						Nine Months Ended September 30, 2012
	($ in thousands)						($ in thousands)
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial and Industrial		2		1,680		1,680		4		1,936		1,936
Residential Real Estate:
Residential		1		475		475		2		518		518
Construction		—		—		—		—		—		—
Commercial Real Estate:
Commercial & Multi-Family		1		260		260		3		982		982
Construction		2		1,669		1,669		2		1,669		1,669
Home Equities		—		—		—		—		—		—
Direct financing leases		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Other		—		—		—		—		—		—

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan or lease in full. If a borrower continues to be delinquent or cannot meet the terms of a TDR and the loan or lease is determined to be uncollectible, the loan or lease will be charged off. The following table presents loans and leases which were classified as TDR’s during the previous 12 months which have defaulted during the three and nine month periods ended September 30, 2012:

30

	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial and Industrial		—		—		4	$	876
Residential Real Estate:
Residential		1	$	44		1		44
Construction		—		—		—		—
Commercial Real Estate:
Commercial and Multi-Family		—		—		4		804
Construction		—		—		1		735
Home Equities		—		—		—		—
Direct financing leases		—		—		—		—
Consumer loans		—		—		—		—
Other		—		—		—		—

Covered Loans and the Related Allowance

On July 24, 2009, the Bank entered into a definitive purchase and assumption agreement with the FDIC under which the Bank assumed approximately $51.0 million in liabilities, consisting almost entirely of deposits, and purchased substantially all of the assets of Waterford Village Bank. The loan portfolio acquired in the transaction totaled $42.0 million. The loans acquired in that acquisition are referred to as “covered” loans because they are “covered” by a loss sharing agreement with the FDIC. The agreement calls for the FDIC to reimburse the Bank for 80% of losses up to $5.6 million and 95% of losses beyond that threshold. At acquisition, the Company marked the covered loan portfolio to its market value and the allowance for loan and lease losses related to the covered loans was zero. Since acquisition, management has provisioned for any incremental increases in estimated credit losses due to deterioration in specific loans or increased risk factors on pools of loans. As a result of the FDIC guarantees, the provision for loan and lease losses and the allowance for loan and lease losses at September 30, 2012 and December 31, 2011 are presented net of FDIC guarantees related to covered loans. The following table depicts the allowance for loan and lease losses related to covered loans as of September 30, 2012 and December 31, 2011:

	September 30, 2012			December 31, 2011
	(in thousands)
Covered loans	$	22,540		$	26,429
Incremental estimated credit losses since acquisition		567			506
FDIC guarantee		(454	)		(405	)
Allowance for loan and lease losses, covered loans	$	113		$	101

5. PER SHARE DATA

The common stock per share information is based upon the weighted average number of shares outstanding during each period. For the three and nine month periods ended September 30, 2012 the Company had 24,321 and 13,436 average dilutive shares, respectively. The Company had 1,767 and 6,331 average dilutive shares for the three and nine month periods ended September 30, 2011, respectively.

31

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share. For the three and nine month periods ended September 30, 2012 there were approximately 71,234 and 161,596 average shares, respectively, that were not included in calculating diluted earnings per share because their effect was anti-dilutive. There were 157,054 and 166,155 potentially anti-dilutive average shares for the three and nine month periods ended September 30, 2011.

6. OTHER COMPREHENSIVE INCOME

The following tables display the components of other comprehensive income (loss):

	Three months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	582		($225	)	$	357
Defined benefit pension plans:
Amortization of prior service cost		21		(8	)		13
Amortization of actuarial loss		41		(15	)		26
Total		62		(23	)		39
Other Comprehensive Income	$	644		($248	)	$	396

	Three months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	1,151			($445	)	$	706
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	1,125			($435	)	$	690
Defined benefit pension plans:
Amortization of prior service cost		23			(9	)		14
Amortization of actuarial loss		9			(4	)		5
Total		32			(13	)		19
Other Comprehensive Income	$	1,157			($448	)	$	709

	Nine months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	415		($159	)	$	256
Defined benefit pension plans:
Amortization of prior service cost		65		(25	)		40
Amortization of actuarial loss		127		(49	)		78
Total		192		(74	)		118
Other Comprehensive Income	$	607		($233	)	$	374

32

	Nine months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	2,563			($992	)	$	1,571
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	2,537			($982	)	$	1,555
Defined benefit pension plans:
Amortization of prior service cost		65			(24	)		41
Amortization of actuarial loss		28			(11	)		17
Total		93			(35	)		58
Other Comprehensive Income	$	2,630			($1,017	)	$	1,613

7. SEGMENT INFORMATION

The Company is comprised of two primary business segments, banking and insurance agency activities. The following tables set forth information regarding these segments for the three and nine month periods ended September 30, 2012 and 2011.

Three Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,976		(31	)	$	6,945
Provision for loan and lease losses		9		—			9
Net interest income (expense) after provision for loan and lease losses		6,967		(31	)		6,936
Non-interest income		1,442		—			1,442
Insurance service and fees		—		1,774			1,774
Non-interest expense		6,078		1,278			7,356
Income before income taxes		2,331		465			2,796
Income tax provision		479		181			660
Net income	$	1,852	$	284		$	2,136

33

Three Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,544		($30	)	$	6,514
Provision for loan and lease losses		159		—			159
Net interest income (expense) after provision for loan and lease losses		6,385		(30	)		6,355
Non-interest income		1,335		—			1,335
Insurance service and fees		—		1,849			1,849
Non-interest expense		5,434		1,369			6,803
Income before income taxes		2,286		450			2,736
Income tax provision		646		164			810
Net income	$	1,640	$	286		$	1,926

Nine Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	20,771		($93	)	$	20,678
Provision for loan and lease losses		62		—		$	62
Net interest income (expense) after provision for loan and lease losses		20,709		(93	)		20,616
Non-interest income		4,180		—			4,180
Insurance service and fees		—		5,363			5,363
Non-interest expense		17,805		3,783			21,588
Income before income taxes		7,084		1,487			8,571
Income tax provision		1,982		580			2,562
Net income	$	5,102	$	907		$	6,009

34

Nine Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	19,186		($89	)	$	19,097
Provision for loan and lease losses		1,656		—			1,656
Net interest income (expense) after provision for loan and lease losses		17,530		(89	)		17,441
Non-interest income		4,031		—			4,031
Insurance service and fees		—		5,539			5,539
Non-interest expense		16,063		4,106			20,169
Income before income taxes		5,498		1,344			6,842
Income tax provision		1,560		509			2,069
Net income	$	3,938	$	835		$	4,773

8. CONTINGENT LIABILITIES AND COMMITMENTS

The unaudited consolidated financial statements do not reflect various commitments and contingent liabilities, which arise in the normal course of business, and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities consist of commitments to extend credit and standby letters of credit. A summary of the Bank’s commitments and contingent liabilities is as follows:

	September 30, 2012		December 31, 2011
	(in thousands)
Commitments to extend credit	$	137,832	$	134,204
Standby letters of credit		8,118		3,429
Total	$	145,950	$	137,633

Commitments to extend credit and standby letters of credit include some exposure to credit loss in the event of nonperformance of the customer. The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the Company’s unaudited consolidated balance sheets. Because these instruments have fixed maturity dates, and because they may expire without being drawn upon, they do not necessarily represent cash requirements of the Bank. The Bank has not incurred any losses on its commitments and has not recorded a reserve for its commitments during 2011 and 2012.

Certain lending commitments for construction residential mortgage loans are considered derivative instruments under the guidelines of GAAP. The changes in the fair value of these commitments, due to interest rate risk, are not recorded on the consolidated balance sheets as the fair value of these derivatives is not considered material.

The Company is subject to possible litigation proceedings in the normal course of business. As of September 30, 2012 and December 31, 2011, there were no claims pending against the Company that management considered material.

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9. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan. The plan covered substantially all Company employees. The plan provides benefits that are based on the employees’ compensation and years of service. Under the freeze, eligible employees will receive at retirement the benefits already earned through January 31, 2008, but have not accrued any additional benefits since then. As a result, service cost is no longer incurred.

The Bank used an actuarial method of amortizing prior service cost and unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank used recognized the prior service cost and net gains or losses over the average remaining service period of active employees.

The Bank also maintains a nonqualified supplemental executive retirement plan covering certain members of the Company’s senior management. The Bank uses an actuarial method of amortizing unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank uses recognizes the net gains or losses over the average remaining service period of active employees.

The Bank contributed $340 thousand to the defined benefit pension plan in the first nine months of 2012 and plans to contribute an additional $30 thousand before the end of the year.

The following table presents the net periodic cost for the Bank’s defined benefit pension plan and supplemental executive retirement plan for the three and nine month periods ended September 30, 2012 and 2011:

Three months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	45	$	45
Interest cost		54			54			39		47
Expected return on plan assets		(57	)		(57	)		—		—
Amortization of prior service cost		—			—			22		21
Amortization of the net loss		16			7			27		3
Net periodic cost	$	13		$	4		$	133	$	116

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Nine months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	135	$	135
Interest cost		160			163			116		142
Expected return on plan assets		(170	)		(171	)		—		—
Amortization of prior service cost		—			—			65		65
Amortization of the net loss		47			20			81		8
Net periodic cost	$	37		$	12		$	397	$	350

10. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2011-03, Reconsideration of Effective Control for Repurchase Agreements. This ASU relates to accounting for repurchase agreements (“repos”) and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. During the global economic crisis, capital market participants questioned the necessity and usefulness of the collateral maintenance guidance for the transferor’s ability criterion when determining whether a repo should be accounted for as a sale or as a secured borrowing. The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The new guidance is effective for interim and annual periods beginning after December 15, 2011. The Company adopted this ASU effective January 1, 2012, which did not have a significant impact on the Company’s repo accounting.

ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (“IFRS”). This ASU was issued to provide largely identical guidance about fair value measurement and disclosure requirements for IFRS and U.S. GAAP. The new guidance clarifies that the application of the highest and best use and valuation premise concepts are not relevant when measuring the fair value of financial assets or liabilities. This ASU also requires new and enhanced disclosures on the quantification and valuation process for significant unobservable inputs, transfers between Levels 1 and 2 and the categorization of all fair value measurements in the fair value hierarchy, even when those measurements are only for disclosure purposes. The Company adopted this ASU effective January 1, 2012. The enhanced disclosures are included in Note 3, “Fair Value Measurements.”

ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The objective of this ASU is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate the convergence of U.S. GAAP and IFRS, the Financial Accounting Standards Board (“FASB”) decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The amendments in this ASU will be applied retrospectively. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In the interim period ended March 31, 2012, the Company adopted this ASU and elected to use the two-statement approach.

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ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This ASU permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this ASU effective January 1, 2012. The Company will evaluate the need for a two-step goodwill impairment test each period subsequent to adoption. The Company typically performs its goodwill impairment test as of December 31^st on an annual basis. As there were no triggering events in the quarter ended September 30, 2012, management did not test goodwill for impairment. The Company does not expect adoption of this ASU to have a material effect on its financial statements.

ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU No. 2011-12 defers the effective date of the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income for all periods presented. The ASU does not change the other requirements of FASB ASU No. 2011-05, Presentation of Comprehensive Income. Entities are still required to present reclassification adjustments within other comprehensive income either on the face of the statement that reports other comprehensive income or in the notes to the financial statements. The requirement to present comprehensive income in either a single continuous statement or two consecutive condensed statements remains for both annual and interim reporting. The deferral of the requirement for the presentation of reclassification adjustments is intended to be temporary until the FASB reconsiders the operational concerns and needs of financial statement users.

The Company adopted the amendments in this Update at the same time as ASU 2011-05, which became effective beginning in the interim period ended March 31, 2012. As the Company had no reclassifications adjustments within other comprehensive income, this Update had no impact on the Company’s financial statements.

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ITEM 2—MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. When used in this report, or in the documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” and similar expressions identify such forward-looking statements. These forward-looking statements include statements regarding the Company’s business plans, prospects, growth and operating strategies, statements regarding the asset quality of the Company’s loan and investment portfolios, and estimates of the Company’s risks and future costs and benefits.

These forward-looking statements are based largely on the expectations of the Company’s management and are subject to a number of risks and uncertainties, including but not limited to general economic conditions, either nationally or in the Company’s market areas, that are worse than expected; increased competition among depository or other financial institutions; inflation and changes in the interest rate environment that reduce the Company’s margins or reduce the fair value of financial instruments; changes in laws or government regulations affecting financial institutions, including changes in regulatory fees, monetary policy, and capital requirements; the Company’s ability to enter new markets successfully and capitalize on growth opportunities; the Company’s ability to successfully integrate acquired entities; changes in accounting pronouncements and practices, as adopted by financial institution regulatory agencies, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board; changes in consumer spending, borrowing and saving habits; changes in the Company’s organization, compensation and benefit plans; and other factors discussed elsewhere in this Quarterly Report on Form 10-Q, as well as in the Company’s periodic reports filed with the SEC, in particular the “Risk Factors” discussed in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Many of these factors are beyond the Company’s control and are difficult to predict.

Because of these and other uncertainties, the Company’s actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events or otherwise.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

The Company’s Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are prepared in accordance with U.S. GAAP and follow general practices within the industries in which it operates. Application of these principles requires management to make estimates, assumptions and judgments that affect the amounts reported in the Company’s Unaudited Consolidated Financial Statements and Notes. These estimates, assumptions and judgments are based on information available as of the date of the Unaudited Consolidated Financial Statements. Accordingly, as this information changes, the Unaudited Consolidated Financial Statements could reflect different estimates, assumptions and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions and judgments, and as such, have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available. When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal cash flow modeling techniques. Refer to Note 3 — “Fair Value Measurements” to the Company’s Unaudited Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further detail on fair value measurement.

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Significant accounting policies followed by the Company are presented in Note 1 — “Organization and Summary of Significant Accounting Policies” to the Audited Consolidated Financial Statements included in Item 8 in its Annual Report on Form 10-K for the year ended December 31, 2011. These policies, along with the disclosures presented in the other Notes to the Company's Audited Consolidated Financial Statements contained in its Annual Report on Form 10-K and in this financial review, provide information on how significant assets and liabilities are presented in the Company’s Unaudited Consolidated Financial Statements and how those values are determined.

Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses and valuation of goodwill to be the accounting areas that require the most subjective or complex judgments, and as such, could be most subject to revision as new information becomes available.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses represents management’s estimate of probable losses in the Company’s loan and lease portfolio. Determining the amount of the allowance for loan and lease losses is considered a critical accounting estimate because it requires significant judgment on the part of management and the use of estimates related to the amount and timing of expected future cash flows on impaired loans and leases, estimated losses on pools of homogeneous loans and leases based on historical loss experience and consideration of current economic trends and conditions, all of which may be susceptible to significant change. The loan and lease portfolio also represents the largest asset type on the Company’s Unaudited Consolidated Balance Sheets. Note 1 to the Audited Consolidated Financial Statements included in Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, describes the methodology used to determine the allowance for loan and lease losses.

Goodwill

The amount of goodwill reflected in the Company’s Unaudited Consolidated Financial Statements is required to be tested by management for impairment on at least an annual basis. The test for impairment of goodwill on the identified reporting unit is considered a critical accounting estimate because it requires judgment on the part of management and the use of estimates related to the growth assumptions and market multiples used in the valuation model. The goodwill impairment testing is typically performed annually on December 31^st. No impairment charges were incurred in the most recent test and the fair value of the tested reporting unit substantially exceeded its fair value. There were no triggering events in the three and nine month periods ended September 30, 2012 that resulted in an interim impairment test.

ANALYSIS OF FINANCIAL CONDITION

Loan and Lease Activity

Total loans and leases grew to $598.6 million at September 30, 2012, reflecting a $0.7 million or 0.1% increase from June 30, 2012 and a $15.2 million or 2.6% increase from December 31, 2011. The national direct financing lease portfolio declined $0.9 million during the third quarter to $2.4 million at September 30, 2012 as the Company had ceased lease originations in the second quarter of 2009 and is winding down the portfolio and exiting this business line.

Core loans, defined as total loans less leases, were $596.2 million at September 30, 2012, a $1.6 million, or 0.3% increase from $594.6 million at June 30, 2012 and an $18.8 million, or 3.3% increase from December 31, 2011. The large amount of loans closed in the fourth quarter of 2011 left the Company’s loan pipeline relatively lighter to start 2012. The Company re-filled the pipeline in the first quarter and early second quarter and was able to generate significant loan closings in the second quarter, with the highest level of growth driven by commercial and multi-family real estate loans. Loan balances in the third quarter were relatively flat as demand has been relatively soft and the marketplace remains extremely competitive. Compared with core loan balances of $560.8 million at September 30, 2011, the growth rate over the past twelve months has been 6.3%.

Loans secured by real estate were $485.3 million at September 30, 2012, an increase of $2.8 million or 0.6% from June 30, 2012, and $20.1 million or 4.3% from December 31, 2011. The strongest growth was in commercial real estate construction loans, which increased $3.8 million or 11.9% in the third quarter of 2012. Year-to-date, growth in commercial real estate construction was $7.7 million, or 27.6%. Commercial real estate lending has long been an area of strength of the Bank and its loan officers and the historical strong performance has continued in 2012.

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Residential mortgages increased to $70.4 million at September 30, 2012 from $69.3 million at June 30, 2012, but decreased from $73.6 million at December 31, 2011. The Company has sold the majority of its originated residential mortgage loans as long-term fixed rate mortgage loan rates remain near all-time historic lows. This, along with prepayments from existing customers re-financing their homes, has resulted in the decrease in residential mortgage balances in 2012. Residential mortgage originations increased to $9.0 million and $24.1 million in the three and nine month periods ended September 30, 2012, respectively, compared with $6.0 million and $23.6 million in the three and nine month periods ended September 30, 2011, respectively.

The Bank sells certain fixed rate residential mortgages to FNMA, while maintaining the servicing rights for those mortgages. During the three and nine month periods ended September 30, 2012, the Bank sold mortgages to FNMA totaling $6.0 million and $17.1 million, respectively, as compared with $2.6 million and $15.8 million sold during the three and nine month periods ended September 30, 2011, respectively. At September 30, 2012, the Bank had a loan servicing portfolio principal balance of $70.5 million upon which it earns servicing fees, as compared with $68.4 million at June 30, 2012 and $62.4 million at December 31, 2011. The value of the mortgage servicing rights for that portfolio was $0.4 million at September 30, 2012, June 30, 2012 and December 31, 2011. Residential mortgage loans held-for-sale were $2.7 million at September 30, 2012, compared with $1.0 million at June 30, 2012 and $3.6 million at December 31, 2011. The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.

The Company continues to focus on commercial and industrial (“C&I”) lending as a way to diversify its loan portfolio, which has historically experienced strong growth rates in real estate loans. However, the Company faces the headwinds of a low growth economy and a very competitive local market. Line of credit commitments and line of credit usage decreased in the third quarter, resulting in C&I balances declining to $106.8 million at September 30, 2012, compared with $107.8 million at June 30, 2012, and $109.5 million at December 31, 2011.

Leasing Portfolio

As noted above, management made the strategic decision in April 2009 to exit the national direct financing lease business and market the portfolio for sale. This decision resulted in the classification of the leasing portfolio as held-for-sale and the portfolio being marked to its market value at September 30, 2009. The mark-to-market adjustment was $7.2 million. At September 30, 2009, management determined to keep the lease portfolio and service it to maturity, terminated its plans to actively market the portfolio for sale, and the portfolio was placed back into held-for-investment at the revised carrying amount as of September 30, 2009. The difference between the principal value and the carrying value, initially created by the mark-to-market adjustment at September 30, 2009, reduces over time as individual leases deteriorate, become uncollectible, and are written off. The allowance for lease losses was zero at September 30, 2009 when the portfolio was classified as held-for-sale and reported at its fair market value. With the portfolio classified as held-for-investment at September 30, 2012, the portfolio has been evaluated in accordance with the Company’s normal credit review policies in determining the appropriate allowance for lease losses. During the third quarter of 2012, a net of $4 thousand in leases were written off and the difference between the principal value and carrying value of the leasing portfolio remained the same at $0.1 million at September 30, 2012 when compared with June 30, 2012. Non-performing leases of $0.3 million at September 30, 2012 declined from $0.4 million at June 30, 2012 and $1.2 million at December 31, 2011. There were no new leases placed in nonaccrual in the third quarter. With both performing and non-performing lease balances declining, management determined that the allowance for leasing losses should decrease by $0.1 million in the third quarter of 2012, following a $0.2 million decrease in the second quarter of 2012 and a $0.4 million decrease in the first quarter of 2012. The following table illustrates the write-off and allowance activity related to the leasing portfolio over the past five quarters.

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	($ in thousands)
	2012									2011
	September 30,			June 30,			March 31,			December 31,			September 30,
Leasing Principal Balance	$	2,526		$	3,445		$	4,953		$	6,509		$	8,467
Mark		(86	)		(90	)		(441	)		(488	)		(684	)
Leasing Carrying Value	$	2,440		$	3,355		$	4,512		$	6,021		$	7,783
Mark-to-Market Adjustment	$	90		$	441		$	488		$	684		$	779
Net Write-Offs		(4	)		(351	)		(47	)		(196	)		(95	)
Remaining Mark	$	86		$	90		$	441		$	488		$	684
	For the three months ended
	2012									2011
	September 30,			June 30,			March 31,			December 31,			September 30,
Allowance for lease losses	$	367		$	583		$	994		$	1,229		$	1,471
Provision for leases		(132	)		(216	)		(411	)		(235	)		(242	)
Leasing net charge-offs		—			—			—			—			—
Allowance for lease losses	$	235		$	367		$	583		$	994		$	1,229
Total mark plus allowance	$	321		$	457		$	1,024		$	1,482		$	1,913
Mark + allowance/leasing principal balance		12.71	%		13.27	%		20.67	%		22.77	%		22.59	%

Credit Quality of Loan Portfolio

Total non-performing loans and leases, defined as accruing loans and leases greater than 90 days past due and non-accrual loans and leases, totaled $9.4 million, or 1.57% of total loans and leases outstanding, at September 30, 2012, compared with $11.0 million, or 1.84%, at June 30, 2012 and $15.2 million, or 2.60% of total loans and leases outstanding at December 31, 2011. There were several reasons for the decline in non-performing loans and leases during the past three quarters.

