10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended:September 30, 2019

o 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:001-13349

BAR HARBOR BANKSHARES

(Exact name of registrant as specified in its charter) 

Maine	01-0393663
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
PO Box 400
82 Main Street, Bar Harbor, ME	04609-0400
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (207) 288-3314

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $2.00 per share	BHB	NYSE American

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 ý  No o

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 ý  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definition of "large accelerated filer," "accelerated filer", "smaller reporting company", or "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Large Accelerated Filer o        Accelerated Filer ý       Non-Accelerated Filer o      Smaller Reporting Company o        Emerging growth company o

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 accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o  No ý

The Registrant had 15,552,297 shares of common stock, par value $2.00 per share, outstanding as of October 31, 2019.

BAR HARBOR BANKSHARES AND SUBSIDIARIES

FORM 10-Q

INDEX 

				Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018			4
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2019 and 2018			5
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2019 and 2018			6
	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended September 30, 2019 and 2018			7
	Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2019 and 2018			8
	Notes to Unaudited Consolidated Interim Financial Statements
		Note 1	Basis of Presentation	9
		Note 2	Securities Available for Sale	12
		Note 3	Loans	15
		Note 4	Allowance for Loan Losses	33
		Note 5	Borrowed Funds	40
		Note 6	Deposits	42
		Note 7	Capital Ratios and Shareholders' Equity	43
		Note 8	Earnings per Share	47
		Note 9	Derivative Financial Instruments and Hedging Activities	48
		Note 10	Fair Value Measurements	51
		Note 11	Non-Interest Income	57
		Note 12	Leases	59
		Note 13	Subsequent Events	61
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			62
		Selected Financial Data		63
		Consolidated Loan and Deposit Analysis		65
		Average Balances and Average Yields/Rates		66
		Non-GAAP Financial Measures		68
		Reconciliation of Non-GAAP Financial Measures		69
		Financial Summary		71
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			78
Item 4.	Controls and Procedures			80

2

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	80
Item 1A.	Risk Factors	80
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81
Item 6.	Exhibits	82
Signatures		83

The Company conducts business operations principally through Bar Harbor Bank & Trust, which may be referred to as the Bank and which is a subsidiary of Bar Harbor Bankshares. Unless the context requires otherwise, references in this report to "our company, "our," "us," "we" and similar terms refer to Bar Harbor Bankshares and its subsidiaries, including the Bank, collectively.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Because of these and other uncertainties, the Company’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company’s past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

3

PART I.    FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)	September 30, 2019			December 31, 2018
Assets
Cash and due from banks	$	50,032		$	35,208
Interest-bearing deposit with the Federal Reserve Bank	21,561			63,546
Total cash and cash equivalents	71,593			98,754
Securities available for sale, at fair value	675,675			725,837
Federal Home Loan Bank stock	27,469			35,659
Total securities	703,144			761,496
Loans:
Commercial real estate	923,773			826,699
Commercial and industrial	402,706			404,870
Residential real estate	1,143,452			1,144,698
Consumer	107,375			113,960
Total loans	2,577,306			2,490,227
Less: Allowance for loan losses	(15,353		)	(13,866		)
Net loans	2,561,953			2,476,361
Premises and equipment, net	47,644			48,804
Other real estate owned	2,455			2,351
Goodwill	100,085			100,085
Other intangible assets	6,879			7,459
Cash surrender value of bank-owned life insurance	75,368			73,810
Deferred tax assets, net	4,988			9,514
Other assets	38,365			29,853
Total assets	$	3,612,474		$	3,608,487
Liabilities
Deposits:
Demand	$	380,707		$	370,889
NOW	490,315			484,717
Savings	360,570			358,888
Money market	359,328			335,951
Time	902,665			932,793
Total deposits	2,493,585			2,483,238
Borrowings:
Senior	641,819			680,823
Subordinated	42,928			42,973
Total borrowings	684,747			723,796
Other liabilities	39,683			30,874
Total liabilities	3,218,015			3,237,908
(continued)
Shareholders’ equity
Capital stock, par value $2.00; authorized 20,000,000 shares; issued 16,428,388 and 16,428,388 shares at September 30, 2019 and December 31, 2018, respectively	32,857			32,857
Additional paid-in capital	188,283			187,653
Retained earnings	174,994			166,526
Accumulated other comprehensive income (loss)	3,045			(11,802		)
Less: 879,785 and 905,201 shares of treasury stock at September 30, 2019 and December 31, 2018, respectively	(4,720		)	(4,655		)
Total shareholders’ equity	394,459			370,579
Total liabilities and shareholders’ equity	$	3,612,474		$	3,608,487

The accompanying notes are an integral part of these consolidated financial statements.

4

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2019		2018		2019		2018
Interest and dividend income
Loans	$	28,157	$	26,212	$	82,681	$	77,272
Securities and other	6,105		5,972		18,593		17,407
Total interest and dividend income	34,262		32,184		101,274		94,679
Interest expense
Deposits	7,143		5,478		20,336		13,868
Borrowings	4,674		4,237		15,232		12,192
Total interest expense	11,817		9,715		35,568		26,060
Net interest income	22,445		22,469		65,706		68,619
Provision for loan losses	893		643		1,779		2,208
Net interest income after provision for loan losses	21,552		21,826		63,927		66,411
Non-interest income
Trust and investment management fee income	3,013		2,952		8,836		9,036
Customer service fees	2,553		2,490		7,336		7,061
Gain on sales of securities, net	157		—		157		—
Bank-owned life insurance income	497		505		1,558		1,328
Customer derivative income	828		—		1,553		545
Other income	595		1,179		1,823		2,515
Total non-interest income	7,643		7,126		21,263		20,485
Non-interest expense
Salaries and employee benefits	11,364		10,331		33,568		31,695
Occupancy and equipment	3,415		3,366		10,101		9,364
Loss on premises and equipment, net	—		—		21		—
Outside services	424		456		1,278		1,597
Professional services	707		223		1,821		1,016
Communication	189		217		707		701
Marketing	613		293		1,419		1,207
Amortization of intangible assets	207		207		621		621
Acquisition, restructuring and other expenses	3,039		70		3,319		619
Other expenses	3,442		2,743		10,075		8,623
Total non-interest expense	23,400		17,906		62,930		55,443
Income before income taxes	5,795		11,046		22,260		31,453
Income tax expense	780		2,076		3,847		6,136
Net income	$	5,015	$	8,970	$	18,413	$	25,317
Earnings per share:
Basic	$	0.32	$	0.58	$	1.19	$	1.64
Diluted	$	0.32	$	0.58	$	1.18	$	1.63
Weighted average common shares outstanding:
Basic	15,547		15,503		15,536		15,478
Diluted	15,581		15,580		15,582		15,564

The accompanying notes are an integral part of these consolidated financial statements.

5

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Net income	$	5,015		$	8,970		$	18,413		$	25,317
Other comprehensive income, before tax:
Changes in unrealized gain (loss) on securities available-for-sale	3,200			(5,850		)	21,746			(19,639		)
Changes in unrealized (loss) gain on cash flow hedging derivatives	(370		)	299			(2,372		)	1,179
Changes in unrealized gain on pension	—			—			—			41
Income taxes related to other comprehensive income:
Changes in unrealized (gain) loss on securities available-for-sale	(747		)	1,291			(5,081		)	4,565
Changes in unrealized loss (gain) on cash flow hedging derivatives	85			(81		)	554			(290		)
Changes in unrealized loss on pension	—			—			—			(10		)
Total other comprehensive income (loss)	2,168			(4,341		)	14,847			(14,154		)
Total comprehensive income	$	7,183		$	4,629		$	33,260		$	11,163

The accompanying notes are an integral part of these consolidated financial statements.

6

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands, except per share data)	Common stock amount		Additional paid-in capital			Retained earnings			Accumulated other comprehensive income (loss)			Treasury stock			Total
Balance at December 31, 2017	$	32,857	$	186,702		$	144,977		$	(4,554	)	$	(5,341	)	$	354,641
Net income	—		—			16,347			—			—			16,347
Other comprehensive loss	—		—			—			(9,813		)	—			(9,813		)
Cash dividends declared ($0.39 per share)	—		—			(5,981		)	—			—			(5,981		)
Treasury stock purchased (9,294 shares)	—		—			—			—			(278		)	(278		)
Net issuance (62,782 shares) to employee stock plans, including related tax effects	—		(131		)	—			—			735			604
Modified retrospective basis adoption of Revenue Recognition Accounting Codification Standard 606	—		—			(184		)	—			—			(184		)
Reclassification of the income tax effects of the Tax Cuts and Jobs Act from accumulated other comprehensive income for adoption of ASU 2018-02	—		—			980			(980		)	—			—
Recognition of stock based compensation	—		627			—			—			—			627
Balance at June 30, 2018	32,857		187,198			156,139			(15,347		)	(4,884		)	355,963
Net income	—		—			8,970			—			—			8,970
Other comprehensive loss	—		—			—			(4,341		)	—			(4,341		)
Cash dividends declared ($0.20 per share)	—		—			(3,101		)	—			—			(3,101		)
Treasury stock purchased (1,605 shares)	—		—			—			—			(46		)	(46		)
Net issuance (11,869 shares) to employee stock plans, including related tax effects	—		(123		)	—			—			154			31
Recognition of stock based compensation	—		209			—			—			—			209
Balance at September 30, 2018	$	32,857	$	187,284		$	162,008		$	(19,688	)	$	(4,776	)	$	357,685
Balance at December 31, 2018	$	32,857	$	187,653		$	166,526		$	(11,802	)	$	(4,655	)	$	370,579
Net income	—		—			13,398			—			—			13,398
Other comprehensive income	—		—			—			12,679			—			12,679
Cash dividends declared ($0.42 per share)	—		—			(6,524		)	—			—			(6,524		)
Treasury stock purchased (8,010 shares)	—		—			—			—			(210		)	(210		)
Net issuance (21,119 shares) to employee stock plans, including related tax effects	—		(69		)	—			—			149			80
Recognition of stock based compensation	—		560			—			—			—			560
Balance at June 30, 2019	32,857		188,144			173,400			877			(4,716		)	390,562
Net income	—		—			5,015			—			—			5,015
Other comprehensive income	—		—			—			2,168			—			2,168
Cash dividends declared ($0.22 per share)	—		—			(3,421		)	—			—			(3,421		)
Treasury stock purchased (5,482 shares)	—		—			—			—			(136		)	(136		)
Net issuance (4,297 shares) to employee stock plans, including related tax effects	—		(17		)	—			—			132			115
Recognition of stock based compensation	—		156			—			—			—			156
Balance at September 30, 2019	$	32,857	$	188,283		$	174,994		$	3,045		$	(4,720	)	$	394,459

The accompanying notes are an integral part of these consolidated financial statements.

7

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS 

	Nine Months Ended September 30,
(in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	18,413		$	25,317
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,779			2,208
Net amortization of securities	2,535			3,066
Change in unamortized net loan costs and premiums	(278		)	46
Premises and equipment depreciation	2,942			2,821
Stock-based compensation expense	716			836
Accretion of purchase accounting entries, net	(2,613		)	(2,780		)
Amortization of other intangibles	621			621
Income from cash surrender value of bank-owned life insurance policies	(1,558		)	(1,328		)
Gain on sales of securities, net	(157		)	—
Loss on other real estate owned	146			—
Loss on premises and equipment, net	21			—
Net change in other assets and liabilities	(1,722		)	(3,644		)
Net cash provided by operating activities	20,845			27,163
Cash flows from investing activities:
Proceeds from sales of securities available for sale	67,983			—
Proceeds from maturities, calls and prepayments of securities available for sale	77,812			72,278
Purchases of securities available for sale	(76,620		)	(90,399		)
Net change in loans	(85,483		)	2,852
Purchase of Federal Home Loan Bank stock	(10,471		)	(1,172		)
Proceeds from sale of Federal Home Loan Bank stock	18,661			5,123
Purchase of premises and equipment, net	(1,803		)	(2,675		)
Purchase of bank-owned life insurance	—			(14,000		)
Proceeds from sale of other real estate owned	—			69
Net cash used in investing activities	(9,921		)	(27,924		)
Cash flows from financing activities:
Net increase in deposits	10,968			38,885
Proceeds from advances from the Federal Home Loan Bank	9,722,907			7,276,306
Repayments of advances from the Federal Home Loan Bank	(9,766,912		)	(7,320,515		)
Net change in short-term other borrowings	5,048			(3,255		)
Exercise of stock options	195			635
Treasury stock purchased	(346		)	(324		)
Cash dividends paid on common stock	(9,945		)	(9,082		)
Net cash used in financing activities	(38,085		)	(17,350		)
Net change in cash and cash equivalents	(27,161		)	(18,111		)
Cash and cash equivalents at beginning of year	98,754			90,685
Cash and cash equivalents at end of year	$	71,593		$	72,574
Supplemental cash flow information:
Interest paid	$	34,394		$	25,537
Income taxes paid, net	2,479			9,927
Other non-cash changes:
Real estate owned acquired in settlement of loans	250			30

The accompanying notes are an integral part of these consolidated financial statements.

8

BAR HARBOR BANKSHARES AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1.          BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for the Company's Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the Securities and Exchange Commission (the "SEC").  In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation.  The reclassifications had no impact on net income in the Company’s consolidated income statement.  

9

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2019
ASU 2016-02, Leases	This ASU creates ASU Topic 842, Leases, and supersedes Topic 840, Leases. The new guidance requires lessees to record a right-of-use asset and a corresponding liability equal to the present value of future rental payments on their balance sheets for all leases with a term greater than one year. There are not significant changes to lessor accounting; however, there are certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. This guidance expands both quantitative and qualitative required disclosures. This ASU is required to be adopted on a modified retrospective basis and allows for practical expedients and elections in conjunction with implementation. The Company may elect some of the expedients upon the adoption date, which may be applied prospectively or retrospectively.	January 1, 2019	The Company adopted this ASU as of January 1, 2019 including the election of the practical expedients, allowing for existing leases to be accounted for consistent with current guidance, with the exception of balance sheet recognition for lessees. A modified retrospective transition approach was utilized, applying the new standard to all leases existing at the date of initial application. At January 1, 2019 the Company recognized a right-of-use asset and corresponding lease liability of $9.0 million. This computation is based, primarily, on the present value of unpaid future minimum lease payments. Additionally, that amount is impacted by assumptions around renewals and/or extensions, and the interest rate used to discount those future lease obligations. Due to the limited size of the Company's leasing portfolio, many other items related to this standard don't apply, or had an immaterial impact on the Company's consolidated financial statements. For transitional disclosures see Note 12 - Leases.
ASU 2018-11 Practical Expedients to Topic 842, Leases
ASU 2018-20 Scope Improvements for Lessors
ASU 2019-01 Leases: Codification Improvements
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This ASU amends Accounting Standards Codification ("ASC") 815, Derivatives and Hedging to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, although it did not have a material impact on the Company's consolidated financial statements.
ASU 2018-16, Inclusion of Overnight Financing Rate or Overnight Swap Rate as a Benchmark for Hedge Accounting
ASU 2018-07, Share Based Payment Accounting	This ASU expands the scope of Topic 718, Compensation- Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Based Payments to non-employees.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, with no material impact on the Company's consolidated financial statements.

10

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses on loans with the application of the expected credit loss model. Also, for acquired purchased impaired loans it requires the reclassification of the credit portion of the total remaining fair value adjustment directly to the allowance for loan losses. Fair value adjustments on purchased credit impaired loans related to interest rates and fair value adjustments on other acquired loans will continue to be accreted into income over time.
ASU 2018-19, Codification Improvements to ASU 2016-13
			In addition, the Company expects the ASU to change the presentation of credit losses for AFS debt securities through an allowance method rather than as a direct write-off and may allow for recovery of these amounts in the future.
	While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time.
			The Company is in the process of evaluating and implementing allowance loan loss estimation models to comply with the guidance under this ASU, which may result in a higher allowance for losses then currently recorded under the existing standard.
	The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	Early adoption is permitted in 2019.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

11

NOTE 2.    SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	344,547	$	5,924	$	1,328	$	349,143
US Government agency	116,912		2,130		217		118,825
Private label	20,268		75		389		19,954
Obligations of states and political subdivisions thereof	107,854		3,519		147		111,226
Corporate bonds	75,652		1,554		679		76,527
Total securities available for sale	$	665,233	$	13,202	$	2,760	$	675,675
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	413,492	$	904	$	9,444	$	404,952
US Government agency	111,938		509		1,935		110,512
Private label	20,353		113		84		20,382
Obligations of states and political subdivisions thereof	133,260		1,081		2,076		132,265
Corporate bonds	58,098		264		636		57,726
Total securities available for sale	$	737,141	$	2,871	$	14,175	$	725,837

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at September 30, 2019 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	190	$	191
Over 1 year to 5 years	33,984		34,856
Over 5 years to 10 years	56,882		57,482
Over 10 years	92,451		95,224
Total bonds and obligations	183,507		187,753
Mortgage-backed securities	481,726		487,922
Total securities available for sale	$	665,233	$	675,675

12

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
(In thousands)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	140	$	30,711	$	1,188	$	60,174	$	1,328	$	90,885
US Government agency	117		10,691		100		9,767		217		20,458
Private label	385		19,573		4		39		389		19,612
Obligations of states and political subdivisions thereof	20		4,138		127		1,692		147		5,830
Corporate bonds	493		14,506		186		7,186		679		21,692
Total securities available for sale	$	1,155	$	79,619	$	1,605	$	78,858	$	2,760	$	158,477
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	155	$	19,367	$	9,289	$	297,569	$	9,444	$	316,936
US Government agency	16		2,570		1,919		68,266		1,935		70,836
Private label	79		10,393		5		47		84		10,440
Obligations of states and political subdivisions thereof	43		6,784		2,033		47,930		2,076		54,714
Corporate bonds	224		11,759		412		14,460		636		26,219
Total securities available for sale	$	517	$	50,873	$	13,658	$	428,272	$	14,175	$	479,145

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired.  For the three and nine months ended September 30, 2019 and 2018 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Estimated credit losses as of prior year-end	$	1,697	$	1,697	$	1,697	$	1,697
Reductions for securities paid off during the period	—		—		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697	$	1,697	$	1,697

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2019, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

13

The following summarizes, by investment security type, the basis for the conclusion that securities in an unrealized loss position were not other-than-temporarily impaired at September 30, 2019:

US Government-sponsored enterprises

172 out of the total 702 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.4% of the amortized cost of securities in unrealized loss positions. The FNMA and FHLMC guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

46 out of the total 190 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 1.0% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

Nine of the total 20 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.9% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

Nine of the total 219 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 2.5% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

Seven out of the total 26 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 3.0% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

14

NOTE 3.    LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	28,802	$	2,064	$	30,866	$	23,754	$	2,890	$	26,644
Other commercial real estate	672,885		220,022		892,907		555,980		244,075		800,055
Total commercial real estate	701,687		222,086		923,773		579,734		246,965		826,699
Commercial and industrial:
Commercial	239,894		40,490		280,384		234,757		52,470		287,227
Agricultural	21,206		—		21,206		22,317		—		22,317
Tax exempt	66,043		35,073		101,116		56,588		38,738		95,326
Total commercial and industrial	327,143		75,563		402,706		313,662		91,208		404,870
Total commercial loans	1,028,830		297,649		1,326,479		893,396		338,173		1,231,569
Residential real estate:
Residential mortgages	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Total residential real estate	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Consumer:
Home equity	58,556		37,600		96,156		57,898		45,291		103,189
Other consumer	10,234		985		11,219		9,414		1,357		10,771
Total consumer	68,790		38,585		107,375		67,312		46,648		113,960
Total loans	$	1,828,136	$	749,170	$	2,577,306	$	1,630,897	$	859,330	$	2,490,227

The carrying amount of the acquired loans at September 30, 2019 totaled $749.2 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $8.4 million (and total note balances of $11.5 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $740.8 million as of September 30, 2019.

15

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,195		$	2,807
Reclassification from non-accretable difference for loans with (decreased) improved cash flows	(126		)	1,985
Accretion	(581		)	(315		)
Balance at end of period	$	3,488		$	4,477
	Nine Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,377		$	3,509
Reclassification from non-accretable difference for loans with improved cash flows	498			2,031
Accretion	(1,387		)	(1,063		)
Balance at end of period	$	3,488		$	4,477

The following is a summary of past due loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	—	$	—	$	73	$	73	$	28,729	$	28,802	$	73
Other commercial real estate	985		56		6,773		7,814		665,071		672,885		—
Total commercial real estate	985		56		6,846		7,887		693,800		701,687		73
Commercial and industrial:
Commercial	772		64		1,145		1,981		237,913		239,894		—
Agricultural	121		72		25		218		20,988		21,206		—
Tax exempt	—		—		—		—		66,043		66,043		—
Total commercial and industrial	893		136		1,170		2,199		324,944		327,143		—
Total commercial loans	1,878		192		8,016		10,086		1,018,744		1,028,830		73
Residential real estate:
Residential mortgages	399		345		871		1,615		728,901		730,516		71
Total residential real estate	399		345		871		1,615		728,901		730,516		71
Consumer:
Home equity	131		65		315		511		58,045		58,556		—
Other consumer	2		7		—		9		10,225		10,234		—
Total consumer	133		72		315		520		68,270		68,790		—
Total loans	$	2,410	$	609	$	9,202	$	12,221	$	1,815,915	$	1,828,136	$	144

16

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	12	$	—	$	—	$	12	$	190	$	2,064	$	—
Other commercial real estate	434		—		240		674		4,859		220,022		72
Total commercial real estate	446		—		240		686		5,049		222,086		72
Commercial and industrial:
Commercial	—		41		750		791		249		40,490		387
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		35,073		—
Total commercial and industrial	—		41		750		791		249		75,563		387
Total commercial loans	446		41		990		1,477		5,298		297,649		459
Residential real estate:
Residential mortgages	245		519		874		1,638		3,093		412,936		47
Total residential real estate	245		519		874		1,638		3,093		412,936		47
Consumer:
Home equity	356		133		180		669		19		37,600		37
Other consumer	—		—		—		—		—		985		—
Total consumer	356		133		180		669		19		38,585		37
Total loans	$	1,047	$	693	$	2,044	$	3,784	$	8,410	$	749,170	$	543

17

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	23,754	$	23,754	$	—
Other commercial real estate	1,146		—		6,725		7,871		548,109		555,980		—
Total commercial real estate	1,146		—		6,725		7,871		571,863		579,734		—
Commercial and industrial:
Commercial	395		60		402		857		233,900		234,757		50
Agricultural	65		6		25		96		22,221		22,317		—
Tax exempt	—		—		—		—		56,588		56,588		—
Total commercial and industrial	460		66		427		953		312,709		313,662		50
Total commercial loans	1,606		66		7,152		8,824		884,572		893,396		50
Residential real estate:
Residential mortgages	3,565		641		1,309		5,515		664,674		670,189		—
Total residential real estate	3,565		641		1,309		5,515		664,674		670,189		—
Consumer:
Home equity	72		—		—		72		57,826		57,898		—
Other consumer	17		—		11		28		9,386		9,414		—
Total consumer	89		—		11		100		67,212		67,312		—
Total loans	$	5,260	$	707	$	8,472	$	14,439	$	1,616,458	$	1,630,897	$	50

18

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	164	$	2,890	$	—
Other commercial real estate	631		99		211		941		6,143		244,075		—
Total commercial real estate	631		99		211		941		6,307		246,965		—
Commercial and industrial:
Commercial	149		26		494		669		679		52,470		—
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		38,738		—
Total commercial and industrial	149		26		494		669		679		91,208		—
Total commercial loans	780		125		705		1,610		6,986		338,173		—
Residential real estate:
Residential mortgages	3,419		254		1,792		5,465		3,095		474,509		—
Total residential real estate	3,419		254		1,792		5,465		3,095		474,509		—
Consumer:
Home equity	198		—		66		264		22		45,291		7
Other consumer	17		—		—		17		3		1,357		189
Total consumer	215		—		66		281		25		46,648		196
Total loans	$	4,414	$	379	$	2,563	$	7,356	$	10,106	$	859,330	$	196

19

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities  Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	1	$	—	$	1	$	1	$	—	$	1
Other commercial real estate	8,172		346		8,518		7,873		282		8,155
Total commercial real estate	8,173		346		8,519		7,874		282		8,156
Commercial and industrial:
Commercial	1,268		575		1,843		1,423		643		2,066
Agricultural	234		—		234		265		—		265
Tax exempt	—		—		—		—		—		—
Total commercial and industrial	1,502		575		2,077		1,688		643		2,331
Total commercial loans	9,675		921		10,596		9,562		925		10,487
Residential real estate:
Residential mortgages	3,277		2,063		5,340		4,213		2,997		7,210
Total residential real estate	3,277		2,063		5,340		4,213		2,997		7,210
Consumer:
Home equity	564		154		718		246		201		447
Other consumer	25		—		25		90		1		91
Total consumer	589		154		743		336		202		538
Total loans	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235

20

Loans evaluated for impairment as of September 30, 2019 and December 31, 2018 are, as follows:

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	8,759	$	1,323	$	2,643	$	13	$	12,738
Collectively evaluated	692,928		325,820		727,873		68,777		1,815,398
Total	$	701,687	$	327,143	$	730,516	$	68,790	$	1,828,136

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	257	$	414	$	973	$	—	$	1,644
Purchased credit impaired	5,049		249		3,093		19		8,410
Collectively evaluated	216,780		74,900		408,870		38,566		739,116
Total	$	222,086	$	75,563	$	412,936	$	38,585	$	749,170

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	9,835	$	1,445	$	2,562	$	13	$	13,855
Collectively evaluated	569,899		312,217		667,627		67,299		1,617,042
Total	$	579,734	$	313,662	$	670,189	$	67,312	$	1,630,897

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	188	$	426	$	744	$	—	$	1,358
Purchased credit impaired	6,307		679		3,095		25		10,106
Collectively evaluated	240,470		90,103		470,670		46,623		847,866
Total	$	246,965	$	91,208	$	474,509	$	46,648	$	859,330

21

The following is a summary of impaired loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	5,634		5,675		—
Commercial	657		713		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	2,082		2,236		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	3,124		3,262		989
Commercial	666		694		240
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	561		594		66
Home equity	13		13		1
Other consumer	—		—		—
Total
Commercial real estate	$	8,759	$	8,938	$	990
Commercial and industrial	1,323		1,407		240
Residential real estate	2,643		2,830		66
Consumer	13		13		1
Total impaired loans	$	12,738	$	13,188	$	1,297

22

Acquired Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	90		90		—
Commercial	414		508		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	616		852		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	167		168		12
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	357		376		32
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	257	$	258	$	12
Commercial and industrial	414		508		—
Residential real estate	973		1,228		32
Consumer	—		—		—
Total impaired loans	$	1,644	$	1,994	$	44

23

Business Activities Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	8,209		8,301		—
Commercial	649		669		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	1,671		1,709		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	1,625		1,660		421
Commercial	796		855		78
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	891		916		111
Home equity	13		13		—
Other consumer	—		—		—
Total
Commercial real estate	$	9,835	$	9,962	$	422
Commercial and industrial	1,445		1,524		78
Residential real estate	2,562		2,625		111
Consumer	13		13		—
Total impaired loans	$	13,855	$	14,124	$	611

24

Acquired Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	188		187		—
Commercial	426		510		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	375		524		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	—		—		—
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	369		379		41
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	188	$	187	$	—
Commercial and industrial	426		510		—
Residential real estate	744		903		41
Consumer	—		—		—
Total impaired loans	$	1,358	$	1,600	$	41

25

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018:

Business Activities Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,528		52		6,639		31
Commercial	747		4		625		2
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,041		16		3,955		9
Home equity	—		—		158		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	1	$	—	$	1	$	—
Other commercial real estate	3,217		—		2,214		—
Commercial	654		—		788		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	551		2		888		3
Home equity	12		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,746	$	52	$	8,854	$	31
Commercial and industrial	1,401		4		1,413		2
Residential real estate	2,592		18		4,843		12
Consumer	12		—		171		—
Total impaired loans	$	12,751	$	74	$	15,281	$	45

26

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,466		56		6,204		46
Commercial	792		7		628		7
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,089		47		4,027		28
Home equity	—		—		236		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	2	$	—	$	1	$	—
Other commercial real estate	2,972		29		1,600		6
Commercial	497		—		716		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	540		7		800		7
Home equity	13		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,440	$	85	$	7,805	$	52
Commercial and industrial	1,289		7		1,344		7
Residential real estate	2,629		54		4,827		35
Consumer	13		—		249		—
Total impaired loans	$	12,371	$	146	$	14,225	$	94

27

Acquired Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	88		—		95		—
Commercial	395		—		469		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	702		—		276		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	165		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	352		—		181		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	253	$	—	$	95	$	—
Commercial and industrial	395		—		469		—
Residential real estate	1,054		—		457		—
Consumer	—		—		—		—
Total impaired loans	$	1,702	$	—	$	1,021	$	—

28

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	89		—		97		1
Commercial	429		—		445		1
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	593		—		124		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	123		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	361		—		186		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	212	$	—	$	97	$	1
Commercial and industrial	429		—		445		1
Residential real estate	954		—		310		—
Consumer	—		—		—		—
Total impaired loans	$	1,595	$	—	$	852	$	2

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

29

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2019 and 2018, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

	Three Months Ended September 30, 2019
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	4	$	268	$	267
Agricultural	1	141		141
Residential mortgages	2	399		342
Total	7	$	808	$	750
	Three Months Ended September 30, 2018
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	1	72		72
Commercial	5	104		60
Residential mortgages	2	228		225
Total	9	$	406	$	358
	Nine Months Ended September 30, 2019
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	9	$	543	$	529
Other commercial	4	168		91
Agricultural	1	141		141
Residential mortgages	11	1,133		1,034
Total	25	$	1,985	$	1,795

30

	Nine Months Ended September 30, 2018
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	9	1,896		1,564
Other commercial	7	556		486
Agricultural	1	167		—
Residential mortgages	15	2,752		2,168
Home equity	1	100		100
Other consumer	2	5		4
Total	36	$	5,478	$	4,323

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest only payments	2	$	90	—	$	—
Forbearance	1	141		1	115
Forbearance and interest only payments	2	176		3	72
Forbearance and maturity concession	—	—		4	143
Forbearance, amortization and maturity concession	2	343		—	—
Maturity concession	—	—		1	28
Total	7	$	750	9	$	358
	Nine Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest rate and maturity concession	—	$	—	1	$	16
Interest only payments	2	90		—	—
Interest only payments and maturity concession	2	73		—	—
Amortization and maturity concession	4	273		—	—
Amortization, interest rate and maturity concession	1	77		—	—
Forbearance	3	253		3	271
Forbearance and interest only payments	5	331		6	121
Forbearance and maturity concession	—	—		17	1,774
Forbearance, amortization and maturity concession	7	640		—	—
Maturity concession	—	—		2	440
Restructure with maturity concession	—	—		5	1,419
Other	1	58		2	282
Total	25	$	1,795	36	$	4,323

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For the three and nine months ended September 30, 2019, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Foreclosure

As of September 30, 2019 and December 31, 2018, the Company maintained bank-owned residential real estate property with a fair value of $2.5 million. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of September 30, 2019 and December 31, 2018 totaled $931 thousand and $1.5 million, respectively.

Mortgage Banking

Total residential loans included held for sale loans of $4.0 million and $168 thousand at September 30, 2019 and December 31, 2018, respectively.

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NOTE 4.               ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level considered adequate to provide for an estimate of probable credit losses inherent in the loan portfolio. The allowance is increased by the provision charged to operating expense and reduced by net charge-offs. Loans are charged against the allowance for loan losses when the Company believes collectability has declined to a point where there is a distinct possibility of some loss of principal and interest. While the Company uses the best information available to make the evaluation, future adjustments may be necessary if there are significant changes in conditions.

The allowance is comprised of four distinct reserve components: (1) specific reserves related to loans individually evaluated; (2) quantitative reserves related to loans collectively evaluated; (3) qualitative reserves related to loans collectively evaluated; and (4) a temporal estimate is made for incurred loss emergence period for each loan category within the collectively evaluated pools.

A summary of the methodology employed on a quarterly basis with respect to each of these components in order to evaluate the overall adequacy of the Company's allowance for loan losses is as follows:

Specific Reserve for Loans Individually Evaluated

First, the Company identifies loan relationships having aggregate balances in excess of $150 thousand with potential credit weaknesses. Such loan relationships are identified primarily through the Company's analysis of internal loan evaluations, past due loan reports, TDRs and loans adversely classified. Each loan so identified is then individually evaluated for impairment. Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement. Substantially all impaired loans have historically been collateral dependent, meaning repayment of the loan is expected or is considered to be provided solely from the sale of the loan's underlying collateral. For such loans, the Company measures impairment based on the fair value of the loan's collateral, which is generally determined utilizing current appraisals. A specific reserve is established in an amount equal to the excess, if any, of the recorded investment in each impaired loan over the fair value of its underlying collateral, less estimated costs to sell. The Company's policy is to re-evaluate the fair value of collateral dependent loans at least every twelve months unless there is a known deterioration in the collateral's value, in which case a new appraisal is obtained.

Purchase credit impaired (“PCI”) loans are collectively evaluated, but are not included in the general reserve as described below. The evaluation of the PCI loans requires continued quarterly assessment of key assumptions and estimates similar to the initial fair value estimate, including changes in the severity of loss, timing and speed of payments, collateral value changes, expected cash flows and other relevant factors. The quarterly assessment is compared to the initial fair value estimate and a determination is made if an adjustment to the allowance for loan loss is deemed necessary.

Quantitative Reserve for Loans Collectively Evaluated

Second, the Company stratifies the loan portfolio into two general business loan pools: substandard (7 risk-rated) and pass-rated (0 to 6 risk-rated) by loan type. Substandard rated loans are subject to higher credit loss rates in the allowance for loan loss calculation. The Company utilizes historical loss rates for commercial real estate and commercial and industrial loans assessed by internal risk rating. Historical loss rates on residential real estate and consumer loans are not risk graded. Residential real estate and consumer loans are considered as part of the pass-rated portfolio unless removed due to specific reserve evaluation based on past due status and/or other indications of credit deterioration. Quantitative reserves relative to each loan pool are established as follows: for all loan segments an allocation equaling 100% of the respective pool's average 3-year historical net loan charge-off rate (determined based upon the most recent 12 quarters) is applied to the aggregate recorded investment in the pool of loans. Purchased performing loans are collectively evaluated as their own separate category within each loan pool.

33

Qualitative Reserve for Loans Collectively Evaluated

Third, the Company considers the necessity to adjust the average historical net loan charge-off rates relative to each of the above two loan pools for potential risks factors that could result in actual losses deviating from prior loss experience. Such qualitative risk factors considered are: (1) lending policies and procedures, (2) business conditions, (3) volume and nature of the loan portfolio, (4) experience, ability and depth of lending management, (5) problem loan trends, (6) quality of the Company’s loan review system, (7) concentrations in the loan portfolio, (8) competition, legal, and regulatory environment and (9) collateral coverage and loan-to-value.

Loss Emergence Period for Loans Collectively Evaluated

Fourth, the general allowance related to loans collectively evaluated includes an estimate of incurred losses over an estimated loss emergence period ("LEP"). The LEP is generated utilizing a charge-off look-back analysis, which evaluates the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology establishes the approximate number of months of LEP that represents incurred losses for each loan portfolio within each portfolio segment in addition to the qualitative reserves.

Activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 are, as follows:

Business Activities Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	7,206		$	2,748		$	3,942		$	394		$	14,290
Charged-off loans	—			—			(108		)	(55		)	(163		)
Recoveries on charged-off loans	1			62			36			1			100
(Releases) provision for loan losses	956			63			(111		)	(94		)	814
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Acquired Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	159		$	22		$	101		$	—		$	282
Charged-off loans	—			—			(52		)	—			(52		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(2		)	(15		)	99			(3		)	79
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

34

Business Activities Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,811		$	2,380		$	3,982		$	408		$	13,581
Charged-off loans	(57		)	(13		)	(110		)	(129		)	(309		)
Recoveries on charged-off loans	131			62			55			8			256
(Releases) provision for loan losses	1,278			444			(168		)	(41		)	1,513
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041

Acquired Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	173		$	35		$	77		$	—		$	285
Charged-off loans	—			(15		)	(222		)	(5		)	(242		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(16		)	(13		)	293			2			266
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

Business Activities Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,367		$	2,509		$	3,454		$	393		$	12,723
Charged-off loans	(29		)	—			(61		)	(40		)	(130		)
Recoveries on charged-off loans	7			18			—			2			27
Provision (releases) for loan losses	291			(31		)	258			66			584
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Acquired Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	200		$	82		$	85		$	—		$	367
Charged-off loans	(30		)	(71		)	(62		)	(5		)	(168		)
Recoveries on charged-off loans	25			—			—			—			25
Provision (releases) for loan losses	(23		)	33			44			5			59
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

35

Business Activities Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,037		$	2,373		$	3,357		$	386		$	12,153
Charged-off loans	(186		)	(111		)	(61		)	(426		)	(784		)
Recoveries on charged-off loans	68			23			2			5			98
Provision for loan losses	717			211			353			456			1,737
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204

Acquired Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	97		$	16		$	59		$	—		$	172
Charged-off loans	(136		)	(166		)	(126		)	(64		)	(492		)
Recoveries on charged-off loans	43			7			—			82			132
Provision (releases) for loan losses	168			187			134			(18		)	471
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Company’s Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Company's Board of Directors with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies, non-performing loans and potential problem loans. The Company seeks to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator and uses an internal risk rating system to categorize commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Consistent with regulatory guidelines, the Company provides for the classification of loans which are considered to be of lesser quality as special mention, substandard, doubtful, or loss (i.e. risk-rated 6, 7, 8 and 9, respectively).

