10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2019

OR

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

For the transition period from                      to                     

Commission file number 0-28364

Norwood Financial Corp.

(Exact name of registrant as specified in its charter)

Pennsylvania	23-2828306
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)
717 Main Street, Honesdale, Pennsylvania	18431
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (570) 253-1455

N/A

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

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.10 per share	NWFL	The Nasdaq Stock Market LLC

Indicate by check (x) 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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

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 definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of November 1, 2019
Common stock, par value $0.10 per share	6,300,881

NORWOOD FINANCIAL CORP.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2019

		Page Number
PART I -	CONSOLIDATED FINANCIAL INFORMATION OF NORWOOD FINANCIAL CORP.
Item 1.	Financial Statements (unaudited)		3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		50
Item 4.	Controls and Procedures		51
PART II -	OTHER INFORMATION
Item 1.	Legal Proceedings		51
Item 1A.	Risk Factors		51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51
Item 3.	Defaults Upon Senior Securities		52
Item 4.	Mine Safety Disclosures		52
Item 5.	Other Information		52
Item 6.	Exhibits		52
Signatures			54

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NORWOOD FINANCIAL CORP.

Consolidated Balance Sheets (unaudited)

(dollars in thousands, except share and per share data)

	September 30, 2019			December 31, 2018
ASSETS
Cash and due from banks	$	20,067		$	18,039
Interest-bearing deposits with banks		848			309
Cash and cash equivalents		20,915			18,348
Securities available for sale, at fair value		211,199			243,277
Loans receivable		905,582			850,182
Less: Allowance for loan losses		8,405			8,452
Net loans receivable		897,177			841,730
Regulatory stock, at cost		3,137			3,926
Bank premises and equipment, net		13,927			13,846
Bank owned life insurance		38,562			37,932
Accrued interest receivable		3,726			3,776
Foreclosed real estate owned		1,572			1,115
Goodwill		11,331			11,331
Other intangibles		257			336
Other assets		14,053			8,942
TOTAL ASSETS	$	1,215,856		$	1,184,559
LIABILITIES
Deposits:
Non-interest bearing demand	$	231,211		$	201,457
Interest-bearing		743,222			745,323
Total deposits		974,433			946,780
Short-term borrowings		52,778			53,046
Other borrowings		35,906			52,284
Accrued interest payable		2,623			1,806
Other liabilities		15,222			8,358
TOTAL LIABILITIES		1,080,962			1,062,274
STOCKHOLDERS’ EQUITY
Preferred stock, no par value per share, authorized: 5,000,000 shares; issued: none		—			—
Common stock, $0.10 par value per share, authorized: 2019: 20,000,000 shares, 2018: 10,000,000 shares issued: 2019: 6,314,688 shares, 2018: 6,295,113 shares		632			630
Surplus		49,052			48,322
Retained earnings		84,522			78,434
Treasury stock at cost: 2019: 13,807 shares, 2018: 2,470 shares		(455	)		(81	)
Accumulated other comprehensive income (loss)		1,143			(5,020	)
TOTAL STOCKHOLDERS’ EQUITY		134,894			122,285
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,215,856		$	1,184,559

See accompanying notes to the unaudited consolidated financial statements.

3

NORWOOD FINANCIAL CORP.

Consolidated Statements of Income (unaudited)

(dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019		2018
INTEREST INCOME
Loans receivable, including fees	$	10,776		$	9,301		$	31,074	$	26,645
Securities		1,278			1,483			4,155		4,543
Other		5			2			70		63
Total interest income		12,059			10,786			35,299		31,251
INTEREST EXPENSE
Deposits		1,787			1,116			5,355		3,198
Short-term borrowings		135			111			344		201
Other borrowings		246			171			827		442
Total interest expense		2,168			1,398			6,526		3,841
NET INTEREST INCOME		9,891			9,388			28,773		27,410
PROVISION FOR LOAN LOSSES		300			375			1,050		1,350
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,591			9,013			27,723		26,060
OTHER INCOME
Service charges and fees		1,200			1,129			3,283		3,211
Income from fiduciary activities		167			151			454		463
Net realized gains on sales of securities		169			13			233		213
Gain on sale of loans, net		15			15			125		15
Earnings and proceeds on bank owned life insurance		222			297			630		848
Other		109			392			358		716
Total other income		1,882			1,997			5,083		5,466
OTHER EXPENSES
Salaries and employee benefits		3,667			3,577			10,915		10,445
Occupancy, furniture & equipment, net		916			910			2,780		2,659
Data processing and related operations		480			368			1,400		1,027
Taxes, other than income		179			153			520		480
Professional fees		276			301			752		760
Federal Deposit Insurance Corporation insurance		(5	)		87			150		265
Foreclosed real estate		24			(26	)		37		68
Amortization of intangibles		23			29			79		97
Other		1,231			1,173			3,591		3,372
Total other expenses		6,791			6,572			20,224		19,173
INCOME BEFORE INCOME TAXES		4,682			4,438			12,582		12,353
INCOME TAX EXPENSE		775			728			1,963		2,001
NET INCOME	$	3,907		$	3,710		$	10,619	$	10,352
BASIC EARNINGS PER SHARE	$	0.62		$	0.59		$	1.70	$	1.66
DILUTED EARNINGS PER SHARE	$	0.62		$	0.58		$	1.68	$	1.64

See accompanying notes to the unaudited consolidated financial statements.

4

NORWOOD FINANCIAL CORP.

Consolidated Statements of Comprehensive Income (unaudited)

(dollars in thousands)

	Three Months Ended September 30,
	2019			2018
Net income	$	3,907		$	3,710
Other comprehensive income (loss):
Investment securities available for sale:
Unrealized holding gain (loss)		1,059			(1,830	)
Tax effect		(224	)		384
Reclassification of investment securities gains recognized in net income		(169	)		(13	)
Tax effect		37			3
Other comprehensive income (loss)		703			(1,456	)
Comprehensive Income	$	4,610		$	2,254

	Nine Months Ended September 30,
	2019			2018
Net income	$	10,619		$	10,352
Other comprehensive income (loss):
Investment securities available for sale:
Unrealized holding gain (loss)		8,034			(7,160	)
Tax effect		(1,688	)		1,503
Reclassification of investment securities gains recognized in net income		(233	)		(213	)
Tax effect		50			45
Other comprehensive income (loss)		6,163			(5,825	)
Comprehensive Income	$	16,782		$	4,527

See accompanying notes to the unaudited consolidated financial statements.

5

NORWOOD FINANCIAL CORP.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Nine Months Ended September 30, 2019 and 2018

(dollars in thousands, except share and per share data)

																Accumulated
																Other
	Common Stock						Retained			Treasury Stock						Comprehensive
	Shares		Amount		Surplus		Earnings			Shares			Amount			Income (Loss)			Total
Balance, December 31, 2018		6,295,113	$	630	$	48,322	$	78,434			2,470		$	(81	)	$	(5,020	)	$	122,285
Net Income		—		—		—		10,619			—			—			—			10,619
Other comprehensive income		—		—		—		—			—			—			6,163			6,163
Cash dividends declared ($0.72 per share)		—		—		—		(4,531	)		—			—			—			(4,531	)
Compensation expense related to restricted stock		—		—		217		—			—			—			—			217
Acquisition of treasury stock		—		—		—		—			11,337			(374	)		—			(374	)
Stock options exercised		19,575		2		357		—			—			—			—			359
Compensation expense related to stock options		—		—		156		—			—			—			—			156
Balance, September 30, 2019		6,314,688	$	632	$	49,052	$	84,522			13,807		$	(455	)	$	1,143		$	134,894
																Accumulated
																Other
	Common Stock						Retained			Treasury Stock						Comprehensive
	Shares		Amount		Surplus		Earnings			Shares			Amount			Loss			Total
Balance, December 31, 2017		6,256,063	$	626	$	47,431	$	70,426			2,608		$	(77	)	$	(2,667	)	$	115,739
Net Income		—		—		—		10,352			—			—			—			10,352
Other comprehensive loss		—		—		—		—			—			—			(5,825	)		(5,825	)
Cash dividends declared ($0.66 per share)		—		—		—		(4,133	)		—			—			—			(4,133	)
Compensation expense related to restricted stock		—		—		154		—			—			—			—			154
Acquisition of treasury stock		—		—		—		—			5,446			(179	)		—			(179	)
Stock options exercised		18,450		2		325		—			(2,325	)		68			—			395
Compensation expense related to stock options		—		—		177		—			—			—			—			177
Balance, September 30, 2018		6,274,513	$	628	$	48,087	$	76,645			5,729		$	(188	)	$	(8,492	)	$	116,680

See accompanying notes to the unaudited consolidated financial statements.

6

NORWOOD FINANCIAL CORP.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Three Months Ended September 30, 2019 and 2018

(dollars in thousands, except share and per share data)

															Accumulated
															Other
	Common Stock						Retained			Treasury Stock					Comprehensive
	Shares		Amount		Surplus		Earnings			Shares		Amount			Income (Loss)			Total
Balance, June 30, 2019		6,304,413	$	630	$	48,741	$	82,127			13,807	$	(455	)	$	440		$	131,483
Net Income		—		—		—		3,907			—		—			—			3,907
Other comprehensive income		—		—		—		—			—		—			703			703
Cash dividends declared ($0.24 per share)		—		—		—		(1,512	)		—		—			—			(1,512	)
Compensation expense related to restricted stock		—		—		72		—			—		—			—			72
Acquisition of treasury stock		—		—		—		—			—		—			—			—
Stock options exercised		10,275		2		187		—			—		—			—			189
Compensation expense related to stock options		—		—		52		—			—		—			—			52
Balance, September 30, 2019		6,314,688	$	632	$	49,052	$	84,522			13,807	$	(455	)	$	1,143		$	134,894
															Accumulated
															Other
	Common Stock						Retained			Treasury Stock					Comprehensive
	Shares		Amount		Surplus		Earnings			Shares		Amount			Loss			Total
Balance, June 30, 2018		6,266,388	$	627	$	47,815	$	74,315			5,729	$	(188	)	$	(7,036	)	$	115,533
Net Income		—		—		—		3,710			—		—			—			3,710
Other comprehensive loss		—		—		—		—			—		—			(1,456	)		(1,456	)
Cash dividends declared ($0.22 per share)		—		—		—		(1,380	)		—		—			—			(1,380	)
Compensation expense related to restricted stock		—		—		52		—			—		—			—			52
Acquisition of treasury stock		—		—		—		—			—		—			—			—
Stock options exercised		8,125		1		161		—			—		—			—			162
Compensation expense related to stock options		—		—		59		—			—		—			—			59
Balance, September 30, 2018		6,274,513	$	628	$	48,087	$	76,645			5,729	$	(188	)	$	(8,492	)	$	116,680

See accompanying notes to the unaudited consolidated financial statements.

7

NORWOOD FINANCIAL CORP.

Consolidated Statements of Cash Flows (Unaudited)

(dollars in thousands)

	Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	10,619		$	10,352
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,050			1,350
Depreciation		739			665
Amortization of intangible assets		79			97
Deferred income taxes		(176	)		(198	)
Net amortization of securities premiums and discounts		1,104			1,308
Net realized gain on sales of securities		(232	)		(213	)
Earnings and proceeds on life insurance policies		(630	)		(848	)
Gain on sales and write-downs of fixed assets and foreclosed real estate owned, net		(67	)		(42	)
Net gain on sale of loans		(125	)		(15	)
Loans originated for sale		(2,767	)		(752	)
Proceeds from sale of loans originated for sale		2,846			767
Compensation expense related to stock options		156			177
Compensation expense related to restricted stock		217			154
Decrease (increase) in accrued interest receivable		50			(76	)
Increase in accrued interest payable		817			271
Other, net		1,017			1,062
Net cash provided by operating activities		14,697			14,059
CASH FLOWS FROM INVESTING ACTIVITIES
Securities available for sale:
Proceeds from sales		22,862			17,745
Proceeds from maturities and principal reductions on mortgage-backed securities		21,211			22,848
Purchases		(5,066	)		(15,458	)
Purchase of regulatory stock		(2,963	)		(3,865	)
Redemption of regulatory stock		3,752			4,109
Net increase in loans		(57,891	)		(56,275	)
Purchase of premises and equipment		(1,056	)		(598	)
Proceeds from sales of foreclosed real estate owned		312			696
Proceeds from sales of bank premises and equipment		246			—
Net cash used in investing activities		(18,593	)		(30,798	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits		27,653			10,330
Net (decrease) increase in short-term borrowings		(268	)		10,290
Repayments of other borrowings		(22,378	)		(9,296	)
Proceeds from other borrowings		6,000			10,000
Stock options exercised		359			395
Purchase of treasury stock		(374	)		(179	)
Cash dividends paid		(4,529	)		(4,130	)
Net cash provided by financing activities		6,463			17,410
Increase in cash and cash equivalents		2,567			671
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		18,348			16,697
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	20,915		$	17,368

8

NORWOOD FINANCIAL CORP.

Consolidated Statements of Cash Flows (Unaudited) (continued)

(dollars in thousands)

	Nine Months Ended September 30,
	2019		2018
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest on deposits and borrowings	$	5,709	$	3,570
Income taxes paid, net of refunds	$	1,447	$	1,547
Supplemental Schedule of Noncash Investing Activities:
Transfers of loans to foreclosed real estate and repossession of other assets	$	1,478	$	333
Dividends payable	$	1,512	$	1,379

See accompanying notes to the unaudited consolidated financial statements.

9

Notes to the Unaudited Consolidated Financial Statements

1. Basis of Presentation

The unaudited consolidated financial statements include the accounts of Norwood Financial Corp. (Company) and its wholly-owned subsidiary, Wayne Bank (Bank) and the Bank’s wholly-owned subsidiaries, WCB Realty Corp., Norwood Investment Corp., and WTRO Properties, Inc. All significant intercompany transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in conformity with generally accepted accounting principles for interim financial statements and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ from those estimates. The financial statements reflect, in the opinion of management, all normal, recurring adjustments necessary to present fairly the consolidated financial position and results of operations of the Company. The operating results for the three month and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future interim period.

2. Revenue Recognition

Management has determined that the primary sources of revenue emanating from interest income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans, commitment fees, and fees from financial guarantees are not within the scope of ASC 606. As a result, no changes were made during the period related to those sources of revenue.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30:

	Three months ended September 30,
(dollars in thousands)	2019		2018
Noninterest Income
In-scope of Topic 606:
Service charges on deposit accounts	$	72	$	66
ATM fees		106		108
Overdraft fees		323		372
Safe deposit box rental		22		23
Loan related service fees		228		152
Debit card fees		370		358
Fiduciary activities		167		151
Commissions on mutual funds and annuities		30		51
Other income		143		374
Noninterest Income (in-scope of Topic 606)		1,461		1,655
Out-of-scope of Topic 606:
Net realized gains on sales of securities		169		13
Loan servicing fees		15		17
Gains on sales of loans		15		15
Earnings on and proceeds from bank-owned life insurance		222		297
Noninterest Income (out-of-scope of Topic 606)		421		342
Total Noninterest Income	$	1,882	$	1,997

10

	Nine months ended September 30,
(dollars in thousands)	2019		2018
Noninterest Income
In-scope of Topic 606:
Service charges on deposit accounts	$	205	$	195
ATM fees		287		299
Overdraft fees		1,017		1,137
Safe deposit box rental		71		76
Loan related service fees		451		387
Debit card fees		1,067		991
Fiduciary activities		454		463
Commissions on mutual funds and annuities		111		154
Other income		379		651
Noninterest Income (in-scope of Topic 606)		4,042		4,353
Out-of-scope of Topic 606:
Net realized gains on sales of securities		233		213
Loan servicing fees		53		37
Gains on sales of loans		125		15
Earnings on and proceeds from bank-owned life insurance		630		848
Noninterest Income (out-of-scope of Topic 606)		1,041		1,113
Total Noninterest Income	$	5,083	$	5,466

3. Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock, and are determined using the treasury stock method.

The following table sets forth the weighted average shares outstanding used in the computations of basic and diluted earnings per share.

(in thousands)	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Weighted average shares outstanding		6,296			6,264			6,293			6,259
Less: Unvested restricted shares		(35	)		(30	)		(35	)		(30	)
Basic EPS weighted average shares outstanding		6,261			6,234			6,258			6,229
Basic EPS weighted average shares outstanding		6,261			6,234			6,258			6,229
Add: Dilutive effect of stock options and restricted shares		48			70			50			72
Diluted EPS weighted average shares outstanding		6,309			6,304			6,308			6,301

11

For the three and nine month periods ended September 30, 2019, there were 60,650 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of Norwood common stock of $31.61 per share as of September 30, 2019.

For the three and nine month periods ended September 30, 2018, there were no stock options that would be anti-dilutive to the earnings per share calculations based upon the closing price of Norwood common stock of $39.16 per share on September 30, 2018.

4. Stock-Based Compensation

No awards were granted during the nine-month period ended September 30, 2019. As of September 30, 2019, there was $52,000 of total unrecognized compensation cost related to non-vested options granted in 2018 under the 2014 Equity Incentive Plan, which will be fully amortized by December 31, 2019. Compensation costs related to stock options amounted to $156,000 and $177,000 during the nine-month periods ended September 30, 2019 and 2018, respectively.

A summary of the Company’s stock option activity for the nine-month period ended September 30, 2019 is as follows:

	Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2019		208,700		$	22.54		5.9 Yrs.	$	2,183
Granted		—			—		—		—
Exercised		(19,575	)		18.32		3.5 Yrs.		283
Forfeited		—			—		—		—
Outstanding at September 30, 2019		189,125		$	22.98		5.4 Yrs.	$	1,691
Exercisable at September 30, 2019		160,225		$	21.29		4.7 Yrs.	$	1,691

Intrinsic value represents the amount by which the market price of the stock on the measurement date exceeded the exercise price of the option. The market price was $31.61 per share as of September 30, 2019 and $33.00 per share as of December 31, 2018.

A summary of the Company’s restricted stock activity for the nine-month periods ended September 30, 2019 and 2018 is as follows:

	2019				2018
	Number of Restricted Stock		Weighted-Average Grant Date Fair Value		Number of Restricted Stock		Weighted-Average Grant Date Fair Value
Non-vested, January 1,		34,615	$	27.82		30,415	$	24.46
Granted		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—		—
Non-vested, September 30,		34,615	$	27.82		30,415	$	24.46

12

The expected future compensation expense relating to the 34,615 shares of non-vested restricted stock outstanding as of September 30, 2019 is $746,000. This cost will be recognized over the remaining vesting period of 4.25 years. Compensation costs related to restricted stock amounted to $217,000 and $154,000 during the nine-month periods ended September 30, 2019 and 2018, respectively.

5. Accumulated Other Comprehensive Income (Loss)

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

	Unrealized gains (losses) on available for sale securities (a)
Balance as of June 30, 2019	$	440
Other comprehensive income before reclassification		835
Amount reclassified from accumulated other comprehensive loss		(132	)
Total other comprehensive income		703
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on available for sale securities (a)
Balance as of June 30, 2018	$	(7,036	)
Other comprehensive loss before reclassification		(1,446	)
Amount reclassified from accumulated other comprehensive loss		(10	)
Total other comprehensive loss		(1,456	)
Balance as of September 30, 2018	$	(8,492	)
	Unrealized gains (losses) on available for sale securities (a)
Balance as of December 31, 2018	$	(5,020	)
Other comprehensive income before reclassification		6,346
Amount reclassified from accumulated other comprehensive loss		(183	)
Total other comprehensive income		6,163
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on available for sale securities (a)
Balance as of December 31, 2017	$	(2,667	)
Other comprehensive loss before reclassification		(5,657	)
Amount reclassified from accumulated other comprehensive loss		(168	)
Total other comprehensive loss		(5,825	)
Balance as of September 30, 2018	$	(8,492	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

13

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

Details about other comprehensive income	Amount Reclassified From Accumulated Other Comprehensive Income (Loss) (a)						Affected Line Item in Consolidated Statements of Income
	Three months ended September 30,
	2019			2018
Unrealized gains on available for sale securities	$	169		$	13			Net realized gains on sales of securities
		(37	)		(3	)		Income tax expense
	$	132		$	10
	Nine months ended September 30,
	2019			2018
Unrealized gains on available for sale securities	$	233		$	213			Net realized gains on sales of securities
		(50	)		(45	)		Income tax expense
	$	183		$	168

(a) Amounts in parentheses indicate debits to net income

6. Off-Balance Sheet Financial Instruments and Guarantees

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

14

A summary of the Bank’s financial instrument commitments is as follows:

(in thousands)	September 30,
	2019		2018
Commitments to grant loans	$	49,806	$	51,225
Unfunded commitments under lines of credit		65,854		78,024
Standby letters of credit		3,687		4,410
	$	119,347	$	133,659

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer and generally consists of real estate.

The Bank does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Bank, generally, holds collateral and/or personal guarantees supporting these commitments. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees. The current amount of the liability as of September 30, 2019 for guarantees under standby letters of credit issued is not material.

7. Securities

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

	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	78,145	$	1,396	$	(14	)	$	79,527
Corporate obligations		6,200		5		(4	)		6,201
Mortgage-backed securities-government sponsored entities		126,087		346		(962	)		125,471
Total debt securities	$	210,432	$	1,747	$	(980	)	$	211,199

15

	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	99,218	$	385	$	(1,990	)	$	97,613
Corporate obligations		8,896		—		(256	)		8,640
Mortgage-backed securities-government sponsored entities		142,197		25		(5,198	)		137,024
Total debt securities	$	250,311	$	410	$	(7,444	)	$	243,277

The following tables show the Company’s investments’ gross unrealized losses and fair value aggregated by length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	September 30, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
States and political subdivisions	$	7,697	$	(12)	$	481	$	(2)	$	8,178	$	(14)
Corporate obligations		—		—		3,109		(4)		3,109		(4)
Mortgage-backed securities-government sponsored entities		25,071		(118)		64,124		(844)		89,195		(962)
	$	32,768	$	(130)	$	67,714	$	(850)	$	100,482	$	(980)

	December 31, 2018
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
States and political subdivisions	$	19,140	$	(390	)	$	56,740	$	(1,600	)	$	75,880	$	(1,990	)
Corporate obligations		2,045		(21	)		6,595		(235	)		8,640		(256	)
Mortgage-backed securities-government sponsored entities		8,444		(22	)		122,950		(5,176	)		131,394		(5,198	)
	$	29,629	$	(433	)	$	186,285	$	(7,011	)	$	215,914	$	(7,444	)

At September 30, 2019, the Company had 30 debt securities in an unrealized loss position in the less than twelve months category and 58 debt securities in the twelve months or more category. In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities. No other-than-temporary-impairment charges were recorded in 2019. Management believes that all unrealized losses represent temporary impairment of the securities as the Company does not have the intent to sell the securities and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

16

The amortized cost and fair value of debt securities as of September 30, 2019 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized Cost		Fair Value
	(In Thousands)
Due in one year or less	$	4,365	$	4,378
Due after one year through five years		17,693		17,705
Due after five years through ten years		33,194		33,365
Due after ten years		29,093		30,280
		84,345		85,728
Mortgage-backed securities-government sponsored entities		126,087		125,471
	$	210,432	$	211,199

Gross realized gains and gross realized losses on sales of securities available for sale were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Gross realized gains	$	169	$	13	$	233	$	213
Gross realized losses		—		—		—		—
Net realized gain	$	169	$	13	$	233	$	213
Proceeds from sales of securities	$	19,326	$	3,162	$	22,862	$	17,745

Securities with a carrying value of $179,075,000 and $169,984,000 at September 30, 2019 and 2018, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

8. Loans Receivable and Allowance for Loan Losses

Set forth below is selected data relating to the composition of the loan portfolio at the dates indicated (dollars in thousands):

	September 30, 2019					December 31, 2018
Real Estate Loans:
Residential	$	230,624		25.5	%	$	235,523		27.7	%
Commercial		384,376		42.4			374,790		44.1
Construction		18,267		2.0			17,445		2.0
Commercial, financial and agricultural		126,835		14.0			110,542		13.0
Consumer loans to individuals		145,547		16.1			112,002		13.2
Total loans		905,649		100.0	%		850,302		100.0	%
Deferred fees, net		(67	)				(120	)
Total loans receivable		905,582					850,182
Allowance for loan losses		(8,405	)				(8,452	)
Net loans receivable	$	897,177				$	841,730

17

The following table presents information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

	September 30, 2019		December 31, 2018
Outstanding Balance	$	946	$	1,055
Carrying Amount	$	807	$	886

As a result of the acquisition of Delaware Bancshares, Inc. (“Delaware”), the Company added $1,397,000 of loans that were accounted for in accordance with ASC 310-30. Based on a review of the loans acquired by senior lending management, which included an analysis of credit deterioration of the loans since origination, the Company recorded a specific credit fair value adjustment of $499,000. For loans that were acquired with specific evidence of deterioration in credit quality, loan losses will be accounted for through a reduction of the specific reserve and will not impact the allowance for loan losses until actual losses exceed the allotted reserves. For loans acquired without a deterioration of credit quality, losses incurred will result in adjustments to the allowance for loan losses through the allowance for loan loss adequacy calculation.