In the first six months of 2012, certain construction loans that were formerly more than 90 days past their maturity dates were converted to permanent loans and remain performing as of September 30, 2012 ($1.4 million). The non-performing leasing portfolio continued to improve and run off ($0.7 million). Other reasons for the decline in non-performing loans and leases included charge-offs ($0.6 million), pay-offs and pay-downs ($0.9 million), and improved performance justifying a return to performing status ($0.5 million).

In the third quarter of 2012, non-performing loans and leases continued to decline. The Company had two non-accruing loans pay off, including two commercial real estate loans for $0.5 million and $0.3 million. The Company partially charged off $0.4 million of a $2.1 million commercial and industrial relationship that was risk rated a 7 on the Company internal risk rating scale and had previously been reserved for. The Company also charged off $0.1 million of a home equity loan. The leasing portfolio continued its run-off in the third quarter with non-accruing leases declining by $0.2 million. The remaining net $0.2 million decrease is from payments on non-accruing loans that remain in the portfolio.

The allowance for loan and lease losses totaled $10.2 million, or 1.71% of total loans and leases outstanding as of September 30, 2012, compared with $10.7 million or 1.78% at June 30, 2012, and $11.5 million or 1.97% at December 31, 2011. The decrease in the allowance over the prior year end resulted from a $0.8 million release of reserves on the leasing portfolio and net charge-offs of $1.4 million in the nine month period ended September 30, 2012, partially offset by a $0.8 million provision for loan losses. The provision for loan losses resulted from the charge-off of three loans that exceeded the reserve associated with those loans at the time of the charge-offs, as well as the loan growth through the first nine months of 2012. The $0.5 million in net charge-offs in the third quarter of 2012 equates to a 0.31% annualized ratio as a percentage of average net loans and leases. This compares with a 0.30% ratio in the second quarter of 2012 and 0.09% in the third quarter of 2011. For the nine months ended September 30, 2012, the $1.4 million in net charge-offs equated to 0.31% of average net loans and leases, compared with $1.4 million in net charge-offs for a ratio of 0.35% in the first nine months of 2011.

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The coverage ratio of the allowance for loan and lease losses to non-performing loans and leases increased from 76% at December 31, 2011 to 97% at June 30, 2012 and 108% at September 30, 2012. There are two factors that significantly influence these ratios. The first factor is the covered loan portfolio acquired in the Waterford transaction which are covered by an FDIC loss-sharing agreement that guarantees 80% of any losses incurred in the portfolio up to $5.6 million, and 95% of losses beyond that threshold. The second factor is the leasing portfolio, which carries significantly higher risk, but also has the remaining mark to consider as depicted in the table above. The following table depicts the allowance and non-performing ratios by segregating the covered and non-covered loan portfolios and the leasing portfolio as of the following dates:

	September 30, 2012
	($ in thousands)
	Balance		Allowance for loan and lease losses		Non-performing loans and leases		Allowance for loan and lease losses/ Total loans and leases			Non-performing loans and leases/Total loans and leases			Allowance for loan and lease losses/ Non- performing loans and leases
Non-covered loans	$	573,636	$	9,860	$	7,245		1.72	%		1.26	%		136.09	%
Covered loans		22,540		113		1,915		0.50	%		8.50	%		5.90	%
Leases		2,440		235		255		9.63	%		10.45	%		92.16	%
Total	$	598,616	$	10,208	$	9,415		1.71	%		1.57	%		108.42	%

	December 31, 2011
	($ in thousands)
	Balance		Allowance for loan and lease losses		Non-performing loans and leases		Allowance for loan and lease losses/ Total loans and leases			Non-performing loans and leases/Total loans and leases			Allowance for loan and lease losses/ Non- performing loans and leases
Non-covered loans	$	550,955	$	10,400	$	11,488		1.89	%		2.09	%		90.53	%
Covered loans		26,429		101		2,528		0.38	%		9.57	%		4.00	%
Leases		6,021		994		1,160		16.51	%		19.27	%		85.69	%
Total	$	583,405	$	11,495	$	15,176		1.97	%		2.60	%		75.74	%

Investing Activities

Total securities were $95.9 million at September 30, 2012, compared with $96.8 million at June 30, 2012 and $103.8 million at December 31, 2011. Interest-bearing deposits at other banks, which consist of overnight funds kept at correspondent banks, increased from $3.2 million at December 31, 2011 to $31.4 million at June 30, 2012 and $52.7 million at September 30, 2012. Interest-bearing cash has increased as deposit growth outpaced loan growth. Securities and interest-bearing deposits at correspondent banks made up 20.0 % of the Bank’s total average interest earning assets in the third quarter of 2012, compared with 19.6% in the second quarter of 2012.

The Company’s highest concentration in its securities portfolio is in tax-advantaged debt securities issued by state and political subdivisions with 33.1% at September 30, 2012, compared with 31.1% at December 31, 2011. The concentration in U.S. government-sponsored agency bonds was 25.6% of the portfolio at September 30, 2012, compared with 29.1% of the portfolio at December 31, 2011.

The credit quality of the securities portfolio as a whole is believed to be strong as the portfolio has no individual securities in a significant unrealized loss position. Despite interest rates remaining near historic lows, the net unrealized gain position of the investment portfolio increased from $4.1 million at December 31, 2011 and $4.0 million at June 30, 2012 to $4.6 million at September 30, 2012.

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The Company monitors extension and prepayment risk in the securities portfolio to limit potential exposures. Available-for-sale securities with a total fair value of $74.9 million at September 30, 2012, as compared with $76.7 million at December 31, 2011, were pledged as collateral to secure public deposits and for other purposes required or permitted by law. The Company has no direct exposure to subprime mortgages, nor does the Company hold private mortgage-backed securities, credit default swaps, or FNMA or FHLMC preferred stock investments in its investment portfolio.

Funding Activities

Total deposits at September 30, 2012 were $672.7 million, reflecting an $18.8 million or 2.9% increase from June 30, 2012 and a $56.5 million, or 9.2%, increase from December 31, 2011. Total demand deposits at September 30, 2012 were $126.3 million, reflecting a $10.0 million or 8.6% increase from June 30, 2012, and an $8.2 million or 7.0% increase from December 31, 2011. Demand deposit balances fluctuate day-to-day based on the high volume of transactions normally associated with the demand product, and therefore average demand deposit growth is a valuable measure of sustained growth. Average demand deposits of $124.6 million during the three month period ended September 30, 2012 was 8.3% higher than the second quarter of 2012, and 12.2% higher than the prior year’s third quarter. Most of the Company’s growth in the past year in demand deposits has come from commercial customers.

The Company’s retail deposit growth vehicle continues to be the complementary Better Checking and Better Savings products, which are included in the NOW and regular savings deposit categories, respectively, on the Company’s balance sheet. The Better Checking product is unique in the Bank’s Western New York footprint as it pays a premium interest rate as a reward to customers who demonstrate a deep relationship with the Bank as evidenced by regular use of their debit card, use of direct deposit, and electronic statements. Overall, Better Checking deposits increased $3.4 million, or 7.4%, during the third quarter of 2012 and $9.8 million, or 24.6%, during the first nine months of the year. Regular savings deposits increased $8.6 million, or 2.5%, during the third quarter of 2012 and $37.8 million, or 12.1% during the first nine months of the year. That growth is mostly a result of an increase in Better Savings deposits, offset by decreases in legacy savings products. Growth in NOW and savings deposits slowed in the third quarter as the Company lowered rates on selected deposit products given the Company’s current excess liquidity and declining net interest margin in this extended low rate environment.

Time deposits were $107.7 million at September 30, 2012, a decrease of $0.6 million, or 0.6%, from June 30, 2012, and a $5.8 million, or 5.1%, decrease from December 31, 2011. Time deposit rates remain near historic lows. As a result, customers have continued to show a preference for liquid savings products over time deposits.

Other borrowings, which typically include the Bank’s overnight line of credit and other advances with the FHLBNY, were $19.0 million at September 30, 2012 and June 30, 2012, and $22.0 million at December 31, 2011 as a $3.0 million advance with FHLBNY matured and was not replaced. Because the Company’s deposit growth has outpaced its loan growth this year, the Bank has not needed to add to its wholesale borrowings.

44

ANALYSIS OF RESULTS OF OPERATIONS

Average Balance Sheet

The following tables present the significant categories of the assets and liabilities of the Company, interest income and interest expense, and the corresponding yields earned and rates paid for the periods indicated. The assets and liabilities are presented as daily averages. The average loan and lease balances include both performing and non-performing loans and leases. Investments are included at amortized cost. Yields are presented on a non-tax-equivalent basis.

	Three Months Ended September 30, 2012							Three Months Ended September 30, 2011
	Average		Interest					Average		Interest
	Outstanding		Earned/		Yield/			Outstanding		Earned/		Yield/
	Balance		Paid		Rate			Balance		Paid		Rate
	(dollars in thousands)							(dollars in thousands)
ASSETS
Interest-earning assets:
Loans and leases, net	$	590,200	$	7,567		5.13	%	$	541,357	$	7,254		5.36	%
Taxable securities		64,923		450		2.77	%		63,483		571		3.60	%
Tax-exempt securities		34,424		277		3.22	%		35,043		337		3.85	%
Interest bearing deposits at banks		48,619		15		0.12	%		17,200		7		0.16	%
Total interest-earning assets		738,166	$	8,309		4.50	%		657,083	$	8,169		4.97	%
Non interest-earning assets:
Cash and due from banks		10,941							13,688
Premises and equipment, net		10,901							10,552
Other assets		35,934							35,407
Total Assets	$	795,942						$	716,730
LIABILITIES & STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
NOW	$	62,283	$	161		1.03	%	$	45,604	$	151		1.32	%
Regular savings		374,170		494		0.53	%		315,487		588		0.75	%
Time deposits		108,179		451		1.67	%		125,037		647		2.07	%
Other borrowed funds		19,000		164		3.45	%		22,003		183		3.33	%
Junior subordinated debentures		11,330		88		3.11	%		11,330		82		2.90	%
Securities sold U/A to repurchase		9,553		6		0.25	%		6,211		4		0.26	%
Total interest-bearing liabilities		584,515	$	1,364		0.93	%		525,672	$	1,655		1.26	%
Noninterest-bearing liabilities:
Demand deposits		124,590							111,044
Other		13,186							12,273
Total liabilities	$	722,291						$	648,989
Stockholders’ equity		73,651							67,741
Total Liabilities and Equity	$	795,942						$	716,730
Net interest earnings			$	6,945						$	6,514
Net interest margin						3.76	%						3.97	%
Interest rate spread						3.57	%						3.71	%

45

	Nine Months Ended September 30, 2012							Nine Months Ended September 30, 2011
	Average		Interest					Average		Interest
	Outstanding		Earned/		Yield/			Outstanding		Earned/		Yield/
	Balance		Paid		Rate			Balance		Paid		Rate
	(dollars in thousands)							(dollars in thousands)
ASSETS
Interest-earning assets:
Loans and leases, net	$	578,003	$	22,596		5.21	%	$	527,988	$	21,486		5.43	%
Taxable securities		67,852		1,452		2.85	%		60,684		1,596		3.51	%
Tax-exempt securities		34,145		879		3.43	%		37,710		1,096		3.88	%
Interest bearing deposits at banks		36,959		39		0.14	%		14,214		19		0.18	%
Total interest-earning assets		716,959	$	24,966		4.64	%		640,596	$	24,197		5.04	%
Non interest-earning assets:
Cash and due from banks		11,239							15,204
Premises and equipment, net		10,586							10,640
Other assets		36,315							35,593
Total Assets	$	775,099						$	702,033
LIABILITIES & STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
NOW	$	59,266	$	451		1.01	%	$	42,947	$	388		1.21	%
Regular savings		361,528		1,583		0.58	%		298,091		1,526		0.68	%
Time deposits		109,844		1,460		1.77	%		135,922		2,354		2.31	%
Other borrowed funds		20,548		517		3.35	%		23,721		577		3.24	%
Junior subordinated debentures		11,330		261		3.07	%		11,330		245		2.88	%
Securities sold U/A to repurchase		9,261		16		0.23	%		6,205		10		0.22	%
Total interest-bearing liabilities		571,777	$	4,288		1.00	%		518,216	$	5,100		1.31	%
Noninterest-bearing liabilities:
Demand deposits		118,524							106,220
Other		13,020							11,698
Total liabilities	$	703,321						$	636,134
Stockholders’ equity		71,778							65,899
Total Liabilities and Equity	$	775,099						$	702,033
Net interest earnings			$	20,678						$	19,097
Net interest margin						3.85	%						3.97	%
Interest rate spread						3.64	%						3.73	%

Net Income

Net income grew to $2.1 million in the third quarter of 2012, up 10.9% from net income of $1.9 million in the third quarter of 2011. The improvement in net income reflected a combination of higher net interest income and a $0.2 million year-over-year reduction in the provision for loan and lease losses. Return on average equity was 11.60% for the third quarter of 2012 compared with 11.37% in the third quarter of 2011.

For the nine months ended September 30, 2012, the Company recorded net income of $6.0 million, or $1.45 per diluted share, a 26% increase over net income of $4.8 million, or $1.16 per diluted share, in the same period in 2011. The return on average equity was 11.15% for the nine-month period ended September 30, 2012, compared with 9.66% in the same period in 2011.

46

Other Results of Operations — Quarterly Comparison

Net interest income was $6.9 million for the 2012 third quarter, up 6.6% when compared with the third quarter of 2011 and comparable to the second quarter of 2012. Growth in interest-earning assets drove the increase from the third quarter of 2011 and offset net interest margin contraction relative to the same period. Core loans, which are defined as total loans and leases less leases, were $596.2 million at September 30, 2012, an increase of 6.3% from $560.8 million at September 30, 2011, and up 0.3% (1.1% annualized) from $594.6 million at June 30, 2012. The majority of the loan growth since the third quarter of 2011 was in the commercial mortgage loan portfolio.

The Company’s net interest margin decreased to 3.76% for the third quarter of 2012, down from the second quarter rate of 3.85% and down from 3.97% in the third quarter of 2011. As compared with last year’s third quarter the decrease in the net interest margin is a result of the continued declining interest rate environment. The Company has been able to partially offset the 47 basis point decrease in yield on interest-earning assets through re-pricing its interest bearing liabilities by 33 basis points. The contribution of interest-free funds declined by 7 basis points when compared with the third quarter 2011.

The Company’s loan and investment portfolios continue to re-price into lower yields, as evidenced by a decrease in yield on interest-earning assets of 14 basis points from the second quarter of 2012.

The provision for loan and lease losses decreased to $9 thousand in the third quarter of 2012 from a provision of $0.2 million in the prior year’s third quarter, and decreased from a provision of $0.3 million in the linked second quarter of 2012. The third quarter of 2012 benefitted from a release of $0.1 million in leasing provision after continued improvement in the leasing portfolio’s performance, which offset an increased specific reserve of $0.1 million on a commercial real estate loan. With no other significant deterioration in credit quality and relatively low loan growth rate of 0.3% in the quarter, provision for loan and lease losses was near zero.

Non-interest income, which represented 31.7% of total revenue in the third quarter of 2012, increased 1.0%, or $32 thousand, to $3.2 million when compared with the third quarter of 2011. Insurance agency revenue of $1.8 million was down $75 thousand, or 4.0%, when compared with the 2011 third quarter due mostly to decreases in personal lines revenue. Premiums on residential mortgages sold to Fannie Mae increased from $33 thousand in last year’s third quarter to $129 thousand in this year’s third quarter, a 291% increase. The Company was able to achieve better execution and improved margins on loan sales in 2012 when compared with 2011. Compared with the second quarter of 2012, total non-interest income was up $0.2 million due mainly to TEA’s increase in revenue of $0.1 million, reflecting the typical revenue cycle seasonality, and an increase in deposit service charges of $50 thousand, reflecting increased overdraft activity.

Total non-interest expense was $7.4 million in the third quarter of 2012, an increase of 8.1%, from $6.8 million in the third quarter of 2011. The largest component of the increase was salaries and employee benefits, which was up $0.7 million, or 17.3%, when compared with the third quarter of 2011. This rise is due in part to merit increases awarded for 2011 performance, higher health care costs, and increased staff. However, $0.5 million is a non-routine expense related to the severance costs incurred due to the departure of an executive from the Company.

As a result of the increase in non-interest expense, the efficiency ratio increased to 71.64% for the third quarter of 2012 from 69.10% for the third quarter of 2011.

Income tax expense for the quarter ended September 30, 2012, was $0.7 million, representing an effective tax rate of 23.6% compared with an effective tax rate of 29.6% in the third quarter of 2011. The decrease in tax rate in the third quarter was primarily due to a previously unrecognized tax benefit of $220 thousand related to the expiration of a statute from the 2008 tax year. Excluding the non-routine item, the effective tax rate would have been 31.5%. The increase in the normalized tax rate is a reflection of tax-exempt income being a lower portion of overall pre-tax income.

47

Other Results of Operations — Year-to-Date Comparison

Net interest income was $20.7 million for the nine months ended September 30, 2012, an 8.3% increase from the first nine months of 2011. Growth in interest-earning assets, particularly loans, and a reduction in the rate paid on interest-bearing deposits drove the increase from 2011 and offset the net interest margin contraction relative to the same period.

The Company’s net interest margin decreased to 3.76% for the nine month period ended September 30, 2012, down from 3.97% in the first nine months of 2011. As the low interest rate cycle continues, the Company’s loan and investment portfolios re-price into lower yields as evidenced by a decrease in yield on interest-earning assets of 47 basis points in the first nine months of 2012 when compared with the same period in 2011. The Company benefited from re-pricing its interest-bearing liabilities earlier in the interest rate cycle so these rates have fallen less than the yield on interest-earning assets in the past year. Correspondingly, the cost of interest-bearing liabilities for the first nine months of 2012 declined only 33 basis points when compared with the same period in 2011.

The provision for loan and lease losses decreased to $0.1 million in the nine month period ended September 30, 2012 from a provision of $1.7 million in the nine month period ended September 30, 2011. With the continuing improvement in the performance of the leasing portfolio, including a steep decrease in non-performing leases, the Company released $0.8 million in leasing reserves in the first nine months of 2012 compared with a release of leasing reserves of $0.2 million in the first nine months of 2011. The provision for loan losses (not including leases) decreased from $1.9 million in the nine month period ended September 30, 2011 to $0.8 million in the first nine months of 2012. In the prior year period there was deterioration in several commercial loan relationships that drove the higher provision. In contrast, in 2012, the percentage of total loans and leases that are non-performing has decreased from 2.60% at December 31, 2011 to 1.57% at September 30, 2012.

Non-interest income, which represented 31.7% of total revenue in the first nine months of 2012, decreased 0.3%, or $27 thousand, to $9.5 million when compared with the first nine months of 2011. Data center income, which declined $0.2 million from the prior year’s first nine months, is from the Bank’s wholly-owned subsidiary, Suchak Data Systems, LLC (“SDS”). SDS is a data processing company which was acquired by the Bank on December 31, 2008. The original contracted revenue generated by service agreements with other banks is expiring as expected. The Company is focusing on the original purpose for the purchase of SDS, which was to provide resources for its own internal bank processing needs. Insurance agency revenue of $5.4 million for the nine month period ended September 30, 2012 was down $0.1 million, or 3.2%, when compared with the nine month period ended September 30, 2011 due mostly to a decrease in profit sharing revenue from the insurance carriers. The lower profit sharing is driven by higher loss ratios related to lower premium levels. These negative trends were somewhat offset by increased deposit service charges, premiums on loans sold, bank-owned life insurance (“BOLI”) income and other income. Deposit service charges increased $59 thousand, or 4.5%, compared with the first nine months of 2011, primarily due to increases in fee rates to be more in-line with market competition. Premiums on loans sold increased $152 thousand year over year due to more disciplined pricing and improved execution on loan sales to FNMA. BOLI income increased $39 thousand, or 11.8%, due to an increased investment in BOLI. Other income was up $136 thousand in the first nine months of 2012 when compared to the prior year mostly from higher interchange and ATM fees ($76 thousand), merchant services fees ($41 thousand), and FNMA servicing fees ($30 thousand).

Total non-interest expense was $21.6 million in the nine month period ended September 30, 2012, an increase of $1.4 million, or 7.0%, from $20.2 million in the third quarter of 2011. The largest component of the increase was salaries and employee benefits, which was up $1.3 million, or 11.2%, from the first nine months of 2011 to $13.2 million in the first nine months of 2012. Part of the increase reflected merit increases awarded for 2011 performance, higher health care costs and increased staff levels, with the rest coming from a $0.5 million severance payment to a former executive. Professional services expenses increased $0.2 million from $1.3 million in the nine month period ended September 30, 2011 to $1.5 million in the first nine months of 2012. The increase is due mainly to higher legal expenses, particularly those related to resolving and collecting impaired loans.

As a result of the increase in non-interest expense, the efficiency ratio increased to 70.48% for the nine month period ended September 30, 2012 from 69.11% in the corresponding period in 2011.

Income tax expense for the nine months ended September 30, 2012, was $2.6 million, representing an effective tax rate of 29.9% compared with an effective tax rate of 30.2% in the nine month period ended September 30, 2011. Excluding the non-routine tax benefit of $0.2 million described above under “Other Results of Operations — Quarterly Comparison,” the effective tax rate the first nine months of 2012 would have been 32.5%. The normalized effective tax rate increased as tax-exempt income, such as interest income from municipal bonds and the increase in the cash surrender value of bank-owned life insurance, comprised a smaller percentage of total income.

