10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q 

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

For the quarterly period ended June 30, 2016

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

For the transition period from __________ to __________

Commission file number 1-33377

Stewardship Financial Corporation
(Exact name of registrant as specified in its charter)
New Jersey	22-3351447
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
630 Godwin Avenue, Midland Park, NJ	07432
(Address of principal executive offices)	(Zip Code)
(201) 444-7100
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o  (Do not check if a smaller reporting company)	Smaller reporting company x

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

The number of shares outstanding, net of treasury stock, of the Registrant’s Common Stock, no par value, as of August 5, 2016 was 6,114,585.

Stewardship Financial Corporation 

INDEX

	PAGE
	NUMBER
PART I  -  FINANCIAL INFORMATION
ITEM 1  -   FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition at June 30, 2016 (Unaudited) and December 31, 2015	1
Consolidated Statements of Income for the Three and Six Months ended June 30, 2016 and 2015 (Unaudited)	2
Consolidated Statements of Comprehensive Income for the Three and Six Months ended June 30, 2016 and 2015 (Unaudited)	3
Consolidated Statement of Changes in Shareholders’ Equity for the Six Months ended June 30, 2016 and 2015 (Unaudited)	4
Consolidated Statements of Cash Flows for the Six Months ended June 30, 2016 and 2015 (Unaudited)	5
Notes to Consolidated Financial Statements (Unaudited)	7
ITEM 2  -   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3 -    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44
ITEM 4 -    CONTROLS AND PROCEDURES	44
PART II  -  OTHER INFORMATION
ITEM 6 -    EXHIBITS	45
SIGNATURES	46
EXHIBIT INDEX	47

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Stewardship Financial Corporation and Subsidiary

Consolidated Statements of Financial Condition

	June 30, 2016		December 31, 2015
	(Unaudited)
Assets
Cash and due from banks	$	13,471,000	$	10,731,000
Other interest-earning assets	430,000		179,000
Cash and cash equivalents	13,901,000		10,910,000
Securities available-for-sale	98,533,000		93,354,000
Securities held to maturity; estimated fair value of $66,772,000 (2016)
and $61,281,000 (2015)	65,666,000		60,738,000
Federal Home Loan Bank of New York stock, at cost	2,650,000		2,608,000
Loans held for sale	581,000		1,522,000
Loans, net of allowance for loan losses of $8,388,000 (at June 30, 2016)
and $8,823,000 (at December 31, 2015)	529,225,000		517,556,000
Premises and equipment, net	6,678,000		6,799,000
Accrued interest receivable	1,912,000		1,967,000
Other real estate owned, net	834,000		880,000
Bank owned life insurance	16,320,000		14,111,000
Other assets	6,287,000		7,443,000
Total assets	$	742,587,000	$	717,888,000
Liabilities and Shareholders' equity
Liabilities
Deposits:
Noninterest-bearing	$	160,461,000	$	147,828,000
Interest-bearing	466,008,000		456,925,000
Total deposits	626,469,000		604,753,000
Federal Home Loan Bank of New York advances	40,000,000		40,000,000
Subordinated Debentures and Subordinated Notes	23,219,000		23,186,000
Accrued interest payable	782,000		791,000
Accrued expenses and other liabilities	1,431,000		1,585,000
Total liabilities	691,901,000		670,315,000
Shareholders' equity
Common stock, no par value; 10,000,000 shares authorized;
6,113,030 and 6,085,528 shares issued and outstanding
at June 30, 2016, and December 31, 2015, respectively	41,571,000		41,410,000
Retained earnings	8,972,000		7,008,000
Accumulated other comprehensive income (loss), net	143,000		(845,000		)
Total Shareholders' equity	50,686,000		47,573,000
Total liabilities and Shareholders' equity	$	742,587,000	$	717,888,000

See accompanying notes to consolidated financial statements.      

1

Stewardship Financial Corporation and Subsidiary

Consolidated Statements of Income (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Interest income:
Loans	$	6,116,000		$	5,623,000		$	11,768,000		$	11,069,000
Securities held to maturity:
Taxable	298,000			227,000			568,000			440,000
Nontaxable	100,000			119,000			203,000			249,000
Securities available-for-sale:
Taxable	409,000			342,000			786,000			704,000
Nontaxable	6,000			6,000			12,000			12,000
FHLB dividends	31,000			33,000			63,000			63,000
Other interest-earning assets	19,000			10,000			28,000			17,000
Total interest income	6,979,000			6,360,000			13,428,000			12,554,000
Interest expense:
Deposits	561,000			506,000			1,118,000			958,000
FHLB-NY Borrowings	201,000			211,000			404,000			427,000
Subordinated Debentures and Subordinated Notes	362,000			125,000			775,000			250,000
Total interest expense	1,124,000			842,000			2,297,000			1,635,000
Net interest income before provision for loan losses	5,855,000			5,518,000			11,131,000			10,919,000
Provision for loan losses	(450,000		)	(600,000		)	(800,000		)	(700,000		)
Net interest income after provision for loan losses	6,305,000			6,118,000			11,931,000			11,619,000
Noninterest income:
Fees and service charges	530,000			557,000			1,059,000			1,036,000
Bank owned life insurance	107,000			101,000			208,000			197,000
Gain on calls and sales of securities, net	32,000			—			56,000			152,000
Gain on sales of mortgage loans	19,000			55,000			37,000			65,000
Gain on sale of other real estate owned	6,000			—			6,000			53,000
Miscellaneous	138,000			169,000			285,000			297,000
Total noninterest income	832,000			882,000			1,651,000			1,800,000
Noninterest expenses:
Salaries and employee benefits	2,742,000			2,688,000			5,457,000			5,396,000
Occupancy, net	404,000			423,000			802,000			890,000
Equipment	148,000			165,000			298,000			321,000
Data processing	477,000			459,000			949,000			912,000
Advertising	157,000			258,000			308,000			470,000
FDIC insurance premium	90,000			117,000			196,000			230,000
Charitable contributions	90,000			70,000			160,000			140,000
Stationery and supplies	47,000			43,000			80,000			60,000
Legal	46,000			105,000			90,000			193,000
Bank-card related services	150,000			131,000			281,000			254,000
Other real estate owned	28,000			75,000			102,000			161,000
Miscellaneous	620,000			571,000			1,178,000			1,127,000
Total noninterest expenses	4,999,000			5,105,000			9,901,000			10,154,000
Income before income tax expense	2,138,000			1,895,000			3,681,000			3,265,000
Income tax expense	776,000			673,000			1,328,000			1,126,000
Net income	1,362,000			1,222,000			2,353,000			2,139,000
Dividends on preferred stock	—			171,000			—			342,000
Net income available to common shareholders	$	1,362,000		$	1,051,000		$	2,353,000		$	1,797,000
Basic and diluted earnings per common share	$	0.22		$	0.17		$	0.39		$	0.30
Weighted average number of basic and diluted common shares outstanding	6,111,729			6,086,474			6,102,040			6,066,191

See accompanying notes to consolidated financial statements. 

2

Stewardship Financial Corporation and Subsidiary

Consolidated Statements of Comprehensive Income

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income	$	1,362,000		$	1,222,000		$	2,353,000		$	2,139,000
Other comprehensive income (loss), net of tax:
Change in unrealized holding gains (losses) on securities available-for-sale	244,000			(325,000		)	916,000			138,000
Reclassification adjustment for gains in net income	(20,000		)	—			(35,000		)	(91,000		)
Accretion of loss on securities reclassified to held to maturity	25,000			34,000			70,000			121,000
Change in fair value of interest rate swap	—			37,000			37,000			71,000
Total other comprehensive income (loss)	249,000			(254,000		)	988,000			239,000
Total comprehensive income	$	1,611,000		$	968,000		$	3,341,000		$	2,378,000

See accompanying notes to consolidated financial statements.

3

Stewardship Financial Corporation and Subsidiary

Consolidated Statement of Changes in Shareholders' Equity

(Unaudited)

	Six Months Ended June 30, 2016
											Accumulated Other Comprehensive
	Preferred		Common Stock					Retained			Income
	Stock		Shares		Amount			Earnings			(Loss), Net			Total
Balance -- December 31, 2015	$	—	6,085,528		$	41,410,000		$	7,008,000		$	(845,000	)	$	47,573,000
Cash dividends declared on common stock	—		—		—			(305,000		)	—			(305,000		)
Payment of discount on dividend reinvestment plan	—		—		(2,000		)	—			—			(2,000		)
Common stock issued under dividend reinvestment plan	—		6,700		36,000			—			—			36,000
Common stock issued under stock plans	—		1,761		10,000			—			—			10,000
Issuance of restricted stock	—		34,332		198,000			(198,000		)	—			—
Amortization of restricted stock, net	—		(15,291	)	(86,000		)	114,000			—			28,000
Tax benefit from restricted stock vesting	—		—		5,000			—			—			5,000
Net income	—		—		—			2,353,000			—			2,353,000
Other comprehensive income	—		—		—			—			988,000			988,000
Balance -- June 30, 2016	$	—	6,113,030		$	41,571,000		$	8,972,000		$	143,000		$	50,686,000

	Six Months Ended June 30, 2015
											Accumulated Other Comprehensive
	Preferred		Common Stock					Retained			Income
	Stock		Shares		Amount			Earnings			(Loss), Net			Total
Balance -- December 31, 2014	$	14,984,000	6,034,933		$	41,125,000		$	3,817,000		$	(957,000	)	$	58,969,000
Cash dividends declared on common stock	—		—		—			(242,000		)	—			(242,000		)
Payment of discount on dividend reinvestment plan	—		—		(2,000		)	—			—			(2,000		)
Cash dividends declared on preferred stock	—		—		—			(342,000		)	—			(342,000		)
Common stock issued under dividend reinvestment plan	—		5,635		30,000			—			—			30,000
Common stock issued under stock plans	—		4,219		21,000			—			—			21,000
Issuance of restricted stock	—		50,974		279,000			(279,000		)	—			—
Amortization of restricted stock, net	—		(7,062	)	(38,000		)	75,000			—			37,000
Tax benefit from restricted stock vesting	—		—		3,000			—			—			3,000
Amortization of issuance costs	5,000		—		—			(5,000		)	—			—
Net income	—		—		—			2,139,000			—			2,139,000
Other comprehensive income	—		—		—			—			239,000			239,000
Balance -- June 30, 2015	$	14,989,000	6,088,699		$	41,418,000		$	5,163,000		$	(718,000	)	$	60,852,000

See accompanying notes to consolidated financial statements.

4

Stewardship Financial Corporation and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended
	June 30,
	2016			2015
Cash flows from operating activities:
Net income	$	2,353,000		$	2,139,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of premises and equipment	185,000			186,000
Amortization of premiums and accretion of discounts, net	285,000			338,000
Amortization of restricted stock	28,000			37,000
Amortization of subordinated debenture issuance costs	33,000			—
Accretion of deferred loan fees	34,000			42,000
Provision for loan losses	(800,000		)	(700,000		)
Originations of mortgage loans held for sale	(2,825,000		)	(5,653,000		)
Proceeds from sale of mortgage loans	3,803,000			4,302,000
Gain on sales of mortgage loans	(37,000		)	(65,000		)
Gain on calls and sales of securities	(56,000		)	(152,000		)
Gain on sale of other real estate owned	(6,000		)	(53,000		)
Deferred income tax expense	248,000			210,000
Increase in accrued interest receivable	55,000			88,000
Increase (decrease) in accrued interest payable	(9,000		)	58,000
Earnings on bank owned life insurance	(208,000		)	(197,000		)
Decrease in other assets	339,000			801,000
Decrease in other liabilities	(117,000		)	(2,053,000		)
Net cash provided by (used in) operating activities	3,305,000			(672,000		)
Cash flows from investing activities:
Purchase of securities available-for-sale	(21,288,000		)	(57,000		)
Proceeds from maturities and principal repayments on securities available-for-sale	6,305,000			6,258,000
Proceeds from sales and calls on securities available-for-sale	11,050,000			27,845,000
Purchase of securities held to maturity	(24,898,000		)	(13,182,000		)
Proceeds from maturities and principal repayments on securities held to maturity	3,464,000			4,921,000
Proceeds from calls on securities held to maturity	16,570,000			5,100,000
Sale (purchase) of FHLB-NY stock	(42,000		)	944,000
Net increase in loans	(11,055,000		)	(29,317,000		)
Proceeds from sale of other real estate owned	184,000			1,149,000
Purchase of bank owned life insurance	(2,000,000		)	—
Additions to premises and equipment	(64,000		)	(584,000		)
Net cash provided by (used in) investing activities	(21,774,000		)	3,077,000
Cash flows from financing activities:
Net increase in noninterest-bearing deposits	12,633,000			16,825,000
Net increase in interest-bearing deposits	9,083,000			12,698,000
Net decrease in short term borrowings	—			(21,700,000		)
Cash dividends paid on common stock	(305,000		)	(242,000		)
Cash dividends paid on preferred stock	—			(342,000		)
Payment of discount on dividend reinvestment plan	(2,000		)	(2,000		)
Issuance of common stock for cash	46,000			51,000
Tax benefit from restricted stock vesting	5,000			3,000
Net cash provided by financing activities	21,460,000			7,291,000
Net increase in cash and cash equivalents	2,991,000			9,696,000
Cash and cash equivalents - beginning	10,910,000			10,086,000
Cash and cash equivalents - ending	$	13,901,000		$	19,782,000

5

Stewardship Financial Corporation and Subsidiary

Consolidated Statements of Cash Flows (continued)

(Unaudited)

	Six Months Ended
	June 30,
	2016		2015
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	2,306,000	$	1,578,000
Cash paid during the period for income taxes	$	746,000	$	1,024,000
Transfers from loans to other real estate owned	$	152,000	$	—

See accompanying notes to consolidated financial statements.  

6

Stewardship Financial Corporation and Subsidiary

Notes to Consolidated Financial Statements

June 30, 2016

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Certain information and note disclosures normally included in the unaudited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Stewardship Financial Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 24, 2016 (the “2015 Annual Report”).

The interim unaudited consolidated financial statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the SEC and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the interim consolidated financial statements, have been included. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results which may be expected for the entire year.

Principles of consolidation

The consolidated financial statements include the accounts of Stewardship Financial Corporation and its wholly-owned subsidiary, Atlantic Stewardship Bank (the “Bank”), together referred to as “the Corporation”. The Bank includes its wholly-owned subsidiaries, Stewardship Investment Corporation, Stewardship Realty LLC, Atlantic Stewardship Insurance Company, LLC and several other subsidiaries formed to hold title to properties acquired through foreclosure or deed in lieu of foreclosure. The Bank’s subsidiaries have an insignificant impact on the Bank’s daily operations. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Corporation have been prepared in conformity with GAAP. In preparing the consolidated financial statements, management is required to make estimates and assumptions, based on available information, that affect the amounts reported in the consolidated financial statements and disclosures provided. Actual results could differ significantly from those estimates.

Material estimates

Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses and deferred income taxes. Management believes the Corporation’s policies with respect to the methodology for the determination of the allowance for loan losses and the evaluation of deferred income taxes involves a higher degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. These critical policies and their application are periodically reviewed with the Audit Committee and the Board of Directors.

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” This ASU is part of the FASB’s initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in ASU 2015-03 are effective for fiscal years, including interim periods, beginning after December 15, 2015. The adoption of the amendments in this standard did not have a material impact on the Corporation’s consolidated financial statements.

7

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities." This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years, including interim periods, beginning after December 15, 2017. Entities should apply the amendment by means of a cumulative-effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments that exist as of the date of adoption. The Corporation intends to adopt the accounting standard during the first quarter of 2018, and is currently evaluating the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. The amendments in ASU 2016-02 are effective for fiscal years, including interim periods, beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The objective of this ASU is to simplify accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU 2016-09, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current accounting) or account for forfeitures when they occur. Within the Cash Flow Statement, excess tax benefits should be classified along with other income tax cash flows as an operating activity, and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. The amendments in ASU 2016-09 are effective for fiscal years, including interim periods, beginning after December 15, 2016. Early adoption of ASU 2016-09 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments in this ASU require financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect 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. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The amendments in ASU

8

2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019. Early adoption of ASU 2016-09 is permitted for fiscal years beginning after December 15, 2018. The Corporation is currently evaluating the potential impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

Note 2. Securities – Available-for-Sale and Held to Maturity

The fair value of the available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	28,426,000	$	164,000	$	20,000	$	28,570,000
Obligations of state and political
subdivisions	1,406,000		26,000		—		1,432,000
Mortgage-backed securities - residential	50,648,000		670,000		32,000		51,286,000
Asset-backed securities (a)	9,291,000		—		205,000		9,086,000
Corporate debt	4,500,000		10,000		85,000		4,425,000
Total debt securities	94,271,000		870,000		342,000		94,799,000
Other equity investments	3,832,000		—		98,000		3,734,000
	$	98,103,000	$	870,000	$	440,000	$	98,533,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	31,266,000	$	81,000	$	393,000	$	30,954,000
Obligations of state and political
subdivisions	1,409,000		2,000		1,000		1,410,000
Mortgage-backed securities - residential	45,520,000		213,000		496,000		45,237,000
Asset-backed securities (a)	9,877,000		—		176,000		9,701,000
Corporate debt	2,500,000		—		81,000		2,419,000
Total debt securities	90,572,000		296,000		1,147,000		89,721,000
Other equity investments	3,778,000		—		145,000		3,633,000
	$	94,350,000	$	296,000	$	1,292,000	$	93,354,000

(a) Collateralized by student loans

Cash proceeds realized from sales and calls of securities available-for-sale for the three and six months ended June 30, 2016 were $9,000,000 and $11,050,000, respectively. There were no cash proceeds realized from sales and calls of securities available-for-sale for the three months ended June 30, 2015. Cash proceeds realized from sales and calls of securities available-for-sale for the six months ended June 30, 2015 were $27,845,000. There were gross gains totaling $7,000 and no gross losses realized on sales and calls during the three and six months ended June 30, 2016. While there were no gross gains and no gross losses realized on sales or calls during the three months ended June 30, 2015, gross gains and gross losses realized on sales and calls during the six months ended June 30, 2015 totaled $213,000 and $61,000, respectively.

9

The following is a summary of the held to maturity securities and related gross unrealized gains and losses:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	20,000	$	—	$	1,019,000
U.S. government-sponsored agencies	24,129,000		131,000		10,000		24,250,000
Obligations of state and political
subdivisions	10,223,000		167,000		—		10,390,000
Mortgage-backed securities - residential	30,315,000		798,000		—		31,113,000
	$	65,666,000	$	1,116,000	$	10,000	$	66,772,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	—	$	11,000	$	988,000
U.S. government-sponsored agencies	15,109,000		132,000		24,000		15,217,000
Obligations of state and political
subdivisions	11,219,000		268,000		—		11,487,000
Mortgage-backed securities - residential	33,411,000		295,000		117,000		33,589,000
	$	60,738,000	$	695,000	$	152,000	$	61,281,000

Cash proceeds realized from calls of securities held to maturity for the three and six months ended June 30, 2016 were $10,230,000 and $16,570,000, respectively. Cash proceeds realized from calls of securities held to maturity for the three and six months ended June 30, 2015 were $2,000,000 and $5,100,000, respectively. There were gross gains totaling $25,000 and no gross losses realized on calls during the three months ended June 30, 2016. There were gross gains totaling $49,000 and no gross losses realized on calls during the six months ended June 30, 2016. There were no gross gains and no gross losses realized on calls during the three and six months ended June 30, 2015.

Mortgage-backed securities are a type of asset-backed security secured by a mortgage or collection of mortgages, purchased by government agencies such as the Government National Mortgage Association and government sponsored agencies such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, which then issue securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool.

Issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This might cause actual maturities to differ from the contractual maturities.

10

The following table presents the amortized cost and fair value of the debt securities portfolio by contractual maturity. As issuers may have the right to call or prepay obligations with or without call or prepayment premiums, the actual maturities may differ from contractual maturities. Securities not due at a single maturity date, such as mortgage-backed securities and asset-backed securities, are shown separately.

	June 30, 2016
	Amortized Cost		Fair Value
Available-for-sale
Within one year	$	500,000	$	502,000
After one year, but within five years	9,778,000		9,798,000
After five years, but within ten years	17,923,000		18,009,000
After ten years	6,131,000		6,118,000
Mortgage-backed securities - residential	50,648,000		51,286,000
Asset-backed securities	9,291,000		9,086,000
Total	$	94,271,000	$	94,799,000
Held to maturity
Within one year	$	3,137,000	$	3,155,000
After one year, but within five years	8,586,000		8,787,000
After five years, but within ten years	21,676,000		21,716,000
After ten years	1,952,000		2,001,000
Mortgage-backed securities - residential	30,315,000		31,113,000
Total	$	65,666,000	$	66,772,000

The following tables summarize the fair value and unrealized losses of those investment securities which reported an unrealized loss at June 30, 2016 and December 31, 2015, and if the unrealized loss position was continuous for the twelve months prior to June 30, 2016 and December 31, 2015.

Available-for-Sale
June 30, 2016	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	1,994,000	$	(8,000	)	$	6,118,000	$	(12,000	)	$	8,112,000	$	(20,000	)
Obligations of state and political subdivisions	—		—			—		—			—		—
Mortgage-backed securities - residential	6,094,000		(11,000		)	3,888,000		(21,000		)	9,982,000		(32,000		)
Asset-backed securities	6,197,000		(69,000		)	2,889,000		(136,000		)	9,086,000		(205,000		)
Corporate debt	999,000		(1,000		)	1,416,000		(84,000		)	2,415,000		(85,000		)
Other equity investments	—		—			3,674,000		(98,000		)	3,674,000		(98,000		)
Total temporarily impaired securities	$	15,284,000	$	(89,000	)	$	17,985,000	$	(351,000	)	$	33,269,000	$	(440,000	)

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December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	18,396,000	$	(183,000	)	$	7,296,000	$	(210,000	)	$	25,692,000	$	(393,000	)
Obligations of state and political subdivisions	984,000		(1,000		)	—		—			984,000		(1,000		)
Mortgage-backed securities - residential	8,599,000		(69,000		)	16,278,000		(427,000		)	24,877,000		(496,000		)
Asset-backed securities	6,791,000		(56,000		)	2,910,000		(120,000		)	9,701,000		(176,000		)
Corporate debt	—		—			1,419,000		(81,000		)	1,419,000		(81,000		)
Other equity investments	—		—			3,573,000		(145,000		)	3,573,000		(145,000		)
Total temporarily impaired securities	$	34,770,000	$	(309,000	)	$	31,476,000	$	(983,000	)	$	66,246,000	$	(1,292,000	)

Held to Maturity
June 30, 2016	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
U.S. Treasury	$	—	$	—		$	—	$	—	$	—	$	—
U.S. government- sponsored agencies	1,891,000		(10,000		)	—		—		1,891,000		(10,000		)
Mortgage-backed securities - residential	—		—			—		—		—		—
Total temporarily impaired securities	$	1,891,000	$	(10,000	)	$	—	$	—	$	1,891,000	$	(10,000	)

December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury	$	988,000	$	(11,000	)	$	—	$	—		$	988,000	$	(11,000	)
U.S. government- sponsored agencies	4,955,000		(24,000		)	—		—			4,955,000		(24,000		)
Mortgage-backed securities - residential	15,183,000		(90,000		)	1,066,000		(27,000		)	16,249,000		(117,000		)
Total temporarily impaired securities	$	21,126,000	$	(125,000	)	$	1,066,000	$	(27,000	)	$	22,192,000	$	(152,000	)

Other-Than-Temporary-Impairment

At June 30, 2016, there were available-for-sale investments comprising three U.S. government-sponsored agency securities, five mortgage-backed securities, one asset-backed security, two corporate debt securities, and one other equity investments security in a continuous loss position for twelve months or longer. Management has assessed the securities that were in an unrealized loss position at June 30, 2016 and December 31, 2015 and has determined that any decline in fair value below amortized cost primarily relates to changes in interest rates and market spreads and was temporary.

In making this determination management considered the following factors in estimating the cash flows expected to be collected from the security: the period of time the securities were in an unrealized loss position; the percentage decline in comparison to the securities’ amortized cost; any adverse conditions specifically related to the security, an

12

industry or a geographic area; the rating or changes to the rating by a credit rating agency; the financial condition of the issuer and guarantor and any recoveries or additional declines in fair value subsequent to the balance sheet date. Management expects to collect all amounts contractually due and none of the debt securities can be prepaid at less than the par values.

Management does not intend to sell these securities in an unrealized loss position and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost bases, which may be at maturity.

Note 3. Loans and Allowance for Loan Losses

At June 30, 2016 and December 31, 2015, respectively, the loan portfolio consisted of the following:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	35,632,000	$	37,993,000
Other	36,388,000		26,867,000
Commercial real estate	337,660,000		334,489,000
Commercial construction	7,097,000		4,609,000
Residential real estate	79,661,000		82,955,000
Consumer:
Secured by real estate	29,876,000		29,224,000
Other	522,000		580,000
Government Guaranteed Loans - guaranteed portion	10,734,000		9,626,000
Other	68,000		134,000
Total gross loans	537,638,000		526,477,000
Less: Deferred loan costs (fees), net	25,000		98,000
Allowance for loan losses	8,388,000		8,823,000
	8,413,000		8,921,000
Loans, net	$	529,225,000	$	517,556,000

The Corporation has purchased the guaranteed portion of several government guaranteed loans. Due to the guarantee of the principal amount of these loans, no allowance for loan losses is established for these government guaranteed loans.

At June 30, 2016 and December 31, 2015, loan participations sold by the Corporation to other lending institutions totaled approximately $8,749,000 and $8,527,000, respectively. These amounts are not included in the totals presented above.

