10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2017

OR

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

For the transition period from _____ to _____.

Commission file number 001-16767

Western New England Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	73-1627673
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

141 Elm Street, Westfield, Massachusetts 01086

(Address of principal executive offices)

(Zip Code)

(413) 568-1911

(Registrant’s telephone number, including area code)

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 ☒  No ☐

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 ☒  No ☐

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

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

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

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

At November 3, 2017, the registrant had 30,634,170 shares of common stock, $0.01 par value, issued and outstanding.

TABLE OF CONTENTS

		Page
FORWARD-LOOKING STATEMENTS		i
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements of Western New England Bancorp, Inc. and Subsidiaries (Unaudited)
	Consolidated Balance Sheets – September 30, 2017 and December 31, 2016	1
	Consolidated Statements of Net Income – Three and Nine Months Ended September 30, 2017 and 2016	2
	Consolidated Statements of Comprehensive Income – Three and Nine Months Ended September 30, 2017 and 2016	3
	Consolidated Statements of Changes in Shareholders’ Equity – Nine Months Ended September 30, 2017 and 2016	4
	Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2017 and 2016	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3.	Defaults upon Senior Securities	45
Item 4.	Mine Safety Disclosures	45
Item 5.	Other Information	45
Item 6.	Exhibits	46

FORWARD–LOOKING STATEMENTS

We may, from time to time, make written or oral “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements contained in our filings with the Securities and Exchange Commission (the “SEC”), our reports to shareholders and in other communications by us. This Quarterly Report on Form 10-Q contains “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “would,” “plan,” “estimate,” “potential” and other similar expressions. Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operation and business that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, but are not limited to:

● changes in the interest rate environment that reduce margins;

● changes in the regulatory environment;

● the highly competitive industry and market area in which we operate;

● general economic conditions, either nationally or regionally, resulting in, among other things, a deterioration in credit quality;

● changes in business conditions and inflation;

● changes in credit market conditions;

● the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions;

● changes in the securities markets which affect investment management revenues;

● increases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments could adversely affect our financial condition;

● changes in technology used in the banking business;

● the soundness of other financial services institutions which may adversely affect our credit risk;

● certain of our intangible assets may become impaired in the future;

● our controls and procedures may fail or be circumvented;

● new line of business or new products and services, which may subject us to additional risks;

● changes in key management personnel which may adversely impact our operations;

● the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010, Basel guidelines, capital requirements and other applicable laws and regulations;

● severe weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business; and

● other factors detailed from time to time in our SEC filings.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

i

PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)

 WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	September 30,			December 31,
	2017			2016
ASSETS
CASH AND DUE FROM BANKS	$	25,108		$	23,297
FEDERAL FUNDS SOLD		885			4,388
INTEREST-BEARING DEPOSITS AND OTHER SHORT-TERM INVESTMENTS		2,907			42,549
CASH AND CASH EQUIVALENTS		28,900			70,234
SECURITIES AVAILABLE-FOR-SALE – AT FAIR VALUE		297,919			300,115
FEDERAL HOME LOAN BANK OF BOSTON AND OTHER RESTRICTED STOCK - AT COST		15,704			16,124
LOANS - Net of allowance for loan losses of $10,518 and $10,068 at September 30, 2017 and December 31, 2016, respectively		1,608,255			1,556,416
PREMISES AND EQUIPMENT, Net		23,440			20,885
ACCRUED INTEREST RECEIVABLE		5,764			5,782
BANK-OWNED LIFE INSURANCE		68,307			66,938
DEFERRED TAX ASSET, Net		15,636			16,159
GOODWILL		12,487			13,747
CORE DEPOSIT INTANGIBLE		4,156			4,438
OTHER REAL ESTATE OWNED		103			298
OTHER ASSETS		5,707			4,882
TOTAL ASSETS	$	2,086,378		$	2,076,018
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES:
DEPOSITS :
Non-interest-bearing	$	308,934		$	303,993
Interest-bearing		1,206,264			1,214,078
Total deposits		1,515,198			1,518,071
SHORT-TERM BORROWINGS		192,465			172,351
LONG-TERM DEBT		106,339			124,836
SECURITIES PENDING SETTLEMENT		137			455
OTHER LIABILITIES		19,684			21,909
TOTAL LIABILITIES		1,833,823			1,837,622
SHAREHOLDERS’ EQUITY:
Preferred stock - $0.01 par value, 5,000,000 shares authorized, none outstanding at September 30, 2017 and December 31, 2016		—			—
Common stock - $0.01 par value, 75,000,000 shares authorized, 30,816,813 shares issued and outstanding at September 30, 2017; 30,380,231 shares issued and outstanding at December 31, 2016		309			304
Additional paid-in capital		206,914			205,996
Unearned compensation - ESOP		(5,946	)		(6,418	)
Unearned compensation - Equity Incentive Plan		(950	)		(536	)
Retained earnings		61,695			51,711
Accumulated other comprehensive loss		(9,467	)		(12,661	)
Total shareholders’ equity		252,555			238,396
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	2,086,378		$	2,076,018

See accompanying notes to unaudited consolidated financial statements.

1

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

(Dollars in thousands, except per share data)

	Three Months				Nine Months
	Ended September 30,				Ended September 30,
	2017		2016		2017		2016
INTEREST AND DIVIDEND INCOME:
Residential and commercial real estate loans	$	13,474	$	7,367	$	40,042	$	20,803
Commercial and industrial loans		2,883		1,728		8,180		5,098
Consumer loans		88		43		260		126
Debt securities, taxable		1,828		1,618		5,529		5,723
Debt securities, tax-exempt		25		32		81		136
Equity securities		35		45		105		140
Other investments		172		130		501		398
Federal funds sold, interest-bearing deposits and other short-term investments		11		14		103		67
Total interest and dividend income		18,516		10,977		54,801		32,491
INTEREST EXPENSE:
Deposits		2,111		1,582		6,180		4,589
Long-term debt		534		446		1,633		1,749
Short-term borrowings		1,075		621		2,946		1,580
Total interest expense		3,720		2,649		10,759		7,918
Net interest and dividend income		14,796		8,328		44,042		24,573
PROVISION FOR LOAN LOSSES		200		375		850		400
Net interest and dividend income after provision for loan losses		14,596		7,953		43,192		24,173
NON-INTEREST INCOME (LOSS):
Service charges and fees		1,714		953		4,789		2,696
Income from bank-owned life insurance		450		369		1,369		1,133
Loss on prepayment of borrowings		—		—		—		(915	)
Gain on sales of securities, net		70		1		52		684
Gain on sale of OREO		67		—		67		—
Other income		111		—		227		—
Total non-interest income		2,412		1,323		6,504		3,598
NON-INTEREST EXPENSE:
Salaries and employee benefits		6,490		4,057		18,954		11,709
Occupancy		891		555		2,815		1,712
Furniture and equipment		410		242		1,149		723
Data processing		680		404		1,740		1,167
Professional fees		642		656		1,919		1,717
FDIC insurance assessment		163		214		466		594
Merger related expenses		—		830		626		1,913
Advertising		328		192		961		696
Other		1,552		1,075		4,792		3,064
Total non-interest expense		11,156		8,225		33,422		23,295
INCOME BEFORE INCOME TAXES		5,852		1,051		16,274		4,476
INCOME TAX PROVISION		2,037		423		3,600		1,495
NET INCOME	$	3,815	$	628	$	12,674	$	2,981
EARNINGS PER COMMON SHARE:
Basic earnings per share	$	0.13	$	0.04	$	0.42	$	0.17
Weighted average shares outstanding		30,103,095		17,377,844		29,895,621		17,340,101
Diluted earnings per share	$	0.13	$	0.02	$	0.42	$	0.17
Weighted average diluted shares outstanding		30,219,083		17,377,844		30,074,361		17,340,101

 See accompanying notes to unaudited consolidated financial statements.

2

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Net income	$	3,815		$	628		$	12,674		$	2,981
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) on available for sale securities		381			(359	)		2,133			5,820
Reclassification adjustment for gains realized in income(1)		(70	)		(1	)		(52	)		(684	)
Amortization of net unrealized loss on held-to-maturity securities(2)		—			—			—			26
Net unrealized loss upon transfer of held-to-maturity to available-for-sale(3)		—			—			—			2,288
Net unrealized gains (losses)		311			(360	)		2,081			7,450
Tax effect		(100	)		125			(627	)		(2,567	)
Net-of-tax amount		211			(235	)		1,454			4,883
Derivative instruments:
Change in fair value of derivatives used for cash flow hedges		(14	)		417			(307	)		(2,863	)
Reclassification adjustment for loss realized in interest expense(4)		228			128			751			313
Reclassification adjustment for termination fee realized in interest expense(5)		269			269			799			687
Net adjustments relating to derivative instruments		483			814			1,243			(1,863	)
Tax effect		(133	)		(277	)		32			633
Net-of-tax amount		350			537			1,275			(1,230	)
Defined benefit pension plans:
Amortization of defined benefit plans actuarial loss(6)		51			24			153			71
Tax effect		28			(8	)		312			(24	)
Net-of-tax amount		79			16			465			47
Other comprehensive income		640			318			3,194			3,700
Comprehensive income	$	4,455		$	946		$	15,868		$	6,681

(1)	Realized gains on available-for-sale securities are recognized as a component of non-interest income. The tax effects applicable to net realized gains were $29,000 and $407 for the three months ended September 30, 2017 and 2016, respectively. The tax effects applicable to net realized gains were $21,000 and $236,000 for the nine months ended September 30, 2017 and 2016, respectively.
(2)	Amortization of net unrealized gains on held-to-maturity securities is recognized as a component of interest income on debt securities. Income tax effects associated with the reclassification adjustments were $(9,000) for the nine months ended September 30, 2016.
(3)	Income tax effect associated with the reclassification adjustments upon transfer of held-to-maturity to available-for-sale was $790,000 for the nine months ended September 30, 2016.
(4)	Loss realized in interest expense on derivative instruments is recognized as a component of interest expense on short-term debt. Income tax effects associated with the reclassification adjustment were $93,000 and $44,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustment were $307,000 and $106,000 for the nine months ended September 30, 2017 and 2016, respectively
(5)	Loss realized in interest expense on derivative instruments is recognized as a component of interest expense on short-term debt. Income tax effects associated with the reclassification adjustment were $110,000 and $91,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustment were $326,000 and $234,000 for the nine months ended September 30, 2017 and 2016, respectively
(6)	Amounts represent the reclassification of defined benefit plans amortization and have been recognized as a component of salaries and employee benefit expense. Income tax effects associated with the reclassification adjustments were $(21,000) and $8,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustments were $(63,000) and $24,000 for the nine months ended September 30, 2017 and 2016, respectively.

Tax rate on reclassification adjustments was 40.85% for the 2017 period and 34.0% for the comparable 2016 period.

See accompanying notes to unaudited consolidated financial statements.

3

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands, except share data)

	Common Stock												Unearned						Accumulated
	Shares			Par Value			Additional Paid-in Capital			Unearned Compensation- ESOP			Compensation- Equity Incentive Plan			Retained Earnings			Other Comprehensive Loss			Total
BALANCE AT DECEMBER 31, 2015		18,267,747		$	183		$	108,210		$	(6,952	)	$	(313	)	$	49,316		$	(10,978	)	$	139,466
Comprehensive income		—			—			—			—			—			2,981			3,700			6,681
Common stock held by ESOP committed to be released (74,430 shares)		—			—			62			382			—			—			—			444
Share-based compensation - equity incentive plan		—			—			—			—			186			—			—			186
Excess tax benefit from equity incentive plan		—			—			5			—			—			—			—			5
Issuance of common stock in connection with equity incentive plan		62,740			1			484			—			(485	)		—			—			—
Cash dividends declared and paid ($0.09 per share)		—			—			—			—			—			(1,559	)		—			(1,559	)
BALANCE AT SEPTEMBER 30, 2016		18,330,487		$	184		$	108,761		$	(6,570	)	$	(612	)	$	50,738		$	(7,278	)	$	145,223
BALANCE AT DECEMBER 31, 2016		30,380,231		$	304		$	205,996		$	(6,418	)	$	(536	)	$	51,711		$	(12,661	)	$	238,396
Comprehensive income		—			—			—			—			—			12,674			3,194			15,868
Common stock held by ESOP committed to be released (93,679 shares)		—			—			226			472			—			—			—			698
Share-based compensation - equity incentive plan		—			—			—			—			490			—			—			490
Common stock repurchased		(574,309	)		(5	)		(5,667	)		—			—			—			—			(5,672	)
Issuance of common stock in connection with stock option exercises		921,849			9			5,456			—			—			—			—			5,465
Issuance of common stock in connection with equity incentive plan		89,042			1			903			—			(904	)		—			—			—
Cash dividends declared and paid ($0.09 per share)		—			—			—			—			—			(2,690	)		—			(2,690	)
BALANCE AT SEPTEMBER 30, 2017		30,816,813		$	309		$	206,914		$	(5,946	)	$	(950	)	$	61,695		$	(9,467	)	$	252,555

See accompanying notes to unaudited consolidated financial statements. 

4

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Nine Months Ended September 30,
	2017			2016
OPERATING ACTIVITIES:
Net income	$	12,674		$	2,981
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		850			400
Depreciation and amortization of premises and equipment		1,468			969
Accretion of purchase accounting adjustments, net		(1,431	)		—
Amortization of core deposit intangible		282			—
Net amortization of premiums and discounts on securities and mortgage loans		2,577			2,758
Net amortization of premiums on modified debt		—			60
Share-based compensation expense		490			186
ESOP expense		698			444
Excess tax benefits from equity incentive plan		—			(5	)
Net gains on sales of securities		(52	)		(684	)
Gain on sale of other real estate owned		(67	)		—
Loss on prepayment of borrowings		—			915
Deferred income tax benefit		(973	)		—
Income from bank-owned life insurance		(1,369	)		(1,133	)
Changes in assets and liabilities:
Accrued interest receivable		18			300
Other assets		(3,578	)		(1,468	)
Other liabilities		1,995			(2,184	)
Net cash provided by operating activities		13,582			3,539
INVESTING ACTIVITIES:
Securities, held to maturity:
Proceeds from calls, maturities, and principal collections		—			6,835
Securities, available for sale:
Purchases		(67,246	)		(59,595	)
Proceeds from sales		22,453			136,825
Proceeds from calls, maturities, and principal collections		46,576			46,639
Purchase of residential mortgages		(48,205	)		(107,632	)
Loan originations and principal payments, net		(4,133	)		(21,185	)
Redemption of Federal Home Loan Bank of Boston stock		420			2,880
Proceeds from sale of other real estate owned		365			—
Purchases of premises and equipment		(1,645	)		(565	)
Proceeds from sale of premises and equipment		—			20
Net cash (used in) provided by investing activities		(51,415	)		4,222
FINANCING ACTIVITIES:
Net (decrease) increase in deposits		(2,120	)		62,195
Net change in short-term borrowings		20,114			51,866
Repayment of long-term debt		(19,700	)		(84,333	)
Proceeds from long-term debt		1,420			1,165
Cash dividends paid		(2,690	)		(1,559	)
Common stock repurchased		(5,990	)		—
Issuance of common stock in connection with stock option exercises		5,465			—
Excess tax benefits in connection with equity incentive plan		—			5
Net cash (used in) provided by financing activities		(3,501	)		29,339
NET CHANGE IN CASH AND CASH EQUIVALENTS:		(41,334	)		37,100
Beginning of period		70,234			13,703
End of period	$	28,900		$	50,803
Supplemental cashflow information:
Securities reclassified from held-to-maturity to available-for-sale	$	—		$	(232,817	)
Net change in cash due to broker for common stock repurchased		(318	)		—
Interest paid		10,774			8,036
Taxes paid		3,658			2,150

See the accompanying notes to unaudited consolidated financial statements.

5

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2017

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations – Western New England Bancorp, Inc. (“Western New England Bancorp,” “WNEB,” the “Company,” “we” or “us”) is a Massachusetts-chartered stock holding company for Westfield Bank, a federally chartered stock savings bank (the “Bank”).

The Bank’s deposits are insured to the limits specified by the Federal Deposit Insurance Corporation (“FDIC”). The Bank operates 21 banking offices in western Massachusetts and northern Connecticut, and its primary sources of revenue are earnings on loans to small and middle-market businesses and to residential property homeowners and income from securities.

Wholly-Owned Subsidiaries and Acquisition– Elm Street Securities Corporation, WFD Securities, Inc. and CSB Colts, Inc., are Massachusetts-chartered securities corporations, formed for the primary purpose of holding qualified securities. WB Real Estate Holdings, LLC, is a Massachusetts-chartered limited liability company that holds real property acquired as security for debts previously contracted by the Bank. On October 21, 2016, we acquired Chicopee Bancorp, Inc. (“Chicopee”), the holding company for Chicopee Savings Bank. The acquisition added eight full-service banking offices located in western Massachusetts.

Principles of Consolidation – The unaudited consolidated financial statements include the accounts of Western New England Bancorp, the Bank, CSB Colts, Inc., Elm Street Securities Corporation, WB Real Estate Holdings, LLC and WFD Securities, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

Estimates – The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of income and expenses for both at the date of the unaudited consolidated financial statements. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, and the realizability of deferred tax assets.

Basis of Presentation – In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of September 30, 2017, and the results of operations, changes in shareholders’ equity and cash flows for the interim periods presented. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations for the year ending December 31, 2017. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Annual Report”).

Reclassifications – Amounts in the prior period financial statements are reclassified when necessary to conform to the current year presentation.

6

2. EARNINGS PER SHARE

Basic earnings per share represent income available to shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential shares had been issued, as well as any adjustment to income that would result from the assumed issuance. No dilutive potential shares were outstanding during the periods presented. Share-based compensation awards that qualify as participating securities (entitled to receive non-forfeitable dividends) are included in basic earnings per share.

Earnings per common share for the three and nine months ended September 30, 2017 and 2016 have been computed based on the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(In thousands, except per share data)
Net income applicable to common stock	$	3,815		$	628		$	12,674		$	2,981
Average number of common shares issued		31,001			18,330			30,799			18,298
Less: Average unallocated ESOP Shares		(838	)		(926	)		(861	)		(945	)
Less: Average unvested equity incentive plan shares		(60	)		(26	)		(42	)		(13	)
Average number of common shares outstanding used to calculate basic earnings per common share		30,103			17,378			29,896			17,340
Effect of dilutive equity incentive plan		26			—			12			—
Effect of dilutive stock options		90			—			166			—
Average number of common shares outstanding used to calculate diluted earnings per common share		30,219			17,378			30,074			17,340
Basic earnings per share	$	0.13		$	0.04		$	0.42		$	0.17
Diluted earnings per share	$	0.13		$	0.04		$	0.42		$	0.17

7

3. COMPREHENSIVE INCOME/LOSS

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

The components of accumulated other comprehensive loss included in shareholders’ equity are as follows:

	September 30, 2017			December 31, 2016
	(In thousands)
Net unrealized losses on securities available-for-sale	$	(3,782	)	$	(5,863	)
Tax effect		1,397			2,024
Net-of-tax amount		(2,385	)		(3,839	)
Fair value of derivatives used for cash flow hedges		(2,709	)		(3,152	)
Termination fees on forward starting interest rate swaps		(3,933	)		(4,733	)
Total derivatives		(6,642	)		(7,885	)
Tax effect		2,713			2,681
Net-of-tax amount		(3,929	)		(5,204	)
Unrecognized actuarial loss on defined benefit plan		(5,329	)		(5,482	)
Tax effect		2,176			1,864
Net-of-tax amount		(3,153	)		(3,618	)
Accumulated other comprehensive loss	$	(9,467	)	$	(12,661	)

The following table presents changes in accumulated other comprehensive loss for the periods ended September 30, 2017 and 2016 by component:

	Securities			Derivatives			Defined Benefit Plans			Accumulated Other Comprehensive Loss
	(In thousands)
Balance at December 31, 2015	$	(3,046	)	$	(5,501	)	$	(2,431	)	$	(10,978	)
Current-period other comprehensive income (loss)		4,883			(1,230	)		47			3,700
Balance at September 30, 2016	$	1,837		$	(6,731	)	$	(2,384	)	$	(7,278	)
Balance at December 31, 2016	$	(3,839	)	$	(5,204	)	$	(3,618	)	$	(12,661	)
Current-period other comprehensive income		1,454			1,275			465			3,194
Balance at September 30, 2017	$	(2,385	)	$	(3,929	)	$	(3,153	)	$	(9,467	)

8

4.       SECURITIES

Securities available-for-sale are summarized as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	193,037	$	120	$	(2,836	)	$	190,321
U.S. government guaranteed mortgage-backed securities		17,408		—		(447	)		16,961
Corporate bonds		56,192		582		(221	)		56,553
State and municipal bonds		3,223		39		(37	)		3,225
Government-sponsored enterprise obligations		25,150		—		(697	)		24,453
Mutual funds		6,691		—		(285	)		6,406
Total available-for-sale	$	301,701	$	741	$	(4,523	)	$	297,919

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
		(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	184,127	$	33	$	(4,024	)	$	180,136
U.S. government guaranteed mortgage-backed securities		17,753		—		(403	)		17,350
Corporate bonds		50,255		265		(203	)		50,317
State and municipal bonds		4,117		13		(122	)		4,008
Government-sponsored enterprise obligations		43,140		—		(1,132	)		42,008
Mutual funds		6,586		—		(290	)		6,296
Total available-for-sale securities	$	305,978	$	311	$	(6,174	)	$	300,115

Our repurchase agreements are collateralized by government-sponsored enterprise obligations and certain mortgage-backed securities (see Note 8).

The amortized cost and fair value of available-for-sale debt securities at September 30, 2017, by maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or repay obligations. Also, because mortgage-backed securities require periodic principal paydowns, they are not included in the maturity categories in the following maturity summary.

	September 30, 2017
	Amortized Cost		Fair Value
	(In thousands)
Available for securities:
Debt securities:
Due in one year or less	$	—	$	—
Due after one year through five years		28,079		28,497
Due after five years through ten years		49,735		49,149
Due after ten years		6,751		6,585
Total securities	$	84,565	$	84,231
Mortgage-backed securities		210,445		207,282
Total	$	295,010	$	291,513

9

Gross realized gains and losses on sales of securities available-for-sale for the three and nine months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
	(In thousands)
Gross gains realized	$	71		$	1	$	117		$	1,521
Gross losses realized		(1	)		—		(65	)		(837	)
Net gain realized	$	70		$	1	$	52		$	684

Proceeds from the sale of securities available-for-sale amounted to $22.5 million and $136.8 million for the nine months ended September 30, 2017 and 2016, respectively.

Information pertaining to securities with gross unrealized losses at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position are as follows:

	September 30, 2017
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	1,022	$	105,596	$	1,814	$	61,415
U.S. government guaranteed mortgage-backed securities		160		9,874		287		7,086
Corporate bonds		210		20,915		11		2,058
State and municipal bonds		—		—		37		1,564
Government-sponsored enterprise obligations		129		5,021		568		19,432
Mutual funds		57		3,508		228		2,898
Total available-for-sale	$	1,578	$	144,914	$	2,945	$	94,453

	December 31, 2016
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	3,016	$	147,691	$	1,008	$	27,303
U.S. government guaranteed mortgage-backed securities		192		12,536		211		4,814
Corporate bonds		203		18,481		—		—
State and municipal bonds		95		1,507		27		305
Government-sponsored enterprise obligations		1,132		42,008		—		—
Mutual funds		79		3,429		211		2,867
Total available-for-sale	$	4,717	$	225,652	$	1,457	$	35,289

10

	September 30, 2017
	Less Than 12 Months									Over 12 Months
	Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)			Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)
	(Dollars in thousands)
Government-sponsored mortgage-backed securities		41	$	106,618	$	1,022		1.0	%		27	$	63,229	$	1,814		2.9	%
U.S. government guaranteed mortgage-backed securities		3		10,034		160		1.6			4		7,373		287		3.9
Corporate bonds		7		21,125		210		1.0			1		2,069		11		0.5
Government-sponsored enterprise obligations		1		5,150		129		2.5			8		20,000		568		2.8
State and municipal bonds		—		—		—		—			3		1,601		37		2.3
Mutual funds		1		3,565		57		1.6			2		3,126		228		7.3
			$	146,492	$	1,578						$	97,398	$	2,945

These unrealized losses are the result of changes in interest rates and not credit quality. Because we do not intend to sell the securities and it is more likely than not that we will not be required to sell the investments before recovery of their amortized cost basis, no declines are deemed to be other-than-temporary.

5.         LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans consisted of the following amounts:	September 30,			December 31,
	2017			2016
	(In thousands)
Commercial real estate	$	716,890		$	720,741
Residential real estate:
Residential		555,768			522,083
Home equity		92,359			92,083
Commercial and industrial		244,374			222,286
Consumer		4,467			4,424
Total Loans		1,613,858			1,561,617
Unearned premiums and deferred loan fees and costs, net		4,915			4,867
Allowance for loan losses		(10,518	)		(10,068	)
	$	1,608,255		$	1,556,416

During the nine months ended September 30, 2017 and 2016, we purchased residential real estate loans aggregating $48.2 million and $107.6 million, respectively.

We have transferred a portion of our originated commercial real estate and commercial and industrial loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in our accompanying unaudited consolidated balance sheets. We share ratably with our participating lenders in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. We continue to service the loans on behalf of the participating lenders and, as such, collect cash payments from the borrowers, remit payments (net of servicing fees) to participating lenders and disburse required escrow funds to relevant parties. At September 30, 2017 and December 31, 2016, we serviced commercial loans for participants aggregating $32.4 million and $42.6 million, respectively.

11

Residential mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of these loans totaled $67.8 million and $75.2 million at September 30, 2017 and December 31, 2016, respectively. Service fee income of $49,000 and $3,000 was recorded for the nine months ended September 30, 2017 and 2016, respectively, and is included in service charges and fees on the consolidated statements of net income.

Residential real estate mortgages are originated by the Bank both for its portfolio and for sale into the secondary market. The Bank may sell its loans to institutional investors such as the Federal Home Loan Mortgage Corporation. Under loan sale and servicing agreements with the investor, the Bank generally continues to service the residential real estate mortgages. The Bank pays the investor an agreed upon rate on the loan, which is less than the interest rate received from the borrower. The Bank retains the difference as a fee for servicing the residential real estate mortgages. The Bank capitalizes mortgage servicing rights at their fair value upon sale of the related loans, amortizes the asset over the estimated life of the serviced loan, and periodically assesses the asset for impairment. The significant assumptions used by a third party to estimate the fair value of capitalized servicing rights at September 30, 2017, include weighted average prepayment speed for the portfolio using the Public Securities Association Standard Prepayment Model (203 PSA), weighted average internal rate of return (10.05%), weighted average servicing fee (0.2501%), and average net cost to service loans ($59.32 per loan). The estimated fair value of capitalized servicing rights may vary significantly in subsequent periods primarily due to changing market interest rates, and their effect on prepayment speeds and discount rates.

