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FAIR VALUES (Tables)
12 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):
 
 
Fair Value Measurement at December 31, 2018 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
 
$
5,472

 
$
—

 
$
5,472

 
$
—

Mortgage-backed securities, residential
 
183,192

 
—

 
183,192

 
—

Obligations of states and political subdivisions
 
44,152

 
—

 
44,152

 
—

Corporate bonds and notes
 
247

 
—

 
247

 
—

SBA loan pools
 
9,195

 
—

 
9,195

 
—

Total available for sale securities
 
$
242,258

 
$
—

 
$
242,258

 
$
—

 
 
 
 
 
 
 
 
 
Equity Investments
 
$
1,075

 
$
1,075

 
$
—

 
$
—

Derivative assets
 
3,142

 
—

 
3,142

 
—

 
 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
3,282

 
$
—

 
$
3,142

 
$
140


There were no transfers between Level 1 and Level 2 during the twelve month period ending December 31, 2018.
 
 
Fair Value Measurement at December 31, 2017 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
 
$
15,491

 
$
—

 
$
15,491

 
$
—

Mortgage-backed securities, residential
 
219,909

 
—

 
219,909

 
—

Obligations of states and political subdivisions
 
53,132

 
—

 
53,132

 
—

Corporate bonds and notes
 
251

 
—

 
251

 
—

SBA loan pools
 
4,308

 
—

 
4,308

 
—

Total available for sale securities
 
$
293,091

 
$
—

 
$
293,091

 
$
—

 
 
 
 
 
 
 
 
 
Equity investments
 
$
1,192

 
$
1,192

 
$
—

 
$
—

Derivative assets
 
974

 
—

 
974

 
—

 
 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
 
Derivative liabilities
 
$
1,049

 
$
—

 
$
974

 
$
75

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation
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 year ended December 31:
 
 
Assets (Liabilities)
 
 
Corporate Bonds and Notes
 
Derivative Liabilities
(in thousands)
 
2018
 
2017
 
2018
 
2017
Balance of recurring Level 3 assets at January 1
 
$
—

 
$
250

 
$
(75
)
 
$
(68
)
Derivative instruments entered into
 
—

 
—

 
(1
)
 
(5
)
Total gains or losses for the period:
 
 
 
 
 
 
 
 
Included in earnings - other non-interest income
 
—

 
—

 
(64
)
 
(2
)
Included in other comprehensive income
 
—

 
1

 
—

 
—

Transfers out of Level 3
 
—

 
(251
)
 
—

 
—

Balance of recurring Level 3 assets at December 31
 
$
—

 
$
—

 
$
(140
)
 
$
(75
)
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
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 year ended December 31:
 
 
Assets (Liabilities)
 
 
Corporate Bonds and Notes
 
Derivative Liabilities
(in thousands)
 
2018
 
2017
 
2018
 
2017
Balance of recurring Level 3 assets at January 1
 
$
—

 
$
250

 
$
(75
)
 
$
(68
)
Derivative instruments entered into
 
—

 
—

 
(1
)
 
(5
)
Total gains or losses for the period:
 
 
 
 
 
 
 
 
Included in earnings - other non-interest income
 
—

 
—

 
(64
)
 
(2
)
Included in other comprehensive income
 
—

 
1

 
—

 
—

Transfers out of Level 3
 
—

 
(251
)
 
—

 
—

Balance of recurring Level 3 assets at December 31
 
$
—

 
$
—

 
$
(140
)
 
$
(75
)
Information Related To Level 3 Non-Recurring Fair Value Measurement
Assets and liabilities measured at fair value on a non-recurring basis are summarized below (in thousands):
 
 
Fair Value Measurement at December 31, 2018 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)
 
Total Gains (Losses)
Impaired Loans:
 
 
 
 
 
 
 
 
 
 
Commercial mortgages:
 
 
 
 
 
 
 
 
 
 
Commercial mortgages
 
$
1,456

 
$
—

 
$
—

 
$
1,456

 
$
240

Total impaired loans
 
$
1,456

 
$
—

 
$
—

 
$
1,456

 
$
240

 
 
 
 
 
 
 
 
 
 
 
Other real estate owned:
 
 

 
 

 
 

 
 

 
 
Commercial mortgages:
 
 

 
 

 
 

 
 

 
 
