10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2015

OR

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

For the Transition Period from _______ to ______

Commission File Number:  0-54241

SI FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________

Maryland	80-0643149
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

803 Main Street, Willimantic, Connecticut	06226
(Address of principal executive offices)	(Zip Code)

(860) 423-4581

(Registrant’s telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x   Noo

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 (Section 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).  Yesx No  o

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

Large Accelerated Filer o	Accelerated Filer x
Non-Accelerated Filer o	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No  x

As of November 2, 2015, there were 12,218,218 shares of the registrant’s common stock outstanding.

SI FINANCIAL GROUP, INC.

TABLE OF CONTENTS

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited):
	Consolidated Balance Sheets at September 30, 2015 and December 31, 2014	1
	Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014	2
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014	3
	Consolidated Statement of Changes in Shareholders’ Equity for the nine months ended September 30, 2015	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
	SIGNATURES	51

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

SI FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts / Unaudited)

	September 30, 2015			December 31, 2014
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	14,011		$	18,965
Interest-bearing	22,551			20,286
Total cash and cash equivalents	36,562			39,251
Available for sale securities, at fair value	176,177			173,040
Loans held for sale	165			747
Loans receivable (net of allowance for loan losses of $9,246 at September 30, 2015 and $7,797 at December 31, 2014)	1,142,998			1,044,864
Federal Home Loan Bank stock, at cost	12,421			10,333
Federal Reserve Bank stock, at cost	3,621			—
Bank-owned life insurance	21,755			21,306
Premises and equipment, net	21,669			21,711
Goodwill and other intangibles	18,246			18,697
Accrued interest receivable	4,230			3,853
Deferred tax asset, net	7,676			8,048
Other real estate owned, net	1,341			1,271
Other assets	6,785			7,412
Total assets	$	1,453,646		$	1,350,533
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Noninterest-bearing	$	151,718		$	146,062
Interest-bearing	891,412			864,651
Total deposits	1,043,130			1,010,713
Mortgagors' and investors' escrow accounts	1,946			3,600
Federal Home Loan Bank advances	224,459			148,277
Junior subordinated debt owed to unconsolidated trust	8,248			8,248
Accrued expenses and other liabilities	21,884			21,956
Total liabilities	1,299,667			1,192,794
Shareholders' Equity:
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)	—			—
Common stock ($.01 par value; 35,000,000 shares authorized; 12,224,153 and 12,776,426 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively)	122			128
Additional paid-in-capital	124,849			125,459
Unallocated common shares held by ESOP	(3,768		)	(4,128		)
Unearned restricted shares	(889		)	(1,312		)
Retained earnings	32,952			37,497
Accumulated other comprehensive income	713			95
Total shareholders' equity	153,979			157,739
Total liabilities and shareholders' equity	$	1,453,646		$	1,350,533

See accompanying notes to unaudited interim consolidated financial statements.

1

SI FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Amounts / Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Interest and dividend income:
Loans, including fees	$	11,278		$	10,735	$	32,823		$	32,489
Securities:
Taxable interest	766			877		2,253			2,651
Tax-exempt interest	14			59		63			160
Dividends	140			46		281			143
Other	19			11		57			39
Total interest and dividend income	12,217			11,728		35,477			35,482
Interest expense:
Deposits	1,403			1,355		4,150			4,033
Federal Home Loan Bank advances	846			602		2,124			1,921
Subordinated debt and other borrowings	84			84		251			251
Total interest expense	2,333			2,041		6,525			6,205
Net interest income	9,884			9,687		28,952			29,277
Provision for loan losses	1,017			350		1,712			1,195
Net interest income after provision for loan losses	8,867			9,337		27,240			28,082
Noninterest income:
Service fees	1,699			1,762		5,039			5,265
Wealth management fees	303			293		916			926
Increase in cash surrender value of bank-owned life insurance	146			147		449			433
Net gain on sales of securities	14			—		146			64
Mortgage banking	139			81		416			396
Net gain (loss) on fair value of derivatives	(7		)	78		(22		)	69
Other	452			85		749			527
Total noninterest income	2,746			2,446		7,693			7,680
Noninterest expenses:
Salaries and employee benefits	4,986			4,897		15,059			15,128
Occupancy and equipment	1,816			1,883		5,660			5,852
Computer and electronic banking services	1,413			1,417		4,168			4,082
Outside professional services	436			420		1,410			1,422
Marketing and advertising	259			216		779			754
Supplies	149			146		441			465
FDIC deposit insurance and regulatory assessments	255			303		748			953
Core deposit intangible amortization	150			150		451			463
Other real estate operations	160			72		444			303
Other	521			500		1,452			1,873
Total noninterest expenses	10,145			10,004		30,612			31,295
Income before income tax provision	1,468			1,779		4,321			4,467
Income tax provision	494			579		1,421			1,447
Net income	$	974		$	1,200	$	2,900		$	3,020
Earnings per share:
Basic	$	0.08		$	0.10	$	0.24		$	0.25
Diluted	$	0.08		$	0.10	$	0.24		$	0.24

See accompanying notes to unaudited interim consolidated financial statements.

2

SI FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands / Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income	$	974		$	1,200		$	2,900		$	3,020
Other comprehensive income (loss), net of tax:
Available for sale securities:
Net unrealized holding gains (losses)	411			(382		)	633			546
Reclassification adjustment for losses (gains) recognized in net income (1)	(9		)	—			(96		)	(42		)
Net unrealized holding gains (losses) on available for sale securities	402			(382		)	537			504
Net unrealized gain on interest-rate swap derivative	29			31			81			77
Other comprehensive income (loss)	431			(351		)	618			581
Comprehensive income	$	1,405		$	849		$	3,518		$	3,601

⁽¹⁾Amounts are included in net gain on sales of securities in noninterest income on the consolidated statements of income. Income tax expense (benefit) associated with the reclassification adjustment for the three and nine months ended September 30, 2015 was $5,000 and $50,000 and for the three and nine months ended September 30, 2014 was $0 and $22,000, respectively.

See accompanying notes to unaudited interim consolidated financial statements.

3

SI FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(In Thousands, Except Share Data / Unaudited)

	Common Stock					Additional Paid-in Capital			Unallocated Common Shares Held by ESOP			Unearned Restricted Shares			Retained Earnings			Accumulated Other Comprehensive Income		Total Shareholders' Equity
	Shares		Dollars
Balance at December 31, 2014	12,776,426		$	128		$	125,459		$	(4,128	)	$	(1,312	)	$	37,497		$	95	$	157,739
Comprehensive income	—		—			—			—			—			2,900			618		3,518
Cash dividends declared ($0.12 per share)	—		—			—			—			—			(1,444		)	—		(1,444		)
Equity incentive plans compensation	—		—			230			—			453			—			—		683
Allocation of 36,477 ESOP shares	—		—			65			360			—			—			—		425
Restricted shares activity						30						(30		)						—
Tax benefit from share-based compensation	—		—			5			—			—			—			—		5
Stock options exercised	297,546		3			3,268			—			—			—			—		3,271
Common shares repurchased	(849,819	)	(9		)	(4,208		)	—			—			(6,001		)	—		(10,218		)
Balance at September 30, 2015	12,224,153		$	122		$	124,849		$	(3,768	)	$	(889	)	$	32,952		$	713	$	153,979

See accompanying notes to unaudited interim consolidated financial statements.

4

SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands / Unaudited)
	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net income	$	2,900		$	3,020
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,712			1,195
Employee stock ownership plan expense	425			416
Equity incentive plan expense	683			559
Excess tax benefit from share-based compensation	(5		)	(4		)
Amortization of investment premiums and discounts, net	851			724
Amortization of loan premiums and discounts, net	1,457			1,051
Depreciation and amortization of premises and equipment	2,036			1,921
Amortization of core deposit intangible	451			463
Amortization of deferred debt issue costs	16			79
Net gain on sales of securities	(146		)	(64		)
Net loss (gain) on fair value of derivatives	22			(69		)
Deferred income tax provision	53			28
Loans originated for sale	(18,807		)	(12,633		)
Proceeds from sale of loans held for sale	19,524			13,353
Net gain on sales of loans held for sale	(234		)	(201		)
Net loss on sales or write-downs of other real estate owned	201			67
Increase in cash surrender value of bank-owned life insurance	(449		)	(433		)
Impairment charge on long-lived assets	—			175
Change in operating assets and liabilities:
Accrued interest receivable	(377		)	123
Other assets	727			1,947
Accrued expenses and other liabilities	33			1,143
Net cash provided by operating activities	11,073			12,860
Cash flows from investing activities:
Purchases of available for sale securities	(35,450		)	(24,626		)
Proceeds from sales of available for sale securities	9,703			1,109
Proceeds from maturities of and principal repayments on available for sale securities	22,719			23,063
Purchases of Federal Home Loan Bank stock	(2,088		)	—
Purchases of Federal Reserve Bank stock	(3,621		)	—
Redemption of Federal Home Loan Bank stock	—			2,776
Loan principal collections, net of originations	(4,996		)	42,628
Purchases of loans	(96,640		)	(38,643		)
Proceeds from sales of other real estate owned	62			1,109
Purchases of premises and equipment	(1,994		)	(2,134		)
Net cash provided by (used in) investing activities	(112,305		)	5,282

5

SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded) (In Thousands / Unaudited)
	Nine Months Ended September 30,
	2015			2014
Cash flows from financing activities:
Net increase in deposits	32,417			13,090
Net decrease in mortgagors' and investors' escrow accounts	(1,654		)	(1,420		)
Proceeds from Federal Home Loan Bank advances	120,478			10,000
Repayments of Federal Home Loan Bank advances	(44,312		)	(32,203		)
Excess tax benefit from share-based compensation	5			4
Cash dividends on common stock	(1,444		)	(1,107		)
Stock options exercised	708			552
Common shares repurchased	(7,655		)	(761		)
Net cash provided by (used in) financing activities	98,543			(11,845		)
Net change in cash and cash equivalents	(2,689		)	6,297
Cash and cash equivalents at beginning of period	39,251			27,321
Cash and cash equivalents at end of period	$	36,562		$	33,618
Supplemental cash flow information:
Interest paid	$	6,490		$	6,234
Income taxes received (paid), net	989			(555		)
Transfer of loans to other real estate owned	333			108
Stock options exercised by net-share settlement	2,563			190

See accompanying notes to unaudited interim consolidated financial statements.

6

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

NOTE 1.  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

SI Financial Group, Inc. (the “Company”) is the holding company for Savings Institute Bank and Trust Company (the “Bank”). Established in 1842, the Bank is a community-oriented financial institution headquartered in Willimantic, Connecticut. The Bank provides a variety of financial services to individuals, businesses and municipalities through its twenty-six offices in eastern Connecticut and Rhode Island. Its primary products include savings, checking and certificate of deposit accounts, residential and commercial mortgage loans, commercial business loans and consumer loans.  In addition, wealth management services, which include trust, financial planning, life insurance and investment services, are offered to individuals and businesses through the Bank’s offices. The Company does not conduct any material business other than owning all of the stock of the Bank and making payments on the subordinated debentures held by the Company.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries, SI Mortgage Company and SI Realty Company, Inc. All significant intercompany accounts and transactions have been eliminated.

Basis of Financial Statement Presentation

The interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and general practices within the banking industry. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been omitted.  Information in the accompanying interim consolidated financial statements and notes to the financial statements of the Company as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company and the accompanying notes for the year ended December 31, 2014 contained in the Company’s Form 10-K.

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows as of and for the periods covered herein. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the year ending December 31, 2015 or for any other period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheets and reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, deferred income taxes and the impairment of long-lived assets.

Reclassifications

Amounts in the Company’s prior year consolidated financial statements are reclassified to conform to the current year presentation.  Such reclassifications have no effect on net income.

7

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Loans Receivable

Loans receivable are stated at current unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Management has the ability and intent to hold its loans receivable for the foreseeable future or until maturity or pay-off.

A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the 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. Impairment is measured on a loan by loan basis for residential and commercial mortgage loans and commercial business loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not typically identify individual consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring ("TDR") agreement.

Troubled Debt Restructurings

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and concessions have been made by the Company to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as below market interest rate reductions, deferral of interest or principal payments, or maturity extensions due to the borrower’s financial condition, the modification is considered a TDR. Modified terms are dependent upon the financial position and needs of the individual borrower. If the modification agreement is violated, the loan is handled by the Company’s Collections Department for resolution which may result in foreclosure.

Management considers all nonaccrual loans, with the exception of certain consumer loans, to be impaired. Also, all TDRs are initially classified as impaired and follow the Company's nonaccrual policy. If the loan was current prior to modification, nonaccrual status would not be required. If the loan was on nonaccrual prior to modification or if the payment amount significantly increases, the loan will remain on nonaccrual for a period of at least six months. Loans qualify for return to accrual status once the borrower has demonstrated the willingness and the ability to perform in accordance with the restructured terms of the loan agreement for a period of not less than six consecutive months. In most cases, loan payments less than 90 days past due are considered minor collection delays and the related loans are generally not considered impaired.

Impaired classification may be removed after a year following the restructure if the borrower demonstrates compliance with the modified terms and the restructuring agreement specifies an interest rate equal to that which would be provided to a borrower with similar risk characteristics at the time of restructuring.

Allowance for Loan Losses

The allowance for loan losses, a material estimate which could change significantly in the near-term, is established through a provision for loan losses charged to earnings to account for losses that are inherent in the loan portfolio and estimated to occur, and is maintained at a level that management considers adequate to absorb losses in the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes the uncollectibility of the principal loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses when received. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, if necessary.

Management's judgment in determining the adequacy of the allowance is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is evaluated on a monthly basis by management and is based on the evaluation of the known and

8

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

inherent risk characteristics and size and composition of the loan portfolio, the assessment of current economic and real estate market conditions, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, historical loan loss experience, the level and trends of nonperforming loans, delinquencies, classified assets and loan charge-offs and evaluations of loans and other relevant factors.

The allowance for loan losses consists of the following key elements:

• Specific allowance for identified impaired loans. For loans identified as impaired, an allowance is established when the present value of expected cash flows (or observable market price of the loan or fair value of the collateral if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan.

• General valuation allowance. The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience adjusted for qualitative factors stratified by the following loan segments: residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer. Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments; changes in the size and composition of the loan portfolio and in the terms of the loans; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans; changes in the quality of the loan review system; changes in the underlying collateral for collateral-dependent loans; the existence and effect of any concentrations of credit and changes in the level of such concentrations; the effect of other external factors such as competition and legal and regulatory capital requirements on the level of estimated credit losses in the portfolio.

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

• Residential – One- to Four-Family – The Bank primarily originates conventional loans with loan-to-value ratios less than 95% and generally originates loans with loan-to-value ratios in excess of 80% only when secured by first liens on owner-occupied one- to four-family residences. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance or additional collateral. 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 of this segment.

• Multi-family and Commercial – Loans in this segment are originated for the purpose of acquiring, developing, improving or refinancing multi-family and commercial real estate where the property is the primary collateral securing the loan, and the income generated from the property is the primary repayment source. The underlying cash flows generated by the properties can be adversely impacted by the economy as evidenced by increased vacancy rates. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the cash flows of these loans.

9

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

• Construction – This segment includes loans to individuals and, to a lesser extent, builders to finance the construction of residential dwellings. The Bank also originates construction loans for commercial development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, correct estimates of the sale price of the property, time to sell at an adequate price and market conditions.

• Commercial Business – 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 reduced viability of the industry in which the customer operates will have a negative impact on the credit quality in this segment. The Bank also provides loans to investors in the time share industry, which are secured by consumer receivables, and provides loans for capital improvements to condominium associations, which are secured by the assigned rights to levy special assessments to condominium owners.

• Consumer – Loans in this segment primarily include home equity lines of credit (representing both first and second liens), indirect automobile loans and, to a lesser extent, loans secured by marketable securities, passbook or certificate accounts, motorcycles, automobiles and recreational vehicles, as well as unsecured loans. Consumer loan collections depend on the borrower’s continuing financial stability and, therefore, are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

In computing the allowance for loan losses, we do not assign a general valuation allowance to the Small Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans that we purchase as such loans are fully guaranteed. These loans are included in commercial business loans. See Note 4 for details.

The majority of the Company's loans are collateralized by real estate located in eastern Connecticut and Rhode Island. To a lesser extent, certain commercial real estate loans are secured by collateral located outside of our primary market area. Accordingly, the collateral value of a substantial portion of the Company's loan portfolio and real estate acquired through foreclosure is susceptible to changes in local market conditions.

Although management believes it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with GAAP, our regulators, in reviewing the loan portfolio, may request us to increase our allowance for loan losses based on judgments different from ours. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses would adversely affect the Company’s financial condition and results of operations.

Interest and Fees on Loans

Interest on loans is accrued and included in net interest income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectibility of the loan or loan interest becomes uncertain. Subsequent recognition of income occurs only to the extent payment is received subject to management's assessment of the collectibility of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectibility of interest and principal is no longer in doubt and the borrower has made regular payments in accordance with the terms of the loan over a period of at least six months. Interest collected on nonaccrual loans is recognized only to the extent cash payments are

10

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

received, and may be recorded as a reduction to principal if the collectibility of the principal balance of the loan is unlikely.

Loan origination fees, direct loan origination costs and loan purchase premiums are deferred, and the net amount is recognized as an adjustment of the related loan's yield utilizing the interest method over the contractual life of the loan. In addition, discounts related to fair value adjustments for loans receivable acquired in a business combination or asset purchase are accreted into earnings over the contractual term as an adjustment of the loan's yield. The Company periodically evaluates the cash flows expected to be collected for loans acquired with deteriorated credit quality. Changes in the expected cash flows compared to the expected cash flows as of the date of acquisition may impact the accretable yield or result in a charge to the provision for loan losses to the extent of a shortfall.

Common Share Repurchases

The Company is chartered in the state of Maryland. Maryland law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized but unissued shares. GAAP states that accounting for treasury stock shall conform to state law. Therefore, the cost of shares repurchased by the Company has been allocated to common stock, additional paid-in capital and retained earnings balances.

Recent Accounting Pronouncements

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. In January 2014, the Financial Accounting Standards Board ("FASB") issued amended guidance that clarifies when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amended guidance clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, the amended guidance requires interim and annual disclosures of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure -In August 2014, the FASB issued amended guidance that addresses the diversity in practice regarding the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program (e.g. HUD, FHA, VA). The amended guidance outlines certain criteria that, if met, the loan (residential or commercial) should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs - In April 2015, the FASB issued guidance simplifying the presentation of debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amended guidance should be applied on a retrospective basis and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The adoption of the amended guidance is not expected to have a material impact on the Company's consolidated financial statements.

11

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - In August 2015, the FASB issued amended guidance pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting that the update issued in April 2015 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within the previous update for debt issuance costs related to line-of-credit-arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there were any outstanding borrowings on the line-of-credit arrangement. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

NOTE 2.  EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Unvested restricted shares are considered outstanding in the computation of basic earnings per share since the shares participate in dividends and the rights to the dividends are non-forfeitable. Diluted earnings per share is computed in a manner similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents were issued during the period. The Company’s common stock equivalents relate solely to stock options. Repurchased common shares and unallocated common shares held by the Bank’s ESOP are not deemed outstanding for earnings per share calculations.

Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented, and are not considered in diluted earnings per share calculations. The Company had anti-dilutive common shares outstanding of 321,793 and 342,819 for the three and nine months ended September 30, 2015, respectively, and 677,590 and 485,459 for the three and nine months ended September 30, 2014, respectively.

The computation of earnings per share is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	974	$	1,200	$	2,900	$	3,020
Weighted average common shares outstanding:
Basic	11,793,218		12,310,368		12,036,573		12,315,829
Effect of dilutive stock options	21,713		23,065		28,485		38,382
Diluted	11,814,931		12,333,433		12,065,058		12,354,211
Earnings per share:
Basic	$	0.08	$	0.10	$	0.24	$	0.25
Diluted	$	0.08	$	0.10	$	0.24	$	0.24

12

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

NOTE 3.  SECURITIES

Available for Sale Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities at September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	68,172	$	620	$	(224	)	$	68,568
Government-sponsored enterprises	30,329		335		—			30,664
Mortgage-backed securities:(1)
Agency - residential	69,527		872		(519		)	69,880
Non-agency - residential	161		—		(5		)	156
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,155		—		(25		)	1,130
Obligations of state and political subdivisions	1,535		2		—			1,537
Tax-exempt securities	3,183		59		—			3,242
Total available for sale securities	$	175,062	$	1,888	$	(773	)	$	176,177

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	66,232	$	385	$	(226	)	$	66,391
Government-sponsored enterprises	27,435		120		(67		)	27,488
Mortgage-backed securities:(1)
Agency - residential	67,008		907		(1,065		)	66,850
Non-agency - residential	254		3		(4		)	253
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,188		—		(7		)	1,181
Obligations of state and political subdivisions	3,039		167		(6		)	3,200
Tax-exempt securities	6,583		97		(3		)	6,677
Total available for sale securities	$	172,739	$	1,679	$	(1,378	)	$	173,040

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or GSEs.  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

13

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

The amortized cost and fair value of debt securities by contractual maturities at September 30, 2015 are presented below. Maturities are based on the final contractual payment dates and do not reflect the impact of potential prepayments or early redemptions. Because mortgage-backed securities ("MBS") are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.

	Amortized Cost		Fair Value
	(In Thousands)
Within 1 year	$	2,536	$	2,539
After 1 but within 5 years	52,956		53,554
After 5 but within 10 years	12,250		12,216
After 10 years	37,632		37,832
	105,374		106,141
Mortgage-backed securities	69,688		70,036
Total debt securities	$	175,062	$	176,177

The following is a summary of realized gains and losses on the sales/calls of securities for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(In Thousands)
Gross gains on sales/calls	$	14	$	—	$	169		$	64
Gross losses on sales/calls	—		—		(23		)	—
Net gain on sales/calls of securities	$	14	$	—	$	146		$	64

There were no sales of available for sale securities for the three months ended September 30, 2015 and 2014. Proceeds from the sale of available for sale securities were $9.7 million and $1.1 million for the nine months ended September 30, 2015 and 2014, respectively.

The following tables present information pertaining to securities with gross unrealized losses at September 30, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.

	Less Than 12 Months				12 Months Or More				Total
September 30, 2015	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	3,880	$	15	$	15,703	$	209	$	19,583	$	224
Mortgage-backed securities:
Agency - residential	4,731		19		28,634		500		33,365		519
Non-agency - residential	—		—		115		5		115		5
Collateralized debt obligation	—		—		1,130		25		1,130		25
Total	$	8,611	$	34	$	45,582	$	739	$	54,193	$	773

14

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

	Less Than 12 Months				12 Months Or More				Total
December 31, 2014	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	9,273	$	15	$	16,655	$	211	$	25,928	$	226
Government-sponsored enterprises	6,974		4		3,973		63		10,947		67
Mortgage-backed securities:
Agency - residential	4,251		122		32,127		943		36,378		1,065
Non-agency - residential	—		—		127		4		127		4
Collateralized debt obligation	1,181		7		—		—		1,181		7
Obligations of state and political subdivisions	—		—		668		6		668		6
Tax-exempt securities	1,141		3		—		—		1,141		3
Total	$	22,820	$	151	$	53,550	$	1,227	$	76,370	$	1,378

At September 30, 2015, twenty-three debt securities with gross unrealized losses had aggregate depreciation of approximately 1.41% of the Company’s amortized cost basis. The majority of the unrealized losses are related to the Company’s agency MBS. There were no investments deemed other-than-temporarily impaired for the three and nine months ended September 30, 2015 and 2014. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements that the applicable investments within the Company’s securities portfolio were not other-than-temporarily impaired at September 30, 2015.

U.S. Government and Agency Obligations. The unrealized losses on the Company’s U.S. Government and agency obligations related primarily to a widening of the rate spread to comparable treasury securities. Because the decline in market value was attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired at September 30, 2015.

Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s agency–residential mortgage-backed securities were caused by increases in the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at September 30, 2015.

Mortgage-backed Securities - Non-agency - Residential. The unrealized losses on the Company's non-agency - residential mortgage-backed securities relate to one investment which has been evaluated by management and no potential credit losses were identified. Because the Company does not intend to sell this security and it is not more likely than not that the Company will be required to sell this security before the recovery of its amortized cost basis, which may be maturity, the Company did not consider this investment to be other-than-temporarily impaired at September 30, 2015.

Collateralized Debt Obligations. The unrealized losses on the Company's collateralized debt obligations relate to one investment in a pooled trust preferred security ("PTPS"). The PTPS market has stabilized at depressed market values as a result of market saturation. The Company's PTPS was upgraded to investment grade and based on its senior credit profile, management does not believe this investment will suffer from any further credit-related losses. Because the Company does not intend to sell the investment and it is not more likely than not the

15

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Company will be required to sell the investment before recovery of its amortized cost basis, which may be at maturity, the Company did not record impairment losses as of September 30, 2015.

NOTE 4.  LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loan Portfolio

The composition of the Company’s loan portfolio at September 30, 2015 and December 31, 2014 is as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	430,287		$	430,575
Multi-family and commercial	339,682			298,320
Construction	17,409			13,579
Total real estate loans	787,378			742,474
Commercial business loans:
SBA and USDA guaranteed	153,811			118,466
Time share	57,760			45,669
Condominium association	26,237			21,386
Other	68,307			66,446
Total commercial business loans	306,115			251,967
Consumer loans:
Home equity	52,985			51,093
Indirect automobile	2,239			3,692
Other	1,915			1,864
Total consumer loans	57,139			56,649
Total loans	1,150,632			1,051,090
Deferred loan origination costs, net of fees	1,612			1,571
Allowance for loan losses	(9,246		)	(7,797		)
Loans receivable, net	$	1,142,998		$	1,044,864

The Company purchased commercial business loans totaling $96.6 million during the nine months ended September 30, 2015.

16

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Allowance for Loan Losses

Changes in the allowance for loan losses for the three and nine months ended September 30, 2015 and 2014 are as follows:

Three Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	986		$	3,766		$	434		$	2,618		$	633	$	8,437
Provision (credit) for loan losses	30			666			(7		)	322			6		1,017
Loans charged-off	—			(136		)	—			(140		)	—		(276		)
Recoveries of loans previously charged-off	41			22			—			5			—		68
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246
Nine Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	955		$	3,607		$	254		$	2,382		$	599	$	7,797
Provision for loan losses	74			843			173			582			40		1,712
Loans charged-off	(46		)	(156		)	—			(165		)	—		(367		)
Recoveries of loans previously charged-off	74			24			—			6			—		104
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246

Three Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	984		$	3,465		$	221	$	2,208		$	567		$	7,445
Provision for loan losses	123			135			26		21			45			350
Loans charged-off	(137		)	(1		)	—		—			(42		)	(180		)
Recoveries of loans previously charged-off	—			—			—		1			3			4
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619
Nine Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	975		$	3,395		$	169	$	1,875		$	502		$	6,916
Provision for loan losses	281			347			78		364			125			1,195
Loans charged-off	(317		)	(144		)	—		(13		)	(75		)	(549		)
Recoveries of loans previously charged-off	31			1			—		4			21			57
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619

17

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Further information pertaining to the allowance for loan losses at September 30, 2015 and December 31, 2014 is as follows:

September 30, 2015	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	310	$	40	$	—	$	—	$	—	$	350
Allowance for loans individually or collectively evaluated and not deemed to be impaired	747		4,278		427		2,805		639		8,896
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,057	$	4,318	$	427	$	2,805	$	639	$	9,246
Loans individually evaluated and deemed to be impaired	$	5,893	$	3,765	$	—	$	485	$	77	$	10,220
Loans individually or collectively evaluated and not deemed to be impaired	424,394		332,193		17,409		304,876		57,062		1,135,934
Amount of loans acquired with deteriorated credit quality	—		3,724		—		754		—		4,478
Total loans	$	430,287	$	339,682	$	17,409	$	306,115	$	57,139	$	1,150,632

December 31, 2014	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	287	$	52	$	—	$	20	$	—	$	359
Allowance for loans individually or collectively evaluated and not deemed to be impaired	668		3,555		254		2,362		599		7,438
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	955	$	3,607	$	254	$	2,382	$	599	$	7,797
Loans individually evaluated and deemed to be impaired	$	5,318	$	1,872	$	—	$	470	$	—	$	7,660
Loans individually or collectively evaluated and not deemed to be impaired	424,885		292,215		13,579		251,140		56,649		1,038,468
Amount of loans acquired with deteriorated credit quality	372		4,233		—		357		—		4,962
Total loans	$	430,575	$	298,320	$	13,579	$	251,967	$	56,649	$	1,051,090

18

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Past Due Loans

The following represents an aging of loans at September 30, 2015 and December 31, 2014:

September 30, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	14	$	1,050	$	926	$	1,990	$	428,297	$	430,287
Multi-family and commercial	3,310		657		2,060		6,027		333,655		339,682
Construction	—		—		—		—		17,409		17,409
Commercial Business:
SBA and USDA guaranteed	—		—		—		—		153,811		153,811
Time share	—		—		—		—		57,760		57,760
Condominium association	—		—		—		—		26,237		26,237
Other	—		155		815		970		67,337		68,307
Consumer:
Home equity	—		—		270		270		52,715		52,985
Indirect automobile	26		3		7		36		2,203		2,239
Other	—		1		—		1		1,914		1,915
Total	$	3,350	$	1,866	$	4,078	$	9,294	$	1,141,338	$	1,150,632

December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans		Past Due 90 Days or More and Accruing
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	4,194	$	258	$	1,602	$	6,054	$	424,521	$	430,575	$	—
Multi-family and commercial	768		794		775		2,337		295,983		298,320		—
Construction	—		—		—		—		13,579		13,579		—
Commercial Business:
SBA and USDA guaranteed	1,536		—		459		1,995		116,471		118,466		459
Time share	—		—		—		—		45,669		45,669		—
Condominium association	—		—		—		—		21,386		21,386		—
Other	50		—		446		496		65,950		66,446		—
Consumer:
Home equity	20		158		23		201		50,892		51,093		—
Indirect automobile	103		10		—		113		3,579		3,692		—
Other	—		—		—		—		1,864		1,864		—
Total	$	6,671	$	1,220	$	3,305	$	11,196	$	1,039,894	$	1,051,090	$	459

The Company did not have any loans that were past due 90 days or more and still accruing interest at September 30, 2015.

19

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Impaired and Nonaccrual Loans

The following is a summary of impaired loans and nonaccrual loans at September 30, 2015 and December 31, 2014:

	Impaired Loans(1)
September 30, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,483	$	3,501	$	—	$	3,272
Multi-family and commercial	5,331		5,664		—		2,631
Commercial business - Other	832		832		—		814
Consumer - Home equity	77		77		—		324
Total impaired loans without valuation allowance	9,723		10,074		—		7,041
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,410		2,421		310		148
Multi-family and commercial	1,204		1,314		40		63
Commercial business - Other	—		—		—		—
Consumer - Home equity	—		—		—		—
Total impaired loans with valuation allowance	3,614		3,735		350		211
Total impaired loans	$	13,337	$	13,809	$	350	$	7,252

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Newport Federal Savings Bank ("Newport") merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance.

	Impaired Loans(1)
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,414	$	3,485	$	—	$	2,923
Multi-family and commercial	4,815		5,102		—		775
Commercial business - Other	645		645		—		264
Consumer - Home equity	—		—		—		23
Total impaired loans without valuation allowance	8,874		9,232		—		3,985
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,276		2,304		287		244
Multi-family and commercial	1,290		1,290		52		132
Commercial business - Other	182		182		20		182
Total impaired loans with valuation allowance	3,748		3,776		359		558
Total impaired loans	$	12,622	$	13,008	$	359	$	4,543

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

20

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

The Company reviews and establishes, if necessary, an allowance for certain impaired loans for the amount by which the present value of expected cash flows (or observable market price of loan or fair value of the collateral if the loan is collateral dependent) are lower than the carrying value of the loan. At September 30, 2015 and December 31, 2014, the Company concluded that certain impaired loans required no valuation allowance as a result of management’s measurement of impairment. No additional funds are committed to be advanced to those borrowers whose loans are deemed impaired.

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,874	$	32	$	6	$	5,726	$	84	$	7
Multi-family and commercial	6,222		72		3		6,071		219		3
Commercial business - Other	1,182		7		6		1,070		15		6
Consumer - Home equity	81		—		—		52		—		—
Total	$	13,359	$	111	$	15	$	12,919	$	318	$	16

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,829	$	27	$	4	$	5,987	$	117	$	47
Multi-family and commercial	6,262		70		—		6,989		312		72
Commercial business - Other	1,145		6		—		1,123		34		15
Consumer - Home equity	22		2		2		40		3		3
Consumer - Other	20		—		—		10		—		—
Total	$	13,278	$	105	$	6	$	14,149	$	466	$	137

Credit Quality Information

The Company utilizes an eight-grade internal loan rating system for all loans in the portfolio, with the exception of its purchased SBA and USDA commercial business loans that are fully guaranteed by the U.S. government, as follows:

o Pass (Ratings 1-4): Loans in these categories are considered low to average risk.

o Special Mention (Rating 5): Loans in this category are starting to show signs of potential weakness and are being closely monitored by management.

21

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

o Substandard (Rating 6): Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

o Doubtful (Rating 7): 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.

o Loss (Rating 8): Loans in this category are considered uncollectible and of such little value that their continuance as assets is not warranted.

Management periodically reviews the ratings described above and the Company’s internal audit function reviews components of the credit files, including the assigned risk ratings, of certain commercial loans as part of its loan review.  