A summary of the activity in the balances of mortgage servicing rights follows:

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	(In thousands)
Balance at the beginning of period:	$	408		$	465
Capitalized mortgage servicing rights		—			—
Amortization		(28	)		(85	)
Balance at the end of period	$	380		$	380
Fair value at the end of period	$	538		$	538

Prior to the acquisition of Chicopee in 2016, mortgage servicing rights were not material to the consolidated financial statements, and therefore, were not recorded.

Loans are recorded at the principal amount outstanding, adjusted for charge-offs, unearned premiums and deferred loan fees and costs. Interest on loans is calculated using the effective yield method on daily balances of the principal amount outstanding and is credited to income on the accrual basis to the extent it is deemed collectable. Our general policy is to discontinue the accrual of interest when principal or interest payments are delinquent 90 days or more based on the contractual terms of the loan, or earlier if the loan is considered impaired. Any unpaid amounts previously accrued on these loans are reversed from income. Subsequent cash receipts are applied to the outstanding principal balance or to interest income if, in the judgment of management, collection of the principal balance is not in question. Loans are returned to accrual status when they become current as to both principal and interest and perform in accordance with contractual terms for a period of at least six months, reducing the concern as to the collectability of principal and interest. Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income over the estimated average lives of the related loans.

The allowance for loan losses is established through provisions for loan losses charged to expense. Loans are charged-off against the allowance when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated, and unallocated components, as further described below.

12

General component

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate (includes one-to-four family and home equity), commercial real estate, commercial and industrial, and consumer. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: trends in delinquencies and nonperforming loans; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; and national and local economic trends and industry conditions. There were no changes in our policies or methodology pertaining to the general component of the allowance for loan losses during the periods presented for disclosure.

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate – We require private mortgage insurance for all loans originated with a loan-to-value ratio greater than 80% and we do not grant subprime loans. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment. Home equity loans are secured by first or second mortgages on one-to-four family owner occupied properties.

Commercial real estate – Loans in this segment are primarily income-producing investment properties and owner-occupied commercial properties throughout New England. The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality in this segment. Management obtains financial information annually and continually monitors the cash flows of these loans.

Commercial and industrial loans – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer loans – Loans in this segment are secured or unsecured and repayment is dependent on the credit quality of the individual borrower.

Allocated component

The allocated component relates to loans that are classified as impaired. Impaired loans are identified by analysis of loan performance, internal credit ratings and watch list loans that management believes are subject to a higher risk of loss. Impairment is measured on a loan by loan basis for commercial real estate and commercial and industrial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

13

Unallocated component

An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance, if any, reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

An analysis of changes in the allowance for loan losses by segment for the periods ended September 30, 2017 and 2016 is as follows:

	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer			Unallocated			Total
	(In thousands)
Three Months Ended
Balance at June 30, 2016	$	3,956		$	2,804		$	2,797		$	20		$	(7	)	$	9,570
Provision (credit)		62			189			83			43			(2	)		375
Charge-offs		—			(40	)		—			(46	)		—			(86	)
Recoveries		59			—			—			9			—			68
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at June 30, 2017	$	4,472		$	3,126		$	2,754		$	53		$	13		$	10,418
Provision (credit)		(68	)		146			(109	)		83			148			200
Charge-offs		—			(107	)		—			(104	)		—			(211	)
Recoveries		—			80			3			28			—			111
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518
Nine Months Ended
Balance at December 31, 2015	$	3,856		$	2,431		$	2,485		$	22		$	46		$	8,840
Provision (credit)		(614	)		610			395			64			(55	)		400
Charge-offs		(170	)		(90	)		—			(87	)		—			(347	)
Recoveries		1,005			2			—			27			—			1,034
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at December 31, 2016	$	4,083		$	2,862		$	3,085		$	38		$	—		$	10,068
Provision (credit)		239			427			(180	)		203			161			850
Charge-offs		(36	)		(148	)		(285	)		(237	)		—			(706	)
Recoveries		118			104			28			56			—			306
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518

14

Further information pertaining to the allowance for loan losses by segment at September 30, 2017 and December 31, 2016 follows:

	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	(In thousands)
September 30, 2017
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,404		3,245		2,648		60		161		10,518
Total allowance for loan losses	$	4,404	$	3,245	$	2,648	$	60	$	161	$	10,518
Impaired loans	$	3,993	$	3,854	$	2,869	$	127	$	—	$	10,843
Non-impaired loans		699,945		640,622		240,421		4,340		—		1,585,328
Loans acquired with deteriorated credit quality		12,952		3,651		1,084		—		—		17,687
Total loans	$	716,890	$	648,127	$	244,374	$	4,467	$	—	$	1,613,858
December 31, 2016
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,083		2,862		3,085		38		—		10,068
Total allowance for loan losses		4,083		2,862		3,085		38		—		10,068
Impaired loans	$	3,335	$	452	$	3,042	$	—	$	—	$	6,829
Non-impaired loans		701,766		609,107		217,972		4,424		—		1,533,269
Loans acquired with deteriorated credit quality		15,640		4,607		1,272		—		—		21,519
Total loans	$	720,741	$	614,166	$	222,286	$	4,424	$	—	$	1,561,617

15

The following is a summary of past due and non-accrual loans by class at September 30, 2017 and December 31, 2016:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Past Due 90 Days or More and Still Accruing		Loans on Non- Accrual
	(In thousands)
September 30, 2017
Commercial real estate	$	196	$	295	$	136	$	627	$	—	$	2,181
Residential real estate:
Residential		2,308		570		572		3,450		—		1,744
Home equity		218		135		72		425		—		73
Commercial and industrial		472		59		108		639		—		2,700
Consumer		54		18		5		77		—		17
Total legacy loans		3,248		1,077		893		5,218		—		6,715
Loans acquired from Chicopee Savings Bank		2,957		1,610		1,279		5,846		—		6,450
Total	$	6,205	$	2,687	$	2,172	$	11,064	$	—	$	13,165
December 31, 2016
Commercial real estate	$	302	$	555	$	137	$	994	$	—	$	2,740
Residential real estate:
Residential		791		262		689		1,742		—		1,658
Home equity		208		36		—		244		—		37
Commercial and industrial		326		32		—		358		—		3,214
Consumer		27		9		7		43		—		14
Total legacy loans		1,654		894		833		3,381		—		7,663
Loans acquired from Chicopee Savings Bank		3,854		1,907		551		6,312		—		6,394
Total past due loans	$	5,508	$	2,801	$	1,384	$	9,693	$	—	$	14,057

The following is a summary of impaired loans by class at and for the periods ended September 30, 2017 and December 31, 2016:

	Impaired Loans(1)(2)
					Three Months Ended				Nine Months Ended
	At September 30, 2017 (1)				September 30, 2017				September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	16,945	$	19,380	$	17,731	$	199	$	18,788	$	650
Residential real estate:
Residential real estate		6,939		7,410		7,016		11		6,548		34
Home equity		566		590		407		1		260		3
Commercial and industrial		3,953		10,242		4,442		54		4,538		183
Consumer		127		131		122		—		83		—
Total impaired loans	$	28,530	$	37,753	$	29,718	$	265	$	30,217	$	870

(1)   Includes loans acquired with deteriorated credit quality and performing troubled debt restructurings.

(2)   Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

16

	Impaired Loans (1)(2)
					Three Months Ended				Nine Months Ended
	At December 31, 2016 (1)				September 30, 2016				September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	18,975	$	21,330	$	3,487	$	17	$	3,551	$	49
Residential real estate		5,059		5,676		515		—		482		—
Commercial and industrial		4,314		11,049		3,356		—		3,434		—
Total impaired loans	$	28,348	$	38,055	$	7,358	$	17	$	7,467	$	49

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp, Inc. merger.

⁽²⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

No interest income was recognized for impaired loans on a cash-basis method during the three and nine months ended September 30, 2017 or 2016. Interest income recognized on an accrual basis during the three and nine months ended September 30, 2017 related to performing purchase impaired loans while activity in the comparable 2016 periods related to performing TDR loans.

We may periodically agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). These concessions could include a reduction in the interest rate on the loan, payment extensions, postponement or forgiveness of principal, forbearance or other actions intended to maximize collection. All TDRs are classified as impaired.

When we modify loans in a TDR, we measure impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment and recognize impairment through the allowance.

Nonperforming TDRs are shown as nonperforming assets. There were no loans modified in TDRs during the three and nine months ended September 30, 2017. A substandard impaired loan relationship in the amount of $4.6 million was designated a TDR during the nine months ended September 30, 2016. The bank entered into a forbearance agreement which offered an interest only period. Due to the borrower continuing to experience declining sales, the interest only period was extended during the second quarter of 2016, resulting in the TDR classification. The loans are on non-accrual and are current. The loans are measured for impairment quarterly and appropriate reserves/charge offs have been taken.

	Nine Months Ended
	September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Commercial Real Estate		1	$	1,940	$	1,940
Commercial and Industrial		3		2,681		2,681
Residential		2		161		161
Total		6	$	4,782	$	4,782

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A default occurs when a loan is 30 days or more past due. No TDRs defaulted within twelve months of restructuring during the three and nine months ended September 30, 2017 or 2016.

There were no charge-offs on TDRs during the three and nine months ended September 30, 2017 and 2016.

Loans Acquired with Deteriorated Credit Quality

The following is a summary of loans acquired from Chicopee with evidence of credit deterioration as of September 30, 2017.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non- Accretable Discount			Accretable Yield			Loans Receivable
	(In thousands)
Balance at December 31, 2016	$	37,437		$	29,040		$	8,397		$	7,521		$	21,519
Collections		(3,860	)		(3,326	)		(534	)		(1,003	)		(2,323	)
Dispositions		(1,833	)		(1,503	)		(330	)		6			(1,509	)
Balance at September 30, 2017	$	31,744		$	24,211		$	7,533		$	6,524		$	17,687

Credit Quality Information

We utilize an eight-grade internal loan rating system for commercial real estate and commercial and industrial loans. Performing residential real estate, home equity and consumer loans are grouped with “Pass” rated loans. Nonperforming residential real estate, home equity and consumer loans are monitored individually for impairment and risk rated as “Substandard.”

Loans rated 1 – 3 are considered “Pass” rated loans with low to average risk.

Loans rated 4 are considered “Pass Watch,” with an acceptable level of risk. Loans in this category remain “pass” rated and are not a criticized or classified loan, however, represent borrowers which may exhibit tight cash flows and/or leveraged balance sheets.

Loans rated 5 are considered “Special Mention.” These loans exhibit potential credit weaknesses or downward trends and are being closely monitored by us.

Loans rated 6 are considered “Substandard.” Generally, a loan is considered substandard if the borrower exhibits a well-defined weakness that may be inadequately protected by the current net worth and cash flow capacity to pay the current debt.

Loans rated 7 are considered “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable and that a partial loss of principal is likely.

Loans rated 8 are considered uncollectible and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, we formally review the ratings on all commercial real estate and commercial and industrial loans. Construction loans are reported within commercial real estate loans and total $67.6 million and $88.9 million at September 30, 2017 and December 31, 2016, respectively. We engage an independent third party to review a significant portion of loans within these segments on a semi-annual basis. We use the results of these reviews as part of our annual review process. In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality in other segments.

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The following table presents our loans by risk rating at September 30, 2017 and December 31, 2016:

	Commercial Real Estate		Residential 1-4 Family		Home Equity		Commercial and Industrial		Consumer		Total
	(In thousands)
September 30, 2017
Loans rated 1 – 3	$	647,599	$	549,936	$	91,854	$	192,968	$	4,340	$	1,486,697
Loans rated 4		45,339		95		—		35,585		—		81,019
Loans rated 5		14,724		—		—		7,521		—		22,245
Loans rated 6		9,228		5,737		505		8,300		127		23,897
	$	716,890	$	555,768	$	92,359	$	244,374	$	4,467	$	1,613,858
December 31, 2016
Loans rated 1 – 3	$	673,957	$	516,339	$	91,964	$	180,675	$	4,391	$	1,467,326
Loans rated 4		24,207		—		—		16,621		6		40,834
Loans rated 5		14,068		—		—		6,727		—		20,795
Loans rated 6		6,604		5,744		119		15,379		27		27,873
Loans rated 7		1,905		—		—		2,884		—		4,789
	$	720,741	$	522,083	$	92,083	$	222,286	$	4,424	$	1,561,617

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6.       GOODWILL AND OTHER INTANGIBLES

Goodwill

Goodwill for the nine months ended September 30, 2017 is summarized as follows:

	Nine Months Ended September 30, 2017
		(In thousands)
Balance at December 31, 2016	$	13,747
Current period adjustments		(1,260	)
Balance at September 30, 2017	$	12,487

At September 30, 2017 and December 31, 2016, the Company’s goodwill related to the acquisition of Chicopee in October 2016. Annually, or more frequently if events or changes in circumstances warrant such evaluation, the Company evaluates its goodwill for impairment. No goodwill impairment was recorded for the nine months ended September 30, 2017.

During the three months ended March 31, 2017, management completed their evaluation of premises and equipment acquired from Chicopee, which resulted in a $2.4 million adjustment to the provisional fair values of bank premises acquired and a $1.4 million reduction in goodwill. The remaining adjustments to goodwill of $140,000 during the three months ended March 31, 2017 resulted from information obtain during the quarter about events and circumstances that existed as of the acquisition date.

Core Deposit Intangibles

In connection with the assumption of $545.7 million of deposit liabilities from the Chicopee acquisition in October 2016, of which $345.2 million were core deposits, the Bank recorded a core deposit intangible of $4.5 million. The resulting core deposit intangible is amortized over twelve years using the straight-line method. Core deposit intangibles are summarized as follows:

	Nine Months Ended September 30, 2017
		(In thousands)
Balance at December 31, 2016	$	4,438
Amortization		(282	)
Balance at September 30, 2017	$	4,156

Amortization expense was $282,000 for the nine months ended September 30, 2017. At September 30, 2017, future amortization of the core deposit intangible totals $375,000 for each of the next five years and $2.3 million thereafter.

7. SHARE-BASED COMPENSATION

Stock Options – Under the terms of the Chicopee merger agreement dated April 4, 2016, each option to purchase shares of Chicopee common stock issued by Chicopee and outstanding at the effective time of the merger, October 21, 2016, pursuant to the Chicopee 2007 Equity Incentive Plan fully vested and converted into an option to purchase shares of WNEB common stock on the same terms and conditions as were applicable before the merger, except (1) the number of shares of WNEB common stock subject to the new option was adjusted to be equal to the product of the number of shares of Chicopee common stock subject to the existing option and the exchange ratio (rounding fractional shares to the nearest whole share) and (2) the exercise price per share of WNEB common stock under the new option was adjusted to be equal to the exercise price per share of Chicopee common stock of the existing option divided by the exchange ratio (rounded to the nearest whole cent).

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A summary of stock option activity for the nine months ended September 30, 2017 is presented below. No options were outstanding during the nine months ended September 30, 2016.

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value  (in thousands)
Outstanding at December 31, 2016		1,178,899		$	6.01		1.98	$	3,930
Exercised		(921,849	)		5.93		0.91		3,675
Outstanding at September 30, 2017		257,050		$	6.31		4.66	$	1,175
Exercisable at September 30, 2017		257,050		$	6.31		4.66	$	1,175

Cash received for options exercised during the nine months ended September 30, 2017 was $5.5 million.

Restricted Stock Awards – In May 2014, our shareholders approved a stock-based compensation plan under which up to 516,000 shares of our common stock were reserved for grants of stock awards, including stock options and restricted stock, which may be granted to any officer, key employee or non-employee director of WNEB. Authorized but unissued shares are issued to awardees upon vesting of such awards. Any shares not issued because vesting requirements are not met will again be available for issuance under the plans.

In January 2015, 48,560 shares were granted under this plan and vest ratably over five years. The fair market value of shares awarded, based on the market price at the date of grant, was recorded as unearned compensation and is being amortized over the applicable vesting period.

In 2016, the Compensation Committee (the “Committee”) approved the long-term incentive program (the “LTI Plan”). The LTI Plan provides a periodic award that is both performance and retention based in that it is designed to recognize the executive’s responsibilities, reward demonstrated performance and leadership and to retain such executives. The objective of the LTI Plan is to align compensation for the named executive officers and directors over a multi-year period directly with the interests of our shareholders by motivating and rewarding creation and preservation of long-term financial strength, shareholder value and relative shareholder return.

The LTI Plan includes eligible officers of the Company who are nominated by the Company’s Chief Executive Officer and approved by the Committee. The LTI Plan is triggered by the Company’s achievement of satisfactory safety and soundness results from its most recent regulatory examination. Employee stock grants made through the 2016 LTI plan will be a combination of 50% time-vested restricted stock and 50% performance-based restricted stock.

In May 2016, 62,740 shares were granted under the LTI Plan. Of this total, 36,543 shares are retention-based, with 10,352 vesting in one year and 26,191 vesting ratably over a three year period. The remaining 26,197 shares granted are performance based and are subject to the achievement of the 2016 LTI performance metric before vesting is realized after a three year period. For the performance shares, the primary performance metric for 2016 awards is return on equity. Performance shares will be earned based upon how the Company performs relative to threshold and target absolute goals (i.e. Company-specific, not relative to a peer index) over the three-year performance period. The threshold amount for the performance period will be a return on equity of 5.85% and a target amount of 6.32%. Participants will be able to earn between 50% (for threshold performance) and 100% of the target amount for the performance shares but will not earn additional shares if performance exceeds target performance.

In May 2017, 89,042 shares were granted under the LTI Plan. Of this total, 55,159 shares are retention-based, with 21,276 vesting in one year and 33,883 vesting ratably over a three year period. The remaining 33,883 shares granted are performance based and are subject to the achievement of the 2017 LTI performance metric before vesting is realized after a three year period. For the performance shares, the primary performance metric for 2017 awards is return on equity. Performance shares will be earned based upon how the Company performs relative to threshold, target and maximum absolute goals (i.e. Company-specific, not relative to a peer index) on an annual performance period, but will be distributed at the end of the three year period.

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The threshold, target and maximum for the three year period under the 2017 Plan is as follows:

	Return on Equity Targets
Performance Period Ending	Threshold		Target		Maximum
December 31, 2017	6.00	%	6.60	%	7.30	%
December 31, 2018	6.30	%	7.00	%	7.60	%
December 31, 2019	6.50	%	7.20	%	7.90	%

Participants will be able to earn between 50% (for threshold performance), 100% (for target performance) and 150% (for the maximum performance).

The fair market value of shares awarded, based on the market price at the date of grant, is recorded as unearned compensation and amortized over the applicable vesting period. Shares granted under performance-based conditions are monitored on a quarterly basis in order to compare actual results to the performance metric established, with any necessary adjustments being recognized through share-based compensation expense and unearned compensation. At September 30, 2017, an additional 315,658 shares were available for future grants under this plan.

Our stock award plan activity for the nine months ended September 30, 2017 and 2016 is summarized below:

	Unvested Stock Awards Outstanding
	Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	91,371		$	7.51
Shares granted	89,042			10.15
Shares vested	(21,552	)		7.44
Outstanding at September 30, 2017	158,861		$	9.00
Outstanding at December 31, 2015	54,160		$	7.28
Shares granted	62,740			7.73
Shares vested	(11,200	)		7.18
Outstanding at September 30, 2016	105,700		$	7.56

We recorded compensation cost related to the stock awards of $490,000 and $186,000 for the nine months ended September 30, 2017 and 2016, respectively.

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

We utilize short-term borrowings and long-term debt as an additional source of funds to finance our lending and investing activities and to provide liquidity for daily operations.

Short-term borrowings are made up of FHLBB advances with an original maturity of less than one year, a line of credit with the FHLBB and customer repurchase agreements, which mature daily. Short-term borrowings issued by the FHLBB were $174.0 million at September 30, 2017 and $155.0 million at December 31, 2016. We have an “Ideal Way” line of credit with the FHLBB for $9.5 million at September 30, 2017 and December 31, 2016. Interest on this line of credit is payable at a rate determined and reset by the FHLBB on a daily basis. The outstanding principal is due daily, but the portion not repaid will be automatically renewed. There were no advances outstanding on the line of credit as of September 30, 2017 or December 31, 2016. Customer repurchase agreements were $18.5 million at September 30, 2017 and $17.4 million at December 31, 2016. A customer repurchase agreement is an agreement by us to sell to and repurchase from the customer an interest in specific securities issued by or guaranteed by the U.S. government. This transaction settles immediately on a same day basis in immediately available funds. Interest paid is commensurate with other products of equal interest and credit risk. In addition, we have lines of credit of $4.0 million and $50.0 million with Bankers Bank Northeast (“BBN”) and PNC Bank, respectively. The interest rates on these lines are determined and reset on a daily basis by each respective bank. There were no advances outstanding under these lines of credit at September 30, 2017 or December 31, 2016. As part of our contract with BBN, we are required to maintain a reserve balance of $300,000 with BBN for our use of this line of credit.

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Long-term debt consists of FHLBB advances with an original maturity of one year or more. At September 30, 2017, we had $106.3 million in long-term debt with the FHLBB. This compares to $124.8 million in long-term debt with FHLBB advances at December 31, 2016.

Customer repurchase agreements are collateralized by government-sponsored enterprise obligations with fair value of $6.8 million and $24.6 million, and mortgage backed securities with a fair value of $61.1 million and $57.6 million, at September 30, 2017 and December 31, 2016, respectively. The securities collateralizing repurchase agreements are subject to fluctuations in fair value. We monitor the fair value of the collateral on a periodic basis, and would pledge additional collateral if necessary based on changes in fair value of collateral or the balances of the repurchase agreements.

All FHLBB advances are collateralized by a blanket lien on our owner occupied residential real estate loans and certain eligible commercial real estate loans.

9.   PENSION BENEFITS

We maintain a pension plan for our eligible employees. On September 30, 2016, we effected a soft freeze on the Plan and therefore no new participants will be included in the Plan after such effective date. We plan to contribute to the pension plan the amount required to meet the minimum funding standards under Section 412 of the Internal Revenue Code of 1986, as amended. Additional contributions will be made as deemed appropriate by management in conjunction with the pension plan’s actuaries. We have not yet determined how much we expect to contribute to our pension plan in 2017. No contributions have been made to the plan for the nine months ended September 30, 2017. The pension plan assets are invested in group annuity contracts with the Principal Financial Group, who also acts as third-party administrator for our 401(k) and ESOP plans.

The following table provides information regarding net pension benefit costs for the periods shown:

	Three Months Ended September 30,						Nine Months Ended, September 30,
	2017			2016			2017			2016
	(In thousands)
Service cost	$	245		$	283		$	778		$	854
Interest cost		254			240			761			719
Expected return on assets		(298	)		(275	)		(895	)		(823	)
Amortization of actuarial losses		51			24			153			71
Net periodic pension cost	$	252		$	272		$	797		$	821

10. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative financial instruments. Specifically, we entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to certain variable rate loan assets and variable rate borrowings.

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Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of our derivative financial instruments designated as hedging instruments as well as our classification on the balance sheet as of September 30, 2017 and December 31, 2016.

September 30, 2017	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	1	Other Liabilities	$	2,710

December 31, 2016	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	—	Other Liabilities	$	3,152

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest income and expense and to manage our exposure to interest rate movements. To accomplish this objective, we entered into interest rate swaps as part of our interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for our making fixed payments.

The following table presents information about our cash flow hedges at September 30, 2017 and December 31, 2016:

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
September 30, 2017	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)								(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		2.6		1.31	%		2.46	%	$	(2,709	)

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
December 31, 2016	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)									(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		3.4		0.92	%		2.46	%	$	(3,152	)

During 2016, we terminated a forward-starting interest rate swap with a notional amount of $32.5 million and incurred a termination fee of $3.4 million. During 2015, we terminated forward-starting interest rate swaps with notional amounts of $47.5 million and incurred a termination fee of $2.4 million. The termination fees are amortized as a reclassification of other comprehensive income into interest expense over the terms of the previously hedged borrowings, which were six and five years for the swaps terminated in 2016 and 2015, respectively.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. We did not recognize any hedge ineffectiveness in earnings during the nine months ended September 30, 2017 or 2016.

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We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of six years (excluding forecasted payment of variable interest on existing financial instruments).

The table below presents the pre-tax net losses of our cash flow hedges for the periods indicated.

	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
	(In thousands)
Interest rate swaps	$	(14	)	$	417	$	(307	)	$	(2,863	)

Amounts reported in accumulated other comprehensive loss related to these derivatives are reclassified to interest expense as interest payments are made on our rate sensitive assets/liabilities. The amount reclassified from accumulated other comprehensive income into net income for the effective portion of interest rate swaps and termination fees was $497,000 and $397,000 during the three months ended September 30, 2017 and 2016, respectively and $1.6 million and $1.0 million during the nine months ended September 30, 2017 and 2016, respectively. During the next 12 months, we estimate that $1.8 million will be reclassified as an increase in interest expense. During the nine months ended September 30, 2017 and 2016, no gains or losses were reclassified from accumulated other comprehensive loss into income for ineffectiveness on cash flow hedges.

Credit-risk-related Contingent Features

By using derivative financial instruments, we expose ourselves to credit risk. Credit risk is the risk of failure by the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative is negative, we owe the counterparty and, therefore, it does not possess credit risk. The credit risk in derivative instruments is mitigated by entering into transactions with highly-rated counterparties that we believe to be creditworthy and by limiting the amount of exposure to each counterparty.

We have agreements with our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. We also have agreements with certain of our derivative counterparties that contain a provision where if we fail to maintain our status as well capitalized, then the counterparty could terminate the derivative positions and we would be required to settle our obligations under the agreements. Certain of our agreements with our derivative counterparties contain provisions where if a formal administrative action by a federal or state regulatory agency occurs that materially changes our creditworthiness in an adverse manner, we may be required to fully collateralize our obligations under the derivative instrument.

As of September 30, 2017, the termination value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $2.7 million. As of September 30, 2017, we have mortgage-backed securities with a fair value of $3.0 million and $50,000 cash posted as collateral against our obligations under these agreements. If we had breached any of these provisions at September 30, 2017, we could have been required to settle our obligations under the agreements at the termination value.

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11.   FAIR VALUE OF ASSETS AND LIABILITIES

Determination of Fair Value

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for our various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair Value Hierarchy – We group our assets and liabilities that are measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets. Level 1 assets generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2 – Valuation is based on 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 for substantially the full term of the assets or liabilities.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Methods and assumptions for valuing our financial instruments are set forth below. Estimated fair values are calculated based on the value without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications or estimated transaction cost.

