10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d)

of the Securities Exchange Act of 1934

For Quarter Ended: March 31, 2013

Commission File Number: 0-19345

ESB FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1659846
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
600 Lawrence Avenue, Ellwood City, PA	16117
(Address of principal executive offices)	(Zip Code)

(724) 758-5584

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, 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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b2 of the Exchange Act)    Yes  ¨    No  x

Number of shares of common stock outstanding as of April 30, 2012:

Common Stock, $0.01 par value	14,682,931 shares
(Class)	(Outstanding)

ESB FINANCIAL CORPORATION

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Statements of Financial Condition as of March 31, 2013 and December 31, 2012 (Unaudited)	1
	Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 (Unaudited)	2
	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012 (Unaudited)	3
	Consolidated Statement of Changes in Stockholders’ Equity for the three months ended March 31, 2013 (Unaudited)	4
	Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012 (Unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Results of Operations and Financial Condition	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	49
Item 4.	Controls and Procedures	49
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
	Signatures	51

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Financial Condition

As of March 31, 2013 (Unaudited) and December 31, 2012

(Dollar amounts in thousands)

	March 31, 2013			December 31, 2012
Assets
Cash on hand and in banks	$	3,323		$	5,664
Interest-earning deposits		11,819			9,400
Cash and cash equivalents		15,142			15,064
Securities available for sale; cost of $1,045,225 and $1,065,447		1,086,629			1,110,776
Loans receivable, net of allowance for loan losses of $6,721 and $6,709		681,273			672,086
Accrued interest receivable		7,943			8,068
Federal Home Loan Bank (FHLB) stock		15,581			15,077
Premises and equipment, net		14,013			14,286
Real estate acquired through foreclosure, net		2,426			2,441
Real estate held for investment		9,550			9,968
Goodwill		41,599			41,599
Intangible assets		252			302
Bank owned life insurance		30,181			30,025
Securities receivable		1,909			1,277
Prepaid expenses and other assets		5,634			6,645
Total assets	$	1,912,132		$	1,927,614
Liabilities and Stockholders’ Equity
Liabilities:
Deposits	$	1,206,843		$	1,178,057
FHLB advances		257,268			213,232
Repurchase agreements		178,000			268,000
Other borrowings		12,963			3,324
Junior subordinated notes		36,083			46,393
Advance payments by borrowers for taxes and insurance		2,650			2,619
Accounts payable for land development		1,967			2,033
Accrued expenses and other liabilities		20,959			19,156
Total liabilities		1,716,733			1,732,814
Stockholders’ Equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued		—			—
Common stock, $.01 par value, 30,000,000 shares authorized; 19,214,524 and 19,211,434 shares issued; (1) 17,618,877 and 17,600,334 shares outstanding (1)		163			163
Additional paid-in capital		103,377			103,346
Treasury stock, at cost; 1,595,647 and 1,611,100 shares (1)		(18,708	)		(18,847	)
Unearned Employee Stock Ownership Plan (ESOP) shares		(2,875	)		(3,132	)
Retained Earnings		91,319			89,065
Accumulated other comprehensive income, net		23,167			25,103
Total ESB Financial Corporation’s stockholders’ equity		196,443			195,698
Noncontrolling interest		(1,044	)		(898	)
Total stockholders’ equity		195,399			194,800
Total liabilities and stockholders’ equity	$	1,912,132		$	1,927,614

(1) Shares issued and outstanding have been adjusted to reflect the six-for-five stock split declared April 16, 2013.

See accompanying notes to unaudited consolidated financial statements.

1

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Operations

For the three months ended March 31, 2013 and 2012 (Unaudited)

(Dollar amounts in thousands, except share data)

	Three Months Ended
	March 31,
	2013		2012
Interest income:
Loans receivable	$	8,073	$	8,349
Taxable securities available for sale		6,688		8,846
Tax free securities available for sale		1,657		1,647
FHLB Stock		8		10
Deposits with banks and federal funds sold		1		18
Total interest income		16,427		18,870
Interest expense:
Deposits		1,962		2,551
Borrowed funds		3,653		4,710
Junior subordinated notes and guaranteed preferred beneficial interest in subordinated debt		561		612
Total interest expense		6,176		7,873
Net interest income		10,251		10,997
Provision for loan losses		150		200
Net interest income after provision for loan losses		10,101		10,797
Noninterest income:
Fees and service charges		725		835
Net gain on sale of loans		—		—
Increase of cash surrender value of bank owned life insurance		155		158
Net realized gain on sale of securities available for sale		268		267
Total other-than-temporary impairment losses		—		—
Portion of loss recognized in other comprehensive income before taxes		—		—
Net impairment losses on investment securities		—		—
Net realized loss on derivatives		15		(131	)
Income from real estate joint ventures		577		419
Other		173		175
Total noninterest income		1,913		1,723
Noninterest expense:
Compensation and employee benefits		4,430		4,358
Premises and equipment		723		717
Federal deposit insurance premiums		308		407
Data processing		579		589
Amortization of intangible assets		48		68
Advertising		134		139
Other		991		1,444
Total noninterest expense		7,213		7,722
Income before income taxes		4,801		4,798
Provision for income taxes		811		845
Net income before noncontrolling interest		3,990		3,953
Less: net income attributable to the noncontrolling interest		276		168
Net income attributable to ESB Financial Corporation	$	3,714	$	3,785
Net income per share
Basic (1)	$	0.21	$	0.22
Diluted (1)	$	0.21	$	0.22
Cash dividends declared per share (1)	$	0.08	$	0.08
Weighted average shares outstanding (1)		17,312,614		17,152,130
Weighted average shares and share equivalents outstanding (1)		17,466,268		17,327,939

(1) Outstanding shares and per share data have been adjusted to reflect the six-for-five stock split declared April 16, 2013.

See accompanying notes to unaudited consolidated financial statements.

2

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income

For the three months ended March 31, 2013 and 2012 (Unaudited)

(Dollar amounts in thousands)

	Three Months Ended
	March 31,
	2013			2012
Net Income before noncontrolling interest		3,990		$	3,953
Other comprehensive income (net of tax and reclassifications)
Net change in unrealized gains (losses):
Securities available for sale other-than-temporarily impaired:
Total losses		—			—
Losses recognized in earnings		—			—
Losses recognized in comprehensive income		—			—
Income tax effect		—			—
Unrealized holding (gains) losses on other-than-temporarily impaired securities available for sale, net of tax		—			—
Securities available for sale not other-than-temporarily impaired:
(Losses) gains arising during the year		(3,506	)		4,834
Income tax effect		1,192			(1,643	)
		(2,314	)		3,191
Gains recognized in earnings		268			267
Income tax effect		(91	)		(91	)
		177			176
Unrealized holding gains (losses) on securities available for sale not other-than-temporarily-impaired, net of tax		(2,137	)		3,367
Unrealized holding gain (loss) on securities, net		(2,137	)		3,367
Pension and Postretirement Amortization		37			52
Income tax effect		(13	)		(17	)
		24			35
Fair Value adjustment on derivatives		268			220
Income tax effect		(91	)		(75	)
		177			145
Other comprehensive income (loss)		(1,936	)		3,547
Net comprehensive income before noncontrolling interest		2,054			7,500
Less: net income attributable to the noncontrolling interest		276			168
Net comprehensive income attributable to ESB Financial Corporation	$	1,778		$	7,332

3

ESB Financial Corporation and Subsidiaries

Consolidated Statement of Changes in Stockholders’ Equity

For the three months ended March 31, 2013 (Unaudited)

(Dollar amounts in thousands, except share data)

	Common stock		Additional paid-in capital			Treasury stock			Unearned ESOP shares			Retained earnings			Accumulated other comprehensive income, net of tax			Noncontrolling Interest			Total stockholders’ equity
Balance at January 1, 2013	$	163	$	103,346		$	(18,847	)	$	(3,132	)	$	89,065		$	25,103		$	(898	)	$	194,800
Net income		—		—			—			—			3,714			—			276			3,990
Other comprehensive results, net		—		—			—			—			—			(1,936	)		—			(1,936	)
Cash dividends at $0.08 per share (1)		—		—			—			—			(1,444	)		—			—			(1,444	)
Purchase of treasury stock, at cost (22.190 shares)		—		—			(305	)		—			—			—			—			(305	)
Reissuance of treasury stock for stock option exercises (37,643 shares)		—		—			444			—			(16	)		—			—			428
Compensation expense ESOP		—		120			—			257			—			—			—			377
Additional ESOP shares purchased		—		(99	)		—			—			—			—			—			(99	)
Tax effect of compensatory stock options		—		10			—			—			—			—			—			10
Effect of compensation expense for stock option		—		—			—			—			—			—			—			—
Capital disbursement for noncontrolling interest		—		—			—			—			—			—			(422	)		(422	)
Unvested shares in MRP		—		—			—			—			—			—			—			—
Balance at March 31, 2013	$	163	$	103,377		$	(18,708	)	$	(2,875	)	$	91,319		$	23,167		$	(1,044	)	$	195,399

(1) Per share data has been adjusted to reflect the six-for-five stock split declared April 16, 2013.

See accompanying notes to unaudited consolidated financial statements.

4

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the three months ended March 31, 2013 and 2012 (Unaudited)

(Dollar amounts in thousands)

	Three months ended
	March 31,
	2013			2012
Operating activities:
Net income	$	3,990		$	3,953
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization for premises and equipment		244			258
Provision for loan losses		150			200
Amortization of premiums and accretion of discounts		1,069			849
Net gain on sale of securities available for sale		(268	)		(267	)
Net realized (gain) loss on derivatives		(15	)		131
Amortization of intangible assets		48			68
Compensation expense on ESOP and MRP		378			375
Increases in Bank owned life insurance		(156	)		(158	)
Decrease in accrued interest receivable		125			550
Decrease in prepaid FDIC assessment		281			377
Decrease (increase) in prepaid expenses and other assets		747			266
Increase in accrued expenses and other liabilities		3,791			2,095
Gain on sale of real estate acquired through foreclosure		(5	)		(9	)
Other		(1,449	)		281
Net cash provided by operating activities		8,930			8,969
Investing activities:
Loan originations		(49,460	)		(55,084	)
Purchases of:
Securities available for sale		(43,441	)		(52,396	)
FHLB stock		(1,904	)		—
Premises and equipment		(74	)		(213	)
Principal repayments of:
Loans receivable		41,431			44,178
Securities available for sale		60,839			59,714
Proceeds from the sale of:
Securities available for sale		1,508			767
Real estate acquired through foreclosure		80			473
Premises and equipment		105			—
Redemption of FHLB stock		1,400			1,063
Funding of real estate held for investment		(1,970	)		(2,057	)
Proceeds from real estate held for investment		871			960
Net cash provided by (used in) investing activities		9,385			(2,595	)
Financing activities:
Net increase in deposits		28,786			33,919
Proceeds from long-term borrowings		53,749			2,628
Repayments of long-term borrowings		(92,073	)		(36,476	)
Net (decrease) increase in short-term borrowings		1,999			(1	)
Capital disbursement to noncontrolling interest		(422	)		(2	)
Redemption of junior subordinated notes		(10,310	)		—
Proceeds received from exercise of stock options		438			389
Dividends paid		—			(1,460	)
Payments to acquire treasury stock		(305	)		(42	)
Stock purchased by ESOP		(99	)		(88	)
Net cash used in financing activities		(18,237	)		(1,133	)
Net increase in cash equivalents		78			5,241
Cash equivalents at beginning of period		15,064			38,848
Cash equivalents at end of period	$	15,142		$	44,089

5

ESB Financial Corporation and Subsidiaries

Consolidated Statements of Cash Flows, (Continued)

For the three months ended March 31, 2013 and 2012 (Unaudited)

(Dollar amounts in thousands)

	Three months ended
	March 31,
	2013		2012
Supplemental information:
Interest paid	$	5,574	$	7,274
Income taxes paid		602		504
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans receivable to real estate acquired through foreclosure		27		366
Transfers from loan originations to proceeds on real estate held for investment		1,451		940
Dividends declared but not paid		1,468		1,431
Unfunded security commitments		738		4,804

See accompanying notes to unaudited consolidated financial statements.

6

ESB Financial Corporation and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Principles of Consolidation

ESB Financial Corporation (the Company) is a publicly traded Pennsylvania thrift holding company. The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries, which are ESB Bank (ESB or the Bank), THF, Inc. (THF), ESB Financial Services, Inc. (EFS) and AMSCO, Inc. (AMSCO). ESB is a Pennsylvania chartered, Federal Deposit Insurance Corporation (FDIC) insured stock savings bank.

AMSCO is engaged in real estate development and construction of 1-4 family residential units independently or in conjunction with its joint ventures. AMSCO is currently involved in nine real estate joint ventures, all of which are owned 51% or greater by AMSCO. The Bank has provided all development and construction financing. These joint ventures have been included in the consolidated financial statements and reflected within the consolidated statements of financial condition as real estate held for investment and related operating income and expenses reflected within other non-interest income or expense. The Bank’s loans to AMSCO and related interest have been eliminated in consolidation.

In addition to the elimination of the loans and interest to the joint ventures described above, all other significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited consolidated financial statements for the interim periods include all adjustments, consisting only of normal recurring accruals, which are necessary, in the opinion of management, to fairly reflect the Company’s financial position and results of operations. Additionally, these consolidated financial statements for the interim periods have been prepared in accordance with instructions for the Securities and Exchange Commission’s Form 10-Q and therefore do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended December 31, 2012, as contained in the Company’s 2012 Annual Report to Stockholders.

The results of operations for the three month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire year. Certain amounts previously reported have been reclassified to conform to the current periods’ reporting format, such reclassifications did not have an effect on stockholders’ equity or net income.

The accounting principles followed by the Company and the methods of applying these principles conform with GAAP and with general practice within the banking industry. In preparing the consolidated financial statements management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Statement of Financial Condition date and revenues and expenses for the period. Actual results could differ significantly from those estimates.

Operating Segments

An operating segment is defined as a component of an enterprise that engages in business activities that generate revenue and incur expense, the operating results of which are reviewed by management. At March 31, 2013, the Company was doing business through 23 full service banking branches, one loan production office and through its various other subsidiaries. Loans and deposits are primarily generated from the areas where banking branches are located. The Company derives its income predominantly from interest on loans and securities and to a lesser extent, non-interest income. The Company’s principal expenses are interest paid on deposits and borrowed funds and normal operating costs. The Company’s operations are principally in the banking industry. Consistent with internal reporting, the Company’s operations are reported in one operating segment, which is community banking.

7

Stock Based Compensation

During the three months ended March 31, 2012 and 2011, the Company recorded approximately $107,000 and $100,000, respectively, in compensation expense and a tax benefit of $9,000 and $6,500, respectively, related to its share-based compensation awards that are expected to vest in 2012. As of March 31, 2012, there was approximately $790,000 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next four years.

As required by GAAP, cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards (excess tax benefits) are classified as financing cash flows.

Financial Instruments

As part of its overall interest rate risk management activities, the Company utilizes derivative instruments to manage its exposure to various types of interest rate risk. Interest rate swaps and interest rate caps are the primary instruments the Company uses for interest rate risk management. Derivative instruments are recorded at fair value as either part of prepaid expenses and other assets or accrued expenses and other liabilities on the consolidated statements of financial condition. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

The Company formally documents the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy, before undertaking an accounting hedge. To qualify for hedge accounting, the derivatives and related hedged items must be designated as a hedge at inception of the hedge relationship. For accounting hedge relationships, we formally assess, both at the inception of the hedge and on an ongoing basis, if the derivatives are highly effective in offsetting designated changes in the fair value or cash flows of the hedged item. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. To the extent the change in fair value of the derivative does not offset the change in fair value of the hedged item, the difference or ineffectiveness is reflected in earnings in the same financial statement category as the hedged item.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (OCI) and subsequently reclassified to earnings when the hedged transaction affects earnings and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

At March 31, 2013, there were sixteen interest rate cap contracts outstanding with notional amounts totaling $170.0 million. These derivative instruments are not hedged and therefore adjustments to fair value are recorded in current earnings.

The Company entered into two interest rate swap contracts to manage its exposure to interest rate risk. These interest rate swap transactions involved the exchange of the Company’s interest payment on $35.0 million in junior subordinated notes which became floating rate notes in 2011 for a fixed rate interest payment without the exchange of the underlying principal amount. Entering into interest rate derivatives potentially exposes the Company to the risk of counterparties’ failure to fulfill their legal obligations including, but not limited to,

8

potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Management utilizes the Change in Variable Cash Flows Method to measure hedge ineffectiveness. To the extent that the cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated cash flows from the hedged exposure, the hedged is deemed effective. As of March 31, 2013 the interest rate swaps were deemed to be effective, therefore no amounts were charged to current earnings. The Company also does not expect to reclassify any hedge related amounts from OCI to earnings over the next twelve months.

The pay fixed interest rate swap contract outstanding at March 31, 2013 is being utilized to hedge $35.0 million in floating rate junior subordinated notes. Below is a summary of the interest rate swap contract and the terms at March 31, 2013:

	Notional		Effective		Pay			Receive			Maturity		Unrealized
(Dollars in thousands)	Amount		Date		Rate			Rate (*)			Date		Gain		Loss
Cash Flow Hedge	$	20,000		2/10/2011		4.18	%		0.31	%		2/10/2018		—	$	3,191
Cash Flow Hedge		15,000		2/10/2011		3.91	%		0.31	%		2/10/2018		—		2,196
	$	35,000												—	$	5,387

* Variable receive rate based upon contract rates in effect at March 31, 2013

Recent Accounting and Regulatory Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

9

In July, 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 (early adoption permitted). This ASU did not have a significant impact on the Company’s financial statements.

In October, 2012, the FASB issued ASU 2012-06, Business Combinations (Topic 805) - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. ASU 2012-06 requires that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU 2012-06 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. This ASU is not expected to have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of Update 2011-11. This ASU did not have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The Company has provided the necessary disclosures in note seven.

10

In February 2013, the FASB issued ASU 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The objective of the amendments in this Update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). Examples of obligations within the scope of this Update include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. U.S. GAAP does not include specific guidance on accounting for such obligations with joint and several liability, which has resulted in diversity in practice. Some entities record the entire amount under the joint and several liability arrangement on the basis of the concept of a liability and the guidance that must be met to extinguish a liability. Other entities record less than the total amount of the obligation, such as an amount allocated, an amount corresponding to the proceeds received, or the portion of the amount the entity agreed to pay among its co-obligors, on the basis of the guidance for contingent liabilities. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter. This ASU is not expected to have a significant impact on the Company’s financial statements.

2. Securities

The Company’s securities available for sale portfolio is summarized as follows:

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
March 31, 2013:
Trust preferred securities	$	45,895	$	409	$	(8,063	)	$	38,241
Municipal securities		177,528		12,154		(423	)		189,259
Equity securities		1,142		849		—			1,991
Corporate bonds		219,737		7,832		(496	)		227,073
Mortgage-backed securities
U.S. sponsored entities		598,647		29,535		(426	)		627,756
Private label		2,276		33		—			2,309
Subtotal mortgage-backed securities		600,923		29,568		(426	)		630,065
Total securities	$	1,045,225	$	50,812	$	(9,408	)	$	1,086,629
December 31, 2012:
Trust preferred securities	$	45,894	$	367	$	(8,234	)	$	38,027
Municipal securities		177,414		13,717		(244	)		190,887
Equity securities		1,142		676		—			1,818
Corporate bonds		219,700		7,186		(1,091	)		225,795
Mortgage-backed securities
U.S. sponsored entities		617,158		33,021		(246	)		649,933
Private label		4,139		177		—			4,316
Subtotal mortgage-backed securities		621,297		33,198		(246	)		654,249
Total securities	$	1,065,447	$	55,144	$	(9,815	)	$	1,110,776

The private-label mortgage backed securities totaled $2.3 million and $4.3 million as of March 31, 2013 and December 31, 2012, respectively.

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013:

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As of March 31, 2013

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,353	$	8,063		9	$	36,353	$	8,063
Municipal securities		10		8,130		210		2		3,032		213		12		11,162		423
Corporate bonds		2		6,078		12		5		20,516		484		7		26,594		496
Mortgage-backed securities
U.S. sponsored entities		16		65,565		426		—		—		—		16		65,565		426
Total		28	$	79,773	$	648		16	$	59,901	$	8,760		44	$	139,674	$	9,408

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2012:

As of December 31, 2012

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,179	$	8,234		9	$	36,179	$	8,234
Municipal securities		5		4,179		58		2		3,059		186		7		7,238		244
Corporate bonds		5		15,604		110		5		20,020		981		10		35,624		1,091
Mortgage-backed securities
U.S. sponsored entities		8		28,246		246		—		—		—		8		28,246		246
Total		18	$	48,029	$	414		16	$	59,258	$	9,401		34	$	107,287	$	9,815

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, trust preferred securities, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the corporate bonds that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI losses and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at March 31, 2013, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. There were no OTTI losses on individual securities during the quarter.

One pooled trust preferred security has previously been determined to be other than temporarily impaired due solely to credit related factors. This security is a collateralized debt obligation currently comprised of trust preferred securities of 10 financial institutions and has a Moody’s rating of Ca, which is below investment grade.

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The Company utilized a discounted cash flow method to determine the amount of impairment. During this analysis, the Company determined that two of these financial institutions are currently deferring interest payments. The Company utilized an independent third party to analyze this bond at December 31, 2011 and the Company believes the factors have improved for this bond since the third party review and no additional impairment exists.

Because of the subprime crisis current markets for variable rate corporate trust preferred securities are illiquid. In order to determine prices of these securities the Company utilizes a discounted cash flow method. This method is described more fully in footnote 9, “Fair Value.”

The following table summarizes scheduled maturities of the Company’s securities as of March 31, 2013 and December 31, 2012 excluding equity securities which have no maturity dates:

As of March 31, 2013

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.71	%	$	22,982	$	23,303
Due from one year to five years		3.06	%		187,547		195,987
Due from five to ten years		3.15	%		106,489		110,108
Due after ten years		3.18	%		727,065		755,240
		3.17	%	$	1,044,083	$	1,084,638

As of December 31, 2012

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.80	%	$	19,137	$	19,411
Due from one year to five years		3.05	%		187,595		195,182
Due from five to ten years		3.27	%		108,288		111,879
Due after ten years		3.30	%		749,285		782,486
		3.26	%	$	1,064,305	$	1,108,958

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the three months ended March 31, 2013 was $1.5 million resulting in gross realized gains of $268,000. The proceeds from the sale of securities for the three months ended March 31, 2012 $25.4 million resulting in gross realized gains of $267,000. There were no gross realized losses for the three months ended March 31, 2013 and 2012, respectively.

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3. Loans Receivable

The Company’s loans receivable as of the respective dates are summarized as follows:

	March 31,			December 31,
(In thousands)	2013			2012
Mortgage loans:
Residential real estate
Single family	$	331,097		$	326,005
Multi family		34,836			33,472
Construction		45,740			46,418
Total residential real estate		411,673			405,895
Commercial real estate
Commercial		83,843			81,077
Construction		14,664			15,878
Total commercial real estate		98,507			96,955
Subtotal mortgage loans		510,180			502,850
Other loans:
Consumer loans
Home equity loans		80,409			80,418
Dealer auto and RV loans		46,861			46,571
Other loans		7,420			7,896
Total consumer loans		134,690			134,885
Commercial business		58,141			54,445
Subtotal other loans		192,831			189,330
Total loans receivable		703,011			692,180
Less:
Allowance for loan losses		6,721			6,709
Deferred loan fees and net discounts		(1,923	)		(1,862	)
Loans in process		16,940			15,247
Subtotal		21,738			20,094
Net loans receivable	$	681,273		$	672,086

At March 31, 2013 and December 31, 2012, the Company conducted its business through 23 offices in Allegheny, Beaver, Butler and Lawrence counties in Pennsylvania which also serves as its primary lending area. Management does not believe it has significant concentrations of credit risk to any one group of borrowers given its underwriting and collateral requirements.

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loans are segmented into the following pools: commercial business loans, commercial real estate loans, residential real estate loans and consumer loans. The Company sub-segments residential real estate loans into the following three classes: single family, construction and multi-family. Commercial real estate is sub-segmented into commercial and construction classes. The Company also sub-segments the consumer loan portfolio into the following three classes: home equity, dealer automobile and recreational vehicle (RV) and other consumer loans. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance allocations. These historical loss percentages are calculated over a three year period for all portfolio segments. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed for each portfolio segment:

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• Levels of and trends in delinquencies and nonaccruals

• Changes in lending policies and procedures

• Volatility of losses within each risk category

• Loans and Lending staff acquired through acquisition

• Economic trends

• Concentrations of credit

• Trends in volume and terms

• Experience depth and ability of management

These qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the portfolio. During the first three months of 2013, the qualitative factors for trends in volume and terms were also increased for other consumer and commercial loans.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Loans by Segment

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the statement of financial condition date. The Company considers the allowance for loan losses of $6.7 million adequate to cover loan losses inherent in the loan portfolio, at March 31, 2013. The following tables present by portfolio segment, the changes in the allowance for loan losses for the periods ended March 31, 2013 and 2012.

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	550	$	2,075	$	1,031	$	2,541	$	512	$	6,709
Charge-offs		—		—		146		10		—		156
Recoveries		—		—		18		—		—		18
Provision		14		50		25		61		—		150
Reallocations		—		—		—		—		—		—
Ending Balance	$	564	$	2,125	$	928	$	2,592	$	512	$	6,721

As of March 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate			Consumer			Residential		Unallocated			Total
Allowance for loan losses:
Beginning balance	$	384	$	2,442		$	1,045		$	2,115	$	551		$	6,537
Charge-offs		—		—			107			39		—			146
Recoveries		—		—			25			17		—			42
Provision		—		—			—			200		—			200
Reallocations		22		(103	)		(8	)		147		(58	)		—
Ending Balance	$	406	$	2,339		$	955		$	2,440	$	493		$	6,633

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The following tables present by portfolio segment, the recorded investment in loans at March 31, 2013 and December 31, 2012.

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,049	$	51	$	—	$	—	$	1,100
Ending balance: collectively evaluated for impairment	$	564	$	1,076	$	877	$	2,592	$	512	$	5,621
Loans Receivable:
Ending Balance	$	58,141	$	98,507	$	134,690	$	411,673	$	—	$	703,011
Ending balance: individually evaluated for impairment	$	—	$	13,055	$	386	$	2,237	$	—	$	15,678
Ending balance: collectively evaluated for impairment	$	58,141	$	85,452	$	134,304	$	409,436	$	—	$	687,333

As of December 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,110	$	54	$	—	$	—	$	1,164
Ending balance: collectively evaluated for impairment	$	550	$	965	$	977	$	2,541	$	512	$	5,545
Loans Receivable:
Ending Balance	$	54,445	$	96,955	$	134,885	$	405,895	$	—	$	692,180
Ending balance: individually evaluated for impairment	$	—	$	13,414	$	327	$	2,163	$	—	$	15,904
Ending balance: collectively evaluated for impairment	$	54,445	$	83,541	$	134,558	$	403,732	$	—	$	676,276

Credit Quality Information

The following tables represent credit exposures by internally assigned grades as of March 31, 2013 and December 31, 2012. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

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Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

Substandard – loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate Multi - family		Residential Real Estate Construction		Commercial Real Estate Commercial		Commercial Real Estate Construction		Commercial
Pass	$	34,836	$	40,403	$	68,511	$	14,664	$	57,535
Special Mention		—		4,459		1,649		—		573
Substandard		—		878		13,683		—		33
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	34,836	$	45,740	$	83,843	$	14,664	$	58,141

As of December 31, 2012

(Dollar amounts in thousands)

	Residential		Residential		Commercial		Commercial
	Real Estate		Real Estate		Real Estate		Real Estate
	Multi - family		Construction		Commercial		Construction		Commercial
Pass	$	33,472	$	41,138	$	65,696	$	15,878	$	53,883
Special Mention		—		4,477		1,334		—		527
Substandard		—		803		14,047		—		35
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	33,472	$	46,418	$	81,077	$	15,878	$	54,445

The following tables present performing and nonperforming single family residential and consumer loans based on payment activity as of March 31, 2013 and December 31, 2012. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days delinquent.

17

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	327,410	$	80,092	$	46,691	$	7,299
Nonperforming		3,687		317		170		121
Total	$	331,097	$	80,409	$	46,861	$	7,420

As of December 31, 2012

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	322,662	$	80,124	$	46,450	$	7,787
Nonperforming		3,343		294		121		109
Total	$	326,005	$	80,418	$	46,571	$	7,896

Nonperforming loans also include certain loans that have been modified and classified as troubled debt restructuring (TDR) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

Non-performing loans, which include non-accrual loans and TDRs, were $7.7 million and $7.4 million at March 31, 2013 and December 31, 2012, respectively. The TDRs included in non-performing loans amounted to $460,000 and $368,000 at both March 31, 2013 and December 31, 2012, respectively. The Company also had TDR’s that were in compliance with their modified terms of $8.3 million and $8.2 million at March 31, 2013 and December 31, 2012, respectively. The Company is not committed to lend additional funds to debtors whose loans are on non-accrual status.

Age Analysis of Past Due Loans Receivable by Class

Following tables are an aging analysis of the investment of past due loans receivable as of March 31, 2013 and December 31, 2012.

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(Dollar amounts in thousands)

As of March 31, 2013

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	361	$	386	$	3,687	$	4,434	$	326,663	$	331,097	$	—
Construction		—		—		—		—		34,836		34,836		—
Multi-family		—		—		—		—		45,740		45,740		—
Commercial Real Estate
Commercial		78		507		3,035		3,620		80,223		83,843		—
Construction		—		—		—		—		14,664		14,664		—
Consumer
Consumer - home equity		94		—		189		283		80,126		80,409		—
Consumer - dealer auto and RV		365		118		158		641		46,220		46,861		—
Consumer - other		17		33		121		171		7,249		7,420		—
Commercial		60		—		36		96		58,045		58,141		—
Total	$	975	$	1,044	$	7,226	$	9,245	$	693,766	$	703,011	$	—

(Dollar amounts in thousands)

As of December 31, 2012

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	887	$	420	$	3,343	$	4,650	$	321,355	$	326,005	$	—
Construction		—		—		—		—		46,418		46,418		—
Multi-family		—		—		—		—		33,472		33,472		—
Commercial Real Estate
Commercial		246		598		3,211		4,055		77,022		81,077		—
Construction		—		—		—		—		15,878		15,878		—
Consumer
Consumer - home equity		219		—		223		442		79,976		80,418		—
Consumer - dealer auto and RV		771		230		104		1,105		45,466		46,571		—
Consumer - other		70		12		109		191		7,705		7,896		—
Commercial		—		2		35		37		54,408		54,445		—
Total	$	2,193	$	1,262	$	7,025	$	10,480	$	681,700	$	692,180	$	—

Impaired Loans

Management considers commercial loans, multi-family, residential real estate construction and commercial real estate loans which are 90 days or more past due to be impaired. Larger commercial loans, commercial real estate loans and development loans which are 60 days or more past due, are selected for impairment testing. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the fair value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through a provision for loan loss estimate or a charge-off to the allowance for loan losses.