The following tables present the Company’s loans by risk rating at September 30, 2015 and December 31, 2014:

September 30, 2015	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	422,608	$	2,021	$	5,658	$	—	$	—	$	430,287
Multi-family and commercial	—		312,740		12,642		14,300		—		—		339,682
Construction	—		17,409		—		—		—		—		17,409
Total real estate loans	—		752,757		14,663		19,958		—		—		787,378
Commercial Business:
SBA and USDA guaranteed	153,811		—		—		—		—		—		153,811
Time share	—		57,760		—		—		—		—		57,760
Condominium association	—		26,237		—		—		—		—		26,237
Other	—		64,820		1,770		1,717		—		—		68,307
Total commercial business loans	153,811		148,817		1,770		1,717		—		—		306,115
Consumer:
Home equity	—		52,548		67		370		—		—		52,985
Indirect automobile	—		2,239		—		—		—		—		2,239
Other	—		1,915		—		—		—		—		1,915
Total consumer loans	—		56,702		67		370		—		—		57,139
Total loans	$	153,811	$	958,276	$	16,500	$	22,045	$	—	$	—	$	1,150,632

22

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

December 31, 2014	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	423,134	$	1,430	$	6,011	$	—	$	—	$	430,575
Multi-family and commercial	—		269,680		17,058		11,582		—		—		298,320
Construction	—		13,579		—		—		—		—		13,579
Total real estate loans	—		706,393		18,488		17,593		—		—		742,474
Commercial Business:
SBA and USDA guaranteed	118,466		—		—		—		—		—		118,466
Time share	—		45,669		—		—		—		—		45,669
Condominium association	—		21,386		—		—		—		—		21,386
Other	—		61,835		2,709		1,902		—		—		66,446
Total commercial business loans	118,466		128,890		2,709		1,902		—		—		251,967
Consumer:
Home equity	—		50,965		57		71		—		—		51,093
Indirect automobile	—		3,692		—		—		—		—		3,692
Other	—		1,864		—		—		—		—		1,864
Total consumer loans	—		56,521		57		71		—		—		56,649
Total loans	$	118,466	$	891,804	$	21,254	$	19,566	$	—	$	—	$	1,051,090

The following table provides information on loans modified as TDRs during the three and nine months ended September 30, 2015 and 2014. During the modification process, there were no loan charge-offs or principal reductions for the loans included in the table below.

	Three Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	—	$	—	$	—
Multi-family and commercial	4	1,035		—		—	—		50
Commercial business - other	2	118		—		—	—		—
Total	9	$	1,655	$	33	—	$	—	$	50
	Nine Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	1	$	100	$	—
Multi-family and commercial	4	1,035		—		2	1,416		50
Commercial business - other	2	118		—		2	314		—
Total	9	$	1,655	$	33	5	$	1,830	$	50

23

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

The following table provides the recorded investment, by type of modification, during the three and nine months ended September 30, 2015 and 2014 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(In Thousands)
Interest rate adjustments	$	559	$	—	$	559	$	379
Principal deferrals	115		—		115		—
Combination of rate and payment (1)	146		—		146		288
Combination of rate and maturity (2)	—		—		—		1,163
Maturity only	835		—		835		—
Total	$	1,655	$	—	$	1,655	$	1,830

⁽¹⁾ Terms include combination of interest rate adjustments and interest-only payment with deferral of principal.

⁽²⁾ Terms include combination of interest rate adjustments and extensions of maturity.

There were no TDRs in payment default (defined as 90 days or more past due) within twelve months of restructure for the three and nine months ended September 30, 2015 and 2014.

As of September 30, 2015, the Company held $605,000 in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.

Loans Acquired with Deteriorated Credit Quality

The following is a summary of loans acquired with evidence of credit deterioration from Newport as of September 30, 2015 and December 31, 2014.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2014	$	5,799		$	4,962		$	837		$	—		$	4,962
Additions	—			143			(143		)	143			—
Collections	(114		)	(107		)	(6		)	(17		)	(90		)
Dispositions	(579		)	(520		)	(59		)	—			(520		)
Balance at September 30, 2015	$	5,106		$	4,478		$	629		$	126		$	4,352

24

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

NOTE 5.  PREMISES AND EQUIPMENT

Premises and equipment at September 30, 2015 and December 31, 2014 are summarized as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,558			11,879
Leasehold improvements	11,037			10,802
Furniture and equipment	12,846			12,741
Construction in process	18			1,233
	42,205			41,401
Accumulated depreciation and amortization	(20,536		)	(19,690		)
Premises and equipment, net	$	21,669		$	21,711

At September 30, 2015, construction in process related to the project to redesign traffic flow at an existing branch.

At December 31, 2014, construction in process related to design and site costs associated with a new branch location.

NOTE 6.  OTHER COMPREHENSIVE INCOME

Accounting principles generally require 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 shareholders’ equity on the balance sheet, such items, along with net income, are components of comprehensive income.

Components of other comprehensive income and related tax effects are as follows:

	Nine Months Ended September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	960		$	(327	)	$	633
Reclassification adjustment for gains recognized in net income	(146		)	50			(96		)
Unrealized holding gains on available for sale securities, net of taxes	814			(277		)	537
Derivative instrument:
Change in fair value of effective cash flow hedging derivative	123			(42		)	81
Other comprehensive income	$	937		$	(319	)	$	618

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

	September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	1,115		$	(379	)	$	736
Net unrealized loss on effective cash flow hedging derivative	(34		)	11			(23		)
Accumulated other comprehensive income	$	1,081		$	(368	)	$	713

25

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

	December 31, 2014
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	301		$	(102	)	$	199
Net unrealized loss on effective cash flow hedging derivative	(157		)	53			(104		)
Accumulated other comprehensive income	$	144		$	(49	)	$	95

NOTE 7.  REGULATORY CAPITAL

The Company and the Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by the Company or the Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our consolidated financial statements. The following tables present regulatory capital information for the Company and the Bank. Information presented for September 30, 2015 reflects the Basel III capital requirements that became effective January 1, 2015 for both the Company and the Bank and changed the inputs and methodology for computing capital. Prior to January 1, 2015, the Bank was subject to capital requirements under Basel I and there were no capital requirements for the Company. Under these capital requirements, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Tier 1 Capital to Average Assets:
Company	$	139,565	9.68	%	$	57,699	4.00	%	$	72,123	5.00	%
Bank	133,681		9.42		56,760		4.00		70,950		5.00
Tier 1 Capital to Risk Weighted Assets:
Company	139,565		15.40		54,391		6.00		72,522		8.00
Bank	133,681		14.78		54,286		6.00		72,381		8.00
Total Capital to Risk Weighted Assets:
Company	149,427		16.48		72,522		8.00		90,653		10.00
Bank	143,543		15.87		72,381		8.00		90,476		10.00
Common Equity Tier 1 Capital:
Company	139,565		15.40		40,794		4.50		58,924		6.50
Bank	133,681		14.78		40,714		4.50		58,809		6.50

26

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Bank:	(Dollars in Thousands)
Tier 1 Capital to Average Assets	$	123,862	9.37	%	$	52,876	4.00	%	$	66,095	5.00	%
Tier 1 Capital to Risk Weighted Assets	123,862		14.86		33,341		4.00		50,012		6.00
Total Capital to Risk Weighted Assets	132,306		15.87		66,695		8.00		83,369		10.00
Tangible Equity Ratio	123,862		9.37		19,828		1.50		N/A		N/A

Quantitative measures established by regulation require the Company and the Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require the Company and the Bank to maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At September 30, 2015, the Company and the Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory requirements. To be “well capitalized,” the Company and the Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes no conditions or events have occurred since September 30, 2015 that would materially adversely change the Company’s and the Bank’s capital classifications.

Beginning January 1, 2016, Basel III implements a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer will be exclusively composed of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios, but not the leverage ratio. On January 1, 2016, the Company and the Bank will be expected to comply with the capital conservation buffer requirement, which will increase the three risk-based capital ratios by 0.625% each year through 2019, at which point, the minimum common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.

NOTE 8.  FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Hierarchy

The Company groups its assets and liabilities in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Transfers between levels are recognized at the end of a reporting period, if applicable.

Level 1: Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities 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 or liabilities.

27

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

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 or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to 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.

Determination of Fair Value

The Company uses 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 the Company’s 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.

The following methods and assumptions were used by the Company in estimating fair value disclosures of its financial instruments:

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

• Securities available for sale.Included in the available for sale category are debt securities. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. Securities measured at fair value in Level 2 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. The Company utilizes a nationally-recognized, third-party pricing service to estimate fair value measurements for the majority of its portfolio. The pricing service evaluates each asset class based on relevant market information considering observable data, but these prices do not represent binding quotes. The fair value prices on all investments are reviewed for reasonableness by management. Securities measured at fair value in Level 3 include one collateralized debt obligation that is backed by trust preferred securities issued by banks and insurance companies. Management determined that an orderly and active market for these securities and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels. The Company employs a valuation specialist to estimate future cash flows discounted using a rate management believes is representative of current market conditions. Factors in determining the discount rate include the current level of deferrals and/or defaults, changes in credit rating and the financial condition of the debtors within the underlying securities, broker quotes for securities with similar structure and credit risk, interest rate movements and pricing for new issuances.

• Federal Home Loan Bank stock.The carrying value of Federal Home Loan Bank (“FHLB”) stock approximates fair value based on the redemption provisions of the FHLB.

• Federal Reserve Bank stock.The carrying value of Federal Reserve Bank ("FRB") stock approximates fair value based on the redemption provisions of the FRB.

28

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

• Loans held for sale.The fair value of loans held for sale is estimated using quoted market prices.

• Loans receivable.For variable rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of fixed-rate loans are estimated by discounting the future cash flows using the rates at the end of the period in which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

• Accrued interest receivable.The carrying amount of accrued interest approximates fair value.

• Deposits.The fair value of demand deposits, negotiable orders of withdrawal, regular savings, certain money market deposits and mortgagors’ and investors’ escrow accounts is the amount payable on demand at the reporting date. The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits.

• Federal Home Loan Bank advances.The fair value of the advances is estimated using a discounted cash flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances.

• Junior subordinated debt owed to unconsolidated trust.Rates currently available for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

• Interest rate swap agreements.The fair values of the Company’s interest rate swaps are obtained from a third-party pricing service and are determined using a discounted cash flow analysis on the expected cash flows of the derivative. The pricing analysis is based on observable inputs for the contractual term of the derivative, including the period to maturity, credit component, and interest rate curves.

• Forward loan sale commitments and derivative loan commitments.Forward loan sale commitments and derivative loan commitments are based on the fair values of the underlying mortgage loans, including the servicing rights for derivative loan commitments, and the probability of such commitments being exercised. Significant management judgment and estimation is required in determining these fair value measurements.

• Off-balance sheet instruments.Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standings.

29

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2015.

	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	25,271	$	43,297	$	—	$	68,568
Government-sponsored enterprises	—		30,664		—		30,664
Mortgage-backed securities	—		70,036		—		70,036
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,130		1,130
Obligations of state and political subdivisions	—		1,537		—		1,537
Tax-exempt securities	—		3,242		—		3,242
Forward loan sale commitments and derivative loan commitments	—		—		37		37
Total assets	$	25,271	$	149,776	$	1,167	$	176,214
Liabilities:
Interest rate swap agreements	$	—	$	170	$	—	$	170
Total liabilities	$	—	$	170	$	—	$	170

	December 31, 2014
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,001	$	45,390	$	—	$	66,391
Government-sponsored enterprises	—		27,488		—		27,488
Mortgage-backed securities	—		67,103		—		67,103
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,181		1,181
Obligations of state and political subdivisions	—		3,200		—		3,200
Tax-exempt securities	—		6,677		—		6,677
Forward loan sale commitments and derivative loan commitments	—		—		59		59
Total assets	$	21,001	$	150,858	$	1,240	$	173,099
Liabilities:
Interest rate swap agreements	$	—	$	271	$	—	$	271
Total liabilities	$	—	$	271	$	—	$	271

30

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets:

	Collateralized Debt Obligations			Derivative Loan and Forward Loan Sale Commitments, Net
	(In Thousands)
Balance at December 31, 2014	$	1,181		$	59
Total realized losses included in net income	—			(22		)
Total unrealized losses included in other comprehensive income	(51		)	—
Balance at September 30, 2015	$	1,130		$	37

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may also be required, from time to time, to measure certain other financial assets on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets at September 30, 2015 and December 31, 2014. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2015 and December 31, 2014.

	At September 30, 2015						At December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	61	$	—	$	—	$	356
Other real estate owned	—		—		1,341		—		—		1,271
Total assets	$	—	$	—	$	1,402	$	—	$	—	$	1,627

The following table summarizes losses (gains) resulting from fair value adjustments for assets measured at fair value on a nonrecurring basis.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(In Thousands)
Impaired loans	$	(20	)	$	22	$	2	$	126
Other real estate owned	65			10		212		25
Total losses	$	45		$	32	$	214	$	151

The Company measures the impairment of loans that are collateral dependent based on the fair value of the collateral (Level 3). The fair value of collateral used by the Company represents the amount expected to be received from the sale of the property, net of selling costs, as determined by an independent, licensed or certified appraiser using observable market data. This data includes information such as selling price of similar properties, expected future cash flows or earnings of the subject property based on current market expectations, and relevant legal, physical and economic factors. The appraised values of collateral are adjusted as necessary by management based on observable inputs for specific properties. Losses applicable to write-downs of impaired loans are based on the appraised market value of the underlying collateral, assuming foreclosure of these loans is imminent.

The amount of other real estate owned represents the carrying value of the collateral based on the appraised value of the underlying collateral less estimated selling costs. The loss on foreclosed assets represents adjustments in the valuation recorded during the time period indicated and not for losses incurred on sales.

31

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

Summary of Fair Values of Financial Instruments

The estimated fair values and related carrying or notional amounts of the Company’s financial instruments are presented in the following table. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

Management uses its best judgment in estimating the fair value of the Company's financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at September 30, 2015 and December 31, 2014. The estimated fair value amounts at September 30, 2015 and December 31, 2014 have been measured as of each respective date, and have not been re-evaluated or updated for purposes of the consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. The information presented should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company's assets. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company's disclosures and those of other banks may not be meaningful.

As of September 30, 2015 and December 31, 2014, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2015
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	36,562	$	36,562	$	—	$	—	$	36,562
Available for sale securities	176,177		25,271		149,776		1,130		176,177
Loans held for sale	165		—		—		165		165
Loans receivable, net	1,142,998		—		—		1,156,501		1,156,501
Federal Home Loan Bank stock	12,421		—		—		12,421		12,421
Federal Reserve Bank stock	3,621		—		—		3,621		3,621
Accrued interest receivable	4,230		—		—		4,230		4,230
Financial Liabilities:
Deposits	1,043,130		—		—		1,047,509		1,047,509
Mortgagors' and investors' escrow accounts	1,946		—		—		1,946		1,946
Federal Home Loan Bank advances	224,459		—		225,337		—		225,337
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,329		—		5,329
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	37		—		—		37		37
Liabilities:
Interest rate swap agreements	170		—		170		—		170

32

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

	December 31, 2014
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	39,251	$	39,251	$	—	$	—	$	39,251
Available for sale securities	173,040		21,001		150,858		1,181		173,040
Loans held for sale	747		—		—		747		747
Loans receivable, net	1,044,864		—		—		1,063,121		1,063,121
Federal Home Loan Bank stock	10,333		—		—		10,333		10,333
Accrued interest receivable	3,853		—		—		3,853		3,853
Financial Liabilities:
Deposits	1,010,713		—		—		1,013,614		1,013,614
Mortgagors' and investors' escrow accounts	3,600		—		—		3,600		3,600
Federal Home Loan Bank advances	148,277		—		149,380		—		149,380
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,815		—		5,815
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	59		—		—		59		59
Liabilities:
Interest rate swap agreements	271		—		271		—		271

NOTE 9.  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Financial Instruments

The Company has stand-alone derivative financial instruments in the form of interest rate swap agreements which derive their value from underlying interest rates. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments and the value of the derivatives are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the Company’s balance sheets as other assets and other liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures and does not expect any counterparties to fail their obligations.

Derivative instruments are generally either negotiated over-the-counter contracts or standardized contracts executed on a recognized exchange. Negotiated over-the-counter derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity.

Derivative Instruments Designated As Hedging Instruments

The Company uses long-term variable rate debt as a source of funds for use in the Company’s lending and investment activities and other general business purposes. These debt obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases. Management believes it is prudent to limit the variability of a portion of its interest payments and, therefore, generally hedges a portion of its variable-rate interest payments. To meet this objective, management entered into an interest rate swap agreement, characterized as a cash flow hedge, whereby the Company receives variable interest rate payments determined by three-month LIBOR in exchange for making payments at a fixed interest rate.

33

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

At September 30, 2015 and December 31, 2014, information pertaining to the outstanding interest rate swap agreement used to hedge variable rate debt is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	8,000		$	8,000
Weighted average fixed pay rate	2.44		%	2.44		%
Weighted average variable receive rate	0.34		%	0.24		%
Weighted average maturity in years	0.2			1.0
Unrealized loss relating to interest rate swap	$	34		$	157

At September 30, 2015 and December 31, 2014, the unrealized loss related to the above mentioned interest rate swap was recorded as a derivative liability. Changes in the fair value of an interest rate swap designated as a hedging instrument of the variability of cash flows associated with long-term debt are reported in other comprehensive income. These amounts are subsequently reclassified into interest expense as a yield adjustment in the same period in which the related interest on the long-term debt affects earnings.

Risk management results for the periods ended September 30, 2015 and December 31, 2014 related to the balance sheet hedging of long-term debt indicate the hedge was 100% effective and there was no component of the derivative instrument’s loss which was excluded from the assessment of hedge effectiveness.

The Company’s derivative contract contains a provision establishing a collateral requirement (subject to minimum collateral posting thresholds) based on the Company’s external credit rating. If the Company’s junior subordinated debt rating was to fall below the level generally recognized as investment grade, the counterparty to such derivative contract could require additional collateral on the derivative transaction in a net liability position (after considering the effect of bilateral netting arrangements and posted collateral). The Company had posted collateral of $50,000 and $400,000 in the normal course of business for a derivative instrument, with a credit-related contingent feature, that was in a net liability position at September 30, 2015 and December 31, 2014, respectively.

Derivative Instruments Not Designated As Hedging Instruments

Certain derivative instruments do not meet the requirements to be accounted for as hedging instruments. These undesignated derivative instruments are recognized on the consolidated balance sheets at fair value, with changes in fair value recorded in noninterest income.

Interest Rate Swap Agreement - In 2012, management entered into an interest rate swap agreement that does not meet the strict hedge accounting requirements of FASB's "Derivatives and Hedging" standard to manage the Company's exposure to interest rate movements and other identified risks. At September 30, 2015 and December 31, 2014, information pertaining to the Company's interest rate swap agreement not designated as a hedge is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	15,000		$	15,000
Weighted average fixed pay rate	1.26		%	1.26		%
Weighted average variable receive rate	0.29		%	0.25		%
Weighted average maturity in years	1.3			2.0
Unrealized loss relating to interest rate swap	$	136		$	114

34

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2015 AND 2014 AND DECEMBER 31, 2014

The Company reported a loss in fair value on the interest rate swap not designated as a hedge in noninterest income of $7,000 and $22,000 for the three and nine months ended September 30, 2015, respectively, and a gain in fair value of $78,000 and $69,000 for the three and nine months ended September 30, 2014, respectively.

Derivative Loan Commitments -Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock.

Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the values of these loan commitments decrease. Conversely, if interest rates decrease, the value of these loan commitments increase. The notional amount of undesignated mortgage loan commitments was $5.0 million at September 30, 2015. At September 30, 2015, the fair value of such commitments was a net asset of $37,000.

Forward Loan Sale Commitments -To protect against the price risk inherent in derivative loan commitments, the Company utilizes “mandatory delivery” forward loan sale commitments to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments.

With a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor to compensate the investor for the shortfall.

The Company expects that these forward loan sale commitments will experience changes in fair value opposite to the change in fair value of derivative loan commitments. The notional amount of undesignated forward loan sale commitments was $2.7 million at September 30, 2015. At September 30, 2015, the fair value of such commitments was a net asset of $0.

Interest Rate Risk Management - Derivative Instruments

The following table presents the fair values of derivative instruments as well as their classification on the consolidated balance sheets at September 30, 2015 and December 31, 2014.

		September 30, 2015					December 31, 2014
	Balance Sheet Location	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
		(In Thousands)
Derivative designated as hedging instrument:
Interest rate swap	Other Liabilities	$	8,000	$	(34	)	$	8,000	$	(157	)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	15,000		(136		)	15,000		(114		)
Derivative loan commitments	Other Assets	4,983		37			6,436		59
Forward loan sale commitments	Other Assets	2,662		—			2,754		—

35

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

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding changes in the Company’s financial condition as of September 30, 2015 and December 31, 2014 and the results of operations for the three and nine months ended September 30, 2015 and 2014. The information contained in this section should be read in conjunction with the consolidated financial statements and notes thereto appearing in Part I, Item 1 of this document as well as with management’s discussion and analysis of financial condition and results of operations and consolidated financial statements included in the Company’s 2014 Annual Report on Form 10-K.

This report may contain certain “forward-looking statements” within the meaning of the federal securities laws, which are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally preceded by terms such as “expects,” “believes,” “anticipates,” “intends,” “estimates,” “projects” and similar expressions. These statements are not historical facts; rather, they are statements based on management’s current expectations regarding our business strategies, intended results and future performance.  

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in interest rates, national and regional economic conditions, legislative and regulatory changes, monetary and fiscal policies of the United States government, including policies of the United States Treasury and the Federal Reserve Board, the quality and composition of the loan and investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in real estate market values in the Company’s market area and changes in relevant accounting principles and guidelines. Additional factors that may affect the Company’s results are discussed in the Company’s Annual Report on Form 10-K and in other reports filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims, any obligation to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

The Company considers accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. The Company considers the determination of allowance for loan losses, deferred income taxes and the impairment of long-lived assets to be its critical accounting policies. Additional information about the Company’s accounting policies is included in the notes to the Company’s consolidated financial statements contained in Part I, Item 1 of this document and in the Company’s 2014 Annual Report on Form 10-K.

Impact of New Accounting Standards

Refer to Note 1 of the consolidated financial statements in this report for a discussion of recent accounting pronouncements.

Comparison of Financial Condition at September 30, 2015 and December 31, 2014

Assets:

Summary. Assets increased$103.1 million, or 7.6%, to $1.45 billion at September 30, 2015, compared to $1.35 billion at December 31, 2014, principally due to increases of $98.1 million in net loans receivable, $3.6 million in Federal Reserve Bank stock and $3.1 million in available for sale securities, offset by a reduction of $2.7 million in cash and cash equivalents.

36

Loans Receivable, Net. Contributing to the increase of $98.1 million in net loans receivable were increases in multi-family and commercial real estate loans, SBA and USDA guaranteed loans and time share loans. Changes in the loan portfolio consisted of the following:

• Residential Real Estate. Residential mortgage loans comprised 37.4% of the total loan portfolio at September 30, 2015 and remained stable at $430.3 million as compared to $430.6 million at December 31, 2014. Residential mortgage loan originations increased $28.8 million, or 66.4%, during the first nine months of 2015 over the comparable period in 2014, as a result of lower interest rates and increased activity in the housing market.

• Multi-family and Commercial Real Estate. Multi-family and commercial real estate loans represented 29.5% of total loans at September 30, 2015 and increased$41.4 million, or 13.9%, during the first nine months of 2015. Loan originations for multi-family and commercial real estate loans were $58.1 million, representing an increase of $22.1 million, during the first nine months of 2015 compared to the same period in 2014.

• Construction. Construction loans, which include both residential and commercial construction loans, increased$3.8 million to $17.4 million for the first nine months of 2015 as a result of increased commercial construction volume.

• Commercial Business. Commercial business loans represented 26.6% of total loans at September 30, 2015. Commercial business loans increased$54.1 million, or 21.5%, for the first nine months of 2015 primarily due to increases of $35.3 million in SBA and USDA guaranteed loans, $12.1 million in time share loans and $4.9 million in condominium association loans. During 2015, SBA and USDA guaranteed loans increased as a result of purchases totaling $52.3 million. Commercial business loan originations increased $9.2 million as compared to the same period in 2014. At September 30, 2015, unfunded lines of credit related to time share lending totaled $20.3 million as a result of focused efforts dedicated to growth within the time share industry.

• Consumer. Consumer loans represented 5.0% of the Company’s total loan portfolio at September 30, 2015. Consumer loans increased$490,000 during the first nine months of 2015 primarily as a result of an increase of $1.9 millionin home equity loans, offset by a decrease of $1.5 million in indirect automobile loans. Loan originations for consumer loans totaled $17.8 million, representing a decrease of $3.3 million, for the first nine months of 2015 over the comparable period in 2014.

The allowance for loan losses totaled $9.2 million at September 30, 2015 compared to $7.8 million at December 31, 2014. The ratio of the allowance for loan losses to total loans increased to 0.80% at September 30, 2015 from 0.74% at December 31, 2014. This was necessitated by a change in the composition of the loan portfolio which included an increase in the commercial loan portfolio, which carries a higher degree of risk (excluding guaranteed SBA and USDA loans) than other loans held in portfolio and an increase in nonperforming assets.

37

The following table provides information with respect to nonperforming assets and TDRs as of the dates indicated.

	September 30 2015			December 31, 2014
Nonaccrual loans:	(Dollars in Thousands)
Real estate loans:
Residential - 1 to 4 family	$	3,420		$	3,167
Multi-family and commercial	2,694			907
Total real estate loans	6,114			4,074
Commercial business loans	814			446
Consumer loans:
Home equity	324			23
Total nonaccrual loans	7,252			4,543
Accruing loans past due 90 days or more	—			459
Total nonperforming loans (1)	7,252			5,002
Other real estate owned, net (2)	1,341			1,271
Total nonperforming assets	8,593			6,273
Accruing troubled debt restructurings	3,691			3,387
Total nonperforming assets and troubled debt restructurings	$	12,284		$	9,660
Allowance for loan losses as a percent of nonperforming loans	127.50		%	155.88		%
Total nonperforming loans to total loans	0.63		%	0.48		%
Total nonperforming loans to total assets	0.50		%	0.37		%
Total nonperforming assets and troubled debt restructurings to total assets	0.85		%	0.72		%

⁽¹⁾ Includes nonperforming TDRs totaling $1.7 million and $603,000 at September 30, 2015 and December 31, 2014, respectively.

⁽²⁾ Other real estate owned balances are shown net of related write-downs.

The increase in nonperforming assets was primarily due to increases in nonperforming multi-family and commercial real estate loans of $1.8 million and commercial business loans of $368,000 at September 30, 2015. Nonperforming home equity loans and residential real estate loans increased$301,000 and$253,000, respectively, during the first nine months of 2015, while accruing loans past due 90 days or more decreased $459,000.

Other real estate owned increased $70,000 to $1.3 million from December 31, 2014 to September 30, 2015, due to the addition of three residential properties, partially offset by the write-down of two commercial and two residential properties and the sale of one residential property. At September 30, 2015, other real estate owned included four commercial properties and two residential properties.

Over the past few years, the Company has sought to restructure nonperforming loans rather than pursue foreclosure or liquidation, believing this approach achieves the best economic outcome for the Company in view of the current economic environment. Modified payment terms for TDRs generally involve deferred principal payments, interest rate concessions, a combination of deferred principal payments, and interest rate concessions or a combination of maturity extensions and interest rate concessions. TDRs increased to $5.4 million at September 30, 2015, compared to $4.0 million at December 31, 2014. Of the TDRs, $3.7 million and $3.4 million were performing in accordance with their restructured terms at both September 30, 2015 and December 31, 2014, respectively. The Company anticipates these borrowers will repay all contractual principal and interest in accordance with the terms of their restructured loan agreements.

Liabilities:

Summary. Liabilities increased$106.9 million, or 9.0%, to $1.30 billion at September 30, 2015 compared to $1.19 billion at December 31, 2014. Deposits increased$32.4 million, or 3.2%, which included increases in NOW and

38

money market accounts of $34.5 million and noninterest-bearing demand deposits and certificates of deposit of $5.7 millioneach, offset by a decrease in savings accounts of $13.7 million. Deposit growth remained strong due to marketing and promotional initiatives and competitively-priced deposit products. The increase in borrowings of $76.2 million from $156.5 million at December 31, 2014 to $232.7 million atSeptember 30, 2015, was used to fund increased commercial lending, including the $52.3 million purchase of SBA guaranteed loans in April 2015.

Equity:

Summary. Shareholders’ equity decreased$3.8 million from $157.7 million at December 31, 2014 to $154.0 million at September 30, 2015. The decrease in shareholders’ equity was attributable to the repurchase of common shares totaling $10.2 million and dividends of $1.4 million, offset by the exercise of stock options of $3.3 million and net income of $2.9 million.

On September 23, 2015, the Company granted 38,000 shares of restricted stock and 100,000 stock options. Stock compensation expense related to this grant of $161,000 was charged against income for the three and nine months ended September 30, 2015. As of September 30, 2015, there was $989,000 of unrecognized compensation cost related to this grant.

Accumulated Other Comprehensive Income. Accumulated other comprehensive income is comprised of the unrealized gains and losses on available for sale securities and unrealized gains and losses on an interest rate swap designated as a hedge, net of taxes. The net unrealized gains on available for sale securities, net of taxes, totaled $736,000 at September 30, 2015 compared to net unrealized gains of $199,000 at December 31, 2014. The net unrealized loss on the interest rate swap, net of taxes, totaled $23,000 at September 30, 2015 compared to $104,000 at December 31, 2014.

Results of Operations for the Three and Nine Months Ended September 30, 2015 and 2014

General. The Company’s results of operations depend primarily on net interest income, which is the difference between the interest income earned on the Company’s interest-earning assets, such as loans and investments, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. The Company also generates noninterest income such as gains on the sale of securities, fees earned from mortgage banking activities, fees from deposits, trust and investment management services, insurance commissions and other fees. The Company’s noninterest expenses primarily consist of employee compensation and benefits, occupancy, computer services, furniture and equipment, outside professional services, electronic banking fees, FDIC deposit insurance and regulatory assessments, marketing and other general and administrative expenses. The Company’s results of operations are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates, governmental policies and actions of regulatory agencies.

Summary. The Company reported net income of $974,000 for the three months ended September 30, 2015 compared to $1.2 million for the three months ended September 30, 2014. The Company reported net income of $2.9 million for the nine months ended September 30, 2015 compared to $3.0 million for the nine months ended September 30, 2014.

Interest and Dividend Income. Total interest and dividend income increased $489,000, or 4.2%, to $12.2 million for the three months ended September 30, 2015, compared to the same period in 2014. The increase in interest and dividend income was primarily due to a higher average balance on loans and securities outstanding, offset by a lower average yield on loans and securities. Interest income on loans and securities reflect net amortization of $179,000 and $108,000 for the quarters ended September 30, 2015 and 2014, respectively, related to fair value adjustments of loans and securities resulting from the Newport acquisition. The average yield earned on interest-earning assets for the three months ended September 30, 2015 decreased 12 basis points to 3.59% compared to 3.71% for the three months ended September 30, 2014. Average interest-earning assets increased $92.6 million to $1.35 billion during the third quarter of 2015, due to increases in the average balance of loans and securities of $89.8 million and $7.7 million, respectively, offset by a decrease of $4.9 million in the average balance of other interest-earning assets, as compared to the same quarter in 2014.

39

Total interest and dividend income remained at $35.5 million for the nine months ended September 30, 2015, compared to the same period in 2014 as the increase in the average balance of loans was offset by a decrease in the average yield on loans and securities. Interest income on loans and securities reflect net amortization of $543,000 and $124,000 for the nine months ended September 30, 2015 and 2014, respectively, related to fair value adjustments of loans and securities resulting from the Newport acquisition. The average yield earned on interest-earning assets decreased 12 basis points from 3.76% for the nine months ended September 30, 2014, to 3.64% for the nine months ended September 30, 2015. Average interest-earning assets increased $42.1 million to $1.31 billion during the first nine months of 2015, due to increases of $44.5 millionand $2.1 million in the average balance of loans and securities, respectively, offset by a decrease of $4.5 million in the average balance of other interest-earning assets as compared to the same period in 2014.

Interest Expense. For the quarter ended September 30, 2015, interest expense increased $292,000, or 14.3%, resulting from higher FHLB advances and a higher balance of average deposits compared to the same quarter in 2014. Higher interest expense on interest-bearing liabilities reflect net accretion of $184,000 and $482,000 for the three months ended September 30, 2015 and 2014, respectively, related to fair value adjustments of deposits and borrowings resulting from the Newport acquisition. Average interest-bearing deposits increased $25.4 million to $888.6 million for the three months ended September 30, 2015 and the average rate paid increased one basis point to 0.63%, compared to the same period in 2014. Increases in the average balance of NOW and money market deposits and certificates of deposit totaled $24.1 million and $16.6 million, respectively, while the average balance of savings accounts decreased$15.5 million compared to the three months ended September 30, 2014. The average balance of FHLB advances increased $57.2 million for the three months ended September 30, 2015, while the average rate paid increased four basis points to 1.58%.

Interest expense increased $320,000, or 5.2%, to $6.5 million for the first nine months of 2015. Interest expense on deposits and borrowings reflect net accretion of $825,000 and $1.5 million for the nine months ended September 30, 2015 and 2014, respectively, related to fair value adjustments of deposits and borrowings resulting from the Newport acquisition. Average interest-bearing deposits increased $21.1 million to $885.7 million and the average rate paid increased one basis point to 0.63%. Increases in the average balance of certificates of deposit and NOW and money market deposits of $19.3 million and $9.6 million, respectively, were offset by a decrease in the average balance of savings accounts of $8.0 million. The average balance of FHLB advances increased $11.7 million, while the average rate paid increased five basis points to 1.60%.

Average Balance Sheet. The following sets forth information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resulting yields and rates paid, interest rate spread, net interest margin, and the ratio of average interest-earning assets to average interest-bearing liabilities for the periods indicated.

40

	At or For the Three Months Ended September 30,
	2015							2014
	Average Balance		Interest & Dividends			Average Yield/ Rate		Average Balance		Interest & Dividends			Average Yield/ Rate
	(Dollars in Thousands)
Interest-earning assets:
Loans (1) (2)	$	1,134,506	$	11,278		3.94	%	$	1,044,702	$	10,735		4.08	%
Securities (3)	192,093		925			1.91		184,376		1,002			2.16
Other interest-earning assets	23,341		19			0.32		28,237		11			0.15
Total interest-earning assets	1,349,940		12,222			3.59		1,257,315		11,748			3.71
Noninterest-earning assets	92,527							91,287
Total assets	$	1,442,467						$	1,348,602
Interest-bearing liabilities:
Deposits:
Business checking	$	415	—			—		$	180	—			—
NOW and money market	474,092		128			0.11		450,011		143			0.13
Savings (4)	31,312		17			0.22		46,854		20			0.17
Certificates of deposit (5)	382,796		1,258			1.30		366,219		1,192			1.29
Total interest-bearing deposits	888,615		1,403			0.63		863,264		1,355			0.62
Federal Home Loan Bank advances	211,863		846			1.58		154,664		602			1.54
Subordinated debt	8,248		84			4.04		8,248		84			4.04
Total interest-bearing liabilities	1,108,726		2,333			0.83		1,026,176		2,041			0.79
Noninterest-bearing liabilities	180,140							165,503
Total liabilities	1,288,866							1,191,679
Total shareholders' equity	153,601							156,923
Total liabilities and shareholders' equity	$	1,442,467						$	1,348,602
Net interest-earning assets	$	241,214						$	231,139
Tax equivalent net interest income (3)			9,889							9,707
Tax equivalent interest rate spread (6)						2.76	%						2.92	%
Tax equivalent net interest margin as a percentage of interest-earning assets (7)						2.91	%						3.06	%
Average of interest-earning assets to average interest-bearing liabilities						121.76	%						122.52	%
Less tax equivalent adjustment (3)			(5		)					(20		)
Net interest income			$	9,884						$	9,687

⁽¹⁾ Amount is net of deferred loan origination fees and costs.  Average balances include nonaccrual loans and loans held for sale and excludes the allowance for loan losses.