Cash and cash equivalents – The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

Securities and mortgage-backed securities – Fair value of securities are primarily measured using unadjusted information from an independent pricing service. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. These securities include marketable equity securities. All other securities are measured at fair value in Level 2 and are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

Federal Home Loan Bank and other stock – These investments are carried at cost which is their estimated redemption value.

Loans receivable – For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans (e.g., commercial real estate and investment property mortgage loans, commercial and industrial loans and residential real estate loans) are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Accrued interest – The carrying amounts of accrued interest approximate fair value.

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

Short-term borrowings and long-term debt – The fair values of our debt instruments are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Interest rate swaps – The valuation of our interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. We have determined that the majority of the inputs used to value our interest rate derivatives fall within Level 2 of the fair value hierarchy.

Commitments to extend credit – Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the term and credit risk. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. Such differences are not considered significant.

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

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Securities available-for-sale
Government-sponsored mortgage-backed securities	$	—	$	190,321	$	—	$	190,321
U.S. government guaranteed mortgage-backed securities		—		16,961		—		16,961
Corporate bonds		—		56,553		—		56,553
State and municipal bonds		—		3,225		—		3,225
Government-sponsored enterprise obligations		—		24,453		—		24,453
Mutual funds		6,406		—		—		6,406
Total securities available-for-sale		6,406		291,513		—		297,919
Interest rate swaps		—		1		—		1
Total assets	$	6,406	$	291,514	$	—	$	297,920
Liabilities:
Interest rate swaps	$	—	$	2,710	$	—	$	2,710

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Government-sponsored mortgage-backed securities	$	—	$	180,136	$	—	$	180,136
U.S. government guaranteed mortgage-backed securities		—		17,350		—		17,350
Corporate bonds		—		50,317		—		50,317
State and municipal bonds		—		4,008		—		4,008
Government-sponsored enterprise obligations		—		42,008		—		42,008
Mutual funds		6,296		—		—		6,296
Total assets	$	6,296	$	293,819	$	—	$	300,115
Liabilities:
Interest rate swaps	$	—	$	3,152	$	—	$	3,152

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Also, we may be required, from time to time, to measure certain other assets at fair value on a non-recurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no assets measured at fair value on a non-recurring basis at September 30, 2017. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related assets at September 30, 2016. Total losses represent the change in carrying value as a result of fair value adjustments related to assets still held at September 30, 2016.

	At September 30, 2016						Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
							Total		Total
	Level 1		Level 2		Level 3		Gains (Losses)		Gains (Losses)
	(In thousands)
Impaired Loans	$	—	$	—	$	2,059	$	—	$	(220	)

The amount of impaired loans represents the carrying value and related write-down and valuation allowance of impaired loans for which adjustments are based on the estimated fair value of the underlying collateral. The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on real estate appraisals performed by independent licensed or certified appraisers. 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 appraisers to adjust for differences between the comparable sales and income data available. Management will discount appraisals as deemed necessary based on the date of the appraisal and new information deemed relevant to the valuation. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. The resulting losses were recognized in earnings through the provision for loan losses. Impaired loans with adjustments resulting from discounted cash flows or without a specific reserve are not included in this disclosure.

There were no transfers to or from Level 1 and 2 during the three and nine months ended September 30, 2017 and 2016. We did not measure any liabilities at fair value on a non-recurring basis on the consolidated balance sheets.

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Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Where quoted market prices are not available, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the estimates. The estimated fair values of our financial instruments are as follows:

	September 30, 2017
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	28,900	$	28,900	$	—	$	—	$	28,900
Securities available-for-sale		297,919		6,406		291,513		—		297,919
Federal Home Loan Bank of Boston and other restricted stock		15,704		—		—		15,704		15,704
Loans - net		1,608,255		—		—		1,577,309		1,577,309
Accrued interest receivable		5,764		—		—		5,764		5,764
Mortgage servicing rights		380		—		380		—		380
Derivative assets		1		—		1		—		1
Liabilities:
Deposits		1,515,198		—		—		1,514,641		1,514,641
Short-term borrowings		192,465		—		192,482		—		192,482
Long-term debt		106,339		—		106,517		—		106,517
Accrued interest payable		394		—		—		394		394
Derivative liabilities		2,710		—		2,710		—		2,710

	December 31, 2016
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	70,234	$	70,234	$	—	$	—	$	70,234
Securities available-for-sale		300,115		6,296		293,819		—		300,115
Federal Home Loan Bank of Boston and other restricted stock		16,124		—		—		16,124		16,124
Loans - net		1,556,416		—		—		1,525,274		1,525,274
Accrued interest receivable		5,782		—		—		5,782		5,782
Mortgage servicing rights		465		—		628		—		628
Liabilities:
Deposits		1,518,071		—		—		1,521,580		1,521,580
Short-term borrowings		172,351		—		172,351		—		172,351
Long-term debt		124,836		—		125,183		—		125,183
Accrued interest payable		1,012		—		—		1,012		1,012
Derivative liabilities		3,152		—		3,152		—		3,152

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12. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting periods, including interim periods, beginning after December 15, 2017. We do not expect the application of this guidance to have a material impact on our consolidated financial statements other than expanded disclosures regarding non-interests income.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall, (Subtopic 825-10). The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Targeted improvements to generally accepted accounting principles include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not expect the application of this guidance to have a material impact on our consolidated financial statements due to the limited amounts of marketable equity securities owned by the Company.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted for all entities. Management is currently evaluating the impact to the consolidated financial statements of adopting this Update but does not expect adoption to have a material impact on our consolidated financial statements. As of September 30, 2017, the Company had $9.9 million of outstanding operating leases pertaining to banking premises, which would be recognized as assets and corresponding liabilities upon adoption.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718). This Update was issued as part of the FASB’s simplification initiative. The areas for simplification in this Update involve several aspects of the 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. The Company adopted this Update during the nine months ended September 30, 2017 which resulted in the recognition of $821,000 in income tax benefit that would have previously been recognized in additional paid in capital.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal years. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is in the process of evaluating the standard. We have put together a project team that has begun to identify appropriate loan segments along with related historical losses for each segment and potential models that would be most appropriate for each individual segment. We have not quantified the effects of any models, but do expect the standard to significantly change the approach to calculating our allowance for loan losses.

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In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. This Update provides guidance on eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; separately identifiable cash flows and application of the predominance principle. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08—Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This Update amends guidance on the amortization period of premiums on certain purchased callable debt securities. Specifically, the amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company plans to adopt ASU 2017-12 on January 1, 2018. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. While the Company continues to assess all potential impacts of the standard, we do not expect the application of this guidance to have a material impact on our consolidated financial statements.

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ITEM 2:      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

We strive to remain a leader in meeting the financial service needs of our local community, and to provide quality service to the individuals and businesses in the market areas that we have served since 1853. Historically, we have been a community-oriented provider of traditional banking products and services to business organizations and individuals, including products such as residential and commercial loans, consumer loans and a variety of deposit products. We meet the needs of our local community through a community-based and service-oriented approach to banking.

We have adopted a growth-oriented strategy that has focused on increasing commercial lending. Our strategy also calls for increasing deposit relationships and broadening our product lines and services. We believe that this business strategy is best for our long-term success and viability, and complements our existing commitment to high-quality customer service. In connection with our overall growth strategy, we seek to:

● grow our commercial and industrial and commercial real estate loan portfolios by targeting businesses in our primary market areas of western Massachusetts and northern Connecticut as a means to increase the yield on and diversify our loan portfolio and build transactional deposit account relationships;

● focus on expanding our retail banking franchise and increase the number of households served within our market area; and

● supplement the commercial focus, grow the residential loan portfolio to diversify risk and deepen customer relationships.

You should read the following financial results for the three and nine months ended September 30, 2017 in the context of this strategy. The third quarter financial results for 2016 reflect the pre-merger operations of the Company. As a result, the Company’s 2017 third quarter may not be comparable to financial results for the third quarter of 2016.

● Net income was $3.8 million, or $0.13 per diluted share, for the three months ended September 30, 2017, compared to $628,000, or $0.04 per diluted share, for the same period in 2016. For the nine months ended September 30, 2017, net income was $12.7 million, or $0.42 per diluted share, as compared to net income of $3.0 million, or $0.17 per diluted share, for the same period in 2016.

● The provision for loan losses was $200,000 and $375,000 for the three months ended September 30, 2017 and 2016, respectively, and $850,000 and $400,000 for the nine months ended September 30, 2017 and 2016, respectively. The lower provision for the nine months ended September 30, 2016 was primarily the result of a $1.0 million partial recovery on a previously charged-off single commercial real estate loan during the first quarter of 2016.

● Net interest income was $14.8 million and $8.3 million for the three months ended September 30, 2017 and 2016, respectively. The net interest margin, on a tax-equivalent basis, was 3.09% for the three months ended September 30, 2017, compared to 2.65% for the same period in 2016. Net interest income was $44.0 million and $24.6 million for the nine months ended September 30, 2017 and 2016, respectively. The net interest margin, on a tax-equivalent basis, was 3.09% and 2.62% for the nine months ended September 30, 2017 and 2016, respectively.

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CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements are prepared in accordance with U.S. GAAP and practices within the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments. Actual results could differ from those estimates.

Critical accounting estimates are necessary in the application of certain accounting policies and procedures, and are particularly susceptible to significant change. Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and could potentially result in materially different results under different assumptions and conditions. There have been no material changes to our critical accounting policies during the nine months ended September 30, 2017. For additional information on our critical accounting policies, please refer to the information contained in Note 1 of the accompanying unaudited consolidated financial statements and Note 1 of the consolidated financial statements included in our 2016 Annual Report.

COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2017 AND DECEMBER 31, 2016

Total assets were $2.1 billion at September 30, 2017 and December 31, 2016. A slight increase in total assets of $10.4 million, or 0.5%, was primarily due to an increase in total loans of $52.3 million, or 3.3%, offset by a decrease in cash and cash equivalents of $41.3 million, or 58.8%, and a decrease in investments of $2.6 million, or 0.8%.

Total loans of $1.6 billion increased $52.3 million, or 3.3%, at September 30, 2017, from $1.6 billion at December 31, 2016. The increase was due to a $33.9 million, or 5.5%, increase in residential loans, including home equity loans, an increase of $22.1 million, or 9.9%, in commercial and industrial loans, partially offset by a decrease of $3.9 million, or 0.5%, in commercial real estate loans. The decrease in the commercial real estate portfolio was largely related to the expected payoff of a $7.5 million completed commercial real estate construction project during first quarter 2017.

All loans where the payments are 90 days or more in arrears as of the closing date of each month are placed on nonaccrual status. Nonperforming loans were $13.2 million at September 30, 2017 and $14.1 million at December 31, 2016. If all nonaccrual loans had been performing in accordance with their terms, we would have earned additional interest income of $580,000 and $371,000 for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, we had $103,000 in other real estate owned (“OREO”). At September 30, 2017 and December 31, 2016, our nonperforming loans to total loans were 0.81% and 0.90%, respectively, while our nonperforming assets to total assets were 0.64% and 0.69%, respectively. A summary of our nonaccrual and past due loans by class are listed in Note 5 of the accompanying unaudited consolidated financial statements.

During the three months ended March 31, 2017, management completed an evaluation of premises and equipment acquired from Chicopee, which resulted in a $2.4 million adjustment to the provisional fair values of bank premises acquired and a $1.4 million reduction to goodwill. The remaining adjustments to goodwill of $140,000 during the three months ended March 31, 2017 resulted from information obtain during the quarter about events and circumstances that existed as of the acquisition date. There were no adjustments to goodwill during the three months ended September 30, 2017.

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At September 30, 2017, total deposits of $1.5 billion decreased $2.9 million, or 0.2%, from December 31, 2016. Savings accounts decreased $5.2 million, or 3.5%, to $144.3 million. Time deposits decreased $6.3 million, or 1.1%, from $572.9 million at December 31, 2016 to $566.7 million at September 30, 2017. The decrease in time deposits was due to non-relationship customers and brokered deposits seeking higher yields. We are focused on allowing high cost non-relationship deposits to mature and be replaced with low cost relationship-based core deposits. Core deposits, defined as all deposits except time deposits, represented 62.6% of total deposits, and increased $3.4 million, or 0.4%, from $945.1 million at December 31, 2016 to $948.5 million at September 30, 2017. Non-interest bearing deposits increased $4.9 million, or 1.6%, to $308.9 million, money market accounts increased $3.4 million, or 0.8%, to $412.7 million, and interest-bearing checking accounts increased $228,000, or 0.3%, to $82.6 million.

Borrowings increased $1.6 million, or 0.5%, to $298.8 million at September 30, 2017 from $297.2 million at December 31, 2016. Short-term borrowings increased $20.1 million, or 11.7%, to $192.5 million at September 30, 2017 from $172.4 million at December 31, 2016 due to an increase in short-term FHLBB funding. Long-term debt decreased $18.5 million, or 14.8%, to $106.3 million at September 30, 2017 from $124.8 million at December 31, 2016.

Shareholders’ equity was $252.6 million, or 12.1% of total assets at September 30, 2017 and $238.4 million, or 11.5% of total assets at December 31, 2016. The increase in shareholders’ equity during the nine months reflects net income of $12.7 million, the exercise of stock options for $5.7 million and other comprehensive income of $3.2 million. These increases were offset by the repurchase of common stock for $5.7 million and the payment of regular dividends of $2.7 million for the nine months ended September 30, 2017.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

General

Net income was $3.8 million, or $0.13 per diluted share for the three months ended September 30, 2017, compared to $628,000, or $0.04 per diluted share for the same period in 2016. Net interest income was $14.8 million and $8.3 million for the three months ended September 30, 2017 and 2016, respectively.

Net Interest and Dividend Income

The following tables set forth the information relating to our average balance and net interest income for the three months ended September 30, 2017 and 2016, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Yields and costs are derived by dividing interest income by the average balance of interest-earning assets and interest expense by the average balance of interest-bearing liabilities for the periods shown. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned from making changes in loan rates and terms and fees earned when the real estate loans are prepaid or refinanced. For analytical purposes, the interest earned on tax-exempt assets is adjusted to a tax-equivalent basis to recognize the income tax savings which facilitates comparison between taxable and tax-exempt assets.

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	Three Months Ended September 30,
	2017								2016
	Average					Average Yield/			Average					Average Yield/
	Balance		Interest			Cost			Balance		Interest			Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	1,605,376	$	16,681			4.16	%	$	932,140	$	9,168			3.93	%
Securities(2)		302,030		1,901			2.52			296,406		1,709			2.31
Other investments		17,748		172			3.88			12,728		130			4.09
Short-term investments(3)		5,206		11			0.85			17,380		14			0.32
Total interest-earning assets		1,930,360		18,765			3.89			1,258,654		11,021			3.50
Total non-interest-earning assets		141,119								79,032
Total assets	$	2,071,479							$	1,337,686
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts	$	82,164		81			0.39		$	31,194		24			0.31	%
Savings accounts		148,433		43			0.12			75,566		20			0.11
Money market accounts		400,400		386			0.39			278,257		293			0.42
Time deposit accounts		568,578		1,601			1.13			383,288		1,245			1.30
Total interest-bearing deposits		1,199,575		2,111			0.70			768,305		1,582			0.82
Short-term borrowings and long-term debt		301,715		1,609			2.13			229,718		1,067			1.86
Interest-bearing liabilities		1,501,290		3,720			0.99			998,023		2,649			1.06
Non-interest-bearing deposits		300,757								177,802
Other non-interest-bearing liabilities		16,147								16,261
Total Non-interest-bearing liabilities		316,904								194,063
Total liabilities		1,818,194								1,192,086
Total equity		253,285								145,601
Total liabilities and equity	$	2,071,479							$	1,337,687
Less: Tax-equivalent adjustment(2)				(249	)							(44	)
Net interest and dividend income			$	14,796							$	8,328
Net interest rate spread(4)							2.90	%							2.44	%
Net interest margin(5)							3.09	%							2.65	%
Ratio of average interest-earning assets to average interest-bearing liabilities							128.58	%							126.11	%

(1) Loans, including non-accrual loans, are net of deferred loan origination costs, and unadvanced funds.

(2) Securities and loan income are presented on a tax-equivalent basis using a tax rate of 35% for the 2017 period and 34% for the 2016 period. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported in the unaudited consolidated statements of net income.

(3) Short-term investments include federal funds sold.

(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(5) Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest earning assets.

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The following table shows how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to:

● interest income changes attributable to changes in volume (changes in volume multiplied by prior rate);

● interest income changes attributable to changes in rate (changes in rate multiplied by current volume); and the net change.

The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	Three Months Ended September 30, 2017 compared to Three Months Ended September 30, 2016
	Increase (Decrease) Due to
	Volume			Rate			Net
Interest-earning assets	(In thousands)
Loans (1)	$	6,622		$	891		$	7,513
Securities (1)		32			160			192
Other investments		51			(9	)		42
Short-term investments		(10	)		7			(3	)
Total interest-earning assets		6,695			1,049			7,744
Interest-bearing liabilities
Interest-bearing checking accounts		39			18			57
Savings accounts		19			4			23
Money market accounts		129			(36	)		93
Time deposit accounts		602			(246	)		356
Short-term borrowing and long-time debt		334			208			542
Total interest-bearing liabilities		1,123			(52	)		1,071
Change in net interest and dividend income (1)	$	5,572		$	1,101		$	6,673

(1) Securities, loan income and change in net interest and dividend income are presented on a tax-equivalent basis using a tax rate of 35%. The tax-equivalent adjustment is deducted from tax-equivalent net interest income.

Net interest and dividend income increased $6.5 million, or 78.3%, to $14.8 million for the three months ended September 30, 2017, compared to $8.3 million for the three months ended September 30, 2016. The increase reflected a $7.5 million, or 68.2%, increase in interest income as average interest-earning assets increased $671.7 million, or 53.4%, primarily due to loan growth as a result of the merger. The yield on interest-earning assets increased 39 basis points from 3.50% for the three months ended September 30, 2016 to 3.89% for the three months ended September 30, 2017.

For the three months ended September 30, 2017, interest expense increased $1.1 million, or 42.3%, compared to the three months ended September 30, 2016. During the same period, interest-bearing liabilities increased $431.3 million, or 56.1%, while non-interest bearing liabilities, such as demand accounts, increased $123.0 million, or 69.2%. The net interest margin of 3.09% for the three months ending September 30, 2017 increased 44 basis points, compared to 2.65% for the three months ended September 30, 2016. The three months ended September 30, 2017 include amortization of purchase accounting adjustments related to the Chicopee acquisition, which increased net interest income by $448,000. Excluding these items, net interest margin for the third quarter of 2017 would have been 3.00%.

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Provision for Loan Losses

The provision for loan losses is reviewed by management based upon our evaluation of then-existing economic and business conditions affecting our key lending areas and other conditions, such as new loan products, credit quality trends (including trends in nonperforming loans expected to result from existing conditions), collateral values, loan volumes and concentrations, specific industry conditions within portfolio segments that existed as of the balance sheet date and the impact that such conditions were believed to have had on the collectability of the loan portfolio.

The amount of the provision for loan losses during the three months ended September 30, 2017 was based upon the changes that occurred in the loan portfolio during that same period. The changes in the loan portfolio primarily includes an increase in residential loans and a higher level of net charge-offs. After evaluating all factors, we recorded a provision for loan losses of $200,000 for the three months ended September 30, 2017, compared to $375,000 for the same period in 2016. The allowance was $10.5 million, or 0.65% of total loans, and $10.1 million, or 0.64% of total loans, at September 30, 2017 and December 31, 2016, respectively.

For the three months ended September 30, 2017, net charge-offs were $100,000. This was comprised of $211,000 in charge-offs, partially offset by recoveries of $111,000.

For the three months ended September 30, 2016, net charge-offs were $18,000. This was comprised of $86,000 in charge-offs, partially offset by recoveries of $68,000.

Although we believe that we have established and maintained the allowance for loan losses at adequate levels, future adjustments may be necessary if economic, real estate and other conditions differ substantially from the current operating environment.

Non-interest Income

For the three months ended September 30, 2017, non-interest income of $2.4 million increased $1.1 million, or 84.6%, compared to $1.3 million for the three months ended September 30, 2016. The increase was primarily due to the merger with Chicopee. The increase was primarily driven by an increase in service charges and fee income of $761,000, or 79.9%, an increase in other income of $111,000, an increase of $81,000, or 22.0%, in income from bank-owned life insurance and an increase of $48,000 in gains on sales of securities.

Non-interest Expense

For the three months ended September 30, 2017, non-interest expense of $11.2 million increased $3.0 million, or 36.6%, from $8.2 million, for the three months ended September 30, 2016. The increase was primarily due to a $2.4 million, or 58.5%, increase in salaries and benefits due to the addition of the Chicopee staff and normal merit increases that typically occur during the first quarter of each year. Occupancy expense increased $336,000, or 60.5%, due to the acquisition of the Chicopee branches, and data processing expense increased $276,000, or 68.3%, while merger related expenses decreased $830,000. The increase to non-interest expense reflects generally higher level of expenses associated with operating a larger financial institution, which include additional employees, increased costs for data processing, occupancy, and professional services. Although there are overall added expenses, the merger provided the opportunity to achieve greater economies of scale as reflected in the improvement in the efficiency ratio from 76.6%, for the three months ended September 30, 2016, to 65.4% for the three months ended September 30, 2017.

Income Taxes

For the three months ended September 30, 2017, we had a tax provision of $2.0 million as compared to $423,000 for the same period in 2016. The effective tax rate was 34.8% for the three months ended September 30, 2017 and 40.2% for the same period in 2016. The three months ended September 30, 2017 include higher levels of pre-tax income as a result of the merger, while the comparable 2016 period includes nondeductible merger expenses of $691,000.

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COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016

General

Net income was $12.7 million, or $0.42 per diluted share, for the nine months ended September 30, 2017, compared to $3.0 million, or $0.17 per diluted share, for the same period in 2016. Net interest income was $44.0 million and $24.6 million for the nine months ended September 30, 2017 and 2016, respectively.

Net Interest and Dividend Income

The following tables set forth the information relating to our average balance and net interest income for the nine months ended September 30, 2017 and 2016, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Yields and costs are derived by dividing interest income by the average balance of interest-earning assets and interest expense by the average balance of interest-bearing liabilities for the periods shown. Average balances are derived from actual daily balances over the periods indicated. Interest income includes fees earned from making changes in loan rates and terms and fees earned when the real estate loans are prepaid or refinanced. For analytical purposes, the interest earned on tax-exempt assets is adjusted to a tax-equivalent basis to recognize the income tax savings which facilitates comparison between taxable and tax-exempt assets.

38

	Nine Months Ended September 30,
	2017								2016
	Average Balance		Interest			Average Yield/ Cost			Average Balance		Interest			Average Yield/ Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	1,589,423	$	49,202			4.13	%	$	875,325	$	26,118			3.98	%
Securities(2)		305,111		5,761			2.52			334,938		6,062			2.41
Other investments		17,665		501			3.78			14,703		398			3.61
Short-term investments(3)		24,023		102			0.57			33,457		67			0.27
Total interest-earning assets		1,936,222		55,566			3.83			1,258,423		32,645			3.46
Total Non-interest-earning assets		137,775								77,626
Total assets	$	2,073,997							$	1,336,049
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking accounts	$	86,841		249			0.38		$	31,353		64			0.27
Savings accounts		150,975		137			0.12			76,381		63			0.11
Money market accounts		398,400		1,150			0.38			264,354		785			0.40
Time deposit accounts		568,728		4,643			1.09			391,793		3,677			1.25
Total interest-bearing deposits		1,204,944		6,179			0.68			763,881		4,589			0.80
Short-term borrowings and long-term debt		302,254		4,579			2.02			250,462		3,329			1.77
Interest-bearing liabilities		1,507,198		10,758			0.95			1,014,343		7,918			1.04
Non-interest-bearing deposits		304,492								165,156
Other non-interest-bearing liabilities		13,774								15,273
Total non-interest-bearing liabilities		318,266								180,429
Total liabilities		1,825,464								1,194,772
Total equity		248,533								141,277
Total liabilities and equity	$	2,073,997							$	1,336,049
Less: Tax-equivalent adjustment(2)				(766	)							(154	)
Net interest and dividend income			$	44,042							$	24,573
Net interest rate spread(4)							2.86	%							2.42	%
Net interest margin(5)							3.09	%							2.62	%
Ratio of average interest-earning assets to average interest-bearing liabilities							128.47	%							124.06	%

(1) Loans, including non-accrual loans, are net of deferred loan origination costs, and unadvanced funds.

(2) Securities and loan income are presented on a tax-equivalent basis using a tax rate of 35% for the 2017 period and 34% for the 2016 period. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported in the statements of net income.

(3) Short-term investments include federal funds sold.

(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(5) Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets.

39

The following table shows how changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to:

● interest income changes attributable to changes in volume (changes in volume multiplied by prior rate);

● interest income changes attributable to changes in rate (changes in rate multiplied by current volume); and the net change.

The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	Nine Months Ended September 30, 2017 compared to Nine Months Ended September 30, 2016
	Increase (Decrease) Due to
	Volume			Rate			Net
Interest-earning assets	(In thousands)
Loans (1)	$	21,307		$	1,777		$	23,084
Securities (1)		(540	)		239			(301	)
Other investments		80			23			103
Short-term investments		(19	)		54			35
Total interest-earning assets		20,828			2,093			22,921
Interest-bearing liabilities
Interest-bearing checking accounts		113			72			185
Savings accounts		62			12			74
Money market accounts		398			(33	)		365
Time deposit accounts		1,661			(695	)		966
Short-term borrowing and long-term debt		688			562			1,250
Total interest-bearing liabilities		2,922			(82	)		2,840
Change in net interest and dividend income	$	17,906		$	2,175		$	20,081

(1) Securities, loan income and change in net interest and dividend income are presented on a tax-equivalent basis using a tax rate of 35%. The tax-equivalent adjustment is deducted from tax-equivalent net interest income.

Net interest income was $44.0 million for the nine months ended September 30, 2017 and $24.6 million for the nine months ended September 30, 2016. The increase in net interest income was primarily due to the increase in interest and dividend income of $22.3 million, or 68.7%, partially offset by the increase in interest expense of $2.8 million, or 35.9%, from the nine months ended September 30, 2016. The net interest margin, on a tax-equivalent basis, was 3.09% and 2.62% for the nine months ended September 30, 2017 and 2016, respectively.