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The following tables summarize impaired loans:

(Dollar amounts in thousands)

	March 31, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	5,135	$	5,242	$	—	$	5,433	$	5,540	$	—
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction loans		878		878		—		803		803		—
Consumer loans
Home Equity		196		223		—		130		130		—
Dealer auto and RV		11		11		—		14		14		—
With an allowance recorded:
Commercial Real Estate		7,920		8,083		1,049		7,981		8,144		1,110
Consumer Loans:
Home Equity		174		151		47		179		179		50
Dealer auto and RV		4		4		4		4		4		4
Total:
Commercial Real Estate		13,055		13,325		1,049		13,414		13,684		1,110
Consumer		385		389		51		327		327		54
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction		878		878		—		803		803		—
Total	$	15,677	$	15,951	$	1,100	$	15,904	$	16,174	$	1,164

(Dollar amounts in thousands)

	Three months ended				Three months ended
	March 31, 2013				March 31, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial Real Estate	$	5,134	$	70	$	5,529	$	50
Commercial business loans		—		—		—		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans
Home equity		149		4
Dealer auto and RV		12		1
With an allowance recorded:
Commercial Real Estate		7,941		124		8,421		106
Commercial business loans		—		—		46		—
Residential single family		—		—		—
Consumer loans
Home equity		175		3		153		2
Dealer auto and RV		4		—		—		—
Total:
Commercial Real Estate	$	13,075	$	194	$	13,950	$	156
Commercial business loans		340		8		46		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans		—		—		153		2

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Nonaccrual Loans

Loans are considered nonaccrual upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed in nonaccrual status, previously accrued but unpaid interest is deducted from interest income.

On the following table are the loans receivable on nonaccrual status as of March 31, 2013 and December 31, 2012. The balances are presented by class of loans:

(Dollar amounts in thousands)	March 31,		December 31,
	2013		2012
Commercial	$	36	$	35
Commercial Real Estate		3,157		3,432
Consumer
Consumer - Home Equity		189		293
Consumer - Dealer auto and RV		158		121
Consumer - other		121		109
Residential		3,687		3,403
Total	$	7,348	$	7,393

Modifications

The Company’s loan portfolio also includes TDR’s, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The following table includes the recorded investment and number of modifications for modified loans, as of March 31, 2013 and December 31, 2012. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured.

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As of March 31, 2013

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		—	$	—	$	—		—	$	—	$	—
Commerical real estate		1		43		—		—		43		43
Consumer
Home equity		3		76		76		—		—		76
Dealer auto and RV		—		—		—		—		—		—
Troubled Debt Restructurings		4	$	119	$	76		—	$	43	$	119

As of December 31, 2012

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		4	$	1,053	$	1,053		—	$	—	$	1,053
Commerical real estate		2		198		198		—		—		198
Consumer
Home equity		7		168		168		—		—		168
Dealer auto and RV		4		18		18		—		—		18
Troubled Debt Restructurings		17	$	1,437	$	1,437		—	$	—	$	1,437

The Company did not have any TDR’s that defaulted subsequent to their modification during the periods reported.

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4. Deposits

The Company’s deposits as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
Type of accounts	Amount		%			Amount		%
Noninterest-bearing deposits	$	113,840		9.4	%	$	109,964		9.3	%
NOW account deposits		247,453		20.5	%		223,736		19.0	%
Money Market deposits		42,143		3.5	%		39,255		3.3	%
Passbook account deposits		178,882		14.8	%		173,343		14.7	%
Time deposits		624,525		51.8	%		631,759		53.7	%
	$	1,206,843		100.0	%	$	1,178,057		100.0	%
Time deposits mature as follows:
Within one year	$	383,629		61.4	%	$	375,862		59.5	%
After one year through two years		113,170		18.1	%		118,333		18.7	%
After two years through three years		80,016		12.8	%		78,492		12.4	%
After three years through four years		27,923		4.5	%		36,920		5.8	%
After four years through five years		14,972		2.4	%		17,106		2.7	%
Thereafter		4,815		0.8	%		5,046		0.8	%
	$	624,525		100.0	%	$	631,759		100.0	%

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5. Borrowed Funds

The Company’s borrowed funds as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
	Weighted					Weighted
	average					average
	rate			Amount		rate			Amount
FHLB advances:
Due within 12 months		2.70	%	$	112,582		2.69	%	$	100,147
Due beyond 12 months but within 2 years		2.83	%		59,202		2.88	%		71,392
Due beyond 2 years but within 3 years		1.79	%		38,071		3.13	%		15,873
Due beyond 3 years but within 4 years		1.36	%		32,234		2.15	%		8,013
Due beyond 4 years but within 5 years		0.93	%		5,179		1.03	%		7,807
Due beyond 5 years		3.61	%		10,000		3.61	%		10,000
				$	257,268				$	213,232
Repurchase agreements:
Due within 12 months		2.82	%	$	78,000		2.99	%	$	148,000
Due beyond 12 months but within 2 years		3.28	%		20,000		3.07	%		40,000
Due beyond 2 years but within 3 years		4.12	%		10,000		4.12	%		10,000
Due beyond 4 years but within 5 years		4.28	%		25,000		4.28	%		25,000
Due beyond 5 years		4.49	%		45,000		4.49	%		45,000
				$	178,000				$	268,000
Other borrowings:
ESOP borrowings
Due within 12 months		4.68	%	$	1,000		4.68	%	$	1,000
Due beyond 12 months but within 2 years		4.68	%		1,000		4.68	%		1,000
Due beyond 2 years but within 3 years		4.68	%		1,000		4.68	%		1,000
Due beyond 3 years but within 4 years		—			—		4.68	%		250
				$	3,000				$	3,250
Corporate borrowings
Due within 12 months		3.75	%	$	1,000		—			—
Due beyond 12 months but within 2 years		3.75	%		1,000		—			—
Due beyond 2 years but within 3 years		3.75	%		1,000		—			—
Due beyond 3 years but within 4 years		3.75	%		1,000		—			—
Due beyond 4 years but within 5 years		3.75	%		5,954		—			—
				$	9,954					—
Borrowings for joint ventures
Due beyond 2 years but within 3 years		3.75	%	$	9		3.75	%	$	74
Junior subordinated notes
Due beyond 5 years		2.11	%	$	36,083		2.41	%	$	46,393

Included in the $257.3 million of FHLB advances at March 31, 2013 are $50.0 million in structured advances in with imbedded caps at various strike rates based on the 3 month LIBOR rate. If during the term of the advance, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured advance is reduced by the difference between the rate and the strike rate.

Included in the $178.0 million of Repurchase Agreements (REPOs) are $20.0 million in structured REPOs with imbedded caps at various strike rates based on the 3 month LIBOR rate. If during the term of the REPO, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured REPO is reduced by the difference

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between the rate and the strike rate. In addition, the Company has $25.0 million in structured REPOs with double, or $50.0 million notional amount of imbedded caps, at a strike rate of 3.75% based on the 3 month LIBOR rate. The terms and conditions of these structured REPOs are that the rate is fixed for five years and after 5 years, on a specified date the counterparty has the one time right (European Call) to call the REPO. If the counterparty does not call the REPO on the specified date, the rate remains the same for the remaining five years. These structured REPOs also include a double imbedded cap for the first five year period with a strike rate to the 3 month LIBOR rate. If during the first five years, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured REPO is reduced by two times the difference between the rate and the strike rate. At no point shall the interest rate on these structured REPOs with imbedded caps be less than zero.

Also included in the $178.0 million of REPOs is a $25.0 million structured REPO in which the Company pays a fixed rate of interest. At the reset date and every quarterly period thereafter, the counterparty has the right to terminate the transaction. It has historically been the Company’s position to pay off any borrowings and replace them with fixed rate funding if converted by the counterparty.

The Company enters into sales of securities under agreements to repurchase. Such REPO’s are treated as borrowed funds. The dollar amount of the securities underlying the agreements remains in their respective asset accounts.

REPO’s are collateralized by various securities that are either held in safekeeping at the FHLB or delivered to the dealer who arranged the transaction and the Company maintains control of these securities.

The market value of such securities exceeded the amortized cost of the securities sold under agreements to repurchase. The market value of the securities as of March 31, 2013 was $220.9 million with an amortized cost of $206.7 million. The market value of the securities as of December 31, 2012 was $318.9 million with an amortized cost of $297.8 million. The average maturity date of the mortgage backed securities sold under agreements to repurchase was greater than 90 days for the periods ended March 31, 2013 and December 31, 2012.

As of March 31, 2013 and December 31, 2012, the Company had REPO’s with Citigroup of $75.0 million and $115.0 million, respectively, Barclays Capital of $30.0 million and $40.0 million, respectively, Credit Suisse of $53.0 million and $83.0 million, respectively and Morgan Stanley of $20.0 million and $30.0 million, respectively.

As of March 31, 2013, the REPO’s with Citigroup had $16.4 million at risk (where the market value of the securities exceeded the borrowing), with a weighted average maturity of 22 months, Barclays Capital had $8.2 million at risk with a weighted average maturity of 35 months, Credit Suisse had $16.2 million at risk with a weighted average maturity of 35 months and Morgan Stanley had $2.1 million at risk with a weighted average maturity of 15 months.

Borrowings under REPO averaged $224.7 million during the three months ended March 31, 2013. The maximum amount outstanding at any month-end was $258.0 million during the three months ended March 31, 2013.

The junior subordinated notes have various maturities, interest rate structures and call dates. The characteristics of these notes are detailed in the following paragraphs.

On April 10, 2003, ESB Capital Trust II (Trust II), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $10.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased $310,000 of common securities of Trust II. The dividend rate on the preferred securities reset quarterly to equal the LIBOR plus 3.25%. Trust II’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by the Trust II to invest in $10.3 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the

25

Company. The subordinated debt primarily represents the sole assets of the Trust II. Dividends on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of April 24, 2033, on or after April 24, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated April 10, 2003, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. On July 23, 2008, the Company redeemed $5.0 million of the preferred securities of ESB Capital Trust II with proceeds from a $14.0 million loan with First Tennessee Bank National Association (“First Tennessee”). The remainder of the First Tennessee loan was used to repay an existing loan with First Tennessee with a remaining balance of $9.0 million, which had an interest rate of 5.55% and was due on December 31, 2008. No unamortized deferred debt issuance costs remain on this issuance. On January 24, 2013, the Company redeemed the remaining $5.1 million of the preferred securities of ESB Capital Trust II with proceeds from a $10.0 million loan with WesBanco, with a fixed interest rate of 3.75%. The remaining $5.0 million of the WesBanco loan was drawn on March 15, 2013 and used to redeem the $5.1 million of the preferred securities of ESB Capital Trust III.

On December 17, 2003, ESB Statutory Trust (Trust III), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $5.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased $155,000 of common securities of Trust III. The preferred securities reset quarterly to equal the LIBOR Index plus 2.95%. Trust III’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by Trust III to invest in $5.2 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust III. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of December 17, 2033, on or after December 17, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated December 17, 2003; the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. No unamortized deferred debt issuance costs remain on this issuance. On January 22, 2013, the Company provided notice of redemption to redeem the preferred securities of ESB Capital Trust III on March 18, 2013 with the aforementioned proceeds of the $10.0 million loan from WesBanco.

On February 10, 2005, ESB Capital Trust IV (Trust IV), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $35.0 million fixed rate preferred securities. The Company purchased $1.1 million of common securities of Trust IV. The preferred securities are fixed at a rate of 6.03% for six years and then are variable at three month LIBOR plus 1.82%. The preferred securities have a stated maturity of thirty years. Trust IV’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by Trust IV to invest in $36.1 million of fixed/variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust IV. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of February 10, 2035, on or after February 10, 2011, at the redemption price, which is equal to the liquidation amount, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated February 10, 2005, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a

26

mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. The Company did not have any deferred debt issuance costs associated with the preferred securities.

6. Net Income Per Share

The following table summarizes the Company’s net income per share:

(Amounts, except earnings per share, in thousands)

	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Net income	$	3,714	$	3,785
Weighted-average common shares outstanding		17,312		17,152
Basic earnings per share	$	0.21	$	0.22
Weighted-average common shares outstanding		17,312		17,152
Common stock equivalents due to effect of stock options		154		176
Total weighted-average common shares and equivalents		17,466		17,328
Diluted earnings per share	$	0.21	$	0.22

The shares controlled by the Company’s Employee Stock Ownership Plan (ESOP) of 296,095 and 395,587 at March 31, 2013 and March 31, 2012, respectively, are not considered in the weighted average shares outstanding until the shares are committed for allocation to an employee’s individual account.

All of the outstanding options to purchase shares at March 31, 2013 and 2012 were included in the computation of diluted earnings per share because the options’ exercise price was less than the average market price of the common shares.

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7. Comprehensive Income

The Company has developed the following table to present the components of accumulated OCI, at the end of the respective periods were as follows:

				Affected line item
Details about AOCI Components	Amount			in the Statement where net
	Reclassified from AOCI			income is presented
Gains/(losses) on cash flow hedges
Interest rate derivative contracts	$	268
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Available-for-sale securities
Realized gain on sale of securities		268		Non-interest income
Impairment expense		—		Non-interest income
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Defined benefit pension plan items
Amortization of prior service costs		26		See Note 1 below
Amortization of actuarial gains/(losses)		10		See Note 1 below
Pension curtailment		—		See Note 1 below
		36		Total before tax
		(12	)	Income tax expense
		24		Net of tax
Total reclassifications		378		Net of tax

Note 1: These items are included in the computation of net periodic pension cost. See Note 8, Retirement Plans, for additional information.

	Gains/(losses) on			Unrealized gains/(losses) on			Defined benefit pension
	Cash Flow Hedges			available-for-sale securities			plan items			Total
Beginning balance	$	(3,733	)	$	29,464		$	(628	)	$	25,103
Other comprehensive income/(loss) before relcassification		177			(2,314	)		24			(2,113	)
Amounts reclassified from AOCI		—			177			—			177
Net current period OCI		177			(2,137	)		24			(1,936	)
Ending Balance	$	(3,556	)	$	27,327		$	(604	)	$	23,167

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(Dollar amounts in thousands)	12/31/2012
Net unrealized gain on securities available for sale	$	29,465
Accumulated loss on effective cash flow hedging derivatives		(3,733	)
Net unrecognized pension cost		(629	)
Total	$	25,103

8. Retirement Plans

Supplemental Executive Retirement Plan and Directors’ Retirement Plan

The Company maintains a Supplemental Executive Benefit Plan (SERP) in order to provide supplemental retirement and death benefits for certain key employees of the Company. Under the SERP, participants shall receive an annual retirement benefit following retirement at age 65 equal to 25% of the participant’s final average pay multiplied by a ratio, ranging from 1.25% to 25.0%, based on the participant’s total years of service. Final average pay is based upon the participant’s last three year’s compensation. The maximum ratio of 25% requires twenty or more years of credited service and the minimum ratio of 1.25% requires one year of credited service. Benefits under the plan are payable in either a lump sum or ten equal annual payments and a lesser benefit is payable upon early retirement at age 50 with at least twelve years of service. If a participant dies prior to retirement, the participant’s estate will receive a lump sum payment equal to the net present value of future benefit payments under the plan. At March 31, 2013, the participants in the plan had credited service under the SERP ranging from 22 to 34 years.

The Company and the Bank maintain the ESB Financial Corporation Directors’ Retirement Plan and have entered into director retirement agreements with each director of the Company and the Bank. The plan provides that any retiring director with a minimum of five or more years of service with the Company or the Bank and a minimum of 10 total years of service, including years of service with any bank acquired by the Company or the Bank, that remains in continuous service as a board member until age 75 will be entitled to receive an annual retirement benefit equal to his or her director’s fees earned during the last full calendar year prior to his or her retirement date, multiplied by a ratio, ranging from 25% to 80%, based on the director’s total years of service. The maximum ratio of 80% of fees requires 20 or more years of service and the minimum ratio of 25% of fees requires 10 years of service. Retirement benefits may also be payable under the plan if a director retires from service as a director prior to attaining age 75. Three directors are currently receiving monthly benefits under the plan.

The following table illustrates the components of the net periodic pension cost for the SERP and Directors Retirement Plan as of March 31, 2013 and 2012:

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(Dollar amounts in thousands)	SERP
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	25	$	20
Interest cost		28		31
Amortization of unrecognized gains and losses		26		20
Amortization of prior service cost		10		10
Net periodic pension cost	$	89	$	81

(Dollar amounts in thousands)	Directors’ Retirement Plan
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	1	$	1
Interest cost		7		9
Amortization of prior service cost		—		22
Net periodic pension cost	$	8	$	32

9. Fair Value

Fair value is defined by GAAP as the amount that an asset could be bought or sold, or a liability incurred or settled, between willing parties, other than during a liquidation. GAAP established a fair value hierarchy that prioritizes the use of inputs in valuation methodologies into the following three levels:

Level I: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets, as of the reported date. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value.

Level II: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets: inputs to the valuation methodology include quoted prices for identical or similar assets or liabililties in markets that are not active; or inputs to the valuation methodology that utilize the model-based techniques for which all significant assumptions are observable in the market.

Level III: Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize a model-based techniques for which significant assumptions are not observable in the market; or inputs to the valuation methodology that requires significant management judgment or estimation, some of which may be internally developed.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

Investment Securities Available-for-Sale

Management classifies the Companies equity securities as Level 1 measurements since quoted market prices were available, unadjusted, for identical securities in active markets. Declines in the fair value of individual equity securities that are deemed to be other than temporary, will be written down to current market value and included in earnings as realized losses. Level 2 investment securities were primarily comprised of debt securities issued by states and municipalities and corporations as well as mortgage-backed securities issued by government agencies. On a monthly basis, the fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Due to recent uncertainties in the credit markets broadly, and the lack of both trading and new issuance of floating rate trust preferred securities, market price indications generally reflect the lack of liquidity in these markets, therefore the Company classifies these securities as Level III. Due to this lack of practical quoted prices, fair value for floating rate trust preferred securities has been determined using a discounted cash-flow technique. Cash flows are estimated based upon the contractual terms of each instrument. Market rates have been calculated based upon the five year historical discount margin for these instruments from August 2002 through August 2007, when the market was more liquid. These market rates were then adjusted for credit spreads and liquidity risk given the current markets. Credit spreads are based upon the Moody’s rating for each bond and range from 45 to 80 basis points. Liquidity risk adjustments ranged from 20 to 55 basis points where the securities of the 15 largest banks in the United States are assigned 20 to 40 basis points and banks outside of the top 15 were given a higher liquidity risk adjustment. Approximately $17.9 million or 49.2% of the $36.4 million in floating rate trust preferred securities represent investments in three of the four largest banks in the United States.

Derivative Financial Instruments

Derivative financial instruments recorded at fair value on a recurring basis are comprised of interest rate caps and interest rate swap agreements. The Company classifies these instruments as Level II. The Company determines the fair value of the interest rate caps quarterly by using quoted prices from two brokers. The maximum market indication used is the highest price obtained from the brokers, unless this price is Level III as indicated by the broker. If so this price is excluded and the highest Level II is used. The Company utilizes a third-party pricing service to measure its interest rate swap contracts. This service provides pricing information by utilizing evaluated pricing models, supported with market data information. Cash flows are projected for each payment date using the index forward curve. These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates, the accepted cost of funds for a financial institution. The implicit assumption is that the risk associated with the cash flows on the derivative is the same as the risk associated with a loan in the interbank market. The present value of the fixed portion is then added to the present value of the floating portion. The sum of both is the fair market value of the interest rate swap.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair value on a recurring basis as of March 31, 2013 and December 31, 2012 by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

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	As of March 31, 2013
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,888	$	36,353	$	38,241
Municipal securities		—		189,259		—		189,259
Equity securities		1,991		—		—		1,991
Corporate bonds		—		227,073		—		227,073
Mortgage backed securities
U.S. sponsored entities		—		627,756		—		627,756
Private label		—		2,309		—		2,309
Subtotal mortgage-backed securities		—		630,065		—		630,065
Total securities available for sale	$	1,991	$	1,048,285	$	36,353	$	1,086,629
Other Assets
Interest rate caps	$	—	$	157	$	—	$	157
Total other assets	$	—	$	157	$	—	$	157
Liabilities
Other Liabilities
Interest rate swaps	$	—	$	5,387	$	—	$	5,387
Total other liabilities	$	—	$	5,387	$	—	$	5,387

	As of December 31, 2012
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,848	$	36,179	$	38,027
Municipal securities		—		190,887		—		190,887
Equity securities		1,818		—		—		1,818
Corporate bonds		—		225,795		—		225,795
Mortgage backed securities
U.S. sponsored entities		—		649,933		—		649,933
Private label		—		4,316		—		4,316
Subtotal mortgage-backed securities		—		654,249		—		654,249
Total securities available for sale	$	1,818	$	1,072,779	$	36,179	$	1,110,776
Other Assets
Interest rate caps	$	—	$	90	$	—	$	90
Total other assets	$	—	$	90	$	—	$	90
Liabilities:
Other Liabilties
Interest rate swaps	$	—	$	5,743	$	—	$	5,743
Total other liabilities	$	—	$	5,743	$	—	$	5,743

There were no transfers between Level I and Level II assets measured at fair value. The following table presents the changes in the Level III assets measured at fair value on a recurring basis for the periods ended March 31, 2013 and 2012.

Fair value measurements using significant unobservable inputs (Level III)

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	Trust Preferred Securities
	March 31,
	2013		2012
Beginning balance January 1,	$	36,179	$	35,789
Total net realized/unrealized gains (losses)
Included in earnings:
Interest income on securities		3		3
Net realized loss on securities available for sale		—		—
Included in other comprehensive income		171		416
Transfers in and/or out of Level III		—		—
Purchases, issuances and settlements
Purchases		—		—
Issuances		—		—
Sales		—		—
Settlements		—		—
Ending balance, March 31,	$	36,353	$	36,208

The following table summarizes changes in unrealized gains and losses recorded in earnings for the three month period ended March 31, 2013 and 2012 for Level III assets and liabilities that are still held at March 31, 2013 and 2012.

	Securities available for sale
	March 31,
	2013		2012
Interest income on securities	$	3	$	3
Net realized loss on securities available for sale		—		—
Total	$	3	$	3

For Level III assets measured at fair value on a recurring or non-recurring basis as of March 31, 2013, the significant observable inputs used in the fair value measurements were as follows:

(Dollar amounts in thousands)	Fair Value at March 31, 2013		Fair Value at December  31, 2012		Valuation Technique	Significant Unobservable Inputs	Range
Trust Preferred Securities	$	36,353	$	36,179	Discounted Cash Flow	Credit Spreads	45-80 basis points
						Liquidity Risk Adjustments	20-55 basis points
						Default Rates	.6% -1%
Impaired Loans		14,578		14,740	Discounted Cash Flow	Remaining term	.5 yrs to 21.5 yrs
						Discount Rate	3.8%-7.0%
					Appraisal of collateral	Interest Rate	3.3%-8.5%
Real estate acquired through foreclosure		2,426		2,441	Appraisal of collateral (1)	N/A	N/A
Servicing assets		12		14	Discounted Cash Flow	Remaining term	.2 yrs to 18.8 yrs
						Discount Rate	11.25%-12.25%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level III inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The significant unobservable inputs in the fair value measurement of the Company’s trust preferred securities are the credit spreads, liquidity risk adjustments and default rates as described above under Investment Securities Available for Sale. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may be required periodically to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or impairment write-downs of individual assets. During the period ended March 31, 2013 and 2012, the Company incurred write-downs on its REO properties of $0 and $150,000, respectively, there were no adjustments to the fair value for the Company’s remaining assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP during the respective periods.

10. Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments, consisting of commitments to extend credit, commitments under line of credit lending arrangements and letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are received.

The following methods and assumptions were used in estimating fair values of financial instruments.

Cash and cash equivalents – The carrying amounts of cash equivalents approximate their fair values.

Securities – With the exception of floating rate trust preferred securities ( the valuation of the trust preferred securities is discussed in footnote 9, Fair Value), fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique which is widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Securities receivable- The carrying amount of securities receivable approximates their fair values.

Loans receivable and held for sale – Fair values for loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values of impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. The carrying amounts of loans held for sale approximate their fair values.

Accrued interest receivable and payable – The carrying amounts of accrued interest approximate their fair values.

FHLB stock – FHLB stock is restricted from trading purposes and thus, the carrying value approximates its fair value.

Bank owned life insurance (BOLI) – The fair value of BOLI at March 31, 2013 and December 31, 2012 approximated the cash surrender value of the policies at those dates.

Interest rate cap and interest rate swap contracts – Fair values of interest rate cap and interest rate swap contracts are based on dealer quotes.

Deposits – The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies current market interest rates to a schedule of aggregated expected monthly maturities.

Borrowed funds and junior subordinated notes – For variable rate borrowings, fair values are based on carrying values. For fixed rate borrowings, fair values are based on the discounted value of contractual cash flows and on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Fair values of structured borrowings are based on dealer quotes.

Advance payments by borrowers for taxes and insurance- The fair value of the advance payments by borrowers for taxes and insurance approximated the carrying value of those commitments at those dates.

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The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of March 31, 2013:

March 31, 2013
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or  Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,142	$	15,142	$	—	$	—	$	15,142
Securities		1,086,629		1,991		1,048,285		36,353		1,086,629
Securities Receivable		1,909		1,909		—		—		1,909
Loans receivable and held for sale		681,273		—		—		712,597		712,597
Accrued Interest Receivable		7,943		7,943		—		—		7,943
FHLB Stock		15,581		15,581		—		—		15,581
Bank owned life insurance		30,181		30,181		—		—		30,181
Interest rate cap contracts		157		—		157		—		157
Financial Liabilities:
Deposits		1,206,843		582,316		—		633,530		1,215,846
Borrowed funds		448,231		—		198,009		273,511		471,520
Junior subordinated notes		36,083		—		21,650		—		21,650
Advance payments by borrowers for taxes and insurance		2,650		2,650		—		—		2,650
Accrued interest payable		1,947		1,947		—		—		1,947
Interest rate swap contracts		5,387		—		5,387		—		5,387

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December 31, 2012
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,064	$	15,064	$	—	$	—	$	15,064
Securities		1,110,776		1,818		1,092,224		35,789		1,129,831
Securities Receivable		1,277		1,277		—		—		1,277
Loans receivable and held for sale		672,086		—		—		679,819		679,819
Accrued Interest Receivable		8,068		8,068		—		—		8,068
FHLB Stock		15,077		15,077		—		—		15,077
Bank owned life insurance		30,025		30,025		—		—		30,025
Interest rate cap contracts		90		—		532		—		532
Financial Liabilities:
Deposits		1,178,057		546,298		—		1,168,438		1,714,736
Borrowed funds		484,556		—		263,288		331,588		594,876
Junior subordinated notes		46,393		—		20,361		—		20,361
Advance payments by borrowers for taxes and insurance		2,619		2,619		—		—		2,619
Accrued interest payable		1,344		1,344		—		—		1,344
Interest rate swap contracts		5,743		—		5,531		—		5,531

The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of December 31, 2011:

11. Subsequent Events

On April 16, 2013 the Company announced a six-for-five stock split of the ESBF common stock payable on May 17, 2013 to the stockholders of record on May 3, 2013. All per share data within this filing has been adjusted to reflect this split.

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

The following discussion and analysis provides further detail to the financial condition and results of operations of the Company. The section should be read in conjunction with the notes and financial statements presented elsewhere in this report.

The Company’s critical accounting policies involving the significant judgments and assumptions used in the preparation of the Consolidated Financial Statements as of March 31, 2013 have remained unchanged from the disclosures presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Forward-looking statements in this report relating to the Company’s plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The information contained in this report should be read in conjunction with ESB’s most recent annual report filed with the Securities and Exchange Commission on Form 10-K for the year ended December 31, 2012, which is available at the SEC’s website, www.sec.gov, or at ESB’s website, www.esbbank.com. Investors are cautioned that forward-looking statements, which are not historical fact, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements, including without limitation, the effect of changing regional and national economic conditions; changes in interest rates, spreads on earning assets and interest-bearing liabilities, and associated interest rate sensitivity; sources of liquidity available to the parent company and its related subsidiary operations; potential future credit losses and the credit risk of commercial, real estate, and consumer loan customers and their borrowing activities; actions of the Federal Reserve Board, Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and other regulatory bodies; potential legislative and federal and state regulatory actions and reform; competitive conditions in the financial services industry; rapidly changing technology affecting financial services, and/or other external developments materially impacting the Company’s operational and financial performance. The Company does not assume any duty to update forward-looking statements.

OVERVIEW

ESB Financial Corporation is a Pennsylvania corporation and thrift holding company that provides a wide array of retail and commercial financial products and services to customers in Western Pennsylvania through its wholly-owned subsidiary ESB Bank. ESB Bank currently operates 23 branches.

During the three months ended March 31, 2013, the Company reported net income of $3.7 million, a decrease of approximately $71,000, or 1.9%, over the same period last year. The Company realized a decrease in interest income of approximately $2.4 million over the same quarter last year. However, interest expense decreased by approximately $1.7 million during the same period. The result was a decrease of $746,000 in net interest income. The Company recorded an increase of $190,000 in noninterest income when compared to the same quarter last year, primarily due to increased income from the Company’s joint ventures and a slight increase in the market value of the Company’s interest rate caps as compared to a write-down of the market value of the Company’s interest rate caps in 2012.

The Company is continuing efforts to improve the net interest margin by employing strategies to decrease the cost of funds, while attempting to increase the yield from the investment portfolio. The Company employs a strategy of purchasing cash-flowing fixed and variable rate mortgage-backed securities funded by wholesale borrowings, which are comprised of FHLB advances and repurchase agreements. This is referred to as the Company’s wholesale strategy. As part of the wholesale strategy, the Company uses a laddered maturity schedule of two to five years on the wholesale borrowings. Additionally, as part of its ongoing interest rate risk strategy, the Company utilizes wholesale borrowings with embedded interest rate caps. These interest rate caps will aid in insulating the Company’s net interest margin against a rapid rise in interest rates which can cause significant pressure to the Company’s interest rate margin.

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During the three months ended March 31, 2013, the Company had approximately $91.8 million of maturing wholesale borrowings at a weighted average rate of 3.09% and an original call/maturity of 4.4 years. The borrowings that matured were replaced with wholesale borrowings of approximately $43.8 million at a weighted average rate of 0.96% and an original call/maturity of 3.5 years and deposit growth of approximately $28.8 million during the period.