The following are the definitions of the Company’s credit quality indicators:

Pass: Loans the Company considers in the commercial portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes there is a low risk of loss related to these loans considered pass-rated.

Special Mention:Loans the Company considers having some potential weaknesses, but are deemed to not carry levels of risk inherent in one of the subsequent categories, are designated as special mention. A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. This might include loans which may require a higher level of supervision or internal reporting because of: (i) declining industry trends; (ii) increasing reliance on secondary sources of repayment; (iii) the poor condition of or lack of control

36

over collateral; or (iv) failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized may be included in this classification. Special mention loans are not adversely classified and do not expose the Company to sufficient risks to warrant classification.

Substandard: Loans theCompany considers as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Doubtful: Loans the Company considers as doubtful have all of the weaknesses inherent in those loans that are classified as substandard. These loans have the added characteristic of a well-defined weakness which is inadequately protected by the current sound worth and paying capacity of borrower or of the collateral pledged, if any, and calls into question the collectability of the full balance of the loan. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status is determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loss: Loans the Company considers as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged-off. This classification does not mean the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they are determined to be uncollectible.

The following tables present the Company’s loans by risk rating at September 30, 2019 and December 31, 2018:

Business Activities Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	28,728	$	23,680	$	647,075	$	532,386	$	675,803	$	556,066
Special mention	—		73		12,474		8,319		12,474		8,392
Substandard	73		—		10,212		13,914		10,285		13,914
Doubtful	1		1		3,124		1,361		3,125		1,362
Total	$	28,802	$	23,754	$	672,885	$	555,980	$	701,687	$	579,734

Acquired Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	1,765	$	2,626	$	212,859	$	236,393	$	214,624	$	239,019
Special mention	12		—		1,962		1,574		1,974		1,574
Substandard	287		264		5,033		6,009		5,320		6,273
Doubtful	—		—		168		99		168		99
Total	$	2,064	$	2,890	$	220,022	$	244,075	$	222,086	$	246,965

37

Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	219,962	$	226,353	$	20,413	$	21,680	$	66,043	$	56,588	$	306,418	$	304,621
Special mention	14,000		6,730		346		215		—		—		14,346		6,945
Substandard	4,922		924		447		422		—		—		5,369		1,346
Doubtful	1,010		750		—		—		—		—		1,010		750
Total	$	239,894	$	234,757	$	21,206	$	22,317	$	66,043	$	56,588	$	327,143	$	313,662

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	37,111	$	46,120	$	—	$	—	$	35,073	$	38,738	$	72,184	$	84,858
Special mention	2,511		4,825		—		—		—		—		2,511		4,825
Substandard	527		1,222		—		—		—		—		527		1,222
Doubtful	341		303		—		—		—		—		341		303
Total	$	40,490	$	52,470	$	—	$	—	$	35,073	$	38,738	$	75,563	$	91,208

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	727,239	$	665,976	$	57,992	$	57,652	$	10,209	$	9,324	$	795,440	$	732,952
Nonperforming	3,277		4,213		564		246		25		90		3,866		4,549
Total	$	730,516	$	670,189	$	58,556	$	57,898	$	10,234	$	9,414	$	799,306	$	737,501

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	409,830	$	470,497	$	37,446	$	45,090	$	985	$	1,356	$	448,261	$	516,943
Nonperforming	3,106		4,012		154		201		—		1		3,260		4,214
Total	$	412,936	$	474,509	$	37,600	$	45,291	$	985	$	1,357	$	451,521	$	521,157

38

The following table summarizes total classified and criticized loans as of September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired  Loans		Total		Business Activities Loans		Acquired  Loans		Total
Non-accrual	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235
Substandard accruing	10,114		6,478		16,592		7,810		7,987		15,797
Doubtful accruing	—		—		—		—		—		—
Total classified	23,655		9,616		33,271		21,921		12,111		34,032
Special mention	26,820		4,485		31,305		15,337		6,399		21,736
Total Criticized	$	50,475	$	14,101	$	64,576	$	37,258	$	18,510	$	55,768

39

NOTE 5.               BORROWED FUNDS

Borrowed funds at September 30, 2019 and December 31, 2018 are summarized, as follows:

	September 30, 2019				December 31, 2018
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	422,583	2.24	%	$	611,683	2.47	%
Other borrowings	41,259		1.24		36,211		1.09
Total short-term borrowings	463,842		2.15		647,894		2.39
Long-term borrowings
Advances from the FHLB	177,977		2.25		32,929		1.86
Subordinated borrowings	37,928		5.69		37,973		5.58
Junior subordinated borrowings	5,000		6.15		5,000		5.96
Total long-term borrowings	220,905		2.93		75,902		3.99
Total	$	684,747	2.40	%	$	723,796	2.56	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLB”) advances with a maturity of less than one year. The Company also maintains a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended September 30, 2019 and December 31, 2018.

The Company has the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program and the Discount Window at the Federal Reserve Bank of Boston (the “FRB”). At September 30, 2019, the Company’s available secured line of credit at the FRB was $107.7 million. The Company has pledged certain loans and securities to the FRB to support this arrangement. There were no borrowings with the FRB for the periods ended September 30, 2019 and December 31, 2018.

The Company maintains, with a correspondent bank, an unused unsecured federal funds line of credit that has an aggregate overnight borrowing capacity of $50 million as of September 30, 2019 and December 31, 2018. There was no outstanding balance on the line of credit as of September 30, 2019 and December 31, 2018.

Long-term FHLB advances consist of advances with a maturity of more than one year. The advances outstanding at September 30, 2019 and December 31, 2018 include no callable advances and $319 thousand of amortizing advances. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of September 30, 2019 is, as follows:

	September 30, 2019
(in thousands, except rates)	Carrying Value		Weighted Average Rate
Fixed rate advances maturing:
2019	$	393,601	2.27	%
2020	54,982		2.14
2021	11,658		2.19
2022	134,000		2.25
2023	1,000		—
2024 and thereafter	5,319		1.79
Total FHLB advances	$	600,560	2.24	%

40

In April 2008, the Company issued fifteen year junior subordinated notes in the amount of $5.0 million. These debt securities qualify as Tier 2 capital for the Company and the Bank. The subordinated debt securities are callable by the Bank after five years without penalty, the next date on which the securities can be redeemed is December 15, 2019. The interest rate is three-month LIBOR plus 3.45%. At September 30, 2019 and December 31, 2018 the interest rate was 5.57% and 6.24%, respectively.

The Company has $17.0 million of subordinated debt issued on October 29, 2014, in connection with the execution of a Subordinated Note Purchase Agreement with an aggregate of $17.0 million of subordinated notes (the “Notes”) to the accredited investors. The Notes have a maturity date of November 1, 2024, and will bear interest at a fixed rate of 6.75% per annum. The Company may, at its option, beginning with the interest payment date of November 1, 2019, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at par plus accrued and unpaid interest to the date of redemption. Any partial redemption will be made pro rata among all of the noteholders. The Notes are not subject to repayment at the option of the noteholders. The Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s senior indebtedness and to the Company’s obligations to its general creditors.

The Company also has $20.6 million in floating Junior Subordinated Deferrable Interest Debentures ("Debentures") issued by NHTB Capital Trust II ("Trust II") and NHTB Capital Trust III ("Trust III"), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2014, carry a variable interest rate of 3-month LIBOR plus 2.79%, and mature in 2034. The debt is callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which the Company is not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into the Company’s financial statements.

41

NOTE 6.               DEPOSITS

A summary of time deposits is, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Time less than $100,000	$	659,610	$	622,478
Time $100,000 through $250,000	151,995		193,535
Time $250,000 or more	91,060		116,780
Total time deposits	$	902,665	$	932,793

At September 30, 2019 and December 31, 2018, the scheduled maturities by year for time deposits are, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Within 1 year	$	416,591	$	505,313
Over 1 year to 2 years	365,372		258,176
Over 2 years to 3 years	70,050		123,337
Over 3 years to 4 years	25,603		14,494
Over 4 years to 5 years	22,597		31,353
Over 5 years	2,452		120
Total	$	902,665	$	932,793

Included in time deposits are brokered deposits of $554.3 million and $466.9 million at September 30, 2019 and December 31, 2018, respectively. Also included in time deposits are reciprocal deposits of $69.7 million and $52.4 million at September 30, 2019 and December 31, 2018, respectively.

42

NOTE 7.           CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:

	September 30, 2019		Regulatory Minimum to be "Well Capitalized"		December 31, 2018		Regulatory Minimum to be "Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	14.01	%	N/A		14.23	%	N/A
Common equity tier 1 capital to risk-weighted assets	11.63		N/A		11.80		N/A
Tier 1 capital to risk-weighted assets	12.47		N/A		12.68		N/A
Tier 1 capital to average assets	8.65		N/A		8.53		N/A
Bank
Total capital to risk-weighted assets	13.45	%	10.00	%	13.82	%	10.00	%
Common equity tier 1 capital to risk-weighted assets	12.60		6.50		12.99		6.50
Tier 1 capital to risk-weighted assets	12.60		8.00		12.99		8.00
Tier 1 capital to average assets	8.74		5.00		8.74		5.00

At each date shown, the Company and the Bank met the conditions to be classified as “well-capitalized” under the relevant regulatory framework. To be categorized as "well-capitalized," an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

The Company and the Bank are subject to the Basel III rule that requires the Company and the Bank to assess their Common equity tier 1 capital to risk-weighted assets and the Company and the Bank each exceed the minimum to be "well-capitalized." Effective January 1, 2019 all banking organizations must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5%.

The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At September 30, 2019, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered "well-capitalized" for regulatory purposes.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income (loss) is, as follows:

(in thousands)	September 30, 2019			December 31, 2018
Other accumulated comprehensive income (loss), before tax:
Net unrealized gain (loss) on AFS securities	$	10,442		$	(11,304	)
Net unrealized loss on effective cash flow hedging derivatives	(5,306		)	(2,934		)
Net unrealized loss on post-retirement plans	(1,162		)	(1,162		)
Income taxes related to items of accumulated other comprehensive (income) loss:
Net unrealized (gain) loss on AFS securities	(2,440		)	2,641
Net unrealized loss on effective cash flow hedging derivatives	1,239			685
Net unrealized loss on post-retirement plans	272			272
Accumulated other comprehensive income (loss)	$	3,045		$	(11,802	)

43

The following table presents the components of other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	3,357		$	(784	)	$	2,573
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	3,200			(747		)	2,453
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period	(370		)	85			(285		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on cash flow hedging derivatives	(370		)	85			(285		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	2,830		$	(662	)	$	2,168
Three Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(5,850	)	$	1,291		$	(4,559	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(5,850		)	1,291			(4,559		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	299			(81		)	218
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	299			(81		)	218
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive loss	$	(5,551	)	$	1,210		$	(4,341	)

44

(in thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	21,903		$	(5,118	)	$	16,785
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	21,746			(5,081		)	16,665
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	(2,372		)	554			(1,818		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	(2,372		)	554			(1,818		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	19,374		$	(4,527	)	$	14,847
Nine Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(19,639	)	$	4,565		$	(15,074	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(19,639		)	4,565			(15,074		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,179			(290		)	889
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	1,179			(290		)	889
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	41			(10		)	31
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	41			(10		)	31
Other comprehensive loss	$	(18,419	)	$	4,265		$	(14,154	)

45

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Net unrealized (loss) gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized  loss on pension plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	5,547		$	(3,782	)	$	(888	)	$	877
Other comprehensive gain (loss) before reclassifications	2,573			(285		)	—			2,288
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	2,453			(285		)	—			2,168
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Three Months Ended September 30, 2018
Balance at beginning of period	$	(12,595	)	$	(2,064	)	$	(688	)	$	(15,347	)
Other comprehensive (loss) gain before reclassifications	(4,559		)	218			—			(4,341		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(4,559		)	218			—			(4,341		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(8,665	)	$	(2,249	)	$	(888	)	$	(11,802	)
Other comprehensive gain (loss) before reclassifications	16,785			(1,818		)	—			14,967
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	16,665			(1,818		)	—			14,847
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(1,713	)	$	(2,250	)	$	(591	)	$	(4,554	)
Other comprehensive (loss) gain before reclassifications	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income for ASU 2018-02	(367		)	(485		)	(128		)	(980		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,					Nine Months Ended September 30,					Affected Line Item where Net Income is Presented
(in thousands)	2019			2018		2019			2018
Net realized gains on AFS securities:
Before tax(1)	$	157		$	—	$	157		$	—	Non-interest income
Tax effect	(37		)	—		(37		)	—		Tax expense
Total reclassifications for the period	$	120		$	—	$	120		$	—	Net of tax

⁽¹⁾ Net realized gains before tax include gross realized gains $716 thousand and realized losses of $559 thousand.

46

NOTE 8.    EARNINGS PER SHARE

The following table presents the calculation of earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share and share data)	2019		2018		2019		2018
Net income	$	5,015	$	8,970	$	18,413	$	25,317
Average number of basic common shares outstanding	15,547,276		15,503,488		15,536,414		15,478,207
Plus: dilutive effect of stock options and awards outstanding (1)	34,027		76,575		45,282		85,559
Average number of diluted common shares outstanding (1)	15,581,303		15,580,063		15,581,696		15,563,766
Anti-dilutive options excluded from earnings calculation	—		—		—		14,394
Earnings per share:
Basic	$	0.32	$	0.58	$	1.19	$	1.64
Diluted	$	0.32	$	0.58	$	1.18	$	1.63

_____________________________________

(1) Average diluted shares outstanding are computed using the treasury stock method.

47

NOTE 9.    DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As part of its overall asset and liability management strategy, the Company periodically uses derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility.  The Company’s interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so the changes in interest rates do not have a significant effect on net interest income.

The Company recognizes its derivative instruments on the consolidated balance sheet at fair value.  On the date the derivative instrument is entered into, the Company designates whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). The Company formally documents relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of hedged items.

Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in other comprehensive income or loss. The Company discontinues hedge accounting when it is determined the derivative is no longer effective in offsetting changes of the hedged risk on the hedged item, or management determines the designation of the derivative as a hedging instrument is no longer appropriate.

The following tables present information about derivative assets and liabilities at September 30, 2019 and December 31, 2018:

	September 30, 2019
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	3.4	$	89
Interest rate swap on deposits	50,000		4.5	(2,179		)
Total cash flow hedges	140,000			(2,090		)
Economic hedges:
Forward sale commitments	7,762		0.1	(61		)
Total economic hedges	7,762			(61		)
Non-hedging derivatives:
Interest rate lock commitments	12,242		0.1	78
Customer loan derivative liability	169,569		9.8	(10,923		)
Customer loan derivative asset	169,569		9.8	10,923
Total non-hedging derivatives	351,380			78
Total	$	499,142		$	(2,073	)

48

	December 31, 2018
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	4.1	$	803
Total cash flow hedges	90,000			803
Non-hedging derivatives:
Interest rate lock commitments	957		0.1	8
Customer loan derivative liability	45,641		9.9	(1,353		)
Customer loan derivative asset	45,641		9.9	1,353
Total non-hedging derivatives	92,239			8
Total	$	182,239		$	811

Information about derivative assets and liabilities for the three and nine months ended September 30, 2019 and 2018 is, as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Cash flow hedges:
Interest rate cap agreements
Realized loss in interest expense	$	(183	)	$	(137	)	$	(521	)	$	(367	)
Interest rate swap on deposits
Realized gain in interest expense	17			—			17			—
Economic hedges:
Forward commitments
Realized (loss) gain in other non-interest income	(31		)	43			(61		)	190
Non-hedging derivatives:
Interest rate lock commitments
Realized gain in other non-interest income	7			—			70			9

Cash flow hedges

Interest rate cap agreements

In 2014, interest rate cap agreements were purchased to limit the Company’s exposure to rising interest rates on four rolling, three-month borrowings indexed to three-month LIBOR.  Under the terms of the agreements, the Company paid total premiums of $4.6 million for the right to receive cash flow payments if three-month LIBOR rises above the caps of 3.00%, thus effectively ensuring interest expense on the borrowings at maximum rates of 3.00% for the duration of the agreements. The interest rate cap agreements were designated as cash flow hedges.  The fair values of the interest rate cap agreements are included in other assets on the Company’s consolidated balance sheets. Changes in the fair value, representing unrealized gains or losses, are recorded in accumulated other comprehensive income, net of tax.  The premiums paid on the interest rate cap agreements are being recognized as increases in interest expense over the duration of the agreements using the caplet method.

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Interest rate swap on deposits

In March 2019, the Company entered into an interest rate swap on brokered deposits (the "SWAP") to limit its exposure to rising interest rates over a five year term. Under the terms of the agreement, the Company pays a fixed rate of 2.461% for a notional amount of $50.0 million, and the financial institution counterparty pays interest on the three-month LIBOR rate. The Company designated the SWAP as a cash flow hedge and the fair value is included in other liabilities on the Company's consolidated balance sheets. Changes in the fair value, representing unrealized gains or losses, are recorded in accumulated other comprehensive income, net of tax.

Economic hedges

The Company utilizes forward sale commitments to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.  The Company typically uses mandatory delivery contracts, which are loan sale agreements where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into mandatory delivery contracts shortly after the loan closes with a customer.

Non-hedging derivatives

Interest rate lock commitments

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs relate to the origination of residential mortgage loans held for sale are considered as derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the market price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s consolidated statements of income. Changes in the fair value of IRLCs subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability when the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Customer loan derivatives

The Company enters into customer loan derivatives to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting loan swap agreements with highly rated third-party financial institutions. The loan swap agreements are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company is party to master netting arrangements with its financial institutional counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all loan swap agreements, as well as collateral or cash funds, in the event of default on, or termination of, any one contract. Collateral is provided by cash or securities received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds. Currently, the Company has posted cash of $10.7 million with the counterparty.

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NOTE 10.    FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2019
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs			Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	349,143		$	—		$	349,143
US Government agency	—		118,825			—			118,825
Private label	—		19,954			—			19,954
Obligations of states and political subdivisions thereof	—		111,226			—			111,226
Corporate bonds	—		76,527			—			76,527
Derivative assets	—		11,012			78			11,090
Derivative liabilities	—		(13,102		)	(61		)	(13,163		)

	December 31, 2018
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs		Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	404,952		$	—	$	404,952
US Government agency	—		110,512			—		110,512
Private label	—		20,382			—		20,382
Obligations of states and political subdivisions thereof	—		132,265			—		132,265
Corporate bonds	—		57,726			—		57,726
Derivative assets	—		2,156			8		2,164
Derivative liabilities	—		(1,353		)	—		(1,353		)

Securities Available for Sale: All securities and major categories of securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities’ terms and conditions, among other things.

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Derivative Assets and Liabilities

Cash Flow Hedges. The valuation of the Company's cash flow hedges are obtained from a third party. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The inputs used to value the Company's cash flow hedges are all classified as Level 2 measurements.

Interest Rate Lock Commitments. The Company enters into IRLCs for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time.  The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood of a loan in a lock position will ultimately close. The closing ratio is derived from the Company’s internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the IRLCs and loans originated for sale. The fair values of the Company’s mandatory delivery loan sale commitments are determined similarly to the IRLCs using quoted prices in the market place that are observable.  However, closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are not considered observable factors. As such, mandatory delivery forward commitments are classified as Level 3 measurements.

Customer Loan Derivatives. The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.  The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its customer loan derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2019:

	Assets (Liabilities)
(in thousands)	Interest Rate Lock Commitments		Forward Commitments
Three Months Ended September 30, 2019
Balance at beginning of period	$	71	$	(30	)
Realized gain recognized in non-interest income	7		(31		)
Balance at end of period	$	78	$	(61	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8	$	—
Realized gain (loss) recognized in non-interest income	70		(61		)
Balance at end of period	$	78	$	(61	)

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Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:

(in thousands, except ratios)	Fair Value September 30, 2019			Valuation Techniques	Unobservable Inputs	Unobservable Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	78		Historical trend	Closing Ratio	90		%
				Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments	(61		)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system	Pair-off contract price
Total	$	17

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements:

	September 30, 2019		December 31, 2018		Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Fair Value Measurement Date as of September 30, 2019
(in thousands)	Level 3 Inputs		Level 3 Inputs		Total Gains (Losses)			Total Gains (Losses)			Level 3 Inputs
Assets
Impaired loans	$	14,382	$	15,213	$	(182	)	$	831		September 2019
Capitalized servicing rights	4,108		4,882		—			—			September 2019
Other real estate owned	2,455		2,351		(146		)	(146		)	August 2019
Assets held for sale	1,901		—		—			—			September 2019
Total	$	22,846	$	22,446	$	(328	)	$	685

There are no liabilities measured at fair value on a non-recurring basis.

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Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is, as follows:

	Fair Value				Range
(in thousands, except ratios)	September 30, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,419	Fair value of collateral -appraised value	Loss severity	0% to 61%
				Appraised value	$0 to $6,915
Impaired loans	2,963		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,019
Capitalized servicing rights	4,108		Discounted cash flow	Constant prepayment rate (CPR)	10.21		%
				Discount rate	10.08		%
Other real estate owned	2,455		Fair value of collateral less selling costs	Appraised value		$2,695
				Selling Costs	6% to 10%
Assets held for sale(b)	1,901		Fair value of asset less selling costs	Appraised value	$136 to $527
				Selling Costs	6		%
Total	$	22,846

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

(b) The carrying value of assets held for sale was $1.8 million as of September 30, 2019. There were no assets held for sale as of December 31, 2018.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2018		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,676	Fair value of collateral -appraised value	Loss severity	0% to 55.00%
				Appraised value	$0 to $6,915
Impaired loans	3,537		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,072
Capitalized servicing rights	4,882		Discounted cash flow	Constant prepayment rate (CPR)	8.19		%
				Discount rate	10.08		%
Other real estate owned	2,351		Fair value of collateral less selling costs	Appraised value		$2,700
				Selling Costs	12.93		%
Total	$	22,446

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

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There were no Level 1 or Level 2 non-recurring fair value measurements for the periods ended September 30, 2019 and December 31, 2018.

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, non-recurring fair value measurement adjustments relating to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral supporting commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. 

Capitalized loan servicing rights.  A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Company. Upon assuming the real estate, the Company records the property at the fair value of the asset less the estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Assets held for sale. Assets held for sale, identified as part of the Company’s strategic review and branch optimization exercise, were transferred from premises and equipment at the lower of amortized cost or fair value less the estimated sales costs. Assets held for sale fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

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Summary of Estimated Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are included in the table below. Certain financial instruments and all non-financial 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.

	September 30, 2019
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	71,593		$	71,593		$	71,593	$	—		$	—
Securities available for sale	675,675			675,675			—		675,675			—
FHLB stock	27,469			27,469			—		27,469			—
Net loans	2,561,953			2,567,331			—		—			2,567,331
Accrued interest receivable	3,218			3,218			—		3,218			—
Cash surrender value of bank-owned life insurance policies	75,368			75,368			—		75,368			—
Derivative assets	11,090			11,090			—		11,012			78
Financial Liabilities
Total deposits	$	2,493,585		$	2,491,023		$	—	$	2,491,023		$	—
Short-term other borrowings	41,259			41,258			—		41,258			—
FHLB advances	600,559			601,377			—		601,377			—
Subordinated borrowings	37,928			37,928			—		37,928			—
Junior subordinated borrowings	5,000			4,556			—		4,556			—
Derivative liabilities	(13,163		)	(13,163		)	—		(13,102		)	(61		)

	December 31, 2018
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	98,754		$	98,754		$	98,754	$	—	$	—
Securities available for sale	725,837			725,837			—		725,837		—
FHLB stock	35,659			35,659			—		35,659		—
Net loans	2,476,361			2,415,863			—		—		2,415,863
Accrued interest receivable	3,533			3,533			—		3,533		—
Cash surrender value of bank-owned life insurance policies	73,810			73,810			—		73,810		—
Derivative assets	2,164			2,164			—		2,156		8
Financial Liabilities
Total deposits	$	2,483,238		$	2,404,250		$	—	$	2,404,250	$	—
Short-term other borrowings	36,211			36,171			—		36,171		—
FHLB advances	644,611			643,065			—		643,065		—
Subordinated borrowings	37,973			37,973			—		37,973		—
Junior subordinated borrowings	5,000			3,923			—		3,923		—
Derivative liabilities	(1,353		)	(1,353		)	—		—		(1,353		)

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which it is practicable to estimate that value.

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Cash and cash equivalents. Carrying value is assumed to represent fair value for cash and cash equivalents that have original maturities of 90 days or less.

FHLB stock and restricted securities. Carrying value approximates fair value based on the redemption provisions of the issuers.

Cash surrender value of life insurance policies. Carrying value approximates fair value.

Loans, net. The fair value of loans are calculated on an individual basis with consideration given to the loans' underlying characteristics, including account types, remaining terms, annual interest rates or coupons, interest types, timing of principal and interest payments, current market rates, risk ratings, credit ratings and remaining balances. A discounted cash flow model is used to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, liquidity premiums, projected default probabilities, loss given defaults, and estimates of prevailing discount rates. 

Accrued interest receivable. Carrying value approximates fair value.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings.  Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every 90 days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments including standby letters of credit and other financial guarantees and commitments are considered immaterial to the Company’s financial statements.

NOTE 11.     NON-INTEREST INCOME

The Company has accounted for the various non-interest revenue streams and related contracts under ASC 606.

Disaggregation of Revenue

The following tables present disaggregation of the Company’s non-interest revenue by major business line and timing of revenue recognition for the transfer of products or services:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Major Products/Service Lines
Trust management fees	$	2,737	$	2,720	$	8,055	$	8,268
Financial services fees	276		232		781		768
Interchange fees	1,323		1,146		3,567		3,277
Customer deposit fees	1,112		1,095		3,046		3,093
Other customer service fees	118		249		723		691
Total	$	5,566	$	5,442	$	16,172	$	16,097

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Timing of Revenue Recognition
Products and services transferred at a point in time	$	2,839	$	2,583	$	7,874	$	7,576
Products and services transferred over time	2,727		2,859		8,298		8,521
Total	$	5,566	$	5,442	$	16,172	$	16,097

Trust Management Fees.

The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of progress. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees.

Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of monthly service requirements.

Interchange Fees.

The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees.

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service.

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Other Customer Service Fees.

The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:

(in thousands)	Balance at September 30, 2019		Balance at December 31, 2018
Balances from contracts with customers only:
Other Assets	$	1,898	$	2,866
Other Liabilities	3,179		4,923

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

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NOTE 12.    LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” and all subsequent ASUs modifying ASC 842. For the Company, ASC 842 primarily affects the accounting treatment for operating lease agreements where the Company is the lessee.

Lessee Accounting

Substantially all of the leases pursuant to which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2040. All leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of ASC 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability using the modified retrospective approach. The total of ROU assets and lease liabilities were $9.0 million as of January 1, 2019.

The Company has elected the following practical expedients in conjunction with implementation of ASC 842 as follows:

• Package of practical expedients:

◦ Lease classification as an operating lease under the prior standards is grandfathered.

◦ Re-evaluation of embedded leases evaluated under the prior standards is not required.

◦ No re-assessment of previously recorded initial direct lease costs.

• Election to exclude short-term leases (i.e., leases with initial terms of twelve months or less), from capitalization on the consolidated balance sheets.

The following table presents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities as of September 30, 2019:

(in thousands)		September 30, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	8,447
Lease Liabilities
Operating lease liabilities	Other liabilities	8,524

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, ASC 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the original lease term as of January 1, 2019 was used.

	September 30, 2019
Weighted-average remaining lease term
Operating leases	9.18
Weighted-average discount rate
Operating leases	3.37	%

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The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease Costs
Operating lease cost	$	234	$	698
Variable lease cost	69		277
Total lease cost	$	303	$	975

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2019 are, as follows:

(in thousands)	Operating Leases
Twelve Months Ended:
September 30, 2020	$	911
September 30, 2021	896
September 30, 2022	912
September 30, 2023	908
September 30, 2024	917
Thereafter	6,065
Total future minimum lease payments	10,609
Amounts representing interest	(2,085		)
Present value of net future minimum lease payments	$	8,524

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NOTE 13.    SUBSEQUENT EVENTS

On July 8, 2019, the Company entered into a definitive agreement to acquire eight branches located in central Maine with approximately $287.0 million of deposits, $111.0 million of loans and $284.0 million of assets under management (as of March 31, 2019) from People’s United Bank, National Association. The transaction closed on October 25, 2019 and the Company received initial proceeds of $134.0 million that were net of a 6.3% premium on average total deposits plus a premium of 1.2 times annualized wealth management revenue and approximately $4.4 million for the premises. The Company used the proceeds to pay-down Federal Home Loan Bank advances. The Company is currently in the process of determining the final purchase price and allocation between the assets acquired and liabilities assumed.

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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this document and with the Company’s consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018. In the following discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwise noted. Operating results discussed herein are not necessarily indicative of the results for the full year 2019 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain reclassifications have been made to make prior periods comparable.

Bar Harbor Bankshares (the “Company”) is the parent of Bar Harbor Bank & Trust (the “Bank”), which is the only community bank headquartered in Northern New England with branches in Maine, New Hampshire and Vermont. The Bank is a true community bank providing exceptional commercial, retail, and wealth management banking services from over 50 locations. The Company’s corporate goal is to be among the most profitable banks in New England, and its business model is centered on the following:

• Employee and customer experience is the foundation of superior performance, which leads to significant financial benefit to shareholders

• Geography, heritage and performance are key while remaining true to a community culture

• Strong commitment to risk management while balancing growth and earnings

• Service and sales driven culture with a focus on core business growth

• Fee income is fundamental to the Company's profitability through trust and treasury management services, customer derivatives and secondary market mortgage banking

• Investment in processes, products, technology, training, leadership and infrastructure

• Expansion of the Company’s brand and business to deepen market presence

• Opportunity and growth for existing employees while adding catalyst recruits across all levels of the Company

Shown below is a profile of the Company as of September 30, 2019:

62

SELECTED FINANCIAL DATA

The following summary data is based in part on the consolidated financial statements and accompanying notes and other information appearing elsewhere in this or prior Forms 10-Q.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
PER SHARE DATA
Net earnings, diluted	$	0.32		$	0.58		$	1.18		$	1.63
Adjusted earnings, diluted(1)	0.47			0.58			1.35			1.66
Total book value	25.37			23.06			25.37			23.06
Tangible book value(1)	18.49			16.11			18.49			16.11
Market price at period end	24.93			28.72			24.93			28.72
Dividends	0.22			0.20			0.64			0.59
PERFORMANCE RATIOS(2)
Return on assets	0.55		%	1.01		%	0.68		%	0.96		%
Adjusted return on assets(1)	0.80			1.01			0.77			0.98
Return on equity	5.04			9.92			6.37			9.54
Adjusted return on equity(1)	7.36			9.98			7.25			9.72
Adjusted return on tangible equity(1)	10.31			14.52			10.25			14.23
Net interest margin, fully taxable equivalent (FTE)(1) (3)	2.75			2.81			2.72			2.90
Net interest margin (FTE), excluding purchased loan accretion((3)	2.65			2.71			2.63			2.79
Efficiency ratio(1)	65.02			57.88			65.83			59.05
GROWTH (Year-to-date)(1)
Total commercial loans	10.5		%	2.8		%	10.5		%	2.8		%
Total loans	4.7			(0.1		)	4.7			(0.1		)
Total deposits	0.6			2.2			0.6			2.2
FINANCIAL DATA (In millions)
Total assets	$	3,612		$	3,561		$	3,612		$	3,561
Total earning assets(4)	3,270			3,253			3,270			3,253
Total investments	703			747			703			747
Total loans	2,577			2,484			2,577			2,484
Allowance for loan losses	15			13			15			13
Total goodwill and intangible assets	107			108			107			108
Total deposits	2,494			2,390			2,494			2,390
Total shareholders' equity	394			358			394			358
Net income	5			9			18			25
Adjusted income(1)	7			9			21			26
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans	0.02		%	0.04		%	0.02		%	0.06		%
Allowance for loan losses/total loans	0.60			0.54			0.60			0.54
Loans/deposits	103			104			103			104
Shareholders' equity to total assets	10.92			10.04			10.92			10.04
Tangible shareholders' equity to tangible assets(1)	8.20			7.24			8.20			7.24

63

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(1) Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures section of Management's Discussion and Analysis for additional information.

(2) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(3) Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.

(4) Earning assets includes non-accruing loans and securities are valued at amortized cost.

64

CONSOLIDATED LOAN AND DEPOSIT ANALYSIS

The following tables present the quarterly trend in loan and deposit data and accompanying quarterly and year-to-date growth rates as of September 30, 2019 on an annualized basis:

LOAN ANALYSIS
											September 30, 2019 Annualized Growth %
(in thousands, except ratios)	Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Quarter End		Year to Date
Commercial real estate	$	923,773	$	881,479	$	821,567	$	826,699	$	840,018	19.2	%	15.7	%
Commercial and industrial	301,590		312,029		305,185		309,544		303,984		(13.4	)	(3.4	)
Total commercial loans	1,225,363		1,193,508		1,126,752		1,136,243		1,144,002		10.7		10.5
Residential real estate	1,143,452		1,167,759		1,184,053		1,144,698		1,140,519		(8.3	)	(0.1	)
Consumer	107,375		112,275		111,402		113,960		117,239		(17.5	)	(7.7	)
Tax exempt and other	101,116		104,696		104,752		95,326		81,830		(13.7	)	8.1
Total loans	$	2,577,306	$	2,578,238	$	2,526,959	$	2,490,227	$	2,483,590	(0.1	)%	4.7	%

DEPOSIT ANALYSIS
											September 30, 2019 Annualized Growth %
(in thousands, except ratios)	Sep 30, 2019		Jun 30, 2019		Mar 31, 2019		Dec 31, 2018		Sep 30, 2018		Quarter End		Year to Date
Demand	$	380,707	$	354,125	$	342,030	$	370,889	$	372,358	30.0	%	3.5	%
NOW	490,315		472,576		470,277		484,717		471,326		15.0		1.5
Savings	360,570		352,657		346,813		358,888		354,908		9.0		0.6
Money market	359,328		305,506		349,833		335,951		254,142		70.5		9.3
Total non-maturity deposits	1,590,920		1,484,864		1,508,953		1,550,445		1,452,734		28.6		3.5
Total time deposits	902,665		996,512		956,818		932,793		937,615		(37.7	)	(4.3	)
Total deposits	$	2,493,585	$	2,481,376	$	2,465,771	$	2,483,238	$	2,390,349	2.0	%	0.6	%

65

AVERAGE BALANCES AND AVERAGE YIELDS/RATES

The following tables present average balances and average yields and rates on an annualized fully taxable equivalent basis for the periods included:

	Three Months Ended September 30,
	2019						2018
(in thousands, except ratios)	Average Balance		Interest (3)		Yield/Rate (3)		Average Balance		Interest (3)		Yield/Rate (3)
Assets
Commercial real estate	$	900,568	$	10,750	4.74	%	$	837,058	$	9,646	4.57	%
Commercial and industrial	410,453		4,947		4.78		388,831		4,497		4.59
Residential	1,154,552		11,293		3.88		1,120,336		10,828		3.83
Consumer	109,562		1,418		5.13		117,735		1,438		4.85
Total loans (1)	2,575,135		28,408		4.38		2,463,960		26,409		4.25
Securities and other (2)	732,925		6,356		3.44		773,562		6,267		3.21
Total earning assets	3,308,060		34,764		4.17	%	3,237,522		32,676		4.00	%
Other assets	333,896						295,162
Total assets	$	3,641,956					$	3,532,684
Liabilities
NOW	$	487,506	$	621	0.51	%	$	461,875	$	501	0.43	%
Savings	359,242		193		0.21		356,834		151		0.17
Money market	338,013		1,168		1.37		259,738		500		0.76
Time deposits	947,949		5,161		2.16		964,108		4,325		1.78
Total interest bearing deposits	2,132,710		7,143		1.33		2,042,555		5,477		1.06
Borrowings	708,222		4,674		2.62		744,632		4,237		2.26
Total interest bearing liabilities	2,840,932		11,817		1.65	%	2,787,187		9,714		1.38	%
Non-interest bearing demand deposits	368,100						357,856
Other liabilities	37,975						28,943
Total liabilities	3,247,007						3,173,986
Total shareholders' equity	394,949						358,698
Total liabilities and shareholders' equity	$	3,641,956					$	3,532,684
Net interest spread					2.52	%					2.62	%
Net interest margin					2.75						2.81

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(1) The average balances of loans include non-accrual loans and unamortized deferred fees and costs.

(2) The average balance for securities available for sale is based on amortized cost.

(3) Fully taxable equivalent considers the impact of tax-advantaged securities and loans.

66

	Nine Months Ended September 30,
	2019						2018
(in thousands, except ratios)	Average Balance		Interest (3)		Yield/Rate (3)		Average Balance		Interest (3)		Yield/Rate (3)
Assets
Commercial real estate	$	859,613	$	30,480	4.74	%	$	827,499	$	27,772	4.49	%
Commercial and industrial	410,350		14,662		4.78		388,627		13,268		4.56
Residential	1,157,923		33,941		3.92		1,131,509		32,669		3.86
Consumer	111,274		4,333		5.21		119,504		4,163		4.66
Total loans (1)	2,539,160		83,416		4.39		2,467,139		77,872		4.22
Securities and other (2)	761,234		19,389		3.41		768,812		18,304		3.18
Total earning assets	3,300,394		102,805		4.16	%	3,235,951		96,176		3.97	%
Other assets	335,883						279,192
Total assets	$	3,636,277					$	3,515,143
Liabilities
NOW	$	472,542	$	1,764	0.50	%	$	451,178	$	1,285	0.38	%
Savings	353,117		545		0.21		356,859		456		0.17
Money market	337,822		3,521		1.39		283,356		1,580		0.75
Time deposits	925,508		14,505		2.10		900,315		10,545		1.57
Total interest bearing deposits	2,088,989		20,335		1.30		1,991,708		13,866		0.93
Borrowings	751,016		15,232		2.71		797,913		12,192		2.04
Total interest bearing liabilities	2,840,005		35,567		1.67	%	2,789,621		26,058		1.25	%
Non-interest bearing demand deposits	377,014						341,656
Other liabilities	32,676						28,926
Total liabilities	3,249,695						3,160,203
Total shareholders' equity	386,582						354,940
Total liabilities and shareholders' equity	$	3,636,277					$	3,515,143
Net interest spread					2.49	%					2.72	%
Net interest margin					2.72						2.90

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(1) The average balances of loans include non-accrual loans and unamortized deferred fees and costs.