The average balance sheet comparison for the nine months ended September 30, 2016 to September 30, 2017 largely reflects the merger with Chicopee. Average interest-earning assets increased $677.8 million, or 53.9%, from $1.3 billion for the nine months ended September 30, 2016 to $1.9 billion for the nine months ended September 30, 2017. The increase in average interest-earning assets was due to a $714.1 million, or 81.6%, increase in average loans, partially offset by a $29.8 million, or 8.9%, decrease in average investments and a $9.4 million, or 28.2%, decrease in other interest-earning assets. The average balance of demand deposit accounts, an interest-free source of funds, increased $139.3 million, or 84.4%, for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016.

The net interest margin increased 47 basis points, from 2.62% for the nine months ended September 30, 2016 to 3.09% for the nine months ended September 30, 2017. During the nine months ended September 30, 2017, amortization of purchase accounting adjustments related to the Chicopee acquisition increased net interest income by $1.4 million. Excluding these items, net interest margin for the nine months ended September 30, 2017 was 2.99%. The average asset yield increased from 3.46% for the nine months ended September 30, 2016 to 3.83% for the nine months ended September 30, 2017. The average cost of funds decreased 9 basis points from 1.04% for the nine months ended September 30, 2016 to 0.95% for the nine months ended September 30, 2017 primarily due to purchase accounting adjustments on time deposits and borrowings as well as the continuation of low market interest rates, which allowed us to renew or replace maturing time deposits at lower costs. The average cost of time deposits decreased 16 basis points, from 1.25% for the nine months ended September 30, 2016 to 1.09% for the nine months ended September 30, 2017. The average cost of borrowings increased 25 basis points, from 1.77% for the nine months ended September 30, 2016 to 2.02% for the nine months ended September 30, 2017. The increase in cost of funds in FHLB borrowings was primarily due to the increase in the Federal Funds target rate in December 2016, March 2017 and mid-June 2017.

40

Provision for Loan Losses

The amount that we provided for loan losses during the nine months ended September 30, 2017 was based upon the changes that occurred in the loan portfolio during that same period. The changes in the loan portfolio for the nine months ended September 30, 2017, described in the comparison of financial condition, include increases in residential real estate loans and commercial and industrial loans as well as an increase in net charge-offs over the comparable period. After evaluating these factors, we recorded a provision for loan losses of $850,000 for the nine months ended September 30, 2017, compared to $400,000 for the same period in 2016. The allowance was $10.5 million, or 0.65% of total loans, at September 30, 2017 and $10.1 million, or 0.64% of total loans, at December 31, 2016.

For the nine months ended September 30, 2017, net charge-offs were $400,000. This was comprised of charge-offs of $706,000 for the nine months ended September 30, 2017, partially offset by recoveries of $306,000.

For the nine months ended September 30, 2016, net recoveries were $687,000. This was comprised of recoveries of $1.0 million for the nine months ended September 30, 2016, partially offset by charge-offs of $347,000. During the nine months ended September 30, 2016, we received a partial recovery of $1.0 million related to a single commercial real estate loan previously charged-off in 2010.

Although we believe that we have established and maintained the allowance for loan losses at adequate levels, future adjustments may be necessary if economic, real estate and other conditions differ substantially from the current operating environment.

Non-interest Income

For the nine months ended September 30, 2017, non-interest income of $6.5 million increased $2.9 million, or 80.8%, compared to $3.6 million for the nine months ended September 30, 2016. The increase of $2.9 million was primarily due to an increase in service charges and fees of $2.1 million, or 77.6%, and an increase in income from bank-owned life insurance of $236,000, or 20.8%. The increase in non-interest income was primarily due to the merger with Chicopee. For the nine months ended September 30, 2017, wealth management fees of $404,000 earned by Westfield Financial Management Services, the Company’s investment management subsidiary, were included in service charges and fee income. Total assets under management increased to $111.7 million at September 30, 2017, compared to $91.6 million at December 31, 2016 due to positive market movements and additions from new and existing clients. Pre-tax realized gains on the sale of securities decreased $632,000, or 92.4%. Additionally, there was a $915,000 decrease on the prepayment of borrowings reported during the nine months ended September 30, 2016 as there were no such prepayments in 2017.

Non-interest Expense

For the nine months ended September 30, 2017, non-interest expense increased $10.1 million, or 43.5% to $33.4 million, or 2.15% of average assets, compared to $23.3 million, or 2.33% of average assets, for the nine months ended September 30, 2016. The increase in non-interest expense was primarily due to a $7.2 million, or 61.9%, increase in salaries and benefits due to the addition of the Chicopee staff and normal merit increases. Occupancy expense increased $1.1 million, or 64.4%, due to the acquisition of the Chicopee branches. Data processing expense increased $573,000, or 49.1%, from $1.2 million for the nine months ended September 30, 2016 to $1.7 million for the nine months ended September 30, 2017. Furniture and equipment increased $426,000, or 58.9%, from $723,000 for the nine months ended September 30, 2016 to $1.1 million for the nine months ended September 30, 2017. Advertising expense increased $265,000, or 38.1%, professional fees increased $202,000, or 11.8%, and other non-interest expense increased $1.7 million, or 56.4%. These increases were partially offset by a $1.3 million, or 67.3%, decrease in merger related expenses as well as a decrease in FDIC insurance expense of $128,000, or 21.5%. The increase to non-interest expense reflects generally higher level of expenses associated with operating a larger financial institution, which includes additional employees, increased costs for data processing, occupancy, and professional services. The merger provided the opportunity to achieve greater economies of scale as reflected in the improvement in the efficiency ratio from 75.3% for the nine months ended September 30, 2016 to 65.0% for the nine months ended September 30, 2017.

41

Income Taxes

For the nine months ended September 30, 2017, we had a tax provision of $3.6 million as compared to $1.5 million for the same period in 2016. The effective tax rate was 22.1% for the nine months ended September 30, 2017 and 33.4% for the same period in 2016. The 2017 period includes $1.8 million in tax benefits recorded on the reversal of a deferred tax valuation allowance and stock option exercises.

LIQUIDITY AND CAPITAL RESOURCES

The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, withdrawals of deposits and operating expenses. Our primary sources of liquidity are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities and calls of securities and funds provided by operations. We also can borrow funds from the FHLBB based on eligible collateral of loans and securities. Our maximum additional borrowing capacity from the FHLBB at September 30, 2017, was $132.0 million. In addition, we have available lines of credit of $4.0 million and $50.0 million with Bankers Bank Northeast (“BBN”) and PNC Bank, respectively. The interest rates on these lines are determined and reset on a daily basis by each respective bank.

Liquidity management is both a daily and long-term function of business management. The measure of a company’s liquidity is its ability to meet its cash commitments at all times with available cash or by conversion of other assets to cash at a reasonable price. Loan repayments and maturing securities are a relatively predictable source of funds. However, deposit flow, calls of securities and repayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds. Management believes that we have sufficient liquidity to meet its current operating needs.

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At September 30, 2017, we exceeded each of the applicable regulatory capital requirements. As of September 30, 2017, the most recent notification from the Office of Comptroller of the Currency categorized the Bank as “well-capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well-capitalized” the Bank must maintain minimum total risk-based, Tier 1 risk-based, Common Equity Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes would change our category. Our actual capital ratios of September 30, 2017 and December 31, 2016 are also presented in the following table.

	Actual					Minimum For Capital Adequacy Purpose					Minimum To Be Well Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
September 30, 2017
Total Capital (to Risk Weighted Assets):
Consolidated	$	257,936		15.76	%	$	130,935		8.00	%		N/A		N/A
Bank		247,801		15.18			130,610		8.00		$	163,263		10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated		247,358		15.11			98,201		6.00			N/A		N/A
Bank		237,223		14.53			97,958		6.00			130,610		8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated		247,358		15.11			73,651		4.50			N/A		N/A
Bank		237,223		14.53			73,468		4.50			106,121		6.50
Tier 1 Leverage Ratio (to Adjusted Average Assets):
Consolidated		247,358		12.01			82,396		4.00			N/A		N/A
Bank		237,223		11.53			82,313		4.00			102,891		5.00
December 31, 2016
Total Capital (to Risk Weighted Assets):
Consolidated	$	245,389		15.10	%	$	130,037		8.00	%		N/A		N/A
Bank		237,626		14.64			129,879		8.00		$	162,349		10.00	%
Tier 1 Capital (to Risk Weighted Assets):
Consolidated		235,261		14.47			97,528		6.00			N/A		N/A
Bank		227,498		14.01			97,409		6.00			129,879		8.00
Common Equity Tier 1 Capital (to Risk Weighted Assets)
Consolidated		235,261		14.47			73,146		4.50			N/A		N/A
Bank		227,498		14.01			73,057		4.50			105,527		6.50
Tier 1 Leverage Ratio (to Adjusted Average Assets):
Consolidated		235,261		12.19			77,187		4.00			N/A		N/A
Bank		227,498		11.86			76,745		4.00			95,931		5.00

43

We also have outstanding, at any time, a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject to strict credit control assessments. Guarantees specify limits to our obligations. Because many commitments and almost all guarantees expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. We are obligated under leases for certain of our branches and equipment. The following table summarizes the contractual obligations and credit commitments at September 30, 2017:

	Within 1 Year		After 1 Year But Within 3 Years		After 3 Year But Within 5 Years		After 5 Years		Total
	(In thousands)
Lease Obligations
Operating lease obligations (1)	$	1,110	$	2,069	$	1,716	$	4,995	$	9,890
Borrowings and Debt
Federal Home Loan Bank		223,938		45,502		10,138		761		280,339
Securities sold under agreements to repurchase		18,465		—		—		—		18,465
Total borrowings and debt		242,403		45,502		10,138		761		298,804
Credit Commitments
Available lines of credit		156,127		9		7		59,721		215,864
Other loan commitments		54,019		13,667		2,053		2,194		71,933
Letters of credit		7,058		392		—		255		7,705
Total credit commitments		217,204		14,068		2,060		62,170		295,502
Other Obligations
Vendor Contracts		2,644		5,288		5,288		6,390		19,610
Total Obligations	$	463,361	$	66,927	$	19,202	$	74,316	$	623,806

⁽¹⁾ Payments are for the lease of real property

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our assessment of our sensitivity to market risk since its presentation in our 2016 Annual Report. Please refer to Item 7A of the 2016 Annual Report for additional information.

ITEM 4: CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Management, including our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), as of the end of the period covered by this report. Based upon the evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, to ensure that information required to be disclosed in the reports we file and submit under the Securities Exchange Act of 1934, as amended, is (i) recorded, processed, summarized and reported as and when required and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussion regarding required disclosure.

44

Changes in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting identified in connection with the evaluation that occurred during our last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are subject to claims and legal actions in the ordinary course of business. We believe that all such claims and actions currently pending against us, if any, are either adequately covered by insurance or would not have a material adverse effect on us if decided in a manner unfavorable to us.

ITEM 1A. RISK FACTORS.

For a summary of risk factors relevant to our operations, see Part 1, Item 1A, “Risk Factors” in our 2016 Annual Report. There are no material changes in the risk factors relevant to our operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

The following table sets forth information with respect to purchases made by us of our common stock during the three months ended September 30, 2017.

Period	Total Number of Shares Purchased		Average Price Paid per Share ($)		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that May Yet Be Purchased Under the Program (1)
July 1 - 31, 2017		—		—		—		3,011,837
August 1 - 31, 2017		99,589		9.87		99,589		2,912,248
September 1 - 30, 2017		153,705		10.51		153,705		2,758,543
Total		253,294		10.26		253,294		2,758,543

(1) On January 31, 2017, the Board of Directors authorized an additional stock repurchase program under which the Company may purchase up to 3,047,000 shares, or 10%, of its outstanding common stock.

There were no sales by us of unregistered securities during the three months ended September 30, 2017.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURE.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

45

ITEM 6. EXHIBITS.

The exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed in the Exhibit Index attached hereto and are incorporated herein by reference.

46

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 on November 7, 2017.

Western New England Bancorp, Inc.
By:	/s/ James C. Hagan
	James C. Hagan
	President and Chief Executive Officer
By:	/s/ Guida R. Sajdak
	Guida R. Sajdak
	Executive Vice President and Chief Financial
	Officer

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of April 4, 2016, by and between Western New England Bancorp, Inc. (f/k/a Westfield Financial, Inc.) and Chicopee Bancorp, Inc. (incorporated by reference to Exhibit 2.1 of the Form 8-K filed with the Securities and Exchange Commission on April 7, 2016).
3.2	Restated Articles of Organization of Western New England Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the SEC on October 26, 2016).
3.3	Amended and Restated Bylaws of Western New England Bancorp, Inc. (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the SEC on February 2, 2017).
4.1	Form of Stock Certificate of Western New England Bancorp, Inc. (f/k/a Westfield Financial, Inc.) (incorporated by reference to Exhibit 4.1 of the Registration Statement No. 333-137024 on Form S-1 filed with the Securities and Exchange Commission on August 31, 2006).
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 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101**	Financial statements from the quarterly report on Form 10-Q of Western New England Bancorp, Inc. for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Net Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements.

* Filed herewith.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

EX-31.1

Western New England Bancorp, Inc. 10-Q

EXHIBIT 31.1

CERTIFICATION

I, James C. Hagan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Western New England Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: November 7, 2017	/s/ James C. Hagan
	James C. Hagan
	President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Western New England Bancorp, Inc. 10-Q

EXHIBIT 31.2

CERTIFICATION 

I, Guida R. Sajdak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Western New England Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: November 7, 2017	/s/ Guida R. Sajdak
	Guida R. Sajdak
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Western New England Bancorp, Inc. 10-Q

EXHIBIT 32.1

statement furnished pursuant to section 906 of the
sarbanes-oxley act of 2002, 18 u.s.c. section 1350

In connection with the Quarterly Report on Form 10-Q of Western New England Bancorp, Inc. (the “Company”) for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), James C. Hagan, President and Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

A) 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

B) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

November 7, 2017	/s/ James C. Hagan
Dated	James C. Hagan
	President and Chief Executive Officer

EX-32.2

Western New England Bancorp, Inc. 10-Q

EXHIBIT 32.2

statement furnished pursuant to section 906 of the
sarbanes-oxley act of 2002, 18 u.s.c. section 1350

In connection with the Quarterly Report on Form 10-Q of Western New England Bancorp, Inc. (the “Company”) for the quarter ended September 30, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Guida R. Sajdak, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

A) 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

B) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

November 7, 2017	/s/ Guida R. Sajdak
Dated	Guida R. Sajdak
	Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 03, 2017
Document And Entity Information
Entity Registrant Name	Western New England Bancorp, Inc.
Entity Central Index Key	0001157647
Document Type	10-Q
Trading Symbol	WNEB
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity a Well-known Seasoned Issuer	No
Entity a Voluntary Filer	No
Entity's Reporting Status Current	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		30,634,170
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2017

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
CASH AND DUE FROM BANKS	$ 25,108	$ 23,297
FEDERAL FUNDS SOLD	885	4,388
INTEREST-BEARING DEPOSITS AND OTHER SHORT-TERM INVESTMENTS	2,907	42,549
CASH AND CASH EQUIVALENTS	28,900	70,234
SECURITIES AVAILABLE-FOR-SALE - AT FAIR VALUE	297,919	300,115
FEDERAL HOME LOAN BANK OF BOSTON AND OTHER RESTRICTED STOCK - AT COST	15,704	16,124
LOANS - Net of allowance for loan losses of $10,518 and $10,068 at September 30, 2017 and December 31, 2016, respectively	1,608,255	1,556,416
PREMISES AND EQUIPMENT, Net	23,440	20,885
ACCRUED INTEREST RECEIVABLE	5,764	5,782
BANK-OWNED LIFE INSURANCE	68,307	66,938
DEFERRED TAX ASSET, Net	15,636	16,159
GOODWILL	12,487	13,747
CORE DEPOSIT INTANGIBLE	4,156	4,438
OTHER REAL ESTATE OWNED	103	298
OTHER ASSETS	5,707	4,882
TOTAL ASSETS	2,086,378	2,076,018
DEPOSITS :
Non-interest-bearing	308,934	303,993
Interest-bearing	1,206,264	1,214,078
Total deposits	1,515,198	1,518,071
SHORT-TERM BORROWINGS	192,465	172,351
LONG-TERM DEBT	106,339	124,836
SECURITIES PENDING SETTLEMENT	137	455
OTHER LIABILITIES	19,684	21,909
TOTAL LIABILITIES	1,833,823	1,837,622
SHAREHOLDERS' EQUITY:
Preferred stock - $0.01 par value, 5,000,000 shares authorized, none outstanding at September 30, 2017 and December 31, 2016
Common stock - $0.01 par value, 75,000,000 shares authorized, 30,816,813 shares issued and outstanding at September 30, 2017; 30,380,231 shares issued and outstanding at December 31, 2016	309	304
Additional paid-in capital	206,914	205,996
Unearned compensation - ESOP	(5,946)	(6,418)
Unearned compensation - Equity Incentive Plan	(950)	(536)
Retained earnings	61,695	51,711
Accumulated other comprehensive loss	(9,467)	(12,661)
Total shareholders' equity	252,555	238,396
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 2,086,378	$ 2,076,018

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CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Allowance for loan losses	$ 10,518	$ 10,068
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized	75,000,000	75,000,000
Common stock, issued	30,816,813	30,380,231
Common stock, outstanding	30,816,813	30,380,231

XML

CONSOLIDATED STATEMENTS OF NET INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INTEREST AND DIVIDEND INCOME:
Residential and commercial real estate loans	$ 13,474	$ 7,367	$ 40,042	$ 20,803
Commercial and industrial loans	2,883	1,728	8,180	5,098
Consumer loans	88	43	260	126
Debt securities, taxable	1,828	1,618	5,529	5,723
Debt securities, tax-exempt	25	32	81	136
Equity securities	35	45	105	140
Other investments	172	130	501	398
Federal funds sold, interest-bearing deposits and other short-term investments	11	14	103	67
Total interest and dividend income	18,516	10,977	54,801	32,491
INTEREST EXPENSE:
Deposits	2,111	1,582	6,180	4,589
Long-term debt	534	446	1,633	1,749
Short-term borrowings	1,075	621	2,946	1,580
Total interest expense	3,720	2,649	10,759	7,918
Net interest and dividend income	14,796	8,328	44,042	24,573
PROVISION FOR LOAN LOSSES	200	375	850	400
Net interest and dividend income after provision for loan losses	14,596	7,953	43,192	24,173
NON-INTEREST INCOME (LOSS):
Service charges and fees	1,714	953	4,789	2,696
Income from bank-owned life insurance	450	369	1,369	1,133
Loss on prepayment of borrowings				(915)
Gain on sales of securities, net	70	1	52	684
Gain on sale of OREO	67		67
Other income	111		227
Total non-interest income	2,412	1,323	6,504	3,598
NON-INTEREST EXPENSE:
Salaries and employee benefits	6,490	4,057	18,954	11,709
Occupancy	891	555	2,815	1,712
Furniture and equipment	410	242	1,149	723
Data processing	680	404	1,740	1,167
Professional fees	642	656	1,919	1,717
FDIC insurance assessment	163	214	466	594
Merger related expenses		830	626	1,913
Advertising	328	192	961	696
Other	1,552	1,075	4,792	3,064
Total non-interest expense	11,156	8,225	33,422	23,295
INCOME BEFORE INCOME TAXES	5,852	1,051	16,274	4,476
INCOME TAX PROVISION	2,037	423	3,600	1,495
NET INCOME	$ 3,815	$ 628	$ 12,674	$ 2,981
EARNINGS PER COMMON SHARE:
Basic earnings per share (in dollars per share)	$ 0.13	$ 0.04	$ 0.42	$ 0.17
Weighted average shares outstanding (in shares)	30,103,095	17,377,844	29,895,621	17,340,101
Diluted earnings per share (in dollars per share)	$ 0.13	$ 0.02	$ 0.42	$ 0.17
Weighted average diluted shares outstanding (in shares)	30,219,083	17,377,844	30,074,361	17,340,101

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income		$ 3,815	$ 628	$ 12,674	$ 2,981
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) on available for sale securities		381	(359)	2,133	5,820
Reclassification adjustment for gains realized in income	[1]	(70)	(1)	(52)	(684)
Amortization of net unrealized loss on held-to-maturity securities	[2]				26
Net unrealized loss upon transfer of held-to-maturity to available-for-sale	[3]				2,288
Net unrealized gains (losses)		311	(360)	2,081	7,450
Tax effect		(100)	125	(627)	(2,567)
Net-of-tax amount		211	(235)	1,454	4,883
Derivative instruments:
Change in fair value of derivatives used for cash flow hedges		(14)	417	(307)	(2,863)
Reclassification adjustment for loss realized in interest expense	[4]	228	128	751	313
Reclassification adjustment for termination fee realized in interest expense	[5]	269	269	799	687
Net adjustments relating to derivative instruments		483	814	1,243	(1,863)
Tax effect		(133)	(277)	32	633
Net-of-tax amount		350	537	1,275	(1,230)
Defined benefit pension plans:
Amortization of defined benefit plans actuarial loss	[6]	51	24	153	71
Tax effect		28	(8)	312	(24)
Net-of-tax amount		79	16	465	47
Other comprehensive income		640	318	3,194	3,700
Comprehensive income		$ 4,455	$ 946	$ 15,868	$ 6,681

[1] Realized gains on available-for-sale securities are recognized as a component of non-interest income. The tax effects applicable to net realized gains were $29,000 and $407 for the three months ended September 30, 2017 and 2016, respectively. The tax effects applicable to net realized gains were $21,000 and $236,000 for the nine months ended September 30, 2017 and 2016, respectively.

[2] Amortization of net unrealized gains on held-to-maturity securities is recognized as a component of interest income on debt securities. Income tax effects associated with the reclassification adjustments were $(9,000) for the nine months ended September 30, 2016.

[3] Income tax effect associated with the reclassification adjustments upon transfer of held-to-maturity to available-for-sale was $790,000 for the nine months ended September 30, 2016.

[4] Loss realized in interest expense on derivative instruments is recognized as a component of interest expense on short-term debt. Income tax effects associated with the reclassification adjustment were $93,000 and $44,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustment were $307,000 and $106,000 for the nine months ended September 30, 2017 and 2016, respectively

[5] Loss realized in interest expense on derivative instruments is recognized as a component of interest expense on short-term debt. Income tax effects associated with the reclassification adjustment were $110,000 and $91,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustment were $326,000 and $234,000 for the nine months ended September 30, 2017 and 2016, respectively

[6] Amounts represent the reclassification of defined benefit plans amortization and have been recognized as a component of salaries and employee benefit expense. Income tax effects associated with the reclassification adjustments were $(21,000) and $8,000 for the three months ended September 30, 2017 and 2016, respectively. Income tax effects associated with the reclassification adjustments were $(63,000) and $24,000 for the nine months ended September 30, 2017 and 2016, respectively.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Income tax expense (benefits) on realized gains reclassification adjustment	$ 29,000	$ 407	$ 21,000	$ 236,000
Income tax expense (benefits) on amortization of net unrealized (gain) loss on held-to-maturity securities				(9,000)
Income tax expense (benefits) on net unrealized (loss) gain upon transfer of held-to-maturity to available-for-sale				790,000
Income tax expense (benefits), derivative instruments	93,000	44,000	307,000	106,000
Income tax benefit on termination fee on derivative instruments	110,000	91,000	326,000	234,000
Income tax expense (benefits), defined benefit plans	$ (21,000)	$ 8,000	$ (63,000)	$ 24,000
Tax rate adjustments (in percent)			40.85%	34.00%

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Unearned Compensation-ESOP [Member]	Unearned Compensation-Equity Incentive Plan [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Total
BEGINNING BALANCE at Dec. 31, 2015	$ 183	$ 108,210	$ (6,952)	$ (313)	$ 49,316	$ (10,978)	$ 139,466
BEGINNING BALANCE (in shares) at Dec. 31, 2015	18,267,747
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income					2,981	3,700	6,681
Common stock held by ESOP committed to be released (93,679 and 74,430 shares at June 30, 2017 and June 30, 2016 respectively)		62	382				444
Share-based compensation - equity incentive plan				186			186
Excess tax benefit from equity incentive plan		5					5
Issuance of common stock in connection with equity incentive plan	$ 1	484		(485)
Issuance of common stock in connection with equity incentive plan (in shares)	62,740
Cash dividends declared and paid ($0.09 per share)					(1,559)		(1,559)
ENDING BALANCE at Sep. 30, 2016	$ 184	108,761	(6,570)	(612)	50,738	(7,278)	145,223
ENDING BALANCE (in shares) at Sep. 30, 2016	18,330,487
BEGINNING BALANCE at Dec. 31, 2016	$ 304	205,996	(6,418)	(536)	51,711	(12,661)	238,396
BEGINNING BALANCE (in shares) at Dec. 31, 2016	30,380,231
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income					12,674	3,194	15,868
Common stock held by ESOP committed to be released (93,679 and 74,430 shares at June 30, 2017 and June 30, 2016 respectively)		226	472				698
Share-based compensation - equity incentive plan				490			490
Issuance of common stock in connection with equity incentive plan	$ 1	903		(904)
Issuance of common stock in connection with equity incentive plan (in shares)	89,042
Cash dividends declared and paid ($0.09 per share)					(2,690)		(2,690)
Common stock repurchased	$ (5)	(5,667)					(5,672)
Common stock repurchased (in shares)	(574,309)
Issuance of common stock in connection with stock option exercises	$ 9	5,456					5,465
Issuance of common stock in connection with stock option exercises (in shares)	921,849
ENDING BALANCE at Sep. 30, 2017	$ 309	$ 206,914	$ (5,946)	$ (950)	$ 61,695	$ (9,467)	$ 252,555
ENDING BALANCE (in shares) at Sep. 30, 2017	30,816,813

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]
Common stock held by ESOP committed to be released, shares	93,679	74,430
Cash dividends declared, per share	$ 0.09	$ 0.09

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
OPERATING ACTIVITIES:
Net income	$ 12,674	$ 2,981
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	850	400
Depreciation and amortization of premises and equipment	1,468	969
Accretion of purchase accounting adjustments, net	(1,431)
Amortization of core deposit intangible	282
Net amortization of premiums and discounts on securities and mortgage loans	2,577	2,758
Net amortization of premiums on modified debt		60
Share-based compensation expense	490	186
ESOP expense	698	444
Excess tax benefits from equity incentive plan		(5)
Net gains on sales of securities	(52)	(684)
Gain on sale of other real estate owned	(67)
Loss on prepayment of borrowings		915
Deferred income tax benefit	(973)
Income from bank-owned life insurance	(1,369)	(1,133)
Changes in assets and liabilities:
Accrued interest receivable	18	300
Other assets	(3,578)	(1,468)
Other liabilities	1,995	(2,184)
Net cash provided by operating activities	13,582	3,539
Securities, held to maturity:
Proceeds from calls, maturities, and principal collections		6,835
Securities, available for sale:
Purchases	(67,246)	(59,595)
Proceeds from sales	22,453	136,825
Proceeds from calls, maturities, and principal collections	46,576	46,639
Purchase of residential mortgages	(48,205)	(107,632)
Loan originations and principal payments, net	(4,133)	(21,185)
Redemption of Federal Home Loan Bank of Boston stock	420	2,880
Proceeds from sale of other real estate owned	365
Purchases of premises and equipment	(1,645)	(565)
Proceeds from sale of premises and equipment		20
Net cash (used in) provided by investing activities	(51,415)	4,222
FINANCING ACTIVITIES:
Net (decrease) increase in deposits	(2,120)	62,195
Net change in short-term borrowings	20,114	51,866
Repayment of long-term debt	(19,700)	(84,333)
Proceeds from long-term debt	1,420	1,165
Cash dividends paid	(2,690)	(1,559)
Common stock repurchased	(5,990)
Issuance of common stock in connection with stock option exercises	5,465
Excess tax benefits in connection with equity incentive plan		5
Net cash (used in) provided by financing activities	(3,501)	29,339
NET CHANGE IN CASH AND CASH EQUIVALENTS:	(41,334)	37,100
Beginning of period	70,234	13,703
End of period	28,900	50,803
Supplemental cashflow information:
Securities reclassified from held-to-maturity to available-for-sale		(232,817)
Net change in cash due to broker for common stock repurchased	(318)
Interest paid	10,774	8,036
Taxes paid	$ 3,658	$ 2,150

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations – Western New England Bancorp, Inc. (“Western New England Bancorp,” “WNEB,” the “Company,” “we” or “us”) is a Massachusetts-chartered stock holding company for Westfield Bank, a federally chartered stock savings bank (the “Bank”).