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans. Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers. Specific loan loss allowances are established for identified losses based on a review of such information. A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement. All loans identified as impaired are evaluated independently. We do not aggregate such loans for evaluation purposes. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired, or are classified as a troubled debt restructuring.

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in foreclosed real estate owned on the Consolidated Balance Sheets. As of September 30, 2019 and December 31, 2018, foreclosed real estate owned totaled $1,572,000 and $1,115,000, respectively. During the nine months ended September 30, 2019, the Company acquired three properties via deed-in-lieu transactions which have subsequently been sold, and foreclosed on one commercial property with a carrying value of $608,000. The Company also disposed of three properties that were previously transferred to foreclosed real estate owned with a carrying value of $151,000 through the sale of the properties. As of September 30, 2019, the Company has initiated formal foreclosure proceedings on three properties classified as consumer residential mortgages with an aggregate carrying value of $300,000.

18

The following table shows the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated:

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
	(In thousands)
September 30, 2019
Individually evaluated for impairment	$	—	$	514	$	—	$	—	$	—	$	514
Loans acquired with deteriorated credit quality		577		230		—		—		—		807
Collectively evaluated for impairment		230,047		383,632		18,267		126,835		145,547		904,328
Total Loans	$	230,624	$	384,376	$	18,267	$	126,835	$	145,547	$	905,649

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
	(In thousands)
December 31, 2018
Individually evaluated for impairment	$	—	$	1,319	$	—	$	—	$	—	$	1,319
Loans acquired with deteriorated credit quality		630		256		—		—		—		886
Collectively evaluated for impairment		234,893		373,215		17,445		110,542		112,002		848,097
Total Loans	$	235,523	$	374,790	$	17,445	$	110,542	$	112,002	$	850,302

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable.

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
			(in thousands)
September 30, 2019
With no related allowance recorded:
Real Estate Loans:
Commercial	$	514	$	1,101	$	—
Subtotal		514		1,101		—
Total:
Real Estate Loans:
Commercial		514		1,101		—
Total Impaired Loans	$	514	$	1,101	$	—

19

	Recorded Investment		Unpaid Principal Balance		Associated Allowance
			(in thousands)
December 31, 2018
With no related allowance recorded:
Real Estate Loans:
Commercial	$	1,319	$	1,747	$	—
Subtotal		1,319		1,747		—
Total:
Real Estate Loans:
Commercial		1,319		1,747		—
Total Impaired Loans	$	1,319	$	1,747	$	—

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded Investment				Interest Income Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	—	$	23	$	—	$	—
Commercial		633		1,217		—		15
Total	$	633	$	1,240	$	—	$	15

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the nine-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded Investment				Interest Income Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	—	$	23	$	—	$	—
Commercial		759		1,195		24		45
Total	$	759	$	1,218	$	24	$	45

20

Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of financial difficulties experienced by the borrower, who could not obtain comparable terms from alternate financing sources. As of September 30, 2019 and December 31, 2018, troubled debt restructured loans totaled $102,000 and $1.1 million, respectively, with no specific reserve. For the nine-month period ended September 30, 2019, there were no new loans identified as troubled debt restructurings. During 2019, the Company recognized a charge-off of $451,000 on a loan that was previously identified as a troubled debt restructuring. The loan was transferred to foreclosed real estate during the first quarter of 2019 with a carrying value of $608,000.

For the nine-month period ended September 30, 2018, there were no new loans identified as troubled debt restructurings nor did the Company recognize any write-down on loans that were previously identified as a troubled debt restructuring.

Management uses an eight point internal risk rating system to monitor the credit quality of the overall loan portfolio. The first four categories are considered not criticized, and are aggregated as “Pass” rated. The criticized rating categories utilized by management generally follow bank regulatory definitions. The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification. Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected. All loans greater than 90 days past due are considered Substandard. Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight. Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as nonperformance, repossession, or death occurs to raise awareness of a possible credit event. The Company’s Loan Review Department is responsible for the timely and accurate risk rating of the loans on an ongoing basis. Every credit which must be approved by Loan Committee or the Board of Directors is assigned a risk rating at time of consideration. Loan Review also annually reviews relationships of $1,500,000 and over to assign or re-affirm risk ratings. Loans in the Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, Doubtful and Loss within the internal risk rating system as of September 30, 2019 and December 31, 2018 (in thousands):

			Special				Doubtful
	Pass		Mention		Substandard		or Loss		Total
September 30, 2019
Commercial real estate loans	$	368,796	$	12,301	$	3,279	$	—	$	384,376
Commercial loans		126,371		252		212		—		126,835
Total	$	495,167	$	12,553	$	3,491	$	—	$	511,211

			Special				Doubtful
	Pass		Mention		Substandard		or Loss		Total
December 31, 2018
Commercial real estate loans	$	360,838	$	7,918	$	6,034	$	—	$	374,790
Commercial loans		109,966		82		494		—		110,542
Total	$	470,804	$	8,000	$	6,528	$	—	$	485,332

21

For residential real estate loans, construction loans and consumer loans, the Company evaluates credit quality based on the performance of the individual credits. The following table presents the recorded investment in the loan classes based on payment activity as of September 30, 2019 and December 31, 2018 (in thousands):

	Performing		Nonperforming		Total
September 30, 2019
Residential real estate loans	$	229,857	$	767	$	230,624
Construction		18,267		—		18,267
Consumer loans		145,490		57		145,547
Total	$	393,614	$	824	$	394,438
	Performing		Nonperforming		Total
December 31, 2018
Residential real estate loans	$	234,725	$	798	$	235,523
Construction		17,445		—		17,445
Consumer loans		112,002		—		112,002
Total	$	364,172	$	798	$	364,970

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2019 and December 31, 2018 (in thousands):

	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
September 30, 2019
Real Estate loans
Residential	$	228,976	$	692	$	189	$	—	$	767	$	1,648	$	230,624
Commercial		383,667		114		54		—		541		709		384,376
Construction		18,267		—		—		—		—		—		18,267
Commercial loans		126,795		14		—		—		26		40		126,835
Consumer loans		145,161		183		146		—		57		386		145,547
Total	$	902,866	$	1,003	$	389	$	—	$	1,391	$	2,783	$	905,649
	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
December 31, 2018
Real Estate loans
Residential	$	234,201	$	373	$	151	$	—	$	798	$	1,322	$	235,523
Commercial		372,617		1,043		788		—		342		2,173		374,790
Construction		17,445		—		—		—		—		—		17,445
Commercial loans		110,191		320		31		—		—		351		110,542
Consumer loans		111,796		171		35		—		—		206		112,002
Total	$	846,250	$	1,907	$	1,005	$	—	$	1,140	$	4,052	$	850,302

22

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses. When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the allowance.

As of September 30, 2019, the allocation of the allowance pertaining to commercial real estate loans is $889,000 lower than the allocation as of December 31, 2018. This decrease is due primarily to a reduction in the historical factor which decreased from 0.42% as of December 31, 2018 to 0.21% at September 30, 2019. Also contributing to the reduced reserve balance is a decrease in the qualitative factor related to the annualized growth rate and large balance loans, which was partially offset by an increase due to a declining economy. Increases in other loan categories reflect loan growth and replenishment of the allowance due to charge offs.

The following table presents the allowance for loan losses by the classes of the loan portfolio:

(In thousands)	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Consumer			Total
Beginning balance, December 31, 2018	$	1,328		$	5,455		$	93		$	712		$	864		$	8,452
Charge Offs		(90	)		(615	)		—			(254	)		(246	)		(1,205	)
Recoveries		20			18			—			31			39			108
Provision for loan losses		310			(292	)		14			454			564			1,050
Ending balance, September 30, 2019	$	1,568		$	4,566		$	107		$	943		$	1,221		$	8,405
Ending balance individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—
Ending balance collectively evaluated for impairment	$	1,568		$	4,566		$	107		$	943		$	1,221		$	8,405
(In thousands)	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Consumer			Total
Beginning balance, June 30, 2019	$	1,447		$	4,694		$	112		$	896		$	1,079		$	8,228
Charge Offs		(15	)		—			—			(20	)		(111	)		(146	)
Recoveries		5			4			—			10			4			23
Provision for loan losses		131			(132	)		(5	)		57			249			300
Ending balance, September 30, 2019	$	1,568		$	4,566		$	107		$	943		$	1,221		$	8,405
(In thousands)	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Consumer			Total
Beginning balance, December 31, 2017	$	1,272		$	5,265		$	90		$	463		$	544		$	7,634
Charge Offs		(85	)		(244	)		—			(246	)		(189	)		(764	)
Recoveries		2			33			—			—			25			60
Provision for loan losses		185			205			4			497			459			1,350
Ending balance, September 30, 2018	$	1,374		$	5,259		$	94		$	714		$	839		$	8,280
Ending balance individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—
Ending balance collectively evaluated for impairment	$	1,374		$	5,259		$	94		$	714		$	839		$	8,280

23

(In thousands)	Residential Real Estate			Commercial Real Estate			Construction			Commercial			Consumer			Total
Beginning balance, June 30, 2018	$	1,455		$	5,247		$	128		$	690		$	806		$	8,326
Charge Offs		(10	)		(110	)		—			(241	)		(72	)		(433	)
Recoveries		—			2			—			—			10			12
Provision for loan losses		(71	)		120			(34	)		265			95			375
Ending balance, September 30, 2018	$	1,374		$	5,259		$	94		$	714		$	839		$	8,280

The Company’s primary business activity as of September 30, 2019 was with customers located in northeastern Pennsylvania and the New York counties of Delaware and Sullivan. Accordingly, the Company has extended credit primarily to commercial entities and individuals in this area whose ability to honor their contracts is influenced by the region’s economy.

As of September 30, 2019, the Company considered its concentration of credit risk to be acceptable. The highest concentrations are in commercial rentals with $80.7 million of loans outstanding, or 8.9% of total loans outstanding, and the hospitality/lodging industry with loans outstanding of $65.0 million, or 7.2% of loans outstanding. During 2019, the Company did not recognize any charge offs in the named concentrations.

9. Fair Value of Assets and Liabilities

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the Consolidated Financial Statements. Those assets and liabilities are presented in the sections entitled “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis” and “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis”. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

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The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 14 of the Company’s 2018 Form 10-K. In accordance with ASU 2016-01, the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses. The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and nonperformance risk. Loans are considered a Level 3 classification.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

	Fair Value Measurement Using
	Reporting Date
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
September 30, 2019
Available for Sale:
States and political subdivisions	$	79,527	$	—	$	79,527	$	—
Corporate obligations		6,201		—		6,201		—
Mortgage-backed securities-government sponsored entities		125,471		—		125,471		—
Total	$	211,199	$	—	$	211,199	$	—
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
December 31, 2018
Available for Sale:
States and political subdivisions	$	97,613	$	—	$	97,613	$	—
Corporate obligations		8,640		—		8,640		—
Mortgage-backed securities-government sponsored entities		137,024		—		137,024		—
Total	$	243,277	$	—	$	243,277	$	—

Securities:

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not

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traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) are used to support fair values of certain Level 3 investments, if applicable.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

			Fair Value Measurement Using Reporting Date
(In thousands)
Description	Total		Level 1		Level 2		Level 3
September 30, 2019
Impaired Loans	$	514	$	—	$	—	$	514
Foreclosed Real Estate Owned		1,572		—		—		1,572
December 31, 2018
Impaired Loans	$	1,319	$	—	$	—	$	1,319
Foreclosed Real Estate Owned		1,115		—		—		1,115

Impaired loans (generally carried at fair value):

The Company measures impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the lowest level of input that is significant to the fair value measurements.

As of September 30, 2019, the fair value investment in impaired loans totaled $514,000 which included five loan relationships that did not require a valuation allowance since either the estimated realizable value of the collateral or the discounted cash flows exceeded the recorded investment in the loan. As of September 30, 2019, the Company has recognized charge-offs against the allowance for loan losses on these impaired loans in the amount of $587,000 over the life of the loans.

As of December 31, 2018, the fair value investment in impaired loans totaled $1,319,000 which included six loans which did not require a valuation allowance since the estimated realizable value of the collateral exceeded the recorded investment in the loan. As of December 31, 2018, the Company had recognized charge-offs against the allowance for loan losses on these impaired loans in the amount of $428,000 over the life of the loans.

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Foreclosed real estate owned (carried at fair value):

Real estate properties acquired through loan foreclosures, or by deed in lieu of loan foreclosure are to be sold and are carried at fair value less estimated cost to sell. Fair value is based upon independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral. These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques		Unobservable Input		Range (Weighted Average)
September 30, 2019
Impaired loans	$	311		Appraisal of collateral(1)		Appraisal adjustments(2)		10.00-10.00% (10.00%)
Impaired loans	$	203		Present value of future cash flows		Loan discount rate		4.00-6.97% (5.35%)
Foreclosed real estate owned	$	1,572		Appraisal of collateral(1)		Liquidation Expenses(2)		7.00-10.00% (8.16%)
	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques		Unobservable Input		Range (Weighted Average)
December 31, 2018
Impaired loans	$	232		Appraisal of collateral(1)		Appraisal adjustments(2)		10.00-81.54% (56.06%)
Impaired loans	$	1,087		Present value of future cash flows		Loan discount rate		4.00-6.00% (5.80%)
Foreclosed real estate owned	$	1,115		Appraisal of collateral(1)		Liquidation Expenses(2)		7.00-85.71% (7.80%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less any associated allowance.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

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Assets and Liabilities Not Required to be Measured or Reported at Fair Value

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018.

Loans receivable (carried at cost):

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Mortgage servicing rights (generally carried at cost)

The Company utilizes a third party provider to estimate the fair value of certain loan servicing rights. Fair value for the purpose of this measurement is defined as the amount at which the asset could be exchanged in a current transaction between willing parties, other than in a forced liquidation.

Deposit liabilities (carried at cost):

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Other borrowings (carried at cost):

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a fair value that is deemed to represent the transfer price if the liability were assumed by a third party.

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The estimated fair values of the Bank’s financial instruments not required to be measured or reported at fair value were as follows at September 30, 2019 and December 31, 2018. (In thousands)

	Fair Value Measurements at September 30, 2019
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	20,915	$	20,915	$	20,915	$	—	$	—
Loans receivable, net		897,177		917,146		—		—		917,146
Mortgage servicing rights		180		220		—		—		220
Regulatory stock (1)		3,137		3,137		3,137		—		—
Bank owned life insurance (1)		38,562		38,562		38,562		—		—
Accrued interest receivable (1)		3,726		3,726		3,726		—		—
Financial liabilities:
Deposits		974,433		977,729		632,151		—		345,045
Short-term borrowings (1)		52,778		52,778		52,778		—		—
Other borrowings		35,906		36,229		—		—		36,229
Accrued interest payable (1)		2,623		2,623		2,623		—		—
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		—		—		—		—		—
	Fair Value Measurements at December 31, 2018
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	18,348	$	18,348	$	18,348	$	—	$	—
Loans receivable, net		841,730		840,134		—		—		840,134
Mortgage servicing rights		178		220		—		—		220
Regulatory stock (1)		3,926		3,926		3,926		—		—
Bank owned life insurance (1)		37,932		37,932		37,932		—		—
Accrued interest receivable (1)		3,776		3,776		3,776		—		—
Financial liabilities:
Deposits		946,780		945,773		601,604		—		344,169
Short-term borrowings (1)		53,046		53,046		53,046		—		—
Other borrowings		52,284		52,043		—		—		52,043
Accrued interest payable (1)		1,806		1,806		1,806		—		—
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		—		—		—		—		—

(1) This financial instrument is carried at cost, which approximates the fair value of the instrument.

10. New and Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements    

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments

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over the lease term on a straight-line basis. ASU 2016-02 was effective for the Company on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842)—Targeted Improvements,” which, among other things, provides an additional transition method that would allow entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In December 2018, the FASB also issued ASU 2018-20, “Leases (Topic 842)- Narrow-Scope Improvements for Lessors,” which provides for certain policy elections and changes lessor accounting for sales and similar taxes and certain lessor costs. Upon adoption of ASU 2016-02, ASU 2018-11 and ASU 2018-20 on January 1, 2019, we recorded recognized a right-of-use assets and related lease liabilities totaling $5.3 million each, which are recorded in other assets and other liabilities, respectively.

New Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. This Update is not expected to have a significant impact on the Company’s financial statements.

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In February 2017, the FASB issued ASU 2017-06, Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965). This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust, which is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trusts balances in each general type of investments. There are also increased disclosure requirements for investments in master trusts. The amendments in this Update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. This Update is not expected to have a significant impact on the Company’s financial statements.

ASU 2018-04, Investments – Debt Securities (Topic 320) and Regulated Operations (Topic 980) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273, ASU 2018-04 supersedes various SEC paragraphs and adds an SEC paragraph pursuant to the issuance of Staff Accounting Bulletin No. 117.

In May 2018, the FASB issued ASU 2018-06, Codification Improvements to Topic 942, Financial Services – Depository and Lending, which supersedes outdated guidance related to the Office of the Comptroller of the Currency (OCC)’s Banking Circular 202, Accounting for Net Deferred Tax Charges (Circular 202), because that guidance has been rescinded by the OCC and no longer is relevant.

In August 2018, the FASB issued ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. This Update is intended to improve financial reporting for insurance companies that issue long-duration contracts, such as life insurance, disability income, long-term care, and annuities, by requiring updated assumptions for liability measurement, standardizing the liability discount rate, simplifying and improving the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts by requiring those benefits to be measured at fair value instead of using two different measurement models, simplifying the amortization of deferred acquisition costs, and increasing transparency by improving the effectiveness of disclosures. This Update is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. On October 16, 2019, the FASB voted to defer the effective date for ASC 944, Financial Services – Insurance, for public business entities that are SEC filers, except for smaller reporting companies, to fiscal years beginning after December 15, 2021, and interim periods within those fiscal years and for all other entities, including smaller reporting companies, to fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The final ASU is expected to be issued in mid-November. This Update is not expected to have a significant impact on the Company’s financial statements.

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In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements. The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815). The amendments in this Update permit use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate (LIBOR) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate. For entities that have not already adopted Update 2017-12, the amendments in this Update are required to be adopted concurrently with the amendments in Update 2017-12. For public business entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period upon issuance of this Update if an entity already has adopted Update 2017-12. This Update is not expected to have a significant impact on the Company’s financial statements.

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In October, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which made improvements in 1) applying the variable interest entity (VIE) guidance to private companies under common control and 2) considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. Under the amendments in this Update, a private company may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. In addition, indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. For entities other than private companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this Update are effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In November, 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), which made the following targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements (1) clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (2) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and (3) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for the applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the

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fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The final ASU is expected to be issued in mid-November. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections, Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. Other miscellaneous updates to agree to the electronic Code of Federal Regulations also have been incorporated.

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

Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words “believes,” “anticipates,” “contemplates,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those projected. Those risks and uncertainties include:

• possible future impairment of intangible assets

• our ability to effectively manage future growth

• loan losses in excess of our allowance

• risks inherent in commercial lending

• real estate collateral which is subject to declines in value

• potential other-than-temporary impairments

• soundness of other financial institutions

• interest rate risks

• potential liquidity risk

• deposits acquired through competitive bidding

• availability of capital

• regional economic factors

• loss of senior officers

• comparatively low legal lending limits

• risks of new capital requirements

• potential impact of Tax Cuts and Jobs Act

• limited market for the Company’s stock

• restrictions on ability to pay dividends

• common stock may lose value

• insider ownership

• issuing additional shares may dilute ownership

• competitive environment

• certain anti-takeover provisions

• extensive and complex governmental regulation and associated cost

• cybersecurity

Norwood Financial Corp. undertakes no obligation to publicly release the results of any revisions to those forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Critical Accounting Policies

Note 2 to the Company’s consolidated financial statements for the year ended December 31, 2018 (incorporated by reference in Item 8 of the Form 10-K) lists significant accounting policies used in the development and presentation of its financial statements. This discussion and analysis, the significant accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of the Company and its results of operations.

35

Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the valuation of deferred tax assets, the fair value of financial instruments, the determination of other-than-temporary impairment on securities and the determination of goodwill impairment. Please refer to the discussion of the allowance for loan losses calculation under “Loans” in the “Changes in Financial Condition” section.

The Company uses the modified prospective transition method to account for stock options. Under this method companies are required to record compensation expense, based on the fair value of options over the vesting period. Restricted shares vest over a five-year period. The product of the number of shares granted and the grant date market price of the Company’s common stock determines the fair value of restricted stock.

Deferred income taxes reflect temporary differences in the recognition of the revenue and expenses for tax reporting and financial statement purposes, principally because certain items are recognized in different periods for financial reporting and tax return purposes. Although realization is not assured, the Company believes that it is more likely than not that all deferred tax assets will be realized.

The fair value of financial instruments is based upon quoted market prices, when available. For those instances where a quoted price is not available, fair values are based upon observable market based parameters as well as unobservable parameters. Any such valuation is applied consistently over time.

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each Consolidated Balance Sheet date.

Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent of the Company to not sell the securities and whether it is more likely than not that it will not have to sell the securities before recovery of their cost basis. The Company believes that all unrealized losses on securities at September 30, 2019 and December 31, 2018 represent temporary impairment of the securities, related to changes in interest rates.

In connection with acquisitions, the Company recorded goodwill in the amount of $11.3 million, representing the excess of amounts paid over the fair value of net assets of the institutions acquired in purchase transactions, at its fair value at the date of acquisition. Goodwill is tested and deemed impaired when the carrying value of goodwill exceeds its implied fair value. The value of the goodwill can change in the future. We expect the value of the goodwill to decrease if there is a significant decrease in the franchise value of the Company or the Bank. If an impairment loss is determined in the future, we will reflect the loss as an expense for the period in which the impairment is determined, leading to a reduction of our net income for that period by the amount of the impairment loss.

Changes in Financial Condition

General

Total assets as of September 30, 2019 were $1.216 billion compared to $1.185 billion as of December 31, 2018. The increase reflects growth in loans which were funded by an increase in deposits and cash flows from securities.

