10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark one)

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

For the quarterly period ended September 30, 2018

OR

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

For the transition period from ______________ to _____________

Commission file number: 001-35352

WELLESLEY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	45-3219901
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

40 Central Street, Wellesley, Massachusetts	02482
(Address of principal executive offices)	(Zip Code)

(781) 235-2550

(Registrant’s telephone number, including area code)

Not Applicable

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes x No ¨

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

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial standards provided pursuant to Section 7(a)(2)(B) of the Securities Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

As of November 1, 2018, there were 2,525,730 shares of the registrant’s common stock outstanding.

WELLESLEY BANCORP, INC.

Table of Contents

		Page No.
Part I.   Financial Information
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, 2018 and December 31, 2017	1
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2018 and 2017	2
	Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2018 and 2017	3
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.	Controls and Procedures	34
Part II.   Other Information
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35
Signatures		36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

CONSOLIDATED BALANCE SHEETS

	September 30, 2018			December 31, 2017
	(Dollars in thousands)
Assets
Cash and due from banks	$	5,421		$	4,604
Short-term investments		18,782			23,858
Total cash and cash equivalents		24,203			28,462
Certificates of deposit		100			100
Securities available for sale, at fair value		67,651			66,486
Federal Home Loan Bank of Boston stock, at cost		5,466			5,937
Loans held for sale		698			—
Loans		726,593			692,455
Less allowance for loan losses		(6,543	)		(6,153	)
Loans, net		720,050			686,302
Bank-owned life insurance		7,710			7,535
Premises and equipment, net		3,604			3,470
Accrued interest receivable		2,308			2,140
Net deferred tax asset		2,949			2,352
Other assets		2,132			2,611
Total assets	$	836,871		$	805,395
Liabilities and Stockholders’ Equity
Deposits:
Non-interest-bearing	$	131,836		$	104,346
Interest-bearing		538,667			512,396
Total deposits		670,503			616,742
Short-term borrowings		27,500			38,000
Long-term borrowings		62,357			77,174
Subordinated debt		9,825			9,802
Accrued expenses and other liabilities		3,664			4,432
Total liabilities		773,849			746,150
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none issued		—			—
Common stock, $0.01 par value; 14,000,000 shares authorized, 2,525,186 and 2,506,532 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		25			25
Additional paid-in capital		26,278			25,601
Retained earnings		38,740			34,736
Accumulated other comprehensive income (loss)		(962	)		39
Unearned compensation – ESOP		(1,059	)		(1,156	)
Total stockholders' equity		63,022			59,245
Total liabilities and stockholders' equity	$	836,871		$	805,395

See accompanying notes to consolidated financial statements.

1

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(Dollars in thousands, except per share data)
Interest and dividend income:
Interest and fees on loans and loans held for sale	$	7,941		$	6,747		$	22,702		$	19,079
Debt securities:
Taxable		364			337			1,050			1,009
Tax-exempt		82			77			246			224
Short-term investments and certificates of deposit		143			78			376			163
FHLB stock		86			66			244			182
Total interest and dividend income		8,616			7,305			24,618			20,657
Interest expense:
Deposits		1,668			919			4,318			2,540
Short-term borrowings		244			95			442			175
Long-term debt		273			316			1,004			901
Subordinated debt		158			158			474			474
Total interest expense		2,343			1,488			6,238			4,090
Net interest income		6,273			5,817			18,380			16,567
Provision for loan losses		130			250			390			372
Net interest income, after provision for loan losses		6,143			5,567			17,990			16,195
Non-interest income:
Customer service fees		42			39			130			109
Mortgage banking activities		35			34			72			98
Income on bank-owned life insurance		60			59			175			173
Wealth management fees		407			314			1,208			917
Miscellaneous		17			58			200			177
Total non-interest income		561			504			1,785			1,474
Non-interest expense:
Salaries and employee benefits		2,660			2,408			8,074			7,518
Occupancy and equipment		782			684			2,201			2,087
Data processing		265			230			734			651
FDIC insurance		150			150			486			447
Professional fees		159			192			572			547
Other general and administrative		566			500			1,666			1,532
Total non-interest expense		4,582			4,164			13,733			12,782
Income before income taxes		2,122			1,907			6,042			4,887
Provision for income taxes		565			741			1,628			1,903
Net income		1,557			1,166			4,414			2,984
Other comprehensive income:
Net unrealized holding (loss) gains on available-for-sale securities		(267	)		63			(1,343	)		640
Income tax benefit (expense)		54			(25	)		335			(239	)
Total other comprehensive (loss) gain income		(213	)		38			(1,008	)		401
Comprehensive income	$	1,344		$	1,204		$	3,406		$	3,385
Earnings per common share:
Basic	$	0.65		$	0.49		$	1.84		$	1.26
Diluted	$	0.62		$	0.48		$	1.77		$	1.22
Weighted average shares outstanding:
Basic		2,408,091			2,370,623			2,398,671			2,364,449
Diluted		2,511,241			2,454,198			2,499,093			2,448,558

See accompanying notes to consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2018 and 2017

											Accumulated
						Additional					Other			Unearned			Total
	Common Stock					Paid-in		Retained			Comprehensive			Compensation-			Stockholders’
	Shares			Amount		Capital		Earnings			Income (Loss)			ESOP			Equity
	(Dollars in thousands)
Balance at December 31, 2016		2,484,852		$	25	$	24,703	$	31,999		$	(229	)	$	(1,284	)	$	55,214
Comprehensive income		—			—		—		2,984			401			—			3,385
Dividends paid to common stockholders ($0.14 per share)		—			—		—		(349	)		—			—			(349	)
Issuance of restricted stock		5,000			—		—		—			—			—			—
Stock options exercised		2,500			—		40		—			—			—			40
Share-based compensation-equity incentive plan		—			—		493		—			—			—			493
ESOP shares committed to be  allocated (9,629)		—			—		164		—			—			96			260
Balance at September 30, 2017		2,492,352		$	25	$	25,400	$	34,634		$	172		$	(1,188	)	$	59,043
Balance at December 31, 2017		2,506,532		$	25	$	25,601	$	34,736		$	39		$	(1,156	)	$	59,245
Comprehensive income		—			—		—		4,414			(1,008	)		—			3,406
Reclassification related to Tax Cuts and Jobs Act		—			—		—		(7	)		7			—			—
Dividends paid to common stockholders ($0.16 per share)		—			—		—		(403	)		—			—			(403	)
Restricted stock forfeitures		(400	)		—		—		—			—			—			—
Stock options exercised		19,054			—		154		—			—			—			154
Share-based compensation- equity incentive plan		—			—		313		—			—			—			313
ESOP shares committed to be allocated (9,629)		—			—		210		—			—			97			307
Balance at September 30, 2018		2,525,186		$	25	$	26,278	$	38,740		$	(962	)	$	(1,059	)	$	63,022

See accompanying notes to consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended September 30,
	2018			2017
	(In thousands)
Cash flows from operating activities:
Net  income	$	4,414		$	2,984
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		390			372
Depreciation and amortization		574			556
Net amortization of securities		117			177
Principal balance of loans sold		5,857			10,449
Loans originated for sale		(6,555	)		(8,995	)
Accretion of net deferred loan fees		(435	)		(438	)
Amortization  of subordinated debt issuance costs		23			25
Income on bank-owned life insurance		(175	)		(173	)
Deferred income tax provision		(262	)		(487	)
ESOP expense		307			260
Share-based compensation		313			493
Net change in other assets and liabilities		(500	)		2,456
Net cash provided  by operating activities		4,068			7,679
Cash flows from investing activities:
Activity in securities available for sale:
Maturities, prepayments and calls		8,289			3,393
Purchases		(10,914	)		(4,013	)
Redemption (purchase) of Federal Home Loan Bank stock		471			(315	)
Net loan originations		(33,703	)		(72,396	)
Additions to premises and equipment		(728	)		(175	)
Proceeds from sale of premises and equipment		63			—
Net cash used by investing activities		(36,522	)		(73,506	)
Cash flows from financing activities:
Net increase in deposits		53,761			58,739
Proceeds from issuance of long-term debt		36,000			39,000
Repayments of long-term debt		(50,817	)		(34,759	)
Increase (decrease)  in short-term borrowings		(10,500	)		5,750
Stock options exercised		154			40
Cash dividends paid on common stock		(403	)		(349	)
Net cash provided by financing activities		28,195			68,421
Net change in cash and cash equivalents		(4,259	)		2,594
Cash and cash equivalents at beginning period		28,462			28,425
Cash and cash equivalents at end of period	$	24,203		$	31,019
Supplementary information:
Interest paid	$	6,083		$	3,986
Income taxes paid		2,086			2,134

See accompanying notes to consolidated financial statements.

4

WELLESLEY BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying unaudited interim consolidated financial statements include the accounts of Wellesley Bancorp, Inc. (the “Company”) and its wholly-owned subsidiary, Wellesley Bank (the “Bank”), the principal operating entity, and its wholly-owned subsidiaries: Wellesley Securities Corporation, which engages in the business of buying, selling and dealing in securities exclusively on its own behalf; Wellesley Investment Partners, LLC, formed to provide investment management services for individuals, not-for-profit entities and businesses; and Central Linden, LLC, to hold, manage and sell foreclosed real estate. All significant intercompany balances and transactions have been eliminated in consolidation. Assets under management at Wellesley Investment Partners, LLC are not included in these consolidated financial statements because they are not assets of the Company. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or for any other period.

NOTE 2 – LOAN POLICIES

The loan portfolio consists of real estate, commercial and other loans to the Company’s customers in our primary market areas in eastern Massachusetts. The ability of the Company’s debtors to honor their contracts is dependent upon the economy in general and the state of real estate and construction sectors within our markets.

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred loan origination fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Interest is generally not accrued on loans which are identified as impaired or loans which are ninety days or more past due. Past due status is based on the contractual terms of the loan. Interest income previously accrued on such loans is reversed against current period interest income. Interest income on non-accrual loans is recognized only to the extent of interest payments received and is first applied to the outstanding principal balance when collectibility of principal is in doubt. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured through sustained payment performance for at least six months.

Allowance for loan losses

The allowance for loan losses is established through a provision for loan losses charged to earnings as losses are estimated to occur. Loan losses are charged against the allowance when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components.

5

General component

The general component is based on the following loan segments: residential real estate, commercial real estate, construction, commercial, home equity lines of credit and other consumer. Management considers a rolling average of historical losses for each segment based on a time frame appropriate to capture relevant loss data for each loan segment, generally three and 10 years. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume, concentrations and terms of loans; level of collateral protection; effects of changes in risk selection and underwriting standards; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no significant changes to the Company’s policies or methodology pertaining to the general component of the allowance during 2018 or 2017.

The qualitative factor adjustments are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate – The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent and does not originate subprime loans. Most loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate – Loans in this segment are primarily income-producing properties in the Company’s primary market areas in eastern Massachusetts. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which, in turn, will have an effect on the credit quality in this segment. Management typically obtains rent rolls annually and continually monitors the cash flows of these loans.

Construction – Loans in this segment include speculative construction loans primarily on residential properties for which payment is derived from the sale of the property. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.    Residential construction loans in this segment also include loans to build one-to-four family owner-occupied properties which are subject to the same credit quality factors as residential real estate.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Home equity lines of credit – Loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Other consumer – Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Allocated component

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the loan or, if the loan is collateral dependent, by the fair value of the collateral, less estimated costs to sell. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan are lower than the carrying value of that loan. Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify performing individual residential and consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

6

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due, according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring ("TDR"). All TDRs are initially classified as impaired.

Unallocated component

An unallocated component is maintained to cover additional uncertainties in management’s estimation of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

NOTE 3 – COMPREHENSIVE INCOME

Accounting principles generally require that recognized revenue, expenses, and gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the stockholders’ equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income/loss.

The components of accumulated other comprehensive income (loss) and related tax effects are as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Unrealized holding  gains (losses) on securities available for sale	$	(1,299	)	$	44
Tax effect		337			(5	)
Net-of tax amount	$	(962	)	$	39

NOTE 4 – RECENT ACCOUNTING AND REGULATORY PRONOUNCEMENTS

Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this update supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company's primary source of revenue is interest income on financial assets, which is explicitly excluded from the scope of the new guidance. In addition, management determined that the timing of the Company’s recognition of wealth management fees did not change materially. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The key provision included in the ASU is that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) will be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost.  This ASU also requires companies to use an “exit price” fair value when measuring the fair values of financial instruments. The adoption of this update did not have a significant impact on the consolidated financial statements, as the Company does not currently invest in equity securities.

7

Effective January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU provide cash flow statement classification guidance for certain areas where diversification existed in practice. The adoption of this update did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this update require that in the statement of cash flows, amounts generally described as restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2017-09, Compensation-Stock Compensation (Topic 718) to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change in terms or conditions of a share-based payment award. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The purpose of this ASU is to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Reform Act of 2017. Upon adoption of this update, the Company recorded a reclassification of $7 thousand to increase accumulated other comprehensive income and decrease retained earnings.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements by adding, changing, or removing certain disclosures about recurring or non-recurring fair value measurements. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this update will not have a significant impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to record a right-to-use asset and liability representing the obligation to make lease payments for long-term leases. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position. Management continues to evaluate the extent of potential impact the new guidance will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Credit losses on available-for-sale debt securities should be measured in a manner similar to current GAAP; however, recognized credit losses will be presented as an allowance rather than as a write-down. This ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods. Management is evaluating the provisions of the update, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial statements. Management is currently in the process of developing an internal solution.

8

NOTE 5 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,953	$	34	$	(64	)	$	3,923
Government-sponsored enterprises		11,787		15		(346	)		11,456
SBA and other asset-backed securities		12,067		32		(299	)		11,800
State and municipal bonds		12,937		58		(205	)		12,790
Government-sponsored enterprise obligations		8,000		—		(306	)		7,694
Corporate bonds		16,155		18		(235	)		15,938
U.S. Treasury bills		4,051		—		(1	)		4,050
	$	68,950	$	157	$	(1,456	)	$	67,651

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,358	$	46	$	(53	)	$	3,351
Government-sponsored enterprises		11,690		43		(84	)		11,649
SBA and other asset-backed securities		11,961		89		(87	)		11,963
State and municipal bonds		13,026		276		(15	)		13,287
Government-sponsored enterprise obligations		8,000		—		(166	)		7,834
Corporate bonds		17,166		52		(57	)		17,161
U.S. Treasury bills		1,241		—		—			1,241
	$	66,442	$	506	$	(462	)	$	66,486

There were no sales of available-for-sale securities for the three and nine months ended September 30, 2018 and 2017.

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2018 are as follows:

	Amortized Cost		Fair Value
	(In thousands)
Within 1 year	$	5,052	$	5,050
After 1 year to 5 years		22,418		21,899
After 5 years to 10 years		5,678		5,652
After 10 years		7,995		7,871
		41,143		40,472
Mortgage- and asset-backed securities		27,807		27,179
	$	68,950	$	67,651

Expected maturities may differ from contractual maturities because the issuer, in certain instances, has the right to call or prepay obligations with or without call or prepayment penalties.

9

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than Twelve Months					Over Twelve Months
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	—		$	—	$	(64	)	$	1,765
Government-sponsored enterprises		(146	)		6,077		(200	)		3,718
SBA and other asset-backed securities		(156	)		7,267		(143	)		2,136
State and municipal bonds		(178	)		8,280		(27	)		849
Government-sponsored enterprise obligations		—			—		(306	)		7,693
Corporate bonds		(141	)		10,998		(94	)		1,944
U.S. Treasury bills		(1	)		4,050		—			—
	$	(622	)	$	36,672	$	(834	)	$	18,105
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	(3	)	$	266	$	(50	)	$	1,611
Government-sponsored enterprises		(13	)		3,578		(71	)		3,110
SBA and other asset-backed securities		(8	)		2,267		(79	)		2,434
State and municipal bonds		(3	)		571		(12	)		871
Government-sponsored enterprise obligations		(27	)		1,973		(139	)		5,860
Corporate bonds		(21	)		7,399		(36	)		1,985
	$	(75	)	$	16,054	$	(387	)	$	15,871

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluations. At September 30, 2018, various debt securities have unrealized losses with aggregate depreciation of 2.6% from their aggregate amortized cost basis. These unrealized losses relate principally to the effect of interest rate changes on the fair value of debt securities and not an increase in credit risk of the issuers. As the Company does not intend to sell the securities and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost, which may be maturity, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.