The Bank’s deposits are insured to the limits specified by the Federal Deposit Insurance Corporation (“FDIC”). The Bank operates 21 banking offices in western Massachusetts and northern Connecticut, and its primary sources of revenue are earnings on loans to small and middle-market businesses and to residential property homeowners and income from securities.

Wholly-Owned Subsidiaries and Acquisition– Elm Street Securities Corporation, WFD Securities, Inc. and CSB Colts, Inc., are Massachusetts-chartered securities corporations, formed for the primary purpose of holding qualified securities. WB Real Estate Holdings, LLC, is a Massachusetts-chartered limited liability company that holds real property acquired as security for debts previously contracted by the Bank. On October 21, 2016, we acquired Chicopee Bancorp, Inc. (“Chicopee”), the holding company for Chicopee Savings Bank. The acquisition added eight full-service banking offices located in western Massachusetts.

Principles of Consolidation – The unaudited consolidated financial statements include the accounts of Western New England Bancorp, the Bank, CSB Colts, Inc., Elm Street Securities Corporation, WB Real Estate Holdings, LLC and WFD Securities, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

Estimates – The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of income and expenses for both at the date of the unaudited consolidated financial statements. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, and the realizability of deferred tax assets.

Basis of Presentation – In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of September 30, 2017, and the results of operations, changes in shareholders’ equity and cash flows for the interim periods presented. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations for the year ending December 31, 2017. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Annual Report”).

Reclassifications – Amounts in the prior period financial statements are reclassified when necessary to conform to the current year presentation.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2017

EARNINGS PER COMMON SHARE:

EARNINGS PER SHARE

2. EARNINGS PER SHARE

Basic earnings per share represent income available to shareholders divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential shares had been issued, as well as any adjustment to income that would result from the assumed issuance. No dilutive potential shares were outstanding during the periods presented. Share-based compensation awards that qualify as participating securities (entitled to receive non-forfeitable dividends) are included in basic earnings per share.

Earnings per common share for the three and nine months ended September 30, 2017 and 2016 have been computed based on the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(In thousands, except per share data)
Net income applicable to common stock	$	3,815		$	628		$	12,674		$	2,981
Average number of common shares issued		31,001			18,330			30,799			18,298
Less: Average unallocated ESOP Shares		(838	)		(926	)		(861	)		(945	)
Less: Average unvested equity incentive plan shares		(60	)		(26	)		(42	)		(13	)
Average number of common shares outstanding used to calculate basic earnings per common share		30,103			17,378			29,896			17,340
Effect of dilutive equity incentive plan		26			—			12			—
Effect of dilutive stock options		90			—			166			—
Average number of common shares outstanding used to calculate diluted earnings per common share		30,219			17,378			30,074			17,340
Basic earnings per share	$	0.13		$	0.04		$	0.42		$	0.17
Diluted earnings per share	$	0.13		$	0.04		$	0.42		$	0.17

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COMPREHENSIVE INCOME/LOSS

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

COMPREHENSIVE INCOME/LOSS

3. COMPREHENSIVE INCOME/LOSS

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

The components of accumulated other comprehensive loss included in shareholders’ equity are as follows:

	September 30,  2017			December 31, 2016
	(In thousands)
Net unrealized losses on securities available-for-sale	$	(3,782	)	$	(5,863	)
Tax effect		1,397			2,024
Net-of-tax amount		(2,385	)		(3,839	)
Fair value of derivatives used for cash flow hedges		(2,709	)		(3,152	)
Termination fees on forward starting interest rate swaps		(3,933	)		(4,733	)
Total derivatives		(6,642	)		(7,885	)
Tax effect		2,713			2,681
Net-of-tax amount		(3,929	)		(5,204	)
Unrecognized actuarial loss on defined benefit plan		(5,329	)		(5,482	)
Tax effect		2,176			1,864
Net-of-tax amount		(3,153	)		(3,618	)
Accumulated other comprehensive loss	$	(9,467	)	$	(12,661	)

The following table presents changes in accumulated other comprehensive loss for the periods ended September 30, 2017 and 2016 by component:

	Securities			Derivatives			Defined Benefit Plans			Accumulated Other Comprehensive Loss
	(In thousands)
Balance at December 31, 2015	$	(3,046	)	$	(5,501	)	$	(2,431	)	$	(10,978	)
Current-period other comprehensive income (loss)		4,883			(1,230	)		47			3,700
Balance at September 30, 2016	$	1,837		$	(6,731	)	$	(2,384	)	$	(7,278	)
Balance at December 31, 2016	$	(3,839	)	$	(5,204	)	$	(3,618	)	$	(12,661	)
Current-period other comprehensive income		1,454			1,275			465			3,194
Balance at September 30, 2017	$	(2,385	)	$	(3,929	)	$	(3,153	)	$	(9,467	)

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SECURITIES

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

SECURITIES

4.       SECURITIES

Securities available-for-sale are summarized as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	193,037	$	120	$	(2,836	)	$	190,321
U.S. government guaranteed mortgage-backed securities		17,408		—		(447	)		16,961
Corporate bonds		56,192		582		(221	)		56,553
State and municipal bonds		3,223		39		(37	)		3,225
Government-sponsored enterprise obligations		25,150		—		(697	)		24,453
Mutual funds		6,691		—		(285	)		6,406
Total available-for-sale	$	301,701	$	741	$	(4,523	)	$	297,919

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
		(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	184,127	$	33	$	(4,024	)	$	180,136
U.S. government guaranteed mortgage-backed securities		17,753		—		(403	)		17,350
Corporate bonds		50,255		265		(203	)		50,317
State and municipal bonds		4,117		13		(122	)		4,008
Government-sponsored enterprise obligations		43,140		—		(1,132	)		42,008
Mutual funds		6,586		—		(290	)		6,296
Total available-for-sale securities	$	305,978	$	311	$	(6,174	)	$	300,115

Our repurchase agreements are collateralized by government-sponsored enterprise obligations and certain mortgage-backed securities (see Note 8).

The amortized cost and fair value of available-for-sale debt securities at September 30, 2017, by maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or repay obligations. Also, because mortgage-backed securities require periodic principal paydowns, they are not included in the maturity categories in the following maturity summary.

	September 30, 2017
	Amortized Cost		Fair Value
	(In thousands)
Available for securities:
Debt securities:
Due in one year or less	$	—	$	—
Due after one year through five years		28,079		28,497
Due after five years through ten years		49,735		49,149
Due after ten years		6,751		6,585
Total securities	$	84,565	$	84,231
Mortgage-backed securities		210,445		207,282
Total	$	295,010	$	291,513

Gross realized gains and losses on sales of securities available-for-sale for the three and nine months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
	(In thousands)
Gross gains realized	$	71		$	1	$	117		$	1,521
Gross losses realized		(1	)		—		(65	)		(837	)
Net gain realized	$	70		$	1	$	52		$	684

Proceeds from the sale of securities available-for-sale amounted to $22.5 million and $136.8 million for the nine months ended September 30, 2017 and 2016, respectively.

Information pertaining to securities with gross unrealized losses at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position are as follows:

	September 30, 2017
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	1,022	$	105,596	$	1,814	$	61,415
U.S. government guaranteed mortgage-backed securities		160		9,874		287		7,086
Corporate bonds		210		20,915		11		2,058
State and municipal bonds		—		—		37		1,564
Government-sponsored enterprise obligations		129		5,021		568		19,432
Mutual funds		57		3,508		228		2,898
Total available-for-sale	$	1,578	$	144,914	$	2,945	$	94,453

	December 31, 2016
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	3,016	$	147,691	$	1,008	$	27,303
U.S. government guaranteed mortgage-backed securities		192		12,536		211		4,814
Corporate bonds		203		18,481		—		—
State and municipal bonds		95		1,507		27		305
Government-sponsored enterprise obligations		1,132		42,008		—		—
Mutual funds		79		3,429		211		2,867
Total available-for-sale	$	4,717	$	225,652	$	1,457	$	35,289

	September 30, 2017
	Less Than 12 Months									Over 12 Months
	Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)			Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)
	(Dollars in thousands)
Government-sponsored mortgage-backed securities		41	$	106,618	$	1,022		1.0	%		27	$	63,229	$	1,814		2.9	%
U.S. government guaranteed mortgage-backed securities		3		10,034		160		1.6			4		7,373		287		3.9
Corporate bonds		7		21,125		210		1.0			1		2,069		11		0.5
Government-sponsored enterprise obligations		1		5,150		129		2.5			8		20,000		568		2.8
State and municipal bonds		—		—		—		—			3		1,601		37		2.3
Mutual funds		1		3,565		57		1.6			2		3,126		228		7.3
			$	146,492	$	1,578						$	97,398	$	2,945

These unrealized losses are the result of changes in interest rates and not credit quality. Because we do not intend to sell the securities and it is more likely than not that we will not be required to sell the investments before recovery of their amortized cost basis, no declines are deemed to be other-than-temporary.

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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

5.         LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans consisted of the following amounts:	September 30,			December 31,
	2017			2016
	(In thousands)
Commercial real estate	$	716,890		$	720,741
Residential real estate:
Residential		555,768			522,083
Home equity		92,359			92,083
Commercial and industrial		244,374			222,286
Consumer		4,467			4,424
Total Loans		1,613,858			1,561,617
Unearned premiums and deferred loan fees and costs, net		4,915			4,867
Allowance for loan losses		(10,518	)		(10,068	)
	$	1,608,255		$	1,556,416

During the nine months ended September 30, 2017 and 2016, we purchased residential real estate loans aggregating $48.2 million and $107.6 million, respectively.

We have transferred a portion of our originated commercial real estate and commercial and industrial loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in our accompanying unaudited consolidated balance sheets. We share ratably with our participating lenders in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. We continue to service the loans on behalf of the participating lenders and, as such, collect cash payments from the borrowers, remit payments (net of servicing fees) to participating lenders and disburse required escrow funds to relevant parties. At September 30, 2017 and December 31, 2016, we serviced commercial loans for participants aggregating $32.4 million and $42.6 million, respectively.

Residential mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of these loans totaled $67.8 million and $75.2 million at September 30, 2017 and December 31, 2016, respectively. Service fee income of $49,000 and $3,000 was recorded for the nine months ended September 30, 2017 and 2016, respectively, and is included in service charges and fees on the consolidated statements of net income.

Residential real estate mortgages are originated by the Bank both for its portfolio and for sale into the secondary market. The Bank may sell its loans to institutional investors such as the Federal Home Loan Mortgage Corporation. Under loan sale and servicing agreements with the investor, the Bank generally continues to service the residential real estate mortgages. The Bank pays the investor an agreed upon rate on the loan, which is less than the interest rate received from the borrower. The Bank retains the difference as a fee for servicing the residential real estate mortgages. The Bank capitalizes mortgage servicing rights at their fair value upon sale of the related loans, amortizes the asset over the estimated life of the serviced loan, and periodically assesses the asset for impairment. The significant assumptions used by a third party to estimate the fair value of capitalized servicing rights at September 30, 2017, include weighted average prepayment speed for the portfolio using the Public Securities Association Standard Prepayment Model (203 PSA), weighted average internal rate of return (10.05%), weighted average servicing fee (0.2501%), and average net cost to service loans ($59.32 per loan). The estimated fair value of capitalized servicing rights may vary significantly in subsequent periods primarily due to changing market interest rates, and their effect on prepayment speeds and discount rates.

A summary of the activity in the balances of mortgage servicing rights follows:

	Three Months Ended   September 30,   2017			Nine Months Ended   September 30,   2017
	(In thousands)
Balance at the beginning of period:	$	408		$	465
Capitalized mortgage servicing rights		—			—
Amortization		(28	)		(85	)
Balance at the end of period	$	380		$	380
Fair value at the end of period	$	538		$	538

Prior to the acquisition of Chicopee in 2016, mortgage servicing rights were not material to the consolidated financial statements, and therefore, were not recorded.

Loans are recorded at the principal amount outstanding, adjusted for charge-offs, unearned premiums and deferred loan fees and costs. Interest on loans is calculated using the effective yield method on daily balances of the principal amount outstanding and is credited to income on the accrual basis to the extent it is deemed collectable. Our general policy is to discontinue the accrual of interest when principal or interest payments are delinquent 90 days or more based on the contractual terms of the loan, or earlier if the loan is considered impaired. Any unpaid amounts previously accrued on these loans are reversed from income. Subsequent cash receipts are applied to the outstanding principal balance or to interest income if, in the judgment of management, collection of the principal balance is not in question. Loans are returned to accrual status when they become current as to both principal and interest and perform in accordance with contractual terms for a period of at least six months, reducing the concern as to the collectability of principal and interest. Loan fees and certain direct loan origination costs are deferred, and the net fee or cost is recognized as an adjustment to interest income over the estimated average lives of the related loans.

The allowance for loan losses is established through provisions for loan losses charged to expense. Loans are charged-off against the allowance when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated, and unallocated components, as further described below.

General component

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate (includes one-to-four family and home equity), commercial real estate, commercial and industrial, and consumer. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: trends in delinquencies and nonperforming loans; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; and national and local economic trends and industry conditions. There were no changes in our policies or methodology pertaining to the general component of the allowance for loan losses during the periods presented for disclosure.

The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows:

Residential real estate – We require private mortgage insurance for all loans originated with a loan-to-value ratio greater than 80% and we do not grant subprime loans. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment. Home equity loans are secured by first or second mortgages on one-to-four family owner occupied properties.

Commercial real estate – Loans in this segment are primarily income-producing investment properties and owner-occupied commercial properties throughout New England. The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality in this segment. Management obtains financial information annually and continually monitors the cash flows of these loans.

Commercial and industrial loans – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment.

Consumer loans – Loans in this segment are secured or unsecured and repayment is dependent on the credit quality of the individual borrower.

Allocated component

The allocated component relates to loans that are classified as impaired. Impaired loans are identified by analysis of loan performance, internal credit ratings and watch list loans that management believes are subject to a higher risk of loss. Impairment is measured on a loan by loan basis for commercial real estate and commercial and industrial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential real estate loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring agreement.

A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. We determine the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Unallocated component

An unallocated component may be maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance, if any, reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio.

An analysis of changes in the allowance for loan losses by segment for the periods ended September 30, 2017 and 2016 is as follows:

	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer			Unallocated			Total
	(In thousands)
Three Months Ended
Balance at June 30, 2016	$	3,956		$	2,804		$	2,797		$	20		$	(7	)	$	9,570
Provision (credit)		62			189			83			43			(2	)		375
Charge-offs		—			(40	)		—			(46	)		—			(86	)
Recoveries		59			—			—			9			—			68
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at June 30, 2017	$	4,472		$	3,126		$	2,754		$	53		$	13		$	10,418
Provision (credit)		(68	)		146			(109	)		83			148			200
Charge-offs		—			(107	)		—			(104	)		—			(211	)
Recoveries		—			80			3			28			—			111
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518
Nine Months Ended
Balance at December 31, 2015	$	3,856		$	2,431		$	2,485		$	22		$	46		$	8,840
Provision (credit)		(614	)		610			395			64			(55	)		400
Charge-offs		(170	)		(90	)		—			(87	)		—			(347	)
Recoveries		1,005			2			—			27			—			1,034
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at December 31, 2016	$	4,083		$	2,862		$	3,085		$	38		$	—		$	10,068
Provision (credit)		239			427			(180	)		203			161			850
Charge-offs		(36	)		(148	)		(285	)		(237	)		—			(706	)
Recoveries		118			104			28			56			—			306
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518

Further information pertaining to the allowance for loan losses by segment at September 30, 2017 and December 31, 2016 follows:

	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	(In thousands)
September 30, 2017
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,404		3,245		2,648		60		161		10,518
Total allowance for loan losses	$	4,404	$	3,245	$	2,648	$	60	$	161	$	10,518
Impaired loans	$	3,993	$	3,854	$	2,869	$	127	$	—	$	10,843
Non-impaired loans		699,945		640,622		240,421		4,340		—		1,585,328
Loans acquired with deteriorated credit quality		12,952		3,651		1,084		—		—		17,687
Total loans	$	716,890	$	648,127	$	244,374	$	4,467	$	—	$	1,613,858
December 31, 2016
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,083		2,862		3,085		38		—		10,068
Total allowance for loan losses		4,083		2,862		3,085		38		—		10,068
Impaired loans	$	3,335	$	452	$	3,042	$	—	$	—	$	6,829
Non-impaired loans		701,766		609,107		217,972		4,424		—		1,533,269
Loans acquired with deteriorated credit quality		15,640		4,607		1,272		—		—		21,519
Total loans	$	720,741	$	614,166	$	222,286	$	4,424	$	—	$	1,561,617

The following is a summary of past due and non-accrual loans by class at September 30, 2017 and December 31, 2016:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Past Due 90 Days or More and Still Accruing		Loans on Non- Accrual
	(In thousands)
September 30, 2017
Commercial real estate	$	196	$	295	$	136	$	627	$	—	$	2,181
Residential real estate:
Residential		2,308		570		572		3,450		—		1,744
Home equity		218		135		72		425		—		73
Commercial and industrial		472		59		108		639		—		2,700
Consumer		54		18		5		77		—		17
Total legacy loans		3,248		1,077		893		5,218		—		6,715
Loans acquired from Chicopee Savings Bank		2,957		1,610		1,279		5,846		—		6,450
Total	$	6,205	$	2,687	$	2,172	$	11,064	$	—	$	13,165
December 31, 2016
Commercial real estate	$	302	$	555	$	137	$	994	$	—	$	2,740
Residential real estate:
Residential		791		262		689		1,742		—		1,658
Home equity		208		36		—		244		—		37
Commercial and industrial		326		32		—		358		—		3,214
Consumer		27		9		7		43		—		14
Total legacy loans		1,654		894		833		3,381		—		7,663
Loans acquired from Chicopee Savings Bank		3,854		1,907		551		6,312		—		6,394
Total past due loans	$	5,508	$	2,801	$	1,384	$	9,693	$	—	$	14,057

The following is a summary of impaired loans by class at and for the periods ended September 30, 2017 and December 31, 2016:

	Impaired Loans(1)(2)
					Three Months Ended				Nine Months Ended
	At September 30, 2017 (1)				September 30, 2017				September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	16,945	$	19,380	$	17,731	$	199	$	18,788	$	650
Residential real estate:
Residential real estate		6,939		7,410		7,016		11		6,548		34
Home equity		566		590		407		1		260		3
Commercial and industrial		3,953		10,242		4,442		54		4,538		183
Consumer		127		131		122		—		83		—
Total impaired loans	$	28,530	$	37,753	$	29,718	$	265	$	30,217	$	870

(1)   Includes loans acquired with deteriorated credit quality and performing troubled debt restructurings.

(2)   Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

	Impaired Loans (1)(2)
					Three Months Ended				Nine Months Ended
	At December 31, 2016 (1)				September 30, 2016				September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	18,975	$	21,330	$	3,487	$	17	$	3,551	$	49
Residential real estate		5,059		5,676		515		—		482		—
Commercial and industrial		4,314		11,049		3,356		—		3,434		—
Total impaired loans	$	28,348	$	38,055	$	7,358	$	17	$	7,467	$	49

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp, Inc. merger.

⁽²⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

No interest income was recognized for impaired loans on a cash-basis method during the three and nine months ended September 30, 2017 or 2016. Interest income recognized on an accrual basis during the three and nine months ended September 30, 2017 related to performing purchase impaired loans while activity in the comparable 2016 periods related to performing TDR loans.

We may periodically agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring (“TDR”). These concessions could include a reduction in the interest rate on the loan, payment extensions, postponement or forgiveness of principal, forbearance or other actions intended to maximize collection. All TDRs are classified as impaired.

When we modify loans in a TDR, we measure impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, or use the current fair value of the collateral, less selling costs for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premium or discount), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment and recognize impairment through the allowance.

Nonperforming TDRs are shown as nonperforming assets. There were no loans modified in TDRs during the three and nine months ended September 30, 2017. A substandard impaired loan relationship in the amount of $4.6 million was designated a TDR during the nine months ended September 30, 2016. The bank entered into a forbearance agreement which offered an interest only period. Due to the borrower continuing to experience declining sales, the interest only period was extended during the second quarter of 2016, resulting in the TDR classification. The loans are on non-accrual and are current. The loans are measured for impairment quarterly and appropriate reserves/charge offs have been taken.

	Nine Months Ended
	September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Commercial Real Estate		1	$	1,940	$	1,940
Commercial and Industrial		3		2,681		2,681
Residential		2		161		161
Total		6	$	4,782	$	4,782

A default occurs when a loan is 30 days or more past due. No TDRs defaulted within twelve months of restructuring during the three and nine months ended September 30, 2017 or 2016.

There were no charge-offs on TDRs during the three and nine months ended September 30, 2017 and 2016.

Loans Acquired with Deteriorated Credit Quality

The following is a summary of loans acquired from Chicopee with evidence of credit deterioration as of September 30, 2017.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non- Accretable Discount			Accretable Yield			Loans Receivable
	(In thousands)
Balance at December 31, 2016	$	37,437		$	29,040		$	8,397		$	7,521		$	21,519
Collections		(3,860	)		(3,326	)		(534	)		(1,003	)		(2,323	)
Dispositions		(1,833	)		(1,503	)		(330	)		6			(1,509	)
Balance at September 30, 2017	$	31,744		$	24,211		$	7,533		$	6,524		$	17,687

Credit Quality Information

We utilize an eight-grade internal loan rating system for commercial real estate and commercial and industrial loans. Performing residential real estate, home equity and consumer loans are grouped with “Pass” rated loans. Nonperforming residential real estate, home equity and consumer loans are monitored individually for impairment and risk rated as “Substandard.”

Loans rated 1 – 3 are considered “Pass” rated loans with low to average risk.

Loans rated 4 are considered “Pass Watch,” with an acceptable level of risk. Loans in this category remain “pass” rated and are not a criticized or classified loan, however, represent borrowers which may exhibit tight cash flows and/or leveraged balance sheets.

Loans rated 5 are considered “Special Mention.” These loans exhibit potential credit weaknesses or downward trends and are being closely monitored by us.

Loans rated 6 are considered “Substandard.” Generally, a loan is considered substandard if the borrower exhibits a well-defined weakness that may be inadequately protected by the current net worth and cash flow capacity to pay the current debt.

Loans rated 7 are considered “Doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable and that a partial loss of principal is likely.

Loans rated 8 are considered uncollectible and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, we formally review the ratings on all commercial real estate and commercial and industrial loans. Construction loans are reported within commercial real estate loans and total $67.6 million and $88.9 million at September 30, 2017 and December 31, 2016, respectively. We engage an independent third party to review a significant portion of loans within these segments on a semi-annual basis. We use the results of these reviews as part of our annual review process. In addition, management utilizes delinquency reports, the watch list and other loan reports to monitor credit quality in other segments.

The following table presents our loans by risk rating at September 30, 2017 and December 31, 2016:

	Commercial Real Estate		Residential 1-4 Family		Home Equity		Commercial and Industrial		Consumer		Total
	(In thousands)
September 30, 2017
Loans rated 1 – 3	$	647,599	$	549,936	$	91,854	$	192,968	$	4,340	$	1,486,697
Loans rated 4		45,339		95		—		35,585		—		81,019
Loans rated 5		14,724		—		—		7,521		—		22,245
Loans rated 6		9,228		5,737		505		8,300		127		23,897
	$	716,890	$	555,768	$	92,359	$	244,374	$	4,467	$	1,613,858
December 31, 2016
Loans rated 1 – 3	$	673,957	$	516,339	$	91,964	$	180,675	$	4,391	$	1,467,326
Loans rated 4		24,207		—		—		16,621		6		40,834
Loans rated 5		14,068		—		—		6,727		—		20,795
Loans rated 6		6,604		5,744		119		15,379		27		27,873
Loans rated 7		1,905		—		—		2,884		—		4,789
	$	720,741	$	522,083	$	92,083	$	222,286	$	4,424	$	1,561,617

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GOODWILL AND OTHER INTANGIBLES

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLES

6.       GOODWILL AND OTHER INTANGIBLES

Goodwill

Goodwill for the nine months ended September 30, 2017 is summarized as follows:

	Nine Months Ended September 30,   2017
		(In thousands)
Balance at December 31, 2016	$	13,747
Current period adjustments		(1,260	)
Balance at September 30, 2017	$	12,487

At September 30, 2017 and December 31, 2016, the Company’s goodwill related to the acquisition of Chicopee in October 2016. Annually, or more frequently if events or changes in circumstances warrant such evaluation, the Company evaluates its goodwill for impairment. No goodwill impairment was recorded for the nine months ended September 30, 2017.

During the three months ended March 31, 2017, management completed their evaluation of premises and equipment acquired from Chicopee, which resulted in a $2.4 million adjustment to the provisional fair values of bank premises acquired and a $1.4 million reduction in goodwill. The remaining adjustments to goodwill of $140,000 during the three months ended March 31, 2017 resulted from information obtain during the quarter about events and circumstances that existed as of the acquisition date.