36

Securities

The fair value of securities available for sale as of September 30, 2019 was $211.2 million compared to $243.3 million as of December 31, 2018. The decrease in the securities portfolio is the result of sales, calls, maturities and principal reductions of securities. The fair value of the portfolio increased $7.8 million due to a reduction in unrealized losses on securities related to the decrease in interest rates during the first nine months of 2019.

The carrying value of the Company’s securities portfolio (Available-for Sale) consisted of the following:

	September 30, 2019					December 31, 2018
(dollars in thousands)	Amount		% of portfolio			Amount		% of portfolio
States and political subdivisions	$	79,527		37.7	%	$	97,613		40.1	%
Corporate obligations		6,201		2.9			8,640		3.6
Mortgage-backed securities-government sponsored entities		125,471		59.4			137,024		56.3
Total	$	211,199		100.0	%	$	243,277		100.0	%

The Company has securities in an unrealized loss position. In management’s opinion, the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities. Management believes that the unrealized losses on all holdings represent temporary impairment of the securities, as the Company has the intent and ability to hold these investments until maturity or market price recovery.

Loans

Loans receivable totaled $905.6 million at September 30, 2019 compared to $850.2 million as of December 31, 2018. The increase in loans receivable includes a $29.5 million increase in retail loans and a $25.9 million increase in commercial loans.

The allowance for loan losses totaled $8,405,000 as of September 30, 2019 and represented 0.93% of total loans outstanding, compared to $8,452,000, or 0.99% of total loans, at December 31, 2018. The Company had net charge-offs for the nine months ended September 30, 2019 of $1,205,000 compared to $704,000 in the corresponding period in 2018. The increase in charge-offs was due to one large commercial loan relationship which was written down by $336,000 during the second quarter of 2019, and one commercial real estate credit which was written down by $451,000 and subsequently transferred to foreclosed real estate during the first quarter of 2019. The Company’s management assesses the adequacy of the allowance for loan losses on a quarterly basis. The process includes an analysis of the risks inherent in the loan portfolio. It includes an analysis of impaired loans and a historical review of credit losses by loan type. Other factors considered include concentration of credit in specific industries, economic and industry conditions, trends in delinquencies and loan classifications, and loan growth. Management considers the allowance adequate at September 30, 2019 based on the Company’s criteria. However, there can be no assurance that the allowance for loan losses will be adequate to cover significant losses, if any that might be incurred in the future.

As of September 30, 2019, non-performing loans totaled $1,391,000, or 0.15% of total loans compared to $1,140,000, or 0.13%, of total loans at December 31, 2018. At September 30, 2019, non-performing assets totaled $2,963,000, or 0.24%, of total assets, compared to $2,255,000, or 0.19%, of total assets at December 31, 2018.

37

The following table sets forth information regarding non-performing loans and foreclosed real estate at the dates indicated:

(dollars in thousands)	September 30, 2019			December 31, 2018
Loans accounted for on a non-accrual basis:
Real Estate
Residential	$	767		$	798
Commercial		541			342
Construction		—			—
Commercial, financial and agricultural		26			—
Consumer loans to individuals		57			—
Total non-accrual loans *		1,391			1,140
Accruing loans which are contractually past due 90 days or more		—			—
Total non-performing loans		1,391			1,140
Foreclosed real estate		1,572			1,115
Total non-performing assets	$	2,963		$	2,255
Allowance for loans losses	$	8,405		$	8,452
Coverage of non-performing loans		604.24	%		741.40	%
Non-performing loans to total loans		0.15	%		0.13	%
Non-performing loans to total assets		0.11	%		0.10	%
Non-performing assets to total assets		0.24	%		0.19	%

* Includes non-accrual TDRs of $102,000 as of September 30, 2019 and $110,000 on December 31, 2018. There were no accruing TDRs as of September 30, 2019 and $977,000 of accruing TDRs as of December 31, 2018.

Deposits

During the nine-month period ended September 30, 2019, total deposits increased $27.7 million due primarily to a $29.8 million increase in demand deposits which reflects seasonal activity in municipal account relationships. All other deposits decreased $2.1 million, net.

The following table sets forth deposit balances as of the dates indicated:

(dollars in thousands)	September 30, 2019		December 31, 2018
Non-interest bearing demand	$	231,211	$	201,457
Interest-bearing demand		99,671		88,917
Money market deposit accounts		135,404		137,636
Savings		166,398		173,593
Time deposits <$100,000		146,779		145,343
Time deposits >$100,000		194,970		199,834
Total	$	974,433	$	946,780

38

Borrowings

Other borrowings as of September 30, 2019, totaled $35.9 million compared to $52.3 million as of December 31, 2018. Short-term borrowings, which consist of securities sold under agreements to repurchase and overnight borrowings from the FHLB, decreased slightly due to an $11.3 million reduction in overnight borrowings, which was partially offset by an $11.2 million increase in repurchase agreements.

Other borrowings consisted of the following:

(dollars in thousands)	September 30, 2019		December 31, 2018
Notes with the FHLB:
Amortizing fixed rate borrowing due January 2019 at 1.393%	$	—	$	423
Term fixed rate borrowing due August 2019 at 1.606%		—		10,000
Amortizing fixed rate borrowing due June 2020 at 1.490%		1,548		3,079
Amortizing fixed rate borrowing due July 2020 at 2.77%		4,234		7,962
Amortizing fixed rate borrowing due December 2020 at 1.706%		1,290		2,051
Amortizing fixed rate borrowing due December 2020 at 3.06%		3,161		5,000
Amortizing fixed rate borrowing due March 2022 at 1.748%		2,227		2,877
Amortizing fixed rate borrowing due August 2022 at 1.94%		5,838		—
Amortizing fixed rate borrowing due October 2022 at 1.88%		5,022		6,200
Amortizing fixed rate borrowing due October 2023 at 3.24%		8,286		9,692
Amortizing fixed rate borrowing due December 2023 at 3.22%		4,300		5,000
	$	35,906	$	52,284

Stockholders’ Equity and Capital Ratios

As of September 30, 2019, stockholders’ equity totaled $134.9 million, compared to $122.3 million as of December 31, 2018. The net change in stockholders’ equity included $10.6 million of net income that was partially offset by $4.5 million of dividends declared. In addition, total equity increased $6.2 million due to an increase in the fair value of securities in the available for sale portfolio, net of tax. This increase in fair value is the result of a change in interest rates and spreads, which may impact the value of the securities. Because of interest rate volatility, the Company’s accumulated other comprehensive income (loss) could materially fluctuate for each interim and year-end period.

39

A comparison of the Company’s consolidated regulatory capital ratios is as follows:

	September 30, 2019			December 31, 2018
Tier 1 Capital
(To average assets)		10.07	%		9.82	%
Tier 1 Capital
(To risk-weighted assets)		13.01	%		13.04	%
Common Equity Tier 1 Capital
(To risk-weighted assets)		13.01	%		13.04	%
Total Capital
(To risk-weighted assets)		13.91	%		14.00	%

Effective January 1, 2015, the Company and the Bank became subject to new regulatory capital rules, which, among other things, impose a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), set the minimum leverage ratio for all banking organizations at a uniform 4% of total assets, increase the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assign a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The new rules also require unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt out is exercised which the Company and the Bank have done. The final rule limits a banking organization’s dividends, stock repurchases and other capital distributions, and certain discretionary bonus payments to executive officers, if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above regulatory minimum risk-based requirements. The capital conservation buffer requirement was phased in beginning January 1, 2016 and ending January 1, 2019, when the full capital conservation buffer requirement became effective. The Company and the Bank are in compliance with their respective new capital requirements, including the capital conservation buffer, as of September 30, 2019.

Liquidity

As of September 30, 2019, the Company had cash and cash equivalents of $20.9 million in the form of cash, due from banks and short-term deposits with other institutions. In addition, the Company had total securities available for sale of $211.2 million which could be used for liquidity needs. This totals $232.1 million of liquidity and represents 19.1% of total assets compared to $261.6 million and 22.1% of total assets as of December 31, 2018. The Company also monitors other liquidity measures, all of which were within the Company’s policy guidelines as of September 30, 2019 and December 31, 2018. Based upon these measures, the Company believes its liquidity is adequate.    

Capital Resources

The Company has a line of credit commitment from Atlantic Community Bankers Bank for $7,000,000 which expires June 30, 2020. There were no borrowings under this line as of September 30, 2019 and December 31, 2018.

The Company has a line of credit commitment available which has no stated expiration date from PNC Bank for $16,000,000. There were no borrowings under this line as of September 30, 2019 and December 31, 2018.

40

The Company has a line of credit commitment available which has no stated expiration date from Zions Bank for $17,000,000. There were no borrowings under this line as of September 30, 2019 and December 31, 2018.

The Bank’s maximum borrowing capacity with the Federal Home Loan Bank was approximately $423,726,000 as of September 30, 2019, of which $38,103,000 and $67,873,000 was outstanding at September 30, 2019 and December 31, 2018, respectively. Additionally, as of September 30, 2019, the Bank had secured Letters of Credit from the Federal Home Loan Bank in the amount of $55.0 million as collateral for specific municipal deposits. These Letters of Credit reduce the availability under the maximum borrowing capacity. There was $45.0 million outstanding in the form of Letters of Credit as of December 31, 2018. Advances and Letters of Credit from the Federal Home Loan Bank are secured by qualifying assets of the Bank.

Non-GAAP Financial Measures

This report contains or references fully taxable-equivalent (fte) interest income and net interest income, which are non-GAAP financial measures. Interest income (fte) and net interest income (fte) are derived from GAAP interest income and net interest income using an assumed tax rate of 21%. We believe the presentation of interest income (fte) and net interest income (fte) ensures comparability of interest income and net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. Net interest income (fte) is reconciled to GAAP net interest income on pages 40 and 44. Although the Company believes that these non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP measures.

41

Results of Operations

NORWOOD FINANCIAL CORP.

Consolidated Average Balance Sheets with Resultant Interest and Rates

(Tax-Equivalent Basis, dollars in thousands)	Three Months Ended September 30,
	2019									2018
	Average Balance (2)			Interest (1)			Average Rate (3)			Average Balance (2)			Interest (1)			Average Rate (3)
Assets
Interest-earning assets:
Interest-bearing deposits with banks	$	693		$	5			2.89	%	$	471		$	2			1.70	%
Securities available for sale:
Taxable		147,079			798			2.17			168,086			895			2.13
Tax-exempt (1)		80,099			608			3.04			97,966			744			3.04
Total securities available for sale (1)		227,178			1,406			2.48			266,052			1,639			2.46
Loans receivable (1) (4) (5)		897,850			10,890			4.85			813,092			9,402			4.63
Total interest-earning assets		1,125,721			12,301			4.37			1,079,615			11,043			4.09
Non-interest earning assets:
Cash and due from banks		14,968									14,629
Allowance for loan losses		(8,344	)								(8,440	)
Other assets		83,474									67,247
Total non-interest earning assets		90,098									73,436
Total Assets	$	1,215,819								$	1,153,051
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and money market	$	232,893		$	173			0.30		$	231,234		$	110			0.19
Savings		168,972			26			0.06			179,897			23			0.05
Time		348,890			1,588			1.82			310,502			983			1.27
Total interest-bearing deposits		750,755			1,787			0.95			721,633			1,116			0.62
Short-term borrowings		56,136			135			0.96			50,998			111			0.87
Other borrowings		39,349			246			2.50			36,028			171			1.90
Total interest-bearing liabilities		846,240			2,168			1.02			808,659			1,398			0.69
Non-interest bearing liabilities:
Demand deposits		218,893									217,258
Other liabilities		16,649									9,829
Total non-interest bearing liabilities		235,542									227,087
Stockholders’ equity		134,037									117,305
Total Liabilities and Stockholders’ Equity	$	1,215,819								$	1,153,051
Net interest income/spread (tax equivalent basis)					10,133			3.35	%					9,645			3.40	%
Tax-equivalent basis adjustment					(242	)								(257	)
Net interest income				$	9,891								$	9,388
Net interest margin (tax equivalent basis)								3.60	%								3.57	%

(1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.

(2) Average balances have been calculated based on daily balances.

(3) Annualized

(4) Loan balances include non-accrual loans and are net of unearned income.

(5) Loan yields include the effect of amortization of deferred fees, net of costs.

42

Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense.

	Increase/(Decrease) Three months ended September 30, 2019 Compared to Three months ended September 30, 2018 Variance due to
	Volume			Rate			Net
	(dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with banks	$	1		$	2		$	3
Securities available for sale:
Taxable		(112	)		15			(97	)
Tax-exempt securities		(136	)		—			(136	)
Total securities		(248	)		15			(233	)
Loans receivable		1,005			483			1,488
Total interest-earning assets		758			500			1,258
Interest-bearing liabilities:
Interest-bearing demand and money market		1			62			63
Savings		(1	)		4			3
Time		161			444			605
Total interest-bearing deposits		161			510			671
Short-term borrowings		12			12			24
Other borrowings		19			56			75
Total interest-bearing liabilities		192			578			770
Net interest income (tax-equivalent basis)	$	566		$	(78	)	$	488

Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.

43

Comparison of Operating Results for the Three Months Ended September 30, 2019 to September 30, 2018

General

For the three months ended September 30, 2019, net income totaled $3,907,000 compared to $3,710,000 earned in the similar period in 2018. The increase in net income for the three months ended September 30, 2019 was due primarily to a $503,000 improvement in net interest income. Earnings per share for the current period were $0.62 per share for basic shares and fully diluted shares compared to $0.59 per share for basic shares and $0.58 per share for fully diluted shares for the three months ended September 30, 2018. The resulting annualized return on average assets and annualized return on average equity for the three months ended September 30, 2019 were 1.27% and 11.56%, respectively, compared to 1.28% and 12.55%, respectively, for the similar period in 2018.

The following table sets forth changes in net income:

(dollars in thousands)	Three months ended
	September 30, 2019 to September 30, 2018
Net income three months ended September 30, 2018	$	3,710
Change due to:
Net interest income		503
Provision for loan losses		75
Net gains on sales		156
Other income		(271	)
Salaries and employee benefits		(90	)
Occupancy, furniture and equipment		(6	)
Data processing and related operations		(112	)
Foreclosed real estate		(50	)
All other expenses		39
Income tax expense		(47	)
Net income three months ended September 30, 2019	$	3,907

Net Interest Income

Net interest income on a fully taxable equivalent basis (fte) for the three months ended September 30, 2019 totaled $10,133,000 which was $488,000 higher than the comparable period in 2018. The increase in net interest income was due primarily to a $1,488,000 increase in interest income (fte) on loans. Tax-equivalent interest income was negatively impacted by a $233,000 decrease in securities income. The fte net interest spread and net interest margin were 3.35% and 3.60%, respectively, for the three months ended September 30, 2019 compared to 3.40% and 3.57%, respectively, for the similar period in 2018. The decrease in the net interest spread reflects the increased cost of funding.

Interest income (fte) totaled $12,301,000 with a yield on average earning assets of 4.37% compared to $11,043,000 and 4.09% for the 2018 period. Average loans increased $84.8 million over the comparable period of last year, while average securities decreased $38.9 million as portfolio runoff was utilized to fund loan growth. Average earning assets totaled $1.126 billion for the three months ended September 30, 2019, an increase of $46.1 million over the average for the similar period in 2018.

44

Interest expense for the three months ended September 30, 2019 totaled $2,168,000 at an average cost of 1.02% compared to $1,398,000 and 0.69% for the similar period in 2018. The increase in average cost reflects the rising rates on borrowed funds and certificates of deposit. The average cost of time deposits, which is the most significant component of funding, increased to 1.82% from 1.27% for the similar period in the prior year.

Provision for Loan Losses

The Company’s provision for loan losses for the three months ended September 30, 2019 was $300,000 compared to $375,000 for the three months ended September 30, 2018. The Company makes provisions for loan losses in an amount necessary to maintain the allowance for loan losses at an acceptable level. Net charge-offs were $123,000 for the quarter ended September 30, 2019, compared to $421,000 for the similar period in 2018. At September 30, 2019, the allowance for loan losses represented 0.93% of loans receivable and 604% of non-performing loans.

Other Income

Other income totaled $1,882,000 for the three months ended September 30, 2019, compared to $1,997,000 for the similar period in 2018. The decrease was due primarily to a $75,000 reduction in earnings and proceeds on bank-owned life insurance policies and a $283,000 reduction in other income due to a litigation settlement in the 2018 period. Gains on sales of securities increased $156,000 over the comparable period in 2018.

Other Expense

Other expense for the three months ended September 30, 2019 totaled $6,791,000, which was $219,000 higher than the same period of 2018 due primarily to a $90,000 increase in salaries and benefits expenses and a $112,000 increase in data processing costs. All other operating expenses increased $17,000, net. The efficiency ratio was 56.5% during the three months ended September 30, 2019 and 2018.

Income Tax Expense

Income tax expense totaled $775,000 for an effective tax rate of 16.6% for the period ended September 30, 2019 compared to $728,000 for an effective tax rate of 16.4% for the similar period in 2018.

45

Results of Operations

NORWOOD FINANCIAL CORP.

Consolidated Average Balance Sheets with Resultant Interest and Rates

(Tax-Equivalent Basis, dollars in thousands)	Nine Months Ended September 30,
	2019									2018
	Average						Average			Average						Average
	Balance			Interest			Rate			Balance			Interest			Rate
	(2)			(1)			(3)			(2)			(1)			(3)
Assets
Interest-earning assets:
Interest bearing deposits with banks	$	3,853		$	70			2.42	%	$	4,789		$	63			1.75	%
Securities available for sale:
Taxable		152,404			2,545			2.23			169,475			2,674			2.10
Tax-exempt (1)		89,369			2,038			3.04			103,217			2,366			3.06
Total securities available for sale (1)		241,773			4,583			2.53			272,692			5,040			2.46
Loans receivable (1) (4) (5)		877,283			31,419			4.78			789,700			26,950			4.55
Total interest-earning assets		1,122,909			36,072			4.28			1,067,181			32,053			4.00
Non-interest earning assets:
Cash and due from banks		14,473									14,317
Allowance for loan losses		(8,472	)								(8,203	)
Other assets		79,743									67,882
Total non-interest earning assets		85,744									73,996
Total Assets	$	1,208,653								$	1,141,177
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Interest-bearing demand and money market	$	230,748		$	486			0.28		$	236,390		$	335			0.19
Savings		172,148			77			0.06			179,489			67			0.05
Time		356,222			4,792			1.79			317,549			2,796			1.17
Total interest-bearing deposits		759,118			5,355			0.94			733,428			3,198			0.58
Short-term borrowings		48,957			344			0.94			39,310			201			0.68
Other borrowings		45,059			827			2.45			33,982			442			1.73
Total interest-bearing liabilities		853,134			6,526			1.02			806,720			3,841			0.63
Non-interest bearing liabilities:
Demand deposits		210,900									209,323
Other liabilities		15,252									9,237
Total non-interest bearing liabilities		226,152									218,560
Stockholders’ equity		129,367									115,897
Total Liabilities and Stockholders’ Equity	$	1,208,653								$	1,141,177
Net interest income/spread (tax equivalent basis)					29,546			3.26	%					28,212			3.37	%
Tax-equivalent basis adjustment					(773	)								(802	)
Net interest income					$ 28,773								$	27,410
Net interest margin (tax equivalent basis)								3.51	%								3.52	%

(1) Interest and yields are presented on a tax-equivalent basis using a marginal tax rate of 21%.

(2) Average balances have been calculated based on daily balances

(3) Annualized

(4) Loan balances include non-accrual loans and are net of unearned income.

(5) Loan yields include the effect of amortization of deferred fees, net of costs.

46

Rate/Volume Analysis. The following table shows the fully taxable equivalent effect of changes in volumes and rates on interest income and interest expense.

	Increase/(Decrease) Nine months ended September 30, 2019 Compared to Nine months ended September  30, 2018 Variance due to
	Volume			Rate			Net
	(dollars in thousands)
Interest-earning assets:
Interest-bearing deposits with banks	$	(15	)	$	22		$	7
Securities available for sale:
Taxable		(215	)		86			(129	)
Tax-exempt securities		(315	)		(13	)		(328	)
Total securities		(530	)		73			(457	)
Loans receivable		3,015			1,454			4,469
Total interest-earning assets		2,470			1,549			4,019
Interest-bearing liabilities:
Interest-bearing demand and money market		(11	)		162			151
Savings		(3	)		13			10
Time		476			1,520			1,996
Total interest-bearing deposits		462			1,695			2,157
Short-term borrowings		60			83			143
Other borrowings		175			210			385
Total interest-bearing liabilities		697			1,988			2,685
Net interest income (tax-equivalent basis)	$	1,773		$	(439	)	$	1,334

Changes in net interest income that could not be specifically identified as either a rate or volume change were allocated proportionately to changes in volume and changes in rate.

47

Comparison of Operating Results for the Nine Months Ended September 30, 2019 to September 30, 2018

General

For the nine months ended September 30, 2019, net income totaled $10,619,000 compared to $10,352,000 earned in the similar period in 2018. The increase in net income for the nine months ended September 30, 2019 was due primarily to a $1,363,000 increase in net interest income. Earnings per share for the current period were $1.70 per share for basic shares and $1.68 for fully diluted shares compared to $1.66 per share for basic shares and $1.64 per share for fully diluted shares for the nine months ended September 30, 2018. The resulting annualized return on average assets and annualized return on average equity for the nine months ended September 30, 2019 were 1.17% and 10.97%, respectively, compared to 1.21% and 11.94%, respectively, for the similar period in 2018.

The following table sets forth changes in net income:

(dollars in thousands)	Nine months ended
	September 30, 2019 to September 30, 2018
Net income nine months ended September 30, 2018	$	10,352
Change due to:
Net interest income		1,363
Provision for loan losses		300
Net gains on sales		130
Other income		(513	)
Salaries and employee benefits		(470	)
Occupancy, furniture and equipment		(121	)
Data processing and related operations		(373	)
Foreclosed real estate		31
All other expenses		(118	)
Income tax expense		38
Net income nine months ended September 30, 2019	$	10,619

Net Interest Income

Net interest income on a fully taxable equivalent basis (fte) for the nine months ended September 30, 2019 totaled $29,546,000 which was $1,334,000 higher than the comparable period in 2018. The increase in net interest income was due primarily to a $4,469,000 increase in interest income (fte) on loans. Tax-equivalent interest income was negatively impacted by a $457,000 decrease in securities income. The fte net interest spread and net interest margin were 3.26% and 3.51%, respectively, for the nine months ended September 30, 2019 compared to 3.37% and 3.52%, respectively, for the similar period in 2018. The decrease in the net interest spread and margin reflects the increased cost of funding.

48

Interest income (fte) totaled $36,072,000 with a yield on average earning assets of 4.28%, compared to $32,053,000 and 4.00% for the 2018 period. Average loans increased $87.6 million over the comparable period of last year, while average securities decreased $30.9 million as portfolio runoff was utilized to fund loan growth. Average earning assets totaled $1.209 billion for the nine months ended September 30, 2019, an increase of $67.5 million over the average for the similar period in 2018.

Interest expense for the nine months ended September 30, 2019 totaled $6,526,000 at an average cost of 1.02% compared to $3,841,000 and 0.63% for the similar period in 2018. The increase in average cost reflects the rising interest rates on borrowed funds and certificates of deposit. The average cost of time deposits, which is the most significant component of funding, increased to 1.79% from 1.17% for the similar period in the prior year.

Provision for Loan Losses

The Company’s provision for loan losses for the nine months ended September 30, 2019 was $1,050,000 compared to $1,350,000 for the nine months ended September 30, 2018. The Company makes provisions for loan losses in an amount necessary to maintain the allowance for loan losses at an acceptable level. Net charge-offs were $1,097,000 for the nine months ended September 30, 2019 compared to $704,000 for the similar period in 2018. The increase in charge-offs was due primarily to two commercial credits which were written down by $786,000 in the aggregate during the 2019 period. At September 30, 2019, the allowance for loan losses represented 0.93% of loans receivable and 604% of non-performing loans.