10

NOTE 6 – LOANS AND ALLOWANCE FOR LOAN LOSSES

A summary of the ending balances of loans is as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Real estate loans:
Residential – fixed	$	54,006		$	31,433
Residential – variable		317,630			297,593
Commercial		149,823			138,784
Construction		109,478			120,004
		630,937			587,814
Commercial loans:
Secured		51,410			62,333
Unsecured		5,413			5,638
		56,823			67,971
Consumer loans:
Home equity lines of credit		38,631			36,378
Other		183			214
		38,814			36,592
Total loans		726,574			692,377
Less:
Allowance for loan losses		(6,543	)		(6,153	)
Net deferred origination costs		19			78
Loans, net	$	720,050		$	686,302

11

The following table summarizes the changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2018 and 2017:

	Residential   Real Estate		Commercial Real Estate		Construction			Commercial			Home   Equity			Other Consumer			Unallocated			Total
	(In thousands)
Three Months Ended September 30, 2018
Allowance at June 30, 2018	$	1,999		1,615	$	1,459		$	962		$	257		$	4		$	117		$	6,413
Provision (credit) for loan losses		108		4		5			(10	)		(6	)		(1	)		30			130
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Three Months Ended September 30, 2017
Allowance at June 30, 2017	$	1,563	$	1,171	$	1,760		$	714		$	215		$	2		$	118		$	5,543
Provision (credit) for loan losses		73		59		86			115			1			—			(84	)		250
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793
Nine Months Ended September 30, 2018
Allowance at December 31, 2017	$	1,722	$	1,520	$	1,661		$	917		$	237		$	2		$	94		$	6,153
Provision (credit) for loan losses		385		99		(197	)		35			14			1			53			390
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Nine Months Ended September 30, 2017
Allowance at December 31, 2016	$	1,422	$	1,145	$	1,827		$	703		$	211		$	3		$	121		$	5,432
Provision (credit) for loan losses		214		85		19			126			5			10			(87	)		372
Loans charged off		—		—		—			—			—			(11	)		—			(11	)
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793

12

Further information pertaining to the allowance for loan losses is as follows:

	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Other Consumer		Unallocated		Total
	(In thousands)
September 30, 2018
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		2,107		1,619		1,464		952		251		3		147		6,543
Total allowance	$	2,107	$	1,619	$	1,464	$	952	$	251	$	3	$	147	$	6,543
Impaired loan balances	$	815	$	2,893	$	—	$	—	$	—	$	—	$	—	$	3,708
Non-impaired loan balances		370,821		146,930		109,478		56,823		38,631		183		—		722,866
Total loans	$	371,636	$	149,823	$	109,478	$	56,823	$	38,631	$	183	$	—	$	726,574
December 31, 2017
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		1,722		1,520		1,661		917		237		2		94		6,153
Total allowance	$	1,722	$	1,520	$	1,661	$	917	$	237	$	2	$	94	$	6,153
Impaired loan balances	$	172		576	$	—	$	—	$	—	$	—	$	—	$	748
Non-impaired loan balances		328,854		138,208		120,004		67,971		36,378		214		—		691,629
Total loans	$	329,026	$	138,784	$	120,004	$	67,971	$	36,378	$	214	$	—	$	692,377

The following is a summary of past due and non-accrual loans at September 30, 2018 and December 31, 2017:

	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Past Due 90 Days or More and Still Accruing		Non-accrual Loans
	(In thousands)
September 30, 2018
Residential real estate	$	—	$	—	$	62	$	62	$	—	$	648
Commercial real estate		557		—		—		557		—		557
Total	$	557	$	—	$	62	$	619	$	—	$	1,205
December 31, 2017
Residential real estate	$	598	$	65	$	—	$	663	$	—	$	—
Commercial real estate		—		—		576		576		—		576
Total	$	598	$	65	$	576	$	1,239	$	—	$	576

13

The following is a summary of impaired loans:

	September 30, 2018				December 31, 2017
	Recorded Investment		Unpaid Principal  Balance		Recorded Investment		Unpaid Principal  Balance
	(In thousands)
Impaired loans without a valuation allowance:
Residential real estate	$	815	$	832	$	172	$	189
Commercial real estate		2,893		3,020		576		710
Total impaired loans	$	3,708	$	3,852	$	748	$	899

Further information pertaining to impaired loans follows:

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	821	$	13	$	2	$	421	$	25	$	5
Commercial real estate		2,949		32		6		1,627		61		34
Total	$	3,770	$	45	$	8	$	2,048	$	86	$	39

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	175	$	2	$	—	$	176	$	5	$	—
Commercial real estate		582		5		5		583		48		48
Total	$	757	$	7	$	5	$	759	$	53	$	48

No additional funds are committed to be advanced in connection with impaired loans.

There were no new troubled debt restructurings recorded during the three and nine months ended September 30, 2018.

14

There were no troubled debt restructurings recorded during the three months ended September 30, 2017.

The following is a summary of troubled debt restructurings recorded for the nine months ended September 30, 2017.

	Number of Contracts		Pre- Modification Outstanding  Recorded Investment		Post- Modification Outstanding  Recorded Investment
	(In thousands)
Commercial real estate	$	1	$	572	$	582

During the nine months ended September 30, 2017, the Company recorded a TDR for one commercial borrower which capitalized past-due interest over the remaining term of the loan in accordance with their bankruptcy filing.

There were no TDRs that defaulted, generally considered 90 days past due or longer, during the three and nine months ended September 30, 2018 and 2017, and for which default was within one year of the restructure date. TDRs did not have a material impact on the allowance for loan losses for the three and nine months ended September 30, 2018 and 2017.

Credit Quality Information

The Company utilizes an eleven-grade internal loan rating system for commercial real estate, construction and commercial loans.

Loans rated 1-4: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 5: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 6: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 7: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 8: Loans in this category are considered “loss” or uncollectible and of such little value that their continuance as loans is not warranted.

Loans rated 9: Loans in this category only include commercial loans under $25 thousand with no other outstandings or relationships with the Company that are not rated for credit quality on an annual basis.

Loans rated 10: Loans in this category include loans which otherwise require rating, but which have not been rated, or loans for which the Company’s loan policy does not require rating.

Loans rated 11: Loans in this category include credit commitments/relationships that cannot be rated due to a lack of financial information or inaccurate financial information. If, within 60 days of the assignment of an 11 rating, information is still not available to allow a standard rating, the credit will be rated 6.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. During each calendar year, the Company engages an independent third party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. On a monthly basis, the Company reviews the residential real estate and consumer loan portfolio for credit quality primarily through the use of delinquency reports.

15

The following table presents the Company’s loans by risk rating:

	September 30, 2018								December 31, 2017
	Commercial Real Estate		Construction		Commercial		Total		Commercial Real Estate		Construction		Commercial		Total
	(In thousands)
Loans rated 1-4	$	146,006	$	109,478	$	55,951	$	311,435	$	134,201	$	120,004	$	67,087	$	321,292
Loans rated 5		925		—		872		1,797		1,476		—		301		1,777
Loans rated 6		2,335		—		—		2.335		2,531		—		583		3,114
Loans rated 7		557		—		—		557		576		—		—		576
Total	$	149,823	$	109,478	$	56,823	$	316,124	$	138,784	$	120,004	$	67,971	$	326,759

NOTE 7 – FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair value hierarchy

The Company groups its assets measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted market prices in active exchange markets for identical assets and liabilities. Valuations are obtained from readily available pricing sources.

Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. Valuations are obtained from readily available pricing sources.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Level 3 assets include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as those for which the determination of fair value requires significant management judgment or estimation.

Transfers between levels are recognized at the end of a reporting period, if applicable.

Determination of fair value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances there are no quoted market prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the assets and liabilities.

16

Assets measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017 are summarized below.

	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
September 30, 2018
Securities available for sale	$	—	$	67,651	$	—	$	67,651
Forward loan sale commitments		—		—		5		5
Derivative loan commitments		—		—		5		5
Total assets	$	—	$	67,661	$	—	$	67,661
December 31, 2017
Securities available for sale	$	—	$	66,486	$	—	$	66,486

Fair value measurements for securities available for sale are obtained from a third-party pricing service and are not adjusted by management. All securities are measured at fair value in Level 2 based on valuation models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

The fair value of forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans, including servicing values as applicable. The fair value of derivative loan commitments also considers the probability of such commitments being exercised.

There were no liabilities measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017.

Assets measured at fair value on a non-recurring basis

The Company may also be required, from time to time, to measure certain other financial assets at fair value on a non-recurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market (“LOCOM”) accounting or write-downs of individual assets. Fair values for loans held for sale are based on commitments in effect from investors or prevailing market rates. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets.

	September 30, 2018						December 31, 2017
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In thousands)
Loans held for sale	$	—	$	—	$	698	$	—	$	—	$	—

There are no liabilities measured at fair value on a non-recurring basis at September 30, 2018 and December 31, 2017.

17

Summary of fair values of financial instruments

The estimated fair values and related carrying amounts of the Company’s financial instruments are outlined in the table below. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2018
Financial assets:
Cash and cash equivalents	$	24,203	$	24,203	$	—	$	—	$	24,203
Certificates of deposit		100		100		—		—		100
Securities available for sale		67,651		—		67,651		—		67,651
FHLB stock		5,466		—		—		5,466		5,466
Loans held for sale		698		—		—		698		698
Loans, net		720,050		—		—		708,181		708,181
Accrued interest receivable		2,308		—		—		2,308		2,308
Forward loan sale commitments		5		—		—		5		5
Derivative loan commitments		5		—		—		5		5
Financial liabilities:
Deposits	$	670,503	$	—	$	—		668,912		668,912
Short-term borrowings		27,500		—		27,500		—		27,500
Long-term debt		62,357		—		61,619		—		61,619
Subordinated debt		9,825		—		—		9,668		9,668
Accrued interest payable		441		—		—		441		441
December 31, 2017
Financial assets:
Cash and cash equivalents	$	28,462	$	28,462	$	—	$	—	$	28,462
Certificates of deposit		100		100		—		—		100
Securities available for sale		66,486		—		66,486		—		66,486
FHLB stock		5,937		—		—		5,937		5,937
Loans, net		686,302		—		—		694,614		694,614
Accrued interest receivable		2,140		—		—		2,140		2,140
Financial liabilities:
Deposits	$	616,742		—		—		615,653		615,653
Short-term borrowings		38,000		—		38,000		—		38,000
Long-term debt		77,174		—		76,906		—		76,906
Subordinated debt		9,802		—		—		9,598		9,598
Accrued interest payable		286		—		—		286		286

18

NOTE 8 – EMPLOYEE STOCK OWNERSHIP PLAN

The Bank maintains an Employee Stock Ownership Plan (the “ESOP”) to provide eligible employees the opportunity to own Company stock. This plan is a tax-qualified retirement plan for the benefit of all Company employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits.

The Company granted a loan to the ESOP to purchase shares of the Company’s common stock on the closing date of the Company’s mutual to stock conversion in 2012. As of September 30, 2018, the ESOP held 177,583 shares or 7.0% of the common stock outstanding on that date. The loan is payable annually over 15 years at the rate of 3.25% per annum. The loan can be prepaid without penalty. Loan payments are expected to be funded by cash contributions from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. Cash dividends paid on allocated shares are reinvested into shares to participants and cash dividends paid on unallocated shares will be used to repay the outstanding debt of the ESOP. Shares used as collateral to secure the loan are released and available for allocation to eligible employees as the principal and interest on the loan is paid.

Shares held by the ESOP at September 30, 2018 include the following:

Allocated	62,039
Committed to be allocated	9,629
Unallocated	105,915
	177,583

The fair value of unallocated shares was $3.6 million at September 30, 2018.

Total compensation expense recognized in connection with the ESOP for the three months and nine months ended September 30, 2018 was $109 thousand and $307 thousand, respectively.

Total compensation expense recognized in connection with the ESOP for the three months and nine months ended September 30, 2017 was $86 thousand and $260 thousand, respectively.

NOTE 9 – EQUITY INCENTIVE PLANS

Under the Company’s 2016 Equity Incentive Plan the Company may grant restricted stock awards to its employees and directors for up to 75,000 shares of its common stock. A restricted stock award (the “award”) is a grant of shares of Company common stock for no consideration, subject to a vesting schedule or the satisfaction of market conditions or performance criteria. Awarded shares are held in reserve for each grantee by the Company’s transfer agent, and will be issued from previously authorized but unissued shares upon vesting. The fair value of the stock awards, based on the market price at the grant date, will be recognized over the five-year vesting period. At September 30, 2018, 34,000 shares remain available to award under the Plan.

Under the Company’s 2012 Equity Incentive Plan the Company granted stock options to its employees and directors in the form of incentive stock options and non-qualified stock options totaling 231,894 shares of its common stock. The exercise price of each stock option was not less than the fair market value of the Company’s common stock on the date of grant, and the maximum term of each option is 10 years from the date of each award. The vesting period was five years from the date of grant, with vesting at 20% per year.

Under the 2012 Equity Incentive Plan, the Company also granted stock awards to management, employees and directors. Awarded shares are held in reserve for each grantee by the Company’s transfer agent, and were issued from previously authorized but unissued shares upon vesting. The fair value of the stock awards, based on the market price at the grant date, is recognized over the five-year vesting period.

The Company’s 2012 Equity Incentive Plan was terminated upon approval of the 2016 Equity Incentive Plan.

19

Stock Options

A summary of option activity under the 2012 Equity Incentive Plan for the nine months ended September 30, 2018 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding at beginning of period		212		$	16.05
Exercised		(19	)		15.35
Forfeited		—			—
Outstanding at end of period		193		$	16.11		4.48	$	3,497
Options exercisable at end of period		175		$	15.29		4.33	$	3,144

For the three months ended September 30, 2018 and 2017, compensation expense applicable to the stock options was $9 thousand and $54 thousand, respectively. There was no recognized tax benefit related to this expense for the period ended September 30, 2018. The recognized tax benefit related to this expense was $10 thousand for the period ended September 30, 2017.

For the nine months ended September 30, 2018 and 2017, compensation expense applicable to the stock options was $28 thousand and $159 thousand, respectively. There was no recognized tax benefit related to this expense for the period ended September 30, 2018. The recognized tax benefit related to this expense was $28 thousand for the period ended September 30, 2017.

Unrecognized compensation expense for non-vested stock options totaled $41 thousand as of September 30, 2018, which will be recognized over the remaining weighted average vesting period of 1.3 years.

Stock Awards

There was no activity in non-vested restricted stock awards under the 2016 or the 2012 Equity Incentive Plan for the three and nine months ended September 30, 2018.

For the three months ended September 30, 2018 and 2017, compensation expense applicable to the stock awards was $97 thousand and $121 thousand, respectively, and the recognized tax benefit related to this expense was $27 thousand and $45 thousand, respectively.

For the nine months ended September 30, 2018 and 2017, compensation expense applicable to the stock awards was $285 thousand and $334 thousand, respectively, and the recognized tax benefit related to this expense was $80 thousand and $134 thousand, respectively.

Unrecognized compensation expense for non-vested restricted stock totaled $556 thousand as of September 30, 2018, which will be recognized over the remaining weighted average vesting period of 2.99 years.

20

NOTE 10 – EARNINGS PER COMMON SHARE

Basic earnings per share represents net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. Under the Company’s 2012 and 2016 Equity Incentive Plans, stock awards contain non-forfeitable dividend rights. Accordingly, these shares are considered outstanding for computation of basic earnings per share. Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method.

	Three Months Ended  September 30,						Nine  Months Ended  September 30,
	2018			2017			2018			2017
	(In thousands, except per share data)
Net income applicable to common stock	$	1,557		$	1,166		$	4,414		$	2,984
Average number of common shares issued		2,516			2,490			2,509			2,488
Less: Average unallocated ESOP shares		(108	)		(120	)		(111	)		(124	)
Average number of common shares outstanding used to calculate basic earnings per common share		2,408			2,370			2,398			2,364
Effect of  dilutive stock options		103			84			101			85
Average number of common shares outstanding used  to calculate diluted earnings per share		2,511			2,454			2,499			2,449
Earnings per common share:
Basic	$	0.65		$	0.49		$	1.84		$	1.26
Diluted	$	0.62		$	0.48		$	1.77		$	1.22

There were no anti-dilutive options that would have been excluded from the computations of diluted earnings per share for the three and nine months ended September 30, 2018 and 2017.

21

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

Safe Harbor Statement for Forward-Looking Statements

This report may contain forward-looking statements within the meaning of the federal securities laws. These statements are not historical facts; rather they are statements based on the Company’s current expectations regarding its business strategies and their intended results and its future performance. Forward-looking statements are preceded by terms such as “expects,” “believes,” “anticipates,” “intends” and similar expressions.

Forward-looking statements are not guarantees of future performance. Numerous risks and uncertainties could cause or contribute to the Company’s actual results, performance and achievements being materially different from those expressed or implied by the forward-looking statements. Factors that may cause or contribute to these differences include, without limitation, general economic conditions, including changes in market interest rates and changes in monetary and fiscal policies of the federal government; legislative and regulatory changes; the changing quality and composition of the loan and investment securities portfolio; loan demand; deposit flows; competition; and, changes in accounting principles and guidelines. Additional factors that may affect our results are discussed in the Company’s 2017 Annual Report on Form 10-K under the section titled “Item 1A.–Risk Factors.” These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company assumes no obligation and disclaims any obligation to update any forward-looking statements.

Critical Accounting Policies

We consider critical accounting policies to be accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income.

