FAIR VALUE (Tables)

9 Months Ended

Sep. 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 September 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	$	38,711	$	—	$	38,711	$	—
Mortgage-backed securities, residential	222,671		—		222,671		—
Obligations of states and political subdivisions	40,552		—		40,552		—
Corporate bonds and notes	255		—		—		255
SBA loan pools	590		—		590		—
Corporate stocks	480		52		428		—
Total available for sale securities	$	303,259	$	52	$	302,952	$	255

Trading assets	$	720	$	720	$	—	$	—
Derivative assets	359		—		359		—

Financial Liabilities:
Derivative liabilities	$	453	$	—	$	359	$	94



			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 September 30, 2016 and September 30, 2015 (in thousands):



	Assets (Liabilities)
	Corporate Bonds and Notes					Derivative Liabilities
	September 30, 2016			September 30, 2015		September 30, 2016			September 30, 2015
Balance of recurring Level 3 assets at July1	$	256		$	—	$	(120	)	$	(13	)
Derivative instruments entered into	—			—		—			—
Total gains or losses for the period:
Included in earnings - other non-interest income	—			—		26			(22		)
Included in other comprehensive income	(1		)	—		—			—
Transfers into Level 3	—			—		—			—
Balance of recurring Level 3 assets at September 30	$	255		$	—	$	(94	)	$	(35	)

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 nine month periods ended September 30, 2016 and September 30, 2015 (in thousands):



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	September 30, 2016		September 30, 2015		September 30, 2016			September 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	—		—		(21		)	(17		)
Included in other comprehensive income	7		—		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at September 30	$	255	$	—	$	(94	)	$	(35	)

Reconciliation of liabilities measured at fair value



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	September 30, 2016		September 30, 2015		September 30, 2016			September 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	—		—		(21		)	(17		)
Included in other comprehensive income	7		—		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at September 30	$	255	$	—	$	(94	)	$	(35	)

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 September 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	$	613	$	—	$	—	$	613
Consumer loans:
Home equity lines and loans	218		—		—		218
Total impaired loans	$	831	$	—	$	—	$	831
Other real estate owned:
Commercial mortgages:
Commercial mortgages	$	51	$	—	$	—	$	51
Residential mortgages	316		—		—		316
Total other real estate owned, net	$	367	$	—	$	—	$	367



			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 September 30, 2016 and December 31, 2015 (in thousands):



Description	Fair Value at September 30, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at September 30, 2016
Impaired loans:
Commercial mortgages:
Commercial mortgages	$	613	Sales comparison	Discount to appraised value	12.88% - 22.10% [14.56%]
Consumer loans:
Home equity lines and loans	218		Sales comparison	Discount to appraised value	20.80% - 20.80% [20.80%]
	$	831

OREO:
Commercial mortgages:
Commercial mortgages	$	51	Sales comparison	Discount to appraised value	20.80% - 20.80% [20.80%]
Residential mortgages	316		Sales comparison	Discount to appraised value	20.80% - 51.55% [30.93%]
	$	367



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 September 30, 2016 and December 31, 2015 (in thousands):



Description	Fair Value at September 30, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at September 30, 2016
Corporate bonds and notes	$	255	Discounted cash flow	Credit spread	1.73% - 1.73% [1.73%]

Derivative liabilities	$	94	Historical trend	Credit default rate	4.79% - 4.79% [4.79%]



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 September 30, 2016 and December 31, 2015, are as follows (in thousands):



	September 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	$	35,345	$	35,345	$	—	$	—	$	35,345
Interest-bearing deposits in other financial institutions	100,159		100,159		—		—		100,159
Trading assets	720		720		—		—		720
Securities available for sale	303,259		52		302,952		255		303,259
Securities held to maturity	4,504		—		—		4,746		4,746
FHLBNY and FRBNY stock	4,491		—		—		—		N/A
Loans, net	1,201,241		—		—		1,224,046		1,224,046
Loans held for sale	119		—		125		—		125
Accrued interest receivable	3,967		3		1,084		2,880		3,967
Derivative assets	359		—		359		—		359

Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,360,526	$	1,360,526	$	—	$	—	$	1,360,526
Time deposits	148,418		—		148,808		—		148,808
Securities sold under agreements to repurchase	30,002		—		30,559		—		30,559
FHLBNY term advances	19,121		—		19,419		—		19,419
Accrued interest payable	201		20		181		—		201
Derivative liabilities	453		—		359		94		453

(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