48

CAPITAL

The Company consistently maintains regulatory capital ratios measurably above the federal “well capitalized” standard, including a Tier 1 leverage ratio of 9.71% at September 30, 2012 and December 31, 2011. Book value per share of the Company’s common stock was $17.82 at September 30, 2012, compared with $16.72 at December 31, 2011. Tangible book value per share (a non-GAAP measure) at September 30, 2012 was $15.77, compared with $14.60 at December 31, 2011. The increase in both book value and tangible book value per share is a result of the Company’s $6.0 million in net income, somewhat offset by the $1.8 million in dividends declared in 2012.

Tangible book value per share is a non-GAAP measure. The Company uses this measure to provide information for investors to effectively analyze financial trends and to enhance comparability with peers. A detailed reconciliation of the Company’s GAAP to non-GAAP measure follows:

($ in thousands, except per share data)	September 30, 2012			December 31, 2011
Stockholders’ equity (“book value”)	$	73,981		$	68,988
Goodwill		(8,101	)		(8,101	)
Intangible assets		(391	)		(678	)
Tangible book value	$	65,489		$	60,209
Number of common shares outstanding		4,151,985			4,124,892
Tangible book value per share	$	15.77		$	14.60

On August 21, 2012, the Company declared a semi-annual cash dividend of $0.22 per share on the Company’s outstanding common stock. The dividend was paid on October 9, 2012 to shareholders of record as of September 11, 2012. The dividend was consistent with the previous semi-annual dividend of $0.22 paid on April 10, 2012.

LIQUIDITY

The Bank utilizes cash flows from the investment portfolio and federal funds sold balances to manage the liquidity requirements related to loan demand and deposit fluctuations. The Bank also has many borrowing options. As a member of the FHLB the Bank is able to borrow funds at competitive rates. Advances of up to $132.8 million can be drawn on the FHLB via an Overnight Line of Credit Agreement between the Bank and the FHLB. An amount equal to 25% of the Bank’s total assets could be borrowed through the advance programs under certain qualifying circumstances. The Bank also has the ability to purchase up to $14.0 million in federal funds from its correspondent banks. By placing sufficient collateral in safekeeping at the Federal Reserve Bank, the Bank could borrow at the discount window. The Bank’s liquidity needs also can be met by more aggressively pursuing time deposits, or accessing the brokered time deposit market, including the Certificate of Deposit Account Registry Service (“CDARS”) network. The Company’s primary source of liquidity is dividends from the Bank. Additionally, the Company has access to capital markets as a funding source. In May 2010, the Company raised $13.4 million in net proceeds in connection with a registered offering and sale of 1.2 million shares of common stock.

Cash flows from the Bank’s investment portfolio are laddered, so that securities mature at regular intervals, to provide funds from principal and interest payments at various times as liquidity needs may arise. Contractual maturities are also laddered, with consideration as to the volatility of market prices. At September 30, 2012, approximately 4.9% of the Bank’s securities had contractual maturity dates of one year or less and approximately 23.1% had maturity dates of five years or less.

49

Management, on an ongoing basis, closely monitors the Company’s liquidity position for compliance with internal policies, and believes that available sources of liquidity are adequate to meet funding needs in the normal course of business. As part of that monitoring process, management calculates the 90-day liquidity each month by analyzing the cash needs of the Bank. Included in the calculation are liquid assets and potential liabilities. Management stresses the potential liabilities calculation to ensure a strong liquidity position. Included in the calculation are assumptions of some significant deposit run-off as well as funds needed for loan closings and investment purchases. At September 30, 2012, in the Company’s internal stress test, the Company had net short-term liquidity of $139.1 million as compared with $82.6 million at December 31, 2011. Available assets of $151.5 million, divided by public and purchased funds of $114.1 million, resulted in a long-term liquidity ratio of 133% at September 30, 2012, compared with 99% at December 31, 2011.

Management does not anticipate engaging in any activities, either currently or in the long term, for which adequate funding would not be available and which would therefore result in significant pressure on liquidity. However, continued economic recession could negatively impact the Company’s liquidity.

The Company believes that the Bank maintains a sufficient level of U.S. government and government agency securities and New York State municipal bonds that can be pledged as collateral for municipal deposits.

ITEM 3—QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Additional information responsive to this Item is contained in the Liquidity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which information is incorporated herein by reference.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates of the Bank’s financial instruments. The primary market risk the Company is exposed to is interest rate risk. The core banking activities of lending and deposit-taking expose the Bank to interest rate risk, which occurs when assets and liabilities reprice at different times and by different amounts as interest rates change. As a result, net interest income earned by the Bank is subject to the effects of changing interest rates. The Bank measures interest rate risk by calculating the variability of net interest income in future periods under various interest rate scenarios using projected balances for interest-earning assets and interest-bearing liabilities. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income to changes in net interest rates. The balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans, and expected maturities of investment securities, loans and deposits. Management supplements the modeling technique described above with analysis of market values of the Bank’s financial instruments and changes to such market values given changes in the interest rates.

The Bank’s Asset-Liability Committee, which includes members of senior management, monitors the Bank’s interest rate sensitivity with the aid of a model that considers the impact of ongoing lending and deposit taking activities, as well as interrelationships in the magnitude and timing of the repricing of financial instruments, including the effect of changing interest rates on expected prepayments and maturities. When deemed prudent, management has taken actions, and intends to do so in the future, to mitigate exposure to interest rate risk through the use of on- or off-balance sheet financial instruments. Possible actions include, but are not limited to, changing the pricing of loan and deposit products, and modifying the composition of interest-earning assets and interest-bearing liabilities, and other financial instruments used for interest rate risk management purposes.

50

The following table demonstrates the possible impact of changes in interest rates on the Bank’s net interest income over a 12-month period of time:

SENSITIVITY OF NET INTEREST INCOME TO CHANGES IN INTEREST RATES

Calculated increase

in projected annual net interest income

(in thousands)

	September 30, 2012		December 31, 2011
Changes in interest rates
+200 basis points	$	1,171	$	1,126
+100 basis points		1,616		1,452
-100 basis points		NM		NM
-200 basis points		NM		NM

Many assumptions were utilized by management to calculate the impact that changes in interest rates may have on the Bank’s net interest income. The more significant assumptions related to the rate of prepayments of mortgage-related assets, loan and deposit volumes and pricing, and deposit maturities. The Bank assumed immediate changes in rates including 200 basis point rate changes. In the event that the 200 basis point rate changes cannot be achieved, the applicable rate changes are limited to lesser amounts such that interest rates cannot be less than zero. These assumptions are inherently uncertain and, as a result, the Bank cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly due to the timing, magnitude, and frequency of interest rate changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions such as those previously described, which management may take to counter such changes. In light of the uncertainties and assumptions associated with the process, the amounts presented in the table and changes in such amounts are not considered significant to the Bank’s projected net interest income.

ITEM 4—CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2012 (the end of the period covered by this Report). Based on that evaluation, the Company’s principal executive and principal financial officers concluded that as of September 30, 2012 the Company’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in the Company’s internal control over financial reporting were identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 6 — EXHIBITS

The information called for by this item is incorporated herein by reference to the Exhibit Index included immediately following the signature page to this Quarterly Report on Form 10-Q.

51

SIGNATURES

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

Evans Bancorp, Inc.
DATE
November 2, 2012	/s/ David J. Nasca
	David J. Nasca
	President and CEO
	(Principal Executive Officer)
DATE
November 2, 2012	/s/ Gary A. Kajtoch
	Gary A. Kajtoch
	Treasurer
	(Principal Financial Officer)

52

EXHIBIT INDEX

Exhibit No.	Name	Page No.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		53
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		54
32.1	Certification of Principal Executive Officer pursuant to 18 USC Section 1350 Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		55
32.2	Certification of Principal Financial Officer pursuant to 18 USC Section 1350 Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		56
101	The following materials from Evans Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets — September 30, 2012 and December 31, 2011; (ii) Unaudited Consolidated Statements of Income—Three months ended September 30, 2012 and 2011; (iii) Unaudited Consolidated Statements of Income—Nine months ended September 30, 2012 and 2011; (iv) Unaudited Statements of Consolidated Comprehensive Income—Three months ended September 30, 2012 and 2011; (v) Unaudited Statements of Consolidated Comprehensive Income—Nine months ended September 30, 2012 and 2011; (vi) Unaudited Consolidated Statements of Stockholder’s Equity—Nine months ended September 30, 2012 and 2011; (vii) Unaudited Consolidated Statements of Cash Flows—Nine months ended September 30, 2012 and 2011; and (vi) Notes toUnaudited Consolidated Financial Statements.*

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

53

EX-31.1

Exhibit 31.1

Certification

I, David J. Nasca, certify that:

1. I have reviewed this report on Form 10-Q of Evans Bancorp, Inc.;

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

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

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

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

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

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

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

5. The registrant’s other certifying officer(s) 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 2, 2012

/s/ David J. Nasca

David J. Nasca

President & Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification

I, Gary A. Kajtoch, certify that:

1. I have reviewed this report on Form 10-Q of Evans Bancorp, Inc.;

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

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

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

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

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

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

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

5. The registrant’s other certifying officer(s) 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 2, 2012

/s/ Gary A. Kajtoch

Gary A. Kajtoch

Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Nasca, the President and Chief Executive Officer of Evans Bancorp, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) the Quarterly Report of Evans Bancorp, Inc. on Form 10-Q for the fiscal quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and (2) the information contained in such Quarterly Report on
Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans Bancorp, Inc.

Date: November 2, 2012

By:	/s/ David J. Nasca
Name:	David J. Nasca
Title:	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary A. Kajtoch, the Treasurer of Evans Bancorp, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) the Quarterly Report of Evans Bancorp, Inc. on
Form 10-Q for the fiscal quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and (2) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans Bancorp, Inc.

Date: November 2, 2012
By:	/s/ Gary A. Kajtoch
Name:	Gary A. Kajtoch
Title:	Treasurer
	(Principal Financial Officer)

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Recorded Investment In Loans And Leases That Are Past Due) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	$ 1,213	$ 4,964
60-89 days	1,318	354
90+ days	4,355	9,667
Total Past Due	6,886	14,985
Current Balance	591,730	568,420
Total gross loans	598,616	583,405
90+ Days Accruing	280	1,299
Non-accruing Loans and Leases	9,135	13,877
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	175	279
60-89 days	2	94
90+ days	571	1,702
Total Past Due	748	2,075
Current Balance	106,046	107,438
Total gross loans	106,794	109,513
90+ Days Accruing	0
Non-accruing Loans and Leases	1,452	2,180
Residential Real Estate: Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	108	735
60-89 days	68	55
90+ days	941	1,062
Total Past Due	1,117	1,852
Current Balance	69,313	71,727
Total gross loans	70,430	73,579
90+ Days Accruing	209	73
Non-accruing Loans and Leases	1,251	1,048
Residential Real Estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90+ days		167
Total Past Due		167
Current Balance	2,008	2,225
Total gross loans	2,008	2,392
Non-accruing Loans and Leases		167
Commercial Real Estate: Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	625	3,086
60-89 days	1,113	64
90+ days	1,375	2,686
Total Past Due	3,113	5,836
Current Balance	317,747	300,847
Total gross loans	320,860	306,683
90+ Days Accruing		59
Non-accruing Loans and Leases	4,829	6,858
Commercial Real Estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
90+ days	735	2,609
Total Past Due	735	2,609
Current Balance	34,846	25,278
Total gross loans	35,581	27,887
90+ Days Accruing		1,167
Non-accruing Loans and Leases	735	1,442
Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	288	481
60-89 days	122	110
90+ days	515	683
Total Past Due	925	1,274
Current Balance	55,541	53,399
Total gross loans	56,466	54,673
90+ Days Accruing	71
Non-accruing Loans and Leases	552	946
Direct Financing Leases [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	13	327
60-89 days	10	26
90+ days	184	754
Total Past Due	207	1,107
Current Balance	2,233	4,914
Total gross loans	2,440	6,021
Non-accruing Loans and Leases	255	1,160
Consumer Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30-59 days	4	56
60-89 days	3	5
90+ days	34	4
Total Past Due	41	65
Current Balance	1,318	1,612
Total gross loans	1,359	1,677
Non-accruing Loans and Leases	61	76
Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current Balance	2,678	980
Total gross loans	2,678	980
Non-accruing Loans and Leases

XML

Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Unrealized gain on available-for-sale securities:
Unrealized gain on investment securities, Before-Tax Amount	$ 582	$ 1,125	$ 415	$ 2,537
Unrealized gain on investment securities, Income Tax (Provision) Benefit	(225)	(435)	(159)	(982)
Unrealized gain on investment securities, Net-of-Tax Amount	357	690	256	1,555
Unrealized gain on investment securities, before reclassification, Before Tax Amount		1,151		2,563
Unrealized gain on investment securities, before reclassification, Income Tax (Provision) Benefit		(445)		(992)
Unrealized gain on investment securities, before reclassification, Net-of-Tax Amount		706		1,571
Reclassification of gain on sale of securities, Before-Tax Amount		(26)		(26)
Reclassification of gain on sale of securities, Income Tax (Provision) Benefit		10		10
Reclassification of gain on sale of securities, Net-of-Tax Amount		(16)		(16)
Defined benefit pension plans:
Amortization of prior service cost, Before-Tax Amount	21	23	65	65
Amortization of prior service cost, Income Tax (Provision) Benefit	(8)	(9)	(25)	(24)
Amortization of prior service cost, Net-of-Tax Amount	13	14	40	41
Amortization of actuarial loss, Before-Tax Amount	41	9	127	28
Amortization of actuarial loss, Income Tax (Provision) Benefit	(15)	(4)	(49)	(11)
Amortization of actuarial loss, Net-of-Tax Amount	26	5	78	17
Defined benefit pension plans: Total, Before-Tax Amount	62	32	192	93
Defined benefit pension plans: Total, Income Tax (Provision) Benefit	(23)	(13)	(74)	(35)
Defined benefit pension plans: Total, Net-of-Tax Amount	39	19	118	58
Other Comprehensive Income, Before-Tax Amount	644	1,157	607	2,630
Other Comprehensive Income, Income Tax (Provision) Benefit	(248)	(448)	(233)	(1,017)
OTHER COMPREHENSIVE INCOME, NET OF TAX	$ 396	$ 709	$ 374	$ 1,613

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Allowance For Loan And Lease Losses Related To Covered Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Loans, Leases, And The Allowance For Loan And Lease Losses [Abstract]
Covered loans	$ 22,540	$ 26,429
Incremental estimated credit losses since acquisition	567	506
FDIC guarantee	(454)	(405)
Allowance for loan and lease losses, covered loans	$ 113	$ 101

XML

Fair Value Measurements (Quantitative Information About Significant Unobservable Inputs Used In The Fair Value Measurement Of MSRs) (Details)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Fair Value Measurements [Abstract]
Servicing fees	0.25%	0.25%
Discount rate	10.08%	10.14%
Prepayment rate (CPR)	17.66%	18.49%

XML

Net Periodic Benefit Costs (Tables)

9 Months Ended

Sep. 30, 2012

Net Periodic Benefit Costs [Abstract]

Defined Benefit Pension Plan And Supplemental Executive Retirement Plan

Three months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	45	$	45
Interest cost		54			54			39		47
Expected return on plan assets		(57	)		(57	)		—		—
Amortization of prior service cost		—			—			22		21
Amortization of the net loss		16			7			27		3
Net periodic cost	$	13		$	4		$	133	$	116

Nine months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	135	$	135
Interest cost		160			163			116		142
Expected return on plan assets		(170	)		(171	)		—		—
Amortization of prior service cost		—			—			65		65
Amortization of the net loss		47			20			81		8
Net periodic cost	$	37		$	12		$	397	$	350

XML

Contingent Liabilities And Commitments (Summary Of Commitments And Contingent Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Contingent Liabilities And Commitments [Line Items]
Commitments and contingent liabilities	$ 145,950	$ 137,633
Claims pending against the management considered material	0	0
Commitments To Extend Credit [Member]
Contingent Liabilities And Commitments [Line Items]
Commitments and contingent liabilities	137,832	134,204
Standby Letters Of Credit [Member]
Contingent Liabilities And Commitments [Line Items]
Commitments and contingent liabilities	$ 8,118	$ 3,429

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Non-Performing Loans And Leases) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	$ 9,135	$ 13,877
Accruing loans 90+ days past due	280	1,299
Total non-performing loans and leases	9,415	15,176
Total non-performing loans and leases to total assets	1.18%	2.05%
Total non-performing loans and leases to total loans and leases	1.57%	2.60%
Commercial And Industrial [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	1,452	2,180
Accruing loans 90+ days past due	0
Residential Real Estate: Residential [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	1,251	1,048
Accruing loans 90+ days past due	209	73
Residential Real Estate: Construction [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases		167
Commercial Real Estate: Commercial [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	4,829	6,858
Accruing loans 90+ days past due		59
Commercial Real Estate: Construction [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	735	1,442
Accruing loans 90+ days past due		1,167
Home Equities [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	552	946
Accruing loans 90+ days past due	71
Direct Financing Leases [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	255	1,160
Consumer Loans [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases	61	76
Other [Member]
Financing Receivable Non-performing Loans And Leases [Line Items]
Total non-accruing loans and leases

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Composition Of The Company's Loan And Lease Portfolio) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	$ 598,616	$ 583,405
Net deferred loan origination costs	523	394
Allowance for loan losses	(10,208)	(11,495)
Loans, net	588,408	571,910
Residential Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	70,430	73,579
Commercial And Multi-Family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	320,860	306,683
Construction-Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	2,008	2,392
Construction-Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	35,581	27,887
Home Equities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	56,466	54,673
Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	485,345	465,214
Direct Financing Leases [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	2,440	6,021
Commercial And Industrial Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	106,794	109,513
Consumer Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	1,359	1,677
Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total gross loans	$ 2,155	$ 586

XML

Net Periodic Benefit Costs (Defined Benefit Pension Plan And Supplemental Executive Retirement Plan) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 54	$ 54	$ 160	$ 163
Expected return on plan assets	(57)	(57)	(170)	(171)
Amortization of the net loss	16	7	47	20
Net periodic cost	13	4	37	12
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	45	45	135	135
Interest cost	39	47	116	142
Expected return on plan assets
Amortization of prior service cost	22	21	65	65
Amortization of the net loss	27	3	81	8
Net periodic cost	$ 133	$ 116	$ 397	$ 350

XML

Per Share Data (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Per Share Data [Abstract]
Weighted average number of shares outstanding, dilutive	24,321	1,767	13,436	6,331
Potential anti-dilutive shares	71,234	157,054	161,596	166,155

XML

Organization And Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by Evans Bancorp, Inc. (the "Company"), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the "Bank"), and the Bank's subsidiaries, Evans National Leasing, Inc. ("ENL"), Evans National Holding Corp. ("ENHC") and Suchak Data Systems, LLC ("SDS"); and (ii) Evans National Financial Services, LLC ("ENFS"), and ENFS's subsidiary, The Evans Agency, LLC ("TEA"), and TEA's subsidiaries, Frontier Claims Services, Inc. ("FCS") and ENB Associates Inc. ("ENBA"), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles ("GAAP") and with general practice within the industries in which it operates. Except as the context otherwise requires, the Company and its direct and indirect subsidiaries are collectively referred to in this report as the "Company."

The accompanying consolidated financial statements are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Company's financial position and results of operations for the interim periods have been made. Certain reclassifications have been made to the 2011 unaudited consolidated financial statements to conform to the presentation used in 2012.

The results of operations for the three and nine month periods ended September 30, 2012 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011. The Company has evaluated subsequent events for potential recognition and/or disclosure through the date of filing.

