FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2016

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

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



			Fair Value Measurement at June 30, 2016 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	70,331	$	—	$	70,331	$	—
Mortgage-backed securities, residential	186,717		—		186,717		—
Obligations of states and political subdivisions	41,395		—		41,395		—
Corporate bonds and notes	756		—		500		256
SBA loan pools	609		—		609		—
Corporate stocks	469		52		417		—
Total available for sale securities	$	300,277	$	52	$	299,969	$	256

Trading assets	$	767	$	767	$	—	$	—
Derivative assets	437		—		437		—

Financial Liabilities:
Derivative liabilities	$	557	$	—	$	437	$	120



			Fair Value Measurement at December 31, 2015 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	100,166	$	14,784	$	85,382	$	—
Mortgage-backed securities, residential	198,366		—		198,366		—
Obligations of states and political subdivisions	44,426		—		44,426		—
Corporate bonds and notes	752		—		504		248
SBA loan pools	647		—		647		—
Corporate stocks	463		56		407		—
Total available for sale securities	$	344,820	$	14,840	$	329,732	$	248

Trading assets	$	701	$	701	$	—	$	—
Derivative assets	15		—		15		—

Financial Liabilities:
Derivative liabilities	$	63	$	—	$	15	$	48

Reconciliation of all assets measured at fair value

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three month periods ended June 30, 2016 and June 30, 2015 (in thousands):



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Balance of recurring Level 3 assets at April 1	$	252	$	—	$	(84	)	$	(33	)
Derivative instruments entered into	—		—		(23		)	—
Total gains or losses for the period:
Included in earnings - other non-interest income	—		—		(13		)	20
Included in other comprehensive income	4		—		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at June 30	$	256	$	—	$	(120	)	$	(13	)

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the six month periods ended June 30, 2016 and June 30, 2015 (in thousands):



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Balance of recurring Level 3 assets at January 1	$	248	$	—	$	(48	)	$	(18	)
Derivative instruments entered into	—		—		(25		)	—
Total gains or losses for the period:
Included in earnings - other non-interest income	—		—		(47		)	5
Included in other comprehensive income	8		—		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at June 30	$	256	$	—	$	(120	)	$	(13	)

Reconciliation of liabilities measured at fair value



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	June 30, 2016		June 30, 2015		June 30, 2016			June 30, 2015
Balance of recurring Level 3 assets at January 1	$	248	$	—	$	(48	)	$	(18	)
Derivative instruments entered into	—		—		(25		)	—
Total gains or losses for the period:
Included in earnings - other non-interest income	—		—		(47		)	5
Included in other comprehensive income	8		—		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at June 30	$	256	$	—	$	(120	)	$	(13	)

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

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



			Fair Value Measurement at June 30, 2016 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	614	$	—	$	—	$	614
Consumer loans:
Home equity lines and loans	239		—		—		239
Total impaired loans	$	853	$	—	$	—	$	853
Other real estate owned:
Commercial mortgages:
Commercial mortgages	$	51	$	—	$	—	$	51
Residential mortgages	325		—		—		325
Consumer loans:
Home equity lines and loans	17		—		—		17
Total other real estate owned, net	$	393	$	—	$	—	$	393



			Fair Value Measurement at December 31, 2015 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	2,629	$	—	$	—	$	2,629
Consumer loans:
Home equity lines and loans	287		—		—		287
Total impaired loans	$	2,916	$	—	$	—	$	2,916
Other real estate owned:
Commercial mortgages:
Commercial mortgages	$	1,491	$	—	$	1,491	$	—
Residential mortgages	39		—		—		39
Total other real estate owned, net	$	1,530	$	—	$	1,491	$	39

Nonrecurring fair value measurement, valuation techniques

The following tables presents information related to Level 3 non-recurring fair value measurement at June 30, 2016 and December 31, 2015 (in thousands):



Description	Fair Value at June 30, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at June 30, 2016
Impaired loans:
Commercial mortgages:
Commercial mortgages	$	614	Sales comparison	Discount to appraised value	10.00% - 21.83% [16.83%]
Consumer loans:
Home equity lines and loans	239		Sales comparison	Discount to appraised value	20.80% - 20.80% [20.80%]
	$	853