The wholesale strategy operates with a lower cost of operations, although with lower interest rate spreads and therefore at a lower margin than the retail operations of the Company. The Company has utilized this strategy for several years. The Company manages this strategy through its interest rate risk management on a macro level. This strategy historically produces wider margins during periods of lower short-term interest rates, reflected in a steep yield curve and can be susceptible to net interest margin strain in both rapidly rising rates and rapidly declining rates as well as a sustained inverted yield curve.

Management continues to pursue methods of insulating this wholesale strategy from significant fluctuations in interest rates by: (1) incorporating a laddered maturity schedule of up to five years on the wholesale borrowings; (2) the purchase of off-balance sheet interest rate caps; (3) providing structure in the investment portfolio in the form of corporate bonds and municipals securities; (4) utilizing cash flows from fixed and adjustable rate mortgage-backed securities; and (5) the placing of the Company’s securities in the available for sale portfolio thereby creating the flexibility to change the composition of the portfolio through restructuring as management deems it necessary due to interest rate fluctuations. Management believes that this insulation affords them the ability to react to measured changes in interest rates and restructure the Company’s statement of financial condition accordingly. This strategy is continually evaluated by management on an ongoing basis.

RESULTS OF OPERATIONS

Earnings Summary. The Company recorded net income of $3.7 million for the three months ended March 31, 2013 as compared to $3.8 million for the same period in the prior year. The $71,000, or 1.9%, decrease in net income for the quarter ended March 31, 2013 as compared to the same period in the prior year was primarily the result of a decrease in net interest income of $746,000 and an increase in net income attributable to the noncontrolling interest of $108,000, partially offset by an increase in noninterest income of $190,000 and as well as decreases in the provision for loan losses, noninterest expense and provision for income taxes of $50,000, $509,000 and $34,000, respectively.

Net interest income. Net interest income, the primary source of revenue for the Company, is determined by the Company’s interest rate spread, which is defined as the difference between income on earning assets and the cost of funds supporting those assets, and the relative amounts of interest earning assets and interest bearing liabilities. Management periodically adjusts the mix of assets and liabilities, as well as the rates earned or paid on those assets and liabilities in order to manage and improve net interest income. The level of interest rates and changes in the amount and composition of interest earning assets and liabilities affect the Company’s net interest income. Historically from an interest rate risk perspective, it has been management’s perception that differing interest rate environments, these being, extended low long-term interest rates, rapidly rising short-term interest rates as well as a sustained inverted yield curve, can cause sensitivity to the Company’s net interest income.

Net interest income decreased $746,000, or 6.8%, to $10.3 million for the three months ended March 31, 2013, compared to $11.0 million for the same period in the prior year. This decrease in net interest income was the result of a decrease in interest income of $2.4 million, partially offset by a decrease in interest expense of $1.7 million.

Interest income. Interest income decreased $2.4 million, or 13.0%, for the three months ended March 31, 2013, compared to the same period in the prior year. This decrease can primarily be attributed to decreases in interest earned on loans receivable and securities available for sale of $276,000 and $2.1 million, respectively.

Interest earned on loans receivable decreased $276,000, or 3.3%, for the three months ended March 31, 2013, compared to the same period in the prior year. This decrease was primarily attributable to a decrease in the yield on the portfolio of 32 basis points to 4.84% for the three months ended March 31, 2013, compared to 5.16% for

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the same period in the prior year, partially offset by an increase in the average balance of loans outstanding of $23.5 million, or 3.6%, to $683.6 million for the three months ended March 31, 2013, compared to $660.1 million for the same period in the prior year.

Interest earned on securities decreased $2.1 million, or 20.5%, for the three months ended March 31, 2013, compared to the same period in the prior year. This decrease was primarily the result of a 67 basis point decrease in the tax equivalent yield on securities to 3.49% for the three months ended March 31, 2013 from 4.16% for the three months ended March 31, 2012, as well as a decrease in the average balance of the securities portfolio of $35.7 million, or 3.3%, to $1.1 billion at March 31, 2013.

These changes are reflected in the rate volume table presented below which depicts that the decreases to the expense associated with the Company’s interest bearing liabilities are the primary sources of the overall increase to net interest income.

Interest expense. Interest expense decreased $1.7 million, or 21.6%, for the three months ended March 31, 2013, compared to the same period in the prior year. This decrease in interest expense can be attributed to decreases in interest incurred on deposits and borrowed funds of $589,000 and $1.1 million, respectively.

Interest incurred on deposits decreased $589,000, or 23.1%, for the three months ended March 31, 2013, compared to the same period in the prior year. This decrease was due to a decrease in the cost of interest-bearing deposits of 22 basis points to 0.74% from 0.96% for the quarters ended March 31, 2013 and 2012, respectively, partially offset by an increase in the average balance of interest-bearing deposits of $5.2 million, or 0.49% to $1.1 billion for the three months ended March 31, 2013. The Company manages its cost of interest bearing deposits by diligently monitoring the interest rates on its products as well as the rates being offered by its competition through weekly interest rate committee meetings and utilizing rate surveys and hence subsequently adjusting rates accordingly.

Interest incurred on borrowed funds decreased $1.1 million, or 22.4%, for the three months ended March 31, 2013 compared to the same period in the prior year. This decrease was primarily attributable to a decrease in the average balance of borrowed funds of $78.0 million, or 14.2%, to $470.2 million for the three months ended March 31, 2013 as well as a decrease in the cost of these funds to 3.15% for the quarter ended March 31, 2013 as compared to 3.46%, for the quarter ended March 31, 2012.

In addition to its wholesale strategy, the Company manages its cost of borrowings through the use of debt associated with the issuance of trust preferred securities. During the quarter ended March 31, 2012, the interest incurred on these borrowings increased by $51,000, or 8.3%, due to a decrease in the average balance of $5.2 million, or 11.1%, to $41.2 million for the three months ended March 31, 2013, partially offset by an increase in the cost of these funds to 5.52% from 5.31% for the same period in the prior year.

Average Balance Sheet and Yield/Rate Analysis. The following table sets forth, for the periods indicated, information concerning the total dollar amounts of interest income from interest-earning assets and the resultant average yields, the total dollar amounts of interest expense on interest-bearing liabilities and the resultant average costs, net interest income, interest rate spread and the net interest margin earned on average interest-earning assets. For purposes of these tables, average balances are calculated using monthly averages and the average loan balances include non-accrual loans and exclude the allowance for loan losses, and interest income includes accretion of net deferred loan fees. Yields on tax-exempt securities (tax-exempt for federal income tax purposes) are shown on a fully tax equivalent basis utilizing a federal tax rate of 34%. Yields and rates have been calculated on an annualized basis utilizing monthly interest amounts.

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(Dollar amounts in thousands)	Three months ended March 31,
	2013							2012
	Average				Yield /			Average				Yield /
	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Taxable securities available for sale	$	638,025	$	4,963		3.11	%	$	727,961	$	6,918		3.80	%
Taxable corporate bonds available for sale		265,613		1,726		2.60	%		214,662		1,928		3.57	%
Tax-exempt securities available for sale		149,821		1,657		6.70	%(1)		146,511		1,647		6.81	%(1)
		1,053,459		8,346		3.49	%(1)		1,089,134		10,493		4.16	%(1)
Mortgage loans		489,416		5,918		4.84	%		479,295		6,167		5.15	%
Other loans		154,861		1,829		4.79	%		147,003		1,881		5.15	%
Tax-exempt loans		39,297		326		5.10	%(1)		33,822		301		5.42	%(1)
		683,574		8,073		4.84	%(1)		660,120		8,349		5.16	%(1)
Cash equivalents		8,497		1		0.05	%		34,253		18		0.21	%
FHLB stock		14,901		8		0.22	%		20,724		10		0.19	%
		23,398		9		0.16	%		54,977		28		0.20	%
Total interest-earning assets		1,760,431		16,428		3.97	%(1)		1,804,231		18,870		4.41	%(1)
Other noninterest-earning assets		154,771		—		—			166,186		—		—
Total assets	$	1,915,202	$	16,428		3.65	%(1)	$	1,970,417	$	18,870		4.03	%(1)
Interest-bearing liabilities:
Interest-bearing demand deposits	$	447,743	$	83		0.08	%	$	405,222	$	161		0.16	%
Time deposits		626,960		1,879		1.22	%		664,240		2,390		1.45	%
		1,074,703		1,962		0.74	%		1,069,462		2,551		0.96	%
FHLB advances		222,338		1,484		2.71	%		199,476		1,615		3.26	%
Repurchase Agreements		239,667		2,083		3.52	%		338,833		2,978		3.53	%
Other borrowings		8,233		86		4.24	%		9,905		117		4.75	%
		470,238		3,653		3.15	%		548,214		4,710		3.46	%
Preferred securities- fixed		36,083		515		5.79	%		36,083		520		5.80	%
Preferred securities- adjustable		5,155		46		3.62	%		10,310		92		3.59	%
		41,238		561		5.52	%		46,393		612		5.31	%
Total interest-bearing liabilities		1,586,179		6,176		1.58	%		1,664,069		7,873		1.90	%
Noninterest-bearing demand deposits		112,616		—		—			98,918		—		—
Other noninterest-bearing liabilities		21,322		—		—			22,851		—		—
Total liabilities		1,720,117		6,176		1.46	%		1,785,838		7,873		1.77	%
Stockholders’ equity		195,085		—		—			184,579		—		—
Total liabilities and equity	$	1,915,202	$	6,176		1.31	%	$	1,970,417	$	7,873		1.61	%
Net interest income			$	10,252						$	10,997
Interest rate spread (difference between weighted average rate on interest-earning assets and interest-bearing liabilities)						2.39	%(1)						2.51	%(1)
Net interest margin (net interest income as a percentage of average interest-earning assets)						2.55	%(1)						2.65	%(1)

(1) The yield on earning assets and the net interest margin are presented on a fully taxable-equivalent (FTE) and annualized basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt investments and tax-exempt loans using the federal statutory rate of 34% for each period presented. ESB believes this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

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Analysis of Changes in Net Interest Income. The following table analyzes the changes in interest income and interest expense, for the three month period ended March 31, 2013 in terms of: (1) changes in volume of interest-earning assets and interest-bearing liabilities and (2) changes in yields and rates. The table reflects the extent to which changes in the Company’s interest income and interest expense are attributable to changes in rate (change in rate multiplied by prior period volume), changes in volume (changes in volume multiplied by prior period rate) and changes attributable to the combined impact of volume/rate (change in rate multiplied by change in volume). The changes attributable to the combined impact of volume/rate are allocated on a consistent basis between the volume and rate variances. Changes in interest income on securities reflects the changes in interest income on a fully tax equivalent basis.

(Dollar amounts in thousands)	Three months ended, March 31,
	2013 versus 2012
	Increase (decrease) due to
	Volume			Rate			Total
Interest income:
Securities	$	(334	)	$	(1,814	)	$	(2,148	)
Loans		290			(566	)		(276	)
Cash equivalents		(8	)		(9	)		(17	)
FHLB stock		(3	)		1			(2	)
Total interest-earning assets		(55	)		(2,388	)		(2,443	)
Interest expense:
Deposits		12			(601	)		(589	)
FHLB advances		172			(303	)		(131	)
Repurchase agreements		(862	)		(33	)		(895	)
Other borrowings		(18	)		(13	)		(31	)
Preferred securities		(70	)		19			(51	)
Total interest-bearing liabilities		(766	)		(931	)		(1,697	)
Net interest income	$	711		$	(1,457	)	$	(746	)

Provision for loan losses. The provision for loan losses decreased $50,000 to $150,000 for the quarter ended March 31, 2013 when compared to March 31, 2012. These provisions were part of the normal operations of the Company for the first quarter of 2013. In determining the appropriate level of allowance for loan losses, management considers historical loss experience, the financial condition of borrowers, economic conditions (particularly as they relate to markets where the Company originates loans), the status of non-performing assets, the estimated underlying value of the collateral and other factors related to the collectability of the loan portfolio. The Company’s total allowance for losses on loans at March 31, 2013 amounted to $6.7 million, or 0.96% of the Company’s total loan portfolio, as compared to $6.7 million, or 0.97%, at December 31, 2012. The Company’s allowance for losses on loans as a percentage of non-performing loans was 87.43% and 90.76% at March 31, 2013 and December 31, 2012, respectively.

Non-interest income. Non-interest income increased $190,000, or 11.0%, for the three months ended March 31, 2013 compared to the same period in the prior year. The increase in non-interest income was comprised of increases in net realized gain (loss) on derivatives and income from joint ventures of $146,000 and $158,000, respectively, partially offset by a decrease in fees and service charges of $110,000.

The Company had a slight gain on derivatives during the quarter ended March 31, 2013 of $15,000 compared to losses in the same period in 2012 of $131,000. These fluctuations were due to market value adjustments to the Company’s interest rate caps.

Real estate joint venture income increased $158,000 for the three months ended March 31, 2013 when compared to the same period ended March 31, 2012. Primarily due to increased sales between the periods. The Company has a 51% ownership in its real estate joint ventures. The Company has a mixture of joint ventures in which it participates either in land development only or construction of units.

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Income from fees and service charges decreased $110,000 for the three months ended March 31, 2013 when compared to the same period ended March 31, 2012. The decrease is primarily related to decreased fees due to the Company’s checking products as well and debit card usage.

Non-interest expense. Non-interest expense decreased $509,000, or 6.6%, to $7.2 million for the three months ended March 31, 2013 as compared to $7.7 million for the same period in the prior year. This decrease was primarily related to decreases in federal deposit insurance premiums, data processing, amortization of intangible assets, advertising and other expenses of $99,000, $10,000, $20,000, $5,000 and $453,000, respectively, partially offset by increases in compensation and employee benefits and premises and equipment of $72,000 and $6,000, respectively. The decrease to other expenses is primarily due to a decline in the losses and operating costs of the Company’s REO properties.

Compensation and employee benefits increased $72,000 for the quarter ended March 31, 2013, as compared to the same period in the prior year. The increases were primarily due to normal salary adjustments between the periods as well as increases to compensation expense related to stock options and the MRP and group life and hospital insurance expense.

Other expenses decreased $453,000 for the quarter ended March 31, 2013, as compared to the same period in the prior year. These decreases were primarily due decreases in the losses and operating costs of the Company’s REO properties. During the quarter ended March 31, 2012 the Company incurred an expense of approximately $212,000 to correct infrastructure issues at one of the Company’s commercial real estate REO properties and a write-down of $88,000 on another REO property.

Provision for income taxes. The provision for income taxes decreased $34,000, or 4.0%, to $811,000 for the three months ended March 31, 2013, compared to $845,000 for the same period in the prior year. This provision for income taxes reflects an effective tax rate of 17.9% for the quarter ended March 31, 2013 as compared to 18.3% for the same period in the prior year.

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CHANGES IN FINANCIAL CONDITION

General. The Company’s total assets decreased by $15.5 million, or 0.8%, during the quarter to $1.91 billion at March 31, 2013 from $1.93 billion at December 31, 2012. This decrease resulted primarily from decreases in securities available for sale, accrued interest receivable, premises and equipment, real estate acquired through foreclosure, real estate held for investment, intangible assets and prepaid expenses and other assets of $24.1 million, or 2.2%, $125,000, or 1.6%, $273,000, or 1.9%, $15,000, or 0.6%, $418,000, or 4.2%, $50,000, or 16.6%, and $1.0 million, or 15.2%, respectively. These decreases were offset by increases in cash and cash equivalents, loans receivable, FHLB Stock, bank owned life insurance and securities receivable of $78,000, or 0.5%, $9.2 million, or 1.4%, $504,000, or 3.3%, $156,000, or 0.5%, and 632,000, or 49.5%, respectively. Total non-performing assets increased to $10.3 million at March 31, 2013 compared to $10.0 million at December 31, 2012 and non-performing assets to total assets were 0.54% at March 31, 2013, compared to 0.52% at December 31, 2012. Total non-performing assets increased primarily due to an increase in non-performing mortgage loans. The Company’s total liabilities decreased $16.1 million, or 0.9%, to $1.72 billion at March 31, 2013. Total stockholders’ equity increased $599,000, or 0.3%, to $195.4 million at March 31, 2013, from $194.8 million at December 31, 2012. The increase to stockholders’ equity was primarily the result of increases in retained earnings of $2.3 million, or 2.5%, and decreases in treasury stock of $139,000, or 0.7%, and unearned employee stock ownership plan shares of $257,000, or 8.2%, partially offset by a decrease in accumulated other comprehensive income of $1.9 million, or 7.7%. Average stockholders’ equity to average assets was 10.19%, and book value per share was $8.47 at March 31, 2013 compared to 9.67% and $8.30, respectively, at December 31, 2012.

Cash on hand, Interest-earning deposits and Federal funds sold. Cash on hand, interest-earning deposits and federal funds sold represent cash equivalents. Cash equivalents increased a combined $78,000, or 0.5%, to $15.1 million at March 31, 2013 from $15.1 million at December 31, 2012. These accounts are typically increased by deposits from customers into saving and checking accounts, loan and security repayments and proceeds from borrowed funds. Decreases result from customer withdrawals, new loan originations, security purchases and repayments of borrowed funds.

Securities. The Company’s securities and loan portfolios represent its two largest balance sheet asset classifications, respectively. The Company’s securities portfolio decreased $24.1 million, or 2.2%, to $1.1 billion at March 31, 2013. During the quarter the Company had sales of $1.5 million, consisting of a fixed-rate collateralized mortgage obligation resulting in a gain of $268,000. In addition, there were repayments and maturities of securities of $61.5 million and premium amortizations of $953,000. In addition the portfolio decreased by $3.9 million due to decreases in market value. These fair value adjustments represent temporary fluctuations resulting from changes in market rates in relation to average yields in the available for sale portfolio. Offsetting these decreases were purchases during the quarter ended March 31, 2013 of available for sale securities of $43.4 million, consisting of purchases of fixed-rate mortgage backed securities of $26.8 million, adjustable–rate mortgage backed securities of $12.3 million and $4.3 million of municipal bonds.

The Company’s investment strategy for 2013 is to utilize the cash flows from the mortgage backed securities and investment portfolios for the funding of loans and for reinvestment into similar investment products to maintain or improve the Company’s interest rate sensitivity. The Company continues to purchase corporate and municipal bonds to provide structure during this historically low interest rate environment. As an additional step to aid interest rate sensitivity, the Company had $95.0 million of wholesale borrowings with embedded interest rate caps totaling $120.0 million and $180.0 million notional amount of interest rate caps that are unhedged and marked to market quarterly through the income statement. These interest rate caps help insulate the net interest margin against a rapid rise in short term interest rates. As of March 31, 2013, this resulted in approximately $15,000 of non-interest income due to increases in the fair value of these interest rate caps.

Quarterly, the Company reviews its securities portfolio for other-than-temporary impairment. This review includes an assessment of the following factors; the rating of the security, the length of time that the decline in fair value has existed, the financial condition of the issuer and the issuer’s ability to continue to pay interest or dividends, whether the decline can be attributed to specific adverse conditions in the geographic area or industry, the extent that fair value is below cost and management’s ability to hold the investment for a period of time to allow for recovery.

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As of March 31, 2013, the Company had securities with unrealized losses for greater than twelve months of $8.8 million, as more fully described in footnote 2 “Securities” to the financial statements included in Item 1. The $8.8 million primarily consists of unrealized losses attributed to the Company’s floating rate trust preferred corporate bonds. Management’s conclusion after reviewing all the factors, is that although the market value of these securities is below book value and will most likely remain so until the economic environment changes, we believe it to be a function of widening credit spreads that have affected the corporate bond market in general as the economy has weakened and is not a reflection of the issuers’ credit worthiness. Therefore, although some of the bonds exhibit a few of the indicators of an other-than-temporary impairment, the majority of the evidence indicates that no impairment exists at this time and the decline is due to the widening credit spreads as well as the current interest rate environment. Finally, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, and considers the securities an important part of managing its interest rate risk profile.

Loans receivable. The loans receivable category consists primarily of single family mortgage loans used to purchase or refinance personal residences located within the Company’s market area and commercial real estate loans used to finance properties that are used in the borrowers businesses or to finance investor-owned rental properties, and to a lesser extent commercial and consumer loans. Net loans receivable increased $9.2 million, or 1.4%, to $681.3 million at March 31, 2013 from $672.1 million at December 31, 2012. Included in this increase in loans receivable were increases in mortgage loans and commercial loans of $7.3 million, or 1.5%, and $3.7 million, or 6.8%, respectively, partially offset by a decrease in consumer loans of $195,000, or 0.1%. Additionally the portfolio was decreased by changes in the allowance for loan losses, deferred loan fees and loans in process which combined increased $1.6 million, or 8.2%, during the three months ended March 31, 2013.

Non-performing assets. Nonperforming assets consist of nonaccrual loans, repossessed automobiles, real estate acquired through foreclosure (REO) and troubled debt restructuring (TDR). A loan is placed on nonaccrual status when, in the judgment of management, the probability of collection of interest is deemed insufficient to warrant further accrual. When a loan is placed on nonaccrual status, previously accrued but uncollected interest is deducted from interest income. The Company does not accrue interest on loans past due 90 days or more.

Non-performing assets amounted to $10.3 million, or 0.54%, of total assets at March 31, 2013 compared to $10.0 million, or 0.52%, of total assets at December 31, 2012. The increase in non-performing assets of approximately $251,000 was primarily the result of increases in the balances of non-performing loans and TDR’s of $203,000 and $92,000, respectively, partially offset by a decrease to REO and repossessed vehicles of approximately $15,000 and $29,000, respectively.

FHLB Stock. FHLB stock increased by $504,000, or 3.3%, to $15.6 million at March 31, 2013 compared to $15.1 million at December 31, 2012. The Bank is required to maintain an investment in capital stock of the FHLB of Pittsburgh in an amount not less than 5.0% of its outstanding notes payable to the FHLB of Pittsburgh.

Real Estate Held for Investment. The Company’s real estate held for investment decreased by $418,000 or 4.2%, to $9.6 million at March 31, 2013 from $10.0 million at December 31, 2012. This decrease was partially the result of sales activity in the joint ventures in which the Company has a 51% ownership, offset by construction activity within those joint ventures.

Intangible assets. Intangible assets decreased $50,000, or 16.6%, to $252,000 at March 31, 2013 from $302,000 at December 31, 2012. The decrease primarily resulted from normal amortization of the core deposit intangible from acquisitions. Amortization is expected to total $170,000, $110,000 and $8,000 for the years 2013, 2014 and 2015, respectively.

Bank owned life insurance. Bank owned life insurance (BOLI) is universal life insurance, purchased by the Bank, on the lives of the Bank’s employees. The beneficial aspects of these universal life insurance policies are tax-free earnings and a tax-free death benefit, which are realized by ESB as the owner of the policies. The cash surrender value of the BOLI as of March 31, 2013 was $30.2 million.

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Prepaid Expenses and Other Assets. Prepaid expenses and other assets decreased $1.1 million, or 15.2%, to $5.6 million at March 31, 2013 from $6.6 million at December 31, 2012. This decrease is primarily due to the reduction of the Company’s investment in ESB Capital Trust II and ESB statutory Trust I of $155,000 each, as well as a decrease in the prepaid FDIC assessment of $281,000 as well as declines in the Company’s receivables. In 2009, the FDIC amended its regulations and required insured institutions to prepay their estimated quarterly risk-based assessments through the year 2012. The Company’s prepaid assessment was $2.0 million at December 31, 2012 and has declined to $1.8 million at March 31, 2013. The FDIC will refund the remaining prepaid assessment by June 30, 2013.

Deposits. The Company considers various sources when evaluating funding needs, including but not limited to deposits, which are a significant source of funds. Deposits totaled $1.2 billion, or 71.4%, of the Company’s total funding sources at March 31, 2013. Total deposits increased $28.8 million, or 2.4%, to $1.2 billion at March 31, 2013. Interest-bearing demand deposits increased $32.1 million and time deposits decreased $7.2 million, during the three months ended March 31, 2013, while non-interest bearing deposits increased approximately $3.9 million during the same period. The deposit growth was comprised primarily of low interest core deposits which increased approximately $36.0 million during the period. The Company continues to pursue low cost core deposit funding through its ongoing campaign to increase commercial, public and personal checking accounts throughout its 23 branch network.

Borrowed funds. The Company utilizes short and long-term borrowings as another source of funding used for asset growth and liquidity needs. These borrowings include FHLB advances and repurchase agreement borrowings. Borrowed funds decreased $46.6 million, or 8.8%, to $484.3 million at March 31, 2013 from $530.9 million at December 31, 2012. FHLB advances increased $44.0 million, or 20.7%, repurchase agreements decreased $90.0 million or 33.6%, other borrowings increased approximately $9.6 million, or 290.0%, while junior subordinated notes decreased approximately $10.3 million, or 22.2% during the three months ended March 31, 2013. Borrowed funds and deposits are two of the primary sources of funds for the Company. As part of its general business practice, the Company seeks out the most competitive rate on the products and will adjust the mix of FHLB advances and repurchase agreements accordingly. During the first quarter of 2013, the Company entered into a loan with Wesbanco Bank and used the proceeds to redeem a portion of the junior subordinated notes. Additional information regarding the redemption can be found in footnote 7.

Accounts payable for land development. The accounts payable for land development decreased $66,000, or 3.3%, to $2.0 million at March 31, 2013 from $2.0 million at December 31, 2012. This account represents the unpaid portion of the development costs for the Company’s joint ventures.

Accrued Expenses and Other Liabilities. Accrued expenses and other liabilities increased by $1.8 million, or 9.4%, to $21.0 million at March 31, 2013 from $19.2 million at December 31, 2012. The increase was primarily due to an increase in the accrued capital stock dividend of $1.5 million as well as increases in various accrued expenses.

Stockholders’ equity. Stockholders’ equity increased $599,000, or 0.3%, to $195.4 million at March 31, 2013, from $194.8 million at December 31, 2012. The increase to stockholders’ equity was primarily the result of increases in retained earnings of $2.3 million, or 2.5%, and decreases in treasury stock of $139,000, or 0.7%, and unearned employee stock ownership plan shares of $257,000, or 8.2%, partially offset by a decrease in accumulated other comprehensive income of $1.9 million, or 7.7%. Average stockholders’ equity to average assets was 10.19%, and book value per share was $8.47 at March 31, 2013 compared to 9.67% and $8.30, respectively, at December 31, 2012.

45

ASSET AND LIABILITY MANAGEMENT

The primary objective of the Company’s asset and liability management function is to maximize the Company’s net interest income while simultaneously maintaining an acceptable level of interest rate risk given the Company’s operating environment, capital and liquidity requirements, performance objectives and overall business focus. The principal determinant of the exposure of the Company’s earnings to interest rate risk is the timing difference between the repricing or maturity of interest-earning assets and the repricing or maturity of its interest-bearing liabilities. The Company’s asset and liability management policies are designed to decrease interest rate sensitivity primarily by shortening the maturities of interest-earning assets while at the same time extending the maturities of interest-bearing liabilities. The Board of Directors of the Company continues to believe in strong asset/liability management in order to insulate the Company from material and prolonged increases in interest rates. As a result of this policy, the Company emphasizes a larger, more diversified portfolio of residential mortgage loans in the form of mortgage-backed securities. Mortgage-backed securities generally increase the quality of the Company’s assets by virtue of the insurance or guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of the Company.

The Company’s Board of Directors has established an Asset and Liability Management Committee consisting of outside directors, the President and Chief Executive Officer, Group Senior Vice President/Chief Financial Officer, Group Senior Vice President/Operations and Group Senior Vice President/Lending. This committee, which meets quarterly, generally monitors various asset and liability management policies and strategies, which were implemented by the Company over the past few years. These strategies have included: (i) an emphasis on the investment in adjustable-rate mortgage-backed securities, corporate bonds and trust preferred securities, (ii) an emphasis on the origination of single-family residential adjustable-rate mortgages (ARMs), residential construction loans and commercial real estate loans, which generally have adjustable or floating interest rates and/or shorter maturities than traditional single-family residential loans, and consumer loans, which generally have shorter terms and higher interest rates than mortgage loans, (iii) increase the duration of the liability base of the Company by extending the maturities of savings deposits, borrowed funds and repurchase agreements and (iv) the purchase of off-balance sheet interest rate caps and structured borrowings with imbedded caps which help to insulate the Bank’s interest rate risk position from increases in interest rates.

As of March 31, 2013, the implementation of these asset and liability initiatives resulted in the following: (i) $144.5 million or 22.9% of the Company’s mortgage-backed securities portfolio, $132.7 million or 58.5% of the Company’s corporate bond portfolio and $36.4 million or 95.1% of the Company’s trust preferred securities portfolio were secured by ARMs; (ii) $183.4 million or 26.1% of the Company’s total loan portfolio had adjustable interest rates or maturities of 12 months or less and $51.9 million or 14.6% of the Company’s portfolio of single-family residential mortgage loans (including residential construction loans) consisted of ARMs, (iii) the weighted average call/maturity of the Company’s FHLB advances and repurchase agreements was 4.2 years and (iv) the Company had $180.0 million in notional amount of interest rate caps and $95.0 million in structured borrowings with $120.0 million in notional amount of imbedded caps.

The implementation of the foregoing asset and liability initiatives and strategies, combined with other external factors such as demand for the Company’s products and economic and interest rate environments in general, has resulted in the Company historically being able to maintain a one-year interest rate sensitivity gap (GAP) ranging between 0.0% of total assets to a negative 20.0% of total assets. The one-year interest rate sensitivity gap is defined as the difference between the Company’s interest-earning assets, which are scheduled to mature or reprice within one year and its interest-bearing liabilities, which are scheduled to mature or reprice within one year. At March 31, 2013, the Company’s interest-earning assets maturing or repricing within one year totaled $709.5 million while the Company’s interest-bearing liabilities maturing or repricing within one-year totaled $740.8 million, providing a deficiency of interest-earning assets over interest-bearing liabilities of $31.3 million or a negative 1.6% of total assets. At March 31, 2013, the percentage of the Company’s assets to liabilities maturing or repricing within one year was 95.8%. The Company normally strives to maintain its one-year interest rate sensitivity gap between a range of 0.0% and a negative 20.0% of total assets.

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Historically, the one-year interest rate sensitivity gap has been the most common industry standard used to measure an institution’s interest rate risk position. In recent years, in addition to utilizing interest rate sensitivity gap analysis, the Company has increased its emphasis on the utilization of interest rate sensitivity simulation analysis to evaluate and manage interest rate risk.

The Company also utilizes income simulation modeling in measuring its interest rate risk and managing its interest rate sensitivity. The Asset and Liability Management Committee of the Company believes that simulation modeling enables the Company to more accurately evaluate and manage the possible effects on net interest income due to the exposure to changing market interest rates, the slope of the yield curve and different loan and mortgage-backed security prepayment and deposit decay assumptions under various interest rate scenarios.