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Troubled Restructured Loans And Leases) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	$ 10,486	$ 7,731
Troubled restructured loans and leases, Nonaccruing	6,600	7,059
Troubled restructured loans and leases, Accruing	3,886	672
Troubled restructured loans and leases, Related Allowance	858	1,102
Commercial And Industrial [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	2,681	1,432
Troubled restructured loans and leases, Nonaccruing	981	1,362
Troubled restructured loans and leases, Accruing	1,700	70
Troubled restructured loans and leases, Related Allowance	403	64
Residential Real Estate: Residential [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	518
Troubled restructured loans and leases, Nonaccruing	518
Troubled restructured loans and leases, Accruing
Troubled restructured loans and leases, Related Allowance
Residential Real Estate: Construction [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total
Troubled restructured loans and leases, Nonaccruing
Troubled restructured loans and leases, Accruing
Troubled restructured loans and leases, Related Allowance
Commercial Real Estate: Commercial [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	5,062	5,258
Troubled restructured loans and leases, Nonaccruing	4,259	5,258
Troubled restructured loans and leases, Accruing	803
Troubled restructured loans and leases, Related Allowance	383	708
Commercial Real Estate: Construction [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	1,669
Troubled restructured loans and leases, Nonaccruing	735
Troubled restructured loans and leases, Accruing	934
Troubled restructured loans and leases, Related Allowance
Home Equities [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	323	327
Troubled restructured loans and leases, Accruing	323	327
Direct Financing Leases [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total	233	714
Troubled restructured loans and leases, Nonaccruing	107	439
Troubled restructured loans and leases, Accruing	126	275
Troubled restructured loans and leases, Related Allowance	72	330
Consumer Loans [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total
Troubled restructured loans and leases, Nonaccruing
Troubled restructured loans and leases, Accruing
Troubled restructured loans and leases, Related Allowance
Other [Member]
Troubled Debt Restructured Loans And Leases [Line Items]
Troubled restructured loans and leases, Total
Troubled restructured loans and leases, Nonaccruing
Troubled restructured loans and leases, Accruing
Troubled restructured loans and leases, Related Allowance

XML

Securities (Unrealized Losses On Available For Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investment [Line Items]
Total temporarily impaired securities, Less than 12 months, Fair Value	$ 4,692	$ 2,640
Total temporarily impaired securities, Less than 12 months, Unrealized Losses	(23)	(13)
Total temporarily impaired securities, 12 months or longer, Fair Value	1,594	1,310
Total temporarily impaired securities, 12 months or longer, Unrealized Losses	(5)	(6)
Total temporarily impaired securities, Total, Fair Value	6,286	3,950
Total temporarily impaired securities, Total, Unrealized Losses	(28)	(19)
US States and Political Subdivisions Debt Securities [Member]
Investment [Line Items]
Held To Maturity, Less than 12 months, Fair Value	2,428	2,239
Held To Maturity, Less than 12 months, Unrealized Losses	(7)	(12)
Held To Maturity, 12 months or longer, Fair Value	1,594	1,006
Held To Maturity, 12 months or longer, Unrealized Losses	(5)	(3)
Held To Maturity, Total, Fair Value	4,022	3,245
Held To Maturity, Total, Unrealized Losses	(12)	(15)
US Government Agencies Debt Securities [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value
Available for Sale, Less than 12 months, Unrealized Losses
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value
Available for Sale, Total, Unrealized Losses
US States and Political Subdivisions Debt Securities [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value	272	401
Available for Sale, Less than 12 months, Unrealized Losses	(3)	(1)
Available for Sale, 12 months or longer, Fair Value		304
Available for Sale, 12 months or longer, Unrealized Losses		(3)
Available for Sale, Total, Fair Value	272	705
Available for Sale, Total, Unrealized Losses	(3)	(4)
Debt Securities [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value	272	401
Available for Sale, Less than 12 months, Unrealized Losses	(3)	(1)
Available for Sale, 12 months or longer, Fair Value	0	304
Available for Sale, 12 months or longer, Unrealized Losses	0	(3)
Available for Sale, Total, Fair Value	272	705
Available for Sale, Total, Unrealized Losses	(3)	(4)
FNMA [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value
Available for Sale, Less than 12 months, Unrealized Losses
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value
Available for Sale, Total, Unrealized Losses
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value	1,992
Available for Sale, Less than 12 months, Unrealized Losses	(13)
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value	1,992
Available for Sale, Total, Unrealized Losses	(13)
GNMA [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value
Available for Sale, Less than 12 months, Unrealized Losses
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value
Available for Sale, Total, Unrealized Losses
CMO'S [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value
Available for Sale, Less than 12 months, Unrealized Losses
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value
Available for Sale, Total, Unrealized Losses
Collateralized Mortgage Backed Securities [Member]
Investment [Line Items]
Available for Sale, Less than 12 months, Fair Value	1,992
Available for Sale, Less than 12 months, Unrealized Losses	(13)
Available for Sale, 12 months or longer, Fair Value
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Fair Value	1,992
Available for Sale, Total, Unrealized Losses	$ (13)

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Securities (Scheduled Maturities Of Debt And Mortgage Backed Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Securities [Abstract]
Debt securities available for sale, Due in one year or less, Amortized cost	$ 2,270	$ 2,426
Debt securities available for sale, Due after one year through five years, Amortized cost	16,247	18,454
Debt securities available for sale, Due after five years through ten years, Amortized cost	26,697	24,995
Debt securities available for sale, Due after ten years, Amortized cost	8,102	13,759
Debt securities available for sale, Amortized cost	53,316	59,634
Debt securities available for sale, Due in one year or less, Fair Value	2,286	2,453
Debt securities available for sale, Due after one year through five years, Fair Value	17,018	19,231
Debt securities available for sale, Due after five years through ten years, Fair Value	28,042	26,238
Debt securities available for sale, Due after ten years, Fair Value	8,942	14,656
Debt securities available for sale, Fair Value	56,288	62,578
Mortgage-backed securities available for sale, Amortized cost	34,014	36,214
Mortgage-backed securities available for sale, Fair value	35,590	37,403
Debt securities available for sale, Total securities designated as available for sale, Amortized cost	87,330	95,848
Debt securities available for sale, Total securities designated as available for sale, Fair Value	91,878	99,981
Debt securities held to maturity, Due in one year or less, Amortized cost	2,435	2,656
Debt securities held to maturity, Due after one year through five years, Amortized cost	400	518
Debt securities held to maturity, Due after five years through ten years, Amortized cost	516	40
Debt securities held to maturity, Due after ten years, Amortized cost	683	588
Debt securities held to maturity, Amortized cost	4,034	3,802
Debt securities held to maturity, Due in one year or less, Fair Value	2,428	2,644
Debt securites held to maturity, Due after one year through five years, Fair Value	406	529
Debt securites held to maturity, Due after five years through ten years, Fair Value	489	42
Debt securities held to maturity, Due after ten years, Fair Value	699	596
Debt securities held to maturity, Fair Value	$ 4,022	$ 3,811

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Loans, Leases, And The Allowance For Loan And Lease Losses (Troubled Debt Restructurings Activity) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	2	4
Pre-Modification Outstanding Recorded Investment	$ 1,680	$ 1,936
Post-Modification Outstanding Recorded Investment	1,680	1,936
Residential Real Estate: Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	2
Pre-Modification Outstanding Recorded Investment	475	518
Post-Modification Outstanding Recorded Investment	475	518
Residential Real Estate: Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Commercial Real Estate: Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	3
Pre-Modification Outstanding Recorded Investment	260	982
Post-Modification Outstanding Recorded Investment	260	982
Commercial Real Estate: Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	2	2
Pre-Modification Outstanding Recorded Investment	1,669	1,669
Post-Modification Outstanding Recorded Investment	1,669	1,669
Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Direct Financing Leases [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Consumer Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Other [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment

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Fair Value Measurements (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 item	Dec. 31, 2011
Impaired Financing Receivable, Related Allowance	$ 1,347	$ 1,639
Impaired Financing Receivable, Recorded Investment	$ 12,872	$ 11,950
Appraisal policy, internal loan rating scale	The Company has an appraisal policy in which appraisals are obtained upon a commercial loan being downgraded on the Company internal loan rating scale to a 5 (special mention) or a 6 (substandard) depending on the amount of the loan, the type of loan and the type of collateral. All impaired commercial loans are either graded a 6 or 7 on the internal loan rating scale. For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be impaired, whichever occurs first. Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and impaired for at least one year more, management may require another follow-up appraisal.
Special mention, internal loan rating	5
Substandard, internal loan rating	6
Impaired commercial loans, internal loan rating	7
Minimum [Member]
Discount on appraisals of the collateral securing the loan, range	10.00%
Number of years after loan has been downgraded, follow-up appraisal	1 year
Maximum [Member]
Discount on appraisals of the collateral securing the loan, range	50.00%

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Dec. 31, 2010
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	429		407
Fair Value, Measurements, Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	429	448	407	353	442	388
US Government Agencies Debt Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
US Government Agencies Debt Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	24,514		30,252
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	24,514		30,252
US States and Political Subdivisions Debt Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
US States and Political Subdivisions Debt Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	31,774		32,326
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	31,774		32,326
Collateralized Mortgage Backed Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
Collateralized Mortgage Backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	35,590		37,403
Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 35,590		$ 37,403

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Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
OPERATING ACTIVITIES:
Interest received	$ 24,648	$ 23,607
Fees received	8,794	9,352
Interest paid	(4,326)	(5,364)
Cash paid to employees and vendors	(18,976)	(17,359)
Cash contributed to pension plan	(340)	(120)
Income taxes paid	(2,274)	(1,983)
Proceeds from sale of loans held for resale	17,407	15,751
Originations of loans held for resale	(16,242)	(18,192)
Net cash provided by operating activities	8,691	5,692
Available for sales securities:
Available for sales securities, Purchases	(25,957)	(15,626)
Available for sales securities, Proceeds from sales		770
Available for sales securities, Proceeds from maturities, calls, and payments	34,409	13,654
Held to maturity securities:
Held to maturity securities, Purchases	(1,567)	(679)
Held to maturity securities, Proceeds from maturities, calls, and payments	1,335	396
Cash paid for bank owned life insurance		(2,000)
Additions to properties and equipment	(1,453)	(541)
Net increase in loans	(18,045)	(40,097)
Net cash used in investing activities	(11,278)	(44,123)
FINANCING ACTIVITIES:
Repayments of borrowings	(2,929)	(13,065)
Net increase in deposits	56,528	68,781
Dividends paid	(909)	(816)
Issuance of common stock	199	178
Net cash provided by financing activities	52,889	55,078
Net increase in cash and equivalents	50,302	16,647
CASH AND CASH EQUIVALENTS:
Beginning of period	14,678	13,722
End of period	64,980	30,369
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income	6,009	4,773
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,175	1,065
Deferred tax expense	476	36
Provision for loan and lease losses	62	1,656
Net gain on sales of securities		(26)
Premium on loans sold	(257)	(105)
Stock options expense	233	200
Proceeds from sale of loans held for resale	17,407	15,751
Originations of loans held for resale	(16,242)	(18,192)
Cash contributed to pension plan	(340)	(120)
Changes in assets and liabilities affecting cash flow:
Other assets	1,717	(562)
Other liabilities	(1,549)	1,216
NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 8,691	$ 5,692

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Fair Value Measurements (Changes In Fair Value For Mortgage Servicing Rights) (Details) (Fair Value, Measurements, Recurring Basis [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Fair Value, Measurements, Recurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights, Beginning balance	$ 448	$ 442	$ 407	$ 388
Losses included in earnings	(67)	(108)	(121)	(145)
Additions from loan sales	48	19	143	110
Mortgage servicing rights, Ending balance	$ 429	$ 353	$ 429	$ 353

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Loans, Leases, And The Allowance For Loan And Lease Losses (Summary Of Activity In The Allowance For Loan And Lease Losses According To Portfolio Segment) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Commercial And Industrial [Member]	Sep. 30, 2011 Commercial And Industrial [Member]	Sep. 30, 2012 Commercial And Industrial [Member]	Sep. 30, 2011 Commercial And Industrial [Member]	Sep. 30, 2012 Commercial Real Estate Mortgages [Member]	Sep. 30, 2011 Commercial Real Estate Mortgages [Member]	Sep. 30, 2012 Commercial Real Estate Mortgages [Member]	Sep. 30, 2011 Commercial Real Estate Mortgages [Member]	Sep. 30, 2012 Consumer Loans [Member]	Sep. 30, 2011 Consumer Loans [Member]	Sep. 30, 2012 Consumer Loans [Member]	Sep. 30, 2011 Consumer Loans [Member]	Sep. 30, 2012 Residential Mortgages [Member]	Sep. 30, 2011 Residential Mortgages [Member]	Sep. 30, 2012 Residential Mortgages [Member]	Sep. 30, 2011 Residential Mortgages [Member]	Sep. 30, 2012 Home Equities [Member]	Sep. 30, 2011 Home Equities [Member]	Sep. 30, 2012 Home Equities [Member]	Sep. 30, 2011 Home Equities [Member]	Sep. 30, 2012 Direct Financing Leases [Member]	Sep. 30, 2011 Direct Financing Leases [Member]	Sep. 30, 2012 Direct Financing Leases [Member]	Sep. 30, 2011 Direct Financing Leases [Member]	Sep. 30, 2011 Unallocated [Member]	Sep. 30, 2012 Unallocated [Member]	Jun. 30, 2012 Unallocated [Member]	Dec. 31, 2011 Unallocated [Member]	Jun. 30, 2011 Unallocated [Member]
Allowance for loan and lease losses:
Beginning balance	$ 10,658	$ 10,667	$ 11,495	$ 10,424	$ 4,216	$ 3,571	$ 4,085	$ 3,435	$ 4,377	$ 4,294	$ 4,670	$ 4,252	$ 48	$ 44	$ 36	$ 29	$ 698	$ 578	$ 793	$ 548	$ 803	$ 560	$ 768	$ 540	$ 367	$ 1,471	$ 994	$ 1,471	$ 149	$ 149	$ 149	$ 149	$ 149
Charge-offs	(528)	(139)	(1,523)	(1,416)	(406)	(101)	(831)	(1,225)		(32)	(546)	(174)	(9)	(6)	(19)	(17)	(11)		(12)		(102)		(115)
Recoveries	69	21	174	44	67	12	137	28		7	15	7	2	2	16	8			0				6	1
Provision	9	159	62	1,656	(184)	183	302	1,427	308	(25)	546	159	(10)	19	(2)	39	0	118	(94)	148	27	106	69	125	(132)	(242)	(759)	(242)	0
Ending balance	10,208	10,708	10,208	10,708	3,693	3,665	3,693	3,665	4,685	4,244	4,685	4,244	31	59	31	59	687	696	687	696	728	666	728	666	235	1,229	235	1,229	149	149	149	149	149
Individually evaluated for impairment	938	1,094	938	1,094	493	48	493	48	359	574	359	574	14	10	14	10	0		0		0		0		72	462	72	462
Collectively evaluated for impairment	9,270	9,614	9,270	9,614	3,200	3,617	3,200	3,617	4,326	3,670	4,326	3,670	17	49	17	49	687	696	687	696	728	666	728	666	163	767	163	767	149	149
Allowance for loan and lease losses, Total	10,208	10,708	10,208	10,708	3,693	3,665	3,693	3,665	4,685	4,244	4,685	4,244	31	59	31	59	687	696	687	696	728	666	728	666	235	1,229	235	1,229	149	149	149	149	149
Loans and leases:
Individually evaluated for impairment	10,235	12,584	10,235	12,584	1,472	2,504	1,472	2,504	6,367	8,566	6,367	8,566	37	52	37	52	1,251		1,251		875	327	875	327	233	1,135	233	1,135
Collectively evaluated for impairment	587,834	555,551	587,834	555,551	105,322	107,543	105,322	107,543	350,074	310,723	350,074	310,723	3,453	3,344	3,453	3,344	71,188	73,002	71,188	73,002	55,590	54,291	55,590	54,291	2,207	6,648	2,207	6,648
Loans acquired with deteriorated credit quality	24	79	24	79									24	79	24	79
Loans and leases, Total	$ 598,093	$ 568,214	$ 598,093	$ 568,214	$ 106,794	$ 110,047	$ 106,794	$ 110,047	$ 356,441	$ 319,289	$ 356,441	$ 319,289	$ 3,514	$ 3,475	$ 3,514	$ 3,475	$ 72,439	$ 73,002	$ 72,439	$ 73,002	$ 56,465	$ 54,618	$ 56,465	$ 54,618	$ 2,440	$ 7,783	$ 2,440	$ 7,783

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and due from banks	$ 12,232	$ 11,486
Interest-bearing deposits at banks	52,748	3,192
Securities:
Available for sale, at fair value (cost: $87,330 at September 30, 2012; $95,848 at December 31, 2011)	91,878	99,981
Held to maturity, at amortized cost (fair value: $4,022 at September 30, 2012; $3,811 at December 31, 2011)	4,034	3,802
Federal Home Loan Bank common stock, at amortized cost	1,804	1,830
Federal Reserve Bank common stock, at amortized cost	1,445	1,425
Loans and leases, net of allowance for loan and lease losses of $10,208 at and $11,495 at December 31, 2011	588,408	571,910
Properties and equipment, net of depreciation of $13,961 at September 30, 2012 and $13,145 at December 31, 2011	11,117	10,477
Goodwill	8,101	8,101
Intangible assets	391	678
Bank-owned life insurance	15,213	14,843
Other assets	11,937	13,177
TOTAL ASSETS	799,308	740,902
Deposits:
Demand	126,251	118,037
NOW	62,946	50,761
Regular savings	375,859	333,938
Time	107,674	113,467
Total deposits	672,730	616,203
Securities sold under agreement to repurchase	9,081	9,010
Other borrowings	19,000	22,000
Other liabilities	13,186	13,371
Junior subordinated debentures	11,330	11,330
Total liabilities	725,327	671,914
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,153,332 and 4,125,272 shares issued at September 30, 2012 and December 31, 2011 respectively, and 4,151,985 and 4,124,892 shares outstanding at September 30, 2012 and December 31, 2011, respectively	2,077	2,063
Capital surplus	41,693	41,275
Retained earnings	29,491	25,304
Accumulated other comprehensive gain, net of tax	720	346
Total stockholders' equity	73,981	68,988
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 799,308	$ 740,902

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Loans, Leases, And The Allowance For Loan And Lease Losses (Troubled Debt Restructurings That Subsequently Defaulted) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts		4
Recorded Investment		$ 876
Residential Real Estate: Residential [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts	1	1
Recorded Investment	44	44
Residential Real Estate: Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Recorded Investment
Commercial Real Estate: Commercial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts		4
Recorded Investment		804
Commercial Real Estate: Construction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts		1
Recorded Investment		735
Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Recorded Investment
Direct Financing Leases [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts
Recorded Investment

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Consolidated Statements Of Changes In Stockholders' Equity (USD $) In Thousands	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Total
Balance at Dec. 31, 2010	$ 2,041	$ 40,660	$ 20,836	$ (473)	$ 63,064
Net Income			4,773		4,773
Other comprehensive gain				1,613	1,613
Cash dividends			(1,638)		(1,638)
Stock options expense		200			200
Excess tax benefit from stock-based compensation		9			9
Issued restricted shares, net of forffeitures	6	(6)
Issued shares under ESPP	4	87			91
Issued shares under DRIP	3	84			87
Balance at Sep. 30, 2011	2,054	41,034	23,971	1,140	68,199
Balance at Dec. 31, 2011	2,063	41,275	25,304	346	68,988
Net Income			6,009		6,009
Other comprehensive gain				374	374
Cash dividends			(1,822)		(1,822)
Stock options expense		233			233
Issued restricted shares, net of forffeitures	6	(6)
Issued shares under ESPP	5	99			104
Issued shares under DRIP	3	92			95
Balance at Sep. 30, 2012	$ 2,077	$ 41,693	$ 29,491	$ 720	$ 73,981

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Fair Value Measurements (Estimated Fair Value Of The Company's Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Level 1, Financial Liabilities:
NOW deposits	$ 62,946	$ 50,761
Securities sold under agreement to repurchase	9,081	9,010
Level 3, Financial Liabilities:
Time deposits	107,674	113,467
Level 1 [Member] | Carrying Amount [Member]
Level 1, Financial assets:
Cash and cash equivalents	64,980	14,678
Level 1, Financial Liabilities:
Demand deposits	126,251	118,037
NOW deposits	62,946	50,761
Regular savings deposits	375,859	333,938
Junior subordinated debentures	11,330	11,330
Commitments to extend credit	76	161
Securities sold under agreement to repurchase	9,081	9,010
Level 1 [Member] | Fair Value [Member]
Level 1, Financial assets:
Cash and cash equivalents	64,980	14,678
Level 1, Financial Liabilities:
Demand deposits	126,251	118,037
NOW deposits	62,946	50,761
Regular savings deposits	375,859	333,938
Junior subordinated debentures	11,330	11,330
Commitments to extend credit	76	161
Securities sold under agreement to repurchase	9,081	9,010
Level 2 [Member] | Carrying Amount [Member]
Level 2, Financial assets:
Available for sale securities	91,878	99,981
FHLB and FRB stock	3,249	3,255
Level 2, Financial Liabilities:
Other borrowed funds	19,000	22,000
Level 2 [Member] | Fair Value [Member]
Level 2, Financial assets:
Available for sale securities	91,878	99,981
FHLB and FRB stock	3,249	3,255
Level 2, Financial Liabilities:
Other borrowed funds	19,641	22,988
Level 3 [Member] | Carrying Amount [Member]
Level 3, Financial assets:
Held to maturity securities	4,034	3,802
Loans and leases, net	588,408	571,910
Mortgage servicing rights	429	407
Level 3, Financial Liabilities:
Time deposits	107,674	113,467
Level 3 [Member] | Fair Value [Member]
Level 3, Financial assets:
Held to maturity securities	4,022	3,811
Loans and leases, net	623,825	602,534
Mortgage servicing rights	429	407
Level 3, Financial Liabilities:
Time deposits	$ 110,925	$ 116,666

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2012

Other Comprehensive Income [Abstract]

Components Of Other Comprehensive Income (Loss)

	Three months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	582		($225	)	$	357
Defined benefit pension plans:
Amortization of prior service cost		21		(8	)		13
Amortization of actuarial loss		41		(15	)		26
Total		62		(23	)		39
Other Comprehensive Income	$	644		($248	)	$	396

	Three months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	1,151			($445	)	$	706
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	1,125			($435	)	$	690
Defined benefit pension plans:
Amortization of prior service cost		23			(9	)		14
Amortization of actuarial loss		9			(4	)		5
Total		32			(13	)		19
Other Comprehensive Income	$	1,157			($448	)	$	709

	Nine months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	415		($159	)	$	256
Defined benefit pension plans:
Amortization of prior service cost		65		(25	)		40
Amortization of actuarial loss		127		(49	)		78
Total		192		(74	)		118
Other Comprehensive Income	$	607		($233	)	$	374

	Nine months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	2,563			($992	)	$	1,571
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	2,537			($982	)	$	1,555
Defined benefit pension plans:
Amortization of prior service cost		65			(24	)		41
Amortization of actuarial loss		28			(11	)		17
Total		93			(35	)		58
Other Comprehensive Income	$	2,630			($1,017	)	$	1,613

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Loans, Leases, And The Allowance For Loan And Lease Losses (Narrative) (Details) (USD $)	3 Months Ended	9 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Mar. 31, 2012	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Sep. 30, 2012 Waterford Village Bank [Member]	Sep. 30, 2012 Residential Mortgages [Member]	Sep. 30, 2011 Residential Mortgages [Member]	Sep. 30, 2012 Residential Mortgages [Member]	Sep. 30, 2011 Residential Mortgages [Member]	Dec. 31, 2011 Residential Mortgages [Member]	Sep. 30, 2012 Direct Financing Leases [Member]	Dec. 31, 2011 Direct Financing Leases [Member]	Sep. 30, 2012 Commercial And Industrial [Member]	Dec. 31, 2011 Commercial And Industrial [Member]	Sep. 30, 2012 Commercial Real Estate Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgages sold to FNMA						$ 6,000,000	$ 2,600,000	$ 17,100,000	$ 15,800,000
Loan servicing portfolio principal balance								70,500,000		62,400,000
Loan servicing portfolio, value of the mortgage servicing rights		400,000
Residential mortgage loans held-for-sale						2,700,000		2,700,000		3,600,000
Loans and leases, restructured and deemed to be a TDR		10,486,000	7,731,000								233,000	714,000	2,681,000	1,432,000
Troubled Debt Restructured Loans And Leases, Nonaccruing		6,600,000	7,059,000								107,000	439,000	981,000	1,362,000
Period of timely payments before reversion to accruing status, months		6 months
Mortgages covered under loss sharing arrangement with FDIC, balance						44,000		44,000							300,000
Allowance for loan losses		(10,208,000)	(11,495,000)		0
Liabilities assumed, acquisition					51,000,000
Loan portfolio acquired, acquisition					42,000,000
Loss sharing agreement to reimburse losses up to minimum threshold, percentage		80.00%
Loss sharing agreement threshold limit, minimum		5,600,000
Loss sharing agreement to reimburse losses for excess of minimum threshold, percentage		95.00%
Allowance for Loan and Lease Losses, Period Increase (Decrease)	100,000
Net deferred loan origination costs		$ 523,000		$ 361,000

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Contingent Liabilities And Commitments (Tables)

9 Months Ended

Sep. 30, 2012

Contingent Liabilities And Commitments [Abstract]

Summary Of Commitments And Contingent Liabilities

	September 30, 2012		December 31, 2011
	(in thousands)
Commitments to extend credit	$	137,832	$	134,204
Standby letters of credit		8,118		3,429
Total	$	145,950	$	137,633

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Consolidated Statements Of Changes In Stockholders' Equity (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Consolidated Statements Of Stockholders' Equity [Abstract]
Cash dividends per common share	$ 0.44	$ 0.4
Issued under DRIP, shares	6,680	6,172
Issued under ESPP	10,267	7,784
Issued restricted shares	11,493	11,090
Issued shares, forffeitures		1,388

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Consolidated Balance Sheets [Abstract]
Available for sale, cost	$ 87,330	$ 95,848
Held to maturity, fair value	4,022	3,811
Allowance for loan and lease losses	10,208	11,495
Properties and equipment, depreciation	$ 13,961	$ 13,145
Common stock, par value	$ 0.5	$ 0.5
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,153,332	4,125,272
Common stock, shares outstanding	4,151,985	4,124,892

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Net Periodic Benefit Costs

9 Months Ended

Sep. 30, 2012

Net Periodic Benefit Costs [Abstract]

Net Periodic Benefit Costs

9. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan. The plan covered substantially all Company employees. The plan provides benefits that are based on the employees' compensation and years of service. Under the freeze, eligible employees will receive at retirement the benefits already earned through January 31, 2008, but have not accrued any additional benefits since then. As a result, service cost is no longer incurred.