Commercial mortgages
 
$
213

 
$
—

 
$
—

 
$
213

 
$
—

Residential mortgages
 
204

 
—

 
—

 
204

 
—

Consumer loans:
 
 
 
 
 
 
 
 
 
 
  Home equity lines and loans
 
157

 
—

 
—

 
157

 
(14
)
Total other real estate owned, net
 
$
574

 
$
—

 
$
—

 
$
574

 
$
(14
)

 
 
Fair Value Measurement at December 31, 2017 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)
 
Total Gains (Losses)
Impaired Loans:
 
 
 
 
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
96

 
$
—

 
$
—

 
$
96

 
$
(70
)
Commercial mortgages:
 
 

 
 

 
 

 
 

 
 
Commercial mortgages
 
411

 
—

 
—

 
411

 
(105
)
Total impaired loans
 
$
507

 
$
—

 
$
—

 
$
507

 
$
(175
)
 
 
 
 
 
 
 
 
 
 
 
Other real estate owned:
 
 

 
 

 
 

 
 

 
 
Commercial mortgages:
 
 

 
 

 
 

 
 

 
 
Commercial mortgages
 
$
1,483

 
$
—

 
$
—

 
$
1,483

 
$
(43
)
Residential mortgages
 
382

 
—

 
—

 
382

 
—

Consumer loans:
 
 

 
 

 
 

 
 

 
 
Home equity lines and loans
 
75

 
—

 
—

 
75

 
—

Total other real estate owned, net
 
$
1,940

 
$
—

 
$
—

 
$
1,940

 
$
(43
)


The following table presents information related to Level 3 non-recurring fair value measurement at December 31, 2018 and 2017 (in thousands):
Asset
 
Fair Value at December 31, 2018
 
Valuation Technique
 
Unobservable Inputs
 
Range
[Weighted Average]
at December 31, 2018
Impaired loans:
 
 
 
 
 
 
 
 
Commercial mortgages:
 
 
 
 
 
 
 
 
Commercial mortgages
 
$
1,456

 
Sales comparison
 
Discount to appraised value
 
11.76% - 11.76%
[11.76%]
 
 
$
1,456

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OREO:
 
 
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
213

 
Sales comparison
 
Discount to appraised value
 
10.00% - 24.80%
[17.72%]
Residential mortgages
 
204

 
Sales comparison
 
Discount to appraised value
 
20.80% - 39.78%
[22.94%]
Consumer loans:
 
 
 
 
 
 
 
 
Home equity lines and loans
 
157

 
Sales comparison
 
Discount to appraised value
 
20.80% - 20.80%
[20.80%]
 
 
$
574

 
 
 
 
 
 

Asset
 
Fair Value at December 31, 2017
 
Valuation Technique
 
Unobservable Inputs
 
Range
[Weighted Average]
at December 31, 2017
Impaired loans:
 
 
 
 
 
 
 
 
Commercial and agricultural:
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
96

 
Sales comparison
 
Discount to appraised value
 
0.00% - 36.07%
[33.02%]
Commercial mortgages:
 
 
 
 
 
 
 
 
Commercial mortgages
 
411

 
Sales comparison
 
Discount to appraised value
 
10.00% - 89.98%
[51.35%]
 
 
$
507

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OREO:
 
 
 
 
 
 
 
 
Commercial mortgages:
 
 
 
 
 
 
 
 
Commercial mortgages
 
$
1,483

 
Sales comparison
 
Discount to appraised value
 
10.00% - 22.95%
[19.75%]
Residential mortgages
 
$
382

 
Sales comparison
 
Discount to appraised value
 
17.28% - 27.97%
[20.77%]
Consumer loans:
 
 
 
 
 
 
 
 
Home equity lines and loans
 
75

 
Sales comparison
 
Discount to appraised value
 
20.80% - 20.80%
[20.80%]
 
 
$
1,940

 
 
 
 
 
 


The following table presents information related to Level 3 recurring fair value measurement at December 31, 2018 and December 31, 2017 (in thousands):
Description
 
Fair Value at
December 31,
2018
 
Valuation Technique
 
Unobservable Inputs
 
Range
[Weighted Average]
at December 31, 2018
Derivative liabilities
 
$
140

 
Historical trend
 
Credit default rate
 
7.46% - 7.46%
[7.46%]

