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, 2017

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

Large Accelerated Filer  o	Accelerated Filer x
Non-Accelerated Filer  o	Smaller Reporting Company  o
	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period

for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange

Act. 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, 2017, there were 12,231,434 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, 2017 and December 31, 2016	1
	Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016	2
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016	3
	Consolidated Statement of Changes in Shareholders’ Equity for the nine months ended September 30, 2017	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016	5
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 4.	Controls and Procedures	52
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54
	SIGNATURES	55

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

SI FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Amounts / Unaudited)

	September 30, 2017			December 31, 2016
ASSETS:
Cash and due from banks:
Noninterest-bearing	$	15,011		$	18,225
Interest-bearing	76,721			54,961
Total cash and cash equivalents	91,732			73,186
Available for sale securities, at fair value	168,545			159,367
Loans held for sale	1,856			1,393
Loans receivable (net of allowance for loan losses of $12,217 at September 30, 2017 and $11,820 at December 31, 2016)	1,227,460			1,220,323
Federal Home Loan Bank stock, at cost	10,017			12,162
Federal Reserve Bank stock, at cost	3,631			3,624
Bank-owned life insurance	21,688			21,293
Premises and equipment, net	19,624			19,884
Goodwill and other intangibles	17,043			17,494
Accrued interest receivable	4,735			4,435
Deferred tax asset, net	9,449			9,658
Other real estate owned, net	1,679			1,466
Other assets	7,541			6,605
Total assets	$	1,585,000		$	1,550,890
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Noninterest-bearing	$	213,732		$	201,598
Interest-bearing	1,000,357			929,087
Total deposits	1,214,089			1,130,685
Mortgagors' and investors' escrow accounts	2,926			4,388
Federal Home Loan Bank advances	166,815			217,759
Junior subordinated debt owed to unconsolidated trust	8,248			8,248
Accrued expenses and other liabilities	21,920			25,083
Total liabilities	1,413,998			1,386,163
Shareholders' Equity:
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)	—			—
Common stock ($.01 par value; 35,000,000 shares authorized; 12,230,680 and 12,212,904 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)	122			122
Additional paid-in-capital	126,309			125,628
Unallocated common shares held by ESOP	(2,808		)	(3,168		)
Unearned restricted shares	(238		)	(341		)
Retained earnings	48,096			43,167
Accumulated other comprehensive loss	(479		)	(681		)
Total shareholders' equity	171,002			164,727
Total liabilities and shareholders' equity	$	1,585,000		$	1,550,890

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,
	2017			2016			2017			2016
Interest and dividend income:
Loans, including fees	$	12,326		$	11,579		$	36,758		$	34,656
Securities:
Taxable interest	891			855			2,465			2,601
Tax-exempt interest	14			14			42			42
Dividends	184			171			538			504
Other	234			84			546			217
Total interest and dividend income	13,649			12,703			40,349			38,020
Interest expense:
Deposits	1,922			1,703			5,555			4,907
Federal Home Loan Bank advances	802			790			2,577			2,480
Subordinated debt and other borrowings	60			48			173			141
Total interest expense	2,784			2,541			8,305			7,528
Net interest income	10,865			10,162			32,044			30,492
Provision for loan losses	171			880			501			1,773
Net interest income after provision for loan losses	10,694			9,282			31,543			28,719
Noninterest income:
Service fees	1,723			1,585			5,165			4,798
Wealth management fees	20			296			539			897
Increase in cash surrender value of bank-owned life insurance	133			136			395			413
Net gain on sales of securities	—			55			—			55
Mortgage banking	519			503			1,140			1,172
Net gain on fair value of derivatives	—			33			—			48
Net loss on disposal of equipment	(4		)	(56		)	(4		)	(92		)
Other	124			101			1,428			650
Total noninterest income	2,515			2,653			8,663			7,941
Noninterest expenses:
Salaries and employee benefits	5,052			4,992			15,485			14,813
Occupancy and equipment	1,662			1,670			5,138			5,116
Computer and electronic banking services	1,345			1,367			4,015			4,311
Outside professional services	379			403			1,172			1,417
Marketing and advertising	173			92			580			543
Supplies	121			130			383			419
FDIC deposit insurance and regulatory assessments	178			263			590			788
Core deposit intangible amortization	150			151			451			452
Other real estate owned operations	117			54			484			179
Other	481			490			1,725			1,420
Total noninterest expenses	9,658			9,612			30,023			29,458
Income before income tax provision	3,551			2,323			10,183			7,202
Income tax provision	1,307			767			3,378			2,377
Net income	$	2,244		$	1,556		$	6,805		$	4,825
Earnings per share:
Basic	$	0.19		$	0.13		$	0.57		$	0.41
Diluted	$	0.19		$	0.13		$	0.57		$	0.41