(2) The average balance for securities available for sale is based on amortized cost.

(3) Fully taxable equivalent considers the impact of tax-advantaged securities and loans.

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NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item that management excludes when computing non-GAAP adjusted earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP adjusted earnings information set forth is not necessarily comparable to non- GAAP information that may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude amounts that the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense.

The Company also calculates adjusted earnings per share based on its measure of adjusted earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP adjusted earnings and adjusted earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following table summarizes the reconciliation of non-GAAP items for the time periods presented:

		At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
(in thousands)		2019			2018			2019			2018
GAAP net income		$	5,015		$	8,970		$	18,413		$	25,317
Plus (less):
Gain on sale of securities, net		(157		)	—			(157		)	—
Loss on sale of premises and equipment, net		—			—			21			—
Loss on other real estate owned		146			(8		)	146			15
Acquisition, restructuring and other expenses		3,039			70			3,319			619
Income tax (expense) benefit(1)		(720		)	(12		)	(792		)	(150		)
Total adjusted income(2)	(A)	$	7,323		$	9,020		$	20,950		$	25,801
GAAP net interest income	(B)	$	22,445		$	22,469		$	65,706		$	68,619
Plus: Non-interest income		7,643			7,126			21,263			20,485
Total Revenue(2)		30,088			29,595			86,969			89,104
Less: Gain on sale of securities, net		(157		)	—			(157		)	—
Total adjusted revenue(2)	(C)	$	29,931		$	29,595		$	86,812		$	89,104
GAAP total non-interest expense		$	23,400		$	17,906		$	62,930		$	55,443
Less: Loss on sale of premises and equipment, net		—			—			(21		)	—
Less: Loss on other real estate owned		(146		)	8			(146		)	(15		)
Less: Acquisition, restructuring and other expenses		(3,039		)	(70		)	(3,319		)	(619		)
Adjusted non-interest expense(2)	(D)	$	20,215		$	17,844		$	59,444		$	54,809
(in millions)
Total average earning assets	(E)	$	3,308		$	3,238		$	3,300		$	3,236
Total average assets	(F)	3,642			3,533			3,636			3,515
Total average shareholders' equity	(G)	395			359			387			355
Total average tangible shareholders' equity(2)(3)	(H)	288			251			279			247
Total tangible shareholders' equity, period-end(2)(3)	(I)	287			250			287			250
Total tangible assets, period-end(2)(3)	(J)	3,506			3,453			3,506			3,453
(in thousands)
Total common shares outstanding, period-end	(K)	15,549			15,509			15,549			15,509
Average diluted shares outstanding	(L)	15,581			15,580			15,582			15,564
Adjusted earnings per share, diluted	(A/L)	$	0.47		$	0.58		$	1.35		$	1.66
Tangible book value per share, period-end(2)	(I/K)	18.49			16.11			18.49			16.11
Securities adjustment, net of tax(4)	(M)	8,002			(17,152		)	8,002			(17,152		)
Tangible book value per share, excluding securities adjustment(4)	(I+M)/K	17.98			17.22			17.98			17.22
Total tangible shareholders' equity/total tangible assets(2)	(I/J)	8.20			7.24			8.20			7.24

69

		At or for the Three Months Ended September 30,						At or for the Nine Months Ended September 30,
		2019			2018			2019			2018
Performance ratios(5)
Return on assets		0.55		%	1.01		%	0.68		%	0.96		%
Adjusted return on assets(2)	(A/F)	0.80			1.01			0.77			0.98
Return on equity		5.04			9.92			6.37			9.54
Adjusted return on equity(2)	(A/G)	7.36			9.98			7.25			9.72
Adjusted return on tangible equity(2)(6)	(A+Q)/H	10.31			14.52			10.25			14.23
Efficiency ratio(2)(7)	(D-O-Q)/(C+N)	65.02			57.88			65.83			59.05
Net interest margin(2)	(B+P)/E	2.75			2.81			2.72			2.90
Supplementary data(in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)	$	658		$	654		$	2,018		$	1,921
Franchise taxes included in non-interest expense	(O)	119			129			350			440
Tax equivalent adjustment for net interest margin	(P)	503			493			1,532			1,498
Intangible amortization	(Q)	207			207			621			621

_____________________________________

(1) Assumes a marginal tax rate of 23.78% in 2019. A marginal tax rate of 23.78% was used in the third and fourth quarter of 2018.

(2) Non-GAAP financial measure.        

(3) Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.          

(4) Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.    

(5) All performance ratios are based on average balance sheet amounts, where applicable.

(6) Adjusted return on tangible equity is computed by dividing the total core income adjusted for the tax-effected amortization of intangible assets, assuming a marginal rate of 23.78% in 2019, 24.15% in the first and second quarter of 2018 and 23.78% in the third and fourth quarter of 2018, by tangible equity.    

(7) Efficiency ratio is computed by dividing adjusted non-interest expense by the sum of net interest income on a fully taxable equivalent basis and adjusted non-interest income. 

70

FINANCIAL SUMMARY

The Company reported third quarter 2019 net income of $5.0 million or $0.32 diluted earnings per share. Net income in the same quarter of 2018 totaled $9.0 million, or $0.58 diluted earnings per share. Adjusted earnings (non-GAAP measure) in the third quarter 2019 totaled $7.3 million, or $0.47 diluted earnings per share, a 15% increase from the prior quarter of $6.3 million or $0.41 diluted earnings per share. Financial highlights for the third quarter 2019 include the following:

• 11% annualized growth in commercial loans

• 29% annualized growth in non-maturity deposits

• 10 basis point expansion in net interest margin

• 3% increase in non-interest income

• 0.53% non-performing assets to total assets

The Company’s performance metrics improved in the third quarter 2019 as its teams focused on profitability of operations and initiatives to enhance revenue and create expense efficiencies. The Company continued to actively manage the balance sheet focusing on operations and taking advantage of the interest rate environment as a planned deleveraging strategy was executed resulting in decreasing the securities portfolio by nearly $73.0 million and using the proceeds to pay off higher cost borrowings. This resulted in yields from securities expanding 15 basis points and borrowings costs decreasing 12 basis points compared to the prior quarter. The commercial team delivered another quarter of strong double digit growth across the Company’s three state footprint including its loan production office in Portland, Maine, which also contributed to significant customer derivative income. Loan quality continues to be strong with net charge-offs close to zero, indicative of a disciplined approach to credit quality, risk mitigation, and an effort focused on proven operators with appropriate loan structures. Growth in non-maturity deposits was up during the quarter, 29% on an annualized basis. That improvement is the direct result of the sales culture, which the Company has been cultivating over the past year under new leadership. All of these efforts in the quarter resulted in a 6% annualized increase to tangible book value per share.

The Company completed the strategic review in the third quarter that was announced in the second quarter. This review positions the Company for improved profitability and judicious deployment of capital, while balancing liquidity and core deposit growth. The results of this strategic review included a branch optimization exercise that evaluated fixed assets, staffing models, and business and operational processes. Towards the end of September the Company announced the intent to close five branches by year-end and identified other non-branch properties to consolidate across the footprint. Additionally, the Company continues to consolidate processes within wealth management businesses to increase efficiency while improving customer service. These strategic decisions along with the elimination of other redundancies and implemented efficiencies are expected to be accretive to earnings in the first quarter of 2020 thereby allowing a platform for profitable growth with positive operating leverage.

In October 2019, the Company completed its previously announced acquisition of eight bank branches. Experienced teams from both sides have been working together to ensure a smooth transition of customer accounts and systems. The Company welcomes its new customers and colleagues while building out its central Maine franchise. The acquisition is expected to be immediately accretive to adjusted income during the fourth quarter 2019.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

Summary

Total assets increased $4.0 million to $3.6 billion at the end of the third quarter 2019 compared with year-end 2018. Loans increased to $2.6 billion from $2.5 billion at year-end 2018 on growth from commercial loans offset in part by lower residential loans primarily due to higher secondary market sales. Securities decreased $58.4 to $703.1 million at the end of the third quarter from year-end 2018 which includes the impact of the executed deleveraging strategy in the third quarter. Asset quality metrics remain strong with an allowance for loan losses to total loans ratio of 0.60% with a coverage ratio to non-accruing loans at 92%, up from 76% as of year-end 2018. The loan to deposit ratio

71

increased to 103% from 100% at year-end 2018 given robust loan growth net of deposit growth. The Company’s book value per share increased 8%, on annualized basis, in the first nine months of 2019 from year-end 2018.

Securities

Securities totaled $703.1 million in the third quarter 2019 and $761.5 million at year-end 2018 representing 19% and 21% of total assets, respectfully. Those ratios are within the tolerance range of the Company’s investment policy and the decrease is the result of the balance sheet deleveraging strategy with opportunistic sales and natural run-off. Securities purchased in 2019 included $52.6 million of mortgage-backed securities guaranteed by US Government-sponsored enterprises, $24.0 million of corporate bonds, and a net $8.2 million decrease in FHLB stock. The purchases were offset by sales of $68.0 million, maturities, calls and pay-downs of amortizing securities of $80.5 million, and a $21.7 million increase in fair value. The increase in fair value was primarily caused by lower long-term interest rates at the end of the third quarter 2019 as compared to year-end 2018. The weighted average yield on the Company’s security profile as of September 30, 2019 was 3.44% for the quarter compared to 3.28% at year-end 2018. At the end of the third quarter 2019, securities held by the Company had a weighted average life of 4.3 years and a duration of 2.9 years compared to a weighted average life of 5.2 years and a duration of 3.9 years at the end of 2018, respectively.

Loans

Total loans at September 30, 2019 were $2.6 billion, an increase of $87.1 million or 4.7% on an annualized basis, from year-end 2018. Commercial real estate grew significantly during 2019 at a rate of 15.7% due to execution of the Company’s growing pipeline across New Hampshire, Vermont, and Maine and loan production office centered in Portland, Maine. Residential loans were flat in the first nine months of 2019 primarily due to higher sales in the secondary market given the overall rate environment and initiatives around profit as fee income is central to the Company’s strategic focus. Yields also increased among all product lines as variable rate loans repriced to higher levels benefiting from the Federal Reserve Bank (“FRB”) rate hikes in 2018.

Asset Quality

Asset quality metrics remained favorable in the first nine months of 2019. The allowance for loan losses increased to $15.4 million from $13.9 million at year-end 2018 due to loan growth offset by lower specific reserves on fewer non-accruing loans. Non-accruing loans decreased $1.6 million in 2019 as the Company benefited from favorable settlements of several credit relationships that approximated the carrying values of the loans. These improvements decreased the ratio of non-accruing loans to total loans to 0.65% from 0.73% at the end of 2018 and decreased the ratio of non-performing assets to total assets to 0.53% from 0.57% at the end of 2018.

Deposits and Borrowings

Total deposits increased $10.3 million to $2.5 billion from year-end 2018. Non-maturity deposits increased $40.5 million from new accounts and seasonally high balances. New non-maturity deposit accounts opened totaled 3,457 in the third quarter 2019 compared to 2,295 in the fourth quarter 2018.  Time deposits decreased $30.1 million, reflecting the shift between time deposits to money market accounts as the interest rate environment changed in 2019. The average cost of deposits increased to 1.33% from 1.12% in the fourth quarter 2018 reflecting the FRB rate hike in December 2018.  Total borrowings decreased by $39.0 as a result of the balance sheet deleveraging strategy.  Borrowing costs are 2.62% in 2019 up from 2.53% in the fourth quarter 2018 as a result of the previously mentioned rate hike offset by the third quarter deleveraging strategy.

Derivative Financial Instruments

The notional balance of derivative financial instruments increased to $499.1 million at the end of the third quarter 2019 from $182.2 million at year-end 2018. The increase includes a $50.0 million notional amount related to an interest rate swap on brokered certificate of deposits to limit the Company’s exposure to rising interest rates over a five-year term. Additionally, as a result of commercial loan growth, the Company increased customer loan derivatives by $247.9 million with matching hedges using a national bank counterparty. The net fair value of total derivatives was a liability of $2.1 million at the end of the third quarter 2019 compared to asset of $811 thousand at year-end 2018.

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Equity

Total equity was $394.5 million, compared with $370.6 million at year-end 2018. The Company’s book value per share increased $1.50 to $25.37 from year-end 2018. The increase was primarily due to a $14.9 million improvement in the Company’s securities fair value adjustment, net of tax, along with strong net income of $18.4 million offset by $9.9 million in dividends. Tangible book value per share (non-GAAP measure) increased to $18.49 per share up from $16.94 per share at year-end 2018. Additionally, tangible book value per share excluding the impact of securities fair value adjustments (non-GAAP measure) increased to $17.98, up from $17.50 at year-end 2018. The Company evaluates changes in tangible book value excluding securities adjustment, a non-GAAP financial measure, which is a commonly considered valuation metric used by the investment community and which parallels some regulatory capital measures. The Company and the Bank remained "well capitalized" under regulatory guidelines at period-end.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

Summary

Third quarter 2019 net income was $5.0 million, or $0.32 per share, compared to $9.0 million, or $0.58 per share, in the same quarter of 2018. Net income in the third quarter 2019 included acquisition, restructuring, and other expense activity totaling $3.0 million. The non-GAAP measure of adjusted earnings in the third quarter 2019 totaled $7.3 million or $0.47 diluted earnings per share and $9.0 million or $0.58 diluted earnings per share in the same period of 2018. Both net income and adjusted earnings in the third quarter 2019 benefited from higher yields on earning assets and non-interest income growth, offset by a higher cost of funds.

The Company reported year to date net income of $18.4 million or $1.18 per share, compared with $25.3 million or $1.63 per share in the same period of 2018. Adjusted earnings decreased to $20.9 million, or $1.35 per share compared with $25.8 million, or $1.66 per share, for these respective periods. These changes largely reflect the same factors and trends discussed above that drove quarterly net income. The return on assets ratio during the first nine months of 2019 was 0.68% compared to 0.96% in the prior year due to lower net income and a higher average asset base. Adjusted return on assets (non-GAAP measure) was 0.77% for the first nine months of 2019 compared to 0.98% in the prior year. Return on equity in the first nine months of 2019 decreased to 6.37% from 9.54% in the prior year due to lower net income and growth in the average equity balance. Correspondingly, adjusted return on equity (non-GAAP measure) was 7.25% for the first nine months of 2019 compared to 9.72% in the prior year.

Net Interest Income

Third quarter net interest income was $22.4 million compared with $22.5 million in the same quarter of 2018. Interest income was $34.3 million, up 6% from $32.2 million in the third quarter of 2018 as average earning assets grew $70.5 million net. The net interest margin for the three months ended decreased 6 basis points over third quarter 2018 to 2.75%. Yields expanded across all loan categories as variable rate products repriced to higher rates driven by the 2018 short-term hikes. The yield on securities improved 23 basis points while the cost of interest bearing liabilities increased 27 basis points. The year over year increase in interest bearing liabilities was primarily due to higher short-term interest rates and the flattening of the yield curve in 2019. However, net interest margin in the third quarter 2019 included the benefit of the deleveraging strategy to remove $72.9 million of securities yielding an average of 2.1% and pay-off of wholesale borrowings with an average cost of 2.4%.

For the first nine months of 2019 net interest income decreased to $65.7 million from $68.6 million in the same period of 2018. Interest income from earning assets increased to $101.3 million with a yield of 4.16% compared to $94.7 million with a yield of 3.97% in the same period of 2018. The net interest margin was 2.72% compared to 2.90% in the prior year. The yield on total loans for the nine months ended expanded 17 basis points, driven by the yield on commercial real estate loans expanding 25 basis points and the yield on commercial and industrial loans expanding 22 basis points. Improvement in interest income was offset by interest expense increasing to $35.6 million in the first nine months of 2019 from $26.1 million in the same period of 2018. The year-to-date effect, and management’s response, on net interest margin from interest-bearing liabilities is the same as the quarterly discussion.

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Non-Interest Income

Third quarter non-interest income grew 7% to $7.6 million from $7.1 million same quarter in 2018. The increase was driven by $828 thousand of customer derivative income associated with commercial loan growth and $157 thousand net gain on sales of securities associated with the balance sheet deleverage strategy. Non-interest income in the third quarter 2018 included a $685 thousand gain associated with the sale of Visa B shares.

Non-interest income for the first nine months of 2019 increased year over year by 4% to $21.3 million compared to $20.5 million for the same period of 2018. The increase in non-interest income for the nine-month period is driven by the same reasons as the quarterly period.

Loan Loss Provision

The third quarter 2019 provision for loan losses increased to $893 thousand from $643 thousand in the same quarter 2018, which is reflective of the increased commercial loan growth. On a year-to-date basis, the provision for loan losses decreased to $1.8 million in 2019 compared to $2.2 million in 2018, which is reflective of the decrease in non-accruing loans of $5.1 million or 23%. The provision for loan losses is a charge to earnings in an amount sufficient to maintain the allowance for loan losses at a level deemed adequate by the Company. The level of the allowance is a critical accounting estimate, which is subject to uncertainty. The net charged-off loans to average loans ratio remained low at 0.02% annualized rate for the third quarter of 2019 compared to 0.04% in the same quarter 2018. Asset quality remains strong with non-accruing loans to total loans at 0.65% in the third quarter 2019, down from 0.88% in the same quarter of 2018.

Non-Interest Expense

Non-interest expense increased to $23.4 million in the third quarter 2019 compared to $17.9 million in the same quarter of 2018. The increase in part is a result of higher salaries and benefits attributable to previously announced strategic hires and an increase in professional service fees. Third quarter acquisition, restructuring and other expenses totaled $3.0 million in 2019 related to the branch acquisition and restructuring expenses associated with our previously announced strategic review.

Non-interest expense increased to $62.9 million in first nine months of 2019 from $55.4 million in the same period of 2018. The increase in non-interest expense for the nine-month period is driven by the same reasons as the quarterly period.

Income Tax Expense

The third quarter effective tax rate decreased to 13.5% in 2019 compared with 18.8% in the same quarter of 2018, and the rate for the nine months 2019 and 2018 was 17.3% and 19.5%, respectively. The decrease in the quarterly and year-to-date rates is due to lower pre-tax income in the respective periods of 2019 as compared to 2018.

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Liquidity and Cash Flows

Liquidity is measured by the Company’s ability to meet short-term cash needs at a reasonable cost or minimal loss. The Company seeks to obtain favorable sources of liabilities and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Besides serving as a funding source for maturing obligations, liquidity provides flexibility in responding to customer-initiated needs. Many factors affect the Company’s ability to meet liquidity needs, including variations in the markets served by its network of offices, its mix of assets and liabilities, reputation and credit standing in the marketplace, and general economic conditions.

The Bank actively manages its liquidity position through target ratios established under its Asset-Liability Management Policy. Continual monitoring of these ratios, by using historical data and through forecasts under multiple rate and stress scenarios, allows the Bank to employ strategies necessary to maintain adequate liquidity. The Bank’s policy is to maintain a liquidity position of at least 4% of total assets. A portion of the Bank’s deposit base has been historically seasonal in nature, with balances typically declining in the winter months through late spring, during which period the Bank’s liquidity position tightens.

The Bank also had capacity to borrow funds on a secured basis utilizing the Borrower-in-Custody program and the Discount Window at the FRB. At September 30, 2019, the Bank’s available secured line of credit at the FRB stood at $107.7 million or 2.98% of the Bank’s total assets. The Bank also has access to the national brokered deposit market, and has used this funding source to bolster its on balance sheet liquidity position.

The Bank maintains a liquidity contingency plan approved by the Bank’s Board of Directors. This plan addresses the steps that would be taken in the event of a liquidity crisis, and identifies other sources of liquidity available to the Company. Company management believes the level of liquidity is sufficient to meet current and future funding requirements. However, changes in economic conditions, including consumer savings habits and availability or access to the brokered deposit market could potentially have a significant impact on the Company’s liquidity position.

Off-Balance Sheet Arrangements

The Company is, from time to time, a party to certain off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that may be material to investors.

The Company’s off-balance sheet arrangements are limited to standby letters of credit whereby the Bank guarantees the obligations or performance of certain customers. These letters of credit are sometimes issued in support of third-party debt. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same origination, portfolio maintenance and management procedures in effect to monitor other credit products. The amount of collateral obtained, if deemed necessary by the Bank upon issuance of a standby letter of credit, is based upon management's credit evaluation of the customer.

The Company’s off-balance sheet arrangements have not changed materially since previously reported in our Annual Report on Form 10-K for the year ended December 31, 2018 or our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

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APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES, AND RECENT ACCOUNTING PRONOUNCEMENTS

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements in this Form 10-Q and in the most recent Form 10-K. Please see those policies in conjunction with this discussion. The accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While the Company bases estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. Please see those policies in conjunction with this discussion. Management believes that the following policies would be considered critical under the SEC’s definition:

Allowance for Loan Losses: The allowance for loan losses represents probable credit losses that are inherent in the loan portfolio at the financial statement date and which may be estimated. Management uses historical information, as well as current economic data, to assess the adequacy of the allowance for loan losses as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. Although management believes that it uses appropriate available information to establish the allowance for loan losses, future additions to the allowance may be necessary if certain future events occur that may cause actual results to differ from the assumptions used in making the evaluation. Conditions in the local economy and real estate values could require the Company to increase provisions for loan losses, which would negatively impact earnings.

Acquired Loans: Loans that the Company acquired in business combinations are initially recorded at fair value with no carryover of the related allowance for loan losses. Determining the fair value of the loans involves estimating the amount and timing of principal and interest cash flows initially expected to be collected on the loans and discounting those cash flows at an appropriate market rate of interest. Going forward, the Company continues to evaluate reasonableness of expectations for the timing and the amount of cash to be collected. Subsequent decreases in expected cash flows may result in changes in the amortization or accretion of fair market value adjustments, and in some cases may result in the loan being considered impaired. For collateral dependent loans with deteriorated credit quality, the Company estimates the fair value of the underlying collateral of the loans. These values are discounted using market derived rates of return, with consideration given to the period of time and costs associated with the foreclosure and disposition of the collateral.

Income Taxes: Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities. The Company uses the asset and liability method of accounting for income taxes in which deferred tax assets and liabilities are established for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The realization of the net deferred tax asset generally depends upon future levels of taxable ordinary income, taxable capital gain income, and the existence of prior years' taxable income, to which carry back refund claims could be made. A valuation allowance would be established for deferred tax assets that management estimates are more likely than not to be unrealizable based on available evidence at the time the estimate is made.

Goodwill and Identifiable Intangible Assets: Goodwill and identifiable intangible assets are recorded as a result of business acquisitions and combinations. These assets are evaluated for impairment annually or whenever events or changes in circumstances indicate the carrying value of these assets may not be recoverable. When these assets are evaluated for impairment, if the carrying amount exceeds fair value, an impairment charge is recorded to income. The fair value is based on observable market prices, when practicable. Other valuation techniques may be used when market prices are unavailable, including estimated discounted cash flows and analysis of market pricing multiples. These types of analyses contain uncertainties because they require management to make assumptions and to apply judgment to

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estimate industry economic factors and the profitability of future business strategies. In the event of future changes in fair value, the Company may be exposed to an impairment charge that could be material.

Determination of Other-Than-Temporary Impairment of Securities: The Company evaluates debt and equity securities within the Company's available for sale for other-than-temporary impairment ("OTTI"), at least quarterly. If the fair value of a debt security is below the amortized cost basis of the security, OTTI is required to be recognized if any of the following are met: (1) the Company intends to sell the security; (2) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the loss is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Noncredit related OTTI for such debt securities is recognized in other comprehensive income, net of applicable taxes. In evaluating its marketable equity securities portfolios for OTTI, the Company considers its intent and ability to hold an equity security to recovery of its cost basis in addition to various other factors, including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI on marketable equity securities is recognized immediately through earnings. Should actual factors and conditions differ materially from those expected by management, the actual realization of gains or losses on investment securities could differ materially from the amounts recorded in the financial statements.

Fair Value of Financial Instruments: The Company uses fair value measurements to record fair value adjustments to certain financial instruments and to determine fair value disclosures. Trading assets, securities available for sale, and derivative instruments are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, or to establish a loss allowance or write-down based on the fair value of impaired assets. Further, the notes to financial statements include information about the extent to which fair value is used to measure assets and liabilities, the valuation methodologies used and its impact to earnings. For financial instruments not recorded at fair value, the notes to financial statements disclose the estimate of their fair value. Due to the judgments and uncertainties involved in the estimation process, the estimates could result in materially different results under different assumptions and conditions.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices, such as interest rates, foreign currency exchange rates, commodity prices and equity prices. Interest rate risk is the most significant market risk affecting the Company. Other types of market risk do not arise in the normal course of the Company’s business activities.

The responsibility for interest rate risk management oversight is the function of the Bank’s Asset and Liability Committee (“ALCO”), chaired by the Chief Financial Officer and composed of various members of senior management. ALCO meets regularly to review balance sheet structure, formulate strategies in light of current and expected economic conditions, adjust product prices as necessary, implement policy, monitor liquidity, and review performance against guidelines established to control exposure to the various types of inherent risk.

Interest Rate Risk: Interest rate risk can be defined as an exposure to movement in interest rates that could have an adverse impact on the Bank's net interest income. Interest rate risk arises from the imbalance in the re-pricing, maturity and or cash flow characteristics of assets and liabilities. Management's objectives are to measure, monitor and develop strategies in response to the interest rate risk profile inherent in the Bank's balance sheet. The objectives in managing the Bank's balance sheet are to preserve the sensitivity of net interest income to actual or potential changes in interest rates, and to enhance profitability through strategies that promote sufficient reward for understood and controlled risk.

The Bank's interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of balance sheet and off-balance sheet instruments as each relate to current and potential changes in interest rates. The level of interest rate risk, measured in terms of the potential future effect on net interest income, is determined through the use of modeling and other techniques under multiple interest rate scenarios. Interest rate risk is evaluated in depth on a quarterly basis and reviewed by ALCO and the Company’s Board of Directors.

The Bank's Asset Liability Management Policy, approved annually by the Bank’s Board of Directors, establishes interest rate risk limits in terms of variability of net interest income under rising, flat, and decreasing rate scenarios. It is the role of the ALCO to evaluate the overall risk profile and to determine actions to maintain and achieve a posture consistent with policy guidelines.

Interest Rate Sensitivity Modeling: The Bank utilizes an interest rate risk model widely recognized in the financial industry to monitor and measure interest rate risk. The model simulates the behavior of interest income and expense for all balance sheet and off-balance sheet instruments, under different interest rate scenarios together with a dynamic future balance sheet. Interest rate risk is measured in terms of potential changes in net interest income based upon shifts in the yield curve.

The interest rate risk sensitivity model requires that assets and liabilities be broken down into components as to fixed, variable, and adjustable interest rates, as well as other homogeneous groupings, which are segregated as to maturity and type of instrument. The model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments. The model uses contractual re-pricing dates for variable products, contractual maturities for fixed rate products, and product-specific assumptions for deposit accounts, such as money market accounts, that are subject to re-pricing based on current market conditions. Re-pricing margins are also determined for adjustable rate assets and incorporated in the model. Investment securities and borrowings with call provisions are examined on an individual basis in each rate environment to estimate the likelihood of a call. Prepayment assumptions for mortgage loans and mortgage-backed securities are developed from industry median estimates of prepayment speeds, based upon similar coupon ranges and degree of seasoning. Cash flows and maturities are then determined, and for certain assets, prepayment assumptions are estimated under different interest rate scenarios. Interest income and interest expense are then simulated under several hypothetical interest rate conditions including:

• A flat interest rate scenario in which current prevailing rates are locked in and the only balance sheet fluctuations that occur are due to cash flows, maturities, new volumes, and re-pricing volumes consistent with this flat rate assumption;

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• A 200 basis point rise or decline in interest rates applied against a parallel shift in the yield curve over a twelve-month horizon together with a dynamic balance sheet anticipated to be consistent with such interest rate changes;

• Various non-parallel shifts in the yield curve, including changes in either short-term or long-term rates over a twelve-month horizon, together with a dynamic balance sheet anticipated to be consistent with such interest rate changes; and

• An extension of the foregoing simulations to each of two, three, four and five year horizons to determine the interest rate risk with the level of interest rates stabilizing in years two through five. Even though rates remain stable during this two to five year time period, re-pricing opportunities driven by maturities, cash flow, and adjustable rate products will continue to change the balance sheet profile for each of the interest rate conditions.

Changes in net interest income based upon the foregoing simulations are measured against the flat interest rate scenario and actions are taken to maintain the balance sheet interest rate risk within established policy guidelines.

As of September 30, 2019 interest rate sensitivity modeling results indicate that the Bank’s balance sheet in year 1 was slightly liability sensitive and in year 2 was asset sensitive.

Assuming short-term and long-term interest rates decline 200 basis points from current levels (i.e., a parallel yield curve shift) and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will deteriorate over the one year horizon (-0.8% versus the base case) while deteriorating further from that level over the two-year horizon (-7.3% versus the base case).

Assuming the Bank’s balance sheet structure and size remain at current levels and the Federal Reserve increases short-term interest rates by 200 basis points with the balance of the yield curve shifting in parallel with these increases, management believes net interest income will remain relatively unchanged over the one and two-year horizons (-1.1% and -0.6%, respectively).

As compared to December 31, 2018, the year-one sensitivity in the down 100 basis points scenario was down slightly for the nine months ended September 30, 2019 (+1.7% prior, versus -.1% current).  The year-two sensitivities in the down 100 basis points scenario changed going from +0.7% to -3.0%.  In the year-one up 200 basis points scenario, results declined going from -3.7% to -1.1%. Year-two, up 200 basis points declined (-8.3% prior, versus -.6% current).

The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels and yield curve shape, prepayment speeds on loans and securities, deposit rates, pricing decisions on loans and deposits, reinvestment or replacement of asset and liability cash flows, and renegotiated loan terms with borrowers. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.

As market conditions vary from those assumed in the sensitivity analysis, actual results may also differ due to: prepayment and refinancing levels deviating from those assumed; the impact of interest rate changes, caps or floors on adjustable rate assets; the potential effect of changing debt service levels on customers with adjustable rate loans; depositor early withdrawals and product preference changes; and other such variables. The sensitivity analysis also does not reflect additional actions that the Bank’s Senior Executive Team and Board of Directors might take in responding to or anticipating changes in interest rates, and the anticipated impact on the Bank’s net interest income.

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ITEM 4.    CONTROLS AND PROCEDURES

(a) Disclosure controls and procedures.

Under the supervision and with the participation of our senior management, consisting of the Company’s principal executive officer and our principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Company’s management, including its principal executive officer and principal financial officer, concluded that as of September 30, 2019 the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.    OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

The Company and its subsidiaries are parties to certain ordinary routine litigation incidental to the normal conduct of their respective businesses, which in the opinion of management based upon currently available information will have no material effect on the Company's consolidated financial statements.

ITEM 1A.               RISK FACTORS

There have been no material changes to the risk factors discussed in Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2018. In addition to the other information set forth in this report, you should carefully consider those risk factors, which could materially affect our business, financial condition and future operating results. Those risk factors are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may have a material adverse effect on our business, financial condition and operating results.

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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)  The following table provides certain information with regard to shares repurchased by the Company in the third quarter of 2019:

Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as a part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs(1)
July 1-31, 2019	—	$	—	—	767,990
August 1-30, 2019	1,185	24.52		1,185	766,805
September 1-30, 2019	—	—		—	766,805
Total	1,185	$	24.52	1,185	766,805

(1) On March 21, 2019 the Company's Board of Directors approved a twelve-month plan to repurchase up to 5% of its outstanding common stock, representing 776,000 shares as of March 15, 2019. The stock repurchase plan expires on March 20, 2020.

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ITEM 6.    EXHIBITS

10.1	Purchase and Assumption Agreement, dated July 8, 2019, by and between People’s United Bank, National Association, and Bar Harbor Bank & Trust
31.1	Certification of Chief Executive Officer under Rule 13a-14(a)/15d-14(a)	Filed herewith
31.2	Certification of Chief Financial Officer under Rule 13a-14(a)/15d-14(a)	Filed herewith
32.1	Certification of Chief Executive Officer under 18 U.S.C. Sec. 1350.	Furnished herewith
32.2	Certification of Chief Financial Officer under 18 U.S.C. Sec. 1350.	Furnished herewith
101	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 is formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Condensed Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to the Consolidated Condensed Financial Statements

*Schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules upon request by the Securities and Exchange Commission; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedules so furnished.

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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.

	BAR HARBOR BANKSHARES
Dated: November 4, 2019	By:	/s/ Curtis C. Simard
		Curtis C. Simard
		President & Chief Executive Officer
Dated: November 4, 2019	By:	/s/ Josephine Iannelli
		Josephine Iannelli
		Executive Vice President & Chief Financial Officer

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EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT

OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis C. Simard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bar Harbor Bankshares (the “Registrant”);

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

3. Based on my knowledge, the financial statements, and other financial information included in this 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 the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

5. The Registrant’s other certifying 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 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.

Date: November 4, 2019            /s/ Curtis C. Simard

Name: Curtis C. Simard

Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT

OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Josephine Iannelli, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bar Harbor Bankshares (the “Registrant”);

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

3. Based on my knowledge, the financial statements, and other financial information included in this 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 the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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

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

5. The Registrant’s other certifying 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 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.