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Activity in the allowance for loan losses is summarized as follows:

	For the three months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,720,000	$	(386,000	)	$	(1,000	)	$	340,000	$	3,673,000
Commercial real estate	4,413,000		(156,000		)	(64,000		)	31,000		4,224,000
Commercial construction	112,000		72,000			—			—		184,000
Residential real estate	106,000		—			—			—		106,000
Consumer	119,000		19,000			(7,000		)	1,000		132,000
Other loans	1,000		1,000			(2,000		)	—		—
Unallocated	69,000		—			—			—		69,000
Total	$	8,540,000	$	(450,000	)	$	(74,000	)	$	372,000	$	8,388,000

	For the six months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,698,000	$	(402,000	)	$	(3,000	)	$	380,000	$	3,673,000
Commercial real estate	4,660,000		(431,000		)	(64,000		)	59,000		4,224,000
Commercial construction	114,000		70,000			—			—		184,000
Residential real estate	109,000		(3,000		)	—			—		106,000
Consumer	118,000		19,000			(7,000		)	2,000		132,000
Other loans	3,000		(1,000		)	(2,000		)	—		—
Unallocated	121,000		(52,000		)	—			—		69,000
Total	$	8,823,000	$	(800,000	)	$	(76,000	)	$	441,000	$	8,388,000

	For the three months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,703,000	$	(503,000	)	$	(1,000	)	$	118,000	$	3,317,000
Commercial real estate	5,116,000		99,000			—			74,000		5,289,000
Commercial construction	106,000		(200,000		)	—			108,000		14,000
Residential real estate	146,000		(6,000		)	—			—		140,000
Consumer	151,000		(13,000		)	—			1,000		139,000
Other loans	—		4,000			(1,000		)	—		3,000
Unallocated	378,000		19,000			—			—		397,000
Total	$	9,600,000	$	(600,000	)	$	(2,000	)	$	301,000	$	9,299,000

14

	For the six months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,704,000	$	(341,000	)	$	(272,000	)	$	226,000	$	3,317,000
Commercial real estate	5,017,000		171,000			—			101,000		5,289,000
Commercial construction	150,000		(477,000		)	—			341,000		14,000
Residential real estate	142,000		(2,000		)	—			—		140,000
Consumer	189,000		(52,000		)	—			2,000		139,000
Other loans	2,000		2,000			(1,000		)	—		3,000
Unallocated	398,000		(1,000		)	—			—		397,000
Total	$	9,602,000	$	(700,000	)	$	(273,000	)	$	670,000	$	9,299,000

15

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	79,000	$	613,000	$	—	$	—	$	—	$	—	$	—	$	—	$	692,000
Collectively evaluated for impairment	3,594,000		3,611,000		184,000		106,000		132,000		—		—		69,000		7,696,000
Total ending allowance balance	$	3,673,000	$	4,224,000	$	184,000	$	106,000	$	132,000	$	—	$	—	$	69,000	$	8,388,000
Loans:
Loans individually evaluated for impairment	$	2,331,000	$	6,768,000	$	—	$	—	$	81,000	$	—	$	—	$	—	$	9,180,000
Loans collectively evaluated for impairment	69,689,000		330,892,000		7,097,000		79,661,000		30,317,000		10,734,000		68,000		—		528,458,000
Total ending loan balance	$	72,020,000	$	337,660,000	$	7,097,000	$	79,661,000	$	30,398,000	$	10,734,000	$	68,000	$	—	$	537,638,000

16

	December 31, 2015
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	81,000	$	638,000	$	—	$	—	$	—	$	—	$	—	$	—	$	719,000
Collectively evaluated for impairment	3,617,000		4,022,000		114,000		109,000		118,000		—		3,000		121,000		8,104,000
Total ending allowance balance	$	3,698,000	$	4,660,000	$	114,000	$	109,000	$	118,000	$	—	$	3,000	$	121,000	$	8,823,000
Loans:
Loans individually evaluated for impairment	$	3,348,000	$	8,113,000	$	—	$	—	$	84,000	$	—	$	—	$	—	$	11,545,000
Loans collectively evaluated for impairment	61,512,000		326,376,000		4,609,000		82,955,000		29,720,000		9,626,000		134,000		—		514,932,000
Total ending loan balance	$	64,860,000	$	334,489,000	$	4,609,000	$	82,955,000	$	29,804,000	$	9,626,000	$	134,000	$	—	$	526,477,000

The following table presents the recorded investment in nonaccrual loans at the dates indicated:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	616,000	$	1,300,000
Other	—		14,000
Commercial real estate	252,000		484,000
Consumer:
Secured by real estate	81,000		84,000
Total nonaccrual loans	$	949,000	$	1,882,000

At June 30, 2016 and December 31, 2015, there were no loans that were past due 90 days and still accruing.

17

The following table presents loans individually evaluated for impairment by class of loan at and for the periods indicated:

	At and for the six months ended June 30, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	2,073,000	$	1,853,000			$	2,310,000	$	47,000
Other	—		—				46,000		—
Commercial real estate	3,824,000		3,563,000				3,197,000		112,000
Consumer:
Secured by real estate	82,000		81,000				83,000		—
With an allowance recorded:
Commercial:
Secured by real estate	190,000		190,000		$	68,000	230,000		4,000
Other	288,000		288,000		11,000		256,000		10,000
Commercial real estate	3,205,000		3,205,000		613,000		4,726,000		66,000
	$	9,662,000	$	9,180,000	$	692,000	$	10,848,000	$	239,000

During the three and six months ended June 30, 2016, no interest income was recognized on a cash basis.

	At and for the year ended December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	3,244,000	$	2,729,000			$	3,683,000	$	156,000
Other	137,000		137,000				61,000		2,000
Commercial real estate	3,245,000		2,885,000				2,890,000		121,000
Commercial construction	—		—				215,000		—
Residential real estate	—		—				74,000		—
Consumer:
Secured by real estate	84,000		84,000				226,000		—
With an allowance recorded:
Commercial:
Secured by real estate	390,000		308,000		$	80,000	405,000		14,000
Other	174,000		174,000		1,000		463,000		31,000
Commercial real estate	5,228,000		5,228,000		638,000		5,534,000		211,000
	$	12,502,000	$	11,545,000	$	719,000	$	13,551,000	$	535,000

18

During the year ended December 31, 2015, no interest income was recognized on a cash basis.

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2016 and December 31, 2015. Nonaccrual loans are included in the disclosure by payment status.

	June 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	616,000	$	616,000	$	35,016,000	$	35,632,000
Other	—		—		—		—		36,388,000		36,388,000
Commercial real estate	—		—		252,000		252,000		337,408,000		337,660,000
Commercial construction	—		—		—		—		7,097,000		7,097,000
Residential real estate	—		—		—		—		79,661,000		79,661,000
Consumer:
Secured by real estate	162,000		—		41,000		203,000		29,673,000		29,876,000
Other	—		—		—		—		522,000		522,000
Government Guaranteed	—		—		—		—		10,734,000		10,734,000
Other	—		—		—		—		68,000		68,000
Total	$	162,000	$	—	$	909,000	$	1,071,000	$	536,567,000	$	537,638,000

	December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	1,011,000	$	1,011,000	$	36,982,000	$	37,993,000
Other	—		—		—		—		26,867,000		26,867,000
Commercial real estate	271,000		—		—		271,000		334,218,000		334,489,000
Commercial construction	—		—		—		—		4,609,000		4,609,000
Residential real estate	—		—		—		—		82,955,000		82,955,000
Consumer:
Secured by real estate	112,000		—		41,000		153,000		29,071,000		29,224,000
Other	—		—		—		—		580,000		580,000
Government Guaranteed	—		—		—		—		9,626,000		9,626,000
Other	—		—		—		—		134,000		134,000
Total	$	383,000	$	—	$	1,052,000	$	1,435,000	$	525,042,000	$	526,477,000

Troubled Debt Restructurings

In order to determine whether a borrower is experiencing financial difficulty necessitating a restructuring, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Corporation’s internal underwriting policy. A loan is considered to be in payment default once it is contractually 90 days past due under the modified terms.

At June 30, 2016 and December 31, 2015, the Corporation had $8.5 million and $10.2 million, respectively, of loans whose terms have been modified in troubled debt restructurings. Of these loans, $8.2 million and $9.7 million were performing in accordance with their new terms at June 30, 2016 and December 31, 2015, respectively. The remaining troubled debt restructurings are reported as nonaccrual loans. Specific reserves of $692,000 and $708,000 have been allocated for the troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016 and December 31, 2015, the Corporation has committed $138,000 of additional funds to a single customer with an outstanding line of credit that is classified as a troubled debt restructuring.

19

There are no troubled debt restructurings for which there was a payment default within twelve months following the modification.

There were no new loans classified as a troubled debt restructuring during the three and six months ended June 30, 2016 or June 30, 2015.

Credit Quality Indicators

The Corporation categorizes certain loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial, commercial real estate and commercial construction loans. This analysis is performed at the time the loan is originated and annually thereafter. The Corporation uses the following definitions for risk ratings.

Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or the Bank’s credit position at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard – Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – A Doubtful loan has all of the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable or improbable. The likelihood of loss is extremely high, but because of certain important and reasonably specific factors, an estimated loss is deferred until a more exact status can be determined.

Loss – A loan classified Loss is considered uncollectible and of such little value that its continuance as an asset is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of June 30, 2016 and December 31, 2015, and based on the most recent analysis performed at those times, the risk category of loans by class is as follows:

	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	33,663,000	$	1,353,000	$	616,000	$	—	$	—	$	35,632,000
Other	35,309,000		720,000		359,000		—		—		36,388,000
Commercial real estate	329,959,000		4,245,000		3,456,000		—		—		337,660,000
Commercial construction	7,097,000		—		—		—		—		7,097,000
Total	$	406,028,000	$	6,318,000	$	4,431,000	$	—	$	—	$	416,777,000

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	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	35,263,000	$	1,431,000	$	1,299,000	$	—	$	—	$	37,993,000
Other	25,725,000		745,000		397,000		—		—		26,867,000
Commercial real estate	326,737,000		4,034,000		3,718,000		—		—		334,489,000
Commercial construction	4,609,000		—		—		—		—		4,609,000
Total	$	392,334,000	$	6,210,000	$	5,414,000	$	—	$	—	$	403,958,000

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loans losses. For residential real estate and consumer loan segments, the Corporation also evaluates credit quality based on payment activity. The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	79,448,000	$	213,000	$	79,661,000
Consumer:
Secured by real estate	28,879,000		997,000		29,876,000
Other	519,000		3,000		522,000
Total	$	108,846,000	$	1,213,000	$	110,059,000

	December 31, 2015
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	82,415,000	$	540,000	$	82,955,000
Consumer:
Secured by real estate	27,730,000		1,494,000		29,224,000
Other	578,000		2,000		580,000
Total	$	110,723,000	$	2,036,000	$	112,759,000

Note 4. Fair Value of Financial Instruments

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values of investment securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted

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prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). As the Corporation is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Corporation compares the prices received from the pricing service to a secondary pricing source. The Corporation’s internal price verification procedures have not historically resulted in adjustment in the prices obtained from the pricing service.

The interest rate swaps are reported at fair values obtained from brokers who utilize internal models with observable market data inputs to estimate the values of these instruments (Level 2 inputs).

The Corporation measures impairment of collateralized loans and other real estate owned (“OREO”) based on the estimated fair value of the collateral less estimated costs to sell the collateral, incorporating assumptions that experienced parties might use in estimating the value of such collateral (Level 3 inputs). At the time a loan or OREO is considered impaired, it is valued at the lower of cost or fair value. Generally, impaired loans carried at fair value have been partially charged-off or receive specific allocations of the allowance for loan losses. OREO is initially recorded at fair value less estimated selling costs. For collateral dependent loans and OREO, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, the net book value recorded for the collateral on the borrower’s financial statements, or aging reports. Collateral is then adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the borrower and borrower’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals are generally obtained to support the fair value of collateral. Appraisals for both collateral-dependent impaired loans and OREO are performed by licensed appraisers whose qualifications and licenses have been reviewed and verified by the Corporation. The Corporation utilizes a third party to order appraisals and, once received, reviews the assumptions and approaches utilized in the appraisal as well as the resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. In addition, appraisers may make adjustments to the sales price of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. Management generally applies a 12% discount to real estate appraised values to cover disposition / selling costs and to reflect the potential price reductions in the market necessary to complete an expedient transaction and to factor in the impact of the perception that a transaction being completed by a bank may result in further price reduction pressure.

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Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	28,570,000	$	—	$	28,570,000	$	—
Obligations of state and political subdivisions	1,432,000		—		1,432,000		—
Mortgage-backed securities - residential	51,286,000		—		51,286,000		—
Asset-backed securities	9,086,000		—		9,086,000		—
Corporate debt	4,425,000		—		4,425,000		—
Other equity investments	3,734,000		3,674,000		60,000		—
Total available-for-sale securities	$	98,533,000	$	3,674,000	$	94,859,000	$	—

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	30,954,000	$	—	$	30,954,000	$	—
Obligations of state and political subdivisions	1,410,000		—		1,410,000		—
Mortgage-backed securities - residential	45,237,000		—		45,237,000		—
Asset-backed securities	9,701,000		—		9,701,000		—
Corporate debt	2,419,000		—		2,419,000		—
Other equity investments	3,633,000		3,573,000		60,000		—
Total available-for-sale securities	$	93,354,000	$	3,573,000	$	89,781,000	$	—
Liabilities:
Interest rate swap	$	62,000	$	—	$	62,000	$	—

There were no transfers of assets between Level 1 and Level 2 during the six months ended June 30, 2016 or during the year ended December 31, 2015. There were no changes to the valuation techniques for fair value measurements as of June 30, 2016 and December 31, 2015.

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Assets and Liabilities Measured on a Non-Recurring Basis

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

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Impaired loans
Commercial:
Secured by real estate	$	252,000	$	—	$	—	$	252,000
Other Real Estate Owned	431,000		—		—		431,000
	$	683,000	$	—	$	—	$	683,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Impaired loans
Commercial:
Secured by real estate	$	367,000	$	—	$	—	$	367,000
Consumer
Secured by real estate	84,000		—		—		84,000
Other Real Estate Owned	880,000		—		—		880,000
	$	1,331,000	$	—	$	—	$	1,331,000

Collateral-dependent impaired loans measured for impairment using the fair value of the collateral had a recorded investment value of $252,000, with no valuation allowance, resulting in no change to the provision for loan losses for the six months ended June 30, 2016.

Collateral-dependent impaired loans measured for impairment using the fair value of the collateral had a recorded investment value of $461,000, with a valuation allowance of $10,000, resulting in an increase of the allocation for loan losses of $16,000 for the year ended December 31, 2015.

OREO, measured at fair value, had a recorded investment value of $451,000 with a $20,000 valuation allowance at June 30, 2016. At December 31, 2015, OREO had a recorded investment value of $880,000 with no valuation allowance. Additional valuation allowances of $20,000 were recorded during the six months ended June 30, 2016. There were $60,000 additional valuation allowances recorded during the six months ended June 30, 2015.

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For the Level 3 assets measured at fair value on a non-recurring basis at June 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

June 30, 2016
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	252,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 5%
				Estimated selling costs.	7%
Other real estate owned	$	431,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 7%
				Estimated selling costs.	7%

December 31, 2015
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	451,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	5% - 9%
				Estimated selling costs.	7%
Other real estate owned	$	990,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0%
				Estimated selling costs.	7%

Fair value estimates for the Corporation’s financial instruments are summarized below:

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			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Financial assets:
Cash and cash equivalents	$	13,901,000	$	13,901,000	$	—	$	—
Securities available-for-sale	98,533,000		3,674,000		94,859,000		—
Securities held to maturity	65,666,000		—		65,666,000		—
FHLB-NY stock	2,651,000		N/A		N/A		N/A
Mortgage loans held for sale	581,000		—		—		581,000
Loans, net	529,225,000		—		—		539,764,000
Accrued interest receivable	1,912,000		1,000		524,000		1,387,000
Financial liabilities:
Deposits	626,469,000		483,034,000		144,244,000		—
FHLB-NY advances	40,000,000		—		40,291,000		—
Subordinated debentures and subordinated notes	23,219,000		—		—		23,240,000
Accrued interest payable	782,000		1,000		398,000		383,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	December 31, 2015
Financial assets:
Cash and cash equivalents	$	10,910,000	$	10,910,000	$	—	$	—
Securities available-for-sale	93,354,000		3,573,000		89,781,000		—
Securities held to maturity	60,738,000		—		61,281,000		—
FHLB-NY stock	2,608,000		N/A		N/A		N/A
Mortgage loans held for sale	1,522,000		—		—		1,522,000
Loans, net	517,556,000		—		—		527,479,000
Accrued interest receivable	1,967,000		1,000		535,000		1,432,000
Financial liabilities:
Deposits	604,753,000		459,327,000		145,560,000		—
FHLB-NY advances	40,000,000		—		40,222,000		—
Subordinated debentures and subordinated notes	23,186,000		—		—		23,206,000
Accrued interest payable	791,000		1,000		387,000		403,000
Interest rate swap	62,000		—		62,000		—

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents – The carrying amount approximates fair value and is classified as Level 1.

Securities available-for-sale and held to maturity – The methods for determining fair values were described previously.

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FHLB-NY stock - It is not practicable to determine the fair value of FHLB-NY stock due to restrictions placed on the transferability of the stock.

Mortgage loans held for sale – Loans in this category have been committed for sale to third party investors at the current carrying amount resulting in a Level 3 classification.

Loans, net – Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential and commercial mortgages, commercial and other installment loans. The fair value of loans is estimated by discounting cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loans resulting in a Level 3 classification. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable loans.

Accrued interest receivable – The carrying amount approximates fair value.

Deposits – The fair value of deposits, with no stated maturity, such as noninterest-bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand resulting in a Level 1 classification. The fair value of certificates of deposit is based on the discounted value of cash flows resulting in a Level 2 classification. The discount rate is estimated using market discount rates which reflect interest rate risk inherent in the certificates of deposit. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable deposits.

FHLB-NY advances – With respect to FHLB-NY borrowings, the fair value is based on the discounted value of cash flows. The discount rate is estimated using market discount rates which reflect the interest rate risk and credit risk inherent in the term borrowings resulting in a Level 2 classification.

Subordinated debentures and subordinated notes – The fair value of the Subordinated Debentures (see Note 6) and the Subordinated Notes (see Note 6) is based on the discounted value of the cash flows. The discount rate is estimated using market rates which reflect the interest rate and credit risk inherent in the Subordinated Debentures and the Subordinated Notes resulting in a Level 3 classification.

Accrued interest payable – The carrying amount approximates fair value.

Interest rate swap – The fair value of derivatives, which is included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition, are based on valuation models using observable market data as of the measurement date (Level 2).

Commitments to extend credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness of the counter parties. At June 30, 2016 and December 31, 2015 the fair value of such commitments were not material.

Limitations

The preceding fair value estimates were made at June 30, 2016 and December 31, 2015 based on pertinent market data and relevant information concerning the financial instruments. These estimates do not include any premiums or discounts that could result from an offer to sell at one time the Corporation's entire holdings of a particular financial instrument or category thereof. Since no market exists for a substantial portion of the Corporation's financial instruments, fair value estimates were necessarily based on judgments with respect to future expected loss experience, current economic conditions, risk assessments of various financial instruments, and other factors. Given the subjective nature of these estimates, the uncertainties surrounding them and the matters of significant judgment that must be applied, these fair value estimates cannot be calculated with precision. Modifications in such assumptions could meaningfully alter these estimates.

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Since these fair value approximations were made solely for on- and off-balance sheet financial instruments at June 30, 2016 and December 31, 2015, no attempt was made to estimate the value of anticipated future business. Furthermore, certain tax implications related to the realization of unrealized gains and losses could have a substantial impact on these fair value estimates and have not been incorporated into the estimates.

Note 5. Earnings Per Share

Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Common stock equivalents are not included in the calculation. Diluted earnings per share is computed similar to that of basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential dilutive common shares were issued.

The following reconciles the income available to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted earnings per share.

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income	$	1,362,000	$	1,222,000	$	2,353,000	$	2,139,000
Dividends on preferred stock	—		171,000		—		342,000
Net income available to common stockholders	$	1,362,000	$	1,051,000	$	2,353,000	$	1,797,000
Weighted average common shares outstanding - basic	6,111,729		6,086,474		6,102,040		6,066,191
Effect of dilutive securities - stock options	N/A		N/A		N/A		N/A
Weighted average common shares outstanding - diluted	6,111,729		6,086,474		6,102,040		6,066,191
Basic earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30
Diluted earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30

There were no stock options to purchase shares of common stock for the three and six months ended June 30, 2016 and 2015.

Note 6. Subordinated Debt

			Carrying Amount
Issue	Maturity	Rate	June 30, 2016		December 31, 2015
9/17/2003	9/17/2033	Fixed / Floating Rate Junior Subordinated Debentures	$	7,217,000	$	7,217,000
8/28/2015	8/25/2025	Fixed Rate Subordinated Notes	16,002,000		15,969,000
			$	23,219,000	$	23,186,000

In 2003, the Corporation formed Stewardship Statutory Trust I (the “Trust”), a statutory business trust, which on September 17, 2003 issued $7.0 million Fixed/Floating Rate Capital Securities (“Capital Securities”). The Trust used the proceeds to purchase from the Corporation, $7,217,000 of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) maturing September 17, 2033. The Trust is obligated to distribute all proceeds of a redemption whether voluntary or upon maturity, to holders of the Capital Securities. The Corporation’s obligation with respect to the Capital Securities, and the Debentures, when taken together, provide a full and unconditional guarantee on a subordinated basis by the Corporation of the Trust’s obligations to pay amounts when due on the Capital Securities. The Corporation is not considered the primary beneficiary of this Trust (variable interest entity); therefore, the Trust is not consolidated in the Corporation’s consolidated financial statements, but rather the Subordinated Debentures are shown as a liability. Prior to September 17, 2008, the Capital Securities and the

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Subordinated Debentures both had a fixed interest rate of 6.75%. Beginning September 17, 2008, the rate floats quarterly at a rate of three month LIBOR plus 2.95%. At June 30, 2016 and December 31, 2015, the rate on both the Capital Securities and the Subordinated Debentures was 3.61% and 3.48%, respectively. The Corporation has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period for up to 20 consecutive quarterly periods. The Subordinated Debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

On August 28, 2015, the Corporation completed a private placement of $16.6 million in aggregate principal amount of fixed rate subordinated notes (the “Subordinated Notes”) to certain institutional accredited investors pursuant to a Subordinated Note Purchase Agreement dated August 28, 2015 between the Corporation and such investors. The Subordinated Notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum, payable semi-annually, in arrears, on March 1 and September 1 of each year during the time that the Subordinated Notes remain outstanding. The Subordinated Notes include a right of prepayment, without penalty, on or after August 28, 2020 and, in certain limited circumstances, before that date. The indebtedness evidenced by the Subordinated Notes, including principal and interest, is unsecured and subordinate and junior in right of the Company's payment to general and secured creditors and depositors of the Bank. The Subordinated Notes have been structured to qualify as Tier 2 capital for regulatory purposes. The Subordinated Notes totaled $16.0 million at June 30, 2016, which includes $598,000 of remaining unamortized debt issuance costs. The debt issuance costs are being amortized over the contractual life of the issue. The net cash proceeds of the Subordinated Notes were used to redeem on September 1, 2015, the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Shares”). The Series B Preferred Shares were issued by the Corporation to the U.S. Department of the Treasury (the “Treasury) on September 1, 2011 in connection with the Corporation’s participation in the Treasury’s Small Business Lending Fund program (“SBLF”), a $30 million fund established under the Small Business Jobs Act of 2010 to encourage small business lending by providing capital to qualified community banks with assets of less than $10 billion.

Note 7. Accumulated Other Comprehensive Income

The components of comprehensive income, both gross and net of tax, are presented for the periods below:

	Three Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	2,138,000		$	(776,000	)	$	1,362,000		$	1,895,000		$	(673,000	)	$	1,222,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	395,000			(151,000		)	244,000			(525,000		)	200,000			(325,000		)
Reclassification adjustment for gains in net income	(32,000		)	12,000			(20,000		)	—			—			—
Accretion of loss on securities reclassified to held to maturity	41,000			(16,000		)	25,000			56,000			(22,000		)	34,000
Change in fair value of interest rate swap	—			—			—			62,000			(25,000		)	37,000
Total other comprehensive income (loss)	404,000			(155,000		)	249,000			(407,000		)	153,000			(254,000		)
Total comprehensive income	$	2,542,000		$	(931,000	)	$	1,611,000		$	1,488,000		$	(520,000	)	$	968,000

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	Six Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	3,681,000		$	(1,328,000	)	$	2,353,000		$	3,265,000		$	(1,126,000	)	$	2,139,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	1,482,000			(566,000		)	916,000			226,000			(88,000		)	138,000
Reclassification adjustment for gains in net income	(56,000		)	21,000			(35,000		)	(152,000		)	61,000			(91,000		)
Accretion of loss on securities reclassified to held to maturity	113,000			(43,000		)	70,000			195,000			(74,000		)	121,000
Change in fair value of interest rate swap	62,000			(25,000		)	37,000			119,000			(48,000		)	71,000
Total other comprehensive income (loss)	1,601,000			(613,000		)	988,000			388,000			(149,000		)	239,000
Total comprehensive income	$	5,282,000		$	(1,941,000	)	$	3,341,000		$	3,653,000		$	(1,275,000	)	$	2,378,000

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The following tables present the after-tax changes in the balances of each component of accumulated other comprehensive income for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2016	$	47,000		$	(153,000	)	$	—		$	(106,000	)
Other comprehensive income before reclassifications	244,000			25,000			—			269,000
Amounts reclassified from other comprehensive income	(20,000		)	—			—			(20,000		)
Other comprehensive income	224,000			25,000			—			249,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000
	Six Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2015	$	(610,000	)	$	(198,000	)	$	(37,000	)	$	(845,000	)
Other comprehensive income before reclassifications	916,000			70,000			37,000			1,023,000
Amounts reclassified from other comprehensive income	(35,000		)	—			—			(35,000		)
Other comprehensive income, net	881,000			70,000			37,000			988,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000

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	Three Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2015	$	(20,000	)	$	(290,000	)	$	(154,000	)	$	(464,000	)
Other comprehensive income (loss) before reclassifications	(325,000		)	34,000			37,000			(254,000		)
Amounts reclassified from other comprehensive income	—			—			—			—
Other comprehensive income (loss), net	(325,000		)	34,000			37,000			(254,000		)
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)
	Six Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(392,000	)	$	(377,000	)	$	(188,000	)	$	(957,000	)
Other comprehensive income before reclassifications	138,000			121,000			71,000			330,000
Amounts reclassified from other comprehensive income	(91,000		)	—			—			(91,000		)
Other comprehensive income, net	47,000			121,000			71,000			239,000
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)

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The following tables present amounts reclassified from each component of accumulated other comprehensive income on a gross and net of tax basis for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended					Income
Components of Accumulated Other	June 30,					Statement
Comprehensive Income	2016			2015		Line Item
Unrealized gains on AFS securities before tax	$	32,000		$	—	Gains on securities transactions, net
Tax effect	(12,000		)	—
Total net of tax	20,000			—
Total reclassifications, net of tax	$	20,000		$	—

	Six Months Ended						Income
Components of Accumulated Other	June 30,						Statement
Comprehensive Income	2016			2015			Line Item
Unrealized gains on AFS securities before tax	$	56,000		$	152,000		Gains on securities transactions, net
Tax effect	(21,000		)	(61,000		)
Total net of tax	35,000			91,000
Total reclassifications, net of tax	$	35,000		$	91,000

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

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain “forward-looking statements” with respect to Stewardship Financial Corporation (the “Corporation”) within the meaning of the Private Securities Litigation Reform Act of 1995, which forward-looking statements may be identified by the use of such words as “expect,” “believe”, “anticipate,” “should,” “plan,” “estimate,” and “potential.” Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of the Corporation that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include: changes in general, economic and market conditions, legislative and regulatory conditions, or the development of an interest rate environment that adversely affects the Corporation’s interest rate spread or other income anticipated from operations and investments. As used in this Form 10-Q, “we”, “us” and “our” refer to the Corporation and its consolidated subsidiary, Atlantic Stewardship Bank (the “Bank”), depending on the context.