⁽²⁾ Loan fees are included in interest income and are immaterial.

⁽³⁾ Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%.  The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amounts reported in the statements of income.

⁽⁴⁾ Includes mortgagors’ and investors’ escrow accounts.

⁽⁵⁾ Includes brokered deposits.

⁽⁶⁾ Tax equivalent 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.

⁽⁷⁾ Tax equivalent net interest margin represents tax equivalent net interest income divided by average interest-earning assets.

41

	At or For the Nine months Ended September 30,
	2015							2014
	Average Balance		Interest & Dividends			Average Yield/ Rate		Average Balance		Interest & Dividends			Average Yield/ Rate
	(Dollars in Thousands)
Interest-earning assets:
Loans (1) (2)	$	1,093,467	$	32,823		4.01	%	$	1,048,969	$	32,489		4.14	%
Securities (3)	187,748		2,618			1.86		185,649		3,008			2.17
Other interest-earning assets	24,082		57			0.32		28,558		39			0.18
Total interest-earning assets	1,305,297		35,498			3.64		1,263,176		35,536			3.76
Noninterest-earning assets	91,974							91,825
Total assets	$	1,397,271						$	1,355,001
Interest-bearing liabilities:
Deposits:
Business checking	$	325	—			—		$	155	—			—
NOW and money market	464,199		394			0.11		454,573		441			0.13
Savings (4)	39,035		52			0.18		47,026		61			0.17
Certificates of deposit (5)	382,140		3,704			1.30		362,829		3,531			1.30
Total interest-bearing deposits	885,699		4,150			0.63		864,583		4,033			0.62
Federal Home Loan Bank advances	177,196		2,124			1.60		165,472		1,921			1.55
Subordinated debt	8,248		251			4.07		8,248		251			4.07
Total interest-bearing liabilities	1,071,143		6,525			0.81		1,038,303		6,205			0.80
Noninterest-bearing liabilities	170,518							160,653
Total liabilities	1,241,661							1,198,956
Total shareholders' equity	155,610							156,045
Total liabilities and shareholders' equity	$	1,397,271						$	1,355,001
Net interest-earning assets	$	234,154						$	224,873
Tax equivalent net interest income (3)			28,973							29,331
Tax equivalent interest rate spread (6)						2.83	%						2.96	%
Tax equivalent net interest margin as a percentage of interest-earning assets (7)						2.97	%						3.10	%
Average of interest-earning assets to average interest-bearing liabilities						121.86	%						121.66	%
Less tax equivalent adjustment (3)			(21		)					(54		)
Net interest income			$	28,952						$	29,277

⁽¹⁾ Amount is net of deferred loan origination fees and costs.  Average balances include nonaccrual loans and loans held for sale and excludes the allowance for loan losses.

⁽²⁾ Loan fees are included in interest income and are immaterial.

⁽³⁾ Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%.  The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amounts reported in the statements of income.

⁽⁴⁾ Includes mortgagors’ and investors’ escrow accounts.

⁽⁵⁾ Includes brokered deposits.

⁽⁶⁾ Tax equivalent 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.

⁽⁷⁾ Tax equivalent net interest margin represents tax equivalent net interest income divided by average interest-earning assets.

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The following table sets forth the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities have on the Company’s interest income and interest expense for the periods presented. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the rate and volume columns. For purposes of this table, changes attributable to both changes in rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

	Three Months Ended September 30, 2015 and 2014									Nine Months Ended September 30, 2015 and 2014
	Increase (Decrease) Due To									Increase (Decrease) Due To
	Rate			Volume			Net			Rate			Volume			Net
	(In Thousands)
Interest-earning assets:
Interest and dividend income:
Loans (1)(2)	$	(358	)	$	901		$	543		$	(1,020	)	$	1,354		$	334
Securities (3)	(118		)	41			(77		)	(424		)	34			(390		)
Other interest-earning assets	10			(2		)	8			23			(5		)	18
Total interest-earning assets	(466		)	940			474			(1,421		)	1,383			(38		)
Interest-bearing liabilities:
Interest expense:
Deposits (4)	(8		)	56			48			(70		)	187			117
Federal Home Loan Bank advances	26			218			244			70			133			203
Total interest-bearing liabilities	18			274			292			—			320			320
Change in net interest income	$	(484	)	$	666		$	182		$	(1,421	)	$	1,063		$	(358	)

⁽¹⁾ Amount is net of deferred loan origination fees and costs.  Average balances include nonaccrual loans and loans held for sale.

⁽²⁾ Loan fees are included in interest income and are immaterial.

⁽³⁾ Municipal securities income and net interest income are presented on a tax equivalent basis using a tax rate of 34%.  The tax equivalent adjustment is deducted from tax equivalent net interest income to agree to the amount reported in the statements of income.

⁽⁴⁾ Includes mortgagors’ and investors’ escrow accounts and brokered deposits.

Provision for Loan Losses. The provision for loan losses increased $667,000 and $517,000 for the three and nine months ended September 30, 2015, respectively, compared to the same periods in 2014, as a result of increases in commercial loans outstanding, which carry a higher degree of risk than other loans in the portfolio, nonperforming loans and, for the three months ended September 30, 2015, loan charge-offs. At September 30, 2015, nonperforming loans increased to $7.3 million, compared to $4.9 million at September 30, 2014, resulting from increases in nonperforming multi-family and commercial loans of $1.7 million, home equity loans of $324,000, and residential mortgage loans of $254,000. Net loan charge-offs were $208,000 and $263,000 for the three and nine months ended September 30, 2015, respectively, compared to $176,000 and $492,000 for the three and nine months ended September 30, 2014, respectively.

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Noninterest Income.  The following table shows the components of noninterest income and the dollar and percentage changes for the periods presented.

	Three Months Ended September 30,					Change					Nine Months Ended September 30,					Change
	2015			2014		Dollars			Percent		2015			2014		Dollars			Percent
	(Dollars in Thousands)
Service fees	$	1,699		$	1,762	$	(63	)	(3.6	)%	$	5,039		$	5,265	$	(226	)	(4.3	)%
Wealth management fees	303			293		10			3.4		916			926		(10		)	(1.1	)
Increase in cash surrender value of bank-owned life insurance	146			147		(1		)	(0.7	)	449			433		16			3.7
Net gain on sales of securities	14			—		14			N/A		146			64		82			128.1
Mortgage banking	139			81		58			71.6		416			396		20			5.1
Net gain (loss) on fair value of derivatives	(7		)	78		(85		)	(109.0	)	(22		)	69		(91		)	(131.9	)
Other	452			85		367			431.8		749			527		222			42.1
Total noninterest income	$	2,746		$	2,446	$	300		12.3	%	$	7,693		$	7,680	$	13		0.2	%

Noninterest income increased $300,000 and $13,000 for the three and nine months ended September 30, 2015, respectively, versus the comparable periods in the prior year. Other noninterest income increased $367,000 and $222,000 for the three and nine months ended September 30, 2015, respectively, compared to the same period in 2014, primarily as a result of profit distributions from our investment in two small business investment companies. Service fees decreased $63,000 and $226,000 for the three and nine months ended September 30, 2015, respectively, compared to the same periods in the prior year, as a result of a reduction in overdraft privilege fees. Net loss on derivatives was $7,000 and $22,000 for the three and nine months ended September 30, 2015, respectively, compared to net gains on derivatives of $78,000 and $69,000 for the three and nine months ended September 30, 2014, respectively, resulting from a change in the fair value of derivative instruments.

Noninterest Expenses. The following table shows the components of noninterest expenses and the dollar and percentage changes for the periods presented.

	Three Months Ended September 30,				Change					Nine Months Ended September 30,				Change
	2015		2014		Dollars			Percent		2015		2014		Dollars			Percent
	(Dollars in Thousands)
Salaries and employee benefits	$	4,986	$	4,897	$	89		1.8	%	$	15,059	$	15,128	$	(69	)	(0.5	)%
Occupancy and equipment	1,816		1,883		(67		)	(3.6	)	5,660		5,852		(192		)	(3.3	)
Computer and electronic banking services	1,413		1,417		(4		)	(0.3	)	4,168		4,082		86			2.1
Outside professional services	436		420		16			3.8		1,410		1,422		(12		)	(0.8	)
Marketing and advertising	259		216		43			19.9		779		754		25			3.3
Supplies	149		146		3			2.1		441		465		(24		)	(5.2	)
FDIC deposit insurance and regulatory assessments	255		303		(48		)	(15.8	)	748		953		(205		)	(21.5	)
Core deposit intangible amortization	150		150		—			—		451		463		(12		)	(2.6	)
Other real estate operations	160		72		88			122.2		444		303		141			46.5
Other	521		500		21			4.2		1,452		1,873		(421		)	(22.5	)
Total noninterest expenses	$	10,145	$	10,004	$	141		1.4	%	$	30,612	$	31,295	$	(683	)	(2.2	)%

Other noninterest expenses decreased $421,000 for the nine months ended September 30, 2015. Higher other noninterest expenses for the first nine months of 2014 included fraudulent debit card transactions of $380,000,

44

and prepayment penalties totaling $75,000 for the early extinguishment of certain Federal Home Loan Bank borrowings. Salaries and employee benefits increased $89,000 for the three months ended September 30, 2015 primarily as a result of equity award compensation and retirement expense compared to the three months ended September 30, 2014. Salaries and employee benefits decreased $69,000 for the nine months ended September 30, 2015 compared to the same period in 2014, as a result of a reduction in staffing levels and associated benefit costs year-over-year. Costs related to other real estate operations increased $88,000 and $141,000 for the three and nine months ended September 30, 2015, respectively, compared to the same periods in 2014. The Bank’s conversion to a state-chartered financial institution effective in December 2014 contributed to the decrease of $48,000 and $205,000 in the regulatory assessment for the three and nine months ended September 30, 2015, respectively, compared to the comparable periods in 2014. Decreased occupancy and equipment expense of $67,000 and $192,000 for the three and nine months ended September 30, 2015, respectively, versus comparable periods in 2014, was in large part a result of reconfiguring and optimizing telephone and data services. Lower noninterest expenses were partially offset by an increase of $86,000 in computer and electronic banking services for the nine months ended September 30, 2015, respectively, resulting from the implementation of an enhanced mobile banking platform.

Income Tax Provision. The provision for income taxes decreased $85,000 and $26,000 for the three and nine months ended September 30, 2015 compared to the same periods in 2014. The effective tax rate for the three months ended September 30, 2015 and 2014 was 33.7% and 32.6%, respectively. The effective tax rate for the first nine months of 2015 and 2014 was 32.9% and 32.4%, respectively.

Liquidity and Capital Resources

Liquidity is the ability to meet current and future financial obligations of a short- and long-term nature. The Bank's primary sources of funds consist of deposit inflows, loan sales and repayments, maturities and sales of securities and FHLB borrowings. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows, mortgage prepayments and loan and security sales are greatly influenced by general interest rates, economic conditions and competition.

The Bank's most liquid assets are cash and cash equivalents. The levels of these assets depend on the Bank's operating, financing, lending and investing activities during any given period. At September 30, 2015, cash and cash equivalents totaled $36.6 million. Securities classified as available for sale, which provide additional sources of liquidity, totaled $176.2 million at September 30, 2015. In addition, at September 30, 2015, the Bank had the ability to borrow an additional $23.5 million from the FHLB, which included overnight lines of credit of $10.0 million. On that date, the Bank had FHLB advances outstanding of $224.5 million and no overnight advances outstanding. Additionally, the Bank has the ability to access the Federal Reserve Bank’s Discount Window on a collateralized basis and maintains a $7.0 million unsecured line of credit with a financial institution to access federal funds. The Bank believes that its liquid assets combined with the available lines from the FHLB provide adequate liquidity to meet its current financial obligations.

The Bank's primary investing activities are the origination, purchase and sale of loans and the purchase and sale of securities. For the nine months ended September 30, 2015, the Bank originated $168.6 million of loans and purchased $35.5 million of securities and $96.6 million of loans. For the year ended December 31, 2014, the Bank originated $168.0 million of loans and purchased $36.2 million of securities and $59.9 million of loans.

Financing activities consist primarily of activity in deposit accounts and in borrowed funds. The net increase in total deposits, including mortgagors’ and investors’ escrow accounts, was $30.8 million for the nine months ended September 30, 2015. FHLB advances increased $76.2 million during the nine months months ended September 30, 2015 and decreased $28.0 million during the year ended December 31, 2014. The increase in borrowings resulted from the need to fund increased commercial lending, including the $52.3 million purchase of SBA guaranteed loans in April 2015. Certificates of deposit due within one year of September 30, 2015 totaled $173.4 million, or 16.6% of total deposits. Management believes the amount of deposits in shorter-term certificates of deposit reflects customers’ hesitancy to invest their funds in longer-term certificates of deposit due

45

to the uncertain interest rate environment. To compensate, the Bank has increased the duration of its borrowings with the FHLB. The Bank will be required to seek other sources of funds, including other certificates of deposit and lines of credit, if maturing certificates of deposit are not retained. Depending on market conditions, the Bank may be required to pay higher rates on such deposits or other borrowings than are currently paid on certificates of deposit. Additionally, a shorter duration in the securities portfolio may be necessary to provide liquidity to compensate for any deposit outflows. The Bank believes, however, based on past experience, a significant portion of its certificates of deposit will be retained. The Bank has the ability, if necessary, to adjust the interest rates offered to its customers in an effort to attract and retain deposits.  

Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by the Bank and its local competitors and other factors. The Bank generally manages the pricing of its deposits to be competitive and to increase core deposits and commercial banking relationships. Occasionally, the Bank offers promotional rates on certain deposit products to attract deposits.

The Company repurchased 849,819 shares of the Company's common stock at a cost of $10.2 million during the first nine months of 2015 and 74,441 shares of the Company’s common stock at a cost of $841,000 during the year ended December 31, 2014. Additional discussion about the Company’s liquidity and capital resources is contained in Item 7 in the Company’s 2014 Annual Report on Form 10-K.

SI Financial Group, Inc. is a separate legal entity from the Bank and must provide for its own liquidity. In addition to its operating expenses, SI Financial Group is responsible for paying any dividends declared to its shareholders and making payments on its subordinated debentures. SI Financial Group may continue to repurchase shares of its common stock in the future. SI Financial Group’s primary sources of funds are interest and dividends on securities and dividends received from the Bank. The amount of dividends the Bank may declare and pay to SI Financial Group in any calendar year cannot exceed net profits for that year to date plus retained net profits (as defined) for the preceding two calendar years. SI Financial Group believes that such restriction will not have an impact on SI Financial Group's ability to meet its ongoing cash obligations. At September 30, 2015, SI Financial Group had cash and cash equivalents of $2.1 million and available for sale securities of $5.1 million.

Payments Due Under Contractual Obligations

Information relating to payments due under contractual obligations is presented in the Company’s Form 10-K for the year ended December 31, 2014. There were no material changes in the Company’s payments due under contractual obligations between December 31, 2014 and September 30, 2015.

Off-Balance Sheet Arrangements

As a financial services provider, we routinely are a party to various financial instruments with off-balance sheet risks, such as commitments to extend credit, standby letters of credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of the commitments to extend credit may expire without being drawn upon. The contractual amounts of commitments to extend credit represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer defaults and the value of any existing collateral becomes worthless. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

46

Financial instruments whose contract amounts represent credit risk at September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015		December 31, 2014
	(In Thousands)
Commitments to extend credit:
Commitments to originate loans	$	24,876	$	26,170
Undisbursed construction loans	19,024		25,107
Undisbursed home equity lines of credit	48,061		45,403
Undisbursed commercial lines of credit	45,578		60,363
Overdraft protection lines	1,261		1,230
Standby letters of credit	165		81
Total commitments	$	138,965	$	158,354

Future loan commitments at September 30, 2015 and December 31, 2014 included fixed-rate loan commitments of $3.4 million and $10.8 million, respectively, at interest rates ranging from 3.00% to 4.75% and 3.00% to 5.75%, respectively.

The Bank is a limited partner in three small business investment corporations ("SBICs"). At September 30, 2015, the Bank’s remaining off-balance sheet commitment for the capital investment in the SBICs was $1.2 million. The Bank recorded no write downs of the SBICs during the nine months ended September 30, 2015, and write downs of $175,000 in one of the SBICs during the nine months ended September 30, 2014.

For the nine months ended September 30, 2015, with the exception of the aforementioned commitments, the Company did not engage in any additional off-balance sheet transactions reasonably likely to have a material effect on the Company’s financial condition, results of operations or cash flows. See Notes 6 and 12 to the consolidated financial statements contained in the Company’s 2014 Annual Report on Form 10-K.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

Qualitative Aspects of Market Risk

The primary market risk affecting the financial condition and operating results of the Company is interest rate risk. Interest rate risk is the exposure of current and future earnings and capital arising from movements in interest rates. The Company manages the interest rate sensitivity of its interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment. To reduce the volatility of its earnings, the Company has sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. The Company’s strategy for managing interest rate risk generally is to emphasize the origination of adjustable-rate mortgage loans for retention in its loan portfolio. However, the ability to originate adjustable-rate loans depends to a great extent on market interest rates and borrowers’ preferences. As an alternative to adjustable-rate mortgage loans, the Company purchases variable-rate SBA and USDA loans in the secondary market that are fully guaranteed by the U.S. government. These loans have a significantly shorter duration than fixed-rate mortgage loans. Fixed-rate mortgage loans typically have an adverse effect on interest rate sensitivity compared to adjustable-rate loans. Accordingly, the Company has sold more longer-term fixed-rate mortgage loans in the secondary market in recent periods to manage interest rate risk. The Company offers 10-year fixed-rate mortgage loans that it retains in its portfolio. The Company may offer attractive rates for existing certificates of deposit accounts to extend their maturities. The Company also uses shorter-term investment securities and longer-term borrowings from the FHLB to help manage interest rate risk.

The Company has an Asset/Liability Committee to communicate, coordinate and control all aspects involving asset/liability management. The committee establishes and monitors the volume, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.

47

In July 2010, the Company entered into an interest rate swap agreement with a third-party financial institution with a notional amount of $8.0 million, whereby the counterparty will pay a variable-rate equal to three-month LIBOR and the Company will pay a fixed rate of 2.44%. The agreement was effective on December 15, 2010 and terminates on December 15, 2015. This agreement was designated as a cash flow hedge against the trust preferred securities issued by SI Capital Trust II. This effectively fixes the interest rate on the $8.0 million of trust preferred securities at 4.14% for the period of December 15, 2010 through December 15, 2015.

In January 2012, the Company entered into an interest rate swap agreement with a third-party financial institution with a notional amount of $15.0 million, whereby the counterparty will pay a variable rate equal to three-month LIBOR and the Company will pay a fixed rate of 1.26%. The agreement was effective on January 11, 2012 and terminates on January 11, 2017. This agreement was not designated as a hedging instrument.

Quantitative Aspects of Market Risk

The Company analyzes its interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The Company’s goal is to manage asset and liability positions to moderate the effect of interest rate fluctuations on net interest income.

Net Interest Income Simulation Analysis

Interest income simulations are completed quarterly and presented to the Asset/Liability Committee. The simulations provide an estimate of the impact of changes in interest rates on net interest income under a range of assumptions. The numerous assumptions used in the simulation process are reviewed by the Asset/Liability Committee on a quarterly basis. Changes to these assumptions can significantly affect the results of the simulation. The simulation incorporates assumptions regarding the potential timing in the repricing of certain assets and liabilities when market rates change and the changes in spreads between different market rates. The simulation analysis incorporates management’s current assessment of the risk that pricing margins will change adversely over time due to competition or other factors. Simulation analysis is only an estimate of the Company’s interest rate risk exposure at a particular point in time. The Company continually reviews the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.

The table below sets forth an approximation of the Company’s exposure as a percentage of estimated net interest income for the next 12- and 24-month periods using interest income simulation. The simulation uses projected repricing of assets and liabilities at September 30, 2015 on the basis of contractual maturities, anticipated repayments and scheduled rate adjustments. Prepayment rates can have a significant impact on interest income simulation. Because of the large percentage of loans and mortgage-backed securities the Company holds, rising or falling interest rates have a significant impact on the prepayment speeds of the Company’s earning assets that in turn affect the rate sensitivity position. When interest rates rise, prepayments tend to slow. When interest rates fall, prepayments tend to rise. The Company’s asset sensitivity would be reduced if prepayments slow and vice versa. While the Company believes such assumptions to be reasonable, there can be no assurance that assumed prepayment rates will approximate actual future mortgage-backed security and loan repayment activity.

The following table reflects changes in estimated net interest income for the Company at September 30, 2015.

	Percentage Change in Estimated Net Interest Income Over
	12 Months		24 Months
100 basis point decrease in rates	(1.83	)%	(2.26	)%
200 basis point increase in rates	1.31		0.46
300 basis point increase in rates	1.26		(0.65	)

48

As indicated by the results of the above scenarios, net interest income would be adversely affected (within our internal guidelines) if rates decreased 100 basis points in the 12- and 24-month periods or increased 300 basis points in the 24-month period. Conversely, net interest income would be positively affected (within our internal guidelines) in the 12-month period if rates increased 200 or 300 basis points and in the 24-month period if rates increased 200 basis points as a result of the Company's initiative to position the balance sheet for the anticipated increase in market interest rates. The Company’s strategy for mitigating interest rate risk includes the purchase of adjustable-rate investment securities and SBA and USDA loans that will reprice in a rising rate environment, selling longer-term and lower fixed-rate residential mortgage loans in the secondary market, restructuring FHLB advances to current lower market interest rates while extending their duration and utilizing certain derivative instruments such as forward loan sale commitments to manage the risk of loss associated with its mortgage banking activities. Additionally, the interest rate swap agreement used to hedge the interest rate of the Company’s long-term variable-rate debt effectively converts the debt to a fixed-rate of interest, which reflects favorably on net interest income in a rising rate environment.

Item 4.  Controls and Procedures.

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. No changes in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings.

The Company is not involved in any pending legal proceedings believed by management to be material to the Company’s financial condition or results of operations. Periodically, there have been various claims and lawsuits against the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank holds a security interest, claims involving the making and servicing of real property loans and other issues incident to the Bank’s business. Management believes these legal proceedings would not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Item 1A.  Risk Factors.

There are no material changes from the risk factors set forth under Part I, Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which could materially and adversely affect the Company’s business, financial condition or future results.  The risks described in the Company’s Annual Report on Form 10-K are not the only risks that the Company faces.  Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

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

The Company's repurchases of equity securities for the three months ended September 30, 2015 were as follows:

Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
July 1 - 31, 2015	—	$	—	—	—
August 1 - 31, 2015	—	—		—	—
September 1 - 30, 2015	4,590	11.86		—	—
Total	4,590	$	11.86	—

⁽¹⁾ Consists of shares surrendered by employees to satisfy tax withholding requirements upon the vesting of stock awards. These shares were not repurchased as part of a publicly announced plan or program.

Item 3.  Defaults Upon Senior Securities.

None.

Item 4.  Mine Safety Disclosures.

None.

Item 5.  Other Information.

None.

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Item 6.  Exhibits.

3.1	Articles of Incorporation of SI Financial Group, Inc. (1)
3.2	Bylaws of SI Financial Group, Inc. (2)
4	Specimen Stock Certificate of SI Financial Group, Inc. (1)
10.1	*Employment Agreement between Rheo A. Brouillard, SI Financial Group, Inc. and Savings Institute Bank and Trust Company, as amended and restated
10.2	*Change in Control Agreement between Lauren L. Murphy, SI Financial Group, Inc. and Savings Institute Bank and Trust Company, as amended and restated
10.3	*Change in Control Agreement between Laurie L. Gervais, SI Financial Group, Inc. and Savings Institute Bank and Trust Company, as amended and restated
10.4	*Change in Control Agreement between Paul R. Little, SI Financial Group, Inc. and Savings Institute Bank and Trust Company, as amended and restated
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32	18 U.S.C. Section 1350 Certifications
101	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in eXtensible Business Reporting Language (XBRL):  (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Statement of Changes in Shareholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi) related Notes to Consolidated Financial Statements.

*Management contract or compensatory plan or arrangement

⁽¹⁾ Incorporated herein by reference into this document from the Exhibits on the Registration Statement on Form S-1 (File No. 333-169302), and any amendments thereto, filed with the Securities and Exchange Commission on September 10, 2010.

⁽²⁾ Incorporated herein by reference into this document from the Exhibits to the Company’s Current Report on Form 8-K (File No. 000-54241) filed with the Securities and Exchange Commission on November 21, 2014.

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.

		SI FINANCIAL GROUP, INC.
Date:	November 6, 2015	/s/ Rheo A. Brouillard
		Rheo A. Brouillard
		President and Chief Executive Officer
		(principal executive officer)

Date:	November 6, 2015	/s/ Lauren L. Murphy
		Lauren L. Murphy
		Senior Vice President and Chief Financial Officer
		(principal accounting and financial officer)

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EX-10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AGREEMENT (the “Agreement”) by and between SI FINANCIAL GROUP, INC., a Maryland chartered corporation(the “Company”), THE SAVINGS INSTITUTE BANK AND TRUST COMPANY (the “Bank”), and RHEO A. BROUILLARD (the “Executive”), originally effective September 20, 2004 and subsequently amended and restated in its entirety on December 17, 2008 for Section 409A compliance and December 13, 2013 to reflect the Bank’s second step conversion is hereby amended and restated in its entirety effective September 23, 2015 (“Effective Date”).

W I T N E S S E T H

WHEREAS, Executive continues to serve in a position of substantial responsibility;

WHEREAS, the Company and the Bank wish to continue to assure the services of Executive for the period set forth in this Agreement and under the terms and conditions outlined in this Agreement;

WHEREAS, Executive is willing to continue to serve in the employ of the Bank and the Company on a full-time basis for said period.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1.    Employment. Executive is employed as the President and Chief Executive Officer of the Company and the Bank. Executive shall perform all duties and shall have all powers which are commonly incident to the offices of President and Chief Executive Officer of the Company and the Bank or which, consistent with those offices, are delegated to him by the Boards of Directors of the Company and the Bank (the “Boards of Directors”). During the term of this Agreement, Executive also agrees to serve, if elected, as an officer and/or director of any subsidiary of the Company and the Bank and in such capacity will carry out such duties and responsibilities reasonably appropriate to that office.

2.    Location and Facilities. The Executive will be furnished with the working facilities and staff customary for executive officers with the title and duties set forth in Section 1 and as are necessary for him to perform his duties. The location of such facilities and staff shall be at the principal administrative offices of the Company and the Bank, or at such other site or sites customary for such offices.

3.    Term.

a.    The term of this Agreement shall expire on September 23, 2018, unless otherwise extended under Section 3(b) of this Agreement.

b.    Commencing on or before December 31, 2016 and continuing on each December 31^st thereafter (“anniversary date”), the Bank and the Company may extend the Agreement for an

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additional year, unless Executive elects not to extend the term of this Agreement by giving proper written notice in accordance with this Agreement. The Compensation Committee of the Board of Directors will review the Agreement and Executive’s performance annually prior to each anniversary date for purposes of determining whether to extend the term of the Agreement. The rationale and results of the discussions shall be included in the Compensation Committee minutes. The Bank and/or the Company shall give notice to the Executive as soon as possible after each such review as to whether the Agreement is to be extended.

i.Nothing in this Agreement shall mandate or prohibit a continuation of the Executive’s employment following the expiration of the term of this Agreement, upon such terms and conditions as the Bank, the Company and the Executive may mutually agree.

4.    Base Compensation.

a.    The Company and the Bank agree to pay the Executive during the term of this Agreement a base salary at the rate of $426,164per year, payable in accordance with customary payroll practices.

b.    The Compensation Committee of the Board of Directors of the Company (the “Committee”) shall review annually the rate of the Executive’s base salary based upon factors it deems relevant, and may maintain or increase his salary, provided that no such action shall reduce the rate of salary below the rate in effect on the Effective Date.

c.    In the absence of action by the Committee or the Boards of Directors, the Executive shall continue to receive salary at the annual rate specified on the Effective Date or, if another rate has been established under the provisions of this Section 4, the rate last properly established by action of the Board under the provisions of this Section 4. The Executive’s salary, as the same maybe modified from time to time, is referred to in this Agreement as the “Base Salary.”

5.    Bonuses. The Executive shall be eligible to participate in discretionary bonuses or other incentive compensation programs that the Company and the Bank may award from time to time to senior management employees pursuant to bonus plans or otherwise.

6.    Benefit Plans. The Executive shall be entitled to participate in such life insurance, medical, dental, pension, profit sharing, retirement and stock-based compensation plans and other programs and arrangements as may be approved from time to time by the Company and the Bank for the benefit of their employees.

7.    Vacation and Leave.

a.    The Executive shall be entitled to paid vacations and other leave in accordance with policy for senior executives, or otherwise as approved by the Board.

b.    In addition to paid vacations and other leave, the Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment for such additional periods of time and for such valid and legitimate reasons as the Board may in its discretion determine.

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Further, the Board may grant to the Executive a leave or leaves of absence, with or without pay, at such time or times and upon such terms and conditions as the Board in its discretion may determine.

8.    Expense Payments and Reimbursements. The Executive shall be reimbursed for all reasonable out-of-pocket business expenses that he shall incur in connection with his services under this Agreement upon substantiation of such expenses in accordance with applicable policies of the Company and the Bank.

9.Automobile Allowance. During the term of this Agreement, the Executive shall be entitled to an automobile allowance on terms no less favorable that those in effect immediately prior to the execution of this Agreement. Executive shall comply with reasonable reporting and expense limitations on the use of such automobile as may be established by the Company or the Bank from time to time, and the Company or the Bank shall annually include on Executive’s Form W-2 any amount of income attributable to Executive’s personal use of such automobile.

10.    Loyalty and Confidentiality.

a.    During the term of this Agreement Executive: i. shall devote all his time, attention, skill, and efforts to the faithful performance of his duties hereunder; provided, however, that from time to time, Executive may serve on the boards of directors of, and hold any other offices or positions in, companies or organizations which will not present any conflict of interest with the Company and the Bank or any of their subsidiaries or affiliates, unfavorably affect the performance of Executive’s duties pursuant to this Agreement, or violate any applicable statute or regulation and ii. shall not engage in any business or activity contrary to the business affairs or interests of the Company and the Bank.

b.    Nothing contained in this Agreement shall prevent or limit Executive’s right to invest in the capital stock or other securities of any business dissimilar from that of the Company and the Bank, or, solely as a passive, minority investor, in any business.

c.    Executive agrees to maintain the confidentiality of any and all information concerning the operation or financial status of the Company and the Bank; the names or addresses of any of its borrowers, depositors and other customers; any information concerning or obtained from such customers; and any other information concerning the Company and the Bank to which he may be exposed during the course of his employment. The Executive further agrees that, unless required by law or specifically permitted by the Board in writing, he will not disclose to any person or entity, either during or subsequent to his employment, any of the above-mentioned information which is not generally known to the public, nor shall he employ such information in any way other than for the benefit of the Company and the Bank.

11.    Termination and Termination Pay. Subject to Section 12 of this Agreement, Executive’s employment under this Agreement may be terminated in the following circumstances:

a.    Death. Executive’s employment under this Agreement shall terminate upon his death during the term of this Agreement, in which event Executive’s estate shall be entitled to receive the compensation due to the Executive through the last day of the calendar month in which his death occurred.

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b.    Retirement. This Agreement shall be terminated upon Executive’s retirement under the retirement benefit plan or plans in which he participates pursuant to Section 6 of this Agreement or otherwise.

c.    Disability.

i.    The Board or Executive may terminate Executive’s employment after     

having determined Executive has a Disability. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties under this Agreement and that results in Executive becoming eligible for long-term disability benefits under any long-term disability plans of the Company and the Bank (or, if there are no such plans in effect, that impairs Executive’s ability to substantially perform his duties under this Agreement for a period of one hundred eighty (180) consecutive days). The Board shall determine whether or not Executive is and continues to be permanently disabled for purposes of this Agreement in good faith, based upon competent medical advice and other factors that they reasonably believe to be relevant. As a condition to any benefits, the Board may require Executive to submit to such physical or mental evaluations and tests as it deems reasonably appropriate.

ii. In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate. The Bank will pay Executive, as Disability pay, an amount equal to one hundred percent (100%) of Executive’s bi-weekly rate of base salary in effect as of the date of his termination of employment due to Disability. Disability payments will be made on a monthly basis and will commence on the first day of the month following the effective date of Executive’s termination of employment for Disability and end on the earlier of: (A) the date he returns to full-time employment at the Bank in the same capacity as he was employed prior to his termination for Disability; (B) his death; or (C) upon attainment of age 65. Such payments shall be reduced by the amount of any short- or long-term disability benefits payable to the Executive under any other disability programs sponsored by the Company and the Bank. In addition, during any period of Executive’s Disability, Executive and his dependents shall, to the greatest extent possible, continue to be covered under all benefit plans (including, without limitation, retirement plans and medical, dental and life insurance plans) of the Company and the Bank, in which Executive participated prior to his Disability on the same terms as if Executive were actively employed by the Company and the Bank.

d.    Termination for Cause.

i. The Board may, by written notice to the Executive in the form and manner specified in this paragraph, immediately terminate his employment at any

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time, for “Cause”. The Executive shall have no right to receive compensation or other benefits for any period after termination for Cause. Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:

(1) Personal dishonesty;

(2) Incompetence;

(3) Willful misconduct;

(4) Breach of fiduciary duty involving personal profit;

(5) Intentional failure to perform stated duties under this Agreement;

(6) Willful violation of any law, rule or regulation (other than traffic violations or similar offenses) that reflects adversely on the reputation of the Company or the Bank, any felon conviction, any violation of law involving moral turpitude or a final cease-and-desist order; or

(7) Material breach by Executive of any provision of this Agreement.

ii. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Cause by the Company and the Bank unless there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board at a meeting of such Board called and held for the purpose (after reasonable notice to Executive and an opportunity for Executive to be heard before the Board with counsel), of finding that in the good faith opinion of the Board, Executive was guilty of the conduct described above and specifying the particulars thereof.

e.    Voluntary Termination by Executive. In addition to his other rights to terminate under this Agreement, Executive may voluntarily terminate employment during the term of this Agreement upon at least sixty (60) days prior written notice to the Boards, in which case Executive shall receive only his compensation, vested rights and employee benefits up to the date of his termination.

f.    Without Cause or With Good Reason.

i. In addition to termination pursuant to Sections 11a. through 11e. the Boards, may, by written notice to Executive, immediately terminate his employment at any time for a reason other than Cause (a termination “Without Cause”) and Executive may, by written notice to the Board, immediately terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason” as defined below (a termination “With Good Reason”).

