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FAIR VALUE
 9 Months Ended
Sep. 30, 2024
Fair Value Disclosures [Abstract]  
FAIR VALUE FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions market participants would use in pricing an asset or liability.

The Corporation used the following methods and significant assumptions to estimate fair value:

Available for Sale Securities:  The fair value of securities available for sale are usually determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs), or matrix pricing, which is a mathematical technique widely used 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 (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair value is calculated using discounted cash flows or other market indicators (Level 3 inputs).

Equity Investments: Securities that are held to fund a deferred compensation plan and securities that have a readily determinable fair market value are recorded at fair value with changes in fair value included in earnings. The fair value of equity investments are determined by quoted market prices (Level 1 inputs).

Individually Analyzed Loans: At the time a loan is considered individually analyzed, it is valued at the lower of amortized cost or fair value. Individually analyzed loans carried at fair value have been partially charged-off or receive specific allocations as part of the allowance for credit loss accounting. For collateral dependent loans, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, typically resulting in Level 3 fair value inputs. Individually analyzed loans are evaluated on a quarterly basis for additional credit loss and adjusted accordingly.

OREO: Assets acquired through or in lieu of loan foreclosures are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral dependent loans and OREO are performed by certified general appraisers (commercial properties) or certified residential appraisers (residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, appraisals are reviewed for reasonableness of assumptions, approaches utilized, Uniform Standards of Professional Appraisal Practice and other regulatory compliance, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals are generally completed within the twelve month period prior to a property being placed into OREO. For individually analyzed loans, appraisal values are adjusted based on the age of the appraisal, the position of the lien, the type of the property, and its condition.
Derivatives: The fair value of interest rate swaps are based on valuation models using observable market data as of the measurement date (Level 2 inputs). Derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair value of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices, and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The Corporation also incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counter-party's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Corporation has considered the impact of any applicable credit enhancements, such as collateral postings. Although the Corporation has determined the majority of inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize credit default rate assumptions (Level 3 inputs).

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
Fair Value Measurement at September 30, 2024 Using
Financial Assets:Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
  U.S. Treasury notes and bonds$57,024 $57,024 $— $— 
  Mortgage-backed securities, residential385,393 — 385,393 — 
  Obligations of states and political subdivisions36,909 — 36,909 — 
  Corporate bonds and notes21,465 — 15,254 6,211 
  SBA loan pools53,784 — 53,784 — 
  Total available for sale securities$554,575 $57,024 $491,340 $6,211 
  Equity investments, at fair value$2,750 $2,750 $— $— 
  Derivative assets$19,715 $— $19,715 $— 
Financial Liabilities:
  Derivative liabilities$19,742 $— $19,742 $— 

There were no transfers between Level 1 and Level 2 during the three and nine month periods ended September 30, 2024.

Fair Value Measurement at December 31, 2023 Using
Financial Assets:Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)
  U.S. Treasury notes and bonds$55,332 $55,332 $— $— 
  Mortgage-backed securities, residential403,824 — 403,824 — 
  Obligations of states and political subdivisions38,686 — 38,686 — 
  Corporate bonds and notes20,669 — 13,139 7,530 
  SBA loan pools65,482 — 65,482 — 
  Total available for sale securities$583,993 $55,332 $521,131 $7,530 
  Equity investments, at fair value$2,552 $2,552 $— $— 
  Derivative assets$23,942 $— $23,942 $— 
Financial Liabilities:
  Derivative liabilities$23,981 $— $23,981 $— 
There were no transfers between Level 1 and Level 2 during the three and nine month periods ended September 30, 2023.
The Corporation transfers assets and liabilities between Level 2 and Level 3 of the fair value hierarchy when the methodology to obtain fair value changes such that there are either more or fewer unobservable inputs as of the end of the measurement date, compared to the prior measurement date. Illiquidity in new issuances of comparable bonds and the size of issuances may lead to pricing difficulties, particularly for smaller corporate bond issuances, and may warrant transfer into Level 3 of assets previously measured using Level 2 inputs. The Corporation utilizes a "beginning of reporting period" timing assumption when recognizing transfers between hierarchy levels, consistent with ASC 820-10-50-2.

There were no subordinated debt issuances transferred between Level 2 and Level 3 during the three month period ended September 30, 2024. One corporate subordinated debt issuance was transferred from Level 3 to Level 2 during the nine month period ended September 30, 2024, due to availability of market data. There were two corporate subordinated debt issuances transferred from Level 3 to Level 2 during the three month period ended September 30, 2023. The Corporation transferred its investment in eight corporate subordinated debt issuances from Level 2 to Level 3 during the nine month period ended September 30, 2023, due to a lack of observable market data relative to the issuance of similarly sized corporate debenture insurances.

