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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Summary of assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

					Fair Value Measurement at June 30, 2019 Using
Financial Assets:	Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	4,995			$	—			$	4,995			$	—
Mortgage-backed securities, residential	200,388				—				200,388				—
Obligations of states and political subdivisions	46,416				—				46,416				—
Corporate bonds and notes	250				—				250				—
SBA loan pools	17,237				—				17,237				—
Total available for sale securities	$	269,286			$	—			$	269,286			$	—
Equity investments	$	1,244			$	1,244			$	—			$	—
Derivative assets	6,095				—				6,095				—
Financial Liabilities:
Derivative liabilities	$	6,460			$	—			$	6,095			$	365

There were no transfers between Level 1 and Level 2 during the three and six month periods ended June 30, 2019.

					Fair Value Measurement at December 31, 2018 Using
Financial Assets:	Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	5,472			$	—			$	5,472			$	—
Mortgage-backed securities, residential	183,192				—				183,192				—
Obligations of states and political subdivisions	44,152				—				44,152				—
Corporate bonds and notes	247				—				247				—
SBA loan pools	9,195				—				9,195				—
Total available for sale securities	$	242,258			$	—			$	242,258			$	—
Equity investments	$	1,075			$	1,075			$	—			$	—
Derivative assets	3,142				—				3,142				—
Financial Liabilities:
Derivative liabilities	$	3,282			$	—			$	3,142			$	140

Reconciliation of all assets measured at fair value

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three-month periods ended June 30, 2019 and 2018 (in thousands):

		Assets (Liabilities)
		Corporate Bonds and Notes								Derivative Liabilities
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Balance of recurring Level 3 assets at April 1		$	—			$	—			$	(230	)		$	(50	)
Derivative instruments entered into		—				—				(11		)		(1		)
Total gains or losses for the period:
Included in earnings - other non-interest income		—				—				(124		)		33
Included in other comprehensive income		—				—				—				—
Transfers out of Level 3		—				—				—				—
Balance of recurring Level 3 assets at June 30		$	—			$	—			$	(365	)		$	(18	)

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six month periods ended June 30, 2019 and June 30, 2018 (in thousands):

		Assets (Liabilities)
		Corporate Bonds and Notes								Derivative Liabilities
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Balance of recurring Level 3 assets at January 1		$	—			$	—			$	(140	)		$	(75	)
Derivative instruments entered into		—				—				(35		)		(1		)
Total gains or losses for the period:
Included in earnings - other non-interest income		—				—				(190		)		58
Included in other comprehensive income		—				—				—				—
Transfers out of Level 3		—				—				—				—
Balance of recurring Level 3 assets at June 30		$	—			$	—			$	(365	)		$	(18	)

Reconciliation of liabilities measured at fair value

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three-month periods ended June 30, 2019 and 2018 (in thousands):

		Assets (Liabilities)
		Corporate Bonds and Notes								Derivative Liabilities
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Balance of recurring Level 3 assets at April 1		$	—			$	—			$	(230	)		$	(50	)
Derivative instruments entered into		—				—				(11		)		(1		)
Total gains or losses for the period:
Included in earnings - other non-interest income		—				—				(124		)		33
Included in other comprehensive income		—				—				—				—
Transfers out of Level 3		—				—				—				—
Balance of recurring Level 3 assets at June 30		$	—			$	—			$	(365	)		$	(18	)

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six month periods ended June 30, 2019 and June 30, 2018 (in thousands):

		Assets (Liabilities)
		Corporate Bonds and Notes								Derivative Liabilities
		June 30, 2019				June 30, 2018				June 30, 2019				June 30, 2018
Balance of recurring Level 3 assets at January 1		$	—			$	—			$	(140	)		$	(75	)
Derivative instruments entered into		—				—				(35		)		(1		)
Total gains or losses for the period:
Included in earnings - other non-interest income		—				—				(190		)		58
Included in other comprehensive income		—				—				—				—
Transfers out of Level 3		—				—				—				—
Balance of recurring Level 3 assets at June 30		$	—			$	—			$	(365	)		$	(18	)

Nonrecurring fair value measurement, valuation techniques

The following table presents information related to Level 3 recurring fair value measurements at June 30, 2019 and December 31, 2018 (in thousands):

Description		Fair Value at June 30, 2019				Valuation Technique		Unobservable Inputs		Range [Weighted Average] at June 30, 2019
Derivative liabilities		$	365			Historical trend		Credit default rate		6.53% - 6.53% [6.53%]

Description		Fair Value at December 31, 2018				Valuation Technique		Unobservable Inputs		Range [Weighted Average] at December 31, 2018
Derivative liabilities		$	140			Historical trend		Credit default rate		7.46% - 7.46% [7.46%]

The following tables present information related to Level 3 non-recurring fair value measurement at June 30, 2019 and December 31, 2018 (in thousands):