Date: November 4, 2019/s/ Josephine Iannelli

Name: Josephine Iannelli

Title: Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

 The undersigned executive officer of Bar Harbor Bankshares (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the period ended September 30, 2019, fully complies with the requirements of Section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (a) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and (b) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

Date: November 4, 2019             /s/ Curtis C. Simard

Name: Curtis C. Simard

Title: President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FIANANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

     The undersigned executive officer of Bar Harbor Bankshares (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the period ended September 30, 2019, fully complies with the requirements of Section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (a) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and (b) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

Date: November 4, 2019         /s/ Josephine Iannelli

Name: Josephine Iannelli

Title: Executive Vice President and Chief Financial Officer

XML

BORROWED FUNDS - Summary of Maturities of FHLB (Details) - Fixed rate advances $ in Thousands	Sep. 30, 2019 USD ($)
Carrying Value
2019	$ 393,601
2020	54,982
2021	11,658
2022	134,000
2023	1,000
2024 and thereafter	5,319
Total FHLB advances	$ 600,560
Weighted Average Rate
2019	2.27%
2020	2.14%
2021	2.19%
2022	2.25%
2023	0.00%
2024 and thereafter	1.79%
Total FHLB advances	2.24%

XML

ALLOWANCE FOR LOAN LOSSES - Allowance Activity (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Activity in the allowance for loan losses
Balance at beginning of period				$ 13,866
Provision (releases) for loan losses	$ 893	$ 643		1,779	$ 2,208
Balance at end of period	15,353			15,353
Allowance For Loan Losses
Total	15,353			13,866		$ 15,353
Business Activities Loans
Activity in the allowance for loan losses
Balance at beginning of period	14,290	12,723		13,581	12,153
Charged-off loans	(163)	(130)		(309)	(784)
Recoveries on charged-off loans	100	27		256	98
Provision (releases) for loan losses	814	584		1,513	1,737
Balance at end of period	15,041	13,204	$ 12,723	15,041	13,204
Allowance For Loan Losses
Individually evaluated for impairment						1,297	$ 842
Collectively evaluated						13,744	12,362
Total	14,290	12,723	12,723	13,581	12,153	15,041	13,204
Business Activities Loans | Commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	7,206	6,367		6,811	6,037
Charged-off loans	0	(29)		(57)	(186)
Recoveries on charged-off loans	1	7		131	68
Provision (releases) for loan losses	956	291		1,278	717
Balance at end of period	8,163	6,636	6,367	8,163	6,636
Allowance For Loan Losses
Individually evaluated for impairment						990	688
Collectively evaluated						7,173	5,948
Total	7,206	6,367	6,367	6,811	6,037	8,163	6,636
Business Activities Loans | Commercial and industrial
Activity in the allowance for loan losses
Balance at beginning of period	2,748	2,509		2,380	2,373
Charged-off loans	0	0		(13)	(111)
Recoveries on charged-off loans	62	18		62	23
Provision (releases) for loan losses	63	(31)		444	211
Balance at end of period	2,873	2,496	2,509	2,873	2,496
Allowance For Loan Losses
Individually evaluated for impairment						240	62
Collectively evaluated						2,633	2,434
Total	2,748	2,509	2,509	2,380	2,373	2,873	2,496
Business Activities Loans | Residential real estate
Activity in the allowance for loan losses
Balance at beginning of period	3,942	3,454		3,982	3,357
Charged-off loans	(108)	(61)		(110)	(61)
Recoveries on charged-off loans	36	0		55	2
Provision (releases) for loan losses	(111)	258		(168)	353
Balance at end of period	3,759	3,651	3,454	3,759	3,651
Allowance For Loan Losses
Individually evaluated for impairment						66	92
Collectively evaluated						3,693	3,559
Total	3,942	3,454	3,454	3,982	3,357	3,759	3,651
Business Activities Loans | Consumer
Activity in the allowance for loan losses
Balance at beginning of period	394	393		408	386
Charged-off loans	(55)	(40)		(129)	(426)
Recoveries on charged-off loans	1	2		8	5
Provision (releases) for loan losses	(94)	66		(41)	456
Balance at end of period	246	421	393	246	421
Allowance For Loan Losses
Individually evaluated for impairment						1	0
Collectively evaluated						245	421
Total	394	393	393	408	386	246	421
Acquired Loans
Activity in the allowance for loan losses
Balance at beginning of period	282	367		285	172
Charged-off loans	(52)		(168)	(242)	(492)
Recoveries on charged-off loans	3		25	3	132
Provision (releases) for loan losses	79		59	266	471
Balance at end of period	312	283	367	312	283
Allowance For Loan Losses
Individually evaluated for impairment						44	20
Collectively evaluated						268	263
Total	282	367	367	285	172	312	283
Acquired Loans | Commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	159	200		173	97
Charged-off loans	0		(30)	0	(136)
Recoveries on charged-off loans	0		25	0	43
Provision (releases) for loan losses	(2)		(23)	(16)	168
Balance at end of period	157	172	200	157	172
Allowance For Loan Losses
Individually evaluated for impairment						12	0
Collectively evaluated						145	172
Total	159	200	200	173	97	157	172
Acquired Loans | Commercial and industrial
Activity in the allowance for loan losses
Balance at beginning of period	22	82		35	16
Charged-off loans	0		(71)	(15)	(166)
Recoveries on charged-off loans	0		0	0	7
Provision (releases) for loan losses	(15)		33	(13)	187
Balance at end of period	7	44	82	7	44
Allowance For Loan Losses
Individually evaluated for impairment						0	0
Collectively evaluated						7	44
Total	22	82	82	35	16	7	44
Acquired Loans | Residential real estate
Activity in the allowance for loan losses
Balance at beginning of period	101	85		77	59
Charged-off loans	(52)		(62)	(222)	(126)
Recoveries on charged-off loans	0		0	0	0
Provision (releases) for loan losses	99		44	293	134
Balance at end of period	148	67	85	148	67
Allowance For Loan Losses
Individually evaluated for impairment						32	20
Collectively evaluated						116	47
Total	101	85	85	77	59	148	67
Acquired Loans | Consumer
Activity in the allowance for loan losses
Balance at beginning of period	0	0		0	0
Charged-off loans	0		(5)	(5)	(64)
Recoveries on charged-off loans	3		0	3	82
Provision (releases) for loan losses	(3)		5	2	(18)
Balance at end of period	0	0	0	0	0
Allowance For Loan Losses
Individually evaluated for impairment						0	0
Collectively evaluated						0	0
Total	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0

XML

CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Actual and Required Capital Ratios (Details)	Sep. 30, 2019	Dec. 31, 2018
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets	14.01%	14.23%
Common equity tier 1 capital to risk-weighted assets	11.63%	11.80%
Tier 1 capital to risk-weighted assets	12.47%	12.68%
Tier 1 capital to average assets	8.65%	8.53%
Bank
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets	13.45%	13.82%
Common equity tier 1 capital to risk-weighted assets	12.60%	12.99%
Tier 1 capital to risk-weighted assets	12.60%	12.99%
Tier 1 capital to average assets	8.74%	8.74%
Regulatory minimum to be well capitalized, Total capital to risk-weighted assets	10.00%	10.00%
Regulatory minimum to be well capitalized, Common equity tier 1 capital to risk-weighted assets	6.50%	6.50%
Regulatory minimum to be well capitalized, Tier 1 capital to risk-weighted assets	8.00%	8.00%
Regulatory minimum to be well capitalized, Tier 1 capital to average assets	5.00%	5.00%

XML

FAIR VALUE MEASUREMENTS - Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 675,675	$ 725,837
US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	349,143	404,952
US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	118,825	110,512
Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	19,954	20,382
Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	111,226	132,265
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	76,527	57,726
Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	675,675	725,837
Derivative assets	11,090	2,164
Derivative liabilities	(13,163)	(1,353)
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Derivative assets	0	0
Derivative liabilities	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	675,675	725,837
Derivative assets	11,012	2,156
Derivative liabilities	(13,102)	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Derivative assets	78	8
Derivative liabilities	(61)	(1,353)
Recurring | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	11,090	2,164
Derivative liabilities	(13,163)	(1,353)
Recurring | Total Fair Value | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	349,143	404,952
Recurring | Total Fair Value | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	118,825	110,512
Recurring | Total Fair Value | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	19,954	20,382
Recurring | Total Fair Value | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	111,226	132,265
Recurring | Total Fair Value | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	76,527	57,726
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0	0
Derivative liabilities	0	0
Recurring | Level 1 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 1 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 1 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 1 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 1 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	11,012	2,156
Derivative liabilities	(13,102)	(1,353)
Recurring | Level 2 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	349,143	404,952
Recurring | Level 2 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	118,825	110,512
Recurring | Level 2 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	19,954	20,382
Recurring | Level 2 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	111,226	132,265
Recurring | Level 2 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	76,527	57,726
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	78	8
Derivative liabilities	(61)	0
Recurring | Level 3 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 3 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 3 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 3 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0	0
Recurring | Level 3 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 0	$ 0

XML

FAIR VALUE MEASUREMENTS - Unobservable Inputs Non-recurring (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Other real estate owned	$ 2,455,000	$ 2,351,000
Non-recurring | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	14,382,000	15,213,000
Capitalized servicing rights	4,108,000	4,882,000
Other real estate owned	2,455,000	2,351,000
Total	22,846,000	22,446,000
Carrying value of assets held for sale	1,800,000	0
Non-recurring | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	11,419,000	11,676,000
Other real estate owned	2,455,000	2,351,000
Non-recurring | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	2,963,000	3,537,000
Capitalized servicing rights	4,108,000	4,882,000
Non-recurring | Valuation, market approach | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	136,000
Carrying value of assets held for sale	1,901,000
Non-recurring | Minimum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	0
Non-recurring | Maximum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	6,915,000
Non-recurring | Maximum | Valuation, market approach | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	527,000
Non-recurring | Impaired loans | Minimum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value		0
Non-recurring | Impaired loans | Minimum | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Cash flows	22,000	22,000
Non-recurring | Impaired loans | Maximum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value		6,915,000
Non-recurring | Impaired loans | Maximum | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Cash flows	1,019,000	1,072,000
Non-recurring | Other real estate owned | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	$ 2,695,000	$ 2,700,000
Selling Costs		12.93%
Non-recurring | Other real estate owned | Minimum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Selling Costs	6.00%
Non-recurring | Other real estate owned | Maximum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Selling Costs	10.00%
Loss severity | Non-recurring | Impaired loans | Minimum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Loss severity	0.00%	0.00%
Loss severity | Non-recurring | Impaired loans | Maximum | Fair value of collateral -appraised value | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Loss severity	61.00%	55.00%
Constant prepayment rate (CPR) | Non-recurring | Capitalized servicing rights | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Constant prepayment rate (CPR)	10.21%	8.19%
Discount rate | Non-recurring | Impaired loans | Minimum | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Discount rate	2.88%	2.88%
Discount rate | Non-recurring | Impaired loans | Maximum | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Discount rate	9.50%	9.50%
Discount rate | Non-recurring | Capitalized servicing rights | Discount cash flow | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Discount rate	10.08%	10.08%

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As part of its overall asset and liability management strategy, the Company periodically uses derivative instruments to minimize significant unplanned fluctuations in earnings and cash flows caused by interest rate volatility.  The Company’s interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so the changes in interest rates do not have a significant effect on net interest income.

The Company recognizes its derivative instruments on the consolidated balance sheet at fair value.  On the date the derivative instrument is entered into, the Company designates whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). The Company formally documents relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of hedged items.

Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in other comprehensive income or loss. The Company discontinues hedge accounting when it is determined the derivative is no longer effective in offsetting changes of the hedged risk on the hedged item, or management determines the designation of the derivative as a hedging instrument is no longer appropriate.

The following tables present information about derivative assets and liabilities at September 30, 2019 and December 31, 2018:

	September 30, 2019
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	3.4	$	89
Interest rate swap on deposits	50,000		4.5	(2,179		)
Total cash flow hedges	140,000			(2,090		)
Economic hedges:
Forward sale commitments	7,762		0.1	(61		)
Total economic hedges	7,762			(61		)
Non-hedging derivatives:
Interest rate lock commitments	12,242		0.1	78
Customer loan derivative liability	169,569		9.8	(10,923		)
Customer loan derivative asset	169,569		9.8	10,923
Total non-hedging derivatives	351,380			78
Total	$	499,142		$	(2,073	)

	December 31, 2018
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	4.1	$	803
Total cash flow hedges	90,000			803
Non-hedging derivatives:
Interest rate lock commitments	957		0.1	8
Customer loan derivative liability	45,641		9.9	(1,353		)
Customer loan derivative asset	45,641		9.9	1,353
Total non-hedging derivatives	92,239			8
Total	$	182,239		$	811

Information about derivative assets and liabilities for the three and nine months ended September 30, 2019 and 2018 is, as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Cash flow hedges:
Interest rate cap agreements
Realized loss in interest expense	$	(183	)	$	(137	)	$	(521	)	$	(367	)
Interest rate swap on deposits
Realized gain in interest expense	17			—			17			—
Economic hedges:
Forward commitments
Realized (loss) gain in other non-interest income	(31		)	43			(61		)	190
Non-hedging derivatives:
Interest rate lock commitments
Realized gain in other non-interest income	7			—			70			9

Cash flow hedges

Interest rate cap agreements

In 2014, interest rate cap agreements were purchased to limit the Company’s exposure to rising interest rates on four rolling, three-month borrowings indexed to three-month LIBOR.  Under the terms of the agreements, the Company paid total premiums of $4.6 million for the right to receive cash flow payments if three-month LIBOR rises above the caps of 3.00%, thus effectively ensuring interest expense on the borrowings at maximum rates of 3.00% for the duration of the agreements. The interest rate cap agreements were designated as cash flow hedges.  The fair values of the interest rate cap agreements are included in other assets on the Company’s consolidated balance sheets. Changes in the fair value, representing unrealized gains or losses, are recorded in accumulated other comprehensive income, net of tax.  The premiums paid on the interest rate cap agreements are being recognized as increases in interest expense over the duration of the agreements using the caplet method.

Interest rate swap on deposits

In March 2019, the Company entered into an interest rate swap on brokered deposits (the "SWAP") to limit its exposure to rising interest rates over a five year term. Under the terms of the agreement, the Company pays a fixed rate of 2.461% for a notional amount of $50.0 million, and the financial institution counterparty pays interest on the three-month LIBOR rate. The Company designated the SWAP as a cash flow hedge and the fair value is included in other liabilities on the Company's consolidated balance sheets. Changes in the fair value, representing unrealized gains or losses, are recorded in accumulated other comprehensive income, net of tax.

Economic hedges

The Company utilizes forward sale commitments to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives with changes in fair value recorded in current period earnings.  The Company typically uses mandatory delivery contracts, which are loan sale agreements where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into mandatory delivery contracts shortly after the loan closes with a customer.

Non-hedging derivatives

Interest rate lock commitments

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs relate to the origination of residential mortgage loans held for sale are considered as derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the market price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s consolidated statements of income. Changes in the fair value of IRLCs subsequent to inception are based on changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and changes in the probability when the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

Customer loan derivatives

The Company enters into customer loan derivatives to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting loan swap agreements with highly rated third-party financial institutions. The loan swap agreements are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company is party to master netting arrangements with its financial institutional counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes. The master netting arrangements provide for a single net settlement of all loan swap agreements, as well as collateral or cash funds, in the event of default on, or termination of, any one contract. Collateral is provided by cash or securities received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds. Currently, the Company has posted cash of $10.7 million with the counterparty.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common stock amount	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock
Balance at beginning of period at Dec. 31, 2017	$ 354,641	$ 32,857	$ 186,702	$ 144,977	$ (4,554)	$ (5,341)
Increase (Decrease) in Stockholders' Equity
Net income	16,347			16,347
Other comprehensive income (loss)	(9,813)				(9,813)
Cash dividends declared	(5,981)			(5,981)
Treasury stock purchased	(278)					(278)
Net issuance to employee stock plans, including related tax effects	604		(131)			735
Recognition of stock based compensation	627		627
Balance at end of period at Jun. 30, 2018	355,963	32,857	187,198	156,139	(15,347)	(4,884)
Balance at beginning of period at Dec. 31, 2017	354,641	32,857	186,702	144,977	(4,554)	(5,341)
Increase (Decrease) in Stockholders' Equity
Net income	25,317
Other comprehensive income (loss)	(14,154)
Balance at end of period at Sep. 30, 2018	357,685	32,857	187,284	162,008	(19,688)	(4,776)
Balance at beginning of period at Jun. 30, 2018	355,963	32,857	187,198	156,139	(15,347)	(4,884)
Increase (Decrease) in Stockholders' Equity
Net income	8,970			8,970
Other comprehensive income (loss)	(4,341)				(4,341)
Cash dividends declared	(3,101)			(3,101)
Treasury stock purchased	(46)					(46)
Net issuance to employee stock plans, including related tax effects	31		(123)			154
Recognition of stock based compensation	209		209
Balance at end of period at Sep. 30, 2018	357,685	32,857	187,284	162,008	(19,688)	(4,776)
Balance at beginning of period at Dec. 31, 2018	370,579	32,857	187,653	166,526	(11,802)	(4,655)
Increase (Decrease) in Stockholders' Equity
Net income	13,398			13,398
Other comprehensive income (loss)	12,679				12,679
Cash dividends declared	(6,524)			(6,524)
Net issuance to employee stock plans, including related tax effects	80		(69)			149
Recognition of stock based compensation	560		560
Balance at end of period at Jun. 30, 2019	390,562	32,857	188,144	173,400	877	(4,716)
Balance at beginning of period at Dec. 31, 2018	370,579	32,857	187,653	166,526	(11,802)	(4,655)
Increase (Decrease) in Stockholders' Equity
Net income	18,413
Other comprehensive income (loss)	14,847
Treasury stock purchased	(210)					(210)
Balance at end of period at Sep. 30, 2019	394,459	32,857	188,283	174,994	3,045	(4,720)
Balance at beginning of period at Jun. 30, 2019	390,562	32,857	188,144	173,400	877	(4,716)
Increase (Decrease) in Stockholders' Equity
Net income	5,015			5,015
Other comprehensive income (loss)	2,168				2,168
Cash dividends declared	(3,421)			(3,421)
Treasury stock purchased	(136)					(136)
Net issuance to employee stock plans, including related tax effects	115		(17)			132
Recognition of stock based compensation	156		156
Balance at end of period at Sep. 30, 2019	$ 394,459	$ 32,857	$ 188,283	$ 174,994	$ 3,045	$ (4,720)

XML

Label	Element	Value
Tax Cuts and Jobs Act, Reclassification from AOCI to Retained Earnings, Tax Effect	us-gaap_TaxCutsAndJobsActOf2017ReclassificationFromAociToRetainedEarningsTaxEffect	$ 0
Retained Earnings [Member]
Tax Cuts and Jobs Act, Reclassification from AOCI to Retained Earnings, Tax Effect	us-gaap_TaxCutsAndJobsActOf2017ReclassificationFromAociToRetainedEarningsTaxEffect	980,000
AOCI Attributable to Parent [Member]
Tax Cuts and Jobs Act, Reclassification from AOCI to Retained Earnings, Tax Effect	us-gaap_TaxCutsAndJobsActOf2017ReclassificationFromAociToRetainedEarningsTaxEffect	(980,000)
Accounting Standards Update 2014-09 [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income	us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleEffectOfChangeOnNetIncome	(184,000)
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member]
New Accounting Pronouncement or Change in Accounting Principle, Effect of Change on Net Income	us-gaap_NewAccountingPronouncementOrChangeInAccountingPrincipleEffectOfChangeOnNetIncome	$ (184,000)

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BORROWED FUNDS

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

BORROWED FUNDS

BORROWED FUNDS

Borrowed funds at September 30, 2019 and December 31, 2018 are summarized, as follows:

	September 30, 2019				December 31, 2018
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	422,583	2.24	%	$	611,683	2.47	%
Other borrowings	41,259		1.24		36,211		1.09
Total short-term borrowings	463,842		2.15		647,894		2.39
Long-term borrowings
Advances from the FHLB	177,977		2.25		32,929		1.86
Subordinated borrowings	37,928		5.69		37,973		5.58
Junior subordinated borrowings	5,000		6.15		5,000		5.96
Total long-term borrowings	220,905		2.93		75,902		3.99
Total	$	684,747	2.40	%	$	723,796	2.56	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLB”) advances with a maturity of less than one year. The Company also maintains a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended September 30, 2019 and December 31, 2018.

The Company has the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program and the Discount Window at the Federal Reserve Bank of Boston (the “FRB”). At September 30, 2019, the Company’s available secured line of credit at the FRB was $107.7 million. The Company has pledged certain loans and securities to the FRB to support this arrangement. There were no borrowings with the FRB for the periods ended September 30, 2019 and December 31, 2018.

The Company maintains, with a correspondent bank, an unused unsecured federal funds line of credit that has an aggregate overnight borrowing capacity of $50 million as of September 30, 2019 and December 31, 2018. There was no outstanding balance on the line of credit as of September 30, 2019 and December 31, 2018.

Long-term FHLB advances consist of advances with a maturity of more than one year. The advances outstanding at September 30, 2019 and December 31, 2018 include no callable advances and $319 thousand of amortizing advances. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of September 30, 2019 is, as follows:

	September 30, 2019
(in thousands, except rates)	Carrying Value		Weighted Average Rate
Fixed rate advances maturing:
2019	$	393,601	2.27	%
2020	54,982		2.14
2021	11,658		2.19
2022	134,000		2.25
2023	1,000		—
2024 and thereafter	5,319		1.79
Total FHLB advances	$	600,560	2.24	%

In April 2008, the Company issued fifteen year junior subordinated notes in the amount of $5.0 million. These debt securities qualify as Tier 2 capital for the Company and the Bank. The subordinated debt securities are callable by the Bank after five years without penalty, the next date on which the securities can be redeemed is December 15, 2019. The interest rate is three-month LIBOR plus 3.45%. At September 30, 2019 and December 31, 2018 the interest rate was 5.57% and 6.24%, respectively.

The Company has $17.0 million of subordinated debt issued on October 29, 2014, in connection with the execution of a Subordinated Note Purchase Agreement with an aggregate of $17.0 million of subordinated notes (the “Notes”) to the accredited investors. The Notes have a maturity date of November 1, 2024, and will bear interest at a fixed rate of 6.75% per annum. The Company may, at its option, beginning with the interest payment date of November 1, 2019, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at par plus accrued and unpaid interest to the date of redemption. Any partial redemption will be made pro rata among all of the noteholders. The Notes are not subject to repayment at the option of the noteholders. The Notes are unsecured, subordinated obligations of the Company and rank junior in right of payment to the Company’s senior indebtedness and to the Company’s obligations to its general creditors.

The Company also has $20.6 million in floating Junior Subordinated Deferrable Interest Debentures ("Debentures") issued by NHTB Capital Trust II ("Trust II") and NHTB Capital Trust III ("Trust III"), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2014, carry a variable interest rate of 3-month LIBOR plus 2.79%, and mature in 2034. The debt is callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which the Company is not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into the Company’s financial statements.

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 50,032	$ 35,208
Interest-bearing deposit with the Federal Reserve Bank	21,561	63,546
Total cash and cash equivalents	71,593	98,754
Securities available for sale, at fair value	675,675	725,837
Federal Home Loan Bank stock	27,469	35,659
Total securities	703,144	761,496
Loans:
Total loans	2,577,306	2,490,227
Less: Allowance for loan losses	(15,353)	(13,866)
Net loans	2,561,953	2,476,361
Premises and equipment, net	47,644	48,804
Other real estate owned	2,455	2,351
Goodwill	100,085	100,085
Other intangible assets	6,879	7,459
Cash surrender value of bank-owned life insurance	75,368	73,810
Deferred tax assets, net	4,988	9,514
Other assets	38,365	29,853
Total assets	3,612,474	3,608,487
Deposits:
Demand	380,707	370,889
NOW	490,315	484,717
Savings	360,570	358,888
Money market	359,328	335,951
Time	902,665	932,793
Total deposits	2,493,585	2,483,238
Borrowings:
Senior	641,819	680,823
Subordinated	42,928	42,973
Total borrowings	684,747	723,796
Other liabilities	39,683	30,874
Total liabilities	3,218,015	3,237,908
Shareholders’ equity
Capital stock, par value $2.00; authorized 20,000,000 shares; issued 16,428,388 and 16,428,388 shares at September 30, 2019 and December 31, 2018, respectively	32,857	32,857
Additional paid-in capital	188,283	187,653
Retained earnings	174,994	166,526
Accumulated other comprehensive income (loss)	3,045	(11,802)
Less: 879,785 and 905,201 shares of treasury stock at September 30, 2019 and December 31, 2018, respectively	(4,720)	(4,655)
Total shareholders’ equity	394,459	370,579
Total liabilities and shareholders’ equity	3,612,474	3,608,487
Commercial real estate
Loans:
Loans:	923,773	826,699
Commercial and industrial
Loans:
Loans:	402,706	404,870
Residential real estate
Loans:
Loans:	1,143,452	1,144,698
Consumer
Loans:
Loans:	$ 107,375	$ 113,960

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SECURITIES AVAILABLE FOR SALE - Summary of Securities with Unrealized Losses (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Gross Unrealized Losses
Less Than Twelve Months	$ 1,155	$ 517
Over Twelve Months	1,605	13,658
Total	2,760	14,175
Fair Value
Less Than Twelve Months	79,619	50,873
Over Twelve Months	78,858	428,272
Total	158,477	479,145
US Government-sponsored enterprises
Gross Unrealized Losses
Less Than Twelve Months	140	155
Over Twelve Months	1,188	9,289
Total	1,328	9,444
Fair Value
Less Than Twelve Months	30,711	19,367
Over Twelve Months	60,174	297,569
Total	90,885	316,936
US Government agency
Gross Unrealized Losses
Less Than Twelve Months	117	16
Over Twelve Months	100	1,919
Total	217	1,935
Fair Value
Less Than Twelve Months	10,691	2,570
Over Twelve Months	9,767	68,266
Total	20,458	70,836
Private label
Gross Unrealized Losses
Less Than Twelve Months	385	79
Over Twelve Months	4	5
Total	389	84
Fair Value
Less Than Twelve Months	19,573	10,393
Over Twelve Months	39	47
Total	19,612	10,440
Obligations of states and political subdivisions thereof
Gross Unrealized Losses
Less Than Twelve Months	20	43
Over Twelve Months	127	2,033
Total	147	2,076
Fair Value
Less Than Twelve Months	4,138	6,784
Over Twelve Months	1,692	47,930
Total	5,830	54,714
Corporate bonds
Gross Unrealized Losses
Less Than Twelve Months	493	224
Over Twelve Months	186	412
Total	679	636
Fair Value
Less Than Twelve Months	14,506	11,759
Over Twelve Months	7,186	14,460
Total	$ 21,692	$ 26,219

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

The following table presents the calculation of earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share and share data)	2019		2018		2019		2018
Net income	$	5,015	$	8,970	$	18,413	$	25,317
Average number of basic common shares outstanding	15,547,276		15,503,488		15,536,414		15,478,207
Plus: dilutive effect of stock options and awards outstanding (1)	34,027		76,575		45,282		85,559
Average number of diluted common shares outstanding (1)	15,581,303		15,580,063		15,581,696		15,563,766
Anti-dilutive options excluded from earnings calculation	—		—		—		14,394
Earnings per share:
Basic	$	0.32	$	0.58	$	1.19	$	1.64
Diluted	$	0.32	$	0.58	$	1.18	$	1.63

_____________________________________

(1) Average diluted shares outstanding are computed using the treasury stock method.

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NON-INTEREST INCOME (Tables)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following tables present disaggregation of the Company’s non-interest revenue by major business line and timing of revenue recognition for the transfer of products or services:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Major Products/Service Lines
Trust management fees	$	2,737	$	2,720	$	8,055	$	8,268
Financial services fees	276		232		781		768
Interchange fees	1,323		1,146		3,567		3,277
Customer deposit fees	1,112		1,095		3,046		3,093
Other customer service fees	118		249		723		691
Total	$	5,566	$	5,442	$	16,172	$	16,097

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Timing of Revenue Recognition
Products and services transferred at a point in time	$	2,839	$	2,583	$	7,874	$	7,576
Products and services transferred over time	2,727		2,859		8,298		8,521
Total	$	5,566	$	5,442	$	16,172	$	16,097

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:

(in thousands)	Balance at September 30, 2019		Balance at December 31, 2018
Balances from contracts with customers only:
Other Assets	$	1,898	$	2,866
Other Liabilities	3,179		4,923

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LOANS (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Schedule of Loans

The following is a summary of total loans:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	28,802	$	2,064	$	30,866	$	23,754	$	2,890	$	26,644
Other commercial real estate	672,885		220,022		892,907		555,980		244,075		800,055
Total commercial real estate	701,687		222,086		923,773		579,734		246,965		826,699
Commercial and industrial:
Commercial	239,894		40,490		280,384		234,757		52,470		287,227
Agricultural	21,206		—		21,206		22,317		—		22,317
Tax exempt	66,043		35,073		101,116		56,588		38,738		95,326
Total commercial and industrial	327,143		75,563		402,706		313,662		91,208		404,870
Total commercial loans	1,028,830		297,649		1,326,479		893,396		338,173		1,231,569
Residential real estate:
Residential mortgages	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Total residential real estate	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Consumer:
Home equity	58,556		37,600		96,156		57,898		45,291		103,189
Other consumer	10,234		985		11,219		9,414		1,357		10,771
Total consumer	68,790		38,585		107,375		67,312		46,648		113,960
Total loans	$	1,828,136	$	749,170	$	2,577,306	$	1,630,897	$	859,330	$	2,490,227

Schedule of Activity in the Accretable Yield for the Acquired Loan Portfolio that Falls Under the Review of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,195		$	2,807
Reclassification from non-accretable difference for loans with (decreased) improved cash flows	(126		)	1,985
Accretion	(581		)	(315		)
Balance at end of period	$	3,488		$	4,477
	Nine Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,377		$	3,509
Reclassification from non-accretable difference for loans with improved cash flows	498			2,031
Accretion	(1,387		)	(1,063		)
Balance at end of period	$	3,488		$	4,477

Summary of Past Due Loans

The following is a summary of past due loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	—	$	—	$	73	$	73	$	28,729	$	28,802	$	73
Other commercial real estate	985		56		6,773		7,814		665,071		672,885		—
Total commercial real estate	985		56		6,846		7,887		693,800		701,687		73
Commercial and industrial:
Commercial	772		64		1,145		1,981		237,913		239,894		—
Agricultural	121		72		25		218		20,988		21,206		—
Tax exempt	—		—		—		—		66,043		66,043		—
Total commercial and industrial	893		136		1,170		2,199		324,944		327,143		—
Total commercial loans	1,878		192		8,016		10,086		1,018,744		1,028,830		73
Residential real estate:
Residential mortgages	399		345		871		1,615		728,901		730,516		71
Total residential real estate	399		345		871		1,615		728,901		730,516		71
Consumer:
Home equity	131		65		315		511		58,045		58,556		—
Other consumer	2		7		—		9		10,225		10,234		—
Total consumer	133		72		315		520		68,270		68,790		—
Total loans	$	2,410	$	609	$	9,202	$	12,221	$	1,815,915	$	1,828,136	$	144

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	12	$	—	$	—	$	12	$	190	$	2,064	$	—
Other commercial real estate	434		—		240		674		4,859		220,022		72
Total commercial real estate	446		—		240		686		5,049		222,086		72
Commercial and industrial:
Commercial	—		41		750		791		249		40,490		387
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		35,073		—
Total commercial and industrial	—		41		750		791		249		75,563		387
Total commercial loans	446		41		990		1,477		5,298		297,649		459
Residential real estate:
Residential mortgages	245		519		874		1,638		3,093		412,936		47
Total residential real estate	245		519		874		1,638		3,093		412,936		47
Consumer:
Home equity	356		133		180		669		19		37,600		37
Other consumer	—		—		—		—		—		985		—
Total consumer	356		133		180		669		19		38,585		37
Total loans	$	1,047	$	693	$	2,044	$	3,784	$	8,410	$	749,170	$	543

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	23,754	$	23,754	$	—
Other commercial real estate	1,146		—		6,725		7,871		548,109		555,980		—
Total commercial real estate	1,146		—		6,725		7,871		571,863		579,734		—
Commercial and industrial:
Commercial	395		60		402		857		233,900		234,757		50
Agricultural	65		6		25		96		22,221		22,317		—
Tax exempt	—		—		—		—		56,588		56,588		—
Total commercial and industrial	460		66		427		953		312,709		313,662		50
Total commercial loans	1,606		66		7,152		8,824		884,572		893,396		50
Residential real estate:
Residential mortgages	3,565		641		1,309		5,515		664,674		670,189		—
Total residential real estate	3,565		641		1,309		5,515		664,674		670,189		—
Consumer:
Home equity	72		—		—		72		57,826		57,898		—
Other consumer	17		—		11		28		9,386		9,414		—
Total consumer	89		—		11		100		67,212		67,312		—
Total loans	$	5,260	$	707	$	8,472	$	14,439	$	1,616,458	$	1,630,897	$	50

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	164	$	2,890	$	—
Other commercial real estate	631		99		211		941		6,143		244,075		—
Total commercial real estate	631		99		211		941		6,307		246,965		—
Commercial and industrial:
Commercial	149		26		494		669		679		52,470		—
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		38,738		—
Total commercial and industrial	149		26		494		669		679		91,208		—
Total commercial loans	780		125		705		1,610		6,986		338,173		—
Residential real estate:
Residential mortgages	3,419		254		1,792		5,465		3,095		474,509		—
Total residential real estate	3,419		254		1,792		5,465		3,095		474,509		—
Consumer:
Home equity	198		—		66		264		22		45,291		7
Other consumer	17		—		—		17		3		1,357		189
Total consumer	215		—		66		281		25		46,648		196
Total loans	$	4,414	$	379	$	2,563	$	7,356	$	10,106	$	859,330	$	196

Summary of Information Pertaining to Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities  Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	1	$	—	$	1	$	1	$	—	$	1
Other commercial real estate	8,172		346		8,518		7,873		282		8,155
Total commercial real estate	8,173		346		8,519		7,874		282		8,156
Commercial and industrial:
Commercial	1,268		575		1,843		1,423		643		2,066
Agricultural	234		—		234		265		—		265
Tax exempt	—		—		—		—		—		—
Total commercial and industrial	1,502		575		2,077		1,688		643		2,331
Total commercial loans	9,675		921		10,596		9,562		925		10,487
Residential real estate:
Residential mortgages	3,277		2,063		5,340		4,213		2,997		7,210
Total residential real estate	3,277		2,063		5,340		4,213		2,997		7,210
Consumer:
Home equity	564		154		718		246		201		447
Other consumer	25		—		25		90		1		91
Total consumer	589		154		743		336		202		538
Total loans	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235

Schedule of Loans Evaluated for Impairment

Loans evaluated for impairment as of September 30, 2019 and December 31, 2018 are, as follows:

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	8,759	$	1,323	$	2,643	$	13	$	12,738
Collectively evaluated	692,928		325,820		727,873		68,777		1,815,398
Total	$	701,687	$	327,143	$	730,516	$	68,790	$	1,828,136

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	257	$	414	$	973	$	—	$	1,644
Purchased credit impaired	5,049		249		3,093		19		8,410
Collectively evaluated	216,780		74,900		408,870		38,566		739,116
Total	$	222,086	$	75,563	$	412,936	$	38,585	$	749,170

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	9,835	$	1,445	$	2,562	$	13	$	13,855
Collectively evaluated	569,899		312,217		667,627		67,299		1,617,042
Total	$	579,734	$	313,662	$	670,189	$	67,312	$	1,630,897

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	188	$	426	$	744	$	—	$	1,358
Purchased credit impaired	6,307		679		3,095		25		10,106
Collectively evaluated	240,470		90,103		470,670		46,623		847,866
Total	$	246,965	$	91,208	$	474,509	$	46,648	$	859,330

Summary of Impaired Loans

The following is a summary of impaired loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	5,634		5,675		—
Commercial	657		713		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	2,082		2,236		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	3,124		3,262		989
Commercial	666		694		240
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	561		594		66
Home equity	13		13		1
Other consumer	—		—		—
Total
Commercial real estate	$	8,759	$	8,938	$	990
Commercial and industrial	1,323		1,407		240
Residential real estate	2,643		2,830		66
Consumer	13		13		1
Total impaired loans	$	12,738	$	13,188	$	1,297

Acquired Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	90		90		—
Commercial	414		508		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	616		852		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	167		168		12
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	357		376		32
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	257	$	258	$	12
Commercial and industrial	414		508		—
Residential real estate	973		1,228		32
Consumer	—		—		—
Total impaired loans	$	1,644	$	1,994	$	44

Business Activities Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	8,209		8,301		—
Commercial	649		669		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	1,671		1,709		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	1,625		1,660		421
Commercial	796		855		78
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	891		916		111
Home equity	13		13		—
Other consumer	—		—		—
Total
Commercial real estate	$	9,835	$	9,962	$	422
Commercial and industrial	1,445		1,524		78
Residential real estate	2,562		2,625		111
Consumer	13		13		—
Total impaired loans	$	13,855	$	14,124	$	611

Acquired Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	188		187		—
Commercial	426		510		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	375		524		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	—		—		—
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	369		379		41
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	188	$	187	$	—
Commercial and industrial	426		510		—
Residential real estate	744		903		41
Consumer	—		—		—
Total impaired loans	$	1,358	$	1,600	$	41

Summary of the Average Recorded Investment and Interest Income Recognized on Impaired Loans

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018:

Business Activities Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,528		52		6,639		31
Commercial	747		4		625		2
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,041		16		3,955		9
Home equity	—		—		158		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	1	$	—	$	1	$	—
Other commercial real estate	3,217		—		2,214		—
Commercial	654		—		788		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	551		2		888		3
Home equity	12		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,746	$	52	$	8,854	$	31
Commercial and industrial	1,401		4		1,413		2
Residential real estate	2,592		18		4,843		12
Consumer	12		—		171		—
Total impaired loans	$	12,751	$	74	$	15,281	$	45

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,466		56		6,204		46
Commercial	792		7		628		7
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,089		47		4,027		28
Home equity	—		—		236		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	2	$	—	$	1	$	—
Other commercial real estate	2,972		29		1,600		6
Commercial	497		—		716		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	540		7		800		7
Home equity	13		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,440	$	85	$	7,805	$	52
Commercial and industrial	1,289		7		1,344		7
Residential real estate	2,629		54		4,827		35
Consumer	13		—		249		—
Total impaired loans	$	12,371	$	146	$	14,225	$	94

Acquired Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	88		—		95		—
Commercial	395		—		469		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	702		—		276		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	165		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	352		—		181		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	253	$	—	$	95	$	—
Commercial and industrial	395		—		469		—
Residential real estate	1,054		—		457		—
Consumer	—		—		—		—
Total impaired loans	$	1,702	$	—	$	1,021	$	—

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	89		—		97		1
Commercial	429		—		445		1
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	593		—		124		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	123		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	361		—		186		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	212	$	—	$	97	$	1
Commercial and industrial	429		—		445		1
Residential real estate	954		—		310		—
Consumer	—		—		—		—
Total impaired loans	$	1,595	$	—	$	852	$	2

Schedule of Recorded Investment and Number of Modifications for TDRs Identified During the Period

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2019 and 2018, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

	Three Months Ended September 30, 2019
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	4	$	268	$	267
Agricultural	1	141		141
Residential mortgages	2	399		342
Total	7	$	808	$	750
	Three Months Ended September 30, 2018
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	1	72		72
Commercial	5	104		60
Residential mortgages	2	228		225
Total	9	$	406	$	358
	Nine Months Ended September 30, 2019
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	9	$	543	$	529
Other commercial	4	168		91
Agricultural	1	141		141
Residential mortgages	11	1,133		1,034
Total	25	$	1,985	$	1,795

	Nine Months Ended September 30, 2018
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	9	1,896		1,564
Other commercial	7	556		486
Agricultural	1	167		—
Residential mortgages	15	2,752		2,168
Home equity	1	100		100
Other consumer	2	5		4
Total	36	$	5,478	$	4,323

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest only payments	2	$	90	—	$	—
Forbearance	1	141		1	115
Forbearance and interest only payments	2	176		3	72
Forbearance and maturity concession	—	—		4	143
Forbearance, amortization and maturity concession	2	343		—	—
Maturity concession	—	—		1	28
Total	7	$	750	9	$	358
	Nine Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest rate and maturity concession	—	$	—	1	$	16
Interest only payments	2	90		—	—
Interest only payments and maturity concession	2	73		—	—
Amortization and maturity concession	4	273		—	—
Amortization, interest rate and maturity concession	1	77		—	—
Forbearance	3	253		3	271
Forbearance and interest only payments	5	331		6	121
Forbearance and maturity concession	—	—		17	1,774
Forbearance, amortization and maturity concession	7	640		—	—
Maturity concession	—	—		2	440
Restructure with maturity concession	—	—		5	1,419
Other	1	58		2	282
Total	25	$	1,795	36	$	4,323

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On July 8, 2019, the Company entered into a definitive agreement to acquire eight branches located in central Maine with approximately $287.0 million of deposits, $111.0 million of loans and $284.0 million of assets under management (as of March 31, 2019) from People’s United Bank, National Association. The transaction closed on October 25, 2019 and the Company received initial proceeds of $134.0 million that were net of a 6.3% premium on average total deposits plus a premium of 1.2 times annualized wealth management revenue and approximately $4.4 million for the premises. The Company used the proceeds to pay-down Federal Home Loan Bank advances. The Company is currently in the process of determining the final purchase price and allocation between the assets acquired and liabilities assumed.