Allowance for Loan Losses. The allowance for loan losses is the amount estimated by management as necessary to cover losses inherent in the loan portfolio at the balance sheet date. The allowance is established through the provision for loan losses, which is charged to income. Determining the amount of the allowance for loan losses necessarily involves a high degree of judgment. Among the material estimates required to establish the allowance are the following: the likelihood of loan default; the loss exposure at default; the amount and timing of future cash flows on impaired loans; the value of collateral; and, the determination of loss factors to be applied to the various qualitative elements of the portfolio. All of these estimates are susceptible to significant change. Management reviews the level of the allowance at least quarterly and establishes the provision for loan losses based upon an evaluation of the portfolio, past loss experience, current economic conditions and other factors related to the collectibility of the loan portfolio. Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance may be necessary if economic or other conditions differ substantially from the assumptions used in making the evaluation. In addition, the Federal Deposit Insurance Corporation and Massachusetts Commissioner of Banks, as an integral part of their examination processes, periodically review our allowance for loan losses and may require us to recognize adjustments to the allowance based on their judgments about information available to them at the time of their examination. A large loss could deplete the allowance and require increased provisions to replenish the allowance, which would adversely affect earnings.

Deferred Tax Assets. Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. Management reviews deferred tax assets on a quarterly basis to identify any uncertainties pertaining to realization of such assets. In determining whether a valuation allowance is required against deferred tax assets, management assesses historical and forecasted operating results, including a review of eligible carry-forward periods, tax planning opportunities and other relevant considerations. We believe the accounting estimate related to the valuation allowance is a critical estimate because the underlying assumptions can change from period to period. For example, tax law changes or variances in future projected operating performance could result in a change in the valuation allowance. Should actual factors and conditions differ materially from those used by management, the actual realization of net deferred tax assets could differ materially from the amounts recorded in the financial statements. If we were not able to realize all or part of our deferred tax assets in the future, an adjustment to the related valuation allowance would be charged to income tax expense in the period such determination was made.

22

Comparison of Financial Condition at September 30, 2018 and December 31, 2017

General. Total assets increased $31.5 million, or 3.9%, from $805.4 million at December 31, 2017 to $836.9 million at September 30, 2018. Total asset growth was primarily related to an increase in the loan portfolio of $34.1 million or 4.9%, an increase of $1.2 million in securities available for sale, partially offset by a decrease in cash and cash equivalents of $4.3 million, or 15.0%.

Loans. The loan portfolio increased $34.1 million. Residential real estate loans increased $42.6 million, or 13.0%, to $371.6 million, compared to $329.0 million at December 31, 2017. Growth in residential real estate was in adjustable-rate and fixed-rate mortgage loans, reflecting customer preferences. Commercial real estate loans increased $11.0 million, or 7.9%, as we have had success in expanding our business development efforts. Construction loans decreased $10.5 million, or 8.8%, primarily due to the completion of several projects during the period. Commercial loans decreased $11.1 million, or 16.4%, due largely to the payoff of a large, credit-only relationship.

At September 30, 2018, past due loans totaled $619 thousand as compared to $1.2 million at December 31, 2017.

Substantially all delinquent loans are secured by real estate collateral with values exceeding outstanding loan principal. Two non-accrual residential mortgage loans totaling $65 thousand and $593 thousand, respectively were newly classified as impaired loans during the nine month period ended September 30, 2018 as borrower payments slowed resulting in continued 90 days past due status. There were no charge-offs on delinquent loans during the nine months ended September 30, 2018. Charge-offs on delinquent loans amounted to $11 thousand for the nine months ended September 30, 2017.

Securities. Total securities increased from $66.5 million at December 31, 2017 to $67.7 million at September 30, 2018, as excess liquidity was primarily invested in U.S. Treasury bills.

Deposits. Total deposits increased $53.4 million, or 8.7%, from $616.7 million at December 31, 2017 to $670.5 million at September 30, 2018. Demand deposits and NOW accounts increased $28.2 million, or 19.9%, to $170.0 million as growth was realized in both retail and commercial accounts. Money market accounts increased $23.7 million, or 16.3%. Certificates of deposit increased $19.2 million, or 8.2%, to $252.5 million. Deposit growth was driven through our continued emphasis on primary relationships as well as targeted offers on interest-bearing accounts. Savings account balances decreased $16.9 million to $81.6 million at September 30, 2018.

Borrowings. We use borrowings, primarily from the FHLB, to supplement our supply of funds for loans and securities, and to support short-term liquidity needs of the institution. Long-term debt, consisting entirely of FHLB advances, decreased $14.8 million, or 19.2%, for the nine months ended September 30, 2018. Short-term borrowings consist entirely of advances from the FHLB with initial maturities less than one year. Balances of short-term borrowings decreased $10.5 million, or 27.6%, since December 31, 2017. Subordinated debt was $9.8 million at September 30, 2018 and December 31, 2017.

Stockholders’ Equity. Stockholders’ equity increased $3.8 million, or 6.4%, from $59.2 million at December 31, 2017 to $63.0 million at September 30, 2018. The increase was primarily a result of net income for the nine month period of $4.4 million, stock compensation expense for the Company’s equity incentive plans and ESOP of $620 thousand, partially offset by an after-tax decrease in the fair value of available for sale securities of $1.0 million and dividends paid of $403 thousand.

Results of Operations for the Three Months Ended September 30, 2018 and 2017

Overview. Net income for the three months ended September 30, 2018 was $1.6 million, compared to net income of $1.2 million for the three months ended September 30, 2017, an increase of 33.5%. The $391 thousand increase was primarily due to an increase in net interest income and non-interest income and a decrease in the provision for loan loss, offset by an increase in non-interest expense. Net interest income increased $456 thousand to $6.3 million, non-interest income increased $57 thousand to $561 thousand and the provision for loan loss decreased $120 thousand to $130 thousand in the 2018 quarter. Non-interest expense increased $418 thousand and totaled $4.6 million for the three months ended September 30, 2018. Income tax expense decreased $176 thousand as compared to the 2017 period.

23

Net Interest Income. Net interest income for the three months ended September 30, 2018 increased $456 thousand, or 7.8%, as compared to the three months ended September 30, 2017. The increase in interest income was due to increases in the average balances of loans and an increasing yield. Interest expense increased, driven by overall deposit growth, higher rates offered on certificates of deposit and money market accounts, and increases in rates on FHLB borrowing expenses.

Interest and dividend income increased $1.3 million, or 17.9%, from $7.3 million for the three months ended September 30, 2017 to $8.6 million for the three months ended September 30, 2018. The average balance of interest-earning assets increased 11.5%, while the average rate earned on these assets increased by 23 basis points (“bps”). Interest and fees on loans increased $1.2 million, or 17.7%, due to a 12.7% increase in the average balance of loans. The average rate earned on loans increased 19 bps to 4.36%. Interest income from investments increased $97 thousand, or 19.7%, due primarily to an increase in the average yields for the three months ended September 30, 2018 as compared to the prior year period.

Interest expense increased $855 thousand, or 57.5% primarily due to an increase in average balances of interest-bearing deposits and an increase in cost of funds. Our funding costs have responded more quickly than loan income to the change in interest rates. Deposit expense increased $749 thousand, or 81.5%. The average balance of interest-bearing deposits increased $71.0 million, or 15.4%, in the three months ended September 30, 2018, compared to the same period in 2017 and the average rate paid on interest bearing deposits increased 45 bps. The cost of term certificates of deposit increased $497 thousand to $1.1 million as balances in our retail products increased. Rates paid on certificates of deposit balances increased to 1.74%, up from 1.19 bps in the same period last year. Interest expense on money market accounts increased by $213 thousand to $382 thousand in the 2018 period. The rate paid on money market accounts increased 47 bps primarily due to a higher tiered-rate structure for these accounts than in the prior year, along with the increase of the average balance of money market accounts of $26.1 million to $150.0 million, as compared to the prior year period.

Interest expense on short-term borrowings totaled $244.5 thousand in the three month period ended September 30, 2018, compared to $95 thousand in the three months ended September 30, 2017 due to increases in the rates by 86 bps as well as an increase in average balances.

Long-term debt expense decreased by $43 thousand in the three month period ended September 30, 2018.

The average balance of long-term FHLB advances decreased from $95.1 million to $66.7 million, while rates paid on long-term FHLB advances increased from 1.32% to 1.62%.

24

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. Loan fees are included in interest income on loans and are insignificant. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

	For the Three Months Ended September 30,
	2018								2017
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate (1)			Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate (1)
Interest-earning assets:
Short-term investments	$	27,703		$	143		2.04	%	$	24,706		$	78		1.24	%
Debt securities:
Taxable		53,789			364		2.69			53,318			337		2.51
Tax-exempt		12,905			82		2.52			12,616			77		2.41
Total loans and loans held for sale		722,979			7,941		4.36			641,681			6,747		4.17
FHLB stock		6,042			86		5.64			6,395			66		4.14
Total interest-earning assets		823,418			8,616		4.15			738,716			7,305		3.92
Allowance for loan losses		(6,479	)							(5,608	)
Total interest-earning assets less allowance for loan losses		816,939								733,108
Non-interest-earning assets		23,564								22,814
Total assets	$	840,503							$	755,922
Interest-bearing liabilities:
Regular savings accounts	$	88,950			136		0.61		$	95,012			106		0.44
NOW checking accounts		37,182			30		0.32			33,494			21		0.25
Money market accounts		149,898			382		1.01			123,830			169		0.54
Certificates of deposit		255,587			1,120		1.74			208,295			623		1.19
Total interest-bearing deposits		531,617			1,668		1.24			460,631			919		0.79
Short-term borrowings		43,060			244		2.25			27,033			95		1.39
Long-term debt		66,743			273		1.62			95,123			316		1.32
Subordinated debt		9,820			158		6.37			9,789			158		6.41
Total interest-bearing liabilities		651,240			2,343		1.43			592,576			1,488		1.00
Non-interest-bearing demand deposits		123,134								100,823
Other non-interest-bearing liabilities		3,292								3,511
Total liabilities		777,666								696,910
Stockholders’ equity		62,837								59,012
Total liabilities and stockholders’ equity	$	840,503							$	755,922
Net interest income				$	6,273							$	5,817
Net interest rate spread (2)							2.72	%							2.93	%
Net interest-earning assets (3)	$	172,177							$	146,140
Net interest margin (4)							3.02	%							3.12	%
Average total interest-earning assets to average total interest-bearing liabilities		126.44	%							124.66	%

(1) Ratios for the three month periods have been annualized.

(2) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Represents total average interest-earning assets less total average interest-bearing liabilities.

(4) Represents net interest income as a percent of average interest-earning assets.

25

Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total increase (decrease) column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.

	Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017
	Increase (Decrease) Due to						Total Increase
(In thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Short-term investments	$	10		$	55		$	65
Debt securities:
Taxable		3			24			27
Tax-exempt		2			3			5
Total loans and loans held for sale		883			311			1,194
FHLB stock		(3	)		23			20
Total interest-earning assets		895			416			1,311
Interest-bearing liabilities:
Regular savings		(6	)		36			30
NOW checking		3			6			9
Money market		42			171			213
Certificates of deposit		163			334			497
Total interest-bearing deposits		202			547			749
Short-term borrowings		73			76			149
Long-term debt		(191	)		148			(43	)
Total interest-bearing liabilities		84			771			855
Increase (decrease) in net interest income	$	811		$	(355	)	$	456

26

Provision for Loan Losses. The provision for loan losses was $130 thousand for the three months ended September 30, 2018, compared to $250 thousand for the three months ended September 30, 2017. In the 2018 period, the provision reflects the shift in the portfolio’s loan mix and current allocations to loan balances in the portfolio, decreased net loan originations, management’s estimate of loan losses based upon historical loan portfolio performance as well as environmental considerations such as the strength of the regional economy and organizational knowledge and expertise.

Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	Three Months Ended
	September 30,
(Dollars in thousands)	2018			2017
Allowance at beginning of period	$	6,413		$	5,543
Provision for loan losses		130			250
Charge-offs		—			—
Recoveries		—			—
Net charge-offs		—			—
Allowance at end of period	$	6,543		$	5,793
Allowance for loan losses to nonperforming loans at end of period		542.89	%		998.45	%
Allowance for loan losses to total loans at end of period		0.90	%		0.89	%
Net charge-offs to average loans outstanding during the period		0.00	%		0.00	%

Two loans totaling $2.4 million, related to one commercial loan relationship were newly classified as impaired loans as of September 30, 2018 as a result of deteriorating cash flow position. The Company does not expect to incur any losses on this relationship.

Non-interest Income. Non-interest income totaled $561 thousand, an increase of $57 thousand or 11.3%. Wealth management fees increased $93 thousand, or 29.6%, as compared to the prior year as total assets under management increased to $435.7 million as of September 30, 2018, up from $346.8 million at September 30, 2017. Other customer related fees included in other income were lower during the three month period ended 2018 offsetting the above referenced increases.

Non-interest Expense. Non-interest expense totaled $4.6 million for the three months ended September 30, 2018, compared to $4.2 million for the three months ended September 30, 2017, an increase of $418 thousand. Salaries and employee benefits increased $252 thousand due to annual merit and benefit cost increases along with increases to staff. Occupancy and equipment costs increased $98 thousand as a result of the consolidation and relocation of business operations to new office space and annual rent adjustments. Data processing costs increased $35 thousand and advertising expense, (included in other general and administrative expense), increased $21 thousand attributable to expanding business volumes and operations.

Income Taxes. An income tax provision of $565 thousand was recorded during the quarter ended September 30, 2018, compared to a provision of $741 thousand in the comparable 2017 quarter. Due to the reduced corporate federal income tax rate enacted at the end of 2017, the effective tax rate for the 2018 three month period was 26.6%, compared to 38.9% for the 2017 three month period.

Results of Operations for the Nine Months Ended September 30, 2018 and 2017

Overview. Net income for the nine months ended September 30, 2018 was $4.4 million, compared to net income of $3.0 million for the nine months ended September 30, 2017, an increase of 47.9%. The $1.4 million increase was primarily due to increased net interest income of $1.8 million and increased non-interest income of $311 thousand, partially offset by increased non-interest expense of $951 thousand.

27

Net Interest Income. Net interest income for the nine months ended September 30, 2018 increased $1.8 million, or 10.9%, as compared to the nine months ended September 30, 2017. The increase in net interest income was primarily due to an increase in interest income of $4.0 million, or 19.2%, partially offset by interest expenses that increased $2.1 million, or 52.5%, during the period.

Interest and dividend income increased $4.0 million, or 19.2%, from $20.7 million for the nine months ended September 30, 2017 to $24.6 million for the nine months ended September 30, 2018. The average balance of interest-earning assets increased 14.7%, while the average rate earned on these assets increased by 15 bps. Interest and fees on loans increased $3.6 million, or 19.0%, due to a 15.7% increase in the average balance of loans and an increase of 12 bps in the average rate earned on loans. Interest income from investments increased $63 thousand, or 5.1%, due to an increase in the average balances for the nine months ended September 30, 2018 as compared to the prior year period, as well as an increase in the average rate earned on these securities, due, in part, to recent Federal Reserve interest rate increases.

The increase in interest expense of $2.1 million, or 52.5%, was primarily due to an increase in average balances of interest-bearing deposits and an increase in the cost of funds. The average balance of interest-bearing deposits increased $80.0 million, or 18.1%, in the nine months ended September 30, 2018, as compared to the same period in 2017, while the average rate paid on interest-bearing deposits increased 33 bps. Interest expense on money market accounts increased by $440 thousand from 2017 to 2018. The rate paid on money market accounts increased to 0.81% up from 0.50% in 2017, while the average balance of these accounts increased $30.6 million to $142.2 million, as compared to the prior year period. The cost of term certificates of deposit increased $1.2 million to $3.0 million as balances in our retail products, deposits generated through a national certificate of deposit clearinghouse, and brokered CDs have increased, as well as an increase of 45 bps in the rates paid to acquire these balances, as compared to the same period last year.

The average balance of short-term FHLB advances increased from $20.3 million to $29.8 million, while rates paid on short-term FHLB advances increased from 1.15% to 1.99%. Interest expense on short-term borrowings totaled $442 thousand in the nine months ended September 30, 2018, compared to $175 thousand in the nine months ended September 30, 2017, an increase of $267 thousand.

The average balance of long-term FHLB advances decreased from $91.9 million to $81.1 million, while rates on long-term FHLB advances increased 34 bps to 1.65% for the nine months ended September 30, 2018. Interest expense on long-term borrowings totaled $1.0 million in the nine months ended September 30, 2018, compared to $901 thousand in the nine months ended September 30, 2017, an increase of $103 thousand.

28

Average Balances and Yields. The following table presents information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. Average balances have been calculated using daily balances. Loan fees are included in interest income on loans and are insignificant. Yields are not presented on a tax-equivalent basis. Any adjustments necessary to present yields on a tax-equivalent basis are insignificant.