Core Deposit Intangibles

In connection with the assumption of $545.7 million of deposit liabilities from the Chicopee acquisition in October 2016, of which $345.2 million were core deposits, the Bank recorded a core deposit intangible of $4.5 million. The resulting core deposit intangible is amortized over twelve years using the straight-line method. Core deposit intangibles are summarized as follows:

	Nine Months Ended September 30,  2017
		(In thousands)
Balance at December 31, 2016	$	4,438
Amortization		(282	)
Balance at September 30, 2017	$	4,156

Amortization expense was $282,000 for the nine months ended September 30, 2017. At September 30, 2017, future amortization of the core deposit intangible totals $375,000 for each of the next five years and $2.3 million thereafter.

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SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

SHARE-BASED COMPENSATION

7. SHARE-BASED COMPENSATION

Stock Options – Under the terms of the Chicopee merger agreement dated April 4, 2016, each option to purchase shares of Chicopee common stock issued by Chicopee and outstanding at the effective time of the merger, October 21, 2016, pursuant to the Chicopee 2007 Equity Incentive Plan fully vested and converted into an option to purchase shares of WNEB common stock on the same terms and conditions as were applicable before the merger, except (1) the number of shares of WNEB common stock subject to the new option was adjusted to be equal to the product of the number of shares of Chicopee common stock subject to the existing option and the exchange ratio (rounding fractional shares to the nearest whole share) and (2) the exercise price per share of WNEB common stock under the new option was adjusted to be equal to the exercise price per share of Chicopee common stock of the existing option divided by the exchange ratio (rounded to the nearest whole cent).

A summary of stock option activity for the nine months ended September 30, 2017 is presented below. No options were outstanding during the nine months ended September 30, 2016.

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term  (in years)		Aggregate Intrinsic Value  (in thousands)
Outstanding at December 31, 2016		1,178,899		$	6.01		1.98	$	3,930
Exercised		(921,849	)		5.93		0.91		3,675
Outstanding at September 30, 2017		257,050		$	6.31		4.66	$	1,175
Exercisable at September 30, 2017		257,050		$	6.31		4.66	$	1,175

Cash received for options exercised during the nine months ended September 30, 2017 was $5.5 million.

Restricted Stock Awards – In May 2014, our shareholders approved a stock-based compensation plan under which up to 516,000 shares of our common stock were reserved for grants of stock awards, including stock options and restricted stock, which may be granted to any officer, key employee or non-employee director of WNEB. Authorized but unissued shares are issued to awardees upon vesting of such awards. Any shares not issued because vesting requirements are not met will again be available for issuance under the plans.

In January 2015, 48,560 shares were granted under this plan and vest ratably over five years. The fair market value of shares awarded, based on the market price at the date of grant, was recorded as unearned compensation and is being amortized over the applicable vesting period.

In 2016, the Compensation Committee (the “Committee”) approved the long-term incentive program (the “LTI Plan”). The LTI Plan provides a periodic award that is both performance and retention based in that it is designed to recognize the executive’s responsibilities, reward demonstrated performance and leadership and to retain such executives. The objective of the LTI Plan is to align compensation for the named executive officers and directors over a multi-year period directly with the interests of our shareholders by motivating and rewarding creation and preservation of long-term financial strength, shareholder value and relative shareholder return.

The LTI Plan includes eligible officers of the Company who are nominated by the Company’s Chief Executive Officer and approved by the Committee. The LTI Plan is triggered by the Company’s achievement of satisfactory safety and soundness results from its most recent regulatory examination. Employee stock grants made through the 2016 LTI plan will be a combination of 50% time-vested restricted stock and 50% performance-based restricted stock.

In May 2016, 62,740 shares were granted under the LTI Plan. Of this total, 36,543 shares are retention-based, with 10,352 vesting in one year and 26,191 vesting ratably over a three year period. The remaining 26,197 shares granted are performance based and are subject to the achievement of the 2016 LTI performance metric before vesting is realized after a three year period. For the performance shares, the primary performance metric for 2016 awards is return on equity. Performance shares will be earned based upon how the Company performs relative to threshold and target absolute goals (i.e. Company-specific, not relative to a peer index) over the three-year performance period. The threshold amount for the performance period will be a return on equity of 5.85% and a target amount of 6.32%. Participants will be able to earn between 50% (for threshold performance) and 100% of the target amount for the performance shares but will not earn additional shares if performance exceeds target performance.

In May 2017, 89,042 shares were granted under the LTI Plan. Of this total, 55,159 shares are retention-based, with 21,276 vesting in one year and 33,883 vesting ratably over a three year period. The remaining 33,883 shares granted are performance based and are subject to the achievement of the 2017 LTI performance metric before vesting is realized after a three year period. For the performance shares, the primary performance metric for 2017 awards is return on equity. Performance shares will be earned based upon how the Company performs relative to threshold, target and maximum absolute goals (i.e. Company-specific, not relative to a peer index) on an annual performance period, but will be distributed at the end of the three year period.

The threshold, target and maximum for the three year period under the 2017 Plan is as follows:

	Return on Equity Targets
Performance Period Ending	Threshold		Target		Maximum
December 31, 2017	6.00	%	6.60	%	7.30	%
December 31, 2018	6.30	%	7.00	%	7.60	%
December 31, 2019	6.50	%	7.20	%	7.90	%

Participants will be able to earn between 50% (for threshold performance), 100% (for target performance) and 150% (for the maximum performance).

The fair market value of shares awarded, based on the market price at the date of grant, is recorded as unearned compensation and amortized over the applicable vesting period. Shares granted under performance-based conditions are monitored on a quarterly basis in order to compare actual results to the performance metric established, with any necessary adjustments being recognized through share-based compensation expense and unearned compensation. At September 30, 2017, an additional 315,658 shares were available for future grants under this plan.

Our stock award plan activity for the nine months ended September 30, 2017 and 2016 is summarized below:

	Unvested Stock Awards Outstanding
	Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	91,371		$	7.51
Shares granted	89,042			10.15
Shares vested	(21,552	)		7.44
Outstanding at September 30, 2017	158,861		$	9.00
Outstanding at December 31, 2015	54,160		$	7.28
Shares granted	62,740			7.73
Shares vested	(11,200	)		7.18
Outstanding at September 30, 2016	105,700		$	7.56

We recorded compensation cost related to the stock awards of $490,000 and $186,000 for the nine months ended September 30, 2017 and 2016, respectively.

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SHORT-TERM BORROWINGS AND LONG-TERM DEBT

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

SHORT-TERM BORROWINGS AND LONG-TERM DEBT

8. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

We utilize short-term borrowings and long-term debt as an additional source of funds to finance our lending and investing activities and to provide liquidity for daily operations.

Short-term borrowings are made up of FHLBB advances with an original maturity of less than one year, a line of credit with the FHLBB and customer repurchase agreements, which mature daily. Short-term borrowings issued by the FHLBB were $174.0 million at September 30, 2017 and $155.0 million at December 31, 2016. We have an “Ideal Way” line of credit with the FHLBB for $9.5 million at September 30, 2017 and December 31, 2016. Interest on this line of credit is payable at a rate determined and reset by the FHLBB on a daily basis. The outstanding principal is due daily, but the portion not repaid will be automatically renewed. There were no advances outstanding on the line of credit as of September 30, 2017 or December 31, 2016. Customer repurchase agreements were $18.5 million at September 30, 2017 and $17.4 million at December 31, 2016. A customer repurchase agreement is an agreement by us to sell to and repurchase from the customer an interest in specific securities issued by or guaranteed by the U.S. government. This transaction settles immediately on a same day basis in immediately available funds. Interest paid is commensurate with other products of equal interest and credit risk. In addition, we have lines of credit of $4.0 million and $50.0 million with Bankers Bank Northeast (“BBN”) and PNC Bank, respectively. The interest rates on these lines are determined and reset on a daily basis by each respective bank. There were no advances outstanding under these lines of credit at September 30, 2017 or December 31, 2016. As part of our contract with BBN, we are required to maintain a reserve balance of $300,000 with BBN for our use of this line of credit.

Long-term debt consists of FHLBB advances with an original maturity of one year or more. At September 30, 2017, we had $106.3 million in long-term debt with the FHLBB. This compares to $124.8 million in long-term debt with FHLBB advances at December 31, 2016.

Customer repurchase agreements are collateralized by government-sponsored enterprise obligations with fair value of $6.8 million and $24.6 million, and mortgage backed securities with a fair value of $61.1 million and $57.6 million, at September 30, 2017 and December 31, 2016, respectively. The securities collateralizing repurchase agreements are subject to fluctuations in fair value. We monitor the fair value of the collateral on a periodic basis, and would pledge additional collateral if necessary based on changes in fair value of collateral or the balances of the repurchase agreements.

All FHLBB advances are collateralized by a blanket lien on our owner occupied residential real estate loans and certain eligible commercial real estate loans.

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PENSION BENEFITS

9 Months Ended

Sep. 30, 2017

Defined Benefit Plan [Abstract]

PENSION BENEFITS

9.   PENSION BENEFITS

We maintain a pension plan for our eligible employees. On September 30, 2016, we effected a soft freeze on the Plan and therefore no new participants will be included in the Plan after such effective date. We plan to contribute to the pension plan the amount required to meet the minimum funding standards under Section 412 of the Internal Revenue Code of 1986, as amended. Additional contributions will be made as deemed appropriate by management in conjunction with the pension plan’s actuaries. We have not yet determined how much we expect to contribute to our pension plan in 2017. No contributions have been made to the plan for the nine months ended September 30, 2017. The pension plan assets are invested in group annuity contracts with the Principal Financial Group, who also acts as third-party administrator for our 401(k) and ESOP plans.

The following table provides information regarding net pension benefit costs for the periods shown:

	Three Months Ended September 30,						Nine Months Ended, September 30,
	2017			2016			2017			2016
	(In thousands)
Service cost	$	245		$	283		$	778		$	854
Interest cost		254			240			761			719
Expected return on assets		(298	)		(275	)		(895	)		(823	)
Amortization of actuarial losses		51			24			153			71
Net periodic pension cost	$	252		$	272		$	797		$	821

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DERIVATIVES AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

10. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our assets and liabilities and the use of derivative financial instruments. Specifically, we entered into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to certain variable rate loan assets and variable rate borrowings.

Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of our derivative financial instruments designated as hedging instruments as well as our classification on the balance sheet as of September 30, 2017 and December 31, 2016.

September 30, 2017	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	1	Other Liabilities	$	2,710

December 31, 2016	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	—	Other Liabilities	$	3,152

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest income and expense and to manage our exposure to interest rate movements. To accomplish this objective, we entered into interest rate swaps as part of our interest rate risk management strategy. These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for our making fixed payments.

The following table presents information about our cash flow hedges at September 30, 2017 and December 31, 2016:

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
September 30, 2017	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)								(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		2.6		1.31	%		2.46	%	$	(2,709	)

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
December 31, 2016	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)									(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		3.4		0.92	%		2.46	%	$	(3,152	)

During 2016, we terminated a forward-starting interest rate swap with a notional amount of $32.5 million and incurred a termination fee of $3.4 million. During 2015, we terminated forward-starting interest rate swaps with notional amounts of $47.5 million and incurred a termination fee of $2.4 million. The termination fees are amortized as a reclassification of other comprehensive income into interest expense over the terms of the previously hedged borrowings, which were six and five years for the swaps terminated in 2016 and 2015, respectively.

For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings), net of tax, and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. We assess the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. We did not recognize any hedge ineffectiveness in earnings during the nine months ended September 30, 2017 or 2016.

We are hedging our exposure to the variability in future cash flows for forecasted transactions over a maximum period of six years (excluding forecasted payment of variable interest on existing financial instruments).

The table below presents the pre-tax net losses of our cash flow hedges for the periods indicated.

	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
	(In thousands)
Interest rate swaps	$	(14	)	$	417	$	(307	)	$	(2,863	)

Amounts reported in accumulated other comprehensive loss related to these derivatives are reclassified to interest expense as interest payments are made on our rate sensitive assets/liabilities. The amount reclassified from accumulated other comprehensive income into net income for the effective portion of interest rate swaps and termination fees was $497,000 and $397,000 during the three months ended September 30, 2017 and 2016, respectively and $1.6 million and $1.0 million during the nine months ended September 30, 2017 and 2016, respectively. During the next 12 months, we estimate that $1.8 million will be reclassified as an increase in interest expense. During the nine months ended September 30, 2017 and 2016, no gains or losses were reclassified from accumulated other comprehensive loss into income for ineffectiveness on cash flow hedges.

Credit-risk-related Contingent Features

By using derivative financial instruments, we expose ourselves to credit risk. Credit risk is the risk of failure by the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. When the fair value of a derivative is negative, we owe the counterparty and, therefore, it does not possess credit risk. The credit risk in derivative instruments is mitigated by entering into transactions with highly-rated counterparties that we believe to be creditworthy and by limiting the amount of exposure to each counterparty.

We have agreements with our derivative counterparties that contain a provision where if we default on any of our indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. We also have agreements with certain of our derivative counterparties that contain a provision where if we fail to maintain our status as well capitalized, then the counterparty could terminate the derivative positions and we would be required to settle our obligations under the agreements. Certain of our agreements with our derivative counterparties contain provisions where if a formal administrative action by a federal or state regulatory agency occurs that materially changes our creditworthiness in an adverse manner, we may be required to fully collateralize our obligations under the derivative instrument.

As of September 30, 2017, the termination value of derivatives in a net liability position related to these agreements, which includes accrued interest but excludes any adjustment for nonperformance risk, was $2.7 million. As of September 30, 2017, we have mortgage-backed securities with a fair value of $3.0 million and $50,000 cash posted as collateral against our obligations under these agreements. If we had breached any of these provisions at September 30, 2017, we could have been required to settle our obligations under the agreements at the termination value.

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FAIR VALUE OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE OF ASSETS AND LIABILITIES

11.   FAIR VALUE OF ASSETS AND LIABILITIES

Determination of Fair Value

We use fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for our various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.

Fair Value Hierarchy – We group our assets and liabilities that are measured at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value.

Level 1 – Valuation is based on quoted prices in active markets for identical assets. Level 1 assets generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets.

Level 2 – Valuation is based on 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 for substantially the full term of the assets or liabilities.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Methods and assumptions for valuing our financial instruments are set forth below. Estimated fair values are calculated based on the value without regard to any premium or discount that may result from concentrations of ownership of a financial instrument, possible tax ramifications or estimated transaction cost.

Cash and cash equivalents – The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets.

Securities and mortgage-backed securities – Fair value of securities are primarily measured using unadjusted information from an independent pricing service. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. These securities include marketable equity securities. All other securities are measured at fair value in Level 2 and are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data.

Federal Home Loan Bank and other stock – These investments are carried at cost which is their estimated redemption value.

Loans receivable – For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans (e.g., commercial real estate and investment property mortgage loans, commercial and industrial loans and residential real estate loans) are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Accrued interest – The carrying amounts of accrued interest approximate fair value.

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

Short-term borrowings and long-term debt – The fair values of our debt instruments are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Interest rate swaps – The valuation of our interest rate swaps is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. We have determined that the majority of the inputs used to value our interest rate derivatives fall within Level 2 of the fair value hierarchy.

Commitments to extend credit – Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the term and credit risk. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. Such differences are not considered significant.

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

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Securities available-for-sale
Government-sponsored mortgage-backed securities	$	—	$	190,321	$	—	$	190,321
U.S. government guaranteed mortgage-backed securities		—		16,961		—		16,961
Corporate bonds		—		56,553		—		56,553
State and municipal bonds		—		3,225		—		3,225
Government-sponsored enterprise obligations		—		24,453		—		24,453
Mutual funds		6,406		—		—		6,406
Total securities available-for-sale		6,406		291,513		—		297,919
Interest rate swaps		—		1		—		1
Total assets	$	6,406	$	291,514	$	—	$	297,920
Liabilities:
Interest rate swaps	$	—	$	2,710	$	—	$	2,710

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Government-sponsored mortgage-backed securities	$	—	$	180,136	$	—	$	180,136
U.S. government guaranteed mortgage-backed securities		—		17,350		—		17,350
Corporate bonds		—		50,317		—		50,317
State and municipal bonds		—		4,008		—		4,008
Government-sponsored enterprise obligations		—		42,008		—		42,008
Mutual funds		6,296		—		—		6,296
Total assets	$	6,296	$	293,819	$	—	$	300,115
Liabilities:
Interest rate swaps	$	—	$	3,152	$	—	$	3,152

Also, we may be required, from time to time, to measure certain other assets at fair value on a non-recurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no assets measured at fair value on a non-recurring basis at September 30, 2017. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related assets at September 30, 2016. Total losses represent the change in carrying value as a result of fair value adjustments related to assets still held at September 30, 2016.

	At September 30, 2016						Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
							Total		Total
	Level 1		Level 2		Level 3		Gains (Losses)		Gains (Losses)
	(In thousands)
Impaired Loans	$	—	$	—	$	2,059	$	—	$	(220	)

The amount of impaired loans represents the carrying value and related write-down and valuation allowance of impaired loans for which adjustments are based on the estimated fair value of the underlying collateral. The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on real estate appraisals performed by independent licensed or certified appraisers. 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 appraisers to adjust for differences between the comparable sales and income data available. Management will discount appraisals as deemed necessary based on the date of the appraisal and new information deemed relevant to the valuation. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. The resulting losses were recognized in earnings through the provision for loan losses. Impaired loans with adjustments resulting from discounted cash flows or without a specific reserve are not included in this disclosure.

There were no transfers to or from Level 1 and 2 during the three and nine months ended September 30, 2017 and 2016. We did not measure any liabilities at fair value on a non-recurring basis on the consolidated balance sheets.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Where quoted market prices are not available, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment. Changes in assumptions could significantly affect the estimates. The estimated fair values of our financial instruments are as follows:

	September 30, 2017
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	28,900	$	28,900	$	—	$	—	$	28,900
Securities available-for-sale		297,919		6,406		291,513		—		297,919
Federal Home Loan Bank of Boston and other restricted stock		15,704		—		—		15,704		15,704
Loans - net		1,608,255		—		—		1,577,309		1,577,309
Accrued interest receivable		5,764		—		—		5,764		5,764
Mortgage servicing rights		380		—		380		—		380
Derivative assets		1		—		1		—		1
Liabilities:
Deposits		1,515,198		—		—		1,514,641		1,514,641
Short-term borrowings		192,465		—		192,482		—		192,482
Long-term debt		106,339		—		106,517		—		106,517
Accrued interest payable		394		—		—		394		394
Derivative liabilities		2,710		—		2,710		—		2,710

	December 31, 2016
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	70,234	$	70,234	$	—	$	—	$	70,234
Securities available-for-sale		300,115		6,296		293,819		—		300,115
Federal Home Loan Bank of Boston and other restricted stock		16,124		—		—		16,124		16,124
Loans - net		1,556,416		—		—		1,525,274		1,525,274
Accrued interest receivable		5,782		—		—		5,782		5,782
Mortgage servicing rights		465		—		628		—		628
Liabilities:
Deposits		1,518,071		—		—		1,521,580		1,521,580
Short-term borrowings		172,351		—		172,351		—		172,351
Long-term debt		124,836		—		125,183		—		125,183
Accrued interest payable		1,012		—		—		1,012		1,012
Derivative liabilities		3,152		—		3,152		—		3,152

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2017

Accounting Changes and Error Corrections [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

12. RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective for annual reporting periods, including interim periods, beginning after December 15, 2017. We do not expect the application of this guidance to have a material impact on our consolidated financial statements other than expanded disclosures regarding non-interests income.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall, (Subtopic 825-10). The amendments in this Update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Targeted improvements to generally accepted accounting principles include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. The amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We do not expect the application of this guidance to have a material impact on our consolidated financial statements due to the limited amounts of marketable equity securities owned by the Company.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the requirements in Topic 840, Leases. The objective of Topic 842 is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. The amendments in this Update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the amendments in this Update is permitted for all entities. Management is currently evaluating the impact to the consolidated financial statements of adopting this Update but does not expect adoption to have a material impact on our consolidated financial statements. As of September 30, 2017, the Company had $9.9 million of outstanding operating leases pertaining to banking premises, which would be recognized as assets and corresponding liabilities upon adoption.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting (Topic 718). This Update was issued as part of the FASB’s simplification initiative. The areas for simplification in this Update involve several aspects of the 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. The Company adopted this Update during the nine months ended September 30, 2017 which resulted in the recognition of $821,000 in income tax benefit that would have previously been recognized in additional paid in capital.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019, and for interim periods within that fiscal years. Early application will be permitted for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is in the process of evaluating the standard. We have put together a project team that has begun to identify appropriate loan segments along with related historical losses for each segment and potential models that would be most appropriate for each individual segment. We have not quantified the effects of any models, but do expect the standard to significantly change the approach to calculating our allowance for loan losses.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. This Update provides guidance on eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; separately identifiable cash flows and application of the predominance principle. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08—Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. This Update amends guidance on the amortization period of premiums on certain purchased callable debt securities. Specifically, the amendments shorten the amortization period of premiums on certain purchased callable debt securities to the earliest call date. The amendments affect all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not expect the application of this guidance to have a material impact on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. The Company plans to adopt ASU 2017-12 on January 1, 2018. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. While the Company continues to assess all potential impacts of the standard, we do not expect the application of this guidance to have a material impact on our consolidated financial statements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – The unaudited consolidated financial statements include the accounts of Western New England Bancorp, the Bank, CSB Colts, Inc., Elm Street Securities Corporation, WB Real Estate Holdings, LLC and WFD Securities, Inc. All material intercompany balances and transactions have been eliminated in consolidation.

Estimates

Estimates – The preparation of unaudited consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of income and expenses for both at the date of the unaudited consolidated financial statements. Actual results could differ from those estimates. Estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, other-than-temporary impairment of securities, and the realizability of deferred tax assets.

Basis of Presentation

Basis of Presentation – In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of September 30, 2017, and the results of operations, changes in shareholders’ equity and cash flows for the interim periods presented. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations for the year ending December 31, 2017. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2016, included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Annual Report”).

Reclassifications

Reclassifications – Amounts in the prior period financial statements are reclassified when necessary to conform to the current year presentation.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2017

EARNINGS PER COMMON SHARE:

Schedule of earnings per common share

Earnings per common share for the three and nine months ended September 30, 2017 and 2016 have been computed based on the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
	(In thousands, except per share data)
Net income applicable to common stock	$	3,815		$	628		$	12,674		$	2,981
Average number of common shares issued		31,001			18,330			30,799			18,298
Less: Average unallocated ESOP Shares		(838	)		(926	)		(861	)		(945	)
Less: Average unvested equity incentive plan shares		(60	)		(26	)		(42	)		(13	)
Average number of common shares outstanding used to calculate basic earnings per common share		30,103			17,378			29,896			17,340
Effect of dilutive equity incentive plan		26			—			12			—
Effect of dilutive stock options		90			—			166			—
Average number of common shares outstanding used to calculate diluted earnings per common share		30,219			17,378			30,074			17,340
Basic earnings per share	$	0.13		$	0.04		$	0.42		$	0.17
Diluted earnings per share	$	0.13		$	0.04		$	0.42		$	0.17

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COMPREHENSIVE INCOME/LOSS (Tables)

9 Months Ended

Sep. 30, 2017

Stockholders' Equity Note [Abstract]

Schedule of accumulated other comprehensive loss in sharesholders equity

The components of accumulated other comprehensive loss included in shareholders’ equity are as follows:

	September 30,  2017			December 31, 2016
	(In thousands)
Net unrealized losses on securities available-for-sale	$	(3,782	)	$	(5,863	)
Tax effect		1,397			2,024
Net-of-tax amount		(2,385	)		(3,839	)
Fair value of derivatives used for cash flow hedges		(2,709	)		(3,152	)
Termination fees on forward starting interest rate swaps		(3,933	)		(4,733	)
Total derivatives		(6,642	)		(7,885	)
Tax effect		2,713			2,681
Net-of-tax amount		(3,929	)		(5,204	)
Unrecognized actuarial loss on defined benefit plan		(5,329	)		(5,482	)
Tax effect		2,176			1,864
Net-of-tax amount		(3,153	)		(3,618	)
Accumulated other comprehensive loss	$	(9,467	)	$	(12,661	)

Schedule of changes in accumulated other loss

The following table presents changes in accumulated other comprehensive loss for the periods ended September 30, 2017 and 2016 by component:

	Securities			Derivatives			Defined Benefit Plans			Accumulated Other Comprehensive Loss
	(In thousands)
Balance at December 31, 2015	$	(3,046	)	$	(5,501	)	$	(2,431	)	$	(10,978	)
Current-period other comprehensive income (loss)		4,883			(1,230	)		47			3,700
Balance at September 30, 2016	$	1,837		$	(6,731	)	$	(2,384	)	$	(7,278	)
Balance at December 31, 2016	$	(3,839	)	$	(5,204	)	$	(3,618	)	$	(12,661	)
Current-period other comprehensive income		1,454			1,275			465			3,194
Balance at September 30, 2017	$	(2,385	)	$	(3,929	)	$	(3,153	)	$	(9,467	)

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Schedule of securities available for sale and held to maturity

Securities available-for-sale are summarized as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	193,037	$	120	$	(2,836	)	$	190,321
U.S. government guaranteed mortgage-backed securities		17,408		—		(447	)		16,961
Corporate bonds		56,192		582		(221	)		56,553
State and municipal bonds		3,223		39		(37	)		3,225
Government-sponsored enterprise obligations		25,150		—		(697	)		24,453
Mutual funds		6,691		—		(285	)		6,406
Total available-for-sale	$	301,701	$	741	$	(4,523	)	$	297,919

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
		(In thousands)
Available-for-sale securities:
Government-sponsored mortgage-backed securities	$	184,127	$	33	$	(4,024	)	$	180,136
U.S. government guaranteed mortgage-backed securities		17,753		—		(403	)		17,350
Corporate bonds		50,255		265		(203	)		50,317
State and municipal bonds		4,117		13		(122	)		4,008
Government-sponsored enterprise obligations		43,140		—		(1,132	)		42,008
Mutual funds		6,586		—		(290	)		6,296
Total available-for-sale securities	$	305,978	$	311	$	(6,174	)	$	300,115

Schedule of amortized cost and fair value of securities available for sale and held to maturity by maturity

The amortized cost and fair value of available-for-sale debt securities at September 30, 2017, by maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers have the right to call or repay obligations. Also, because mortgage-backed securities require periodic principal paydowns, they are not included in the maturity categories in the following maturity summary.