As with gap analysis and earnings simulation modeling, assumptions about the timing and variability of cash flows are critical in economic value of equity (EVE) valuation analysis. Particularly important are the assumptions driving mortgage prepayments and the assumptions about expected attrition of the core deposit portfolios. These assumptions are based on the Company’s historical experience and industry standards and are applied consistently across the different rate risk measures.

The Company has established the following guidelines for assessing interest rate risk:

Net interest income simulation: Given a 200 basis point parallel and gradual increase or decrease in market interest rates, the Company strives to maintain the change in net interest income to no more than approximately 10% for a one-year period.

Economic Value of Equity (EVE): EVE is the net present value of the Company’s existing assets and liabilities. EVE is expressed as a percentage of the value of equity to total assets. Given a 200 basis point immediate and permanent increase or decrease in market interest rates, the Company strives to maintain the EVE increase or decrease to no more than approximately 50% of stockholders equity.

The following table presents the simulated impact of a 100 basis point or 200 basis point upward or downward shift of market interest rates on net interest income, return on average equity, diluted earnings per share and the change in EVE. This analysis was done assuming that the interest-earning asset and interest-bearing liability levels at March 31, 2013 remained constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over a one-year period from the March 31, 2013 levels for net interest income, return on average equity and diluted earnings per share. The impact of market rate movements was developed by simulating the effects of an immediate and permanent change in rates at March 31, 2013 for the change in EVE. The impact of the rate change for net interest income is compared to the base amount which can fluctuate from period to period.

	Increase						Decrease
	+100			+200			-100			-200
	BP			BP			BP			BP
Net interest income - increase (decrease)		3.28	%		5.96	%		(4.14	%)		0.00	%
Return on average equity - increase (decrease)		6.44	%		11.62	%		(8.08	%)		0.00	%
Diluted earnings per share - increase (decrease)		6.65	%		12.07	%		(8.37	%)		0.00	%
EVE - increase (decrease)		1.54	%		(7.46	%)		(5.66	%)		0.00	%

The following table presents the simulated impact of a 100 basis point or 200 basis point upward or downward shift of market interest rates on net interest income, return on average equity, diluted earnings per share and the change in EVE. This analysis was done assuming that the interest-earning asset and interest-bearing liability levels at December 31, 2012 remained constant. The impact of the market rate movements was developed by simulating the effects of rates changing gradually over a one-year period from the December 31, 2012 levels for

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net interest income, return on average equity and diluted earnings per share. The impact of market rate movements was developed by simulating the effects of an immediate and permanent change in rates at December 31, 2012 for the change in EVE. The impact of the rate change for net interest income is compared to the base amount which can fluctuate from period to period

	Increase						Decrease
	+100			+200			-100			-200
	BP			BP			BP			BP
Net interest income - increase (decrease)		3.19	%		6.13	%		(3.49	%)		N/A
Return on average equity - increase (decrease)		6.52	%		12.59	%		(7.26	%)		N/A
Diluted earnings per share - increase (decrease)		6.80	%		13.07	%		(7.45	%)		N/A
EVE - increase (decrease)		(3.47	%)		(10.65	%)		(13.76	%)		N/A

LIQUIDITY

The Company’s primary sources of funds generally have been deposits obtained through the offices of the Bank, borrowings from the FHLB, repurchase agreement borrowings and amortization and prepayments of outstanding loans and maturing investment securities.

Net cash provided by operating activities totaled $8.9 million for the three months ended March 31, 2013. Net cash provided by operating activities was primarily comprised of net income of $4.0 million and increases in amortization of premiums and discounts and accrued expenses and other liabilities of $1.1 million and $3.7 million, respectively, as well as slight variances in other operating activities.

Funds provided by investing activities totaled $9.4 million during the three months ended March 31, 2013. Primary sources of funds were principal repayments of loans receivable and securities available for sale of $41.4 million and $60.8 million, respectively. These sources were partially offset by uses of funds of $43.4 million for purchases of securities available for sale and $49.5 million for loan originations and purchases.

Funds used by financing activities totaled $18.2 million for the three months ended March 31, 2013. The primary uses of funds included repayments of long-term borrowings, the redemption of junior subordinated notes, the purchase of treasury stock and the purchase of ESOP stock of $92.1 million, $10.3 million, $305,000 and $99,000, respectively. These uses were offset by sources of funds from an increase in deposits and proceeds from long-term borrowings of $28.8 million and $53.7 million, respectively.

At March 31, 2013, the total approved loan commitments outstanding amounted to $6.1 million. At the same date, commitments under unused lines of credit and credit card lines amounted to $84.9 million and the unadvanced portion of construction loans approximated $16.9 million. Certificates of deposit scheduled to mature in one year or less at March 31, 2013 totaled $383.6 million.

Historically, the Company used its sources of funds primarily to meet its ongoing commitments to pay maturing savings certificates and savings withdrawals, fund loan commitments and maintain a substantial portfolio of investment securities. The Company has been able to generate sufficient cash through the retail deposit market, its traditional funding source, and through FHLB advances and other borrowings, to provide the cash utilized in investing activities. Management believes that the Company currently has adequate liquidity available to respond to liquidity demands.

On March 19, 2013 the Company’s Board of Directors declared a cash dividend of $0.10 per share of common stock payable April 25, 2013, to shareholders of record at the close of business on March 29, 2013. Dividends are subject to determination and declaration by the Board of Directors, which take into account the Company’s financial condition, statutory and regulatory restrictions, general economic conditions and other factors. There can be no assurance that dividends will in fact be paid on the common stock in future periods or that, if paid, such dividends will not be reduced or eliminated.

48

REGULATORY CAPITAL REQUIREMENTS

Current regulatory requirements specify that the Bank and similar institutions must maintain leverage capital equal to 4% of adjusted total assets and total risk-based capital equal to 8% of risk-weighted assets. The Federal Deposit Insurance Corporation (FDIC) may require higher core capital ratios if warranted, and institutions are to maintain capital levels consistent with their risk exposures. The FDIC reserves the right to apply this higher standard to any insured financial institution when considering an institution’s capital adequacy. At March 31, 2013, ESB Bank was in compliance with all regulatory capital requirements with leverage and total risk-based capital ratios of 8.7% and 15.1%, respectively.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative disclosures about market risk are presented at December 31, 2012 in Item 7A of the Company’s Annual Report on Form 10-K, for the year ended December 31, 2012, filed with the SEC on March 15, 2013. Management believes there have been no material changes in the Company’s market risk since December 31, 2011.

Item 4. Controls and Procedures

As of March 31, 2013, an evaluation was performed under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), on the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2013. During the period ended March 31, 2013 there have been no significant changes in the Company’s internal controls over financial reporting or in other factors that could significantly affect internal controls.

Disclosure controls and procedures are the controls and other procedures that are designed to ensure that the information required to be disclosed by the Company in its reports filed and submitted under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its reports filed under the Exchange Act is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are involved in various legal proceedings occurring in the ordinary course of business. It is the opinion of management, after consultation with legal counsel, that these matters will not materially affect the Company’s consolidated financial position or results of operations.

Item 1A. Risk Factors

There are no material changes to the risk factors included in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

49

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

(a) – (b) Not applicable

(c) The following table sets forth information with respect to purchases made by or on behalf of the Company of shares of common stock of the Company during the indicated periods.

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares  Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares  that May Yet Be Purchased Under the Plans or Programs (1)
January 1-31, 2013		—		—		—		35,362
February 1-28, 2013		18,697		13.74		18,697		16,665
March 1-31, 2013		3,493		13.75		3,493		13,172
Totals		22,190	$	13.74		22,190		13,172

(1) On May 20, 2009, the Company announced a new program to repurchase up to 5% of the outstanding shares of common stock of the Company, or 600,000 shares, of the Company’s outstanding common stock. The program began upon the completion of the existing plan. The program does not have an expiration date and all shares are purchased in the open market or in privately negotiated transactions, as in the opinion of management, market conditions warrant.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits:

31.1	Certification of Chief Executive Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant Section 906 of the Sarbanes-Oxley Act of 2002. (18 U.S.C. 1350)
32.2	Certification of Chief Financial Officer Pursuant Section 906 of the Sarbanes-Oxley Act of 2002. (18 U.S.C. 1350)
101.INS	XBRL Instance Document *
101.SCH	XBRL Taxonomy Extension Schema Document *
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document *
101.LAB	XBRL Taxonomy Extension Label Linkbase Document *
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document *
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document *

* These interactive data files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

50

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.

ESB FINANCIAL CORPORATION
Date: May 10, 2013	By:	/s/ Charlotte A. Zuschlag
	Charlotte A. Zuschlag
	President and Chief Executive Officer
Date: May 10, 2013	By:	/s/ Charles P. Evanoski
	Charles P. Evanoski
	Group Senior Vice President and Chief Financial Officer

51

EX-31.1

Certifications

Exhibit 31.1

Certification of Chief Executive Officer

I, Charlotte A. Zuschlag, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ESB Financial Corporation (the “Registrant”);

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 quarterly 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 quarterly 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 other within those entities, particularly during the period in which this report is being prepared;

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

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

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

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls.

Date: May 10, 2013	By:	/s/ Charlotte A. Zuschlag
	Charlotte A. Zuschlag
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Charles P. Evanoski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ESB Financial Corporation (the “Registrant”);

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 quarterly 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 quarterly 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 other within those entities, particularly during the period in which this report is being prepared;

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

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

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

5. The Registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent function):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant’s ability to record, process, summarize and report financial data and have identified for the Registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal controls;

Date: May 10, 2013	By:	/s/ Charles P. Evanoski	.
	Charles P. Evanoski
	Group Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

The undersigned executive officer of ESB Financial Corporation (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the period ending March 31, 2012 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

By:	/s/ Charlotte A. Zuschlag	.
Charlotte A. Zuschlag
President and Chief Executive Officer

Date: May 10, 2013

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

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

The undersigned executive officer of ESB Financial Corporation (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the period ending March 31, 2012 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

By:	/s/ Charles P. Evanoski	.
Charles P. Evanoski
Group Senior Vice President and Chief Financial Officer

Date: May 10, 2013

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

XML

Loans Receivable (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	$ 6,709	$ 6,537
Charge-offs	156	146
Recoveries	18	42
Provision	150	200
Reallocations
Ending Balance	6,721	6,633
Ending balance: individually evaluated for impairment	1,100		1,164
Ending balance: collectively evaluated for impairment	5,621		5,545
Loans Receivable:
Loans Receivable, Ending Balance	703,011		692,180
Ending balance: individually evaluated for impairment	15,678		15,904
Ending balance: collectively evaluated for impairment	687,333		676,276
Commercial [Member]
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	550	384
Provision	14
Reallocations		22
Ending Balance	564	406
Ending balance: collectively evaluated for impairment	564		550
Loans Receivable:
Loans Receivable, Ending Balance	58,141		54,445
Ending balance: collectively evaluated for impairment	58,141		54,445
Consumer [Member]
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	1,031	1,045
Charge-offs	146	107
Recoveries	18	25
Provision	25
Reallocations		(8)
Ending Balance	928	955
Ending balance: individually evaluated for impairment	51		54
Ending balance: collectively evaluated for impairment	877		977
Loans Receivable:
Loans Receivable, Ending Balance	134,690		134,885
Ending balance: individually evaluated for impairment	386		327
Ending balance: collectively evaluated for impairment	134,304		134,558
Residential [Member]
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	2,541	2,115
Charge-offs	10	39
Recoveries		17
Provision	61	200
Reallocations		147
Ending Balance	2,592	2,440
Ending balance: collectively evaluated for impairment	2,592		2,541
Loans Receivable:
Loans Receivable, Ending Balance	411,673		405,895
Ending balance: individually evaluated for impairment	2,237		2,163
Ending balance: collectively evaluated for impairment	409,436		403,732
Unallocated [Member]
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	512	551
Reallocations		(58)
Ending Balance	512	493
Ending balance: collectively evaluated for impairment	512		512
Commercial Real Estate [Member]
Changes in allowance for loan losses and recorded investment in loans
Beginning balance	2,075	2,442
Provision	50
Reallocations		(103)
Ending Balance	2,125	2,339
Ending balance: individually evaluated for impairment	1,049		1,110
Ending balance: collectively evaluated for impairment	1,076		965
Loans Receivable:
Loans Receivable, Ending Balance	98,507		96,955
Ending balance: individually evaluated for impairment	13,055		13,414
Ending balance: collectively evaluated for impairment	$ 85,452		$ 83,541

XML

Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Gains/(losses) on cash flow hedges
Interest rate derivative contracts	$ 268
Interest rate derivative contracts, Total before tax	268	220
Income tax effect	(91)	(75)
Interest rate derivative contracts, Net of tax	177
Available-for-sale securities
Realized gain on sale of securities	268
Impairment expense
Available-for-sale securities, Total before tax	268
Income tax expense	(91)	(91)
Available-for-sale securities, Net of tax	177
Defined benefit pension plan items
Amortization of prior service costs	(37)	(52)
Amortization of actuarial gains/(losses)	10
Pension curtailment
Defined benefit pension plan items, Total before tax	36
Defined benefit pension plan items, Income tax expense	(12)
Defined benefit pension plan items, Net of tax	24
Total reclassifications	$ 378

XML

Deposits (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Summary of deposits
Noninterest-bearing deposits	$ 113,840	$ 109,964
NOW account deposits	247,453	223,736
Money Market deposits	42,143	39,255
Passbook account deposits	178,882	173,343
Time deposits	624,525	631,759
Total	$ 1,206,843	$ 1,178,057
Percentage of noninterest-bearing deposits	9.40%	9.30%
Percentage of NOW account deposits	20.50%	19.00%
Percentage of Money Market deposits	3.50%	3.30%
Percentage of Passbook account deposits	14.80%	14.70%
Percentage of Time deposits	51.80%	53.70%
Percentage of deposits, total	100.00%	100.00%

XML

Comprehensive Income (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Summary of comprehensive income loss
Beginning balance, Gains/(losses) on Cash Flow Hedges	$ (3,733)
Beginning Balance, Unrealized gains/(losses) on available-for-sale securities	29,465
Beginning Balance, Defined benefit pension plan items	(629)
Beginning Balance, Total	25,103
Other comprehensive income/(loss) before reclassification, Gains/(losses) on Cash Flow Hedges	177
Other comprehensive income/(loss) before reclassification, Unrealized gains/(losses) on available-for-sale securities	(2,314)	3,191
Other comprehensive income/(loss) before reclassification, Defined benefit pension plan items	24
Other comprehensive income/(loss) before reclassification, Total	(2,113)
Amounts reclassified from AOCI, Unrealized gains/(losses) on available-for-sale securities	177
Amounts reclassified from AOCI, Total	177
Net current period OCI, Gains/(losses) on Cash Flow Hedges	177	145
Net current period OCI, Unrealized gains/(losses) on available-for-sale securities	(2,137)
Net current period OCI, Defined benefit pension plan items	24
Net current period OCI, Total	(1,936)	3,547
Ending balance, Gains/(losses) on Cash Flow Hedges	(3,556)
Ending Balance, Unrealized gains/(losses) on available-for-sale securities	27,327
Ending Balance, Defined benefit pension plan items	(604)
Ending Balance, Total	$ 23,167

XML

Loans Receivable (Details 8) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Contract	Dec. 31, 2012 Contract
Summery of information relating to troubled debt restructuring by class of loans
Number of Contracts	4	17
Pre-Modification Outstanding Recorded Investment	$ 119	$ 1,437
Maturity Date Extension	76	1,437
Deferral of Principal Payments	0
Other Pre-Modification Outstanding Recorded Investment	43
Pre-Modification Outstanding Recorded Investment	119	1,437
Residential Construction Loans [Member]
Summery of information relating to troubled debt restructuring by class of loans
Pre-Modification Outstanding Recorded Investment		1,053
Number of Contracts		4
Maturity Date Extension		1,053
Deferral of Principal Payments
Other Pre-Modification Outstanding Recorded Investment
Pre-Modification Outstanding Recorded Investment		1,053
Commercial Real Estate [Member]
Summery of information relating to troubled debt restructuring by class of loans
Pre-Modification Outstanding Recorded Investment	43	198
Number of Contracts	1	2
Maturity Date Extension		198
Deferral of Principal Payments
Other Pre-Modification Outstanding Recorded Investment	43
Pre-Modification Outstanding Recorded Investment	43	198
Consumer [Member]
Summery of information relating to troubled debt restructuring by class of loans
Number of Contracts
Pre-Modification Outstanding Recorded Investment
Number of Contracts
Maturity Date Extension
Deferral of Principal Payments
Other Pre-Modification Outstanding Recorded Investment
Pre-Modification Outstanding Recorded Investment
Consumer - Home Equity [Member]
Summery of information relating to troubled debt restructuring by class of loans
Pre-Modification Outstanding Recorded Investment	76	168
Number of Contracts	3	7
Maturity Date Extension	76	168
Deferral of Principal Payments			[1]
Pre-Modification Outstanding Recorded Investment	76	168
Dealer Auto and RV [Member]
Summery of information relating to troubled debt restructuring by class of loans
Pre-Modification Outstanding Recorded Investment		18
Number of Contracts		4
Maturity Date Extension		18
Deferral of Principal Payments
Other Pre-Modification Outstanding Recorded Investment
Pre-Modification Outstanding Recorded Investment		$ 18

[1] Per share data has been adjusted to reflect the six-for-five stock split declared April 16, 2013.

XML

Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013 Offices Contract Segment Branches RealEstate	Mar. 31, 2012	Mar. 31, 2011
Summary of Significant Accounting Policies (Textual) [Abstract]
Real estate development and construction maximum family residential units	4
Real estate development and construction minimum family residential units	1
Number of real estate joint ventures currently involved	9
Number of full service banking branches	23
Number of loan production offices	1
Number of operating segment	1
Notional amount of interest rate cap derivatives	$ 170,000,000
Interest rate cap contracts outstanding	16
Number of interest rate swap contracts	2
Interest payment in junior subordinated notes	35,000,000
Minimum cumulative percentage change in anticipated cash flows	80.00%
Maximum cumulative percentage change in anticipated cash flows	125.00%
Stock-based compensation expense		107,000	100,000
Amounts charged to current earnings	0
Tax benefit from compensation expense		9,000	6,500
Unrecognized compensation cost		$ 790,000
Share based compensation expense recognized, years		4 years
AMSCO Inc [Member]
Summary of Significant Accounting Policies [Line Items]
Ownership percentage	51.00%

XML

Retirement Plans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
SERP [Member]
Components of net periodic pension cost for retirement plan
Service cost	$ 25	$ 20
Interest cost	28	31
Amortization of unrecognized gains and losses	26	20
Amortization of prior service cost	10	10
Net periodic pension cost	89	81
Directors' Retirement Plan [Member]
Components of net periodic pension cost for retirement plan
Service cost	1	1
Interest cost	7	9
Amortization of prior service cost		22
Net periodic pension cost	$ 8	$ 32

XML

Deposits (Tables)

3 Months Ended

Mar. 31, 2013

Deposits [Abstract]

Summary of deposits

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
Type of accounts	Amount		%			Amount		%
Noninterest-bearing deposits	$	113,840		9.4	%	$	109,964		9.3	%
NOW account deposits		247,453		20.5	%		223,736		19.0	%
Money Market deposits		42,143		3.5	%		39,255		3.3	%
Passbook account deposits		178,882		14.8	%		173,343		14.7	%
Time deposits		624,525		51.8	%		631,759		53.7	%
	$	1,206,843		100.0	%	$	1,178,057		100.0	%

Schedule of deposits of time deposits maturity

Within one year	$	383,629	61.4	%	$	375,862	59.5	%
After one year through two years		113,170	18.1	%		118,333	18.7	%
After two years through three years		80,016	12.8	%		78,492	12.4	%
After three years through four years		27,923	4.5	%		36,920	5.8	%
After four years through five years		14,972	2.4	%		17,106	2.7	%
Thereafter		4,815	0.8	%		5,046	0.8	%
	$	624,525	100.0	%	$	631,759	100.0	%

XML

Borrowed Funds (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Summary of borrowed funds
Due within 12 months, Weighted average rate	2.70%	2.69%
Due beyond 12 months but within 2 years, Weighted average rate	2.83%	2.88%
Due beyond 2 years but within 3 years, Weighted average rate	1.79%	3.13%
Due beyond 3 years but within 4 years, Weighted average rate	1.36%	2.15%
Due beyond 4 years but within 5 years, Weighted average rate	0.93%	1.03%
Due beyond 5 years, Weighted average rate	3.61%	3.61%
Due within 12 months	$ 112,582	$ 100,147
Due beyond 12 months but within 2 years	59,202	71,392
Due beyond 2 years but within 3 years	38,071	15,873
Due beyond 3 years but within 4 years	32,234	8,013
Due beyond 4 years but within 5 years	5,179	7,807
Due beyond 5 years	10,000	10,000
Total	257,268	213,232
Repurchase agreements [Member]
Summary of borrowed funds
Due within 12 months, Weighted average rate	2.82%	2.99%
Due beyond 12 months but within 2 years, Weighted average rate	3.28%	3.07%
Due beyond 2 years but within 3 years, Weighted average rate	4.12%	4.12%
Due beyond 4 years but within 5 years, Weighted average rate	4.28%	4.28%
Due beyond 5 years, Weighted average rate	4.49%	4.49%
Due within 12 months	78,000	148,000
Due beyond 12 months but within 2 years	20,000	40,000
Due beyond 2 years but within 3 years	10,000	10,000
Due beyond 4 years but within 5 years	25,000	25,000
Due beyond 5 years	45,000	45,000
Total	178,000	268,000
ESOP borrowings [Member]
Summary of borrowed funds
Due within 12 months, Weighted average rate	4.68%	4.68%
Due beyond 12 months but within 2 years, Weighted average rate	4.68%	4.68%
Due beyond 2 years but within 3 years, Weighted average rate	4.68%	4.68%
Due beyond 3 years but within 4 years, Weighted average rate		4.68%
Due within 12 months, Amount	1,000	1,000
Due beyond 12 months but within 2 years	1,000	1,000
Due beyond 2 years but within 3 years	1,000	1,000
Due beyond 3 years but within 4 years		250
Total	3,000	3,250
Corporate borrowings [Member]
Summary of borrowed funds
Due within 12 months, Weighted average rate	3.75%
Due beyond 12 months but within 2 years, Weighted average rate	3.75%
Due beyond 2 years but within 3 years, Weighted average rate	3.75%
Due beyond 3 years but within 4 years, Weighted average rate	3.75%
Due beyond 4 years but within 5 years, Weighted average rate	3.75%
Due within 12 months, Amount	1,000
Due beyond 12 months but within 2 years	1,000
Due beyond 2 years but within 3 years	1,000
Due beyond 3 years but within 4 years	1,000
Due beyond 4 years but within 5 years	5,954
Total	9,954
Borrowings for joint ventures [Member]
Summary of borrowed funds
Due beyond 2 years but within 3 years, Weighted average rate	3.75%	3.75%
Due beyond 2 years but within 3 years	9	74
Junior subordinated notes [Member]
Summary of borrowed funds
Due beyond 5 years, Weighted average rate	2.11%	2.41%
Due beyond 5 years	$ 36,083	$ 46,393

XML

Loans Receivable (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	$ 975		$ 2,193
60-89 Days Past Due	1,044		1,262
90 Days Or Greater	7,226		7,025
Total Past Due	9,245		10,480
Current	693,766		681,700
Total loans receivable	703,011		692,180
Recorded Investment greater than 90 Days and Accruing
Residential Real Estate, Single Family [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	361		887
60-89 Days Past Due	386		420
90 Days Or Greater	3,687		3,343
Total Past Due	4,434		4,650
Current	326,663		321,355
Total loans receivable	331,097		326,005
Recorded Investment greater than 90 Days and Accruing
Residential Real Estate, Construction [Member]
Aging analysis of investment of past due loans receivable
Current	34,836		46,418
Total loans receivable	34,836		46,418
Recorded Investment greater than 90 Days and Accruing
Residential Real Estate Multi - family [Member]
Aging analysis of investment of past due loans receivable
Current	45,740		33,472
Total loans receivable	45,740		33,472
Recorded Investment greater than 90 Days and Accruing
Commercial Real Estate, Commercial [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	78		246
60-89 Days Past Due	507		598
90 Days Or Greater	3,035		3,211
Total Past Due	3,620		4,055
Current	80,223		77,022
Total loans receivable	83,843		96,955
Recorded Investment greater than 90 Days and Accruing		[1]
Commercial Real Estate, Construction [Member]
Aging analysis of investment of past due loans receivable
Current	14,664		15,878
Total loans receivable	14,664		15,878
Recorded Investment greater than 90 Days and Accruing
Consumer Home Equity [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	94		219
90 Days Or Greater	189		223
Total Past Due	283		442
Current	80,126		79,976
Total loans receivable	80,409		80,418
Recorded Investment greater than 90 Days and Accruing
Dealer Auto and RV [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	365		771
60-89 Days Past Due	118		230
90 Days Or Greater	158		104
Total Past Due	641		1,105
Current	46,220		45,466
Total loans receivable	46,861		46,571
Recorded Investment greater than 90 Days and Accruing
Other Consumer [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	17		70
60-89 Days Past Due	33		12
90 Days Or Greater	121		109
Total Past Due	171		191
Current	7,249		7,705
Total loans receivable	7,420		7,896
Recorded Investment greater than 90 Days and Accruing
Commercial [Member]
Aging analysis of investment of past due loans receivable
30-59 Days Past Due	60
60-89 Days Past Due			2
90 Days Or Greater	36		35
Total Past Due	96		37
Current	58,045		54,408
Total loans receivable	58,141		54,445
Recorded Investment greater than 90 Days and Accruing

[1] Per share data has been adjusted to reflect the six-for-five stock split declared April 16, 2013.

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Securities (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013 Entity	Mar. 31, 2012	Dec. 31, 2012
Securities (Textual) [Abstract]
Fair value, Securities	$ 1,086,629,000		$ 1,110,776,000
Securities (Additional Textual) [Abstract]
Number of financial institutions collateralized debt obligation	10
Number of financial institutions defaulted interest payments	2
Additional credit impairment	0
Proceeds from the sale of securities	1,500,000	25,400,000
Gross realized gains from sale of securities	268,000	267,000
Gross realized losses	0	0
Residential Mortgage Backed Securities [Member]
Securities (Textual) [Abstract]
Fair value, Securities	$ 2,300,000		$ 4,300,000

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Net Income Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Summary of net income per share
Net income	$ 3,714		$ 3,785
Weighted-average common shares outstanding	17,312		17,152
Basic earnings per share	$ 0.21	[1]	$ 0.22	[1]
Weighted-average common shares outstanding	17,312,614	[1]	17,152,130	[1]
Common stock equivalents due to effect of stock options	154		176
Total weighted-average common shares and equivalents	17,466		17,328
Diluted earnings per share	$ 0.21	[1]	$ 0.22	[1]

[1] Outstanding shares and per share data have been adjusted to reflect the six-for-five stock split declared April 16, 2013.