	For the Nine Months Ended September 30,
	2018								2017
(Dollars in thousands)	Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate (1)			Average Outstanding Balance			Interest Earned/ Paid		Average Yield/ Rate (1)
Interest-earning assets:
Short-term investments	$	28,908		$	376		3.85	%	$	21,725		$	163		1.00	%
Debt securities:
Taxable		53,796			1,050		2.61			54,138			1,009		2.49
Tax-exempt		12,971			246		2.53			11,993			224		2.49
Total loans and loans held for sale		702,490			22,702		4.32			607,356			19,079		4.20
FHLB stock		5,993			244		5.43			6,189			182		3.93
Total interest-earning assets		804,158			24,618		4.09			701,401			20,657		3.94
Allowance for loan losses		(6,321	)							(5,498	)
Total interest-earning assets less allowance for loan losses		797,837								695,903
Non-interest-earning assets		23,163								22,446
Total assets	$	821,000							$	718,349
Interest-bearing liabilities:
Regular savings accounts	$	95,695			401		0.56		$	96,719			325		0.45
NOW checking accounts		37,384			84		0.30			34,159			67		0.26
Money market accounts		142,235			859		0.81			111,679			419		0.50
Certificates of deposit		247,795			2,974		1.60			200,554			1,729		1.15
Total interest-bearing deposits		523,109			4,318		1.10			443,111			2,540		0.77
Short-term borrowings		29,778			442		1.99			20,262			175		1.15
Long-term debt		81,132			1,004		1.65			91,864			901		1.31
Subordinated debt		9,812			474		6.45			9,780			474		6.49
Total interest-bearing liabilities		643,831			6,238		1.29			565,017			4,090		0.97
Non-interest-bearing demand deposits		112,474								92,532
Other non-interest-bearing liabilities		3,327								3,191
Total liabilities		759,632								660,740
Stockholders’ equity		61,368								57,609
Total liabilities and stockholders’ equity	$	821,000							$	718,349
Net interest income				$	18,380							$	16,567
Net interest rate spread (2)							2.80	%							2.97	%
Net interest-earning assets (3)	$	160,326							$	136,384
Net interest margin (4)							3.06	%							3.16	%
Average total interest-earning assets to average total interest-bearing liabilities		124.90	%							124.14	%

(1) Ratios for the nine month periods have been annualized.

(2) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.

(3) Represents total average interest-earning assets less total average interest-bearing liabilities.

(4) Represents net interest income as a percent of average interest-earning assets.

29

Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total increase (decrease) column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.

	Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017
	Increase (Decrease) Due to						Total Increase
(In thousands)	Volume			Rate			(Decrease)
Interest-earning assets:
Short-term investments	$	66		$	147		$	213
Debt securities:
Taxable		(6	)		47			41
Tax-exempt		18			4			22
Total loans and loans held for sale		3,061			562			3,623
FHLB stock		(5	)		67			62
Total interest-earning assets		3,134			827			3,961
Interest-bearing liabilities:
Regular savings		(3	)		80			77
NOW checking		7			10			17
Money market		136			303			439
Certificates of deposit		467			778			1,245
Total interest-bearing deposits		607			1,171			1,778
Short-term borrowings		105			163			267
Long-term debt		(83	)		186			103
Subordinated debt		—			—			—
Total interest-bearing liabilities		629			1,520			2,148
Increase (decrease) in net interest income	$	2,505		$	(693	)	$	1,813

Provision for Loan Losses. The provision for loan losses was $390 thousand for the nine months ended September 30, 2018, compared to $372 thousand for the nine month period ended September 30, 2017. In the 2018 period, the provision reflects management’s estimate of loan losses based upon the shift in the portfolio’s loan mix and current allocations in loan balances in the portfolio, decreased net loan originations, historical loan portfolio performance, and growth of the portfolio, loan mix, as well as environmental considerations such as the strength of the regional economy and organizational knowledge and expertise.

30

Analysis of Loan Loss Experience. The following table sets forth an analysis of the allowance for loan losses for the periods indicated.

	Nine Months Ended
	September 30,
(Dollars in thousands)	2018			2017
Allowance at beginning of period	$	6,153		$	5,432
Provision for loan losses		390			372
Charge-offs: Other consumer loans		—			(11	)
Recoveries		—			—
Net charge- offs		—			(11	)
Allowance at end of period	$	6,543		$	5,793
Allowance for loan losses to nonperforming loans at end of period		542.89	%		998.45	%
Allowance for loan losses to total loans at end of period		0.90	%		0.89	%
Net charge-offs to average loans outstanding during the period		0.00	%		0.00	%

Non-interest Income. Non-interest income totaled $1.8 million, an increase of $311 thousand, or 21.1%, as income from wealth management fees in 2018 increased $291 thousand as assets under management increased to $435.7 million as of September 30, 2018. Customer service fees increased by $21 thousand due to increasing volumes of ATM interchange and wire transfers. Mortgage banking fees were lower during the nine month period ended 2018 offsetting the above referenced increases.

Non-interest Expense. Non-interest expense increased $951 thousand to $13.7 million during the nine months ended September 30, 2018, from $12.8 million for the nine months ended September 30, 2017. Factors that contributed to the increase in non-interest expense during the 2018 period were increased salaries and employee benefits of $556 thousand, or 7.4%, primarily attributable to annual salary and employee benefits increases and additions to staff. Occupancy and equipment cost increased $114 thousand as a result of the consolidation and relocation of business operations to new office space and annual rent adjustments. FDIC insurance costs increased $39 thousand based on growth and higher assessment rates. Data processing expenses increased $83 thousand and other general administrative costs increased $134 thousand due to expanding business volumes and operations. Professional fees increased $25 thousand as a result of increased training and corporate legal expenses.

Income Taxes. An income tax provision of $1.6 million was recorded during the nine months ended September 30, 2018 compared to a provision of $1.9 million in the comparable 2017 period. The effective tax rate for the 2018 nine month period was 26.9%, compared with 38.9% for the 2017 nine month period and reflects the reduced corporate income tax rate effective in 2018.

Liquidity and Capital Resources

Liquidity Management. Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. The Bank’s primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities, and borrowings from the FHLB. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, calls of securities and prepayments on loans are greatly influenced by seasonal events, general interest rates, economic conditions and competition.

Management regularly adjusts our investments in liquid assets based upon an assessment of the following: expected loan demand; expected deposit flows; yields available on interest-earning deposits and securities; and, the objectives of our interest-rate risk and investment policies.

Our most liquid assets are cash and cash equivalents, interest-bearing deposits in other banks, and securities available for sale. The level of these assets depends on our operating, financing, lending and investing activities during any given period. At September 30, 2018, cash and cash equivalents, which include short-term investments, totaled $24.2 million. Securities classified as available-for-sale, whose aggregate fair value is $67.7 million, provide additional sources of liquidity.

31

At September 30, 2018, we had $27.5 million in short-term borrowings outstanding, represented entirely by FHLB advances, and $62.3 million in long-term debt, also consisting entirely of FHLB advances. At September 30, 2018, we had a total of $99.2 million in unused borrowing capacity from the FHLB. Short-term borrowings are generally used to fund temporary cash needs due to the timing of loan originations and deposit gathering activities. Long-term debt is generally used to provide for longer-term funding needs of the Company, including the match funding of loans originated for portfolio. At September 30, 2018, we also had the ability to borrow $5.0 million from the Co-operative Central Bank on an unsecured basis, a credit line of $5.0 million with a correspondent bank, and $7.3 million from the Federal Reserve Bank under a collateralized borrowing program, none of which was outstanding at that date.

At September 30, 2018, we had $143.8 million in loan commitments outstanding, which included $58.4 million in unadvanced funds on construction loans, $39.8 million in unadvanced home equity lines of credit, $27.8 million in unadvanced commercial lines of credit, and $16.2 million in new loan originations.

Term certificates of deposit due within one year of September 30, 2018 amounted to $197.6 million, or 78.3%, of total term certificates, an increase of $22.4 million from $175.2 million at December 31, 2017. Balances of term certificates maturing in more than one year decreased to $54.9 million as compared to $58.1 million at December 31, 2017. Balances of term certificates that mature within one year reflect customer preferences for greater liquidity of personal funds, while longer-dated certificates reflect a willingness among customers to accept current interest rates for extended time periods. If maturing deposits are not renewed, we will be required to seek other sources of funds, including new term certificates and other borrowings. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the existing funds. We have the ability to attract and retain deposits by adjusting the interest rates offered.

The Company is a separate legal entity from the Bank and will have to provide for its own liquidity to pay its operating expenses and other financial obligations. The Company’s primary source of income will be dividends received from the Bank and earnings from investment of net proceeds from the offering retained by the Company. Massachusetts banking law and FDIC regulations limit distributions of capital. In addition, the Company is subject to the policy of the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) that dividends should be paid only out of current earnings and only if the prospective rate of earnings retention by the Company appears consistent with its capital needs, asset quality and overall financial condition. At September 30, 2018, the Company had $197 thousand of liquid assets as represented by cash and cash equivalents on an unconsolidated basis.

Capital Management. The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Federal banking regulations require a minimum ratio of common equity Tier 1 capital to risk-weighted assets of 4.5%; a minimum ratio of Tier 1 capital to risk-weighted assets of 6%; a minimum ratio of total capital to risk-weighted assets of 8%; and, a minimum leverage ratio of 4% for all banking organizations. Additionally, community banking institutions must maintain a capital conservation buffer of common equity Tier 1 capital in an amount greater than 2.5% of total risk-weighted assets to avoid being subject to limitations on capital distributions and discretionary bonuses. The capital conservation buffer and certain deductions from and adjustments to regulatory capital and risk-weighted assets are being phased in over several years. The required minimum conservation buffer is 1.875% on January 1, 2018 and will increase to 2.5% on January 1, 2019. An institution is subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

32

At September 30, 2018, the Bank was well-capitalized under the current rules. Management believes the Bank’s capital levels will be characterized as “well-capitalized” upon full implementation of the new rules.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For information about our loan commitments and unused lines of credit see Liquidity Management herein.

For the nine months ended September 30, 2018, the Company did not engage in any off-balance sheet transactions reasonably likely to have a material effect on the Company’s financial condition, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Qualitative Aspects of Market Risk

One significant risk affecting the financial condition and operating results of the Company and the Bank is interest rate risk. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment. Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturities of deposits. As a result, sharp increases in interest rates may adversely affect our earnings while decreases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. Our strategy for managing interest rate risk emphasizes the following: originating adjustable-rate loans for retention in our loan portfolio; selling in the secondary market newly originated, conforming longer-term fixed rate residential mortgage loans; promoting core deposit products; adjusting the maturities of borrowings; and, adjusting the investment portfolio mix and duration.

We have an Asset/Liability Committee, which includes members of management, to communicate, coordinate and control all aspects involving asset-liability management. The committee establishes and monitors the volume, maturities, pricing and mix of assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.

Quantitative Aspects of Market Risk

We analyze our interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income and equity simulations. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.

Our goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income and the present value of our equity. Interest income and equity simulations are completed quarterly and presented to the Asset/Liability Committee and the Board of Directors. The simulations provide an estimate of the impact of changes in interest rates on net interest income and the present value of our equity under a range of assumptions. The simulation incorporates assumptions regarding the potential timing in the repricing of certain assets and liabilities when market rates change and changes spreads between different market rates. The simulation analysis incorporates management’s current assessment of the risk that pricing margins will change adversely over time due to competition or other factors.

Simulation analysis is only an estimate of our interest rate risk exposure at a particular point in time. We continually review the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.

The table below sets forth an approximation of our exposure as a percentage of estimated net interest income for the next 12 month period using interest income and equity simulations. The simulations use projected repricing of assets and liabilities at September 30, 2018 on the basis of contractual maturities, anticipated repayments and scheduled rate adjustments. Prepayment rates can have a significant impact on the simulations. Because of the large percentage of loans we hold, rising or falling interest rates have a significant impact on the prepayment speeds of our earning assets that, in turn, affect the rate sensitivity position. When interest rates rise, loan prepayments tend to slow. When interest rates fall, loan prepayments tend to rise. Our asset sensitivity would be reduced if prepayments slowed and would increase if prepayments accelerated. While we believe such assumptions to be reasonable, there can be no assurance that assumed prepayment rates will approximate actual future mortgage-backed security and loan repayment activity.

33

The following table reflects the estimated effects of changes in interest rates on the present value of our equity at September 30, 2018 and on our projected net interest income from September 30, 2018 through September 30, 2019. These estimates are in compliance with our internal policy limits.

	As of September 30, 2018								Over the Next 12 Months Ending September 30, 2019
	Present Value of Equity								Projected Net Interest Income
Basis Point (“bp”) Change in Rates	$ Amount		$ Change			% Change			$ Amount		$ Change			% Change
	(Dollars in thousands)
300 bp	$	79,837	$	(17,485	)		(17.97	)%	$	23,655	$	(2,062	)		(8.02	)%
200		89,824		(7,498	)		(7.70	)		24,534		(1,183	)		(4.60	)
0		97,322		—			—			25,717		—			—
(100)		97,005		(317	)		(0.33	)		26,079		362			1.41

Item 4. Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

34

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business. The Company’s management believes that such routine legal proceedings, in the aggregate, are immaterial to the Company’s financial condition and results of operations.

Item 1A. Risk Factors

For information regarding the Company’s risk factors, see Part I, Item 1A “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 29, 2018. As of September 30, 2018, the risk factors of the Company have not changed materially from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2017.

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

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

3.1	Amended and Restated Articles of Incorporation of Wellesley Bancorp, Inc. (1)
3.2	Amended and Restated Bylaws of Wellesley Bancorp, Inc. (2)
4.1	Form of 6.00% Fixed to Floating Subordinated Note Due 2025 (3)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0	Section 1350 Certification
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Changes in Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.

(1) Incorporated herein by reference to the exhibits to Wellesley Bancorp, Inc.’s Pre-Effective Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-176764), filed with the Securities and Exchange Commission on November 7, 2011.

(2) Incorporated herein by reference to the exhibits to Wellesley Bancorp, Inc.’s Annual Report on Form 10-K (File No. 001-35352), filed with the Securities and Exchange Commission on March 29, 2018.

(3) Incorporated herein by reference to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 17, 2015 (included as Exhibit A to the Purchase Agreement filed as Exhibit 10.1 thereto).

35

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.

		WELLESLEY BANCORP, INC.
Dated:	November 8, 2018	By:	/s/ Thomas J. Fontaine
			Thomas J. Fontaine
			President and Chief Executive Officer
			(principal executive officer)
Dated:	November 8, 2018	By:	/s/ Michael W. Dvorak
			Michael W. Dvorak
			Chief Financial Officer and Treasurer
			(principal accounting and financial officer)

36

EX-31.1

Exhibit 31.1

Certification

I, Thomas J. Fontaine, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Wellesley Bancorp, Inc.;

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in 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.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 8, 2018	/s/ Thomas J. Fontaine
		Thomas J. Fontaine
		President and Chief Executive Officer
		(principal executive officer)

EX-31.2

Exhibit 31.2

Certification

I, Michael W. Dvorak, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Wellesley Bancorp, Inc.;

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

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

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

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

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and in 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.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:	November 8, 2018	/s/ Michael W. Dvorak
		Michael W. Dvorak
		Chief Financial Officer and Treasurer
		(principal accounting and financial officer)

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Wellesley Bancorp, Inc. (the “Company”) for the quarter ended September 30, 2018, as filed with the Securities and Exchange Commission (the “Report”), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by the Report.