Other Income

Other income totaled $5,083,000 for the nine months ended September 30, 2019 compared to $5,466,000 for the similar period in 2018. The decrease was due primarily to a $218,000 decrease in earnings and proceeds on bank-owned life insurance policies and a $358,000 decrease in other income due to the settlement of litigation in the 2018 period. Gains from the sales of loans and securities increased $130,000 over the first nine months of 2018, while all other items included in other income increased $63,000, net.

Other Expenses

Other expenses for the nine months ended September 30, 2019 totaled $20,224,000 which was $1,051,000 higher than the same period of 2018 due primarily to a $470,000 increase in salaries and benefits expenses and a $373,000 increase in data processing costs. All other operating expenses increased $208,000, net. The efficiency ratio for the first nine months of 2019 was 58.4% compared to 56.9% during the same period of 2018.

Income Tax Expense

Income tax expense totaled $1,963,000 for an effective tax rate of 15.6% for the period ended September 30, 2019 compared to $2,001,000 for an effective tax rate of 16.2% for the similar period in 2018.

49

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market Risk

Interest rate sensitivity and the repricing characteristics of assets and liabilities are managed by the Asset and Liability Management Committee (ALCO). The principal objective of ALCO is to maximize net interest income within acceptable levels of risk, which are established by policy. Interest rate risk is monitored and managed by using financial modeling techniques to measure the impact of changes in interest rates.

Net interest income, which is the primary source of the Company’s earnings, is impacted by changes in interest rates and the relationship of different interest rates. To manage the impact of the rate changes, the balance sheet must be structured so that repricing opportunities exist for both assets and liabilities at approximately the same time intervals. The Company uses net interest simulation to assist in interest rate risk management. The process includes simulating various interest rate environments and their impact on net interest income. As of September 30, 2019, the level of net interest income at risk in a rising or declining 200 basis point change in interest rates was within the Company’s policy limits. The Company’s policy allows for a decline of no more than 10% of net interest income for a ± 200 basis point shift in interest rates.

Imbalance in repricing opportunities at a given point in time reflects interest-sensitivity gaps measured as the difference between rate-sensitive assets (RSA) and rate-sensitive liabilities (RSL). These are static gap measurements that do not take into account any future activity, and as such are principally used as early indications of potential interest rate exposures over specific intervals.

As of September 30, 2019, the Company had a positive 90-day interest sensitivity gap of $16.1 million or 1.3% of total assets, compared to the $18.7 million negative gap, or (1.6)% of total assets, as of December 31, 2018. Rate-sensitive assets repricing within 90 days increased $22.8 million due primarily to a $16.3 million increase in loans and a $5.9 million increase in securities. Rate-sensitive liabilities repricing within 90 days decreased $12.0 million since year end due to a $9.9 million decrease in borrowings and a $3.3 million decrease in time deposits repricing. A positive gap means that rate-sensitive assets are greater than rate-sensitive liabilities at the time interval. This would indicate that in a rising rate environment, yield on interest-earning assets in the 90-day time frame could increase faster than the cost of interest-bearing liabilities. The repricing intervals are managed by ALCO strategies, including adjusting the average life of the investment portfolio, pricing of deposit liabilities to attract longer term time deposits, loan pricing to encourage variable rate products and evaluation of loan sales of long-term fixed rate mortgages.

Certain interest-bearing deposits with no stated maturity dates are included in the interest-sensitivity table below. The balances allocated to the respective time periods represent an estimate of the total outstanding balance that has the potential to migrate through withdrawal or transfer to time deposits, thereby impacting the interest-sensitivity position of the Company. The estimates were derived from an independently prepared non-maturity deposit study for Wayne Bank which addressed the various deposit types and their pricing sensitivity to movements in market interest rates. The process involved analyzing correlations between product rates and market rates over a ten-year period. The Company believes the study provides pertinent data to support the assumptions used in modeling non-maturity deposits.

50

September 30, 2019

Rate Sensitivity Table

(dollars in thousands)

	3 Months			3-12 Months			1 to 3 Years			Over 3 Years			Total
Federal funds sold and interest-bearing deposits	$	848		$	—		$	—		$	—		$	848
Securities		12,710			35,716			59,137			103,636			211,199
Loans Receivable		151,604			166,461			296,280			291,237			905,582
Total RSA	$	165,162		$	202,177		$	355,417		$	394,873		$	1,117,629
Non-maturity interest-bearing deposits	$	60,709		$	59,128		$	157,532		$	124,104		$	401,473
Time Deposits		70,416			135,891			99,088			36,354			341,749
Borrowings		17,961			29,028			38,056			3,639			88,684
Total RSL	$	149,086		$	224,047		$	294,676		$	164,097		$	831,906
Interest Sensitivity Gap	$	16,076		$	(21,870	)	$	60,741		$	230,776		$	285,723
Cumulative Gap		16,076			(5,794	)		54,947			285,723
RSA/RSL-cumulative		110.8	%		98.4	%		108.2	%		134.3	%
December 31, 2018
Interest Sensitivity Gap	$	(18,749	)	$	(60,791	)	$	18,852		$	303,804		$	243,116
Cumulative Gap		(18,749	)		(79,540	)		(60,688	)		243,116
RSA/RSL-cumulative		88.4	%		79.8	%		91.1	%		128.6	%

Item 4. Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures, as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s 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

Not applicable.

Item 1A. Risk Factors

There have been no material changes in the risk factors affecting the Company that were identified in Item 1A of Part 1 of the Company’s Form 10-K for the year ended December 31, 2018.

Item 2. Unregistered Sales of Equity Sales and Use of Proceeds

(a) Unregistered Sales of Equity Securities. Not Applicable.

(b) Use of Proceeds. Not Applicable

51

(c) Issuer Purchases of Equity Securities. Set forth below is information regarding the Company’s stock repurchases during the quarter ended September 30, 2019.

	Issuer Purchases of Equity Securities
	Total Number of Shares (or Units) Purchased		Average Price Paid Per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs *		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
July 1 – 31, 2019		—	$	—		—		129,500
August 1 – 31, 2019		—		—		—		129,500
September 1 – 30, 2019		—		—		—		129,500
Total		—	$	—		—		129,500

* On March 19, 2008, the Registrant announced its intention to repurchase up to 5% of its outstanding common stock (approximately 226,050 split-adjusted shares) in the open market. On November 10, 2011, the Registrant announced that the Company had increased the number of shares which may be repurchased under its open-market program to 5% of its currently outstanding shares, or approximately 270,600 split-adjusted shares. There is no expiration date for this plan.

Item 3. Defaults Upon Senior Securities

Not applicable

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

None

Item 6. Exhibits

No.	Description
3(i)	Amended and Restated Articles of Incorporation of Norwood Financial Corp. (1)
3(ii)	Bylaws of Norwood Financial Corp. (2)
4.0	Specimen Stock Certificate of Norwood Financial Corp. (3)
10.1	Employment Agreement with Lewis J. Critelli (4)
10.2	Change in Control Severance Agreement with William S. Lance(4)
10.3	Change in Control Severance Agreement with Robert J. Mancuso(5)
10.4	Salary Continuation Agreement between the Bank and William W. Davis, Jr. (6)
10.5	Amended and Restated Salary Continuation Agreement, dated September 1, 2017, between the Bank and Lewis J. Critelli (7)
10.6	Salary Continuation Agreement between the Bank and John H. Sanders (8)
10.7	2006 Stock Option Plan (9)
10.8	First and Second Amendments to Salary Continuation Agreement with William W. Davis, Jr. (10)
10.9	First and Second Amendments to Salary Continuation Agreement with John H. Sanders (10)
10.10	Change In Control Severance Agreement with James F. Burke(11)
10.11	2014 Equity Incentive Plan, as amended(12)
10.12	Addendum to Change in Control Severance Agreement with William S. Lance (13)

52

10.13	Salary Continuation Agreement, dated September 1, 2017, between Wayne Bank and William S. Lance (7)
10.14	Salary Continuation Agreement, dated September 1, 2017, between Wayne Bank and Robert J. Mancuso (7)
10.15	Salary Continuation Agreement, dated September  1, 2017, between Wayne Bank and James F. Burke (7)
10.16	Change-In-Control Severance Agreement, dated January  16, 2018, by and among Norwood Financial Corp., Wayne Bank, and John F. Carmody(14)
10.17	Addendum, dated January  16, 2018, to Change-In-Control Severance Agreement, dated March 2, 2010, by and among Norwood Financial Corp., Wayne Bank and William S. Lance(14)
10.18	Addendum, dated January  16, 2018, to Change-In-Control Severance Agreement, dated January 3, 2013, by and among Norwood Financial Corp., Wayne Bank and Robert J. Mancuso(14)
31.1	Rule 13a-14(a)/15d-14(a) Certification of CEO
31.2	Rule 13a-14(a)/15d-14(a) Certification of CFO
32	Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of Sarbanes Oxley Act of 2002
101	Interactive Data Files consisting of the following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.

(1) Incorporated by reference into this document from Exhibit 3(i) to the Registrant’s Form 10-Q filed with the Commission on May 9, 2019

(2) Incorporated by reference into this document from the identically numbered exhibit to the Registrant’s Form 10-Q filed with the Commission on August 8, 2014

(3) Incorporated herein by reference into this document from the identically numbered Exhibits to the Registrant’s Form 10, Registration Statement initially filed in paper with the Commission on April 29, 1996, Registration No. 0-28364

(4) Incorporated by reference into this document from the identically numbered exhibits to the Registrant’s Form 10-K filed with the Commission on March 15, 2010.

(5) Incorporated by reference into this document from Exhibit 10.4 to the Registrant’s Form 10-K filed with the Commission on March 14, 2013, File No. 0-28364.

(6) Incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-K filed with the Commission on March 23, 2000.

(7) Incorporated by reference from the exhibits to the Current Report on Form 8-K filed with the Commission on September 5, 2017.

(8) Incorporated herein by reference to Exhibit 10.11 to the Registrant’s Form 10-K filed with the Commission on March 22, 2004.

(9) Incorporated by reference to this document from Exhibit 4.1 to Registrant’s Registration Statement on Form S-8 (File No. 333-134831) filed with the Commission on June 8, 2006.

(10) Incorporated herein by reference from Exhibit 10.1 and 10.5 to the Registrant’s Current Report on Form 8-K filed on April 4, 2006.

(11) Incorporated by reference from Exhibit 10.13 to the Registrant’s Form 10-Q filed with the Commission on November 7, 2013.

(12) Incorporated by reference to Exhibit 10.1 to Post-Effective No. 1 to the Registrant’s Registration Statement on Form S-8 (File No. 333-195643) filed with the Commission on May 4, 2018.

(13) Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on February 18, 2015.

(14) Incorporated by reference into this document from the exhibits to the Registrant’s Current Report on Form 8-K filed with the Commission on January 16, 2018.

53

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.

		NORWOOD FINANCIAL CORP.
Date: November 8, 2019	By:	/s/ Lewis J. Critelli
		Lewis J. Critelli
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 8, 2019	By:	/s/ William S. Lance
		William S. Lance
		Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

54

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Lewis J. Critelli, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Norwood Financial Corp.;

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 the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: November 8, 2019	/s/ Lewis J. Critelli
	Lewis J. Critelli
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, William S. Lance, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Norwood Financial Corp.;

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 the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: November 8, 2019	/s/ William S. Lance
	William S. Lance
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Norwood Financial Corp. (the Company) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Lewis J. Critelli, President and Chief Executive Officer, and William S. Lance, Executive Vice President and Chief Financial Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Lewis J. Critelli	/s/ William S. Lance
Lewis J. Critelli	William S. Lance
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer

November 8, 2019

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Securities

9 Months Ended

Sep. 30, 2019

Securities [Abstract]

Securities

7.         Securities

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

	September 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	78,145	$	1,396	$	(14)	$	79,527
Corporate obligations		6,200		5		(4)		6,201
Mortgage-backed securities-
government sponsored entities		126,087		346		(962)		125,471
Total debt securities	$	210,432	$	1,747	$	(980)	$	211,199

	December 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	99,218	$	385	$	(1,990)	$	97,613
Corporate obligations		8,896		-		(256)		8,640
Mortgage-backed securities-government
sponsored entities		142,197		25		(5,198)		137,024
Total debt securities	$	250,311	$	410	$	(7,444)	$	243,277

The following tables show the Company’s investments’ gross unrealized losses and fair value aggregated by length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	September 30, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
States and political subdivisions	$	7,697	$	(12)	$	481	$	(2)	$	8,178	$	(14)
Corporate obligations		-		-		3,109		(4)		3,109		(4)
Mortgage-backed securities-government sponsored entities		25,071		(118)		64,124		(844)		89,195		(962)
	$	32,768	$	(130)	$	67,714	$	(850)	$	100,482	$	(980)

	December 31, 2018
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
States and political subdivisions	$	19,140	$	(390)	$	56,740	$	(1,600)	$	75,880	$	(1,990)
Corporate obligations		2,045		(21)		6,595		(235)		8,640		(256)
Mortgage-backed securities-government sponsored entities		8,444		(22)		122,950		(5,176)		131,394		(5,198)
	$	29,629	$	(433)	$	186,285	$	(7,011)	$	215,914	$	(7,444)

At September 30, 2019, the Company had 30 debt securities in an unrealized loss position in the less than twelve months category and 58 debt securities in the twelve months or more category.  In Management’s opinion the unrealized losses reflect changes in interest rates subsequent to the acquisition of specific securities.  No other-than-temporary-impairment charges were recorded in 2019.  Management believes that all unrealized losses represent temporary impairment of the securities as the Company does not have the intent to sell the securities and it is more likely than not that it will not have to sell the securities before recovery of its cost basis.

The amortized cost and fair value of debt securities as of September 30, 2019 by contractual maturity are shown below.  Expected maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized Cost		Fair Value
		(In Thousands)
Due in one year or less	$	4,365	$	4,378
Due after one year through five years		17,693		17,705
Due after five years through ten years		33,194		33,365
Due after ten years		29,093		30,280
		84,345		85,728
Mortgage-backed securities-government sponsored entities		126,087		125,471
	$	210,432	$	211,199

Gross realized gains and gross realized losses on sales of securities available for sale were as follows (in thousands):

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2019		2018		2019		2018
Gross realized gains	$	169	$	13	$	233	$	213
Gross realized losses		-		-		-		-
Net realized gain	$	169	$	13	$	233	$	213
Proceeds from sales of securities	$	19,326	$	3,162	$	22,862	$	17,745

Securities with a carrying value of $179,075,000 and $169,984,000 at September 30, 2019 and 2018, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.  

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

3.         Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.  Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock, and are determined using the treasury stock method.

The following table sets forth the weighted average shares outstanding used in the computations of basic and diluted earnings per share. 

(in thousands)	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019	2018	2019	2018
Weighted average shares outstanding	6,296	6,264	6,293	6,259
Less: Unvested restricted shares	(35)	(30)	(35)	(30)
Basic EPS weighted average shares outstanding	6,261	6,234	6,258	6,229
Basic EPS weighted average shares outstanding	6,261	6,234	6,258	6,229
Add:  Dilutive effect of stock options and restricted shares	48	70	50	72
Diluted EPS weighted average shares outstanding	6,309	6,304	6,308	6,301

For the three and nine month periods ended September 30, 2019, there were  60,650 stock options that were anti-dilutive and thereby excluded from the earnings per share calculations based upon the closing price of Norwood common stock of $31.61 per share as of September 30, 2019.

For the three and nine month periods ended September 30, 2018, there were no stock options that would be anti-dilutive to the earnings per share calculations based upon the closing price of Norwood common stock of $39.16 per share on September 30, 2018.

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Basis of Presentation (Policy)

9 Months Ended

Sep. 30, 2019

Basis of Presentation [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited consolidated financial statements include the accounts of Norwood Financial Corp. (Company) and its wholly-owned subsidiary, Wayne Bank (Bank) and the Bank’s wholly-owned subsidiaries, WCB Realty Corp., Norwood Investment Corp., and WTRO Properties, Inc.  All significant intercompany transactions have been eliminated in consolidation. 

The accompanying unaudited consolidated  financial statements have been prepared in conformity with generally accepted accounting principles for interim financial statements and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.  Actual results could differ from those estimates.  The financial statements reflect, in the opinion of management, all normal, recurring adjustments necessary to present fairly the consolidated financial position and results of operations of the Company.  The operating results for the three month and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future interim period.

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Earnings Per Share (Narrative) (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Earnings Per Share [Abstract]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	60,650	0	60,650	0
Share price	$ 31.61	$ 39.16	$ 31.61	$ 39.16	$ 33.00

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Stock-Based Compensation (Summary of Restricted Stock Activity) (Details) - $ / shares	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Stock Based Compensation [Abstract]
Restricted stock Non-vested, beginning balance	34,615	30,415
Restricted stock, granted	0	0
Restricted stock, vested	0	0
Restricted stock, forfeited	0	0
Restricted stock Non-vested, ending balance	34,615	30,415
Restricted stock Non-vested, weighted-average grant date fair value, beginning balance	$ 27.82	$ 24.46
Restricted stock, granted, weighted-average grant date fair value	0.00	0.00
Restricted stock, vested, weighted-average grant date fair value	0.00	0.00
Restricted stock, forfeited, weighted-average grant date fair value	0.00	0.00
Restricted stock Non-vested, weighted-average grant date fair value, ending balance	$ 27.82	$ 24.46

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Basis of Presentation [Abstract]

Basis of Presentation

1.         Basis of Presentation

The unaudited consolidated financial statements include the accounts of Norwood Financial Corp. (Company) and its wholly-owned subsidiary, Wayne Bank (Bank) and the Bank’s wholly-owned subsidiaries, WCB Realty Corp., Norwood Investment Corp., and WTRO Properties, Inc.  All significant intercompany transactions have been eliminated in consolidation. 

The accompanying unaudited consolidated  financial statements have been prepared in conformity with generally accepted accounting principles for interim financial statements and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period.  Actual results could differ from those estimates.  The financial statements reflect, in the opinion of management, all normal, recurring adjustments necessary to present fairly the consolidated financial position and results of operations of the Company.  The operating results for the three month and nine month periods ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other future interim period.

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Fair Value of Assets and Liabilities (Fair Value, by Balance Sheet Grouping) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets: Cash and cash equivalents, Fair Value Disclosure	$ 20,915	$ 18,348
Financial assets: Loans receivable, net, Fair Value Disclosure	917,146	840,134
Financial assets: Mortgage servicing rights, Fair Value Disclosure	220	220
Financial assets: Regulatory stock, Fair Value Disclosure	3,137	3,926
Financial assets: Bank owned life insurance, Fair Value Disclosure	38,562	37,932
Financial assets: Accrued interest receivable, Fair Value Disclosure	3,726	3,776
Financial liabilities: Deposits, Fair Value Disclosure	977,729	945,773
Financial liabilities: Short-term borrowings, Fair Value Disclosure	52,778	53,046
Financial liabilities: Other borrowings, Fair Value Disclosure	36,229	52,043
Financial liabilities: Accrued interest payable, Fair Value Disclosure	2,623	1,806
Off-balance sheet financial instruments: Commitments to extend credit and outstanding letters of credit, Fair Value Disclosure	0	0
Financial assets: Cash and cash equivalents	20,915	18,348	$ 17,368	$ 16,697
Financial assets: Loans receivable, net	897,177	841,730
Financial assets: Mortgage servicing rights	180	178
Financial assets: Regulatory stock	3,137	3,926
Financial assets: Bank owned life insurance	38,562	37,932
Financial assets: Accrued interest receivable	3,726	3,776
Financial liabilities: Deposits	974,433	946,780
Financial liabilities: Short-term borrowings	52,778	53,046
Financial liabilities: Other borrowings	35,906	52,284
Financial liabilities: Accrued interest payable	2,623	1,806
Off-balance sheet financial instruments: Commitments to extend credit and outstanding letters of credit	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets: Cash and cash equivalents, Fair Value Disclosure	20,915	18,348
Financial assets: Loans receivable, net, Fair Value Disclosure	0	0
Financial assets: Mortgage servicing rights, Fair Value Disclosure	0	0
Financial assets: Regulatory stock, Fair Value Disclosure	3,137	3,926
Financial assets: Bank owned life insurance, Fair Value Disclosure	38,562	37,932
Financial assets: Accrued interest receivable, Fair Value Disclosure	3,726	3,776
Financial liabilities: Deposits, Fair Value Disclosure	632,151	601,604
Financial liabilities: Short-term borrowings, Fair Value Disclosure	52,778	53,046
Financial liabilities: Other borrowings, Fair Value Disclosure	0	0
Financial liabilities: Accrued interest payable, Fair Value Disclosure	2,623	1,806
Off-balance sheet financial instruments: Commitments to extend credit and outstanding letters of credit, Fair Value Disclosure	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets: Cash and cash equivalents, Fair Value Disclosure	0	0
Financial assets: Loans receivable, net, Fair Value Disclosure	0	0
Financial assets: Mortgage servicing rights, Fair Value Disclosure	0	0
Financial assets: Regulatory stock, Fair Value Disclosure	0	0
Financial assets: Bank owned life insurance, Fair Value Disclosure	0	0
Financial assets: Accrued interest receivable, Fair Value Disclosure	0	0
Financial liabilities: Deposits, Fair Value Disclosure	0	0
Financial liabilities: Short-term borrowings, Fair Value Disclosure	0	0
Financial liabilities: Other borrowings, Fair Value Disclosure	0	0
Financial liabilities: Accrued interest payable, Fair Value Disclosure	0	0
Off-balance sheet financial instruments: Commitments to extend credit and outstanding letters of credit, Fair Value Disclosure	0	0
Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial assets: Cash and cash equivalents, Fair Value Disclosure	0	0
Financial assets: Loans receivable, net, Fair Value Disclosure	917,146	840,134
Financial assets: Mortgage servicing rights, Fair Value Disclosure	220	220
Financial assets: Regulatory stock, Fair Value Disclosure	0	0
Financial assets: Bank owned life insurance, Fair Value Disclosure	0	0
Financial assets: Accrued interest receivable, Fair Value Disclosure	0	0
Financial liabilities: Deposits, Fair Value Disclosure	345,045	344,169
Financial liabilities: Short-term borrowings, Fair Value Disclosure	0	0
Financial liabilities: Other borrowings, Fair Value Disclosure	36,229	52,043
Financial liabilities: Accrued interest payable, Fair Value Disclosure	0	0
Off-balance sheet financial instruments: Commitments to extend credit and outstanding letters of credit, Fair Value Disclosure	$ 0	$ 0

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 01, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	NORWOOD FINANCIAL CORP
Entity Central Index Key	0001013272
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		6,300,881
Entity Interactive Data Current	Yes

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Fair Value of Assets and Liabilities (Narrative) (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) loan	Dec. 31, 2018 USD ($) loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of impaired loans not requiring a valuation allowance | loan		6
Impaired Loans, Cumulative Charge-Offs | $	$ 587	$ 428
Number of impaired loans requiring a valuation allowance | loan	5
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value | $	$ 514	$ 1,319

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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
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 3,907	$ 3,710	$ 10,619	$ 10,352
Investment securities available for sale:
Unrealized holding gain (loss)	1,059	(1,830)	8,034	(7,160)
Tax effect	(224)	384	(1,688)	1,503
Reclassification of investment securities gains recognized in net income	(169)	(13)	(233)	(213)
Tax effect	37	3	50	45
Other comprehensive income (loss)	703	(1,456)	6,163	(5,825)
Comprehensive Income	$ 4,610	$ 2,254	$ 16,782	$ 4,527