Critical Accounting Policies and Estimates

“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as disclosures found elsewhere in this Quarterly Report on Form 10-Q, are based upon the Corporation’s consolidated financial statements, which have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires the Corporation to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the Corporation’s Audited Consolidated Financial Statements for the year ended December 31, 2015 included in the Corporation’s 2015 Annual Report contains a summary of the Corporation’s significant accounting policies. Management believes the Corporation’s policy with respect to the methodology for the determination of the allowance for loan losses and the evaluation of deferred income taxes involves a higher degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. This critical accounting policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.

Allowance for Loan Losses. The allowance for loan losses is based upon management’s evaluation of the adequacy of the allowance, including an assessment of known and inherent risks in the loan portfolio, giving consideration to the size and composition of the loan portfolio, actual loan loss experience, level of delinquencies, detailed analysis of individual loans for which full collectability may not be assured, the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans, and current economic and market conditions. Although management uses the best information available, the level of the allowance for loan losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Corporation’s allowance for loan losses. Such agencies may require the Corporation to make additional provisions for loan losses based upon information available to them at the time of their examination. Furthermore, the majority of the Corporation’s loans are secured by real estate in the State of New Jersey. Accordingly, the collectability of a substantial portion of the carrying value of the Corporation’s loan portfolio is susceptible to changes in local market conditions and may be adversely affected should real estate values decline or the northern New Jersey area experience adverse economic changes. Future adjustments to the allowance for loan losses may be necessary due to economic, operating, regulatory and other conditions beyond the Corporation’s control.

Deferred Income Taxes. The Corporation records income taxes in accordance with ASC 740, “Income Taxes,” as amended, using the asset and liability method. Accordingly, deferred tax assets and liabilities: (i) are recognized for the expected future tax consequences of events that have been recognized in the financial statements or tax returns; (ii) are attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases; and (iii) are measured using enacted tax rates expected to apply in the years when those temporary differences are expected to be recovered or settled. Where applicable, deferred tax assets are reduced by a valuation allowance for any portions determined not likely to be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period of enactment. The valuation allowance is adjusted, by a charge or credit to income tax expense, as changes in facts and circumstances warrant.

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Financial Condition

Total assets increased $24.7 million to $742.6 million at June 30, 2016 from $717.9 million at December 31, 2015. Cash and cash equivalents increased $3.0 million to $13.9 million at June 30, 2016 from $10.9 million at December 31, 2015, reflecting some additional liquidity from deposit growth. Securities available-for-sale increased $5.2 million to $98.5 million and securities held to maturity increased $4.9 million to $65.7 million. Net loans increased $11.7 million to $529.2 million at June 30, 2016 compared to $517.6 million at December 31, 2015, reflecting new loan originations, partially offset by normal principal amortization and payoffs.

Deposits totaled $626.5 million at June 30, 2016, an increase of $21.7 million from $604.8 million at December 31, 2015. The growth in deposits consisted of a $12.6 million increase in noninterest-bearing accounts and a $9.1 million increase in interest-bearing accounts.

Results of Operations

General

The Corporation reported net income available to common shareholders of $1.4 million, or $0.22 diluted earnings per common share for the three months ended June 30, 2016, compared to net income available to common shareholders of $1.1 million, or $0.17 diluted earnings per common share for the comparable prior year period. For the six months ended June 30, 2016, the Corporation reported net income available to common shareholders of $2.4 million, or $0.39 diluted earnings per common share compared to net income available to common shareholders of $1.8 million, or $0.30 diluted earnings per common share for the comparable prior year period.

Net Interest Income

Net interest income, on a tax equivalent basis, for the three and six months ended June 30, 2016 was $5.9 million and $11.1 million, respectively, compared to $5.5 million and $10.9 recorded in the prior year periods. The net interest rate spread and net yield on interest-earning assets for the three months ended June 30, 2016 were 3.16% and 3.38%, respectively, compared to 3.21% and 3.40% for the three months ended June 30, 2015. For the six months ended June 30, 2016, the net interest rate spread and net yield on interest-earning assets were 3.03% and 3.24%, respectively, compared to 3.23% and 3.40% for the six months ended June 30, 2015.

The declines in both the net interest rate spread and net yield on interest-earning assets include the impact of the $16.6 million of Subordinated Notes issued on August 28, 2015 to certain institutional accredited investors (see Note 6 to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q). While the cost of the Subordinated Notes reduces net interest income, the increased interest expense for the quarter, on an after tax basis, is less than the dividends that would have accrued for the quarter on the Corporation’s Series B Preferred Shares , which were redeemed by the Corporation using the net cash proceeds for the Subordinated Notes, resulting in an overall benefit to net income available to common shareholders for the quarter. The dividend rate on the Series B Preferred Shares would have accrued at a rate of 4.56% for January and February 2016 but, beginning on March 1, 2016 and for all dividend periods thereafter, the dividend rate would have increased to and become fixed at 9% per annum, making the issuance of the Subordinated Notes an even more positive impact to net income available to common shareholders in the future.

For the three and six months ended June 30, 2016, net interest income includes approximately $450,000 of nonrecurring interest recoveries and prepayment premiums on loans. However, in general, the net interest rate spread and net yield on interest-earning assets for the current year periods reflects an overall decline in loan interest rates. These reduced loan yields primarily reflect the historically low market rates in the current environment.

The following tables reflect the components of the Corporation’s net interest income for the three and six months ended June 30, 2016 and 2015 including: (1) average assets, liabilities and shareholders’ equity based on average daily balances, (2) interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities, (3) average yields earned on interest-earning assets and average rates paid on interest-bearing liabilities and (4) net yield on interest-earning assets. Nontaxable income from investment securities and loans is presented on a tax-equivalent basis assuming a statutory tax rate of 34% for the periods presented. This was accomplished by adjusting non-taxable income upward to make it equivalent to the level of taxable income required to earn the same amount after taxes.

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Analysis of Net Interest Income (Unaudited)
Three Months Ended June 30,
	2016								2015
	Average Balance			Interest Income/ Expense			Average Rates Earned/ Paid		Average Balance			Interest Income/ Expense			Average Rates Earned/ Paid
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans (1) (2)	$	527,777		$	6,125		4.67	%	$	494,951		$	5,632		4.56	%
Taxable investment securities (1)	151,067			738			1.96	%	137,255			602			1.76
Tax-exempt investment securities (1) (2)	11,992			159			5.33		14,104			189			5.37
Other interest-earning assets	13,947			19			0.55		13,477			10			0.30
Total interest-earning assets	704,783			7,041			4.02		659,787			6,433			3.91
Non-interest-earning assets:
Allowance for loan losses	(8,743		)						(9,730		)
Other assets	42,276								41,963
Total assets	$	738,316							$	692,020
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	229,276		$	141		0.25	%	$	208,635		$	144		0.27	%
Savings deposits	87,005			23			0.10		78,846			21			0.10
Time deposits	145,993			397			1.09		140,554			341			0.97
FHLB-NY borrowing	40,001			201			2.02		46,440			211			1.82
Subordinated debentures and subordinated notes	23,211			362			6.27		7,217			125			7.00
Total interest-bearing liabilities	525,486			1,124			0.86		481,692			842			0.70	%
Non-interest-bearing liabilities:
Demand deposits	161,055								147,683
Other liabilities	2,178								2,105
Stockholders' equity	49,597								60,540
Total liabilities and stockholders' equity	$	738,316							$	692,020
Net interest income (taxable equivalent basis)				5,917								5,591
Tax equivalent adjustment				(62		)						(73		)
Net interest income				$	5,855							$	5,518
Net interest spread (taxable equivalent basis)							3.16	%							3.21	%
Net yield on interest-earning assets (taxable equivalent basis) (3)							3.38	%							3.40	%

(1) For purpose of these calculations, nonaccruing loans are included in the average balance.  Loans and total interest-earning assets are net of unearned income.  Securities are included at amortized cost.

(2) The tax equivalent adjustments are based on a marginal tax rate of 34%.

(3) Net interest income (taxable equivalent basis) divided by average interest-earning assets.

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Analysis of Net Interest Income (Unaudited)
Six Months Ended June 30,
	2016								2015
	Average Balance			Interest Income/ Expense			Average Rates Earned/ Paid		Average Balance			Interest Income/ Expense			Average Rates Earned/ Paid
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans (1) (2)	$	527,873		$	11,787		4.49	%	$	489,526		$	11,088		4.57	%
Taxable investment securities (1)	147,806			1,417			1.93	%	140,143			1,207			1.74
Tax-exempt investment securities (1) (2)	12,148			322			5.33		14,719			392			5.37
Other interest-earning assets	10,009			28			0.58		11,272			17			0.30
Total interest-earning assets	697,836			13,554			3.91		655,660			12,704			3.91
Non-interest-earning assets:
Allowance for loan losses	(8,794		)						(9,891		)
Other assets	42,076								41,963
Total assets	$	731,118							$	687,732
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	227,924		$	280		0.25	%	$	208,553		$	282		0.27	%
Savings deposits	85,498			44			0.10		78,229			41			0.11
Time deposits	146,718			794			1.09		137,416			634			0.93
FHLB-NY borrowing	40,643			404			2.00		50,671			428			1.70
Subordinated debentures and subordinated notes	23,203			775			6.72		7,217			250			6.99
Total interest-bearing liabilities	523,986			2,297			0.88		482,086			1,635			0.68	%
Non-interest-bearing liabilities:
Demand deposits	155,749								142,908
Other liabilities	2,300								2,619
Stockholders' equity	49,083								60,119
Total liabilities and stockholders' equity	$	731,118							$	687,732
Net interest income (taxable equivalent basis)				11,257								11,069
Tax equivalent adjustment				(126		)						(150		)
Net interest income				$	11,131							$	10,919
Net interest spread (taxable equivalent basis)							3.03	%							3.23	%
Net yield on interest-earning assets (taxable equivalent basis) (3)							3.24	%							3.40	%

(1) For purpose of these calculations, nonaccruing loans are included in the average balance.  Loans and total interest-earning assets are net of unearned income.  Securities are included at amortized cost.

(2) The tax equivalent adjustments are based on a marginal tax rate of 34%.

(3) Net interest income (taxable equivalent basis) divided by average interest-earning assets.

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For the three and six months ended June 30, 2016, total interest income, on a tax equivalent basis, was $7.0 million and $13.6 million, respectively, compared to $6.4 million and $12.7 million for the same prior year periods. Included in interest income for the current periods is the previously mentioned $450,000 of nonrecurring interest recoveries and prepayment premiums on loans. In addition, the increase also reflects an increase in the average balances of interest-earning assets. Average interest-earning assets increased $45.0 million and $42.2 million for the three and six months ended June 30, 2016 compared to the prior year periods. The change in average interest-earning assets primarily reflects an increase from the comparable prior year periods in average loans as well as a slight increase in securities. Average loans increased $32.8 million and $38.3 million for the three and six months ended June 30, 2016 while average securities increased $11.7 million and $5.1 million when compared to the prior year averages. The average rate earned on interest-earning assets was 4.02% and 3.91% for the three and six months ended June 30, 2016 compared to an average rate of 3.91% for both the three and six months ended June 30, 2015.

Interest expense increased $282,000 and $662,000 for the three and six months ended June 30, 2016, compared to the same periods for 2015. The issuance of the Subordinated Notes on August 28, 2015 had the effect of increasing average interest-bearing liabilities and added approximately $297,000 and $593,000 to interest expense for the current three and six month periods. An increase in the other components of average interest-bearing liabilities also contributed to the increase in interest expense for the three and six months ended June 30, 2016. The average balance of interest-bearing deposits increased $34.2 million and $35.9 million for the three and six months ended June 30, 2016 from the comparable 2015 periods. Partially offsetting these increases, for the three and six months ended June 30, 2016, FHLB-NY borrowings accounted for decreases of $6.4 million and $10.0 million, respectively, in average interest-bearing liabilities. For the three and six months ended June 30, 2016, the total cost for interest-bearing liabilities was 0.86% and 0.88% compared to 0.70% and 0.68% for the comparable prior year periods. As noted previously, the issuance of the Subordinated Notes contributed to the overall increase in the current year period. Excluding the Subordinated Debentures and the Subordinated Notes, the cost for interest-bearing deposits and FHLB-NY borrowings was 0.61% and 0.68% for the three and six months ended June 30, 2016, respectively, compared to 0.61% and 0.59% for the comparable prior year periods.

Provision for Loan Losses

The Corporation maintains an allowance for loan losses at a level considered by management to be adequate to cover the probable losses to be incurred associated with its loan portfolio. The Corporation’s policy with respect to the methodology for the determination of the allowance for loan losses involves judgments. The adequacy of the allowance for loan losses is based upon management’s evaluation of the known and inherent risks in the portfolio, consideration of the size and composition of the loan portfolio, actual loan loss experience, the level of delinquencies, detailed analysis of individual loans for which full collectability may not be assured, the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans, and current economic and market conditions.

The allowance for loan losses contains an unallocated reserve amount to cover inherent losses which may not otherwise have been measured. Due to the judgment in determining the estimated amount of allowance for loan losses, these unallocated reserves reflect management's attempt to ensure that the overall allowance reflects an appropriate level of reserves. During the six months ended June 30, 2016, the Corporation’s unallocated reserves decreased by $52,000. Management believes that the reduction in unallocated reserves at June 30, 2016 is appropriate as the Corporation has demonstrated a sustained level of performance in the loan portfolio.

For the three and six months ended June 30, 2016, the Corporation recorded a $450,000 and $800,000 negative loan loss provision, respectively, compared to $600,000 and $700,000 negative provision to loan losses for the three and six months ended June 30, 2015. The negative provision for loan losses reflects the continued improvement in the credit quality of the portfolio. In addition, for the three and six months ended June 30, 2016, the Corporation recorded net recoveries of $298,000 and $365,000, respectively. Nonperforming loans of $949,000 at June 30, 2016, or 0.18% of total gross loans, reflected a decrease from $1.9 million of nonperforming loans, or 0.36% of total gross loans, at December 31, 2015.

The allowance for loan losses was $8.4 million, or 1.56% of total gross loans, as of June 30, 2016 compared to $8.8 million, or 1.68% of total gross loans, as of December 31, 2015. The allowance for loan losses related to impaired loans decreased from $719,000 at December 31, 2015 to $692,000 at June 30, 2016. During the six months ended June 30, 2016, the Corporation charged-off $76,000 of loan balances and recovered $441,000 in previously charged-off loans compared to $273,000 and $670,000, respectively, during the same period in 2015.

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The Corporation monitors its loan portfolio and intends to continue to provide for loan loss reserves based on its ongoing periodic review of the loan portfolio, charge-off activity and general market conditions. There can be no assurances that the current level of no provision or additional releases of the allowance for loan losses will continue in the future.

See “Asset Quality” section below for a summary of the allowance for loan losses and nonperforming assets.

Noninterest Income

Noninterest income was $832,000 and $1.7 million for the three and six months ended June 30, 2016, respectively, compared to $882,000 and $1.8 million for the prior year periods. The $149,000 decrease for the six months ended June 30, 2016, reflects the fact that noninterest income included only $56,000 of gains on calls and sales of securities compared to $152,000 in the comparable prior year periods. In addition, the six months ended June 30, 2016 included only $6,000 of gains on sales of other real estate owned compared to $53,000 of gains during the six months ended June 30, 2015.

Noninterest Expense

Noninterest expenses for the three and six months ended June 30, 2016 was $5.0 million and $9.9 million respectively, compared to $5.1 million and $10.2 million in the comparable prior year period. The Corporation continues to appropriately control expenses.

Income Tax Expense

Income tax expense totaled $776,000 and $1.3 million for the three and six months ended June 30, 2016, respectively, representing effective tax rates of 36.3% and 36.1%. For the three and six months ended June 30, 2015, income tax expense totaled $673,000 and $1.1 million, respectively, equating to effective tax rates of 35.5% and 34.5%. For the 2016 periods, tax expense reflects a higher overall projected effective tax rate as a result of the Corporation’s tax exempt income representing a smaller percentage of pretax income.

Asset Quality

The Corporation’s principal earning asset is its loan portfolio. Inherent in the lending function is the risk of deterioration in the borrowers’ ability to repay loans under existing loan agreements. The Corporation manages this risk by maintaining reserves to absorb probable incurred loan losses. In determining the adequacy of the allowance for loan losses, management considers the risks inherent in its loan portfolio and changes in the nature and volume of its loan activities, along with general economic and real estate market conditions. Although management endeavors to establish a reserve sufficient to offset probable incurred losses in the portfolio, changes in economic conditions, regulatory policies and borrowers’ performance could require future changes to the allowance.

Risk elements include nonaccrual loans, past due and restructured loans, potential problem loans, loan concentrations and other real estate owned. The following table shows the composition of nonperforming assets at the end of each of the last four quarters:

39

	June 30, 2016			March 31, 2016			December 31, 2015			September 30, 2015
	(Dollars in thousands)
Nonaccrual loans (1)	$	949		$	2,304		$	1,882		$	2,574
Loans past due 90 days or more and accruing (2)	—			—			—			—
Total nonperforming loans	949			2,304			1,882			2,574
Other real estate owned	834			1,013			880			587
Total nonperforming assets	$	1,783		$	3,317		$	2,762		$	3,161
Allowance for loan losses	$	8,388		$	8,540		$	8,823		$	8,805
Nonperforming loans to total gross loans	0.18		%	0.44		%	0.36		%	0.50		%
Nonperforming assets to total assets	0.24		%	0.46		%	0.38		%	0.45		%
Allowance for loan losses to total gross loans	1.56		%	1.62		%	1.68		%	1.70		%
Allowance for loan losses to
nonperforming loans	883.88		%	370.66		%	468.81		%	342.07		%

(1) Generally represents loans as to which the payment of principal or interest is in arrears for a period of more than 90 days. Interest previously accrued on these loans and not yet paid is reversed and charged against income during the current period. Interest earned thereafter is only included in income to the extent that it is received in cash.

(2) Represents loans as to which payment of principal or interest is contractually past due 90 days or more but which are currently accruing income at the contractually stated rates. A determination is made to continue accruing income on those loans which are sufficiently collateralized and on which management believes all interest and principal owed will be collected.

A loan is generally placed on nonaccrual when, based on current information and events, it is probable that the Corporation will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. The identification of nonaccrual loans reflects careful monitoring of the loan portfolio. The Corporation is focused on resolving nonperforming loans and mitigating future losses in the portfolio. All delinquent loans continue to be reviewed by management.

At June 30, 2016, the nonaccrual loans were comprised of six loans. During the six months ended June 30, 2016, nonaccrual loans decreased approximately 49.6% to $949,000. The decrease reflects loan payoffs, payments received and loans returned to an accrual status.

Evaluation of all nonperforming loans includes the updating of appraisals and specific evaluation of such loans to determine estimated cash flows from business and/or collateral. We have assessed these loans for collectability and considered, among other things, the borrower’s ability to repay, the value of the underlying collateral, and other market conditions to ensure the allowance for loan losses is adequate to absorb probable losses to be incurred. All of our nonperforming loans at June 30, 2016 are secured by real estate collateral. We have continued to record appropriate charge-offs and the existing underlying collateral coverage for the nonperforming loans currently supports collection of our remaining principal.

For loans not included in nonperforming loans, at June 30, 2016, the level of loans past due 30-89 days was $162,000 compared to $1.0 million at December 31, 2015. We will continue to monitor delinquencies for early identification of new problem loans.

The Corporation maintains an allowance for loan losses at a level considered by management to be adequate to cover the probable losses to be incurred associated with its loan portfolio. The Corporation’s policy with respect to the methodology for the determination of the allowance for loan losses involves a high degree of complexity and requires management to make difficult and subjective judgments.

The adequacy of the allowance for loan losses is based upon management’s evaluation of the known and inherent risks in the portfolio, consideration to the size and composition of the loan portfolio, actual loan loss experience, the level of delinquencies, detailed analysis of individual loans for which full collectability may not be assured, the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans, and current economic and market conditions.

40

In establishing the allowance for loan losses, the Corporation utilizes a two-tier approach by (1) identifying problem loans and allocating specific loss allowances on such loans and (2) establishing a general loan loss allowance on the remainder of its loan portfolio. The Corporation maintains a loan review system that allows for a periodic review of its loan portfolio and the early identification of potential problem loans. Such a system takes into consideration, among other things, delinquency status, size of loans, type of collateral and financial condition of the borrowers.

Allocations of specific loan loss allowances are established for identified loans based on a review of various information including appraisals of underlying collateral. Appraisals are performed by independent licensed appraisers to determine the value of impaired, collateral-dependent loans. Appraisals are periodically updated to ascertain any further decline in value. General loan loss allowances are based upon a combination of factors including, but not limited to, actual loss experience, composition of the loan portfolio, current economic conditions and management’s judgment.

For the six months ended June 30, 2016, a negative loan loss provision was recorded in the amount of $800,000 compared to a negative loan loss provision of $700,000 recorded for the three months ended June 30, 2015. The total allowance for loan losses of 1.56% of total loans was comparable to a ratio of 1.68% at December 31, 2015.

When management expects that some portion or all of a loan balance will not be collected, that amount is charged-off as a loss against the allowance for loan losses. For the three and six months ended June 30, 2016 net recoveries of $298,000 and $365,000, respectively, were recorded compared to net recoveries of $299,000 and $397,000 for the three and six months ended June 30, 2015. Recorded charge-offs reflect partial writedowns or full charge-offs on nonaccrual loans due to the initial and ongoing evaluations of market values of the underlying real estate collateral in accordance with Accounting Standards Codification (“ASC”) 310-40. Regardless of our actions of recording partial and full charge-offs on loans, we continue to aggressively pursue collection, including legal action.

While regular monthly payments continue to be made on many of the nonaccrual loans, certain charge-offs result, nevertheless, from the borrowers’ inability to provide adequate documentation evidencing their ability to continue to service their debt. Therefore, consideration has been given to any underlying collateral and appropriate charge-offs recorded based, in general, on the deficiency of such collateral. In general, the charge-offs reflect partial writedowns and full charge-offs on nonaccrual loans due to the initial evaluation of market values of the underlying real estate collateral in accordance with ASC 310-40. Management believes the charge-off of these reserves provides a clearer indication of the value of nonaccrual loans.

At June 30, 2016 and December 31, 2015, the Corporation had $8.5 million and $10.2 million, respectively, of loans the terms of which have been modified in troubled debt restructurings. Of these loans, $8.2 million and $9.7 million were performing in accordance with their new terms at June 30, 2016 and December 31, 2015, respectively. The remaining troubled debt restructurings are reported as nonaccrual loans. Specific reserves of $692,000 and $708,000 have been allocated for the troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016 and December 31, 2015, the Corporation had $138,000 of additional committed funds to these borrowers.

As of June 30, 2016, there were $5.6 million of other loans not included in the preceding table or discussion of troubled debt restructurings where credit conditions of borrowers, including real estate tax delinquencies, caused management to have concerns about the possibility of the borrowers not complying with the present terms and conditions of repayment and which may result in disclosure of such loans as nonperforming loans at a future date. These loans have been considered by management in conjunction with the analysis of the adequacy of the allowance for loan losses.

The Corporation’s lending activities are concentrated in loans secured by real estate located in northern New Jersey. Accordingly, the collectability of a substantial portion of the Corporation’s loan portfolio is susceptible to changes in real estate market conditions in northern New Jersey.

Capital Adequacy

The Corporation is subject to capital adequacy guidelines promulgated by the Board of Governors of the Federal Reserve System (“FRB Board”). The Bank is subject to somewhat comparable but different capital adequacy requirements imposed by the Federal Deposit Insurance Corporation (the “FDIC”). The federal banking agencies have adopted risk-based capital guidelines for banks and bank holding companies. The risk-based capital guidelines are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies, to account for off-balance sheet exposure, and to minimize disincentives for holding liquid assets.

41

Under these guidelines, assets and off-balance sheet items are assigned to broad risk categories, each with appropriate weights. The resulting capital ratios represent capital as a percentage of total risk-weighted assets and off-balance sheet items.

Federal banking regulators have also adopted leverage capital guidelines to supplement the risk-based measures. Leverage capital to average total assets is determined by dividing Tier 1 Capital as defined under the risk-based capital guidelines by average total assets (non-risk adjusted).

Guidelines for Banks

In December 2010 and January 2011, the Basel Committee on Banking Supervision (the “Basel Committee”) published the final texts of reforms on capital and liquidity, which are generally referred to as “Basel III”. The Basel Committee is a committee of central banks and bank supervisors and regulators from the major industrialized countries that develops broad policy guidelines for the regulation of banks and bank holding companies. In July 2013, the FDIC and the other federal bank regulatory agencies adopted final rules (the “Basel Rules”) to implement certain provisions of Basel III and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Basel Rules revise the leverage and risk-based capital requirements and the methods for calculating risk-weighted assets. The Basel Rules apply to all depository institutions, top-tier bank holding companies with total consolidated assets of $1 billion or more and top-tier savings and loan holding companies.

Among other things, the Basel Rules (a) establish a new common equity Tier 1 Capital (“CET1”) to risk-weighted assets ratio minimum of 4.5% of risk-weighted assets, (b) raise the minimum Tier 1 Capital to risk-based assets requirement (“Tier 1 Capital Ratio) from 4% to 6% of risk-weighted assets and (c) assign a higher risk weight of 150% to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities. The minimum ratio of Total Capital to risk-weighted assets (including certain off-balance sheet activities, such as standby letters of credit) is 8%. At least 6% of the Total Capital is required to be “Tier 1 Capital”, which consists of common shareholders’ equity and certain preferred stock, less certain items and other intangible assets. The remainder, “Tier 2 Capital,” may consist of (a) the allowance for loan losses of up to 1.25% of risk-weighted assets, (b) excess of qualifying preferred stock, (c) hybrid capital instruments, (d) debt, (e) mandatory convertible securities and (f) qualifying subordinated debt. “Total Capital” is the sum of Tier 1 Capital and Tier 2 Capital less reciprocal holdings of other banking organizations’ capital instruments, investments in unconsolidated subsidiaries and any other deductions as determined by the federal banking regulatory agencies on a case-by-case basis or as a matter of policy after formal rule-making. A small bank holding company that has the highest regulatory examination rating and is not contemplating significant growth or expansion must maintain a minimum level of Tier 1 Capital to average total consolidated assets leverage ratio of at least 3%. All other bank holding companies are expected to maintain a leverage ratio of at least 100 to 200 basis points above the stated minimum.