By:	/s/ Thomas J. Fontaine
	Thomas J. Fontaine
	President and Chief Executive Officer
	(principal executive officer)
	November 8, 2018
By:	/s/ Michael W. Dvorak
	Michael W. Dvorak
	Chief Financial Officer and Treasurer
	(principal financial and accounting officer)
	November 8, 2018

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 01, 2018
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Registrant Name	Wellesley Bancorp, Inc.
Entity Central Index Key	0001526952
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Trading Symbol	WEBK
Entity Common Stock, Shares Outstanding		2,525,730
Entity Emerging Growth Company	false
Entity Small Business	true

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Assets
Cash and due from banks	$ 5,421	$ 4,604
Short-term investments	18,782	23,858
Total cash and cash equivalents	24,203	28,462
Certificates of deposit	100	100
Securities available for sale, at fair value	67,651	66,486
Federal Home Loan Bank of Boston stock, at cost	5,466	5,937
Loans held for sale	698	0
Loans	726,593	692,455
Less allowance for loan losses	(6,543)	(6,153)
Loans, net	720,050	686,302
Bank-owned life insurance	7,710	7,535
Premises and equipment, net	3,604	3,470
Accrued interest receivable	2,308	2,140
Net deferred tax asset	2,949	2,352
Other assets	2,132	2,611
Total assets	836,871	805,395
Deposits:
Non-interest-bearing	131,836	104,346
Interest-bearing	538,667	512,396
Total deposits	670,503	616,742
Short-term borrowings	27,500	38,000
Long-term borrowings	62,357	77,174
Subordinated debt	9,825	9,802
Accrued expenses and other liabilities	3,664	4,432
Total liabilities	773,849	746,150
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized, none issued	0	0
Common stock, $0.01 par value; 14,000,000 shares authorized, 2,525,186 and 2,506,532 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	25	25
Additional paid-in capital	26,278	25,601
Retained earnings	38,740	34,736
Accumulated other comprehensive income (loss)	(962)	39
Unearned compensation – ESOP	(1,059)	(1,156)
Total stockholders' equity	63,022	59,245
Total liabilities and stockholders' equity	$ 836,871	$ 805,395

XML

CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Sep. 30, 2018	Dec. 31, 2017
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	1,000,000	1,000,000
Preferred Stock, Shares Issued	0	0
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	14,000,000	14,000,000
Common Stock, Shares, Issued	2,525,186	2,506,532
Common Stock, Shares, Outstanding	2,525,186	2,506,532

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Interest and dividend income:
Interest and fees on loans and loans held for sale	$ 7,941	$ 6,747	$ 22,702	$ 19,079
Debt securities:
Taxable	364	337	1,050	1,009
Tax-exempt	82	77	246	224
Short-term investments and certificates of deposit	143	78	376	163
FHLB stock	86	66	244	182
Total interest and dividend income	8,616	7,305	24,618	20,657
Interest expense:
Deposits	1,668	919	4,318	2,540
Short-term borrowings	244	95	442	175
Long-term debt	273	316	1,004	901
Subordinated debt	158	158	474	474
Total interest expense	2,343	1,488	6,238	4,090
Net interest income	6,273	5,817	18,380	16,567
Provision for loan losses	130	250	390	372
Net interest income, after provision for loan losses	6,143	5,567	17,990	16,195
Non-interest income:
Customer service fees	42	39	130	109
Mortgage banking activities	35	34	72	98
Income on bank-owned life insurance	60	59	175	173
Wealth management fees	407	314	1,208	917
Miscellaneous	17	58	200	177
Total non-interest income	561	504	1,785	1,474
Non-interest expense:
Salaries and employee benefits	2,660	2,408	8,074	7,518
Occupancy and equipment	782	684	2,201	2,087
Data processing	265	230	734	651
FDIC insurance	150	150	486	447
Professional fees	159	192	572	547
Other general and administrative	566	500	1,666	1,532
Total non-interest expense	4,582	4,164	13,733	12,782
Income before income taxes	2,122	1,907	6,042	4,887
Provision for income taxes	565	741	1,628	1,903
Net income	1,557	1,166	4,414	2,984
Other comprehensive income:
Net unrealized holding (loss) gains on available-for-sale securities	(267)	63	(1,343)	640
Income tax benefit (expense)	54	(25)	335	(239)
Total other comprehensive (loss) gain income	(213)	38	(1,008)	401
Comprehensive income	$ 1,344	$ 1,204	$ 3,406	$ 3,385
Earnings per common share:
Basic	$ 0.65	$ 0.49	$ 1.84	$ 1.26
Diluted	$ 0.62	$ 0.48	$ 1.77	$ 1.22
Weighted average shares outstanding:
Basic	2,408,091	2,370,623	2,398,671	2,364,449
Diluted	2,511,241	2,454,198	2,499,093	2,448,558

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (loss) [Member]	Unearned Compensation - ESOP [Member]
Balance at Dec. 31, 2016	$ 55,214	$ 25	$ 24,703	$ 31,999	$ (229)	$ (1,284)
Balance (in shares) at Dec. 31, 2016		2,484,852
Comprehensive income	3,385	$ 0	0	2,984	401	0
Dividends paid to common stockholders	(349)	0	0	(349)	0	0
Issuance of restricted stock	0	$ 0	0	0	0	0
Issuance of restricted stock (shares)		5,000
Stock options exercised	40	$ 0	40	0	0	0
Stock options exercised (shares)		2,500
Share-based compensation- equity incentive plan	493	$ 0	493	0	0	0
ESOP shares committed to be allocated (9,629)	260	0	164	0	0	96
Balance at Sep. 30, 2017	59,043	$ 25	25,400	34,634	172	(1,188)
Balance (in shares) at Sep. 30, 2017		2,492,352
Balance at Dec. 31, 2017	59,245	$ 25	25,601	34,736	39	(1,156)
Balance (in shares) at Dec. 31, 2017		2,506,532
Comprehensive income	3,406	$ 0	0	4,414	(1,008)	0
Reclassification related to Tax Cuts and Jobs Act	0	0	0	(7)	7	0
Dividends paid to common stockholders	(403)	0	0	(403)	0	0
Restricted stock forfeitures	0	$ 0	0	0	0	0
Restricted stock forfeitures (shares)		(400)
Stock options exercised	154	$ 0	154	0	0	0
Stock options exercised (shares)		19,054
Share-based compensation- equity incentive plan	313	$ 0	313	0	0	0
ESOP shares committed to be allocated (9,629)	307	0	210	0	0	97
Balance at Sep. 30, 2018	$ 63,022	$ 25	$ 26,278	$ 38,740	$ (962)	$ (1,059)
Balance (in shares) at Sep. 30, 2018		2,525,186

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY [Parenthetical] - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Dividends paid to common stockholders, per share	$ 0.16	$ 0.14
ESOP shares committed to be allocated, Shares	9,629	9,629

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net income	$ 4,414	$ 2,984
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	390	372
Depreciation and amortization	574	556
Net amortization of securities	117	177
Principal balance of loans sold	5,857	10,449
Loans originated for sale	(6,555)	(8,995)
Accretion of net deferred loan fees	(435)	(438)
Amortization of subordinated debt issuance costs	23	25
Income on bank-owned life insurance	(175)	(173)
Deferred income tax provision	(262)	(487)
ESOP expense	307	260
Share-based compensation	313	493
Net change in other assets and liabilities	(500)	2,456
Net cash provided by operating activities	4,068	7,679
Cash flows from investing activities:
Maturities, prepayments and calls	8,289	3,393
Purchases	(10,914)	(4,013)
Redemption (purchase) of Federal Home Loan Bank stock	471	(315)
Net loan originations	(33,703)	(72,396)
Additions to premises and equipment	(728)	(175)
Proceeds from sale of premises and equipment	63	0
Net cash used by investing activities	(36,522)	(73,506)
Cash flows from financing activities:
Net increase in deposits	53,761	58,739
Proceeds from issuance of long-term debt	36,000	39,000
Repayments of long-term debt	(50,817)	(34,759)
Increase (decrease) in short-term borrowings	(10,500)	5,750
Stock options exercised	154	40
Cash dividends paid on common stock	(403)	(349)
Net cash provided by financing activities	28,195	68,421
Net change in cash and cash equivalents	(4,259)	2,594
Cash and cash equivalents at beginning period	28,462	28,425
Cash and cash equivalents at end of period	24,203	31,019
Supplementary information:
Interest paid	6,083	3,986
Income taxes paid	$ 2,086	$ 2,134

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BASIS OF PRESENTATION AND CONSOLIDATION

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Accounting [Text Block]

NOTE 1 – BASIS OF PRESENTATION AND CONSOLIDATION

The accompanying unaudited interim consolidated financial statements include the accounts of Wellesley Bancorp, Inc. (the “Company”) and its wholly-owned subsidiary, Wellesley Bank (the “Bank”), the principal operating entity, and its wholly-owned subsidiaries: Wellesley Securities Corporation, which engages in the business of buying, selling and dealing in securities exclusively on its own behalf; Wellesley Investment Partners, LLC, formed to provide investment management services for individuals, not-for-profit entities and businesses; and Central Linden, LLC, to hold, manage and sell foreclosed real estate. All significant intercompany balances and transactions have been eliminated in consolidation. Assets under management at Wellesley Investment Partners, LLC are not included in these consolidated financial statements because they are not assets of the Company. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements.

In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s 2017 Annual Report on Form 10-K. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018 or for any other period.

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LOAN POLICIES

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Loan Portfolio [Text Block]

NOTE 2 – LOAN POLICIES

The loan portfolio consists of real estate, commercial and other loans to the Company’s customers in our primary market areas in eastern Massachusetts. The ability of the Company’s debtors to honor their contracts is dependent upon the economy in general and the state of real estate and construction sectors within our markets.

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred loan origination fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Interest is generally not accrued on loans which are identified as impaired or loans which are ninety days or more past due. Past due status is based on the contractual terms of the loan. Interest income previously accrued on such loans is reversed against current period interest income. Interest income on non-accrual loans is recognized only to the extent of interest payments received and is first applied to the outstanding principal balance when collectibility of principal is in doubt. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured through sustained payment performance for at least six months.

Allowance for loan losses

The allowance for loan losses is established through a provision for loan losses charged to earnings as losses are estimated to occur. Loan losses are charged against the allowance when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components.

General component

The general component is based on the following loan segments: residential real estate, commercial real estate, construction, commercial, home equity lines of credit and other consumer. Management considers a rolling average of historical losses for each segment based on a time frame appropriate to capture relevant loss data for each loan segment, generally three and 10 years. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume, concentrations and terms of loans; level of collateral protection; effects of changes in risk selection and underwriting standards; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no significant changes to the Company’s policies or methodology pertaining to the general component of the allowance during 2018 or 2017.

The qualitative factor adjustments are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate – The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent and does not originate subprime loans. Most loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate – Loans in this segment are primarily income-producing properties in the Company’s primary market areas in eastern Massachusetts. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which, in turn, will have an effect on the credit quality in this segment. Management typically obtains rent rolls annually and continually monitors the cash flows of these loans.

Construction – Loans in this segment include speculative construction loans primarily on residential properties for which payment is derived from the sale of the property. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.    Residential construction loans in this segment also include loans to build one-to-four family owner-occupied properties which are subject to the same credit quality factors as residential real estate.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Home equity lines of credit – Loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Other consumer – Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Allocated component

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the loan or, if the loan is collateral dependent, by the fair value of the collateral, less estimated costs to sell. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan are lower than the carrying value of that loan. Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify performing individual residential and consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due, according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring ("TDR"). All TDRs are initially classified as impaired.

Unallocated component

An unallocated component is maintained to cover additional uncertainties in management’s estimation of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

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COMPREHENSIVE INCOME

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Comprehensive Income (Loss) Note [Text Block]

NOTE 3 – COMPREHENSIVE INCOME

Accounting principles generally require that recognized revenue, expenses, and gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the stockholders’ equity section of the consolidated balance sheets, such items, along with net income, are components of comprehensive income/loss.

The components of accumulated other comprehensive income (loss) and related tax effects are as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Unrealized holding gains (losses) on securities available for sale	$	(1,299	)	$	44
Tax effect		337			(5	)
Net-of tax amount	$	(962	)	$	39

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RECENT ACCOUNTING AND REGULATORY PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

NOTE 4 – RECENT ACCOUNTING AND REGULATORY PRONOUNCEMENTS

Effective January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this update supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company's primary source of revenue is interest income on financial assets, which is explicitly excluded from the scope of the new guidance. In addition, management determined that the timing of the Company’s recognition of wealth management fees did not change materially. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The key provision included in the ASU is that equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) will be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost.  This ASU also requires companies to use an “exit price” fair value when measuring the fair values of financial instruments. The adoption of this update did not have a significant impact on the consolidated financial statements, as the Company does not currently invest in equity securities.

Effective January 1, 2018, the Company adopted ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU provide cash flow statement classification guidance for certain areas where diversification existed in practice. The adoption of this update did not have an impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this update require that in the statement of cash flows, amounts generally described as restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2017-09, Compensation-Stock Compensation (Topic 718) to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change in terms or conditions of a share-based payment award. The adoption of this update did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2018, the Company adopted ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The purpose of this ASU is to eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Reform Act of 2017. Upon adoption of this update, the Company recorded a reclassification of $7 thousand to increase accumulated other comprehensive income and decrease retained earnings.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820), which amends the disclosure requirements by adding, changing, or removing certain disclosures about recurring or non-recurring fair value measurements. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The adoption of this update will not have a significant impact on the consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires a lessee to record a right-to-use asset and liability representing the obligation to make lease payments for long-term leases. This ASU will be effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, this is not expected to be material to the Company's results of operations or financial position. Management continues to evaluate the extent of potential impact the new guidance will have on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount. Credit losses on available-for-sale debt securities should be measured in a manner similar to current GAAP; however, recognized credit losses will be presented as an allowance rather than as a write-down. This ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods. Management is evaluating the provisions of the update, and will closely monitor developments and additional guidance to determine the potential impact on the Company's consolidated financial statements. Management is currently in the process of developing an internal solution.

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SECURITIES AVAILABLE FOR SALE

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 5 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,953	$	34	$	(64	)	$	3,923
Government-sponsored enterprises		11,787		15		(346	)		11,456
SBA and other asset-backed securities		12,067		32		(299	)		11,800
State and municipal bonds		12,937		58		(205	)		12,790
Government-sponsored enterprise obligations		8,000		—		(306	)		7,694
Corporate bonds		16,155		18		(235	)		15,938
U.S. Treasury bills		4,051		—		(1	)		4,050
	$	68,950	$	157	$	(1,456	)	$	67,651

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,358	$	46	$	(53	)	$	3,351
Government-sponsored enterprises		11,690		43		(84	)		11,649
SBA and other asset-backed securities		11,961		89		(87	)		11,963
State and municipal bonds		13,026		276		(15	)		13,287
Government-sponsored enterprise obligations		8,000		—		(166	)		7,834
Corporate bonds		17,166		52		(57	)		17,161
U.S. Treasury bills		1,241		—		—			1,241
	$	66,442	$	506	$	(462	)	$	66,486

There were no sales of available-for-sale securities for the three and nine months ended September 30, 2018 and 2017.

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2018 are as follows:

	Amortized Cost		Fair Value
	(In thousands)
Within 1 year	$	5,052	$	5,050
After 1 year to 5 years		22,418		21,899
After 5 years to 10 years		5,678		5,652
After 10 years		7,995		7,871
		41,143		40,472
Mortgage- and asset-backed securities		27,807		27,179
	$	68,950	$	67,651

Expected maturities may differ from contractual maturities because the issuer, in certain instances, has the right to call or prepay obligations with or without call or prepayment penalties.

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than Twelve Months					Over Twelve Months
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	—		$	—	$	(64	)	$	1,765
Government-sponsored enterprises		(146	)		6,077		(200	)		3,718
SBA and other asset-backed securities		(156	)		7,267		(143	)		2,136
State and municipal bonds		(178	)		8,280		(27	)		849
Government-sponsored enterprise obligations		—			—		(306	)		7,693
Corporate bonds		(141	)		10,998		(94	)		1,944
U.S. Treasury bills		(1	)		4,050		—			—
	$	(622	)	$	36,672	$	(834	)	$	18,105
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	(3	)	$	266	$	(50	)	$	1,611
Government-sponsored enterprises		(13	)		3,578		(71	)		3,110
SBA and other asset-backed securities		(8	)		2,267		(79	)		2,434
State and municipal bonds		(3	)		571		(12	)		871
Government-sponsored enterprise obligations		(27	)		1,973		(139	)		5,860
Corporate bonds		(21	)		7,399		(36	)		1,985
	$	(75	)	$	16,054	$	(387	)	$	15,871

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluations. At September 30, 2018, various debt securities have unrealized losses with aggregate depreciation of 2.6% from their aggregate amortized cost basis. These unrealized losses relate principally to the effect of interest rate changes on the fair value of debt securities and not an increase in credit risk of the issuers. As the Company does not intend to sell the securities and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost, which may be maturity, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.

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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2018

Notes and Loans Payable, Current [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 6 – LOANS AND ALLOWANCE FOR LOAN LOSSES

A summary of the ending balances of loans is as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Real estate loans:
Residential – fixed	$	54,006		$	31,433
Residential – variable		317,630			297,593
Commercial		149,823			138,784
Construction		109,478			120,004
		630,937			587,814
Commercial loans:
Secured		51,410			62,333
Unsecured		5,413			5,638
		56,823			67,971
Consumer loans:
Home equity lines of credit		38,631			36,378
Other		183			214
		38,814			36,592
Total loans		726,574			692,377
Less:
Allowance for loan losses		(6,543	)		(6,153	)
Net deferred origination costs		19			78
Loans, net	$	720,050		$	686,302

The following table summarizes the changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2018 and 2017:

	Residential Real Estate		Commercial Real Estate		Construction			Commercial			Home Equity			Other Consumer			Unallocated			Total
	(In thousands)
Three Months Ended September 30, 2018
Allowance at June 30, 2018	$	1,999		1,615	$	1,459		$	962		$	257		$	4		$	117		$	6,413
Provision (credit) for loan losses		108		4		5			(10	)		(6	)		(1	)		30			130
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Three Months Ended September 30, 2017
Allowance at June 30, 2017	$	1,563	$	1,171	$	1,760		$	714		$	215		$	2		$	118		$	5,543
Provision (credit) for loan losses		73		59		86			115			1			—			(84	)		250
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793
Nine Months Ended September 30, 2018
Allowance at December 31, 2017	$	1,722	$	1,520	$	1,661		$	917		$	237		$	2		$	94		$	6,153
Provision (credit) for loan losses		385		99		(197	)		35			14			1			53			390
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Nine Months Ended September 30, 2017
Allowance at December 31, 2016	$	1,422	$	1,145	$	1,827		$	703		$	211		$	3		$	121		$	5,432
Provision (credit) for loan losses		214		85		19			126			5			10			(87	)		372
Loans charged off		—		—		—			—			—			(11	)		—			(11	)
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793

Further information pertaining to the allowance for loan losses is as follows:

	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Other Consumer		Unallocated		Total
	(In thousands)
September 30, 2018
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		2,107		1,619		1,464		952		251		3		147		6,543
Total allowance	$	2,107	$	1,619	$	1,464	$	952	$	251	$	3	$	147	$	6,543
Impaired loan balances	$	815	$	2,893	$	—	$	—	$	—	$	—	$	—	$	3,708
Non-impaired loan balances		370,821		146,930		109,478		56,823		38,631		183		—		722,866
Total loans	$	371,636	$	149,823	$	109,478	$	56,823	$	38,631	$	183	$	—	$	726,574
December 31, 2017
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		1,722		1,520		1,661		917		237		2		94		6,153
Total allowance	$	1,722	$	1,520	$	1,661	$	917	$	237	$	2	$	94	$	6,153
Impaired loan balances	$	172		576	$	—	$	—	$	—	$	—	$	—	$	748
Non-impaired loan balances		328,854		138,208		120,004		67,971		36,378		214		—		691,629
Total loans	$	329,026	$	138,784	$	120,004	$	67,971	$	36,378	$	214	$	—	$	692,377

The following is a summary of past due and non-accrual loans at September 30, 2018 and December 31, 2017:

	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Past Due 90 Days or More and Still Accruing		Non- accrual Loans
	(In thousands)
September 30, 2018
Residential real estate	$	—	$	—	$	62	$	62	$	—	$	648
Commercial real estate		557		—		—		557		—		557
Total	$	557	$	—	$	62	$	619	$	—	$	1,205
December 31, 2017
Residential real estate	$	598	$	65	$	—	$	663	$	—	$	—
Commercial real estate		—		—		576		576		—		576
Total	$	598	$	65	$	576	$	1,239	$	—	$	576

The following is a summary of impaired loans:

	September 30, 2018				December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance
	(In thousands)
Impaired loans without a valuation allowance:
Residential real estate	$	815	$	832	$	172	$	189
Commercial real estate		2,893		3,020		576		710
Total impaired loans	$	3,708	$	3,852	$	748	$	899

Further information pertaining to impaired loans follows:

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	821	$	13	$	2	$	421	$	25	$	5
Commercial real estate		2,949		32		6		1,627		61		34
Total	$	3,770	$	45	$	8	$	2,048	$	86	$	39

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	175	$	2	$	—	$	176	$	5	$	—
Commercial real estate		582		5		5		583		48		48
Total	$	757	$	7	$	5	$	759	$	53	$	48

No additional funds are committed to be advanced in connection with impaired loans.