The Bank used an actuarial method of amortizing prior service cost and unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank used recognized the prior service cost and net gains or losses over the average remaining service period of active employees.

The Bank also maintains a nonqualified supplemental executive retirement plan covering certain members of the Company's senior management. The Bank uses an actuarial method of amortizing unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank uses recognizes the net gains or losses over the average remaining service period of active employees.

The Bank contributed $340 thousand to the defined benefit pension plan in the first nine months of 2012 and plans to contribute an additional $30 thousand before the end of the year.

The following table presents the net periodic cost for the Bank's defined benefit pension plan and supplemental executive retirement plan for the three and nine month periods ended September 30, 2012 and 2011:

Three months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	45	$	45
Interest cost		54			54			39		47
Expected return on plan assets		(57	)		(57	)		—		—
Amortization of prior service cost		—			—			22		21
Amortization of the net loss		16			7			27		3
Net periodic cost	$	13		$	4		$	133	$	116

Nine months ended September 30,

(in thousands)

							Supplemental Executive
	Pension Benefits						Retirement Plan
	2012			2011			2012		2011
Service cost	$	—		$	—		$	135	$	135
Interest cost		160			163			116		142
Expected return on plan assets		(170	)		(171	)		—		—
Amortization of prior service cost		—			—			65		65
Amortization of the net loss		47			20			81		8
Net periodic cost	$	37		$	12		$	397	$	350

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Document And Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 30, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Sep. 30, 2012
Amendment Flag	false
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012
Entity Registrant Name	EVANS BANCORP INC
Entity Central Index Key	0000842518
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,157,422

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

10. RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update ("ASU") 2011-03, Reconsideration of Effective Control for Repurchase Agreements. This ASU relates to accounting for repurchase agreements ("repos") and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. During the global economic crisis, capital market participants questioned the necessity and usefulness of the collateral maintenance guidance for the transferor's ability criterion when determining whether a repo should be accounted for as a sale or as a secured borrowing. The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee, and (2) the collateral maintenance implementation guidance related to that criterion. The new guidance is effective for interim and annual periods beginning after December 15, 2011. The Company adopted this ASU effective January 1, 2012, which did not have a significant impact on the Company's repo accounting.

ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRS"). This ASU was issued to provide largely identical guidance about fair value measurement and disclosure requirements for IFRS and U.S. GAAP. The new guidance clarifies that the application of the highest and best use and valuation premise concepts are not relevant when measuring the fair value of financial assets or liabilities. This ASU also requires new and enhanced disclosures on the quantification and valuation process for significant unobservable inputs, transfers between Levels 1 and 2 and the categorization of all fair value measurements in the fair value hierarchy, even when those measurements are only for disclosure purposes. The Company adopted this ASU effective January 1, 2012. The enhanced disclosures are included in Note 3, "Fair Value Measurements."

ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. The objective of this ASU is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate the convergence of U.S. GAAP and IFRS, the Financial Accounting Standards Board ("FASB") decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in shareholders' equity. The amendments require that all non-owner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income. The amendments in this ASU will be applied retrospectively. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. In the interim period ended March 31, 2012, the Company adopted this ASU and elected to use the two-statement approach.

ASU No. 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This ASU permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it need not perform the two-step impairment test. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted this ASU effective January 1, 2012. The Company will evaluate the need for a two-step goodwill impairment test each period subsequent to adoption. The Company typically performs its goodwill impairment test as of December 31^st on an annual basis. As there were no triggering events in the quarter ended September 30, 2012, management did not test goodwill for impairment. The Company does not expect adoption of this ASU to have a material effect on its financial statements.

ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU No. 2011-12 defers the effective date of the requirement to present separate line items on the income statement for reclassification adjustments of items out of accumulated other comprehensive income into net income for all periods presented. The ASU does not change the other requirements of FASB ASU No. 2011-05, Presentation of Comprehensive Income. Entities are still required to present reclassification adjustments within other comprehensive income either on the face of the statement that reports other comprehensive income or in the notes to the financial statements. The requirement to present comprehensive income in either a single continuous statement or two consecutive condensed statements remains for both annual and interim reporting. The deferral of the requirement for the presentation of reclassification adjustments is intended to be temporary until the FASB reconsiders the operational concerns and needs of financial statement users.

The Company adopted the amendments in this Update at the same time as ASU 2011-05, which became effective beginning in the interim period ended March 31, 2012. As the Company had no reclassifications adjustments within other comprehensive income, this Update had no impact on the Company's financial statements.

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Consolidated Statements Of Income (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
INTEREST INCOME
Loans and leases	$ 7,567	$ 7,254	$ 22,596	$ 21,486
Interest bearing deposits at banks	15	7	39	19
Securities:
Taxable	450	571	1,452	1,596
Non-taxable	277	337	879	1,096
Total interest income	8,309	8,169	24,966	24,197
INTEREST EXPENSE
Deposits	1,106	1,386	3,494	4,268
Other borrowings	170	187	533	587
Junior subordinated debentures	88	82	261	245
Total interest expense	1,364	1,655	4,288	5,100
NET INTEREST INCOME	6,945	6,514	20,678	19,097
PROVISION FOR LOAN AND LEASE LOSSES	9	159	62	1,656
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES	6,936	6,355	20,616	17,441
NON-INTEREST INCOME
Bank charges	487	498	1,360	1,301
Insurance service and fees	1,774	1,849	5,363	5,539
Data center income	103	127	347	558
Net gain on sales (and calls) of securities		26		26
Gain on loans sold	129	33	257	105
Bank-owned life insurance	118	117	370	331
Other	605	534	1,846	1,710
Total non-interest income	3,216	3,184	9,543	9,570
NON-INTEREST EXPENSE
Salaries and employee benefits	4,778	4,073	13,221	11,889
Occupancy	679	777	2,009	2,370
Repairs and maintenance	210	184	556	498
Advertising and public relations	119	188	600	565
Professional services	356	510	1,462	1,319
Technology and communications	320	212	860	710
Amortization of intangibles	77	120	287	376
FDIC insurance	118	135	392	500
Other	699	604	2,201	1,942
Total non-interest expense	7,356	6,803	21,588	20,169
INCOME BEFORE INCOME TAXES	2,796	2,736	8,571	6,842
INCOME TAX PROVISION	660	810	2,562	2,069
NET INCOME	$ 2,136	$ 1,926	$ 6,009	$ 4,773
Net income per common share-basic	$ 0.51	$ 0.47	$ 1.45	$ 1.16
Net income per common share-diluted	$ 0.51	$ 0.47	$ 1.45	$ 1.16
Cash dividends per common share	$ 0.22	$ 0.20	$ 0.44	$ 0.4
Weighted average number of common shares outstanding	4,153,246	4,107,414	4,139,951	4,097,788
Weighted average number of diluted shares outstanding	4,177,567	4,109,181	4,153,387	4,104,119

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Loans, Leases, And The Allowance For Loan And Lease Losses

9 Months Ended

Sep. 30, 2012

Loans, Leases, And The Allowance For Loan And Lease Losses [Abstract]

Loans, Leases, And The Allowance For Loan And Lease Losses

4. LOANS, LEASES, AND THE ALLOWANCE FOR LOAN AND LEASE LOSSES

Loan and Lease Portfolio Composition

The following table presents selected information on the composition of the Company's loan and lease portfolio as of the dates indicated:

	September 30, 2012			December 31, 2011
	(in thousands)
Mortgage loans on real estate:
Residential Mortgages	$	70,430		$	73,579
Commercial and multi-family		320,860			306,683
Construction-Residential		2,008			2,392
Construction-Commercial		35,581			27,887
Home equities		56,466			54,673
Total real estate loans		485,345			465,214
Direct financing leases		2,440			6,021
Commercial and industrial loans		106,794			109,513
Consumer loans		1,359			1,677
Other		2,155			586
Net deferred loan origination costs		523			394
Total gross loans		598,616			583,405
Allowance for loan losses		(10,208	)		(11,495	)
Loans, net	$	588,408		$	571,910

The Bank sells certain fixed rate residential mortgages to FNMA, while maintaining the servicing rights for those mortgages. During the three and nine month periods ended September 30, 2012, the Bank sold mortgages to FNMA totaling $6.0 million and $17.1 million, respectively as compared with $2.6 million and $15.8 million sold during the three and nine month periods ended September 30, 2011, respectively. At September 30, 2012, the Bank had a loan servicing portfolio principal balance of $70.5 million upon which it earns servicing fees, as compared with $62.4 million at December 31, 2011. The value of the mortgage servicing rights for that portfolio was $0.4 million at September 30, 2012 and December 31, 2011. Residential mortgage loans held-for-sale were $2.7 million at September 30, 2012, compared with $3.6 million at December 31, 2011. The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.

As noted in Note 1, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2011. Disclosures related to the basis for accounting for loans and leases, the method for recognizing interest income on loans and leases, the policy for placing loans and leases on nonaccrual status and the subsequent recording of payments and resuming accrual of interest, the policy for determining past due status, a description of the Company's accounting policies and methodology used to estimate the allowance for loan and lease losses, the policy for charging off loans and leases, the accounting policies for impaired loans, and more descriptive information on the Company's credit risk ratings are all contained in the Notes to the Audited Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2011. Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2011 are consistent with those utilized in the nine months ended September 30, 2012.

Credit Quality Indicators

The Bank monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators ("CQI"). The primary CQI for its commercial mortgage and commercial and industrial ("C&I") portfolios is the individual loan's credit risk rating. The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for loan and lease losses:

• 1-3-Pass

• 4-Watch

• 5-O.A.E.M. (Other Assets Especially Mentioned) or Special Mention

• 6-Substandard

• 7-Doubtful

• 8-Loss

The Company's consumer loans, including residential mortgages and home equities, and commercial leases are not individually risk rated or reviewed in the Company's loan review process. Consumers are not required to provide the Company with updated financial information as is a commercial customer. Consumer loans also carry smaller balances. Given the lack of updated information since the initial underwriting of the loan and small size of individual loans, the Company uses delinquency status as the credit quality indicator for consumer loans.

In the first quarter of 2012, the Company changed its methodology for reserving for non-accruing residential mortgages and home equities in response to the Interagency Supervisory Guidance issued by federal banking regulators in January 2012. Previously, estimated loss percentages were applied to pools of non-accruing residential mortgages and home equity loans. The Company now evaluates required loss reserves on an individual loan basis. This change resulted from the Company's successful efforts to obtain more information about the financial status of borrowers and the fair value of loan collateral. The change from reserving for non-accruing residential mortgages and home equities on an individual basis versus a pooled approach resulted in a reduction of allowance for loan and lease losses of $0.1 million.

There were no other changes in the Company's allowance for loan and lease loss methodology in the nine month period ended September 30, 2012.

The following tables provide data, at the class level, of credit quality indicators of certain loans and leases for the dates specified:

September 30, 2012
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	31,580	$	274,012	$	305,592	$	77,030
4		1,538		36,020		37,558		22,288
5		1,728		3,946		5,674		3,742
6		735		3,576		4,311		3,000
7		—		3,306		—		734
Total	$	35,581	$	320,860	$	353,135	$	106,794

December 31, 2011
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	21,607	$	250,575	$	272,182	$	77,017
4		4,421		45,505		49,926		21,448
5		362		1,758		2,120		5,939
6		1,497		8,845		10,342		4,761
7		—		—		—		348
Total	$	27,887	$	306,683	$	334,570	$	109,513

Past Due Loans and Leases

The following tables provide an analysis of the age of the recorded investment in loans and leases that are past due as of the dates indicated:

September 30, 2012
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	175	$	2	$	571	$	748	$	106,046	$	106,794	$	0	$	1,452
Residential real estate:
Residential		108		68		941		1,117		69,313		70,430		209		1,251
Construction		—		—		—		—		2,008		2,008		—		—
Commercial real estate:
Commercial		625		1,113		1,375		3,113		317,747		320,860		—		4,829
Construction		—		—		735		735		34,846		35,581		—		735
Home equities		288		122		515		925		55,541		56,466		71		552
Direct financing leases		13		10		184		207		2,233		2,440		—		255
Consumer		4		3		34		41		1,318		1,359		—		61
Other		—		—		—		—		2,678		2,678		—		—
Total Loans	$	1,213	$	1,318	$	4,355	$	6,886	$	591,730	$	598,616	$	280	$	9,135

December 31, 2011
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	279	$	94	$	1,702	$	2,075	$	107,438	$	109,513	$	—	$	2,180
Residential real estate:
Residential		735		55		1,062		1,852		71,727		73,579		73		1,048
Construction		—		—		167		167		2,225		2,392		—		167
Commercial real estate:
Commercial		3,086		64		2,686		5,836		300,847		306,683		59		6,858
Construction		—		—		2,609		2,609		25,278		27,887		1,167		1,442
Home equities		481		110		683		1,274		53,399		54,673		—		946
Direct financing leases		327		26		754		1,107		4,914		6,021		—		1,160
Consumer		56		5		4		65		1,612		1,677		—		76
Other		—		—		—		—		980		980		—		—
Total Loans	$	4,964	$	354	$	9,667	$	14,985	$	568,420	$	583,405	$	1,299	$	13,877

Allowance for loan and lease losses

The following tables present the activity in the allowance for loan and lease losses according to portfolio segment, for the nine month periods ended September 30, 2012 and September 30, 2011:

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,085		$	4,670		$	36		$	793		$	768		$	994		$	149	$	11,495
Charge-offs		(831	)		(546	)		(19	)		(12	)		(115	)		—			—		(1,523	)
Recoveries		137			15			16			0			6			—			—		174
Provision		302			546			(2	)		(94	)		69			(759	)		—		62
Ending balance	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Allowance for loan and lease losses:
Individually evaluated for impairment	$	493		$	359		$	14		$	0		$	0		$	72		$	—	$	938
Collectively evaluated for impairment		3,200			4,326			17			687			728			163			149		9,270
Loans acquired with deteriorated credit quality		—			—			—			—			—			—			—		—
Total	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	1,472		$	6,367		$	37		$	1,251		$	875		$	233		$	—	$	10,235
Collectively evaluated for impairment		105,322			350,074			3,453			71,188			55,590			2,207			—		587,834
Loans acquired with deteriorated credit quality		—			—			24			—			—			—			—		24
Total	$	106,794		$	356,441		$	3,514		$	72,439		$	56,465		$	2,440		$	—	$	598,093

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $523 thousand in net deferred loan and lease origination costs as of September 30, 2012.

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,435		$	4,252		$	29		$	548	$	540	$	1,471		$	149	$	10,424
Charge-offs		(1,225	)		($174	)		($17	)		—		—		—			—		(1,416	)
Recoveries		28			7			8			—		1		—			—		44
Provision	$	1,427		$	159		$	39		$	148	$	125	($	242	)	$	0		1,656
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Allowance for loan and lease losses:
Individually evaluated for impairment	$	48		$	574		$	10		$	—	$	—	$	462		$	—	$	1,094
Collectively evaluated for impairment		3,617		$	3,670		$	49			696		666		767			149		9,614
Loans acquired with deteriorated credit quality		—			—			—			—		—		—			—		—
Total	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	2,504		$	8,566		$	52		$	—	$	327	$	1,135		$	—	$	12,584
Collectively evaluated for impairment		107,543		$	310,723		$	3,344			73,002		54,291		6,648			—		555,551
Loans acquired with deteriorated credit quality		—			—			79			—		—		—			—		79
Total	$	110,047		$	319,289		$	3,475		$	73,002	$	54,618	$	7,783		$	—	$	568,214

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $361 thousand in net deferred loan and lease origination costs as of September 30, 2011.

The following tables present the activity in the allowance for loan and lease losses according to portfolio segment, for the three month periods ended September 30, 2012 and September 30, 2011:

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages		Consumer			Residential Mortgages			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,216		$	4,377	$	48		$	698		$	803		$	367		$	149	$	10,658
Charge-offs		(406	)		—		(9	)		(11	)		(102	)		—			—		(528	)
Recoveries		67			—		2			—			—			—			—		69
Provision		(184	)		308		(10	)		0			27			(132	)		—		9
Ending balance	$	3,693		$	4,685	$	31		$	687		$	728		$	235		$	149	$	10,208

23

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages			Consumer			Residential Mortgages		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,571		$	4,294		$	44		$	578	$	560	$	1,471		$	149	$	10,667
Charge-offs		(101	)		(32	)		(6	)		—		—		—			—		(139	)
Recoveries		12			7			2			—		—		—			—		21
Provision		183			(25	)		19			118		106		(242	)		—		159
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708

Impaired Loans and Leases

The following tables provide data, at the class level, of impaired loans and leases as of the dates indicated:

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	345	$	480	$	0	$	425	$	16	$	5
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		1,901		2,031		—		1,909		98		3
Construction		735		814		—		746		20		—
Home equities		875		1,009		—		978		24		9
Direct financing leases		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	5,107	$	5,697	$	—	$	5,311	$	188	$	23

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	2,806	$	3,124	$	782	$	3,041	$	45	$	87
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		3,731		3,984		383		3,747		156		—
Construction		934		934		49		934		—		22
Home equities		—		—		—		—		—		—
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		0
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,765	$	8,424	$	1,347	$	8,107	$	222	$	109

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	3,151	$	3,604	$	782	$	3,466	$	61	$	92
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		5,632		6,015		383		5,656		254		3
Construction		1,669		1,748		49		1,680		20		22
Home equities		875		1,009		—		978		24		9
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	12,872	$	14,121	$	1,347	$	13,418	$	410	$	132

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	261	$	270	$	—	$	371	$	9	$	7
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		2,723		2,916		—		2,503		215		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		327		327		—		331		—		9
Direct financing leases		—		—		—		—		—		—
Consumer		32		95		—		79		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	4,785	$	5,105	$	—	$	4,639	$	279	$	63

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	1,969	$	2,007	$	405	$	2,151	$	58	$	36
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		4,135		4,418		844		4,257		267		—
Construction		—		—		—		—		—		—
Home equities		170		170		31		170		4		2
Direct financing leases		847		907		350		1,214		60		1
Consumer		44		49		9		56		4		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,165	$	7,551	$	1,639	$	7,848	$	393	$	39

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	2,230	$	2,277	$	405	$	2,522	$	67	$	43
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		6,858		7,334		844		6,760		482		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		497		497		31		501		4		11
Direct financing leases		847		907		350		1,214		60		1
Consumer		76		144		9		135		11		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	11,950	$	12,656	$	1,639	$	12,487	$	672	$	102

Non-performing loans and leases

The following table sets forth information regarding non-performing loans and leases as of the dates specified:

	September 30, 2012			December 31, 2011
	(in thousands)
Non-accruing loans and leases:
Commercial and industrial loans	$	1,452		$	2,180
Residential real estate:
Residential		1,251			1,048
Construction		—			167
Commercial real estate:
Commercial and multi-family		4,829			6,858
Construction		735			1,442
Home equities		552			946
Direct financing leases		255			1,160
Consumer loans		61			76
Other		—			—
Total non-accruing loans and leases	$	9,135		$	13,877
Accruing loans 90+ days past due		280			1,299
Total non-performing loans and leases	$	9,415		$	15,176
Total non-performing loans and leases to total assets		1.18	%		2.05	%
Total non-performing loans and leases to total loans and leases		1.57	%		2.60	%

Troubled debt restructurings

The Company had $10.5 million in loans and leases that were restructured in a troubled debt restructuring ("TDR") at September 30, 2012, compared with $7.7 million at December 31, 2011. $6.6 million and $7.1 million of those balances were in non-accrual status at September 30, 2012 and December 31, 2011, respectively. Any TDR that is placed on non-accrual is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months. Those loans and leases that are in accruing status have shown evidence of performance for at least six months as of September 30, 2012 and December 31, 2011. One of the restructurings was made under a government assistance program in the third quarter of 2012. Two commercial mortgages with a combined balance of $0.3 million restructured in 2011 and one residential mortgage with a balance of $44 thousand restructured in the second quarter of 2012 are covered under the Bank's loss-sharing arrangement with the FDIC. All of the Company's restructurings were allowed in an effort to maximize its ability to collect on loans and leases where borrowers were experiencing financial difficulty. Modifications made to loans in a troubled debt restructuring did not have a material impact on the Company's net income for the three and nine month periods ended September 30, 2012 and 2011. The reserve for a TDR is based upon the present value of the future expected cash flows discounted at the loan's original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent. This reserve methodology is used because all TDR loans are considered impaired. As of September 30, 2012, there were no commitments to lend additional funds to debtors owing loans or leases whose terms have been modified in TDRs. The Company's TDRs involve interest only payments and lengthening of terms as concessions to try and maximize the collectability of the loans.