	September 30, 2017
	Amortized Cost		Fair Value
	(In thousands)
Available for securities:
Debt securities:
Due in one year or less	$	—	$	—
Due after one year through five years		28,079		28,497
Due after five years through ten years		49,735		49,149
Due after ten years		6,751		6,585
Total securities	$	84,565	$	84,231
Mortgage-backed securities		210,445		207,282
Total	$	295,010	$	291,513

Schedule of gross realized gains and losses on sales of securities available for sale

Gross realized gains and losses on sales of securities available-for-sale for the three and nine months ended September 30, 2017 and 2016 are as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2017			2016		2017			2016
	(In thousands)
Gross gains realized	$	71		$	1	$	117		$	1,521
Gross losses realized		(1	)		—		(65	)		(837	)
Net gain realized	$	70		$	1	$	52		$	684

Schedule of securities with gross unrealized losses in continuous loss position

Information pertaining to securities with gross unrealized losses at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position are as follows:

	September 30, 2017
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	1,022	$	105,596	$	1,814	$	61,415
U.S. government guaranteed mortgage-backed securities		160		9,874		287		7,086
Corporate bonds		210		20,915		11		2,058
State and municipal bonds		—		—		37		1,564
Government-sponsored enterprise obligations		129		5,021		568		19,432
Mutual funds		57		3,508		228		2,898
Total available-for-sale	$	1,578	$	144,914	$	2,945	$	94,453

	December 31, 2016
	Less Than 12 Months				Over 12 Months
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale:
Government-sponsored mortgage-backed securities	$	3,016	$	147,691	$	1,008	$	27,303
U.S. government guaranteed mortgage-backed securities		192		12,536		211		4,814
Corporate bonds		203		18,481		—		—
State and municipal bonds		95		1,507		27		305
Government-sponsored enterprise obligations		1,132		42,008		—		—
Mutual funds		79		3,429		211		2,867
Total available-for-sale	$	4,717	$	225,652	$	1,457	$	35,289

	September 30, 2017
	Less Than 12 Months									Over 12 Months
	Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)			Number of Securities		Amortized Cost Basis		Gross Loss		Depreciation from Amortized Cost Basis (%)
	(Dollars in thousands)
Government-sponsored mortgage-backed securities		41	$	106,618	$	1,022		1.0	%		27	$	63,229	$	1,814		2.9	%
U.S. government guaranteed mortgage-backed securities		3		10,034		160		1.6			4		7,373		287		3.9
Corporate bonds		7		21,125		210		1.0			1		2,069		11		0.5
Government-sponsored enterprise obligations		1		5,150		129		2.5			8		20,000		568		2.8
State and municipal bonds		—		—		—		—			3		1,601		37		2.3
Mutual funds		1		3,565		57		1.6			2		3,126		228		7.3
			$	146,492	$	1,578						$	97,398	$	2,945

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Schedule of loans

Loans consisted of the following amounts:	September 30,			December 31,
	2017			2016
	(In thousands)
Commercial real estate	$	716,890		$	720,741
Residential real estate:
Residential		555,768			522,083
Home equity		92,359			92,083
Commercial and industrial		244,374			222,286
Consumer		4,467			4,424
Total Loans		1,613,858			1,561,617
Unearned premiums and deferred loan fees and costs, net		4,915			4,867
Allowance for loan losses		(10,518	)		(10,068	)
	$	1,608,255		$	1,556,416

Schedule of mortgage servicing rights

A summary of the activity in the balances of mortgage servicing rights follows:

	Three Months Ended   September 30,   2017			Nine Months Ended   September 30,   2017
	(In thousands)
Balance at the beginning of period:	$	408		$	465
Capitalized mortgage servicing rights		—			—
Amortization		(28	)		(85	)
Balance at the end of period	$	380		$	380
Fair value at the end of period	$	538		$	538

Schedule of analysis of changes in allowance for loan losses by segment

An analysis of changes in the allowance for loan losses by segment for the periods ended September 30, 2017 and 2016 is as follows:

	Commercial Real Estate			Residential Real Estate			Commercial and Industrial			Consumer			Unallocated			Total
	(In thousands)
Three Months Ended
Balance at June 30, 2016	$	3,956		$	2,804		$	2,797		$	20		$	(7	)	$	9,570
Provision (credit)		62			189			83			43			(2	)		375
Charge-offs		—			(40	)		—			(46	)		—			(86	)
Recoveries		59			—			—			9			—			68
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at June 30, 2017	$	4,472		$	3,126		$	2,754		$	53		$	13		$	10,418
Provision (credit)		(68	)		146			(109	)		83			148			200
Charge-offs		—			(107	)		—			(104	)		—			(211	)
Recoveries		—			80			3			28			—			111
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518
Nine Months Ended
Balance at December 31, 2015	$	3,856		$	2,431		$	2,485		$	22		$	46		$	8,840
Provision (credit)		(614	)		610			395			64			(55	)		400
Charge-offs		(170	)		(90	)		—			(87	)		—			(347	)
Recoveries		1,005			2			—			27			—			1,034
Balance at September 30, 2016	$	4,077		$	2,953		$	2,880		$	26		$	(9	)	$	9,927
Balance at December 31, 2016	$	4,083		$	2,862		$	3,085		$	38		$	—		$	10,068
Provision (credit)		239			427			(180	)		203			161			850
Charge-offs		(36	)		(148	)		(285	)		(237	)		—			(706	)
Recoveries		118			104			28			56			—			306
Balance at September 30, 2017	$	4,404		$	3,245		$	2,648		$	60		$	161		$	10,518

Schedule of information pertaining to the allowance for loan losses by segment

Further information pertaining to the allowance for loan losses by segment at September 30, 2017 and December 31, 2016 follows:

	Commercial Real Estate		Residential Real Estate		Commercial and Industrial		Consumer		Unallocated		Total
	(In thousands)
September 30, 2017
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,404		3,245		2,648		60		161		10,518
Total allowance for loan losses	$	4,404	$	3,245	$	2,648	$	60	$	161	$	10,518
Impaired loans	$	3,993	$	3,854	$	2,869	$	127	$	—	$	10,843
Non-impaired loans		699,945		640,622		240,421		4,340		—		1,585,328
Loans acquired with deteriorated credit quality		12,952		3,651		1,084		—		—		17,687
Total loans	$	716,890	$	648,127	$	244,374	$	4,467	$	—	$	1,613,858
December 31, 2016
Amount of allowance for impaired loans	$	—	$	—	$	—	$	—	$	—	$	—
Amount of allowance for non-impaired loans		4,083		2,862		3,085		38		—		10,068
Total allowance for loan losses		4,083		2,862		3,085		38		—		10,068
Impaired loans	$	3,335	$	452	$	3,042	$	—	$	—	$	6,829
Non-impaired loans		701,766		609,107		217,972		4,424		—		1,533,269
Loans acquired with deteriorated credit quality		15,640		4,607		1,272		—		—		21,519
Total loans	$	720,741	$	614,166	$	222,286	$	4,424	$	—	$	1,561,617

Schedule of past due and nonaccrual loans by class

The following is a summary of past due and non-accrual loans by class at September 30, 2017 and December 31, 2016:

	30 – 59 Days Past Due		60 – 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Past Due 90 Days or More and Still Accruing		Loans on Non- Accrual
	(In thousands)
September 30, 2017
Commercial real estate	$	196	$	295	$	136	$	627	$	—	$	2,181
Residential real estate:
Residential		2,308		570		572		3,450		—		1,744
Home equity		218		135		72		425		—		73
Commercial and industrial		472		59		108		639		—		2,700
Consumer		54		18		5		77		—		17
Total legacy loans		3,248		1,077		893		5,218		—		6,715
Loans acquired from Chicopee Savings Bank		2,957		1,610		1,279		5,846		—		6,450
Total	$	6,205	$	2,687	$	2,172	$	11,064	$	—	$	13,165
December 31, 2016
Commercial real estate	$	302	$	555	$	137	$	994	$	—	$	2,740
Residential real estate:
Residential		791		262		689		1,742		—		1,658
Home equity		208		36		—		244		—		37
Commercial and industrial		326		32		—		358		—		3,214
Consumer		27		9		7		43		—		14
Total legacy loans		1,654		894		833		3,381		—		7,663
Loans acquired from Chicopee Savings Bank		3,854		1,907		551		6,312		—		6,394
Total past due loans	$	5,508	$	2,801	$	1,384	$	9,693	$	—	$	14,057

Schedule of impaired loans by class

The following is a summary of impaired loans by class at and for the periods ended September 30, 2017 and December 31, 2016:

	Impaired Loans(1)(2)
					Three Months Ended				Nine Months Ended
	At September 30, 2017 (1)				September 30, 2017				September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	16,945	$	19,380	$	17,731	$	199	$	18,788	$	650
Residential real estate:
Residential real estate		6,939		7,410		7,016		11		6,548		34
Home equity		566		590		407		1		260		3
Commercial and industrial		3,953		10,242		4,442		54		4,538		183
Consumer		127		131		122		—		83		—
Total impaired loans	$	28,530	$	37,753	$	29,718	$	265	$	30,217	$	870

(1)   Includes loans acquired with deteriorated credit quality and performing troubled debt restructurings.

(2)   Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

	Impaired Loans (1)(2)
					Three Months Ended				Nine Months Ended
	At December 31, 2016 (1)				September 30, 2016				September 30, 2016
	Recorded Investment		Unpaid Principal Balance		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Impaired loans without a valuation allowance (2):
Commercial real estate	$	18,975	$	21,330	$	3,487	$	17	$	3,551	$	49
Residential real estate		5,059		5,676		515		—		482		—
Commercial and industrial		4,314		11,049		3,356		—		3,434		—
Total impaired loans	$	28,348	$	38,055	$	7,358	$	17	$	7,467	$	49

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp, Inc. merger.

⁽²⁾ Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

Schedule of troubled debt restructurings

The loans are on non-accrual and are current. The loans are measured for impairment quarterly and appropriate reserves/charge offs have been taken.

	Nine Months Ended
	September 30, 2016
	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt Restructurings
Commercial Real Estate		1	$	1,940	$	1,940
Commercial and Industrial		3		2,681		2,681
Residential		2		161		161
Total		6	$	4,782	$	4,782

Schedule of loans acquired with deteriorated credit quality

The following is a summary of loans acquired from Chicopee with evidence of credit deterioration as of September 30, 2017.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non- Accretable Discount			Accretable Yield			Loans Receivable
	(In thousands)
Balance at December 31, 2016	$	37,437		$	29,040		$	8,397		$	7,521		$	21,519
Collections		(3,860	)		(3,326	)		(534	)		(1,003	)		(2,323	)
Dispositions		(1,833	)		(1,503	)		(330	)		6			(1,509	)
Balance at September 30, 2017	$	31,744		$	24,211		$	7,533		$	6,524		$	17,687

Schedule of loans by risk rating

The following table presents our loans by risk rating at September 30, 2017 and December 31, 2016:

	Commercial Real Estate		Residential 1-4 Family		Home Equity		Commercial and Industrial		Consumer		Total
	(In thousands)
September 30, 2017
Loans rated 1 – 3	$	647,599	$	549,936	$	91,854	$	192,968	$	4,340	$	1,486,697
Loans rated 4		45,339		95		—		35,585		—		81,019
Loans rated 5		14,724		—		—		7,521		—		22,245
Loans rated 6		9,228		5,737		505		8,300		127		23,897
	$	716,890	$	555,768	$	92,359	$	244,374	$	4,467	$	1,613,858
December 31, 2016
Loans rated 1 – 3	$	673,957	$	516,339	$	91,964	$	180,675	$	4,391	$	1,467,326
Loans rated 4		24,207		—		—		16,621		6		40,834
Loans rated 5		14,068		—		—		6,727		—		20,795
Loans rated 6		6,604		5,744		119		15,379		27		27,873
Loans rated 7		1,905		—		—		2,884		—		4,789
	$	720,741	$	522,083	$	92,083	$	222,286	$	4,424	$	1,561,617

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GOODWILL AND OTHER INTANGIBLES (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

Goodwill for the nine months ended September 30, 2017 is summarized as follows:

	Nine Months Ended September 30,   2017
		(In thousands)
Balance at December 31, 2016	$	13,747
Current period adjustments		(1,260	)
Balance at September 30, 2017	$	12,487

Schedule of other intangible assets

The resulting core deposit intangible is amortized over twelve years using the straight-line method. Core deposit intangibles are summarized as follows:

	Nine Months Ended September 30,  2017
		(In thousands)
Balance at December 31, 2016	$	4,438
Amortization		(282	)
Balance at September 30, 2017	$	4,156

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SHARE-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of stock option activity

A summary of stock option activity for the nine months ended September 30, 2017 is presented below. No options were outstanding during the nine months ended September 30, 2016.

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term  (in years)		Aggregate Intrinsic Value  (in thousands)
Outstanding at December 31, 2016		1,178,899		$	6.01		1.98	$	3,930
Exercised		(921,849	)		5.93		0.91		3,675
Outstanding at September 30, 2017		257,050		$	6.31		4.66	$	1,175
Exercisable at September 30, 2017		257,050		$	6.31		4.66	$	1,175

Schedule of threshold, target and maximum

The threshold, target and maximum for the three year period under the 2017 Plan is as follows:

	Return on Equity Targets
Performance Period Ending	Threshold		Target		Maximum
December 31, 2017	6.00	%	6.60	%	7.30	%
December 31, 2018	6.30	%	7.00	%	7.60	%
December 31, 2019	6.50	%	7.20	%	7.90	%

Schedule of unvested restricted stock awards

Our stock award plan activity for the nine months ended September 30, 2017 and 2016 is summarized below:

	Unvested Stock Awards Outstanding
	Shares			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016	91,371		$	7.51
Shares granted	89,042			10.15
Shares vested	(21,552	)		7.44
Outstanding at September 30, 2017	158,861		$	9.00
Outstanding at December 31, 2015	54,160		$	7.28
Shares granted	62,740			7.73
Shares vested	(11,200	)		7.18
Outstanding at September 30, 2016	105,700		$	7.56

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PENSION BENEFITS (Tables)

9 Months Ended

Sep. 30, 2017

Defined Benefit Plan [Abstract]

Schedule of net pension benefit costs

The following table provides information regarding net pension benefit costs for the periods shown:

	Three Months Ended September 30,						Nine Months Ended, September 30,
	2017			2016			2017			2016
	(In thousands)
Service cost	$	245		$	283		$	778		$	854
Interest cost		254			240			761			719
Expected return on assets		(298	)		(275	)		(895	)		(823	)
Amortization of actuarial losses		51			24			153			71
Net periodic pension cost	$	252		$	272		$	797		$	821

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DERIVATIVES AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of fair values of derivative instruments on the balance sheet

The table below presents the fair value of our derivative financial instruments designated as hedging instruments as well as our classification on the balance sheet as of September 30, 2017 and December 31, 2016.

September 30, 2017	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	1	Other Liabilities	$	2,710

December 31, 2016	Asset Derivatives			Liability Derivatives
	Balance Sheet Location		Fair Value	Balance Sheet Location		Fair Value
	(In thousands)
Interest rate swaps	Other Assets	$	—	Other Liabilities	$	3,152

Schedule of information about cash flow hedges

The following table presents information about our cash flow hedges at September 30, 2017 and December 31, 2016:

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
September 30, 2017	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)								(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		2.6		1.31	%		2.46	%	$	(2,709	)

	Notional		Weighted Average		Weighted Average Rate						Estimated Fair
December 31, 2016	Amount		Maturity		Receive			Pay			Value
	(In thousands)		(In years)									(In thousands)
Interest rate swaps on FHLBB borrowings	$	75,000		3.4		0.92	%		2.46	%	$	(3,152	)

Schedule of pre-tax net gains (losses) of cash flow hedges

The table below presents the pre-tax net losses of our cash flow hedges for the periods indicated.

	Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)
	Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016		2017			2016
	(In thousands)
Interest rate swaps	$	(14	)	$	417	$	(307	)	$	(2,863	)

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FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2017

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:

	September 30, 2017
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Securities available-for-sale
Government-sponsored mortgage-backed securities	$	—	$	190,321	$	—	$	190,321
U.S. government guaranteed mortgage-backed securities		—		16,961		—		16,961
Corporate bonds		—		56,553		—		56,553
State and municipal bonds		—		3,225		—		3,225
Government-sponsored enterprise obligations		—		24,453		—		24,453
Mutual funds		6,406		—		—		6,406
Total securities available-for-sale		6,406		291,513		—		297,919
Interest rate swaps		—		1		—		1
Total assets	$	6,406	$	291,514	$	—	$	297,920
Liabilities:
Interest rate swaps	$	—	$	2,710	$	—	$	2,710

	December 31, 2016
	Level 1		Level 2		Level 3		Total
Assets:	(In thousands)
Government-sponsored mortgage-backed securities	$	—	$	180,136	$	—	$	180,136
U.S. government guaranteed mortgage-backed securities		—		17,350		—		17,350
Corporate bonds		—		50,317		—		50,317
State and municipal bonds		—		4,008		—		4,008
Government-sponsored enterprise obligations		—		42,008		—		42,008
Mutual funds		6,296		—		—		6,296
Total assets	$	6,296	$	293,819	$	—	$	300,115
Liabilities:
Interest rate swaps	$	—	$	3,152	$	—	$	3,152

Schedule of assets measured at fair value on non-recurring basis

Total losses represent the change in carrying value as a result of fair value adjustments related to assets still held at September 30, 2016.

	At September 30, 2016						Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
							Total		Total
	Level 1		Level 2		Level 3		Gains (Losses)		Gains (Losses)
	(In thousands)
Impaired Loans	$	—	$	—	$	2,059	$	—	$	(220	)

Summary of fair values of financial instruments

The estimated fair values of our financial instruments are as follows:

	September 30, 2017
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	28,900	$	28,900	$	—	$	—	$	28,900
Securities available-for-sale		297,919		6,406		291,513		—		297,919
Federal Home Loan Bank of Boston and other restricted stock		15,704		—		—		15,704		15,704
Loans - net		1,608,255		—		—		1,577,309		1,577,309
Accrued interest receivable		5,764		—		—		5,764		5,764
Mortgage servicing rights		380		—		380		—		380
Derivative assets		1		—		1		—		1
Liabilities:
Deposits		1,515,198		—		—		1,514,641		1,514,641
Short-term borrowings		192,465		—		192,482		—		192,482
Long-term debt		106,339		—		106,517		—		106,517
Accrued interest payable		394		—		—		394		394
Derivative liabilities		2,710		—		2,710		—		2,710

	December 31, 2016
	Carrying Value		Fair Value
			Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Cash and cash equivalents	$	70,234	$	70,234	$	—	$	—	$	70,234
Securities available-for-sale		300,115		6,296		293,819		—		300,115
Federal Home Loan Bank of Boston and other restricted stock		16,124		—		—		16,124		16,124
Loans - net		1,556,416		—		—		1,525,274		1,525,274
Accrued interest receivable		5,782		—		—		5,782		5,782
Mortgage servicing rights		465		—		628		—		628
Liabilities:
Deposits		1,518,071		—		—		1,521,580		1,521,580
Short-term borrowings		172,351		—		172,351		—		172,351
Long-term debt		124,836		—		125,183		—		125,183
Accrued interest payable		1,012		—		—		1,012		1,012
Derivative liabilities		3,152		—		3,152		—		3,152

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	Sep. 30, 2017 Office
Western Massachusetts and Northern Connecticut [Member]
Number of banking offices in which bank operates	21

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings per common share
Net income applicable to common stock	$ 3,815	$ 628	$ 12,674	$ 2,981
Average number of common shares issued	31,001	18,330	30,799	18,298
Less: Average unallocated ESOP Shares	(838)	(926)	(861)	(945)
Less: Average unvested equity incentive plan shares	(60)	(26)	(42)	(13)
Average number of common shares outstanding used to calculate basic earnings per common share	30,103,095	17,377,844	29,895,621	17,340,101
Effect of dilutive equity incentive plan	26		12
Effect of dilutive stock options	90		166
Average number of common shares outstanding used to calculate diluted earnings per common share	30,219,083	17,377,844	30,074,361	17,340,101
Basic earnings per share (in dollars per share)	$ 0.13	$ 0.04	$ 0.42	$ 0.17
Diluted earnings per share (in dollars per share)	$ 0.13	$ 0.02	$ 0.42	$ 0.17

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COMPREHENSIVE INCOME/LOSS (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Dec. 31, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss), net of tax amount, ending	$ (9,467)	$ (12,661)	$ (7,278)	$ (10,978)
Unrealized Losses Available For Sale Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) before tax, beginning	(3,782)	(5,863)
Tax effect	1,397	2,024
Accumulated other comprehensive income (loss), net of tax amount, ending	(2,385)	(3,839)
Fair value of derivatives used for cash flow hedges [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) before tax, beginning	(2,709)	(3,152)
Termination fees on forward starting interest rate swaps	(3,933)	(4,733)
Total derivatives	(6,642)	(7,885)
Tax effect	2,713	2,681
Accumulated other comprehensive income (loss), net of tax amount, ending	(3,929)	(5,204)
Unrecognized actuarial loss on defined benefit plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss) before tax, beginning	(5,329)	(5,482)
Tax effect	2,176	1,864
Accumulated other comprehensive income (loss), net of tax amount, ending	$ (3,153)	$ (3,618)

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COMPREHENSIVE INCOME/LOSS (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ (12,661)	$ (10,978)
Current-period other comprehensive income (loss)	$ 640	$ 318	3,194	3,700
Ending balance	(9,467)	(7,278)	(9,467)	(7,278)
Defined Benefit Plan [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(3,618)	(2,431)
Current-period other comprehensive income (loss)			465	47
Ending balance	(3,153)	(2,384)	(3,153)	(2,384)
Derivative [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(5,204)	(5,501)
Current-period other comprehensive income (loss)			1,275	(1,230)
Ending balance	(3,929)	(6,731)	(3,929)	(6,731)
Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			(3,839)	(3,046)
Current-period other comprehensive income (loss)			1,454	4,883
Ending balance	$ (2,385)	$ 1,837	$ (2,385)	$ 1,837

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SECURITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Available-for-sale securities
Amortized Cost	$ 301,701	$ 305,978
Gross Unrealized Gains	741	311
Gross Unrealized Losses	(4,523)	(6,174)
Fair Value	297,919	300,115
Government-Sponsored Mortgage-Backed Securities [Member]
Available-for-sale securities
Amortized Cost	193,037	184,127
Gross Unrealized Gains	120	33
Gross Unrealized Losses	(2,836)	(4,024)
Fair Value	190,321	180,136
US Government Guaranteed Mortgage-Backed Securities [Member]
Available-for-sale securities
Amortized Cost	17,408	17,753
Gross Unrealized Losses	(447)	(403)
Fair Value	16,961	17,350
Corporate Bonds [Member]
Available-for-sale securities
Amortized Cost	56,192	50,255
Gross Unrealized Gains	582	265
Gross Unrealized Losses	(221)	(203)
Fair Value	56,553	50,317
States and Municipal Bonds [Member]
Available-for-sale securities
Amortized Cost	3,223	4,117
Gross Unrealized Gains	39	13
Gross Unrealized Losses	(37)	(122)
Fair Value	3,225	4,008
Government-Sponsored Enterprise Obligations [Member]
Available-for-sale securities
Amortized Cost	25,150	43,140
Gross Unrealized Losses	(697)	(1,132)
Fair Value	24,453	42,008
Mutual Funds [Member]
Available-for-sale securities
Amortized Cost	6,691	6,586
Gross Unrealized Losses	(285)	(290)
Fair Value	$ 6,406	$ 6,296

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SECURITIES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Investments [Line Items]
Available for Sale Securities, Amortized Cost, Total	$ 301,701	$ 305,978
Debt Securities [Member]
Schedule of Investments [Line Items]
Available for Sale Securities, Amortized Cost, Due after one year through five years	28,079
Available for Sale Securities, Amortized Cost, Due after five years through ten years	49,735
Available for Sale Securities, Amortized Cost, Due after ten years	6,751
Available for Sale Securities, Amortized Cost, Total	84,565
Available for Sale Securities, Fair Value, Due after one year through five years	28,497
Available for Sale Securities, Fair Value, Due after five years through ten years	49,149
Available for Sale Securities, Fair Value, Due after ten years	6,585
Available for Sale Securities, Fair Value, Total	84,231
Mortgage-Backed Securities [Member]
Schedule of Investments [Line Items]
Available for Sale Securities, Amortized Cost, Total	210,445
Available for Sale Securities, Fair Value, Total	207,282
Available-For-Sale Securities [Member]
Schedule of Investments [Line Items]
Available for Sale Securities, Amortized Cost, Total	295,010
Available for Sale Securities, Fair Value, Total	$ 291,513

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SECURITIES (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Gross gains realized	$ 71	$ 1	$ 117	$ 1,521
Gross losses realized	(1)		(65)	(837)
Net gain realized	$ 70	$ 1	$ 52	$ 684