There were no new troubled debt restructurings recorded during the three and nine months ended September 30, 2018.

There were no troubled debt restructurings recorded during the three months ended September 30, 2017.

The following is a summary of troubled debt restructurings recorded for the nine months ended September 30, 2017.

	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
			(In thousands)
Commercial real estate	$	1	$	572	$	582

During the nine months ended September 30, 2017, the Company recorded a TDR for one commercial borrower which capitalized past-due interest over the remaining term of the loan in accordance with their bankruptcy filing.

There were no TDRs that defaulted, generally considered 90 days past due or longer, during the three and nine months ended September 30, 2018 and 2017, and for which default was within one year of the restructure date. TDRs did not have a material impact on the allowance for loan losses for the three and nine months ended September 30, 2018 and 2017.

Credit Quality Information

The Company utilizes an eleven-grade internal loan rating system for commercial real estate, construction and commercial loans.

Loans rated 1-4: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 5: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 6: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 7: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 8: Loans in this category are considered “loss” or uncollectible and of such little value that their continuance as loans is not warranted.

Loans rated 9: Loans in this category only include commercial loans under $25 thousand with no other outstandings or relationships with the Company that are not rated for credit quality on an annual basis.

Loans rated 10: Loans in this category include loans which otherwise require rating, but which have not been rated, or loans for which the Company’s loan policy does not require rating.

Loans rated 11: Loans in this category include credit commitments/relationships that cannot be rated due to a lack of financial information or inaccurate financial information. If, within 60 days of the assignment of an 11 rating, information is still not available to allow a standard rating, the credit will be rated 6.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. During each calendar year, the Company engages an independent third party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. On a monthly basis, the Company reviews the residential real estate and consumer loan portfolio for credit quality primarily through the use of delinquency reports.

The following table presents the Company’s loans by risk rating:

	September 30, 2018								December 31, 2017
	Commercial Real Estate		Construction		Commercial		Total		Commercial Real Estate		Construction		Commercial		Total
	(In thousands)
Loans rated 1-4	$	146,006	$	109,478	$	55,951	$	311,435	$	134,201	$	120,004	$	67,087	$	321,292
Loans rated 5		925		—		872		1,797		1,476		—		301		1,777
Loans rated 6		2,335		—		—		2.335		2,531		—		583		3,114
Loans rated 7		557		—		—		557		576		—		—		576
Total	$	149,823	$	109,478	$	56,823	$	316,124	$	138,784	$	120,004	$	67,971	$	326,759

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FAIR VALUES OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2018

Financial Liabilities Fair Value Disclosure [Abstract]

Financial Instruments Disclosure [Text Block]

NOTE 7 – FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair value hierarchy

The Company groups its assets measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted market prices in active exchange markets for identical assets and liabilities. Valuations are obtained from readily available pricing sources.

Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets and liabilities. Valuations are obtained from readily available pricing sources.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. Level 3 assets include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as those for which the determination of fair value requires significant management judgment or estimation.

Transfers between levels are recognized at the end of a reporting period, if applicable.

Determination of fair value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances there are no quoted market prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the assets and liabilities.

Assets measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017 are summarized below.

	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
September 30, 2018
Securities available for sale	$	—	$	67,651	$	—	$	67,651
Forward loan sale commitments		—		—		5		5
Derivative loan commitments		—		—		5		5
Total assets	$	—	$	67,661	$	—	$	67,661
December 31, 2017
Securities available for sale	$	—	$	66,486	$	—	$	66,486

Fair value measurements for securities available for sale are obtained from a third-party pricing service and are not adjusted by management. All securities are measured at fair value in Level 2 based on valuation models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

The fair value of forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans, including servicing values as applicable. The fair value of derivative loan commitments also considers the probability of such commitments being exercised.

There were no liabilities measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017.

Assets measured at fair value on a non-recurring basis

The Company may also be required, from time to time, to measure certain other financial assets at fair value on a non-recurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market (“LOCOM”) accounting or write-downs of individual assets. Fair values for loans held for sale are based on commitments in effect from investors or prevailing market rates. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets.

	September 30, 2018						December 31, 2017
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In thousands)
Loans held for sale	$	—	$	—	$	698	$	—	$	—	$	—

There are no liabilities measured at fair value on a non-recurring basis at September 30, 2018 and December 31, 2017.

Summary of fair values of financial instruments

The estimated fair values and related carrying amounts of the Company’s financial instruments are outlined in the table below. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2018
Financial assets:
Cash and cash equivalents	$	24,203	$	24,203	$	—	$	—	$	24,203
Certificates of deposit		100		100		—		—		100
Securities available for sale		67,651		—		67,651		—		67,651
FHLB stock		5,466		—		—		5,466		5,466
Loans held for sale		698		—		—		698		698
Loans, net		720,050		—		—		708,181		708,181
Accrued interest receivable		2,308		—		—		2,308		2,308
Forward loan sale commitments		5		—		—		5		5
Derivative loan commitments		5		—		—		5		5
Financial liabilities:
Deposits	$	670,503	$	—	$	—		668,912		668,912
Short-term borrowings		27,500		—		27,500		—		27,500
Long-term debt		62,357		—		61,619		—		61,619
Subordinated debt		9,825		—		—		9,668		9,668
Accrued interest payable		441		—		—		441		441
December 31, 2017
Financial assets:
Cash and cash equivalents	$	28,462	$	28,462	$	—	$	—	$	28,462
Certificates of deposit		100		100		—		—		100
Securities available for sale		66,486		—		66,486		—		66,486
FHLB stock		5,937		—		—		5,937		5,937
Loans, net		686,302		—		—		694,614		694,614
Accrued interest receivable		2,140		—		—		2,140		2,140
Financial liabilities:
Deposits	$	616,742		—		—		615,653		615,653
Short-term borrowings		38,000		—		38,000		—		38,000
Long-term debt		77,174		—		76,906		—		76,906
Subordinated debt		9,802		—		—		9,598		9,598
Accrued interest payable		286		—		—		286		286

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EMPLOYEE STOCK OWNERSHIP PLAN

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Compensation and Employee Benefit Plans [Text Block]

NOTE 8 – EMPLOYEE STOCK OWNERSHIP PLAN

The Bank maintains an Employee Stock Ownership Plan (the “ESOP”) to provide eligible employees the opportunity to own Company stock. This plan is a tax-qualified retirement plan for the benefit of all Company employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits.

The Company granted a loan to the ESOP to purchase shares of the Company’s common stock on the closing date of the Company’s mutual to stock conversion in 2012. As of September 30, 2018, the ESOP held 177,583 shares or 7.0% of the common stock outstanding on that date. The loan is payable annually over 15 years at the rate of 3.25% per annum. The loan can be prepaid without penalty. Loan payments are expected to be funded by cash contributions from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. Cash dividends paid on allocated shares are reinvested into shares to participants and cash dividends paid on unallocated shares will be used to repay the outstanding debt of the ESOP. Shares used as collateral to secure the loan are released and available for allocation to eligible employees as the principal and interest on the loan is paid.

Shares held by the ESOP at September 30, 2018 include the following:

Allocated	62,039
Committed to be allocated	9,629
Unallocated	105,915
	177,583

The fair value of unallocated shares was $3.6 million at September 30, 2018.

Total compensation expense recognized in connection with the ESOP for the three months and nine months ended September 30, 2018 was $109 thousand and $307 thousand, respectively.

Total compensation expense recognized in connection with the ESOP for the three months and nine months ended September 30, 2017 was $86 thousand and $260 thousand, respectively.

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EQUITY INCENTIVE PLANS

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE 9 – EQUITY INCENTIVE PLANS

Under the Company’s 2016 Equity Incentive Plan the Company may grant restricted stock awards to its employees and directors for up to 75,000 shares of its common stock. A restricted stock award (the “award”) is a grant of shares of Company common stock for no consideration, subject to a vesting schedule or the satisfaction of market conditions or performance criteria. Awarded shares are held in reserve for each grantee by the Company’s transfer agent, and will be issued from previously authorized but unissued shares upon vesting. The fair value of the stock awards, based on the market price at the grant date, will be recognized over the five-year vesting period. At September 30, 2018, 34,000 shares remain available to award under the Plan.

Under the Company’s 2012 Equity Incentive Plan the Company granted stock options to its employees and directors in the form of incentive stock options and non-qualified stock options totaling 231,894 shares of its common stock. The exercise price of each stock option was not less than the fair market value of the Company’s common stock on the date of grant, and the maximum term of each option is 10 years from the date of each award. The vesting period was five years from the date of grant, with vesting at 20% per year.

Under the 2012 Equity Incentive Plan, the Company also granted stock awards to management, employees and directors. Awarded shares are held in reserve for each grantee by the Company’s transfer agent, and were issued from previously authorized but unissued shares upon vesting. The fair value of the stock awards, based on the market price at the grant date, is recognized over the five-year vesting period.

The Company’s 2012 Equity Incentive Plan was terminated upon approval of the 2016 Equity Incentive Plan.

Stock Options

A summary of option activity under the 2012 Equity Incentive Plan for the nine months ended September 30, 2018 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding at beginning of period		212		$	16.05
Exercised		(19	)		15.35
Forfeited		—			—
Outstanding at end of period		193		$	16.11		4.48	$	3,497
Options exercisable at end of period		175		$	15.29		4.33	$	3,144

For the three months ended September 30, 2018 and 2017, compensation expense applicable to the stock options was $9 thousand and $54 thousand, respectively. There was no recognized tax benefit related to this expense for the period ended September 30, 2018. The recognized tax benefit related to this expense was $10 thousand for the period ended September 30, 2017.

For the nine months ended September 30, 2018 and 2017, compensation expense applicable to the stock options was $28 thousand and $159 thousand, respectively. There was no recognized tax benefit related to this expense for the period ended September 30, 2018. The recognized tax benefit related to this expense was $28 thousand for the period ended September 30, 2017.

Unrecognized compensation expense for non-vested stock options totaled $41 thousand as of September 30, 2018, which will be recognized over the remaining weighted average vesting period of 1.3 years.

Stock Awards

There was no activity in non-vested restricted stock awards under the 2016 or the 2012 Equity Incentive Plan for the three and nine months ended September 30, 2018.

For the three months ended September 30, 2018 and 2017, compensation expense applicable to the stock awards was $97 thousand and $121 thousand, respectively, and the recognized tax benefit related to this expense was $27 thousand and $45 thousand, respectively.

For the nine months ended September 30, 2018 and 2017, compensation expense applicable to the stock awards was $285 thousand and $334 thousand, respectively, and the recognized tax benefit related to this expense was $80 thousand and $134 thousand, respectively.

Unrecognized compensation expense for non-vested restricted stock totaled $556 thousand as of September 30, 2018, which will be recognized over the remaining weighted average vesting period of 2.99 years.

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EARNINGS PER COMMON SHARE

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

NOTE 10 – EARNINGS PER COMMON SHARE

Basic earnings per share represents net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. Under the Company’s 2012 and 2016 Equity Incentive Plans, stock awards contain non-forfeitable dividend rights. Accordingly, these shares are considered outstanding for computation of basic earnings per share. Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In thousands, except per share data)
Net income applicable to common stock	$	1,557		$	1,166		$	4,414		$	2,984
Average number of common shares issued		2,516			2,490			2,509			2,488
Less: Average unallocated ESOP shares		(108	)		(120	)		(111	)		(124	)
Average number of common shares outstanding used to calculate basic earnings per common share		2,408			2,370			2,398			2,364
Effect of dilutive stock options		103			84			101			85
Average number of common shares outstanding used to calculate diluted earnings per share		2,511			2,454			2,499			2,449
Earnings per common share:
Basic	$	0.65		$	0.49		$	1.84		$	1.26
Diluted	$	0.62		$	0.48		$	1.77		$	1.22

There were no anti-dilutive options that would have been excluded from the computations of diluted earnings per share for the three and nine months ended September 30, 2018 and 2017.

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LOAN POLICIES (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

LOAN POLICIES

The loan portfolio consists of real estate, commercial and other loans to the Company’s customers in our primary market areas in eastern Massachusetts. The ability of the Company’s debtors to honor their contracts is dependent upon the economy in general and the state of real estate and construction sectors within our markets.

Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or pay-off, are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred loan origination fees or costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Interest is generally not accrued on loans which are identified as impaired or loans which are ninety days or more past due. Past due status is based on the contractual terms of the loan. Interest income previously accrued on such loans is reversed against current period interest income. Interest income on non-accrual loans is recognized only to the extent of interest payments received and is first applied to the outstanding principal balance when collectibility of principal is in doubt. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured through sustained payment performance for at least six months.

Allowance for loan losses

The allowance for loan losses is established through a provision for loan losses charged to earnings as losses are estimated to occur. Loan losses are charged against the allowance when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components.

General component

The general component is based on the following loan segments: residential real estate, commercial real estate, construction, commercial, home equity lines of credit and other consumer. Management considers a rolling average of historical losses for each segment based on a time frame appropriate to capture relevant loss data for each loan segment, generally three and 10 years. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume, concentrations and terms of loans; level of collateral protection; effects of changes in risk selection and underwriting standards; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no significant changes to the Company’s policies or methodology pertaining to the general component of the allowance during 2018 or 2017.

The qualitative factor adjustments are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate – The Company generally does not originate loans with a loan-to-value ratio greater than 80 percent and does not originate subprime loans. Most loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate – Loans in this segment are primarily income-producing properties in the Company’s primary market areas in eastern Massachusetts. The underlying cash flows generated by the properties may be adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which, in turn, will have an effect on the credit quality in this segment. Management typically obtains rent rolls annually and continually monitors the cash flows of these loans.

Construction – Loans in this segment include speculative construction loans primarily on residential properties for which payment is derived from the sale of the property. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.    Residential construction loans in this segment also include loans to build one-to-four family owner-occupied properties which are subject to the same credit quality factors as residential real estate.

Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Home equity lines of credit – Loans in this segment are collateralized by one-to-four family residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Other consumer – Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

Allocated component

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the fair value of the loan or, if the loan is collateral dependent, by the fair value of the collateral, less estimated costs to sell. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan are lower than the carrying value of that loan. Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify performing individual residential and consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due, according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring ("TDR"). All TDRs are initially classified as impaired.

