Condensed Consolidated Statements of Cash Flow (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating Activities:
Net income	$ 7,843	$ 10,452
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	(300)	1,110
Depreciation expense	1,478	1,632
Increase in surrender value of life insurance	(742)	(768)
Provision (benefit) for deferred income taxes	963	(1,560)
Amortization of investment security discounts and premiums, net	2,812	2,381
Net gain on sale of securities available-for-sale	0	(1,325)
Net gain on sale of premises and equipment	0	2
Proceeds from the sale of loans held-for-sale	46,811	30,369
Origination of loans held-for-sale	(45,073)	(28,593)
Gain on sale of loans held-for-sale	(1,214)	(621)
Gain on foreclosed real estate	(50)	(61)
Amortization of capitalized servicing rights	361	278
Amortization of intangible assets	665	722
Restricted stock expense, net	381	366
Amortization of prepaid FDIC insurance premium	557	764
Impairment loss on fixed asset	0	570
Change in other assets and liabilities	(748)	(292)
Net cash provided by operating activities	13,744	15,426
Investing Activities:
Proceeds from maturities, redemptions, calls and principal repayments of investment securities available-for-sale	84,979	73,299
Proceeds from sales of investment securities available-for-sale	0	57,824
Purchase of investment securities available-for-sale	(55,547)	(121,427)
Purchase of FHLB and FRB stock	(63)	(13,093)
Redemption of FHLB stock	558	13,298
Net (increase) decrease in loans and leases	(36,684)	24,213
Purchases of premises and equipment	(863)	(1,022)
Proceeds from the sale of premises and equipment	47	0
Proceeds from disposition of foreclosed assets	579	703
Net cash provided by (used in) investing activities	(6,994)	33,795
Financing Activities:
Net increase (decrease) in checking, savings and money market accounts	99,037	(10,981)
Net decrease in time accounts	(55,699)	(15,556)
Net (decrease) increase in short-term borrowings	824	(2,611)
Payments on long-term borrowings	(10,000)	(15,000)
Proceeds from long-term borrowings	0	10,000
Proceeds from the exercise of stock options	0	102
Retirement of common stock	(165)	(103)
Tax (provision) benefit for stock-based compensation	(38)	43
Purchase of shares for directors' deferred stock-based plan	(362)	(350)
Cash dividends paid to common shareholders	(4,446)	(4,265)
Net cash provided by (used in) financing activities	29,151	(38,721)
Net increase in cash and cash equivalents	35,901	10,500
Cash and cash equivalents at beginning of period	52,802	32,501
Cash and cash equivalents at end of period	88,703	43,001
Supplemental Disclosures of Cash Flow Information:
Interest received during the period	36,485	42,521
Interest paid during the period	7,714	9,779
Income taxes	213	5,048
Non-cash investing and financing activities:
Change in unrealized gain on available-for-sale securities	1,149	5,497
Transfer of loans to other real estate	1,036	659
Common dividend declared and unpaid	$ 1,530	$ 1,472

ALLIANCE FINANCIAL CORP /NY/ 10-Q