The Basel Rules also require unrealized gains and losses on certain available-for-sale securities to be included for purposes of calculating regulatory capital unless a one-time opt-out is exercised. Additional constraints are also imposed on the inclusion in regulatory capital of mortgage-servicing assets and deferred tax assets. The Basel Rules limit a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of CET1 to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The purpose of the capital conservation buffer is to ensure that banking organizations conserve capital when it is needed most, allowing them to weather periods of economic stress. Banking institutions with a CET1 Ratio, Tier 1 Capital Ratio and Total Capital Ratio above the minimum capital ratios but below the minimum capital ratios plus the capital conservation buffer will face constraints on their ability to pay dividends, repurchase equity and pay discretionary bonuses to executive officers based on the amount of the shortfall. The Basel Rules became effective for the Bank on January 1, 2015. The phase-in period for the capital conservation buffer requirement began on January 1, 2016 and will end on January 1, 2019, when the full capital conservation buffer requirement will be effective.

Bank assets are given risk-weights of 0%, 20%, 50%, 100%, and 150%. In addition, certain off-balance sheet items are given similar credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. These computations result in the total risk-weighted assets. Most loans are assigned to the 100% risk category, except for performing first mortgage loans fully secured by residential property which carry a 50% risk-weighting. Loan exposures past due 90 days or more or on nonaccrual are assigned a risk-weighting of at least 100%. Most investment securities (including, primarily, general obligation claims of states or other political subdivisions of the United States) are assigned to the 20% category, except for municipal or state revenue bonds, which have a 50% risk-weight, and direct obligations of the U.S. Treasury or obligations backed by the full faith and credit of the U.S.

42

government, which have a 0% risk-weight. In converting off-balance sheet items, direct credit substitutes, including general guarantees and standby letters of credit backing nonfinancial obligations, and undrawn commitments (including commercial credit lines with an initial maturity of more than one year) have a 50% risk-weighting. Short-term undrawn commitments and commercial letters of credit with an initial maturity of under one year have a 20% risk-weighting and certain short-term unconditionally cancelable commitments are not risk-weighted.

Guidelines for Small Bank Holding Companies

In April 2015, the FRB Board updated and amended its Small Bank Holding Company Policy Statement. Under the revised Small Bank Holding Company Policy Statement, Basel III capital rules and reporting requirements will not apply to small bank holding companies (“SBHC”), such as the Corporation, that have total consolidated assets of less than $1 billion. The minimum risk-based capital requirements for a SBHC to be considered adequately capitalized are 4% for Tier 1 capital and 8% for total capital to risk-weighted assets.

The regulations for SBHCs classify risk-based capital into two categories: “Tier 1 Capital” which consists of common and qualifying perpetual preferred shareholders’ equity less goodwill and other intangibles and “Tier 2 Capital” which consists of (a) the allowance for loan losses of up to 1.25% of risk-weighted assets, (b) the excess of qualifying preferred stock, (c) hybrid capital instruments, (d) debt, (e) mandatory convertible securities and (f) qualifying subordinated debt. Total qualifying capital consists of Tier 1 Capital and Tier 2 Capital less reciprocal holdings of other banking organizations’ capital instruments, investments in unconsolidated subsidiaries and any other deductions as determined by the FRB on a case-by-case basis or as a matter of policy after formal rule-making. However, the amount of Tier 2 Capital may not exceed the amount of Tier 1 Capital. The Corporation must maintain a minimum level of Tier 1 Capital to average total consolidated assets leverage ratio of 3%, which is the leverage ratio reserved for top-tier bank holding companies having the highest regulatory examination rating and not contemplating significant growth or expansion.

Bank holding company assets are given risk-weights of 0%, 20%, 50%, and 100%. In addition, certain off-balance sheet items are given similar credit conversion factors to convert them to asset equivalent amounts to which an appropriate risk-weight will apply. These computations result in the total risk-weighted assets.

As of June 30, 2016, the Corporation and the Bank exceeded all regulatory capital requirements as follows:

	Actual		Required for Capital Adequacy Purposes		To Be Well Capitalized Under Prompt Corrective Action Regulations
Tier 1 Leverage ratio
Corporation	7.78	%	4.00	%	N/A
Bank	9.52	%	4.00	%	5.00	%
Risk-based capital
Common Equity Tier 1
Corporation	N/A		N/A		N/A
Bank	12.28	%	4.50	%	6.50	%
Tier 1
Corporation	10.17	%	4.00	%	N/A
Bank	12.28	%	6.00	%	8.00	%
Total
Corporation	14.26	%	8.00	%	N/A
Bank	13.53	%	8.00	%	10.00	%

Liquidity and Capital Resources

The Corporation’s primary sources of funds are deposits, amortization and prepayments of loans and mortgage-backed securities, maturities of investment securities and funds provided from operations. While scheduled loan and mortgage-backed securities amortization and maturities of investment securities are a relatively predictable source of funds, deposit flow and prepayments on loans and mortgage-backed securities are greatly influenced by market interest

43

rates, economic conditions and competition. The Corporation’s liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities.

The primary source of cash from operating activities is net income. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in interest-earning cash accounts or short-term investments, such as federal funds sold.

Cash and cash equivalents increased $3.0 million during the first six months of 2016. Net operating and financing activities provided $3.3 million and $21.5 million, respectively, while investing activities used $21.8 million.

We anticipate that the Corporation will have sufficient funds available to meet its current contractual commitments. Should we need temporary funding, the Corporation has the ability to borrow overnight with the Federal Home Loan Bank-NY (“FHLB-NY”). The Corporation’s overall borrowing capacity is contingent on available collateral to secure borrowings and the ability to purchase additional activity-based capital stock of the FHLB-NY. The Corporation may also borrow from the Discount Window of the Federal Reserve Bank of New York based on the market value of collateral pledged. In addition, the Corporation has available overnight variable repricing lines of credit with other correspondent banks totaling $38 million on an unsecured basis.

With respect to the payment of dividends on common stock, the Corporation has historically paid a quarterly cash dividend; however, management recognizes that the payment of future dividends could be impacted by losses or reduced earnings and the Corporation cannot assure the payment of future dividends. On July 20, 2016, the Corporation announced that its Board of Directors had declared a $0.03 per share cash dividend payable on its common stock to shareholders of record as of August 1, 2016. The dividend is to be paid on August 15, 2016.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to smaller reporting companies.

ITEM 4. Controls and Procedures

Evaluation of internal controls and procedures

Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our principal executive officer and principal financial officer have concluded that our internal disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Controls over Financial Reporting

Pursuant to Rule 13a-15(d) under the Exchange Act, our management, with the participation of our principal executive officer and principal financial officer, has evaluated our internal controls over financial reporting and based upon such evaluation concluded that there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

44

Part II -- Other Information

 Item 6. Exhibits

See Exhibit Index following this report.

_____________________________________________________________

45

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.

	Stewardship Financial Corporation
Date: August 9, 2016	By:	/s/ Paul Van Ostenbridge
		Paul Van Ostenbridge
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 9, 2016	By:	/s/ Claire M. Chadwick
		Claire M. Chadwick
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

46

EXHIBIT INDEX

Exhibit Number	Description of Exhibits
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	The following material from Stewardship Financial Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text[1]

__________________________________________

1 This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Corporation specifically incorporates it by reference.

47

EX-31.1

Exhibit 31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,

as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

I, Paul Van Ostenbridge, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Stewardship Financial Corporation;

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(s) 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 13(a)-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(s) 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: August 9, 2016

/s/ Paul Van Ostenbridge

Paul Van Ostenbridge

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934,

as adopted pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

I, Claire M. Chadwick, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Stewardship Financial Corporation;

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(s) 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 13(a)-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(s) 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: August 9, 2016

/s/ Claire M. Chadwick

Claire M. Chadwick

Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to 18 U.S.C. § 1350 as adopted pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Stewardship Financial Corporation (the “Company”), certifies that:

(1) the Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

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

Dated: August 9, 2016	/s/ Paul Van Ostenbridge
	Paul Van Ostenbridge
	President and Chief Executive Officer
Dated: August 9, 2016	/s/ Claire M. Chadwick
	Claire M. Chadwick
	Executive Vice President and
	Chief Financial Officer

This certification is made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 05, 2016
Document And Entity Information
Entity Registrant Name	STEWARDSHIP FINANCIAL CORP
Entity Central Index Key	0001023860
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity Reporting Status Current	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,114,585
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016

XML

Consolidated Statements of Financial Condition - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 13,471,000	$ 10,731,000
Other interest-earning assets	430,000	179,000
Cash and cash equivalents	13,901,000	10,910,000
Securities available-for-sale	98,533,000	93,354,000
Securities held to maturity; estimated fair value of $66,772,000 (2016) and $61,281,000 (2015)	65,666,000	60,738,000
Federal Home Loan Bank of New York stock, at cost	2,650,000	2,608,000
Loans held for sale	581,000	1,522,000
Loans, net of allowance for loan losses of $8,388,000 (at June 30, 2016) and $8,823,000 (at December 31, 2015)	529,225,000	517,556,000
Premises and equipment, net	6,678,000	6,799,000
Accrued interest receivable	1,912,000	1,967,000
Other real estate owned, net	834,000	880,000
Bank owned life insurance	16,320,000	14,111,000
Other assets	6,287,000	7,443,000
Total assets	742,587,000	717,888,000
Deposits:
Noninterest-bearing	160,461,000	147,828,000
Interest-bearing	466,008,000	456,925,000
Total deposits	626,469,000	604,753,000
Federal Home Loan Bank of New York advances	40,000,000	40,000,000
Subordinated Debentures and Subordinated Notes	23,219,000	23,186,000
Accrued interest payable	782,000	791,000
Accrued expenses and other liabilities	1,431,000	1,585,000
Total liabilities	691,901,000	670,315,000
Shareholders' equity
Common stock, no par value; 10,000,000 shares authorized; 6,113,030 and 6,085,528 shares issued and outstanding at June 30, 2016, and December 31, 2015, respectively	41,571,000	41,410,000
Retained earnings	8,972,000	7,008,000
Accumulated other comprehensive income (loss), net	143,000	(845,000)
Total Shareholders' equity	50,686,000	47,573,000
Total liabilities and Shareholders' equity	$ 742,587,000	$ 717,888,000

XML

Consolidated Statements of Financial Condition (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets
Securities held to maturity	$ 66,772,000	$ 61,281,000
Allowance for loan losses	$ 8,388,000	$ 8,823,000
Shareholders' equity
Common stock, shares authorized (in shares)	10,000,000	10,000,000
Common stock, shares issued (in shares)	6,113,030	6,085,528
Common stock, shares outstanding (in shares)	6,113,030	6,085,528

XML

Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest income:
Loans	$ 6,116,000	$ 5,623,000	$ 11,768,000	$ 11,069,000
Securities held to maturity:
Taxable	298,000	227,000	568,000	440,000
Nontaxable	100,000	119,000	203,000	249,000
Securities available-for-sale:
Taxable	409,000	342,000	786,000	704,000
Nontaxable	6,000	6,000	12,000	12,000
FHLB dividends	31,000	33,000	63,000	63,000
Other interest-earning assets	19,000	10,000	28,000	17,000
Total interest income	6,979,000	6,360,000	13,428,000	12,554,000
Interest expense:
Deposits	561,000	506,000	1,118,000	958,000
FHLB-NY Borrowings	201,000	211,000	404,000	427,000
Subordinated Debentures and Subordinated Notes	362,000	125,000	775,000	250,000
Total interest expense	1,124,000	842,000	2,297,000	1,635,000
Net interest income before provision for loan losses	5,855,000	5,518,000	11,131,000	10,919,000
Provision for loan losses	(450,000)	(600,000)	(800,000)	(700,000)
Net interest income after provision for loan losses	6,305,000	6,118,000	11,931,000	11,619,000
Noninterest income:
Fees and service charges	530,000	557,000	1,059,000	1,036,000
Bank owned life insurance	107,000	101,000	208,000	197,000
Gain on calls and sales of securities, net	32,000	0	56,000	152,000
Gain on sales of mortgage loans	19,000	55,000	37,000	65,000
Gain on sale of other real estate owned	6,000	0	6,000	53,000
Miscellaneous	138,000	169,000	285,000	297,000
Total noninterest income	832,000	882,000	1,651,000	1,800,000
Noninterest expenses:
Salaries and employee benefits	2,742,000	2,688,000	5,457,000	5,396,000
Occupancy, net	404,000	423,000	802,000	890,000
Equipment	148,000	165,000	298,000	321,000
Data processing	477,000	459,000	949,000	912,000
Advertising	157,000	258,000	308,000	470,000
FDIC insurance premium	90,000	117,000	196,000	230,000
Charitable contributions	90,000	70,000	160,000	140,000
Stationery and supplies	47,000	43,000	80,000	60,000
Legal	46,000	105,000	90,000	193,000
Bank-card related services	150,000	131,000	281,000	254,000
Other real estate owned	28,000	75,000	102,000	161,000
Miscellaneous	620,000	571,000	1,178,000	1,127,000
Total noninterest expenses	4,999,000	5,105,000	9,901,000	10,154,000
Income before income tax expense	2,138,000	1,895,000	3,681,000	3,265,000
Income tax expense	776,000	673,000	1,328,000	1,126,000
Net income	1,362,000	1,222,000	2,353,000	2,139,000
Dividends on preferred stock	0	171,000	0	342,000
Net income available to common shareholders	$ 1,362,000	$ 1,051,000	$ 2,353,000	$ 1,797,000
Basic and diluted earnings per common share (in usd per share)	$ 0.22	$ 0.17	$ 0.39	$ 0.30
Weighted average number of basic and diluted common shares outstanding (in shares)	6,111,729	6,086,474	6,102,040	6,066,191

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Consolidated Statements of Comprehensive Income - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 1,362,000	$ 1,222,000	$ 2,353,000	$ 2,139,000
Other comprehensive income (loss), net of tax:
Change in unrealized holding gains (losses) on securities available-for-sale	244,000	(325,000)	916,000	138,000
Reclassification adjustment for gains in net income	(20,000)	0	(35,000)	(91,000)
Accretion of loss on securities reclassified to held to maturity	25,000	34,000	70,000	121,000
Change in fair value of interest rate swap	0	37,000	37,000	71,000
Total other comprehensive income (loss)	249,000	(254,000)	988,000	239,000
Total comprehensive income	$ 1,611,000	$ 968,000	$ 3,341,000	$ 2,378,000

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Consolidated Statement of Changes in Shareholders' Equity - USD ($)	Total	Preferred Stock [Member]	Common Stock [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss), Net [Member]
Balance beginning at Dec. 31, 2014	$ 58,969,000	$ 14,984,000	$ 41,125,000	$ 3,817,000	$ (957,000)
Balance beginning, shares at Dec. 31, 2014			6,034,933
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock	(242,000)			(242,000)
Payment of discount on dividend reinvestment plan	(2,000)		$ (2,000)
Cash dividends declared on preferred stock	(342,000)			(342,000)
Common stock issued under dividend reinvestment plan, shares			5,635
Common stock issued under dividend reinvestment plan	30,000		$ 30,000
Common stock issued under stock plans, shares			4,219
Common stock issued under stock plans	21,000		$ 21,000
Issuance of restricted stock, shares			50,974
Issuance of restricted stock	0		$ 279,000	(279,000)
Amortization of restricted stock, net, shares			(7,062)
Amortization of restricted stock, net	37,000		$ (38,000)	75,000
Tax benefit from restricted stock vesting	3,000		3,000
Amortization of issuance costs	0	5,000		(5,000)
Net income	2,139,000			2,139,000
Other comprehensive income	239,000				239,000
Balance ending at Jun. 30, 2015	60,852,000	14,989,000	$ 41,418,000	5,163,000	(718,000)
Balance ending, shares at Jun. 30, 2015			6,088,699
Balance beginning at Dec. 31, 2015	$ 47,573,000	0	$ 41,410,000	7,008,000	(845,000)
Balance beginning, shares at Dec. 31, 2015	6,085,528		6,085,528
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared on common stock	$ (305,000)			(305,000)
Payment of discount on dividend reinvestment plan	(2,000)		$ (2,000)
Common stock issued under dividend reinvestment plan, shares			6,700
Common stock issued under dividend reinvestment plan	36,000		$ 36,000
Common stock issued under stock plans, shares			1,761
Common stock issued under stock plans	10,000		$ 10,000
Issuance of restricted stock, shares			34,332
Issuance of restricted stock	0		$ 198,000	(198,000)
Amortization of restricted stock, net, shares			(15,291)
Amortization of restricted stock, net	28,000		$ (86,000)	114,000
Tax benefit from restricted stock vesting	5,000		5,000
Net income	2,353,000
Other comprehensive income	988,000				988,000
Balance ending at Jun. 30, 2016	$ 50,686,000	$ 0	$ 41,571,000	$ 8,972,000	$ 143,000
Balance ending, shares at Jun. 30, 2016	6,113,030		6,113,030

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Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities:
Net income	$ 2,353,000	$ 2,139,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment	185,000	186,000
Amortization of premiums and accretion of discounts, net	285,000	338,000
Amortization of restricted stock	28,000	37,000
Amortization of subordinated debenture issuance costs	33,000	0
Accretion of deferred loan fees	34,000	42,000
Provision for loan losses	(800,000)	(700,000)
Originations of mortgage loans held for sale	(2,825,000)	(5,653,000)
Proceeds from sale of mortgage loans	3,803,000	4,302,000
Gain on sales of mortgage loans	(37,000)	(65,000)
Gain on calls and sales of securities	(56,000)	(152,000)
Gain on sale of other real estate owned	(6,000)	(53,000)
Deferred income tax expense	248,000	210,000
Increase in accrued interest receivable	55,000	88,000
Increase (decrease) in accrued interest payable	(9,000)	58,000
Earnings on bank owned life insurance	(208,000)	(197,000)
Decrease in other assets	339,000	801,000
Decrease in other liabilities	(117,000)	(2,053,000)
Net cash provided by (used in) operating activities	3,305,000	(672,000)
Cash flows from investing activities:
Purchase of securities available-for-sale	(21,288,000)	(57,000)
Proceeds from maturities and principal repayments on securities available-for-sale	6,305,000	6,258,000
Proceeds from sales and calls on securities available-for-sale	11,050,000	27,845,000
Purchase of securities held to maturity	(24,898,000)	(13,182,000)
Proceeds from maturities and principal repayments on securities held to maturity	3,464,000	4,921,000
Proceeds from calls on securities held to maturity	16,570,000	5,100,000
Sale (purchase) of FHLB-NY stock	(42,000)	944,000
Net increase in loans	(11,055,000)	(29,317,000)
Proceeds from sale of other real estate owned	184,000	1,149,000
Purchase of bank owned life insurance	(2,000,000)	0
Additions to premises and equipment	(64,000)	(584,000)
Net cash provided by (used in) investing activities	(21,774,000)	3,077,000
Cash flows from financing activities:
Net increase in noninterest-bearing deposits	12,633,000	16,825,000
Net increase in interest-bearing deposits	9,083,000	12,698,000
Net decrease in short term borrowings	0	(21,700,000)
Cash dividends paid on common stock	(305,000)	(242,000)
Cash dividends paid on preferred stock	0	(342,000)
Payment of discount on dividend reinvestment plan	(2,000)	(2,000)
Issuance of common stock for cash	46,000	51,000
Tax benefit from restricted stock vesting	5,000	3,000
Net cash provided by financing activities	21,460,000	7,291,000
Net increase in cash and cash equivalents	2,991,000	9,696,000
Cash and cash equivalents - beginning	10,910,000	10,086,000
Cash and cash equivalents - ending	13,901,000	19,782,000
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	2,306,000	1,578,000
Cash paid during the period for income taxes	746,000	1,024,000
Transfers from loans to other real estate owned	$ 152,000	$ 0

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Certain information and note disclosures normally included in the unaudited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Stewardship Financial Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 24, 2016 (the “2015 Annual Report”).

The interim unaudited consolidated financial statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the SEC and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the interim consolidated financial statements, have been included. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results which may be expected for the entire year.

Principles of consolidation

The consolidated financial statements include the accounts of Stewardship Financial Corporation and its wholly-owned subsidiary, Atlantic Stewardship Bank (the “Bank”), together referred to as “the Corporation”. The Bank includes its wholly-owned subsidiaries, Stewardship Investment Corporation, Stewardship Realty LLC, Atlantic Stewardship Insurance Company, LLC and several other subsidiaries formed to hold title to properties acquired through foreclosure or deed in lieu of foreclosure. The Bank’s subsidiaries have an insignificant impact on the Bank’s daily operations. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Corporation have been prepared in conformity with GAAP. In preparing the consolidated financial statements, management is required to make estimates and assumptions, based on available information, that affect the amounts reported in the consolidated financial statements and disclosures provided. Actual results could differ significantly from those estimates.

Material estimates

Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses and deferred income taxes. Management believes the Corporation’s policies with respect to the methodology for the determination of the allowance for loan losses and the evaluation of deferred income taxes involves a higher degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. These critical policies and their application are periodically reviewed with the Audit Committee and the Board of Directors.

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” This ASU is part of the FASB’s initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in ASU 2015-03 are effective for fiscal years, including interim periods, beginning after December 15, 2015. The adoption of the amendments in this standard did not have a material impact on the Corporation’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities." This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years, including interim periods, beginning after December 15, 2017. Entities should apply the amendment by means of a cumulative-effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments that exist as of the date of adoption. The Corporation intends to adopt the accounting standard during the first quarter of 2018, and is currently evaluating the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. The amendments in ASU 2016-02 are effective for fiscal years, including interim periods, beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The objective of this ASU is to simplify accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU 2016-09, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current accounting) or account for forfeitures when they occur. Within the Cash Flow Statement, excess tax benefits should be classified along with other income tax cash flows as an operating activity, and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. The amendments in ASU 2016-09 are effective for fiscal years, including interim periods, beginning after December 15, 2016. Early adoption of ASU 2016-09 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments in this ASU require financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect 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. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The amendments in ASU 2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019. Early adoption of ASU 2016-09 is permitted for fiscal years beginning after December 15, 2018. The Corporation is currently evaluating the potential impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

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Securities - Available-for-Sale and Held to Maturity

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Securities - Available-for-Sale and Held to Maturity

Securities – Available-for-Sale and Held to Maturity

The fair value of the available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	28,426,000	$	164,000	$	20,000	$	28,570,000
Obligations of state and political
subdivisions	1,406,000		26,000		—		1,432,000
Mortgage-backed securities - residential	50,648,000		670,000		32,000		51,286,000
Asset-backed securities (a)	9,291,000		—		205,000		9,086,000
Corporate debt	4,500,000		10,000		85,000		4,425,000
Total debt securities	94,271,000		870,000		342,000		94,799,000
Other equity investments	3,832,000		—		98,000		3,734,000
	$	98,103,000	$	870,000	$	440,000	$	98,533,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	31,266,000	$	81,000	$	393,000	$	30,954,000
Obligations of state and political
subdivisions	1,409,000		2,000		1,000		1,410,000
Mortgage-backed securities - residential	45,520,000		213,000		496,000		45,237,000
Asset-backed securities (a)	9,877,000		—		176,000		9,701,000
Corporate debt	2,500,000		—		81,000		2,419,000
Total debt securities	90,572,000		296,000		1,147,000		89,721,000
Other equity investments	3,778,000		—		145,000		3,633,000
	$	94,350,000	$	296,000	$	1,292,000	$	93,354,000

(a) Collateralized by student loans

Cash proceeds realized from sales and calls of securities available-for-sale for the three and six months ended June 30, 2016 were $9,000,000 and $11,050,000, respectively. There were no cash proceeds realized from sales and calls of securities available-for-sale for the three months ended June 30, 2015. Cash proceeds realized from sales and calls of securities available-for-sale for the six months ended June 30, 2015 were $27,845,000. There were gross gains totaling $7,000 and no gross losses realized on sales and calls during the three and six months ended June 30, 2016. While there were no gross gains and no gross losses realized on sales or calls during the three months ended June 30, 2015, gross gains and gross losses realized on sales and calls during the six months ended June 30, 2015 totaled $213,000 and $61,000, respectively.

The following is a summary of the held to maturity securities and related gross unrealized gains and losses:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	20,000	$	—	$	1,019,000
U.S. government-sponsored agencies	24,129,000		131,000		10,000		24,250,000
Obligations of state and political
subdivisions	10,223,000		167,000		—		10,390,000
Mortgage-backed securities - residential	30,315,000		798,000		—		31,113,000
	$	65,666,000	$	1,116,000	$	10,000	$	66,772,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	—	$	11,000	$	988,000
U.S. government-sponsored agencies	15,109,000		132,000		24,000		15,217,000
Obligations of state and political
subdivisions	11,219,000		268,000		—		11,487,000
Mortgage-backed securities - residential	33,411,000		295,000		117,000		33,589,000
	$	60,738,000	$	695,000	$	152,000	$	61,281,000

Cash proceeds realized from calls of securities held to maturity for the three and six months ended June 30, 2016 were $10,230,000 and $16,570,000, respectively. Cash proceeds realized from calls of securities held to maturity for the three and six months ended June 30, 2015 were $2,000,000 and $5,100,000, respectively. There were gross gains totaling $25,000 and no gross losses realized on calls during the three months ended June 30, 2016. There were gross gains totaling $49,000 and no gross losses realized on calls during the six months ended June 30, 2016. There were no gross gains and no gross losses realized on calls during the three and six months ended June 30, 2015.

Mortgage-backed securities are a type of asset-backed security secured by a mortgage or collection of mortgages, purchased by government agencies such as the Government National Mortgage Association and government sponsored agencies such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, which then issue securities that represent claims on the principal and interest payments made by borrowers on the loans in the pool.

Issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This might cause actual maturities to differ from the contractual maturities.

The following table presents the amortized cost and fair value of the debt securities portfolio by contractual maturity. As issuers may have the right to call or prepay obligations with or without call or prepayment premiums, the actual maturities may differ from contractual maturities. Securities not due at a single maturity date, such as mortgage-backed securities and asset-backed securities, are shown separately.

	June 30, 2016
	Amortized Cost		Fair Value
Available-for-sale
Within one year	$	500,000	$	502,000
After one year, but within five years	9,778,000		9,798,000
After five years, but within ten years	17,923,000		18,009,000
After ten years	6,131,000		6,118,000
Mortgage-backed securities - residential	50,648,000		51,286,000
Asset-backed securities	9,291,000		9,086,000
Total	$	94,271,000	$	94,799,000
Held to maturity
Within one year	$	3,137,000	$	3,155,000
After one year, but within five years	8,586,000		8,787,000
After five years, but within ten years	21,676,000		21,716,000
After ten years	1,952,000		2,001,000
Mortgage-backed securities - residential	30,315,000		31,113,000
Total	$	65,666,000	$	66,772,000

The following tables summarize the fair value and unrealized losses of those investment securities which reported an unrealized loss at June 30, 2016 and December 31, 2015, and if the unrealized loss position was continuous for the twelve months prior to June 30, 2016 and December 31, 2015.