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

Schedule of Actual and Required Capital Ratios

The actual and required capital ratios are, as follows:

	September 30, 2019		Regulatory Minimum to be "Well Capitalized"		December 31, 2018		Regulatory Minimum to be "Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	14.01	%	N/A		14.23	%	N/A
Common equity tier 1 capital to risk-weighted assets	11.63		N/A		11.80		N/A
Tier 1 capital to risk-weighted assets	12.47		N/A		12.68		N/A
Tier 1 capital to average assets	8.65		N/A		8.53		N/A
Bank
Total capital to risk-weighted assets	13.45	%	10.00	%	13.82	%	10.00	%
Common equity tier 1 capital to risk-weighted assets	12.60		6.50		12.99		6.50
Tier 1 capital to risk-weighted assets	12.60		8.00		12.99		8.00
Tier 1 capital to average assets	8.74		5.00		8.74		5.00

Schedule of Components of Accumulated Other Comprehensive Income

Components of accumulated other comprehensive income (loss) is, as follows:

(in thousands)	September 30, 2019			December 31, 2018
Other accumulated comprehensive income (loss), before tax:
Net unrealized gain (loss) on AFS securities	$	10,442		$	(11,304	)
Net unrealized loss on effective cash flow hedging derivatives	(5,306		)	(2,934		)
Net unrealized loss on post-retirement plans	(1,162		)	(1,162		)
Income taxes related to items of accumulated other comprehensive (income) loss:
Net unrealized (gain) loss on AFS securities	(2,440		)	2,641
Net unrealized loss on effective cash flow hedging derivatives	1,239			685
Net unrealized loss on post-retirement plans	272			272
Accumulated other comprehensive income (loss)	$	3,045		$	(11,802	)

Schedule of Components of Other Comprehensive Income

The following table presents the components of other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	3,357		$	(784	)	$	2,573
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	3,200			(747		)	2,453
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period	(370		)	85			(285		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on cash flow hedging derivatives	(370		)	85			(285		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	2,830		$	(662	)	$	2,168
Three Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(5,850	)	$	1,291		$	(4,559	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(5,850		)	1,291			(4,559		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	299			(81		)	218
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	299			(81		)	218
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive loss	$	(5,551	)	$	1,210		$	(4,341	)

(in thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	21,903		$	(5,118	)	$	16,785
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	21,746			(5,081		)	16,665
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	(2,372		)	554			(1,818		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	(2,372		)	554			(1,818		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	19,374		$	(4,527	)	$	14,847
Nine Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(19,639	)	$	4,565		$	(15,074	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(19,639		)	4,565			(15,074		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,179			(290		)	889
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	1,179			(290		)	889
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	41			(10		)	31
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	41			(10		)	31
Other comprehensive loss	$	(18,419	)	$	4,265		$	(14,154	)

Schedule of Gross Changes in Each Component of Accumulated Other Comprehensive Income

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Net unrealized (loss) gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized  loss on pension plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	5,547		$	(3,782	)	$	(888	)	$	877
Other comprehensive gain (loss) before reclassifications	2,573			(285		)	—			2,288
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	2,453			(285		)	—			2,168
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Three Months Ended September 30, 2018
Balance at beginning of period	$	(12,595	)	$	(2,064	)	$	(688	)	$	(15,347	)
Other comprehensive (loss) gain before reclassifications	(4,559		)	218			—			(4,341		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(4,559		)	218			—			(4,341		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(8,665	)	$	(2,249	)	$	(888	)	$	(11,802	)
Other comprehensive gain (loss) before reclassifications	16,785			(1,818		)	—			14,967
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	16,665			(1,818		)	—			14,847
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(1,713	)	$	(2,250	)	$	(591	)	$	(4,554	)
Other comprehensive (loss) gain before reclassifications	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income for ASU 2018-02	(367		)	(485		)	(128		)	(980		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)

Reclassification out of Accumulated Other Comprehensive Income

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,					Nine Months Ended September 30,					Affected Line Item where Net Income is Presented
(in thousands)	2019			2018		2019			2018
Net realized gains on AFS securities:
Before tax(1)	$	157		$	—	$	157		$	—	Non-interest income
Tax effect	(37		)	—		(37		)	—		Tax expense
Total reclassifications for the period	$	120		$	—	$	120		$	—	Net of tax

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LOANS - Average Recorded Investment and Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 12,751	$ 15,281	$ 12,371	$ 14,225
Interest Income Recognized	74	45	146	94
Business Activities Loans | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	8,746	8,854	8,440	7,805
Interest Income Recognized	52	31	85	52
Business Activities Loans | Commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	1	1	2	1
Interest income recognized, with related allowance	0	0	0	0
Business Activities Loans | Commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	5,528	6,639	5,466	6,204
Interest income recognized, with no related allowance	52	31	56	46
Average recorded investment, with related allowance	3,217	2,214	2,972	1,600
Interest income recognized, with related allowance	0	0	29	6
Business Activities Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,401	1,413	1,289	1,344
Interest Income Recognized	4	2	7	7
Business Activities Loans | Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	747	625	792	628
Interest income recognized, with no related allowance	4	2	7	7
Average recorded investment, with related allowance	654	788	497	716
Interest income recognized, with related allowance	0	0	0	0
Business Activities Loans | Commercial and industrial | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Business Activities Loans | Commercial and industrial | Tax exempt
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Business Activities Loans | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	2,592	4,843	2,629	4,827
Interest Income Recognized	18	12	54	35
Business Activities Loans | Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	2,041	3,955	2,089	4,027
Interest income recognized, with no related allowance	16	9	47	28
Average recorded investment, with related allowance	551	888	540	800
Interest income recognized, with related allowance	2	3	7	7
Business Activities Loans | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	12	171	13	249
Interest Income Recognized	0	0	0	0
Business Activities Loans | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	158	0	236
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	12	13	13	13
Interest income recognized, with related allowance	0	0	0	0
Business Activities Loans | Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,702	1,021	1,595	852
Interest Income Recognized	0	0	0	2
Acquired Loans | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	253	95	212	97
Interest Income Recognized	0	0	0	1
Acquired Loans | Commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	88	95	89	97
Interest income recognized, with no related allowance	0	0	0	1
Average recorded investment, with related allowance	165	0	123	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	395	469	429	445
Interest Income Recognized	0	0	0	1
Acquired Loans | Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	395	469	429	445
Interest income recognized, with no related allowance	0	0	0	1
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Commercial and industrial | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Commercial and industrial | Tax exempt
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,054	457	954	310
Interest Income Recognized	0	0	0	0
Acquired Loans | Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	702	276	593	124
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	352	181	361	186
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	0	0	0	0
Interest Income Recognized	0	0	0	0
Acquired Loans | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	0	0	0	0
Acquired Loans | Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	0	0	0	0
Interest income recognized, with no related allowance	0	0	0	0
Average recorded investment, with related allowance	0	0	0	0
Interest income recognized, with related allowance	$ 0	$ 0	$ 0	$ 0

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SECURITIES AVAILABLE FOR SALE - Narrative (Details)	9 Months Ended
	Sep. 30, 2019 security
US Government-sponsored enterprises
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	172
Available for sale securities portfolio, number of securities (security)	702
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	1.40%
US Government agency
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	46
Available for sale securities portfolio, number of securities (security)	190
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	1.00%
Private label
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	9
Available for sale securities portfolio, number of securities (security)	20
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	1.90%
Obligations of states and political subdivisions thereof
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	9
Available for sale securities portfolio, number of securities (security)	219
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	2.50%
Corporate bonds
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	7
Available for sale securities portfolio, number of securities (security)	26
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	3.00%

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LOANS - Summary of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Past Due [Line Items]
Total loans	$ 2,577,306	$ 2,490,227
Business Activities Loans
Financing Receivable, Past Due [Line Items]
Total Past Due	12,221	14,439
Current	1,815,915	1,616,458
Total loans	1,828,136	1,630,897
Past Due More Than 90 days and Accruing	144	50
Business Activities Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,410	5,260
Business Activities Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	609	707
Business Activities Loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	9,202	8,472
Business Activities Loans | Total commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	7,887	7,871
Current	693,800	571,863
Total loans	701,687	579,734
Past Due More Than 90 days and Accruing	73	0
Business Activities Loans | Total commercial real estate | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	73	0
Current	28,729	23,754
Total loans	28,802	23,754
Past Due More Than 90 days and Accruing	73	0
Business Activities Loans | Total commercial real estate | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	7,814	7,871
Current	665,071	548,109
Total loans	672,885	555,980
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	985	1,146
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	985	1,146
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	56	0
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	56	0
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	6,846	6,725
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	73	0
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	6,773	6,725
Business Activities Loans | Total commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	2,199	953
Current	324,944	312,709
Total loans	327,143	313,662
Past Due More Than 90 days and Accruing	0	50
Business Activities Loans | Total commercial and industrial | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	1,981	857
Current	237,913	233,900
Total loans	239,894	234,757
Past Due More Than 90 days and Accruing	0	50
Business Activities Loans | Total commercial and industrial | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	218	96
Current	20,988	22,221
Total loans	21,206	22,317
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial and industrial | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Current	66,043	56,588
Total loans	66,043	56,588
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial and industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	893	460
Business Activities Loans | Total commercial and industrial | 30-59 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	772	395
Business Activities Loans | Total commercial and industrial | 30-59 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	121	65
Business Activities Loans | Total commercial and industrial | 30-59 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Total commercial and industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	136	66
Business Activities Loans | Total commercial and industrial | 60-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	64	60
Business Activities Loans | Total commercial and industrial | 60-89 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	72	6
Business Activities Loans | Total commercial and industrial | 60-89 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Total commercial and industrial | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,170	427
Business Activities Loans | Total commercial and industrial | 90 Days or Greater Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	1,145	402
Business Activities Loans | Total commercial and industrial | 90 Days or Greater Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	25	25
Business Activities Loans | Total commercial and industrial | 90 Days or Greater Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Total commercial loans
Financing Receivable, Past Due [Line Items]
Total Past Due	10,086	8,824
Current	1,018,744	884,572
Total loans	1,028,830	893,396
Past Due More Than 90 days and Accruing	73	50
Business Activities Loans | Total commercial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,878	1,606
Business Activities Loans | Total commercial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	192	66
Business Activities Loans | Total commercial loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	8,016	7,152
Business Activities Loans | Total residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,615	5,515
Current	728,901	664,674
Total loans	730,516	670,189
Past Due More Than 90 days and Accruing	71	0
Business Activities Loans | Total residential real estate | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	1,615	5,515
Current	728,901	664,674
Total loans	730,516	670,189
Past Due More Than 90 days and Accruing	71	0
Business Activities Loans | Total residential real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	399	3,565
Business Activities Loans | Total residential real estate | 30-59 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	399	3,565
Business Activities Loans | Total residential real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	345	641
Business Activities Loans | Total residential real estate | 60-89 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	345	641
Business Activities Loans | Total residential real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	871	1,309
Business Activities Loans | Total residential real estate | 90 Days or Greater Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	871	1,309
Business Activities Loans | Total consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	520	100
Current	68,270	67,212
Total loans	68,790	67,312
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	511	72
Current	58,045	57,826
Total loans	58,556	57,898
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total consumer | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	9	28
Current	10,225	9,386
Total loans	10,234	9,414
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	133	89
Business Activities Loans | Total consumer | 30-59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	131	72
Business Activities Loans | Total consumer | 30-59 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	2	17
Business Activities Loans | Total consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	72	0
Business Activities Loans | Total consumer | 60-89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	65	0
Business Activities Loans | Total consumer | 60-89 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	7	0
Business Activities Loans | Total consumer | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	315	11
Business Activities Loans | Total consumer | 90 Days or Greater Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	315	0
Business Activities Loans | Total consumer | 90 Days or Greater Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	0	11
Acquired Loans
Financing Receivable, Past Due [Line Items]
Total Past Due	3,784	7,356
Current	8,410
Acquired Credit Impaired		10,106
Total loans	749,170	859,330
Past Due More Than 90 days and Accruing	543	196
Acquired Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,047	4,414
Acquired Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	693	379
Acquired Loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,044	2,563
Acquired Loans | Total commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	686	941
Current	5,049
Acquired Credit Impaired		6,307
Total loans	222,086	246,965
Past Due More Than 90 days and Accruing	72	0
Acquired Loans | Total commercial real estate | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	12	0
Current	190
Acquired Credit Impaired		164
Total loans	2,064	2,890
Past Due More Than 90 days and Accruing	0	0
Acquired Loans | Total commercial real estate | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	674	941
Current	4,859
Acquired Credit Impaired		6,143
Total loans	220,022	244,075
Past Due More Than 90 days and Accruing	72	0
Acquired Loans | Total commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	446	631
Acquired Loans | Total commercial real estate | 30-59 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	12	0
Acquired Loans | Total commercial real estate | 30-59 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	434	631
Acquired Loans | Total commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	99
Acquired Loans | Total commercial real estate | 60-89 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial real estate | 60-89 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	0	99
Acquired Loans | Total commercial real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	240	211
Acquired Loans | Total commercial real estate | 90 Days or Greater Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial real estate | 90 Days or Greater Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	240	211
Acquired Loans | Total commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	791	669
Current	249
Acquired Credit Impaired		679
Total loans	75,563	91,208
Past Due More Than 90 days and Accruing	387	0
Acquired Loans | Total commercial and industrial | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	791	669
Current	249
Acquired Credit Impaired		679
Total loans	40,490	52,470
Past Due More Than 90 days and Accruing	387	0
Acquired Loans | Total commercial and industrial | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Current	0
Acquired Credit Impaired		0
Total loans	0	0
Past Due More Than 90 days and Accruing	0	0
Acquired Loans | Total commercial and industrial | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Current	0
Acquired Credit Impaired		0
Total loans	35,073	38,738
Past Due More Than 90 days and Accruing	0	0
Acquired Loans | Total commercial and industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	0	149
Acquired Loans | Total commercial and industrial | 30-59 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	0	149
Acquired Loans | Total commercial and industrial | 30-59 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial and industrial | 30-59 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial and industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	41	26
Acquired Loans | Total commercial and industrial | 60-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	41	26
Acquired Loans | Total commercial and industrial | 60-89 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial and industrial | 60-89 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial and industrial | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	750	494
Acquired Loans | Total commercial and industrial | 90 Days or Greater Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	750	494
Acquired Loans | Total commercial and industrial | 90 Days or Greater Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial and industrial | 90 Days or Greater Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total commercial loans
Financing Receivable, Past Due [Line Items]
Total Past Due	1,477	1,610
Current	5,298
Acquired Credit Impaired		6,986
Total loans	297,649	338,173
Past Due More Than 90 days and Accruing	459	0
Acquired Loans | Total commercial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	446	780
Acquired Loans | Total commercial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	41	125
Acquired Loans | Total commercial loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	990	705
Acquired Loans | Total residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,638	5,465
Current	3,093
Acquired Credit Impaired		3,095
Total loans	412,936	474,509
Past Due More Than 90 days and Accruing	47	0
Acquired Loans | Total residential real estate | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	1,638	5,465
Current	3,093
Acquired Credit Impaired		3,095
Total loans	412,936	474,509
Past Due More Than 90 days and Accruing	47	0
Acquired Loans | Total residential real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	245	3,419
Acquired Loans | Total residential real estate | 30-59 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	245	3,419
Acquired Loans | Total residential real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	519	254
Acquired Loans | Total residential real estate | 60-89 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	519	254
Acquired Loans | Total residential real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	874	1,792
Acquired Loans | Total residential real estate | 90 Days or Greater Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	874	1,792
Acquired Loans | Total consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	669	281
Current	19
Acquired Credit Impaired		25
Total loans	38,585	46,648
Past Due More Than 90 days and Accruing	37	196
Acquired Loans | Total consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	669	264
Current	19
Acquired Credit Impaired		22
Total loans	37,600	45,291
Past Due More Than 90 days and Accruing	37	7
Acquired Loans | Total consumer | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	0	17
Current	0
Acquired Credit Impaired		3
Total loans	985	1,357
Past Due More Than 90 days and Accruing	0	189
Acquired Loans | Total consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	356	215
Acquired Loans | Total consumer | 30-59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	356	198
Acquired Loans | Total consumer | 30-59 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	0	17
Acquired Loans | Total consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	133	0
Acquired Loans | Total consumer | 60-89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	133	0
Acquired Loans | Total consumer | 60-89 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Acquired Loans | Total consumer | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	180	66
Acquired Loans | Total consumer | 90 Days or Greater Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	180	66
Acquired Loans | Total consumer | 90 Days or Greater Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 0	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2014
Derivative [Line Items]
Notional amount of interest rate swap		$ 499,142	$ 182,239
Interest rate cap agreements
Derivative [Line Items]
Premiums paid				$ 4,600
Cap interest rate				3.00%
Effective percentage interest rate, maximum				3.00%
Interest rate swap on deposits
Derivative [Line Items]
Cash posted with counterparty		10,700
Designated as hedging instrument | Cash flow hedges
Derivative [Line Items]
Notional amount of interest rate swap		140,000	90,000
Designated as hedging instrument | Cash flow hedges | Interest rate cap agreements
Derivative [Line Items]
Notional amount of interest rate swap		90,000	$ 90,000
Designated as hedging instrument | Cash flow hedges | Interest rate swap on deposits
Derivative [Line Items]
Term of interest rate swap	5 years
Fixed rate of interest rate swap	2.461%
Notional amount of interest rate swap	$ 50,000	$ 50,000

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Reclassification out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Non-interest income	$ 7,643	$ 7,126			$ 21,263	$ 20,485
Tax expense	780	2,076			3,847	6,136
Net of tax	5,015	8,970	$ 13,398	$ 16,347	18,413	25,317
Reclassification out of AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Non-interest income	157	0			157	0
Tax expense	(37)	0			(37)	0
Net of tax	$ 120	$ 0			$ 120	$ 0

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2019

Deposits [Abstract]

Summary of Time Deposits

A summary of time deposits is, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Time less than $100,000	$	659,610	$	622,478
Time $100,000 through $250,000	151,995		193,535
Time $250,000 or more	91,060		116,780
Total time deposits	$	902,665	$	932,793

Time Deposit Maturities

At September 30, 2019 and December 31, 2018, the scheduled maturities by year for time deposits are, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Within 1 year	$	416,591	$	505,313
Over 1 year to 2 years	365,372		258,176
Over 2 years to 3 years	70,050		123,337
Over 3 years to 4 years	25,603		14,494
Over 4 years to 5 years	22,597		31,353
Over 5 years	2,452		120
Total	$	902,665	$	932,793

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SECURITIES AVAILABLE FOR SALE (Tables)

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

Summary of Securities Available for Sale

The following is a summary of securities available for sale:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	344,547	$	5,924	$	1,328	$	349,143
US Government agency	116,912		2,130		217		118,825
Private label	20,268		75		389		19,954
Obligations of states and political subdivisions thereof	107,854		3,519		147		111,226
Corporate bonds	75,652		1,554		679		76,527
Total securities available for sale	$	665,233	$	13,202	$	2,760	$	675,675
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	413,492	$	904	$	9,444	$	404,952
US Government agency	111,938		509		1,935		110,512
Private label	20,353		113		84		20,382
Obligations of states and political subdivisions thereof	133,260		1,081		2,076		132,265
Corporate bonds	58,098		264		636		57,726
Total securities available for sale	$	737,141	$	2,871	$	14,175	$	725,837

Schedule of Amortized Cost and Estimated Fair Value of Available for Sale (AFS) Securities, Segregated by Contractual Maturity

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at September 30, 2019 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	190	$	191
Over 1 year to 5 years	33,984		34,856
Over 5 years to 10 years	56,882		57,482
Over 10 years	92,451		95,224
Total bonds and obligations	183,507		187,753
Mortgage-backed securities	481,726		487,922
Total securities available for sale	$	665,233	$	675,675

Schedule of Securities with Unrealized Losses, Segregated by the Duration of Continuous Unrealized Loss Positions

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
(In thousands)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	140	$	30,711	$	1,188	$	60,174	$	1,328	$	90,885
US Government agency	117		10,691		100		9,767		217		20,458
Private label	385		19,573		4		39		389		19,612
Obligations of states and political subdivisions thereof	20		4,138		127		1,692		147		5,830
Corporate bonds	493		14,506		186		7,186		679		21,692
Total securities available for sale	$	1,155	$	79,619	$	1,605	$	78,858	$	2,760	$	158,477
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	155	$	19,367	$	9,289	$	297,569	$	9,444	$	316,936
US Government agency	16		2,570		1,919		68,266		1,935		70,836
Private label	79		10,393		5		47		84		10,440
Obligations of states and political subdivisions thereof	43		6,784		2,033		47,930		2,076		54,714
Corporate bonds	224		11,759		412		14,460		636		26,219
Total securities available for sale	$	517	$	50,873	$	13,658	$	428,272	$	14,175	$	479,145

Schedule of Other Than Temporary Impairment Losses

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired.  For the three and nine months ended September 30, 2019 and 2018 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Estimated credit losses as of prior year-end	$	1,697	$	1,697	$	1,697	$	1,697
Reductions for securities paid off during the period	—		—		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697	$	1,697	$	1,697

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NON-INTEREST INCOME

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

NON-INTEREST INCOME

NON-INTEREST INCOME

The Company has accounted for the various non-interest revenue streams and related contracts under ASC 606.

Disaggregation of Revenue

The following tables present disaggregation of the Company’s non-interest revenue by major business line and timing of revenue recognition for the transfer of products or services:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Major Products/Service Lines
Trust management fees	$	2,737	$	2,720	$	8,055	$	8,268
Financial services fees	276		232		781		768
Interchange fees	1,323		1,146		3,567		3,277
Customer deposit fees	1,112		1,095		3,046		3,093
Other customer service fees	118		249		723		691
Total	$	5,566	$	5,442	$	16,172	$	16,097

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Timing of Revenue Recognition
Products and services transferred at a point in time	$	2,839	$	2,583	$	7,874	$	7,576
Products and services transferred over time	2,727		2,859		8,298		8,521
Total	$	5,566	$	5,442	$	16,172	$	16,097

Trust Management Fees.

The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of progress. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees.

Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of monthly service requirements.

Interchange Fees.

The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees.

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service.

Other Customer Service Fees.

The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:

(in thousands)	Balance at September 30, 2019		Balance at December 31, 2018
Balances from contracts with customers only:
Other Assets	$	1,898	$	2,866
Other Liabilities	3,179		4,923

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

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LOANS - Summary of Total Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 2,577,306	$ 2,490,227
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,828,136	1,630,897
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	749,170	859,330
Total commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	923,773	826,699
Total commercial real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	701,687	579,734
Total commercial real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	222,086	246,965
Total commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	30,866	26,644
Total commercial real estate | Construction and land development | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	28,802	23,754
Total commercial real estate | Construction and land development | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,064	2,890
Total commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	892,907	800,055
Total commercial real estate | Other commercial real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	672,885	555,980
Total commercial real estate | Other commercial real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	220,022	244,075
Total commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	402,706	404,870
Total commercial and industrial | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	327,143	313,662
Total commercial and industrial | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	75,563	91,208
Total commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	280,384	287,227
Total commercial and industrial | Commercial | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	239,894	234,757
Total commercial and industrial | Commercial | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	40,490	52,470
Total commercial and industrial | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	21,206	22,317
Total commercial and industrial | Agricultural | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	21,206	22,317
Total commercial and industrial | Agricultural | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	0	0
Total commercial and industrial | Tax exempt
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	101,116	95,326
Total commercial and industrial | Tax exempt | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	66,043	56,588
Total commercial and industrial | Tax exempt | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	35,073	38,738
Total commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,326,479	1,231,569
Total commercial loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,028,830	893,396
Total commercial loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	297,649	338,173
Total residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,143,452	1,144,698
Total residential real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	730,516	670,189
Total residential real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	412,936	474,509
Total residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,143,452	1,144,698
Total residential real estate | Residential mortgages | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	730,516	670,189
Total residential real estate | Residential mortgages | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	412,936	474,509
Total consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	107,375	113,960
Total consumer | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	68,790	67,312
Total consumer | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	38,585	46,648
Total consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	96,156	103,189
Total consumer | Home equity | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	58,556	57,898
Total consumer | Home equity | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	37,600	45,291
Total consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	11,219	10,771
Total consumer | Other consumer | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	10,234	9,414
Total consumer | Other consumer | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 985	$ 1,357

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LOANS - Summary Information Pertaining to Non-accrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Non-accrual loans
Total loans	$ 16,679	$ 18,235
Business Activities Loans
Non-accrual loans
Total loans	13,541	14,111
Acquired Loans
Non-accrual loans
Total loans	3,138	4,124
Total commercial real estate
Non-accrual loans
Total loans	8,519	8,156
Total commercial real estate | Business Activities Loans
Non-accrual loans
Total loans	8,173	7,874
Total commercial real estate | Acquired Loans
Non-accrual loans
Total loans	346	282
Total commercial real estate | Construction and land development
Non-accrual loans
Total loans	1	1
Total commercial real estate | Construction and land development | Business Activities Loans
Non-accrual loans
Total loans	1	1
Total commercial real estate | Construction and land development | Acquired Loans
Non-accrual loans
Total loans	0	0
Total commercial real estate | Other commercial real estate
Non-accrual loans
Total loans	8,518	8,155
Total commercial real estate | Other commercial real estate | Business Activities Loans
Non-accrual loans
Total loans	8,172	7,873
Total commercial real estate | Other commercial real estate | Acquired Loans
Non-accrual loans
Total loans	346	282
Total commercial and industrial
Non-accrual loans
Total loans	2,077	2,331
Total commercial and industrial | Business Activities Loans
Non-accrual loans
Total loans	1,502	1,688
Total commercial and industrial | Acquired Loans
Non-accrual loans
Total loans	575	643
Total commercial and industrial | Commercial
Non-accrual loans
Total loans	1,843	2,066
Total commercial and industrial | Commercial | Business Activities Loans
Non-accrual loans
Total loans	1,268	1,423
Total commercial and industrial | Commercial | Acquired Loans
Non-accrual loans
Total loans	575	643
Total commercial and industrial | Agricultural
Non-accrual loans
Total loans	234	265
Total commercial and industrial | Agricultural | Business Activities Loans
Non-accrual loans
Total loans	234	265
Total commercial and industrial | Agricultural | Acquired Loans
Non-accrual loans
Total loans	0	0
Total commercial and industrial | Tax exempt
Non-accrual loans
Total loans	0	0
Total commercial and industrial | Tax exempt | Business Activities Loans
Non-accrual loans
Total loans	0	0
Total commercial and industrial | Tax exempt | Acquired Loans
Non-accrual loans
Total loans	0	0
Total commercial loans
Non-accrual loans
Total loans	10,596	10,487
Total commercial loans | Business Activities Loans
Non-accrual loans
Total loans	9,675	9,562
Total commercial loans | Acquired Loans
Non-accrual loans
Total loans	921	925
Total residential real estate
Non-accrual loans
Total loans	5,340	7,210
Total residential real estate | Business Activities Loans
Non-accrual loans
Total loans	3,277	4,213
Total residential real estate | Acquired Loans
Non-accrual loans
Total loans	2,063	2,997
Total residential real estate | Residential mortgages
Non-accrual loans
Total loans	5,340	7,210
Total residential real estate | Residential mortgages | Business Activities Loans
Non-accrual loans
Total loans	3,277	4,213
Total residential real estate | Residential mortgages | Acquired Loans
Non-accrual loans
Total loans	2,063	2,997
Total consumer
Non-accrual loans
Total loans	743	538
Total consumer | Business Activities Loans
Non-accrual loans
Total loans	589	336
Total consumer | Acquired Loans
Non-accrual loans
Total loans	154	202
Total consumer | Home equity
Non-accrual loans
Total loans	718	447
Total consumer | Home equity | Business Activities Loans
Non-accrual loans
Total loans	564	246
Total consumer | Home equity | Acquired Loans
Non-accrual loans
Total loans	154	201
Total consumer | Other consumer
Non-accrual loans
Total loans	25	91
Total consumer | Other consumer | Business Activities Loans
Non-accrual loans
Total loans	25	90
Total consumer | Other consumer | Acquired Loans
Non-accrual loans
Total loans	$ 0	$ 1

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LOANS - Recorded Investment and Number of Modifications (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) modification	Sep. 30, 2018 USD ($) modification	Sep. 30, 2019 USD ($) modification	Sep. 30, 2018 USD ($) modification
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	7	9	25	36
Pre-Modification Outstanding Recorded Investment	$ 808	$ 406	$ 1,985	$ 5,478
Post-Modification Outstanding Recorded Investment	$ 750	$ 358	$ 1,795	$ 4,323
Interest rate and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			0	1
Post-Modification Outstanding Recorded Investment			$ 0	$ 16
Interest only payments
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	2	0	2	0
Post-Modification Outstanding Recorded Investment	$ 90	$ 0	$ 90	$ 0
Interest only payments and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			2	0
Post-Modification Outstanding Recorded Investment			$ 73	$ 0
Amortization and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			4	0
Post-Modification Outstanding Recorded Investment			$ 273	$ 0
Amortization, interest rate and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			1	0
Post-Modification Outstanding Recorded Investment			$ 77	$ 0
Forbearance
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	1	1	3	3
Post-Modification Outstanding Recorded Investment	$ 141	$ 115	$ 253	$ 271
Forbearance and interest only payments
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	2	3	5	6
Post-Modification Outstanding Recorded Investment	$ 176	$ 72	$ 331	$ 121
Forbearance and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	0	4	0	17
Post-Modification Outstanding Recorded Investment	$ 0	$ 143	$ 0	$ 1,774
Forbearance, amortization and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	2	0	7	0
Post-Modification Outstanding Recorded Investment	$ 343	$ 0	$ 640	$ 0
Maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	0	1	0	2
Post-Modification Outstanding Recorded Investment	$ 0	$ 28	$ 0	$ 440
Restructure with maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			0	5
Post-Modification Outstanding Recorded Investment			$ 0	$ 1,419
Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification			1	2
Post-Modification Outstanding Recorded Investment			$ 58	$ 282
Other commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification		1		1
Pre-Modification Outstanding Recorded Investment		$ 2		$ 2
Post-Modification Outstanding Recorded Investment		$ 1		$ 1
Other commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	4	1	9	9
Pre-Modification Outstanding Recorded Investment	$ 268	$ 72	$ 543	$ 1,896
Post-Modification Outstanding Recorded Investment	$ 267	$ 72	$ 529	$ 1,564
Commercial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification		5	4	7
Pre-Modification Outstanding Recorded Investment		$ 104	$ 168	$ 556
Post-Modification Outstanding Recorded Investment		$ 60	$ 91	$ 486
Commercial | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	1		1	1
Pre-Modification Outstanding Recorded Investment	$ 141		$ 141	$ 167
Post-Modification Outstanding Recorded Investment	$ 141		$ 141	$ 0
Residential mortgages | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification	2	2	11	15
Pre-Modification Outstanding Recorded Investment	$ 399	$ 228	$ 1,133	$ 2,752
Post-Modification Outstanding Recorded Investment	$ 342	$ 225	$ 1,034	$ 2,168
Home equity and other consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification				1
Pre-Modification Outstanding Recorded Investment				$ 100
Post-Modification Outstanding Recorded Investment				$ 100
Home equity and other consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | modification				2
Pre-Modification Outstanding Recorded Investment				$ 5
Post-Modification Outstanding Recorded Investment				$ 4

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LEASES - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
Leases [Abstract]
Operating lease right-of-use assets	$ 8,447	$ 9,000
Operating lease liabilities	$ 8,524	$ 9,000

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	$ 390,562	$ 355,963	$ 370,579	$ 354,641	$ 370,579	$ 354,641
Other comprehensive gain (loss) before reclassifications	2,288	(4,341)			14,967	(14,154)
Less: amounts reclassified from accumulated other comprehensive income	120	0			120	0
Total other comprehensive income (loss)	2,168	(4,341)	12,679	(9,813)	14,847	(14,154)
Balance at end of period	394,459	357,685	390,562	355,963	394,459	357,685
Net unrealized (loss) gain on AFS Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	5,547	(12,595)	(8,665)	(1,713)	(8,665)	(1,713)
Other comprehensive gain (loss) before reclassifications	2,573	(4,559)			16,785	(15,074)
Less: amounts reclassified from accumulated other comprehensive income	120	0			120	0
Total other comprehensive income (loss)	2,453	(4,559)			16,665	(15,074)
Balance at end of period	8,000	(17,154)	5,547	(12,595)	8,000	(17,154)
Net loss on effective cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	(3,782)		(2,249)		(2,249)
Other comprehensive gain (loss) before reclassifications	(285)				(1,818)
Less: amounts reclassified from accumulated other comprehensive income	0				0
Total other comprehensive income (loss)	(285)				(1,818)
Balance at end of period	(4,067)		(3,782)		(4,067)
Net loss on effective cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period		(2,064)		(2,250)		(2,250)
Other comprehensive gain (loss) before reclassifications		218				889
Less: amounts reclassified from accumulated other comprehensive income		0				0
Total other comprehensive income (loss)		218				889
Balance at end of period		(1,846)		(2,064)		(1,846)
Net unrealized loss on pension plans
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	(888)	(688)	(888)	(591)	(888)	(591)
Other comprehensive gain (loss) before reclassifications	0	0			0	31
Less: amounts reclassified from accumulated other comprehensive income	0	0			0	0
Total other comprehensive income (loss)	0	0			0	31
Balance at end of period	(888)	(688)	(888)	(688)	(888)	(688)
Accumulated other comprehensive (loss) income
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	877	(15,347)	(11,802)	(4,554)	(11,802)	(4,554)
Total other comprehensive income (loss)	2,168	(4,341)	12,679	(9,813)
Balance at end of period	$ 3,045	$ (19,688)	$ 877	$ (15,347)	$ 3,045	(19,688)
Accounting Standards Update 2018-02
Accumulated Other Comprehensive Income (Loss), Net of Tax
Less: amounts reclassified from accumulated other comprehensive income						(980)
Accounting Standards Update 2018-02 | Net unrealized (loss) gain on AFS Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax
Less: amounts reclassified from accumulated other comprehensive income						(367)
Accounting Standards Update 2018-02 | Net loss on effective cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax
Less: amounts reclassified from accumulated other comprehensive income						(485)
Accounting Standards Update 2018-02 | Net unrealized loss on pension plans
Accumulated Other Comprehensive Income (Loss), Net of Tax
Less: amounts reclassified from accumulated other comprehensive income						$ (128)

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DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2019	Dec. 31, 2018
Deposits [Abstract]
Brokered deposits	$ 554.3	$ 466.9
Reciprocal deposits	$ 69.7	$ 52.4

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BORROWED FUNDS - Narrative (Details) - USD ($)		1 Months Ended
	Mar. 30, 2014	Apr. 30, 2008	Sep. 30, 2019	Dec. 31, 2018	Oct. 29, 2014
Debt Instrument [Line Items]
Borrowings with the FRB			$ 463,842,000	$ 647,894,000
Callable advances			220,905,000	75,902,000
Financial Guarantee | NHTB Capital Trust II and NHTB Capital Trust III
Debt Instrument [Line Items]
Debentures issued by variable interest entities	$ 20,600,000
Subordinated debt
Debt Instrument [Line Items]
Principal amount of debt issued					$ 17,000,000.0
Fixed interest rate					6.75%
LIBOR | Financial Guarantee
Debt Instrument [Line Items]
Interest rate margin	2.79%
Advances from the FHLB
Debt Instrument [Line Items]
Secured line of credit maintained			1,000,000
Outstanding balance on the FHLB line of credit			0	0
Borrowings with the FRB			422,583,000	611,683,000
Callable advances			177,977,000	32,929,000
Federal Reserve Bank Advances
Debt Instrument [Line Items]
Secured line of credit maintained			107,735,000
Borrowings with the FRB			0	0
Federal Reserve Bank Advances | Unsecured Debt
Debt Instrument [Line Items]
Secured line of credit maintained			50,000,000	50,000,000
Outstanding balance on unused unsecured federal funds line of credit			0	0
Federal Home Loan Bank Certificates and Obligations FHLB Callable Advances
Debt Instrument [Line Items]
Callable advances			0
Federal Home Loan Bank Certificates and Obligations FHLB Amortizing Advances
Debt Instrument [Line Items]
Callable advances			319,000	319,000
Subordinated borrowings
Debt Instrument [Line Items]
Callable advances			$ 37,928,000	$ 37,973,000
Maturity period		15 years
Principal amount of debt issued		$ 5,000,000.0
Earliest callable period without penalties		5 years
Effective interest rate			5.57%	6.24%
Subordinated borrowings | LIBOR
Debt Instrument [Line Items]
Interest rate margin		3.45%

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ALLOWANCE FOR LOAN LOSSES - Narrative (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Receivables [Abstract]
Specific reserve for loans individually evaluated, loan relationships with an aggregate balance (in excess)	$ 150

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FAIR VALUE MEASUREMENTS - Changes in Level 3 (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Interest Rate Lock Commitments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	$ 71	$ 8
Realized gain recognized in non-interest income	7	70
Ending balance	78	78
Forward Commitments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	(30)	0
Realized gain recognized in non-interest income	(31)	(61)
Ending balance	$ (61)	$ (61)

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FAIR VALUE MEASUREMENTS - Fair Values and Carrying Amounts (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financial Assets
Securities available for sale	$ 675,675	$ 725,837
Level 1
Financial Assets
Cash and cash equivalents	71,593	98,754
Securities available for sale	0	0
FHLB stock	0	0
Net loans	0	0
Accrued interest receivable	0	0
Cash surrender value of bank-owned life insurance policies	0	0
Derivative assets	0	0
Financial Liabilities
Total deposits	0	0
Short-term other borrowings	0	0
FHLB advances	0	0
Derivative liabilities	0	0
Level 1 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	0	0
Level 1 | Junior subordinated borrowings
Financial Liabilities
Subordinated borrowings	0	0
Level 2
Financial Assets
Cash and cash equivalents	0	0
Securities available for sale	675,675	725,837
FHLB stock	27,469	35,659
Net loans	0	0
Accrued interest receivable	3,218	3,533
Cash surrender value of bank-owned life insurance policies	75,368	73,810
Derivative assets	11,012	2,156
Financial Liabilities
Total deposits	2,491,023	2,404,250
Short-term other borrowings	41,258	36,171
FHLB advances	601,377	643,065
Derivative liabilities	(13,102)	0
Level 2 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	37,928	37,973
Level 2 | Junior subordinated borrowings
Financial Liabilities
Subordinated borrowings	4,556	3,923
Level 3
Financial Assets
Cash and cash equivalents	0	0
Securities available for sale	0	0
FHLB stock	0	0
Net loans	2,567,331	2,415,863
Accrued interest receivable	0	0
Cash surrender value of bank-owned life insurance policies	0	0
Derivative assets	78	8
Financial Liabilities
Total deposits	0	0
Short-term other borrowings	0	0
FHLB advances	0	0
Derivative liabilities	(61)	(1,353)
Level 3 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	0	0
Level 3 | Junior subordinated borrowings
Financial Liabilities
Subordinated borrowings	0	0
Carrying Amount
Financial Assets
Cash and cash equivalents	71,593	98,754
Securities available for sale	675,675	725,837
FHLB stock	27,469	35,659
Net loans	2,561,953	2,476,361
Accrued interest receivable	3,218	3,533
Cash surrender value of bank-owned life insurance policies	75,368	73,810
Derivative assets	11,090	2,164
Financial Liabilities
Total deposits	2,493,585	2,483,238
Short-term other borrowings	41,259	36,211
FHLB advances	600,559	644,611
Derivative liabilities	(13,163)	(1,353)
Carrying Amount | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	37,928	37,973
Carrying Amount | Junior subordinated borrowings
Financial Liabilities
Subordinated borrowings	5,000	5,000
Fair Value
Financial Assets
Cash and cash equivalents	71,593	98,754
Securities available for sale	675,675	725,837
FHLB stock	27,469	35,659
Net loans	2,567,331	2,415,863
Accrued interest receivable	3,218	3,533
Cash surrender value of bank-owned life insurance policies	75,368	73,810
Derivative assets	11,090	2,164
Financial Liabilities
Total deposits	2,491,023	2,404,250
Short-term other borrowings	41,258	36,171
FHLB advances	601,377	643,065
Derivative liabilities	(13,163)	(1,353)
Fair Value | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	37,928	37,973
Fair Value | Junior subordinated borrowings
Financial Liabilities
Subordinated borrowings	$ 4,556	$ 3,923

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

The following table presents the calculation of earnings per share:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share and share data)	2019		2018		2019		2018
Net income	$	5,015	$	8,970	$	18,413	$	25,317
Average number of basic common shares outstanding	15,547,276		15,503,488		15,536,414		15,478,207
Plus: dilutive effect of stock options and awards outstanding (1)	34,027		76,575		45,282		85,559
Average number of diluted common shares outstanding (1)	15,581,303		15,580,063		15,581,696		15,563,766
Anti-dilutive options excluded from earnings calculation	—		—		—		14,394
Earnings per share:
Basic	$	0.32	$	0.58	$	1.19	$	1.64
Diluted	$	0.32	$	0.58	$	1.18	$	1.63

_____________________________________

(1) Average diluted shares outstanding are computed using the treasury stock method.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.22	$ 0.20	$ 0.42	$ 0.39
Treasury stock purchased (in shares)	5,482	1,605	8,010	9,294
Net issuance (in shares)	4,297	11,869	21,119	62,782

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ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

ALLOWANCE FOR LOAN LOSSES

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level considered adequate to provide for an estimate of probable credit losses inherent in the loan portfolio. The allowance is increased by the provision charged to operating expense and reduced by net charge-offs. Loans are charged against the allowance for loan losses when the Company believes collectability has declined to a point where there is a distinct possibility of some loss of principal and interest. While the Company uses the best information available to make the evaluation, future adjustments may be necessary if there are significant changes in conditions.