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ii. Subject to Section 12 of this Agreement, in the event of termination under this Section 11f., Executive shall be entitled to receive his base salary for the remaining term of the Agreement paid in one lump sum within ten (10) calendar days of such termination. Also, in such event, Executive shall, for the remaining term of the Agreement, receive the benefits he would have received during the remaining term of the Agreement under any retirement programs (whether tax-qualified or non-qualified) in which Executive participated prior to his termination (with the amount of the benefits determined by reference to the benefits received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding his termination) and continue to participate in any benefit plans of the Company or the Bank that provide health (including medical and dental), life or disability insurance, or similar coverage upon terms no less favorable than the most favorable terms provided to senior executives of the Company and the Bank during such period. In the event that the Company and the Bank are unable to provide such coverage by reason of Executive no longer being an employee, the Company and the Bank shall provide Executive with comparable coverage on an individual policy basis.

iii. For purposes of this Agreement a termination With Good Reason shall occur if the conditions stated in both clauses (x) and (y) of this Section 11(f) are satisfied:

(x)    a voluntary termination by the Executive shall be considered a termination With Good Reason if any of the following occur without the Executive’s written consent, and the term Good Reason shall mean the occurrence of any of the following without the Executive’s written consent:

(1)    a material diminution of the Executive’s Base Salary (unless the reduction is part of a company-wide or executive-level restructuring of compensation),

(2)    a material diminution of the Executive’s authority, duties, or responsibilities, or

(3)    a change in the geographic location at which the Executive must perform services for the Company by more than 25 miles from such location at the effective date.

(y)    the Executive must give notice to the Company or the Bank of the existence of one or more of the conditions described in clause (x) within sixty (60) days after the initial existence of the condition, and the Company or the Bank shall have thirty (30) days thereafter to remedy the condition. In addition, the Executive’s voluntary termination With Good Reason must occur within ninety (90) days after the initial existence of one or more of the conditions set forth in (x)(1) – (x)(3) above.

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g.    Continuing Covenant Not to Compete or Interfere with Relationships. Regardless of anything herein to the contrary, following a termination by the Company and the Bank or Executive pursuant to Section 11f of this Agreement:

i. Executive’s obligations under Section 10c. of this Agreement will continue in effect; and

ii. During the period ending on the first anniversary of such termination, the Executive shall not serve as an officer, director or employee of any bank holding company, bank, savings bank, savings and loan holding company, or mortgage company (any of which, a “Financial Institution”) which Financial Institution offers products or services competing with those offered by the Bank from any office within fifty (50) miles from the main office or any branch of the Bank and shall not interfere with the relationship of the Company and the Bank and any of its employees, agents, or representatives.

12.    Termination in Connection with a Change in Control.

a.    For purposes of this Agreement, a Change in Control means any of the following events:

i. Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

ii. Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

iii. Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause iii., each director who is first elected by the board (or

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first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

iv. Sale of Assets: The Company sells to a third party all or substantially all of its assets.

b.    Termination. If within the period ending two (2) years after a Change in Control, (i) the Company and the Bank shall terminate the Executive’s employment Without Cause, or (ii) Executive voluntarily terminates his employment With Good Reason, the Company and the Bank shall, within ten calendar days of the termination of Executive’s employment, make a lump-sum cash payment to him equal to 2.99 times the Executive’s average Annual Compensation over the five (5) most recently completed calendar years ending with the year immediately preceding the effective date of the Change in Control. In determining Executive’s average Annual Compensation, Annual Compensation shall include base salary and any other taxable income, including but not limited to amounts related to the granting, vesting or exercise of restricted stock or stock option awards, commissions, bonuses (whether paid or accrued for the applicable period), as well as, retirement benefits, director or committee fees and fringe benefits paid or to be paid to Executive or paid for Executive’s benefit during any such year, profit sharing, employee stock ownership plan and other retirement contributions or benefits, including to any tax-qualified plan or arrangement (whether or not taxable) made or accrued on behalf of Executive of such year. The cash payment made under this Section 12b. shall be made in lieu of any payment also required under Section 11f. of this Agreement because of a termination in such period. Executive’s rights under Section 11f. of this Agreement are not otherwise affected by this Section 12. Also, in such event, the Executive shall, for a thirty-six (36) month period following his termination of employment, receive the benefits he would have received over such period under any retirement programs (whether tax-qualified or nonqualified) in which the Executive participated prior to his termination (with the amount of the benefits determined by reference to the benefits received by the Executive or accrued on his behalf under such programs during the twelve (12) months preceding the Change in Control) and continue to participate in any benefit plans of the Company and the Bank that provide health (including medical and dental), life or disability insurance, or similar coverage upon terms no less favorable than the most favorable terms provided to senior executives of during such period. In the event that the Company and the Bank are unable to provide such coverage by reason of the Executive no longer being an employee, the Company and the Bank shall provide the Executive with comparable coverage on an individual policy.

c.    The provisions of Section 12 and Sections 14 through 27, including the defined terms used is such sections, shall continue in effect until the later of the expiration of this Agreement or two (2) years following a Change in Control.

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13.    Indemnification and Liability Insurance.

a.    Indemnification. The Company and the Bank agree to indemnify the Executive (and his heirs, executors, and administrators), and to advance expenses related thereto, to the fullest extent permitted under applicable law and regulations against any and all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit, or proceeding in which he may be involved by reason of his having been a director or Executive of the Company, the Bank or any of their subsidiaries (whether or not he continues to be a director or Executive at the time of incurring any such expenses or liabilities) such expenses and liabilities to include, but not be limited to, judgments, court costs, and attorney’s fees and the cost of reasonable settlements, such settlements to be approved by the Board, if such action is brought against the Executive in his capacity as an Executive or director of the Company and the Bank or any of their subsidiaries. Indemnification for expense shall not extend to matters for which the Executive has been terminated for Cause. Nothing contained herein shall be deemed to provide indemnification prohibited by applicable law or regulation. Notwithstanding anything herein to the contrary, the obligations of this Section 13 shall survive the term of this Agreement by a period of six (6) years.

b.    Insurance. During the period in which indemnification of the Executive is required under this Section, the Company and the Bank shall provide the Executive (and his heirs, executors, and administrators) with coverage under a directors’ and Executives’ liability policy at the expense of the Company and the Bank, at least equivalent to such coverage provided to directors and senior Executives of the Company and the Bank.

14.    Reimbursement of Executive’s Expenses to Enforce this Agreement. The Company and the Bank shall reimburse the Executive for all out-of-pocket expenses, including, without limitation, reasonable attorney’s fees, incurred by the Executive in connection with successful enforcement by the Executive of the obligations of the Company and the Bank to the Executive under this Agreement. Successful enforcement shall mean the grant of an award of money or the requirement that the Company and the Bank take some action specified by this Agreement: i. as a result of court order; or ii. otherwise by the Company and the Bank following an initial failure of the Company and the Bank to pay such money or take such action promptly after written demand therefor from the Executive stating the reason that such money or action was due under this Agreement at or prior to the time of such demand.

15.    Potential Limitation of Benefits Under Certain Circumstances. Notwithstanding any other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be made or afforded to the Executive under this Agreement or otherwise, which are deemed to be parachute payments as defined in Section 280G of the Code, or any successor thereof (the “Termination Benefits”), would be deemed to include an “excess parachute payment” under Section 280G of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the Non-Triggering Amount less the product of the marginal rate of any applicable state and federal income tax and the Non-Triggering Amount would be greater than the aggregate value of the Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by the Executive thereon by Section 4999 of the Code and further minus (2) the product of the Termination Benefits and the marginal rate of any applicable state and federal income tax, then the

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Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction required hereby among the Termination Benefits shall be first deducted from the cash payment due under Section 11 of this Agreement.  Notwithstanding the foregoing, if required by regulation, the Company and the Bank shall not pay the Executive severance benefits under this Agreement in excess of three (3) times his average annual compensation (or, if required, such other amount that may be permitted by the Office of the Comptroller of the Currency pursuant to regulation or regulatory guidance). The Company’s independent public accountants will determine the value of any reduction in the payments and benefits; the Company will pay for the accountants’ opinion. If the Company, Bank and/or the Executive do not agree with the accountants’ opinion, the Company will pay to the Executive the maximum amount of payments and benefits pursuant to this Agreement or otherwise, as selected by Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible and subject to the excise tax imposed under Section 4999 of the Code. The Company may also request, and the Executive has the right to demand that, a ruling from the IRS as to whether the disputed payments and benefits have such tax consequences. The Company or the Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the Company or the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Company, Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(1)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 15 hereof, or a reduction in the payments and benefits specified, below zero.

16.    Injunctive Relief. If there is a breach or threatened breach of Section 11g. of this Agreement or the prohibitions upon disclosure contained in Section 10c. of this Agreement, the parties agree that there is no adequate remedy at law for such breach, and that the Company and the Bank shall be entitled to injunctive relief restraining the Executive from such breach or threatened breach, but such relief shall not be the exclusive remedy hereunder for such breach. The parties hereto likewise agree that the Executive, without limitation, shall be entitled to injunctive relief to enforce the obligations of the Company and the Bank under this Agreement.

17.Successors and Assigns.

a.    This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Company and the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets or stock of the Company and the Bank.

b.    Since the Company and the Bank are contracting for the unique and personal skills of Executive, Executive shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Company and the Bank.

18.    No Mitigation. Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment

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shall be offset or reduced by the amount of any compensation or benefits provided to Executive in any subsequent employment.

19.    Notices. All notices, requests, demands and other communications in connection with this Agreement shall be made in writing and shall be deemed to have been given when delivered by hand or 48 hours after mailing at any general or branch United States Post Office, by registered or certified mail, postage prepaid, addressed to the Company and/or the Bank at their principal business offices and to Executive at his home address as maintained in the records of the Company and the Bank.

20.    No Plan Created by this Agreement. Executive, the Company and the Bank expressly declare and agree that this Agreement was negotiated among them and that no provision or provisions of this Agreement are intended to, or shall be deemed to, create any plan for purposes of the Employee Retirement Income Security Act or any other law or regulation, and each party expressly waives any right to assert the contrary. Any assertion in any judicial or administrative filing, hearing, or process that such a plan was so created by this Agreement shall be deemed a material breach of this Agreement by the party making such an assertion.

21.    Amendments. No amendments or additions to this Agreement shall be binding unless made in writing and signed by all of the parties, except as herein otherwise specifically provided.

22.    Applicable Law. Except to the extent preempted by Federal law, the laws of the State of Connecticut shall govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise.

23.    Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

24.    Headings. Headings contained herein are for convenience of reference only.

25.    Entire Agreement. This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement among the parties hereto with respect to the subject matter hereof, other than written agreements with respect to specific plans, programs or arrangements described in Sections 5 and 6.

26.    Required Provisions.

In the event any of the provisions of this Section 26 are in conflict with the other terms of this Agreement, this Section 26 shall prevail.

a.    The Bank’s board of directors may terminate Executive’s employment at any time, but any termination by the Bank, other than termination for Just Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.

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b.    If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

c.    If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

d.    If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

e.    All obligations under this contract shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of the Bank (i) by the director of the Office of the Comptroller of the Currency (the “OCC”) or her or her designee (the “Director”), at the time the OCC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director, at the time the Director approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of Executive that have already vested, however, shall not be affected by such action.

f.    Any payments made to employees pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

27.     Section 409A of the Code.

a.    This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by

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December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with b. below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

b.    If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 11f. ii of this Agreement or 12b. of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank or the Company will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 11f. ii. or 12b. of this Agreement to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

c.    If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 11f.ii. or 12b. of this Agreement it is not possible to continue coverage for Executive and his dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 11f.ii. or 12b. of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank or the Company shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit (and associated income tax gross-up benefit, if applicable) had Executive’s employment not terminated, assuming continued coverage for 36 months. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 27b. of this Agreement applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

d.    References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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IN WITNESS WHEREOF, the parties hereto have executed this amended and restated Agreement on September 23, 2015.

Attest:                            SI FINANCIAL GROUP, INC.

/s/ Michael Garvey                     By:/s/ Mark Alliod    

Attest:                            SAVINGS INSTITUTE BANK

AND TRUST COMPANY

/s/ Michael Garvey                    By:    /s/ Mark Alliod            

Witness:                        EXECUTIVE

/s/ Jennifer Saladin            /s/ Jennifer Saladin                

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EX-10.2

SAVINGS INSTITUTE BANK AND TRUST COMPANY

CHANGE IN CONTROL AGREEMENT, AS AMENDED AND RESTATED

THIS AGREEMENT (the “Agreement”) by and between THE SAVINGS INSTITUTE BANK AND TRUST COMPANY with its principal offices at 803 Main Street, Willimantic, Connecticut 06226 (the “Bank”), LAUREN L. MURPHY (the “Executive”) and SI FINANCIAL GROUP, INC., a Maryland corporation and the holding company of the Bank, as guarantor, originally entered into as of September 21, 2011, amended and restated effective December 18, 2013, is hereby amended and restated in its entirety effective September 23, 2015.

WHEREAS, the Bank continues to recognize the importance of Executive to the Bank’s operations and wishes to protect her position with the Bank in the event of a change in control of the Bank or the Company for the period provided for in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

1. Term of Agreement.

(a)    The term of this Agreement shall expire on September 23, 2018, unless otherwise extended as noted under Section 1(b) of this Agreement.

(b) Commencing on or before December 31, 2016 and continuing on each December 31^st thereafter (“anniversary date”), the Bank may extend the Agreement for an additional year, unless Executive elects not to extend the term of this Agreement by giving proper written notice in accordance with this Agreement. The Compensation Committee of the Board of Directors will review the Agreement and Executive’s performance annually prior to each anniversary date for purposes of determining whether to extend the term of the Agreement. The rationale and results of the discussions shall be included in the Compensation Committee minutes. The Bank shall give notice to the Executive as soon as possible after each such review as to whether the Agreement is to be extended.

(c)    Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Bank terminates Executive’s employment prior to a Change in Control.

2. Change in Control.

(a)    Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the termination of Executive’s employment in accordance with the terms of this Agreement, other than for Just Cause, as defined in Section 2(c) of this Agreement, the provisions of Section 3 of this Agreement shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his

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employment at any time during the term of this Agreement following an event constituting “Good Reason.”

“Good Reason” means, unless Executive has consented in writing thereto, the occurrence following a Change in Control, of any of the following:

(1)    a material diminution of the Executive’s base salary (unless the reduction is part of a company-wide or executive-level restructuring of compensation),

(2)    a material diminution of the Executive’s authority, duties, or responsibilities, or

(3)    a change in the geographic location at which the Executive must perform services for the Bank by more than 25 miles from such location at the effective date.

the Executive must give notice to the Bank of the existence of one or more of the conditions noted above within sixty (60) days after the initial existence of the condition, and the Bank shall have thirty (30) days thereafter to remedy the condition. In addition, the Executive’s voluntary termination with Good Reason must occur within ninety (90) days after the initial existence of one or more of the conditions set forth in (1) – (3) above.

(b)    For purposes of this Agreement, a “Change in Control” shall be deemed to occur on the earliest of any of the following events:

(i)    Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

(ii)    Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(iii)    Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause

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(iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(iv)    Sale of Assets: The Company sells to a third party all or substantially all of its assets.

(c)    Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon termination for Just Cause. The term “Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order, or any material breach of any provision of this Agreement. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Just Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Executive was guilty of conduct justifying termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 4 hereof through the Date of Termination, stock options granted to Executive under any stock option plan shall not be exercisable nor shall any unvested stock awards granted to Executive under any stock benefit plan of the Bank, the Company or any subsidiary or affiliate thereof, vest. At the Date of Termination, such stock options and any such unvested stock awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such termination for Just Cause.

3.Termination Benefits.

(a)    If Executive’s employment is voluntarily (in accordance with Section 2(a) of this Agreement) or involuntarily terminated within two (2) years of a Change in Control, Executive shall receive:

(i) a lump sum cash payment equal to three (3) times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Such payment shall be made not later than five (5) days following Executive’s termination of employment under this Section 3.

(ii) Continued benefit coverage under all Bank health and welfare plans which Executive participated in as of the date of the Change in Control (collectively, the “Employee Benefit Plans”) for a period of thirty-six (36) months

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following Executive’s termination of employment. Said coverage shall be provided under the same terms and conditions in effect on the date of Executive’s termination of employment. Solely for purposes of benefits continuation under the Employee Benefit Plans, Executive shall be deemed to be an active employee. To the extent that benefits required under this Section 3(a) cannot be provided under the terms of any Employee Benefit Plan, the Bank shall enter into alternative arrangements that will provide Executive with comparable benefits.

(b)    Notwithstanding any other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be made or afforded to the Executive under this Agreement or otherwise, which are deemed to be parachute payments as defined in Section 280G of the Code, or any successor thereof (the “Termination Benefits”), would be deemed to include an “excess parachute payment” under Section 280G of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the Non-Triggering Amount less the product of the marginal rate of any applicable state and federal income tax and the Non-Triggering Amount would be greater than the aggregate value of the Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by the Executive thereon by Section 4999 of the Code and further minus (2) the product of the Termination Benefits and the marginal rate of any applicable state and federal income tax, then the Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction required hereby among the Termination Benefits shall be first deducted from the cash payment due under Section 3(a) of this Agreement.  Notwithstanding the foregoing, if required by regulation, the Bank shall not pay the Executive severance benefits under this Agreement in excess of three (3) times his average annual compensation (or, if required, such other amount that may be permitted by the Office of the Comptroller of the Currency pursuant to regulation or regulatory guidance). The Company’s independent public accountants will determine the value of any reduction in the payments and benefits; the Company will pay for the accountants’ opinion. If the Bank and/or the Executive do not agree with the accountants’ opinion, the Bank will pay to the Executive the maximum amount of payments and benefits pursuant to this Agreement or otherwise, as selected by Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible and subject to the excise tax imposed under Section 4999 of the Code. The Bank may also request, and the Executive has the right to demand that, a ruling from the IRS as to whether the disputed payments and benefits have such tax consequences. The Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(1)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 3(b) hereof, or a reduction in the payments and benefits specified, below zero.

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.

4.Notice of Termination.

(a)    Any purported termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b)“Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Just Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given).

5.Source of Payments.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

6.    Effect on Prior Agreements and Existing Benefit Plans.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.

7.No Attachment.

(a)    Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

(b)    This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank and their respective successors and assigns.

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8.    Modification and Waiver.

(a)    This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b)    No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

9.Severability.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

10. Headings for Reference Only.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. In addition, references herein to the masculine shall apply to both the masculine and the feminine.

11. Governing Law.

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Connecticut, without regard to principles of conflicts of law of that State.

12. Arbitration.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Bank then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

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13. Payment of Legal Fees.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful pursuant to a legal judgment, arbitration or settlement.

14.    Indemnification.

The Company or the Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company or the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys’ fees and the cost of reasonable settlements.

15.Successors to the Bank and the Company.

The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank’s and the Company’s obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place.

16.Required Provisions.

In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

a.    The Board of Directors may terminate Executive’s employment at any time, but any termination by the Bank, other than termination for Just Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.

b.    If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

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c.    If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

d.    If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

e.    All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of the Bank (i) by the director of the Office of the Comptroller of the Currency (the “OCC”) or her or her designee (the “Director”), at the time the OCC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director, at the time the Director approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of Executive that have already vested, however, shall not be affected by such action.

f.    Any payments made to employees pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

17.     Section 409A of the Code.

a.    This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with subparagraph (b) of this Agreement below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

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b.    If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 3(a)(i) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank or the Company will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 3(a)(i) of this Agreement to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

c.    If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 3(a)(ii) of this Agreement it is not possible to continue coverage for Executive and her dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 3(a)(ii) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank or the Company shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit had Executive’s employment not terminated. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 17(b) of this Agreement applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

d.    References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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SIGNATURES

IN WITNESS WHEREOF, Savings Institute Bank and Trust Company and SI Financial Group, Inc. have caused this amended and restated Agreement to be executed by their duly authorized officers, and Executive has signed this Agreement, on September ____, 2015

ATTEST: SAVINGS INSTITUTE BANK AND TRUST COMPANY

/s/ Michael Garvey___________ By:    _/s/ Mark Alliod_________________

ATTEST:                        SI FINANCIAL GROUP, INC.

(Guarantor)

/s/ Michael Garvey_____________ By:    _/s/ Mark Alliod________________

WITNESS:                        EXECUTIVE

__________________    /s/ Lauren L. Murphy    __________    

Lauren L. Murphy

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EX-10.3

SAVINGS INSTITUTE BANK AND TRUST COMPANY

CHANGE IN CONTROL AGREEMENT, AS AMENDED AND RESTATED

THIS AGREEMENT (the “Agreement”) by and between THE SAVINGS INSTITUTE BANK AND TRUST COMPANY with its principal offices at 803 Main Street, Willimantic, Connecticut 06226 (the “Bank”), LAURIE L. GERVAIS (the “Executive”) and SI FINANCIAL GROUP, INC., a Maryland corporation and the holding company of the Bank, as guarantor, originally entered into as of September 20, 2004, amended and restated effective December 18, 2013, is hereby amended and restated in its entirety effective September 23, 2015.

WHEREAS, the Bank continues to recognize the importance of Executive to the Bank’s operations and wishes to protect her position with the Bank in the event of a change in control of the Bank or the Company for the period provided for in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

1. Term of Agreement.

(a)    The term of this Agreement shall expire on September 23, 2018, unless otherwise extended as noted under Section 1(b) of this Agreement.

(b) Commencing on or before December 31, 2016 and continuing on each December 31^st thereafter (“anniversary date”), the Bank may extend the Agreement for an additional year, unless Executive elects not to extend the term of this Agreement by giving proper written notice in accordance with this Agreement. The Compensation Committee of the Board of Directors will review the Agreement and Executive’s performance annually prior to each anniversary date for purposes of determining whether to extend the term of the Agreement. The rationale and results of the discussions shall be included in the Compensation Committee minutes. The Bank shall give notice to the Executive as soon as possible after each such review as to whether the Agreement is to be extended.

(c)    Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Bank terminates Executive’s employment prior to a Change in Control.

2. Change in Control.

(a)    Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the termination of Executive’s employment in accordance with the terms of this Agreement, other than for Just Cause, as defined in Section 2(c) of this Agreement, the provisions of Section 3 of this Agreement shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his

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employment at any time during the term of this Agreement following an event constituting “Good Reason.”

“Good Reason” means, unless Executive has consented in writing thereto, the occurrence following a Change in Control, of any of the following:

(1)    a material diminution of the Executive’s base salary (unless the reduction is part of a company-wide or executive-level restructuring of compensation),

(2)    a material diminution of the Executive’s authority, duties, or responsibilities, or

(3)    a change in the geographic location at which the Executive must perform services for the Bank by more than 25 miles from such location at the effective date.

the Executive must give notice to the Bank of the existence of one or more of the conditions noted above within sixty (60) days after the initial existence of the condition, and the Bank shall have thirty (30) days thereafter to remedy the condition. In addition, the Executive’s voluntary termination with Good Reason must occur within ninety (90) days after the initial existence of one or more of the conditions set forth in (1) – (3) above.

(b)    For purposes of this Agreement, a “Change in Control” shall be deemed to occur on the earliest of any of the following events:

(i)    Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

(ii)    Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(iii)    Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause

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(iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(iv)    Sale of Assets: The Company sells to a third party all or substantially all of its assets.

(c)    Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon termination for Just Cause. The term “Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order, or any material breach of any provision of this Agreement. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Just Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Executive was guilty of conduct justifying termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 4 hereof through the Date of Termination, stock options granted to Executive under any stock option plan shall not be exercisable nor shall any unvested stock awards granted to Executive under any stock benefit plan of the Bank, the Company or any subsidiary or affiliate thereof, vest. At the Date of Termination, such stock options and any such unvested stock awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such termination for Just Cause.

3.Termination Benefits.

(a)    If Executive’s employment is voluntarily (in accordance with Section 2(a) of this Agreement) or involuntarily terminated within two (2) years of a Change in Control, Executive shall receive:

(i) a lump sum cash payment equal to three (3) times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Such payment shall be made not later than five (5) days following Executive’s termination of employment under this Section 3.

(ii) Continued benefit coverage under all Bank health and welfare plans which Executive participated in as of the date of the Change in Control (collectively, the “Employee Benefit Plans”) for a period of thirty-six (36) months

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following Executive’s termination of employment. Said coverage shall be provided under the same terms and conditions in effect on the date of Executive’s termination of employment. Solely for purposes of benefits continuation under the Employee Benefit Plans, Executive shall be deemed to be an active employee. To the extent that benefits required under this Section 3(a) cannot be provided under the terms of any Employee Benefit Plan, the Bank shall enter into alternative arrangements that will provide Executive with comparable benefits.

(b)    Notwithstanding any other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be made or afforded to the Executive under this Agreement or otherwise, which are deemed to be parachute payments as defined in Section 280G of the Code, or any successor thereof (the “Termination Benefits”), would be deemed to include an “excess parachute payment” under Section 280G of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the Non-Triggering Amount less the product of the marginal rate of any applicable state and federal income tax and the Non-Triggering Amount would be greater than the aggregate value of the Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by the Executive thereon by Section 4999 of the Code and further minus (2) the product of the Termination Benefits and the marginal rate of any applicable state and federal income tax, then the Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction required hereby among the Termination Benefits shall be first deducted from the cash payment due under Section 3(a) of this Agreement.  Notwithstanding the foregoing, if required by regulation, the Bank shall not pay the Executive severance benefits under this Agreement in excess of three (3) times his average annual compensation (or, if required, such other amount that may be permitted by the Office of the Comptroller of the Currency pursuant to regulation or regulatory guidance). The Company’s independent public accountants will determine the value of any reduction in the payments and benefits; the Company will pay for the accountants’ opinion. If the Bank and/or the Executive do not agree with the accountants’ opinion, the Bank will pay to the Executive the maximum amount of payments and benefits pursuant to this Agreement or otherwise, as selected by Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible and subject to the excise tax imposed under Section 4999 of the Code. The Bank may also request, and the Executive has the right to demand that, a ruling from the IRS as to whether the disputed payments and benefits have such tax consequences. The Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(1)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 3(b) hereof, or a reduction in the payments and benefits specified, below zero.

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4.Notice of Termination.

(a)    Any purported termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b)“Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Just Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given).

5.Source of Payments.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

6.    Effect on Prior Agreements and Existing Benefit Plans.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.

7.No Attachment.

(a)    Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

(b)    This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank and their respective successors and assigns.

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8.    Modification and Waiver.

(a)    This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b)    No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

9.Severability.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

10. Headings for Reference Only.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. In addition, references herein to the masculine shall apply to both the masculine and the feminine.

11. Governing Law.

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Connecticut, without regard to principles of conflicts of law of that State.

12. Arbitration.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Bank then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

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13. Payment of Legal Fees.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful pursuant to a legal judgment, arbitration or settlement.

14.    Indemnification.

The Company or the Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company or the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys’ fees and the cost of reasonable settlements.

15.Successors to the Bank and the Company.

The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank’s and the Company’s obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place.

16.Required Provisions.

In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

a.    The Board of Directors may terminate Executive’s employment at any time, but any termination by the Bank, other than termination for Just Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.

b.    If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

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c.    If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

d.    If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

e.    All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of the Bank (i) by the director of the Office of the Comptroller of the Currency (the “OCC”) or her or her designee (the “Director”), at the time the OCC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director, at the time the Director approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of Executive that have already vested, however, shall not be affected by such action.

f.    Any payments made to employees pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

17.     Section 409A of the Code.

a.    This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with subparagraph (b) of this Agreement below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

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b.    If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 3(a)(i) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank or the Company will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 3(a)(i) of this Agreement to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

c.    If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 3(a)(ii) of this Agreement it is not possible to continue coverage for Executive and her dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 3(a)(ii) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank or the Company shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit had Executive’s employment not terminated. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 17(b) of this Agreement applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

d.    References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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SIGNATURES

IN WITNESS WHEREOF, Savings Institute Bank and Trust Company and SI Financial Group, Inc. have caused this amended and restated Agreement to be executed by their duly authorized officers, and Executive has signed this Agreement, on September 23, 2015

ATTEST: SAVINGS INSTITUTE BANK AND TRUST COMPANY

/s/ Michael Garvey___________ By:    _/s/ Mark Alliod_________________

ATTEST:                        SI FINANCIAL GROUP, INC.

(Guarantor)

/s/ Michael Garvey___________ By:    /s/ Mark Alliod_________________

WITNESS:                        EXECUTIVE

____________        /s/ Laurie L. Gervais    ___

Laurie L. Gervais

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EX-10.4

SAVINGS INSTITUTE BANK AND TRUST COMPANY

CHANGE IN CONTROL AGREEMENT, AS AMENDED AND RESTATED

THIS AGREEMENT (the “Agreement”) by and between THE SAVINGS INSTITUTE BANK AND TRUST COMPANY with its principal offices at 803 Main Street, Willimantic, Connecticut 06226 (the “Bank”), PAUL R. LITTLE (the “Executive”) and SI FINANCIAL GROUP, INC., a Maryland corporation and the holding company of the Bank, as guarantor, originally entered into as of September 21, 2011, amended and restated effective December 18, 2013, is hereby amended and restated in its entirety effective September 23, 2015.

WHEREAS, the Bank continues to recognize the importance of Executive to the Bank’s operations and wishes to protect his position with the Bank in the event of a change in control of the Bank or the Company for the period provided for in this Agreement.

NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is hereby agreed as follows:

1. Term of Agreement.

(a)    The term of this Agreement shall expire on September 23, 2018, unless otherwise extended as noted under Section 1(b) of this Agreement.

(b) Commencing on or before December 31, 2016 and continuing on each December 31^st thereafter (“anniversary date”), the Bank may extend the Agreement for an additional year, unless Executive elects not to extend the term of this Agreement by giving proper written notice in accordance with this Agreement. The Compensation Committee of the Board of Directors will review the Agreement and Executive’s performance annually prior to each anniversary date for purposes of determining whether to extend the term of the Agreement. The rationale and results of the discussions shall be included in the Compensation Committee minutes. The Bank shall give notice to the Executive as soon as possible after each such review as to whether the Agreement is to be extended.

(c)    Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Bank terminates Executive’s employment prior to a Change in Control.

2. Change in Control.

(a)    Upon the occurrence of a Change in Control of the Bank or the Company followed at any time during the term of this Agreement by the termination of Executive’s employment in accordance with the terms of this Agreement, other than for Just Cause, as defined in Section 2(c) of this Agreement, the provisions of Section 3 of this Agreement shall apply. Upon the occurrence of a Change in Control, Executive shall have the right to elect to voluntarily terminate his

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employment at any time during the term of this Agreement following an event constituting “Good Reason.”

“Good Reason” means, unless Executive has consented in writing thereto, the occurrence following a Change in Control, of any of the following:

(1)    a material diminution of the Executive’s base salary (unless the reduction is part of a company-wide or executive-level restructuring of compensation),

(2)    a material diminution of the Executive’s authority, duties, or responsibilities, or

(3)    a change in the geographic location at which the Executive must perform services for the Bank by more than 25 miles from such location at the effective date.

the Executive must give notice to the Bank of the existence of one or more of the conditions noted above within sixty (60) days after the initial existence of the condition, and the Bank shall have thirty (30) days thereafter to remedy the condition. In addition, the Executive’s voluntary termination with Good Reason must occur within ninety (90) days after the initial existence of one or more of the conditions set forth in (1) – (3) above.

(b)    For purposes of this Agreement, a “Change in Control” shall be deemed to occur on the earliest of any of the following events:

(i)    Merger: The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation.

(ii)    Acquisition of Significant Share Ownership: There is filed or required to be filed a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s voting securities, but this clause (b) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities.

(iii)    Change in Board Composition: During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause

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(iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(iv)    Sale of Assets: The Company sells to a third party all or substantially all of its assets.

(c)    Executive shall not have the right to receive termination benefits pursuant to Section 3 hereof upon termination for Just Cause. The term “Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order, or any material breach of any provision of this Agreement. Notwithstanding the foregoing, Executive shall not be deemed to have been terminated for Just Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors at a meeting of the Board of Directors called and held for that purpose (after reasonable notice to Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors), finding that in the good faith opinion of the Board of Directors, Executive was guilty of conduct justifying termination for Just Cause and specifying the particulars thereof in detail. Executive shall not have the right to receive compensation or other benefits for any period after termination for Just Cause. During the period beginning on the date of the Notice of Termination for Just Cause pursuant to Section 4 hereof through the Date of Termination, stock options granted to Executive under any stock option plan shall not be exercisable nor shall any unvested stock awards granted to Executive under any stock benefit plan of the Bank, the Company or any subsidiary or affiliate thereof, vest. At the Date of Termination, such stock options and any such unvested stock awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such termination for Just Cause.

3.Termination Benefits.

(a)    If Executive’s employment is voluntarily (in accordance with Section 2(a) of this Agreement) or involuntarily terminated within two (2) years of a Change in Control, Executive shall receive:

(i) a lump sum cash payment equal to three (3) times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). Such payment shall be made not later than five (5) days following Executive’s termination of employment under this Section 3.

(ii) Continued benefit coverage under all Bank health and welfare plans which Executive participated in as of the date of the Change in Control (collectively, the “Employee Benefit Plans”) for a period of thirty-six (36) months

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following Executive’s termination of employment. Said coverage shall be provided under the same terms and conditions in effect on the date of Executive’s termination of employment. Solely for purposes of benefits continuation under the Employee Benefit Plans, Executive shall be deemed to be an active employee. To the extent that benefits required under this Section 3(a) cannot be provided under the terms of any Employee Benefit Plan, the Bank shall enter into alternative arrangements that will provide Executive with comparable benefits.