Description		Fair Value at June 30, 2019				Valuation Technique		Unobservable Inputs		Range [Weighted Average] at June 30, 2019
Impaired loans:
Commercial mortgages:
Commercial mortgages		$	7,611			Sales comparison		Discount to appraised value		10.00% - 14.94% [10.43%]
		$	7,611
OREO:
Commercial mortgages:
Commercial mortgages		$	62			Sales comparison		Discount to appraised value		22.00% - 22.00% [22.00%]
Residential mortgages		55				Sales comparison		Discount to appraised value		20.80% -20.80% [20.80%]
Consumer loans:
Home equity lines and loans		97				Sales comparison		Discount to appraised value		20.80% - 88.42% [52.29%]
		$	214

Description		Fair Value at December 31, 2018				Valuation Technique		Unobservable Inputs		Range [Weighted Average] at December 31, 2018
Impaired loans:
Commercial and agricultural:
Commercial and industrial		$	1,456			Sales comparison		Discount to appraised value		11.76% - 11.76% [11.76%]
		$	1,456
OREO:
Commercial mortgages:
Commercial mortgages		$	213			Sales comparison		Discount to appraised value		10.00% - 24.80% [17.72%]
Residential mortgages		204				Sales comparison		Discount to appraised value		20.80% - 39.78% [22.94%]
Consumer loans:
Home equity lines and loans		157				Sales comparison		Discount to appraised value		20.80% - 20.80% [20.80%]
		$	574

Summary of assets and liabilities measured at fair value on a non-recurring basis

Assets and liabilities measured at fair value on a non-recurring basis are summarized below (in thousands):

					Fair Value Measurement at June 30, 2019 Using
Financial Assets:	Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Gains (Losses)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	7,611			$	—			$	—			$	7,611			$	(1,891	)
Total impaired loans	$	7,611			$	—			$	—			$	7,611			$	(1,891	)
Other real estate owned:
Commercial mortgages:
Commercial mortgages	$	62			$	—			$	—			$	62			$	—
Residential mortgages	55				—				—				55				(2		)
Consumer loans:
Home equity lines and loans	97				—				—				97				(50		)
Total other real estate owned, net	$	214			$	—			$	—			$	214			$	(52	)

					Fair Value Measurement at December 31, 2018 Using
Financial Assets:	Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Total Gains (Losses)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	1,456			$	—			$	—			$	1,456			$	240
Total impaired loans	$	1,456			$	—			$	—			$	1,456			$	240
Other real estate owned:
Commercial mortgages:
Commercial mortgages	$	213			$	—			$	—			$	213			$	—
Residential mortgages	204				—				—				204				—
Consumer loans:
Home equity lines and loans	157				—				—				157				(14		)
Total other real estate owned, net	$	574			$	—			$	—			$	574			$	(14	)

Carrying value and estimated fair value of financial instruments

The carrying amounts and estimated fair values of other financial instruments, at June 30, 2019 and December 31, 2018, are as follows (in thousands):

	June 30, 2019
Financial assets:	Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Estimated Fair Value (1)
Cash and due from financial institutions	$	32,622			$	32,622			$	—			$	—			$	32,622
Interest-earning deposits in other financial institutions	83,838				83,838				—				—				83,838
Equity investments	1,244				1,244				—				—				1,244
Securities available for sale	269,286				—				269,286				—				269,286
Securities held to maturity	4,090				—				2,349				1,750				4,099
FHLBNY and FRBNY stock	3,091				—				—				—				N/A
Loans, net and loans held for sale	1,269,339				—				—				1,260,787				1,260,787
Accrued interest receivable	4,940				73				815				4,052				4,940
Derivative assets	6,095				—				6,095				—				6,095
Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,363,346			$	1,363,346			$	—			$	—			$	1,363,346
Accrued interest payable	314				37				277				—				314
Derivative liabilities	6,460				—				6,095				365				6,460

(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

	December 31, 2018
Financial assets:	Carrying Amount				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)				Estimated Fair Value (1)
Cash and due from financial institutions	$	33,040			$	33,040			$	—			$	—			$	33,040
Interest-earning deposits in other financial institutions	96,932				96,932				—				—				96,932
Equity investments	1,075				1,075				—				—				1,075
Securities available for sale	242,258				—				242,258				—				242,258
Securities held to maturity	4,875				—				1,838				3,020				4,858
FHLBNY and FRBNY stock	3,138				—				—				—				N/A
Loans, net and loans held for sale	1,293,464				—				—				1,287,495				1,287,495
Accrued interest receivable	4,480				80				697				3,703				4,480
Derivative assets	3,142				—				3,142				—				3,142
Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,419,011			$	1,419,011			$	—			$	—			$	1,419,011
Time deposits	150,226				—				150,938				—				150,938
Accrued interest payable	232				26				206				—				232
Derivative liabilities	3,282				—				3,142				140				3,282

(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.

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- Definition

Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.

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Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

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Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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Tabular disclosure of assets and liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3).

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