Unallocated component

An unallocated component is maintained to cover additional uncertainties in management’s estimation of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

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COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2018

Stockholders' Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The components of accumulated other comprehensive income (loss) and related tax effects are as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Unrealized holding gains (losses) on securities available for sale	$	(1,299	)	$	44
Tax effect		337			(5	)
Net-of tax amount	$	(962	)	$	39

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SECURITIES AVAILABLE FOR SALE (Tables)

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Available-for-sale Securities [Table Text Block]

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,953	$	34	$	(64	)	$	3,923
Government-sponsored enterprises		11,787		15		(346	)		11,456
SBA and other asset-backed securities		12,067		32		(299	)		11,800
State and municipal bonds		12,937		58		(205	)		12,790
Government-sponsored enterprise obligations		8,000		—		(306	)		7,694
Corporate bonds		16,155		18		(235	)		15,938
U.S. Treasury bills		4,051		—		(1	)		4,050
	$	68,950	$	157	$	(1,456	)	$	67,651

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	3,358	$	46	$	(53	)	$	3,351
Government-sponsored enterprises		11,690		43		(84	)		11,649
SBA and other asset-backed securities		11,961		89		(87	)		11,963
State and municipal bonds		13,026		276		(15	)		13,287
Government-sponsored enterprise obligations		8,000		—		(166	)		7,834
Corporate bonds		17,166		52		(57	)		17,161
U.S. Treasury bills		1,241		—		—			1,241
	$	66,442	$	506	$	(462	)	$	66,486

Investments Classified by Contractual Maturity Date [Table Text Block]

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2018 are as follows:

	Amortized Cost		Fair Value
	(In thousands)
Within 1 year	$	5,052	$	5,050
After 1 year to 5 years		22,418		21,899
After 5 years to 10 years		5,678		5,652
After 10 years		7,995		7,871
		41,143		40,472
Mortgage- and asset-backed securities		27,807		27,179
	$	68,950	$	67,651

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less Than Twelve Months					Over Twelve Months
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2018
Residential mortgage-backed securities:
Government National Mortgage Association	$	—		$	—	$	(64	)	$	1,765
Government-sponsored enterprises		(146	)		6,077		(200	)		3,718
SBA and other asset-backed securities		(156	)		7,267		(143	)		2,136
State and municipal bonds		(178	)		8,280		(27	)		849
Government-sponsored enterprise obligations		—			—		(306	)		7,693
Corporate bonds		(141	)		10,998		(94	)		1,944
U.S. Treasury bills		(1	)		4,050		—			—
	$	(622	)	$	36,672	$	(834	)	$	18,105
December 31, 2017
Residential mortgage-backed securities:
Government National Mortgage Association	$	(3	)	$	266	$	(50	)	$	1,611
Government-sponsored enterprises		(13	)		3,578		(71	)		3,110
SBA and other asset-backed securities		(8	)		2,267		(79	)		2,434
State and municipal bonds		(3	)		571		(12	)		871
Government-sponsored enterprise obligations		(27	)		1,973		(139	)		5,860
Corporate bonds		(21	)		7,399		(36	)		1,985
	$	(75	)	$	16,054	$	(387	)	$	15,871

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2018

Notes and Loans Payable, Current [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

A summary of the ending balances of loans is as follows:

	September 30,			December 31,
	2018			2017
	(In thousands)
Real estate loans:
Residential – fixed	$	54,006		$	31,433
Residential – variable		317,630			297,593
Commercial		149,823			138,784
Construction		109,478			120,004
		630,937			587,814
Commercial loans:
Secured		51,410			62,333
Unsecured		5,413			5,638
		56,823			67,971
Consumer loans:
Home equity lines of credit		38,631			36,378
Other		183			214
		38,814			36,592
Total loans		726,574			692,377
Less:
Allowance for loan losses		(6,543	)		(6,153	)
Net deferred origination costs		19			78
Loans, net	$	720,050		$	686,302

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

The following table summarizes the changes in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2018 and 2017:

	Residential Real Estate		Commercial Real Estate		Construction			Commercial			Home Equity			Other Consumer			Unallocated			Total
	(In thousands)
Three Months Ended September 30, 2018
Allowance at June 30, 2018	$	1,999		1,615	$	1,459		$	962		$	257		$	4		$	117		$	6,413
Provision (credit) for loan losses		108		4		5			(10	)		(6	)		(1	)		30			130
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Three Months Ended September 30, 2017
Allowance at June 30, 2017	$	1,563	$	1,171	$	1,760		$	714		$	215		$	2		$	118		$	5,543
Provision (credit) for loan losses		73		59		86			115			1			—			(84	)		250
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793
Nine Months Ended September 30, 2018
Allowance at December 31, 2017	$	1,722	$	1,520	$	1,661		$	917		$	237		$	2		$	94		$	6,153
Provision (credit) for loan losses		385		99		(197	)		35			14			1			53			390
Allowance at September 30, 2018	$	2,107	$	1,619	$	1,464		$	952		$	251		$	3		$	147		$	6,543
Nine Months Ended September 30, 2017
Allowance at December 31, 2016	$	1,422	$	1,145	$	1,827		$	703		$	211		$	3		$	121		$	5,432
Provision (credit) for loan losses		214		85		19			126			5			10			(87	)		372
Loans charged off		—		—		—			—			—			(11	)		—			(11	)
Allowance at September 30, 2017	$	1,636	$	1,230	$	1,846		$	829		$	216		$	2		$	34		$	5,793

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Further information pertaining to the allowance for loan losses is as follows:

	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Home Equity		Other Consumer		Unallocated		Total
	(In thousands)
September 30, 2018
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		2,107		1,619		1,464		952		251		3		147		6,543
Total allowance	$	2,107	$	1,619	$	1,464	$	952	$	251	$	3	$	147	$	6,543
Impaired loan balances	$	815	$	2,893	$	—	$	—	$	—	$	—	$	—	$	3,708
Non-impaired loan balances		370,821		146,930		109,478		56,823		38,631		183		—		722,866
Total loans	$	371,636	$	149,823	$	109,478	$	56,823	$	38,631	$	183	$	—	$	726,574
December 31, 2017
Allowance related to impaired loans	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Allowance related to non-impaired loans		1,722		1,520		1,661		917		237		2		94		6,153
Total allowance	$	1,722	$	1,520	$	1,661	$	917	$	237	$	2	$	94	$	6,153
Impaired loan balances	$	172		576	$	—	$	—	$	—	$	—	$	—	$	748
Non-impaired loan balances		328,854		138,208		120,004		67,971		36,378		214		—		691,629
Total loans	$	329,026	$	138,784	$	120,004	$	67,971	$	36,378	$	214	$	—	$	692,377

Past Due Financing Receivables [Table Text Block]

The following is a summary of past due and non-accrual loans at September 30, 2018 and December 31, 2017:

	30-59 Days Past Due		60-89 Days Past Due		Past Due 90 Days or More		Total Past Due		Past Due 90 Days or More and Still Accruing		Non- accrual Loans
	(In thousands)
September 30, 2018
Residential real estate	$	—	$	—	$	62	$	62	$	—	$	648
Commercial real estate		557		—		—		557		—		557
Total	$	557	$	—	$	62	$	619	$	—	$	1,205
December 31, 2017
Residential real estate	$	598	$	65	$	—	$	663	$	—	$	—
Commercial real estate		—		—		576		576		—		576
Total	$	598	$	65	$	576	$	1,239	$	—	$	576

Impaired Financing Receivables [Table Text Block]

The following is a summary of impaired loans:

	September 30, 2018				December 31, 2017
	Recorded Investment		Unpaid Principal Balance		Recorded Investment		Unpaid Principal Balance
	(In thousands)
Impaired loans without a valuation allowance:
Residential real estate	$	815	$	832	$	172	$	189
Commercial real estate		2,893		3,020		576		710
Total impaired loans	$	3,708	$	3,852	$	748	$	899

Impaired Financing Receivables By Class Of Loans [Table Text Block]

Further information pertaining to impaired loans follows:

	Three Months Ended September 30, 2018						Nine Months Ended September 30, 2018
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	821	$	13	$	2	$	421	$	25	$	5
Commercial real estate		2,949		32		6		1,627		61		34
Total	$	3,770	$	45	$	8	$	2,048	$	86	$	39

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
Residential real estate	$	175	$	2	$	—	$	176	$	5	$	—
Commercial real estate		582		5		5		583		48		48
Total	$	757	$	7	$	5	$	759	$	53	$	48

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following is a summary of troubled debt restructurings recorded for the nine months ended September 30, 2017.

	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
			(In thousands)
Commercial real estate	$	1	$	572	$	582

Financing Receivable Credit Quality Indicators [Table Text Block]

The following table presents the Company’s loans by risk rating:

	September 30, 2018								December 31, 2017
	Commercial Real Estate		Construction		Commercial		Total		Commercial Real Estate		Construction		Commercial		Total
	(In thousands)
Loans rated 1-4	$	146,006	$	109,478	$	55,951	$	311,435	$	134,201	$	120,004	$	67,087	$	321,292
Loans rated 5		925		—		872		1,797		1,476		—		301		1,777
Loans rated 6		2,335		—		—		2.335		2,531		—		583		3,114
Loans rated 7		557		—		—		557		576		—		—		576
Total	$	149,823	$	109,478	$	56,823	$	316,124	$	138,784	$	120,004	$	67,971	$	326,759

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FAIR VALUES OF FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2018

Financial Liabilities Fair Value Disclosure [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets measured at fair value on a recurring basis at September 30, 2018 and December 31, 2017 are summarized below.

	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
September 30, 2018
Securities available for sale	$	—	$	67,651	$	—	$	67,651
Forward loan sale commitments		—		—		5		5
Derivative loan commitments		—		—		5		5
Total assets	$	—	$	67,661	$	—	$	67,661
December 31, 2017
Securities available for sale	$	—	$	66,486	$	—	$	66,486

Fair Value Measurements, Nonrecurring [Table Text Block]

The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets.

	September 30, 2018						December 31, 2017
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In thousands)
Loans held for sale	$	—	$	—	$	698	$	—	$	—	$	—

Fair Value, by Balance Sheet Grouping [Table Text Block]

Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

			Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2018
Financial assets:
Cash and cash equivalents	$	24,203	$	24,203	$	—	$	—	$	24,203
Certificates of deposit		100		100		—		—		100
Securities available for sale		67,651		—		67,651		—		67,651
FHLB stock		5,466		—		—		5,466		5,466
Loans held for sale		698		—		—		698		698
Loans, net		720,050		—		—		708,181		708,181
Accrued interest receivable		2,308		—		—		2,308		2,308
Forward loan sale commitments		5		—		—		5		5
Derivative loan commitments		5		—		—		5		5
Financial liabilities:
Deposits	$	670,503	$	—	$	—		668,912		668,912
Short-term borrowings		27,500		—		27,500		—		27,500
Long-term debt		62,357		—		61,619		—		61,619
Subordinated debt		9,825		—		—		9,668		9,668
Accrued interest payable		441		—		—		441		441
December 31, 2017
Financial assets:
Cash and cash equivalents	$	28,462	$	28,462	$	—	$	—	$	28,462
Certificates of deposit		100		100		—		—		100
Securities available for sale		66,486		—		66,486		—		66,486
FHLB stock		5,937		—		—		5,937		5,937
Loans, net		686,302		—		—		694,614		694,614
Accrued interest receivable		2,140		—		—		2,140		2,140
Financial liabilities:
Deposits	$	616,742		—		—		615,653		615,653
Short-term borrowings		38,000		—		38,000		—		38,000
Long-term debt		77,174		—		76,906		—		76,906
Subordinated debt		9,802		—		—		9,598		9,598
Accrued interest payable		286		—		—		286		286

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EMPLOYEE STOCK OWNERSHIP PLAN (Tables)

9 Months Ended

Sep. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Stock Ownership Plan ESOP Status Of Entity Shares Held [Table Text Block]

Shares held by the ESOP at September 30, 2018 include the following:

Allocated	62,039
Committed to be allocated	9,629
Unallocated	105,915
	177,583

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EQUITY INCENTIVE PLANS (Tables)

9 Months Ended

Sep. 30, 2018

Equity [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

A summary of option activity under the 2012 Equity Incentive Plan for the nine months ended September 30, 2018 is presented below:

Options	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
	(In thousands)					(In years)		(In thousands)
Outstanding at beginning of period		212		$	16.05
Exercised		(19	)		15.35
Forfeited		—			—
Outstanding at end of period		193		$	16.11		4.48	$	3,497
Options exercisable at end of period		175		$	15.29		4.33	$	3,144

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EARNINGS PER COMMON SHARE (Tables)

9 Months Ended

Sep. 30, 2018

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

Potential common shares that may be issued by the Company relate to outstanding stock options and are determined using the treasury stock method.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(In thousands, except per share data)
Net income applicable to common stock	$	1,557		$	1,166		$	4,414		$	2,984
Average number of common shares issued		2,516			2,490			2,509			2,488
Less: Average unallocated ESOP shares		(108	)		(120	)		(111	)		(124	)
Average number of common shares outstanding used to calculate basic earnings per common share		2,408			2,370			2,398			2,364
Effect of dilutive stock options		103			84			101			85
Average number of common shares outstanding used to calculate diluted earnings per share		2,511			2,454			2,499			2,449
Earnings per common share:
Basic	$	0.65		$	0.49		$	1.84		$	1.26
Diluted	$	0.62		$	0.48		$	1.77		$	1.22

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LOAN POLICIES (Details Textual)	9 Months Ended
	Sep. 30, 2018
Residential Portfolio Segment [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loan To Value Ratio	80.00%
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Time Period To Capture Relevant Loan Loss Data	10 years

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COMPREHENSIVE INCOME (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized holding gains (losses) on securities available for sale	$ (1,299)	$ 44
Tax effect	337	(5)
Net-of tax amount	$ (962)	$ 39

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RECENT ACCOUNTING AND REGULATORY PRONOUNCEMENTS (Details Textual) $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($)
Reclassification from AOCI, Current Period, Tax	$ 0
Accounting Standards Update 2018-02 [Member]
Reclassification from AOCI, Current Period, Tax	$ 7

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SECURITIES AVAILABLE FOR SALE (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 68,950	$ 66,442
Gross Unrealized Gains	157	506
Gross Unrealized Losses	(1,456)	(462)
Fair Value	67,651	66,486
SBA and other asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	12,067	11,961
Gross Unrealized Gains	32	89
Gross Unrealized Losses	(299)	(87)
Fair Value	11,800	11,963
State and municipal bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	12,937	13,026
Gross Unrealized Gains	58	276
Gross Unrealized Losses	(205)	(15)
Fair Value	12,790	13,287
Government-sponsored enterprise obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	8,000	8,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(306)	(166)
Fair Value	7,694	7,834
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	16,155	17,166
Gross Unrealized Gains	18	52
Gross Unrealized Losses	(235)	(57)
Fair Value	15,938	17,161
US Treasury Bill Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,051	1,241
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(1)	0
Fair Value	4,050	1,241
Residential mortgage-backed securities [Member] | Government National Mortgage Association [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	3,953	3,358
Gross Unrealized Gains	34	46
Gross Unrealized Losses	(64)	(53)
Fair Value	3,923	3,351
Residential mortgage-backed securities [Member] | Government-sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11,787	11,690
Gross Unrealized Gains	15	43
Gross Unrealized Losses	(346)	(84)
Fair Value	$ 11,456	$ 11,649

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SECURITIES AVAILABLE FOR SALE (Details 1) $ in Thousands	Sep. 30, 2018 USD ($)
Available-for-sale Securities, Debt Maturities, Amortized Cost
Within 1 year	$ 5,052
After 1 year to 5 years	22,418
After 5 years to 10 years	5,678
After 10 years	7,995
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost Basis, Total	41,143
Mortgage- and asset-backed securities	27,807
Available-for-sale Debt Securities, Amortized Cost Basis, Total	68,950
Available-for-sale Securities, Debt Maturities, Fair Value
Within 1 year	5,050
After 1 year to 5 years	21,899
After 5 years to 10 years	5,652
After 10 years	7,871
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Fair Value Total	40,472
Mortgage- and asset-backed securities	27,179
Available-for-sale Securities, Debt Securities, Fair Value Total	$ 67,651

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SECURITIES AVAILABLE FOR SALE (Details 2) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	$ (622)	$ (75)
Less Than Twelve Months Fair Value	36,672	16,054
Over Twelve Months Gross Unrealized Losses	(834)	(387)
Over Twelve Months Fair Value	18,105	15,871
SBA and other asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	(156)	(8)
Less Than Twelve Months Fair Value	7,267	2,267
Over Twelve Months Gross Unrealized Losses	(143)	(79)
Over Twelve Months Fair Value	2,136	2,434
State and municipal bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	(178)	(3)
Less Than Twelve Months Fair Value	8,280	571
Over Twelve Months Gross Unrealized Losses	(27)	(12)
Over Twelve Months Fair Value	849	871
Government-sponsored enterprise obligations [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	0	(27)
Less Than Twelve Months Fair Value	0	1,973
Over Twelve Months Gross Unrealized Losses	(306)	(139)
Over Twelve Months Fair Value	7,693	5,860
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	(141)	(21)
Less Than Twelve Months Fair Value	10,998	7,399
Over Twelve Months Gross Unrealized Losses	(94)	(36)
Over Twelve Months Fair Value	1,944	1,985
US Treasury Bill Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	(1)
Less Than Twelve Months Fair Value	4,050
Over Twelve Months Gross Unrealized Losses	0
Over Twelve Months Fair Value	0
Residential mortgage-backed securities [Member] | Government National Mortgage Association [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	0	(3)
Less Than Twelve Months Fair Value	0	266
Over Twelve Months Gross Unrealized Losses	(64)	(50)
Over Twelve Months Fair Value	1,765	1,611
Residential mortgage-backed securities [Member] | Government-sponsored enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Less Than Twelve Months Gross Unrealized Losses	(146)	(13)
Less Than Twelve Months Fair Value	6,077	3,578
Over Twelve Months Gross Unrealized Losses	(200)	(71)
Over Twelve Months Fair Value	$ 3,718	$ 3,110