The allowance is comprised of four distinct reserve components: (1) specific reserves related to loans individually evaluated; (2) quantitative reserves related to loans collectively evaluated; (3) qualitative reserves related to loans collectively evaluated; and (4) a temporal estimate is made for incurred loss emergence period for each loan category within the collectively evaluated pools.

A summary of the methodology employed on a quarterly basis with respect to each of these components in order to evaluate the overall adequacy of the Company's allowance for loan losses is as follows:

Specific Reserve for Loans Individually Evaluated

First, the Company identifies loan relationships having aggregate balances in excess of $150 thousand with potential credit weaknesses. Such loan relationships are identified primarily through the Company's analysis of internal loan evaluations, past due loan reports, TDRs and loans adversely classified. Each loan so identified is then individually evaluated for impairment. Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement. Substantially all impaired loans have historically been collateral dependent, meaning repayment of the loan is expected or is considered to be provided solely from the sale of the loan's underlying collateral. For such loans, the Company measures impairment based on the fair value of the loan's collateral, which is generally determined utilizing current appraisals. A specific reserve is established in an amount equal to the excess, if any, of the recorded investment in each impaired loan over the fair value of its underlying collateral, less estimated costs to sell. The Company's policy is to re-evaluate the fair value of collateral dependent loans at least every twelve months unless there is a known deterioration in the collateral's value, in which case a new appraisal is obtained.

Purchase credit impaired (“PCI”) loans are collectively evaluated, but are not included in the general reserve as described below. The evaluation of the PCI loans requires continued quarterly assessment of key assumptions and estimates similar to the initial fair value estimate, including changes in the severity of loss, timing and speed of payments, collateral value changes, expected cash flows and other relevant factors. The quarterly assessment is compared to the initial fair value estimate and a determination is made if an adjustment to the allowance for loan loss is deemed necessary.

Quantitative Reserve for Loans Collectively Evaluated

Second, the Company stratifies the loan portfolio into two general business loan pools: substandard (7 risk-rated) and pass-rated (0 to 6 risk-rated) by loan type. Substandard rated loans are subject to higher credit loss rates in the allowance for loan loss calculation. The Company utilizes historical loss rates for commercial real estate and commercial and industrial loans assessed by internal risk rating. Historical loss rates on residential real estate and consumer loans are not risk graded. Residential real estate and consumer loans are considered as part of the pass-rated portfolio unless removed due to specific reserve evaluation based on past due status and/or other indications of credit deterioration. Quantitative reserves relative to each loan pool are established as follows: for all loan segments an allocation equaling 100% of the respective pool's average 3-year historical net loan charge-off rate (determined based upon the most recent 12 quarters) is applied to the aggregate recorded investment in the pool of loans. Purchased performing loans are collectively evaluated as their own separate category within each loan pool.

Qualitative Reserve for Loans Collectively Evaluated

Third, the Company considers the necessity to adjust the average historical net loan charge-off rates relative to each of the above two loan pools for potential risks factors that could result in actual losses deviating from prior loss experience. Such qualitative risk factors considered are: (1) lending policies and procedures, (2) business conditions, (3) volume and nature of the loan portfolio, (4) experience, ability and depth of lending management, (5) problem loan trends, (6) quality of the Company’s loan review system, (7) concentrations in the loan portfolio, (8) competition, legal, and regulatory environment and (9) collateral coverage and loan-to-value.

Loss Emergence Period for Loans Collectively Evaluated

Fourth, the general allowance related to loans collectively evaluated includes an estimate of incurred losses over an estimated loss emergence period ("LEP"). The LEP is generated utilizing a charge-off look-back analysis, which evaluates the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology establishes the approximate number of months of LEP that represents incurred losses for each loan portfolio within each portfolio segment in addition to the qualitative reserves.

Activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 are, as follows:

Business Activities Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	7,206		$	2,748		$	3,942		$	394		$	14,290
Charged-off loans	—			—			(108		)	(55		)	(163		)
Recoveries on charged-off loans	1			62			36			1			100
(Releases) provision for loan losses	956			63			(111		)	(94		)	814
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Acquired Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	159		$	22		$	101		$	—		$	282
Charged-off loans	—			—			(52		)	—			(52		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(2		)	(15		)	99			(3		)	79
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

Business Activities Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,811		$	2,380		$	3,982		$	408		$	13,581
Charged-off loans	(57		)	(13		)	(110		)	(129		)	(309		)
Recoveries on charged-off loans	131			62			55			8			256
(Releases) provision for loan losses	1,278			444			(168		)	(41		)	1,513
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041

Acquired Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	173		$	35		$	77		$	—		$	285
Charged-off loans	—			(15		)	(222		)	(5		)	(242		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(16		)	(13		)	293			2			266
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

Business Activities Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,367		$	2,509		$	3,454		$	393		$	12,723
Charged-off loans	(29		)	—			(61		)	(40		)	(130		)
Recoveries on charged-off loans	7			18			—			2			27
Provision (releases) for loan losses	291			(31		)	258			66			584
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Acquired Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	200		$	82		$	85		$	—		$	367
Charged-off loans	(30		)	(71		)	(62		)	(5		)	(168		)
Recoveries on charged-off loans	25			—			—			—			25
Provision (releases) for loan losses	(23		)	33			44			5			59
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

Business Activities Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,037		$	2,373		$	3,357		$	386		$	12,153
Charged-off loans	(186		)	(111		)	(61		)	(426		)	(784		)
Recoveries on charged-off loans	68			23			2			5			98
Provision for loan losses	717			211			353			456			1,737
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204

Acquired Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	97		$	16		$	59		$	—		$	172
Charged-off loans	(136		)	(166		)	(126		)	(64		)	(492		)
Recoveries on charged-off loans	43			7			—			82			132
Provision (releases) for loan losses	168			187			134			(18		)	471
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Company’s Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Company's Board of Directors with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies, non-performing loans and potential problem loans. The Company seeks to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator and uses an internal risk rating system to categorize commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Consistent with regulatory guidelines, the Company provides for the classification of loans which are considered to be of lesser quality as special mention, substandard, doubtful, or loss (i.e. risk-rated 6, 7, 8 and 9, respectively).

The following are the definitions of the Company’s credit quality indicators:

Pass: Loans the Company considers in the commercial portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes there is a low risk of loss related to these loans considered pass-rated.

Special Mention:Loans the Company considers having some potential weaknesses, but are deemed to not carry levels of risk inherent in one of the subsequent categories, are designated as special mention. A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. This might include loans which may require a higher level of supervision or internal reporting because of: (i) declining industry trends; (ii) increasing reliance on secondary sources of repayment; (iii) the poor condition of or lack of control over collateral; or (iv) failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point where the liquidation is jeopardized may be included in this classification. Special mention loans are not adversely classified and do not expose the Company to sufficient risks to warrant classification.

Substandard: Loans theCompany considers as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Doubtful: Loans the Company considers as doubtful have all of the weaknesses inherent in those loans that are classified as substandard. These loans have the added characteristic of a well-defined weakness which is inadequately protected by the current sound worth and paying capacity of borrower or of the collateral pledged, if any, and calls into question the collectability of the full balance of the loan. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status is determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loss: Loans the Company considers as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged-off. This classification does not mean the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they are determined to be uncollectible.

The following tables present the Company’s loans by risk rating at September 30, 2019 and December 31, 2018:

Business Activities Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	28,728	$	23,680	$	647,075	$	532,386	$	675,803	$	556,066
Special mention	—		73		12,474		8,319		12,474		8,392
Substandard	73		—		10,212		13,914		10,285		13,914
Doubtful	1		1		3,124		1,361		3,125		1,362
Total	$	28,802	$	23,754	$	672,885	$	555,980	$	701,687	$	579,734

Acquired Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	1,765	$	2,626	$	212,859	$	236,393	$	214,624	$	239,019
Special mention	12		—		1,962		1,574		1,974		1,574
Substandard	287		264		5,033		6,009		5,320		6,273
Doubtful	—		—		168		99		168		99
Total	$	2,064	$	2,890	$	220,022	$	244,075	$	222,086	$	246,965

Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	219,962	$	226,353	$	20,413	$	21,680	$	66,043	$	56,588	$	306,418	$	304,621
Special mention	14,000		6,730		346		215		—		—		14,346		6,945
Substandard	4,922		924		447		422		—		—		5,369		1,346
Doubtful	1,010		750		—		—		—		—		1,010		750
Total	$	239,894	$	234,757	$	21,206	$	22,317	$	66,043	$	56,588	$	327,143	$	313,662

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	37,111	$	46,120	$	—	$	—	$	35,073	$	38,738	$	72,184	$	84,858
Special mention	2,511		4,825		—		—		—		—		2,511		4,825
Substandard	527		1,222		—		—		—		—		527		1,222
Doubtful	341		303		—		—		—		—		341		303
Total	$	40,490	$	52,470	$	—	$	—	$	35,073	$	38,738	$	75,563	$	91,208

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	727,239	$	665,976	$	57,992	$	57,652	$	10,209	$	9,324	$	795,440	$	732,952
Nonperforming	3,277		4,213		564		246		25		90		3,866		4,549
Total	$	730,516	$	670,189	$	58,556	$	57,898	$	10,234	$	9,414	$	799,306	$	737,501

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	409,830	$	470,497	$	37,446	$	45,090	$	985	$	1,356	$	448,261	$	516,943
Nonperforming	3,106		4,012		154		201		—		1		3,260		4,214
Total	$	412,936	$	474,509	$	37,600	$	45,291	$	985	$	1,357	$	451,521	$	521,157

The following table summarizes total classified and criticized loans as of September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired  Loans		Total		Business Activities Loans		Acquired  Loans		Total
Non-accrual	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235
Substandard accruing	10,114		6,478		16,592		7,810		7,987		15,797
Doubtful accruing	—		—		—		—		—		—
Total classified	23,655		9,616		33,271		21,921		12,111		34,032
Special mention	26,820		4,485		31,305		15,337		6,399		21,736
Total Criticized	$	50,475	$	14,101	$	64,576	$	37,258	$	18,510	$	55,768

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 2.00	$ 2
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	16,428,388	16,428,388
Treasury stock (in shares)	879,785	905,201

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Information About Derivative Assets and Liabilities

The following tables present information about derivative assets and liabilities at September 30, 2019 and December 31, 2018:

	September 30, 2019
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	3.4	$	89
Interest rate swap on deposits	50,000		4.5	(2,179		)
Total cash flow hedges	140,000			(2,090		)
Economic hedges:
Forward sale commitments	7,762		0.1	(61		)
Total economic hedges	7,762			(61		)
Non-hedging derivatives:
Interest rate lock commitments	12,242		0.1	78
Customer loan derivative liability	169,569		9.8	(10,923		)
Customer loan derivative asset	169,569		9.8	10,923
Total non-hedging derivatives	351,380			78
Total	$	499,142		$	(2,073	)

	December 31, 2018
	Notional Amount		Weighted Average Maturity	Estimated Fair Value Asset (Liability)
	(in thousands)		(in years)	(in thousands)
Cash flow hedges:
Interest rate cap agreements	$	90,000	4.1	$	803
Total cash flow hedges	90,000			803
Non-hedging derivatives:
Interest rate lock commitments	957		0.1	8
Customer loan derivative liability	45,641		9.9	(1,353		)
Customer loan derivative asset	45,641		9.9	1,353
Total non-hedging derivatives	92,239			8
Total	$	182,239		$	811

Information about derivative assets and liabilities for the three and nine months ended September 30, 2019 and 2018 is, as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2019			2018			2019			2018
Cash flow hedges:
Interest rate cap agreements
Realized loss in interest expense	$	(183	)	$	(137	)	$	(521	)	$	(367	)
Interest rate swap on deposits
Realized gain in interest expense	17			—			17			—
Economic hedges:
Forward commitments
Realized (loss) gain in other non-interest income	(31		)	43			(61		)	190
Non-hedging derivatives:
Interest rate lock commitments
Realized gain in other non-interest income	7			—			70			9

XML

BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets	$ 8,447	$ 9,000
Operating lease liabilities	$ 8,524	9,000
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets		9,000
Operating lease liabilities		$ 9,000

XML

SECURITIES AVAILABLE FOR SALE - Securities Impairment (Details) - Available-for-sale Securities - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Other than Temporary Impairment, Credit Losses Recognized in Earnings
Estimated credit losses as of prior year-end	$ 1,697	$ 1,697	$ 1,697	$ 1,697
Reductions for securities paid off during the period	0	0	0	0
Estimated credit losses at end of the period	$ 1,697	$ 1,697	$ 1,697	$ 1,697

XML

ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Schedule of Activity in the Allowance for Loan Losses

Activity in the allowance for loan losses for the three and nine months ended September 30, 2019 and 2018 are, as follows:

Business Activities Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	7,206		$	2,748		$	3,942		$	394		$	14,290
Charged-off loans	—			—			(108		)	(55		)	(163		)
Recoveries on charged-off loans	1			62			36			1			100
(Releases) provision for loan losses	956			63			(111		)	(94		)	814
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Acquired Loans	At or for the Three Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	159		$	22		$	101		$	—		$	282
Charged-off loans	—			—			(52		)	—			(52		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(2		)	(15		)	99			(3		)	79
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

Business Activities Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,811		$	2,380		$	3,982		$	408		$	13,581
Charged-off loans	(57		)	(13		)	(110		)	(129		)	(309		)
Recoveries on charged-off loans	131			62			55			8			256
(Releases) provision for loan losses	1,278			444			(168		)	(41		)	1,513
Balance at end of period	$	8,163		$	2,873		$	3,759		$	246		$	15,041
Individually evaluated for impairment	990			240			66			1			1,297
Collectively evaluated	7,173			2,633			3,693			245			13,744
Total	$	8,163		$	2,873		$	3,759		$	246		$	15,041

Acquired Loans	At or for the Nine Months Ended September 30, 2019
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	173		$	35		$	77		$	—		$	285
Charged-off loans	—			(15		)	(222		)	(5		)	(242		)
Recoveries on charged-off loans	—			—			—			3			3
(Releases) provision for loan losses	(16		)	(13		)	293			2			266
Balance at end of period	$	157		$	7		$	148		$	—		$	312
Individually evaluated for impairment	12			—			32			—			44
Collectively evaluated	145			7			116			—			268
Total	$	157		$	7		$	148		$	—		$	312

Business Activities Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,367		$	2,509		$	3,454		$	393		$	12,723
Charged-off loans	(29		)	—			(61		)	(40		)	(130		)
Recoveries on charged-off loans	7			18			—			2			27
Provision (releases) for loan losses	291			(31		)	258			66			584
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Acquired Loans	At or for the Three Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	200		$	82		$	85		$	—		$	367
Charged-off loans	(30		)	(71		)	(62		)	(5		)	(168		)
Recoveries on charged-off loans	25			—			—			—			25
Provision (releases) for loan losses	(23		)	33			44			5			59
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

Business Activities Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	6,037		$	2,373		$	3,357		$	386		$	12,153
Charged-off loans	(186		)	(111		)	(61		)	(426		)	(784		)
Recoveries on charged-off loans	68			23			2			5			98
Provision for loan losses	717			211			353			456			1,737
Balance at end of period	$	6,636		$	2,496		$	3,651		$	421		$	13,204
Individually evaluated for impairment	688			62			92			—			842
Collectively evaluated	5,948			2,434			3,559			421			12,362
Total	$	6,636		$	2,496		$	3,651		$	421		$	13,204

Acquired Loans	At or for the Nine Months Ended September 30, 2018
(in thousands)	Commercial real estate			Commercial and industrial			Residential real estate			Consumer			Total
Balance at beginning of period	$	97		$	16		$	59		$	—		$	172
Charged-off loans	(136		)	(166		)	(126		)	(64		)	(492		)
Recoveries on charged-off loans	43			7			—			82			132
Provision (releases) for loan losses	168			187			134			(18		)	471
Balance at end of period	$	172		$	44		$	67		$	—		$	283
Individually evaluated for impairment	—			—			20			—			20
Collectively evaluated	172			44			47			—			263
Total	$	172		$	44		$	67		$	—		$	283

Schedule of Loans by Risk Rating

The following tables present the Company’s loans by risk rating at September 30, 2019 and December 31, 2018:

Business Activities Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	28,728	$	23,680	$	647,075	$	532,386	$	675,803	$	556,066
Special mention	—		73		12,474		8,319		12,474		8,392
Substandard	73		—		10,212		13,914		10,285		13,914
Doubtful	1		1		3,124		1,361		3,125		1,362
Total	$	28,802	$	23,754	$	672,885	$	555,980	$	701,687	$	579,734

Acquired Loans

Commercial Real Estate

	Commercial construction and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	1,765	$	2,626	$	212,859	$	236,393	$	214,624	$	239,019
Special mention	12		—		1,962		1,574		1,974		1,574
Substandard	287		264		5,033		6,009		5,320		6,273
Doubtful	—		—		168		99		168		99
Total	$	2,064	$	2,890	$	220,022	$	244,075	$	222,086	$	246,965

Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	219,962	$	226,353	$	20,413	$	21,680	$	66,043	$	56,588	$	306,418	$	304,621
Special mention	14,000		6,730		346		215		—		—		14,346		6,945
Substandard	4,922		924		447		422		—		—		5,369		1,346
Doubtful	1,010		750		—		—		—		—		1,010		750
Total	$	239,894	$	234,757	$	21,206	$	22,317	$	66,043	$	56,588	$	327,143	$	313,662

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Grade:
Pass	$	37,111	$	46,120	$	—	$	—	$	35,073	$	38,738	$	72,184	$	84,858
Special mention	2,511		4,825		—		—		—		—		2,511		4,825
Substandard	527		1,222		—		—		—		—		527		1,222
Doubtful	341		303		—		—		—		—		341		303
Total	$	40,490	$	52,470	$	—	$	—	$	35,073	$	38,738	$	75,563	$	91,208

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	727,239	$	665,976	$	57,992	$	57,652	$	10,209	$	9,324	$	795,440	$	732,952
Nonperforming	3,277		4,213		564		246		25		90		3,866		4,549
Total	$	730,516	$	670,189	$	58,556	$	57,898	$	10,234	$	9,414	$	799,306	$	737,501

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018		Sep 30, 2019		Dec 31, 2018
Performing	$	409,830	$	470,497	$	37,446	$	45,090	$	985	$	1,356	$	448,261	$	516,943
Nonperforming	3,106		4,012		154		201		—		1		3,260		4,214
Total	$	412,936	$	474,509	$	37,600	$	45,291	$	985	$	1,357	$	451,521	$	521,157

Summary of Information About Total Loans Rated Special Mention or Lower

The following table summarizes total classified and criticized loans as of September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired  Loans		Total		Business Activities Loans		Acquired  Loans		Total
Non-accrual	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235
Substandard accruing	10,114		6,478		16,592		7,810		7,987		15,797
Doubtful accruing	—		—		—		—		—		—
Total classified	23,655		9,616		33,271		21,921		12,111		34,032
Special mention	26,820		4,485		31,305		15,337		6,399		21,736
Total Criticized	$	50,475	$	14,101	$	64,576	$	37,258	$	18,510	$	55,768

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BASIS OF PRESENTATION (Policies)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for the Company's Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the Securities and Exchange Commission (the "SEC").  In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation.  The reclassifications had no impact on net income in the Company’s consolidated income statement.  

Recent Accounting Pronouncements

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2019
ASU 2016-02, Leases	This ASU creates ASU Topic 842, Leases, and supersedes Topic 840, Leases. The new guidance requires lessees to record a right-of-use asset and a corresponding liability equal to the present value of future rental payments on their balance sheets for all leases with a term greater than one year. There are not significant changes to lessor accounting; however, there are certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. This guidance expands both quantitative and qualitative required disclosures. This ASU is required to be adopted on a modified retrospective basis and allows for practical expedients and elections in conjunction with implementation. The Company may elect some of the expedients upon the adoption date, which may be applied prospectively or retrospectively.	January 1, 2019	The Company adopted this ASU as of January 1, 2019 including the election of the practical expedients, allowing for existing leases to be accounted for consistent with current guidance, with the exception of balance sheet recognition for lessees. A modified retrospective transition approach was utilized, applying the new standard to all leases existing at the date of initial application. At January 1, 2019 the Company recognized a right-of-use asset and corresponding lease liability of $9.0 million. This computation is based, primarily, on the present value of unpaid future minimum lease payments. Additionally, that amount is impacted by assumptions around renewals and/or extensions, and the interest rate used to discount those future lease obligations. Due to the limited size of the Company's leasing portfolio, many other items related to this standard don't apply, or had an immaterial impact on the Company's consolidated financial statements. For transitional disclosures see Note 12 - Leases.
ASU 2018-11 Practical Expedients to Topic 842, Leases
ASU 2018-20 Scope Improvements for Lessors
ASU 2019-01 Leases: Codification Improvements
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This ASU amends Accounting Standards Codification ("ASC") 815, Derivatives and Hedging to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, although it did not have a material impact on the Company's consolidated financial statements.
ASU 2018-16, Inclusion of Overnight Financing Rate or Overnight Swap Rate as a Benchmark for Hedge Accounting
ASU 2018-07, Share Based Payment Accounting	This ASU expands the scope of Topic 718, Compensation- Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Based Payments to non-employees.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, with no material impact on the Company's consolidated financial statements.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses on loans with the application of the expected credit loss model. Also, for acquired purchased impaired loans it requires the reclassification of the credit portion of the total remaining fair value adjustment directly to the allowance for loan losses. Fair value adjustments on purchased credit impaired loans related to interest rates and fair value adjustments on other acquired loans will continue to be accreted into income over time.
ASU 2018-19, Codification Improvements to ASU 2016-13
			In addition, the Company expects the ASU to change the presentation of credit losses for AFS debt securities through an allowance method rather than as a direct write-off and may allow for recovery of these amounts in the future.
	While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time.
			The Company is in the process of evaluating and implementing allowance loan loss estimation models to comply with the guidance under this ASU, which may result in a higher allowance for losses then currently recorded under the existing standard.
	The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	Early adoption is permitted in 2019.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

Adoption of ASC 606, Revenue from Contracts with Customers

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

Trust Management Fees.

The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of progress. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees.

Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of monthly service requirements.

Interchange Fees.

The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees.

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service.

Other Customer Service Fees.

The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

The Company has accounted for the various non-interest revenue streams and related contracts under ASC 606.

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income	$ 5,015	$ 8,970	$ 13,398	$ 16,347	$ 18,413	$ 25,317
Average number of basic common shares outstanding (in shares)	15,547,276	15,503,488			15,536,414	15,478,207
Plus: dilutive effect of stock options and awards outstanding (in shares)	34,027	76,575			45,282	85,559
Average number of diluted common shares outstanding (in shares)	15,581,303	15,580,063			15,581,696	15,563,766
Anti-dilutive options excluded from earnings calculation (in shares)	0	0			0	14,394
Earnings per share:
Basic (in dollars per share)	$ 0.32	$ 0.58			$ 1.19	$ 1.64
Diluted (in dollars per share)	$ 0.32	$ 0.58			$ 1.18	$ 1.63

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of AOCI (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	$ 3,045	$ (11,802)
Net unrealized (loss) gain on AFS Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	10,442	(11,304)
Income taxes related to items of accumulated other comprehensive (income) loss:	(2,440)	2,641
Net unrealized loss on effective cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	(5,306)
Income taxes related to items of accumulated other comprehensive (income) loss:	1,239
Net unrealized loss on effective cash flow hedging derivatives
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:		(2,934)
Income taxes related to items of accumulated other comprehensive (income) loss:		685
Net unrealized loss on post-retirement plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	(1,162)	(1,162)
Income taxes related to items of accumulated other comprehensive (income) loss:	$ 272	$ 272

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LEASES - ROU Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
Leases [Abstract]
Operating lease right-of-use assets	$ 8,447	$ 9,000
Operating lease liabilities	$ 8,524	$ 9,000

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LOANS - Accretable Yield Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule
Balance at beginning of period	$ 4,195	$ 2,807	$ 4,377	$ 3,509
Reclassification from non-accretable difference for loans with (decreased) improved cash flows	(126)	1,985	498	2,031
Accretion	(581)	(315)	(1,387)	(1,063)
Balance at end of period	$ 3,488	$ 4,477	$ 3,488	$ 4,477

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LOANS - Summary of Impaired Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Business Activities Loans
Recorded Investment
Total	$ 12,738	$ 13,855
Unpaid Principal Balance
Total	13,188	14,124
Related Allowance
With an allowance recorded	1,297	611
Business Activities Loans | Total commercial real estate
Recorded Investment
Total	8,759	9,835
Unpaid Principal Balance
Total	8,938	9,962
Related Allowance
With an allowance recorded	990	422
Business Activities Loans | Total commercial real estate | Construction and land development
Recorded Investment
With no related allowance	0	0
With an allowance recorded	1	1
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	1	1
Related Allowance
With an allowance recorded	1	1
Business Activities Loans | Total commercial real estate | Other commercial real estate
Recorded Investment
With no related allowance	5,634	8,209
With an allowance recorded	3,124	1,625
Unpaid Principal Balance
With no related allowance	5,675	8,301
With an allowance recorded	3,262	1,660
Related Allowance
With an allowance recorded	989	421
Business Activities Loans | Total commercial and industrial
Recorded Investment
Total	1,323	1,445
Unpaid Principal Balance
Total	1,407	1,524
Related Allowance
With an allowance recorded	240	78
Business Activities Loans | Total commercial and industrial | Commercial
Recorded Investment
With no related allowance	657	649
With an allowance recorded	666	796
Unpaid Principal Balance
With no related allowance	713	669
With an allowance recorded	694	855
Related Allowance
With an allowance recorded	240	78
Business Activities Loans | Total commercial and industrial | Agricultural
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Business Activities Loans | Total commercial and industrial | Tax exempt
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Business Activities Loans | Total residential real estate
Recorded Investment
Total	2,643	2,562
Unpaid Principal Balance
Total	2,830	2,625
Related Allowance
With an allowance recorded	66	111
Business Activities Loans | Total residential real estate | Residential mortgages
Recorded Investment
With no related allowance	2,082	1,671
With an allowance recorded	561	891
Unpaid Principal Balance
With no related allowance	2,236	1,709
With an allowance recorded	594	916
Related Allowance
With an allowance recorded	66	111
Business Activities Loans | Total consumer
Recorded Investment
Total	13	13
Unpaid Principal Balance
Total	13	13
Related Allowance
With an allowance recorded	1	0
Business Activities Loans | Total consumer | Home equity
Recorded Investment
With no related allowance	0	0
With an allowance recorded	13	13
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	13	13
Related Allowance
With an allowance recorded	1	0
Business Activities Loans | Total consumer | Other consumer
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans
Recorded Investment
Total	1,644	1,358
Unpaid Principal Balance
Total	1,994	1,600
Related Allowance
With an allowance recorded	44	41
Acquired Loans | Total commercial real estate
Recorded Investment
Total	257	188
Unpaid Principal Balance
Total	258	187
Related Allowance
With an allowance recorded	12	0
Acquired Loans | Total commercial real estate | Construction and land development
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total commercial real estate | Other commercial real estate
Recorded Investment
With no related allowance	90	188
With an allowance recorded	167	0
Unpaid Principal Balance
With no related allowance	90	187
With an allowance recorded	168	0
Related Allowance
With an allowance recorded	12	0
Acquired Loans | Total commercial and industrial
Recorded Investment
Total	414	426
Unpaid Principal Balance
Total	508	510
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total commercial and industrial | Commercial
Recorded Investment
With no related allowance	414	426
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	508	510
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total commercial and industrial | Agricultural
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total commercial and industrial | Tax exempt
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total residential real estate
Recorded Investment
Total	973	744
Unpaid Principal Balance
Total	1,228	903
Related Allowance
With an allowance recorded	32	41
Acquired Loans | Total residential real estate | Residential mortgages
Recorded Investment
With no related allowance	616	375
With an allowance recorded	357	369
Unpaid Principal Balance
With no related allowance	852	524
With an allowance recorded	376	379
Related Allowance
With an allowance recorded	32	41
Acquired Loans | Total consumer
Recorded Investment
Total	0	0
Unpaid Principal Balance
Total	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total consumer | Home equity
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	0	0
Acquired Loans | Total consumer | Other consumer
Recorded Investment
With no related allowance	0	0
With an allowance recorded	0	0
Unpaid Principal Balance
With no related allowance	0	0
With an allowance recorded	0	0
Related Allowance
With an allowance recorded	$ 0	$ 0

XML

NON-INTEREST INCOME - Timing of Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 5,566	$ 5,442	$ 16,172	$ 16,097
Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenue	2,839	2,583	7,874	7,576
Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenue	$ 2,727	$ 2,859	$ 8,298	$ 8,521

XML

LEASES - Future Minimum Payments for Leases (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jan. 01, 2019
Leases [Abstract]
September 30, 2020	$ 911
September 30, 2021	896
September 30, 2022	912
September 30, 2023	908
September 30, 2024	917
Thereafter	6,065
Total future minimum lease payments	10,609
Amounts representing interest	(2,085)
Present value of net future minimum lease payments	$ 8,524	$ 9,000

XML

SUBSEQUENT EVENTS (Details) $ in Thousands	Oct. 25, 2019 USD ($)	Sep. 30, 2019 USD ($)	Jul. 08, 2019 branch	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Subsequent Event [Line Items]
Deposits		$ 2,493,585			$ 2,483,238
Loans		$ 2,577,306			$ 2,490,227
People's United Bank, National Association
Subsequent Event [Line Items]
Number of branches to be acquired | branch			8
Deposits				$ 287,000
Loans				111,000
Assets				$ 284,000
People's United Bank, National Association | Subsequent Event
Subsequent Event [Line Items]
Business Acquisition, Expected Premium On Deposits, Amount Received	$ 134,000
Expected premium on deposits	6.30%
Expected premium on annualized wealth management revenue	1.2
Approximate value of premises	$ 4,400

XML

FAIR VALUE MEASUREMENTS - Measured on Non-recurring Basis (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Dec. 31, 2018
Assets
Other real estate owned	$ 2,455,000	$ 2,455,000	$ 2,351,000
Non-recurring | Level 3
Assets
Impaired loans	14,382,000	14,382,000	15,213,000
Capitalized servicing rights	4,108,000	4,108,000	4,882,000
Other real estate owned	2,455,000	2,455,000	2,351,000
Assets held for sale	1,800,000	1,800,000	0
Total	22,846,000	22,846,000	22,446,000
Total Gains (Losses)	(328,000)	685,000
Impaired loans | Non-recurring | Level 3
Assets
Total Gains (Losses)	(182,000)	831,000
Capitalized servicing rights | Non-recurring | Level 3
Assets
Total Gains (Losses)	0	0
Other real estate owned | Non-recurring | Level 3
Assets
Total Gains (Losses)	(146,000)	(146,000)
Assets held for sale | Non-recurring | Level 3
Assets
Assets held for sale	1,901,000	1,901,000	$ 0
Total Gains (Losses)	$ 0	$ 0

XML

DEPOSITS - Schedule of Time Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Deposits [Abstract]
Time less than $100,000	$ 659,610	$ 622,478
Time $100,000 through $250,000	151,995	193,535
Time $250,000 or more	91,060	116,780
Total time deposits	$ 902,665	$ 932,793