Available-for-Sale
June 30, 2016	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	1,994,000	$	(8,000	)	$	6,118,000	$	(12,000	)	$	8,112,000	$	(20,000	)
Obligations of state and political subdivisions	—		—			—		—			—		—
Mortgage-backed securities - residential	6,094,000		(11,000		)	3,888,000		(21,000		)	9,982,000		(32,000		)
Asset-backed securities	6,197,000		(69,000		)	2,889,000		(136,000		)	9,086,000		(205,000		)
Corporate debt	999,000		(1,000		)	1,416,000		(84,000		)	2,415,000		(85,000		)
Other equity investments	—		—			3,674,000		(98,000		)	3,674,000		(98,000		)
Total temporarily impaired securities	$	15,284,000	$	(89,000	)	$	17,985,000	$	(351,000	)	$	33,269,000	$	(440,000	)

December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	18,396,000	$	(183,000	)	$	7,296,000	$	(210,000	)	$	25,692,000	$	(393,000	)
Obligations of state and political subdivisions	984,000		(1,000		)	—		—			984,000		(1,000		)
Mortgage-backed securities - residential	8,599,000		(69,000		)	16,278,000		(427,000		)	24,877,000		(496,000		)
Asset-backed securities	6,791,000		(56,000		)	2,910,000		(120,000		)	9,701,000		(176,000		)
Corporate debt	—		—			1,419,000		(81,000		)	1,419,000		(81,000		)
Other equity investments	—		—			3,573,000		(145,000		)	3,573,000		(145,000		)
Total temporarily impaired securities	$	34,770,000	$	(309,000	)	$	31,476,000	$	(983,000	)	$	66,246,000	$	(1,292,000	)

Held to Maturity
June 30, 2016	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
U.S. Treasury	$	—	$	—		$	—	$	—	$	—	$	—
U.S. government- sponsored agencies	1,891,000		(10,000		)	—		—		1,891,000		(10,000		)
Mortgage-backed securities - residential	—		—			—		—		—		—
Total temporarily impaired securities	$	1,891,000	$	(10,000	)	$	—	$	—	$	1,891,000	$	(10,000	)

December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury	$	988,000	$	(11,000	)	$	—	$	—		$	988,000	$	(11,000	)
U.S. government- sponsored agencies	4,955,000		(24,000		)	—		—			4,955,000		(24,000		)
Mortgage-backed securities - residential	15,183,000		(90,000		)	1,066,000		(27,000		)	16,249,000		(117,000		)
Total temporarily impaired securities	$	21,126,000	$	(125,000	)	$	1,066,000	$	(27,000	)	$	22,192,000	$	(152,000	)

Other-Than-Temporary-Impairment

At June 30, 2016, there were available-for-sale investments comprising three U.S. government-sponsored agency securities, five mortgage-backed securities, one asset-backed security, two corporate debt securities, and one other equity investments security in a continuous loss position for twelve months or longer. Management has assessed the securities that were in an unrealized loss position at June 30, 2016 and December 31, 2015 and has determined that any decline in fair value below amortized cost primarily relates to changes in interest rates and market spreads and was temporary.

In making this determination management considered the following factors in estimating the cash flows expected to be collected from the security: the period of time the securities were in an unrealized loss position; the percentage decline in comparison to the securities’ amortized cost; any adverse conditions specifically related to the security, an industry or a geographic area; the rating or changes to the rating by a credit rating agency; the financial condition of the issuer and guarantor and any recoveries or additional declines in fair value subsequent to the balance sheet date. Management expects to collect all amounts contractually due and none of the debt securities can be prepaid at less than the par values.

Management does not intend to sell these securities in an unrealized loss position and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost bases, which may be at maturity.

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loans and Allowance for Loan Losses

Loans and Allowance for Loan Losses

At June 30, 2016 and December 31, 2015, respectively, the loan portfolio consisted of the following:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	35,632,000	$	37,993,000
Other	36,388,000		26,867,000
Commercial real estate	337,660,000		334,489,000
Commercial construction	7,097,000		4,609,000
Residential real estate	79,661,000		82,955,000
Consumer:
Secured by real estate	29,876,000		29,224,000
Other	522,000		580,000
Government Guaranteed Loans - guaranteed portion	10,734,000		9,626,000
Other	68,000		134,000
Total gross loans	537,638,000		526,477,000
Less: Deferred loan costs (fees), net	25,000		98,000
Allowance for loan losses	8,388,000		8,823,000
	8,413,000		8,921,000
Loans, net	$	529,225,000	$	517,556,000

The Corporation has purchased the guaranteed portion of several government guaranteed loans. Due to the guarantee of the principal amount of these loans, no allowance for loan losses is established for these government guaranteed loans.

At June 30, 2016 and December 31, 2015, loan participations sold by the Corporation to other lending institutions totaled approximately $8,749,000 and $8,527,000, respectively. These amounts are not included in the totals presented above.

Activity in the allowance for loan losses is summarized as follows:

	For the three months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,720,000	$	(386,000	)	$	(1,000	)	$	340,000	$	3,673,000
Commercial real estate	4,413,000		(156,000		)	(64,000		)	31,000		4,224,000
Commercial construction	112,000		72,000			—			—		184,000
Residential real estate	106,000		—			—			—		106,000
Consumer	119,000		19,000			(7,000		)	1,000		132,000
Other loans	1,000		1,000			(2,000		)	—		—
Unallocated	69,000		—			—			—		69,000
Total	$	8,540,000	$	(450,000	)	$	(74,000	)	$	372,000	$	8,388,000

	For the six months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,698,000	$	(402,000	)	$	(3,000	)	$	380,000	$	3,673,000
Commercial real estate	4,660,000		(431,000		)	(64,000		)	59,000		4,224,000
Commercial construction	114,000		70,000			—			—		184,000
Residential real estate	109,000		(3,000		)	—			—		106,000
Consumer	118,000		19,000			(7,000		)	2,000		132,000
Other loans	3,000		(1,000		)	(2,000		)	—		—
Unallocated	121,000		(52,000		)	—			—		69,000
Total	$	8,823,000	$	(800,000	)	$	(76,000	)	$	441,000	$	8,388,000

	For the three months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,703,000	$	(503,000	)	$	(1,000	)	$	118,000	$	3,317,000
Commercial real estate	5,116,000		99,000			—			74,000		5,289,000
Commercial construction	106,000		(200,000		)	—			108,000		14,000
Residential real estate	146,000		(6,000		)	—			—		140,000
Consumer	151,000		(13,000		)	—			1,000		139,000
Other loans	—		4,000			(1,000		)	—		3,000
Unallocated	378,000		19,000			—			—		397,000
Total	$	9,600,000	$	(600,000	)	$	(2,000	)	$	301,000	$	9,299,000

	For the six months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,704,000	$	(341,000	)	$	(272,000	)	$	226,000	$	3,317,000
Commercial real estate	5,017,000		171,000			—			101,000		5,289,000
Commercial construction	150,000		(477,000		)	—			341,000		14,000
Residential real estate	142,000		(2,000		)	—			—		140,000
Consumer	189,000		(52,000		)	—			2,000		139,000
Other loans	2,000		2,000			(1,000		)	—		3,000
Unallocated	398,000		(1,000		)	—			—		397,000
Total	$	9,602,000	$	(700,000	)	$	(273,000	)	$	670,000	$	9,299,000

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	79,000	$	613,000	$	—	$	—	$	—	$	—	$	—	$	—	$	692,000
Collectively evaluated for impairment	3,594,000		3,611,000		184,000		106,000		132,000		—		—		69,000		7,696,000
Total ending allowance balance	$	3,673,000	$	4,224,000	$	184,000	$	106,000	$	132,000	$	—	$	—	$	69,000	$	8,388,000
Loans:
Loans individually evaluated for impairment	$	2,331,000	$	6,768,000	$	—	$	—	$	81,000	$	—	$	—	$	—	$	9,180,000
Loans collectively evaluated for impairment	69,689,000		330,892,000		7,097,000		79,661,000		30,317,000		10,734,000		68,000		—		528,458,000
Total ending loan balance	$	72,020,000	$	337,660,000	$	7,097,000	$	79,661,000	$	30,398,000	$	10,734,000	$	68,000	$	—	$	537,638,000

	December 31, 2015
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	81,000	$	638,000	$	—	$	—	$	—	$	—	$	—	$	—	$	719,000
Collectively evaluated for impairment	3,617,000		4,022,000		114,000		109,000		118,000		—		3,000		121,000		8,104,000
Total ending allowance balance	$	3,698,000	$	4,660,000	$	114,000	$	109,000	$	118,000	$	—	$	3,000	$	121,000	$	8,823,000
Loans:
Loans individually evaluated for impairment	$	3,348,000	$	8,113,000	$	—	$	—	$	84,000	$	—	$	—	$	—	$	11,545,000
Loans collectively evaluated for impairment	61,512,000		326,376,000		4,609,000		82,955,000		29,720,000		9,626,000		134,000		—		514,932,000
Total ending loan balance	$	64,860,000	$	334,489,000	$	4,609,000	$	82,955,000	$	29,804,000	$	9,626,000	$	134,000	$	—	$	526,477,000

The following table presents the recorded investment in nonaccrual loans at the dates indicated:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	616,000	$	1,300,000
Other	—		14,000
Commercial real estate	252,000		484,000
Consumer:
Secured by real estate	81,000		84,000
Total nonaccrual loans	$	949,000	$	1,882,000

At June 30, 2016 and December 31, 2015, there were no loans that were past due 90 days and still accruing.

The following table presents loans individually evaluated for impairment by class of loan at and for the periods indicated:

	At and for the six months ended June 30, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	2,073,000	$	1,853,000			$	2,310,000	$	47,000
Other	—		—				46,000		—
Commercial real estate	3,824,000		3,563,000				3,197,000		112,000
Consumer:
Secured by real estate	82,000		81,000				83,000		—
With an allowance recorded:
Commercial:
Secured by real estate	190,000		190,000		$	68,000	230,000		4,000
Other	288,000		288,000		11,000		256,000		10,000
Commercial real estate	3,205,000		3,205,000		613,000		4,726,000		66,000
	$	9,662,000	$	9,180,000	$	692,000	$	10,848,000	$	239,000

During the three and six months ended June 30, 2016, no interest income was recognized on a cash basis.

	At and for the year ended December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	3,244,000	$	2,729,000			$	3,683,000	$	156,000
Other	137,000		137,000				61,000		2,000
Commercial real estate	3,245,000		2,885,000				2,890,000		121,000
Commercial construction	—		—				215,000		—
Residential real estate	—		—				74,000		—
Consumer:
Secured by real estate	84,000		84,000				226,000		—
With an allowance recorded:
Commercial:
Secured by real estate	390,000		308,000		$	80,000	405,000		14,000
Other	174,000		174,000		1,000		463,000		31,000
Commercial real estate	5,228,000		5,228,000		638,000		5,534,000		211,000
	$	12,502,000	$	11,545,000	$	719,000	$	13,551,000	$	535,000

During the year ended December 31, 2015, no interest income was recognized on a cash basis.

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2016 and December 31, 2015. Nonaccrual loans are included in the disclosure by payment status.

	June 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	616,000	$	616,000	$	35,016,000	$	35,632,000
Other	—		—		—		—		36,388,000		36,388,000
Commercial real estate	—		—		252,000		252,000		337,408,000		337,660,000
Commercial construction	—		—		—		—		7,097,000		7,097,000
Residential real estate	—		—		—		—		79,661,000		79,661,000
Consumer:
Secured by real estate	162,000		—		41,000		203,000		29,673,000		29,876,000
Other	—		—		—		—		522,000		522,000
Government Guaranteed	—		—		—		—		10,734,000		10,734,000
Other	—		—		—		—		68,000		68,000
Total	$	162,000	$	—	$	909,000	$	1,071,000	$	536,567,000	$	537,638,000

	December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	1,011,000	$	1,011,000	$	36,982,000	$	37,993,000
Other	—		—		—		—		26,867,000		26,867,000
Commercial real estate	271,000		—		—		271,000		334,218,000		334,489,000
Commercial construction	—		—		—		—		4,609,000		4,609,000
Residential real estate	—		—		—		—		82,955,000		82,955,000
Consumer:
Secured by real estate	112,000		—		41,000		153,000		29,071,000		29,224,000
Other	—		—		—		—		580,000		580,000
Government Guaranteed	—		—		—		—		9,626,000		9,626,000
Other	—		—		—		—		134,000		134,000
Total	$	383,000	$	—	$	1,052,000	$	1,435,000	$	525,042,000	$	526,477,000

Troubled Debt Restructurings

In order to determine whether a borrower is experiencing financial difficulty necessitating a restructuring, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Corporation’s internal underwriting policy. A loan is considered to be in payment default once it is contractually 90 days past due under the modified terms.

At June 30, 2016 and December 31, 2015, the Corporation had $8.5 million and $10.2 million, respectively, of loans whose terms have been modified in troubled debt restructurings. Of these loans, $8.2 million and $9.7 million were performing in accordance with their new terms at June 30, 2016 and December 31, 2015, respectively. The remaining troubled debt restructurings are reported as nonaccrual loans. Specific reserves of $692,000 and $708,000 have been allocated for the troubled debt restructurings at June 30, 2016 and December 31, 2015, respectively. As of June 30, 2016 and December 31, 2015, the Corporation has committed $138,000 of additional funds to a single customer with an outstanding line of credit that is classified as a troubled debt restructuring.

There are no troubled debt restructurings for which there was a payment default within twelve months following the modification.

There were no new loans classified as a troubled debt restructuring during the three and six months ended June 30, 2016 or June 30, 2015.

Credit Quality Indicators

The Corporation categorizes certain loans into risk categories based on relevant information about the ability of the borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Corporation analyzes loans individually by classifying the loans as to credit risk. This analysis includes non-homogeneous loans, such as commercial, commercial real estate and commercial construction loans. This analysis is performed at the time the loan is originated and annually thereafter. The Corporation uses the following definitions for risk ratings.

Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention, which, if left uncorrected, may result in deterioration of the repayment prospects for the asset or the Bank’s credit position at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard – Substandard loans are inadequately protected by the current net worth and paying capacity of the borrower or by the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the repayment and liquidation of the debt. These loans are characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful – A Doubtful loan has all of the weaknesses inherent in those classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions, and values, highly questionable or improbable. The likelihood of loss is extremely high, but because of certain important and reasonably specific factors, an estimated loss is deferred until a more exact status can be determined.

Loss – A loan classified Loss is considered uncollectible and of such little value that its continuance as an asset is not warranted. This classification does not necessarily mean that an asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off a basically worthless asset even though partial recovery may be effected in the future.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans. As of June 30, 2016 and December 31, 2015, and based on the most recent analysis performed at those times, the risk category of loans by class is as follows:

	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	33,663,000	$	1,353,000	$	616,000	$	—	$	—	$	35,632,000
Other	35,309,000		720,000		359,000		—		—		36,388,000
Commercial real estate	329,959,000		4,245,000		3,456,000		—		—		337,660,000
Commercial construction	7,097,000		—		—		—		—		7,097,000
Total	$	406,028,000	$	6,318,000	$	4,431,000	$	—	$	—	$	416,777,000

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	35,263,000	$	1,431,000	$	1,299,000	$	—	$	—	$	37,993,000
Other	25,725,000		745,000		397,000		—		—		26,867,000
Commercial real estate	326,737,000		4,034,000		3,718,000		—		—		334,489,000
Commercial construction	4,609,000		—		—		—		—		4,609,000
Total	$	392,334,000	$	6,210,000	$	5,414,000	$	—	$	—	$	403,958,000

The Corporation considers the performance of the loan portfolio and its impact on the allowance for loans losses. For residential real estate and consumer loan segments, the Corporation also evaluates credit quality based on payment activity. The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	79,448,000	$	213,000	$	79,661,000
Consumer:
Secured by real estate	28,879,000		997,000		29,876,000
Other	519,000		3,000		522,000
Total	$	108,846,000	$	1,213,000	$	110,059,000

	December 31, 2015
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	82,415,000	$	540,000	$	82,955,000
Consumer:
Secured by real estate	27,730,000		1,494,000		29,224,000
Other	578,000		2,000		580,000
Total	$	110,723,000	$	2,036,000	$	112,759,000

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

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 reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values of investment securities are determined by matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). As the Corporation is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, the Corporation compares the prices received from the pricing service to a secondary pricing source. The Corporation’s internal price verification procedures have not historically resulted in adjustment in the prices obtained from the pricing service.

The interest rate swaps are reported at fair values obtained from brokers who utilize internal models with observable market data inputs to estimate the values of these instruments (Level 2 inputs).

The Corporation measures impairment of collateralized loans and other real estate owned (“OREO”) based on the estimated fair value of the collateral less estimated costs to sell the collateral, incorporating assumptions that experienced parties might use in estimating the value of such collateral (Level 3 inputs). At the time a loan or OREO is considered impaired, it is valued at the lower of cost or fair value. Generally, impaired loans carried at fair value have been partially charged-off or receive specific allocations of the allowance for loan losses. OREO is initially recorded at fair value less estimated selling costs. For collateral dependent loans and OREO, fair value is commonly based on real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, the net book value recorded for the collateral on the borrower’s financial statements, or aging reports. Collateral is then adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the borrower and borrower’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals are generally obtained to support the fair value of collateral. Appraisals for both collateral-dependent impaired loans and OREO are performed by licensed appraisers whose qualifications and licenses have been reviewed and verified by the Corporation. The Corporation utilizes a third party to order appraisals and, once received, reviews the assumptions and approaches utilized in the appraisal as well as the resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Real estate appraisals typically incorporate measures such as recent sales prices for comparable properties. In addition, appraisers may make adjustments to the sales price of the comparable properties as deemed appropriate based on the age, condition or general characteristics of the subject property. Management generally applies a 12% discount to real estate appraised values to cover disposition / selling costs and to reflect the potential price reductions in the market necessary to complete an expedient transaction and to factor in the impact of the perception that a transaction being completed by a bank may result in further price reduction pressure.

Assets and Liabilities Measured on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	28,570,000	$	—	$	28,570,000	$	—
Obligations of state and political subdivisions	1,432,000		—		1,432,000		—
Mortgage-backed securities - residential	51,286,000		—		51,286,000		—
Asset-backed securities	9,086,000		—		9,086,000		—
Corporate debt	4,425,000		—		4,425,000		—
Other equity investments	3,734,000		3,674,000		60,000		—
Total available-for-sale securities	$	98,533,000	$	3,674,000	$	94,859,000	$	—

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	30,954,000	$	—	$	30,954,000	$	—
Obligations of state and political subdivisions	1,410,000		—		1,410,000		—
Mortgage-backed securities - residential	45,237,000		—		45,237,000		—
Asset-backed securities	9,701,000		—		9,701,000		—
Corporate debt	2,419,000		—		2,419,000		—
Other equity investments	3,633,000		3,573,000		60,000		—
Total available-for-sale securities	$	93,354,000	$	3,573,000	$	89,781,000	$	—
Liabilities:
Interest rate swap	$	62,000	$	—	$	62,000	$	—

There were no transfers of assets between Level 1 and Level 2 during the six months ended June 30, 2016 or during the year ended December 31, 2015. There were no changes to the valuation techniques for fair value measurements as of June 30, 2016 and December 31, 2015.

Assets and Liabilities Measured on a Non-Recurring Basis

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

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Impaired loans
Commercial:
Secured by real estate	$	252,000	$	—	$	—	$	252,000
Other Real Estate Owned	431,000		—		—		431,000
	$	683,000	$	—	$	—	$	683,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Impaired loans
Commercial:
Secured by real estate	$	367,000	$	—	$	—	$	367,000
Consumer
Secured by real estate	84,000		—		—		84,000
Other Real Estate Owned	880,000		—		—		880,000
	$	1,331,000	$	—	$	—	$	1,331,000

Collateral-dependent impaired loans measured for impairment using the fair value of the collateral had a recorded investment value of $252,000, with no valuation allowance, resulting in no change to the provision for loan losses for the six months ended June 30, 2016.

Collateral-dependent impaired loans measured for impairment using the fair value of the collateral had a recorded investment value of $461,000, with a valuation allowance of $10,000, resulting in an increase of the allocation for loan losses of $16,000 for the year ended December 31, 2015.

OREO, measured at fair value, had a recorded investment value of $451,000 with a $20,000 valuation allowance at June 30, 2016. At December 31, 2015, OREO had a recorded investment value of $880,000 with no valuation allowance. Additional valuation allowances of $20,000 were recorded during the six months ended June 30, 2016. There were $60,000 additional valuation allowances recorded during the six months ended June 30, 2015.

For the Level 3 assets measured at fair value on a non-recurring basis at June 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

June 30, 2016
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	252,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 5%
				Estimated selling costs.	7%
Other real estate owned	$	431,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 7%
				Estimated selling costs.	7%

December 31, 2015
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	451,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	5% - 9%
				Estimated selling costs.	7%
Other real estate owned	$	990,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0%
				Estimated selling costs.	7%

Fair value estimates for the Corporation’s financial instruments are summarized below:

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Financial assets:
Cash and cash equivalents	$	13,901,000	$	13,901,000	$	—	$	—
Securities available-for-sale	98,533,000		3,674,000		94,859,000		—
Securities held to maturity	65,666,000		—		65,666,000		—
FHLB-NY stock	2,651,000		N/A		N/A		N/A
Mortgage loans held for sale	581,000		—		—		581,000
Loans, net	529,225,000		—		—		539,764,000
Accrued interest receivable	1,912,000		1,000		524,000		1,387,000
Financial liabilities:
Deposits	626,469,000		483,034,000		144,244,000		—
FHLB-NY advances	40,000,000		—		40,291,000		—
Subordinated debentures and subordinated notes	23,219,000		—		—		23,240,000
Accrued interest payable	782,000		1,000		398,000		383,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	December 31, 2015
Financial assets:
Cash and cash equivalents	$	10,910,000	$	10,910,000	$	—	$	—
Securities available-for-sale	93,354,000		3,573,000		89,781,000		—
Securities held to maturity	60,738,000		—		61,281,000		—
FHLB-NY stock	2,608,000		N/A		N/A		N/A
Mortgage loans held for sale	1,522,000		—		—		1,522,000
Loans, net	517,556,000		—		—		527,479,000
Accrued interest receivable	1,967,000		1,000		535,000		1,432,000
Financial liabilities:
Deposits	604,753,000		459,327,000		145,560,000		—
FHLB-NY advances	40,000,000		—		40,222,000		—
Subordinated debentures and subordinated notes	23,186,000		—		—		23,206,000
Accrued interest payable	791,000		1,000		387,000		403,000
Interest rate swap	62,000		—		62,000		—

The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents – The carrying amount approximates fair value and is classified as Level 1.

Securities available-for-sale and held to maturity – The methods for determining fair values were described previously.

FHLB-NY stock - It is not practicable to determine the fair value of FHLB-NY stock due to restrictions placed on the transferability of the stock.

Mortgage loans held for sale – Loans in this category have been committed for sale to third party investors at the current carrying amount resulting in a Level 3 classification.

Loans, net – Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as residential and commercial mortgages, commercial and other installment loans. The fair value of loans is estimated by discounting cash flows using estimated market discount rates which reflect the credit and interest rate risk inherent in the loans resulting in a Level 3 classification. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable loans.

Accrued interest receivable – The carrying amount approximates fair value.

Deposits – The fair value of deposits, with no stated maturity, such as noninterest-bearing demand deposits, savings, NOW and money market accounts, is equal to the amount payable on demand resulting in a Level 1 classification. The fair value of certificates of deposit is based on the discounted value of cash flows resulting in a Level 2 classification. The discount rate is estimated using market discount rates which reflect interest rate risk inherent in the certificates of deposit. Fair values estimated in this manner do not fully incorporate an exit-price approach to fair value, but instead are based on a comparison to current market rates for comparable deposits.

FHLB-NY advances – With respect to FHLB-NY borrowings, the fair value is based on the discounted value of cash flows. The discount rate is estimated using market discount rates which reflect the interest rate risk and credit risk inherent in the term borrowings resulting in a Level 2 classification.

Subordinated debentures and subordinated notes – The fair value of the Subordinated Debentures (see Note 6) and the Subordinated Notes (see Note 6) is based on the discounted value of the cash flows. The discount rate is estimated using market rates which reflect the interest rate and credit risk inherent in the Subordinated Debentures and the Subordinated Notes resulting in a Level 3 classification.

Accrued interest payable – The carrying amount approximates fair value.

Interest rate swap – The fair value of derivatives, which is included in Accrued Expenses and Other Liabilities on the Consolidated Statements of Financial Condition, are based on valuation models using observable market data as of the measurement date (Level 2).

Commitments to extend credit – The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness of the counter parties. At June 30, 2016 and December 31, 2015 the fair value of such commitments were not material.

Limitations

The preceding fair value estimates were made at June 30, 2016 and December 31, 2015 based on pertinent market data and relevant information concerning the financial instruments. These estimates do not include any premiums or discounts that could result from an offer to sell at one time the Corporation's entire holdings of a particular financial instrument or category thereof. Since no market exists for a substantial portion of the Corporation's financial instruments, fair value estimates were necessarily based on judgments with respect to future expected loss experience, current economic conditions, risk assessments of various financial instruments, and other factors. Given the subjective nature of these estimates, the uncertainties surrounding them and the matters of significant judgment that must be applied, these fair value estimates cannot be calculated with precision. Modifications in such assumptions could meaningfully alter these estimates.

Since these fair value approximations were made solely for on- and off-balance sheet financial instruments at June 30, 2016 and December 31, 2015, no attempt was made to estimate the value of anticipated future business. Furthermore, certain tax implications related to the realization of unrealized gains and losses could have a substantial impact on these fair value estimates and have not been incorporated into the estimates.

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Earnings Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Common stock equivalents are not included in the calculation. Diluted earnings per share is computed similar to that of basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all potential dilutive common shares were issued.

The following reconciles the income available to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted earnings per share.

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income	$	1,362,000	$	1,222,000	$	2,353,000	$	2,139,000
Dividends on preferred stock	—		171,000		—		342,000
Net income available to common stockholders	$	1,362,000	$	1,051,000	$	2,353,000	$	1,797,000
Weighted average common shares outstanding - basic	6,111,729		6,086,474		6,102,040		6,066,191
Effect of dilutive securities - stock options	N/A		N/A		N/A		N/A
Weighted average common shares outstanding - diluted	6,111,729		6,086,474		6,102,040		6,066,191
Basic earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30
Diluted earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30

There were no stock options to purchase shares of common stock for the three and six months ended June 30, 2016 and 2015.