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Securities (Schedule of Investments' Gross Unrealized Losses and Fair Value Aggregated by Security Type and Length of Time that Individual Securities have been in a Continuous Unrealized Loss Position) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Investments [Line Items]
Less than 12 Months, Fair Value	$ 32,768	$ 29,629
Less than 12 Months, Unrealized Losses	(130)	(433)
12 Months or More, Fair Value	67,714	186,285
12 Months or More, Unrealized Losses	(850)	(7,011)
Total, Fair Value	100,482	215,914
Total, Unrealized Losses	(980)	(7,444)
States and Political Subdivisions [Member]
Schedule of Investments [Line Items]
Less than 12 Months, Fair Value	7,697	19,140
Less than 12 Months, Unrealized Losses	(12)	(390)
12 Months or More, Fair Value	481	56,740
12 Months or More, Unrealized Losses	(2)	(1,600)
Total, Fair Value	8,178	75,880
Total, Unrealized Losses	(14)	(1,990)
Corporate Obligations [Member]
Schedule of Investments [Line Items]
Less than 12 Months, Fair Value	0	2,045
Less than 12 Months, Unrealized Losses	0	(21)
12 Months or More, Fair Value	3,109	6,595
12 Months or More, Unrealized Losses	(4)	(235)
Total, Fair Value	3,109	8,640
Total, Unrealized Losses	(4)	(256)
Mortgage-backed Securities-Government Sponsored Entities [Member]
Schedule of Investments [Line Items]
Less than 12 Months, Fair Value	25,071	8,444
Less than 12 Months, Unrealized Losses	(118)	(22)
12 Months or More, Fair Value	64,124	122,950
12 Months or More, Unrealized Losses	(844)	(5,176)
Total, Fair Value	89,195	131,394
Total, Unrealized Losses	$ (962)	$ (5,198)

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Loans Receivable and Allowance for Loan Losses (Composition of the Loan Portfolio) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 905,649		$ 850,302
Deferred fees, net	(67)		(120)
Total loans receivable	905,582		850,182
Allowance for loan losses	(8,405)	$ (8,228)	(8,452)	$ (8,280)	$ (8,326)	$ (7,634)
Net loans receivable	$ 897,177		$ 841,730
Percent of Loans	100.00%		100.00%
Residential Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 230,624		$ 235,523
Allowance for loan losses	$ (1,568)	(1,447)	$ (1,328)	(1,374)	(1,455)	(1,272)
Percent of Loans	25.50%		27.70%
Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 384,376		$ 374,790
Allowance for loan losses	$ (4,566)	(4,694)	$ (5,455)	(5,259)	(5,247)	(5,265)
Percent of Loans	42.40%		44.10%
Construction Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 18,267		$ 17,445
Allowance for loan losses	$ (107)	(112)	$ (93)	(94)	(128)	(90)
Percent of Loans	2.00%		2.00%
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 126,835		$ 110,542
Allowance for loan losses	$ (943)	(896)	$ (712)	(714)	(690)	(463)
Percent of Loans	14.00%		13.00%
Consumer Loans To Individuals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Loans	$ 145,547		$ 112,002
Allowance for loan losses	$ (1,221)	$ (1,079)	$ (864)	$ (839)	$ (806)	$ (544)
Percent of Loans	16.10%		13.20%

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Off-Balance Sheet Financial Instruments and Gurantees (Tables)

9 Months Ended

Sep. 30, 2019

Off-Balance Sheet Financial Instruments and Gurantees [Abstract]

Schedule of Fair Value, Off-balance Sheet Risks

(in thousands)	September 30,
	2019		2018
Commitments to grant loans	$	49,806	$	51,225
Unfunded commitments under lines of credit		65,854		78,024
Standby letters of credit		3,687		4,410
	$	119,347	$	133,659

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2019

Revenue Recognition [Abstract]

Noninterest Income

		Three months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	72	$	66
ATM fees		106		108
Overdraft fees		323		372
Safe deposit box rental		22		23
Loan related service fees		228		152
Debit card fees		370		358
Fiduciary activities		167		151
Commissions on mutual funds and annuities		30		51
Other income		143		374
Noninterest Income (in-scope of Topic 606)		1,461		1,655
Out-of-scope of Topic 606:
Net realized gains on sales of securities		169		13
Loan servicing fees		15		17
Gains on sales of loans		15		15
Earnings on and proceeds from bank-owned life insurance		222		297
Noninterest Income (out-of-scope of Topic 606)		421		342
Total Noninterest Income	$	1,882	$	1,997

		Nine months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	205	$	195
ATM fees		287		299
Overdraft fees		1,017		1,137
Safe deposit box rental		71		76
Loan related service fees		451		387
Debit card fees		1,067		991
Fiduciary activities		454		463
Commissions on mutual funds and annuities		111		154
Other income		379		651
Noninterest Income (in-scope of Topic 606)		4,042		4,353
Out-of-scope of Topic 606:
Net realized gains on sales of securities		233		213
Loan servicing fees		53		37
Gains on sales of loans		125		15
Earnings on and proceeds from bank-owned life insurance		630		848
Noninterest Income (out-of-scope of Topic 606)		1,041		1,113
Total Noninterest Income	$	5,083	$	5,466

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Securities (Schedule of Amortized Cost and Fair Value Of Debt Securities by Contractual Maturity) (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Securities [Abstract]
Available for Sale, Amortized Cost, Due in one year or less	$ 4,365
Available for Sale, Amortized Cost, Due after one year through five years	17,693
Available for Sale, Amortized Cost, Due after five years through ten years	33,194
Available for Sale, Amortized Cost, Due after ten years	29,093
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Amortized Cost Basis, Total	84,345
Available for Sale, Amortized Cost, Mortgage-backed securities- government sponsored agencies	126,087
Available for Sale, Amortized Cost, Total	210,432
Available for Sale, Fair Value, Due in one year or less	4,378
Available for Sale, Fair Value, Due after one year through five years	17,705
Available for Sale, Fair Value, Due after five years through ten years	33,365
Available for Sale, Fair Value, Due after ten years	30,280
Available-for-sale Securities, Debt Maturities, Single Maturity Date, Total	85,728
Available for Sale, Fair Value, Mortgage-backed securities-government sponsored agencies	125,471
Available for Sale, Fair Value, Total	$ 211,199

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Loans Receivable and Allowance for Loan Losses (Information Regarding Loans Acquired and Accounted for in Accordance with ASC 310-30) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Loans Receivable and Allowance for Loan Losses [Abstract]
Outstanding Balance	$ 946	$ 1,055
Carrying Amount	$ 807	$ 886

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income (Loss) [Abstract]

Summary of Changes In Accumulated Other Comprehensive Income (Loss)

	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of June 30, 2019	$	440
Other comprehensive income before reclassification		835
Amount reclassified from accumulated other comprehensive loss		(132)
Total other comprehensive income		703
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  June 30, 2018	$	(7,036)
Other comprehensive loss before reclassification		(1,446)
Amount reclassified from accumulated other comprehensive loss		(10)
Total other comprehensive loss		(1,456)
Balance as of September 30, 2018	$	(8,492)

	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  December 31, 2018	$	(5,020)
Other comprehensive income before reclassification		6,346
Amount reclassified from accumulated other comprehensive loss		(183)
Total other comprehensive income		6,163
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  December 31, 2017	$	(2,667)
Other comprehensive loss before reclassification		(5,657)
Amount reclassified from accumulated other comprehensive loss		(168)
Total other comprehensive loss		(5,825)
Balance as of September 30, 2018	$	(8,492)

(a) All amounts are net of tax.  Amounts in parentheses indicate debits.

Significant Amounts Reclassified Out of Each Component of Accumulated Other Comprehensive Income (Loss)

	Amount Reclassified
	From Accumulated				Affected Line Item in
	Other				Consolidated
	Comprehensive				Statements
Details about other comprehensive income	Income (Loss) (a)				of Income
		Three months ended
		September 30,
		2019		2018
Unrealized gains on available for sale securities	$	169	$	13	Net realized gains on sales of securities
		(37)		(3)	Income tax expense
	$	132	$	10
		Nine months ended
		September 30,
		2019		2018
Unrealized gains on available for sale securities	$	233	$	213	Net realized gains on sales of securities
		(50)		(45)	Income tax expense
	$	183	$	168

(a)  Amounts in parentheses indicate debits to net income

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Loans Receivable and Allowance for Loan Losses (Policy)

9 Months Ended

Sep. 30, 2019

Loans Receivable and Allowance for Loan Losses [Abstract]

Loans Receivable

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans.  Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers.  Specific loan loss allowances are established for identified losses based on a review of such information.  A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.  All loans identified as impaired are evaluated independently.  We do not aggregate such loans for evaluation purposes.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.  Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired, or are classified as a troubled debt restructuring.

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New and Recently Adopted Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

New and Recently Adopted Accounting Pronouncements [Abstract]

New and Recently Adopted Accounting Pronouncements

10. New and Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements  

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. A short-term lease is defined as one in which (a) the lease term is 12 months or less and (b) there is not an option to purchase the underlying asset that the lessee is reasonably certain to exercise. For short-term leases, lessees may elect to recognize lease payments over the lease term on a straight-line basis. ASU 2016-02 was effective for the Company on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, “Leases (Topic 842) - Targeted Improvements,” which, among other things, provides an additional transition method that would allow entities to not apply the guidance in ASU 2016-02 in the comparative periods presented in the financial statements and instead recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. In December 2018, the FASB also issued ASU 2018-20, “Leases (Topic 842)- Narrow-Scope Improvements for Lessors,” which provides for certain policy elections and changes lessor accounting for sales and similar taxes and certain lessor costs. Upon adoption of ASU 2016-02, ASU 2018-11 and ASU 2018-20 on January 1, 2019, we recorded recognized a right-of-use assets and related lease liabilities totaling $5.3 million each, which are recorded in other assets and other liabilities, respectively.

New Accounting Pronouncements Not Yet Adopted

 In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the impairment model for most financial assets. This Update is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The underlying premise of the Update is that financial assets measured at amortized cost should be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The allowance for credit losses should reflect management’s current estimate of credit losses that are expected to occur over the remaining life of a financial asset. The income statement will be effected for the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. With certain exceptions, transition to the new requirements will be through a cumulative effect adjustment to opening retained earnings as of the beginning of the first reporting period in which the guidance is adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  The final ASU is expected to be issued in mid-November. We expect to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, but cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. To simplify the subsequent measurement of goodwill, the FASB eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in this Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting units fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. A public business entity that is not an SEC filer should adopt the amendments in this Update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2020. All other entities, including not-for-profit entities, that are adopting the amendments in this Update should do so for their annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 350, Intangibles – Goodwill and Other, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  The final ASU is expected to be issued in mid-November. This Update is not expected to have a significant impact on the Company’s financial statements.

In February 2017, the FASB issued ASU 2017-06,  Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), and Health and Welfare Benefit Plans (Topic 965).  This Update relates primarily to the reporting by an employee benefit plan for its interest in a master trust, which is a trust for which a regulated financial institution serves as a trustee or custodian and in which assets of more than one plan sponsored by a single employer or by a group of employers under common control are held. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trusts balances in each general type of investments. There are also increased disclosure requirements for investments in master trusts. The amendments in this Update are effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. This Update is not expected to have a significant impact on the Company’s financial statements.

ASU 2018-04, Investments – Debt Securities (Topic 320) and Regulated Operations (Topic 980) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 117 and SEC Release No. 33-9273, ASU 2018-04 supersedes various SEC paragraphs and adds an SEC paragraph pursuant to the issuance of Staff Accounting Bulletin No. 117.

In May 2018, the FASB issued ASU 2018-06, Codification Improvements to Topic 942, Financial Services – Depository and Lending, which supersedes outdated guidance related to the Office of the Comptroller of the Currency (OCC)’s Banking Circular 202, Accounting for Net Deferred Tax Charges (Circular 202), because that guidance has been rescinded by the OCC and no longer is relevant.

In August 2018, the FASB issued ASU 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. This Update is intended to improve financial reporting for insurance companies that issue long-duration contracts, such as life insurance, disability income, long-term care, and annuities, by requiring updated assumptions for liability measurement, standardizing the liability discount rate, simplifying and improving the accounting for certain market-based options or guarantees associated with deposit (or account balance) contracts by requiring those benefits to be measured at fair value instead of using two different measurement models, simplifying the amortization of deferred acquisition costs, and increasing transparency by improving the effectiveness of disclosures. This Update is effective for public business entities for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. On October 16, 2019, the FASB voted to defer the effective date for ASC 944, Financial Services – Insurance, for public business entities that are SEC filers, except for smaller reporting companies, to fiscal years beginning after December 15, 2021, and interim periods within those fiscal years and for all other entities, including smaller reporting companies, to fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.  The final ASU is expected to be issued in mid-November.This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes the Disclosure Requirements for Fair Value Measurements. The Update removes the requirement to disclose the amount of and reasons for transfers between Level I and Level II of the fair value hierarchy; the policy for timing of transfers between levels; and the valuation processes for Level III fair value measurements. The Update requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level III fair value measurements held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level III fair value measurements. This Update is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits (Topic 715-20). This Update amends ASC 715 to add, remove and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The Update eliminates the requirement to disclose the amounts in accumulated other comprehensive income expected to be recognized as part of net periodic benefit cost over the next year. The Update also removes the disclosure requirements for the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost and the benefit obligation for postretirement health care benefits. This Update is effective for public business entities for fiscal years ending after December 15, 2020, and must be applied on a retrospective basis. For all other entities, this Update is effective for fiscal years ending after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40). This Update addresses customers’ accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This Update is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. The amendments in this Update can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. This Update is not expected to have a significant impact on the Company’s financial statements.

In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815). The amendments in this Update permit use of the Overnight Index Swap (OIS) rate based on the Secured Overnight Financing Rate (SOFR) as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815, in addition to the interest rates on direct Treasury obligations of the U.S. government, the London Interbank Offered Rate (LIBOR) swap rate, the OIS rate based on the Fed Funds Effective Rate, and the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Rate. For entities that have not already adopted Update 2017-12, the amendments in this Update are required to be adopted concurrently with the amendments in Update 2017-12. For public business entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities that already have adopted the amendments in Update 2017-12, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted in any interim period upon issuance of this Update if an entity already has adopted Update 2017-12. This Update is not expected to have a significant impact on the Company’s financial statements.

In October, 2018, the FASB issued ASU 2018-17, Consolidation (Topic 810), which made improvements in 1) applying the variable interest entity (VIE) guidance to private companies under common control and 2) considering indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. Under the amendments in this Update, a private company may elect not to apply VIE guidance to legal entities under common control (including common control leasing arrangements) if both the parent and the legal entity being evaluated for consolidation are not public business entities. In addition, indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. For entities other than private companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The amendments in this Update are effective for a private company for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In November, 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808), which made the following targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements (1) clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of a unit of account, (2) add unit-of-account guidance in Topic 808 to align with the guidance in Topic 606  (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic 606, and (3) require that in a transaction with a collaborative arrangement participant that is not directly related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if the collaborative arrangement participant is not a customer. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. This Update is not expected to have a significant impact on the Company’s financial statements.

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, which affects a variety of topics in the Codification and applies to all reporting entities within the scope of the affected accounting guidance. Topic 326, Financial Instruments – Credit Losses amendments are effective for SEC registrants for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. For all other public business entities, the effective date is for fiscal years beginning after December 15, 2020, and for all other entities, the effective date is for fiscal years beginning after December 15, 2021. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  The final ASU is expected to be issued in mid-November.  Topic 815, Derivatives and Hedging amendments are effective for public business entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020. For entities that have adopted the amendments in Update 2017-12, the effective date is as of the beginning of the first annual period beginning after the issuance of this Update. Topic 825, Financial Instruments amendmentsare effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years. This Update is not expected to have a significant impact on the Company’s financial statements.

In May 2019, the FASB issued ASU 2019-05, Financial Instruments – Credit Losses, Topic 326, which allows entities to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost upon adoption of the new credit losses standard. To be eligible for the transition election, the existing financial asset must otherwise be both within the scope of the new credit losses standard and eligible for the applying the fair value option in ASC 825-10.3. The election must be applied on an instrument-by-instrument basis and is not available for either available-for-sale or held-to-maturity debt securities. For entities that elect the fair value option, the difference between the carrying amount and the fair value of the financial asset would be recognized through a cumulative-effect adjustment to opening retained earnings as of the date an entity adopted ASU 2016-13. Changes in fair value of that financial asset would subsequently be reported in current earnings. For entities that have not yet adopted ASU 2016-13, the effective dates and transition requirements are the same as those in ASU 2016-13. For entities that have adopted ASU 2016-13, ASU 2019-05 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted once ASU 2016-13 has been adopted. On October 16, 2019, the FASB voted to defer the effective date for ASC 326, Financial Instruments – Credit Losses, for smaller reporting companies to fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.  The final ASU is expected to be issued in mid-November.  The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections, Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates. This ASU amends various SEC paragraphs pursuant to the issuance of SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization. Other miscellaneous updates to agree to the electronic Code of Federal Regulations also have been incorporated.

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Off-Balance Sheet Financial Instruments and Gurantees

9 Months Ended

Sep. 30, 2019

Off-Balance Sheet Financial Instruments and Gurantees [Abstract]

Off-Balance Sheet Financial Instruments and Gurantees

6.         Off-Balance Sheet Financial Instruments and Guarantees

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and letters of credit.  Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and letters of credit is represented by the contractual amount of those instruments.  The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of the Bank’s financial instrument commitments is as follows:

(in thousands)	September 30,
	2019		2018
Commitments to grant loans	$	49,806	$	51,225
Unfunded commitments under lines of credit		65,854		78,024
Standby letters of credit		3,687		4,410
	$	119,347	$	133,659

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.  Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.  Since some of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.  The Bank evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by the Bank upon extension of credit, is based on management’s credit evaluation of the customer and generally consists of real estate.

The Bank does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit.  Standby letters of credit written are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party.  Generally, all letters of credit, when issued, have expiration dates within one year.  The credit risk involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers.  The Bank, generally, holds collateral and/or personal guarantees supporting these commitments.  Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.  The current amount of the liability as of September 30, 2019 for guarantees under standby letters of credit issued is not material.

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Revenue Recognition

9 Months Ended

Sep. 30, 2019

Revenue Recognition [Abstract]

Revenue Recognition

2.Revenue Recognition

Management has determined that the primary sources of revenue emanating from interest income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans, commitment fees, and fees from financial guarantees are not within the scope of ASC 606.  As a result, no changes were made during the period related to those sources of revenue.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30:

		Three months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	72	$	66
ATM fees		106		108
Overdraft fees		323		372
Safe deposit box rental		22		23
Loan related service fees		228		152
Debit card fees		370		358
Fiduciary activities		167		151
Commissions on mutual funds and annuities		30		51
Other income		143		374
Noninterest Income (in-scope of Topic 606)		1,461		1,655
Out-of-scope of Topic 606:
Net realized gains on sales of securities		169		13
Loan servicing fees		15		17
Gains on sales of loans		15		15
Earnings on and proceeds from bank-owned life insurance		222		297
Noninterest Income (out-of-scope of Topic 606)		421		342
Total Noninterest Income	$	1,882	$	1,997

		Nine months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	205	$	195
ATM fees		287		299
Overdraft fees		1,017		1,137
Safe deposit box rental		71		76
Loan related service fees		451		387
Debit card fees		1,067		991
Fiduciary activities		454		463
Commissions on mutual funds and annuities		111		154
Other income		379		651
Noninterest Income (in-scope of Topic 606)		4,042		4,353
Out-of-scope of Topic 606:
Net realized gains on sales of securities		233		213
Loan servicing fees		53		37
Gains on sales of loans		125		15
Earnings on and proceeds from bank-owned life insurance		630		848
Noninterest Income (out-of-scope of Topic 606)		1,041		1,113
Total Noninterest Income	$	5,083	$	5,466

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Earnings Per Share (Schedule of Weighted Average Shares Outstanding Used in the Computations of Basic and Diluted Earnings Per Share) (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Weighted average shares outstanding	6,296	6,264	6,293	6,259
Less: Unvested restricted shares	(35)	(30)	(35)	(30)
Basic EPS weighted average shares outstanding	6,261	6,234	6,258	6,229
Add: Dilutive effect of stock options and restricted shares	48	70	50	72
Diluted EPS weighted average shares outstanding	6,309	6,304	6,308	6,301

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Accumulated Other Comprehensive Income (Loss) (Summary Of Changes In Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ (5,020)
Other comprehensive income (loss)	$ 703	$ (1,456)	6,163	$ (5,825)
Ending balance	1,143		1,143
Unrealized gains (losses) on available for sale securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	440	(7,036)	(5,020)	(2,667)
Other comprehensive income (loss) before reclassification	835	(1,446)	6,346	(5,657)
Other comprehensive income (loss)	703	(1,456)	6,163	(5,825)
Ending balance	1,143	(8,492)	1,143	(8,492)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss)	703	(1,456)	6,163	(5,825)
Amount Reclassified From Accumulated Other Comprehensive Income (Loss) [Member] | Unrealized gains (losses) on available for sale securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amount reclassified from accumulated other comprehensive loss	$ (132)	$ (10)	$ (183)	$ (168)

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Fair Value of Assets and Liabilities (Additional Qualitative Information about Level 3 Assets) (Details) $ in Thousands	Sep. 30, 2019 USD ($) item	Dec. 31, 2018 USD ($) item
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure | $	$ 514	$ 1,319
Impaired Loans [Member] | Appraisal of collateral [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure | $	311	232
Impaired Loans [Member] | Present value of future cash flows [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure | $	$ 203	$ 1,087
Impaired Loans [Member] | Minimum [Member] | Appraisal of collateral [Member] | Measurement Input, Appraised Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.1	0.1
Impaired Loans [Member] | Minimum [Member] | Present value of future cash flows [Member] | Measurement Input, Discount Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.04	0.04
Impaired Loans [Member] | Maximum [Member] | Appraisal of collateral [Member] | Measurement Input, Appraised Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.1000	0.8154
Impaired Loans [Member] | Maximum [Member] | Present value of future cash flows [Member] | Measurement Input, Discount Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.0697	0.06
Impaired Loans [Member] | Weighted Average [Member] | Appraisal of collateral [Member] | Measurement Input, Appraised Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.1000	0.5606
Impaired Loans [Member] | Weighted Average [Member] | Present value of future cash flows [Member] | Measurement Input, Discount Rate [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing Asset, Measurement Input	0.0535	0.058
Foreclosed Real Estate Owned [Member] | Appraisal of collateral [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure | $	$ 1,572	$ 1,115
Foreclosed Real Estate Owned [Member] | Minimum [Member] | Appraisal of collateral [Member] | Measurement Input, Cost to Sell [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate Owned, Measurement Input	0.07	0.07
Foreclosed Real Estate Owned [Member] | Maximum [Member] | Appraisal of collateral [Member] | Measurement Input, Cost to Sell [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate Owned, Measurement Input	0.1000	0.8571
Foreclosed Real Estate Owned [Member] | Weighted Average [Member] | Appraisal of collateral [Member] | Measurement Input, Cost to Sell [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate Owned, Measurement Input	0.0816	0.078