The OCC recently clarified the categorization of loans of borrowers who are in Chapter 7 bankruptcy in which the bankruptcy court discharges the borrower's obligation to the bank and the borrower does not reaffirm the debt. The release of the borrower's personal liability as order by the court is considered a concession and the loan would become a TDR. This guidance did not cause any loans in the Company's portfolio to become a TDR.

The following tables summarize the loans and leases that were classified as troubled debt restructurings as of the dates indicated:

	September 30, 2012
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	2,681	$	981	$	1,700	$	403
Residential real estate:
Residential		518		518		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,062		4,259		803		383
Construction		1,669		735		934		—
Home equities		323		—		323		—
Direct financing leases		233		107		126		72
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	10,486	$	6,600	$	3,886	$	858

	December 31, 2011
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,432	$	1,362	$	70	$	64
Residential real estate:
Residential		—		—		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,258		5,258		—		708
Construction		—		—		—		—
Home equities		327		—		327		—
Direct financing leases		714		439		275		330
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	7,731	$	7,059	$	672	$	1,102

The following table shows the data for TDR activity for the three and nine month periods ended September 30, 2012:

	Three Months Ended September 30, 2012						Nine Months Ended September 30, 2012
	($ in thousands)						($ in thousands)
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial and Industrial		2		1,680		1,680		4		1,936		1,936
Residential Real Estate:
Residential		1		475		475		2		518		518
Construction		—		—		—		—		—		—
Commercial Real Estate:
Commercial & Multi-Family		1		260		260		3		982		982
Construction		2		1,669		1,669		2		1,669		1,669
Home Equities		—		—		—		—		—		—
Direct financing leases		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Other		—		—		—		—		—		—

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan or lease in full. If a borrower continues to be delinquent or cannot meet the terms of a TDR and the loan or lease is determined to be uncollectible, the loan or lease will be charged off. The following table presents loans and leases which were classified as TDR's during the previous 12 months which have defaulted during the three and nine month periods ended September 30, 2012:

	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial and Industrial		—		—		4	$	876
Residential Real Estate:
Residential		1	$	44		1		44
Construction		—		—		—		—
Commercial Real Estate:
Commercial and Multi-Family		—		—		4		804
Construction		—		—		1		735
Home Equities		—		—		—		—
Direct financing leases		—		—		—		—
Consumer loans		—		—		—		—
Other		—		—		—		—

Covered Loans and the Related Allowance

On July 24, 2009, the Bank entered into a definitive purchase and assumption agreement with the FDIC under which the Bank assumed approximately $51.0 million in liabilities, consisting almost entirely of deposits, and purchased substantially all of the assets of Waterford Village Bank. The loan portfolio acquired in the transaction totaled $42.0 million. The loans acquired in that acquisition are referred to as "covered" loans because they are "covered" by a loss sharing agreement with the FDIC. The agreement calls for the FDIC to reimburse the Bank for 80% of losses up to $5.6 million and 95% of losses beyond that threshold. At acquisition, the Company marked the covered loan portfolio to its market value and the allowance for loan and lease losses related to the covered loans was zero. Since acquisition, management has provisioned for any incremental increases in estimated credit losses due to deterioration in specific loans or increased risk factors on pools of loans.. As a result of the FDIC guarantees, the provision for loan and lease losses and the allowance for loan and lease losses at September 30, 2012 and December 31, 2011 are presented net of FDIC guarantees related to covered loans. The following table depicts the allowance for loan and lease losses related to covered loans as of September 30, 2012 and December 31, 2011:

	September 30, 2012			December 31, 2011
	(in thousands)
Covered loans	$	22,540		$	26,429
Incremental estimated credit losses since acquisition		567			506
FDIC guarantee		(454	)		(405	)
Allowance for loan and lease losses, covered loans	$	113		$	101

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Fair Value Measurements

3. FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, "Fair Value Measurements and Disclosures." Those provisions relate to financial assets and liabilities carried at fair value and fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

There are three levels of inputs to fair value measurements:

• Level 1, meaning the use of quoted prices for identical instruments in active markets;

• Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; and

• Level 3, meaning the use of unobservable inputs.

Observable market data should be used when available.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011:

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Securities available-for-sale:
U.S. government agencies	$	—	$	24,514	$	—	$	24,514
States and political subdivisions		—		31,774		—		31,774
Mortgage-backed securities		—		35,590		—		35,590
Mortgage servicing rights		—		—		429		429
December 31, 2011
Securities available-for-sale:
U.S. Treasury and other U.S. government agencies	$	—	$	30,252	$	—	$	30,252
States and political subdivisions		—		32,326		—		32,326
Mortgage-backed securities		—		37,403		—		37,403
Mortgage servicing rights		—		—		407		407

Securities available for sale

Fair values for securities are determined using independent pricing services and market-participating brokers. The Company's independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data. Because many fixed income securities do not trade on a daily basis, the evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations. In addition, model processes, such as the Option Adjusted Spread model, are used to assess interest rate impact and develop prepayment scenarios. The models and the process take into account market convention. For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models. The company's service provider may occasionally determine that it does have not sufficient verifiable information to value a particular security. In these cases the Company will utilize valuations from another pricing service.

Management believes that it has a sufficient understanding of the third party service's valuation models, assumptions and inputs used in determining the fair value of securities to enable management to maintain an appropriate system of internal control. On a quarterly basis the Company reviews changes in the market value of its security portfolio. Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities. Additionally, on an annual basis the Company has its entire security portfolio priced by a second pricing service to determine consistency with another market evaluator. If, on the Company's review or in comparing with another servicer, a material difference between pricing evaluations were to exist, the Company may submit an inquiry to the service provider regarding the data used to value a particular security. If the Company determines it has market information that would support a different valuation than the initial evaluation it can submit a challenge for a change to that security's valuation. There were no material differences in valuations noted in 2012 or 2011.

Securities available for sale are classified as Level 2 in the fair value hierarchy as the valuation provided by the third-party provider uses observable market data.

Mortgage servicing rights

Mortgage servicing rights ("MSRs") do not trade in an active, open market with readily observable prices. Accordingly, the Company obtains the fair value of the MSRs using a third-party pricing provider. The provider determines the fair value by discounting projected net servicing cash flows of the remaining servicing portfolio. The valuation model used by the provider considers market loan prepayment predictions and other economic factors which management considers to be significant unobservable inputs. The fair value of MSRs is mostly affected by changes in mortgage interest rates since rate changes cause the loan prepayment acceleration factors to increase or decrease. All assumptions are market driven.. Management has a sufficient understanding of the third party service's valuation models, assumptions and inputs used in determining the fair value of MSRs to enable management to maintain an appropriate system of internal control. Mortgage servicing rights are classified within Level 3 of the fair value hierarchy as the valuation is model driven and primarily based on unobservable inputs.

The following table summarizes the changes in fair value for mortgage servicing rights during the three and nine month periods ended September 30, 2012 and 2011, respectively:

	Three months ended September 30,
	2012			2011
Beginning balance, June 30	$	448		$	442
Losses included in earnings		(67	)		(108	)
Additions from loan sales		48			19
Ending balance, September 30	$	429		$	353

	Nine months ended September 30,
	2012			2011
Beginning balance, December 31	$	407		$	388
Losses included in earnings		(121	)		(145	)
Additions from loan sales		143			110
Ending balance, September 30	$	429		$	353

Quantitative information about the significant unobservable inputs used in the fair value measurement of MSRs at the respective dates is as follows:

	9/30/2012			9/30/2011
Servicing fees		0.25	%		0.25	%
Discount rate		10.08	%		10.14	%
Prepayment rate (CPR)		17.66	%		18.49	%

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements. The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a nonrecurring basis at September 30, 2012 and December 31, 2011:

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Impaired loans	$	—	$	—	$	11,525	$	11,525
December 31, 2011
Impaired loans	$	—	$	—	$	10,311	$	10,311

Impaired loans

The Company evaluates and values impaired loans at the time the loan is identified as impaired, and the fair values of such loans are estimated using Level 3 inputs in the fair value hierarchy. Each loan's collateral has a unique appraisal and management's discount of the value is based on factors unique to each impaired loan. The significant unobservable input in determining the fair value is management's subjective discount on appraisals of the collateral securing the loan, which ranges from 10% - 50%. Collateral may consist of real estate and/or business assets including equipment, inventory and/or accounts receivable and the value of these assets is determined based on appraisals by qualified licensed appraisers hired by the Company. Appraised and reported values may be discounted based on management's historical knowledge, changes in market conditions from the time of valuation, estimated costs to sell, and/or management's expertise and knowledge of the client and the client's business.

The Company has an appraisal policy in which appraisals are obtained upon a commercial loan being downgraded on the Company internal loan rating scale to a 5 (special mention) or a 6 (substandard) depending on the amount of the loan, the type of loan and the type of collateral. All impaired commercial loans are either graded a 6 or 7 on the internal loan rating scale. For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be impaired, whichever occurs first. Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and impaired for at least one year more, management may require another follow-up appraisal.Between receipts of updated appraisals, if necessary, management may perform an internal valuation based on any known changing conditions in the marketplace such as sales of similar properties, a change in the condition of the collateral, or feedback from local appraisers. Impaired loans had a gross value of $12.9 million, with a valuation allowance of $1.4 million, at September 30, 2012, compared to a gross value for impaired loans of $11.9 million, with a valuation allowance of $1.6 million, at December 31, 2011.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At September 30, 2012 and December 31, 2011, the estimated fair values of the Company's financial instruments, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows:

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	64,980	$	64,980	$	14,678	$	14,678
Level 2:
Available for sale securities		91,878		91,878		99,981		99,981
FHLB and FRB stock		3,249		3,249		3,255		3,255
Level 3:
Held to maturity securities		4,034		4,022		3,802		3,811
Loans and leases, net		588,408		623,825		571,910		602,534
Mortgage servicing rights		429		429		407		407
Financial liabilities:
Level 1:
Demand deposits	$	126,251	$	126,251	$	118,037	$	118,037
NOW deposits		62,946		62,946		50,761		50,761
Regular savings deposits		375,859		375,859		333,938		333,938
Junior subordinated debentures		11,330		11,330		11,330		11,330
Commitments to extend credit		76		76		161		161
Securities sold under agreement to repurchase		9,081		9,081		9,010		9,010
Level 2:
Other borrowed funds		19,000		19,641		22,000		22,988
Level 3:
Time deposits		107,674		110,925		113,467		116,666

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value.

Cash and Cash Equivalents. For these short-term instruments, the carrying amount is a reasonable estimate of fair value. "Cash and Cash Equivalents" includes interest-bearing deposits at other banks.

FHLB and FRB stock. The carrying value of FHLB and FRB stock approximate fair value.

Securities held to maturity. The Company holds certain municipal bonds as held-to-maturity. These bonds are generally small in dollar amount and are issued only by certain local municipalities within the Company's market area. The original terms are negotiated directly and on an individual basis consistent with our loan and credit guidelines. These bonds are not traded on the open market and management intends to hold the bonds to maturity. The fair value of held-to-maturity securities is estimated by discounting the future cash flows using the current rates at which similar agreements would be made with municipalities with similar credit ratings and for the same remaining maturities.

Loans and Leases, net. The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, net of the appropriate portion of the allowance for loan losses. For variable rate loans, the carrying amount is a reasonable estimate of fair value. This fair value calculation is not necessarily indicative of the exit price, as defined in ASC 820..

Deposits. The fair value of demand deposits, NOW accounts, muni-vest accounts and regular savings accounts is the amount payable on demand at the reporting date. The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.

Junior Subordinated Debentures. The carrying amount of Junior Subordinated Debentures is a reasonable estimate of fair value due to the fact that they bear a floating interest rate that adjusts on a quarterly basis.

Commitments to extend credit and standby letters of credit. As described in Note 8—"Contingent Liabilities and Commitments" to these Unaudited Consolidated Financial Statements, the Company was a party to financial instruments with off-balance sheet risk at September 30, 2012 and December 31, 2011. Such financial instruments consist of commitments to extend permanent financing and letters of credit. If the options are exercised by the prospective borrowers, these financial instruments will become interest-earning assets of the Company. If the options expire, the Company retains any fees paid by the counterparty in order to obtain the commitment or guarantee. The fees collected for these commitments are recorded as "unearned commitment fees" in Other Liabilities. The carrying value approximates the fair value.

Securities Sold Under Agreement to Repurchase. The fair value of the securities sold under agreement to repurchase approximates its carrying value.

Other Borrowed Funds. The fair value of the short-term portion of other borrowed funds approximates its carrying value. The fair value of the long-term portion of other borrowed funds is estimated using a discounted cash flow analysis based on the Company's current incremental borrowing rates for similar types of borrowing arrangements.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2012

Segment Information [Abstract]

Business Segment Information

Three Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,976		(31	)	$	6,945
Provision for loan and lease losses		9		—			9
Net interest income (expense) after provision for loan and lease losses		6,967		(31	)		6,936
Non-interest income		1,442		—			1,442
Insurance service and fees		—		1,774			1,774
Non-interest expense		6,078		1,278			7,356
Income before income taxes		2,331		465			2,796
Income tax provision		479		181			660
Net income	$	1,852	$	284		$	2,136

Three Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,544		($30	)	$	6,514
Provision for loan and lease losses		159		—			159
Net interest income (expense) after provision for loan and lease losses		6,385		(30	)		6,355
Non-interest income		1,335		—			1,335
Insurance service and fees		—		1,849			1,849
Non-interest expense		5,434		1,369			6,803
Income before income taxes		2,286		450			2,736
Income tax provision		646		164			810
Net income	$	1,640	$	286		$	1,926

Nine Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	20,771		($93	)	$	20,678
Provision for loan and lease losses		62		—		$	62
Net interest income (expense) after provision for loan and lease losses		20,709		(93	)		20,616
Non-interest income		4,180		—			4,180
Insurance service and fees		—		5,363			5,363
Non-interest expense		17,805		3,783			21,588
Income before income taxes		7,084		1,487			8,571
Income tax provision		1,982		580			2,562
Net income	$	5,102	$	907		$	6,009

Nine Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	19,186		($89	)	$	19,097
Provision for loan and lease losses		1,656		—			1,656
Net interest income (expense) after provision for loan and lease losses		17,530		(89	)		17,441
Non-interest income		4,031		—			4,031
Insurance service and fees		—		5,539			5,539
Non-interest expense		16,063		4,106			20,169
Income before income taxes		5,498		1,344			6,842
Income tax provision		1,560		509			2,069
Net income	$	3,938	$	835		$	4,773

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Securities (Tables)

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Schedule Of Amortized Cost And Fair Value Of Securities

	September 30, 2012
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. government agencies	$	23,244	$	1,270	$	0		$	24,514
States and political subdivisions		30,072		1,705		(3	)		31,774
Total debt securities	$	53,316	$	2,975		($3	)	$	56,288
Mortgage-backed securities:
FNMA	$	16,807	$	1,023	$	0		$	17,830
FHLMC		6,961		233		(13	)		7,181
GNMA		8,450		304		—			8,754
CMO		1,796		29		—			1,825
Total mortgage-backed securities	$	34,014	$	1,589		($13	)	$	35,590
Total securities designated as available for sale	$	87,330	$	4,564		($16	)	$	91,878
Held to Maturity:
Debt securities
States and political subdivisions		4,034		—		(12	)		4,022
Total securities designated as held to maturity	$	4,034	$	0		($12	)	$	4,022
Total securities	$	91,364	$	4,564		($28	)	$	95,900

	December 31, 2011
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	29,002	$	1,250	$	—		$	30,252
States and political subdivisions		30,632		1,698		(4	)		32,326
Total debt securities	$	59,634	$	2,948		($4	)	$	62,578
Mortgage-backed securities:
FNMA	$	20,071	$	647		—		$	20,718
FHLMC		8,052		269		—			8,321
GNMA		5,895		248		—			6,143
CMO		2,196		25		—			2,221
Total mortgage-backed securities	$	36,214	$	1,189		—		$	37,403
Total securities designated as available for sale	$	95,848	$	4,137		($4	)	$	99,981
Held to Maturity:
Debt securities
States and political subdivisions		3,802		24		(15	)		3,811
Total securities designated as held to maturity	$	3,802	$	24		($15	)	$	3,811
Total securities	$	99,650	$	4,161		($19	)	$	103,792

Scheduled Maturities Of Debt And Mortgage Backed Securities

	September 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
	(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,270	$	2,286	$	2,426	$	2,453
Due after one year through five years		16,247		17,018		18,454		19,231
Due after five years through ten years		26,697		28,042		24,995		26,238
Due after ten years		8,102		8,942		13,759		14,656
		53,316		56,288		59,634		62,578
Mortgage-backed securities available for sale		34,014		35,590		36,214		37,403
Total available for sale securities	$	87,330	$	91,878	$	95,848	$	99,981
Debt securities held to maturity:
Due in one year or less	$	2,435	$	2,428	$	2,656	$	2,644
Due after one year through five years		400		406		518		529
Due after five years through ten years		516		489		40		42
Due after ten years		683		699		588		596
Total held to maturity securities	$	4,034	$	4,022	$	3,802	$	3,811

Unrealized Losses On Available For Sale Securities

	September 30, 2012
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		272		(3	)		—		—			272		(3	)
Total debt securities	$	272		($3	)	$	0	$	0		$	272		($3	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		1,992		(13	)		—		—			1,992		(13	)
GNMA		—		—			—		—			—		—
CMO'S		—		—			—		—			—		—
Total mortgage-backed securities	$	1,992		($13	)	$	—	$	—		$	1,992		($13	)
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,428		($7	)	$	1,594		($5	)	$	4,022		($12	)
Total temporarily impaired securities	$	4,692		($23	)	$	1,594		($5	)	$	6,286		($28	)

	December 31, 2011
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		401		(1	)		304		(3	)		705		(4	)
Total debt securities	$	401		($1	)	$	304		($3	)	$	705		($4	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		—		—			—		—			—		—
GNMA		—		—			—		—			—		—
CMO'S		—		—			—		—			—		—
Total mortgage-backed securities	$	—	$	—		$	—	$	—		$	—	$	—
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,239		($12	)	$	1,006		($3	)	$	3,245		($15	)
Total temporarily impaired securities	$	2,640		($13	)	$	1,310		($6	)	$	3,950		($19	)

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Segment Information

9 Months Ended

Sep. 30, 2012

Segment Information [Abstract]

Segment Information

7. SEGMENT INFORMATION

The Company is comprised of two primary business segments, banking and insurance agency activities. The following tables set forth information regarding these segments for the three and nine month periods ended September 30, 2012 and 2011.