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Subordinated Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Subordinated Debt

Subordinated Debt

			Carrying Amount
Issue	Maturity	Rate	June 30, 2016		December 31, 2015
9/17/2003	9/17/2033	Fixed / Floating Rate Junior Subordinated Debentures	$	7,217,000	$	7,217,000
8/28/2015	8/25/2025	Fixed Rate Subordinated Notes	16,002,000		15,969,000
			$	23,219,000	$	23,186,000

In 2003, the Corporation formed Stewardship Statutory Trust I (the “Trust”), a statutory business trust, which on September 17, 2003 issued $7.0 million Fixed/Floating Rate Capital Securities (“Capital Securities”). The Trust used the proceeds to purchase from the Corporation, $7,217,000 of Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) maturing September 17, 2033. The Trust is obligated to distribute all proceeds of a redemption whether voluntary or upon maturity, to holders of the Capital Securities. The Corporation’s obligation with respect to the Capital Securities, and the Debentures, when taken together, provide a full and unconditional guarantee on a subordinated basis by the Corporation of the Trust’s obligations to pay amounts when due on the Capital Securities. The Corporation is not considered the primary beneficiary of this Trust (variable interest entity); therefore, the Trust is not consolidated in the Corporation’s consolidated financial statements, but rather the Subordinated Debentures are shown as a liability. Prior to September 17, 2008, the Capital Securities and the Subordinated Debentures both had a fixed interest rate of 6.75%. Beginning September 17, 2008, the rate floats quarterly at a rate of three month LIBOR plus 2.95%. At June 30, 2016 and December 31, 2015, the rate on both the Capital Securities and the Subordinated Debentures was 3.61% and 3.48%, respectively. The Corporation has the right to defer payments of interest on the Subordinated Debentures by extending the interest payment period for up to 20 consecutive quarterly periods. The Subordinated Debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

On August 28, 2015, the Corporation completed a private placement of $16.6 million in aggregate principal amount of fixed rate subordinated notes (the “Subordinated Notes”) to certain institutional accredited investors pursuant to a Subordinated Note Purchase Agreement dated August 28, 2015 between the Corporation and such investors. The Subordinated Notes have a maturity date of August 28, 2025 and bear interest at the rate of 6.75% per annum, payable semi-annually, in arrears, on March 1 and September 1 of each year during the time that the Subordinated Notes remain outstanding. The Subordinated Notes include a right of prepayment, without penalty, on or after August 28, 2020 and, in certain limited circumstances, before that date. The indebtedness evidenced by the Subordinated Notes, including principal and interest, is unsecured and subordinate and junior in right of the Company's payment to general and secured creditors and depositors of the Bank. The Subordinated Notes have been structured to qualify as Tier 2 capital for regulatory purposes. The Subordinated Notes totaled $16.0 million at June 30, 2016, which includes $598,000 of remaining unamortized debt issuance costs. The debt issuance costs are being amortized over the contractual life of the issue. The net cash proceeds of the Subordinated Notes were used to redeem on September 1, 2015, the Corporation’s Senior Non-Cumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Shares”). The Series B Preferred Shares were issued by the Corporation to the U.S. Department of the Treasury (the “Treasury) on September 1, 2011 in connection with the Corporation’s participation in the Treasury’s Small Business Lending Fund program (“SBLF”), a $30 million fund established under the Small Business Jobs Act of 2010 to encourage small business lending by providing capital to qualified community banks with assets of less than $10 billion.

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

The components of comprehensive income, both gross and net of tax, are presented for the periods below:

	Three Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	2,138,000		$	(776,000	)	$	1,362,000		$	1,895,000		$	(673,000	)	$	1,222,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	395,000			(151,000		)	244,000			(525,000		)	200,000			(325,000		)
Reclassification adjustment for gains in net income	(32,000		)	12,000			(20,000		)	—			—			—
Accretion of loss on securities reclassified to held to maturity	41,000			(16,000		)	25,000			56,000			(22,000		)	34,000
Change in fair value of interest rate swap	—			—			—			62,000			(25,000		)	37,000
Total other comprehensive income (loss)	404,000			(155,000		)	249,000			(407,000		)	153,000			(254,000		)
Total comprehensive income	$	2,542,000		$	(931,000	)	$	1,611,000		$	1,488,000		$	(520,000	)	$	968,000

	Six Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	3,681,000		$	(1,328,000	)	$	2,353,000		$	3,265,000		$	(1,126,000	)	$	2,139,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	1,482,000			(566,000		)	916,000			226,000			(88,000		)	138,000
Reclassification adjustment for gains in net income	(56,000		)	21,000			(35,000		)	(152,000		)	61,000			(91,000		)
Accretion of loss on securities reclassified to held to maturity	113,000			(43,000		)	70,000			195,000			(74,000		)	121,000
Change in fair value of interest rate swap	62,000			(25,000		)	37,000			119,000			(48,000		)	71,000
Total other comprehensive income (loss)	1,601,000			(613,000		)	988,000			388,000			(149,000		)	239,000
Total comprehensive income	$	5,282,000		$	(1,941,000	)	$	3,341,000		$	3,653,000		$	(1,275,000	)	$	2,378,000

The following tables present the after-tax changes in the balances of each component of accumulated other comprehensive income for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2016	$	47,000		$	(153,000	)	$	—		$	(106,000	)
Other comprehensive income before reclassifications	244,000			25,000			—			269,000
Amounts reclassified from other comprehensive income	(20,000		)	—			—			(20,000		)
Other comprehensive income	224,000			25,000			—			249,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000
	Six Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2015	$	(610,000	)	$	(198,000	)	$	(37,000	)	$	(845,000	)
Other comprehensive income before reclassifications	916,000			70,000			37,000			1,023,000
Amounts reclassified from other comprehensive income	(35,000		)	—			—			(35,000		)
Other comprehensive income, net	881,000			70,000			37,000			988,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000

	Three Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2015	$	(20,000	)	$	(290,000	)	$	(154,000	)	$	(464,000	)
Other comprehensive income (loss) before reclassifications	(325,000		)	34,000			37,000			(254,000		)
Amounts reclassified from other comprehensive income	—			—			—			—
Other comprehensive income (loss), net	(325,000		)	34,000			37,000			(254,000		)
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)
	Six Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(392,000	)	$	(377,000	)	$	(188,000	)	$	(957,000	)
Other comprehensive income before reclassifications	138,000			121,000			71,000			330,000
Amounts reclassified from other comprehensive income	(91,000		)	—			—			(91,000		)
Other comprehensive income, net	47,000			121,000			71,000			239,000
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)

The following tables present amounts reclassified from each component of accumulated other comprehensive income on a gross and net of tax basis for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended					Income
Components of Accumulated Other	June 30,					Statement
Comprehensive Income	2016			2015		Line Item
Unrealized gains on AFS securities before tax	$	32,000		$	—	Gains on securities transactions, net
Tax effect	(12,000		)	—
Total net of tax	20,000			—
Total reclassifications, net of tax	$	20,000		$	—

	Six Months Ended						Income
Components of Accumulated Other	June 30,						Statement
Comprehensive Income	2016			2015			Line Item
Unrealized gains on AFS securities before tax	$	56,000		$	152,000		Gains on securities transactions, net
Tax effect	(21,000		)	(61,000		)
Total net of tax	35,000			91,000
Total reclassifications, net of tax	$	35,000		$	91,000

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Basis of presentation

Certain information and note disclosures normally included in the unaudited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Stewardship Financial Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on March 24, 2016 (the “2015 Annual Report”).

The interim unaudited consolidated financial statements included herein have been prepared in accordance with instructions for Form 10-Q and the rules and regulations of the SEC and, therefore, do not include information or footnotes necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with GAAP. However, all adjustments, consisting only of normal recurring adjustments, which in the opinion of management are necessary for a fair presentation of the interim consolidated financial statements, have been included. The results of operations for the three and six months ended June 30, 2016 are not necessarily indicative of the results which may be expected for the entire year.

Principles of consolidation

Principles of consolidation

The consolidated financial statements include the accounts of Stewardship Financial Corporation and its wholly-owned subsidiary, Atlantic Stewardship Bank (the “Bank”), together referred to as “the Corporation”. The Bank includes its wholly-owned subsidiaries, Stewardship Investment Corporation, Stewardship Realty LLC, Atlantic Stewardship Insurance Company, LLC and several other subsidiaries formed to hold title to properties acquired through foreclosure or deed in lieu of foreclosure. The Bank’s subsidiaries have an insignificant impact on the Bank’s daily operations. All intercompany accounts and transactions have been eliminated in the consolidated financial statements.

The consolidated financial statements of the Corporation have been prepared in conformity with GAAP. In preparing the consolidated financial statements, management is required to make estimates and assumptions, based on available information, that affect the amounts reported in the consolidated financial statements and disclosures provided. Actual results could differ significantly from those estimates.

Material estimates

Material estimates

Material estimates that are particularly susceptible to significant changes relate to the determination of the allowance for loan losses and deferred income taxes. Management believes the Corporation’s policies with respect to the methodology for the determination of the allowance for loan losses and the evaluation of deferred income taxes involves a higher degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. These critical policies and their application are periodically reviewed with the Audit Committee and the Board of Directors.

Adoption of New Accounting Standards

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2015-03, “Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.” This ASU is part of the FASB’s initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in ASU 2015-03 are effective for fiscal years, including interim periods, beginning after December 15, 2015. The adoption of the amendments in this standard did not have a material impact on the Corporation’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Liabilities." This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This amendment supersedes the guidance to classify equity securities with readily determinable fair values into different categories, requires equity securities to be measured at fair value with changes in the fair value recognized through net income, and simplifies the impairment assessment of equity investments without readily determinable fair values. The amendment requires public business entities that are required to disclose the fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion. The amendment requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option. The amendment requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or in the accompanying notes to the financial statements. The amendment reduces diversity in current practice by clarifying that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entity’s other deferred tax assets. This amendment is effective for fiscal years, including interim periods, beginning after December 15, 2017. Entities should apply the amendment by means of a cumulative-effect adjustment as of the beginning of the fiscal year of adoption, with the exception of the amendment related to equity securities without readily determinable fair values, which should be applied prospectively to equity investments that exist as of the date of adoption. The Corporation intends to adopt the accounting standard during the first quarter of 2018, and is currently evaluating the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, “Leases (Subtopic 842).” This ASU requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. The amendments in ASU 2016-02 are effective for fiscal years, including interim periods, beginning after December 15, 2018. Early adoption of ASU 2016-02 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”. The objective of this ASU is to simplify accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. Under ASU 2016-09, all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) should be recognized as income tax expense or benefit in the income statement. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. An entity also should recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period. An entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest (current accounting) or account for forfeitures when they occur. Within the Cash Flow Statement, excess tax benefits should be classified along with other income tax cash flows as an operating activity, and cash paid by an employer when directly withholding shares for tax-withholding purposes should be classified as a financing activity. The amendments in ASU 2016-09 are effective for fiscal years, including interim periods, beginning after December 15, 2016. Early adoption of ASU 2016-09 is permitted. The Corporation is currently assessing the impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date. The amendments in this ASU require financial assets measured at amortized cost to be presented at the net amount expected to be collected. The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. The income statement would reflect 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. The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The amendments in ASU 2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019. Early adoption of ASU 2016-09 is permitted for fiscal years beginning after December 15, 2018. The Corporation is currently evaluating the potential impact that the adoption of the guidance will have on the Corporation's consolidated financial statements.

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Securities - Available-for-Sale and Held to Maturity (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of Fair Value of Securities Available For Sale and Related Gross Unrealized Gains and Losses

The fair value of the available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	28,426,000	$	164,000	$	20,000	$	28,570,000
Obligations of state and political
subdivisions	1,406,000		26,000		—		1,432,000
Mortgage-backed securities - residential	50,648,000		670,000		32,000		51,286,000
Asset-backed securities (a)	9,291,000		—		205,000		9,086,000
Corporate debt	4,500,000		10,000		85,000		4,425,000
Total debt securities	94,271,000		870,000		342,000		94,799,000
Other equity investments	3,832,000		—		98,000		3,734,000
	$	98,103,000	$	870,000	$	440,000	$	98,533,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. government-sponsored agencies	$	31,266,000	$	81,000	$	393,000	$	30,954,000
Obligations of state and political
subdivisions	1,409,000		2,000		1,000		1,410,000
Mortgage-backed securities - residential	45,520,000		213,000		496,000		45,237,000
Asset-backed securities (a)	9,877,000		—		176,000		9,701,000
Corporate debt	2,500,000		—		81,000		2,419,000
Total debt securities	90,572,000		296,000		1,147,000		89,721,000
Other equity investments	3,778,000		—		145,000		3,633,000
	$	94,350,000	$	296,000	$	1,292,000	$	93,354,000

(a) Collateralized by student loans

Schedule of Held to Maturity Securities and Related Unrecognized Gains and Losses

The following is a summary of the held to maturity securities and related gross unrealized gains and losses:

	June 30, 2016
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	20,000	$	—	$	1,019,000
U.S. government-sponsored agencies	24,129,000		131,000		10,000		24,250,000
Obligations of state and political
subdivisions	10,223,000		167,000		—		10,390,000
Mortgage-backed securities - residential	30,315,000		798,000		—		31,113,000
	$	65,666,000	$	1,116,000	$	10,000	$	66,772,000

	December 31, 2015
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
U.S. Treasury	$	999,000	$	—	$	11,000	$	988,000
U.S. government-sponsored agencies	15,109,000		132,000		24,000		15,217,000
Obligations of state and political
subdivisions	11,219,000		268,000		—		11,487,000
Mortgage-backed securities - residential	33,411,000		295,000		117,000		33,589,000
	$	60,738,000	$	695,000	$	152,000	$	61,281,000

Amortized Cost and Fair Value of the Investment Securities Portfolio by Contractual Maturity.

The following table presents the amortized cost and fair value of the debt securities portfolio by contractual maturity. As issuers may have the right to call or prepay obligations with or without call or prepayment premiums, the actual maturities may differ from contractual maturities. Securities not due at a single maturity date, such as mortgage-backed securities and asset-backed securities, are shown separately.

	June 30, 2016
	Amortized Cost		Fair Value
Available-for-sale
Within one year	$	500,000	$	502,000
After one year, but within five years	9,778,000		9,798,000
After five years, but within ten years	17,923,000		18,009,000
After ten years	6,131,000		6,118,000
Mortgage-backed securities - residential	50,648,000		51,286,000
Asset-backed securities	9,291,000		9,086,000
Total	$	94,271,000	$	94,799,000
Held to maturity
Within one year	$	3,137,000	$	3,155,000
After one year, but within five years	8,586,000		8,787,000
After five years, but within ten years	21,676,000		21,716,000
After ten years	1,952,000		2,001,000
Mortgage-backed securities - residential	30,315,000		31,113,000
Total	$	65,666,000	$	66,772,000

Schedule of Continuous Unrealized Loss Position for Investment Securities Available for Sale and Held to Maturity

The following tables summarize the fair value and unrealized losses of those investment securities which reported an unrealized loss at June 30, 2016 and December 31, 2015, and if the unrealized loss position was continuous for the twelve months prior to June 30, 2016 and December 31, 2015.

Available-for-Sale
June 30, 2016	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	1,994,000	$	(8,000	)	$	6,118,000	$	(12,000	)	$	8,112,000	$	(20,000	)
Obligations of state and political subdivisions	—		—			—		—			—		—
Mortgage-backed securities - residential	6,094,000		(11,000		)	3,888,000		(21,000		)	9,982,000		(32,000		)
Asset-backed securities	6,197,000		(69,000		)	2,889,000		(136,000		)	9,086,000		(205,000		)
Corporate debt	999,000		(1,000		)	1,416,000		(84,000		)	2,415,000		(85,000		)
Other equity investments	—		—			3,674,000		(98,000		)	3,674,000		(98,000		)
Total temporarily impaired securities	$	15,284,000	$	(89,000	)	$	17,985,000	$	(351,000	)	$	33,269,000	$	(440,000	)

December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. government- sponsored agencies	$	18,396,000	$	(183,000	)	$	7,296,000	$	(210,000	)	$	25,692,000	$	(393,000	)
Obligations of state and political subdivisions	984,000		(1,000		)	—		—			984,000		(1,000		)
Mortgage-backed securities - residential	8,599,000		(69,000		)	16,278,000		(427,000		)	24,877,000		(496,000		)
Asset-backed securities	6,791,000		(56,000		)	2,910,000		(120,000		)	9,701,000		(176,000		)
Corporate debt	—		—			1,419,000		(81,000		)	1,419,000		(81,000		)
Other equity investments	—		—			3,573,000		(145,000		)	3,573,000		(145,000		)
Total temporarily impaired securities	$	34,770,000	$	(309,000	)	$	31,476,000	$	(983,000	)	$	66,246,000	$	(1,292,000	)

Held to Maturity
June 30, 2016	Less than 12 Months					12 Months or Longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
U.S. Treasury	$	—	$	—		$	—	$	—	$	—	$	—
U.S. government- sponsored agencies	1,891,000		(10,000		)	—		—		1,891,000		(10,000		)
Mortgage-backed securities - residential	—		—			—		—		—		—
Total temporarily impaired securities	$	1,891,000	$	(10,000	)	$	—	$	—	$	1,891,000	$	(10,000	)

December 31, 2015	Less than 12 Months					12 Months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Treasury	$	988,000	$	(11,000	)	$	—	$	—		$	988,000	$	(11,000	)
U.S. government- sponsored agencies	4,955,000		(24,000		)	—		—			4,955,000		(24,000		)
Mortgage-backed securities - residential	15,183,000		(90,000		)	1,066,000		(27,000		)	16,249,000		(117,000		)
Total temporarily impaired securities	$	21,126,000	$	(125,000	)	$	1,066,000	$	(27,000	)	$	22,192,000	$	(152,000	)

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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Loan Portfolio Schedule

At June 30, 2016 and December 31, 2015, respectively, the loan portfolio consisted of the following:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	35,632,000	$	37,993,000
Other	36,388,000		26,867,000
Commercial real estate	337,660,000		334,489,000
Commercial construction	7,097,000		4,609,000
Residential real estate	79,661,000		82,955,000
Consumer:
Secured by real estate	29,876,000		29,224,000
Other	522,000		580,000
Government Guaranteed Loans - guaranteed portion	10,734,000		9,626,000
Other	68,000		134,000
Total gross loans	537,638,000		526,477,000
Less: Deferred loan costs (fees), net	25,000		98,000
Allowance for loan losses	8,388,000		8,823,000
	8,413,000		8,921,000
Loans, net	$	529,225,000	$	517,556,000

Schedule of Allowance for Loan Losses

Activity in the allowance for loan losses is summarized as follows:

	For the three months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,720,000	$	(386,000	)	$	(1,000	)	$	340,000	$	3,673,000
Commercial real estate	4,413,000		(156,000		)	(64,000		)	31,000		4,224,000
Commercial construction	112,000		72,000			—			—		184,000
Residential real estate	106,000		—			—			—		106,000
Consumer	119,000		19,000			(7,000		)	1,000		132,000
Other loans	1,000		1,000			(2,000		)	—		—
Unallocated	69,000		—			—			—		69,000
Total	$	8,540,000	$	(450,000	)	$	(74,000	)	$	372,000	$	8,388,000

	For the six months ended June 30, 2016
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,698,000	$	(402,000	)	$	(3,000	)	$	380,000	$	3,673,000
Commercial real estate	4,660,000		(431,000		)	(64,000		)	59,000		4,224,000
Commercial construction	114,000		70,000			—			—		184,000
Residential real estate	109,000		(3,000		)	—			—		106,000
Consumer	118,000		19,000			(7,000		)	2,000		132,000
Other loans	3,000		(1,000		)	(2,000		)	—		—
Unallocated	121,000		(52,000		)	—			—		69,000
Total	$	8,823,000	$	(800,000	)	$	(76,000	)	$	441,000	$	8,388,000

	For the three months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,703,000	$	(503,000	)	$	(1,000	)	$	118,000	$	3,317,000
Commercial real estate	5,116,000		99,000			—			74,000		5,289,000
Commercial construction	106,000		(200,000		)	—			108,000		14,000
Residential real estate	146,000		(6,000		)	—			—		140,000
Consumer	151,000		(13,000		)	—			1,000		139,000
Other loans	—		4,000			(1,000		)	—		3,000
Unallocated	378,000		19,000			—			—		397,000
Total	$	9,600,000	$	(600,000	)	$	(2,000	)	$	301,000	$	9,299,000

	For the six months ended June 30, 2015
	Balance, beginning of period		Provision charged to operations			Loans charged off			Recoveries of loans charged off		Balance, end of period
Commercial	$	3,704,000	$	(341,000	)	$	(272,000	)	$	226,000	$	3,317,000
Commercial real estate	5,017,000		171,000			—			101,000		5,289,000
Commercial construction	150,000		(477,000		)	—			341,000		14,000
Residential real estate	142,000		(2,000		)	—			—		140,000
Consumer	189,000		(52,000		)	—			2,000		139,000
Other loans	2,000		2,000			(1,000		)	—		3,000
Unallocated	398,000		(1,000		)	—			—		397,000
Total	$	9,602,000	$	(700,000	)	$	(273,000	)	$	670,000	$	9,299,000

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on the impairment method as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	79,000	$	613,000	$	—	$	—	$	—	$	—	$	—	$	—	$	692,000
Collectively evaluated for impairment	3,594,000		3,611,000		184,000		106,000		132,000		—		—		69,000		7,696,000
Total ending allowance balance	$	3,673,000	$	4,224,000	$	184,000	$	106,000	$	132,000	$	—	$	—	$	69,000	$	8,388,000
Loans:
Loans individually evaluated for impairment	$	2,331,000	$	6,768,000	$	—	$	—	$	81,000	$	—	$	—	$	—	$	9,180,000
Loans collectively evaluated for impairment	69,689,000		330,892,000		7,097,000		79,661,000		30,317,000		10,734,000		68,000		—		528,458,000
Total ending loan balance	$	72,020,000	$	337,660,000	$	7,097,000	$	79,661,000	$	30,398,000	$	10,734,000	$	68,000	$	—	$	537,638,000

	December 31, 2015
	Commercial		Commercial Real Estate		Commercial Construction		Residential Real Estate		Consumer		Government Guaranteed		Other Loans		Unallocated		Total
Allowance for loan losses
Ending allowance balance attributable to loans
Individually evaluated for impairment	$	81,000	$	638,000	$	—	$	—	$	—	$	—	$	—	$	—	$	719,000
Collectively evaluated for impairment	3,617,000		4,022,000		114,000		109,000		118,000		—		3,000		121,000		8,104,000
Total ending allowance balance	$	3,698,000	$	4,660,000	$	114,000	$	109,000	$	118,000	$	—	$	3,000	$	121,000	$	8,823,000
Loans:
Loans individually evaluated for impairment	$	3,348,000	$	8,113,000	$	—	$	—	$	84,000	$	—	$	—	$	—	$	11,545,000
Loans collectively evaluated for impairment	61,512,000		326,376,000		4,609,000		82,955,000		29,720,000		9,626,000		134,000		—		514,932,000
Total ending loan balance	$	64,860,000	$	334,489,000	$	4,609,000	$	82,955,000	$	29,804,000	$	9,626,000	$	134,000	$	—	$	526,477,000

Schedule of Recorded Investment in Nonaccrual Loans

The following table presents the recorded investment in nonaccrual loans at the dates indicated:

	June 30, 2016		December 31, 2015
Commercial:
Secured by real estate	$	616,000	$	1,300,000
Other	—		14,000
Commercial real estate	252,000		484,000
Consumer:
Secured by real estate	81,000		84,000
Total nonaccrual loans	$	949,000	$	1,882,000

Schedule of Recorded Investments in Impaired Loans

The following table presents loans individually evaluated for impairment by class of loan at and for the periods indicated:

	At and for the six months ended June 30, 2016
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	2,073,000	$	1,853,000			$	2,310,000	$	47,000
Other	—		—				46,000		—
Commercial real estate	3,824,000		3,563,000				3,197,000		112,000
Consumer:
Secured by real estate	82,000		81,000				83,000		—
With an allowance recorded:
Commercial:
Secured by real estate	190,000		190,000		$	68,000	230,000		4,000
Other	288,000		288,000		11,000		256,000		10,000
Commercial real estate	3,205,000		3,205,000		613,000		4,726,000		66,000
	$	9,662,000	$	9,180,000	$	692,000	$	10,848,000	$	239,000

During the three and six months ended June 30, 2016, no interest income was recognized on a cash basis.

	At and for the year ended December 31, 2015
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial:
Secured by real estate	$	3,244,000	$	2,729,000			$	3,683,000	$	156,000
Other	137,000		137,000				61,000		2,000
Commercial real estate	3,245,000		2,885,000				2,890,000		121,000
Commercial construction	—		—				215,000		—
Residential real estate	—		—				74,000		—
Consumer:
Secured by real estate	84,000		84,000				226,000		—
With an allowance recorded:
Commercial:
Secured by real estate	390,000		308,000		$	80,000	405,000		14,000
Other	174,000		174,000		1,000		463,000		31,000
Commercial real estate	5,228,000		5,228,000		638,000		5,534,000		211,000
	$	12,502,000	$	11,545,000	$	719,000	$	13,551,000	$	535,000

Schedule of Aging of the Recorded Investment in Past Due Loans by Class of Loans

The following table presents the aging of the recorded investment in past due loans by class of loans as of June 30, 2016 and December 31, 2015. Nonaccrual loans are included in the disclosure by payment status.

	June 30, 2016
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	616,000	$	616,000	$	35,016,000	$	35,632,000
Other	—		—		—		—		36,388,000		36,388,000
Commercial real estate	—		—		252,000		252,000		337,408,000		337,660,000
Commercial construction	—		—		—		—		7,097,000		7,097,000
Residential real estate	—		—		—		—		79,661,000		79,661,000
Consumer:
Secured by real estate	162,000		—		41,000		203,000		29,673,000		29,876,000
Other	—		—		—		—		522,000		522,000
Government Guaranteed	—		—		—		—		10,734,000		10,734,000
Other	—		—		—		—		68,000		68,000
Total	$	162,000	$	—	$	909,000	$	1,071,000	$	536,567,000	$	537,638,000

	December 31, 2015
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total
Commercial:
Secured by real estate	$	—	$	—	$	1,011,000	$	1,011,000	$	36,982,000	$	37,993,000
Other	—		—		—		—		26,867,000		26,867,000
Commercial real estate	271,000		—		—		271,000		334,218,000		334,489,000
Commercial construction	—		—		—		—		4,609,000		4,609,000
Residential real estate	—		—		—		—		82,955,000		82,955,000
Consumer:
Secured by real estate	112,000		—		41,000		153,000		29,071,000		29,224,000
Other	—		—		—		—		580,000		580,000
Government Guaranteed	—		—		—		—		9,626,000		9,626,000
Other	—		—		—		—		134,000		134,000
Total	$	383,000	$	—	$	1,052,000	$	1,435,000	$	525,042,000	$	526,477,000

Schedule of Loans by Credit Quality Indicators

As of June 30, 2016 and December 31, 2015, and based on the most recent analysis performed at those times, the risk category of loans by class is as follows:

	June 30, 2016
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	33,663,000	$	1,353,000	$	616,000	$	—	$	—	$	35,632,000
Other	35,309,000		720,000		359,000		—		—		36,388,000
Commercial real estate	329,959,000		4,245,000		3,456,000		—		—		337,660,000
Commercial construction	7,097,000		—		—		—		—		7,097,000
Total	$	406,028,000	$	6,318,000	$	4,431,000	$	—	$	—	$	416,777,000

	December 31, 2015
	Pass		Special Mention		Substandard		Doubtful		Loss		Total
Commercial:
Secured by real estate	$	35,263,000	$	1,431,000	$	1,299,000	$	—	$	—	$	37,993,000
Other	25,725,000		745,000		397,000		—		—		26,867,000
Commercial real estate	326,737,000		4,034,000		3,718,000		—		—		334,489,000
Commercial construction	4,609,000		—		—		—		—		4,609,000
Total	$	392,334,000	$	6,210,000	$	5,414,000	$	—	$	—	$	403,958,000

Schedule of Recorded Investment in Residential Real Estate and Consumer Loans Based on Payment Activity

The following table presents the recorded investment in residential real estate and consumer loans based on payment activity as of June 30, 2016 and December 31, 2015.