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Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Changes in unrealized gains and losses recorded in earnings for Level III assets and liabilities
Interest income on securities	$ 3	$ 3
Net realized loss on securities available for sale
Total	$ 3	$ 3

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Loans Receivable (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013 Offices	Mar. 31, 2012 Offices	Dec. 31, 2012
Loans Receivable (Textual) [Abstract]
Number of offices of company	23	23
Allowance for loan losses	$ 6,721,000		$ 6,709,000
Borrowers sustained repayment period	6 months
Non-performing loans, including non-accrual loans and TDRs	7,348,000		7,393,000
Troubled debt restructuring (TDRs)	460,000	368,000
Maturity period of impaired loans	90 days
Maturity period of Larger commercial loans	60 days
Description of Loans	Loans are considered nonaccrual upon reaching 90 days delinquency
Historical loss calculation period	3 years
TDR with modified terms	$ 8,300,000		$ 8,200,000

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating activities:
Net income	$ 3,990	$ 3,953
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization for premises and equipment	244	258
Provision for loan losses	150	200
Amortization of premiums and accretion of discounts	1,069	849
Net gain on sale of securities available for sale	(268)	(267)
Net realized (gain) loss on derivatives	(15)	131
Amortization of intangible assets	48	68
Compensation expense on ESOP and MRP	378	375
Increases in Bank owned life insurance	(155)	(158)
Decrease in accrued interest receivable	125	550
Decrease in prepaid FDIC assessment	281	377
Decrease (increase) in prepaid expenses and other assets	747	266
Increase in accrued expenses and other liabilities	3,791	2,095
Gain on sale of real estate acquired through foreclosure	(5)	(9)
Other	(1,449)	281
Net cash provided by operating activities	8,930	8,969
Investing activities:
Loan originations	(49,460)	(55,084)
Purchases of:
Securities available for sale	(43,441)	(52,396)
FHLB stock	(1,904)
Premises and equipment	(74)	(213)
Principal repayments of:
Loans receivable	41,431	44,178
Securities available for sale	60,839	59,714
Proceeds from the sale of:
Securities available for sale	1,508	767
Real estate acquired through foreclosure	80	473
Premises and equipment	105
Redemption of FHLB stock	1,400	1,063
Funding of real estate held for investment	(1,970)	(2,057)
Proceeds from real estate held for investment	871	960
Net cash provided by (used in) investing activities	9,385	(2,595)
Financing activities:
Net increase in deposits	28,786	33,919
Proceeds from long-term borrowings	53,749	2,628
Repayments of long-term borrowings	(92,073)	(36,476)
Net (decrease) increase in short-term borrowings	1,999	(1)
Capital disbursement to noncontrolling interest	(422)	(2)
Redemption of junior subordinated notes	(10,310)
Proceeds received from exercise of stock options	438	389
Dividends paid		(1,460)
Payments to acquire treasury stock	(305)	(42)
Stock purchased by ESOP	(99)	(88)
Net cash used in financing activities	(18,237)	(1,133)
Net increase in cash equivalents	78	5,241
Cash equivalents at beginning of period	15,064	38,848
Cash equivalents at end of period	15,142	44,089
Supplemental information:
Interest paid	5,574	7,274
Income taxes paid	602	504
Supplemental schedule of non-cash investing and financing activities:
Transfers from loans receivable to real estate acquired through foreclosure	27	366
Transfers from loan originations to proceeds on real estate held for investment	1,451	940
Dividends declared but not paid	1,468	1,431
Unfunded security commitments	$ 738	$ 4,804

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Fair Value (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Level III assets measured at fair value on recurring or non-recurring basis
Valuation Technique	Appraisal of collateral
Impaired Loans [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Fair Value of Assets	$ 14,578	$ 14,740
Valuation Technique	Discounted Cash Flow
Significant Unobservable Inputs	Remaining term
Range	.5 yrs to 21.5 yrs
Real estate acquired through foreclosure [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Fair Value of Assets	2,426	2,441
Valuation Technique	Appraisal of collateral (1)
Servicing assets [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Fair Value of Assets	12	14
Valuation Technique	Discounted Cash Flow
Significant Unobservable Inputs	Remaining term
Range	.2 yrs to 18.8 yrs
Trust preferred securities [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Fair Value of Assets	$ 36,353	$ 36,179
Valuation Technique	Discounted Cash Flow
Trust Preferred Securities Credit Spreads [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Credit Spreads
Range	45-80 basis points
Trust Preferred Securities Liquidity Risk Adjustments [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Liquidity Risk Adjustments
Range	20-55 basis points
Trust Preferred Securities Default Rates [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Default Rates
Range	.6% -1%
Servicing Assets Discount Rate [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Discount Rate
Range	11.25% - 12.25%
Impaired Loans Discount Rate [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Discount Rate
Range	3.8% - 7.0%
Impaired Loans Interest Rate [Member]
Level III assets measured at fair value on recurring or non-recurring basis
Significant Unobservable Inputs	Interest Rate
Range	3.3% - 8.5%

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Loans Receivable (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	$ 15,677	$ 15,904
Unpaid Principal Balance	15,951	16,174
Related Allowance	1,100	1,164
Commercial Real Estate [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	13,055	13,414
Unpaid Principal Balance	13,325	13,684
Related Allowance	1,049	1,110
Residential Single Family [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	1,359	1,360
Unpaid Principal Balance	1,359	1,360
Residential Construction Loans Consumer loans [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	878	803
Unpaid Principal Balance	878	803
Consumer Loan [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	385	327
Unpaid Principal Balance	389	327
Related Allowance	51	54
With an allowance recorded [Member] | Commercial Real Estate [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	7,920	7,981
Unpaid Principal Balance	8,083	8,144
Related Allowance	1,049	1,110
With an allowance recorded [Member] | Consumer Home Equity [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	174	179
Unpaid Principal Balance	151	179
Related Allowance	47	50
With an allowance recorded [Member] | Dealer Auto and RV [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	4	4
Unpaid Principal Balance	4	4
Related Allowance	4	4
With no related allowance recorded [Member] | Commercial Real Estate [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	5,135	5,433
Unpaid Principal Balance	5,242	5,540
Related Allowance
With no related allowance recorded [Member] | Residential Single Family [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	1,359	1,360
Unpaid Principal Balance	1,359	1,360
Related Allowance
With no related allowance recorded [Member] | Residential Construction Loans Consumer loans [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	878	803
Unpaid Principal Balance	878	803
Related Allowance
With no related allowance recorded [Member] | Consumer Home Equity [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	196	130
Unpaid Principal Balance	223	130
Related Allowance
With no related allowance recorded [Member] | Dealer Auto and RV [Member]
Recorded investment and unpaid principal balances for impaired loans receivable
Recorded Investment	11	14
Unpaid Principal Balance	11	14
Related Allowance

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Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2013

Retirement Plans [Abstract]

Schedule of net periodic pension cost for retirement plan

(Dollar amounts in thousands)	SERP
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	25	$	20
Interest cost		28		31
Amortization of unrecognized gains and losses		26		20
Amortization of prior service cost		10		10
Net periodic pension cost	$	89	$	81

(Dollar amounts in thousands)	Directors’ Retirement Plan
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	1	$	1
Interest cost		7		9
Amortization of prior service cost		—		22
Net periodic pension cost	$	8	$	32

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Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Comprehensive Income [Abstract]

Summary of Amounts recognized in other comprehensive income loss

				Affected line item
Details about AOCI Components	Amount			in the Statement where net
	Reclassified from AOCI			income is presented
Gains/(losses) on cash flow hedges
Interest rate derivative contracts	$	268
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Available-for-sale securities
Realized gain on sale of securities		268		Non-interest income
Impairment expense		—		Non-interest income
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Defined benefit pension plan items
Amortization of prior service costs		26		See Note 1 below
Amortization of actuarial gains/(losses)		10		See Note 1 below
Pension curtailment		—		See Note 1 below
		36		Total before tax
		(12	)	Income tax expense
		24		Net of tax
Total reclassifications		378		Net of tax

Note 1: These items are included in the computation of net periodic pension cost. See Note 8, Retirement Plans, for additional information.

Summary of comprehensive income loss

	Gains/(losses) on			Unrealized gains/(losses) on			Defined benefit pension
	Cash Flow Hedges			available-for-sale securities			plan items			Total
Beginning balance	$	(3,733	)	$	29,464		$	(628	)	$	25,103
Other comprehensive income/(loss) before relcassification		177			(2,314	)		24			(2,113	)
Amounts reclassified from AOCI		—			177			—			177
Net current period OCI		177			(2,137	)		24			(1,936	)
Ending Balance	$	(3,556	)	$	27,327		$	(604	)	$	23,167

Schedule of components of AOCI, net of tax

(Dollar amounts in thousands)	12/31/2012
Net unrealized gain on securities available for sale	$	29,465
Accumulated loss on effective cash flow hedging derivatives		(3,733	)
Net unrecognized pension cost		(629	)
Total	$	25,103

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Comprehensive Income (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of components of AOCI, net of tax
Net unrealized gain on securities available for sale	$ 27,327	$ 29,465
Accumulated loss on effective cash flow hedging derivatives	(3,556)	(3,733)
Net unrecognized pension cost	604	(629)
Total	$ 23,167	$ 25,103

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Loans Receivable (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Commercial business loans [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	$ 340	$ 46
Interest Income Recognized	8
Residential Real Estate, Single Family [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	1,359	1,363
Interest Income Recognized	3	3
Commercial Real Estate [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	13,075	13,950
Interest Income Recognized	194	156
Consumer Loan [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment		153
Interest Income Recognized		2
Residential Construction Loans [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	853
Interest Income Recognized	7
With an allowance recorded [Member] | Consumer Home Equity [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	175	153
Interest Income Recognized	3	2
With an allowance recorded [Member] | Commercial business loans [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment		46
With an allowance recorded [Member] | Residential Real Estate, Single Family [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment
Interest Income Recognized
With an allowance recorded [Member] | Commercial Real Estate [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	7,941	8,421
Interest Income Recognized	124	106
With an allowance recorded [Member] | Dealer Auto and RV [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	4
With no related allowance recorded [Member] | Consumer Home Equity [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	149
Interest Income Recognized	4
With no related allowance recorded [Member] | Commercial business loans [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment
Interest Income Recognized
With no related allowance recorded [Member] | Residential Real Estate, Single Family [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	1,359	1,363
Interest Income Recognized	3	3
With no related allowance recorded [Member] | Commercial Real Estate [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	5,134	5,529
Interest Income Recognized	70	50
With no related allowance recorded [Member] | Residential Construction Loans [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	853
Interest Income Recognized	7
With no related allowance recorded [Member] | Dealer Auto and RV [Member]
Average recorded investment and interest income recognized on loans
Average Recorded Investment	12
Interest Income Recognized	$ 1

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Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value [Abstract]

Assets and Liabilities Reported on the Consolidated Statements of Financial Condition at their Fair Value on a Recurring Basis

	As of March 31, 2013
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,888	$	36,353	$	38,241
Municipal securities		—		189,259		—		189,259
Equity securities		1,991		—		—		1,991
Corporate bonds		—		227,073		—		227,073
Mortgage backed securities
U.S. sponsored entities		—		627,756		—		627,756
Private label		—		2,309		—		2,309
Subtotal mortgage-backed securities		—		630,065		—		630,065
Total securities available for sale	$	1,991	$	1,048,285	$	36,353	$	1,086,629
Other Assets
Interest rate caps	$	—	$	157	$	—	$	157
Total other assets	$	—	$	157	$	—	$	157
Liabilities
Other Liabilities
Interest rate swaps	$	—	$	5,387	$	—	$	5,387
Total other liabilities	$	—	$	5,387	$	—	$	5,387

	As of December 31, 2012
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,848	$	36,179	$	38,027
Municipal securities		—		190,887		—		190,887
Equity securities		1,818		—		—		1,818
Corporate bonds		—		225,795		—		225,795
Mortgage backed securities
U.S. sponsored entities		—		649,933		—		649,933
Private label		—		4,316		—		4,316
Subtotal mortgage-backed securities		—		654,249		—		654,249
Total securities available for sale	$	1,818	$	1,072,779	$	36,179	$	1,110,776
Other Assets
Interest rate caps	$	—	$	90	$	—	$	90
Total other assets	$	—	$	90	$	—	$	90
Liabilities:
Other Liabilties
Interest rate swaps	$	—	$	5,743	$	—	$	5,743
Total other liabilities	$	—	$	5,743	$	—	$	5,743

Fair Value Measurements Using Significant Unobservable Inputs (Level III)

	Trust Preferred Securities
	March 31,
	2013		2012
Beginning balance January 1,	$	36,179	$	35,789
Total net realized/unrealized gains (losses)
Included in earnings:
Interest income on securities		3		3
Net realized loss on securities available for sale		—		—
Included in other comprehensive income		171		416
Transfers in and/or out of Level III		—		—
Purchases, issuances and settlements
Purchases		—		—
Issuances		—		—
Sales		—		—
Settlements		—		—
Ending balance, March 31,	$	36,353	$	36,208

Changes in Unrealized Gains and Losses Recorded in Earnings for Level III Assets and Liabilities

	Securities available for sale
	March 31,
	2013		2012
Interest income on securities	$	3	$	3
Net realized loss on securities available for sale		—		—
Total	$	3	$	3

Schedule of fair value level III assets measured at fair value on a recurring or non- recurring basis

(Dollar amounts in thousands)	Fair Value at March 31, 2013		Fair Value at December  31, 2012		Valuation Technique	Significant Unobservable Inputs	Range
Trust Preferred Securities	$	36,353	$	36,179	Discounted Cash Flow	Credit Spreads	45-80 basis points
						Liquidity Risk Adjustments	20-55 basis points
						Default Rates	.6% -1%
Impaired Loans		14,578		14,740	Discounted Cash Flow	Remaining term	.5 yrs to 21.5 yrs
						Discount Rate	3.8%-7.0%
					Appraisal of collateral	Interest Rate	3.3%-8.5%
Real estate acquired through foreclosure		2,426		2,441	Appraisal of collateral (1)	N/A	N/A
Servicing assets		12		14	Discounted Cash Flow	Remaining term	.2 yrs to 18.8 yrs
						Discount Rate	11.25%-12.25%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level III inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

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Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Financial Instruments [Abstract]

Carrying amount and fair value of the Company's financial instruments

March 31, 2013
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or  Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,142	$	15,142	$	—	$	—	$	15,142
Securities		1,086,629		1,991		1,048,285		36,353		1,086,629
Securities Receivable		1,909		1,909		—		—		1,909
Loans receivable and held for sale		681,273		—		—		712,597		712,597
Accrued Interest Receivable		7,943		7,943		—		—		7,943
FHLB Stock		15,581		15,581		—		—		15,581
Bank owned life insurance		30,181		30,181		—		—		30,181
Interest rate cap contracts		157		—		157		—		157
Financial Liabilities:
Deposits		1,206,843		582,316		—		633,530		1,215,846
Borrowed funds		448,231		—		198,009		273,511		471,520
Junior subordinated notes		36,083		—		21,650		—		21,650
Advance payments by borrowers for taxes and insurance		2,650		2,650		—		—		2,650
Accrued interest payable		1,947		1,947		—		—		1,947
Interest rate swap contracts		5,387		—		5,387		—		5,387

December 31, 2012
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,064	$	15,064	$	—	$	—	$	15,064
Securities		1,110,776		1,818		1,092,224		35,789		1,129,831
Securities Receivable		1,277		1,277		—		—		1,277
Loans receivable and held for sale		672,086		—		—		679,819		679,819
Accrued Interest Receivable		8,068		8,068		—		—		8,068
FHLB Stock		15,077		15,077		—		—		15,077
Bank owned life insurance		30,025		30,025		—		—		30,025
Interest rate cap contracts		90		—		532		—		532
Financial Liabilities:
Deposits		1,178,057		546,298		—		1,168,438		1,714,736
Borrowed funds		484,556		—		263,288		331,588		594,876
Junior subordinated notes		46,393		—		20,361		—		20,361
Advance payments by borrowers for taxes and insurance		2,619		2,619		—		—		2,619
Accrued interest payable		1,344		1,344		—		—		1,344
Interest rate swap contracts		5,743		—		5,531		—		5,531

XML

Consolidated Statement of Changes in Stockholders' Equity (Parenthetical) (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2013
Cash dividends per share	$ 0.08
Purchase of treasury stock, shares	22,190
Reissuance of treasury stock for stock option exercises, shares	37,643
Stock split ratio	six-for-five stock
Treasury stock
Purchase of treasury stock, shares	22,190
Reissuance of treasury stock for stock option exercises, shares	37,643
Retained earnings
Cash dividends per share	$ 0.08
Reissuance of treasury stock for stock option exercises, shares	37,643

XML

Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Summary of the interest rate swap contract
Notional Amount	$ 35,000
Unrealized Gain
Unrealized Loss	5,387
4.18 % Cash Flow Hedge [Member]
Summary of the interest rate swap contract
Notional Amount	20,000
Effective Date	Feb. 10, 2011
Pay Rate	4.18%
Receive Rate	0.31%
Maturity Date	Feb. 10, 2018
Unrealized Gain
Unrealized Loss	3,191
3.91 % Cash Flow Hedge [Member]
Summary of the interest rate swap contract
Notional Amount	15,000
Effective Date	Feb. 10, 2011
Pay Rate	3.91%
Receive Rate	0.31%
Maturity Date	Feb. 10, 2018
Unrealized Gain
Unrealized Loss	$ 2,196

XML

Loans Receivable (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Residential Real Estate Multi - family [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	$ 34,836	$ 33,472
Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	45,740	46,418
Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	83,843	81,077
Commercial Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	14,664	15,878
Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	58,141	54,445
Pass [Member] | Residential Real Estate Multi - family [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	34,836	33,472
Pass [Member] | Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	40,403	41,138
Pass [Member] | Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	68,511	65,696
Pass [Member] | Commercial Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	14,664	15,878
Pass [Member] | Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	57,535	53,883
Special Mention [Member] | Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	4,459	4,477
Special Mention [Member] | Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	1,649	1,334
Special Mention [Member] | Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	573	527
Substandard [Member] | Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	878	803
Substandard [Member] | Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	13,683	14,047
Substandard [Member] | Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable	33	35
Doubtful [Member] | Residential Real Estate Multi - family [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Doubtful [Member] | Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Doubtful [Member] | Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Doubtful [Member] | Commercial Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Doubtful [Member] | Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Loss [Member] | Residential Real Estate Multi - family [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Loss [Member] | Residential Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Loss [Member] | Commercial Real Estate Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Loss [Member] | Commercial Real Estate, Construction [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable
Loss [Member] | Commercial [Member]
Schedule of credit exposures by internally assigned grades
Financing Receivable

XML

Net Income Per Share (Details Textual)	Mar. 31, 2013	Mar. 31, 2012
Net Income Per Share (Textual) [Abstract]
Shares controlled by Employee Stock Ownership Plan (ESOP)	296,095	395,587

XML

Consolidated Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Assets
Cash on hand and in banks	$ 3,323		$ 5,664
Interest-earning deposits	11,819		9,400
Cash and cash equivalents	15,142		15,064
Securities available for sale; cost of $1,045,225 and $1,065,447	1,086,629		1,110,776
Loans receivable, net of allowance for loan losses of $6,721 and $6,709	681,273		672,086
Accrued interest receivable	7,943		8,068
Federal Home Loan Bank (FHLB) stock	15,581		15,077
Premises and equipment, net	14,013		14,286
Real estate acquired through foreclosure, net	2,426		2,441
Real estate held for investment	9,550		9,968
Goodwill	41,599		41,599
Intangible assets	252		302
Bank owned life insurance	30,181		30,025
Securities receivable	1,909		1,277
Prepaid expenses and other assets	5,634		6,645
Total assets	1,912,132		1,927,614
Liabilities:
Deposits	1,206,843		1,178,057
FHLB advances	257,268		213,232
Repurchase agreements	178,000		268,000
Other borrowings	12,963		3,324
Junior subordinated notes	36,083		46,393
Advance payments by borrowers for taxes and insurance	2,650		2,619
Accounts payable for land development	1,967		2,033
Accrued expenses and other liabilities	20,959		19,156
Total liabilities	1,716,733		1,732,814
Stockholders' Equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized; none issued
Common stock, $.01 par value, 30,000,000 shares authorized; 19,214,524 and 19,211,434 shares issued; 17,618,877 and 17,600,334 shares outstanding	163	[1]	163	[1]
Additional paid-in capital	103,377		103,346
Treasury stock, at cost; 1,595,647 and 1,611,100 shares	(18,708)	[1]	(18,847)	[1]
Unearned Employee Stock Ownership Plan (ESOP) shares	(2,875)		(3,132)
Retained Earnings	91,319		89,065
Accumulated other comprehensive income, net	23,167		25,103
Total ESB Financial Corporation's stockholders' equity	196,443		195,698
Noncontrolling interest	(1,044)		(898)
Total stockholders' equity	195,399		194,800
Total liabilities and stockholders' equity	$ 1,912,132		$ 1,927,614

[1] Shares issued and outstanding have been adjusted to reflect the six-for-five stock split declared April 16, 2013.

XML

Loans Receivable (Details 7) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	$ 7,348	$ 7,393
Commercial [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	36	35
Commercial Real Estate [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	3,157	3,432
Consumer [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status
Consumer - Home Equity [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	189	293
Dealer Auto and RV [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	158	121
Other Consumer [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	121	109
Residential [Member]
Schedule of loans receivable on nonaccrual status
Loans receivable on nonaccrual status	$ 3,687	$ 3,403

XML

Consolidated Statements of Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Consolidated Statements of Comprehensive Income [Abstract]
Net Income before noncontrolling interest	$ 3,990	$ 3,953
Securities available for sale other-than-temporarily impaired:
Total losses
Losses recognized in earnings
Losses recognized in comprehensive income
Income tax effect
Unrealized holding (gains) losses on other-than-temporarily impaired securities available for sale, net of tax
Securities available for sale not other-than-temporarily impaired:
(Losses) gains arising during the year	(3,506)	4,834
Income tax effect	1,192	(1,643)
Gains arising during the year, net of tax	(2,314)	3,191
Gains recognized in earnings	268	267
Income tax effect	(91)	(91)
Gains recognized in earnings, net of tax	177	176
Unrealized holding gains (losses) on securities available for sale not other-than-temporarily-impaired, net of tax	(2,137)	3,367
Unrealized holding gain (loss) on securities, net	(2,137)	3,367
Pension and Postretirement Amortization	37	52
Income tax effect	(13)	(17)
Pension and Postretirement Amortization, net of tax	24	35
Fair Value adjustment on derivatives	268	220
Income tax effect	(91)	(75)
Fair Value adjustment on derivatives	177	145
Other comprehensive income (loss)	(1,936)	3,547
Net comprehensive income before noncontrolling interest	2,054	7,500
Less: net income attributable to the noncontrolling interest	276	168
Net comprehensive income attributable to ESB Financial Corporation	$ 1,778	$ 7,332

XML

Fair Value (Details) (Fair Value, Measurements, Recurring [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	$ 1,086,629	$ 1,110,776
Mortgage backed securities	630,065	654,249
Total other assets	157	90
Total other liabilities	5,387	5,743
Trust preferred securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	38,241	38,027
Municipal securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	189,259	190,887
Equity securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	1,991	1,818
Corporate bonds [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	227,073	225,795
U.S. sponsored entities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities	627,756	649,933
Private label [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities	2,309	4,316
Interest rate caps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other assets	157	90
Interest rate swaps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other liabilities	5,387	5,743
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	1,991	1,818
Mortgage backed securities
Total other assets
Total other liabilities
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Trust preferred securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Municipal securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Equity securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	1,991	1,818
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Corporate bonds [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | U.S. sponsored entities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Private label [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Interest rate caps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other assets
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member] | Interest rate swaps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other liabilities
Significant Other Observable Inputs (Level II) [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	1,048,285	1,072,779
Mortgage backed securities	630,065	654,249
Total other assets	157	90
Total other liabilities	5,387	5,743
Significant Other Observable Inputs (Level II) [Member] | Trust preferred securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	1,888	1,848
Significant Other Observable Inputs (Level II) [Member] | Municipal securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	189,259	190,887
Significant Other Observable Inputs (Level II) [Member] | Equity securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Significant Other Observable Inputs (Level II) [Member] | Corporate bonds [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	227,073	225,795
Significant Other Observable Inputs (Level II) [Member] | U.S. sponsored entities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities	627,756	649,933
Significant Other Observable Inputs (Level II) [Member] | Private label [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities	2,309	4,316
Significant Other Observable Inputs (Level II) [Member] | Interest rate caps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other assets	157	90
Significant Other Observable Inputs (Level II) [Member] | Interest rate swaps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other liabilities	5,387	5,743
Significant Unobservable Inputs (Level III) [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	36,353	36,179
Mortgage backed securities
Total other assets
Total other liabilities
Significant Unobservable Inputs (Level III) [Member] | Trust preferred securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale	36,353	36,179
Significant Unobservable Inputs (Level III) [Member] | Municipal securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Significant Unobservable Inputs (Level III) [Member] | Equity securities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Significant Unobservable Inputs (Level III) [Member] | Corporate bonds [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Securities available for sale
Significant Unobservable Inputs (Level III) [Member] | U.S. sponsored entities [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities
Significant Unobservable Inputs (Level III) [Member] | Private label [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Mortgage backed securities
Significant Unobservable Inputs (Level III) [Member] | Interest rate caps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other assets
Significant Unobservable Inputs (Level III) [Member] | Interest rate swaps [Member]
Assets and liabilities reported on the consolidated statements of financial condition on a recurring basis
Total other liabilities

XML

Securities (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013 Securities	Dec. 31, 2012 Securities
Schedule of investments gross unrealized losses and fair value
Less than 12 Months, # of Securities	28	18
Less than 12 Months, Fair Value	$ 79,773	$ 48,029
Less than 12 Months, Unrealized losses	648	414
12 Months or more, # of Securities	16	16
12 Months or more, Fair Value	59,901	59,258
12 Months or more, Unrealized losses	8,760	9,401
Total, # of Securities	44	34
Total, Fair Value	139,674	107,287
Total, Unrealized losses	9,408	9,815
Trust preferred securities [Member]
Schedule of investments gross unrealized losses and fair value
Less than 12 Months, # of Securities
Less than 12 Months, Fair Value
Less than 12 Months, Unrealized losses
12 Months or more, # of Securities	9	9
12 Months or more, Fair Value	36,353	36,179
12 Months or more, Unrealized losses	8,063	8,234
Total, # of Securities	9	9
Total, Fair Value	36,353	36,179
Total, Unrealized losses	8,063	8,234
Municipal securities [Member]
Schedule of investments gross unrealized losses and fair value
Less than 12 Months, # of Securities	10	5
Less than 12 Months, Fair Value	8,130	4,179
Less than 12 Months, Unrealized losses	210	58
12 Months or more, # of Securities	2	2
12 Months or more, Fair Value	3,032	3,059
12 Months or more, Unrealized losses	213	186
Total, # of Securities	12	7
Total, Fair Value	11,162	7,238
Total, Unrealized losses	423	244
Corporate bonds [Member]
Schedule of investments gross unrealized losses and fair value
Less than 12 Months, # of Securities	2	5
Less than 12 Months, Fair Value	6,078	15,604
Less than 12 Months, Unrealized losses	12	110
12 Months or more, # of Securities	5	5
12 Months or more, Fair Value	20,516	20,020
12 Months or more, Unrealized losses	484	981
Total, # of Securities	7	10
Total, Fair Value	26,594	35,624
Total, Unrealized losses	496	1,091
U.S. sponsored entities [Member]
Schedule of investments gross unrealized losses and fair value
Less than 12 Months, # of Securities	16	8
Less than 12 Months, Fair Value	65,565	28,246
Less than 12 Months, Unrealized losses	426	246
12 Months or more, # of Securities
12 Months or more, Fair Value
12 Months or more, Unrealized losses
Total, # of Securities	16	8
Total, Fair Value	65,565	28,246
Total, Unrealized losses	$ 426	$ 246

XML

Subsequent Events (Details)	3 Months Ended		12 Months Ended	1 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Apr. 16, 2013 Subsequent Event [Member]
Subsequent Events (Textual) [Abstract]
Stock split ratio	six-for-five stock	six-for-five stock	six-for-five stock	six-for-five stock

XML

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of the interest rate swap contract

	Notional		Effective		Pay			Receive			Maturity		Unrealized
(Dollars in thousands)	Amount		Date		Rate			Rate (*)			Date		Gain		Loss
Cash Flow Hedge	$	20,000		2/10/2011		4.18	%		0.31	%		2/10/2018		—	$	3,191
Cash Flow Hedge		15,000		2/10/2011		3.91	%		0.31	%		2/10/2018		—		2,196
	$	35,000												—	$	5,387

* Variable receive rate based upon contract rates in effect at March 31, 2013

XML

Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Scheduled maturities of securities
Weighted Average Yield, Due in one year or less	0.0371	0.0380
Amortized cost, Due in one year or less	$ 22,982	$ 19,137
Fair value, Due in one year or less	23,303	19,411
Weighted Average Yield, Due from one year to five years	0.0306	0.0305
Amortized cost, Due from one year to five years	187,547	187,595
Fair value, Due from one year to five years	195,987	195,182
Weighted Average Yield, Due from five to ten years	0.0315	0.0327
Amortized cost, Due from five to ten years	106,489	108,288
Fair value, Due from five to ten years	110,108	111,879
Weighted Average Yield, Due after ten years	0.0318	0.0330
Amortized cost, Due after ten years	727,065	749,285
Fair value, Due after ten years	755,240	782,486
Weighted Average Yield, Total	0.0317	0.0326
Amortized cost, Total	1,044,083	1,064,305
Fair value, Total	$ 1,084,638	$ 1,108,958

XML

Loans Receivable (Tables)

3 Months Ended

Mar. 31, 2013

Loans Receivable [Abstract]

Schedule of loans receivable

	March 31,			December 31,
(In thousands)	2013			2012
Mortgage loans:
Residential real estate
Single family	$	331,097		$	326,005
Multi family		34,836			33,472
Construction		45,740			46,418
Total residential real estate		411,673			405,895
Commercial real estate
Commercial		83,843			81,077
Construction		14,664			15,878
Total commercial real estate		98,507			96,955
Subtotal mortgage loans		510,180			502,850
Other loans:
Consumer loans
Home equity loans		80,409			80,418
Dealer auto and RV loans		46,861			46,571
Other loans		7,420			7,896
Total consumer loans		134,690			134,885
Commercial business		58,141			54,445
Subtotal other loans		192,831			189,330
Total loans receivable		703,011			692,180
Less:
Allowance for loan losses		6,721			6,709
Deferred loan fees and net discounts		(1,923	)		(1,862	)
Loans in process		16,940			15,247
Subtotal		21,738			20,094
Net loans receivable	$	681,273		$	672,086

Changes in allowance for loan losses and recorded investment in loans

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	550	$	2,075	$	1,031	$	2,541	$	512	$	6,709
Charge-offs		—		—		146		10		—		156
Recoveries		—		—		18		—		—		18
Provision		14		50		25		61		—		150
Reallocations		—		—		—		—		—		—
Ending Balance	$	564	$	2,125	$	928	$	2,592	$	512	$	6,721

As of March 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate			Consumer			Residential		Unallocated			Total
Allowance for loan losses:
Beginning balance	$	384	$	2,442		$	1,045		$	2,115	$	551		$	6,537
Charge-offs		—		—			107			39		—			146
Recoveries		—		—			25			17		—			42
Provision		—		—			—			200		—			200
Reallocations		22		(103	)		(8	)		147		(58	)		—
Ending Balance	$	406	$	2,339		$	955		$	2,440	$	493		$	6,633

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,049	$	51	$	—	$	—	$	1,100
Ending balance: collectively evaluated for impairment	$	564	$	1,076	$	877	$	2,592	$	512	$	5,621
Loans Receivable:
Ending Balance	$	58,141	$	98,507	$	134,690	$	411,673	$	—	$	703,011
Ending balance: individually evaluated for impairment	$	—	$	13,055	$	386	$	2,237	$	—	$	15,678
Ending balance: collectively evaluated for impairment	$	58,141	$	85,452	$	134,304	$	409,436	$	—	$	687,333

As of December 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,110	$	54	$	—	$	—	$	1,164
Ending balance: collectively evaluated for impairment	$	550	$	965	$	977	$	2,541	$	512	$	5,545
Loans Receivable:
Ending Balance	$	54,445	$	96,955	$	134,885	$	405,895	$	—	$	692,180
Ending balance: individually evaluated for impairment	$	—	$	13,414	$	327	$	2,163	$	—	$	15,904
Ending balance: collectively evaluated for impairment	$	54,445	$	83,541	$	134,558	$	403,732	$	—	$	676,276

Schedule of credit exposures by internally assigned grades

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate Multi - family		Residential Real Estate Construction		Commercial Real Estate Commercial		Commercial Real Estate Construction		Commercial
Pass	$	34,836	$	40,403	$	68,511	$	14,664	$	57,535
Special Mention		—		4,459		1,649		—		573
Substandard		—		878		13,683		—		33
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	34,836	$	45,740	$	83,843	$	14,664	$	58,141

As of December 31, 2012

(Dollar amounts in thousands)

	Residential		Residential		Commercial		Commercial
	Real Estate		Real Estate		Real Estate		Real Estate
	Multi - family		Construction		Commercial		Construction		Commercial
Pass	$	33,472	$	41,138	$	65,696	$	15,878	$	53,883
Special Mention		—		4,477		1,334		—		527
Substandard		—		803		14,047		—		35
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	33,472	$	46,418	$	81,077	$	15,878	$	54,445

Performing and nonperforming single family residential and consumer loans based on payment activity

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	327,410	$	80,092	$	46,691	$	7,299
Nonperforming		3,687		317		170		121
Total	$	331,097	$	80,409	$	46,861	$	7,420

As of December 31, 2012

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	322,662	$	80,124	$	46,450	$	7,787
Nonperforming		3,343		294		121		109
Total	$	326,005	$	80,418	$	46,571	$	7,896

Aging analysis of investment of past due loans receivable

(Dollar amounts in thousands)