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SECURITIES (Details 3) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) Security	Dec. 31, 2016 USD ($)
Available for sale, Less Than 12 Months Gross Unrealized Losses	$ 1,578	$ 4,717
Available for sale, Less Than 12 Months Fair Value	144,914	225,652
Available for sale, Over 12 Months Gross Unrealized Losses	2,945	1,457
Available for sale, Over 12 Months Fair Value	94,453	35,289
Amortized Cost Basis - less than 12 months	146,492
Gross Loss - less than 12 months	1,578
Amortized Cost Basis - Over 12 Months	97,398
Gross Loss - Over 12 Months	2,945
Government-Sponsored Mortgage-Backed Securities [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses	1,022	3,016
Available for sale, Less Than 12 Months Fair Value	105,596	147,691
Available for sale, Over 12 Months Gross Unrealized Losses	1,814	1,008
Available for sale, Over 12 Months Fair Value	$ 61,415	27,303
Number of Securities - less than 12 months | Security	41
Amortized Cost Basis - less than 12 months	$ 106,618
Gross Loss - less than 12 months	$ 1,022
Depreciation from Amortized Cost Basis (%) - less than 12 months	1.00%
Number of Securities - Over 12 Months | Security	27
Amortized Cost Basis - Over 12 Months	$ 63,229
Gross Loss - Over 12 Months	$ 1,814
Depreciation from Amortized Cost Basis (%) - Over 12 months	2.90%
US Government Guaranteed Mortgage-Backed Securities [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses	$ 160	192
Available for sale, Less Than 12 Months Fair Value	9,874	12,536
Available for sale, Over 12 Months Gross Unrealized Losses	287	211
Available for sale, Over 12 Months Fair Value	$ 7,086	4,814
Number of Securities - less than 12 months | Security	3
Amortized Cost Basis - less than 12 months	$ 10,034
Gross Loss - less than 12 months	$ 160
Depreciation from Amortized Cost Basis (%) - less than 12 months	1.60%
Number of Securities - Over 12 Months | Security	4
Amortized Cost Basis - Over 12 Months	$ 7,373
Gross Loss - Over 12 Months	$ 287
Depreciation from Amortized Cost Basis (%) - Over 12 months	3.90%
Corporate Bonds [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses	$ 210	203
Available for sale, Less Than 12 Months Fair Value	20,915	18,481
Available for sale, Over 12 Months Gross Unrealized Losses	11
Available for sale, Over 12 Months Fair Value	$ 2,058
Number of Securities - less than 12 months | Security	7
Amortized Cost Basis - less than 12 months	$ 21,125
Gross Loss - less than 12 months	$ 210
Depreciation from Amortized Cost Basis (%) - less than 12 months	1.00%
Number of Securities - Over 12 Months | Security	1
Amortized Cost Basis - Over 12 Months	$ 2,069
Gross Loss - Over 12 Months	$ 11
Depreciation from Amortized Cost Basis (%) - Over 12 months	0.50%
States and Municipal Bonds [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses		95
Available for sale, Less Than 12 Months Fair Value		1,507
Available for sale, Over 12 Months Gross Unrealized Losses	$ 37	27
Available for sale, Over 12 Months Fair Value	$ 1,564	305
Number of Securities - Over 12 Months | Security	3
Amortized Cost Basis - Over 12 Months	$ 1,601
Gross Loss - Over 12 Months	$ 37
Depreciation from Amortized Cost Basis (%) - Over 12 months	2.30%
Government-Sponsored Enterprise Obligations [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses	$ 129	1,132
Available for sale, Less Than 12 Months Fair Value	5,021	42,008
Available for sale, Over 12 Months Gross Unrealized Losses	568
Available for sale, Over 12 Months Fair Value	$ 19,432
Number of Securities - less than 12 months | Security	1
Amortized Cost Basis - less than 12 months	$ 5,150
Gross Loss - less than 12 months	$ 129
Depreciation from Amortized Cost Basis (%) - less than 12 months	2.50%
Number of Securities - Over 12 Months | Security	8
Amortized Cost Basis - Over 12 Months	$ 20,000
Gross Loss - Over 12 Months	$ 568
Depreciation from Amortized Cost Basis (%) - Over 12 months	2.80%
Mutual Funds [Member]
Available for sale, Less Than 12 Months Gross Unrealized Losses	$ 57	79
Available for sale, Less Than 12 Months Fair Value	3,508	3,429
Available for sale, Over 12 Months Gross Unrealized Losses	228	211
Available for sale, Over 12 Months Fair Value	$ 2,898	$ 2,867
Number of Securities - less than 12 months | Security	1
Amortized Cost Basis - less than 12 months	$ 3,565
Gross Loss - less than 12 months	$ 57
Depreciation from Amortized Cost Basis (%) - less than 12 months	1.60%
Number of Securities - Over 12 Months | Security	2
Amortized Cost Basis - Over 12 Months	$ 3,126
Gross Loss - Over 12 Months	$ 228
Depreciation from Amortized Cost Basis (%) - Over 12 months	7.30%

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,613,858		$ 1,561,617
Unearned premiums and deferred loan fees and costs, net	4,915		4,867
Allowance for loan losses	(10,518)	$ (10,418)	(10,068)	$ (9,927)	$ (9,570)	$ (8,840)
Loans, net	1,608,255		1,556,416
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	716,890		720,741
Allowance for loan losses	(4,404)	(4,472)	(4,083)	(4,077)	(3,956)	(3,856)
Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	555,768		522,083
Home Equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	92,359		92,083
Commercial and Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	244,374		222,286
Allowance for loan losses	(2,648)	(2,754)	(3,085)	(2,880)	(2,797)	(2,485)
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	4,467		4,424
Allowance for loan losses	$ (60)	$ (53)	$ (38)	$ (26)	$ (20)	$ (22)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 1) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2017
Servicing Asset [Roll Forward]
Balance at the beginning of period:	$ 408	$ 465
Amortization	(28)	(85)
Balance at the end of year	380	380
Fair value at the end of year	$ 538	$ 538

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Beginning Balance	$ 10,418	$ 9,570	$ 10,068	$ 8,840
Provision (credit)	200	375	850	400
Charge-offs	(211)	(86)	(706)	(347)
Recoveries	111	68	306	1,034
Ending Balance	10,518	9,927	10,518	9,927
Commercial Real Estate [Member]
Beginning Balance	4,472	3,956	4,083	3,856
Provision (credit)	(68)	62	239	(676)
Charge-offs			(36)	(170)
Recoveries		59	118	1,005
Ending Balance	4,404	4,077	4,404	4,077
Residential Real Estate [Member]
Beginning Balance	3,126	2,804	2,862	2,431
Provision (credit)	146	189	427	610
Charge-offs	(107)	(40)	(148)	(90)
Recoveries	80		104	2
Ending Balance	3,245	2,953	3,245	2,953
Commercial and Industrial [Member]
Beginning Balance	2,754	2,797	3,085	2,485
Provision (credit)	(109)	83	(180)	395
Charge-offs			(285)
Recoveries	3		28
Ending Balance	2,648	2,880	2,648	2,880
Consumer [Member]
Beginning Balance	53	20	38	22
Provision (credit)	83	43	203	64
Charge-offs	(104)	(46)	(237)	(87)
Recoveries	28	9	56	27
Ending Balance	60	26	60	26
Unallocated [Member]
Beginning Balance	13	(7)		46
Provision (credit)	148	(2)	161	(55)
Ending Balance	$ 161	$ (9)	$ 161	$ (9)

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	$ 10,518		$ 10,068
Total allowance for loan losses	10,518	$ 10,418	10,068	$ 9,927	$ 9,570	$ 8,840
Impaired loans	10,843		6,829
Non-impaired loans	1,585,328		1,533,269
Amount of loans acquired with deteriorated credit quality	17,687		21,519
Total loans	1,613,858		1,561,617
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	4,404		4,083
Total allowance for loan losses	4,404	4,472	4,083	4,077	3,956	3,856
Impaired loans	3,993		3,335
Non-impaired loans	699,945		701,766
Amount of loans acquired with deteriorated credit quality	12,952		15,640
Total loans	716,890		720,741
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	3,245		2,862
Total allowance for loan losses	3,245	3,126	2,862	2,953	2,804	2,431
Impaired loans	3,854		452
Non-impaired loans	640,622		609,107
Amount of loans acquired with deteriorated credit quality	3,651		4,607
Total loans	648,127		614,166
Commercial and Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	2,648		3,085
Total allowance for loan losses	2,648	2,754	3,085	2,880	2,797	2,485
Impaired loans	2,869		3,042
Non-impaired loans	240,421		217,972
Amount of loans acquired with deteriorated credit quality	1,084		1,272
Total loans	244,374		222,286
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	60		38
Total allowance for loan losses	60	53	38	26	20	22
Impaired loans	127
Non-impaired loans	4,340		4,424
Total loans	4,467		$ 4,424
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Amount of allowance for non-impaired loans	161
Total allowance for loan losses	$ 161	$ 13		$ (9)	$ (7)	$ 46

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	$ 5,218	$ 3,381
Loans acquired from Chicopee Savings Bank	5,846	6,312
Total Past Due	11,064	9,693
Total legacy loans on non-accrual	6,715	7,663
Loans acquired from Chicopee Savings Bank as non accrual	6,450	6,394
Total past due on non accrual	13,165	14,057
30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	3,248	1,654
Loans acquired from Chicopee Savings Bank	2,957	3,854
Total Past Due	6,205	5,508
60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	1,077	894
Loans acquired from Chicopee Savings Bank	1,610	1,907
Total Past Due	2,687	2,801
Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	893	833
Loans acquired from Chicopee Savings Bank	1,279	551
Total Past Due	2,172	1,384
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	627	994
Loans on Non-Accrual	2,181	2,740
Commercial Real Estate [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	196	302
Commercial Real Estate [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	295	555
Commercial Real Estate [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	136	137
Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	3,450	1,742
Loans on Non-Accrual	1,744	1,658
Residential [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	2,308	791
Residential [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	570	262
Residential [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	572	689
Home Equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	425	244
Loans on Non-Accrual	73	37
Home Equity [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	218	208
Home Equity [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	135	36
Home Equity [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	72
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	639	358
Loans on Non-Accrual	2,700	3,214
Commercial and Industrial [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	472	326
Commercial and Industrial [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	59	32
Commercial and Industrial [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	108
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	77	43
Loans on Non-Accrual	17	14
Consumer [Member] | 30-59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	54	27
Consumer [Member] | 60 - 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	18	9
Consumer [Member] | Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total legacy loans	$ 5	$ 7

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) - USD ($) $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2017		Sep. 30, 2016	[2],[3]	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	[3]
Total Impaired loans:
Recorded Investment	[1],[2]	$ 28,530				$ 28,530		$ 28,348
Unpaid Principal Balance	[1],[2]	37,753				37,753		38,055
Average Recorded Investment		29,718	[1],[2]	$ 7,358		30,217	$ 7,467
Interest Income Recognized		265	[1],[2]	17		870	49
Commercial Real Estate [Member]
Total Impaired loans:
Recorded Investment	[1],[2]	16,945				16,945		18,975
Unpaid Principal Balance	[1],[2]	19,380				19,380		21,330
Average Recorded Investment		17,731	[1],[2]	3,487		18,788	3,551
Interest Income Recognized		199	[1],[2]	17		650	49
Residential Real Estate [Member]
Total Impaired loans:
Recorded Investment	[1],[2]	6,939				6,939		5,059
Unpaid Principal Balance	[1],[2]	7,410				7,410		5,676
Average Recorded Investment		7,016	[1],[2]	515		6,548	482
Interest Income Recognized		11	[1],[2]			34
Home Equity [Member]
Total Impaired loans:
Recorded Investment	[1],[2]	566				566
Unpaid Principal Balance	[1],[2]	590				590
Average Recorded Investment		407	[1],[2]			260
Interest Income Recognized		1	[1],[2]			3
Commercial and Industrial [Member]
Total Impaired loans:
Recorded Investment	[1],[2]	3,953				3,953		4,314
Unpaid Principal Balance	[1],[2]	10,242				10,242		$ 11,049
Average Recorded Investment		4,442	[1],[2]	$ 3,356		4,538	$ 3,434
Interest Income Recognized		54	[1],[2]			183
Consumer [Member]
Total Impaired loans:
Recorded Investment	[1],[2]	127				127
Unpaid Principal Balance	[1],[2]	131				131
Average Recorded Investment		$ 122	[1],[2]			$ 83

[1] Includes loans acquired with deteriorated credit quality and performing troubled debt restructurings.

[2] Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp merger.

[3] Includes loans acquired with deteriorated credit quality from the Chicopee Bancorp, Inc. merger.

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Contracts
Number of Contracts | Contracts	6
Pre- Modification Outstanding Recorded Investment	$ 4,782
Post- Modification Outstanding Recorded Investment	$ 4,782
Commercial Real Estate [Member]
Number of Contracts | Contracts	1
Pre- Modification Outstanding Recorded Investment	$ 1,940
Post- Modification Outstanding Recorded Investment	$ 1,940
Commercial and Industrial [Member]
Number of Contracts | Contracts	3
Pre- Modification Outstanding Recorded Investment	$ 2,681
Post- Modification Outstanding Recorded Investment	$ 2,681
Residential Real Estate [Member]
Number of Contracts | Contracts	2
Pre- Modification Outstanding Recorded Investment	$ 161
Post- Modification Outstanding Recorded Investment	$ 161

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) - Chicopee Bancorp Inc [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Loans receivable - Contractual Required Payments Receivable beginning	$ 37,437
Loans receivable - Cash Expected To Be Collected beginning	29,040
Loans receivable at acquisition - Non-Accretable Discount beginning	8,397
Loans receivable at acquisition - Accretable Yield beginning	7,521
Loans receivable at acquisition - Outstanding beginning	21,519
Collections - Contractually Required Payments Receivable	(3,860)
Collections - Cash Flows Expected to be Collected	(3,326)
Collections - Non-Accretable DIscount	(534)
Collections - Accretable Yield	(1,003)
Collections	(2,323)
Dispositions - Contractually Required Payments Receivable	(1,833)
Dispositions - Cash Flows Expected to be Collected	(1,503)
Dispositions - Non-Accretable Discount	(330)
Dispositions - Accretable Yield	6
Dispositions	(1,509)
Loans receivable - Contractual Required Payments Receivable ending	31,744
Loans receivable - Cash Expected To Be Collected ending	24,211
Loans receivable at acquisition - Non-Accretable Discount ending	7,533
Loans receivable at acquisition - Accretable Yield ending	6,524
Loans receivable at acquisition - Outstanding ending	$ 17,687

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 1,613,858	$ 1,561,617
Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,486,697	1,467,326
Loans rated 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	81,019	40,834
Loans rated 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	22,245	20,795
Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	23,897	27,873
Loans rated 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		4,789
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	716,890	720,741
Commercial Real Estate [Member] | Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	647,599	673,957
Commercial Real Estate [Member] | Loans rated 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	45,339	24,207
Commercial Real Estate [Member] | Loans rated 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,724	14,068
Commercial Real Estate [Member] | Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	9,228	6,604
Commercial Real Estate [Member] | Loans rated 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		1,905
Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	555,768	522,083
Residential [Member] | Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	549,936	516,339
Residential [Member] | Loans rated 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	95
Residential [Member] | Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,737	5,744
Home Equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	92,359	92,083
Home Equity [Member] | Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	91,854	91,964
Home Equity [Member] | Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	505	119
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	244,374	222,286
Commercial and Industrial [Member] | Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	192,968	180,675
Commercial and Industrial [Member] | Loans rated 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	35,585	16,621
Commercial and Industrial [Member] | Loans rated 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	7,521	6,727
Commercial and Industrial [Member] | Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	8,300	15,379
Commercial and Industrial [Member] | Loans rated 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		2,884
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	4,467	4,424
Consumer [Member] | Loans rated 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	4,340	4,391
Consumer [Member] | Loans rated 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans		6
Consumer [Member] | Loans rated 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 127	$ 27

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) $ / Loan	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Purchase of residential mortgages	$ 48,205	$ 107,632
Serviced commercial loans for participants	32,400		$ 42,600
Mortgage loans serviced for others	67,800		75,200
Loans	1,613,858		1,561,617
Net service fee income	$ 49	3
Weighted average internal rate of return	10.05%
Weighted average servicing fee	0.2501%
Net cost to service loans | $ / Loan	59.32
Impaired loans desginated as TDR		$ 4,600
Commercial Real Estate - Construction Loans [Member]
Loans	$ 67,600		$ 88,900

XML

GOODWILL AND OTHER INTANGIBLES (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Goodwill [Roll Forward]
Balance at beginning of the year	$ 13,747
Current period adjustments	(1,260)
Balance at end of the year	$ 12,487

XML

GOODWILL AND OTHER INTANGIBLES (Details 1) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Core Deposit Intangibles [Roll Forward]
Balance at end of the year	$ 4,156	$ 4,438
Core Deposit Intangibles [Member]
Core Deposit Intangibles [Roll Forward]
Balance at beginning of the year	4,438
Amortization	(282)
Balance at end of the year	$ 4,156

XML

GOODWILL AND OTHER INTANGIBLES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2017	Sep. 30, 2017
Acquired deposit liabilities		$ 545,700
Acquired core deposit liabilities		345,200
Amortization of core deposit intangible		282
Reduction in Goodwill	$ 1,400
Adjustment to aquire asset	2,400
Reamining adjustments to goodwill	$ 140
Core Deposit Intangibles [Member]
Acquired core deposit liabilities		4,500
Future amortization of core deposit intangible assets years 1-5		375
Future amortization of core deposit intangible assets thereafter		$ 2,300

XML

SHARE-BASED COMPENSATION (Details) - Stock Options [Member] $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($) $ / shares shares
Options, Outstanding
Outstanding at beginning | shares	1,178,899
Exercised | shares	(921,849)
Outstanding at end | shares	257,050
Exercisable at end | shares	257,050
Options, Outstanding, Weighted Average Exercise Price
Outstanding at beginning | $ / shares	$ 6.01
Exercised | $ / shares	5.93
Outstanding at end | $ / shares	6.31
Exercisable at end | $ / shares	$ 6.31
Options, Outstanding, Weighted Average Remaining Contractual Term (in years)
Outstanding at beginning	1 year 11 months 23 days
Exercised	10 months 28 days
Outstanding at end	4 years 7 months 28 days
Exercisable at end	4 years 7 months 28 days
Options, Outstanding, Aggregate Intrinsic Value
Outstanding at beginning | $	$ 3,930
Exercised | $	3,675
Outstanding at end | $	1,175
Exercisable at end | $	$ 1,175

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SHARE-BASED COMPENSATION (Details 1)	9 Months Ended
	Sep. 30, 2017
Threshold [Member]
December 31, 2017	6.00%
December 31, 2018	6.30%
December 31, 2019	6.50%
Target [Member]
December 31, 2017	6.60%
December 31, 2018	7.00%
December 31, 2019	7.20%
Maximum [Member]
December 31, 2017	7.30%
December 31, 2018	7.60%
December 31, 2019	7.90%

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SHARE-BASED COMPENSATION (Details 2) - Restricted Stock [Member] - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Shares [Roll Forward]
Beginning balance	91,371	54,160
Shares granted	89,042	62,740
Shares vested	(21,552)	(11,200)
Ending balance	158,861	105,700
Weighted Average Grant Date Fair Value [Roll Forward]
Beginning balance	$ 7.51	$ 7.28
Shares granted	10.15	7.73
Shares vested	7.44	7.18
Ending balance	$ 9.00	$ 7.56

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SHARE-BASED COMPENSATION (Detail Narrative) - USD ($) $ in Thousands	1 Months Ended			9 Months Ended
	May 31, 2017	May 31, 2016	Jan. 31, 2015	Sep. 30, 2017	Sep. 30, 2016	May 31, 2014
Stock Options
Cash received for options exercised				$ 5,465
Restricted Stock Awards
Share-based compensation expense				$ 490	$ 186
LTI Plan [Member]
Restricted Stock Awards
Shares granted	89,042	62,740
Share based compensation, shares available for grant				315,658
Stock Compensation Plan [Member]
Restricted Stock Awards
Shares authorized						516,000
Shares granted			48,560
Vesting term			5 years
Time-Vested Restricted Stock [Member] | LTI Plan [Member]
Restricted Stock Awards
Percent of awards under plan				50.00%
Performance Shares [Member] | LTI Plan [Member]
Restricted Stock Awards
Shares granted	33,883	26,197
Vesting term	3 years	3 years
Percent of awards under plan				50.00%
Return on equity - performance threshold		5.85%
Return on equity - target		6.32%
Performance Shares [Member] | LTI Plan [Member] | Threshold [Member]
Restricted Stock Awards
Percent of awards participants may earn	50.00%	50.00%
Performance Shares [Member] | LTI Plan [Member] | Target [Member]
Restricted Stock Awards
Percent of awards participants may earn	100.00%	100.00%
Performance Shares [Member] | LTI Plan [Member] | Maximum [Member]
Restricted Stock Awards
Percent of awards participants may earn	150.00%
Retention Based Shares [Member] | LTI Plan [Member]
Restricted Stock Awards
Shares granted	55,159	36,543
Retention Based Shares [Member] | LTI Plan [Member] | Award, Tranche One [Member]
Restricted Stock Awards
Shares granted	21,276	10,352
Vesting term	1 year	1 year
Retention Based Shares [Member] | LTI Plan [Member] | Award, Tranche Two [Member]
Restricted Stock Awards
Shares granted	33,883	26,191
Vesting term	3 years	3 years

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SHORT-TERM BORROWINGS AND LONG-TERM DEBT (Detail Narrative) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Short-term borrowings	$ 192,465	$ 172,351
Long-term debt	106,339	124,836
Government-Sponsored Mortgage-Backed Securities [Member]
Fair value of collateralized repurchase agreements	6,800	24,600
Mortgage-Backed Securities [Member]
Fair value of collateralized repurchase agreements	61,100	57,600
Cutomer Repurchase Agreements [Member]
Customer repurchase agreements	18,500	17,400
FHLBB Ideal Way Line of Credit [Member]
Line of credit available	9,500	9,500
BBN [Member]
Line of credit available	4,000	4,000
Required cash reserve amount	300	300
PNC Bank [Member]
Line of credit available	50,000	50,000
FHLBB Advances [Member]
Short-term borrowings	174,000	155,000
Long-term debt	$ 106,300	$ 124,800

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PENSION BENEFITS (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Defined Benefit Plan [Abstract]
Service cost	$ 245	$ 283	$ 778	$ 854
Interest cost	254	240	761	719
Expected return on assets	(298)	(275)	(895)	(823)
Amortization of actuarial losses	51	24	153	71
Net periodic pension cost	$ 252	$ 272	$ 797	$ 821

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DERIVATIVES AND HEDGING ACTIVITIES (Details) - Interest Rate Swap Agreement [Member] - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair value of derivative assets	$ 2,709	$ 3,152
Other Assets [Member] | Designated as Hedging Instrument [Member]
Fair value of derivative assets	1
Other Liabilities [Member] | Designated as Hedging Instrument [Member]
Fair value of derivative liability	$ 2,710	$ 3,152

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DERIVATIVES AND HEDGING ACTIVITIES (Details 1) - Interest Rate Swap Agreement [Member] - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Notional Amount	$ 75,000	$ 75,000
Weighted Average Maturity	2 years 7 months 6 days	3 years 4 months 24 days
Weighted Average Rate Received	1.31%	0.92%
Weighted Average Rate Paid	2.46%	2.46%
Estimated Fair Value	$ (2,709)	$ (3,152)

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DERIVATIVES AND HEDGING ACTIVITIES (Details 2) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest Rate Swap [Member] | Derivatives Designated As Cash Flow Hedges [Member]
Amount of Loss Recognized in OCI on Derivative	$ (14)	$ 417	$ (307)	$ (2,863)

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DERIVATIVES AND HEDGING ACTIVITIES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Dec. 31, 2015
Termination value of derivatives in a net liability position	$ 2,700		$ 2,700
Estimated amount to be reclassified during the next 12 month period	1,800		1,800
Cash posted as collateral	50		50
Mortgage-Backed Securities [Member]
Fair value of mortgage backed securities collateralized	3,000		3,000
Terminated Foward Starting Interest Rate Swap [Member]
Derivative notional amount					$ 32,500	$ 47,500
Termination fees					$ 3,400	$ 2,400
Termination fees amortized period					6 years	5 years
Interest Rate Swap [Member]
Reclassifications amount, effective portion	$ 497	$ 397	$ 1,600	$ 1,000

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FAIR VALUE OF ASSETS AND LIABLITIES (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 297,919	$ 300,115
Interest rate swaps - Assets	1
Interest rate swaps - Liabilities	2,710	3,152
Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	6,406	6,296
Government-Sponsored Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	190,321	180,136
US Government Guaranteed Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	16,961	17,350
Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	56,553	50,317
States and Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	3,225	4,008
Government-Sponsored Enterprise Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	24,453	42,008
Fair Value Inputs Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	6,406	6,296
Fair Value Inputs Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	291,513	293,819
Interest rate swaps - Assets	1
Interest rate swaps - Liabilities	2,710	3,152
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	297,919
Interest rate swaps - Assets	1
Total assets	297,920	300,115
Interest rate swaps - Liabilities	2,710	3,152
Recurring [Member] | Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mutual funds	6,406	6,296
Recurring [Member] | Government-Sponsored Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	190,321	180,136
Recurring [Member] | US Government Guaranteed Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	16,961	17,350
Recurring [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	56,553	50,317
Recurring [Member] | States and Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	3,225	4,008
Recurring [Member] | Government-Sponsored Enterprise Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	24,453	42,008
Recurring [Member] | Fair Value Inputs Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	6,406
Total assets	6,406	6,296
Recurring [Member] | Fair Value Inputs Level 1 [Member] | Mutual Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mutual funds	6,406	6,296
Recurring [Member] | Fair Value Inputs Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	291,513
Interest rate swaps - Assets	1
Total assets	291,514	293,819
Interest rate swaps - Liabilities	2,710	3,152
Recurring [Member] | Fair Value Inputs Level 2 [Member] | Government-Sponsored Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	190,321	180,136
Recurring [Member] | Fair Value Inputs Level 2 [Member] | US Government Guaranteed Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	16,961	17,350
Recurring [Member] | Fair Value Inputs Level 2 [Member] | Corporate Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	56,553	50,317
Recurring [Member] | Fair Value Inputs Level 2 [Member] | States and Municipal Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	3,225	4,008
Recurring [Member] | Fair Value Inputs Level 2 [Member] | Government-Sponsored Enterprise Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 24,453	$ 42,008

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FAIR VALUE OF ASSETS AND LIABLITIES (Details 1) - Nonrecurring [Member] - Impaired Loans [Member] - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gains (Losses) arising from fair value adjustment of assets		$ (220)
Fair Value Inputs Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gains (Losses) arising from fair value adjustment of assets	$ 2,059

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FAIR VALUE OF ASSETS AND LIABLITIES (Details 2) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets:
Cash and cash equivalents	$ 28,900	$ 70,234
Securities available for sale	297,919	300,115
Federal Home Loan Bank of Boston and other restricted stock	15,704	16,124
Loans - net	1,577,309	1,525,274
Accrued interest receivable	5,764	5,782
Mortgage servicing rights	380	628
Derivative assets	1
Liabilities:
Deposits	1,514,641	1,521,580
Short-term borrowings	192,482	172,351
Long-term debt	106,517	125,183
Accrued interest payable	394	1,012
Derivative liabilities	2,710	3,152
Fair Value Inputs Level 1 [Member]
Assets:
Cash and cash equivalents	28,900	70,234
Securities available for sale	6,406	6,296
Fair Value Inputs Level 2 [Member]
Assets:
Securities available for sale	291,513	293,819
Mortgage servicing rights	380	628
Derivative assets	1
Liabilities:
Short-term borrowings	192,482	172,351
Long-term debt	106,517	125,183
Derivative liabilities	2,710	3,152
Fair Value Inputs Level 3 [Member]
Assets:
Federal Home Loan Bank of Boston and other restricted stock	15,704	16,124
Loans - net	1,577,309	1,525,274
Accrued interest receivable	5,764	5,782
Liabilities:
Deposits	1,514,641	1,521,580
Accrued interest payable	394	1,012
Carrying Value [Member]
Assets:
Cash and cash equivalents	28,900	70,234
Securities available for sale	297,919	300,115
Federal Home Loan Bank of Boston and other restricted stock	15,704	16,124
Loans - net	1,608,255	1,556,416
Accrued interest receivable	5,764	5,782
Mortgage servicing rights	380	465
Derivative assets	1
Liabilities:
Deposits	1,515,198	1,518,071
Short-term borrowings	192,465	172,351
Long-term debt	106,339	124,836
Accrued interest payable	394	1,012
Derivative liabilities	$ 2,710	$ 3,152

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RECENT ACCOUNTING PRONOUNCEMENTS (Details Narrative) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
Stock Options [Member]
Tax benefit	$ 821