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SECURITIES AVAILABLE FOR SALE (Details Textual)	Sep. 30, 2018
Schedule of Available-for-sale Securities [Line Items]
Unrealized Losses Debt Securities Aggregate Depreciation Percentage	2.60%

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Total loans	$ 726,574	$ 692,377
Less: Allowance for loan losses	(6,543)	(6,153)
Net deferred origination costs	19	78
Loans, net	720,050	686,302
Commercial loan [Member]
Total loans	56,823	67,971
Consumer loan [Member]
Total loans	38,814	36,592
Residential - fixed [Member]
Total loans	54,006	31,433
Residential - variable [Member]
Total loans	317,630	297,593
Commercial Real Estate [Member]
Total loans	149,823	138,784
Construction [Member]
Total loans	109,478	120,004
Secured [Member]
Total loans	51,410	62,333
Unsecured [Member]
Total loans	5,413	5,638
Home equity lines of credit [Member]
Total loans	38,631	36,378
Other Consumer [Member]
Total loans	183	214
Real estate loans [Member]
Total loans	$ 630,937	$ 587,814

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Allowance Beginning Balance	$ 6,413	$ 5,543	$ 6,153	$ 5,432
Provision (credit) for loan losses	130	250	390	372
Loans charged off				(11)
Allowance Ending Balance	6,543	5,793	6,543	5,793
Commercial [Member]
Allowance Beginning Balance	962	714	917	703
Provision (credit) for loan losses	(10)	115	35	126
Loans charged off				0
Allowance Ending Balance	952	829	952	829
Residential Real Estate [Member]
Allowance Beginning Balance	1,999	1,563	1,722	1,422
Provision (credit) for loan losses	108	73	385	214
Loans charged off				0
Allowance Ending Balance	2,107	1,636	2,107	1,636
Commercial Real Estate [Member]
Allowance Beginning Balance	1,615	1,171	1,520	1,145
Provision (credit) for loan losses	4	59	99	85
Loans charged off				0
Allowance Ending Balance	1,619	1,230	1,619	1,230
Construction [Member]
Allowance Beginning Balance	1,459	1,760	1,661	1,827
Provision (credit) for loan losses	5	86	(197)	19
Loans charged off				0
Allowance Ending Balance	1,464	1,846	1,464	1,846
Home equity lines of credit [Member]
Allowance Beginning Balance	257	215	237	211
Provision (credit) for loan losses	(6)	1	14	5
Loans charged off				0
Allowance Ending Balance	251	216	251	216
Other Consumer [Member]
Allowance Beginning Balance	4	2	2	3
Provision (credit) for loan losses	(1)	0	1	10
Loans charged off				(11)
Allowance Ending Balance	3	2	3	2
Unallocated [Member]
Allowance Beginning Balance	117	118	94	121
Provision (credit) for loan losses	30	(84)	53	(87)
Loans charged off				0
Allowance Ending Balance	$ 147	$ 34	$ 147	$ 34

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016
Allowance related to impaired loans	$ 0		$ 0
Allowance related to non-impaired loans	6,543		6,153
Total allowance	6,543	$ 6,413	6,153	$ 5,793	$ 5,543	$ 5,432
Impaired loan balances	3,708		748
Non-impaired loan balances	722,866		691,629
Total loans	726,574		692,377
Commercial [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	952		917
Total allowance	952	962	917	829	714	703
Impaired loan balances	0		0
Non-impaired loan balances	56,823		67,971
Total loans	56,823		67,971
Residential Real Estate [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	2,107		1,722
Total allowance	2,107	1,999	1,722	1,636	1,563	1,422
Impaired loan balances	815		172
Non-impaired loan balances	370,821		328,854
Total loans	371,636		329,026
Commercial Real Estate [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	1,619		1,520
Total allowance	1,619	1,615	1,520	1,230	1,171	1,145
Impaired loan balances	2,893		576
Non-impaired loan balances	146,930		138,208
Total loans	149,823		138,784
Construction [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	1,464		1,661
Total allowance	1,464	1,459	1,661	1,846	1,760	1,827
Impaired loan balances	0		0
Non-impaired loan balances	109,478		120,004
Total loans	109,478		120,004
Home equity lines of credit [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	251		237
Total allowance	251	257	237	216	215	211
Impaired loan balances	0		0
Non-impaired loan balances	38,631		36,378
Total loans	38,631		36,378
Other Consumer [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	3		2
Total allowance	3	4	2	2	2	3
Impaired loan balances	0		0
Non-impaired loan balances	183		214
Total loans	183		214
Unallocated [Member]
Allowance related to impaired loans	0		0
Allowance related to non-impaired loans	147		94
Total allowance	147	$ 117	94	$ 34	$ 118	$ 121
Impaired loan balances	0		0
Non-impaired loan balances	0		0
Total loans	$ 0		$ 0

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Total Past Due	$ 619	$ 1,239
Past Due 90 Days or More and Still Accruing	0	0
Non-accrual Loans	1,205	576
Financing Receivables, 30 to 59 Days Past Due [Member]
Total Past Due	557	598
Financing Receivables, 60 to 89 Days Past Due [Member]
Total Past Due	0	65
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total Past Due	62	576
Residential Real Estate [Member]
Total Past Due	62	663
Past Due 90 Days or More and Still Accruing	0	0
Non-accrual Loans	648	0
Residential Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total Past Due	0	598
Residential Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total Past Due	0	65
Residential Real Estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total Past Due	62	0
Commercial Real Estate [Member]
Total Past Due	557	576
Past Due 90 Days or More and Still Accruing	0	0
Non-accrual Loans	557	576
Commercial Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Total Past Due	557	0
Commercial Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Total Past Due	0	0
Commercial Real Estate [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Total Past Due	$ 0	$ 576

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Total impaired loans Recorded Investment	$ 3,708	$ 748
Total impaired loans Unpaid Principal Balance	3,852	899
Residential Real Estate [Member]
Impaired loans Recorded Investment, Without a Valuation Allowance	815	172
Impaired loans Unpaid Principal Balance, Without a Valuation Allowance	832	189
Commercial Real Estate [Member]
Impaired loans Recorded Investment, Without a Valuation Allowance	2,893	576
Impaired loans Unpaid Principal Balance, Without a Valuation Allowance	$ 3,020	$ 710

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Average Recorded Investment	$ 3,770	$ 757	$ 2,048	$ 759
Interest Income Recognized	45	7	86	53
Interest Income Recognized on Cash Basis	8	5	39	48
Residential real estate [Member]
Average Recorded Investment	821	175	421	176
Interest Income Recognized	13	2	25	5
Interest Income Recognized on Cash Basis	2	0	5	0
Commercial real estate [Member]
Average Recorded Investment	2,949	582	1,627	583
Interest Income Recognized	32	5	61	48
Interest Income Recognized on Cash Basis	$ 6	$ 5	$ 34	$ 48

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) - Commercial real estate [Member] pure in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Number of Contracts	1
Pre-Modification Outstanding Recorded Investment	$ 572
Post-Modification Outstanding Recorded Investment	$ 582

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Loans	$ 316,124	$ 326,759
Loans rated 1-4 [Member]
Loans	311,435	321,292
Loans rated 5 [Member]
Loans	1,797	1,777
Loans rated 6 [Member]
Loans	2,335	3,114
Loans rated 7 [Member]
Loans	557	576
Commercial Real Estate [Member]
Loans	149,823	138,784
Commercial Real Estate [Member] | Loans rated 1-4 [Member]
Loans	146,006	134,201
Commercial Real Estate [Member] | Loans rated 5 [Member]
Loans	925	1,476
Commercial Real Estate [Member] | Loans rated 6 [Member]
Loans	2,335	2,531
Commercial Real Estate [Member] | Loans rated 7 [Member]
Loans	557	576
Construction [Member]
Loans	109,478	120,004
Construction [Member] | Loans rated 1-4 [Member]
Loans	109,478	120,004
Construction [Member] | Loans rated 5 [Member]
Loans	0	0
Construction [Member] | Loans rated 6 [Member]
Loans	0	0
Construction [Member] | Loans rated 7 [Member]
Loans	0	0
Commercial [Member]
Loans	56,823	67,971
Commercial [Member] | Loans rated 1-4 [Member]
Loans	55,951	67,087
Commercial [Member] | Loans rated 5 [Member]
Loans	872	301
Commercial [Member] | Loans rated 6 [Member]
Loans	0	583
Commercial [Member] | Loans rated 7 [Member]
Loans	$ 0	$ 0

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Details Textual) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Loans and Leases Receivable, Gross	$ 726,574	$ 692,377
Commercial Loan [Member]
Loans and Leases Receivable, Gross	56,823	$ 67,971
Loan rated 9 [Member] | Maximum [Member] | Commercial Loan [Member]
Loans and Leases Receivable, Gross	$ 25
Credit Rating Eleven [Member] | Maximum [Member]
Period After Credit Rating Assignment	60 days

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FAIR VALUES OF FINANCIAL INSTRUMENTS (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 67,661
Forward loan sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	5
Securities available for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,651	$ 66,486
Derivative loan commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	5
Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 1 [Member] | Forward loan sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 1 [Member] | Securities available for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Fair Value, Inputs, Level 1 [Member] | Derivative loan commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,661
Fair Value, Inputs, Level 2 [Member] | Forward loan sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 2 [Member] | Securities available for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,651	66,486
Fair Value, Inputs, Level 2 [Member] | Derivative loan commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
Fair Value, Inputs, Level 3 [Member] | Forward loan sale commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	5
Fair Value, Inputs, Level 3 [Member] | Securities available for sale
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	$ 0
Fair Value, Inputs, Level 3 [Member] | Derivative loan commitments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 5

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FAIR VALUES OF FINANCIAL INSTRUMENTS (Details 1) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017
Loans held for sale	$ 698
Fair Value, Inputs, Level 1 [Member]
Loans held for sale	0	$ 0
Fair Value, Inputs, Level 2 [Member]
Loans held for sale	0	0
Fair Value, Inputs, Level 3 [Member]
Loans held for sale	$ 698	$ 0

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FAIR VALUES OF FINANCIAL INSTRUMENTS (Details 2) - USD ($) $ in Thousands	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016
Financial assets:
Cash and cash equivalents, Carrying Amount	$ 24,203	$ 28,462	$ 31,019	$ 28,425
Certificates of deposit, Carrying Amount	100	100
FHLB stock, Carrying Amount	5,466	5,937
Loans held for sale, Carrying Amount	698	0
Loans, net, Carrying Amount	720,050	686,302
Accrued interest receivable, Carrying Amount	2,308	2,140
Forward loan sale commitments, Carrying Amount	5
Derivative loan commitments, Carrying Amount	5
Cash and cash equivalents, Fair Value	24,203	28,462
Certificates of deposit, Fair Value	100	100
Securities available for sale, Fair Value	67,651	66,486
FHLB stock, Fair Value	5,466	5,937
Loans held for sale, Fair Value	698
Loans, net, Fair Value	708,181	694,614
Accrued interest receivable, Fair Value	2,308	2,140
Forward loan sale commitments,Fair Value	5
Derivative loan commitments, Fair Value	5
Financial liabilities:
Deposits, Carrying Amount	670,503	616,742
Short-term borrowings, Carrying Amount	27,500	38,000
Long-term debt, Carrying Amount	62,357	77,174
Subordinated debt, Carrying Amount	9,825	9,802
Accrued interest payable, Carrying Amount	441	286
Deposits, Fair Value	668,912	615,653
Short-term borrowings, Fair Value	27,500	38,000
Long-term debt, Fair Value	61,619	76,906
Subordinated debt, Fair Value	9,668	9,598
Accrued interest payable, Fair Value	441	286
Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents, Fair Value	24,203	28,462
Certificates of deposit, Fair Value	100	100
Securities available for sale, Fair Value	0	0
FHLB stock, Fair Value	0	0
Loans held for sale, Fair Value	0	0
Loans, net, Fair Value	0	0
Accrued interest receivable, Fair Value	0	0
Forward loan sale commitments,Fair Value	0
Derivative loan commitments, Fair Value	0
Financial liabilities:
Deposits, Fair Value	0	0
Short-term borrowings, Fair Value	0	0
Long-term debt, Fair Value	0	0
Subordinated debt, Fair Value	0	0
Accrued interest payable, Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Financial assets:
Cash and cash equivalents, Fair Value	0	0
Certificates of deposit, Fair Value	0	0
Securities available for sale, Fair Value	67,651	66,486
FHLB stock, Fair Value	0	0
Loans held for sale, Fair Value	0	0
Loans, net, Fair Value	0	0
Accrued interest receivable, Fair Value	0	0
Forward loan sale commitments,Fair Value	0
Derivative loan commitments, Fair Value	0
Financial liabilities:
Deposits, Fair Value	0	0
Short-term borrowings, Fair Value	27,500	38,000
Long-term debt, Fair Value	61,619	76,906
Subordinated debt, Fair Value	0	0
Accrued interest payable, Fair Value	0	0
Fair Value, Inputs, Level 3 [Member]
Financial assets:
Cash and cash equivalents, Fair Value	0	0
Certificates of deposit, Fair Value	0	0
Securities available for sale, Fair Value	0	0
FHLB stock, Fair Value	5,466	5,937
Loans held for sale, Fair Value	698	0
Loans, net, Fair Value	708,181	694,614
Accrued interest receivable, Fair Value	2,308	2,140
Forward loan sale commitments,Fair Value	5
Derivative loan commitments, Fair Value	5
Financial liabilities:
Deposits, Fair Value	668,912	615,653
Short-term borrowings, Fair Value	0	0
Long-term debt, Fair Value	0	0
Subordinated debt, Fair Value	9,668	9,598
Accrued interest payable, Fair Value	$ 441	$ 286

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EMPLOYEE STOCK OWNERSHIP PLAN (Details) - shares	Sep. 30, 2018	Sep. 30, 2017
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Allocated	62,039
Committed to be allocated	9,629	9,629
Unallocated	105,915
Total	177,583

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EMPLOYEE STOCK OWNERSHIP PLAN (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Employee Stock Ownership Plan ESOP Percent Of Shares Authorized To Be Purchased			7.00%
Employee Stock Ownership Plan ESOP Debt Structure Direct Loan Term			15 years
Employee Stock Ownership Plan ESOP Debt Structure Direct Loan Interest Rate			3.25%
Employee Stock Ownership Plan ESOP Cost Of Committed To Be Released Shares			$ 3,600
Employee Stock Ownership Plan (ESOP), Shares in ESOP	177,583		177,583
Employee Stock Ownership Plan (ESOP), Compensation Expense	$ 109	$ 86	$ 307	$ 260

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EQUITY INCENTIVE PLANS (Details) - 2012 Equity Incentive Plan [Member] $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Sep. 30, 2018 USD ($) $ / shares shares
Options
Outstanding at beginning of period | shares	212
Exercised | shares	(19)
Forfeited | shares	0
Outstanding at end of period | shares	193
Options exercisable at end of period | shares	175
Weighted Average Exercise Price
Outstanding at beginning of period | $ / shares	$ 16.05
Exercised | $ / shares	15.35
Forfeited | $ / shares	0
Outstanding at end of period | $ / shares	16.11
Options exercisable at end of period | $ / shares	$ 15.29
Weighted Average Remaining Contractual Term
Outstanding at end of period	4 years 5 months 23 days
Options exercisable at end of period	4 years 3 months 29 days
Aggregate intrinsic value
Outstanding | $	$ 3,497
Options exercisable at end of period | $	$ 3,144

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EQUITY INCENTIVE PLANS (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense for non-vested stock options	$ 41		$ 41
Unrecognized compensation expense, recognition period			1 year 3 months 18 days
Compensation expense for stock award plan	97	$ 121	$ 285	$ 334
Recognize tax Benefit	27	45	80	134
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense for non-vested stock options	556		$ 556
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense, recognition period			2 years 11 months 26 days
Recognize tax Benefit		10		28
Share base compensation expenses applicable to stock option plan	$ 9	$ 54	$ 28	$ 159
2012 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plan, options granted	231,894		231,894
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period			10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage			20.00%
2016 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity Incentive Plan, options granted	75,000		75,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	34,000		34,000

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EARNINGS PER COMMON SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
Net income applicable to common stock	$ 1,557	$ 1,166	$ 4,414	$ 2,984
Average number of common shares issued	2,516,000	2,490,000	2,509,000	2,488,000
Less: Average unallocated ESOP shares	(108,000)	(120,000)	(111,000)	(124,000)
Average number of common shares outstanding used to calculate basic earnings per common share	2,408,091	2,370,623	2,398,671	2,364,449
Effect of dilutive stock options	103,000	84,000	101,000	85,000
Average number of common shares outstanding used to calculate diluted earnings per share	2,511,241	2,454,198	2,499,093	2,448,558
Earnings per common share:
Basic	$ 0.65	$ 0.49	$ 1.84	$ 1.26
Diluted	$ 0.62	$ 0.48	$ 1.77	$ 1.22