As of March 31, 2013

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	361	$	386	$	3,687	$	4,434	$	326,663	$	331,097	$	—
Construction		—		—		—		—		34,836		34,836		—
Multi-family		—		—		—		—		45,740		45,740		—
Commercial Real Estate
Commercial		78		507		3,035		3,620		80,223		83,843		—
Construction		—		—		—		—		14,664		14,664		—
Consumer
Consumer - home equity		94		—		189		283		80,126		80,409		—
Consumer - dealer auto and RV		365		118		158		641		46,220		46,861		—
Consumer - other		17		33		121		171		7,249		7,420		—
Commercial		60		—		36		96		58,045		58,141		—
Total	$	975	$	1,044	$	7,226	$	9,245	$	693,766	$	703,011	$	—

(Dollar amounts in thousands)

As of December 31, 2012

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	887	$	420	$	3,343	$	4,650	$	321,355	$	326,005	$	—
Construction		—		—		—		—		46,418		46,418		—
Multi-family		—		—		—		—		33,472		33,472		—
Commercial Real Estate
Commercial		246		598		3,211		4,055		77,022		81,077		—
Construction		—		—		—		—		15,878		15,878		—
Consumer
Consumer - home equity		219		—		223		442		79,976		80,418		—
Consumer - dealer auto and RV		771		230		104		1,105		45,466		46,571		—
Consumer - other		70		12		109		191		7,705		7,896		—
Commercial		—		2		35		37		54,408		54,445		—
Total	$	2,193	$	1,262	$	7,025	$	10,480	$	681,700	$	692,180	$	—

Recorded investment and unpaid principal balances for impaired loans receivable

(Dollar amounts in thousands)

	March 31, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	5,135	$	5,242	$	—	$	5,433	$	5,540	$	—
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction loans		878		878		—		803		803		—
Consumer loans
Home Equity		196		223		—		130		130		—
Dealer auto and RV		11		11		—		14		14		—
With an allowance recorded:
Commercial Real Estate		7,920		8,083		1,049		7,981		8,144		1,110
Consumer Loans:
Home Equity		174		151		47		179		179		50
Dealer auto and RV		4		4		4		4		4		4
Total:
Commercial Real Estate		13,055		13,325		1,049		13,414		13,684		1,110
Consumer		385		389		51		327		327		54
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction		878		878		—		803		803		—
Total	$	15,677	$	15,951	$	1,100	$	15,904	$	16,174	$	1,164

Average recorded investment and interest income recognized on loans

(Dollar amounts in thousands)

	Three months ended				Three months ended
	March 31, 2013				March 31, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial Real Estate	$	5,134	$	70	$	5,529	$	50
Commercial business loans		—		—		—		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans
Home equity		149		4
Dealer auto and RV		12		1
With an allowance recorded:
Commercial Real Estate		7,941		124		8,421		106
Commercial business loans		—		—		46		—
Residential single family		—		—		—
Consumer loans
Home equity		175		3		153		2
Dealer auto and RV		4		—		—		—
Total:
Commercial Real Estate	$	13,075	$	194	$	13,950	$	156
Commercial business loans		340		8		46		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans		—		—		153		2

Schedule of loans receivable on nonaccrual status

(Dollar amounts in thousands)	March 31,		December 31,
	2013		2012
Commercial	$	36	$	35
Commercial Real Estate		3,157		3,432
Consumer
Consumer - Home Equity		189		293
Consumer - Dealer auto and RV		158		121
Consumer - other		121		109
Residential		3,687		3,403
Total	$	7,348	$	7,393

Summery of information relating to troubled debt restructuring by class of loans

As of March 31, 2013

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		—	$	—	$	—		—	$	—	$	—
Commerical real estate		1		43		—		—		43		43
Consumer
Home equity		3		76		76		—		—		76
Dealer auto and RV		—		—		—		—		—		—
Troubled Debt Restructurings		4	$	119	$	76		—	$	43	$	119

As of December 31, 2012

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		4	$	1,053	$	1,053		—	$	—	$	1,053
Commerical real estate		2		198		198		—		—		198
Consumer
Home equity		7		168		168		—		—		168
Dealer auto and RV		4		18		18		—		—		18
Troubled Debt Restructurings		17	$	1,437	$	1,437		—	$	—	$	1,437

XML

Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands		Total	Common stock	Additional paid-in capital	Treasury stock	Unearned ESOP shares	Retained earnings	Accumulated other comprehensive income, net of tax	Noncontrolling Interest
Beginning balance at Dec. 31, 2012		$ 194,800	$ 163	$ 103,346	$ (18,847)	$ (3,132)	$ 89,065	$ 25,103	$ (898)
Net income		3,990					3,714		276
Other comprehensive results, net		(1,936)						(1,936)
Cash dividends at $0.08 per share	[1]	(1,444)					(1,444)
Purchase of treasury stock, at cost (22,190 shares)		(305)			(305)
Reissuance of treasury stock for stock option exercises (37,643 shares)		428			444		(16)
Compensation expense ESOP		377		120		257
Additional ESOP shares purchased		(99)		(99)
Tax effect of compensatory stock options		10		10
Effect of compensation expense for stock option
Capital disbursement for noncontrolling interest		(422)							(422)
Unvested shares in MRP
Ending balance at Mar. 31, 2013		$ 195,399	$ 163	$ 103,377	$ (18,708)	$ (2,875)	$ 91,319	$ 23,167	$ (1,044)

[1] Per share data has been adjusted to reflect the six-for-five stock split declared April 16, 2013.

XML

Consolidated Statements of Financial Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Consolidated Statements of Financial Condition [Abstract]
Securities available for sale; cost	$ 1,045,225	$ 1,065,447
Loans receivable, allowance for loan losses	$ 6,721	$ 6,709
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	19,214,524	19,211,434
Common stock, shares outstanding	17,618,877	17,600,334
Treasury stock, shares	1,595,647	1,611,100
Stock split ratio	six-for-five stock	six-for-five stock

XML

Retirement Plans

3 Months Ended

Mar. 31, 2013

Retirement Plans [Abstract]

Retirement Plans

8. Retirement Plans

Supplemental Executive Retirement Plan and Directors’ Retirement Plan

The Company maintains a Supplemental Executive Benefit Plan (SERP) in order to provide supplemental retirement and death benefits for certain key employees of the Company. Under the SERP, participants shall receive an annual retirement benefit following retirement at age 65 equal to 25% of the participant’s final average pay multiplied by a ratio, ranging from 1.25% to 25.0%, based on the participant’s total years of service. Final average pay is based upon the participant’s last three year’s compensation. The maximum ratio of 25% requires twenty or more years of credited service and the minimum ratio of 1.25% requires one year of credited service. Benefits under the plan are payable in either a lump sum or ten equal annual payments and a lesser benefit is payable upon early retirement at age 50 with at least twelve years of service. If a participant dies prior to retirement, the participant’s estate will receive a lump sum payment equal to the net present value of future benefit payments under the plan. At March 31, 2013, the participants in the plan had credited service under the SERP ranging from 22 to 34 years.

The Company and the Bank maintain the ESB Financial Corporation Directors’ Retirement Plan and have entered into director retirement agreements with each director of the Company and the Bank. The plan provides that any retiring director with a minimum of five or more years of service with the Company or the Bank and a minimum of 10 total years of service, including years of service with any bank acquired by the Company or the Bank, that remains in continuous service as a board member until age 75 will be entitled to receive an annual retirement benefit equal to his or her director’s fees earned during the last full calendar year prior to his or her retirement date, multiplied by a ratio, ranging from 25% to 80%, based on the director’s total years of service. The maximum ratio of 80% of fees requires 20 or more years of service and the minimum ratio of 25% of fees requires 10 years of service. Retirement benefits may also be payable under the plan if a director retires from service as a director prior to attaining age 75. Three directors are currently receiving monthly benefits under the plan.

The following table illustrates the components of the net periodic pension cost for the SERP and Directors Retirement Plan as of March 31, 2013 and 2012:

(Dollar amounts in thousands)	SERP
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	25	$	20
Interest cost		28		31
Amortization of unrecognized gains and losses		26		20
Amortization of prior service cost		10		10
Net periodic pension cost	$	89	$	81

(Dollar amounts in thousands)	Directors’ Retirement Plan
	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Components of net periodic pension cost
Service cost	$	1	$	1
Interest cost		7		9
Amortization of prior service cost		—		22
Net periodic pension cost	$	8	$	32

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	ESB FINANCIAL CORP
Entity Central Index Key	0000872835
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,682,931

XML

Fair Value

3 Months Ended

Mar. 31, 2013

Fair Value [Abstract]

Fair Value

9. Fair Value

Fair value is defined by GAAP as the amount that an asset could be bought or sold, or a liability incurred or settled, between willing parties, other than during a liquidation. GAAP established a fair value hierarchy that prioritizes the use of inputs in valuation methodologies into the following three levels:

Level I: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets, as of the reported date. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. A contractually binding sales price also provides reliable evidence of fair value.

Level II: Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets: inputs to the valuation methodology include quoted prices for identical or similar assets or liabililties in markets that are not active; or inputs to the valuation methodology that utilize the model-based techniques for which all significant assumptions are observable in the market.

Level III: Inputs to the valuation methodology are unobservable and significant to the fair value measurement; inputs to the valuation methodology that utilize a model-based techniques for which significant assumptions are not observable in the market; or inputs to the valuation methodology that requires significant management judgment or estimation, some of which may be internally developed.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Investment Securities Available-for-Sale

Management classifies the Companies equity securities as Level 1 measurements since quoted market prices were available, unadjusted, for identical securities in active markets. Declines in the fair value of individual equity securities that are deemed to be other than temporary, will be written down to current market value and included in earnings as realized losses. Level 2 investment securities were primarily comprised of debt securities issued by states and municipalities and corporations as well as mortgage-backed securities issued by government agencies. On a monthly basis, the fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities. Due to recent uncertainties in the credit markets broadly, and the lack of both trading and new issuance of floating rate trust preferred securities, market price indications generally reflect the lack of liquidity in these markets, therefore the Company classifies these securities as Level III. Due to this lack of practical quoted prices, fair value for floating rate trust preferred securities has been determined using a discounted cash-flow technique. Cash flows are estimated based upon the contractual terms of each instrument. Market rates have been calculated based upon the five year historical discount margin for these instruments from August 2002 through August 2007, when the market was more liquid. These market rates were then adjusted for credit spreads and liquidity risk given the current markets. Credit spreads are based upon the Moody’s rating for each bond and range from 45 to 80 basis points. Liquidity risk adjustments ranged from 20 to 55 basis points where the securities of the 15 largest banks in the United States are assigned 20 to 40 basis points and banks outside of the top 15 were given a higher liquidity risk adjustment. Approximately $17.9 million or 49.2% of the $36.4 million in floating rate trust preferred securities represent investments in three of the four largest banks in the United States.

Derivative Financial Instruments

Derivative financial instruments recorded at fair value on a recurring basis are comprised of interest rate caps and interest rate swap agreements. The Company classifies these instruments as Level II. The Company determines the fair value of the interest rate caps quarterly by using quoted prices from two brokers. The maximum market indication used is the highest price obtained from the brokers, unless this price is Level III as indicated by the broker. If so this price is excluded and the highest Level II is used. The Company utilizes a third-party pricing service to measure its interest rate swap contracts. This service provides pricing information by utilizing evaluated pricing models, supported with market data information. Cash flows are projected for each payment date using the index forward curve. These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates, the accepted cost of funds for a financial institution. The implicit assumption is that the risk associated with the cash flows on the derivative is the same as the risk associated with a loan in the interbank market. The present value of the fixed portion is then added to the present value of the floating portion. The sum of both is the fair market value of the interest rate swap.

The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair value on a recurring basis as of March 31, 2013 and December 31, 2012 by level within the fair value hierarchy. As required by GAAP, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	As of March 31, 2013
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,888	$	36,353	$	38,241
Municipal securities		—		189,259		—		189,259
Equity securities		1,991		—		—		1,991
Corporate bonds		—		227,073		—		227,073
Mortgage backed securities
U.S. sponsored entities		—		627,756		—		627,756
Private label		—		2,309		—		2,309
Subtotal mortgage-backed securities		—		630,065		—		630,065
Total securities available for sale	$	1,991	$	1,048,285	$	36,353	$	1,086,629
Other Assets
Interest rate caps	$	—	$	157	$	—	$	157
Total other assets	$	—	$	157	$	—	$	157
Liabilities
Other Liabilities
Interest rate swaps	$	—	$	5,387	$	—	$	5,387
Total other liabilities	$	—	$	5,387	$	—	$	5,387

	As of December 31, 2012
(Dollar amounts in thousands)	Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable  Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total
Assets:
Securities available for sale
Trust preferred securities	$	—	$	1,848	$	36,179	$	38,027
Municipal securities		—		190,887		—		190,887
Equity securities		1,818		—		—		1,818
Corporate bonds		—		225,795		—		225,795
Mortgage backed securities
U.S. sponsored entities		—		649,933		—		649,933
Private label		—		4,316		—		4,316
Subtotal mortgage-backed securities		—		654,249		—		654,249
Total securities available for sale	$	1,818	$	1,072,779	$	36,179	$	1,110,776
Other Assets
Interest rate caps	$	—	$	90	$	—	$	90
Total other assets	$	—	$	90	$	—	$	90
Liabilities:
Other Liabilties
Interest rate swaps	$	—	$	5,743	$	—	$	5,743
Total other liabilities	$	—	$	5,743	$	—	$	5,743

There were no transfers between Level I and Level II assets measured at fair value. The following table presents the changes in the Level III assets measured at fair value on a recurring basis for the periods ended March 31, 2013 and 2012.

Fair value measurements using significant unobservable inputs (Level III)

	Trust Preferred Securities
	March 31,
	2013		2012
Beginning balance January 1,	$	36,179	$	35,789
Total net realized/unrealized gains (losses)
Included in earnings:
Interest income on securities		3		3
Net realized loss on securities available for sale		—		—
Included in other comprehensive income		171		416
Transfers in and/or out of Level III		—		—
Purchases, issuances and settlements
Purchases		—		—
Issuances		—		—
Sales		—		—
Settlements		—		—
Ending balance, March 31,	$	36,353	$	36,208

The following table summarizes changes in unrealized gains and losses recorded in earnings for the three month period ended March 31, 2013 and 2012 for Level III assets and liabilities that are still held at March 31, 2013 and 2012.

	Securities available for sale
	March 31,
	2013		2012
Interest income on securities	$	3	$	3
Net realized loss on securities available for sale		—		—
Total	$	3	$	3

For Level III assets measured at fair value on a recurring or non-recurring basis as of March 31, 2013, the significant observable inputs used in the fair value measurements were as follows:

(Dollar amounts in thousands)	Fair Value at March 31, 2013		Fair Value at December  31, 2012		Valuation Technique	Significant Unobservable Inputs	Range
Trust Preferred Securities	$	36,353	$	36,179	Discounted Cash Flow	Credit Spreads	45-80 basis points
						Liquidity Risk Adjustments	20-55 basis points
						Default Rates	.6% -1%
Impaired Loans		14,578		14,740	Discounted Cash Flow	Remaining term	.5 yrs to 21.5 yrs
						Discount Rate	3.8%-7.0%
					Appraisal of collateral	Interest Rate	3.3%-8.5%
Real estate acquired through foreclosure		2,426		2,441	Appraisal of collateral (1)	N/A	N/A
Servicing assets		12		14	Discounted Cash Flow	Remaining term	.2 yrs to 18.8 yrs
						Discount Rate	11.25%-12.25%

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various level III inputs which are not identifiable. Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.

The significant unobservable inputs in the fair value measurement of the Company’s trust preferred securities are the credit spreads, liquidity risk adjustments and default rates as described above under Investment Securities Available for Sale. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may be required periodically to measure certain assets and liabilities at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower-of-cost-or-fair value accounting or impairment write-downs of individual assets. During the period ended March 31, 2013 and 2012, the Company incurred write-downs on its REO properties of $0 and $150,000, respectively, there were no adjustments to the fair value for the Company’s remaining assets and liabilities measured at fair value on a nonrecurring basis in accordance with GAAP during the respective periods.

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Interest income:
Loans receivable	$ 8,073		$ 8,349
Taxable securities available for sale	6,688		8,846
Tax free securities available for sale	1,657		1,647
FHLB Stock	8		10
Deposits with banks and federal funds sold	1		18
Total interest income	16,427		18,870
Interest expense:
Deposits	1,962		2,551
Borrowed funds	3,653		4,710
Junior subordinated notes and guaranteed preferred beneficial interest in subordinated debt	561		612
Total interest expense	6,176		7,873
Net interest income	10,251		10,997
Provision for loan losses	150		200
Net interest income after provision for loan losses	10,101		10,797
Noninterest income:
Fees and service charges	725		835
Net gain on sale of loans
Increase of cash surrender value of bank owned life insurance	155		158
Net realized gain on sale of securities available for sale	268		267
Total other-than-temporary impairment losses
Portion of loss recognized in other comprehensive income before taxes
Net impairment losses on investment securities
Net realized loss on derivatives	15		(131)
Income from real estate joint ventures	577		419
Other	173		175
Total noninterest income	1,913		1,723
Noninterest expense:
Compensation and employee benefits	4,430		4,358
Premises and equipment	723		717
Federal deposit insurance premiums	308		407
Data processing	579		589
Amortization of intangible assets	48		68
Advertising	134		139
Other	991		1,444
Total noninterest expense	7,213		7,722
Income before income taxes	4,801		4,798
Provision for income taxes	811		845
Net income before noncontrolling interest	3,990		3,953
Less: net income attributable to the noncontrolling interest	276		168
Net income attributable to ESB Financial Corporation	$ 3,714		$ 3,785
Net income per share
Basic	$ 0.21	[1]	$ 0.22	[1]
Diluted	$ 0.21	[1]	$ 0.22	[1]
Cash dividends declared per share	$ 0.08	[1]	$ 0.08	[1]
Weighted average shares outstanding	17,312,614	[1]	17,152,130	[1]
Weighted average shares and share equivalents outstanding	17,466,268	[1]	17,327,939	[1]

[1] Outstanding shares and per share data have been adjusted to reflect the six-for-five stock split declared April 16, 2013.

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Loans Receivable

3 Months Ended

Mar. 31, 2013

Loans Receivable [Abstract]

Loans Receivable

3. Loans Receivable

The Company’s loans receivable as of the respective dates are summarized as follows:

	March 31,			December 31,
(In thousands)	2013			2012
Mortgage loans:
Residential real estate
Single family	$	331,097		$	326,005
Multi family		34,836			33,472
Construction		45,740			46,418
Total residential real estate		411,673			405,895
Commercial real estate
Commercial		83,843			81,077
Construction		14,664			15,878
Total commercial real estate		98,507			96,955
Subtotal mortgage loans		510,180			502,850
Other loans:
Consumer loans
Home equity loans		80,409			80,418
Dealer auto and RV loans		46,861			46,571
Other loans		7,420			7,896
Total consumer loans		134,690			134,885
Commercial business		58,141			54,445
Subtotal other loans		192,831			189,330
Total loans receivable		703,011			692,180
Less:
Allowance for loan losses		6,721			6,709
Deferred loan fees and net discounts		(1,923	)		(1,862	)
Loans in process		16,940			15,247
Subtotal		21,738			20,094
Net loans receivable	$	681,273		$	672,086

At March 31, 2013 and December 31, 2012, the Company conducted its business through 23 offices in Allegheny, Beaver, Butler and Lawrence counties in Pennsylvania which also serves as its primary lending area. Management does not believe it has significant concentrations of credit risk to any one group of borrowers given its underwriting and collateral requirements.

Management has an established methodology to determine the adequacy of the allowance for loan losses that assesses the risks and losses inherent in the loan portfolio. For purposes of determining the allowance for loan losses, the Company has segmented certain loans in the portfolio by product type. Loans are segmented into the following pools: commercial business loans, commercial real estate loans, residential real estate loans and consumer loans. The Company sub-segments residential real estate loans into the following three classes: single family, construction and multi-family. Commercial real estate is sub-segmented into commercial and construction classes. The Company also sub-segments the consumer loan portfolio into the following three classes: home equity, dealer automobile and recreational vehicle (RV) and other consumer loans. Historical loss percentages for each risk category are calculated and used as the basis for calculating allowance allocations. These historical loss percentages are calculated over a three year period for all portfolio segments. Certain qualitative factors are then added to the historical loss percentages to get the adjusted factor to be applied to non classified loans. The following qualitative factors are analyzed for each portfolio segment:

• Levels of and trends in delinquencies and nonaccruals

• Changes in lending policies and procedures

• Volatility of losses within each risk category

• Loans and Lending staff acquired through acquisition

• Economic trends

• Concentrations of credit

• Trends in volume and terms

• Experience depth and ability of management

These qualitative factors are reviewed each quarter and adjusted based upon relevant changes within the portfolio. During the first three months of 2013, the qualitative factors for trends in volume and terms were also increased for other consumer and commercial loans.

In terms of the Company’s loan portfolio, the commercial and industrial loans and commercial real estate loans are deemed to have more risk than the consumer real estate loans and other consumer loans in the portfolio. The commercial loans not secured by real estate are highly dependent on financial condition and are more dependent on economic conditions. The commercial loans secured by real estate are also dependent on economic conditions but generally have stronger forms of collateral. More recently, commercial real estate has been negatively impacted by devaluation so these commercial loans carry a higher qualitative factor for changes in the value of collateral. The commercial loans and commercial real estate loans have historically been responsible for the majority of the Company’s delinquencies, non-accrual loans, and charge-offs so both of these categories carry higher qualitative factors than consumer real estate loans and other consumer loans. The Company has historically experienced very low levels of consumer real estate and consumer loan charge-offs so these qualitative factors are set lower than the commercial real estate and commercial and industrial loans.

Loans by Segment

The total allowance reflects management’s estimate of loan losses inherent in the loan portfolio at the statement of financial condition date. The Company considers the allowance for loan losses of $6.7 million adequate to cover loan losses inherent in the loan portfolio, at March 31, 2013. The following tables present by portfolio segment, the changes in the allowance for loan losses for the periods ended March 31, 2013 and 2012.

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Beginning balance	$	550	$	2,075	$	1,031	$	2,541	$	512	$	6,709
Charge-offs		—		—		146		10		—		156
Recoveries		—		—		18		—		—		18
Provision		14		50		25		61		—		150
Reallocations		—		—		—		—		—		—
Ending Balance	$	564	$	2,125	$	928	$	2,592	$	512	$	6,721

As of March 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate			Consumer			Residential		Unallocated			Total
Allowance for loan losses:
Beginning balance	$	384	$	2,442		$	1,045		$	2,115	$	551		$	6,537
Charge-offs		—		—			107			39		—			146
Recoveries		—		—			25			17		—			42
Provision		—		—			—			200		—			200
Reallocations		22		(103	)		(8	)		147		(58	)		—
Ending Balance	$	406	$	2,339		$	955		$	2,440	$	493		$	6,633

The following tables present by portfolio segment, the recorded investment in loans at March 31, 2013 and December 31, 2012.

As of March 31, 2013

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,049	$	51	$	—	$	—	$	1,100
Ending balance: collectively evaluated for impairment	$	564	$	1,076	$	877	$	2,592	$	512	$	5,621
Loans Receivable:
Ending Balance	$	58,141	$	98,507	$	134,690	$	411,673	$	—	$	703,011
Ending balance: individually evaluated for impairment	$	—	$	13,055	$	386	$	2,237	$	—	$	15,678
Ending balance: collectively evaluated for impairment	$	58,141	$	85,452	$	134,304	$	409,436	$	—	$	687,333

As of December 31, 2012

(Dollar amounts in thousands)

	Commercial		Commercial Real Estate		Consumer		Residential		Unallocated		Total
Allowance for loan losses:
Ending balance: individually evaluated for impairment	$	—	$	1,110	$	54	$	—	$	—	$	1,164
Ending balance: collectively evaluated for impairment	$	550	$	965	$	977	$	2,541	$	512	$	5,545
Loans Receivable:
Ending Balance	$	54,445	$	96,955	$	134,885	$	405,895	$	—	$	692,180
Ending balance: individually evaluated for impairment	$	—	$	13,414	$	327	$	2,163	$	—	$	15,904
Ending balance: collectively evaluated for impairment	$	54,445	$	83,541	$	134,558	$	403,732	$	—	$	676,276

Credit Quality Information

The following tables represent credit exposures by internally assigned grades as of March 31, 2013 and December 31, 2012. The grading analysis estimates the capability of the borrower to repay the contractual obligations of the loan agreements as scheduled or at all. The Company’s internal credit risk grading system is based on experiences with similarly graded loans.

The Company’s internally assigned grades are as follows:

Pass – loans which are protected by the current net worth and paying capacity of the obligor or by the value of the underlying collateral.

Special Mention – loans where a potential weakness or risk exists, which could cause a more serious problem if not corrected.

Substandard – loans that have a well-defined weakness based on objective evidence and be characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, based on existing circumstances.

Loss – loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate Multi - family		Residential Real Estate Construction		Commercial Real Estate Commercial		Commercial Real Estate Construction		Commercial
Pass	$	34,836	$	40,403	$	68,511	$	14,664	$	57,535
Special Mention		—		4,459		1,649		—		573
Substandard		—		878		13,683		—		33
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	34,836	$	45,740	$	83,843	$	14,664	$	58,141

As of December 31, 2012

(Dollar amounts in thousands)

	Residential		Residential		Commercial		Commercial
	Real Estate		Real Estate		Real Estate		Real Estate
	Multi - family		Construction		Commercial		Construction		Commercial
Pass	$	33,472	$	41,138	$	65,696	$	15,878	$	53,883
Special Mention		—		4,477		1,334		—		527
Substandard		—		803		14,047		—		35
Doubtful		—		—		—		—		—
Loss		—		—		—		—		—
Ending Balance	$	33,472	$	46,418	$	81,077	$	15,878	$	54,445

The following tables present performing and nonperforming single family residential and consumer loans based on payment activity as of March 31, 2013 and December 31, 2012. Payment activity is reviewed by management on a monthly basis to determine how loans are performing. Loans are considered to be nonperforming when they become 90 days delinquent.

As of March 31, 2013

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	327,410	$	80,092	$	46,691	$	7,299
Nonperforming		3,687		317		170		121
Total	$	331,097	$	80,409	$	46,861	$	7,420

As of December 31, 2012

(Dollar amounts in thousands)

	Residential Real Estate		Consumer		Dealer		Other
	Single Family		Home Equity		Auto and RV		Consumer
Performing	$	322,662	$	80,124	$	46,450	$	7,787
Nonperforming		3,343		294		121		109
Total	$	326,005	$	80,418	$	46,571	$	7,896

Nonperforming loans also include certain loans that have been modified and classified as troubled debt restructuring (TDR) where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

Non-performing loans, which include non-accrual loans and TDRs, were $7.7 million and $7.4 million at March 31, 2013 and December 31, 2012, respectively. The TDRs included in non-performing loans amounted to $460,000 and $368,000 at both March 31, 2013 and December 31, 2012, respectively. The Company also had TDR’s that were in compliance with their modified terms of $8.3 million and $8.2 million at March 31, 2013 and December 31, 2012, respectively. The Company is not committed to lend additional funds to debtors whose loans are on non-accrual status.

Age Analysis of Past Due Loans Receivable by Class

Following tables are an aging analysis of the investment of past due loans receivable as of March 31, 2013 and December 31, 2012.

(Dollar amounts in thousands)

As of March 31, 2013

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	361	$	386	$	3,687	$	4,434	$	326,663	$	331,097	$	—
Construction		—		—		—		—		34,836		34,836		—
Multi-family		—		—		—		—		45,740		45,740		—
Commercial Real Estate
Commercial		78		507		3,035		3,620		80,223		83,843		—
Construction		—		—		—		—		14,664		14,664		—
Consumer
Consumer - home equity		94		—		189		283		80,126		80,409		—
Consumer - dealer auto and RV		365		118		158		641		46,220		46,861		—
Consumer - other		17		33		121		171		7,249		7,420		—
Commercial		60		—		36		96		58,045		58,141		—
Total	$	975	$	1,044	$	7,226	$	9,245	$	693,766	$	703,011	$	—

(Dollar amounts in thousands)

As of December 31, 2012

													Recorded
													Investment >
	30-59 Days		60-89 Days		90 Days		Total Past				Total Loans		90 Days and
	Past Due		Past Due		Or Greater		Due		Current		Receivable		Accruing
Residential real estate
Single family	$	887	$	420	$	3,343	$	4,650	$	321,355	$	326,005	$	—
Construction		—		—		—		—		46,418		46,418		—
Multi-family		—		—		—		—		33,472		33,472		—
Commercial Real Estate
Commercial		246		598		3,211		4,055		77,022		81,077		—
Construction		—		—		—		—		15,878		15,878		—
Consumer
Consumer - home equity		219		—		223		442		79,976		80,418		—
Consumer - dealer auto and RV		771		230		104		1,105		45,466		46,571		—
Consumer - other		70		12		109		191		7,705		7,896		—
Commercial		—		2		35		37		54,408		54,445		—
Total	$	2,193	$	1,262	$	7,025	$	10,480	$	681,700	$	692,180	$	—

Impaired Loans

Management considers commercial loans, multi-family, residential real estate construction and commercial real estate loans which are 90 days or more past due to be impaired. Larger commercial loans, commercial real estate loans and development loans which are 60 days or more past due, are selected for impairment testing. These loans are analyzed to determine if it is probable that all amounts will not be collected according to the contractual terms of the loan agreement. If management determines that the fair value of the impaired loan is less than the recorded investment in the loan, impairment is recognized through a provision for loan loss estimate or a charge-off to the allowance for loan losses.

The following tables summarize impaired loans:

(Dollar amounts in thousands)

	March 31, 2013						December 31, 2012
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial real estate	$	5,135	$	5,242	$	—	$	5,433	$	5,540	$	—
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction loans		878		878		—		803		803		—
Consumer loans
Home Equity		196		223		—		130		130		—
Dealer auto and RV		11		11		—		14		14		—
With an allowance recorded:
Commercial Real Estate		7,920		8,083		1,049		7,981		8,144		1,110
Consumer Loans:
Home Equity		174		151		47		179		179		50
Dealer auto and RV		4		4		4		4		4		4
Total:
Commercial Real Estate		13,055		13,325		1,049		13,414		13,684		1,110
Consumer		385		389		51		327		327		54
Residential single family		1,359		1,359		—		1,360		1,360		—
Residential construction		878		878		—		803		803		—
Total	$	15,677	$	15,951	$	1,100	$	15,904	$	16,174	$	1,164

(Dollar amounts in thousands)

	Three months ended				Three months ended
	March 31, 2013				March 31, 2012
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial Real Estate	$	5,134	$	70	$	5,529	$	50
Commercial business loans		—		—		—		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans
Home equity		149		4
Dealer auto and RV		12		1
With an allowance recorded:
Commercial Real Estate		7,941		124		8,421		106
Commercial business loans		—		—		46		—
Residential single family		—		—		—
Consumer loans
Home equity		175		3		153		2
Dealer auto and RV		4		—		—		—
Total:
Commercial Real Estate	$	13,075	$	194	$	13,950	$	156
Commercial business loans		340		8		46		—
Residential single family		1,359		3		1,363		3
Residential construction loans		853		7
Consumer loans		—		—		153		2

Nonaccrual Loans

Loans are considered nonaccrual upon reaching 90 days delinquency, although the Company may be receiving partial payments of interest and partial repayments of principal on such loans. When a loan is placed in nonaccrual status, previously accrued but unpaid interest is deducted from interest income.