Three Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,976		(31	)	$	6,945
Provision for loan and lease losses		9		—			9
Net interest income (expense) after provision for loan and lease losses		6,967		(31	)		6,936
Non-interest income		1,442		—			1,442
Insurance service and fees		—		1,774			1,774
Non-interest expense		6,078		1,278			7,356
Income before income taxes		2,331		465			2,796
Income tax provision		479		181			660
Net income	$	1,852	$	284		$	2,136

Three Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	6,544		($30	)	$	6,514
Provision for loan and lease losses		159		—			159
Net interest income (expense) after provision for loan and lease losses		6,385		(30	)		6,355
Non-interest income		1,335		—			1,335
Insurance service and fees		—		1,849			1,849
Non-interest expense		5,434		1,369			6,803
Income before income taxes		2,286		450			2,736
Income tax provision		646		164			810
Net income	$	1,640	$	286		$	1,926

Nine Months Ended September 30, 2012

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	20,771		($93	)	$	20,678
Provision for loan and lease losses		62		—		$	62
Net interest income (expense) after provision for loan and lease losses		20,709		(93	)		20,616
Non-interest income		4,180		—			4,180
Insurance service and fees		—		5,363			5,363
Non-interest expense		17,805		3,783			21,588
Income before income taxes		7,084		1,487			8,571
Income tax provision		1,982		580			2,562
Net income	$	5,102	$	907		$	6,009

Nine Months Ended September 30, 2011

(in thousands)

			Insurance Agency
	Banking Activities		Activities			Total
Net interest income (expense)	$	19,186		($89	)	$	19,097
Provision for loan and lease losses		1,656		—			1,656
Net interest income (expense) after provision for loan and lease losses		17,530		(89	)		17,441
Non-interest income		4,031		—			4,031
Insurance service and fees		—		5,539			5,539
Non-interest expense		16,063		4,106			20,169
Income before income taxes		5,498		1,344			6,842
Income tax provision		1,560		509			2,069
Net income	$	3,938	$	835		$	4,773

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Per Share Data

9 Months Ended

Sep. 30, 2012

Per Share Data [Abstract]

Per Share Data

5. PER SHARE DATA

The common stock per share information is based upon the weighted average number of shares outstanding during each period. For the three and nine month periods ended September 30, 2012 the Company had 24,321 and 13,436 average dilutive shares, respectively. The Company had 1,767 and 6,331 average dilutive shares for the three and nine month periods ended September 30, 2011, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share. For the three and nine month periods ended September 30, 2012 there were approximately 71,234 and 161,596 average shares, respectively, that were not included in calculating diluted earnings per share because their effect was anti-dilutive. There were 157,054 and 166,155 potentially anti-dilutive average shares for the three and nine month periods ended September 30, 2011.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2012

Other Comprehensive Income [Abstract]

Other Comprehensive Income

6. OTHER COMPREHENSIVE INCOME

The following tables display the components of other comprehensive income (loss):

	Three months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	582		($225	)	$	357
Defined benefit pension plans:
Amortization of prior service cost		21		(8	)		13
Amortization of actuarial loss		41		(15	)		26
Total		62		(23	)		39
Other Comprehensive Income	$	644		($248	)	$	396

	Three months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	1,151			($445	)	$	706
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	1,125			($435	)	$	690
Defined benefit pension plans:
Amortization of prior service cost		23			(9	)		14
Amortization of actuarial loss		9			(4	)		5
Total		32			(13	)		19
Other Comprehensive Income	$	1,157			($448	)	$	709

	Nine months ended September 30, 2012
	Before-Tax Amount		Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities	$	415		($159	)	$	256
Defined benefit pension plans:
Amortization of prior service cost		65		(25	)		40
Amortization of actuarial loss		127		(49	)		78
Total		192		(74	)		118
Other Comprehensive Income	$	607		($233	)	$	374

	Nine months ended September 30, 2011
	Before-Tax Amount			Income Tax (Provision) Benefit			Net-of-Tax Amount
Unrealized gain on investment securities:
Unrealized gain on investment securities	$	2,563			($992	)	$	1,571
Reclassification of gain on sale of securities		(26	)		10			(16	)
Total	$	2,537			($982	)	$	1,555
Defined benefit pension plans:
Amortization of prior service cost		65			(24	)		41
Amortization of actuarial loss		28			(11	)		17
Total		93			(35	)		58
Other Comprehensive Income	$	2,630			($1,017	)	$	1,613

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Contingent Liabilities And Commitments

9 Months Ended

Sep. 30, 2012

Contingent Liabilities And Commitments [Abstract]

Contingent Liabilities And Commitments

8. CONTINGENT LIABILITIES AND COMMITMENTS

The unaudited consolidated financial statements do not reflect various commitments and contingent liabilities, which arise in the normal course of business, and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities consist of commitments to extend credit and standby letters of credit. A summary of the Bank's commitments and contingent liabilities is as follows:

	September 30, 2012		December 31, 2011
	(in thousands)
Commitments to extend credit	$	137,832	$	134,204
Standby letters of credit		8,118		3,429
Total	$	145,950	$	137,633

Commitments to extend credit and standby letters of credit include some exposure to credit loss in the event of nonperformance of the customer. The Bank's credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the Company's unaudited consolidated balance sheets. Because these instruments have fixed maturity dates, and because they may expire without being drawn upon, they do not necessarily represent cash requirements of the Bank. The Bank has not incurred any losses on its commitments and has not recorded a reserve for its commitments during 2011 and 2012.

Certain lending commitments for construction residential mortgage loans are considered derivative instruments under the guidelines of GAAP. The changes in the fair value of these commitments, due to interest rate risk, are not recorded on the consolidated balance sheets as the fair value of these derivatives is not considered material.

The Company is subject to possible litigation proceedings in the normal course of business.. As of September 30, 2012 and December 31, 2011, there were no claims pending against the Company that management considered material.

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value, Measurements, Nonrecurring Basis [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 11,525	$ 10,311
Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 11,525	$ 10,311

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Net Periodic Benefit Costs (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2012 Scenario, Forecast [Member]
Contribution to the defined benefit pension plan	$ 340	$ 30

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Loans, Leases, And The Allowance For Loan And Lease Losses (Tables)

9 Months Ended

Sep. 30, 2012

Loans, Leases, And The Allowance For Loan And Lease Losses [Abstract]

Composition Of The Company's Loan And Lease Portfolio

	September 30, 2012			December 31, 2011
	(in thousands)
Mortgage loans on real estate:
Residential Mortgages	$	70,430		$	73,579
Commercial and multi-family		320,860			306,683
Construction-Residential		2,008			2,392
Construction-Commercial		35,581			27,887
Home equities		56,466			54,673
Total real estate loans		485,345			465,214
Direct financing leases		2,440			6,021
Commercial and industrial loans		106,794			109,513
Consumer loans		1,359			1,677
Other		2,155			586
Net deferred loan origination costs		523			394
Total gross loans		598,616			583,405
Allowance for loan losses		(10,208	)		(11,495	)
Loans, net	$	588,408		$	571,910

Credit Quality Indicators Of Loans And Leases

September 30, 2012
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	31,580	$	274,012	$	305,592	$	77,030
4		1,538		36,020		37,558		22,288
5		1,728		3,946		5,674		3,742
6		735		3,576		4,311		3,000
7		—		3,306		—		734
Total	$	35,581	$	320,860	$	353,135	$	106,794

December 31, 2011
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial Real Estate Other		Total Commercial Real Estate		Commercial and Industrial
3	$	21,607	$	250,575	$	272,182	$	77,017
4		4,421		45,505		49,926		21,448
5		362		1,758		2,120		5,939
6		1,497		8,845		10,342		4,761
7		—		—		—		348
Total	$	27,887	$	306,683	$	334,570	$	109,513

Recorded Investment In Loans And Leases That Are Past Due

September 30, 2012
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	175	$	2	$	571	$	748	$	106,046	$	106,794	$	0	$	1,452
Residential real estate:
Residential		108		68		941		1,117		69,313		70,430		209		1,251
Construction		—		—		—		—		2,008		2,008		—		—
Commercial real estate:
Commercial		625		1,113		1,375		3,113		317,747		320,860		—		4,829
Construction		—		—		735		735		34,846		35,581		—		735
Home equities		288		122		515		925		55,541		56,466		71		552
Direct financing leases		13		10		184		207		2,233		2,440		—		255
Consumer		4		3		34		41		1,318		1,359		—		61
Other		—		—		—		—		2,678		2,678		—		—
Total Loans	$	1,213	$	1,318	$	4,355	$	6,886	$	591,730	$	598,616	$	280	$	9,135

December 31, 2011
(in thousands)
	30-59 days		60-89 days		90+ days		Total Past Due		Current Balance		Total Balance		90+ Days Accruing		Non- accruing Loans  and Leases
Commercial and industrial	$	279	$	94	$	1,702	$	2,075	$	107,438	$	109,513	$	—	$	2,180
Residential real estate:
Residential		735		55		1,062		1,852		71,727		73,579		73		1,048
Construction		—		—		167		167		2,225		2,392		—		167
Commercial real estate:
Commercial		3,086		64		2,686		5,836		300,847		306,683		59		6,858
Construction		—		—		2,609		2,609		25,278		27,887		1,167		1,442
Home equities		481		110		683		1,274		53,399		54,673		—		946
Direct financing leases		327		26		754		1,107		4,914		6,021		—		1,160
Consumer		56		5		4		65		1,612		1,677		—		76
Other		—		—		—		—		980		980		—		—
Total Loans	$	4,964	$	354	$	9,667	$	14,985	$	568,420	$	583,405	$	1,299	$	13,877

Summary Of Activity In The Allowance For Loan And Lease Losses According To Portfolio Segment

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,085		$	4,670		$	36		$	793		$	768		$	994		$	149	$	11,495
Charge-offs		(831	)		(546	)		(19	)		(12	)		(115	)		—			—		(1,523	)
Recoveries		137			15			16			0			6			—			—		174
Provision		302			546			(2	)		(94	)		69			(759	)		—		62
Ending balance	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Allowance for loan and lease losses:
Individually evaluated for impairment	$	493		$	359		$	14		$	0		$	0		$	72		$	—	$	938
Collectively evaluated for impairment		3,200			4,326			17			687			728			163			149		9,270
Loans acquired with deteriorated credit quality		—			—			—			—			—			—			—		—
Total	$	3,693		$	4,685		$	31		$	687		$	728		$	235		$	149	$	10,208
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	1,472		$	6,367		$	37		$	1,251		$	875		$	233		$	—	$	10,235
Collectively evaluated for impairment		105,322			350,074			3,453			71,188			55,590			2,207			—		587,834
Loans acquired with deteriorated credit quality		—			—			24			—			—			—			—		24
Total	$	106,794		$	356,441		$	3,514		$	72,439		$	56,465		$	2,440		$	—	$	598,093

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $523 thousand in net deferred loan and lease origination costs as of September 30, 2012.

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages*			Consumer ^			Residential Mortgages*		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,435		$	4,252		$	29		$	548	$	540	$	1,471		$	149	$	10,424
Charge-offs		(1,225	)		($174	)		($17	)		—		—		—			—		(1,416	)
Recoveries		28			7			8			—		1		—			—		44
Provision	$	1,427		$	159		$	39		$	148	$	125	($	242	)	$	0		1,656
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Allowance for loan and lease losses:
Individually evaluated for impairment	$	48		$	574		$	10		$	—	$	—	$	462		$	—	$	1,094
Collectively evaluated for impairment		3,617		$	3,670		$	49			696		666		767			149		9,614
Loans acquired with deteriorated credit quality		—			—			—			—		—		—			—		—
Total	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708
Loans and leases:
Ending balance:
Individually evaluated for impairment	$	2,504		$	8,566		$	52		$	—	$	327	$	1,135		$	—	$	12,584
Collectively evaluated for impairment		107,543		$	310,723		$	3,344			73,002		54,291		6,648			—		555,551
Loans acquired with deteriorated credit quality		—			—			79			—		—		—			—		79
Total	$	110,047		$	319,289		$	3,475		$	73,002	$	54,618	$	7,783		$	—	$	568,214

* Includes construction loans

^ Includes other loans

Note: Loan and lease balances do not include $361 thousand in net deferred loan and lease origination costs as of September 30, 2011.

The following tables present the activity in the allowance for loan and lease losses according to portfolio segment, for the three month periods ended September 30, 2012 and September 30, 2011:

September 30, 2012
(in thousands)	Commercial and Industrial			Commercial Real Estate Mortgages		Consumer			Residential Mortgages			HELOC			Direct Financing Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	4,216		$	4,377	$	48		$	698		$	803		$	367		$	149	$	10,658
Charge-offs		(406	)		—		(9	)		(11	)		(102	)		—			—		(528	)
Recoveries		67			—		2			—			—			—			—		69
Provision		(184	)		308		(10	)		0			27			(132	)		—		9
Ending balance	$	3,693		$	4,685	$	31		$	687		$	728		$	235		$	149	$	10,208

September 30, 2011
(in thousands)	Commercial			Commercial Real Estate Mortgages			Consumer			Residential Mortgages		HELOC		Finance Leases			Unallocated		Total
Allowance for loan and lease losses:
Beginning balance	$	3,571		$	4,294		$	44		$	578	$	560	$	1,471		$	149	$	10,667
Charge-offs		(101	)		(32	)		(6	)		—		—		—			—		(139	)
Recoveries		12			7			2			—		—		—			—		21
Provision		183			(25	)		19			118		106		(242	)		—		159
Ending balance	$	3,665		$	4,244		$	59		$	696	$	666	$	1,229		$	149	$	10,708

Impaired Loans And Leases

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	345	$	480	$	0	$	425	$	16	$	5
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		1,901		2,031		—		1,909		98		3
Construction		735		814		—		746		20		—
Home equities		875		1,009		—		978		24		9
Direct financing leases		—		—		—		—		—		—
Consumer		—		—		—		—		—		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	5,107	$	5,697	$	—	$	5,311	$	188	$	23
	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	2,806	$	3,124	$	782	$	3,041	$	45	$	87
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		3,731		3,984		383		3,747		156		—
Construction		934		934		49		934		—		22
Home equities		—		—		—		—		—		—
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		0
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,765	$	8,424	$	1,347	$	8,107	$	222	$	109

	At September 30, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	3,151	$	3,604	$	782	$	3,466	$	61	$	92
Residential real estate:
Residential		1,251		1,363		—		1,253		30		6
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		5,632		6,015		383		5,656		254		3
Construction		1,669		1,748		49		1,680		20		22
Home equities		875		1,009		—		978		24		9
Direct financing leases		233		247		72		323		14		—
Consumer		61		135		61		62		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	12,872	$	14,121	$	1,347	$	13,418	$	410	$	132
	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With no related allowance recorded:
Commercial and industrial	$	261	$	270	$	—	$	371	$	9	$	7
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		2,723		2,916		—		2,503		215		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		327		327		—		331		—		9
Direct financing leases		—		—		—		—		—		—
Consumer		32		95		—		79		7		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	4,785	$	5,105	$	—	$	4,639	$	279	$	63

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
With a related allowance recorded:
Commercial and industrial	$	1,969	$	2,007	$	405	$	2,151	$	58	$	36
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		4,135		4,418		844		4,257		267		—
Construction		—		—		—		—		—		—
Home equities		170		170		31		170		4		2
Direct financing leases		847		907		350		1,214		60		1
Consumer		44		49		9		56		4		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	7,165	$	7,551	$	1,639	$	7,848	$	393	$	39

	At December 31, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
	(in thousands)
Total
Commercial and industrial	$	2,230	$	2,277	$	405	$	2,522	$	67	$	43
Residential real estate:
Residential		—		—		—		—		—		—
Construction		—		—		—		—		—		—
Commercial real estate:
Commercial		6,858		7,334		844		6,760		482		44
Construction		1,442		1,497		—		1,355		48		3
Home equities		497		497		31		501		4		11
Direct financing leases		847		907		350		1,214		60		1
Consumer		76		144		9		135		11		—
Other		—		—		—		—		—		—
Total impaired loans and leases	$	11,950	$	12,656	$	1,639	$	12,487	$	672	$	102

Non-Performing Loans And Leases

	September 30, 2012			December 31, 2011
	(in thousands)
Non-accruing loans and leases:
Commercial and industrial loans	$	1,452		$	2,180
Residential real estate:
Residential		1,251			1,048
Construction		—			167
Commercial real estate:
Commercial and multi-family		4,829			6,858
Construction		735			1,442
Home equities		552			946
Direct financing leases		255			1,160
Consumer loans		61			76
Other		—			—
Total non-accruing loans and leases	$	9,135		$	13,877
Accruing loans 90+ days past due		280			1,299
Total non-performing loans and leases	$	9,415		$	15,176
Total non-performing loans and leases to total assets		1.18	%		2.05	%
Total non-performing loans and leases to total loans and leases		1.57	%		2.60	%

Troubled Restructured Loans And Leases

	September 30, 2012
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	2,681	$	981	$	1,700	$	403
Residential real estate:
Residential		518		518		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,062		4,259		803		383
Construction		1,669		735		934		—
Home equities		323		—		323		—
Direct financing leases		233		107		126		72
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	10,486	$	6,600	$	3,886	$	858

	December 31, 2011
	($ in thousands)
	Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,432	$	1,362	$	70	$	64
Residential real estate:
Residential		—		—		—		—
Construction		—		—		—		—
Commercial real estate:
Commercial and multi family		5,258		5,258		—		708
Construction		—		—		—		—
Home equities		327		—		327		—
Direct financing leases		714		439		275		330
Consumer loans		—		—		—		—
Other		—		—		—		—
Total troubled restructured loans and leases	$	7,731	$	7,059	$	672	$	1,102

Troubled Debt Restructurings Activity

	Three Months Ended September 30, 2012						Nine Months Ended September 30, 2012
	($ in thousands)						($ in thousands)
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial and Industrial		2		1,680		1,680		4		1,936		1,936
Residential Real Estate:
Residential		1		475		475		2		518		518
Construction		—		—		—		—		—		—
Commercial Real Estate:
Commercial & Multi-Family		1		260		260		3		982		982
Construction		2		1,669		1,669		2		1,669		1,669
Home Equities		—		—		—		—		—		—
Direct financing leases		—		—		—		—		—		—
Consumer loans		—		—		—		—		—		—
Other		—		—		—		—		—		—

Troubled Debt Restructurings That Subsequently Defaulted

	Three Months Ended				Nine Months Ended
	September 30, 2012				September 30, 2012
	($ in thousands)
Troubled Debt Restructurings That Subsequently Defaulted	Number of Contracts		Recorded Investment		Number of Contracts		Recorded Investment
Commercial and Industrial		—		—		4	$	876
Residential Real Estate:
Residential		1	$	44		1		44
Construction		—		—		—		—
Commercial Real Estate:
Commercial and Multi-Family		—		—		4		804
Construction		—		—		1		735
Home Equities		—		—		—		—
Direct financing leases		—		—		—		—
Consumer loans		—		—		—		—
Other		—		—		—		—

Allowance For Loan And Lease Losses Related To Covered Loans

	September 30, 2012			December 31, 2011
	(in thousands)
Covered loans	$	22,540		$	26,429
Incremental estimated credit losses since acquisition		567			506
FDIC guarantee		(454	)		(405	)
Allowance for loan and lease losses, covered loans	$	113		$	101

XML

Securities (Narrative) (Details) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities pledged as collateral	$ 74,900,000	$ 76,700,000
FHLBNY stock	1,804,000	1,830,000
Other-than-temporary impairment charges	0	0
FHLBNY [Member]
Schedule of Available-for-sale Securities [Line Items]
Borrowed funds	$ 19,000,000	$ 22,000,000
Maximum [Member]
Schedule of Available-for-sale Securities [Line Items]
Gross unrealized losses, percentage of total fair value of the securities portfolio	0.1	0.1

XML

Segment Information (Business Segment Information) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Net interest income (expense)	$ 6,945	$ 6,514	$ 20,678	$ 19,097
Provision for loan and lease losses	9	159	62	1,656
Net interest income (expense) after provision for loan and lease losses	6,936	6,355	20,616	17,441
Non-interest income	1,442	1,335	4,180	4,031
Insurance service and fees	1,774	1,849	5,363	5,539
Non-interest expense	7,356	6,803	21,588	20,169
Income before income taxes	2,796	2,736	8,571	6,842
Income tax provision	660	810	2,562	2,069
Net income	2,136	1,926	6,009	4,773
Banking Activities [Member]
Segment Reporting Information [Line Items]
Net interest income (expense)	6,976	6,544	20,771	19,186
Provision for loan and lease losses	9	159	62	1,656
Net interest income (expense) after provision for loan and lease losses	6,967	6,385	20,709	17,530
Non-interest income	1,442	1,335	4,180	4,031
Insurance service and fees
Non-interest expense	6,078	5,434	17,805	16,063
Income before income taxes	2,331	2,286	7,084	5,498
Income tax provision	479	646	1,982	1,560
Net income	1,852	1,640	5,102	3,938
Insurance Agency Activities [Member]
Segment Reporting Information [Line Items]
Net interest income (expense)	(31)	(30)	(93)	(89)
Net interest income (expense) after provision for loan and lease losses	(31)	(30)	(93)	(89)
Insurance service and fees	1,774	1,849	5,363	5,539
Non-interest expense	1,278	1,369	3,783	4,106
Income before income taxes	465	450	1,487	1,344
Income tax provision	181	164	580	509
Net income	$ 284	$ 286	$ 907	$ 835