(b)    Notwithstanding any other provisions of this Agreement, in the event that (x) the aggregate payments or benefits to be made or afforded to the Executive under this Agreement or otherwise, which are deemed to be parachute payments as defined in Section 280G of the Code, or any successor thereof (the “Termination Benefits”), would be deemed to include an “excess parachute payment” under Section 280G of the Code; and (y) if such Termination Benefits were reduced to an amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00) less than an amount equal to three (3) times the Executive’s “base amount,” as determined in accordance with Section 280G of the Code and the Non-Triggering Amount less the product of the marginal rate of any applicable state and federal income tax and the Non-Triggering Amount would be greater than the aggregate value of the Termination Benefits (without such reduction) minus (1) the amount of tax required to be paid by the Executive thereon by Section 4999 of the Code and further minus (2) the product of the Termination Benefits and the marginal rate of any applicable state and federal income tax, then the Termination Benefits shall be reduced to the Non-Triggering Amount. The allocation of the reduction required hereby among the Termination Benefits shall be first deducted from the cash payment due under Section 3(a) of this Agreement.  Notwithstanding the foregoing, if required by regulation, the Bank shall not pay the Executive severance benefits under this Agreement in excess of three (3) times his average annual compensation (or, if required, such other amount that may be permitted by the Office of the Comptroller of the Currency pursuant to regulation or regulatory guidance). The Company’s independent public accountants will determine the value of any reduction in the payments and benefits; the Company will pay for the accountants’ opinion. If the Bank and/or the Executive do not agree with the accountants’ opinion, the Bank will pay to the Executive the maximum amount of payments and benefits pursuant to this Agreement or otherwise, as selected by Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible and subject to the excise tax imposed under Section 4999 of the Code. The Bank may also request, and the Executive has the right to demand that, a ruling from the IRS as to whether the disputed payments and benefits have such tax consequences. The Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(1)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 3(b) hereof, or a reduction in the payments and benefits specified, below zero.

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4.Notice of Termination.

(a)    Any purported termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.

(b)“Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Just Cause, shall not be less than thirty (30) days from the date such Notice of Termination is given).

5.Source of Payments.

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank. The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company.

6.    Effect on Prior Agreements and Existing Benefit Plans.

This Agreement contains the entire understanding between the parties hereto and supersedes any prior agreement between the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. Nothing in this Agreement shall confer upon Executive the right to continue in the employ of the Bank or shall impose on the Bank any obligation to employ or retain Executive in its employ for any period.

7.No Attachment.

(a)    Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation or to execution, attachment, levy or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void and of no effect.

(b)    This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank and their respective successors and assigns.

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8.    Modification and Waiver.

(a)    This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(b)    No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

9.Severability.

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

10. Headings for Reference Only.

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. In addition, references herein to the masculine shall apply to both the masculine and the feminine.

11. Governing Law.

Except to the extent preempted by federal law, the validity, interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of Connecticut, without regard to principles of conflicts of law of that State.

12. Arbitration.

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators sitting in a location selected by Executive within fifty (50) miles from the location of the Bank, in accordance with the rules of the American Arbitration Bank then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

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13. Payment of Legal Fees.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if Executive is successful pursuant to a legal judgment, arbitration or settlement.

14.    Indemnification.

The Company or the Bank shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense and shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under applicable law against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Company or the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs, attorneys’ fees and the cost of reasonable settlements.

15.Successors to the Bank and the Company.

The Bank and the Company shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all of the business or assets of the Bank or the Company, expressly and unconditionally to assume and agree to perform the Bank’s and the Company’s obligations under this Agreement, in the same manner and to the same extent that the Bank and the Company would be required to perform if no such succession or assignment had taken place.

16.Required Provisions.

In the event any of the foregoing provisions of this Section 16 are in conflict with the terms of this Agreement, this Section 16 shall prevail.

a.    The Board of Directors may terminate Executive’s employment at any time, but any termination by the Bank, other than termination for Just Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause.

b.    If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the obligations which were suspended.

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c.    If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

d.    If the Bank is in default as defined in Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

e.    All obligations under this Agreement shall be terminated, except to the extent a determination is made that continuation of the contract is necessary for the continued operation of the Bank (i) by the director of the Office of the Comptroller of the Currency (the “OCC”) or his or her designee (the “Director”), at the time the OCC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) of the Federal Deposit Insurance Act; or (ii) by the Director, at the time the Director approves a supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director to be in an unsafe or unsound condition. Any rights of Executive that have already vested, however, shall not be affected by such action.

f.    Any payments made to employees pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

17.     Section 409A of the Code.

a.    This Agreement is intended to comply with the requirements of Section 409A of the Code, and specifically, with the “short-term deferral exception” under Treasury Regulation Section 1.409A-1(b)(4) and the “separation pay exception” under Treasury Regulation Section 1.409A-1(b)(9)(iii), and shall in all respects be administered in accordance with Section 409A of the Code. If any payment or benefit hereunder cannot be provided or made at the time specified herein without incurring sanctions on Executive under Section 409A of the Code, then such payment or benefit shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. For purposes of Section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under Section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment, the right to a series of installment payments under this Agreement (if any) is to be treated as a right to a series of separate payments, and if a payment is not made by the designated payment date under this Agreement, the payment shall be made by December 31 of the calendar year in which the designated date occurs. To the extent that any payment provided for hereunder would be subject to additional tax under Section 409A of the Code, or would cause the administration of this Agreement to fail to satisfy the requirements of Section 409A of the Code, such provision shall be deemed null and void to the extent permitted by applicable law, and any such amount shall be payable in accordance with subparagraph (b) of this Agreement below. In no event shall Executive, directly or indirectly, designate the calendar year of payment.

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b.    If when separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if the cash severance payment under Section 3(a)(i) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available (i.e., the “short-term deferral exception” under Treasury Regulations Section 1.409A-1(b)(4) or the “separation pay exception” under Treasury Section 1.409A-1(b)(9)(iii)), the Bank or the Company will make the maximum severance payment possible in order to comply with an exception from the six month requirement and make any remaining severance payment under Section 3(a)(i) of this Agreement to Executive in a single lump sum without interest on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

c.    If (x) under the terms of the applicable policy or policies for the insurance or other benefits specified in Section 3(a)(ii) of this Agreement it is not possible to continue coverage for Executive and his dependents, or (y) when a separation from service occurs Executive is a “specified employee” within the meaning of Section 409A of the Code, and if any of the continued insurance coverage or other benefits specified in Section 3(a)(ii) of this Agreement would be considered deferred compensation under Section 409A of the Code, and, finally, if an exemption from the six-month delay requirement of Section 409A(a)(2)(B)(i) of the Code is not available for that particular insurance or other benefit, the Bank or the Company shall pay to Executive in a single lump sum an amount in cash equal to the present value of the Bank’s projected cost to maintain that particular insurance benefit had Executive’s employment not terminated. The lump-sum payment shall be made thirty (30) days after employment termination or, if Section 17(b) of this Agreement applies, on the first payroll date that occurs after the date that is six (6) months after the date on which Executive separates from service.

d.    References in this Agreement to Section 409A of the Code include rules, regulations, and guidance of general application issued by the Department of the Treasury under Internal Revenue Section 409A of the Code.

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SIGNATURES

IN WITNESS WHEREOF, Savings Institute Bank and Trust Company and SI Financial Group, Inc. have caused this amended and restated Agreement to be executed by their duly authorized officers, and Executive has signed this Agreement, on September 23, 2015

ATTEST: SAVINGS INSTITUTE BANK AND TRUST COMPANY

/s/ Michael Garvey__________ By:    /s/ Mark Alliod__________________

ATTEST:                        SI FINANCIAL GROUP, INC.

(Guarantor)

/s/ Michael Garvey_____________ By:    _/s/ Mark Alliod_____________

WITNESS:                        EXECUTIVE

_/s/ Jennifer Saladin_____________/s/ Paul R. Little______

Paul R. Little

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EX-31.1

Exhibit 31.1

CERTIFICATION

I, Rheo A. Brouillard, certify that:

1. I have reviewed this report on Form 10-Q of SI Financial Group, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

/s/ Rheo A. Brouillard

Rheo A. Brouillard

President and Chief Executive Officer

November 6, 2015

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Lauren L. Murphy, certify that:

1. I have reviewed this report on Form 10-Q of SI Financial Group, 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

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

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

/s/ Lauren L. Murphy

Lauren L. Murphy

Senior Vice President and Chief Financial Officer

November 6, 2015

EX-32.1

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the report of SI Financial Group, Inc. (the “Company”) on Form 10-Q for the quarterly period ended September 30, 2015, as filed with the Securities and Exchange Commission (the “Report”), the undersigned hereby certify pursuant to 18 U.S.C. Section 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, that:

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

2. The information contained in this Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by this Report.

By:/s/ Rheo A. Brouillard

Rheo A. Brouillard

President and Chief Executive Officer

November 6, 2015

By:/s/ Lauren L. Murphy

Lauren L. Murphy

Senior Vice President and Chief Financial Officer

November 6, 2015

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Past Due Loans Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 9,294	$ 11,196
Loans Receivable Current and Not Past Due	1,141,338	1,039,894
Total loans	1,150,632	1,051,090
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		459
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,350	6,671
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,866	1,220
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	4,078	3,305
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,990	6,054
Loans Receivable Current and Not Past Due	428,297	424,521
Total loans	430,287	430,575
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Real estate: Residential - 1 to 4 family [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	14	4,194
Real estate: Residential - 1 to 4 family [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,050	258
Real estate: Residential - 1 to 4 family [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	926	1,602
Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	6,027	2,337
Loans Receivable Current and Not Past Due	333,655	295,983
Total loans	339,682	298,320
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Real estate: Multi-family and commercial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,310	768
Real estate: Multi-family and commercial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	657	794
Real estate: Multi-family and commercial [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	2,060	775
Real estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Loans Receivable Current and Not Past Due	17,409	13,579
Total loans	17,409	13,579
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Real estate: Construction [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Real estate: Construction [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Real estate: Construction [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	1,995
Loans Receivable Current and Not Past Due	153,811	116,471
Total loans	153,811	118,466
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		459
Commercial business: SBA and USDA guaranteed [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	1,536
Commercial business: SBA and USDA guaranteed [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: SBA and USDA guaranteed [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	459
Commercial business: Time share [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Loans Receivable Current and Not Past Due	57,760	45,669
Total loans	57,760	45,669
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Commercial business: Time share [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Time share [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Time share [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Loans Receivable Current and Not Past Due	26,237	21,386
Total loans	26,237	21,386
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Commercial business: Condominium association [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Condominium association [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Condominium association [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Commercial business: Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	970	496
Loans Receivable Current and Not Past Due	67,337	65,950
Total loans	68,307	66,446
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Commercial business: Other [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	50
Commercial business: Other [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	155	0
Commercial business: Other [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	815	446
Consumer: Home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	270	201
Loans Receivable Current and Not Past Due	52,715	50,892
Total loans	52,985	51,093
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Consumer: Home equity [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	20
Consumer: Home equity [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	158
Consumer: Home equity [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	270	23
Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	36	113
Loans Receivable Current and Not Past Due	2,203	3,579
Total loans	2,239	3,692
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Consumer: Indirect automobile [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	26	103
Consumer: Indirect automobile [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3	10
Consumer: Indirect automobile [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	7	0
Consumer: Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1	0
Loans Receivable Current and Not Past Due	1,914	1,864
Total loans	1,915	1,864
Financing Receivable, Recorded Investment, 90 Days Past Due and Still Accruing		0
Consumer: Other [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Consumer: Other [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1	0
Consumer: Other [Member] | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 0	$ 0

XML

FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Financial Assets [Abstract]
Cash and Cash Equivalents, at Carrying Value	$ 36,562	$ 39,251	$ 33,618	$ 27,321
Available-for-sale Securities	176,177	173,040
Loans held for sale	165	747
Loans Receivable, Net Amount	1,142,998	1,044,864
Federal Home Loan Bank Stock	12,421	10,333
Federal Reserve Bank Stock	3,621	0
Accrued interest receivable	4,230	3,853
Financial Liabilities [Abstract]
Deposits	1,043,130	1,010,713
Mortgagors' and investors' escrow accounts	1,946	3,600
Federal Home Loan Bank Advances	224,459	148,277
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, at Carrying Value	36,562	39,251
Available-for-sale Securities	176,177	173,040
Loans held for sale	165	747
Loans Receivable, Net Amount	1,142,998	1,044,864
Federal Home Loan Bank Stock	12,421	10,333
Accrued interest receivable	4,230	3,853
Financial Liabilities [Abstract]
Deposits	1,043,130	1,010,713
Mortgagors' and investors' escrow accounts	1,946	3,600
Federal Home Loan Bank Advances	224,459	148,277
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	37	59
Derivative Liabilities [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	170	271
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	36,562	39,251
Available-for-sale securities, Fair Value Disclosure	176,177	173,040
Loans Held-for-sale, Fair Value Disclosure	165	747
Loans Receivable, Fair Value Disclosure	1,156,501	1,063,121
Federal Home Loan Bank Stock, Fair Value Disclosure	12,421	10,333
Federal Reserve Bank stock, Fair Value Disclosure	3,621
Accrued interest receivable, Fair Value Disclosure	4,230	3,853
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	1,047,509	1,013,614
Mortgagors' and investors' escrow accounts	1,946	3,600
Federal Home Loan Bank Advances, Fair Value Disclosure	225,337	149,380
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	5,329	5,815
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	37	59
Derivative Liabilities [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	170	271
Fair Value, Inputs, Level 1 [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	36,562	39,251
Available-for-sale securities, Fair Value Disclosure	25,271	21,001
Loans Held-for-sale, Fair Value Disclosure	0	0
Loans Receivable, Fair Value Disclosure	0	0
Federal Home Loan Bank Stock, Fair Value Disclosure	0	0
Federal Reserve Bank stock, Fair Value Disclosure	0
Accrued interest receivable, Fair Value Disclosure	0	0
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	0	0
Mortgagors' and investors' escrow accounts	0	0
Federal Home Loan Bank Advances, Fair Value Disclosure	0	0
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	0	0
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	0	0
Derivative Liabilities [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	0	0
Fair Value, Inputs, Level 2 [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	0	0
Available-for-sale securities, Fair Value Disclosure	149,776	150,858
Loans Held-for-sale, Fair Value Disclosure	0	0
Loans Receivable, Fair Value Disclosure	0	0
Federal Home Loan Bank Stock, Fair Value Disclosure	0	0
Federal Reserve Bank stock, Fair Value Disclosure	0
Accrued interest receivable, Fair Value Disclosure	0	0
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	0	0
Mortgagors' and investors' escrow accounts	0	0
Federal Home Loan Bank Advances, Fair Value Disclosure	225,337	149,380
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	5,329	5,815
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	0	0
Derivative Liabilities [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	170	271
Fair Value, Inputs, Level 3 [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	0	0
Available-for-sale securities, Fair Value Disclosure	1,130	1,181
Loans Held-for-sale, Fair Value Disclosure	165	747
Loans Receivable, Fair Value Disclosure	1,156,501	1,063,121
Federal Home Loan Bank Stock, Fair Value Disclosure	12,421	10,333
Federal Reserve Bank stock, Fair Value Disclosure	3,621
Accrued interest receivable, Fair Value Disclosure	4,230	3,853
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	1,047,509	1,013,614
Mortgagors' and investors' escrow accounts	1,946	3,600
Federal Home Loan Bank Advances, Fair Value Disclosure	0	0
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	0	0
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	37	59
Derivative Liabilities [Abstract]
Interest Rate Derivative Liabilities, at Fair Value	$ 0	$ 0

XML

OTHER COMPREHENSIVE INCOME Components of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Before Tax Amount	$ 1,115	$ 301
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Tax Effects	(379)	(102)
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	736	199
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Before Tax Amount	(34)	(157)
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Tax Effects	11	53
Accumulated Other Comprehensive Income (Loss), Cumulative Changes in Net Gain (Loss) from Cash Flow Hedges, Effect Net of Tax	(23)	(104)
Accumulated Other Comprehensive Income (Loss), Before Tax Amount	1,081	144
Accumulated Other Comprehensive Income (Loss), Tax Effects	(368)	(49)
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ 713	$ 95

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Instrument - Cash Flow Hedge (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Derivative [Line Items]
Collateral Already Posted, Aggregate Fair Value	$ 50	$ 400
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivative [Line Items]
Notional Amount	$ 8,000	$ 8,000
Weighted average fixed pay rate	2.44%	2.44%
Weighted average variable receive rate	0.34%	0.24%
Weighted average maturity in years	2 months	1 year
Interest Rate Cash Flow Hedge Liability at Fair Value	$ 34	$ 157

XML

PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Abstract]
Land	$ 4,746	$ 4,746
Buildings	13,558	11,879
Leasehold Improvements	11,037	10,802
Furniture and Equipment	12,846	12,741
Construction in Process	18	1,233
Total	42,205	41,401
Accumulated depreciation and amortization	(20,536)	(19,690)
Premises and equipment, net	$ 21,669	$ 21,711

XML

SECURITIES Summary of Realized Gains/Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Investments, Debt and Equity Securities [Abstract]
Gross gains on sales	$ 14	$ 0	$ 169	$ 64
Gross losses on sales	0	0	(23)	0
Net gain on sales of securities	$ 14	$ 0	$ 146	$ 64

XML

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Fair Value and Balance Sheet Classification (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member]
Derivatives, Fair Value [Line Items]
Description of Location of Interest Rate Derivatives on Balance Sheet	Other Liabilities
Notional Amount	$ 8,000	$ 8,000
Interest Rate Cash Flow Hedge Liability at Fair Value	(34)	(157)
Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Notional Amount	$ 15,000	15,000
Description of Location of Interest Rate Derivative Instruments Not Designated as Hedging Instruments on Balance Sheet	Other Liabilities
Interest Rate Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value	$ (136)	(114)
Description of Location of Derivative Loan Commitments Not Designated as Hedging Instruments on Balance Sheet	Other Assets
Derivative Loan Commitments, Notional Amount, Net	$ 4,983	6,436
Derivative Loan Commitments, Fair Value, Net	$ 37	59
Description of Location of Forward Loan Sale Commitments Not Designated as Hedging Instruments on Balance Sheet	Other Assets
Forward Loan Sale Commitments, Notional Amount, Net	$ 2,662	2,754
Forward Loan Sale Commitments, Fair Value, Net	$ 0	$ 0

XML

FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2015.

	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	25,271	$	43,297	$	—	$	68,568
Government-sponsored enterprises	—		30,664		—		30,664
Mortgage-backed securities	—		70,036		—		70,036
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,130		1,130
Obligations of state and political subdivisions	—		1,537		—		1,537
Tax-exempt securities	—		3,242		—		3,242
Forward loan sale commitments and derivative loan commitments	—		—		37		37
Total assets	$	25,271	$	149,776	$	1,167	$	176,214
Liabilities:
Interest rate swap agreements	$	—	$	170	$	—	$	170
Total liabilities	$	—	$	170	$	—	$	170

	December 31, 2014
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,001	$	45,390	$	—	$	66,391
Government-sponsored enterprises	—		27,488		—		27,488
Mortgage-backed securities	—		67,103		—		67,103
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,181		1,181
Obligations of state and political subdivisions	—		3,200		—		3,200
Tax-exempt securities	—		6,677		—		6,677
Forward loan sale commitments and derivative loan commitments	—		—		59		59
Total assets	$	21,001	$	150,858	$	1,240	$	173,099
Liabilities:
Interest rate swap agreements	$	—	$	271	$	—	$	271
Total liabilities	$	—	$	271	$	—	$	271

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets:

	Collateralized Debt Obligations			Derivative Loan and Forward Loan Sale Commitments, Net
	(In Thousands)
Balance at December 31, 2014	$	1,181		$	59
Total realized losses included in net income	—			(22		)
Total unrealized losses included in other comprehensive income	(51		)	—
Balance at September 30, 2015	$	1,130		$	37

Fair Value Measurements, Nonrecurring [Table Text Block]

The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets at September 30, 2015 and December 31, 2014. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2015 and December 31, 2014.

	At September 30, 2015						At December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	61	$	—	$	—	$	356
Other real estate owned	—		—		1,341		—		—		1,271
Total assets	$	—	$	—	$	1,402	$	—	$	—	$	1,627

Fair Value - Nonrecurring Gain/Loss Adjustments [Table Text Block]

The following table summarizes losses (gains) resulting from fair value adjustments for assets measured at fair value on a nonrecurring basis.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(In Thousands)
Impaired loans	$	(20	)	$	22	$	2	$	126
Other real estate owned	65			10		212		25
Total losses	$	45		$	32	$	214	$	151

Fair Value, by Balance Sheet Grouping [Table Text Block]

As of September 30, 2015 and December 31, 2014, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2015
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	36,562	$	36,562	$	—	$	—	$	36,562
Available for sale securities	176,177		25,271		149,776		1,130		176,177
Loans held for sale	165		—		—		165		165
Loans receivable, net	1,142,998		—		—		1,156,501		1,156,501
Federal Home Loan Bank stock	12,421		—		—		12,421		12,421
Federal Reserve Bank stock	3,621		—		—		3,621		3,621
Accrued interest receivable	4,230		—		—		4,230		4,230
Financial Liabilities:
Deposits	1,043,130		—		—		1,047,509		1,047,509
Mortgagors' and investors' escrow accounts	1,946		—		—		1,946		1,946
Federal Home Loan Bank advances	224,459		—		225,337		—		225,337
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,329		—		5,329
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	37		—		—		37		37
Liabilities:
Interest rate swap agreements	170		—		170		—		170

	December 31, 2014
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	39,251	$	39,251	$	—	$	—	$	39,251
Available for sale securities	173,040		21,001		150,858		1,181		173,040
Loans held for sale	747		—		—		747		747
Loans receivable, net	1,044,864		—		—		1,063,121		1,063,121
Federal Home Loan Bank stock	10,333		—		—		10,333		10,333
Accrued interest receivable	3,853		—		—		3,853		3,853
Financial Liabilities:
Deposits	1,010,713		—		—		1,013,614		1,013,614
Mortgagors' and investors' escrow accounts	3,600		—		—		3,600		3,600
Federal Home Loan Bank advances	148,277		—		149,380		—		149,380
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,815		—		5,815
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	59		—		—		59		59
Liabilities:
Interest rate swap agreements	271		—		271		—		271

XML

FAIR VALUE OF ASSETS AND LIABILITIES Fair Value Measurements - Recurring (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	$ 176,214	$ 173,099
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	170	271
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	25,271	21,001
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	149,776	150,858
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	170	271
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,167	1,240
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	0
Forward loan sale commitments and derivative loan commitments [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	37	59
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Forward loan sale commitments and derivative loan commitments [Member] | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	37	59
Interest rate swap agreement [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	170	271
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 1 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	0
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	170	271
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 3 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	0
U.S. Government and agency obligations
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	68,568	66,391
U.S. Government and agency obligations | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	25,271	21,001
U.S. Government and agency obligations | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	43,297	45,390
U.S. Government and agency obligations | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Government-sponsored enterprises
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	30,664	27,488
Government-sponsored enterprises | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Government-sponsored enterprises | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	30,664	27,488
Government-sponsored enterprises | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Mortgage-backed securities:(1)
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	70,036	67,103
Mortgage-backed securities:(1) | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Mortgage-backed securities:(1) | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	70,036	67,103
Mortgage-backed securities:(1) | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Corporate debt securities
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,000	1,000
Corporate debt securities | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Corporate debt securities | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,000	1,000
Corporate debt securities | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Collateralized debt obligation
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,130	1,181
Collateralized debt obligation | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Collateralized debt obligation | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Collateralized debt obligation | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,130	1,181
Obligations of state and political subdivisions
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,537	3,200
Obligations of state and political subdivisions | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Obligations of state and political subdivisions | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,537	3,200
Obligations of state and political subdivisions | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Tax-exempt securities
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	3,242	6,677
Tax-exempt securities | Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Tax-exempt securities | Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	3,242	6,677
Tax-exempt securities | Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	$ 0	$ 0

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Credit Quality Information (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	$ 1,150,632	$ 1,051,090
Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	787,378	742,474
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	430,287	430,575
Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	339,682	298,320
Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	17,409	13,579
Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	306,115	251,967
Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	153,811	118,466
Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	57,760	45,669
Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,237	21,386
Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	68,307	66,446
Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	57,139	56,649
Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	52,985	51,093
Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	2,239	3,692
Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,915	1,864
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	153,811	118,466
Not Rated [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	153,811	118,466
Not Rated [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	153,811	118,466
Not Rated [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Not Rated [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	958,276	891,804
Pass [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	752,757	706,393
Pass [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	422,608	423,134
Pass [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	312,740	269,680
Pass [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	17,409	13,579
Pass [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	148,817	128,890
Pass [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Pass [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	57,760	45,669
Pass [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,237	21,386
Pass [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	64,820	61,835
Pass [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	56,702	56,521
Pass [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	52,548	50,965
Pass [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	2,239	3,692
Pass [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,915	1,864
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	16,500	21,254
Special Mention [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	14,663	18,488
Special Mention [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	2,021	1,430
Special Mention [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	12,642	17,058
Special Mention [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Special Mention [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,770	2,709
Special Mention [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Special Mention [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Special Mention [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Special Mention [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,770	2,709
Special Mention [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	67	57
Special Mention [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	67	57
Special Mention [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Special Mention [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	22,045	19,566
Substandard [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	19,958	17,593
Substandard [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	5,658	6,011
Substandard [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	14,300	11,582
Substandard [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,717	1,902
Substandard [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,717	1,902
Substandard [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	370	71
Substandard [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	370	71
Substandard [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Substandard [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Doubtful [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	0	0
Loss [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	$ 0	$ 0

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period			$ 7,797
Provision for loan losses	$ 1,017	$ 350	1,712	$ 1,195
Balance at end of period	9,246		9,246
Allowance for loan losses [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	8,437	7,445	7,797	6,916
Provision for loan losses	1,017	350	1,712	1,195
Loans charged-off	(276)	(180)	(367)	(549)
Recoveries of loans previously charged-off	68	4	104	57
Balance at end of period	9,246	7,619	9,246	7,619
Real estate: Residential - 1 to 4 family [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	986	984	955	975
Provision for loan losses	30	123	74	281
Loans charged-off	0	(137)	(46)	(317)
Recoveries of loans previously charged-off	41	0	74	31
Balance at end of period	1,057	970	1,057	970
Real estate: Multi-family and commercial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	3,766	3,465	3,607	3,395
Provision for loan losses	666	135	843	347
Loans charged-off	(136)	(1)	(156)	(144)
Recoveries of loans previously charged-off	22	0	24	1
Balance at end of period	4,318	3,599	4,318	3,599
Real estate: Construction [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	434	221	254	169
Provision for loan losses	(7)	26	173	78
Loans charged-off	0	0	0	0
Recoveries of loans previously charged-off	0	0	0	0
Balance at end of period	427	247	427	247
Commercial Business [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	2,618	2,208	2,382	1,875
Provision for loan losses	322	21	582	364
Loans charged-off	(140)	0	(165)	(13)
Recoveries of loans previously charged-off	5	1	6	4
Balance at end of period	2,805	2,230	2,805	2,230
Consumer [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	633	567	599	502
Provision for loan losses	6	45	40	125
Loans charged-off	0	(42)	0	(75)
Recoveries of loans previously charged-off	0	3	0	21
Balance at end of period	$ 639	$ 573	$ 639	$ 573

XML

FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Nonrecurring Hierarchy (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, Fair Value Disclosure	$ 1,341	$ 1,271
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure	0	0
Other real estate owned, Fair Value Disclosure	0	0
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure	0	0
Other real estate owned, Fair Value Disclosure	0	0
Assets, Fair Value Disclosure, Nonrecurring	0	0
Fair Value, Measurements, Nonrecurring [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans Fair Value Disclosure	61	356
Other real estate owned, Fair Value Disclosure	1,341	1,271
Assets, Fair Value Disclosure, Nonrecurring	$ 1,402	$ 1,627

XML

OTHER COMPREHENSIVE INCOME Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Securities: [Abstract]
Unrealized holding gains on available for sale securities, Before Tax Amount				$ 960
Unrealized holding gains on available for sale securities, Tax Effects				(327)
Unrealized holding gains on available for sale securities, Net of Tax Amount		$ 411	$ (382)	633	$ 546
Reclassification adjustment for gains recognized in net income, Before Tax Amount				(146)
Reclassification adjustment for losses (gains) recognized in net income, Tax Effects		5	0	50	22
Reclassification adjustment for losses (gains) recognized in net income, Net of Tax Amount	[1]	(9)	0	(96)	(42)
Net unrealized holding gains on available for sale securities, Before Tax Amount				814
Net unrealized holding gains on available for sale securities, Tax Effects				(277)
Net unrealized holding gains on available for sale securities		402	(382)	537	504
Derivative instrument: [Abstract]
Change in fair value of effective cash flow hedging derivative, Before Tax Amount				123
Change in fair value of effective cash flow hedgeing derivative, Tax Effects				(42)
Change in fair value of effective cash flow hedging derivative, Net of Tax		29	31	81	77
Other comprehensive income, Before Tax Amount				937
Other comprehensive income, Tax Effects				(319)
Other comprehensive income		$ 431	$ (351)	$ 618	$ 581

[1] Amounts are included in net gain on sales of securities in noninterest income on the consolidated statements of income. Income tax expense (benefit) associated with the reclassification adjustment for the three and nine months ended September 30, 2015 was $5,000 and $50,000 and for the three and nine months ended September 30, 2014 was $0 and $22,000, respectively.

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

SI Financial Group, Inc. (the “Company”) is the holding company for Savings Institute Bank and Trust Company (the “Bank”). Established in 1842, the Bank is a community-oriented financial institution headquartered in Willimantic, Connecticut. The Bank provides a variety of financial services to individuals, businesses and municipalities through its twenty-six offices in eastern Connecticut and Rhode Island. Its primary products include savings, checking and certificate of deposit accounts, residential and commercial mortgage loans, commercial business loans and consumer loans.  In addition, wealth management services, which include trust, financial planning, life insurance and investment services, are offered to individuals and businesses through the Bank’s offices. The Company does not conduct any material business other than owning all of the stock of the Bank and making payments on the subordinated debentures held by the Company.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries, SI Mortgage Company and SI Realty Company, Inc. All significant intercompany accounts and transactions have been eliminated.

Basis of Financial Statement Presentation

The interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and general practices within the banking industry. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been omitted.  Information in the accompanying interim consolidated financial statements and notes to the financial statements of the Company as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company and the accompanying notes for the year ended December 31, 2014 contained in the Company’s Form 10-K.

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows as of and for the periods covered herein. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the year ending December 31, 2015 or for any other period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheets and reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, deferred income taxes and the impairment of long-lived assets.

Reclassifications

Amounts in the Company’s prior year consolidated financial statements are reclassified to conform to the current year presentation.  Such reclassifications have no effect on net income.

Loans Receivable

Loans receivable are stated at current unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Management has the ability and intent to hold its loans receivable for the foreseeable future or until maturity or pay-off.

A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the 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. Impairment is measured on a loan by loan basis for residential and commercial mortgage loans and commercial business loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not typically identify individual consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring ("TDR") agreement.

Troubled Debt Restructurings

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and concessions have been made by the Company to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as below market interest rate reductions, deferral of interest or principal payments, or maturity extensions due to the borrower’s financial condition, the modification is considered a TDR. Modified terms are dependent upon the financial position and needs of the individual borrower. If the modification agreement is violated, the loan is handled by the Company’s Collections Department for resolution which may result in foreclosure.

Management considers all nonaccrual loans, with the exception of certain consumer loans, to be impaired. Also, all TDRs are initially classified as impaired and follow the Company's nonaccrual policy. If the loan was current prior to modification, nonaccrual status would not be required. If the loan was on nonaccrual prior to modification or if the payment amount significantly increases, the loan will remain on nonaccrual for a period of at least six months. Loans qualify for return to accrual status once the borrower has demonstrated the willingness and the ability to perform in accordance with the restructured terms of the loan agreement for a period of not less than six consecutive months. In most cases, loan payments less than 90 days past due are considered minor collection delays and the related loans are generally not considered impaired.

Impaired classification may be removed after a year following the restructure if the borrower demonstrates compliance with the modified terms and the restructuring agreement specifies an interest rate equal to that which would be provided to a borrower with similar risk characteristics at the time of restructuring.

Allowance for Loan Losses

The allowance for loan losses, a material estimate which could change significantly in the near-term, is established through a provision for loan losses charged to earnings to account for losses that are inherent in the loan portfolio and estimated to occur, and is maintained at a level that management considers adequate to absorb losses in the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes the uncollectibility of the principal loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses when received. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, if necessary.

Management's judgment in determining the adequacy of the allowance is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is evaluated on a monthly basis by management and is based on the evaluation of the known and inherent risk characteristics and size and composition of the loan portfolio, the assessment of current economic and real estate market conditions, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, historical loan loss experience, the level and trends of nonperforming loans, delinquencies, classified assets and loan charge-offs and evaluations of loans and other relevant factors.

The allowance for loan losses consists of the following key elements:

• Specific allowance for identified impaired loans. For loans identified as impaired, an allowance is established when the present value of expected cash flows (or observable market price of the loan or fair value of the collateral if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan.

• General valuation allowance. The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience adjusted for qualitative factors stratified by the following loan segments: residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer. Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments; changes in the size and composition of the loan portfolio and in the terms of the loans; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans; changes in the quality of the loan review system; changes in the underlying collateral for collateral-dependent loans; the existence and effect of any concentrations of credit and changes in the level of such concentrations; the effect of other external factors such as competition and legal and regulatory capital requirements on the level of estimated credit losses in the portfolio.

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

• Residential – One- to Four-Family – The Bank primarily originates conventional loans with loan-to-value ratios less than 95% and generally originates loans with loan-to-value ratios in excess of 80% only when secured by first liens on owner-occupied one- to four-family residences. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance or additional collateral. 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 of this segment.

• Multi-family and Commercial – Loans in this segment are originated for the purpose of acquiring, developing, improving or refinancing multi-family and commercial real estate where the property is the primary collateral securing the loan, and the income generated from the property is the primary repayment source. The underlying cash flows generated by the properties can be adversely impacted by the economy as evidenced by increased vacancy rates. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the cash flows of these loans.