On the following table are the loans receivable on nonaccrual status as of March 31, 2013 and December 31, 2012. The balances are presented by class of loans:

(Dollar amounts in thousands)	March 31,		December 31,
	2013		2012
Commercial	$	36	$	35
Commercial Real Estate		3,157		3,432
Consumer
Consumer - Home Equity		189		293
Consumer - Dealer auto and RV		158		121
Consumer - other		121		109
Residential		3,687		3,403
Total	$	7,348	$	7,393

Modifications

The Company’s loan portfolio also includes TDR’s, where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Delinquent TDRs are classified as nonperforming at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months.

When the Company modifies a loan, management evaluates any possible impairment based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, except when the sole (remaining) source of repayment for the loan is the operation or liquidation of the collateral. In these cases, management uses the current fair value of the collateral, less selling costs, instead of discounted cash flows. If management determines that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized by segment or class of loan, as applicable, through an allowance estimate or a charge-off to the allowance. Segment and class status is determined by the loan’s classification at origination.

The following table includes the recorded investment and number of modifications for modified loans, as of March 31, 2013 and December 31, 2012. The Company reports the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured.

As of March 31, 2013

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		—	$	—	$	—		—	$	—	$	—
Commerical real estate		1		43		—		—		43		43
Consumer
Home equity		3		76		76		—		—		76
Dealer auto and RV		—		—		—		—		—		—
Troubled Debt Restructurings		4	$	119	$	76		—	$	43	$	119

As of December 31, 2012

(Dollar amounts in thousands)

					Pre-Modification Recorded Investment
			Pre-Modification
			Outstanding
	Number of		Recorded		Maturity Date		Deferral of
	Contracts		Investment		Extension		Principal Payments		Other		Total
Troubled Debt Restructurings
Residential construction		4	$	1,053	$	1,053		—	$	—	$	1,053
Commerical real estate		2		198		198		—		—		198
Consumer
Home equity		7		168		168		—		—		168
Dealer auto and RV		4		18		18		—		—		18
Troubled Debt Restructurings		17	$	1,437	$	1,437		—	$	—	$	1,437

The Company did not have any TDR’s that defaulted subsequent to their modification during the periods reported.

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Securities

3 Months Ended

Mar. 31, 2013

Securities [Abstract]

Securities

2. Securities

The Company’s securities available for sale portfolio is summarized as follows:

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
March 31, 2013:
Trust preferred securities	$	45,895	$	409	$	(8,063	)	$	38,241
Municipal securities		177,528		12,154		(423	)		189,259
Equity securities		1,142		849		—			1,991
Corporate bonds		219,737		7,832		(496	)		227,073
Mortgage-backed securities
U.S. sponsored entities		598,647		29,535		(426	)		627,756
Private label		2,276		33		—			2,309
Subtotal mortgage-backed securities		600,923		29,568		(426	)		630,065
Total securities	$	1,045,225	$	50,812	$	(9,408	)	$	1,086,629
December 31, 2012:
Trust preferred securities	$	45,894	$	367	$	(8,234	)	$	38,027
Municipal securities		177,414		13,717		(244	)		190,887
Equity securities		1,142		676		—			1,818
Corporate bonds		219,700		7,186		(1,091	)		225,795
Mortgage-backed securities
U.S. sponsored entities		617,158		33,021		(246	)		649,933
Private label		4,139		177		—			4,316
Subtotal mortgage-backed securities		621,297		33,198		(246	)		654,249
Total securities	$	1,065,447	$	55,144	$	(9,815	)	$	1,110,776

The private-label mortgage backed securities totaled $2.3 million and $4.3 million as of March 31, 2013 and December 31, 2012, respectively.

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2013:

As of March 31, 2013

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,353	$	8,063		9	$	36,353	$	8,063
Municipal securities		10		8,130		210		2		3,032		213		12		11,162		423
Corporate bonds		2		6,078		12		5		20,516		484		7		26,594		496
Mortgage-backed securities
U.S. sponsored entities		16		65,565		426		—		—		—		16		65,565		426
Total		28	$	79,773	$	648		16	$	59,901	$	8,760		44	$	139,674	$	9,408

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2012:

As of December 31, 2012

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,179	$	8,234		9	$	36,179	$	8,234
Municipal securities		5		4,179		58		2		3,059		186		7		7,238		244
Corporate bonds		5		15,604		110		5		20,020		981		10		35,624		1,091
Mortgage-backed securities
U.S. sponsored entities		8		28,246		246		—		—		—		8		28,246		246
Total		18	$	48,029	$	414		16	$	59,258	$	9,401		34	$	107,287	$	9,815

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, trust preferred securities, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the corporate bonds that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI losses and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at March 31, 2013, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. There were no OTTI losses on individual securities during the quarter.

One pooled trust preferred security has previously been determined to be other than temporarily impaired due solely to credit related factors. This security is a collateralized debt obligation currently comprised of trust preferred securities of 10 financial institutions and has a Moody’s rating of Ca, which is below investment grade. The Company utilized a discounted cash flow method to determine the amount of impairment. During this analysis, the Company determined that two of these financial institutions are currently deferring interest payments. The Company utilized an independent third party to analyze this bond at December 31, 2011 and the Company believes the factors have improved for this bond since the third party review and no additional impairment exists.

Because of the subprime crisis current markets for variable rate corporate trust preferred securities are illiquid. In order to determine prices of these securities the Company utilizes a discounted cash flow method. This method is described more fully in footnote 9, “Fair Value.”

The following table summarizes scheduled maturities of the Company’s securities as of March 31, 2013 and December 31, 2012 excluding equity securities which have no maturity dates:

As of March 31, 2013

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.71	%	$	22,982	$	23,303
Due from one year to five years		3.06	%		187,547		195,987
Due from five to ten years		3.15	%		106,489		110,108
Due after ten years		3.18	%		727,065		755,240
		3.17	%	$	1,044,083	$	1,084,638

As of December 31, 2012

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.80	%	$	19,137	$	19,411
Due from one year to five years		3.05	%		187,595		195,182
Due from five to ten years		3.27	%		108,288		111,879
Due after ten years		3.30	%		749,285		782,486
		3.26	%	$	1,064,305	$	1,108,958

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the three months ended March 31, 2013 was $1.5 million resulting in gross realized gains of $268,000. The proceeds from the sale of securities for the three months ended March 31, 2012 $25.4 million resulting in gross realized gains of $267,000. There were no gross realized losses for the three months ended March 31, 2013 and 2012, respectively.

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Securities (Tables)

3 Months Ended

Mar. 31, 2013

Securities [Abstract]

Schedule of securities available for sale portfolio

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
March 31, 2013:
Trust preferred securities	$	45,895	$	409	$	(8,063	)	$	38,241
Municipal securities		177,528		12,154		(423	)		189,259
Equity securities		1,142		849		—			1,991
Corporate bonds		219,737		7,832		(496	)		227,073
Mortgage-backed securities
U.S. sponsored entities		598,647		29,535		(426	)		627,756
Private label		2,276		33		—			2,309
Subtotal mortgage-backed securities		600,923		29,568		(426	)		630,065
Total securities	$	1,045,225	$	50,812	$	(9,408	)	$	1,086,629
December 31, 2012:
Trust preferred securities	$	45,894	$	367	$	(8,234	)	$	38,027
Municipal securities		177,414		13,717		(244	)		190,887
Equity securities		1,142		676		—			1,818
Corporate bonds		219,700		7,186		(1,091	)		225,795
Mortgage-backed securities
U.S. sponsored entities		617,158		33,021		(246	)		649,933
Private label		4,139		177		—			4,316
Subtotal mortgage-backed securities		621,297		33,198		(246	)		654,249
Total securities	$	1,065,447	$	55,144	$	(9,815	)	$	1,110,776

Schedule of investments gross unrealized losses and fair value

As of March 31, 2013

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,353	$	8,063		9	$	36,353	$	8,063
Municipal securities		10		8,130		210		2		3,032		213		12		11,162		423
Corporate bonds		2		6,078		12		5		20,516		484		7		26,594		496
Mortgage-backed securities
U.S. sponsored entities		16		65,565		426		—		—		—		16		65,565		426
Total		28	$	79,773	$	648		16	$	59,901	$	8,760		44	$	139,674	$	9,408

As of December 31, 2012

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,179	$	8,234		9	$	36,179	$	8,234
Municipal securities		5		4,179		58		2		3,059		186		7		7,238		244
Corporate bonds		5		15,604		110		5		20,020		981		10		35,624		1,091
Mortgage-backed securities
U.S. sponsored entities		8		28,246		246		—		—		—		8		28,246		246
Total		18	$	48,029	$	414		16	$	59,258	$	9,401		34	$	107,287	$	9,815

Scheduled maturities of securities

As of March 31, 2013

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.71	%	$	22,982	$	23,303
Due from one year to five years		3.06	%		187,547		195,987
Due from five to ten years		3.15	%		106,489		110,108
Due after ten years		3.18	%		727,065		755,240
		3.17	%	$	1,044,083	$	1,084,638

As of December 31, 2012

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.80	%	$	19,137	$	19,411
Due from one year to five years		3.05	%		187,595		195,182
Due from five to ten years		3.27	%		108,288		111,879
Due after ten years		3.30	%		749,285		782,486
		3.26	%	$	1,064,305	$	1,108,958

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Financial Instruments

3 Months Ended

Mar. 31, 2013

Financial Instruments [Abstract]

Financial Instruments

10. Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments, consisting of commitments to extend credit, commitments under line of credit lending arrangements and letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are received.

The following methods and assumptions were used in estimating fair values of financial instruments.

Cash and cash equivalents – The carrying amounts of cash equivalents approximate their fair values.

Securities – With the exception of floating rate trust preferred securities ( the valuation of the trust preferred securities is discussed in footnote 9, Fair Value), fair values for securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique which is widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Securities receivable- The carrying amount of securities receivable approximates their fair values.

Loans receivable and held for sale – Fair values for loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values of impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. The carrying amounts of loans held for sale approximate their fair values.

Accrued interest receivable and payable – The carrying amounts of accrued interest approximate their fair values.

FHLB stock – FHLB stock is restricted from trading purposes and thus, the carrying value approximates its fair value.

Bank owned life insurance (BOLI) – The fair value of BOLI at March 31, 2013 and December 31, 2012 approximated the cash surrender value of the policies at those dates.

Interest rate cap and interest rate swap contracts – Fair values of interest rate cap and interest rate swap contracts are based on dealer quotes.

Deposits – The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies current market interest rates to a schedule of aggregated expected monthly maturities.

Borrowed funds and junior subordinated notes – For variable rate borrowings, fair values are based on carrying values. For fixed rate borrowings, fair values are based on the discounted value of contractual cash flows and on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. Fair values of structured borrowings are based on dealer quotes.

Advance payments by borrowers for taxes and insurance- The fair value of the advance payments by borrowers for taxes and insurance approximated the carrying value of those commitments at those dates.

The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of March 31, 2013:

March 31, 2013
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or  Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,142	$	15,142	$	—	$	—	$	15,142
Securities		1,086,629		1,991		1,048,285		36,353		1,086,629
Securities Receivable		1,909		1,909		—		—		1,909
Loans receivable and held for sale		681,273		—		—		712,597		712,597
Accrued Interest Receivable		7,943		7,943		—		—		7,943
FHLB Stock		15,581		15,581		—		—		15,581
Bank owned life insurance		30,181		30,181		—		—		30,181
Interest rate cap contracts		157		—		157		—		157
Financial Liabilities:
Deposits		1,206,843		582,316		—		633,530		1,215,846
Borrowed funds		448,231		—		198,009		273,511		471,520
Junior subordinated notes		36,083		—		21,650		—		21,650
Advance payments by borrowers for taxes and insurance		2,650		2,650		—		—		2,650
Accrued interest payable		1,947		1,947		—		—		1,947
Interest rate swap contracts		5,387		—		5,387		—		5,387

December 31, 2012
(Dollar amounts in thousands)	Carrying amount		Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I)		Significant Other Observable Inputs (Level II)		Significant Unobservable Inputs (Level III)		Total Fair Value
Financial Assets:
Cash and Cash Equivalents	$	15,064	$	15,064	$	—	$	—	$	15,064
Securities		1,110,776		1,818		1,092,224		35,789		1,129,831
Securities Receivable		1,277		1,277		—		—		1,277
Loans receivable and held for sale		672,086		—		—		679,819		679,819
Accrued Interest Receivable		8,068		8,068		—		—		8,068
FHLB Stock		15,077		15,077		—		—		15,077
Bank owned life insurance		30,025		30,025		—		—		30,025
Interest rate cap contracts		90		—		532		—		532
Financial Liabilities:
Deposits		1,178,057		546,298		—		1,168,438		1,714,736
Borrowed funds		484,556		—		263,288		331,588		594,876
Junior subordinated notes		46,393		—		20,361		—		20,361
Advance payments by borrowers for taxes and insurance		2,619		2,619		—		—		2,619
Accrued interest payable		1,344		1,344		—		—		1,344
Interest rate swap contracts		5,743		—		5,531		—		5,531

The following table sets forth the carrying amount and fair value of the Company’s financial instruments included in the consolidated statement of financial condition as of December 31, 2011:

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Net Income Per Share

3 Months Ended

Mar. 31, 2013

Net Income Per Share [Abstract]

Net Income Per Share

6. Net Income Per Share

The following table summarizes the Company’s net income per share:

(Amounts, except earnings per share, in thousands)

	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Net income	$	3,714	$	3,785
Weighted-average common shares outstanding		17,312		17,152
Basic earnings per share	$	0.21	$	0.22
Weighted-average common shares outstanding		17,312		17,152
Common stock equivalents due to effect of stock options		154		176
Total weighted-average common shares and equivalents		17,466		17,328
Diluted earnings per share	$	0.21	$	0.22

The shares controlled by the Company’s Employee Stock Ownership Plan (ESOP) of 296,095 and 395,587 at March 31, 2013 and March 31, 2012, respectively, are not considered in the weighted average shares outstanding until the shares are committed for allocation to an employee’s individual account.

All of the outstanding options to purchase shares at March 31, 2013 and 2012 were included in the computation of diluted earnings per share because the options’ exercise price was less than the average market price of the common shares.

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Fair Value (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Total net realized/unrealized gains (losses)
Interest income on securities	$ 3	$ 3
Net realized loss on securities available for sale
Level 3 [Member]
Fair value measurements using significant unobservable inputs (Level III)
Beginning balance January 1	36,179	35,789
Total net realized/unrealized gains (losses)
Interest income on securities	3	3
Net realized loss on securities available for sale
Included in other comprehensive income	171	416
Transfers in and/or out of Level III
Purchases, issuances and settlements
Purchases
Issuances
Sales
Settlements
Ending balance, March 31	$ 36,353	$ 36,208

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Deposits

3 Months Ended

Mar. 31, 2013

Deposits [Abstract]

Deposits

4. Deposits

The Company’s deposits as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
Type of accounts	Amount		%			Amount		%
Noninterest-bearing deposits	$	113,840		9.4	%	$	109,964		9.3	%
NOW account deposits		247,453		20.5	%		223,736		19.0	%
Money Market deposits		42,143		3.5	%		39,255		3.3	%
Passbook account deposits		178,882		14.8	%		173,343		14.7	%
Time deposits		624,525		51.8	%		631,759		53.7	%
	$	1,206,843		100.0	%	$	1,178,057		100.0	%
Time deposits mature as follows:
Within one year	$	383,629		61.4	%	$	375,862		59.5	%
After one year through two years		113,170		18.1	%		118,333		18.7	%
After two years through three years		80,016		12.8	%		78,492		12.4	%
After three years through four years		27,923		4.5	%		36,920		5.8	%
After four years through five years		14,972		2.4	%		17,106		2.7	%
Thereafter		4,815		0.8	%		5,046		0.8	%
	$	624,525		100.0	%	$	631,759		100.0	%

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Borrowed Funds

3 Months Ended

Mar. 31, 2013

Borrowed Funds [Abstract]

Borrowed Funds

5. Borrowed Funds

The Company’s borrowed funds as of the respective dates are summarized as follows:

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
	Weighted					Weighted
	average					average
	rate			Amount		rate			Amount
FHLB advances:
Due within 12 months		2.70	%	$	112,582		2.69	%	$	100,147
Due beyond 12 months but within 2 years		2.83	%		59,202		2.88	%		71,392
Due beyond 2 years but within 3 years		1.79	%		38,071		3.13	%		15,873
Due beyond 3 years but within 4 years		1.36	%		32,234		2.15	%		8,013
Due beyond 4 years but within 5 years		0.93	%		5,179		1.03	%		7,807
Due beyond 5 years		3.61	%		10,000		3.61	%		10,000
				$	257,268				$	213,232
Repurchase agreements:
Due within 12 months		2.82	%	$	78,000		2.99	%	$	148,000
Due beyond 12 months but within 2 years		3.28	%		20,000		3.07	%		40,000
Due beyond 2 years but within 3 years		4.12	%		10,000		4.12	%		10,000
Due beyond 4 years but within 5 years		4.28	%		25,000		4.28	%		25,000
Due beyond 5 years		4.49	%		45,000		4.49	%		45,000
				$	178,000				$	268,000
Other borrowings:
ESOP borrowings
Due within 12 months		4.68	%	$	1,000		4.68	%	$	1,000
Due beyond 12 months but within 2 years		4.68	%		1,000		4.68	%		1,000
Due beyond 2 years but within 3 years		4.68	%		1,000		4.68	%		1,000
Due beyond 3 years but within 4 years		—			—		4.68	%		250
				$	3,000				$	3,250
Corporate borrowings
Due within 12 months		3.75	%	$	1,000		—			—
Due beyond 12 months but within 2 years		3.75	%		1,000		—			—
Due beyond 2 years but within 3 years		3.75	%		1,000		—			—
Due beyond 3 years but within 4 years		3.75	%		1,000		—			—
Due beyond 4 years but within 5 years		3.75	%		5,954		—			—
				$	9,954					—
Borrowings for joint ventures
Due beyond 2 years but within 3 years		3.75	%	$	9		3.75	%	$	74
Junior subordinated notes
Due beyond 5 years		2.11	%	$	36,083		2.41	%	$	46,393

Included in the $257.3 million of FHLB advances at March 31, 2013 are $50.0 million in structured advances in with imbedded caps at various strike rates based on the 3 month LIBOR rate. If during the term of the advance, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured advance is reduced by the difference between the rate and the strike rate.

Included in the $178.0 million of Repurchase Agreements (REPOs) are $20.0 million in structured REPOs with imbedded caps at various strike rates based on the 3 month LIBOR rate. If during the term of the REPO, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured REPO is reduced by the difference between the rate and the strike rate. In addition, the Company has $25.0 million in structured REPOs with double, or $50.0 million notional amount of imbedded caps, at a strike rate of 3.75% based on the 3 month LIBOR rate. The terms and conditions of these structured REPOs are that the rate is fixed for five years and after 5 years, on a specified date the counterparty has the one time right (European Call) to call the REPO. If the counterparty does not call the REPO on the specified date, the rate remains the same for the remaining five years. These structured REPOs also include a double imbedded cap for the first five year period with a strike rate to the 3 month LIBOR rate. If during the first five years, the 3 month LIBOR rate exceeds the strike rate, the interest rate on the structured REPO is reduced by two times the difference between the rate and the strike rate. At no point shall the interest rate on these structured REPOs with imbedded caps be less than zero.

Also included in the $178.0 million of REPOs is a $25.0 million structured REPO in which the Company pays a fixed rate of interest. At the reset date and every quarterly period thereafter, the counterparty has the right to terminate the transaction. It has historically been the Company’s position to pay off any borrowings and replace them with fixed rate funding if converted by the counterparty.

The Company enters into sales of securities under agreements to repurchase. Such REPO’s are treated as borrowed funds. The dollar amount of the securities underlying the agreements remains in their respective asset accounts.

REPO’s are collateralized by various securities that are either held in safekeeping at the FHLB or delivered to the dealer who arranged the transaction and the Company maintains control of these securities.

The market value of such securities exceeded the amortized cost of the securities sold under agreements to repurchase. The market value of the securities as of March 31, 2013 was $220.9 million with an amortized cost of $206.7 million. The market value of the securities as of December 31, 2012 was $318.9 million with an amortized cost of $297.8 million. The average maturity date of the mortgage backed securities sold under agreements to repurchase was greater than 90 days for the periods ended March 31, 2013 and December 31, 2012.

As of March 31, 2013 and December 31, 2012, the Company had REPO’s with Citigroup of $75.0 million and $115.0 million, respectively, Barclays Capital of $30.0 million and $40.0 million, respectively, Credit Suisse of $53.0 million and $83.0 million, respectively and Morgan Stanley of $20.0 million and $30.0 million, respectively.

As of March 31, 2013, the REPO’s with Citigroup had $16.4 million at risk (where the market value of the securities exceeded the borrowing), with a weighted average maturity of 22 months, Barclays Capital had $8.2 million at risk with a weighted average maturity of 35 months, Credit Suisse had $16.2 million at risk with a weighted average maturity of 35 months and Morgan Stanley had $2.1 million at risk with a weighted average maturity of 15 months.

Borrowings under REPO averaged $224.7 million during the three months ended March 31, 2013. The maximum amount outstanding at any month-end was $258.0 million during the three months ended March 31, 2013.

The junior subordinated notes have various maturities, interest rate structures and call dates. The characteristics of these notes are detailed in the following paragraphs.

On April 10, 2003, ESB Capital Trust II (Trust II), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $10.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased $310,000 of common securities of Trust II. The dividend rate on the preferred securities reset quarterly to equal the LIBOR plus 3.25%. Trust II’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by the Trust II to invest in $10.3 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of the Trust II. Dividends on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of April 24, 2033, on or after April 24, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated April 10, 2003, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. On July 23, 2008, the Company redeemed $5.0 million of the preferred securities of ESB Capital Trust II with proceeds from a $14.0 million loan with First Tennessee Bank National Association (“First Tennessee”). The remainder of the First Tennessee loan was used to repay an existing loan with First Tennessee with a remaining balance of $9.0 million, which had an interest rate of 5.55% and was due on December 31, 2008. No unamortized deferred debt issuance costs remain on this issuance. On January 24, 2013, the Company redeemed the remaining $5.1 million of the preferred securities of ESB Capital Trust II with proceeds from a $10.0 million loan with WesBanco, with a fixed interest rate of 3.75%. The remaining $5.0 million of the WesBanco loan was drawn on March 15, 2013 and used to redeem the $5.1 million of the preferred securities of ESB Capital Trust III.

On December 17, 2003, ESB Statutory Trust (Trust III), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $5.0 million variable rate preferred securities with a stated value and liquidation preference of $1,000 per share. The Company purchased $155,000 of common securities of Trust III. The preferred securities reset quarterly to equal the LIBOR Index plus 2.95%. Trust III’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by Trust III to invest in $5.2 million of variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust III. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of December 17, 2033, on or after December 17, 2008, at the redemption price, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated December 17, 2003; the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. No unamortized deferred debt issuance costs remain on this issuance. On January 22, 2013, the Company provided notice of redemption to redeem the preferred securities of ESB Capital Trust III on March 18, 2013 with the aforementioned proceeds of the $10.0 million loan from WesBanco.

On February 10, 2005, ESB Capital Trust IV (Trust IV), a statutory business trust established under Delaware law that is a subsidiary of the Company, issued $35.0 million fixed rate preferred securities. The Company purchased $1.1 million of common securities of Trust IV. The preferred securities are fixed at a rate of 6.03% for six years and then are variable at three month LIBOR plus 1.82%. The preferred securities have a stated maturity of thirty years. Trust IV’s obligations under the preferred securities issued are fully and unconditionally guaranteed by the Company. The proceeds from the sale of the preferred securities and the common securities were utilized by Trust IV to invest in $36.1 million of fixed/variable rate subordinated debt of the Company. The subordinated debt is unsecured and ranks subordinate and junior in right of payment to all indebtedness, liabilities and obligations of the Company. The subordinated debt primarily represents the sole assets of Trust IV. Interest on the preferred securities is cumulative and payable quarterly in arrears. The Company has the right to optionally redeem the subordinated debt prior to the maturity date of February 10, 2035, on or after February 10, 2011, at the redemption price, which is equal to the liquidation amount, plus accrued and unpaid distributions, if any, at the redemption date. Under the occurrence of certain events, specifically, a tax event, investment company event or capital treatment event as more fully defined in the Indenture dated February 10, 2005, the Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event. Proceeds from any redemption of the subordinated debt would cause a mandatory redemption of the preferred securities and the common securities having an aggregate liquidation amount equal to the principal amount of the subordinated debt redeemed. The Company did not have any deferred debt issuance costs associated with the preferred securities.

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Comprehensive Income

3 Months Ended

Mar. 31, 2013

Comprehensive Income [Abstract]

Comprehensive Income

7. Comprehensive Income

The Company has developed the following table to present the components of accumulated OCI, at the end of the respective periods were as follows:

				Affected line item
Details about AOCI Components	Amount			in the Statement where net
	Reclassified from AOCI			income is presented
Gains/(losses) on cash flow hedges
Interest rate derivative contracts	$	268
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Available-for-sale securities
Realized gain on sale of securities		268		Non-interest income
Impairment expense		—		Non-interest income
		268		Total before tax
		(91	)	Income tax expense
		177		Net of tax
Defined benefit pension plan items
Amortization of prior service costs		26		See Note 1 below
Amortization of actuarial gains/(losses)		10		See Note 1 below
Pension curtailment		—		See Note 1 below
		36		Total before tax
		(12	)	Income tax expense
		24		Net of tax
Total reclassifications		378		Net of tax

Note 1: These items are included in the computation of net periodic pension cost. See Note 8, Retirement Plans, for additional information.