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Loans Receivable and Allowance for Loan Losses (Allowance for Loan Losses and Recorded Investment in Financing Receivables) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	$ 8,228	$ 8,326	$ 8,452	$ 7,634
Charge Offs	(146)	(433)	(1,205)	(764)
Recoveries	23	12	108	60
Provision for loan losses	300	375	1,050	1,350
Ending balance,	8,405	8,280	8,405	8,280
Ending balance individually evaluated for impairment	0		0
Ending balance collectively evaluated for impairment	8,405	8,280	8,405	8,280
Residential Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	1,447	1,455	1,328	1,272
Charge Offs	(15)	(10)	(90)	(85)
Recoveries	5		20	2
Provision for loan losses	131	(71)	310	185
Ending balance,	1,568	1,374	1,568	1,374
Ending balance individually evaluated for impairment	0		0
Ending balance collectively evaluated for impairment	1,568	1,374	1,568	1,374
Commercial Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	4,694	5,247	5,455	5,265
Charge Offs		(110)	(615)	(244)
Recoveries	4	2	18	33
Provision for loan losses	(132)	120	(292)	205
Ending balance,	4,566	5,259	4,566	5,259
Ending balance individually evaluated for impairment	0		0
Ending balance collectively evaluated for impairment	4,566	5,259	4,566	5,259
Construction Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	112	128	93	90
Charge Offs	0	0	0	0
Recoveries	0	0	0	0
Provision for loan losses	(5)	(34)	14	4
Ending balance,	107	94	107	94
Ending balance individually evaluated for impairment	0	0	0	0
Ending balance collectively evaluated for impairment	107	94	107	94
Commercial [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	896	690	712	463
Charge Offs	(20)	(241)	(254)	(246)
Recoveries	10	0	31	0
Provision for loan losses	57	265	454	497
Ending balance,	943	714	943	714
Ending balance individually evaluated for impairment	0	0	0	0
Ending balance collectively evaluated for impairment	943	714	943	714
Consumer Loans To Individuals [Member]
Financing Receivable, Allowance for Credit Loss [Line Items]
Beginning balance,	1,079	806	864	544
Charge Offs	(111)	(72)	(246)	(189)
Recoveries	4	10	39	25
Provision for loan losses	249	95	564	459
Ending balance,	1,221	839	1,221	839
Ending balance individually evaluated for impairment	0		0
Ending balance collectively evaluated for impairment	$ 1,221	$ 839	$ 1,221	$ 839

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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 INCOME
Loans receivable, including fees	$ 10,776	$ 9,301	$ 31,074	$ 26,645
Securities	1,278	1,483	4,155	4,543
Other	5	2	70	63
Total Interest Income	12,059	10,786	35,299	31,251
INTEREST EXPENSE
Deposits	1,787	1,116	5,355	3,198
Short-term borrowings	135	111	344	201
Other borrowings	246	171	827	442
Total interest expense	2,168	1,398	6,526	3,841
NET INTEREST INCOME	9,891	9,388	28,773	27,410
PROVISION FOR LOAN LOSSES	300	375	1,050	1,350
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	9,591	9,013	27,723	26,060
OTHER INCOME
Other Income	1,461	1,655	4,042	4,353
Net realized gains on sales of securities	169	13	233	213
Gain on sale of loans, net	15	15	125	15
Earnings and proceeds on bank owned life insurance	222	297	630	848
Other	109	392	358	716
Total Other Income	1,882	1,997	5,083	5,466
OTHER EXPENSES
Salaries and employee benefits	3,667	3,577	10,915	10,445
Occupancy, furniture & equipment, net	916	910	2,780	2,659
Data processing and related operations	480	368	1,400	1,027
Taxes, other than income	179	153	520	480
Professional fees	276	301	752	760
Federal Deposit Insurance Corporation insurance	(5)	87	150	265
Foreclosed real estate	24	(26)	37	68
Amortization of intangibles	23	29	79	97
Other	1,231	1,173	3,591	3,372
Total other expenses	6,791	6,572	20,224	19,173
INCOME BEFORE INCOME TAXES	4,682	4,438	12,582	12,353
INCOME TAX EXPENSE	775	728	1,963	2,001
NET INCOME	$ 3,907	$ 3,710	$ 10,619	$ 10,352
BASIC EARNINGS PER SHARE	$ 0.62	$ 0.59	$ 1.70	$ 1.66
DILUTED EARNINGS PER SHARE	$ 0.62	$ 0.58	$ 1.68	$ 1.64
Service Charges And Fees [Member]
OTHER INCOME
Other Income	$ 1,200	$ 1,129	$ 3,283	$ 3,211
Income From Fiduciary Activities [Member]
OTHER INCOME
Other Income	$ 167	$ 151	$ 454	$ 463

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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	$ 10,619	$ 10,352
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,050	1,350
Depreciation	739	665
Amortization of intangible assets	79	97
Deferred income taxes	(176)	(198)
Net amortization of securities premiums and discounts	1,104	1,308
Net realized gain on sales of securities	(232)	(213)
Earnings and proceeds on life insurance policies	(630)	(848)
Gain on sales and write-downs of fixed assets and foreclosed real estate owned, net	(67)	(42)
Net gain on sale of loans	(125)	(15)
Loans originated for sale	(2,767)	(752)
Proceeds from sale of loans originated for sale	2,846	767
Compensation expense related to stock options	156	177
Compensation expense related to restricted stock	217	154
Decrease (increase) in accrued interest receivable	50	(76)
Increase in accrued interest payable	817	271
Other, net	1,017	1,062
Net cash provided by operating activities	14,697	14,059
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales	22,862	17,745
Proceeds from maturities and principal reductions on mortgage-backed securities	21,211	22,848
Purchases	(5,066)	(15,458)
Purchase of regulatory stock	(2,963)	(3,865)
Redemption of regulatory stock	3,752	4,109
Net increase in loans	(57,891)	(56,275)
Purchase of premises and equipment	(1,056)	(598)
Proceeds from sales of foreclosed real estate owned	312	696
Proceeds from sales of bank premises and equipment	246	0
Net cash used in investing activities	(18,593)	(30,798)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits	27,653	10,330
Net (decrease) increase in short-term borrowings	(268)	10,290
Repayments of other borrowings	(22,378)	(9,296)
Proceeds from other borrowings	6,000	10,000
Stock options exercised	359	395
Purchase of treasury stock	(374)	(179)
Cash dividends paid	(4,529)	(4,130)
Net cash provided by financing activities	6,463	17,410
Increase in cash and cash equivalents	2,567	671
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	18,348	16,697
CASH AND CASH EQUIVALENTS, END OF PERIOD	20,915	17,368
Supplemental Disclosures of Cash Flow Information
Interest on deposits and borrowings	5,709	3,570
Income taxes paid, net of refunds	1,447	1,547
Supplemental Schedule of Noncash Investing Activities:
Transfers of loans to foreclosed real estate and repossession of other assets	1,478	333
Dividends payable	$ 1,512	$ 1,379

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Loans Receivable and Allowance for Loan Losses (Impaired Loans and Related Interest Income by Loan Portfolio Class) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	$ 633	$ 1,240	$ 759	$ 1,218
Interest Income Recognized, Total	0	15	24	45
Impaired Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	514		514		$ 1,319
Impaired Financing Receivable, with Related Allowance, Recorded Investment	514		514		1,319
Unpaid Principal Balance, With no related allowance recorded	1,101		1,101		1,747
Unpaid Principal Balance, With an allowance recorded	1,101		1,101		1,747
Associated Allowance	0		0		0
Residential Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	0	23	0	23
Interest Income Recognized, Total	0	0	0	0
Commercial Real Estate Loans [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment, Total	633	1,217	759	1,195
Interest Income Recognized, Total	0	$ 15	24	$ 45
Commercial Real Estate Loans [Member] | Impaired Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	514		514		1,319
Impaired Financing Receivable, with Related Allowance, Recorded Investment	514		514		1,319
Unpaid Principal Balance, With no related allowance recorded	1,101		1,101		1,747
Unpaid Principal Balance, With an allowance recorded	1,101		1,101		1,747
Associated Allowance	$ 0		$ 0		$ 0

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Securities (Schedule of Amortized Cost Gross Unrealized Gains and Losses, and Fair Values of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Investments [Line Items]
Available for Sale, Gross Unrealized Gains	$ 0	$ 0
Available for Sale, Gross Unrealized Losses	0	0
Available for Sale, Fair Value	211,199	243,277
Total Debt Securities [Member]
Schedule of Investments [Line Items]
Available for Sale, Amortized Cost	210,432	250,311
Available for Sale, Gross Unrealized Gains	1,747	410
Available for Sale, Gross Unrealized Losses	(980)	(7,444)
Available for Sale, Fair Value	211,199	243,277
States and Political Subdivisions [Member]
Schedule of Investments [Line Items]
Available for Sale, Amortized Cost	78,145	99,218
Available for Sale, Gross Unrealized Gains	1,396	385
Available for Sale, Gross Unrealized Losses	(14)	(1,990)
Available for Sale, Fair Value	79,527	97,613
Corporate Obligations [Member]
Schedule of Investments [Line Items]
Available for Sale, Amortized Cost	6,200	8,896
Available for Sale, Gross Unrealized Gains	5	0
Available for Sale, Gross Unrealized Losses	(4)	(256)
Available for Sale, Fair Value	6,201	8,640
Mortgage-backed Securities-Government Sponsored Entities [Member]
Schedule of Investments [Line Items]
Available for Sale, Amortized Cost	126,087	142,197
Available for Sale, Gross Unrealized Gains	346	25
Available for Sale, Gross Unrealized Losses	(962)	(5,198)
Available for Sale, Fair Value	$ 125,471	$ 137,024

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Loans Receivable and Allowance for Loan Losses (Narrative) (Details)	9 Months Ended		12 Months Ended
	Sep. 30, 2019 USD ($) property loan	Sep. 30, 2018 USD ($) loan	Dec. 31, 2018 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Acquired Loans with Specific Evidence of Deterioration in Credit Quality, Outstanding Balance	$ 946,000		$ 1,055,000
Real Estate Acquired Through Foreclosure	1,572,000		1,115,000
Loans and Leases Receivable, Gross	$ 905,649,000		$ 850,302,000
Historical loss factor	0.21%		0.42%
Proceeds from Sale of Foreclosed Assets	$ 312,000	$ 696,000
Multiple Properties [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Real Estate Acquired Through Foreclosure	$ 151,000
Number Of Properties Disposed By Sale | property	3
Commercial Rentals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 80,700,000
Commercial Rentals [Member] | Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Concentration Risk, Percentage	8.90%
Hospitality Lodging Industry [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	$ 65,000,000
Hospitality Lodging Industry [Member] | Loans Receivable [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Concentration Risk, Percentage	7.20%
Residential Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number Of Properties Under Foreclosure Proceedings | property	3
Mortgage Loans in Process of Foreclosure, Amount	$ 300,000
Loans and Leases Receivable, Gross	230,624,000		$ 235,523,000
Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans and Leases Receivable, Gross	384,376,000		374,790,000
Allowance for Loan and Lease Losses, Real Estate			889,000
Troubled Debt Restructured Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Impaired Financing Receivable, Related Allowance	$ 0		0
New Loans Identified as Troubled Debt Restructurings, Number of Loans | loan	0	0
Real Estate Acquired Through Foreclosure	$ 608,000
Number Of Properties Acquired Through Foreclosure | property	1
Financing Receivable, Troubled Debt Restructuring	$ 102,000		$ 1,100,000
Proceeds from Sale of Foreclosed Assets	451,000
Delaware Bancshares, Inc. Acquisition [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Acquired Loans with Specific Evidence of Deterioration in Credit Quality, Outstanding Balance	1,397,000
Assets, Fair Value Adjustment	499,000
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Annual Loan Review threshold, amount	$ 1,500,000

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Schedule Of Weighted Average Shares Outstanding Used In The Computations Of Basic And Diluted Earnings Per Share

(in thousands)	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2019	2018	2019	2018
Weighted average shares outstanding	6,296	6,264	6,293	6,259
Less: Unvested restricted shares	(35)	(30)	(35)	(30)
Basic EPS weighted average shares outstanding	6,261	6,234	6,258	6,229
Basic EPS weighted average shares outstanding	6,261	6,234	6,258	6,229
Add:  Dilutive effect of stock options and restricted shares	48	70	50	72
Diluted EPS weighted average shares outstanding	6,309	6,304	6,308	6,301

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Revenue Recognition (Policy)

9 Months Ended

Sep. 30, 2019

Revenue Recognition [Abstract]

Revenue Recognition

Management has determined that the primary sources of revenue emanating from interest income on loans and investments along with noninterest revenue resulting from investment security gains, loan servicing, gains on the sale of loans, commitment fees, and fees from financial guarantees are not within the scope of ASC 606.  As a result, no changes were made during the period related to those sources of revenue.

The following presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and nine months ended September 30:

		Three months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	72	$	66
ATM fees		106		108
Overdraft fees		323		372
Safe deposit box rental		22		23
Loan related service fees		228		152
Debit card fees		370		358
Fiduciary activities		167		151
Commissions on mutual funds and annuities		30		51
Other income		143		374
Noninterest Income (in-scope of Topic 606)		1,461		1,655
Out-of-scope of Topic 606:
Net realized gains on sales of securities		169		13
Loan servicing fees		15		17
Gains on sales of loans		15		15
Earnings on and proceeds from bank-owned life insurance		222		297
Noninterest Income (out-of-scope of Topic 606)		421		342
Total Noninterest Income	$	1,882	$	1,997

		Nine months ended
		September 30,
(dollars in thousands)
Noninterest Income		2019		2018
In-scope of Topic 606:
Service charges on deposit accounts	$	205	$	195
ATM fees		287		299
Overdraft fees		1,017		1,137
Safe deposit box rental		71		76
Loan related service fees		451		387
Debit card fees		1,067		991
Fiduciary activities		454		463
Commissions on mutual funds and annuities		111		154
Other income		379		651
Noninterest Income (in-scope of Topic 606)		4,042		4,353
Out-of-scope of Topic 606:
Net realized gains on sales of securities		233		213
Loan servicing fees		53		37
Gains on sales of loans		125		15
Earnings on and proceeds from bank-owned life insurance		630		848
Noninterest Income (out-of-scope of Topic 606)		1,041		1,113
Total Noninterest Income	$	5,083	$	5,466

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Securities (Tables)

9 Months Ended

Sep. 30, 2019

Securities [Abstract]

Schedule of Amortized Cost Gross Unrealized Gains and Losses, and Fair Values of Securities

	September 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	78,145	$	1,396	$	(14)	$	79,527
Corporate obligations		6,200		5		(4)		6,201
Mortgage-backed securities-
government sponsored entities		126,087		346		(962)		125,471
Total debt securities	$	210,432	$	1,747	$	(980)	$	211,199

	December 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In Thousands)
Available for Sale:
States and political subdivisions	$	99,218	$	385	$	(1,990)	$	97,613
Corporate obligations		8,896		-		(256)		8,640
Mortgage-backed securities-government
sponsored entities		142,197		25		(5,198)		137,024
Total debt securities	$	250,311	$	410	$	(7,444)	$	243,277

Schedule of Investments' Gross Unrealized Losses and Fair Value Aggregated by Security Type and Length of Time that Individual Securities have been in a Continous Unrealized Loss Position

	September 30, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
States and political subdivisions	$	7,697	$	(12)	$	481	$	(2)	$	8,178	$	(14)
Corporate obligations		-		-		3,109		(4)		3,109		(4)
Mortgage-backed securities-government sponsored entities		25,071		(118)		64,124		(844)		89,195		(962)
	$	32,768	$	(130)	$	67,714	$	(850)	$	100,482	$	(980)

	December 31, 2018
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
States and political subdivisions	$	19,140	$	(390)	$	56,740	$	(1,600)	$	75,880	$	(1,990)
Corporate obligations		2,045		(21)		6,595		(235)		8,640		(256)
Mortgage-backed securities-government sponsored entities		8,444		(22)		122,950		(5,176)		131,394		(5,198)
	$	29,629	$	(433)	$	186,285	$	(7,011)	$	215,914	$	(7,444)

Schedule of Amortized Cost and Fair Value of Debt Securities by Contractual Maturity

	Available for Sale
	Amortized Cost		Fair Value
		(In Thousands)
Due in one year or less	$	4,365	$	4,378
Due after one year through five years		17,693		17,705
Due after five years through ten years		33,194		33,365
Due after ten years		29,093		30,280
		84,345		85,728
Mortgage-backed securities-government sponsored entities		126,087		125,471
	$	210,432	$	211,199

Gross Realized Gains and Losses on Sales of Securities Available-for-Sale

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2019		2018		2019		2018
Gross realized gains	$	169	$	13	$	233	$	213
Gross realized losses		-		-		-		-
Net realized gain	$	169	$	13	$	233	$	213
Proceeds from sales of securities	$	19,326	$	3,162	$	22,862	$	17,745

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Off-Balance Sheet Financial Instruments and Gurantees (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
Loss Contingencies [Line Items]
Financial instrument commitments	$ 119,347	$ 133,659
Commitments to grant loans [Member]
Loss Contingencies [Line Items]
Financial instrument commitments	49,806	51,225
Unfunded commitments under lines of credit [Member]
Loss Contingencies [Line Items]
Financial instrument commitments	65,854	78,024
Standby letters of credit [Member]
Loss Contingencies [Line Items]
Financial instrument commitments	$ 3,687	$ 4,410

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Revenue Recognition (Noninterest Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Noninterest Income (in scope of Topic 606)	$ 1,461	$ 1,655	$ 4,042	$ 4,353
Net realized gains on sales of securities	169	13	233	213
Loan servicing fees	15	17	53	37
Gain on sales of loans	15	15	125	15
Earnings on and proceeds from bank-owned life insurance	222	297	630	848
Noninterest Income (out-of-scope of Topic 606)	421	342	1,041	1,113
Total Other Income	1,882	1,997	5,083	5,466
Service Charges On Deposit Accounts [Member]
Noninterest Income (in scope of Topic 606)	72	66	205	195
ATM Fees [Member]
Noninterest Income (in scope of Topic 606)	106	108	287	299
Overdraft Fees [Member]
Noninterest Income (in scope of Topic 606)	323	372	1,017	1,137
Safe Deposit Box Rental [Member]
Noninterest Income (in scope of Topic 606)	22	23	71	76
Loan Related Service Fees [Member]
Noninterest Income (in scope of Topic 606)	228	152	451	387
Debit Card [Member]
Noninterest Income (in scope of Topic 606)	370	358	1,067	991
Fiduciary Activities [Member]
Noninterest Income (in scope of Topic 606)	167	151	454	463
Commissions On Mutual Funds And Annuities [Member]
Noninterest Income (in scope of Topic 606)	30	51	111	154
Other Income [Member]
Noninterest Income (in scope of Topic 606)	$ 143	$ 374	$ 379	$ 651

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Stock-Based Compensation (Summary of Stock Option Activity) (Details) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares shares
Stock Based Compensation [Abstract]
Options, beginning of year | shares	208,700
Options, Granted | shares	0
Options, Exercised | shares	(19,575)
Options, Forfeited | shares	0
Options, end of year | shares	189,125	208,700
Options, Exercisable, end of period | shares	160,225
Weighted Average Exercise Price Per Share, Outstanding, beginning of period | $ / shares	$ 22.54
Weighted Average Exercise Price Per Share, Granted | $ / shares
Weighted Average Exercise Price Per Share, Exercised | $ / shares	18.32
Weighted Average Exercise Price Per Share, Forfeited | $ / shares	0.00
Weighted Average Exercise Price Per Share, Outstanding, end of period | $ / shares	22.98	$ 22.54
Weighted Average Exercise Price Per Share, Exercisable, end of period | $ / shares	$ 21.29
Weighted Average Remaining Contractual Term, Outstanding	5 years 4 months 24 days	5 years 10 months 24 days
Weighted Average Remaining Contractual Term, Exercised During Period	3 years 6 months
Weighted Average Remaining Contractual Term, Exercisable at End of Period	4 years 8 months 12 days
Aggregate Intrinsic Value, Outstanding, beginning of period | $	$ 2,183
Aggregate Intrinsic Value, Granted in Period | $	0
Aggregate Intrinsic Value, Exercised in Period | $	283
Aggregate Intrinsic Value, Forfeited in Period | $	0
Aggregate Intrinsic Value, Outstanding, end of period | $	1,691	$ 2,183
Aggregate Intrinsic Value, Exercisable at end of period | $	$ 1,691

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Loans Receivable and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2019

Loans Receivable and Allowance for Loan Losses [Abstract]

Loans Receivable and Allowance for Loan Losses

8.        Loans Receivable and Allowance for Loan Losses

Set forth below is selected data relating to the composition of the loan portfolio at the dates indicated (dollars in thousands):

	September 30, 2019				December 31, 2018
Real Estate Loans:
Residential	$	230,624	25.5	%	$	235,523	27.7	%
Commercial		384,376	42.4			374,790	44.1
Construction		18,267	2.0			17,445	2.0
Commercial, financial and agricultural		126,835	14.0			110,542	13.0
Consumer loans to individuals		145,547	16.1			112,002	13.2
Total loans		905,649	100.0	%		850,302	100.0	%
Deferred fees, net		(67)				(120)
Total loans receivable		905,582				850,182
Allowance for loan losses		(8,405)				(8,452)
Net loans receivable	$	897,177			$	841,730

The following table presents information regarding loans acquired and accounted for in accordance with ASC 310-30 (in thousands):

	September 30, 2019		December 31, 2018
Outstanding Balance	$	946	$	1,055
Carrying Amount	$	807	$	886

As a result of the acquisition of Delaware Bancshares, Inc. (“Delaware”), the Company added $1,397,000 of loans that were accounted for in accordance with ASC 310-30.  Based on a review of the loans acquired by senior lending management, which included an analysis of credit deterioration of the loans since origination, the Company recorded a specific credit fair value adjustment of $499,000.  For loans that were acquired with specific evidence of deterioration in credit quality, loan losses will be accounted for through a reduction of the specific reserve and will not impact the allowance for loan losses until actual losses exceed the allotted reserves.  For loans acquired without a deterioration of credit quality, losses incurred will result in adjustments to the allowance for loan losses through the allowance for loan loss adequacy calculation. 

The Company maintains a loan review system, which allows for a periodic review of our loan portfolio and the early identification of potential impaired loans.  Such system takes into consideration, among other things, delinquency status, size of loans, type and market value of collateral and financial condition of the borrowers.  Specific loan loss allowances are established for identified losses based on a review of such information.  A loan evaluated for impairment is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement.  All loans identified as impaired are evaluated independently.  We do not aggregate such loans for evaluation purposes.  Impairment is measured on a loan-by-loan basis for commercial and construction loans by the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral-dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment.  Accordingly, the Company does not separately identify individual consumer and residential mortgage loans for impairment disclosures, unless such loans are part of a larger relationship that is impaired, or are classified as a troubled debt restructuring.

Foreclosed assets acquired in settlement of loans are carried at fair value less estimated costs to sell and are included in foreclosed real estate owned on the Consolidated Balance Sheets.  As of September 30, 2019 and December 31, 2018, foreclosed real estate owned totaled $1,572,000 and $1,115,000, respectively.  During the nine months ended September 30, 2019, the Company acquired three properties via deed-in-lieu transactions which have subsequently been sold, and foreclosed on one commercial property with a carrying value of $608,000.  The Company also disposed of three properties that were previously transferred to foreclosed real estate owned with a carrying value of $151,000 through the sale of the properties.  As of September 30, 2019, the Company has initiated formal foreclosure proceedings on three properties classified as consumer residential mortgages with an aggregate carrying value of $300,000.