• Construction – This segment includes loans to individuals and, to a lesser extent, builders to finance the construction of residential dwellings. The Bank also originates construction loans for commercial development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, correct estimates of the sale price of the property, time to sell at an adequate price and market conditions.

• Commercial Business – 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 reduced viability of the industry in which the customer operates will have a negative impact on the credit quality in this segment. The Bank also provides loans to investors in the time share industry, which are secured by consumer receivables, and provides loans for capital improvements to condominium associations, which are secured by the assigned rights to levy special assessments to condominium owners.

• Consumer – Loans in this segment primarily include home equity lines of credit (representing both first and second liens), indirect automobile loans and, to a lesser extent, loans secured by marketable securities, passbook or certificate accounts, motorcycles, automobiles and recreational vehicles, as well as unsecured loans. Consumer loan collections depend on the borrower’s continuing financial stability and, therefore, are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

In computing the allowance for loan losses, we do not assign a general valuation allowance to the Small Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans that we purchase as such loans are fully guaranteed. These loans are included in commercial business loans. See Note 4 for details.

The majority of the Company's loans are collateralized by real estate located in eastern Connecticut and Rhode Island. To a lesser extent, certain commercial real estate loans are secured by collateral located outside of our primary market area. Accordingly, the collateral value of a substantial portion of the Company's loan portfolio and real estate acquired through foreclosure is susceptible to changes in local market conditions.

Although management believes it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with GAAP, our regulators, in reviewing the loan portfolio, may request us to increase our allowance for loan losses based on judgments different from ours. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses would adversely affect the Company’s financial condition and results of operations.

Interest and Fees on Loans

Interest on loans is accrued and included in net interest income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectibility of the loan or loan interest becomes uncertain. Subsequent recognition of income occurs only to the extent payment is received subject to management's assessment of the collectibility of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectibility of interest and principal is no longer in doubt and the borrower has made regular payments in accordance with the terms of the loan over a period of at least six months. Interest collected on nonaccrual loans is recognized only to the extent cash payments are received, and may be recorded as a reduction to principal if the collectibility of the principal balance of the loan is unlikely.

Loan origination fees, direct loan origination costs and loan purchase premiums are deferred, and the net amount is recognized as an adjustment of the related loan's yield utilizing the interest method over the contractual life of the loan. In addition, discounts related to fair value adjustments for loans receivable acquired in a business combination or asset purchase are accreted into earnings over the contractual term as an adjustment of the loan's yield. The Company periodically evaluates the cash flows expected to be collected for loans acquired with deteriorated credit quality. Changes in the expected cash flows compared to the expected cash flows as of the date of acquisition may impact the accretable yield or result in a charge to the provision for loan losses to the extent of a shortfall.

Common Share Repurchases

The Company is chartered in the state of Maryland. Maryland law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized but unissued shares. GAAP states that accounting for treasury stock shall conform to state law. Therefore, the cost of shares repurchased by the Company has been allocated to common stock, additional paid-in capital and retained earnings balances.

Recent Accounting Pronouncements

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. In January 2014, the Financial Accounting Standards Board ("FASB") issued amended guidance that clarifies when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amended guidance clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, the amended guidance requires interim and annual disclosures of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure -In August 2014, the FASB issued amended guidance that addresses the diversity in practice regarding the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program (e.g. HUD, FHA, VA). The amended guidance outlines certain criteria that, if met, the loan (residential or commercial) should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs - In April 2015, the FASB issued guidance simplifying the presentation of debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amended guidance should be applied on a retrospective basis and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The adoption of the amended guidance is not expected to have a material impact on the Company's consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - In August 2015, the FASB issued amended guidance pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting that the update issued in April 2015 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within the previous update for debt issuance costs related to line-of-credit-arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there were any outstanding borrowings on the line-of-credit arrangement. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loans Modified as TDRs (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	9	0	9	5
Financing Receivable Modifications Investment Recorded	$ 1,655	$ 0	$ 1,655	$ 1,830
Financing Receivable, Modifications, Allowance for Loan Losses	$ 33	$ 50	$ 33	$ 50
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	3	0	3	1
Financing Receivable Modifications Investment Recorded	$ 502	$ 0	$ 502	$ 100
Financing Receivable, Modifications, Allowance for Loan Losses	$ 33	$ 0	$ 33	$ 0
Real estate: Multi-family and commercial [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	4	0	4	2
Financing Receivable Modifications Investment Recorded	$ 1,035	$ 0	$ 1,035	$ 1,416
Financing Receivable, Modifications, Allowance for Loan Losses	$ 0	$ 50	$ 0	$ 50
Commercial business: Other [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	2	0	2	2
Financing Receivable Modifications Investment Recorded	$ 118	$ 0	$ 118	$ 314
Financing Receivable, Modifications, Allowance for Loan Losses	$ 0	$ 0	$ 0	$ 0

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share, Basic and Diluted [Line Items]
Net income	$ 974	$ 1,200	$ 2,900	$ 3,020
Weighted average common shares outstanding:
Basic	11,793,218	12,310,368	12,036,573	12,315,829
Effect of dilutive stock options	21,713	23,065	28,485	38,382
Diluted	11,814,931	12,333,433	12,065,058	12,354,211
Earnings per share:
Basic	$ 0.08	$ 0.10	$ 0.24	$ 0.25
Diluted	$ 0.08	$ 0.10	$ 0.24	$ 0.24

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EARNINGS PER SHARE (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share, Amount	321,793	677,590	342,819	485,459

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Instrument - Nonhedge (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Derivative [Line Items]
Notional Amount	$ 15,000		$ 15,000		$ 15,000
Weighted average fixed pay rate	1.26%		1.26%		1.26%
Weighted average variable receive rate	0.29%		0.29%		0.25%
Weighted average maturity in years			1 year 3 months		2 years
Interest Rate Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value	$ 136		$ 136		$ 114
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	(7)	$ 78	(22)	$ 69
Derivative Loan Commitments, Notional Amount, Net	4,983		4,983		6,436
Derivative Loan Commitments, Fair Value, Net	37		37		59
Forward Loan Sale Commitments, Notional Amount, Net	2,662		2,662		2,754
Forward Loan Sale Commitments, Fair Value, Net	$ 0		$ 0		$ 0

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES TDR - By Type of Modification (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period		$ 1,655	$ 0	$ 1,655	$ 1,830
Adjusted Interest Rate [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period		559	0	559	379
Principal Deferrals [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period		115	0	115	0
Combination of Rate and Payment [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	[1]	146	0	146	288
Combination Of Rate And Maturity [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	[2]	0	0	0	1,163
Extension of Maturity Date [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period		$ 835	$ 0	$ 835	$ 0

[1] (1) Terms include combination of interest rate adjustments and interest-only payment with deferral of principal.

[2] (2) Terms include combination of interest rate adjustments and extensions of maturity.

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SECURITIES Securities (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)
Investments, Debt and Equity Securities [Abstract]
Proceeds from sales of available for sale securities	$ 0	$ 0	$ 9,703	$ 1,109
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	23		23
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Other			0.01406323909

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SECURITIES Summary of Available for Sale Securities (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		$ 175,062	$ 172,739
Gross Unrealized Gains		1,888	1,679
Gross Unrealized Losses		773	1,378
Available for sale securities, at fair value		176,177	173,040
U.S. Government and agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		68,172	66,232
Gross Unrealized Gains		620	385
Gross Unrealized Losses		224	226
Available for sale securities, at fair value		68,568	66,391
Government-sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		30,329	27,435
Gross Unrealized Gains		335	120
Gross Unrealized Losses		0	67
Available for sale securities, at fair value		30,664	27,488
Agency - residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	[1]	69,527	67,008
Gross Unrealized Gains	[1]	872	907
Gross Unrealized Losses	[1]	519	1,065
Available for sale securities, at fair value	[1]	69,880	66,850
Non-agency - residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	[1]	161	254
Gross Unrealized Gains	[1]	0	3
Gross Unrealized Losses	[1]	5	4
Available for sale securities, at fair value	[1]	156	253
Corporate debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,000	1,000
Gross Unrealized Gains		0	0
Gross Unrealized Losses		0	0
Available for sale securities, at fair value		1,000	1,000
Collateralized debt obligation
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,155	1,188
Gross Unrealized Gains		0	0
Gross Unrealized Losses		25	7
Available for sale securities, at fair value		1,130	1,181
Obligations of state and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,535	3,039
Gross Unrealized Gains		2	167
Gross Unrealized Losses		0	6
Available for sale securities, at fair value		1,537	3,200
Tax-exempt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		3,183	6,583
Gross Unrealized Gains		59	97
Gross Unrealized Losses		0	3
Available for sale securities, at fair value		$ 3,242	$ 6,677

[1] Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”). Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities:
Net income	$ 2,900	$ 3,020
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,712	1,195
Employee stock ownership plan expense	425	416
Equity incentive plan expense	683	559
Excess tax benefit from share-based compensation	(5)	(4)
Amortization of investment premiums and discounts, net	851	724
Amortization of loan premiums and discounts, net	1,457	1,051
Depreciation and amortization of premises and equipment	2,036	1,921
Amortization of core deposit intangible	451	463
Amortization of deferred debt issue costs	16	79
Net gain on sales of securities	(146)	(64)
Net loss (gain) on fair value of derivatives	22	(69)
Deferred income tax provision	53	28
Loans originated for sale	(18,807)	(12,633)
Proceeds from sale of loans held for sale	19,524	13,353
Net gain on sales of loans held for sale	(234)	(201)
Net loss on sales or write-downs of other real estate owned	201	67
Increase in cash surrender value of bank-owned life insurance	(449)	(433)
Impairment charge on long-lived assets	0	175
Change in operating assets and liabilities:
Accrued interest receivable	(377)	123
Other assets	727	1,947
Accrued expenses and other liabilities	33	1,143
Net cash provided by operating activities	11,073	12,860
Cash flows from investing activities:
Purchases of available for sale securities	(35,450)	(24,626)
Proceeds from sales of available for sale securities	9,703	1,109
Proceeds from maturities of and principal repayments on available for sale securities	22,719	23,063
Purchases of Federal Home Loan Bank stock	(2,088)	0
Purchases of Federal Reserve Bank stock	(3,621)	0
Redemption of Federal Home Loan Bank stock	0	2,776
Loan principal collections, net of originations	(4,996)	42,628
Purchases of loans	(96,640)	(38,643)
Proceeds from sales of other real estate owned	62	1,109
Purchases of premises and equipment	(1,994)	(2,134)
Net cash provided by (used in) investing activities	(112,305)	5,282
Cash flows from financing activities:
Net increase in deposits	32,417	13,090
Net decrease in mortgagors' and investors' escrow accounts	(1,654)	(1,420)
Proceeds from Federal Home Loan Bank advances	120,478	10,000
Repayments of Federal Home Loan Bank advances	(44,312)	(32,203)
Excess tax benefit from share-based compensation	5	4
Cash dividends on common stock	(1,444)	(1,107)
Stock options exercised	708	552
Common shares repurchased	(7,655)	(761)
Net cash provided by (used in) financing activities	98,543	(11,845)
Net change in cash and cash equivalents	(2,689)	6,297
Cash and cash equivalents at beginning of period	39,251	27,321
Cash and cash equivalents at end of period	36,562	33,618
Supplemental cash flow information:
Interest paid	6,490	6,234
Income taxes received (paid), net	989	(555)
Transfer of loans to other real estate owned	333	108
Stock options exercised by net-share settlement	$ 2,563	$ 190

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SECURITIES Debt Securities by Contractual Maturities (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Investments, Debt and Equity Securities [Abstract]
Within 1 year, Amortized Cost	$ 2,536
Within 1 year, Fair Value	2,539
After 1 but within 5 years, Amortized Cost	52,956
After 1 but within 5 years, Fair Value	53,554
After 5 but within 10 years, Amortized Cost	12,250
After 5 but within 10 years, Fair Value	12,216
After 10 years, Amortized Cost	37,632
After 10 years, Fair Value	37,832
Available-for-Sale Securities, Debt Maturities, excluding Mortgage-Backed Securities, Amortized Cost	105,374
Available-for-Sale, Debt Securities, Excluding Mortgage-Backed Securities	106,141
Mortgage-backed securities, Amortized Cost	69,688
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	70,036
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	175,062
Available-for-sale Securities, Debt Securities	$ 176,177

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Impaired Loans and Non Accrual Loans by Class (Details) - USD ($) $ in Thousands	Sep. 30, 2015		Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Related Allowance	$ 350	[1]	$ 359	[2]
Impaired Financing Receivable, Recorded Investment	13,337	[1]	12,622	[2]
Impaired Financing Receivable, Unpaid Principal Balance	13,809	[1]	13,008	[2]
Financing Receivable, Recorded Investment, Nonaccrual Status	7,252		4,543
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	2,410	[1]	2,276	[2]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	2,421	[1]	2,304	[2]
Impaired Financing Receivable, Related Allowance	310	[1]	287	[2]
Nonaccrual Loans, with Related Allowance	148		244
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	1,204	[1]	1,290	[2]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	1,314	[1]	1,290	[2]
Impaired Financing Receivable, Related Allowance	40	[1]	52	[2]
Nonaccrual Loans, with Related Allowance	63		132
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0	[1]	182	[2]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0	[1]	182	[2]
Impaired Financing Receivable, Related Allowance	0	[1]	20	[2]
Nonaccrual Loans, with Related Allowance	0		182
Total impaired loans with valuation allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	3,614	[1]	3,748	[2]
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	3,735	[1]	3,776	[2]
Impaired Financing Receivable, Related Allowance	350	[1]	359	[2]
Nonaccrual Loans, with Related Allowance	211		558
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	3,483	[1]	3,414	[2]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	3,501	[1]	3,485	[2]
Nonaccrual Loans, with No Related Allowance	3,272		2,923
Impaired Financing Receivable, Related Allowance	0	[1]	0	[2]
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	5,331	[1]	4,815	[2]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	5,664	[1]	5,102	[2]
Nonaccrual Loans, with No Related Allowance	2,631		775
Impaired Financing Receivable, Related Allowance	0	[1]	0	[2]
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	832	[1]	645	[2]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	832	[1]	645	[2]
Nonaccrual Loans, with No Related Allowance	814		264
Impaired Financing Receivable, Related Allowance	0	[1]	0	[2]
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	77	[1]	0	[2]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	77	[1]	0	[2]
Nonaccrual Loans, with No Related Allowance	324		23
Impaired Financing Receivable, Related Allowance	0	[1]	0	[2]
Total impaired loans without valuation allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	9,723	[1]	8,874	[2]
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	10,074	[1]	9,232	[2]
Nonaccrual Loans, with No Related Allowance	7,041		3,985
Impaired Financing Receivable, Related Allowance	$ 0	[1]	$ 0	[2]

[1] (1) Includes loans acquired with deteriorated credit quality from the Newport Federal Savings Bank ("Newport") merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance.

[2] (1) Includes loans acquired with deteriorated credit quality from the Newport merger and performing troubled debt restructurings.

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FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Nonrecurring Gain/Loss Adjustments (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	$ (20)	$ 22	$ 2	$ 126
Other real estate owned	65	10	212	25
Total Adjustments to Fair Value, Assets Measured on a Nonrecurring Basis	$ 45	$ 32	$ 214	$ 151

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Cash and due from banks:
Noninterest-bearing	$ 14,011	$ 18,965
Interest-bearing	22,551	20,286
Total cash and cash equivalents	36,562	39,251
Available for sale securities, at fair value	176,177	173,040
Loans held for sale	165	747
Loans receivable (net of allowance for loan losses of $9,246 at September 30, 2015 and $7,797 at December 31, 2014)	1,142,998	1,044,864
Federal Home Loan Bank stock, at cost	12,421	10,333
Federal Reserve Bank stock, at cost	3,621	0
Bank-owned life insurance	21,755	21,306
Premises and equipment, net	21,669	21,711
Goodwill and other intangibles	18,246	18,697
Accrued interest receivable	4,230	3,853
Deferred tax asset, net	7,676	8,048
Other real estate owned, net	1,341	1,271
Other assets	6,785	7,412
Total assets	1,453,646	1,350,533
Deposits:
Noninterest-bearing	151,718	146,062
Interest-bearing	891,412	864,651
Total deposits	1,043,130	1,010,713
Mortgagors' and investors' escrow accounts	1,946	3,600
Federal Home Loan Bank advances	224,459	148,277
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Accrued expenses and other liabilities	21,884	21,956
Total liabilities	1,299,667	1,192,794
Shareholders' Equity:
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)	0	0
Common stock ($.01 par value; 35,000,000 shares authorized; 12,224,153 and 12,776,426 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively)	122	128
Additional paid-in-capital	124,849	125,459
Unallocated common shares held by ESOP	(3,768)	(4,128)
Unearned restricted shares	(889)	(1,312)
Retained earnings	32,952	37,497
Accumulated other comprehensive income	713	95
Total shareholders' equity	153,979	157,739
Total liabilities and shareholders' equity	$ 1,453,646	$ 1,350,533

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loans Acquired with Evidence of Credit Deteroration (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Contractual Required Payments Receivable [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Loans Acquired with Deteriorated Credit, Carrying Amount	$ 5,106	$ 5,799
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	0
Collections of principal repayments on loans acquired with deteriorated credit	(114)
Disposition of loans acquired with deteriorated credit quality	(579)
Cash Expected to be Collected [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Loans Acquired with Deteriorated Credit, Carrying Amount	4,478	4,962
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	143
Collections of principal repayments on loans acquired with deteriorated credit	(107)
Disposition of loans acquired with deteriorated credit quality	(520)
Non-Accretable Discount [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Loans Acquired with Deteriorated Credit, Carrying Amount	629	837
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	(143)
Collections of principal repayments on loans acquired with deteriorated credit	(6)
Disposition of loans acquired with deteriorated credit quality	(59)
Accretable Yield [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Loans Acquired with Deteriorated Credit, Carrying Amount	126	0
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	143
Collections of principal repayments on loans acquired with deteriorated credit	17
Loans Receivable [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Line Items]
Loans Acquired with Deteriorated Credit, Carrying Amount	4,352	$ 4,962
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	0
Collections of principal repayments on loans acquired with deteriorated credit	(90)
Disposition of loans acquired with deteriorated credit quality	$ (520)

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Unallocated Common Shares Held By ESOP [Member]	Unearned Restricted Shares [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income [Member]
Balance at Dec. 31, 2014	$ 157,739	$ 128	$ 125,459	$ (4,128)	$ (1,312)	$ 37,497	$ 95
Balance (in shares) at Dec. 31, 2014		12,776,426
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	3,518					2,900	618
Cash dividends declared ($0.12 per share)	(1,444)					(1,444)
Equity incentive plans compensation	683		230		453
Allocation of 36,477 ESOP shares	425		65	360
Restricted shares activity	0		30		(30)
Tax benefit from share-based compensation	5		5
Stock options exercised, Value	3,271	$ 3	3,268
Stock options exercised		297,546
Common shares repurchased, Value	(10,218)	$ (9)	(4,208)			(6,001)
Common shares repurchased		(849,819)
Balance at Sep. 30, 2015	$ 153,979	$ 122	$ 124,849	$ (3,768)	$ (889)	$ 32,952	$ 713
Balance (in shares) at Sep. 30, 2015		12,224,153

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 1,150,632		$ 1,051,090
Allowance for loan losses	(9,246)		(7,797)
Loans receivable, net	1,142,998		1,044,864
Total real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	787,378		742,474
Real estate: Residential - 1 to 4 family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	430,287		430,575
Allowance for loan losses	(1,057)	$ (986)	(955)	$ (970)	$ (984)	$ (975)
Real estate: Multi-family and commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	339,682		298,320
Allowance for loan losses	(4,318)	(3,766)	(3,607)	(3,599)	(3,465)	(3,395)
Real estate: Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	17,409		13,579
Allowance for loan losses	(427)	(434)	(254)	(247)	(221)	(169)
Total commercial business loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	306,115		251,967
Allowance for loan losses	(2,805)	(2,618)	(2,382)	(2,230)	(2,208)	(1,875)
Commercial business: SBA and USDA guaranteed [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	153,811		118,466
Commercial business: Time share [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	57,760		45,669
Commercial business: Condominium association [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	26,237		21,386
Commercial business: Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	68,307		66,446
Total consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	57,139		56,649
Allowance for loan losses	(639)	(633)	(599)	(573)	(567)	(502)
Consumer: Home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	52,985		51,093
Consumer: Indirect automobile [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	2,239		3,692
Consumer: Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,915		1,864
Deferred loan origination costs, net of fees [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Deferred loan origination costs, net of fees	1,612		1,571
Allowance for loan losses [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ (9,246)	$ (8,437)	$ (7,797)	$ (7,619)	$ (7,445)	$ (6,916)

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PREMISES AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

Premises and Equipment [Table Text Block]

Premises and equipment at September 30, 2015 and December 31, 2014 are summarized as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,558			11,879
Leasehold improvements	11,037			10,802
Furniture and equipment	12,846			12,741
Construction in process	18			1,233
	42,205			41,401
Accumulated depreciation and amortization	(20,536		)	(19,690		)
Premises and equipment, net	$	21,669		$	21,711

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Narrative - (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage Loans in Process of Foreclosure, Amount	$ 605
Financing Receivable, Significant Purchases	$ (96,640)	$ (38,643)

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REGULATORY CAPITAL (Tables)

9 Months Ended

Sep. 30, 2015

Banking and Thrift [Abstract]

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Tier 1 Capital to Average Assets:
Company	$	139,565	9.68	%	$	57,699	4.00	%	$	72,123	5.00	%
Bank	133,681		9.42		56,760		4.00		70,950		5.00
Tier 1 Capital to Risk Weighted Assets:
Company	139,565		15.40		54,391		6.00		72,522		8.00
Bank	133,681		14.78		54,286		6.00		72,381		8.00
Total Capital to Risk Weighted Assets:
Company	149,427		16.48		72,522		8.00		90,653		10.00
Bank	143,543		15.87		72,381		8.00		90,476		10.00
Common Equity Tier 1 Capital:
Company	139,565		15.40		40,794		4.50		58,924		6.50
Bank	133,681		14.78		40,714		4.50		58,809		6.50

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Bank:	(Dollars in Thousands)
Tier 1 Capital to Average Assets	$	123,862	9.37	%	$	52,876	4.00	%	$	66,095	5.00	%
Tier 1 Capital to Risk Weighted Assets	123,862		14.86		33,341		4.00		50,012		6.00
Total Capital to Risk Weighted Assets	132,306		15.87		66,695		8.00		83,369		10.00
Tangible Equity Ratio	123,862		9.37		19,828		1.50		N/A		N/A

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical)	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Cash dividends declared per share | $ / shares	$ 0.12
Allocation of ESOP shares	36,477

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS:
Loans receivable, allowance for loan losses	$ 9,246	$ 7,797
Shareholders' Equity
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	1,000,000	1,000,000
Preferred stock, issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	35,000,000	35,000,000
Common stock, shares issued	12,224,153	12,776,426
Common stock, outstanding (in shares)	12,224,153	12,776,426
Treasury stock (in shares)	0	0

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Financial Instruments

The Company has stand-alone derivative financial instruments in the form of interest rate swap agreements which derive their value from underlying interest rates. These transactions involve both credit and market risk. The notional amounts are amounts on which calculations, payments and the value of the derivatives are based. Notional amounts do not represent direct credit exposures. Direct credit exposure is limited to the net difference between the calculated amounts to be received and paid, if any. Such difference, which represents the fair value of the derivative instruments, is reflected on the Company’s balance sheets as other assets and other liabilities. The Company is exposed to credit-related losses in the event of nonperformance by the counterparties to these agreements. The Company controls the credit risk of its financial contracts through credit approvals, limits and monitoring procedures and does not expect any counterparties to fail their obligations.

Derivative instruments are generally either negotiated over-the-counter contracts or standardized contracts executed on a recognized exchange. Negotiated over-the-counter derivative contracts are generally entered into between two counterparties that negotiate specific agreement terms, including the underlying instrument, amount, exercise prices and maturity.

Derivative Instruments Designated As Hedging Instruments

The Company uses long-term variable rate debt as a source of funds for use in the Company’s lending and investment activities and other general business purposes. These debt obligations expose the Company to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases. Conversely, if interest rates decrease, interest expense decreases. Management believes it is prudent to limit the variability of a portion of its interest payments and, therefore, generally hedges a portion of its variable-rate interest payments. To meet this objective, management entered into an interest rate swap agreement, characterized as a cash flow hedge, whereby the Company receives variable interest rate payments determined by three-month LIBOR in exchange for making payments at a fixed interest rate.

At September 30, 2015 and December 31, 2014, information pertaining to the outstanding interest rate swap agreement used to hedge variable rate debt is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	8,000		$	8,000
Weighted average fixed pay rate	2.44		%	2.44		%
Weighted average variable receive rate	0.34		%	0.24		%
Weighted average maturity in years	0.2			1.0
Unrealized loss relating to interest rate swap	$	34		$	157

At September 30, 2015 and December 31, 2014, the unrealized loss related to the above mentioned interest rate swap was recorded as a derivative liability. Changes in the fair value of an interest rate swap designated as a hedging instrument of the variability of cash flows associated with long-term debt are reported in other comprehensive income. These amounts are subsequently reclassified into interest expense as a yield adjustment in the same period in which the related interest on the long-term debt affects earnings.

Risk management results for the periods ended September 30, 2015 and December 31, 2014 related to the balance sheet hedging of long-term debt indicate the hedge was 100% effective and there was no component of the derivative instrument’s loss which was excluded from the assessment of hedge effectiveness.

The Company’s derivative contract contains a provision establishing a collateral requirement (subject to minimum collateral posting thresholds) based on the Company’s external credit rating. If the Company’s junior subordinated debt rating was to fall below the level generally recognized as investment grade, the counterparty to such derivative contract could require additional collateral on the derivative transaction in a net liability position (after considering the effect of bilateral netting arrangements and posted collateral). The Company had posted collateral of $50,000 and $400,000 in the normal course of business for a derivative instrument, with a credit-related contingent feature, that was in a net liability position at September 30, 2015 and December 31, 2014, respectively.

Derivative Instruments Not Designated As Hedging Instruments

Certain derivative instruments do not meet the requirements to be accounted for as hedging instruments. These undesignated derivative instruments are recognized on the consolidated balance sheets at fair value, with changes in fair value recorded in noninterest income.

Interest Rate Swap Agreement - In 2012, management entered into an interest rate swap agreement that does not meet the strict hedge accounting requirements of FASB's "Derivatives and Hedging" standard to manage the Company's exposure to interest rate movements and other identified risks. At September 30, 2015 and December 31, 2014, information pertaining to the Company's interest rate swap agreement not designated as a hedge is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	15,000		$	15,000
Weighted average fixed pay rate	1.26		%	1.26		%
Weighted average variable receive rate	0.29		%	0.25		%
Weighted average maturity in years	1.3			2.0
Unrealized loss relating to interest rate swap	$	136		$	114

The Company reported a loss in fair value on the interest rate swap not designated as a hedge in noninterest income of $7,000 and $22,000 for the three and nine months ended September 30, 2015, respectively, and a gain in fair value of $78,000 and $69,000 for the three and nine months ended September 30, 2014, respectively.

Derivative Loan Commitments -Mortgage loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock.

Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the values of these loan commitments decrease. Conversely, if interest rates decrease, the value of these loan commitments increase. The notional amount of undesignated mortgage loan commitments was $5.0 million at September 30, 2015. At September 30, 2015, the fair value of such commitments was a net asset of $37,000.

Forward Loan Sale Commitments -To protect against the price risk inherent in derivative loan commitments, the Company utilizes “mandatory delivery” forward loan sale commitments to mitigate the risk of potential decreases in the value of loans that would result from the exercise of the derivative loan commitments.

With a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor to compensate the investor for the shortfall.

The Company expects that these forward loan sale commitments will experience changes in fair value opposite to the change in fair value of derivative loan commitments. The notional amount of undesignated forward loan sale commitments was $2.7 million at September 30, 2015. At September 30, 2015, the fair value of such commitments was a net asset of $0.

Interest Rate Risk Management - Derivative Instruments

The following table presents the fair values of derivative instruments as well as their classification on the consolidated balance sheets at September 30, 2015 and December 31, 2014.

		September 30, 2015					December 31, 2014
	Balance Sheet Location	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
		(In Thousands)
Derivative designated as hedging instrument:
Interest rate swap	Other Liabilities	$	8,000	$	(34	)	$	8,000	$	(157	)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	15,000		(136		)	15,000		(114		)
Derivative loan commitments	Other Assets	4,983		37			6,436		59
Forward loan sale commitments	Other Assets	2,662		—			2,754		—

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 02, 2015
Entity Information [Line Items]
Entity Registrant Name	SI Financial Group, Inc.
Entity Central Index Key	0001500213
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		12,218,218

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Level 2 (Policies)

9 Months Ended

Sep. 30, 2015

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, the Bank, and the Bank’s wholly-owned subsidiaries, SI Mortgage Company and SI Realty Company, Inc. All significant intercompany accounts and transactions have been eliminated.

Basis of Accounting, Policy [Policy Text Block]

Basis of Financial Statement Presentation

The interim consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission ("SEC") and general practices within the banking industry. Accordingly, certain information and footnote disclosures required by GAAP for complete financial statements have been omitted.  Information in the accompanying interim consolidated financial statements and notes to the financial statements of the Company as of September 30, 2015 and for the three and nine months ended September 30, 2015 and 2014 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited financial statements of the Company and the accompanying notes for the year ended December 31, 2014 contained in the Company’s Form 10-K.

In the opinion of management, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial condition, results of operations and cash flows as of and for the periods covered herein. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the operating results for the year ending December 31, 2015 or for any other period.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the balance sheets and reported amounts of revenues and expenses for the periods presented. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, deferred income taxes and the impairment of long-lived assets.

Reclassification, Policy [Policy Text Block]

Reclassifications

Amounts in the Company’s prior year consolidated financial statements are reclassified to conform to the current year presentation.  Such reclassifications have no effect on net income.

Finance, Loans and Leases Receivable, Policy [Policy Text Block]

Loans Receivable

Loans receivable are stated at current unpaid principal balances, net of the allowance for loan losses and deferred loan origination fees and costs. Management has the ability and intent to hold its loans receivable for the foreseeable future or until maturity or pay-off.

A loan is impaired when, based on current information and events, it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the 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. Impairment is measured on a loan by loan basis for residential and commercial mortgage loans and commercial business loans by either the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not typically identify individual consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring ("TDR") agreement.

Loans and Leases Receivable, Troubled Debt Restructuring Policy [Policy Text Block]

Troubled Debt Restructurings

The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and concessions have been made by the Company to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as below market interest rate reductions, deferral of interest or principal payments, or maturity extensions due to the borrower’s financial condition, the modification is considered a TDR. Modified terms are dependent upon the financial position and needs of the individual borrower. If the modification agreement is violated, the loan is handled by the Company’s Collections Department for resolution which may result in foreclosure.

Management considers all nonaccrual loans, with the exception of certain consumer loans, to be impaired. Also, all TDRs are initially classified as impaired and follow the Company's nonaccrual policy. If the loan was current prior to modification, nonaccrual status would not be required. If the loan was on nonaccrual prior to modification or if the payment amount significantly increases, the loan will remain on nonaccrual for a period of at least six months. Loans qualify for return to accrual status once the borrower has demonstrated the willingness and the ability to perform in accordance with the restructured terms of the loan agreement for a period of not less than six consecutive months. In most cases, loan payments less than 90 days past due are considered minor collection delays and the related loans are generally not considered impaired.

Impaired classification may be removed after a year following the restructure if the borrower demonstrates compliance with the modified terms and the restructuring agreement specifies an interest rate equal to that which would be provided to a borrower with similar risk characteristics at the time of restructuring.

Loans and Leases Receivable, Allowance for Loan Losses Policy [Policy Text Block]

Allowance for Loan Losses

The allowance for loan losses, a material estimate which could change significantly in the near-term, is established through a provision for loan losses charged to earnings to account for losses that are inherent in the loan portfolio and estimated to occur, and is maintained at a level that management considers adequate to absorb losses in the loan portfolio. Loan losses are charged against the allowance for loan losses when management believes the uncollectibility of the principal loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance for loan losses when received. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, if necessary.

Management's judgment in determining the adequacy of the allowance is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance for loan losses is evaluated on a monthly basis by management and is based on the evaluation of the known and inherent risk characteristics and size and composition of the loan portfolio, the assessment of current economic and real estate market conditions, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, historical loan loss experience, the level and trends of nonperforming loans, delinquencies, classified assets and loan charge-offs and evaluations of loans and other relevant factors.

The allowance for loan losses consists of the following key elements:

• Specific allowance for identified impaired loans. For loans identified as impaired, an allowance is established when the present value of expected cash flows (or observable market price of the loan or fair value of the collateral if the loan is collateral dependent) of the impaired loan is lower than the carrying value of that loan.

• General valuation allowance. The general component represents a valuation allowance on the remainder of the loan portfolio, after excluding impaired loans. For this portion of the allowance, loans are segregated by category and assigned an allowance percentage based on historical loan loss experience adjusted for qualitative factors stratified by the following loan segments: residential one- to four-family, multi-family and commercial real estate, construction, commercial business and consumer. Management uses a rolling average of historical losses based on the time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off and recovery practices; changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments; changes in the size and composition of the loan portfolio and in the terms of the loans; changes in the experience, ability, and depth of lending management and other relevant staff; changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans; changes in the quality of the loan review system; changes in the underlying collateral for collateral-dependent loans; the existence and effect of any concentrations of credit and changes in the level of such concentrations; the effect of other external factors such as competition and legal and regulatory capital requirements on the level of estimated credit losses in the portfolio.

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

• Residential – One- to Four-Family – The Bank primarily originates conventional loans with loan-to-value ratios less than 95% and generally originates loans with loan-to-value ratios in excess of 80% only when secured by first liens on owner-occupied one- to four-family residences. Loans with loan-to-value ratios in excess of 80% generally require private mortgage insurance or additional collateral. 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 of this segment.

• Multi-family and Commercial – Loans in this segment are originated for the purpose of acquiring, developing, improving or refinancing multi-family and commercial real estate where the property is the primary collateral securing the loan, and the income generated from the property is the primary repayment source. The underlying cash flows generated by the properties can be adversely impacted by the economy as evidenced by increased vacancy rates. Payments on loans secured by income-producing properties often depend on the successful operation and management of the properties. Management continually monitors the cash flows of these loans.