XML

ALLOWANCE FOR LOAN LOSSES - Loans by Credit Risk Rating (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Credit quality information
Loans	$ 2,577,306	$ 2,490,227
Special mention
Credit quality information
Loans	31,305	21,736
Substandard
Credit quality information
Loans	16,592	15,797
Doubtful
Credit quality information
Loans	0	0
Non-accrual
Credit quality information
Loans	16,679	18,235
Total classified
Credit quality information
Loans	33,271	34,032
Total Criticized
Credit quality information
Loans	64,576	55,768
Business Activities Loans
Credit quality information
Loans	1,828,136	1,630,897
Business Activities Loans | Commercial real estate
Credit quality information
Loans	701,687	579,734
Business Activities Loans | Commercial real estate | Construction and land development
Credit quality information
Loans	28,802	23,754
Business Activities Loans | Commercial real estate | Commercial real estate other
Credit quality information
Loans	672,885	555,980
Business Activities Loans | Commercial and industrial
Credit quality information
Loans	327,143	313,662
Business Activities Loans | Commercial and industrial | Commercial
Credit quality information
Loans	239,894	234,757
Business Activities Loans | Commercial and industrial | Agricultural
Credit quality information
Loans	21,206	22,317
Business Activities Loans | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	66,043	56,588
Business Activities Loans | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	799,306	737,501
Business Activities Loans | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	730,516	670,189
Business Activities Loans | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	58,556	57,898
Business Activities Loans | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	10,234	9,414
Business Activities Loans | Performing | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	795,440	732,952
Business Activities Loans | Performing | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	727,239	665,976
Business Activities Loans | Performing | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	57,992	57,652
Business Activities Loans | Performing | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	10,209	9,324
Business Activities Loans | Nonperforming | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	3,866	4,549
Business Activities Loans | Nonperforming | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	3,277	4,213
Business Activities Loans | Nonperforming | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	564	246
Business Activities Loans | Nonperforming | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	25	90
Business Activities Loans | Pass | Commercial real estate
Credit quality information
Loans	675,803	556,066
Business Activities Loans | Pass | Commercial real estate | Construction and land development
Credit quality information
Loans	28,728	23,680
Business Activities Loans | Pass | Commercial real estate | Commercial real estate other
Credit quality information
Loans	647,075	532,386
Business Activities Loans | Pass | Commercial and industrial
Credit quality information
Loans	306,418	304,621
Business Activities Loans | Pass | Commercial and industrial | Commercial
Credit quality information
Loans	219,962	226,353
Business Activities Loans | Pass | Commercial and industrial | Agricultural
Credit quality information
Loans	20,413	21,680
Business Activities Loans | Pass | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	66,043	56,588
Business Activities Loans | Special mention
Credit quality information
Loans	26,820	15,337
Business Activities Loans | Special mention | Commercial real estate
Credit quality information
Loans	12,474	8,392
Business Activities Loans | Special mention | Commercial real estate | Construction and land development
Credit quality information
Loans	0	73
Business Activities Loans | Special mention | Commercial real estate | Commercial real estate other
Credit quality information
Loans	12,474	8,319
Business Activities Loans | Special mention | Commercial and industrial
Credit quality information
Loans	14,346	6,945
Business Activities Loans | Special mention | Commercial and industrial | Commercial
Credit quality information
Loans	14,000	6,730
Business Activities Loans | Special mention | Commercial and industrial | Agricultural
Credit quality information
Loans	346	215
Business Activities Loans | Special mention | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Business Activities Loans | Substandard
Credit quality information
Loans	10,114	7,810
Business Activities Loans | Substandard | Commercial real estate
Credit quality information
Loans	10,285	13,914
Business Activities Loans | Substandard | Commercial real estate | Construction and land development
Credit quality information
Loans	73	0
Business Activities Loans | Substandard | Commercial real estate | Commercial real estate other
Credit quality information
Loans	10,212	13,914
Business Activities Loans | Substandard | Commercial and industrial
Credit quality information
Loans	5,369	1,346
Business Activities Loans | Substandard | Commercial and industrial | Commercial
Credit quality information
Loans	4,922	924
Business Activities Loans | Substandard | Commercial and industrial | Agricultural
Credit quality information
Loans	447	422
Business Activities Loans | Substandard | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Business Activities Loans | Doubtful
Credit quality information
Loans	0	0
Business Activities Loans | Doubtful | Commercial real estate
Credit quality information
Loans	3,125	1,362
Business Activities Loans | Doubtful | Commercial real estate | Construction and land development
Credit quality information
Loans	1	1
Business Activities Loans | Doubtful | Commercial real estate | Commercial real estate other
Credit quality information
Loans	3,124	1,361
Business Activities Loans | Doubtful | Commercial and industrial
Credit quality information
Loans	1,010	750
Business Activities Loans | Doubtful | Commercial and industrial | Commercial
Credit quality information
Loans	1,010	750
Business Activities Loans | Doubtful | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Business Activities Loans | Doubtful | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Business Activities Loans | Non-accrual
Credit quality information
Loans	13,541	14,111
Business Activities Loans | Total classified
Credit quality information
Loans	23,655	21,921
Business Activities Loans | Total Criticized
Credit quality information
Loans	50,475	37,258
Acquired Loans
Credit quality information
Loans	749,170	859,330
Acquired Loans | Commercial real estate
Credit quality information
Loans	222,086	246,965
Acquired Loans | Commercial real estate | Construction and land development
Credit quality information
Loans	2,064	2,890
Acquired Loans | Commercial real estate | Commercial real estate other
Credit quality information
Loans	220,022	244,075
Acquired Loans | Commercial and industrial
Credit quality information
Loans	75,563	91,208
Acquired Loans | Commercial and industrial | Commercial
Credit quality information
Loans	40,490	52,470
Acquired Loans | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Acquired Loans | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	35,073	38,738
Acquired Loans | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	451,521	521,157
Acquired Loans | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	412,936	474,509
Acquired Loans | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	37,600	45,291
Acquired Loans | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	985	1,357
Acquired Loans | Performing | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	448,261	516,943
Acquired Loans | Performing | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	409,830	470,497
Acquired Loans | Performing | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	37,446	45,090
Acquired Loans | Performing | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	985	1,356
Acquired Loans | Nonperforming | Residential real estate and consumer
Credit quality information
Total Performing and Nonperforming Loans	3,260	4,214
Acquired Loans | Nonperforming | Residential real estate and consumer | Residential real estate
Credit quality information
Total Performing and Nonperforming Loans	3,106	4,012
Acquired Loans | Nonperforming | Residential real estate and consumer | Home equity
Credit quality information
Total Performing and Nonperforming Loans	154	201
Acquired Loans | Nonperforming | Residential real estate and consumer | Other consumer
Credit quality information
Total Performing and Nonperforming Loans	0	1
Acquired Loans | Pass | Commercial real estate
Credit quality information
Loans	214,624	239,019
Acquired Loans | Pass | Commercial real estate | Construction and land development
Credit quality information
Loans	1,765	2,626
Acquired Loans | Pass | Commercial real estate | Commercial real estate other
Credit quality information
Loans	212,859	236,393
Acquired Loans | Pass | Commercial and industrial
Credit quality information
Loans	72,184	84,858
Acquired Loans | Pass | Commercial and industrial | Commercial
Credit quality information
Loans	37,111	46,120
Acquired Loans | Pass | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Acquired Loans | Pass | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	35,073	38,738
Acquired Loans | Special mention
Credit quality information
Loans	4,485	6,399
Acquired Loans | Special mention | Commercial real estate
Credit quality information
Loans	1,974	1,574
Acquired Loans | Special mention | Commercial real estate | Construction and land development
Credit quality information
Loans	12	0
Acquired Loans | Special mention | Commercial real estate | Commercial real estate other
Credit quality information
Loans	1,962	1,574
Acquired Loans | Special mention | Commercial and industrial
Credit quality information
Loans	2,511	4,825
Acquired Loans | Special mention | Commercial and industrial | Commercial
Credit quality information
Loans	2,511	4,825
Acquired Loans | Special mention | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Acquired Loans | Special mention | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Acquired Loans | Substandard
Credit quality information
Loans	6,478	7,987
Acquired Loans | Substandard | Commercial real estate
Credit quality information
Loans	5,320	6,273
Acquired Loans | Substandard | Commercial real estate | Construction and land development
Credit quality information
Loans	287	264
Acquired Loans | Substandard | Commercial real estate | Commercial real estate other
Credit quality information
Loans	5,033	6,009
Acquired Loans | Substandard | Commercial and industrial
Credit quality information
Loans	527	1,222
Acquired Loans | Substandard | Commercial and industrial | Commercial
Credit quality information
Loans	527	1,222
Acquired Loans | Substandard | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Acquired Loans | Substandard | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Acquired Loans | Doubtful
Credit quality information
Loans	0	0
Acquired Loans | Doubtful | Commercial real estate
Credit quality information
Loans	168	99
Acquired Loans | Doubtful | Commercial real estate | Construction and land development
Credit quality information
Loans	0	0
Acquired Loans | Doubtful | Commercial real estate | Commercial real estate other
Credit quality information
Loans	168	99
Acquired Loans | Doubtful | Commercial and industrial
Credit quality information
Loans	341	303
Acquired Loans | Doubtful | Commercial and industrial | Commercial
Credit quality information
Loans	341	303
Acquired Loans | Doubtful | Commercial and industrial | Agricultural
Credit quality information
Loans	0	0
Acquired Loans | Doubtful | Commercial and industrial | Tax exempt loans
Credit quality information
Loans	0	0
Acquired Loans | Non-accrual
Credit quality information
Loans	3,138	4,124
Acquired Loans | Total classified
Credit quality information
Loans	9,616	12,111
Acquired Loans | Total Criticized
Credit quality information
Loans	$ 14,101	$ 18,510

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2019
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs			Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	349,143		$	—		$	349,143
US Government agency	—		118,825			—			118,825
Private label	—		19,954			—			19,954
Obligations of states and political subdivisions thereof	—		111,226			—			111,226
Corporate bonds	—		76,527			—			76,527
Derivative assets	—		11,012			78			11,090
Derivative liabilities	—		(13,102		)	(61		)	(13,163		)

	December 31, 2018
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs		Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	404,952		$	—	$	404,952
US Government agency	—		110,512			—		110,512
Private label	—		20,382			—		20,382
Obligations of states and political subdivisions thereof	—		132,265			—		132,265
Corporate bonds	—		57,726			—		57,726
Derivative assets	—		2,156			8		2,164
Derivative liabilities	—		(1,353		)	—		(1,353		)

Schedule of Changes in Level 3 Assets and Liabilities That Were Measured at Fair Value on a Recurring Basis

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2019:

	Assets (Liabilities)
(in thousands)	Interest Rate Lock Commitments		Forward Commitments
Three Months Ended September 30, 2019
Balance at beginning of period	$	71	$	(30	)
Realized gain recognized in non-interest income	7		(31		)
Balance at end of period	$	78	$	(61	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8	$	—
Realized gain (loss) recognized in non-interest income	70		(61		)
Balance at end of period	$	78	$	(61	)

Schedule of Quantitative Information About the Significant Unobservable Inputs Within Level 3

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:

(in thousands, except ratios)	Fair Value September 30, 2019			Valuation Techniques	Unobservable Inputs	Unobservable Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	78		Historical trend	Closing Ratio	90		%
				Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments	(61		)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system	Pair-off contract price
Total	$	17

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is, as follows:

	Fair Value				Range
(in thousands, except ratios)	September 30, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,419	Fair value of collateral -appraised value	Loss severity	0% to 61%
				Appraised value	$0 to $6,915
Impaired loans	2,963		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,019
Capitalized servicing rights	4,108		Discounted cash flow	Constant prepayment rate (CPR)	10.21		%
				Discount rate	10.08		%
Other real estate owned	2,455		Fair value of collateral less selling costs	Appraised value		$2,695
				Selling Costs	6% to 10%
Assets held for sale(b)	1,901		Fair value of asset less selling costs	Appraised value	$136 to $527
				Selling Costs	6		%
Total	$	22,846

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

(b) The carrying value of assets held for sale was $1.8 million as of September 30, 2019. There were no assets held for sale as of December 31, 2018.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2018		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,676	Fair value of collateral -appraised value	Loss severity	0% to 55.00%
				Appraised value	$0 to $6,915
Impaired loans	3,537		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,072
Capitalized servicing rights	4,882		Discounted cash flow	Constant prepayment rate (CPR)	8.19		%
				Discount rate	10.08		%
Other real estate owned	2,351		Fair value of collateral less selling costs	Appraised value		$2,700
				Selling Costs	12.93		%
Total	$	22,446

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

Summary of Applicable Non-Recurring Fair Value Measurements

The following is a summary of applicable non-recurring fair value measurements:

	September 30, 2019		December 31, 2018		Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Fair Value Measurement Date as of September 30, 2019
(in thousands)	Level 3 Inputs		Level 3 Inputs		Total Gains (Losses)			Total Gains (Losses)			Level 3 Inputs
Assets
Impaired loans	$	14,382	$	15,213	$	(182	)	$	831		September 2019
Capitalized servicing rights	4,108		4,882		—			—			September 2019
Other real estate owned	2,455		2,351		(146		)	(146		)	August 2019
Assets held for sale	1,901		—		—			—			September 2019
Total	$	22,846	$	22,446	$	(328	)	$	685

Summary of Estimated Fair Values, and Related Carrying Amounts, of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are included in the table below. Certain financial instruments and all non-financial 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.

	September 30, 2019
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	71,593		$	71,593		$	71,593	$	—		$	—
Securities available for sale	675,675			675,675			—		675,675			—
FHLB stock	27,469			27,469			—		27,469			—
Net loans	2,561,953			2,567,331			—		—			2,567,331
Accrued interest receivable	3,218			3,218			—		3,218			—
Cash surrender value of bank-owned life insurance policies	75,368			75,368			—		75,368			—
Derivative assets	11,090			11,090			—		11,012			78
Financial Liabilities
Total deposits	$	2,493,585		$	2,491,023		$	—	$	2,491,023		$	—
Short-term other borrowings	41,259			41,258			—		41,258			—
FHLB advances	600,559			601,377			—		601,377			—
Subordinated borrowings	37,928			37,928			—		37,928			—
Junior subordinated borrowings	5,000			4,556			—		4,556			—
Derivative liabilities	(13,163		)	(13,163		)	—		(13,102		)	(61		)

	December 31, 2018
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	98,754		$	98,754		$	98,754	$	—	$	—
Securities available for sale	725,837			725,837			—		725,837		—
FHLB stock	35,659			35,659			—		35,659		—
Net loans	2,476,361			2,415,863			—		—		2,415,863
Accrued interest receivable	3,533			3,533			—		3,533		—
Cash surrender value of bank-owned life insurance policies	73,810			73,810			—		73,810		—
Derivative assets	2,164			2,164			—		2,156		8
Financial Liabilities
Total deposits	$	2,483,238		$	2,404,250		$	—	$	2,404,250	$	—
Short-term other borrowings	36,211			36,171			—		36,171		—
FHLB advances	644,611			643,065			—		643,065		—
Subordinated borrowings	37,973			37,973			—		37,973		—
Junior subordinated borrowings	5,000			3,923			—		3,923		—
Derivative liabilities	(1,353		)	(1,353		)	—		—		(1,353		)

XML

SECURITIES AVAILABLE FOR SALE - Schedule of Maturity of Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Amortized Cost
Within 1 year	$ 190
Over 1 year to 5 years	33,984
Over 5 years to 10 years	56,882
Over 10 years	92,451
Total bonds and obligations	183,507
Mortgage-backed securities	481,726
Amortized Cost	665,233	$ 737,141
Fair Value
Within 1 year	191
Over 1 year to 5 years	34,856
Over 5 years to 10 years	57,482
Over 10 years	95,224
Total bonds and obligations	187,753
Mortgage-backed securities	487,922
Total securities available for sale	$ 675,675	$ 725,837

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 5,015	$ 8,970	$ 18,413	$ 25,317
Other comprehensive income, before tax:
Changes in unrealized gain (loss) on securities available-for-sale	3,200	(5,850)	21,746	(19,639)
Changes in unrealized (loss) gain on cash flow hedging derivatives	(370)		(2,372)
Changes in unrealized (loss) gain on cash flow hedging derivatives		299		1,179
Changes in unrealized gain on pension	0	0	0	41
Income taxes related to other comprehensive income:
Changes in unrealized (gain) loss on securities available-for-sale	(747)	1,291	(5,081)	4,565
Changes in unrealized loss (gain) on cash flow hedging derivatives	85		554
Changes in unrealized loss (gain) on cash flow hedging derivatives		(81)		(290)
Changes in unrealized loss on pension	0	0	0	(10)
Total other comprehensive income (loss)	2,168	(4,341)	14,847	(14,154)
Total comprehensive income	$ 7,183	$ 4,629	$ 33,260	$ 11,163

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DEPOSITS

9 Months Ended

Sep. 30, 2019

Deposits [Abstract]

DEPOSITS

DEPOSITS

A summary of time deposits is, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Time less than $100,000	$	659,610	$	622,478
Time $100,000 through $250,000	151,995		193,535
Time $250,000 or more	91,060		116,780
Total time deposits	$	902,665	$	932,793

At September 30, 2019 and December 31, 2018, the scheduled maturities by year for time deposits are, as follows:

(in thousands)	September 30, 2019		December 31, 2018
Within 1 year	$	416,591	$	505,313
Over 1 year to 2 years	365,372		258,176
Over 2 years to 3 years	70,050		123,337
Over 3 years to 4 years	25,603		14,494
Over 4 years to 5 years	22,597		31,353
Over 5 years	2,452		120
Total	$	902,665	$	932,793

Included in time deposits are brokered deposits of $554.3 million and $466.9 million at September 30, 2019 and December 31, 2018, respectively. Also included in time deposits are reciprocal deposits of $69.7 million and $52.4 million at September 30, 2019 and December 31, 2018, respectively.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Oct. 31, 2019
Document and Entity Information
Entity Registrant Name	BAR HARBOR BANKSHARES
Entity Central Index Key	0000743367
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		15,552,297

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SECURITIES AVAILABLE FOR SALE

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	344,547	$	5,924	$	1,328	$	349,143
US Government agency	116,912		2,130		217		118,825
Private label	20,268		75		389		19,954
Obligations of states and political subdivisions thereof	107,854		3,519		147		111,226
Corporate bonds	75,652		1,554		679		76,527
Total securities available for sale	$	665,233	$	13,202	$	2,760	$	675,675
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	413,492	$	904	$	9,444	$	404,952
US Government agency	111,938		509		1,935		110,512
Private label	20,353		113		84		20,382
Obligations of states and political subdivisions thereof	133,260		1,081		2,076		132,265
Corporate bonds	58,098		264		636		57,726
Total securities available for sale	$	737,141	$	2,871	$	14,175	$	725,837

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at September 30, 2019 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	190	$	191
Over 1 year to 5 years	33,984		34,856
Over 5 years to 10 years	56,882		57,482
Over 10 years	92,451		95,224
Total bonds and obligations	183,507		187,753
Mortgage-backed securities	481,726		487,922
Total securities available for sale	$	665,233	$	675,675

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
(In thousands)	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
September 30, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	140	$	30,711	$	1,188	$	60,174	$	1,328	$	90,885
US Government agency	117		10,691		100		9,767		217		20,458
Private label	385		19,573		4		39		389		19,612
Obligations of states and political subdivisions thereof	20		4,138		127		1,692		147		5,830
Corporate bonds	493		14,506		186		7,186		679		21,692
Total securities available for sale	$	1,155	$	79,619	$	1,605	$	78,858	$	2,760	$	158,477
December 31, 2018
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	155	$	19,367	$	9,289	$	297,569	$	9,444	$	316,936
US Government agency	16		2,570		1,919		68,266		1,935		70,836
Private label	79		10,393		5		47		84		10,440
Obligations of states and political subdivisions thereof	43		6,784		2,033		47,930		2,076		54,714
Corporate bonds	224		11,759		412		14,460		636		26,219
Total securities available for sale	$	517	$	50,873	$	13,658	$	428,272	$	14,175	$	479,145

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired.  For the three and nine months ended September 30, 2019 and 2018 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Estimated credit losses as of prior year-end	$	1,697	$	1,697	$	1,697	$	1,697
Reductions for securities paid off during the period	—		—		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697	$	1,697	$	1,697

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of September 30, 2019, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that securities in an unrealized loss position were not other-than-temporarily impaired at September 30, 2019:

US Government-sponsored enterprises

172 out of the total 702 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.4% of the amortized cost of securities in unrealized loss positions. The FNMA and FHLMC guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

46 out of the total 190 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 1.0% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

Nine of the total 20 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.9% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

Nine of the total 219 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 2.5% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

Seven out of the total 26 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 3.0% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

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LEASES

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASES

LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” and all subsequent ASUs modifying ASC 842. For the Company, ASC 842 primarily affects the accounting treatment for operating lease agreements where the Company is the lessee.

Lessee Accounting

Substantially all of the leases pursuant to which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2040. All leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of ASC 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability using the modified retrospective approach. The total of ROU assets and lease liabilities were $9.0 million as of January 1, 2019.

The Company has elected the following practical expedients in conjunction with implementation of ASC 842 as follows:

• Package of practical expedients:

◦ Lease classification as an operating lease under the prior standards is grandfathered.

◦ Re-evaluation of embedded leases evaluated under the prior standards is not required.

◦ No re-assessment of previously recorded initial direct lease costs.

• Election to exclude short-term leases (i.e., leases with initial terms of twelve months or less), from capitalization on the consolidated balance sheets.

The following table presents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities as of September 30, 2019:

(in thousands)		September 30, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	8,447
Lease Liabilities
Operating lease liabilities	Other liabilities	8,524

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, ASC 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the original lease term as of January 1, 2019 was used.

	September 30, 2019
Weighted-average remaining lease term
Operating leases	9.18
Weighted-average discount rate
Operating leases	3.37	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease Costs
Operating lease cost	$	234	$	698
Variable lease cost	69		277
Total lease cost	$	303	$	975

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2019 are, as follows:

(in thousands)	Operating Leases
Twelve Months Ended:
September 30, 2020	$	911
September 30, 2021	896
September 30, 2022	912
September 30, 2023	908
September 30, 2024	917
Thereafter	6,065
Total future minimum lease payments	10,609
Amounts representing interest	(2,085		)
Present value of net future minimum lease payments	$	8,524

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BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for the Company's Annual Report on Form 10-K for the year ended December 31, 2018 previously filed with the Securities and Exchange Commission (the "SEC").  In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation.  The reclassifications had no impact on net income in the Company’s consolidated income statement.

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2019
ASU 2016-02, Leases	This ASU creates ASU Topic 842, Leases, and supersedes Topic 840, Leases. The new guidance requires lessees to record a right-of-use asset and a corresponding liability equal to the present value of future rental payments on their balance sheets for all leases with a term greater than one year. There are not significant changes to lessor accounting; however, there are certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. This guidance expands both quantitative and qualitative required disclosures. This ASU is required to be adopted on a modified retrospective basis and allows for practical expedients and elections in conjunction with implementation. The Company may elect some of the expedients upon the adoption date, which may be applied prospectively or retrospectively.	January 1, 2019	The Company adopted this ASU as of January 1, 2019 including the election of the practical expedients, allowing for existing leases to be accounted for consistent with current guidance, with the exception of balance sheet recognition for lessees. A modified retrospective transition approach was utilized, applying the new standard to all leases existing at the date of initial application. At January 1, 2019 the Company recognized a right-of-use asset and corresponding lease liability of $9.0 million. This computation is based, primarily, on the present value of unpaid future minimum lease payments. Additionally, that amount is impacted by assumptions around renewals and/or extensions, and the interest rate used to discount those future lease obligations. Due to the limited size of the Company's leasing portfolio, many other items related to this standard don't apply, or had an immaterial impact on the Company's consolidated financial statements. For transitional disclosures see Note 12 - Leases.
ASU 2018-11 Practical Expedients to Topic 842, Leases
ASU 2018-20 Scope Improvements for Lessors
ASU 2019-01 Leases: Codification Improvements
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This ASU amends Accounting Standards Codification ("ASC") 815, Derivatives and Hedging to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, although it did not have a material impact on the Company's consolidated financial statements.
ASU 2018-16, Inclusion of Overnight Financing Rate or Overnight Swap Rate as a Benchmark for Hedge Accounting
ASU 2018-07, Share Based Payment Accounting	This ASU expands the scope of Topic 718, Compensation- Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Based Payments to non-employees.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, with no material impact on the Company's consolidated financial statements.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses on loans with the application of the expected credit loss model. Also, for acquired purchased impaired loans it requires the reclassification of the credit portion of the total remaining fair value adjustment directly to the allowance for loan losses. Fair value adjustments on purchased credit impaired loans related to interest rates and fair value adjustments on other acquired loans will continue to be accreted into income over time.
ASU 2018-19, Codification Improvements to ASU 2016-13
			In addition, the Company expects the ASU to change the presentation of credit losses for AFS debt securities through an allowance method rather than as a direct write-off and may allow for recovery of these amounts in the future.
	While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time.
			The Company is in the process of evaluating and implementing allowance loan loss estimation models to comply with the guidance under this ASU, which may result in a higher allowance for losses then currently recorded under the existing standard.
	The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	Early adoption is permitted in 2019.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 234	$ 698
Variable lease cost	69	277
Total lease cost	$ 303	$ 975

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NON-INTEREST INCOME - Contract Balances from Contracts with Customers (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Balances from contracts with customers only:
Other Assets	$ 1,898	$ 2,866
Other Liabilities	$ 3,179	$ 4,923

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FAIR VALUE MEASUREMENTS - Unobservable Inputs Recurring (Details) - USD ($)	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ (2,073,000)	$ 811,000
Level 3 | Recurring
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Total	17,000
Level 3 | Recurring | Interest Rate Lock Commitment
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ 78,000
Level 3 | Recurring | Interest Rate Lock Commitment | Pricing Model
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Closing Ratio	90.00%
Origination Costs, per loan	$ 1,700
Level 3 | Recurring | Forward Commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ (61,000)

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NON-INTEREST INCOME - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 5,566	$ 5,442	$ 16,172	$ 16,097
Trust management fees
Disaggregation of Revenue [Line Items]
Revenue	2,737	2,720	8,055	8,268
Financial services fees
Disaggregation of Revenue [Line Items]
Revenue	276	232	781	768
Interchange fees
Disaggregation of Revenue [Line Items]
Revenue	1,323	1,146	3,567	3,277
Customer deposit fees
Disaggregation of Revenue [Line Items]
Revenue	1,112	1,095	3,046	3,093
Other customer service fees
Disaggregation of Revenue [Line Items]
Revenue	$ 118	$ 249	$ 723	$ 691

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DEPOSITS - Maturities by Year (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Deposits [Abstract]
Within 1 year	$ 416,591	$ 505,313
Over 1 year to 2 years	365,372	258,176
Over 2 years to 3 years	70,050	123,337
Over 3 years to 4 years	25,603	14,494
Over 4 years to 5 years	22,597	31,353
Over 5 years	2,452	120
Total time deposits	$ 902,665	$ 932,793

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BORROWED FUNDS - Summary of Borrowed Funds (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Short-term borrowings
Carrying Value	$ 463,842	$ 647,894
Weighted Average Rate	2.15%	2.39%
Long-term borrowings
Carrying Value	$ 220,905	$ 75,902
Weighted Average Rate	2.93%	3.99%
Total borrowings	$ 684,747	$ 723,796
Weighted Average Rate	2.40%	2.56%
Advances from the FHLB
Short-term borrowings
Carrying Value	$ 422,583	$ 611,683
Weighted Average Rate	2.24%	2.47%
Long-term borrowings
Carrying Value	$ 177,977	$ 32,929
Weighted Average Rate	2.25%	1.86%
Other borrowings
Short-term borrowings
Carrying Value	$ 41,259	$ 36,211
Weighted Average Rate	1.24%	1.09%
Subordinated borrowings
Long-term borrowings
Carrying Value	$ 37,928	$ 37,973
Weighted Average Rate	5.69%	5.58%
Junior subordinated borrowings
Long-term borrowings
Carrying Value	$ 5,000	$ 5,000
Weighted Average Rate	6.15%	5.96%

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LEASES (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

ROU Assets and Liabilities

The following table presents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities as of September 30, 2019:

(in thousands)		September 30, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	8,447
Lease Liabilities
Operating lease liabilities	Other liabilities	8,524

Additional Information Regarding Leases

	September 30, 2019
Weighted-average remaining lease term
Operating leases	9.18
Weighted-average discount rate
Operating leases	3.37	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.

(in thousands)	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease Costs
Operating lease cost	$	234	$	698
Variable lease cost	69		277
Total lease cost	$	303	$	975

Future Minimum Payments for Leases

Future minimum payments for operating leases with initial or remaining terms of one year or more as of September 30, 2019 are, as follows:

(in thousands)	Operating Leases
Twelve Months Ended:
September 30, 2020	$	911
September 30, 2021	896
September 30, 2022	912
September 30, 2023	908
September 30, 2024	917
Thereafter	6,065
Total future minimum lease payments	10,609
Amounts representing interest	(2,085		)
Present value of net future minimum lease payments	$	8,524

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SECURITIES AVAILABLE FOR SALE - Summary of Securities Available for Sale (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Investment Holdings [Line Items]
Amortized Cost	$ 665,233	$ 737,141
Gross Unrealized Gains	13,202	2,871
Gross Unrealized Losses	2,760	14,175
Available for sale securities	675,675	725,837
US Government-sponsored enterprises
Investment Holdings [Line Items]
Amortized Cost	344,547	413,492
Gross Unrealized Gains	5,924	904
Gross Unrealized Losses	1,328	9,444
Available for sale securities	349,143	404,952
US Government agency
Investment Holdings [Line Items]
Amortized Cost	116,912	111,938
Gross Unrealized Gains	2,130	509
Gross Unrealized Losses	217	1,935
Available for sale securities	118,825	110,512
Private label
Investment Holdings [Line Items]
Amortized Cost	20,268	20,353
Gross Unrealized Gains	75	113
Gross Unrealized Losses	389	84
Available for sale securities	19,954	20,382
Obligations of states and political subdivisions thereof
Investment Holdings [Line Items]
Amortized Cost	107,854	133,260
Gross Unrealized Gains	3,519	1,081
Gross Unrealized Losses	147	2,076
Available for sale securities	111,226	132,265
Corporate bonds
Investment Holdings [Line Items]
Amortized Cost	75,652	58,098
Gross Unrealized Gains	1,554	264
Gross Unrealized Losses	679	636
Available for sale securities	$ 76,527	$ 57,726

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2019 and December 31, 2018, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	September 30, 2019
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs			Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	349,143		$	—		$	349,143
US Government agency	—		118,825			—			118,825
Private label	—		19,954			—			19,954
Obligations of states and political subdivisions thereof	—		111,226			—			111,226
Corporate bonds	—		76,527			—			76,527
Derivative assets	—		11,012			78			11,090
Derivative liabilities	—		(13,102		)	(61		)	(13,163		)

	December 31, 2018
(in thousands)	Level 1 Inputs		Level 2 Inputs			Level 3 Inputs		Total Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	404,952		$	—	$	404,952
US Government agency	—		110,512			—		110,512
Private label	—		20,382			—		20,382
Obligations of states and political subdivisions thereof	—		132,265			—		132,265
Corporate bonds	—		57,726			—		57,726
Derivative assets	—		2,156			8		2,164
Derivative liabilities	—		(1,353		)	—		(1,353		)

Securities Available for Sale: All securities and major categories of securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities’ terms and conditions, among other things.

Derivative Assets and Liabilities

Cash Flow Hedges. The valuation of the Company's cash flow hedges are obtained from a third party. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The inputs used to value the Company's cash flow hedges are all classified as Level 2 measurements.

Interest Rate Lock Commitments. The Company enters into IRLCs for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time.  The estimated fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood of a loan in a lock position will ultimately close. The closing ratio is derived from the Company’s internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the IRLCs and loans originated for sale. The fair values of the Company’s mandatory delivery loan sale commitments are determined similarly to the IRLCs using quoted prices in the market place that are observable.  However, closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are not considered observable factors. As such, mandatory delivery forward commitments are classified as Level 3 measurements.

Customer Loan Derivatives. The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves.  The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its customer loan derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of September 30, 2019, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three and nine months ended September 30, 2019:

	Assets (Liabilities)
(in thousands)	Interest Rate Lock Commitments		Forward Commitments
Three Months Ended September 30, 2019
Balance at beginning of period	$	71	$	(30	)
Realized gain recognized in non-interest income	7		(31		)
Balance at end of period	$	78	$	(61	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	8	$	—
Realized gain (loss) recognized in non-interest income	70		(61		)
Balance at end of period	$	78	$	(61	)

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:

(in thousands, except ratios)	Fair Value September 30, 2019			Valuation Techniques	Unobservable Inputs	Unobservable Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	78		Historical trend	Closing Ratio	90		%
				Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments	(61		)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system	Pair-off contract price
Total	$	17

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements:

	September 30, 2019		December 31, 2018		Three Months Ended September 30, 2019			Nine Months Ended September 30, 2019			Fair Value Measurement Date as of September 30, 2019
(in thousands)	Level 3 Inputs		Level 3 Inputs		Total Gains (Losses)			Total Gains (Losses)			Level 3 Inputs
Assets
Impaired loans	$	14,382	$	15,213	$	(182	)	$	831		September 2019
Capitalized servicing rights	4,108		4,882		—			—			September 2019
Other real estate owned	2,455		2,351		(146		)	(146		)	August 2019
Assets held for sale	1,901		—		—			—			September 2019
Total	$	22,846	$	22,446	$	(328	)	$	685

There are no liabilities measured at fair value on a non-recurring basis.

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is, as follows:

	Fair Value				Range
(in thousands, except ratios)	September 30, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,419	Fair value of collateral -appraised value	Loss severity	0% to 61%
				Appraised value	$0 to $6,915
Impaired loans	2,963		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,019
Capitalized servicing rights	4,108		Discounted cash flow	Constant prepayment rate (CPR)	10.21		%
				Discount rate	10.08		%
Other real estate owned	2,455		Fair value of collateral less selling costs	Appraised value		$2,695
				Selling Costs	6% to 10%
Assets held for sale(b)	1,901		Fair value of asset less selling costs	Appraised value	$136 to $527
				Selling Costs	6		%
Total	$	22,846

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

(b) The carrying value of assets held for sale was $1.8 million as of September 30, 2019. There were no assets held for sale as of December 31, 2018.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2018		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	11,676	Fair value of collateral -appraised value	Loss severity	0% to 55.00%
				Appraised value	$0 to $6,915
Impaired loans	3,537		Discount cash flow	Discount rate	2.88% to 9.50%
				Cash flows	$22 to $1,072
Capitalized servicing rights	4,882		Discounted cash flow	Constant prepayment rate (CPR)	8.19		%
				Discount rate	10.08		%
Other real estate owned	2,351		Fair value of collateral less selling costs	Appraised value		$2,700
				Selling Costs	12.93		%
Total	$	22,446

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individuals properties.

There were no Level 1 or Level 2 non-recurring fair value measurements for the periods ended September 30, 2019 and December 31, 2018.

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, non-recurring fair value measurement adjustments relating to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral supporting commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3. 

Capitalized loan servicing rights.  A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Company. Upon assuming the real estate, the Company records the property at the fair value of the asset less the estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Assets held for sale. Assets held for sale, identified as part of the Company’s strategic review and branch optimization exercise, were transferred from premises and equipment at the lower of amortized cost or fair value less the estimated sales costs. Assets held for sale fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Summary of Estimated Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are included in the table below. Certain financial instruments and all non-financial 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.

	September 30, 2019
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2			Level 3
Financial Assets
Cash and cash equivalents	$	71,593		$	71,593		$	71,593	$	—		$	—
Securities available for sale	675,675			675,675			—		675,675			—
FHLB stock	27,469			27,469			—		27,469			—
Net loans	2,561,953			2,567,331			—		—			2,567,331
Accrued interest receivable	3,218			3,218			—		3,218			—
Cash surrender value of bank-owned life insurance policies	75,368			75,368			—		75,368			—
Derivative assets	11,090			11,090			—		11,012			78
Financial Liabilities
Total deposits	$	2,493,585		$	2,491,023		$	—	$	2,491,023		$	—
Short-term other borrowings	41,259			41,258			—		41,258			—
FHLB advances	600,559			601,377			—		601,377			—
Subordinated borrowings	37,928			37,928			—		37,928			—
Junior subordinated borrowings	5,000			4,556			—		4,556			—
Derivative liabilities	(13,163		)	(13,163		)	—		(13,102		)	(61		)

	December 31, 2018
(in thousands)	Carrying Amount			Fair Value			Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	98,754		$	98,754		$	98,754	$	—	$	—
Securities available for sale	725,837			725,837			—		725,837		—
FHLB stock	35,659			35,659			—		35,659		—
Net loans	2,476,361			2,415,863			—		—		2,415,863
Accrued interest receivable	3,533			3,533			—		3,533		—
Cash surrender value of bank-owned life insurance policies	73,810			73,810			—		73,810		—
Derivative assets	2,164			2,164			—		2,156		8
Financial Liabilities
Total deposits	$	2,483,238		$	2,404,250		$	—	$	2,404,250	$	—
Short-term other borrowings	36,211			36,171			—		36,171		—
FHLB advances	644,611			643,065			—		643,065		—
Subordinated borrowings	37,973			37,973			—		37,973		—
Junior subordinated borrowings	5,000			3,923			—		3,923		—
Derivative liabilities	(1,353		)	(1,353		)	—		—		(1,353		)

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which it is practicable to estimate that value.

Cash and cash equivalents. Carrying value is assumed to represent fair value for cash and cash equivalents that have original maturities of 90 days or less.

FHLB stock and restricted securities. Carrying value approximates fair value based on the redemption provisions of the issuers.

Cash surrender value of life insurance policies. Carrying value approximates fair value.

Loans, net. The fair value of loans are calculated on an individual basis with consideration given to the loans' underlying characteristics, including account types, remaining terms, annual interest rates or coupons, interest types, timing of principal and interest payments, current market rates, risk ratings, credit ratings and remaining balances. A discounted cash flow model is used to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, liquidity premiums, projected default probabilities, loss given defaults, and estimates of prevailing discount rates. 