The following table shows the amount of loans in each category that were individually and collectively evaluated for impairment at the dates indicated:

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
September 30, 2019	(In thousands)
Individually evaluated for impairment	$	-	$	514	$	-	$	-	$	-	$	514
Loans acquired with deteriorated credit quality		577		230		-		-		-		807
Collectively evaluated for impairment		230,047		383,632		18,267		126,835		145,547		904,328
Total Loans	$	230,624	$	384,376	$	18,267	$	126,835	$	145,547	$	905,649

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
	(In thousands)
December 31, 2018
Individually evaluated for impairment	$	-	$	1,319	$	-	$	-	$	-	$	1,319
Loans acquired with deteriorated credit quality		630		256		-		-		-		886
Collectively evaluated for impairment		234,893		373,215		17,445		110,542		112,002		848,097
Total Loans	$	235,523	$	374,790	$	17,445	$	110,542	$	112,002	$	850,302

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable. 

			Unpaid
	Recorded		Principal		Associated
	Investment		Balance		Allowance
September 30, 2019				(in thousands)
With no related allowance recorded:
Real Estate Loans:
Commercial	$	514	$	1,101	$	-
Subtotal		514		1,101		-
Total:
Real Estate Loans:
Commercial		514		1,101		-
Total Impaired Loans	$	514	$	1,101	$	-

			Unpaid
	Recorded		Principal		Associated
	Investment		Balance		Allowance
December 31, 2018				(in thousands)
With no related allowance recorded:
Real Estate Loans:
Commercial	$	1,319	$	1,747	$	-
Subtotal		1,319		1,747		-
Total:
Real Estate Loans:
Commercial		1,319		1,747		-
Total Impaired Loans	$	1,319	$	1,747	$	-

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded				Interest Income
	Investment				Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	-	$	23	$	-	$	-
Commercial		633		1,217		-		15
Total	$	633	$	1,240	$	-	$	15

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the nine-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded				Interest Income
	Investment				Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	-	$	23	$	-	$	-
Commercial		759		1,195		24		45
Total	$	759	$	1,218	$	24	$	45

Troubled debt restructured loans are those loans whose terms have been renegotiated to provide a reduction or deferral of principal or interest as a result of financial difficulties experienced by the borrower, who could not obtain comparable terms from alternate financing sources.  As of September 30, 2019 and December 31, 2018, troubled debt restructured loans totaled $102,000 and $1.1 million, respectively, with no specific reserve.  For the nine-month period ended September 30, 2019, there were no new loans identified as troubled debt restructurings.  During 2019, the Company recognized a charge-off of $451,000 on a loan that was previously identified as a troubled debt restructuring.  The loan was transferred to foreclosed real estate during the first quarter of 2019 with a carrying value of $608,000.

For the nine-month period ended September 30, 2018, there were no new loans identified as troubled debt restructurings nor did the Company recognize any write-down on loans that were previously identified as a troubled debt restructuring.

Management uses an eight point internal risk rating system to monitor the credit quality of the overall loan portfolio.  The first four categories are considered not criticized, and are aggregated as “Pass” rated.  The criticized rating categories utilized by management generally follow bank regulatory definitions.  The Special Mention category includes assets that are currently protected but are potentially weak, resulting in an undue and unwarranted credit risk, but not to the point of justifying a Substandard classification.  Loans in the Substandard category have well-defined weaknesses that jeopardize the liquidation of the debt, and have a distinct possibility that some loss will be sustained if the weaknesses are not corrected.  All loans greater than 90 days past due are considered Substandard.  Any portion of a loan that has been charged off is placed in the Loss category.

To help ensure that risk ratings are accurate and reflect the present and future capacity of borrowers to repay a loan as agreed, the Bank has a structured loan rating process with several layers of internal and external oversight.  Generally, consumer and residential mortgage loans are included in the Pass categories unless a specific action, such as nonperformance, repossession, or death occurs to raise awareness of a possible credit event.  The Company’s Loan Review Department is responsible for the timely and accurate risk rating of the loans on an ongoing basis.  Every credit which must be approved by Loan Committee or the Board of Directors is assigned a risk rating at time of consideration.  Loan Review also annually reviews relationships of $1,500,000 and over to assign or re-affirm risk ratings.  Loans in the Substandard categories that are collectively evaluated for impairment are given separate consideration in the determination of the allowance.

The following table presents the classes of the loan portfolio summarized by the aggregate Pass and the criticized categories of Special Mention, Substandard, Doubtful and Loss within the internal risk rating system as of  September 30, 2019 and December 31, 2018 (in thousands):

			Special					Doubtful
	Pass		Mention		Substandard		or Loss		Total
September 30, 2019
Commercial real estate loans	$	368,796	$	12,301	$	3,279	$	-	$	384,376
Commercial loans		126,371		252		212		-		126,835
Total	$	495,167	$	12,553	$	3,491	$	-	$	511,211

			Special					Doubtful
	Pass		Mention		Substandard		or Loss		Total
December 31, 2018
Commercial real estate loans	$	360,838	$	7,918	$	6,034	$	-	$	374,790
Commercial loans		109,966		82		494		-		110,542
Total	$	470,804	$	8,000	$	6,528	$	-	$	485,332

For residential real estate loans, construction loans and consumer loans, the Company evaluates credit quality based on the performance of the individual credits.  The following table presents the recorded investment in the loan classes based on payment activity as of September 30, 2019 and December 31, 2018 (in thousands):

	Performing		Nonperforming		Total
September 30, 2019
Residential real estate loans	$	229,857	$	767	$	230,624
Construction		18,267		-		18,267
Consumer loans		145,490		57		145,547
Total	$	393,614	$	824	$	394,438

	Performing		Nonperforming		Total
December 31, 2018
Residential real estate loans	$	234,725	$	798	$	235,523
Construction		17,445		-		17,445
Consumer loans		112,002		-		112,002
Total	$	364,172	$	798	$	364,970

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is past due.  The following table presents the classes of the loan portfolio summarized by the aging categories of performing loans and nonaccrual loans as of September 30, 2019 and December 31, 2018 (in thousands):

	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
September 30, 2019
Real Estate loans
Residential	$	228,976	$	692	$	189	$	-	$	767	$	1,648	$	230,624
Commercial		383,667		114		54		-		541		709		384,376
Construction		18,267		-		-		-		-		-		18,267
Commercial  loans		126,795		14		-		-		26		40		126,835
Consumer  loans		145,161		183		146		-		57		386		145,547
Total	$	902,866	$	1,003	$	389	$	-	$	1,391	$	2,783	$	905,649

	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
December 31, 2018
Real Estate loans
Residential	$	234,201	$	373	$	151	$	-	$	798	$	1,322	$	235,523
Commercial		372,617		1,043		788		-		342		2,173		374,790
Construction		17,445		-		-		-		-		-		17,445
Commercial  loans		110,191		320		31		-		-		351		110,542
Consumer  loans		111,796		171		35		-		-		206		112,002
Total	$	846,250	$	1,907	$	1,005	$	-	$	1,140	$	4,052	$	850,302

Management reviews the loan portfolio on a quarterly basis using a defined, consistently applied process in order to make appropriate and timely adjustments to the allowance for loan losses.  When information confirms all or part of specific loans to be uncollectible, these amounts are promptly charged off against the allowance. 

As of September 30, 2019, the allocation of the allowance pertaining to commercial real estate loans is $889,000 lower than the allocation as of December 31, 2018.  This decrease is due primarily to a reduction in the historical factor which decreased from 0.42% as of December 31, 2018 to 0.21% at September 30, 2019.  Also contributing to the reduced reserve balance is a decrease in the qualitative factor related to the annualized growth rate and large balance loans, which was partially offset by an increase due to a declining economy.  Increases in other loan categories reflect loan growth and replenishment of the allowance due to charge offs.

The following table presents the allowance for loan losses by the classes of the loan portfolio:

(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, December 31, 2018	$	1,328	$	5,455	$	93	$	712	$	864	$	8,452
Charge Offs		(90)		(615)		-		(254)		(246)		(1,205)
Recoveries		20		18		-		31		39		108
Provision for loan losses		310		(292)		14		454		564		1,050
Ending balance, September 30, 2019	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405
Ending balance individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance collectively evaluated for impairment	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405
(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, June 30, 2019	$	1,447	$	4,694	$	112	$	896	$	1,079	$	8,228
Charge Offs		(15)		-		-		(20)		(111)		(146)
Recoveries		5		4		-		10		4		23
Provision for loan losses		131		(132)		(5)		57		249		300
Ending balance, September 30, 2019	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405

(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, December 31, 2017	$	1,272	$	5,265	$	90	$	463	$	544	$	7,634
Charge Offs		(85)		(244)		-		(246)		(189)		(764)
Recoveries		2		33		-		-		25		60
Provision for loan losses		185		205		4		497		459		1,350
Ending balance, September 30, 2018	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280
Ending balance individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance collectively evaluated for impairment	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280
(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, June 30, 2018	$	1,455	$	5,247	$	128	$	690	$	806	$	8,326
Charge Offs		(10)		(110)		-		(241)		(72)		(433)
Recoveries		-		2		-		-		10		12
Provision for loan losses		(71)		120		(34)		265		95		375
Ending balance, September 30, 2018	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280

The Company’s primary business activity as of September 30, 2019 was with customers located in northeastern Pennsylvania and the New York counties of Delaware and Sullivan.  Accordingly, the Company has extended credit primarily to commercial entities and individuals in this area whose ability to honor their contracts is influenced by the region’s economy.

As of September 30, 2019, the Company considered its concentration of credit risk to be acceptable.  The highest concentrations are in commercial rentals with $80.7 million of loans outstanding, or 8.9% of total loans outstanding, and the hospitality/lodging industry with loans outstanding of $65.0 million, or 7.2% of loans outstanding.  During 2019, the Company did not recognize any charge offs in the named concentrations.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2019

Stock Based Compensation [Abstract]

Stock-Based Compensation

4.         Stock-Based Compensation

No awards were granted during the nine-month period ended September 30, 2019. As of September 30, 2019, there was $52,000 of total unrecognized compensation cost related to non-vested options granted in 2018 under the 2014 Equity Incentive Plan, which will be fully amortized by December 31, 2019. Compensation costs related to stock options amounted to $156,000 and $177,000 during the nine-month periods ended September 30, 2019 and 2018, respectively.

A summary of the Company’s stock option activity for the nine-month period ended September 30, 2019 is as follows:

		Weighted
		Average Exercise		Weighted Average		Aggregate
		Price		Remaining		Intrinsic Value
	Options	Per Share		Contractual Term		($000)
Outstanding at January 1, 2019	208,700	$	22.54	5.9	Yrs.	$	2,183
Granted	-		-	-			-
Exercised	(19,575)		18.32	3.5	Yrs.		283
Forfeited	-		-	-			-
Outstanding at September 30, 2019	189,125	$	22.98	5.4	Yrs.	$	1,691
Exercisable at September 30, 2019	160,225	$	21.29	4.7	Yrs.	$	1,691

Intrinsic value represents the amount by which the market price of the stock on the measurement date exceeded the exercise price of the option.  The market price was $31.61 per share as of September 30, 2019 and $33.00 per share as of December 31, 2018.

A summary of the Company’s restricted stock activity for the nine-month periods ended September 30, 2019 and 2018 is as follows:

	2019			2018
			Weighted-Average			Weighted-Average
	Number of		Grant Date	Number of		Grant Date
	Restricted Stock		Fair Value	Restricted Stock		Fair Value
Non-vested, January 1,	34,615	$	27.82	30,415	$	24.46
Granted	-		-	-		-
Vested	-		-	-		-
Forfeited	-		-	-		-
Non-vested, September 30,	34,615	$	27.82	30,415	$	24.46

The expected future compensation expense relating to the34,615shares of non-vested restricted stock outstanding as of September 30, 2019 is $746,000.  This cost will be recognized over the remaining vesting period of 4.25 years.  Compensation costs related to restricted stock amounted to $217,000 and $154,000 during the nine-month periods ended September 30, 2019 and 2018, respectively.

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
ASSETS
Cash and due from banks	$ 20,067	$ 18,039
Interest-bearing deposits with banks	848	309
Cash and cash equivalents	20,915	18,348
Securities available for sale, at fair value	211,199	243,277
Loans receivable	905,582	850,182
Less: Allowance for loan losses	8,405	8,452
Net loans receivable	897,177	841,730
Regulatory stock, at cost	3,137	3,926
Bank premises and equipment, net	13,927	13,846
Bank owned life insurance	38,562	37,932
Accrued interest receivable	3,726	3,776
Foreclosed real estate owned	1,572	1,115
Goodwill	11,331	11,331
Other intangibles	257	336
Other assets	14,053	8,942
TOTAL ASSETS	1,215,856	1,184,559
LIABILITIES
Deposits: Non-interest bearing demand	231,211	201,457
Deposits: Interest-bearing	743,222	745,323
Total deposits	974,433	946,780
Short-term borrowings	52,778	53,046
Other borrowings	35,906	52,284
Accrued interest payable	2,623	1,806
Other liabilities	15,222	8,358
TOTAL LIABILITIES	1,080,962	1,062,274
STOCKHOLDERS' EQUITY
Preferred stock, no par value per share, authorized: 5,000,000 shares; issued: none
Common stock, $0.10 par value per share, authorized: 2019: 20,000,000 shares, 2018: 10,000,000 shares issued: 2019: 6,314,688 shares, 2018: 6,295,113 shares	632	630
Surplus	49,052	48,322
Retained earnings	84,522	78,434
Treasury stock at cost: 2019: 13,807 shares, 2018: 2,470 shares	(455)	(81)
Accumulated other comprehensive income (loss)	1,143	(5,020)
TOTAL STOCKHOLDERS' EQUITY	134,894	122,285
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,215,856	$ 1,184,559

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Fair Value of Assets and Liabilities (Fair Value, Assets 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	$ 211,199	$ 243,277
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	211,199	243,277
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	211,199	243,277
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	79,527	97,613
States and Political Subdivisions [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	79,527	97,613
States and Political Subdivisions [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	79,527	97,613
Corporate Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	6,201	8,640
Corporate Obligations [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	6,201	8,640
Corporate Obligations [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	6,201	8,640
Mortgage-backed Securities-Government Sponsored Entities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	125,471	137,024
Mortgage-backed Securities-Government Sponsored Entities [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	125,471	137,024
Mortgage-backed Securities-Government Sponsored Entities [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities	$ 125,471	$ 137,024

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Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Beginning balance at Dec. 31, 2017	$ 626	$ 47,431	$ 70,426	$ (77)	$ (2,667)	$ 115,739
Beginning balance, shares at Dec. 31, 2017	6,256,063			2,608
Net income			10,352			10,352
Other comprehensive income (loss)					(5,825)	(5,825)
Cash dividends declared			(4,133)			(4,133)
Compensation expense related to restricted stock		154				154
Acquisition of treasury stock				$ (179)		(179)
Acquisition of treasury stock, shares				5,446
Stock options exercised	$ 2	325		$ 68		395
Stock options exercised, shares	18,450			2,325
Compensation expense related to stock options		177				177
Ending balance, shares at Sep. 30, 2018	6,274,513			5,729
Ending balance at Sep. 30, 2018	$ 628	48,087	76,645	$ (188)	(8,492)	116,680
Beginning balance at Jun. 30, 2018	$ 627	47,815	74,315	$ (188)	(7,036)	115,533
Beginning balance, shares at Jun. 30, 2018	6,266,388			5,729
Net income			3,710			3,710
Other comprehensive income (loss)					(1,456)	(1,456)
Cash dividends declared			(1,380)			(1,380)
Compensation expense related to restricted stock		52				52
Acquisition of treasury stock
Stock options exercised	$ 1	161				162
Stock options exercised, shares	8,125
Compensation expense related to stock options		59				59
Ending balance, shares at Sep. 30, 2018	6,274,513			5,729
Ending balance at Sep. 30, 2018	$ 628	48,087	76,645	$ (188)	(8,492)	116,680
Beginning balance at Dec. 31, 2018	$ 630	48,322	78,434	$ (81)	(5,020)	122,285
Beginning balance, shares at Dec. 31, 2018	6,295,113			2,470
Net income			10,619			10,619
Other comprehensive income (loss)					6,163	6,163
Cash dividends declared			(4,531)			(4,531)
Compensation expense related to restricted stock		217				217
Acquisition of treasury stock				$ (374)		(374)
Acquisition of treasury stock, shares				11,337
Stock options exercised	$ 2	357				$ 359
Stock options exercised, shares	19,575					19,575
Compensation expense related to stock options		156				$ 156
Ending balance, shares at Sep. 30, 2019	6,314,688			13,807
Ending balance at Sep. 30, 2019	$ 632	49,052	84,522	$ (455)	1,143	134,894
Beginning balance at Jun. 30, 2019	$ 630	48,741	82,127	$ (455)	440	131,483
Beginning balance, shares at Jun. 30, 2019	6,304,413			13,807
Net income			3,907			3,907
Other comprehensive income (loss)					703	703
Cash dividends declared			(1,512)			(1,512)
Compensation expense related to restricted stock		72				72
Acquisition of treasury stock
Stock options exercised	$ 2	187				189
Stock options exercised, shares	10,275
Compensation expense related to stock options		52				52
Ending balance, shares at Sep. 30, 2019	6,314,688			13,807
Ending balance at Sep. 30, 2019	$ 632	$ 49,052	$ 84,522	$ (455)	$ 1,143	$ 134,894

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Loans Receivable and Allowance for Loan Losses (Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	$ 394,438	$ 364,970
Total Summarized by Aggregate Risk Rating [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	511,211	485,332
Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	495,167	470,804
Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	12,553	8,000
Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	3,491	6,528
Doubtful Or Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	0	0
Performing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	393,614	364,172
Nonperforming [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	824	798
Commercial Real Estate Loans [Member] | Total Summarized by Aggregate Risk Rating [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	384,376	374,790
Commercial Real Estate Loans [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	368,796	360,838
Commercial Real Estate Loans [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	12,301	7,918
Commercial Real Estate Loans [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	3,279	6,034
Commercial Real Estate Loans [Member] | Doubtful Or Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	0	0
Commercial [Member] | Total Summarized by Aggregate Risk Rating [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	126,835	110,542
Commercial [Member] | Pass [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	126,371	109,966
Commercial [Member] | Special Mention [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	252	82
Commercial [Member] | Substandard [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	212	494
Commercial [Member] | Doubtful Or Loss [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	0	0
Residential Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	230,624	235,523
Residential Real Estate Loans [Member] | Performing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	229,857	234,725
Residential Real Estate Loans [Member] | Nonperforming [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	767	798
Construction Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	18,267	17,445
Construction Real Estate Loans [Member] | Performing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	18,267	17,445
Construction Real Estate Loans [Member] | Nonperforming [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	0	0
Consumer Loans To Individuals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	145,547	112,002
Consumer Loans To Individuals [Member] | Performing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	145,490	112,002
Consumer Loans To Individuals [Member] | Nonperforming [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Carrying Amount	$ 57	$ 0

XML

New and Recently Adopted Accounting Pronouncements (Details) - Accounting Standards Update 2016-02 [Member] $ in Millions	Dec. 31, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating Lease, Right-of-Use Asset	$ 5.3
Finance Lease, Liability	$ 5.3

XML

Fair Value of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value of Assets and Liabilities [Abstract]

Fair Value, Assets Measured on Recurring Basis

	Fair Value Measurement Using
	Reporting Date
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
September 30, 2019
Available for Sale:
States and political subdivisions	$	79,527	$	-	$	79,527	$	-
Corporate obligations		6,201		-		6,201		-
Mortgage-backed securities-government
sponsored entities		125,471		-		125,471		-
Total	$	211,199	$	-	$	211,199	$	-
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
December 31, 2018
Available for Sale:
States and political subdivisions	$	97,613	$	-	$	97,613	$	-
Corporate obligations		8,640		-		8,640		-
Mortgage-backed securities-government
sponsored entities		137,024		-		137,024		-
Total	$	243,277	$	-	$	243,277	$	-

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis

			Fair Value Measurement Using Reporting Date
(In thousands)
Description	Total		Level 1		Level 2		Level 3
September 30, 2019
Impaired Loans	$	514	$	-	$	-	$	514
Foreclosed Real Estate Owned		1,572		-		-		1,572
December 31, 2018
Impaired Loans	$	1,319	$	-	$	-	$	1,319
Foreclosed Real Estate Owned		1,115		-		-		1,115

Additional Qualitative Information about Level 3 Assets

		Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
September 30, 2019
Impaired loans	$	311	Appraisal of collateral(1)	Appraisal adjustments(2)	10.00-10.00%  (10.00%)
Impaired loans	$	203	Present value of future cash flows	Loan discount rate	4.00-6.97%  (5.35%)
Foreclosed real estate owned	$	1,572	Appraisal of collateral(1)	Liquidation Expenses(2)	7.00-10.00%  (8.16%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
December 31, 2018
Impaired loans	$	232	Appraisal of collateral(1)	Appraisal adjustments(2)	10.00-81.54%  (56.06%)
Impaired loans	$	1,087	Present value of future cash flows	Loan discount rate	4.00-6.00%  (5.80%)
Foreclosed real estate owned	$	1,115	Appraisal of collateral(1)	Liquidation Expenses(2)	7.00-85.71%  (7.80%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less any associated allowance.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Fair Value, by Balance Sheet Grouping

	Fair Value Measurements at September 30, 2019
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	20,915	$	20,915	$	20,915	$	-	$	-
Loans receivable, net		897,177		917,146		-		-		917,146
Mortgage servicing rights		180		220		-		-		220
Regulatory stock (1)		3,137		3,137		3,137		-		-
Bank owned life insurance (1)		38,562		38,562		38,562		-		-
Accrued interest receivable (1)		3,726		3,726		3,726		-		-
Financial liabilities:
Deposits		974,433		977,729		632,151		-		345,045
Short-term borrowings (1)		52,778		52,778		52,778		-		-
Other borrowings		35,906		36,229		-		-		36,229
Accrued interest payable (1)		2,623		2,623		2,623		-		-
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		-		-		-		-		-

	Fair Value Measurements at December 31, 2018
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	18,348	$	18,348	$	18,348	$	-	$	-
Loans receivable, net		841,730		840,134		-		-		840,134
Mortgage servicing rights		178		220		-		-		220
Regulatory stock (1)		3,926		3,926		3,926		-		-
Bank owned life insurance (1)		37,932		37,932		37,932		-		-
Accrued interest receivable (1)		3,776		3,776		3,776		-		-
Financial liabilities:
Deposits		946,780		945,773		601,604		-		344,169
Short-term borrowings (1)		53,046		53,046		53,046		-		-
Other borrowings		52,284		52,043		-		-		52,043
Accrued interest payable (1)		1,806		1,806		1,806		-		-
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		-		-		-		-		-

(1) This financial instrument is carried at cost, which approximates the fair value of the instrument.