OREO:
Commercial mortgages:
Commercial mortgages	$	51	Sales comparison	Discount to appraised value	23.66% - 23.66% [23.66%]
Residential mortgages	325		Sales comparison	Discount to appraised value	20.80% - 39.22% [28.94%]
Consumer loans:
Home equity lines and loans	17		Sales comparison	Discount to appraised value	20.80% - 20.80% [20.80%]
	$	393



Description	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at December 31, 2015
Impaired loans:
Commercial mortgages:
Commercial mortgages	$	2,629	Sales comparison	Discount to appraised value	10.00% - 17.19% [16.06%]
Consumer loans:
Home equity lines and loans	287		Sales comparison	Discount to appraised value	18.04% - 18.04% [18.04%]
	$	2,916

OREO:
Residential mortgages	$	39	Sales comparison	Discount to appraised value	22.30% - 22.30% [22.30%]
	$	39

The following table presents information related to Level 3 recurring fair value measurements at June 30, 2016 and December 31, 2015 (in thousands):



Description	Fair Value at June 30, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at June 30, 2016
Corporate bonds and notes	$	256	Discounted cash flow	Credit spread	1.73% - 1.73% [1.73%]

Derivative liabilities	$	120	Historical trend	Credit default rate	5.83% - 5.83% [5.83%]



Description	Fair Value at December 31, 2015		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at December 31, 2015
Corporate bonds and notes	$	248	Discounted cash flow	Credit spread	1.73% - 1.73% [1.73%]

Derivative liabilities	$	48	Historical trend	Credit default rate	5.83% - 5.83% [5.83%]

Carrying value and estimated fair value of financial instruments

The carrying amounts and estimated fair values of other financial instruments, at June 30, 2016 and December 31, 2015, are as follows (in thousands):



	June 30, 2016
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value (1)
Cash and due from financial institutions	$	27,233	$	27,233	$	—	$	—	$	27,233
Interest-bearing deposits in other financial institutions	80,121		80,121		—		—		80,121
Trading assets	767		767		—		—		767
Securities available for sale	300,277		52		299,969		256		300,277
Securities held to maturity	3,518		—		—		3,793		3,793
FHLBNY and FRBNY stock	4,491		—		—		—		N/A
Loans, net	1,186,488		—		—		1,209,140		1,209,140
Loans held for sale	809		—		843		—		843
Accrued interest receivable	3,904		—		965		2,939		3,904
Derivative assets	437		—		437		—		437

Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,309,265	$	1,309,265	$	—	$	—	$	1,309,265
Time deposits	158,655		—		159,084		—		159,084
Securities sold under agreements to repurchase	28,778		—		29,459		—		29,459
FHLBNY term advances	19,148		—		19,564		—		19,564
Accrued interest payable	213		21		192		—		213
Derivative liabilities	557		—		437		120		557

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



	December 31, 2015
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value (1)
Cash and due from financial institutions	$	24,886	$	24,886	$	—	$	—	$	24,886
Interest-bearing deposits in other financial institutions	1,299		1,299		—		—		1,299
Trading assets	701		701		—		—		701
Securities available for sale	344,820		14,840		329,732		248		344,820
Securities held to maturity	4,566		—		—		4,822		4,822
FHLBNY and FRBNY stock	4,797		—		—		—		N/A
Loans, net	1,154,373		—		—		1,178,081		1,178,081
Loans held for sale	1,076		—		1,076		—		1,076
Accrued interest receivable	4,015		39		1,141		2,835		4,015
Derivative assets	15		—		15		—		15

Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,234,216	$	1,234,216	$	—	$	—	$	1,234,216
Time deposits	166,079		—		166,551		—		166,551
Securities sold under agreements to repurchase	28,453		—		29,128		—		29,128
FHLBNY overnight advances	13,900		—		13,901		—		13,901
FHLBNY term advances	19,203		—		19,658		—		19,658
Accrued interest payable	209		17		192		—		209
Derivative liabilities	63		—		15		48		63