• Construction – This segment includes loans to individuals and, to a lesser extent, builders to finance the construction of residential dwellings. The Bank also originates construction loans for commercial development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, correct estimates of the sale price of the property, time to sell at an adequate price and market conditions.

• Commercial Business – 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 reduced viability of the industry in which the customer operates will have a negative impact on the credit quality in this segment. The Bank also provides loans to investors in the time share industry, which are secured by consumer receivables, and provides loans for capital improvements to condominium associations, which are secured by the assigned rights to levy special assessments to condominium owners.

• Consumer – Loans in this segment primarily include home equity lines of credit (representing both first and second liens), indirect automobile loans and, to a lesser extent, loans secured by marketable securities, passbook or certificate accounts, motorcycles, automobiles and recreational vehicles, as well as unsecured loans. Consumer loan collections depend on the borrower’s continuing financial stability and, therefore, are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy.

In computing the allowance for loan losses, we do not assign a general valuation allowance to the Small Business Administration (“SBA”) and United States Department of Agriculture (“USDA”) loans that we purchase as such loans are fully guaranteed. These loans are included in commercial business loans. See Note 4 for details.

The majority of the Company's loans are collateralized by real estate located in eastern Connecticut and Rhode Island. To a lesser extent, certain commercial real estate loans are secured by collateral located outside of our primary market area. Accordingly, the collateral value of a substantial portion of the Company's loan portfolio and real estate acquired through foreclosure is susceptible to changes in local market conditions.

Although management believes it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and the Company’s results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while management believes it has established the allowance for loan losses in conformity with GAAP, our regulators, in reviewing the loan portfolio, may request us to increase our allowance for loan losses based on judgments different from ours. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, the existing allowance for loan losses may not be adequate or increases may be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses would adversely affect the Company’s financial condition and results of operations.

Revenue Recognition, Interest [Policy Text Block]

Interest and Fees on Loans

Interest on loans is accrued and included in net interest income based on contractual rates applied to principal amounts outstanding. Accrual of interest is discontinued when loan payments are 90 days or more past due, based on contractual terms, or when, in the judgment of management, collectibility of the loan or loan interest becomes uncertain. Subsequent recognition of income occurs only to the extent payment is received subject to management's assessment of the collectibility of the remaining interest and principal. A nonaccrual loan is restored to accrual status when it is no longer delinquent and collectibility of interest and principal is no longer in doubt and the borrower has made regular payments in accordance with the terms of the loan over a period of at least six months. Interest collected on nonaccrual loans is recognized only to the extent cash payments are received, and may be recorded as a reduction to principal if the collectibility of the principal balance of the loan is unlikely.

Loan origination fees, direct loan origination costs and loan purchase premiums are deferred, and the net amount is recognized as an adjustment of the related loan's yield utilizing the interest method over the contractual life of the loan. In addition, discounts related to fair value adjustments for loans receivable acquired in a business combination or asset purchase are accreted into earnings over the contractual term as an adjustment of the loan's yield. The Company periodically evaluates the cash flows expected to be collected for loans acquired with deteriorated credit quality. Changes in the expected cash flows compared to the expected cash flows as of the date of acquisition may impact the accretable yield or result in a charge to the provision for loan losses to the extent of a shortfall.

Earnings Per Share, Policy [Policy Text Block]

Basic earnings per share is calculated by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Unvested restricted shares are considered outstanding in the computation of basic earnings per share since the shares participate in dividends and the rights to the dividends are non-forfeitable. Diluted earnings per share is computed in a manner similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents were issued during the period. The Company’s common stock equivalents relate solely to stock options. Repurchased common shares and unallocated common shares held by the Bank’s ESOP are not deemed outstanding for earnings per share calculations.

Stockholders' Equity, Policy [Policy Text Block]

Common Share Repurchases

The Company is chartered in the state of Maryland. Maryland law does not provide for treasury shares, rather shares repurchased by the Company constitute authorized but unissued shares. GAAP states that accounting for treasury stock shall conform to state law. Therefore, the cost of shares repurchased by the Company has been allocated to common stock, additional paid-in capital and retained earnings balances.

Comprehensive Income, Policy [Policy Text Block]

Accounting principles generally require 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 shareholders’ equity on the balance sheet, such items, along with net income, are components of comprehensive income.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value Hierarchy

The Company groups its assets and liabilities in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Transfers between levels are recognized at the end of a reporting period, if applicable.

Level 1: Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities 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 or liabilities.

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 or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to 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.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. In January 2014, the Financial Accounting Standards Board ("FASB") issued amended guidance that clarifies when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The amended guidance clarifies that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. In addition, the amended guidance requires interim and annual disclosures of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure -In August 2014, the FASB issued amended guidance that addresses the diversity in practice regarding the classification and measurement of foreclosed loans which were part of a government-sponsored loan guarantee program (e.g. HUD, FHA, VA). The amended guidance outlines certain criteria that, if met, the loan (residential or commercial) should be derecognized and a separate other receivable should be recorded upon foreclosure at the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The adoption of the amended guidance on January 1, 2015 did not have a material impact on the Company’s consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs - In April 2015, the FASB issued guidance simplifying the presentation of debt issuance costs. The amended guidance requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amended guidance should be applied on a retrospective basis and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015, with early adoption permitted. The adoption of the amended guidance is not expected to have a material impact on the Company's consolidated financial statements.

Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - In August 2015, the FASB issued amended guidance pursuant to the SEC Staff Announcement at the June 18, 2015 Emerging Issues Task Force meeting that the update issued in April 2015 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within the previous update for debt issuance costs related to line-of-credit-arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there were any outstanding borrowings on the line-of-credit arrangement. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest and dividend income:
Loans, including fees	$ 11,278	$ 10,735	$ 32,823	$ 32,489
Securities:
Taxable interest	766	877	2,253	2,651
Tax-exempt interest	14	59	63	160
Dividends	140	46	281	143
Other	19	11	57	39
Total interest and dividend income	12,217	11,728	35,477	35,482
Interest expense:
Deposits	1,403	1,355	4,150	4,033
Federal Home Loan Bank advances	846	602	2,124	1,921
Subordinated debt and other borrowings	84	84	251	251
Total interest expense	2,333	2,041	6,525	6,205
Net interest income	9,884	9,687	28,952	29,277
Provision for loan losses	1,017	350	1,712	1,195
Net interest income after provision for loan losses	8,867	9,337	27,240	28,082
Noninterest income:
Service fees	1,699	1,762	5,039	5,265
Wealth management fees	303	293	916	926
Increase in cash surrender value of bank-owned life insurance	146	147	449	433
Net gain on sales of securities	14	0	146	64
Mortgage banking	139	81	416	396
Net gain (loss) on fair value of derivatives	(7)	78	(22)	69
Other	452	85	749	527
Total noninterest income	2,746	2,446	7,693	7,680
Noninterest expenses:
Salaries and employee benefits	4,986	4,897	15,059	15,128
Occupancy and equipment	1,816	1,883	5,660	5,852
Computer and electronic banking services	1,413	1,417	4,168	4,082
Outside professional services	436	420	1,410	1,422
Marketing and advertising	259	216	779	754
Supplies	149	146	441	465
FDIC deposit insurance and regulatory assessments	255	303	748	953
Core deposit intangible amortization	150	150	451	463
Other real estate operations	160	72	444	303
Other	521	500	1,452	1,873
Total noninterest expenses	10,145	10,004	30,612	31,295
Income before income tax provision	1,468	1,779	4,321	4,467
Income tax provision	494	579	1,421	1,447
Net income	$ 974	$ 1,200	$ 2,900	$ 3,020
Earnings per share:
Basic	$ 0.08	$ 0.10	$ 0.24	$ 0.25
Diluted	$ 0.08	$ 0.10	$ 0.24	$ 0.24

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loan Portfolio

The composition of the Company’s loan portfolio at September 30, 2015 and December 31, 2014 is as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	430,287		$	430,575
Multi-family and commercial	339,682			298,320
Construction	17,409			13,579
Total real estate loans	787,378			742,474
Commercial business loans:
SBA and USDA guaranteed	153,811			118,466
Time share	57,760			45,669
Condominium association	26,237			21,386
Other	68,307			66,446
Total commercial business loans	306,115			251,967
Consumer loans:
Home equity	52,985			51,093
Indirect automobile	2,239			3,692
Other	1,915			1,864
Total consumer loans	57,139			56,649
Total loans	1,150,632			1,051,090
Deferred loan origination costs, net of fees	1,612			1,571
Allowance for loan losses	(9,246		)	(7,797		)
Loans receivable, net	$	1,142,998		$	1,044,864

The Company purchased commercial business loans totaling $96.6 million during the nine months ended September 30, 2015.

Allowance for Loan Losses

Changes in the allowance for loan losses for the three and nine months ended September 30, 2015 and 2014 are as follows:

Three Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	986		$	3,766		$	434		$	2,618		$	633	$	8,437
Provision (credit) for loan losses	30			666			(7		)	322			6		1,017
Loans charged-off	—			(136		)	—			(140		)	—		(276		)
Recoveries of loans previously charged-off	41			22			—			5			—		68
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246
Nine Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	955		$	3,607		$	254		$	2,382		$	599	$	7,797
Provision for loan losses	74			843			173			582			40		1,712
Loans charged-off	(46		)	(156		)	—			(165		)	—		(367		)
Recoveries of loans previously charged-off	74			24			—			6			—		104
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246

Three Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	984		$	3,465		$	221	$	2,208		$	567		$	7,445
Provision for loan losses	123			135			26		21			45			350
Loans charged-off	(137		)	(1		)	—		—			(42		)	(180		)
Recoveries of loans previously charged-off	—			—			—		1			3			4
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619
Nine Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	975		$	3,395		$	169	$	1,875		$	502		$	6,916
Provision for loan losses	281			347			78		364			125			1,195
Loans charged-off	(317		)	(144		)	—		(13		)	(75		)	(549		)
Recoveries of loans previously charged-off	31			1			—		4			21			57
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619

Further information pertaining to the allowance for loan losses at September 30, 2015 and December 31, 2014 is as follows:

September 30, 2015	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	310	$	40	$	—	$	—	$	—	$	350
Allowance for loans individually or collectively evaluated and not deemed to be impaired	747		4,278		427		2,805		639		8,896
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,057	$	4,318	$	427	$	2,805	$	639	$	9,246
Loans individually evaluated and deemed to be impaired	$	5,893	$	3,765	$	—	$	485	$	77	$	10,220
Loans individually or collectively evaluated and not deemed to be impaired	424,394		332,193		17,409		304,876		57,062		1,135,934
Amount of loans acquired with deteriorated credit quality	—		3,724		—		754		—		4,478
Total loans	$	430,287	$	339,682	$	17,409	$	306,115	$	57,139	$	1,150,632

December 31, 2014	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	287	$	52	$	—	$	20	$	—	$	359
Allowance for loans individually or collectively evaluated and not deemed to be impaired	668		3,555		254		2,362		599		7,438
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	955	$	3,607	$	254	$	2,382	$	599	$	7,797
Loans individually evaluated and deemed to be impaired	$	5,318	$	1,872	$	—	$	470	$	—	$	7,660
Loans individually or collectively evaluated and not deemed to be impaired	424,885		292,215		13,579		251,140		56,649		1,038,468
Amount of loans acquired with deteriorated credit quality	372		4,233		—		357		—		4,962
Total loans	$	430,575	$	298,320	$	13,579	$	251,967	$	56,649	$	1,051,090

Past Due Loans

The following represents an aging of loans at September 30, 2015 and December 31, 2014:

September 30, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	14	$	1,050	$	926	$	1,990	$	428,297	$	430,287
Multi-family and commercial	3,310		657		2,060		6,027		333,655		339,682
Construction	—		—		—		—		17,409		17,409
Commercial Business:
SBA and USDA guaranteed	—		—		—		—		153,811		153,811
Time share	—		—		—		—		57,760		57,760
Condominium association	—		—		—		—		26,237		26,237
Other	—		155		815		970		67,337		68,307
Consumer:
Home equity	—		—		270		270		52,715		52,985
Indirect automobile	26		3		7		36		2,203		2,239
Other	—		1		—		1		1,914		1,915
Total	$	3,350	$	1,866	$	4,078	$	9,294	$	1,141,338	$	1,150,632

December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans		Past Due 90 Days or More and Accruing
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	4,194	$	258	$	1,602	$	6,054	$	424,521	$	430,575	$	—
Multi-family and commercial	768		794		775		2,337		295,983		298,320		—
Construction	—		—		—		—		13,579		13,579		—
Commercial Business:
SBA and USDA guaranteed	1,536		—		459		1,995		116,471		118,466		459
Time share	—		—		—		—		45,669		45,669		—
Condominium association	—		—		—		—		21,386		21,386		—
Other	50		—		446		496		65,950		66,446		—
Consumer:
Home equity	20		158		23		201		50,892		51,093		—
Indirect automobile	103		10		—		113		3,579		3,692		—
Other	—		—		—		—		1,864		1,864		—
Total	$	6,671	$	1,220	$	3,305	$	11,196	$	1,039,894	$	1,051,090	$	459

The Company did not have any loans that were past due 90 days or more and still accruing interest at September 30, 2015.

Impaired and Nonaccrual Loans

The following is a summary of impaired loans and nonaccrual loans at September 30, 2015 and December 31, 2014:

	Impaired Loans(1)
September 30, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,483	$	3,501	$	—	$	3,272
Multi-family and commercial	5,331		5,664		—		2,631
Commercial business - Other	832		832		—		814
Consumer - Home equity	77		77		—		324
Total impaired loans without valuation allowance	9,723		10,074		—		7,041
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,410		2,421		310		148
Multi-family and commercial	1,204		1,314		40		63
Commercial business - Other	—		—		—		—
Consumer - Home equity	—		—		—		—
Total impaired loans with valuation allowance	3,614		3,735		350		211
Total impaired loans	$	13,337	$	13,809	$	350	$	7,252

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Newport Federal Savings Bank ("Newport") merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance.

	Impaired Loans(1)
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,414	$	3,485	$	—	$	2,923
Multi-family and commercial	4,815		5,102		—		775
Commercial business - Other	645		645		—		264
Consumer - Home equity	—		—		—		23
Total impaired loans without valuation allowance	8,874		9,232		—		3,985
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,276		2,304		287		244
Multi-family and commercial	1,290		1,290		52		132
Commercial business - Other	182		182		20		182
Total impaired loans with valuation allowance	3,748		3,776		359		558
Total impaired loans	$	12,622	$	13,008	$	359	$	4,543

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

The Company reviews and establishes, if necessary, an allowance for certain impaired loans for the amount by which the present value of expected cash flows (or observable market price of loan or fair value of the collateral if the loan is collateral dependent) are lower than the carrying value of the loan. At September 30, 2015 and December 31, 2014, the Company concluded that certain impaired loans required no valuation allowance as a result of management’s measurement of impairment. No additional funds are committed to be advanced to those borrowers whose loans are deemed impaired.

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,874	$	32	$	6	$	5,726	$	84	$	7
Multi-family and commercial	6,222		72		3		6,071		219		3
Commercial business - Other	1,182		7		6		1,070		15		6
Consumer - Home equity	81		—		—		52		—		—
Total	$	13,359	$	111	$	15	$	12,919	$	318	$	16

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,829	$	27	$	4	$	5,987	$	117	$	47
Multi-family and commercial	6,262		70		—		6,989		312		72
Commercial business - Other	1,145		6		—		1,123		34		15
Consumer - Home equity	22		2		2		40		3		3
Consumer - Other	20		—		—		10		—		—
Total	$	13,278	$	105	$	6	$	14,149	$	466	$	137

Credit Quality Information

The Company utilizes an eight-grade internal loan rating system for all loans in the portfolio, with the exception of its purchased SBA and USDA commercial business loans that are fully guaranteed by the U.S. government, as follows:

o Pass (Ratings 1-4): Loans in these categories are considered low to average risk.

o Special Mention (Rating 5): Loans in this category are starting to show signs of potential weakness and are being closely monitored by management.

o Substandard (Rating 6): Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

o Doubtful (Rating 7): 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.

o Loss (Rating 8): Loans in this category are considered uncollectible and of such little value that their continuance as assets is not warranted.

Management periodically reviews the ratings described above and the Company’s internal audit function reviews components of the credit files, including the assigned risk ratings, of certain commercial loans as part of its loan review.  

The following tables present the Company’s loans by risk rating at September 30, 2015 and December 31, 2014:

September 30, 2015	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	422,608	$	2,021	$	5,658	$	—	$	—	$	430,287
Multi-family and commercial	—		312,740		12,642		14,300		—		—		339,682
Construction	—		17,409		—		—		—		—		17,409
Total real estate loans	—		752,757		14,663		19,958		—		—		787,378
Commercial Business:
SBA and USDA guaranteed	153,811		—		—		—		—		—		153,811
Time share	—		57,760		—		—		—		—		57,760
Condominium association	—		26,237		—		—		—		—		26,237
Other	—		64,820		1,770		1,717		—		—		68,307
Total commercial business loans	153,811		148,817		1,770		1,717		—		—		306,115
Consumer:
Home equity	—		52,548		67		370		—		—		52,985
Indirect automobile	—		2,239		—		—		—		—		2,239
Other	—		1,915		—		—		—		—		1,915
Total consumer loans	—		56,702		67		370		—		—		57,139
Total loans	$	153,811	$	958,276	$	16,500	$	22,045	$	—	$	—	$	1,150,632

December 31, 2014	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	423,134	$	1,430	$	6,011	$	—	$	—	$	430,575
Multi-family and commercial	—		269,680		17,058		11,582		—		—		298,320
Construction	—		13,579		—		—		—		—		13,579
Total real estate loans	—		706,393		18,488		17,593		—		—		742,474
Commercial Business:
SBA and USDA guaranteed	118,466		—		—		—		—		—		118,466
Time share	—		45,669		—		—		—		—		45,669
Condominium association	—		21,386		—		—		—		—		21,386
Other	—		61,835		2,709		1,902		—		—		66,446
Total commercial business loans	118,466		128,890		2,709		1,902		—		—		251,967
Consumer:
Home equity	—		50,965		57		71		—		—		51,093
Indirect automobile	—		3,692		—		—		—		—		3,692
Other	—		1,864		—		—		—		—		1,864
Total consumer loans	—		56,521		57		71		—		—		56,649
Total loans	$	118,466	$	891,804	$	21,254	$	19,566	$	—	$	—	$	1,051,090

The following table provides information on loans modified as TDRs during the three and nine months ended September 30, 2015 and 2014. During the modification process, there were no loan charge-offs or principal reductions for the loans included in the table below.

	Three Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	—	$	—	$	—
Multi-family and commercial	4	1,035		—		—	—		50
Commercial business - other	2	118		—		—	—		—
Total	9	$	1,655	$	33	—	$	—	$	50
	Nine Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	1	$	100	$	—
Multi-family and commercial	4	1,035		—		2	1,416		50
Commercial business - other	2	118		—		2	314		—
Total	9	$	1,655	$	33	5	$	1,830	$	50

The following table provides the recorded investment, by type of modification, during the three and nine months ended September 30, 2015 and 2014 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(In Thousands)
Interest rate adjustments	$	559	$	—	$	559	$	379
Principal deferrals	115		—		115		—
Combination of rate and payment (1)	146		—		146		288
Combination of rate and maturity (2)	—		—		—		1,163
Maturity only	835		—		835		—
Total	$	1,655	$	—	$	1,655	$	1,830

⁽¹⁾ Terms include combination of interest rate adjustments and interest-only payment with deferral of principal.

⁽²⁾ Terms include combination of interest rate adjustments and extensions of maturity.

There were no TDRs in payment default (defined as 90 days or more past due) within twelve months of restructure for the three and nine months ended September 30, 2015 and 2014.

As of September 30, 2015, the Company held $605,000 in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.

Loans Acquired with Deteriorated Credit Quality

The following is a summary of loans acquired with evidence of credit deterioration from Newport as of September 30, 2015 and December 31, 2014.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2014	$	5,799		$	4,962		$	837		$	—		$	4,962
Additions	—			143			(143		)	143			—
Collections	(114		)	(107		)	(6		)	(17		)	(90		)
Dispositions	(579		)	(520		)	(59		)	—			(520		)
Balance at September 30, 2015	$	5,106		$	4,478		$	629		$	126		$	4,352

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SECURITIES

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

SECURITIES [Text Block]

SECURITIES

Available for Sale Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities at September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	68,172	$	620	$	(224	)	$	68,568
Government-sponsored enterprises	30,329		335		—			30,664
Mortgage-backed securities:(1)
Agency - residential	69,527		872		(519		)	69,880
Non-agency - residential	161		—		(5		)	156
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,155		—		(25		)	1,130
Obligations of state and political subdivisions	1,535		2		—			1,537
Tax-exempt securities	3,183		59		—			3,242
Total available for sale securities	$	175,062	$	1,888	$	(773	)	$	176,177

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	66,232	$	385	$	(226	)	$	66,391
Government-sponsored enterprises	27,435		120		(67		)	27,488
Mortgage-backed securities:(1)
Agency - residential	67,008		907		(1,065		)	66,850
Non-agency - residential	254		3		(4		)	253
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,188		—		(7		)	1,181
Obligations of state and political subdivisions	3,039		167		(6		)	3,200
Tax-exempt securities	6,583		97		(3		)	6,677
Total available for sale securities	$	172,739	$	1,679	$	(1,378	)	$	173,040

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or GSEs.  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

The amortized cost and fair value of debt securities by contractual maturities at September 30, 2015 are presented below. Maturities are based on the final contractual payment dates and do not reflect the impact of potential prepayments or early redemptions. Because mortgage-backed securities ("MBS") are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.

	Amortized Cost		Fair Value
	(In Thousands)
Within 1 year	$	2,536	$	2,539
After 1 but within 5 years	52,956		53,554
After 5 but within 10 years	12,250		12,216
After 10 years	37,632		37,832
	105,374		106,141
Mortgage-backed securities	69,688		70,036
Total debt securities	$	175,062	$	176,177

The following is a summary of realized gains and losses on the sales/calls of securities for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(In Thousands)
Gross gains on sales/calls	$	14	$	—	$	169		$	64
Gross losses on sales/calls	—		—		(23		)	—
Net gain on sales/calls of securities	$	14	$	—	$	146		$	64

There were no sales of available for sale securities for the three months ended September 30, 2015 and 2014. Proceeds from the sale of available for sale securities were $9.7 million and $1.1 million for the nine months ended September 30, 2015 and 2014, respectively.

The following tables present information pertaining to securities with gross unrealized losses at September 30, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.

	Less Than 12 Months				12 Months Or More				Total
September 30, 2015	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	3,880	$	15	$	15,703	$	209	$	19,583	$	224
Mortgage-backed securities:
Agency - residential	4,731		19		28,634		500		33,365		519
Non-agency - residential	—		—		115		5		115		5
Collateralized debt obligation	—		—		1,130		25		1,130		25
Total	$	8,611	$	34	$	45,582	$	739	$	54,193	$	773

	Less Than 12 Months				12 Months Or More				Total
December 31, 2014	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	9,273	$	15	$	16,655	$	211	$	25,928	$	226
Government-sponsored enterprises	6,974		4		3,973		63		10,947		67
Mortgage-backed securities:
Agency - residential	4,251		122		32,127		943		36,378		1,065
Non-agency - residential	—		—		127		4		127		4
Collateralized debt obligation	1,181		7		—		—		1,181		7
Obligations of state and political subdivisions	—		—		668		6		668		6
Tax-exempt securities	1,141		3		—		—		1,141		3
Total	$	22,820	$	151	$	53,550	$	1,227	$	76,370	$	1,378

At September 30, 2015, twenty-three debt securities with gross unrealized losses had aggregate depreciation of approximately 1.41% of the Company’s amortized cost basis. The majority of the unrealized losses are related to the Company’s agency MBS. There were no investments deemed other-than-temporarily impaired for the three and nine months ended September 30, 2015 and 2014. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements that the applicable investments within the Company’s securities portfolio were not other-than-temporarily impaired at September 30, 2015.

U.S. Government and Agency Obligations. The unrealized losses on the Company’s U.S. Government and agency obligations related primarily to a widening of the rate spread to comparable treasury securities. Because the decline in market value was attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell the securities before their anticipated recovery, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired at September 30, 2015.

Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s agency–residential mortgage-backed securities were caused by increases in the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before the recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at September 30, 2015.

Mortgage-backed Securities - Non-agency - Residential. The unrealized losses on the Company's non-agency - residential mortgage-backed securities relate to one investment which has been evaluated by management and no potential credit losses were identified. Because the Company does not intend to sell this security and it is not more likely than not that the Company will be required to sell this security before the recovery of its amortized cost basis, which may be maturity, the Company did not consider this investment to be other-than-temporarily impaired at September 30, 2015.

Collateralized Debt Obligations. The unrealized losses on the Company's collateralized debt obligations relate to one investment in a pooled trust preferred security ("PTPS"). The PTPS market has stabilized at depressed market values as a result of market saturation. The Company's PTPS was upgraded to investment grade and based on its senior credit profile, management does not believe this investment will suffer from any further credit-related losses. Because the Company does not intend to sell the investment and it is not more likely than not the Company will be required to sell the investment before recovery of its amortized cost basis, which may be at maturity, the Company did not record impairment losses as of September 30, 2015.

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OTHER COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

Schedule of Comprehensive Income (Loss) [Table Text Block]

Components of other comprehensive income and related tax effects are as follows:

	Nine Months Ended September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	960		$	(327	)	$	633
Reclassification adjustment for gains recognized in net income	(146		)	50			(96		)
Unrealized holding gains on available for sale securities, net of taxes	814			(277		)	537
Derivative instrument:
Change in fair value of effective cash flow hedging derivative	123			(42		)	81
Other comprehensive income	$	937		$	(319	)	$	618

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

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

	September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	1,115		$	(379	)	$	736
Net unrealized loss on effective cash flow hedging derivative	(34		)	11			(23		)
Accumulated other comprehensive income	$	1,081		$	(368	)	$	713

	December 31, 2014
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	301		$	(102	)	$	199
Net unrealized loss on effective cash flow hedging derivative	(157		)	53			(104		)
Accumulated other comprehensive income	$	144		$	(49	)	$	95

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share, Basic and Diluted [Table Text Block]

The computation of earnings per share is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	974	$	1,200	$	2,900	$	3,020
Weighted average common shares outstanding:
Basic	11,793,218		12,310,368		12,036,573		12,315,829
Effect of dilutive stock options	21,713		23,065		28,485		38,382
Diluted	11,814,931		12,333,433		12,065,058		12,354,211
Earnings per share:
Basic	$	0.08	$	0.10	$	0.24	$	0.25
Diluted	$	0.08	$	0.10	$	0.24	$	0.24

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REGULATORY CAPITAL

9 Months Ended

Sep. 30, 2015

Banking and Thrift [Abstract]

REGULATORY CAPITAL

REGULATORY CAPITAL

The Company and the Bank are subject to regulatory capital adequacy requirements promulgated by federal bank regulatory agencies. Failure by the Company or the Bank to meet minimum capital requirements could result in certain mandatory and discretionary actions by regulators that could have a material adverse effect on our consolidated financial statements. The following tables present regulatory capital information for the Company and the Bank. Information presented for September 30, 2015 reflects the Basel III capital requirements that became effective January 1, 2015 for both the Company and the Bank and changed the inputs and methodology for computing capital. Prior to January 1, 2015, the Bank was subject to capital requirements under Basel I and there were no capital requirements for the Company. Under these capital requirements, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classifications are also subject to qualitative judgments by regulators about components, risk weightings and other factors.

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2015	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Tier 1 Capital to Average Assets:
Company	$	139,565	9.68	%	$	57,699	4.00	%	$	72,123	5.00	%
Bank	133,681		9.42		56,760		4.00		70,950		5.00
Tier 1 Capital to Risk Weighted Assets:
Company	139,565		15.40		54,391		6.00		72,522		8.00
Bank	133,681		14.78		54,286		6.00		72,381		8.00
Total Capital to Risk Weighted Assets:
Company	149,427		16.48		72,522		8.00		90,653		10.00
Bank	143,543		15.87		72,381		8.00		90,476		10.00
Common Equity Tier 1 Capital:
Company	139,565		15.40		40,794		4.50		58,924		6.50
Bank	133,681		14.78		40,714		4.50		58,809		6.50

	Actual				For Capital Adequacy Purposes				To Be Well Capitalized Under Prompt Corrective Action Provisions
December 31, 2014	Amount		Ratio		Amount		Ratio		Amount		Ratio
Bank:	(Dollars in Thousands)
Tier 1 Capital to Average Assets	$	123,862	9.37	%	$	52,876	4.00	%	$	66,095	5.00	%
Tier 1 Capital to Risk Weighted Assets	123,862		14.86		33,341		4.00		50,012		6.00
Total Capital to Risk Weighted Assets	132,306		15.87		66,695		8.00		83,369		10.00
Tangible Equity Ratio	123,862		9.37		19,828		1.50		N/A		N/A

Quantitative measures established by regulation require the Company and the Bank to maintain certain minimum capital amounts and ratios. Federal bank regulators require the Company and the Bank to maintain minimum ratios of core capital to adjusted average assets of 4.0%, common equity tier 1 capital to risk-weighted assets of 4.5%, tier 1 capital to risk-weighted assets of 6.0% and total risk-based capital to risk-weighted assets of 8.0%. At September 30, 2015, the Company and the Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory requirements. To be “well capitalized,” the Company and the Bank must maintain minimum leverage, common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios of at least 5.0%, 6.5%, 8.0% and 10.0%, respectively. Management believes no conditions or events have occurred since September 30, 2015 that would materially adversely change the Company’s and the Bank’s capital classifications.

Beginning January 1, 2016, Basel III implements a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer will be exclusively composed of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios, but not the leverage ratio. On January 1, 2016, the Company and the Bank will be expected to comply with the capital conservation buffer requirement, which will increase the three risk-based capital ratios by 0.625% each year through 2019, at which point, the minimum common equity tier 1 risk-based, tier 1 risk-based and total risk-based capital ratios will be 7.0%, 8.5% and 10.5%, respectively.

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PREMISES AND EQUIPMENT

9 Months Ended

Sep. 30, 2015

Property, Plant and Equipment [Abstract]

Premises and Equipment Disclosure [Text Block]

PREMISES AND EQUIPMENT

Premises and equipment at September 30, 2015 and December 31, 2014 are summarized as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,558			11,879
Leasehold improvements	11,037			10,802
Furniture and equipment	12,846			12,741
Construction in process	18			1,233
	42,205			41,401
Accumulated depreciation and amortization	(20,536		)	(19,690		)
Premises and equipment, net	$	21,669		$	21,711

At September 30, 2015, construction in process related to the project to redesign traffic flow at an existing branch.

At December 31, 2014, construction in process related to design and site costs associated with a new branch location.

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OTHER COMPREHENSIVE (LOSS) INCOME

9 Months Ended

Sep. 30, 2015

Stockholders' Equity Note [Abstract]

OTHER COMPREHENSIVE (LOSS) INCOME

OTHER COMPREHENSIVE INCOME

Accounting principles generally require 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 shareholders’ equity on the balance sheet, such items, along with net income, are components of comprehensive income.

Components of other comprehensive income and related tax effects are as follows:

	Nine Months Ended September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	960		$	(327	)	$	633
Reclassification adjustment for gains recognized in net income	(146		)	50			(96		)
Unrealized holding gains on available for sale securities, net of taxes	814			(277		)	537
Derivative instrument:
Change in fair value of effective cash flow hedging derivative	123			(42		)	81
Other comprehensive income	$	937		$	(319	)	$	618

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

	September 30, 2015
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	1,115		$	(379	)	$	736
Net unrealized loss on effective cash flow hedging derivative	(34		)	11			(23		)
Accumulated other comprehensive income	$	1,081		$	(368	)	$	713

	December 31, 2014
	Before Tax Amount			Tax Effects			Net of Tax Amount
	(In Thousands)
Net unrealized gains on available for sale securities	$	301		$	(102	)	$	199
Net unrealized loss on effective cash flow hedging derivative	(157		)	53			(104		)
Accumulated other comprehensive income	$	144		$	(49	)	$	95

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FAIR VALUE OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE OF ASSETS AND LIABILITIES

FAIR VALUE OF ASSETS AND LIABILITIES

Fair Value Hierarchy

The Company groups its assets and liabilities in three levels based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Transfers between levels are recognized at the end of a reporting period, if applicable.

Level 1: Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities 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 or liabilities.

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 or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using unobservable inputs to 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.

Determination of Fair Value

The Company uses 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 the Company’s 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.

The following methods and assumptions were used by the Company in estimating fair value disclosures of its financial instruments:

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

• Securities available for sale.Included in the available for sale category are debt securities. The securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. Securities measured at fair value in Level 2 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. The Company utilizes a nationally-recognized, third-party pricing service to estimate fair value measurements for the majority of its portfolio. The pricing service evaluates each asset class based on relevant market information considering observable data, but these prices do not represent binding quotes. The fair value prices on all investments are reviewed for reasonableness by management. Securities measured at fair value in Level 3 include one collateralized debt obligation that is backed by trust preferred securities issued by banks and insurance companies. Management determined that an orderly and active market for these securities and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels. The Company employs a valuation specialist to estimate future cash flows discounted using a rate management believes is representative of current market conditions. Factors in determining the discount rate include the current level of deferrals and/or defaults, changes in credit rating and the financial condition of the debtors within the underlying securities, broker quotes for securities with similar structure and credit risk, interest rate movements and pricing for new issuances.

• Federal Home Loan Bank stock.The carrying value of Federal Home Loan Bank (“FHLB”) stock approximates fair value based on the redemption provisions of the FHLB.

• Federal Reserve Bank stock.The carrying value of Federal Reserve Bank ("FRB") stock approximates fair value based on the redemption provisions of the FRB.

• Loans held for sale.The fair value of loans held for sale is estimated using quoted market prices.

• Loans receivable.For variable rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. The fair value of fixed-rate loans are estimated by discounting the future cash flows using the rates at the end of the period in which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

• Accrued interest receivable.The carrying amount of accrued interest approximates fair value.

• Deposits.The fair value of demand deposits, negotiable orders of withdrawal, regular savings, certain money market deposits and mortgagors’ and investors’ escrow accounts is the amount payable on demand at the reporting date. The fair value of certificates of deposit and other time deposits is estimated using a discounted cash flow calculation that applies interest rates currently being offered for deposits of similar remaining maturities to a schedule of aggregated expected maturities on such deposits.