Description
 
Fair Value at
December 31,
2017
 
Valuation Technique
 
Unobservable Inputs
 
Range
[Weighted Average]
at December 31, 2017
Derivative liabilities
 
$
75

 
Historical trend
 
Credit default rate
 
5.67% - 5.67%
[5.67%]
Carrying Value and Estimated Fair Value of Other Financial Instruments
he carrying amounts and estimated fair values of other financial instruments, at December 31, 2018 and December 31, 2017, are as follows (in thousands):
 
 
 
 
Fair Value Measurements at
December 31, 2018 Using
 
 
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
 
$
33,040

 
$
33,040

 
$
—

 
$
—

 
$
33,040

Interest-bearing deposits in other financial institutions
 
96,932

 
96,932

 
—

 
—

 
96,932

Equity investments
 
1,909

 
1,909

 
—

 
—

 
1,909

Securities available for sale
 
242,258

 
—

 
242,258

 
—

 
242,258

Securities held to maturity
 
4,875

 
—

 
1,838

 
3,020

 
4,858

FHLBNY and FRBNY stock
 
3,138

 
—

 
—

 
—

 
N/A

Loans, net and loans held for sale (2)
 
1,293,464

 
—

 
—

 
1,287,495

 
1,287,495

Accrued interest receivable
 
4,480

 
80

 
697

 
3,703

 
4,480

Derivative assets
 
3,142

 
—

 
3,142

 
—

 
3,142

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

Demand, savings, and insured money market accounts
 
$
1,419,011

 
$
1,419,011

 
$
—

 
$
—

 
$
1,419,011

Time deposits
 
150,226

 
—

 
150,938

 
—

 
150,938

Securities sold under agreements to repurchase
 
—

 
—

 
—

 
—

 
—

FHLBNY overnight advances
 
—

 
—

 
—

 
—

 
—

FHLBNY term advances
 
—

 
—

 
—

 
—

 
—

Accrued interest payable
 
232

 
26

 
206

 
—

 
232

Derivative liabilities
 
3,282

 
—

 
3,142

 
140

 
3,282

(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.
(2) Due to the adoption of ASU 2016-01, the fair value of loans, net and loans held for sale are estimated using exit pricing as of December 31, 2018. Prior to the adoption of ASU 2016-01, the fair value of loans, net and loans held for sale were presented using entrance pricing, therefore, prior year presentation is not comparable.

 
 
 
 
Fair Value Measurements at
December 31, 2017 Using
 
 
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
 
$
27,966

 
$
27,966

 
$
—

 
$
—

 
$
27,966

Interest-bearing deposits in other financial institutions
 
2,763

 
2,763

 
—

 
—

 
2,763

Equity investments
 
1,192

 
1,192

 
—

 
—

 
1,192

Securities available for sale
 
293,091

 
—

 
293,091

 
—

 
293,091

Securities held to maturity
 
3,781

 
—

 
1,830

 
1,946

 
3,776

FHLBNY and FRBNY stock
 
5,784

 
—

 
—

 
—

 
N/A

Loans, net (2)
 
1,290,663

 
—

 
—

 
1,289,584

 
1,289,584

Loans held for sale (2)
 
542

 
—

 
542

 
—

 
542

Accrued interest receivable
 
4,642

 
1

 
867

 
3,774

 
4,642

Derivative assets
 
974

 
—

 
974

 
—

 
974

 
 
 
 
 
 
 
 
 
 
 
Financial liabilities:
 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

Demand, savings, and insured money market accounts
 
$
1,349,084

 
$
1,349,084

 
$
—

 
$
—

 
$
1,349,084

Time deposits
 
118,362

 
—

 
118,598

 
—

 
118,598

Securities sold under agreements to repurchase
 
10,000

 
—

 
10,058

 
—

 
10,058

FHLBNY overnight advances
 
57,700

 
—

 
57,700

 
—

 
57,700

FHLBNY term advances
 
2,000

 
—

 
2,001

 
—

 
2,001

Accrued interest payable
 
148

 
24

 
124

 
—

 
148

Derivative liabilities
 
1,049

 
—

 
974

 
75

 
1,049

(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.
(2) Due to the adoption of ASU 2016-01, the fair value of loans, net and loans held for sale are estimated using exit pricing as of December 31, 2018. Prior to the adoption of ASU 2016-01, the fair value of loans, net and loans held for sale were presented using entrance pricing, therefore, prior year presentation is not comparable.