The following tables present a reconciliation of assets and liabilities measured at fair value on a recurring basis using unobservable inputs (Level 3) for the three and nine month periods ended September 30, 2024 and September 30, 2023 (in thousands):

Level 3 Financial Assets:For the Three Months Ended
Corporate bonds and notesSeptember 30, 2024September 30, 2023
Balance of recurring Level 3 assets as of July 1,$6,175 $8,593 
Total gains or losses for the period:
     Included in Other Comprehensive Income 36 190 
Transfers into Level 3— — 
Transfers out of Level 3— (1,323)
     Balance of recurring Level 3 assets as of September 30,$6,211 $7,460 


Level 3 Financial Assets:
For the Nine Months Ended
Corporate bonds and notesSeptember 30, 2024
September 30, 2023
Balance of recurring Level 3 assets as of January 1,$7,530 $— 
Total gains and losses for the period:
Included in other comprehensive income430 (1,172)
Transfers into Level 3— 9,955 
Transfers out of Level 3(1,749)(1,323)
Balance of recurring Level 3 assets as of September 30,$6,211 $7,460 

The following tables present quantitative information regarding Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024Fair ValueValuation TechniquesUnobservable InputRange [Weighted Average] at September 30, 2024
Corporate bonds and notes$6,211 Discounted cash flowMarket discount rate
12.00% -12.00% [12.00%]

December 31, 2023Fair ValueValuation TechniquesUnobservable InputRange [Weighted Average] at December 31, 2023
Corporate bonds and notes$7,530 Discounted cash flowMarket discount rate
12.50% - 12.50%
[12.50%]
Assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2024 and December 31, 2023 are summarized below (in thousands):
 Fair Value Measurement at September 30, 2024 Using
Financial Assets:Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total Gains (Losses)
Individually analyzed loans:
Commercial and industrial$11 $— $— $11 $— 
Commercial mortgages, other923 — — 923 — 
Total individually analyzed loans$934 $— $— $934 $— 
Other real estate owned:    
Residential mortgages$317 $— $— $317 $— 
Consumer loans:     
Home equity lines and loans166 — — 166 — 
Total other real estate owned, net$483 $— $— $483 $— 

 Fair Value Measurement at December 31, 2023 Using
Financial Assets:Fair ValueQuoted Prices in Active Markets for Identical Assets
(Level 1)		Significant Other Observable Inputs
(Level 2)		Significant Unobservable Inputs
(Level 3)		Total Gains (Losses)
Individually analyzed loans:
Commercial and industrial$64 $— $— $64 $— 
Total individually analyzed loans$64 $— $— $64 $— 
Other real estate owned:    
Residential mortgages$116 $— $— $116 $— 
Consumer loans:     
Home equity lines and loans211 — — 211 — 
Total other real estate owned, net$327 $— $— $327 $— 


The following tables present quantitative information regarding Level 3 significant unobservable inputs for assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):
DescriptionFair Value at September 30, 2024Valuation TechniqueUnobservable InputsRange [Weighted Average] at September 30, 2024
Individually analyzed loans:
Commercial and industrial$11 Net present valuePresent value of cash flows
42.73% - 42.73%
[42.73%]
Commercial mortgages, other923 Income approachDiscount to appraised value
12.10% - 12.10%
[12.10%]
Total individually analyzed loans$934 
Other real estate owned:
Residential mortgages$317 Sales comparisonDiscount to appraised value
20.80% - 20.80%
[20.80%]
Consumer loans:
Home equity lines and loans166 Sales comparisonDiscount to appraised value
20.80% - 20.80%
[20.80%]
Total other real estate owned, net$483 
DescriptionFair Value at December 31, 2023Valuation TechniqueUnobservable InputsRange [Weighted Average] at December 31, 2023
Individually analyzed loans:
Commercial and industrial$64 Net present valuePresent value of cash flows
47.30% - 56.80%
[54.80%]
Total individually analyzed loans$64 
Other real estate owned:
Residential mortgages$116 Sales comparisonDiscount to appraised value
20.80% - 20.80%
[20.80%]
Consumer loans:
Home equity lines and loans211 Sales comparisonDiscount to appraised value
20.80% - 20.80%
[20.80%]
Total other real estate owned, net$327 



FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of financial instruments, as of September 30, 2024 and December 31, 2023, are as follows (in thousands):
September 30, 2024
Financial assets:Carrying AmountQuoted 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$36,247 $36,247 $— $— $36,247 
   Interest-earning deposits in other financial institutions44,193 44,193 — — 44,193 
   Equity investments3,244 3,244 — — 3,244 
   Securities available for sale554,575 57,024 491,340 6,211 554,575 
   Securities held to maturity657 — — 657 657 
   FHLBNY and FRBNY stock4,189 — — — N/A
   Loans, net and loans held for sale2,028,954 — — 1,949,576 1,949,576 
   Derivative assets19,715 — 19,715 — 19,715 
Financial liabilities:     
   Deposits:     
      Demand, savings, and insured money market deposits$1,839,290 $1,839,290 $— $— $1,839,290 
      Time deposits611,831 — 611,575 — 611,575 
   FHLBNY and FRB advances50,000 — 50,047 — 50,047 
   Derivative liabilities19,742 — 19,742 — 19,742 
(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, 2023
Financial assets:Carrying AmountQuoted 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$22,247 $22,247 $— $— $22,247 
   Interest-earning deposits in other financial institutions14,600 14,600 — — 14,600 
   Equity investments3,046 3,046 — — 3,046 
   Securities available for sale583,993 55,332 521,131 7,530 583,993 
   Securities held to maturity785 — — 785 785 
   FHLBNY and FRBNY stock5,498 — — — N/A
   Loans, net and loans held for sale1,972,664 — — 1,875,390 1,875,390 
   Derivative assets23,942 — 23,942 — 23,942 
Financial liabilities:     
   Deposits:     
      Demand, savings, and insured money market deposits$1,817,162 $1,817,162 $— $— $1,817,162 
      Time deposits612,265 — 609,863 — 609,863 
   FHLBNY overnight advances31,920 — 31,925 — 31,925 
   Derivative liabilities23,981 — 23,981 — 23,981 
(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.