	June 30, 2016
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	79,448,000	$	213,000	$	79,661,000
Consumer:
Secured by real estate	28,879,000		997,000		29,876,000
Other	519,000		3,000		522,000
Total	$	108,846,000	$	1,213,000	$	110,059,000

	December 31, 2015
	Current		Past Due and Nonaccrual		Total
Residential real estate	$	82,415,000	$	540,000	$	82,955,000
Consumer:
Secured by real estate	27,730,000		1,494,000		29,224,000
Other	578,000		2,000		580,000
Total	$	110,723,000	$	2,036,000	$	112,759,000

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

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

Assets and liabilities measured at fair value on a recurring basis are summarized below:

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	28,570,000	$	—	$	28,570,000	$	—
Obligations of state and political subdivisions	1,432,000		—		1,432,000		—
Mortgage-backed securities - residential	51,286,000		—		51,286,000		—
Asset-backed securities	9,086,000		—		9,086,000		—
Corporate debt	4,425,000		—		4,425,000		—
Other equity investments	3,734,000		3,674,000		60,000		—
Total available-for-sale securities	$	98,533,000	$	3,674,000	$	94,859,000	$	—

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Available-for-sale securities
U.S. government - sponsored agencies	$	30,954,000	$	—	$	30,954,000	$	—
Obligations of state and political subdivisions	1,410,000		—		1,410,000		—
Mortgage-backed securities - residential	45,237,000		—		45,237,000		—
Asset-backed securities	9,701,000		—		9,701,000		—
Corporate debt	2,419,000		—		2,419,000		—
Other equity investments	3,633,000		3,573,000		60,000		—
Total available-for-sale securities	$	93,354,000	$	3,573,000	$	89,781,000	$	—
Liabilities:
Interest rate swap	$	62,000	$	—	$	62,000	$	—

Schedule of Assets and Liabilities Measured at Fair Value on a Non-recurring Basis

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

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Assets:
Impaired loans
Commercial:
Secured by real estate	$	252,000	$	—	$	—	$	252,000
Other Real Estate Owned	431,000		—		—		431,000
	$	683,000	$	—	$	—	$	683,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At December 31, 2015
Assets:
Impaired loans
Commercial:
Secured by real estate	$	367,000	$	—	$	—	$	367,000
Consumer
Secured by real estate	84,000		—		—		84,000
Other Real Estate Owned	880,000		—		—		880,000
	$	1,331,000	$	—	$	—	$	1,331,000

Schedule of Fair Value Assumptions for Level 3 Asset Measurements

For the Level 3 assets measured at fair value on a non-recurring basis at June 30, 2016 and December 31, 2015, the significant unobservable inputs used in the fair value measurements were as follows:

June 30, 2016
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	252,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 5%
				Estimated selling costs.	7%
Other real estate owned	$	431,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0% - 7%
				Estimated selling costs.	7%

December 31, 2015
	Fair
Assets	Value		Valuation Technique	Unobservable Inputs	Range
Impaired loans	$	451,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	5% - 9%
				Estimated selling costs.	7%
Other real estate owned	$	990,000	Comparable real estate sales and / or the income approach.	Adjustments for differences between comparable sales and income data available.	0%
				Estimated selling costs.	7%

Schedule of Fair Value Estimates for the Financial Instruments

Fair value estimates for the Corporation’s financial instruments are summarized below:

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	At June 30, 2016
Financial assets:
Cash and cash equivalents	$	13,901,000	$	13,901,000	$	—	$	—
Securities available-for-sale	98,533,000		3,674,000		94,859,000		—
Securities held to maturity	65,666,000		—		65,666,000		—
FHLB-NY stock	2,651,000		N/A		N/A		N/A
Mortgage loans held for sale	581,000		—		—		581,000
Loans, net	529,225,000		—		—		539,764,000
Accrued interest receivable	1,912,000		1,000		524,000		1,387,000
Financial liabilities:
Deposits	626,469,000		483,034,000		144,244,000		—
FHLB-NY advances	40,000,000		—		40,291,000		—
Subordinated debentures and subordinated notes	23,219,000		—		—		23,240,000
Accrued interest payable	782,000		1,000		398,000		383,000

			Fair Value Measurements Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	December 31, 2015
Financial assets:
Cash and cash equivalents	$	10,910,000	$	10,910,000	$	—	$	—
Securities available-for-sale	93,354,000		3,573,000		89,781,000		—
Securities held to maturity	60,738,000		—		61,281,000		—
FHLB-NY stock	2,608,000		N/A		N/A		N/A
Mortgage loans held for sale	1,522,000		—		—		1,522,000
Loans, net	517,556,000		—		—		527,479,000
Accrued interest receivable	1,967,000		1,000		535,000		1,432,000
Financial liabilities:
Deposits	604,753,000		459,327,000		145,560,000		—
FHLB-NY advances	40,000,000		—		40,222,000		—
Subordinated debentures and subordinated notes	23,186,000		—		—		23,206,000
Accrued interest payable	791,000		1,000		387,000		403,000
Interest rate swap	62,000		—		62,000		—

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of Earnings Per Common Share

The following reconciles the income available to common shareholders (numerator) and the weighted average common stock outstanding (denominator) for both basic and diluted earnings per share.

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Net income	$	1,362,000	$	1,222,000	$	2,353,000	$	2,139,000
Dividends on preferred stock	—		171,000		—		342,000
Net income available to common stockholders	$	1,362,000	$	1,051,000	$	2,353,000	$	1,797,000
Weighted average common shares outstanding - basic	6,111,729		6,086,474		6,102,040		6,066,191
Effect of dilutive securities - stock options	N/A		N/A		N/A		N/A
Weighted average common shares outstanding - diluted	6,111,729		6,086,474		6,102,040		6,066,191
Basic earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30
Diluted earnings per common share	$	0.22	$	0.17	$	0.39	$	0.30

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Subordinated Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of subordinated debt

			Carrying Amount
Issue	Maturity	Rate	June 30, 2016		December 31, 2015
9/17/2003	9/17/2033	Fixed / Floating Rate Junior Subordinated Debentures	$	7,217,000	$	7,217,000
8/28/2015	8/25/2025	Fixed Rate Subordinated Notes	16,002,000		15,969,000
			$	23,219,000	$	23,186,000

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

Schedule of components of comprehensive income

The components of comprehensive income, both gross and net of tax, are presented for the periods below:

	Three Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	2,138,000		$	(776,000	)	$	1,362,000		$	1,895,000		$	(673,000	)	$	1,222,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	395,000			(151,000		)	244,000			(525,000		)	200,000			(325,000		)
Reclassification adjustment for gains in net income	(32,000		)	12,000			(20,000		)	—			—			—
Accretion of loss on securities reclassified to held to maturity	41,000			(16,000		)	25,000			56,000			(22,000		)	34,000
Change in fair value of interest rate swap	—			—			—			62,000			(25,000		)	37,000
Total other comprehensive income (loss)	404,000			(155,000		)	249,000			(407,000		)	153,000			(254,000		)
Total comprehensive income	$	2,542,000		$	(931,000	)	$	1,611,000		$	1,488,000		$	(520,000	)	$	968,000

	Six Months Ended June 30,
	2016									2015
	Gross			Tax Effect			Net			Gross			Tax Effect			Net
Net income	$	3,681,000		$	(1,328,000	)	$	2,353,000		$	3,265,000		$	(1,126,000	)	$	2,139,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available-for-sale	1,482,000			(566,000		)	916,000			226,000			(88,000		)	138,000
Reclassification adjustment for gains in net income	(56,000		)	21,000			(35,000		)	(152,000		)	61,000			(91,000		)
Accretion of loss on securities reclassified to held to maturity	113,000			(43,000		)	70,000			195,000			(74,000		)	121,000
Change in fair value of interest rate swap	62,000			(25,000		)	37,000			119,000			(48,000		)	71,000
Total other comprehensive income (loss)	1,601,000			(613,000		)	988,000			388,000			(149,000		)	239,000
Total comprehensive income	$	5,282,000		$	(1,941,000	)	$	3,341,000		$	3,653,000		$	(1,275,000	)	$	2,378,000

Schedule of Components of Accumulated Other Comprehensive Income

The following tables present the after-tax changes in the balances of each component of accumulated other comprehensive income for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2016	$	47,000		$	(153,000	)	$	—		$	(106,000	)
Other comprehensive income before reclassifications	244,000			25,000			—			269,000
Amounts reclassified from other comprehensive income	(20,000		)	—			—			(20,000		)
Other comprehensive income	224,000			25,000			—			249,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000
	Six Months Ended June 30, 2016
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2015	$	(610,000	)	$	(198,000	)	$	(37,000	)	$	(845,000	)
Other comprehensive income before reclassifications	916,000			70,000			37,000			1,023,000
Amounts reclassified from other comprehensive income	(35,000		)	—			—			(35,000		)
Other comprehensive income, net	881,000			70,000			37,000			988,000
Balance at June 30, 2016	$	271,000		$	(128,000	)	$	—		$	143,000

	Three Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at March 31, 2015	$	(20,000	)	$	(290,000	)	$	(154,000	)	$	(464,000	)
Other comprehensive income (loss) before reclassifications	(325,000		)	34,000			37,000			(254,000		)
Amounts reclassified from other comprehensive income	—			—			—			—
Other comprehensive income (loss), net	(325,000		)	34,000			37,000			(254,000		)
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)
	Six Months Ended June 30, 2015
	Components of Accumulated Other Comprehensive Income (Loss)									Total
	Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities			Loss on securities reclassified from Available-for-Sale to Held to Maturity			Unrealized Gains and (Losses) on Derivatives			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2014	$	(392,000	)	$	(377,000	)	$	(188,000	)	$	(957,000	)
Other comprehensive income before reclassifications	138,000			121,000			71,000			330,000
Amounts reclassified from other comprehensive income	(91,000		)	—			—			(91,000		)
Other comprehensive income, net	47,000			121,000			71,000			239,000
Balance at June 30, 2015	$	(345,000	)	$	(256,000	)	$	(117,000	)	$	(718,000	)

Schedule of Amount Reclassified from each Component of Accumulated Other Comprehensive Income

The following tables present amounts reclassified from each component of accumulated other comprehensive income on a gross and net of tax basis for the three and six months ended June 30, 2016 and 2015.

	Three Months Ended					Income
Components of Accumulated Other	June 30,					Statement
Comprehensive Income	2016			2015		Line Item
Unrealized gains on AFS securities before tax	$	32,000		$	—	Gains on securities transactions, net
Tax effect	(12,000		)	—
Total net of tax	20,000			—
Total reclassifications, net of tax	$	20,000		$	—

	Six Months Ended						Income
Components of Accumulated Other	June 30,						Statement
Comprehensive Income	2016			2015			Line Item
Unrealized gains on AFS securities before tax	$	56,000		$	152,000		Gains on securities transactions, net
Tax effect	(21,000		)	(61,000		)
Total net of tax	35,000			91,000
Total reclassifications, net of tax	$	35,000		$	91,000

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Securities - Available-for-Sale and Held to Maturity (Schedule of Fair Value of Securities Available For Sale and Related Gross Unrealized Gains and Losses) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Available for sale securities
Amortized Cost	$ 98,103,000	$ 94,350,000
Gross Unrealized Gains	870,000	296,000
Gross Unrealized Losses	440,000	1,292,000
Fair Value	98,533,000	93,354,000
U.S. government-sponsored agencies [Member]
Available for sale securities
Amortized Cost	28,426,000	31,266,000
Gross Unrealized Gains	164,000	81,000
Gross Unrealized Losses	20,000	393,000
Fair Value	28,570,000	30,954,000
Obligations of state and political and subdivisions [Member]
Available for sale securities
Amortized Cost	1,406,000	1,409,000
Gross Unrealized Gains	26,000	2,000
Gross Unrealized Losses	0	1,000
Fair Value	1,432,000	1,410,000
Mortgage-backed securities - residential [Member]
Available for sale securities
Amortized Cost	50,648,000	45,520,000
Gross Unrealized Gains	670,000	213,000
Gross Unrealized Losses	32,000	496,000
Fair Value	51,286,000	45,237,000
Asset-backed Securities [Member]
Available for sale securities
Amortized Cost	9,291,000	9,877,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	205,000	176,000
Fair Value	9,086,000	9,701,000
Corporate Debt Securities [Member]
Available for sale securities
Amortized Cost	4,500,000	2,500,000
Gross Unrealized Gains	10,000	0
Gross Unrealized Losses	85,000	81,000
Fair Value	4,425,000	2,419,000
Total debt securities [Member]
Available for sale securities
Amortized Cost	94,271,000	90,572,000
Gross Unrealized Gains	870,000	296,000
Gross Unrealized Losses	342,000	1,147,000
Fair Value	94,799,000	89,721,000
Other equity investments [Member]
Available for sale securities
Amortized Cost	3,832,000	3,778,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	98,000	145,000
Fair Value	$ 3,734,000	$ 3,633,000

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Securities - Available-for-Sale and Held to Maturity (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) item	Jun. 30, 2015 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Cash proceeds realized from sales and calls of securities available for sale	$ 9,000,000	$ 0	$ 11,050,000	$ 27,845,000
Gross realized gain from sales and calls of securities available for sale	7,000	0	7,000	213,000
Gross realized losses from sales and calls of securities available for sale	0	0	0	61,000
Proceeds from calls on securities held to maturity	10,230,000	2,000,000	16,570,000	5,100,000
Gross realized gain from calls on securities held to maturity	25,000	0	49,000	0
Gross realized losses calls on securities held to maturity	$ 0	$ 0	$ 0	$ 0
U.S. government-sponsored agency securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | item	3		3
Mortgage-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | item	5		5
Asset-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | item	1		1
Corporate debt securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | item	2		2
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year | item	1		1

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Securities - Available-for-Sale and Held to Maturity (Schedule of Held to Maturity Securities and Related Unrecognized Gains and Losses) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Held to maturity securities
Amortized Cost	$ 65,666,000	$ 60,738,000
Gross Unrealized Gains	1,116,000	695,000
Gross Unrealized Losses	10,000	152,000
Fair Value	66,772,000	61,281,000
U.S. Treasury [Member]
Held to maturity securities
Amortized Cost	999,000	999,000
Gross Unrealized Gains	20,000	0
Gross Unrealized Losses	0	11,000
Fair Value	1,019,000	988,000
U.S. government-sponsored agencies [Member]
Held to maturity securities
Amortized Cost	24,129,000	15,109,000
Gross Unrealized Gains	131,000	132,000
Gross Unrealized Losses	10,000	24,000
Fair Value	24,250,000	15,217,000
Obligations of state and political and subdivisions [Member]
Held to maturity securities
Amortized Cost	10,223,000	11,219,000
Gross Unrealized Gains	167,000	268,000
Gross Unrealized Losses	0	0
Fair Value	10,390,000	11,487,000
Mortgage-backed securities - residential [Member]
Held to maturity securities
Amortized Cost	30,315,000	33,411,000
Gross Unrealized Gains	798,000	295,000
Gross Unrealized Losses	0	117,000
Fair Value	$ 31,113,000	$ 33,589,000

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Securities - Available-for-Sale and Held to Maturity (Schedule of Amortized Cost and Fair Value of the Investment Securities Portfolio by Contractual Maturity) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Amortized Cost
Within one year	$ 500,000
After one year, but within five years	9,778,000
After five years, but within ten years	17,923,000
After ten years	6,131,000
Total	94,271,000
Fair Value
Within one year	502,000
After one year, but within five years	9,798,000
After five years, but within ten years	18,009,000
After ten years	6,118,000
Total	94,799,000
Amortized Cost
Within one year	3,137,000
After one year, but within five years	8,586,000
After five years, but within ten years	21,676,000
After ten years	1,952,000
Total	65,666,000	$ 60,738,000
Fair Value
Within one year	3,155,000
After one year, but within five years	8,787,000
After five years, but within ten years	21,716,000
After ten years	2,001,000
Total	66,772,000	61,281,000
Mortgage-backed securities - residential [Member]
Amortized Cost
Total	50,648,000
Fair Value
Total	51,286,000
Amortized Cost
Total	30,315,000
Fair Value
Total	31,113,000	$ 33,589,000
Asset-backed Securities [Member]
Amortized Cost
Total	9,291,000
Fair Value
Total	$ 9,086,000

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Securities - Available-for-Sale and Held to Maturity (Schedule of Continuous Unrealized Loss Position for Investment Securities Available for Sale) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	$ 15,284,000	$ 34,770,000
Less than 12 Months, Unrealized Losses	(89,000)	(309,000)
12 Months or Longer, Fair Value	17,985,000	31,476,000
12 Months or Longer, Unrealized Losses	(351,000)	(983,000)
Fair Value	33,269,000	66,246,000
Unrealized Losses	(440,000)	(1,292,000)
Held to maturity securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	1,891,000	21,126,000
Less than 12 Months, Unrealized Losses	(10,000)	(125,000)
12 Months or Longer, Fair Value	0	1,066,000
12 Months or Longer, Unrealized Losses	0	(27,000)
Fair Value	1,891,000	22,192,000
Unrealized Losses	(10,000)	(152,000)
U.S. government-sponsored agencies [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	1,994,000	18,396,000
Less than 12 Months, Unrealized Losses	(8,000)	(183,000)
12 Months or Longer, Fair Value	6,118,000	7,296,000
12 Months or Longer, Unrealized Losses	(12,000)	(210,000)
Fair Value	8,112,000	25,692,000
Unrealized Losses	(20,000)	(393,000)
Held to maturity securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	1,891,000	4,955,000
Less than 12 Months, Unrealized Losses	(10,000)	(24,000)
12 Months or Longer, Fair Value	0	0
12 Months or Longer, Unrealized Losses	0	0
Fair Value	1,891,000	4,955,000
Unrealized Losses	(10,000)	(24,000)
Obligations of state and political and subdivisions [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	0	984,000
Less than 12 Months, Unrealized Losses	0	(1,000)
12 Months or Longer, Fair Value	0	0
12 Months or Longer, Unrealized Losses	0	0
Fair Value	0	984,000
Unrealized Losses	0	(1,000)
Mortgage-backed securities - residential [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	6,094,000	8,599,000
Less than 12 Months, Unrealized Losses	(11,000)	(69,000)
12 Months or Longer, Fair Value	3,888,000	16,278,000
12 Months or Longer, Unrealized Losses	(21,000)	(427,000)
Fair Value	9,982,000	24,877,000
Unrealized Losses	(32,000)	(496,000)
Held to maturity securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	0	15,183,000
Less than 12 Months, Unrealized Losses	0	(90,000)
12 Months or Longer, Fair Value	0	1,066,000
12 Months or Longer, Unrealized Losses	0	(27,000)
Fair Value	0	16,249,000
Unrealized Losses	0	(117,000)
Asset-backed Securities [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	6,197,000	6,791,000
Less than 12 Months, Unrealized Losses	(69,000)	(56,000)
12 Months or Longer, Fair Value	2,889,000	2,910,000
12 Months or Longer, Unrealized Losses	(136,000)	(120,000)
Fair Value	9,086,000	9,701,000
Unrealized Losses	(205,000)	(176,000)
Corporate Debt Securities [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	999,000	0
Less than 12 Months, Unrealized Losses	(1,000)	0
12 Months or Longer, Fair Value	1,416,000	1,419,000
12 Months or Longer, Unrealized Losses	(84,000)	(81,000)
Fair Value	2,415,000	1,419,000
Unrealized Losses	(85,000)	(81,000)
Other equity investments [Member]
Available for sale securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	0	0
Less than 12 Months, Unrealized Losses	0	0
12 Months or Longer, Fair Value	3,674,000	3,573,000
12 Months or Longer, Unrealized Losses	(98,000)	(145,000)
Fair Value	3,674,000	3,573,000
Unrealized Losses	(98,000)	(145,000)
U.S. Treasury [Member]
Held to maturity securities, Continuous unrealized loss position
Less than 12 Months, Fair Value	0	988,000
Less than 12 Months, Unrealized Losses	0	(11,000)
12 Months or Longer, Fair Value	0	0
12 Months or Longer, Unrealized Losses	0	0
Fair Value	0	988,000
Unrealized Losses	$ 0	$ (11,000)

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Loans and Allowance for Loan Losses (Loan Portfolio Schedule) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Total gross loans	$ 537,638,000	$ 526,477,000
Less: Deferred loan costs (fees), net	25,000	98,000
Allowance for loan losses	8,388,000	8,823,000
Allowance net of deferred loan fees	8,413,000	8,921,000
Loans, net	529,225,000	517,556,000
Commercial loan secured by real estate [Member]
Total gross loans	35,632,000	37,993,000
Commercial loan - Other [Member]
Total gross loans	36,388,000	26,867,000
Commercial real estate [Member]
Total gross loans	337,660,000	334,489,000
Allowance for loan losses	4,224,000	4,660,000
Commercial Construction [Member]
Total gross loans	7,097,000	4,609,000
Allowance for loan losses	184,000	114,000
Residential real estate [Member]
Total gross loans	79,661,000	82,955,000
Allowance for loan losses	106,000	109,000
Consumer loan secured by real estate [Member]
Total gross loans	29,876,000	29,224,000
Consumer loan - Other [Member]
Total gross loans	522,000	580,000
Government Guaranteed Loans - guaranteed portion [Member]
Total gross loans	10,734,000	9,626,000
Allowance for loan losses	0	0
Other Loans [Member]
Total gross loans	68,000	134,000
Allowance for loan losses	$ 0	$ 3,000

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Loans and Allowance for Loan Losses (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) item loan	Jun. 30, 2015 item	Jun. 30, 2016 USD ($) item loan	Jun. 30, 2015 item	Dec. 31, 2015 USD ($) loan
Receivables [Abstract]
Loans participated by the Corporation to other organizations, recorded off-balance sheet	$ 8,749,000		$ 8,749,000		$ 8,527,000
Number of loans past due over 90 days still accruing | loan	0		0		0
Total value of modified loans in troubled debt restructurings	$ 8,500,000		$ 8,500,000		$ 10,200,000
Trouble debt restructuring classified as performing	8,200,000		8,200,000		9,700,000
Specific reserve related to TDR	692,000		692,000		708,000
Committed funds for construction loan, classified as troubled debt restructuring	$ 138,000		$ 138,000		$ 138,000
Number of loans classified as a trouble debt restructuring | item	0	0	0	0

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Loans and Allowance for Loan Losses (Schedule of Allowance for Loan Losses) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Activity in the allowance for loan losses
Balance, beginning of period	$ 8,540,000	$ 9,600,000	$ 8,823,000	$ 9,602,000
Provision charged to operations	(450,000)	(600,000)	(800,000)	(700,000)
Loans charged off	(74,000)	(2,000)	(76,000)	(273,000)
Recoveries of loans charged off	372,000	301,000	441,000	670,000
Balance, end of period	8,388,000	9,299,000	8,388,000	9,299,000
Commercial [Member]
Activity in the allowance for loan losses
Balance, beginning of period	3,720,000	3,703,000	3,698,000	3,704,000
Provision charged to operations	(386,000)	(503,000)	(402,000)	(341,000)
Loans charged off	(1,000)	(1,000)	(3,000)	(272,000)
Recoveries of loans charged off	340,000	118,000	380,000	226,000
Balance, end of period	3,673,000	3,317,000	3,673,000	3,317,000
Commercial loan secured by real estate [Member]
Activity in the allowance for loan losses
Balance, beginning of period	4,413,000	5,116,000	4,660,000	5,017,000
Provision charged to operations	(156,000)	99,000	(431,000)	171,000
Loans charged off	(64,000)	0	(64,000)	0
Recoveries of loans charged off	31,000	74,000	59,000	101,000
Balance, end of period	4,224,000	5,289,000	4,224,000	5,289,000
Commercial Construction [Member]
Activity in the allowance for loan losses
Balance, beginning of period	112,000	106,000	114,000	150,000
Provision charged to operations	72,000	(200,000)	70,000	(477,000)
Loans charged off	0	0	0	0
Recoveries of loans charged off	0	108,000	0	341,000
Balance, end of period	184,000	14,000	184,000	14,000
Residential real estate [Member]
Activity in the allowance for loan losses
Balance, beginning of period	106,000	146,000	109,000	142,000
Provision charged to operations	0	(6,000)	(3,000)	(2,000)
Loans charged off	0	0	0	0
Recoveries of loans charged off	0	0	0	0
Balance, end of period	106,000	140,000	106,000	140,000
Consumer [Member]
Activity in the allowance for loan losses
Balance, beginning of period	119,000	151,000	118,000	189,000
Provision charged to operations	19,000	(13,000)	19,000	(52,000)
Loans charged off	(7,000)	0	(7,000)	0
Recoveries of loans charged off	1,000	1,000	2,000	2,000
Balance, end of period	132,000	139,000	132,000	139,000
Other loans [Member]
Activity in the allowance for loan losses
Balance, beginning of period	1,000	0	3,000	2,000
Provision charged to operations	1,000	4,000	(1,000)	2,000
Loans charged off	(2,000)	(1,000)	(2,000)	(1,000)
Recoveries of loans charged off	0	0	0	0
Balance, end of period	0	3,000	0	3,000
Unallocated Loans [Member]
Activity in the allowance for loan losses
Balance, beginning of period	69,000	378,000	121,000	398,000
Provision charged to operations	0	19,000	(52,000)	(1,000)
Loans charged off	0	0	0	0
Recoveries of loans charged off	0	0	0	0
Balance, end of period	$ 69,000	$ 397,000	$ 69,000	$ 397,000