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Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Granted	0
Compensation expense related to stock options	$ 156	$ 177
Share price	$ 31.61	$ 39.16	$ 33.00
Non-vested stock outstanding	34,615	30,415	34,615	30,415
Future compensation expense of non-vested restricted stock outstanding	$ 746
Non-vested restricted stock recognition period	4 years 3 months
Compensation expense related to restricted stock	$ 217	$ 154
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation cost	217	$ 154
Norwood Financial Corp 2014 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost related to non-vested options granted	$ 52

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Accumulated Other Comprehensive Income (Loss) (Significant Amounts Reclassified Out Of Each Component Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains on sales of securities	$ 169	$ 13	$ 233	$ 213
Income tax expense	(775)	(728)	(1,963)	(2,001)
NET INCOME	3,907	3,710	10,619	10,352
Amount Reclassified From Accumulated Other Comprehensive Income (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Income tax expense	(37)	(3)	(50)	(45)
NET INCOME	132	10	183	168
Amount Reclassified From Accumulated Other Comprehensive Income (Loss) [Member] | Unrealized gains (losses) on available for sale securities [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized gains on sales of securities	$ 169	$ 13	$ 233	$ 213

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Fair Value of Assets and Liabilities

9 Months Ended

Sep. 30, 2019

Fair Value of Assets and Liabilities [Abstract]

Fair Value of Assets and Liabilities

9.         Fair Value of Assets and Liabilities

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  In accordance with fair value accounting guidance, the Company measures, records, and reports various types of assets and liabilities at fair value on either a recurring or non-recurring basis in the Consolidated Financial Statements.  Those assets and liabilities are presented in the sections entitled “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis” and “Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis”.  There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The methods of determining the fair value of assets and liabilities presented in this note are consistent with our methodologies disclosed in Note 14 of the Company’s 2018 Form 10-K.  In accordance with ASU 2016-01, the fair value of loans, excluding previously presented impaired loans measured at fair value on a non-recurring basis, is estimated using discounted cash flow analyses.  The discount rates used to determine fair value use interest rate spreads that reflect factors such as liquidity, credit and nonperformance risk.  Loans are considered a Level 3 classification.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Recurring Basis

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

	Fair Value Measurement Using
	Reporting Date
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
September 30, 2019
Available for Sale:
States and political subdivisions	$	79,527	$	-	$	79,527	$	-
Corporate obligations		6,201		-		6,201		-
Mortgage-backed securities-government
sponsored entities		125,471		-		125,471		-
Total	$	211,199	$	-	$	211,199	$	-
Description	Total		Level 1		Level 2		Level 3
	(In thousands)
December 31, 2018
Available for Sale:
States and political subdivisions	$	97,613	$	-	$	97,613	$	-
Corporate obligations		8,640		-		8,640		-
Mortgage-backed securities-government
sponsored entities		137,024		-		137,024		-
Total	$	243,277	$	-	$	243,277	$	-

Securities:

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence (Level 3). In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support on certain Level 3 investments. Internal cash flow models using a present value formula that includes assumptions market participants would use along with indicative exit pricing obtained from broker/dealers (where available) are used to support fair values of certain Level 3 investments, if applicable.

Assets and Liabilities Required to be Measured and Reported at Fair Value on a Non-Recurring Basis

For financial assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2019 and December 31, 2018 are as follows:

			Fair Value Measurement Using Reporting Date
(In thousands)
Description	Total		Level 1		Level 2		Level 3
September 30, 2019
Impaired Loans	$	514	$	-	$	-	$	514
Foreclosed Real Estate Owned		1,572		-		-		1,572
December 31, 2018
Impaired Loans	$	1,319	$	-	$	-	$	1,319
Foreclosed Real Estate Owned		1,115		-		-		1,115

Impaired loans (generally carried at fair value):

The Company measures impairment generally based on the fair value of the loan’s collateral.  Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the lowest level of input that is significant to the fair value measurements.

As of September 30, 2019, the fair value investment in impaired loans totaled $514,000 which included five loan relationships that did not require a valuation allowance since either the estimated realizable value of the collateral or the discounted cash flows exceeded the recorded investment in the loan.  As of September 30, 2019, the Company has recognized charge-offs against the allowance for loan losses on these impaired loans in the amount of $587,000 over the life of the loans.

As of December 31, 2018, the fair value investment in impaired loans totaled $1,319,000 which included six loans which did not require a valuation allowance since the estimated realizable value of the collateral exceeded the recorded investment in the loan.  As of December 31, 2018, the Company had recognized charge-offs against the allowance for loan losses on these impaired loans in the amount of $428,000 over the life of the loans.

Foreclosed real estate owned (carried at fair value):

Real estate properties acquired through loan foreclosures, or by deed in lieu of loan foreclosure are to be sold and are carried at fair value less estimated cost to sell.  Fair value is based upon independent market prices, appraised value of the collateral or management’s estimation of the value of the collateral.  These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

The following table presents additional quantitative information about assets measured at fair value on a non-recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

		Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
September 30, 2019
Impaired loans	$	311	Appraisal of collateral(1)	Appraisal adjustments(2)	10.00-10.00%  (10.00%)
Impaired loans	$	203	Present value of future cash flows	Loan discount rate	4.00-6.97%  (5.35%)
Foreclosed real estate owned	$	1,572	Appraisal of collateral(1)	Liquidation Expenses(2)	7.00-10.00%  (8.16%)

	Quantitative Information about Level 3 Fair Value Measurements
(dollars in thousands)	Fair Value Estimate		Valuation Techniques	Unobservable Input	Range (Weighted Average)
December 31, 2018
Impaired loans	$	232	Appraisal of collateral(1)	Appraisal adjustments(2)	10.00-81.54%  (56.06%)
Impaired loans	$	1,087	Present value of future cash flows	Loan discount rate	4.00-6.00%  (5.80%)
Foreclosed real estate owned	$	1,115	Appraisal of collateral(1)	Liquidation Expenses(2)	7.00-85.71%  (7.80%)

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally include various Level 3 inputs which are not identifiable, less any associated allowance.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses.  The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

Assets and Liabilities Not Required to be Measured or Reported at Fair Value

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at September 30, 2019 and December 31, 2018.

Loans receivable (carried at cost):

The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Mortgage servicing rights (generally carried at cost)

The Company utilizes a third party provider to estimate the fair value of certain loan servicing rights.  Fair value for the purpose of this measurement is defined as the amount at which the asset could be exchanged in a current transaction between willing parties, other than in a forced liquidation.

Deposit liabilities (carried at cost):

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Other borrowings (carried at cost):

Fair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a fair value that is deemed to represent the transfer price if the liability were assumed by a third party.

The estimated fair values of the Bank’s financial instruments not required to be measured or reported at fair value were as follows at September 30, 2019 and December 31, 2018. (In thousands)

	Fair Value Measurements at September 30, 2019
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	20,915	$	20,915	$	20,915	$	-	$	-
Loans receivable, net		897,177		917,146		-		-		917,146
Mortgage servicing rights		180		220		-		-		220
Regulatory stock (1)		3,137		3,137		3,137		-		-
Bank owned life insurance (1)		38,562		38,562		38,562		-		-
Accrued interest receivable (1)		3,726		3,726		3,726		-		-
Financial liabilities:
Deposits		974,433		977,729		632,151		-		345,045
Short-term borrowings (1)		52,778		52,778		52,778		-		-
Other borrowings		35,906		36,229		-		-		36,229
Accrued interest payable (1)		2,623		2,623		2,623		-		-
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		-		-		-		-		-

	Fair Value Measurements at December 31, 2018
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents (1)	$	18,348	$	18,348	$	18,348	$	-	$	-
Loans receivable, net		841,730		840,134		-		-		840,134
Mortgage servicing rights		178		220		-		-		220
Regulatory stock (1)		3,926		3,926		3,926		-		-
Bank owned life insurance (1)		37,932		37,932		37,932		-		-
Accrued interest receivable (1)		3,776		3,776		3,776		-		-
Financial liabilities:
Deposits		946,780		945,773		601,604		-		344,169
Short-term borrowings (1)		53,046		53,046		53,046		-		-
Other borrowings		52,284		52,043		-		-		52,043
Accrued interest payable (1)		1,806		1,806		1,806		-		-
Off-balance sheet financial instruments:
Commitments to extend credit and outstanding letters of credit		-		-		-		-		-

(1) This financial instrument is carried at cost, which approximates the fair value of the instrument.

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income (Loss) [Abstract]

Accumulated Other Comprehensive Income (Loss)

5.         Accumulated Other Comprehensive Income (Loss)

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

	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of June 30, 2019	$	440
Other comprehensive income before reclassification		835
Amount reclassified from accumulated other comprehensive loss		(132)
Total other comprehensive income		703
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  June 30, 2018	$	(7,036)
Other comprehensive loss before reclassification		(1,446)
Amount reclassified from accumulated other comprehensive loss		(10)
Total other comprehensive loss		(1,456)
Balance as of September 30, 2018	$	(8,492)

	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  December 31, 2018	$	(5,020)
Other comprehensive income before reclassification		6,346
Amount reclassified from accumulated other comprehensive loss		(183)
Total other comprehensive income		6,163
Balance as of September 30, 2019	$	1,143
	Unrealized gains (losses) on
	available for sale
	securities (a)
Balance as of  December 31, 2017	$	(2,667)
Other comprehensive loss before reclassification		(5,657)
Amount reclassified from accumulated other comprehensive loss		(168)
Total other comprehensive loss		(5,825)
Balance as of September 30, 2018	$	(8,492)

(a) All amounts are net of tax.  Amounts in parentheses indicate debits.

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

	Amount Reclassified
	From Accumulated				Affected Line Item in
	Other				Consolidated
	Comprehensive				Statements
Details about other comprehensive income	Income (Loss) (a)				of Income
		Three months ended
		September 30,
		2019		2018
Unrealized gains on available for sale securities	$	169	$	13	Net realized gains on sales of securities
		(37)		(3)	Income tax expense
	$	132	$	10
		Nine months ended
		September 30,
		2019		2018
Unrealized gains on available for sale securities	$	233	$	213	Net realized gains on sales of securities
		(50)		(45)	Income tax expense
	$	183	$	168

(a)  Amounts in parentheses indicate debits to net income

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Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
Consolidated Balance Sheets [Abstract]
Preferred Stock, No Par Value
Preferred Stock, Shares Authorized	5,000,000	5,000,000
Preferred Stock, Shares Issued	0
Common Stock, Par Value Per Share	$ 0.10	$ 0.10
Common Stock, Shares Authorized	20,000,000	10,000,000
Common Stock, Shares, Issued	6,314,688	6,295,113
Treasury Stock, Shares	13,807	2,470

XML

Fair Value of Assets and Liabilities (Fair Value, Assets and Liabilities Measured on Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 514	$ 1,319
Fair Value, Nonrecurring [Member] | Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	514	1,319
Fair Value, Nonrecurring [Member] | Impaired Loans [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Nonrecurring [Member] | Impaired Loans [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Nonrecurring [Member] | Impaired Loans [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	514	1,319
Fair Value, Nonrecurring [Member] | Foreclosed Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	1,572	1,115
Fair Value, Nonrecurring [Member] | Foreclosed Real Estate Owned [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Nonrecurring [Member] | Foreclosed Real Estate Owned [Member] | Significant Other Observable Inputs (Level 2) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	0	0
Fair Value, Nonrecurring [Member] | Foreclosed Real Estate Owned [Member] | Significant Unobservable Inputs (Level 3) [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 1,572	$ 1,115

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Consolidated Statements of Changes in Stockholders' Equity [Abstract]
Cash dividends declared	$ 0.24	$ 0.22	$ 0.72	$ 0.66

XML

Loans Receivable and Allowance for Loan Losses (Loan Portfolio Summarized by the Past Due Status) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financing Receivable, Past Due [Line Items]
Current	$ 902,866	$ 846,250
Non-Accrual	1,391	1,140
Total Past Due and Non-Accrual	2,783	4,052
Total Loans	905,649	850,302
Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	1,003	1,907
Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	389	1,005
Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Residential Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Current	228,976	234,201
Non-Accrual	767	798
Total Past Due and Non-Accrual	1,648	1,322
Total Loans	230,624	235,523
Residential Real Estate Loans [Member] | Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	692	373
Residential Real Estate Loans [Member] | Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	189	151
Residential Real Estate Loans [Member] | Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Commercial Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Current	383,667	372,617
Non-Accrual	541	342
Total Past Due and Non-Accrual	709	2,173
Total Loans	384,376	374,790
Commercial Real Estate Loans [Member] | Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	114	1,043
Commercial Real Estate Loans [Member] | Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	54	788
Commercial Real Estate Loans [Member] | Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Construction Real Estate Loans [Member]
Financing Receivable, Past Due [Line Items]
Current	18,267	17,445
Non-Accrual	0	0
Total Past Due and Non-Accrual	0	0
Total Loans	18,267	17,445
Construction Real Estate Loans [Member] | Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Construction Real Estate Loans [Member] | Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Construction Real Estate Loans [Member] | Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Commercial [Member]
Financing Receivable, Past Due [Line Items]
Current	126,795	110,191
Non-Accrual	26	0
Total Past Due and Non-Accrual	40	351
Total Loans	126,835	110,542
Commercial [Member] | Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	14	320
Commercial [Member] | Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	31
Commercial [Member] | Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	0	0
Consumer Loans To Individuals [Member]
Financing Receivable, Past Due [Line Items]
Current	145,161	111,796
Non-Accrual	57	0
Total Past Due and Non-Accrual	386	206
Total Loans	145,547	112,002
Consumer Loans To Individuals [Member] | Financing Receivables, 31 to 60 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	183	171
Consumer Loans To Individuals [Member] | Financing Receivables, 61 to 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	146	35
Consumer Loans To Individuals [Member] | Financing Receivables, Greater than 90 Days Past Due [Member]
Financing Receivable, Past Due [Line Items]
Past Due	$ 0	$ 0

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Securities (Narrative) (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) security	Sep. 30, 2018 USD ($)
Securities [Abstract]
Debt securities in unrealized loss position in the less than twelve months category | security	30
Debt securities in unrealized loss position in the twelve months or more category | security	58
Impairment of investments | $	$ 0
Pledged Financial Instruments, Not Separately Reported, Securities | $	$ 179,075,000	$ 169,984,000

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Securities (Gross Realized Gains and Losses on Sales of Securities Available-for-Sale) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Securities [Abstract]
Gross realized gains	$ 169	$ 13	$ 233	$ 213
Gross realized losses	0	0	0	0
Net realized gain	169	13	233	213
Proceeds from sale of securities	$ 19,326	$ 3,162	$ 22,862	$ 17,745

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Loans Receivable and Allowance for Loan Losses (Summary of Amount of Loans in Each Category that were Individually and Collectively Evaluated for Impairment) (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	$ 514	$ 1,319
Loans acquired with deteriorated credit quality	807	886
Collectively evaluated for impairment	904,328	848,097
Total Loans	905,649	850,302
Residential Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0	0
Loans acquired with deteriorated credit quality	577	630
Collectively evaluated for impairment	230,047	234,893
Total Loans	230,624	235,523
Commercial Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	514	1,319
Loans acquired with deteriorated credit quality	230	256
Collectively evaluated for impairment	383,632	373,215
Total Loans	384,376	374,790
Construction Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0	0
Loans acquired with deteriorated credit quality	0	0
Collectively evaluated for impairment	18,267	17,445
Total Loans	18,267	17,445
Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0	0
Loans acquired with deteriorated credit quality	0	0
Collectively evaluated for impairment	126,835	110,542
Total Loans	126,835	110,542
Consumer Loans To Individuals [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Individually evaluated for impairment	0	0
Loans acquired with deteriorated credit quality	0	0
Collectively evaluated for impairment	145,547	112,002
Total Loans	$ 145,547	$ 112,002

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Loans Receivable and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

Loans Receivable and Allowance for Loan Losses [Abstract]

Composition of the Loan Portfolio

	September 30, 2019				December 31, 2018
Real Estate Loans:
Residential	$	230,624	25.5	%	$	235,523	27.7	%
Commercial		384,376	42.4			374,790	44.1
Construction		18,267	2.0			17,445	2.0
Commercial, financial and agricultural		126,835	14.0			110,542	13.0
Consumer loans to individuals		145,547	16.1			112,002	13.2
Total loans		905,649	100.0	%		850,302	100.0	%
Deferred fees, net		(67)				(120)
Total loans receivable		905,582				850,182
Allowance for loan losses		(8,405)				(8,452)
Net loans receivable	$	897,177			$	841,730

Information Regarding Loans Acquired and Accounted for in Accordance With ASC 310-30

	September 30, 2019		December 31, 2018
Outstanding Balance	$	946	$	1,055
Carrying Amount	$	807	$	886

Summary of Amount of Loans in Each Category that were Individually and Collectively Evaluated for Impairment

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
September 30, 2019	(In thousands)
Individually evaluated for impairment	$	-	$	514	$	-	$	-	$	-	$	514
Loans acquired with deteriorated credit quality		577		230		-		-		-		807
Collectively evaluated for impairment		230,047		383,632		18,267		126,835		145,547		904,328
Total Loans	$	230,624	$	384,376	$	18,267	$	126,835	$	145,547	$	905,649

	Real Estate Loans
							Commercial		Consumer
	Residential		Commercial		Construction		Loans		Loans		Total
	(In thousands)
December 31, 2018
Individually evaluated for impairment	$	-	$	1,319	$	-	$	-	$	-	$	1,319
Loans acquired with deteriorated credit quality		630		256		-		-		-		886
Collectively evaluated for impairment		234,893		373,215		17,445		110,542		112,002		848,097
Total Loans	$	235,523	$	374,790	$	17,445	$	110,542	$	112,002	$	850,302

Impaired Loans and Related Interest Income by Loan Portfolio Class

The following table includes the recorded investment and unpaid principal balances for impaired loans with the associated allowance amount, if applicable. 

			Unpaid
	Recorded		Principal		Associated
	Investment		Balance		Allowance
September 30, 2019				(in thousands)
With no related allowance recorded:
Real Estate Loans:
Commercial	$	514	$	1,101	$	-
Subtotal		514		1,101		-
Total:
Real Estate Loans:
Commercial		514		1,101		-
Total Impaired Loans	$	514	$	1,101	$	-

			Unpaid
	Recorded		Principal		Associated
	Investment		Balance		Allowance
December 31, 2018				(in thousands)
With no related allowance recorded:
Real Estate Loans:
Commercial	$	1,319	$	1,747	$	-
Subtotal		1,319		1,747		-
Total:
Real Estate Loans:
Commercial		1,319		1,747		-
Total Impaired Loans	$	1,319	$	1,747	$	-

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the three-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded				Interest Income
	Investment				Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	-	$	23	$	-	$	-
Commercial		633		1,217		-		15
Total	$	633	$	1,240	$	-	$	15

The following table presents the average recorded investment in impaired loans and the related amount of interest income recognized during the nine-month periods ended September 30, 2019 and 2018, respectively (in thousands):

	Average Recorded				Interest Income
	Investment				Recognized
	2019		2018		2019		2018
Real Estate Loans:
Residential	$	-	$	23	$	-	$	-
Commercial		759		1,195		24		45
Total	$	759	$	1,218	$	24	$	45

Classes of the Loan Portfolio Summarized by the Aggregate Risk Rating

			Special					Doubtful
	Pass		Mention		Substandard		or Loss		Total
September 30, 2019
Commercial real estate loans	$	368,796	$	12,301	$	3,279	$	-	$	384,376
Commercial loans		126,371		252		212		-		126,835
Total	$	495,167	$	12,553	$	3,491	$	-	$	511,211

			Special					Doubtful
	Pass		Mention		Substandard		or Loss		Total
December 31, 2018
Commercial real estate loans	$	360,838	$	7,918	$	6,034	$	-	$	374,790
Commercial loans		109,966		82		494		-		110,542
Total	$	470,804	$	8,000	$	6,528	$	-	$	485,332

For residential real estate loans, construction loans and consumer loans, the Company evaluates credit quality based on the performance of the individual credits.  The following table presents the recorded investment in the loan classes based on payment activity as of September 30, 2019 and December 31, 2018 (in thousands):

	Performing		Nonperforming		Total
September 30, 2019
Residential real estate loans	$	229,857	$	767	$	230,624
Construction		18,267		-		18,267
Consumer loans		145,490		57		145,547
Total	$	393,614	$	824	$	394,438

	Performing		Nonperforming		Total
December 31, 2018
Residential real estate loans	$	234,725	$	798	$	235,523
Construction		17,445		-		17,445
Consumer loans		112,002		-		112,002
Total	$	364,172	$	798	$	364,970

Loan Portfolio Summarized by the Past Due Status

	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
September 30, 2019
Real Estate loans
Residential	$	228,976	$	692	$	189	$	-	$	767	$	1,648	$	230,624
Commercial		383,667		114		54		-		541		709		384,376
Construction		18,267		-		-		-		-		-		18,267
Commercial  loans		126,795		14		-		-		26		40		126,835
Consumer  loans		145,161		183		146		-		57		386		145,547
Total	$	902,866	$	1,003	$	389	$	-	$	1,391	$	2,783	$	905,649

	Current		31-60 Days Past Due		61-90 Days Past Due		Greater than 90 Days Past Due and still accruing		Non-Accrual		Total Past Due and Non-Accrual		Total Loans
December 31, 2018
Real Estate loans
Residential	$	234,201	$	373	$	151	$	-	$	798	$	1,322	$	235,523
Commercial		372,617		1,043		788		-		342		2,173		374,790
Construction		17,445		-		-		-		-		-		17,445
Commercial  loans		110,191		320		31		-		-		351		110,542
Consumer  loans		111,796		171		35		-		-		206		112,002
Total	$	846,250	$	1,907	$	1,005	$	-	$	1,140	$	4,052	$	850,302

Allowance for Loan Losses and Recorded Investment in Financing Receivables

(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, December 31, 2018	$	1,328	$	5,455	$	93	$	712	$	864	$	8,452
Charge Offs		(90)		(615)		-		(254)		(246)		(1,205)
Recoveries		20		18		-		31		39		108
Provision for loan losses		310		(292)		14		454		564		1,050
Ending balance, September 30, 2019	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405
Ending balance individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance collectively evaluated for impairment	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405
(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, June 30, 2019	$	1,447	$	4,694	$	112	$	896	$	1,079	$	8,228
Charge Offs		(15)		-		-		(20)		(111)		(146)
Recoveries		5		4		-		10		4		23
Provision for loan losses		131		(132)		(5)		57		249		300
Ending balance, September 30, 2019	$	1,568	$	4,566	$	107	$	943	$	1,221	$	8,405

(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, December 31, 2017	$	1,272	$	5,265	$	90	$	463	$	544	$	7,634
Charge Offs		(85)		(244)		-		(246)		(189)		(764)
Recoveries		2		33		-		-		25		60
Provision for loan losses		185		205		4		497		459		1,350
Ending balance, September 30, 2018	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280
Ending balance individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-
Ending balance collectively evaluated for impairment	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280
(In thousands)	Residential Real Estate		Commercial Real Estate		Construction		Commercial		Consumer		Total
Beginning balance, June 30, 2018	$	1,455	$	5,247	$	128	$	690	$	806	$	8,326
Charge Offs		(10)		(110)		-		(241)		(72)		(433)
Recoveries		-		2		-		-		10		12
Provision for loan losses		(71)		120		(34)		265		95		375
Ending balance, September 30, 2018	$	1,374	$	5,259	$	94	$	714	$	839	$	8,280

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Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2019

Stock Based Compensation [Abstract]

Summary of Stock Option Activity

		Weighted
		Average Exercise		Weighted Average		Aggregate
		Price		Remaining		Intrinsic Value
	Options	Per Share		Contractual Term		($000)
Outstanding at January 1, 2019	208,700	$	22.54	5.9	Yrs.	$	2,183
Granted	-		-	-			-
Exercised	(19,575)		18.32	3.5	Yrs.		283
Forfeited	-		-	-			-
Outstanding at September 30, 2019	189,125	$	22.98	5.4	Yrs.	$	1,691
Exercisable at September 30, 2019	160,225	$	21.29	4.7	Yrs.	$	1,691

Summary of Restricted Stock Activity

	2019			2018
			Weighted-Average			Weighted-Average
	Number of		Grant Date	Number of		Grant Date
	Restricted Stock		Fair Value	Restricted Stock		Fair Value
Non-vested, January 1,	34,615	$	27.82	30,415	$	24.46
Granted	-		-	-		-
Vested	-		-	-		-
Forfeited	-		-	-		-
Non-vested, September 30,	34,615	$	27.82	30,415	$	24.46

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Earnings Per Share (Policy)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

Basic earnings per share represents income available to common stockholders divided by the weighted average number of common shares outstanding during the period.  Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance.  Potential common shares that may be issued by the Company relate solely to outstanding stock options and restricted stock, and are determined using the treasury stock method.