	Gains/(losses) on			Unrealized gains/(losses) on			Defined benefit pension
	Cash Flow Hedges			available-for-sale securities			plan items			Total
Beginning balance	$	(3,733	)	$	29,464		$	(628	)	$	25,103
Other comprehensive income/(loss) before relcassification		177			(2,314	)		24			(2,113	)
Amounts reclassified from AOCI		—			177			—			177
Net current period OCI		177			(2,137	)		24			(1,936	)
Ending Balance	$	(3,556	)	$	27,327		$	(604	)	$	23,167

(Dollar amounts in thousands)	12/31/2012
Net unrealized gain on securities available for sale	$	29,465
Accumulated loss on effective cash flow hedging derivatives		(3,733	)
Net unrecognized pension cost		(629	)
Total	$	25,103

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Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Financial Assets:
Fair value, Securities	$ 1,086,629	$ 1,110,776
Securities Receivable	1,909	1,277
Loans receivable and held for sale	681,273	672,086
Accrued Interest Receivable	7,943	8,068
FHLB Stock	15,581	15,077
Bank owned life insurance	30,181	30,025
Financial Liabilities:
Deposits	1,206,843	1,178,057
Junior subordinated notes	36,083	46,393
Advance payment by borrowers for taxes and insurance	2,650	2,619
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level I) [Member]
Financial Assets:
Cash and Cash Equivalents	15,142	15,064
Fair value, Securities	1,991	1,818
Securities Receivable	1,909	1,277
Loans receivable and held for sale
Accrued Interest Receivable	7,943	8,068
FHLB Stock	15,581	15,077
Bank owned life insurance	30,181	30,025
Interest rate cap contracts
Financial Liabilities:
Deposits	582,316	546,298
Borrowed funds
Junior subordinated notes
Advance payment by borrowers for taxes and insurance	2,650	2,619
Accrued interest payable	1,947	1,344
Interest rate swap contracts
Significant Other Observable Inputs (Level II) [Member]
Financial Assets:
Cash and Cash Equivalents
Fair value, Securities	1,048,285	1,092,224
Securities Receivable
Loans receivable and held for sale
Accrued Interest Receivable
FHLB Stock
Bank owned life insurance
Interest rate cap contracts	157	532
Financial Liabilities:
Deposits
Borrowed funds	198,009	263,288
Junior subordinated notes	21,650	20,361
Advance payment by borrowers for taxes and insurance
Accrued interest payable
Interest rate swap contracts	5,387	5,531
Significant Unobservable Inputs (Level III) [Member]
Financial Assets:
Cash and Cash Equivalents
Fair value, Securities	36,353	35,789
Securities Receivable
Loans receivable and held for sale	712,597	679,819
Accrued Interest Receivable
FHLB Stock
Bank owned life insurance
Interest rate cap contracts
Financial Liabilities:
Deposits	633,530	1,168,438
Borrowed funds	273,511	331,588
Junior subordinated notes
Advance payment by borrowers for taxes and insurance
Accrued interest payable
Interest rate swap contracts
Carrying Amount [Member]
Financial Assets:
Cash and Cash Equivalents	15,142	15,064
Fair value, Securities	1,086,629	1,110,776
Securities Receivable	1,909	1,277
Loans receivable and held for sale	681,273	672,086
Accrued Interest Receivable	7,943	8,068
FHLB Stock	15,581	15,077
Bank owned life insurance	30,181	30,025
Interest rate cap contracts	157	90
Financial Liabilities:
Deposits	1,206,843	1,178,057
Borrowed funds	448,231	484,556
Junior subordinated notes	36,083	46,393
Advance payment by borrowers for taxes and insurance	2,650	2,619
Accrued interest payable	1,947	1,344
Interest rate swap contracts	5,387	5,743
Fair Value [Member]
Financial Assets:
Cash and Cash Equivalents	15,142	15,064
Fair value, Securities	1,086,629	1,129,831
Securities Receivable	1,909	1,277
Loans receivable and held for sale	712,597	679,819
Accrued Interest Receivable		8,068
FHLB Stock	15,581	15,077
Bank owned life insurance	30,181	30,025
Interest rate cap contracts	157	532
Financial Liabilities:
Deposits	1,215,846	1,714,736
Borrowed funds	471,520	594,876
Junior subordinated notes	21,650	20,361
Advance payment by borrowers for taxes and insurance	2,650	2,619
Accrued interest payable	1,947	1,344
Interest rate swap contracts	$ 5,387	$ 5,531

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Fair Value (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Fair Value (Textual) [Abstract]
Credit spreads on Moody's rating	45-80 basis points
Liquidity risk adjustments ranged	20-55 basis points
Liquidity risk adjustments ranged, securities of 15 largest banks	20-40 basis points
Investment in three largest banks	$ 17,900,000
Investment in three largest banks percentage	49.20%
Investment in Floating rate trust preferred securities	36,400,000
Write-downs on REO properties	$ 0	$ 150,000

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of securities available for sale portfolio
Amortized cost	$ 1,045,225	$ 1,065,447
Unrealized gains	50,812	55,144
Unrealized losses	(9,408)	(9,815)
Fair value	1,086,629	1,110,776
Trust preferred securities [Member]
Schedule of securities available for sale portfolio
Amortized cost	45,895	45,894
Unrealized gains	409	367
Unrealized losses	(8,063)	(8,234)
Fair value	38,241	38,027
Municipal securities [Member]
Schedule of securities available for sale portfolio
Amortized cost	177,528	177,414
Unrealized gains	12,154	13,717
Unrealized losses	(423)	(244)
Fair value	189,259	190,887
Equity securities [Member]
Schedule of securities available for sale portfolio
Amortized cost	1,142	1,142
Unrealized gains	849	676
Fair value	1,991	1,818
Corporate bonds [Member]
Schedule of securities available for sale portfolio
Amortized cost	219,737	219,700
Unrealized gains	7,832	7,186
Unrealized losses	(496)	(1,091)
Fair value	227,073	225,795
U.S. sponsored entities [Member]
Schedule of securities available for sale portfolio
Amortized cost	598,647	617,158
Unrealized gains	29,535	33,021
Unrealized losses	(426)	(246)
Fair value	627,756	649,933
Private label [Member]
Schedule of securities available for sale portfolio
Amortized cost	2,276	4,139
Unrealized gains	33	177
Fair value	2,309	4,316
Subtotal mortgage-backed securities [Member]
Schedule of securities available for sale portfolio
Amortized cost	600,923	621,297
Unrealized gains	29,568	33,198
Unrealized losses	(426)	(246)
Fair value	$ 630,065	$ 654,249

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Borrowed Funds (Details Textual) (USD $)	3 Months Ended	12 Months Ended		12 Months Ended		3 Months Ended	1 Months Ended		3 Months Ended			3 Months Ended		3 Months Ended			3 Months Ended							3 Months Ended		3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Trust II Preferred Securities [Member]	Dec. 31, 2012 Trust III Preferred Securities [Member]	Mar. 31, 2013 Trust III Preferred Securities [Member]	Mar. 31, 2013 Trust IV Preferred Securities [Member]	Jan. 24, 2013 ESB Capital Trust II (Trust II) [Member]	Jul. 23, 2008 ESB Capital Trust II (Trust II) [Member]	Mar. 31, 2013 ESB Capital Trust II (Trust II) [Member]	Dec. 31, 2008 ESB Capital Trust II (Trust II) [Member]	Apr. 10, 2003 ESB Capital Trust II (Trust II) [Member]	Mar. 31, 2013 ESB Capital Trust IV (Trust IV) [Member]	Feb. 10, 2005 ESB Capital Trust IV (Trust IV) [Member]	Mar. 31, 2013 ESB Statutory Trust (Trust III) [Member]	Mar. 15, 2013 ESB Statutory Trust (Trust III) [Member]	Dec. 17, 2003 ESB Statutory Trust (Trust III) [Member]	Mar. 31, 2013 Structured advances [Member]	Mar. 31, 2013 Repurchase agreements [Member]	Dec. 31, 2012 Repurchase agreements [Member]	Mar. 31, 2013 Variable rate [Member] ESB Capital Trust II (Trust II) [Member]	Apr. 10, 2003 Variable rate [Member] ESB Capital Trust II (Trust II) [Member]	Mar. 31, 2013 Variable rate [Member] ESB Statutory Trust (Trust III) [Member]	Dec. 17, 2003 Variable rate [Member] ESB Statutory Trust (Trust III) [Member]	Mar. 31, 2013 Structured REPOs [Member]	Dec. 31, 2012 Structured REPOs [Member]	Mar. 31, 2013 Citigroup [Member]	Dec. 31, 2012 Citigroup [Member]	Mar. 31, 2013 Barclays Capital [Member]	Dec. 31, 2012 Barclays Capital [Member]	Mar. 31, 2013 Credit Suisse [Member]	Dec. 31, 2012 Credit Suisse [Member]	Mar. 31, 2013 Morgan Stanley [Member]	Dec. 31, 2012 Morgan Stanley [Member]	Jan. 24, 2013 WesBanco Loan [Member]
Borrowed Funds (Textual) [Abstract]
FHLB advances	$ 257,268,000	$ 213,232,000															$ 257,300,000	$ 178,000,000	$ 268,000,000
Structured advances																	50,000,000
Structured REPO's																		178,000,000
Period of fixed interest rate																		5 years
Notional amount of imbedded caps	50,000,000
Debt instrument variable rates basis																	50.0 million in structured advances in with imbedded caps at various strike rates based on the 3 month LIBOR rate.
Repurchase agreements with flexible interest rates																								20,000,000
REPO interest rate term																								3.75% based on the 3 month LIBOR rate
Repurchase agreements with fixed interest rate																								25,000,000
Securities available for sale; cost	1,045,225,000	1,065,447,000																						206,700,000	297,800,000
REPO's with other banks																										75,000,000	115,000,000	30,000,000	40,000,000	53,000,000	83,000,000	20,000,000	30,000,000
Risk related to repurchase agreement amount																										16,400,000		8,200,000		16,200,000		2,100,000
Weighted average maturity																										22 months		35 months		35 months		15 months
Preferred securities													35,000,000								10,000,000		5,000,000
Liquidation preference per share											$ 1,000					$ 1,000
Redeemed preferred securities							5,100,000	5,000,000							5,100,000
Preferred securities									5,000,000
Purchase of common securities									310,000			1,100,000		155,000
Proceeds from bank loan							10,000,000	14,000,000
Loans Payable										9,000,000
Interest rate										5.55%
Subordinated debt												36,100,000								10,300,000		5,200,000
Maturity date of subordinated debt									Apr. 24, 2033			Feb. 10, 2035		Dec. 17, 2033
Preferred securities fixed interest rate												6.03% for six years
Preferred securities variable interest rate									LIBOR plus 3.25%			Three month LIBOR plus 1.82%		LIBOR Index plus 2.95%
Maturity year of preferred securities												30 years
Maturity date of subordinated debt start date range									Apr. 24, 2008			Feb. 10, 2011		Dec. 17, 2008
Maturity date of subordinated debt end date range									Apr. 24, 2033			Feb. 10, 2035		Dec. 17, 2033
Fixed interest rate						6.03%																												3.75%
Unamortized deferred debt issuance costs									0			0		0
Proceeds from bank loan	10,000,000
Preferred securities interest rate			3.25%		2.95%	1.82%
Maturity of redemption of subordinated debt				90 days		90 days
Borrowed Funds (Additional Textual) [Abstract]
Market value of the securities	220,900,000	318,900,000
Repurchase agreements, maturities	Greater than 90 days	Greater than 90 days
Average borrowings under REPO	224,700,000
Maximum month-end outstanding amount	$ 258,000,000
Subordinated debt redemption description	The Company may redeem in whole, but not in part, the subordinated debt at any time within 90 days following the occurrence of such event
LIBOR Rate	3 months
Strike rate of imbedded caps	3.75%
Interest rate on structured REPO's with imbedded caps	less than zero
Preferred securities maturity period	Six years

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

ESB Financial Corporation (the Company) is a publicly traded Pennsylvania thrift holding company. The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries, which are ESB Bank (ESB or the Bank), THF, Inc. (THF), ESB Financial Services, Inc. (EFS) and AMSCO, Inc. (AMSCO). ESB is a Pennsylvania chartered, Federal Deposit Insurance Corporation (FDIC) insured stock savings bank.

AMSCO is engaged in real estate development and construction of 1-4 family residential units independently or in conjunction with its joint ventures. AMSCO is currently involved in nine real estate joint ventures, all of which are owned 51% or greater by AMSCO. The Bank has provided all development and construction financing. These joint ventures have been included in the consolidated financial statements and reflected within the consolidated statements of financial condition as real estate held for investment and related operating income and expenses reflected within other non-interest income or expense. The Bank’s loans to AMSCO and related interest have been eliminated in consolidation.

In addition to the elimination of the loans and interest to the joint ventures described above, all other significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements for the interim periods include all adjustments, consisting only of normal recurring accruals, which are necessary, in the opinion of management, to fairly reflect the Company’s financial position and results of operations. Additionally, these consolidated financial statements for the interim periods have been prepared in accordance with instructions for the Securities and Exchange Commission’s Form 10-Q and therefore do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended December 31, 2012, as contained in the Company’s 2012 Annual Report to Stockholders.

The results of operations for the three month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire year. Certain amounts previously reported have been reclassified to conform to the current periods’ reporting format, such reclassifications did not have an effect on stockholders’ equity or net income.

The accounting principles followed by the Company and the methods of applying these principles conform with GAAP and with general practice within the banking industry. In preparing the consolidated financial statements management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Statement of Financial Condition date and revenues and expenses for the period. Actual results could differ significantly from those estimates.

Operating Segments

Operating Segments

An operating segment is defined as a component of an enterprise that engages in business activities that generate revenue and incur expense, the operating results of which are reviewed by management. At March 31, 2013, the Company was doing business through 23 full service banking branches, one loan production office and through its various other subsidiaries. Loans and deposits are primarily generated from the areas where banking branches are located. The Company derives its income predominantly from interest on loans and securities and to a lesser extent, non-interest income. The Company’s principal expenses are interest paid on deposits and borrowed funds and normal operating costs. The Company’s operations are principally in the banking industry. Consistent with internal reporting, the Company’s operations are reported in one operating segment, which is community banking.

Stock Based Compensation

Stock Based Compensation

During the three months ended March 31, 2012 and 2011, the Company recorded approximately $107,000 and $100,000, respectively, in compensation expense and a tax benefit of $9,000 and $6,500, respectively, related to its share-based compensation awards that are expected to vest in 2012. As of March 31, 2012, there was approximately $790,000 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next four years.

As required by GAAP, cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards (excess tax benefits) are classified as financing cash flows.

Financial Instruments

Financial Instruments

As part of its overall interest rate risk management activities, the Company utilizes derivative instruments to manage its exposure to various types of interest rate risk. Interest rate swaps and interest rate caps are the primary instruments the Company uses for interest rate risk management. Derivative instruments are recorded at fair value as either part of prepaid expenses and other assets or accrued expenses and other liabilities on the consolidated statements of financial condition. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

The Company formally documents the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy, before undertaking an accounting hedge. To qualify for hedge accounting, the derivatives and related hedged items must be designated as a hedge at inception of the hedge relationship. For accounting hedge relationships, we formally assess, both at the inception of the hedge and on an ongoing basis, if the derivatives are highly effective in offsetting designated changes in the fair value or cash flows of the hedged item. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. To the extent the change in fair value of the derivative does not offset the change in fair value of the hedged item, the difference or ineffectiveness is reflected in earnings in the same financial statement category as the hedged item.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (OCI) and subsequently reclassified to earnings when the hedged transaction affects earnings and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

At March 31, 2013, there were sixteen interest rate cap contracts outstanding with notional amounts totaling $170.0 million. These derivative instruments are not hedged and therefore adjustments to fair value are recorded in current earnings.

The Company entered into two interest rate swap contracts to manage its exposure to interest rate risk. These interest rate swap transactions involved the exchange of the Company’s interest payment on $35.0 million in junior subordinated notes which became floating rate notes in 2011 for a fixed rate interest payment without the exchange of the underlying principal amount. Entering into interest rate derivatives potentially exposes the Company to the risk of counterparties’ failure to fulfill their legal obligations including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Management utilizes the Change in Variable Cash Flows Method to measure hedge ineffectiveness. To the extent that the cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated cash flows from the hedged exposure, the hedged is deemed effective. As of March 31, 2013 the interest rate swaps were deemed to be effective, therefore no amounts were charged to current earnings. The Company also does not expect to reclassify any hedge related amounts from OCI to earnings over the next twelve months.

The pay fixed interest rate swap contract outstanding at March 31, 2013 is being utilized to hedge $35.0 million in floating rate junior subordinated notes. Below is a summary of the interest rate swap contract and the terms at March 31, 2013:

	Notional		Effective		Pay			Receive			Maturity		Unrealized
(Dollars in thousands)	Amount		Date		Rate			Rate (*)			Date		Gain		Loss
Cash Flow Hedge	$	20,000		2/10/2011		4.18	%		0.31	%		2/10/2018		—	$	3,191
Cash Flow Hedge		15,000		2/10/2011		3.91	%		0.31	%		2/10/2018		—		2,196
	$	35,000												—	$	5,387

* Variable receive rate based upon contract rates in effect at March 31, 2013

Recent Accounting and Regulatory Pronouncements

Recent Accounting and Regulatory Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In July, 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 (early adoption permitted). This ASU did not have a significant impact on the Company’s financial statements.

In October, 2012, the FASB issued ASU 2012-06, Business Combinations (Topic 805) - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. ASU 2012-06 requires that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU 2012-06 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. This ASU is not expected to have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of Update 2011-11. This ASU did not have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The Company has provided the necessary disclosures in note seven.

In February 2013, the FASB issued ASU 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The objective of the amendments in this Update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). Examples of obligations within the scope of this Update include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. U.S. GAAP does not include specific guidance on accounting for such obligations with joint and several liability, which has resulted in diversity in practice. Some entities record the entire amount under the joint and several liability arrangement on the basis of the concept of a liability and the guidance that must be met to extinguish a liability. Other entities record less than the total amount of the obligation, such as an amount allocated, an amount corresponding to the proceeds received, or the portion of the amount the entity agreed to pay among its co-obligors, on the basis of the guidance for contingent liabilities. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter. This ASU is not expected to have a significant impact on the Company’s financial statements.

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Borrowed Funds (Tables)

3 Months Ended

Mar. 31, 2013

Borrowed Funds [Abstract]

Summary of borrowed funds

(Dollar amounts in thousands)	March 31, 2013					December 31, 2012
	Weighted					Weighted
	average					average
	rate			Amount		rate			Amount
FHLB advances:
Due within 12 months		2.70	%	$	112,582		2.69	%	$	100,147
Due beyond 12 months but within 2 years		2.83	%		59,202		2.88	%		71,392
Due beyond 2 years but within 3 years		1.79	%		38,071		3.13	%		15,873
Due beyond 3 years but within 4 years		1.36	%		32,234		2.15	%		8,013
Due beyond 4 years but within 5 years		0.93	%		5,179		1.03	%		7,807
Due beyond 5 years		3.61	%		10,000		3.61	%		10,000
				$	257,268				$	213,232
Repurchase agreements:
Due within 12 months		2.82	%	$	78,000		2.99	%	$	148,000
Due beyond 12 months but within 2 years		3.28	%		20,000		3.07	%		40,000
Due beyond 2 years but within 3 years		4.12	%		10,000		4.12	%		10,000
Due beyond 4 years but within 5 years		4.28	%		25,000		4.28	%		25,000
Due beyond 5 years		4.49	%		45,000		4.49	%		45,000
				$	178,000				$	268,000
Other borrowings:
ESOP borrowings
Due within 12 months		4.68	%	$	1,000		4.68	%	$	1,000
Due beyond 12 months but within 2 years		4.68	%		1,000		4.68	%		1,000
Due beyond 2 years but within 3 years		4.68	%		1,000		4.68	%		1,000
Due beyond 3 years but within 4 years		—			—		4.68	%		250
				$	3,000				$	3,250
Corporate borrowings
Due within 12 months		3.75	%	$	1,000		—			—
Due beyond 12 months but within 2 years		3.75	%		1,000		—			—
Due beyond 2 years but within 3 years		3.75	%		1,000		—			—
Due beyond 3 years but within 4 years		3.75	%		1,000		—			—
Due beyond 4 years but within 5 years		3.75	%		5,954		—			—
				$	9,954					—
Borrowings for joint ventures
Due beyond 2 years but within 3 years		3.75	%	$	9		3.75	%	$	74
Junior subordinated notes
Due beyond 5 years		2.11	%	$	36,083		2.41	%	$	46,393

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Deposits (Details 1) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Time deposits maturity as follows:
Within one year	$ 383,629	$ 375,862
After one year through two years	113,170	118,333
After two years through three years	80,016	78,492
After three years through four years	27,923	36,920
After four years through five years	14,972	17,106
Thereafter	4,815	5,046
Total	$ 624,525	$ 631,759
Within one year, Weighted average rate	61.40%	59.50%
After one year through two years, Weighted average rate	18.10%	18.70%
After two years through three years, Weighted average rate	12.80%	12.40%
After three years through four years, Weighted average rate	4.50%	5.80%
After four years through five years, Weighted average rate	2.40%	2.70%
Thereafter, Weighted average rate	0.80%	0.80%
Total, Weighted average rate	100.00%	100.00%

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Loans Receivable (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Residential Real Estate, Single Family [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	$ 331,097	$ 326,005
Consumer Home Equity [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	80,409	80,418
Dealer Auto and RV [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	46,861	46,571
Other Consumer [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	7,420	7,896
Performing [Member] | Residential Real Estate, Single Family [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	327,410	322,662
Performing [Member] | Consumer Home Equity [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	80,092	80,124
Performing [Member] | Dealer Auto and RV [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	46,691	46,450
Performing [Member] | Other Consumer [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	7,299	7,787
Nonperforming [Member] | Residential Real Estate, Single Family [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	3,687	3,343
Nonperforming [Member] | Consumer Home Equity [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	317	294
Nonperforming [Member] | Dealer Auto and RV [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	170	121
Nonperforming [Member] | Other Consumer [Member]
Performing and nonperforming single family residential and consumer loans based on payment activity
Financing Receivable	$ 121	$ 109

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Consolidated Statements of Operations (Parenthetical) (Unaudited)	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Consolidated Statements of Operations [Abstract]
Stock split ratio	six-for-five stock	six-for-five stock	six-for-five stock

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

Principles of Consolidation

ESB Financial Corporation (the Company) is a publicly traded Pennsylvania thrift holding company. The consolidated financial statements include the accounts of the Company and its direct and indirect wholly-owned subsidiaries, which are ESB Bank (ESB or the Bank), THF, Inc. (THF), ESB Financial Services, Inc. (EFS) and AMSCO, Inc. (AMSCO). ESB is a Pennsylvania chartered, Federal Deposit Insurance Corporation (FDIC) insured stock savings bank.

AMSCO is engaged in real estate development and construction of 1-4 family residential units independently or in conjunction with its joint ventures. AMSCO is currently involved in nine real estate joint ventures, all of which are owned 51% or greater by AMSCO. The Bank has provided all development and construction financing. These joint ventures have been included in the consolidated financial statements and reflected within the consolidated statements of financial condition as real estate held for investment and related operating income and expenses reflected within other non-interest income or expense. The Bank’s loans to AMSCO and related interest have been eliminated in consolidation.

In addition to the elimination of the loans and interest to the joint ventures described above, all other significant intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The accompanying unaudited consolidated financial statements for the interim periods include all adjustments, consisting only of normal recurring accruals, which are necessary, in the opinion of management, to fairly reflect the Company’s financial position and results of operations. Additionally, these consolidated financial statements for the interim periods have been prepared in accordance with instructions for the Securities and Exchange Commission’s Form 10-Q and therefore do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP). For further information, refer to the audited consolidated financial statements and footnotes thereto for the year ended December 31, 2012, as contained in the Company’s 2012 Annual Report to Stockholders.

The results of operations for the three month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the entire year. Certain amounts previously reported have been reclassified to conform to the current periods’ reporting format, such reclassifications did not have an effect on stockholders’ equity or net income.

The accounting principles followed by the Company and the methods of applying these principles conform with GAAP and with general practice within the banking industry. In preparing the consolidated financial statements management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the Statement of Financial Condition date and revenues and expenses for the period. Actual results could differ significantly from those estimates.

Operating Segments

An operating segment is defined as a component of an enterprise that engages in business activities that generate revenue and incur expense, the operating results of which are reviewed by management. At March 31, 2013, the Company was doing business through 23 full service banking branches, one loan production office and through its various other subsidiaries. Loans and deposits are primarily generated from the areas where banking branches are located. The Company derives its income predominantly from interest on loans and securities and to a lesser extent, non-interest income. The Company’s principal expenses are interest paid on deposits and borrowed funds and normal operating costs. The Company’s operations are principally in the banking industry. Consistent with internal reporting, the Company’s operations are reported in one operating segment, which is community banking.

Stock Based Compensation

During the three months ended March 31, 2012 and 2011, the Company recorded approximately $107,000 and $100,000, respectively, in compensation expense and a tax benefit of $9,000 and $6,500, respectively, related to its share-based compensation awards that are expected to vest in 2012. As of March 31, 2012, there was approximately $790,000 of unrecognized compensation cost related to unvested share-based compensation awards granted. That cost is expected to be recognized over the next four years.

As required by GAAP, cash flows from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for stock-based awards (excess tax benefits) are classified as financing cash flows.

Financial Instruments

As part of its overall interest rate risk management activities, the Company utilizes derivative instruments to manage its exposure to various types of interest rate risk. Interest rate swaps and interest rate caps are the primary instruments the Company uses for interest rate risk management. Derivative instruments are recorded at fair value as either part of prepaid expenses and other assets or accrued expenses and other liabilities on the consolidated statements of financial condition. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

The Company formally documents the relationship between the hedging instruments and hedged items, as well as the risk management objective and strategy, before undertaking an accounting hedge. To qualify for hedge accounting, the derivatives and related hedged items must be designated as a hedge at inception of the hedge relationship. For accounting hedge relationships, we formally assess, both at the inception of the hedge and on an ongoing basis, if the derivatives are highly effective in offsetting designated changes in the fair value or cash flows of the hedged item. If it is determined that the derivative instrument is not highly effective, hedge accounting is discontinued.

For derivatives designated as fair value hedges, changes in the fair value of the derivative and the hedged item related to the hedged risk are recognized in earnings. To the extent the change in fair value of the derivative does not offset the change in fair value of the hedged item, the difference or ineffectiveness is reflected in earnings in the same financial statement category as the hedged item.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (OCI) and subsequently reclassified to earnings when the hedged transaction affects earnings and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. The Company assesses the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For derivatives not designated as hedges, changes in fair value are recognized in earnings.

At March 31, 2013, there were sixteen interest rate cap contracts outstanding with notional amounts totaling $170.0 million. These derivative instruments are not hedged and therefore adjustments to fair value are recorded in current earnings.

The Company entered into two interest rate swap contracts to manage its exposure to interest rate risk. These interest rate swap transactions involved the exchange of the Company’s interest payment on $35.0 million in junior subordinated notes which became floating rate notes in 2011 for a fixed rate interest payment without the exchange of the underlying principal amount. Entering into interest rate derivatives potentially exposes the Company to the risk of counterparties’ failure to fulfill their legal obligations including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Management utilizes the Change in Variable Cash Flows Method to measure hedge ineffectiveness. To the extent that the cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated cash flows from the hedged exposure, the hedged is deemed effective. As of March 31, 2013 the interest rate swaps were deemed to be effective, therefore no amounts were charged to current earnings. The Company also does not expect to reclassify any hedge related amounts from OCI to earnings over the next twelve months.

The pay fixed interest rate swap contract outstanding at March 31, 2013 is being utilized to hedge $35.0 million in floating rate junior subordinated notes. Below is a summary of the interest rate swap contract and the terms at March 31, 2013:

	Notional		Effective		Pay			Receive			Maturity		Unrealized
(Dollars in thousands)	Amount		Date		Rate			Rate (*)			Date		Gain		Loss
Cash Flow Hedge	$	20,000		2/10/2011		4.18	%		0.31	%		2/10/2018		—	$	3,191
Cash Flow Hedge		15,000		2/10/2011		3.91	%		0.31	%		2/10/2018		—		2,196
	$	35,000												—	$	5,387

* Variable receive rate based upon contract rates in effect at March 31, 2013

Recent Accounting and Regulatory Pronouncements

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-10, Property, Plant, and Equipment (Topic 360): Derecognition of in Substance Real Estate-a Scope Clarification. The amendments in this Update affect entities that cease to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt. Under the amendments in this Update, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in substance real estate as a result of default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20 to determine whether it should derecognize the in substance real estate. Generally, a reporting entity would not satisfy the requirements to derecognize the in substance real estate before the legal transfer of the real estate to the lender and the extinguishment of the related nonrecourse indebtedness. That is, even if the reporting entity ceases to have a controlling financial interest under Subtopic 810-10, the reporting entity would continue to include the real estate, debt, and the results of the subsidiary’s operations in its consolidated financial statements until legal title to the real estate is transferred to legally satisfy the debt. The amendments in this Update should be applied on a prospective basis to deconsolidation events occurring after the effective date. Prior periods should not be adjusted even if the reporting entity has continuing involvement with previously derecognized in substance real estate entities. For public entities, the amendments in this Update are effective for fiscal years, and interim periods within those years, beginning on or after June 15, 2012. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2013, and interim and annual periods thereafter. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect all entities that have financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or Section 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement. The requirements amend the disclosure requirements on offsetting in Section 210-20-50. This information will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements on an entity’s financial position, including the effect or potential effect of rights of setoff associated with certain financial instruments and derivative instruments in the scope of this Update. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In July, 2012, the FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment. ASU 2012-02 give entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012 (early adoption permitted). This ASU did not have a significant impact on the Company’s financial statements.

In October, 2012, the FASB issued ASU 2012-06, Business Combinations (Topic 805) - Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution. ASU 2012-06 requires that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs (as a result of a change in cash flows expected to be collected on the assets subject to indemnification), the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets). ASU 2012-06 is effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. This ASU is not expected to have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments clarify that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The effective date is the same as the effective date of Update 2011-11. This ASU did not have a significant impact on the Company’s financial statements or the Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. The amendments in this Update require an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. generally accepted accounting principles (GAAP) to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. For nonpublic entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. The Company has provided the necessary disclosures in note seven.

In February 2013, the FASB issued ASU 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The objective of the amendments in this Update is to provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. generally accepted accounting principles (GAAP). Examples of obligations within the scope of this Update include debt arrangements, other contractual obligations, and settled litigation and judicial rulings. U.S. GAAP does not include specific guidance on accounting for such obligations with joint and several liability, which has resulted in diversity in practice. Some entities record the entire amount under the joint and several liability arrangement on the basis of the concept of a liability and the guidance that must be met to extinguish a liability. Other entities record less than the total amount of the obligation, such as an amount allocated, an amount corresponding to the proceeds received, or the portion of the amount the entity agreed to pay among its co-obligors, on the basis of the guidance for contingent liabilities. The amendments in this Update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For nonpublic entities, the amendments are effective for fiscal years ending after December 15, 2014, and interim periods and annual periods thereafter. This ASU is not expected to have a significant impact on the Company’s financial statements.

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Retirement Plans (Details Textual)	3 Months Ended
	Mar. 31, 2013
SERP [Member]
Retirement Plans (Textual) [Abstract]
Annual retirement benefit age	65 years
Annual retirement benefit percentage	25.00%
Credited service description	twenty or more years
Credited service	1 year
Number of payments	lump sum or ten equal annual payments
Benefit payable upon early retirement	age 50 with at least twelve years of service
Service needed to lesser benefit payable upon early retirement	12 years
SERP [Member] | Maximum [Member]
Retirement Plans (Textual) [Abstract]
Final average pay multiplied by a ratio	25.00%
Participants credited service under benefit plans	34 years
SERP [Member] | Minimum [Member]
Retirement Plans (Textual) [Abstract]
Final average pay multiplied by a ratio	1.25%
Participants credited service under benefit plans	22 years
Directors' Retirement Plan [Member]
Retirement Plans (Textual) [Abstract]
Annual retirement benefit age	75 years
Directors' Retirement Plan [Member] | Maximum [Member]
Retirement Plans (Textual) [Abstract]
Service period to get retirement benefit	10 years
Retirement benefit calculation ratio	80.00%
Years of service required for ratios	20 years
Directors' Retirement Plan [Member] | Minimum [Member]
Retirement Plans (Textual) [Abstract]
Service period to get retirement benefit	5 years
Retirement benefit calculation ratio	25.00%
Years of service required for ratios	10 years

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Net Income Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Net Income Per Share [Abstract]

Summary of net income per share

(Amounts, except earnings per share, in thousands)

	Three Months		Three Months
	Ended		Ended
	March 31, 2013		March 31, 2012
Net income	$	3,714	$	3,785
Weighted-average common shares outstanding		17,312		17,152
Basic earnings per share	$	0.21	$	0.22
Weighted-average common shares outstanding		17,312		17,152
Common stock equivalents due to effect of stock options		154		176
Total weighted-average common shares and equivalents		17,466		17,328
Diluted earnings per share	$	0.21	$	0.22

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Loans Receivable (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule of loans receivable
Total residential real estate	$ 411,673	$ 405,895
Total commercial real estate	98,507	96,955
Subtotal mortgage loans	510,180	502,850
Total consumer loans	134,690	134,885
Commercial business	58,141	54,445
Subtotal other loans	192,831	189,330
Total loans receivable	703,011	692,180
Allowance for loan losses	6,721	6,709
Deferred loan fees and net discounts	(1,923)	(1,862)
Loans in process	16,940	15,247
Subtotal	21,738	20,094
Net loans receivable	681,273	672,086
Residential Real Estate, Single Family [Member]
Schedule of loans receivable
Total residential real estate	331,097	326,005
Total loans receivable	331,097	326,005
Residential Real Estate, Multi family [Member]
Schedule of loans receivable
Total residential real estate	34,836	33,472
Total loans receivable	45,740	33,472
Residential Real Estate, Construction [Member]
Schedule of loans receivable
Total residential real estate	45,740	46,418
Total loans receivable	34,836	46,418
Commercial Real Estate [Member]
Schedule of loans receivable
Total commercial real estate	83,843	81,077
Total loans receivable	98,507	96,955
Commercial Real Estate, Construction [Member]
Schedule of loans receivable
Total commercial real estate	14,664	15,878
Total loans receivable	14,664	15,878
Consumer Home Equity [Member]
Schedule of loans receivable
Total consumer loans	80,409	80,418
Total loans receivable	80,409	80,418
Dealer auto and RV loans [Member]
Schedule of loans receivable
Total consumer loans	46,861	46,571
Total loans receivable	46,861	46,571
Other Consumer [Member]
Schedule of loans receivable
Total consumer loans	7,420	7,896
Total loans receivable	$ 7,420	$ 7,896

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Subsequent Events

3 Months Ended

Mar. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

On April 16, 2013 the Company announced a six-for-five stock split of the ESBF common stock payable on May 17, 2013 to the stockholders of record on May 3, 2013. All per share data within this filing has been adjusted to reflect this split.