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Loans and Allowance for Loan Losses (Schedule of Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	$ 692,000	$ 719,000
Collectively evaluated for impairment	7,696,000	8,104,000
Total ending allowance balance	8,388,000	8,823,000
Loans
Loans individually evaluated for impairment	9,180,000	11,545,000
Loans collectively evaluated for impairment	528,458,000	514,932,000
Total	537,638,000	526,477,000
Commercial [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	79,000	81,000
Collectively evaluated for impairment	3,594,000	3,617,000
Total ending allowance balance	3,673,000	3,698,000
Loans
Loans individually evaluated for impairment	2,331,000	3,348,000
Loans collectively evaluated for impairment	69,689,000	61,512,000
Total	72,020,000	64,860,000
Commercial real estate [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	613,000	638,000
Collectively evaluated for impairment	3,611,000	4,022,000
Total ending allowance balance	4,224,000	4,660,000
Loans
Loans individually evaluated for impairment	6,768,000	8,113,000
Loans collectively evaluated for impairment	330,892,000	326,376,000
Total	337,660,000	334,489,000
Commercial Construction [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	184,000	114,000
Total ending allowance balance	184,000	114,000
Loans
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	7,097,000	4,609,000
Total	7,097,000	4,609,000
Residential real estate [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	106,000	109,000
Total ending allowance balance	106,000	109,000
Loans
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	79,661,000	82,955,000
Total	79,661,000	82,955,000
Consumer [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	132,000	118,000
Total ending allowance balance	132,000	118,000
Loans
Loans individually evaluated for impairment	81,000	84,000
Loans collectively evaluated for impairment	30,317,000	29,720,000
Total	30,398,000	29,804,000
Government Guaranteed [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	0	0
Total ending allowance balance	0	0
Loans
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	10,734,000	9,626,000
Total	10,734,000	9,626,000
Other Loans [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	0	3,000
Total ending allowance balance	0	3,000
Loans
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	68,000	134,000
Total	68,000	134,000
Unallocated Loans [Member]
Allowance for loan losses, Ending allowance balance attributable to loans
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	69,000	121,000
Total ending allowance balance	69,000	121,000
Loans
Loans individually evaluated for impairment	0	0
Loans collectively evaluated for impairment	0	0
Total	$ 0	$ 0

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Loans and Allowance for Loan Losses (Schedule of Recorded Investment in Nonaccrual Loans) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Total nonaccrual loans	$ 949,000	$ 1,882,000
Commercial loan secured by real estate [Member]
Total nonaccrual loans	616,000	1,300,000
Commercial loan - Other [Member]
Total nonaccrual loans	0	14,000
Commercial Real Estate Portfolio Segment [Member]
Total nonaccrual loans	252,000	484,000
Consumer loan secured by real estate [Member]
Total nonaccrual loans	$ 81,000	$ 84,000

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Loans and Allowance for Loan Losses (Schedule of Recorded Investments in Impaired Loans) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
With an allowance recorded:
Allowance for Loan Losses Allocated	$ 692,000	$ 719,000
Total impaired loans
Unpaid Principal Balance	9,662,000	12,502,000
Recorded Investment	9,180,000	11,545,000
Average Recorded Investment	10,848,000	13,551,000
Interest Income Recognized	239,000	535,000
Commercial loan secured by real estate [Member]
With no related allowance recorded:
Unpaid Principal Balance	2,073,000	3,244,000
Recorded Investment	1,853,000	2,729,000
Average Recorded Investment	2,310,000	3,683,000
Interest Income Recognized	47,000	156,000
With an allowance recorded:
Unpaid Principal Balance	190,000	390,000
Recorded Investment	190,000	308,000
Allowance for Loan Losses Allocated	68,000	80,000
Average Recorded Investment	230,000	405,000
Interest Income Recognized	4,000	14,000
Commercial loan - Other [Member]
With no related allowance recorded:
Unpaid Principal Balance	0	137,000
Recorded Investment	0	137,000
Average Recorded Investment	46,000	61,000
Interest Income Recognized	0	2,000
With an allowance recorded:
Unpaid Principal Balance	288,000	174,000
Recorded Investment	288,000	174,000
Allowance for Loan Losses Allocated	11,000	1,000
Average Recorded Investment	256,000	463,000
Interest Income Recognized	10,000	31,000
Commercial real estate [Member]
With no related allowance recorded:
Unpaid Principal Balance	3,824,000	3,245,000
Recorded Investment	3,563,000	2,885,000
Average Recorded Investment	3,197,000	2,890,000
Interest Income Recognized	112,000	121,000
With an allowance recorded:
Unpaid Principal Balance	3,205,000	5,228,000
Recorded Investment	3,205,000	5,228,000
Allowance for Loan Losses Allocated	613,000	638,000
Average Recorded Investment	4,726,000	5,534,000
Interest Income Recognized	66,000	211,000
Commercial Construction [Member]
With no related allowance recorded:
Unpaid Principal Balance		0
Recorded Investment		0
Average Recorded Investment		215,000
Interest Income Recognized		0
Residential real estate [Member]
With no related allowance recorded:
Unpaid Principal Balance		0
Recorded Investment		0
Average Recorded Investment		74,000
Interest Income Recognized		0
Consumer loan secured by real estate [Member]
With no related allowance recorded:
Unpaid Principal Balance	82,000	84,000
Recorded Investment	81,000	84,000
Average Recorded Investment	83,000	226,000
Interest Income Recognized	$ 0	$ 0

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Loans and Allowance for Loan Losses (Schedule of Aging of the Recorded Investment in Past Due Loans by Class of Loans) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Aging analysis of past due loans
Total Past Due	$ 1,071,000	$ 1,435,000
Loans Not Past Due	536,567,000	525,042,000
Total	537,638,000	526,477,000
Commercial loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	616,000	1,011,000
Loans Not Past Due	35,016,000	36,982,000
Total	35,632,000	37,993,000
Commercial loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	36,388,000	26,867,000
Total	36,388,000	26,867,000
Commercial real estate [Member]
Aging analysis of past due loans
Total Past Due	252,000	271,000
Loans Not Past Due	337,408,000	334,218,000
Total	337,660,000	334,489,000
Commercial Construction [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	7,097,000	4,609,000
Total	7,097,000	4,609,000
Residential real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	79,661,000	82,955,000
Total	79,661,000	82,955,000
Consumer loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	203,000	153,000
Loans Not Past Due	29,673,000	29,071,000
Total	29,876,000	29,224,000
Consumer loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	522,000	580,000
Total	522,000	580,000
Government Guaranteed [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	10,734,000	9,626,000
Total	10,734,000	9,626,000
Other Loans [Member]
Aging analysis of past due loans
Total Past Due	0	0
Loans Not Past Due	68,000	134,000
Total	68,000	134,000
30 to 59 Days [Member]
Aging analysis of past due loans
Total Past Due	162,000	383,000
30 to 59 Days [Member] | Commercial loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Commercial loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Commercial real estate [Member]
Aging analysis of past due loans
Total Past Due	0	271,000
30 to 59 Days [Member] | Commercial Construction [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Residential real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Consumer loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	162,000	112,000
30 to 59 Days [Member] | Consumer loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Government Guaranteed [Member]
Aging analysis of past due loans
Total Past Due	0	0
30 to 59 Days [Member] | Other Loans [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Commercial loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Commercial loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Commercial real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Commercial Construction [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Residential real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Consumer loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Consumer loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Government Guaranteed [Member]
Aging analysis of past due loans
Total Past Due	0	0
60 to 89 Days [Member] | Other Loans [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member]
Aging analysis of past due loans
Total Past Due	909,000	1,052,000
Greater Than 90 Days [Member] | Commercial loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	616,000	1,011,000
Greater Than 90 Days [Member] | Commercial loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member] | Commercial real estate [Member]
Aging analysis of past due loans
Total Past Due	252,000	0
Greater Than 90 Days [Member] | Commercial Construction [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member] | Residential real estate [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member] | Consumer loan secured by real estate [Member]
Aging analysis of past due loans
Total Past Due	41,000	41,000
Greater Than 90 Days [Member] | Consumer loan - Other [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member] | Government Guaranteed [Member]
Aging analysis of past due loans
Total Past Due	0	0
Greater Than 90 Days [Member] | Other Loans [Member]
Aging analysis of past due loans
Total Past Due	$ 0	$ 0

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Loans and Allowance for Loan Losses (Schedule of Loans by Credit Quality Indicators) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Total Loans	$ 537,638,000	$ 526,477,000
Commercial loan secured by real estate [Member]
Total Loans	35,632,000	37,993,000
Commercial loan - Other [Member]
Total Loans	36,388,000	26,867,000
Commercial real estate [Member]
Total Loans	337,660,000	334,489,000
Commercial Construction [Member]
Total Loans	7,097,000	4,609,000
Receivables Acquired with Deteriorated Credit Quality [Member]
Total Loans	416,777,000	403,958,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Pass [Member]
Total Loans	406,028,000	392,334,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Special Mention [Member]
Total Loans	6,318,000	6,210,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Substandard [Member]
Total Loans	4,431,000	5,414,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Doubtful [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Loss [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member]
Total Loans	35,632,000	37,993,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member] | Pass [Member]
Total Loans	33,663,000	35,263,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member] | Special Mention [Member]
Total Loans	1,353,000	1,431,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member] | Substandard [Member]
Total Loans	616,000	1,299,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member] | Doubtful [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan secured by real estate [Member] | Loss [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member]
Total Loans	36,388,000	26,867,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member] | Pass [Member]
Total Loans	35,309,000	25,725,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member] | Special Mention [Member]
Total Loans	720,000	745,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member] | Substandard [Member]
Total Loans	359,000	397,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member] | Doubtful [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial loan - Other [Member] | Loss [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member]
Total Loans	337,660,000	334,489,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member] | Pass [Member]
Total Loans	329,959,000	326,737,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member] | Special Mention [Member]
Total Loans	4,245,000	4,034,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member] | Substandard [Member]
Total Loans	3,456,000	3,718,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member] | Doubtful [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial real estate [Member] | Loss [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member]
Total Loans	7,097,000	4,609,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member] | Pass [Member]
Total Loans	7,097,000	4,609,000
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member] | Special Mention [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member] | Substandard [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member] | Doubtful [Member]
Total Loans	0	0
Receivables Acquired with Deteriorated Credit Quality [Member] | Commercial Construction [Member] | Loss [Member]
Total Loans	$ 0	$ 0

XML

Loans and Allowance for Loan Losses (Schedule of Recorded Investment in Residential Real Estate and Consumer Loans Based on Payment Activity) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Total Loans	$ 537,638,000	$ 526,477,000
Residential real estate [Member]
Total Loans	79,661,000	82,955,000
Residential real estate [Member] | Current [Member]
Total Loans	79,448,000	82,415,000
Residential real estate [Member] | Past Due and Nonaccrual [Member]
Total Loans	213,000	540,000
Consumer loan secured by real estate [Member]
Total Loans	29,876,000	29,224,000
Consumer loan secured by real estate [Member] | Current [Member]
Total Loans	28,879,000	27,730,000
Consumer loan secured by real estate [Member] | Past Due and Nonaccrual [Member]
Total Loans	997,000	1,494,000
Consumer loan - Other [Member]
Total Loans	522,000	580,000
Consumer loan - Other [Member] | Current [Member]
Total Loans	519,000	578,000
Consumer loan - Other [Member] | Past Due and Nonaccrual [Member]
Total Loans	3,000	2,000
Real estate and consumer loans [Member]
Total Loans	110,059,000	112,759,000
Real estate and consumer loans [Member] | Current [Member]
Total Loans	108,846,000	110,723,000
Real estate and consumer loans [Member] | Past Due and Nonaccrual [Member]
Total Loans	$ 1,213,000	$ 2,036,000

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Fair Value of Financial Instruments (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Discount to real estate appraised values (as a percent)			12.00%
Allowance for loan losses	$ 8,388,000		$ 8,388,000		$ 8,823,000
Provision for loan losses	(450,000)	$ (600,000)	(800,000)	$ (700,000)
Fair Value, Measurements, Nonrecurring [Member] | Impaired Loans [Member]
Recorded Investment With an allowance recorded	252,000		252,000		461,000
Allowance for loan losses					10,000
Provision for loan losses					16,000
Fair Value, Measurements, Nonrecurring [Member] | Other Real Estate Owned [Member]
Recorded Investment With an allowance recorded	451,000		451,000		880,000
Provision for loan losses			20,000	$ 60,000
Allowance for losses on other real estate owned	$ 20,000		$ 20,000		$ 0

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Fair Value of Financial Instruments (Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets, Fair Value
Total available-for-sale securities	$ 98,533,000	$ 93,354,000
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets, Fair Value
Total available-for-sale securities	3,674,000	3,573,000
Liabilities, Fair Value
Interest rate swap		0
Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value
Total available-for-sale securities	94,859,000	89,781,000
Liabilities, Fair Value
Interest rate swap		62,000
Significant Unobservable Inputs (Level 3) [Member]
Assets, Fair Value
Total available-for-sale securities	0	0
Liabilities, Fair Value
Interest rate swap		0
Carrying Value [Member]
Assets, Fair Value
Total available-for-sale securities	98,533,000	93,354,000
Liabilities, Fair Value
Interest rate swap		62,000
Fair Value Measured on a Recurring Basis [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets, Fair Value
U.S. government - sponsored agencies	0	0
Obligations of state and political subdivisions	0	0
Mortgage-backed securities - residential	0	0
Asset-backed securities	0	0
Corporate debt	0	0
Other equity investments	3,674,000	3,573,000
Total available-for-sale securities	3,674,000	3,573,000
Liabilities, Fair Value
Interest rate swap		0
Fair Value Measured on a Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value
U.S. government - sponsored agencies	28,570,000	30,954,000
Obligations of state and political subdivisions	1,432,000	1,410,000
Mortgage-backed securities - residential	51,286,000	45,237,000
Asset-backed securities	9,086,000	9,701,000
Corporate debt	4,425,000	2,419,000
Other equity investments	60,000	60,000
Total available-for-sale securities	94,859,000	89,781,000
Liabilities, Fair Value
Interest rate swap		62,000
Fair Value Measured on a Recurring Basis [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets, Fair Value
U.S. government - sponsored agencies	0	0
Obligations of state and political subdivisions	0	0
Mortgage-backed securities - residential	0	0
Asset-backed securities	0	0
Corporate debt	0	0
Other equity investments	0	0
Total available-for-sale securities	0	0
Liabilities, Fair Value
Interest rate swap		0
Fair Value Measured on a Recurring Basis [Member] | Carrying Value [Member]
Assets, Fair Value
U.S. government - sponsored agencies	28,570,000	30,954,000
Obligations of state and political subdivisions	1,432,000	1,410,000
Mortgage-backed securities - residential	51,286,000	45,237,000
Asset-backed securities	9,086,000	9,701,000
Corporate debt	4,425,000	2,419,000
Other equity investments	3,734,000	3,633,000
Total available-for-sale securities	$ 98,533,000	93,354,000
Liabilities, Fair Value
Interest rate swap		$ 62,000

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Fair Value of Financial Instruments (Schedule of Assets and Liabilities Measured at Fair Value on Non-recurring Basis) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets, Fair Value
Impaired loans, Fair Value	$ 0	$ 0
Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value
Impaired loans, Fair Value	0	0
Significant Unobservable Inputs (Level 3) [Member]
Assets, Fair Value
Impaired loans, Fair Value	539,764,000	527,479,000
Carrying Value [Member]
Assets, Fair Value
Impaired loans, Fair Value	529,225,000	517,556,000
Fair Value, Measurements, Nonrecurring [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets, Fair Value
Commercial loan secured by real estate	0	0
Consumer loan secured by real estate		0
Other Real Estate Owned	0	0
Impaired loans, Fair Value	0	0
Fair Value, Measurements, Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets, Fair Value
Commercial loan secured by real estate	0	0
Consumer loan secured by real estate		0
Other Real Estate Owned	0	0
Impaired loans, Fair Value	0	0
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets, Fair Value
Commercial loan secured by real estate	252,000	367,000
Consumer loan secured by real estate		84,000
Other Real Estate Owned	431,000	880,000
Impaired loans, Fair Value	683,000	1,331,000
Fair Value, Measurements, Nonrecurring [Member] | Carrying Value [Member]
Assets, Fair Value
Commercial loan secured by real estate	252,000	367,000
Consumer loan secured by real estate		84,000
Other Real Estate Owned	431,000	880,000
Impaired loans, Fair Value	$ 683,000	$ 1,331,000

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Fair Value of Financial Instruments (Schedule of Fair Value Assumptions for Level 3 Asset Measurements) (Details) - Significant Unobservable Inputs (Level 3) [Member] - Fair Value, Measurements, Nonrecurring [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Range of Unobservable inputs, Estimated selling costs (as a percent)	7.00%
Impaired Loans [Member]
Fair value of financial assets	$ 252,000	$ 451,000
Range of Unobservable inputs, Estimated selling costs (as a percent)	7.00%	7.00%
Impaired Loans [Member] | Minimum [Member]
Range of Unobservable inputs, Adjustments for differences between comparable sales and income data available (as a percent)	0.00%	5.00%
Impaired Loans [Member] | Maximum [Member]
Range of Unobservable inputs, Adjustments for differences between comparable sales and income data available (as a percent)	5.00%	9.00%
Other Real Estate Owned [Member]
Fair value of financial assets	$ 431,000	$ 990,000
Range of Unobservable inputs, Adjustments for differences between comparable sales and income data available (as a percent)		0.00%
Range of Unobservable inputs, Estimated selling costs (as a percent)		7.00%
Other Real Estate Owned [Member] | Minimum [Member]
Range of Unobservable inputs, Adjustments for differences between comparable sales and income data available (as a percent)	0.00%
Other Real Estate Owned [Member] | Maximum [Member]
Range of Unobservable inputs, Estimated selling costs (as a percent)	7.00%

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Fair Value of Financial Instruments (Schedule of Fair Value Estimates for the Financial Instruments) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financial assets:
Securities available-for-sale	$ 98,533,000	$ 93,354,000
Securities held to maturity	65,666,000	60,738,000
FHLB-NY stock	2,650,000	2,608,000
Financial liabilities:
Subordinated debentures and subordinated notes	23,219,000	23,186,000
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Financial assets:
Cash and cash equivalents	13,901,000	10,910,000
Securities available-for-sale	3,674,000	3,573,000
Securities held to maturity	0	0
FHLB-NY stock	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Accrued interest receivable	1,000	1,000
Financial liabilities:
Deposits	483,034,000	459,327,000
FHLB-NY advances	0	0
Subordinated debentures and subordinated notes	0	0
Accrued interest payable	1,000	1,000
Interest rate swap		0
Significant Other Observable Inputs (Level 2) [Member]
Financial assets:
Cash and cash equivalents	0	0
Securities available-for-sale	94,859,000	89,781,000
Securities held to maturity	65,666,000	61,281,000
FHLB-NY stock	0	0
Mortgage loans held for sale	0	0
Loans, net	0	0
Accrued interest receivable	524,000	535,000
Financial liabilities:
Deposits	144,244,000	145,560,000
FHLB-NY advances	40,291,000	40,222,000
Subordinated debentures and subordinated notes	0	0
Accrued interest payable	398,000	387,000
Interest rate swap		62,000
Significant Unobservable Inputs (Level 3) [Member]
Financial assets:
Cash and cash equivalents	0	0
Securities available-for-sale	0	0
Securities held to maturity	0	0
FHLB-NY stock	0	0
Mortgage loans held for sale	581,000	1,522,000
Loans, net	539,764,000	527,479,000
Accrued interest receivable	1,387,000	1,432,000
Financial liabilities:
Deposits	0	0
FHLB-NY advances	0	0
Subordinated debentures and subordinated notes	23,240,000	23,206,000
Accrued interest payable	383,000	403,000
Interest rate swap		0
Carrying Value [Member]
Financial assets:
Cash and cash equivalents	13,901,000	10,910,000
Securities available-for-sale	98,533,000	93,354,000
Securities held to maturity	65,666,000	60,738,000
FHLB-NY stock	2,651,000	2,608,000
Mortgage loans held for sale	581,000	1,522,000
Loans, net	529,225,000	517,556,000
Accrued interest receivable	1,912,000	1,967,000
Financial liabilities:
Deposits	626,469,000	604,753,000
FHLB-NY advances	40,000,000	40,000,000
Subordinated debentures and subordinated notes	23,219,000	23,186,000
Accrued interest payable	$ 782,000	791,000
Interest rate swap		$ 62,000

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Earnings Per Share (Schedule of Earnings Per Common Share) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net income	$ 1,362,000	$ 1,222,000	$ 2,353,000	$ 2,139,000
Dividends on preferred stock	0	171,000	0	342,000
Net income available to common shareholders	$ 1,362,000	$ 1,051,000	$ 2,353,000	$ 1,797,000
Weighted average common shares outstanding - basic (in shares)	6,111,729	6,086,474	6,102,040	6,066,191
Effect of dilutive securities - stock options (in shares)	0	0	0	0
Weighted average common shares outstanding - diluted (in shares)	6,111,729	6,086,474	6,102,040	6,066,191
Basic earnings per common share (in usd per share)	$ 0.22	$ 0.17	$ 0.39	$ 0.30
Diluted earnings per common share (in usd per share)	$ 0.22	$ 0.17	$ 0.39	$ 0.30

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Earnings Per Share (Narrative) (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	0	0	0

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Subordinated Debt (Schedule of Subordinated Debt) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Sep. 17, 2003
Subordinated Debt [Line Items]
Subordinated debt, carrying amount	$ 23,219,000	$ 23,186,000
Fixed / Floating Rate Junior Subordinated Debentures [Member]
Subordinated Debt [Line Items]
Subordinated debt, carrying amount	7,217,000	7,217,000	$ 7,217,000
Fixed Rate Subordinated Notes [Member]
Subordinated Debt [Line Items]
Subordinated debt, carrying amount	$ 16,002,000	$ 15,969,000

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Subordinated Debt (Details)			6 Months Ended
	Sep. 17, 2008	Sep. 17, 2003 USD ($)	Jun. 30, 2016 USD ($) quarter	Dec. 31, 2015 USD ($)	Aug. 28, 2015 USD ($)	Sep. 16, 2008
Subordinated Debt [Line Items]
Subordinated debt, carrying amount			$ 23,219,000	$ 23,186,000
Number of maximum extended period for interest payment | quarter			20
Unamortized debt issuance costs			$ 598,000
Amount of fund established to encourage lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion			30,000,000
Junior Subordinated Debt [Member]
Subordinated Debt [Line Items]
Securities issued by the trust		$ 7,000,000
Subordinated debt, carrying amount		$ 7,217,000	$ 7,217,000	$ 7,217,000
Interest rate (as a percentage)			3.606%	3.48%		6.75%
Variable Rate Basis	3
Spread on Variable Rate (as a percent)	2.95%
Subordinated Notes [Member]
Subordinated Debt [Line Items]
Subordinated debt, carrying amount			$ 16,002,000	$ 15,969,000
Interest rate (as a percentage)			3.61%	3.48%	6.75%	6.75%
Principal amount					$ 16,600,000

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Accumulated Other Comprehensive Income (Schedule of Components of Comprehensive Income) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stockholders' Equity Note [Abstract]
Net income, gross	$ 2,138,000	$ 1,895,000	$ 3,681,000	$ 3,265,000
Net income, tax effect	(776,000)	(673,000)	(1,328,000)	(1,126,000)
Net income	1,362,000	1,222,000	2,353,000	2,139,000
Other comprehensive (loss) income:
Change in unrealized holding gains (losses) on securities available for sale, gross	395,000	(525,000)	1,482,000	226,000
Change in unrealized holding gains (losses) on securities available for sale, tax effect	(151,000)	200,000	(566,000)	(88,000)
Change in unrealized holding gains (losses) on securities available for sale, net	244,000	(325,000)	916,000	138,000
Reclassification adjustment for gains in net income, gross	(32,000)	0	(56,000)	(152,000)
Reclassification adjustment for gains in net income, tax effect	12,000	0	21,000	61,000
Reclassification adjustment for gains in net income, net	(20,000)	0	(35,000)	(91,000)
Accretion of loss on securities reclassified to held to maturity, gross	41,000	56,000	113,000	195,000
Accretion of loss on securities reclassified to held to maturity, tax effect	(16,000)	(22,000)	(43,000)	(74,000)
Accretion of loss on securities reclassified to held to maturity, net	25,000	34,000	70,000	121,000
Change in fair value of interest rate swap, gross	0	62,000	62,000	119,000
Change in fair value of interest rate swap, tax effect	0	(25,000)	(25,000)	(48,000)
Change in fair value of interest rate swap, net	0	37,000	37,000	71,000
Total other comprehensive income, gross	404,000	(407,000)	1,601,000	388,000
Total other comprehensive income, tax effect	(155,000)	153,000	(613,000)	(149,000)
Total other comprehensive income (loss)	249,000	(254,000)	988,000	239,000
Total comprehensive income, gross	2,542,000	1,488,000	5,282,000	3,653,000
Total comprehensive income, tax effect	(931,000)	(520,000)	(1,941,000)	(1,275,000)
Total comprehensive income	$ 1,611,000	$ 968,000	$ 3,341,000	$ 2,378,000

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Accumulated Other Comprehensive Income (Schedule of Components of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Unrealized gains and losses on available for sale (AFS) securities
Balance at the beginning	$ (106,000)	$ (464,000)	$ (845,000)	$ (957,000)
Other comprehensive income before reclassifications	269,000	(254,000)	1,023,000	330,000
Amounts reclassified from other comprehensive income	(20,000)	0	(35,000)	(91,000)
Other comprehensive income, net	249,000	(254,000)	988,000	239,000
Balance at the end	143,000	(718,000)	143,000	(718,000)
Unrealized Gains and (Losses) on Available-for-Sale (AFS) Securities [Member]
Unrealized gains and losses on available for sale (AFS) securities
Balance at the beginning	47,000	(20,000)	(610,000)	(392,000)
Other comprehensive income before reclassifications	244,000	(325,000)	916,000	138,000
Amounts reclassified from other comprehensive income	(20,000)	0	(35,000)	(91,000)
Other comprehensive income, net	224,000	(325,000)	881,000	47,000
Balance at the end	271,000	(345,000)	271,000	(345,000)
Loss on securities reclassified from Available-for-Sale to Held to Maturity [Member]
Unrealized gains and losses on available for sale (AFS) securities
Balance at the beginning	(153,000)	(290,000)	(198,000)	(377,000)
Other comprehensive income before reclassifications	25,000	34,000	70,000	121,000
Amounts reclassified from other comprehensive income	0	0	0	0
Other comprehensive income, net	25,000	34,000	70,000	121,000
Balance at the end	(128,000)	(256,000)	(128,000)	(256,000)
Unrealized Gains and (Losses) on Derivatives [Member]
Unrealized gains and losses on available for sale (AFS) securities
Balance at the beginning	0	(154,000)	(37,000)	(188,000)
Other comprehensive income before reclassifications	0	37,000	37,000	71,000
Amounts reclassified from other comprehensive income	0	0	0	0
Other comprehensive income, net	0	37,000	37,000	71,000
Balance at the end	$ 0	$ (117,000)	$ 0	$ (117,000)

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Accumulated Other Comprehensive Income (Schedule of Amount Reclassified from each Component of Accumulated Other Comprehensive Income) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stockholders' Equity Note [Abstract]
Unrealized gains on AFS securities before tax	$ 32,000	$ 0	$ 56,000	$ 152,000
Tax effect	(12,000)	0	(21,000)	(61,000)
Total net of tax	20,000	0	35,000	91,000
Total reclassifications, net of tax	$ 20,000	$ 0	$ 35,000	$ 91,000