• Federal Home Loan Bank advances.The fair value of the advances is estimated using a discounted cash flow calculation that applies current FHLB interest rates for advances of similar maturity to a schedule of maturities of such advances.

• Junior subordinated debt owed to unconsolidated trust.Rates currently available for debt with similar terms and remaining maturities are used to estimate fair value of existing debt.

• Interest rate swap agreements.The fair values of the Company’s interest rate swaps are obtained from a third-party pricing service and are determined using a discounted cash flow analysis on the expected cash flows of the derivative. The pricing analysis is based on observable inputs for the contractual term of the derivative, including the period to maturity, credit component, and interest rate curves.

• Forward loan sale commitments and derivative loan commitments.Forward loan sale commitments and derivative loan commitments are based on the fair values of the underlying mortgage loans, including the servicing rights for derivative loan commitments, and the probability of such commitments being exercised. Significant management judgment and estimation is required in determining these fair value measurements.

• Off-balance sheet instruments.Fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standings.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2015.

	September 30, 2015
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	25,271	$	43,297	$	—	$	68,568
Government-sponsored enterprises	—		30,664		—		30,664
Mortgage-backed securities	—		70,036		—		70,036
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,130		1,130
Obligations of state and political subdivisions	—		1,537		—		1,537
Tax-exempt securities	—		3,242		—		3,242
Forward loan sale commitments and derivative loan commitments	—		—		37		37
Total assets	$	25,271	$	149,776	$	1,167	$	176,214
Liabilities:
Interest rate swap agreements	$	—	$	170	$	—	$	170
Total liabilities	$	—	$	170	$	—	$	170

	December 31, 2014
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,001	$	45,390	$	—	$	66,391
Government-sponsored enterprises	—		27,488		—		27,488
Mortgage-backed securities	—		67,103		—		67,103
Corporate debt securities	—		1,000		—		1,000
Collateralized debt obligation	—		—		1,181		1,181
Obligations of state and political subdivisions	—		3,200		—		3,200
Tax-exempt securities	—		6,677		—		6,677
Forward loan sale commitments and derivative loan commitments	—		—		59		59
Total assets	$	21,001	$	150,858	$	1,240	$	173,099
Liabilities:
Interest rate swap agreements	$	—	$	271	$	—	$	271
Total liabilities	$	—	$	271	$	—	$	271

The following table shows a reconciliation of the beginning and ending balances for Level 3 assets:

	Collateralized Debt Obligations			Derivative Loan and Forward Loan Sale Commitments, Net
	(In Thousands)
Balance at December 31, 2014	$	1,181		$	59
Total realized losses included in net income	—			(22		)
Total unrealized losses included in other comprehensive income	(51		)	—
Balance at September 30, 2015	$	1,130		$	37

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may also be required, from time to time, to measure certain other financial assets on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets at September 30, 2015 and December 31, 2014. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2015 and December 31, 2014.

	At September 30, 2015						At December 31, 2014
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	61	$	—	$	—	$	356
Other real estate owned	—		—		1,341		—		—		1,271
Total assets	$	—	$	—	$	1,402	$	—	$	—	$	1,627

The following table summarizes losses (gains) resulting from fair value adjustments for assets measured at fair value on a nonrecurring basis.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015		2014
	(In Thousands)
Impaired loans	$	(20	)	$	22	$	2	$	126
Other real estate owned	65			10		212		25
Total losses	$	45		$	32	$	214	$	151

The Company measures the impairment of loans that are collateral dependent based on the fair value of the collateral (Level 3). The fair value of collateral used by the Company represents the amount expected to be received from the sale of the property, net of selling costs, as determined by an independent, licensed or certified appraiser using observable market data. This data includes information such as selling price of similar properties, expected future cash flows or earnings of the subject property based on current market expectations, and relevant legal, physical and economic factors. The appraised values of collateral are adjusted as necessary by management based on observable inputs for specific properties. Losses applicable to write-downs of impaired loans are based on the appraised market value of the underlying collateral, assuming foreclosure of these loans is imminent.

The amount of other real estate owned represents the carrying value of the collateral based on the appraised value of the underlying collateral less estimated selling costs. The loss on foreclosed assets represents adjustments in the valuation recorded during the time period indicated and not for losses incurred on sales.

Summary of Fair Values of Financial Instruments

The estimated fair values and related carrying or notional amounts of the Company’s financial instruments are presented in the following table. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

Management uses its best judgment in estimating the fair value of the Company's financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at September 30, 2015 and December 31, 2014. The estimated fair value amounts at September 30, 2015 and December 31, 2014 have been measured as of each respective date, and have not been re-evaluated or updated for purposes of the consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. The information presented should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a limited portion of the Company's assets. Due to the wide range of valuation techniques and the degree of subjectivity used in making the estimate, comparisons between the Company's disclosures and those of other banks may not be meaningful.

As of September 30, 2015 and December 31, 2014, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2015
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	36,562	$	36,562	$	—	$	—	$	36,562
Available for sale securities	176,177		25,271		149,776		1,130		176,177
Loans held for sale	165		—		—		165		165
Loans receivable, net	1,142,998		—		—		1,156,501		1,156,501
Federal Home Loan Bank stock	12,421		—		—		12,421		12,421
Federal Reserve Bank stock	3,621		—		—		3,621		3,621
Accrued interest receivable	4,230		—		—		4,230		4,230
Financial Liabilities:
Deposits	1,043,130		—		—		1,047,509		1,047,509
Mortgagors' and investors' escrow accounts	1,946		—		—		1,946		1,946
Federal Home Loan Bank advances	224,459		—		225,337		—		225,337
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,329		—		5,329
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	37		—		—		37		37
Liabilities:
Interest rate swap agreements	170		—		170		—		170

	December 31, 2014
	Carrying Amount		Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	39,251	$	39,251	$	—	$	—	$	39,251
Available for sale securities	173,040		21,001		150,858		1,181		173,040
Loans held for sale	747		—		—		747		747
Loans receivable, net	1,044,864		—		—		1,063,121		1,063,121
Federal Home Loan Bank stock	10,333		—		—		10,333		10,333
Accrued interest receivable	3,853		—		—		3,853		3,853
Financial Liabilities:
Deposits	1,010,713		—		—		1,013,614		1,013,614
Mortgagors' and investors' escrow accounts	3,600		—		—		3,600		3,600
Federal Home Loan Bank advances	148,277		—		149,380		—		149,380
Junior subordinated debt owed to unconsolidated trust	8,248		—		5,815		—		5,815
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	59		—		—		59		59
Liabilities:
Interest rate swap agreements	271		—		271		—		271

XML

SECURITIES Securities in Continuous Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 8,611	$ 22,820
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	34	151
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	45,582	53,550
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	739	1,227
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	54,193	76,370
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	773	1,378
U.S. Government and agency obligations
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	3,880	9,273
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	15	15
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	15,703	16,655
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	209	211
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	19,583	25,928
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	224	226
Government-sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		6,974
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		4
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		3,973
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		63
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		10,947
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		67
Agency - residential
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	4,731	4,251
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	19	122
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	28,634	32,127
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	500	943
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	33,365	36,378
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	519	1,065
Non-agency - residential
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	115	127
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	5	4
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	115	127
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	5	4
Collateralized debt obligation
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	0	1,181
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	0	7
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1,130	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	25	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	1,130	1,181
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 25	7
Obligations of state and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		668
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		6
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		668
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		6
Tax-exempt securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		1,141
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss		3
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		1,141
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss		$ 3

XML

FAIR VALUE OF ASSETS AND LIABILITIES Reconciliation of Level 3 Assets and Liabilities - Recurring (Details) - Fair Value, Measurements, Recurring [Member] - Fair Value, Inputs, Level 3 [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Collateralized Debt Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Beginning balance	$ 1,181
Total realized losses included in net income	0
Total unrealized losses included in other comprehensive income	(51)
Ending balance	1,130
Derivative Loan and Forward Loan Sale Commitments, Net [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Beginning balance	59
Total realized losses included in net income	(22)
Total unrealized losses included in other comprehensive income	0
Ending balance	$ 37

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2015

Receivables [Abstract]

Composition of the Company's loan portfolio [Table Text Block]

The composition of the Company’s loan portfolio at September 30, 2015 and December 31, 2014 is as follows:

	September 30, 2015			December 31, 2014
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	430,287		$	430,575
Multi-family and commercial	339,682			298,320
Construction	17,409			13,579
Total real estate loans	787,378			742,474
Commercial business loans:
SBA and USDA guaranteed	153,811			118,466
Time share	57,760			45,669
Condominium association	26,237			21,386
Other	68,307			66,446
Total commercial business loans	306,115			251,967
Consumer loans:
Home equity	52,985			51,093
Indirect automobile	2,239			3,692
Other	1,915			1,864
Total consumer loans	57,139			56,649
Total loans	1,150,632			1,051,090
Deferred loan origination costs, net of fees	1,612			1,571
Allowance for loan losses	(9,246		)	(7,797		)
Loans receivable, net	$	1,142,998		$	1,044,864

Allowance for Credit Losses on Financing Receivables [Table Text Block]

Changes in the allowance for loan losses for the three and nine months ended September 30, 2015 and 2014 are as follows:

Three Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	986		$	3,766		$	434		$	2,618		$	633	$	8,437
Provision (credit) for loan losses	30			666			(7		)	322			6		1,017
Loans charged-off	—			(136		)	—			(140		)	—		(276		)
Recoveries of loans previously charged-off	41			22			—			5			—		68
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246
Nine Months Ended September 30, 2015	Residential - 1 to 4 Family			Multi-family and Commercial			Construction			Commercial Business			Consumer		Total
	(In Thousands)
Balance at beginning of period	$	955		$	3,607		$	254		$	2,382		$	599	$	7,797
Provision for loan losses	74			843			173			582			40		1,712
Loans charged-off	(46		)	(156		)	—			(165		)	—		(367		)
Recoveries of loans previously charged-off	74			24			—			6			—		104
Balance at end of period	$	1,057		$	4,318		$	427		$	2,805		$	639	$	9,246

Three Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	984		$	3,465		$	221	$	2,208		$	567		$	7,445
Provision for loan losses	123			135			26		21			45			350
Loans charged-off	(137		)	(1		)	—		—			(42		)	(180		)
Recoveries of loans previously charged-off	—			—			—		1			3			4
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619
Nine Months Ended September 30, 2014	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	975		$	3,395		$	169	$	1,875		$	502		$	6,916
Provision for loan losses	281			347			78		364			125			1,195
Loans charged-off	(317		)	(144		)	—		(13		)	(75		)	(549		)
Recoveries of loans previously charged-off	31			1			—		4			21			57
Balance at end of period	$	970		$	3,599		$	247	$	2,230		$	573		$	7,619

Additional Information on Allowance for Credit Losses on Financing Receivables [Table Text Block]

Further information pertaining to the allowance for loan losses at September 30, 2015 and December 31, 2014 is as follows:

September 30, 2015	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	310	$	40	$	—	$	—	$	—	$	350
Allowance for loans individually or collectively evaluated and not deemed to be impaired	747		4,278		427		2,805		639		8,896
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,057	$	4,318	$	427	$	2,805	$	639	$	9,246
Loans individually evaluated and deemed to be impaired	$	5,893	$	3,765	$	—	$	485	$	77	$	10,220
Loans individually or collectively evaluated and not deemed to be impaired	424,394		332,193		17,409		304,876		57,062		1,135,934
Amount of loans acquired with deteriorated credit quality	—		3,724		—		754		—		4,478
Total loans	$	430,287	$	339,682	$	17,409	$	306,115	$	57,139	$	1,150,632

December 31, 2014	Residential - 1 to 4 Family		Multi-family and Commercial		Construction		Commercial Business		Consumer		Total
	(In Thousands)
Allowance for loans individually evaluated and deemed to be impaired	$	287	$	52	$	—	$	20	$	—	$	359
Allowance for loans individually or collectively evaluated and not deemed to be impaired	668		3,555		254		2,362		599		7,438
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	955	$	3,607	$	254	$	2,382	$	599	$	7,797
Loans individually evaluated and deemed to be impaired	$	5,318	$	1,872	$	—	$	470	$	—	$	7,660
Loans individually or collectively evaluated and not deemed to be impaired	424,885		292,215		13,579		251,140		56,649		1,038,468
Amount of loans acquired with deteriorated credit quality	372		4,233		—		357		—		4,962
Total loans	$	430,575	$	298,320	$	13,579	$	251,967	$	56,649	$	1,051,090

Past Due Loans Receivables [Table Text Block]

The following represents an aging of loans at September 30, 2015 and December 31, 2014:

September 30, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	14	$	1,050	$	926	$	1,990	$	428,297	$	430,287
Multi-family and commercial	3,310		657		2,060		6,027		333,655		339,682
Construction	—		—		—		—		17,409		17,409
Commercial Business:
SBA and USDA guaranteed	—		—		—		—		153,811		153,811
Time share	—		—		—		—		57,760		57,760
Condominium association	—		—		—		—		26,237		26,237
Other	—		155		815		970		67,337		68,307
Consumer:
Home equity	—		—		270		270		52,715		52,985
Indirect automobile	26		3		7		36		2,203		2,239
Other	—		1		—		1		1,914		1,915
Total	$	3,350	$	1,866	$	4,078	$	9,294	$	1,141,338	$	1,150,632

December 31, 2014	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total 30 Days or More Past Due		Current		Total Loans		Past Due 90 Days or More and Accruing
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	4,194	$	258	$	1,602	$	6,054	$	424,521	$	430,575	$	—
Multi-family and commercial	768		794		775		2,337		295,983		298,320		—
Construction	—		—		—		—		13,579		13,579		—
Commercial Business:
SBA and USDA guaranteed	1,536		—		459		1,995		116,471		118,466		459
Time share	—		—		—		—		45,669		45,669		—
Condominium association	—		—		—		—		21,386		21,386		—
Other	50		—		446		496		65,950		66,446		—
Consumer:
Home equity	20		158		23		201		50,892		51,093		—
Indirect automobile	103		10		—		113		3,579		3,692		—
Other	—		—		—		—		1,864		1,864		—
Total	$	6,671	$	1,220	$	3,305	$	11,196	$	1,039,894	$	1,051,090	$	459

Impaired Financing Receivables [Table Text Block]

The following is a summary of impaired loans and nonaccrual loans at September 30, 2015 and December 31, 2014:

	Impaired Loans(1)
September 30, 2015	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,483	$	3,501	$	—	$	3,272
Multi-family and commercial	5,331		5,664		—		2,631
Commercial business - Other	832		832		—		814
Consumer - Home equity	77		77		—		324
Total impaired loans without valuation allowance	9,723		10,074		—		7,041
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,410		2,421		310		148
Multi-family and commercial	1,204		1,314		40		63
Commercial business - Other	—		—		—		—
Consumer - Home equity	—		—		—		—
Total impaired loans with valuation allowance	3,614		3,735		350		211
Total impaired loans	$	13,337	$	13,809	$	350	$	7,252

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Newport Federal Savings Bank ("Newport") merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance.

	Impaired Loans(1)
December 31, 2014	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,414	$	3,485	$	—	$	2,923
Multi-family and commercial	4,815		5,102		—		775
Commercial business - Other	645		645		—		264
Consumer - Home equity	—		—		—		23
Total impaired loans without valuation allowance	8,874		9,232		—		3,985
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,276		2,304		287		244
Multi-family and commercial	1,290		1,290		52		132
Commercial business - Other	182		182		20		182
Total impaired loans with valuation allowance	3,748		3,776		359		558
Total impaired loans	$	12,622	$	13,008	$	359	$	4,543

⁽¹⁾

Additional Information Related to Impaired Loans [Table Text Block]

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,874	$	32	$	6	$	5,726	$	84	$	7
Multi-family and commercial	6,222		72		3		6,071		219		3
Commercial business - Other	1,182		7		6		1,070		15		6
Consumer - Home equity	81		—		—		52		—		—
Total	$	13,359	$	111	$	15	$	12,919	$	318	$	16

	Three Months Ended September 30, 2014						Nine Months Ended September 30, 2014
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	5,829	$	27	$	4	$	5,987	$	117	$	47
Multi-family and commercial	6,262		70		—		6,989		312		72
Commercial business - Other	1,145		6		—		1,123		34		15
Consumer - Home equity	22		2		2		40		3		3
Consumer - Other	20		—		—		10		—		—
Total	$	13,278	$	105	$	6	$	14,149	$	466	$	137

Financing Receivable Credit Quality Indicators [Table Text Block]

The following tables present the Company’s loans by risk rating at September 30, 2015 and December 31, 2014:

September 30, 2015	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	422,608	$	2,021	$	5,658	$	—	$	—	$	430,287
Multi-family and commercial	—		312,740		12,642		14,300		—		—		339,682
Construction	—		17,409		—		—		—		—		17,409
Total real estate loans	—		752,757		14,663		19,958		—		—		787,378
Commercial Business:
SBA and USDA guaranteed	153,811		—		—		—		—		—		153,811
Time share	—		57,760		—		—		—		—		57,760
Condominium association	—		26,237		—		—		—		—		26,237
Other	—		64,820		1,770		1,717		—		—		68,307
Total commercial business loans	153,811		148,817		1,770		1,717		—		—		306,115
Consumer:
Home equity	—		52,548		67		370		—		—		52,985
Indirect automobile	—		2,239		—		—		—		—		2,239
Other	—		1,915		—		—		—		—		1,915
Total consumer loans	—		56,702		67		370		—		—		57,139
Total loans	$	153,811	$	958,276	$	16,500	$	22,045	$	—	$	—	$	1,150,632

December 31, 2014	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	423,134	$	1,430	$	6,011	$	—	$	—	$	430,575
Multi-family and commercial	—		269,680		17,058		11,582		—		—		298,320
Construction	—		13,579		—		—		—		—		13,579
Total real estate loans	—		706,393		18,488		17,593		—		—		742,474
Commercial Business:
SBA and USDA guaranteed	118,466		—		—		—		—		—		118,466
Time share	—		45,669		—		—		—		—		45,669
Condominium association	—		21,386		—		—		—		—		21,386
Other	—		61,835		2,709		1,902		—		—		66,446
Total commercial business loans	118,466		128,890		2,709		1,902		—		—		251,967
Consumer:
Home equity	—		50,965		57		71		—		—		51,093
Indirect automobile	—		3,692		—		—		—		—		3,692
Other	—		1,864		—		—		—		—		1,864
Total consumer loans	—		56,521		57		71		—		—		56,649
Total loans	$	118,466	$	891,804	$	21,254	$	19,566	$	—	$	—	$	1,051,090

Loans Modified as Troubled Debt Restructurings [Table Text Block]

The following table provides information on loans modified as TDRs during the three and nine months ended September 30, 2015 and 2014. During the modification process, there were no loan charge-offs or principal reductions for the loans included in the table below.

	Three Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	—	$	—	$	—
Multi-family and commercial	4	1,035		—		—	—		50
Commercial business - other	2	118		—		—	—		—
Total	9	$	1,655	$	33	—	$	—	$	50
	Nine Months Ended September 30,
	2015					2014
				Allowance for Loan Losses (End of Period)					Allowance for Loan Losses (End of Period)
	Number of Loans	Recorded Investment				Number of Loans	Recorded Investment
	(Dollars in Thousands)
Residential - 1 to 4 family	3	$	502	$	33	1	$	100	$	—
Multi-family and commercial	4	1,035		—		2	1,416		50
Commercial business - other	2	118		—		2	314		—
Total	9	$	1,655	$	33	5	$	1,830	$	50

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table provides the recorded investment, by type of modification, during the three and nine months ended September 30, 2015 and 2014 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(In Thousands)
Interest rate adjustments	$	559	$	—	$	559	$	379
Principal deferrals	115		—		115		—
Combination of rate and payment (1)	146		—		146		288
Combination of rate and maturity (2)	—		—		—		1,163
Maturity only	835		—		835		—
Total	$	1,655	$	—	$	1,655	$	1,830

⁽¹⁾ Terms include combination of interest rate adjustments and interest-only payment with deferral of principal.

⁽²⁾ Terms include combination of interest rate adjustments and extensions of maturity.

Certain Loans Acquired in Transfer Not Accounted for as Debt Securities Acquired During Period [Table Text Block]

The following is a summary of loans acquired with evidence of credit deterioration from Newport as of September 30, 2015 and December 31, 2014.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2014	$	5,799		$	4,962		$	837		$	—		$	4,962
Additions	—			143			(143		)	143			—
Collections	(114		)	(107		)	(6		)	(17		)	(90		)
Dispositions	(579		)	(520		)	(59		)	—			(520		)
Balance at September 30, 2015	$	5,106		$	4,478		$	629		$	126		$	4,352

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments Designated as Hedging Instruments [Table Text Block]

At September 30, 2015 and December 31, 2014, information pertaining to the outstanding interest rate swap agreement used to hedge variable rate debt is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	8,000		$	8,000
Weighted average fixed pay rate	2.44		%	2.44		%
Weighted average variable receive rate	0.34		%	0.24		%
Weighted average maturity in years	0.2			1.0
Unrealized loss relating to interest rate swap	$	34		$	157

Schedule of Derivative Instruments [Table Text Block]

At September 30, 2015 and December 31, 2014, information pertaining to the Company's interest rate swap agreement not designated as a hedge is as follows:

	September 30, 2015			December 31, 2014
	(Dollars in Thousands)
Notional amount	$	15,000		$	15,000
Weighted average fixed pay rate	1.26		%	1.26		%
Weighted average variable receive rate	0.29		%	0.25		%
Weighted average maturity in years	1.3			2.0
Unrealized loss relating to interest rate swap	$	136		$	114

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

The following table presents the fair values of derivative instruments as well as their classification on the consolidated balance sheets at September 30, 2015 and December 31, 2014.

		September 30, 2015					December 31, 2014
	Balance Sheet Location	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
		(In Thousands)
Derivative designated as hedging instrument:
Interest rate swap	Other Liabilities	$	8,000	$	(34	)	$	8,000	$	(157	)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	15,000		(136		)	15,000		(114		)
Derivative loan commitments	Other Assets	4,983		37			6,436		59
Forward loan sale commitments	Other Assets	2,662		—			2,754		—

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REGULATORY CAPITAL (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
SI Financial Group, Inc. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Leverage Capital	$ 139,565
Tier One Leverage Capital to Average Assets	9.68%
Tier One Leverage Capital Required for Capital Adequacy	$ 57,699
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%
Tier One Leverage Capital Required to be Well Capitalized	$ 72,123
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%
Tier One Risk Based Capital	$ 139,565
Tier One Risk Based Capital to Risk Weighted Assets	15.40%
Tier One Risk Based Capital Required for Capital Adequacy	$ 54,391
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%
Tier One Risk Based Capital Required to be Well Capitalized	$ 72,522
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%
Capital	$ 149,427
Capital to Risk Weighted Assets	16.48%
Capital Required for Capital Adequacy	$ 72,522
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%
Capital Required to be Well Capitalized	$ 90,653
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%
Tier One Common Equity	$ 139,565
Tier One Common Equity to Risk Weighted Assets	15.40%
Tier One Common Equity Required for Capital Adequacy	$ 40,794
Tier One Common Equity Required for Capital Adequacy to Risk Weighted Assets	4.50%
Tier One Common Equity Required to be Well Capitalized	$ 58,924
Tier One Common Equity Required to be Well Capitalized to Risk Weighted Assets	6.50%
Savings Institute Bank and Trust Company [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Leverage Capital	$ 133,681	$ 123,862
Tier One Leverage Capital to Average Assets	9.42%	9.37%
Tier One Leverage Capital Required for Capital Adequacy	$ 56,760	$ 52,876
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Tier One Leverage Capital Required to be Well Capitalized	$ 70,950	$ 66,095
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Tier One Risk Based Capital	$ 133,681	$ 123,862
Tier One Risk Based Capital to Risk Weighted Assets	14.78%	14.86%
Tier One Risk Based Capital Required for Capital Adequacy	$ 54,286	$ 33,341
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%	4.00%
Tier One Risk Based Capital Required to be Well Capitalized	$ 72,381	$ 50,012
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%	6.00%
Capital	$ 143,543	$ 132,306
Capital to Risk Weighted Assets	15.87%	15.87%
Capital Required for Capital Adequacy	$ 72,381	$ 66,695
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Capital Required to be Well Capitalized	$ 90,476	$ 83,369
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tangible Capital		$ 123,862
Tangible Capital to Tangible Assets		9.37%
Tangible Capital Required for Capital Adequacy		$ 19,828
Tangible Capital Required for Capital Adequacy to Tangible Assets		1.50%
Tier One Common Equity	$ 133,681
Tier One Common Equity to Risk Weighted Assets	14.78%
Tier One Common Equity Required for Capital Adequacy	$ 40,714
Tier One Common Equity Required for Capital Adequacy to Risk Weighted Assets	4.50%
Tier One Common Equity Required to be Well Capitalized	$ 58,809
Tier One Common Equity Required to be Well Capitalized to Risk Weighted Assets	6.50%

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Additional Info Related to Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	$ 13,359	$ 13,278	$ 12,919	$ 14,149
Interest Income Recognized	111	105	318	466
Interest Income Recognized on Cash Basis	15	6	16	137
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	5,874	5,829	5,726	5,987
Interest Income Recognized	32	27	84	117
Interest Income Recognized on Cash Basis	6	4	7	47
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	6,222	6,262	6,071	6,989
Interest Income Recognized	72	70	219	312
Interest Income Recognized on Cash Basis	3	0	3	72
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	1,182	1,145	1,070	1,123
Interest Income Recognized	7	6	15	34
Interest Income Recognized on Cash Basis	6	0	6	15
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	81	22	52	40
Interest Income Recognized	0	2	0	3
Interest Income Recognized on Cash Basis	$ 0	2	$ 0	3
Consumer: Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment		20		10
Interest Income Recognized		0		0
Interest Income Recognized on Cash Basis		$ 0		$ 0

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net income		$ 974	$ 1,200	$ 2,900	$ 3,020
Available for sale securities:
Net unrealized holding gains (losses)		411	(382)	633	546
Reclassification adjustment for losses (gains) recognized in net income (1)	[1]	(9)	0	(96)	(42)
Net unrealized holding gains (losses) on available for sale securities		402	(382)	537	504
Net unrealized gain on interest-rate swap derivative		29	31	81	77
Other comprehensive income (loss)		431	(351)	618	581
Comprehensive income		1,405	849	3,518	3,601
Reclassification adjustment for losses (gains) recognized in net income, Tax Effects		$ 5	$ 0	$ 50	$ 22

[1] Amounts are included in net gain on sales of securities in noninterest income on the consolidated statements of income. Income tax expense (benefit) associated with the reclassification adjustment for the three and nine months ended September 30, 2015 was $5,000 and $50,000 and for the three and nine months ended September 30, 2014 was $0 and $22,000, respectively.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income available to common shareholders by the weighted average number of common shares outstanding during the period. Unvested restricted shares are considered outstanding in the computation of basic earnings per share since the shares participate in dividends and the rights to the dividends are non-forfeitable. Diluted earnings per share is computed in a manner similar to basic earnings per share except that the weighted average number of common shares outstanding is increased to include the incremental common shares (as computed using the treasury stock method) that would have been outstanding if all potentially dilutive common stock equivalents were issued during the period. The Company’s common stock equivalents relate solely to stock options. Repurchased common shares and unallocated common shares held by the Bank’s ESOP are not deemed outstanding for earnings per share calculations.

Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the weighted average market value for the periods presented, and are not considered in diluted earnings per share calculations. The Company had anti-dilutive common shares outstanding of 321,793 and 342,819 for the three and nine months ended September 30, 2015, respectively, and 677,590 and 485,459 for the three and nine months ended September 30, 2014, respectively.

The computation of earnings per share is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	974	$	1,200	$	2,900	$	3,020
Weighted average common shares outstanding:
Basic	11,793,218		12,310,368		12,036,573		12,315,829
Effect of dilutive stock options	21,713		23,065		28,485		38,382
Diluted	11,814,931		12,333,433		12,065,058		12,354,211
Earnings per share:
Basic	$	0.08	$	0.10	$	0.24	$	0.25
Diluted	$	0.08	$	0.10	$	0.24	$	0.24

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Narrative (Details)	9 Months Ended
	Sep. 30, 2015
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Year Founded	1842
Number of Branch Offices	26

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Allowance for Loan Losses, Futher Information (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	$ 350		$ 359
Allowance for loans individually or collectively evaluated and not deemed to be impaired	8,896		7,438
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	9,246		7,797
Loans individually evaluated and deemed to be impaired	10,220		7,660
Loans individually or collectively evaluated and not deemed to be impaired	1,135,934		1,038,468
Amount of loans acquired with deteriorated credit quality	4,478		4,962
Total loans	1,150,632		1,051,090
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	310		287
Allowance for loans individually or collectively evaluated and not deemed to be impaired	747		668
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	1,057	$ 986	955	$ 970	$ 984	$ 975
Loans individually evaluated and deemed to be impaired	5,893		5,318
Loans individually or collectively evaluated and not deemed to be impaired	424,394		424,885
Amount of loans acquired with deteriorated credit quality	0		372
Total loans	430,287		430,575
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	40		52
Allowance for loans individually or collectively evaluated and not deemed to be impaired	4,278		3,555
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	4,318	3,766	3,607	3,599	3,465	3,395
Loans individually evaluated and deemed to be impaired	3,765		1,872
Loans individually or collectively evaluated and not deemed to be impaired	332,193		292,215
Amount of loans acquired with deteriorated credit quality	3,724		4,233
Total loans	339,682		298,320
Real estate: Construction [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	0		0
Allowance for loans individually or collectively evaluated and not deemed to be impaired	427		254
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	427	434	254	247	221	169
Loans individually evaluated and deemed to be impaired	0		0
Loans individually or collectively evaluated and not deemed to be impaired	17,409		13,579
Amount of loans acquired with deteriorated credit quality	0		0
Total loans	17,409		13,579
Commercial Business [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	0		20
Allowance for loans individually or collectively evaluated and not deemed to be impaired	2,805		2,362
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	2,805	2,618	2,382	2,230	2,208	1,875
Loans individually evaluated and deemed to be impaired	485		470
Loans individually or collectively evaluated and not deemed to be impaired	304,876		251,140
Amount of loans acquired with deteriorated credit quality	754		357
Total loans	306,115		251,967
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	0		0
Allowance for loans individually or collectively evaluated and not deemed to be impaired	639		599
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	639	$ 633	599	$ 573	$ 567	$ 502
Loans individually evaluated and deemed to be impaired	77		0
Loans individually or collectively evaluated and not deemed to be impaired	57,062		56,649
Amount of loans acquired with deteriorated credit quality	0		0
Total loans	$ 57,139		$ 56,649

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

Available for Sale Securities

The amortized cost, gross unrealized gains and losses and fair values of available for sale securities at September 30, 2015 and December 31, 2014 are as follows:

	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	68,172	$	620	$	(224	)	$	68,568
Government-sponsored enterprises	30,329		335		—			30,664
Mortgage-backed securities:(1)
Agency - residential	69,527		872		(519		)	69,880
Non-agency - residential	161		—		(5		)	156
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,155		—		(25		)	1,130
Obligations of state and political subdivisions	1,535		2		—			1,537
Tax-exempt securities	3,183		59		—			3,242
Total available for sale securities	$	175,062	$	1,888	$	(773	)	$	176,177

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or government-sponsored enterprises (“GSEs”).  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	66,232	$	385	$	(226	)	$	66,391
Government-sponsored enterprises	27,435		120		(67		)	27,488
Mortgage-backed securities:(1)
Agency - residential	67,008		907		(1,065		)	66,850
Non-agency - residential	254		3		(4		)	253
Corporate debt securities	1,000		—		—			1,000
Collateralized debt obligation	1,188		—		(7		)	1,181
Obligations of state and political subdivisions	3,039		167		(6		)	3,200
Tax-exempt securities	6,583		97		(3		)	6,677
Total available for sale securities	$	172,739	$	1,679	$	(1,378	)	$	173,040

⁽¹⁾ Agency securities refer to debt obligations issued or guaranteed by government corporations or GSEs.  Non-agency securities, or private-label securities, are the sole obligation of their issuer and are not guaranteed by any of the GSEs or the U.S. Government.

Investments Classified by Contractual Maturity Date [Table Text Block]

The amortized cost and fair value of debt securities by contractual maturities at September 30, 2015 are presented below. Maturities are based on the final contractual payment dates and do not reflect the impact of potential prepayments or early redemptions. Because mortgage-backed securities ("MBS") are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.

	Amortized Cost		Fair Value
	(In Thousands)
Within 1 year	$	2,536	$	2,539
After 1 but within 5 years	52,956		53,554
After 5 but within 10 years	12,250		12,216
After 10 years	37,632		37,832
	105,374		106,141
Mortgage-backed securities	69,688		70,036
Total debt securities	$	175,062	$	176,177

Realized Gain (Loss) on Investments [Table Text Block]

The following is a summary of realized gains and losses on the sales/calls of securities for the three and nine months ended September 30, 2015 and 2014:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015			2014
	(In Thousands)
Gross gains on sales/calls	$	14	$	—	$	169		$	64
Gross losses on sales/calls	—		—		(23		)	—
Net gain on sales/calls of securities	$	14	$	—	$	146		$	64

Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Table Text Block]

The following tables present information pertaining to securities with gross unrealized losses at September 30, 2015 and December 31, 2014, aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position.

	Less Than 12 Months				12 Months Or More				Total
September 30, 2015	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	3,880	$	15	$	15,703	$	209	$	19,583	$	224
Mortgage-backed securities:
Agency - residential	4,731		19		28,634		500		33,365		519
Non-agency - residential	—		—		115		5		115		5
Collateralized debt obligation	—		—		1,130		25		1,130		25
Total	$	8,611	$	34	$	45,582	$	739	$	54,193	$	773

	Less Than 12 Months				12 Months Or More				Total
December 31, 2014	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	9,273	$	15	$	16,655	$	211	$	25,928	$	226
Government-sponsored enterprises	6,974		4		3,973		63		10,947		67
Mortgage-backed securities:
Agency - residential	4,251		122		32,127		943		36,378		1,065
Non-agency - residential	—		—		127		4		127		4
Collateralized debt obligation	1,181		7		—		—		1,181		7
Obligations of state and political subdivisions	—		—		668		6		668		6
Tax-exempt securities	1,141		3		—		—		1,141		3
Total	$	22,820	$	151	$	53,550	$	1,227	$	76,370	$	1,378