Accrued interest receivable. Carrying value approximates fair value.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings.  Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every 90 days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments including standby letters of credit and other financial guarantees and commitments are considered immaterial to the Company’s financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Cash flows from operating activities:
Net income	$ 18,413	$ 25,317
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,779	2,208
Net amortization of securities	2,535	3,066
Change in unamortized net loan costs and premiums	(278)	46
Premises and equipment depreciation	2,942	2,821
Stock-based compensation expense	716	836
Accretion of purchase accounting entries, net	(2,613)	(2,780)
Amortization of other intangibles	621	621
Income from cash surrender value of bank-owned life insurance policies	(1,558)	(1,328)
Gain on sales of securities, net	(157)	0
Loss on other real estate owned	146	0
Loss on premises and equipment, net	21	0
Net change in other assets and liabilities	(1,722)	(3,644)
Net cash provided by operating activities	20,845	27,163
Cash flows from investing activities:
Proceeds from sales of securities available for sale	67,983	0
Proceeds from maturities, calls and prepayments of securities available for sale	77,812	72,278
Purchases of securities available for sale	(76,620)	(90,399)
Net change in loans	(85,483)	2,852
Purchase of Federal Home Loan Bank stock	(10,471)	(1,172)
Proceeds from sale of Federal Home Loan Bank stock	18,661	5,123
Purchase of premises and equipment, net	(1,803)	(2,675)
Purchase of bank-owned life insurance	0	(14,000)
Proceeds from sale of other real estate owned	0	69
Net cash used in investing activities	(9,921)	(27,924)
Cash flows from financing activities:
Net increase in deposits	10,968	38,885
Proceeds from advances from the Federal Home Loan Bank	9,722,907	7,276,306
Repayments of advances from the Federal Home Loan Bank	(9,766,912)	(7,320,515)
Net change in short-term other borrowings	5,048	(3,255)
Exercise of stock options	195	635
Treasury stock purchased	(346)	(324)
Cash dividends paid on common stock	(9,945)	(9,082)
Net cash used in financing activities	(38,085)	(17,350)
Net change in cash and cash equivalents	(27,161)	(18,111)
Cash and cash equivalents at beginning of year	98,754	90,685
Cash and cash equivalents at end of year	71,593	72,574
Supplemental cash flow information:
Interest paid	34,394	25,537
Income taxes paid, net	2,479	9,927
Other non-cash changes:
Real estate owned acquired in settlement of loans	$ 250	$ 30

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Interest and dividend income
Loans	$ 28,157	$ 26,212	$ 82,681	$ 77,272
Securities and other	6,105	5,972	18,593	17,407
Total interest and dividend income	34,262	32,184	101,274	94,679
Interest expense
Deposits	7,143	5,478	20,336	13,868
Borrowings	4,674	4,237	15,232	12,192
Total interest expense	11,817	9,715	35,568	26,060
Net interest income	22,445	22,469	65,706	68,619
Provision for loan losses	893	643	1,779	2,208
Net interest income after provision for loan losses	21,552	21,826	63,927	66,411
Non-interest income
Trust and investment management fee income	3,013	2,952	8,836	9,036
Customer service fees	2,553	2,490	7,336	7,061
Gain on sales of securities, net	157	0	157	0
Bank-owned life insurance income	497	505	1,558	1,328
Customer derivative income	828	0	1,553	545
Other income	595	1,179	1,823	2,515
Total non-interest income	7,643	7,126	21,263	20,485
Non-interest expense
Salaries and employee benefits	11,364	10,331	33,568	31,695
Occupancy and equipment	3,415	3,366	10,101	9,364
Loss on premises and equipment, net	0	0	21	0
Outside services	424	456	1,278	1,597
Professional services	707	223	1,821	1,016
Communication	189	217	707	701
Marketing	613	293	1,419	1,207
Amortization of intangible assets	207	207	621	621
Acquisition, restructuring and other expenses	3,039	70	3,319	619
Other expenses	3,442	2,743	10,075	8,623
Total non-interest expense	23,400	17,906	62,930	55,443
Income before income taxes	5,795	11,046	22,260	31,453
Income tax expense	780	2,076	3,847	6,136
Net income	$ 5,015	$ 8,970	$ 18,413	$ 25,317
Earnings per share:
Basic (in dollars per share)	$ 0.32	$ 0.58	$ 1.19	$ 1.64
Diluted (in dollars per share)	$ 0.32	$ 0.58	$ 1.18	$ 1.63
Weighted average common shares outstanding:
Basic (in shares)	15,547,276	15,503,488	15,536,414	15,478,207
Diluted (in shares)	15,581,303	15,580,063	15,581,696	15,563,766

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2019

Stockholders' Equity Note [Abstract]

CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:

	September 30, 2019		Regulatory Minimum to be "Well Capitalized"		December 31, 2018		Regulatory Minimum to be "Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	14.01	%	N/A		14.23	%	N/A
Common equity tier 1 capital to risk-weighted assets	11.63		N/A		11.80		N/A
Tier 1 capital to risk-weighted assets	12.47		N/A		12.68		N/A
Tier 1 capital to average assets	8.65		N/A		8.53		N/A
Bank
Total capital to risk-weighted assets	13.45	%	10.00	%	13.82	%	10.00	%
Common equity tier 1 capital to risk-weighted assets	12.60		6.50		12.99		6.50
Tier 1 capital to risk-weighted assets	12.60		8.00		12.99		8.00
Tier 1 capital to average assets	8.74		5.00		8.74		5.00

At each date shown, the Company and the Bank met the conditions to be classified as “well-capitalized” under the relevant regulatory framework. To be categorized as "well-capitalized," an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

The Company and the Bank are subject to the Basel III rule that requires the Company and the Bank to assess their Common equity tier 1 capital to risk-weighted assets and the Company and the Bank each exceed the minimum to be "well-capitalized." Effective January 1, 2019 all banking organizations must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5%.

The final capital rules impose restrictions on capital distributions and certain discretionary cash bonus payments if the minimum capital conservation buffer is not met.

At September 30, 2019, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered "well-capitalized" for regulatory purposes.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income (loss) is, as follows:

(in thousands)	September 30, 2019			December 31, 2018
Other accumulated comprehensive income (loss), before tax:
Net unrealized gain (loss) on AFS securities	$	10,442		$	(11,304	)
Net unrealized loss on effective cash flow hedging derivatives	(5,306		)	(2,934		)
Net unrealized loss on post-retirement plans	(1,162		)	(1,162		)
Income taxes related to items of accumulated other comprehensive (income) loss:
Net unrealized (gain) loss on AFS securities	(2,440		)	2,641
Net unrealized loss on effective cash flow hedging derivatives	1,239			685
Net unrealized loss on post-retirement plans	272			272
Accumulated other comprehensive income (loss)	$	3,045		$	(11,802	)

The following table presents the components of other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Before Tax			Tax Effect			Net of Tax
Three Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	3,357		$	(784	)	$	2,573
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	3,200			(747		)	2,453
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period	(370		)	85			(285		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on cash flow hedging derivatives	(370		)	85			(285		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	2,830		$	(662	)	$	2,168
Three Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(5,850	)	$	1,291		$	(4,559	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(5,850		)	1,291			(4,559		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	299			(81		)	218
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	299			(81		)	218
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive loss	$	(5,551	)	$	1,210		$	(4,341	)

(in thousands)	Before Tax			Tax Effect			Net of Tax
Nine Months Ended September 30, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	21,903		$	(5,118	)	$	16,785
Less: reclassification adjustment for gains (losses) realized in net income	157			(37		)	120
Net unrealized gain on AFS securities	21,746			(5,081		)	16,665
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period	(2,372		)	554			(1,818		)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on derivative hedges	(2,372		)	554			(1,818		)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	—			—			—
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	—			—			—
Other comprehensive income	$	19,374		$	(4,527	)	$	14,847
Nine Months Ended September 30, 2018
Net unrealized loss on AFS securities:
Net unrealized loss arising during the period	$	(19,639	)	$	4,565		$	(15,074	)
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized loss on AFS securities	(19,639		)	4,565			(15,074		)
Net unrealized gain on cash flow hedging derivatives:
Net unrealized gain arising during the period	1,179			(290		)	889
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on cash flow hedging derivatives	1,179			(290		)	889
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period	41			(10		)	31
Less: reclassification adjustment for gains (losses) realized in net income	—			—			—
Net unrealized gain on post-retirement plans	41			(10		)	31
Other comprehensive loss	$	(18,419	)	$	4,265		$	(14,154	)

The following table presents the changes in each component of accumulated other comprehensive income (loss), for the three and nine months ended September 30, 2019 and 2018:

(in thousands)	Net unrealized (loss) gain on AFS Securities			Net loss on effective cash flow hedging derivatives			Net unrealized  loss on pension plans			Total
Three Months Ended September 30, 2019
Balance at beginning of period	$	5,547		$	(3,782	)	$	(888	)	$	877
Other comprehensive gain (loss) before reclassifications	2,573			(285		)	—			2,288
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	2,453			(285		)	—			2,168
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Three Months Ended September 30, 2018
Balance at beginning of period	$	(12,595	)	$	(2,064	)	$	(688	)	$	(15,347	)
Other comprehensive (loss) gain before reclassifications	(4,559		)	218			—			(4,341		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(4,559		)	218			—			(4,341		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)
Nine Months Ended September 30, 2019
Balance at beginning of period	$	(8,665	)	$	(2,249	)	$	(888	)	$	(11,802	)
Other comprehensive gain (loss) before reclassifications	16,785			(1,818		)	—			14,967
Less: amounts reclassified from accumulated other comprehensive income	120			—			—			120
Total other comprehensive income (loss)	16,665			(1,818		)	—			14,847
Balance at end of period	$	8,000		$	(4,067	)	$	(888	)	$	3,045
Nine Months Ended September 30, 2018
Balance at beginning of period	$	(1,713	)	$	(2,250	)	$	(591	)	$	(4,554	)
Other comprehensive (loss) gain before reclassifications	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income	—			—			—			—
Total other comprehensive (loss) income	(15,074		)	889			31			(14,154		)
Less: amounts reclassified from accumulated other comprehensive income for ASU 2018-02	(367		)	(485		)	(128		)	(980		)
Balance at end of period	$	(17,154	)	$	(1,846	)	$	(688	)	$	(19,688	)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2019 and 2018:

	Three Months Ended September 30,					Nine Months Ended September 30,					Affected Line Item where Net Income is Presented
(in thousands)	2019			2018		2019			2018
Net realized gains on AFS securities:
Before tax(1)	$	157		$	—	$	157		$	—	Non-interest income
Tax effect	(37		)	—		(37		)	—		Tax expense
Total reclassifications for the period	$	120		$	—	$	120		$	—	Net of tax

⁽¹⁾ Net realized gains before tax include gross realized gains $716 thousand and realized losses of $559 thousand.

XML

LOANS

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

LOANS

LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	28,802	$	2,064	$	30,866	$	23,754	$	2,890	$	26,644
Other commercial real estate	672,885		220,022		892,907		555,980		244,075		800,055
Total commercial real estate	701,687		222,086		923,773		579,734		246,965		826,699
Commercial and industrial:
Commercial	239,894		40,490		280,384		234,757		52,470		287,227
Agricultural	21,206		—		21,206		22,317		—		22,317
Tax exempt	66,043		35,073		101,116		56,588		38,738		95,326
Total commercial and industrial	327,143		75,563		402,706		313,662		91,208		404,870
Total commercial loans	1,028,830		297,649		1,326,479		893,396		338,173		1,231,569
Residential real estate:
Residential mortgages	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Total residential real estate	730,516		412,936		1,143,452		670,189		474,509		1,144,698
Consumer:
Home equity	58,556		37,600		96,156		57,898		45,291		103,189
Other consumer	10,234		985		11,219		9,414		1,357		10,771
Total consumer	68,790		38,585		107,375		67,312		46,648		113,960
Total loans	$	1,828,136	$	749,170	$	2,577,306	$	1,630,897	$	859,330	$	2,490,227

The carrying amount of the acquired loans at September 30, 2019 totaled $749.2 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30. These purchased credit-impaired loans presently maintain a carrying value of $8.4 million (and total note balances of $11.5 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $740.8 million as of September 30, 2019.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,195		$	2,807
Reclassification from non-accretable difference for loans with (decreased) improved cash flows	(126		)	1,985
Accretion	(581		)	(315		)
Balance at end of period	$	3,488		$	4,477
	Nine Months Ended September 30,
(in thousands)	2019			2018
Balance at beginning of period	$	4,377		$	3,509
Reclassification from non-accretable difference for loans with improved cash flows	498			2,031
Accretion	(1,387		)	(1,063		)
Balance at end of period	$	3,488		$	4,477

The following is a summary of past due loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	—	$	—	$	73	$	73	$	28,729	$	28,802	$	73
Other commercial real estate	985		56		6,773		7,814		665,071		672,885		—
Total commercial real estate	985		56		6,846		7,887		693,800		701,687		73
Commercial and industrial:
Commercial	772		64		1,145		1,981		237,913		239,894		—
Agricultural	121		72		25		218		20,988		21,206		—
Tax exempt	—		—		—		—		66,043		66,043		—
Total commercial and industrial	893		136		1,170		2,199		324,944		327,143		—
Total commercial loans	1,878		192		8,016		10,086		1,018,744		1,028,830		73
Residential real estate:
Residential mortgages	399		345		871		1,615		728,901		730,516		71
Total residential real estate	399		345		871		1,615		728,901		730,516		71
Consumer:
Home equity	131		65		315		511		58,045		58,556		—
Other consumer	2		7		—		9		10,225		10,234		—
Total consumer	133		72		315		520		68,270		68,790		—
Total loans	$	2,410	$	609	$	9,202	$	12,221	$	1,815,915	$	1,828,136	$	144

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
September 30, 2019
Commercial real estate:
Construction and land development	$	12	$	—	$	—	$	12	$	190	$	2,064	$	—
Other commercial real estate	434		—		240		674		4,859		220,022		72
Total commercial real estate	446		—		240		686		5,049		222,086		72
Commercial and industrial:
Commercial	—		41		750		791		249		40,490		387
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		35,073		—
Total commercial and industrial	—		41		750		791		249		75,563		387
Total commercial loans	446		41		990		1,477		5,298		297,649		459
Residential real estate:
Residential mortgages	245		519		874		1,638		3,093		412,936		47
Total residential real estate	245		519		874		1,638		3,093		412,936		47
Consumer:
Home equity	356		133		180		669		19		37,600		37
Other consumer	—		—		—		—		—		985		—
Total consumer	356		133		180		669		19		38,585		37
Total loans	$	1,047	$	693	$	2,044	$	3,784	$	8,410	$	749,170	$	543

Business Activities Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	23,754	$	23,754	$	—
Other commercial real estate	1,146		—		6,725		7,871		548,109		555,980		—
Total commercial real estate	1,146		—		6,725		7,871		571,863		579,734		—
Commercial and industrial:
Commercial	395		60		402		857		233,900		234,757		50
Agricultural	65		6		25		96		22,221		22,317		—
Tax exempt	—		—		—		—		56,588		56,588		—
Total commercial and industrial	460		66		427		953		312,709		313,662		50
Total commercial loans	1,606		66		7,152		8,824		884,572		893,396		50
Residential real estate:
Residential mortgages	3,565		641		1,309		5,515		664,674		670,189		—
Total residential real estate	3,565		641		1,309		5,515		664,674		670,189		—
Consumer:
Home equity	72		—		—		72		57,826		57,898		—
Other consumer	17		—		11		28		9,386		9,414		—
Total consumer	89		—		11		100		67,212		67,312		—
Total loans	$	5,260	$	707	$	8,472	$	14,439	$	1,616,458	$	1,630,897	$	50

Acquired Loans

(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Acquired Credit Impaired		Total Loans		Past Due > 90 days and Accruing
December 31, 2018
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	164	$	2,890	$	—
Other commercial real estate	631		99		211		941		6,143		244,075		—
Total commercial real estate	631		99		211		941		6,307		246,965		—
Commercial and industrial:
Commercial	149		26		494		669		679		52,470		—
Agricultural	—		—		—		—		—		—		—
Tax exempt	—		—		—		—		—		38,738		—
Total commercial and industrial	149		26		494		669		679		91,208		—
Total commercial loans	780		125		705		1,610		6,986		338,173		—
Residential real estate:
Residential mortgages	3,419		254		1,792		5,465		3,095		474,509		—
Total residential real estate	3,419		254		1,792		5,465		3,095		474,509		—
Consumer:
Home equity	198		—		66		264		22		45,291		7
Other consumer	17		—		—		17		3		1,357		189
Total consumer	215		—		66		281		25		46,648		196
Total loans	$	4,414	$	379	$	2,563	$	7,356	$	10,106	$	859,330	$	196

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at September 30, 2019 and December 31, 2018:

	September 30, 2019						December 31, 2018
(in thousands)	Business Activities  Loans		Acquired Loans		Total		Business Activities  Loans		Acquired Loans		Total
Commercial real estate:
Construction and land development	$	1	$	—	$	1	$	1	$	—	$	1
Other commercial real estate	8,172		346		8,518		7,873		282		8,155
Total commercial real estate	8,173		346		8,519		7,874		282		8,156
Commercial and industrial:
Commercial	1,268		575		1,843		1,423		643		2,066
Agricultural	234		—		234		265		—		265
Tax exempt	—		—		—		—		—		—
Total commercial and industrial	1,502		575		2,077		1,688		643		2,331
Total commercial loans	9,675		921		10,596		9,562		925		10,487
Residential real estate:
Residential mortgages	3,277		2,063		5,340		4,213		2,997		7,210
Total residential real estate	3,277		2,063		5,340		4,213		2,997		7,210
Consumer:
Home equity	564		154		718		246		201		447
Other consumer	25		—		25		90		1		91
Total consumer	589		154		743		336		202		538
Total loans	$	13,541	$	3,138	$	16,679	$	14,111	$	4,124	$	18,235

Loans evaluated for impairment as of September 30, 2019 and December 31, 2018 are, as follows:

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	8,759	$	1,323	$	2,643	$	13	$	12,738
Collectively evaluated	692,928		325,820		727,873		68,777		1,815,398
Total	$	701,687	$	327,143	$	730,516	$	68,790	$	1,828,136

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
September 30, 2019
Balance at end of period
Individually evaluated for impairment	$	257	$	414	$	973	$	—	$	1,644
Purchased credit impaired	5,049		249		3,093		19		8,410
Collectively evaluated	216,780		74,900		408,870		38,566		739,116
Total	$	222,086	$	75,563	$	412,936	$	38,585	$	749,170

Business Activities Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	9,835	$	1,445	$	2,562	$	13	$	13,855
Collectively evaluated	569,899		312,217		667,627		67,299		1,617,042
Total	$	579,734	$	313,662	$	670,189	$	67,312	$	1,630,897

Acquired Loans

(in thousands)	Commercial real estate		Commercial and industrial		Residential real estate		Consumer		Total
December 31, 2018
Balance at end of period
Individually evaluated for impairment	$	188	$	426	$	744	$	—	$	1,358
Purchased credit impaired	6,307		679		3,095		25		10,106
Collectively evaluated	240,470		90,103		470,670		46,623		847,866
Total	$	246,965	$	91,208	$	474,509	$	46,648	$	859,330

The following is a summary of impaired loans at September 30, 2019 and December 31, 2018:

Business Activities Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	5,634		5,675		—
Commercial	657		713		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	2,082		2,236		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	3,124		3,262		989
Commercial	666		694		240
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	561		594		66
Home equity	13		13		1
Other consumer	—		—		—
Total
Commercial real estate	$	8,759	$	8,938	$	990
Commercial and industrial	1,323		1,407		240
Residential real estate	2,643		2,830		66
Consumer	13		13		1
Total impaired loans	$	12,738	$	13,188	$	1,297

Acquired Loans

	September 30, 2019
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	90		90		—
Commercial	414		508		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	616		852		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	167		168		12
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	357		376		32
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	257	$	258	$	12
Commercial and industrial	414		508		—
Residential real estate	973		1,228		32
Consumer	—		—		—
Total impaired loans	$	1,644	$	1,994	$	44

Business Activities Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	8,209		8,301		—
Commercial	649		669		—
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	1,671		1,709		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	1	$	1	$	1
Other commercial real estate	1,625		1,660		421
Commercial	796		855		78
Agricultural	—		—		—
Tax exempt loans	—		—		—
Residential real estate	891		916		111
Home equity	13		13		—
Other consumer	—		—		—
Total
Commercial real estate	$	9,835	$	9,962	$	422
Commercial and industrial	1,445		1,524		78
Residential real estate	2,562		2,625		111
Consumer	13		13		—
Total impaired loans	$	13,855	$	14,124	$	611

Acquired Loans

	December 31, 2018
(in thousands)	Recorded  Investment		Unpaid Principal Balance		Related  Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	188		187		—
Commercial	426		510		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	375		524		—
Home equity	—		—		—
Other consumer	—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—
Other commercial real estate	—		—		—
Commercial	—		—		—
Agricultural	—		—		—
Tax exempt	—		—		—
Residential mortgages	369		379		41
Home equity	—		—		—
Other consumer	—		—		—
Total
Commercial real estate	$	188	$	187	$	—
Commercial and industrial	426		510		—
Residential real estate	744		903		41
Consumer	—		—		—
Total impaired loans	$	1,358	$	1,600	$	41

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three and nine months ended September 30, 2019 and 2018:

Business Activities Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,528		52		6,639		31
Commercial	747		4		625		2
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,041		16		3,955		9
Home equity	—		—		158		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	1	$	—	$	1	$	—
Other commercial real estate	3,217		—		2,214		—
Commercial	654		—		788		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	551		2		888		3
Home equity	12		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,746	$	52	$	8,854	$	31
Commercial and industrial	1,401		4		1,413		2
Residential real estate	2,592		18		4,843		12
Consumer	12		—		171		—
Total impaired loans	$	12,751	$	74	$	15,281	$	45

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	5,466		56		6,204		46
Commercial	792		7		628		7
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	2,089		47		4,027		28
Home equity	—		—		236		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	2	$	—	$	1	$	—
Other commercial real estate	2,972		29		1,600		6
Commercial	497		—		716		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	540		7		800		7
Home equity	13		—		13		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	8,440	$	85	$	7,805	$	52
Commercial and industrial	1,289		7		1,344		7
Residential real estate	2,629		54		4,827		35
Consumer	13		—		249		—
Total impaired loans	$	12,371	$	146	$	14,225	$	94

Acquired Loans

	Three Months Ended September 30, 2019				Three Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	88		—		95		—
Commercial	395		—		469		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	702		—		276		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	165		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	352		—		181		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	253	$	—	$	95	$	—
Commercial and industrial	395		—		469		—
Residential real estate	1,054		—		457		—
Consumer	—		—		—		—
Total impaired loans	$	1,702	$	—	$	1,021	$	—

	Nine Months Ended September 30, 2019				Nine Months Ended September 30, 2018
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	89		—		97		1
Commercial	429		—		445		1
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	593		—		124		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
With an allowance recorded:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate	123		—		—		—
Commercial	—		—		—		—
Agricultural	—		—		—		—
Tax exempt loans	—		—		—		—
Residential real estate	361		—		186		—
Home equity	—		—		—		—
Other consumer	—		—		—		—
Total
Commercial real estate	$	212	$	—	$	97	$	1
Commercial and industrial	429		—		445		1
Residential real estate	954		—		310		—
Consumer	—		—		—		—
Total impaired loans	$	1,595	$	—	$	852	$	2

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three and nine months ended September 30, 2019 and 2018, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

	Three Months Ended September 30, 2019
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	4	$	268	$	267
Agricultural	1	141		141
Residential mortgages	2	399		342
Total	7	$	808	$	750
	Three Months Ended September 30, 2018
(in thousands, except modifications)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	1	72		72
Commercial	5	104		60
Residential mortgages	2	228		225
Total	9	$	406	$	358
	Nine Months Ended September 30, 2019
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Other commercial real estate	9	$	543	$	529
Other commercial	4	168		91
Agricultural	1	141		141
Residential mortgages	11	1,133		1,034
Total	25	$	1,985	$	1,795

	Nine Months Ended September 30, 2018
(in thousands)	Number of Modifications	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Construction and land development	1	$	2	$	1
Other commercial real estate	9	1,896		1,564
Other commercial	7	556		486
Agricultural	1	167		—
Residential mortgages	15	2,752		2,168
Home equity	1	100		100
Other consumer	2	5		4
Total	36	$	5,478	$	4,323

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest only payments	2	$	90	—	$	—
Forbearance	1	141		1	115
Forbearance and interest only payments	2	176		3	72
Forbearance and maturity concession	—	—		4	143
Forbearance, amortization and maturity concession	2	343		—	—
Maturity concession	—	—		1	28
Total	7	$	750	9	$	358
	Nine Months Ended September 30,
	2019			2018
(in thousands, except modifications)	Number of Modifications	Post-Modification Outstanding  Recorded Investment		Number of Modifications	Post-Modification Outstanding  Recorded Investment
Interest rate and maturity concession	—	$	—	1	$	16
Interest only payments	2	90		—	—
Interest only payments and maturity concession	2	73		—	—
Amortization and maturity concession	4	273		—	—
Amortization, interest rate and maturity concession	1	77		—	—
Forbearance	3	253		3	271
Forbearance and interest only payments	5	331		6	121
Forbearance and maturity concession	—	—		17	1,774
Forbearance, amortization and maturity concession	7	640		—	—
Maturity concession	—	—		2	440
Restructure with maturity concession	—	—		5	1,419
Other	1	58		2	282
Total	25	$	1,795	36	$	4,323

For the three and nine months ended September 30, 2019, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Foreclosure

As of September 30, 2019 and December 31, 2018, the Company maintained bank-owned residential real estate property with a fair value of $2.5 million. Additionally, residential mortgage loans collateralized by real estate property that are in the process of foreclosure as of September 30, 2019 and December 31, 2018 totaled $931 thousand and $1.5 million, respectively.

Mortgage Banking

Total residential loans included held for sale loans of $4.0 million and $168 thousand at September 30, 2019 and December 31, 2018, respectively.

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BORROWED FUNDS (Tables)

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Schedule of Borrowed Funds

Borrowed funds at September 30, 2019 and December 31, 2018 are summarized, as follows:

	September 30, 2019				December 31, 2018
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	422,583	2.24	%	$	611,683	2.47	%
Other borrowings	41,259		1.24		36,211		1.09
Total short-term borrowings	463,842		2.15		647,894		2.39
Long-term borrowings
Advances from the FHLB	177,977		2.25		32,929		1.86
Subordinated borrowings	37,928		5.69		37,973		5.58
Junior subordinated borrowings	5,000		6.15		5,000		5.96
Total long-term borrowings	220,905		2.93		75,902		3.99
Total	$	684,747	2.40	%	$	723,796	2.56	%

Summary of Maturities of FHLB Advances

A summary of maturities of FHLB advances as of September 30, 2019 is, as follows:

	September 30, 2019
(in thousands, except rates)	Carrying Value		Weighted Average Rate
Fixed rate advances maturing:
2019	$	393,601	2.27	%
2020	54,982		2.14
2021	11,658		2.19
2022	134,000		2.25
2023	1,000		—
2024 and thereafter	5,319		1.79
Total FHLB advances	$	600,560	2.24	%

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BASIS OF PRESENTATION (Tables)

9 Months Ended

Sep. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2019
ASU 2016-02, Leases	This ASU creates ASU Topic 842, Leases, and supersedes Topic 840, Leases. The new guidance requires lessees to record a right-of-use asset and a corresponding liability equal to the present value of future rental payments on their balance sheets for all leases with a term greater than one year. There are not significant changes to lessor accounting; however, there are certain improvements made to align lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. This guidance expands both quantitative and qualitative required disclosures. This ASU is required to be adopted on a modified retrospective basis and allows for practical expedients and elections in conjunction with implementation. The Company may elect some of the expedients upon the adoption date, which may be applied prospectively or retrospectively.	January 1, 2019	The Company adopted this ASU as of January 1, 2019 including the election of the practical expedients, allowing for existing leases to be accounted for consistent with current guidance, with the exception of balance sheet recognition for lessees. A modified retrospective transition approach was utilized, applying the new standard to all leases existing at the date of initial application. At January 1, 2019 the Company recognized a right-of-use asset and corresponding lease liability of $9.0 million. This computation is based, primarily, on the present value of unpaid future minimum lease payments. Additionally, that amount is impacted by assumptions around renewals and/or extensions, and the interest rate used to discount those future lease obligations. Due to the limited size of the Company's leasing portfolio, many other items related to this standard don't apply, or had an immaterial impact on the Company's consolidated financial statements. For transitional disclosures see Note 12 - Leases.
ASU 2018-11 Practical Expedients to Topic 842, Leases
ASU 2018-20 Scope Improvements for Lessors
ASU 2019-01 Leases: Codification Improvements
ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities	This ASU amends Accounting Standards Codification ("ASC") 815, Derivatives and Hedging to (1) improve the transparency and understandability of information conveyed to financial statement users about an entity's risk management activities by better aligning the entity's financial reporting for hedging relationships with those risk management activities and (2) reduce the complexity of and simplify the application of hedge accounting by preparers.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, although it did not have a material impact on the Company's consolidated financial statements.
ASU 2018-16, Inclusion of Overnight Financing Rate or Overnight Swap Rate as a Benchmark for Hedge Accounting
ASU 2018-07, Share Based Payment Accounting	This ASU expands the scope of Topic 718, Compensation- Stock Compensation to include share-based payments issued to non-employees for goods or services. Consequently, the accounting for share-based payments to non-employees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity-Based Payments to non-employees.	January 1, 2019	The Company adopted this ASU as of January 1, 2019, with no material impact on the Company's consolidated financial statements.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses on loans with the application of the expected credit loss model. Also, for acquired purchased impaired loans it requires the reclassification of the credit portion of the total remaining fair value adjustment directly to the allowance for loan losses. Fair value adjustments on purchased credit impaired loans related to interest rates and fair value adjustments on other acquired loans will continue to be accreted into income over time.
ASU 2018-19, Codification Improvements to ASU 2016-13
			In addition, the Company expects the ASU to change the presentation of credit losses for AFS debt securities through an allowance method rather than as a direct write-off and may allow for recovery of these amounts in the future.
	While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time.
			The Company is in the process of evaluating and implementing allowance loan loss estimation models to comply with the guidance under this ASU, which may result in a higher allowance for losses then currently recorded under the existing standard.
	The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	Early adoption is permitted in 2019.
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

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LEASES - Additional Lease Information (Details)	Sep. 30, 2019
Leases [Abstract]
Weighted-average remaining lease term	9 years 2 months 5 days
Weighted-average discount rate	3.37%

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Derivative Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Mar. 31, 2019
Derivative [Line Items]
Notional Amount	$ 499,142		$ 499,142		$ 182,239
Estimated Fair Value Asset (Liability)	(2,073)		(2,073)		811
Designated as hedging instrument | Cash flow hedges
Derivative [Line Items]
Notional Amount	140,000		140,000		$ 90,000
Weighted Average Maturity (in years)
Estimated Fair Value Asset (Liability)	(2,090)		(2,090)		$ 803
Designated as hedging instrument | Cash flow hedges | Interest rate cap agreements
Derivative [Line Items]
Notional Amount	90,000		$ 90,000		$ 90,000
Weighted Average Maturity (in years)			3 years 4 months 24 days		4 years 1 month 6 days
Estimated Fair Value Asset (Liability)	89		$ 89		$ 803
Realized gain (loss)	(183)	$ (137)	(521)	$ (367)
Designated as hedging instrument | Cash flow hedges | Interest rate swap on deposits
Derivative [Line Items]
Notional Amount	50,000		$ 50,000			$ 50,000
Weighted Average Maturity (in years)			4 years 6 months
Estimated Fair Value Asset (Liability)	(2,179)		$ (2,179)
Realized gain (loss)	17	0	17	0
Designated as hedging instrument | Economic hedges
Derivative [Line Items]
Notional Amount	7,762		7,762
Estimated Fair Value Asset (Liability)	(61)		(61)
Designated as hedging instrument | Economic hedges | Forward sale commitments
Derivative [Line Items]
Notional Amount	7,762		$ 7,762
Weighted Average Maturity (in years)			1 month 6 days
Estimated Fair Value Asset (Liability)	(61)		$ (61)
Realized gain (loss)	(31)	43	(61)	190
Not designated as hedging instrument
Derivative [Line Items]
Notional Amount	351,380		351,380		92,239
Estimated Fair Value Asset (Liability)	78		78		8
Not designated as hedging instrument | Interest rate lock commitments
Derivative [Line Items]
Notional Amount	12,242		$ 12,242		$ 957
Weighted Average Maturity (in years)			1 month 6 days		1 month 6 days
Estimated Fair Value Asset (Liability)	78		$ 78		$ 8
Realized gain (loss)	7	$ 0	70	$ 9
Not designated as hedging instrument | Customer loan derivative liability
Derivative [Line Items]
Notional Amount	169,569		$ 169,569		$ 45,641
Weighted Average Maturity (in years)			9 years 9 months 18 days		9 years 10 months 24 days
Estimated Fair Value Asset (Liability)	(10,923)		$ (10,923)		$ (1,353)
Not designated as hedging instrument | Customer loan derivative asset
Derivative [Line Items]
Notional Amount	169,569		$ 169,569		$ 45,641
Weighted Average Maturity (in years)			9 years 9 months 18 days		9 years 10 months 24 days
Estimated Fair Value Asset (Liability)	$ 10,923		$ 10,923		$ 1,353

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of OCI (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Net unrealized gain (loss) arising during the period
Net of Tax	$ 2,288	$ (4,341)			$ 14,967	$ (14,154)
Less: reclassification adjustment for gains (losses) realized in net income
Net of Tax	120	0			120	0
Other comprehensive income (loss)
Before Tax	2,830	(5,551)			19,374	(18,419)
Tax Effect	(662)	1,210			(4,527)	4,265
Total other comprehensive income (loss)	2,168	(4,341)	$ 12,679	$ (9,813)	14,847	(14,154)
Net unrealized (loss) gain on AFS Securities
Net unrealized gain (loss) arising during the period
Before Tax	3,357	(5,850)			21,903	(19,639)
Tax Effect	(784)	1,291			(5,118)	4,565
Net of Tax	2,573	(4,559)			16,785	(15,074)
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	157	0			157	0
Tax Effect	(37)	0			(37)	0
Net of Tax	120	0			120	0
Other comprehensive income (loss)
Before Tax	3,200	(5,850)			21,746	(19,639)
Tax Effect	(747)	1,291			(5,081)	4,565
Total other comprehensive income (loss)	2,453	(4,559)			16,665	(15,074)
Net unrealized loss on cash flow hedging derivatives
Net unrealized gain (loss) arising during the period
Before Tax	(370)				(2,372)
Tax Effect	85				554
Net of Tax	(285)				(1,818)
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	0				0
Tax Effect	0				0
Net of Tax	0				0
Other comprehensive income (loss)
Before Tax	(370)				(2,372)
Tax Effect	85				554
Total other comprehensive income (loss)	(285)				(1,818)
Net unrealized gain on post-retirement plans
Net unrealized gain (loss) arising during the period
Before Tax	0	0			0	41
Tax Effect	0	0			0	(10)
Net of Tax	0	0			0	31
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	0	0			0	0
Tax Effect	0	0			0	0
Net of Tax	0	0			0	0
Other comprehensive income (loss)
Before Tax	0	0			0	41
Tax Effect	0	0			0	(10)
Total other comprehensive income (loss)	$ 0	0			$ 0	31
Net unrealized gain on cash flow hedging derivatives
Net unrealized gain (loss) arising during the period
Before Tax		299				1,179
Tax Effect		(81)				(290)
Net of Tax		218				889
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax		0				0
Tax Effect		0				0
Net of Tax		0				0
Other comprehensive income (loss)
Before Tax		299				1,179
Tax Effect		(81)				(290)
Total other comprehensive income (loss)		$ 218				$ 889

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LOANS - Narrative (Details) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) modification	Sep. 30, 2019 USD ($) modification	Dec. 31, 2018 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying amount of acquired loans	$ 2,577,306	$ 2,577,306	$ 2,490,227
Borrower's sustained repayment performance period			6 months
Number of modifications which subsequently defaulted | modification	0	0
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fair value of bank-owned residential real estate property	$ 2,500	$ 2,500	$ 2,500
Total residential loans included in held for sale loans	4,000	4,000	168
Residential mortgages | Mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential mortgage loans collateralized by real estate property in the process of foreclosure		931	1,500
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying amount of acquired loans	749,170	749,170	859,330
Carrying value of purchased credit-impaired loans	8,400	8,400
Total note balances	11,500	11,500
Carrying amount of acquired loans considered not impaired at the acquisition date	740,800	740,800
Acquired Loans | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying amount of acquired loans	$ 412,936	$ 412,936	$ 474,509

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LOANS - Loans Evaluated for Impairment (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Allowance for loan losses
Total	$ 2,577,306	$ 2,490,227
Commercial real estate
Allowance for loan losses
Total	923,773	826,699
Commercial and industrial
Allowance for loan losses
Total	402,706	404,870
Residential real estate
Allowance for loan losses
Total	1,143,452	1,144,698
Consumer
Allowance for loan losses
Total	107,375	113,960
Business Activities Loans
Allowance for loan losses
Individually evaluated for impairment	12,738	13,855
Collectively evaluated	1,815,398	1,617,042
Total	1,828,136	1,630,897
Business Activities Loans | Commercial real estate
Allowance for loan losses
Individually evaluated for impairment	8,759	9,835
Collectively evaluated	692,928	569,899
Total	701,687	579,734
Business Activities Loans | Commercial and industrial
Allowance for loan losses
Individually evaluated for impairment	1,323	1,445
Collectively evaluated	325,820	312,217
Total	327,143	313,662
Business Activities Loans | Residential real estate
Allowance for loan losses
Individually evaluated for impairment	2,643	2,562
Collectively evaluated	727,873	667,627
Total	730,516	670,189
Business Activities Loans | Consumer
Allowance for loan losses
Individually evaluated for impairment	13	13
Collectively evaluated	68,777	67,299
Total	68,790	67,312
Acquired Loans
Allowance for loan losses
Individually evaluated for impairment	1,644	1,358
Purchased credit impaired	8,410	10,106
Collectively evaluated	739,116	847,866
Total	749,170	859,330
Acquired Loans | Commercial real estate
Allowance for loan losses
Individually evaluated for impairment	257	188
Purchased credit impaired	5,049	6,307
Collectively evaluated	216,780	240,470
Total	222,086	246,965
Acquired Loans | Commercial and industrial
Allowance for loan losses
Individually evaluated for impairment	414	426
Purchased credit impaired	249	679
Collectively evaluated	74,900	90,103
Total	75,563	91,208
Acquired Loans | Residential real estate
Allowance for loan losses
Individually evaluated for impairment	973	744
Purchased credit impaired	3,093	3,095
Collectively evaluated	408,870	470,670
Total	412,936	474,509
Acquired Loans | Consumer
Allowance for loan losses
Individually evaluated for impairment	0	0
Purchased credit impaired	19	25
Collectively evaluated	38,566	46,623
Total	$ 38,585	$ 46,648