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Impaired Loans And Leases) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	$ 5,107	$ 4,785
Impaired loans, Recorded Investment, With a related allowance recorded	7,765	7,165
Impaired loans, Recorded Investment, Total	12,872	11,950
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	5,697	5,105
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	8,424	7,551
Impaired loans, Unpaid Principal Balance, Total	14,121	12,656
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	1,347	1,639
Impaired loans, Related Allowance, Total	1,347	1,639
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	5,311	4,639
Impaired loans, Average Recorded Investment, With a related allowance recorded	8,107	7,848
Impaired loans, Average Recorded Investment, Total	13,418	12,487
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	188	279
Impaired Loans, Interest Income Foregone, With a related allowance recorded	222	393
Impaired Loans, Interest Income Foregone, Total	410	672
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded	23	63
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded	109	39
Impaired Loans, Interest Income Recognized, Total	132	102
Commercial And Industrial [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	345	261
Impaired loans, Recorded Investment, With a related allowance recorded	2,806	1,969
Impaired loans, Recorded Investment, Total	3,151	2,230
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	480	270
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	3,124	2,007
Impaired loans, Unpaid Principal Balance, Total	3,604	2,277
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	782	405
Impaired loans, Related Allowance, Total	782	405
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	425	371
Impaired loans, Average Recorded Investment, With a related allowance recorded	3,041	2,151
Impaired loans, Average Recorded Investment, Total	3,466	2,522
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	16	9
Impaired Loans, Interest Income Foregone, With a related allowance recorded	45	58
Impaired Loans, Interest Income Foregone, Total	61	67
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded	5	7
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded	87	36
Impaired Loans, Interest Income Recognized, Total	92	43
Residential Real Estate: Residential [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	1,251
Impaired loans, Recorded Investment, With a related allowance recorded
Impaired loans, Recorded Investment, Total	1,251
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	1,363
Impaired loans, Unpaid Principal Balance, With a related allowance recorded
Impaired loans, Unpaid Principal Balance, Total	1,363
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance
Impaired loans, Related Allowance, Total
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	1,253
Impaired loans, Average Recorded Investment, With a related allowance recorded
Impaired loans, Average Recorded Investment, Total	1,253
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	30
Impaired Loans, Interest Income Foregone, With a related allowance recorded
Impaired Loans, Interest Income Foregone, Total	30
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded	6
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded
Impaired Loans, Interest Income Recognized, Total	6
Residential Real Estate: Construction [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded
Impaired loans, Recorded Investment, With a related allowance recorded
Impaired loans, Recorded Investment, Total
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded
Impaired loans, Unpaid Principal Balance, With a related allowance recorded
Impaired loans, Unpaid Principal Balance, Total
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance
Impaired loans, Related Allowance, Total
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded
Impaired loans, Average Recorded Investment, With a related allowance recorded
Impaired loans, Average Recorded Investment, Total
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded
Impaired Loans, Interest Income Foregone, Total
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded
Impaired Loans, Interest Income Recognized, Total
Commercial Real Estate: Commercial [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	1,901	2,723
Impaired loans, Recorded Investment, With a related allowance recorded	3,731	4,135
Impaired loans, Recorded Investment, Total	5,632	6,858
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	2,031	2,916
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	3,984	4,418
Impaired loans, Unpaid Principal Balance, Total	6,015	7,334
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	383	844
Impaired loans, Related Allowance, Total	383	844
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	1,909	2,503
Impaired loans, Average Recorded Investment, With a related allowance recorded	3,747	4,257
Impaired loans, Average Recorded Investment, Total	5,656	6,760
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	98	215
Impaired Loans, Interest Income Foregone, With a related allowance recorded	156	267
Impaired Loans, Interest Income Foregone, Total	254	482
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded	3	44
Impaired Loans, Interest Income Recognized, Total	3	44
Commercial Real Estate: Construction [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	735	1,442
Impaired loans, Recorded Investment, With a related allowance recorded	934
Impaired loans, Recorded Investment, Total	1,669	1,442
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	814	1,497
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	934
Impaired loans, Unpaid Principal Balance, Total	1,748	1,497
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	49
Impaired loans, Related Allowance, Total	49
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	746	1,355
Impaired loans, Average Recorded Investment, With a related allowance recorded	934
Impaired loans, Average Recorded Investment, Total	1,680	1,355
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	20	48
Impaired Loans, Interest Income Foregone, Total	20	48
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded		3
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded	22
Impaired Loans, Interest Income Recognized, Total	22	3
Home Equities [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded	875	327
Impaired loans, Recorded Investment, With a related allowance recorded		170
Impaired loans, Recorded Investment, Total	875	497
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded	1,009	327
Impaired loans, Unpaid Principal Balance, With a related allowance recorded		170
Impaired loans, Unpaid Principal Balance, Total	1,009	497
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance		31
Impaired loans, Related Allowance, Total		31
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded	978	331
Impaired loans, Average Recorded Investment, With a related allowance recorded		170
Impaired loans, Average Recorded Investment, Total	978	501
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	24
Impaired Loans, Interest Income Foregone, With a related allowance recorded		4
Impaired Loans, Interest Income Foregone, Total	24	4
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded	9	9
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded		2
Impaired Loans, Interest Income Recognized, Total	9	11
Direct Financing Leases [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded
Impaired loans, Recorded Investment, With a related allowance recorded	233	847
Impaired loans, Recorded Investment, Total	233	847
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	247	907
Impaired loans, Unpaid Principal Balance, Total	247	907
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	72	350
Impaired loans, Related Allowance, Total	72	350
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded
Impaired loans, Average Recorded Investment, With a related allowance recorded	323	1,214
Impaired loans, Average Recorded Investment, Total	323	1,214
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded	14	60
Impaired Loans, Interest Income Foregone, Total	14	60
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded		1
Impaired Loans, Interest Income Recognized, Total		1
Consumer Loans [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded		32
Impaired loans, Recorded Investment, With a related allowance recorded	61	44
Impaired loans, Recorded Investment, Total	61	76
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded		95
Impaired loans, Unpaid Principal Balance, With a related allowance recorded	135	49
Impaired loans, Unpaid Principal Balance, Total	135	144
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance	61	9
Impaired loans, Related Allowance, Total	61	9
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded		79
Impaired loans, Average Recorded Investment, With a related allowance recorded	62	56
Impaired loans, Average Recorded Investment, Total	62	135
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded		7
Impaired Loans, Interest Income Foregone, With a related allowance recorded	7	4
Impaired Loans, Interest Income Foregone, Total	7	11
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded	0
Other [Member]
Impaired Financing Receivable, Recorded Investment
Impaired loans, Recorded Investment, With no related allowance recorded
Impaired loans, Recorded Investment, With a related allowance recorded
Impaired loans, Recorded Investment, Total
Impaired Financing Receivable, Unpaid Principal Balance
Impaired loans, Unpaid Principal Balance, With no related allowance recorded
Impaired loans, Unpaid Principal Balance, With a related allowance recorded
Impaired loans, Unpaid Principal Balance, Total
Impaired Financing Receivable Related Allowance
Impaired loans, Related Allowance
Impaired loans, Related Allowance, Total
Impaired Financing Receivable, Average Recorded Investment
Impaired loans, Average Recorded Investment, With no related allowance recorded
Impaired loans, Average Recorded Investment, With a related allowance recorded
Impaired loans, Average Recorded Investment, Total
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded
Impaired Loans, Interest Income Foregone, Total
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With No Related Allowance Recorded
Impaired Loans, Interest Income Recognized, With a Related Allowance Recorded
Impaired Loans, Interest Income Recognized, Total

XML

Statements Of Consolidated Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Statements Of Consolidated Comprehensive Income [Abstract]
Net Income	$ 2,136	$ 1,926	$ 6,009	$ 4,773
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on investment securities, before reclassification, Net-of-Tax Amount		706		1,571
Unrealized gain on available-for-sale securities	357	690	256	1,555
Reclassification of gain on sale of securities		(16)		(16)
Defined benefit pension plans:
Amortization of prior service cost	13	14	40	41
Amortization of actuarial loss	26	5	78	17
Defined benefit pension plans: Total, Net-of-Tax Amount	39	19	118	58
OTHER COMPREHENSIVE INCOME, NET OF TAX	396	709	374	1,613
COMPREHENSIVE INCOME	$ 2,532	$ 2,635	$ 6,383	$ 6,386

XML

Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Securities

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2012 and December 31, 2011 were as follows:

	September 30, 2012
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. government agencies	$	23,244	$	1,270	$	0		$	24,514
States and political subdivisions		30,072		1,705		(3	)		31,774
Total debt securities	$	53,316	$	2,975		($3	)	$	56,288
Mortgage-backed securities:
FNMA	$	16,807	$	1,023	$	0		$	17,830
FHLMC		6,961		233		(13	)		7,181
GNMA		8,450		304		—			8,754
CMO		1,796		29		—			1,825
Total mortgage-backed securities	$	34,014	$	1,589		($13	)	$	35,590
Total securities designated as available for sale	$	87,330	$	4,564		($16	)	$	91,878
Held to Maturity:
Debt securities
States and political subdivisions		4,034		—		(12	)		4,022
Total securities designated as held to maturity	$	4,034	$	0		($12	)	$	4,022
Total securities	$	91,364	$	4,564		($28	)	$	95,900

	December 31, 2011
	(in thousands)
	Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	29,002	$	1,250	$	—		$	30,252
States and political subdivisions		30,632		1,698		(4	)		32,326
Total debt securities	$	59,634	$	2,948		($4	)	$	62,578
Mortgage-backed securities:
FNMA	$	20,071	$	647		—		$	20,718
FHLMC		8,052		269		—			8,321
GNMA		5,895		248		—			6,143
CMO		2,196		25		—			2,221
Total mortgage-backed securities	$	36,214	$	1,189		—		$	37,403
Total securities designated as available for sale	$	95,848	$	4,137		($4	)	$	99,981
Held to Maturity:
Debt securities
States and political subdivisions		3,802		24		(15	)		3,811
Total securities designated as held to maturity	$	3,802	$	24		($15	)	$	3,811
Total securities	$	99,650	$	4,161		($19	)	$	103,792

Available for sale securities with a total fair value of $74.9 million and $76.7 million at September 30, 2012 and December 31, 2011, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The Company uses the Federal Home Loan Bank of New York ("FHLBNY") as its primary source of overnight funds and also has several long-term advances with FHLBNY. The Company had a total of $19.0 million and $22.0 million in borrowed funds with FHLBNY at September 30, 2012 and December 31, 2011, respectively.. The Company has placed sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meet FHLB collateral requirements. As a member of the Federal Home Loan Bank ("FHLB") System, the Bank is required to hold stock in FHLBNY. The Bank held $1.8 million in FHLBNY stock as of September 30, 2012 and December 31, 2011 at amortized cost.

The scheduled maturities of debt and mortgage-backed securities at September 30, 2012 and December 31, 2011 are summarized below. All maturity amounts are contractual maturities. Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.

	September 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
	(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,270	$	2,286	$	2,426	$	2,453
Due after one year through five years		16,247		17,018		18,454		19,231
Due after five years through ten years		26,697		28,042		24,995		26,238
Due after ten years		8,102		8,942		13,759		14,656
		53,316		56,288		59,634		62,578
Mortgage-backed securities available for sale		34,014		35,590		36,214		37,403
Total available for sale securities	$	87,330	$	91,878	$	95,848	$	99,981
Debt securities held to maturity:
Due in one year or less	$	2,435	$	2,428	$	2,656	$	2,644
Due after one year through five years		400		406		518		529
Due after five years through ten years		516		489		40		42
Due after ten years		683		699		588		596
Total held to maturity securities	$	4,034	$	4,022	$	3,802	$	3,811

Information regarding unrealized losses within the Company's available for sale securities at September 30, 2012 and December 31, 2011, is summarized below. The securities are primarily U.S. government-guaranteed agency securities or municipal securities. All unrealized losses are considered temporary and related to market interest rate fluctuations.

	September 30, 2012
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		272		(3	)		—		—			272		(3	)
Total debt securities	$	272		($3	)	$	0	$	0		$	272		($3	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		1,992		(13	)		—		—			1,992		(13	)
GNMA		—		—			—		—			—		—
CMO'S		—		—			—		—			—		—
Total mortgage-backed securities	$	1,992		($13	)	$	—	$	—		$	1,992		($13	)
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,428		($7	)	$	1,594		($5	)	$	4,022		($12	)
Total temporarily impaired securities	$	4,692		($23	)	$	1,594		($5	)	$	6,286		($28	)

	December 31, 2011
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(in thousands)
Available for Sale:
Debt securities:
U.S. Treasury and other U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
States and political subdivisions		401		(1	)		304		(3	)		705		(4	)
Total debt securities	$	401		($1	)	$	304		($3	)	$	705		($4	)
Mortgage-backed securities:
FNMA	$	—	$	—		$	—	$	—		$	—	$	—
FHLMC		—		—			—		—			—		—
GNMA		—		—			—		—			—		—
CMO'S		—		—			—		—			—		—
Total mortgage-backed securities	$	—	$	—		$	—	$	—		$	—	$	—
Held To Maturity:
Debt securities:
States and political subdivisions	$	2,239		($12	)	$	1,006		($3	)	$	3,245		($15	)
Total temporarily impaired securities	$	2,640		($13	)	$	1,310		($6	)	$	3,950		($19	)

In regard to municipal securities, the Company's general investment policy is that in-state securities must be rated at least Moody's Baa (or equivalent) at the time of purchase. The Company reviews the ratings report and municipality financial statements and prepares a pre-purchase analysis report before the purchase of any municipal securities. Out-of-state issues must be rated by Moody's at least Aa (or equivalent) at the time of purchase. The Company did not own any out-of-state municipal bonds at September 30, 2012 or December 31, 2011. Bonds rated below A are reviewed periodically to ensure their continued credit worthiness. While purchase of non-rated municipal securities is permitted under the Company's investment policy, such purchases are limited to bonds issued by municipalities in the Company's general market area. Those municipalities are typically customers of the Bank whose financial situation is familiar to management. The financial statements of the issuers of non-rated securities are reviewed by the Bank and a credit file of the issuers is kept on each non-rated municipal security with relevant financial information. 

Although concerns have been raised in the marketplace recently about the health of municipal bonds, the Company has not experienced any significant credit troubles in this portfolio and does not believe any credit troubles are imminent with respect to its portfolio. Aside from the non-rated municipal securities to local municipalities discussed above that are considered held-to-maturity, all of the Company's available-for-sale municipal bonds are investment-grade government obligation ("G..O.") bonds. G.O. bonds are generally considered safer than revenue bonds because they are backed by the full faith and credit of the government while revenue bonds rely on the revenue produced by a particular project. All of the Company's municipal bonds are issued by municipalities in New York State. To the Company's knowledge, there has never been a default of a NY G.O. in the history of the state. The Company believes that its risk of loss on default of a G.O. municipal bond for the Company is relatively low. However, historical performance does not guarantee future performance.

Management has assessed the securities available for sale in an unrealized loss position at September 30, 2012 and December 31, 2011 and determined the decline in fair value below amortized cost to be temporary. In making this determination, management considered the period of time the securities were in a loss position, the percentage decline in comparison to the securities' amortized cost, and the financial condition of the issuer (primarily government or government-sponsored enterprises). In addition, management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost. Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers.

The Company has not recorded any other-than-temporary impairment charges in 2012 or 2011, with the gross unrealized losses at an immaterial level, amounting to less than 0.1% of the total fair value of the securities portfolio at September 30, 2012 and December 31, 2011. Nevertheless, it remains possible that there could be deterioration in the asset quality of the securities portfolio in the future. The credit worthiness of the Company's portfolio is largely reliant on the ability of U.S. government sponsored agencies such as FHLB, Federal National Mortgage Association ("FNMA"), Government National Mortgage Association ("GNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC"), and municipalities throughout New York State to meet their obligations. In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio. The relatively stable past performance is not a guarantee for similar performance of the Company's securities portfolio going forward.

XML

Securities (Schedule Of Amortized Cost And Fair Value Of Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	$ 87,330	$ 95,848
Available-for-sale Securities, Unrealized Gains	4,564	4,137
Available-for-sale Securities, Unrealized Losses	(16)	(4)
Available-for-sale Securities, Fair Value	91,878	99,981
Held-to-maturity Securities, Amortized Cost	4,034	3,802
Held-to-maturity Securities, Unrealized Gains	0	24
Held-to-maturity Securities, Unrealized Losses	(12)	(15)
Held-to-maturity Securities, Fair Value	4,022	3,811
Securities, Amortized Cost	91,364	99,650
Securities, Unrealized Gains	4,564	4,161
Securities, Unrealized Losses	(28)	(19)
Securities, Fair Value	95,900	103,792
US States and Political Subdivisions Debt Securities [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Held-to-maturity Securities, Amortized Cost	4,034	3,802
Held-to-maturity Securities, Unrealized Gains		24
Held-to-maturity Securities, Unrealized Losses	(12)	(15)
Held-to-maturity Securities, Fair Value	4,022	3,811
US Government Agencies Debt Securities [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	23,244	29,002
Available-for-sale Securities, Unrealized Gains	1,270	1,250
Available-for-sale Securities, Unrealized Losses	0
Available-for-sale Securities, Fair Value	24,514	30,252
US States and Political Subdivisions Debt Securities [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	30,072	30,632
Available-for-sale Securities, Unrealized Gains	1,705	1,698
Available-for-sale Securities, Unrealized Losses	(3)	(4)
Available-for-sale Securities, Fair Value	31,774	32,326
Debt Securities [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	53,316	59,634
Available-for-sale Securities, Unrealized Gains	2,975	2,948
Available-for-sale Securities, Unrealized Losses	(3)	(4)
Available-for-sale Securities, Fair Value	56,288	62,578
FNMA [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	16,807	20,071
Available-for-sale Securities, Unrealized Gains	1,023	647
Available-for-sale Securities, Unrealized Losses	0
Available-for-sale Securities, Fair Value	17,830	20,718
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	6,961	8,052
Available-for-sale Securities, Unrealized Gains	233	269
Available-for-sale Securities, Unrealized Losses	(13)
Available-for-sale Securities, Fair Value	7,181	8,321
GNMA [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	8,450	5,895
Available-for-sale Securities, Unrealized Gains	304	248
Available-for-sale Securities, Fair Value	8,754	6,143
CMO'S [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	1,796	2,196
Available-for-sale Securities, Unrealized Gains	29	25
Available-for-sale Securities, Fair Value	1,825	2,221
Collateralized Mortgage Backed Securities [Member]
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) [Line Items]
Available-for-sale Securities, Amortized Cost	34,014	36,214
Available-for-sale Securities, Unrealized Gains	1,589	1,189
Available-for-sale Securities, Unrealized Losses	(13)
Available-for-sale Securities, Fair Value	$ 35,590	$ 37,403

XML

Loans, Leases, And The Allowance For Loan And Lease Losses (Credit Quality Indicators Of Loans And Leases) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Commercial Real Estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	$ 35,581	$ 27,887
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure-By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	31,580	21,607
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure-By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	1,538	4,421
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure-By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	1,728	362
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure-By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	735	1,497
Commercial Real Estate Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	320,860	306,683
Commercial Real Estate Other [Member] | Corporate Credit Exposure-By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	274,012	250,575
Commercial Real Estate Other [Member] | Corporate Credit Exposure-By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	36,020	45,505
Commercial Real Estate Other [Member] | Corporate Credit Exposure-By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	3,946	1,758
Commercial Real Estate Other [Member] | Corporate Credit Exposure-By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	3,576	8,845
Commercial Real Estate Other [Member] | Corporate Credit Exposure-By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	3,306
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	353,135	334,570
Commercial Real Estate [Member] | Corporate Credit Exposure-By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	305,592	272,182
Commercial Real Estate [Member] | Corporate Credit Exposure-By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	37,558	49,926
Commercial Real Estate [Member] | Corporate Credit Exposure-By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	5,674	2,120
Commercial Real Estate [Member] | Corporate Credit Exposure-By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	4,311	10,342
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	106,794	109,513
Commercial And Industrial [Member] | Corporate Credit Exposure-By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	77,030	77,017
Commercial And Industrial [Member] | Corporate Credit Exposure-By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	22,288	21,448
Commercial And Industrial [Member] | Corporate Credit Exposure-By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	3,742	5,939
Commercial And Industrial [Member] | Corporate Credit Exposure-By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	3,000	4,761
Commercial And Industrial [Member] | Corporate Credit Exposure-By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and leases, Total	$ 734	$ 348

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements [Abstract]

Financial Instruments Measured At Fair Value On Recurring Basis

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Securities available-for-sale:
U.S. government agencies	$	—	$	24,514	$	—	$	24,514
States and political subdivisions		—		31,774		—		31,774
Mortgage-backed securities		—		35,590		—		35,590
Mortgage servicing rights		—		—		429		429
December 31, 2011
Securities available-for-sale:
U.S. Treasury and other U.S. government agencies	$	—	$	30,252	$	—	$	30,252
States and political subdivisions		—		32,326		—		32,326
Mortgage-backed securities		—		37,403		—		37,403
Mortgage servicing rights		—		—		407		407

Changes In Fair Value For Mortgage Servicing Rights

	Three months ended September 30,
	2012			2011
Beginning balance, June 30	$	448		$	442
Losses included in earnings		(67	)		(108	)
Additions from loan sales		48			19
Ending balance, September 30	$	429		$	353

	Nine months ended September 30,
	2012			2011
Beginning balance, December 31	$	407		$	388
Losses included in earnings		(121	)		(145	)
Additions from loan sales		143			110
Ending balance, September 30	$	429		$	353

Quantitative Information About Significant Unobservable Inputs Used In The Fair Value Measurement Of MSRs

	9/30/2012			9/30/2011
Servicing fees		0.25	%		0.25	%
Discount rate		10.08	%		10.14	%
Prepayment rate (CPR)		17.66	%		18.49	%

Financial Instruments Measured At Fair Value On Nonrecurring Basis

	Level 1		Level 2		Level 3		Fair Value
September 30, 2012
Impaired loans	$	—	$	—	$	11,525	$	11,525
December 31, 2011
Impaired loans	$	—	$	—	$	10,311	$	10,311

Estimated Fair Value Of The Company's Financial Instruments

	September 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
	(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	64,980	$	64,980	$	14,678	$	14,678
Level 2:
Available for sale securities		91,878		91,878		99,981		99,981
FHLB and FRB stock		3,249		3,249		3,255		3,255
Level 3:
Held to maturity securities		4,034		4,022		3,802		3,811
Loans and leases, net		588,408		623,825		571,910		602,534
Mortgage servicing rights		429		429		407		407
Financial liabilities:
Level 1:
Demand deposits	$	126,251	$	126,251	$	118,037	$	118,037
NOW deposits		62,946		62,946		50,761		50,761
Regular savings deposits		375,859		375,859		333,938		333,938
Junior subordinated debentures		11,330		11,330		11,330		11,330
Commitments to extend credit		76		76		161		161
Securities sold under agreement to repurchase		9,081		9,081		9,010		9,010
Level 2:
Other borrowed funds		19,000		19,641		22,000		22,988
Level 3:
Time deposits		107,674		110,925		113,467		116,666