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,
	2017		2016			2017		2016
Net income	$	2,244	$	1,556		$	6,805	$	4,825
Other comprehensive income, net of tax:
Available for sale securities:
Net unrealized holding gains (losses)	47		(371		)	202		985
Reclassification adjustment for gains recognized in net income (1)	—		(36		)	—		(36		)
Net unrealized holding gains (losses) on available for sale securities	47		(407		)	202		949
Other comprehensive income (loss)	47		(407		)	202		949
Comprehensive income	$	2,291	$	1,149		$	7,007	$	5,774

⁽¹⁾ Amounts are included in net gain on sales of securities in noninterest income on the consolidated statements of income. The income tax provision associated with the reclassification adjustment for both the three and nine months ended September 30, 2016 was $19,000, 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, 2017

(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 Loss			Total Shareholders' Equity
	Shares		Dollars
Balance at December 31, 2016	12,212,904		$	122	$	125,628		$	(3,168	)	$	(341	)	$	43,167		$	(681	)	$	164,727
Comprehensive income	—		—		—			—			—			6,805			202			7,007
Cash dividends declared ($0.15 per share)	—		—		—			—			—			(1,778		)	—			(1,778		)
Equity incentive plans compensation	—		—		243			—			103			—			—			346
Allocation of 36,477 ESOP shares	—		—		184			360			—			—			—			544
Stock options exercised	42,362		—		524			—			—			—			—			524
Common shares repurchased	(24,586	)	—		(270		)	—			—			(98		)	—			(368		)
Balance at September 30, 2017	12,230,680		$	122	$	126,309		$	(2,808	)	$	(238	)	$	48,096		$	(479	)	$	171,002

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,
	2017			2016
Cash flows from operating activities:
Net income	$	6,805		$	4,825
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	501			1,773
Employee stock ownership plan expense	544			498
Equity incentive plan expense	346			688
Excess tax benefit from share-based compensation	—			(14		)
Amortization of investment premiums and discounts, net	745			614
Amortization of loan premiums and discounts, net	881			1,041
Depreciation and amortization of premises and equipment	1,666			1,814
Amortization of core deposit intangible	451			452
Net gain on sales of securities	—			(55		)
Net gain on fair value of derivatives	—			(48		)
Deferred income tax provision (benefit)	105			(82		)
Loans originated for sale	(38,379		)	(33,512		)
Proceeds from sale of loans held for sale	38,506			35,144
Net gain on sales of loans held for sale	(896		)	(958		)
Net loss on disposal of equipment	—			92
Net loss (gain) on sales or write-downs of other real estate owned	393			(1		)
Increase in cash surrender value of bank-owned life insurance	(395		)	(413		)
Change in operating assets and liabilities:
Accrued interest receivable	(300		)	174
Other assets	(630		)	(410		)
Accrued expenses and other liabilities	(3,163		)	(781		)
Net cash provided by operating activities	7,180			10,841
Cash flows from investing activities:
Purchases of available for sale securities	(32,008		)	(29,493		)
Proceeds from sales of available for sale securities	—			8,014
Proceeds from maturities of and principal repayments on available for sale securities	22,391			26,799
Purchases of Federal Home Loan Bank stock	(69		)	—
Purchases of Federal Reserve Bank stock	(7		)	(3		)
Redemption of Federal Home Loan Bank stock	2,214			504
Loan principal originations (repayments), net	12,867			(11,155		)
Purchases of loans	(22,280		)	(33,660		)
Proceeds from sales of other real estate owned	288			533
Purchases of premises and equipment	(1,406		)	(1,127		)
Proceeds from bank-owned life insurance	—			1,201
Net cash used in investing activities	(18,010		)	(38,387		)

5

SI FINANCIAL GROUP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded) (In Thousands / Unaudited)
	Nine Months Ended September 30,
	2017			2016
Cash flows from financing activities:
Net increase in deposits	83,404			78,927
Net decrease in mortgagors' and investors' escrow accounts	(1,462		)	(1,330		)
Proceeds from Federal Home Loan Bank advances	14,500			24,000
Repayments of Federal Home Loan Bank advances	(65,444		)	(50,007		)
Excess tax benefit from share-based compensation	—			14
Cash dividends on common stock	(1,778		)	(1,417		)
Stock options exercised	361			37
Common shares repurchased	(205		)	(99		)
Net cash provided by financing activities	29,376			50,125
Net change in cash and cash equivalents	18,546			22,579
Cash and cash equivalents at beginning of period	73,186			40,778
Cash and cash equivalents at end of period	$	91,732		$	63,357
Supplemental cash flow information:
Interest paid	$	8,356		$	7,559
Income taxes paid, net	5,670			2,284
Transfer of loans to other real estate owned	894			841
Stock options exercised by net-share settlement	163			—

See accompanying notes to unaudited interim consolidated financial statements.

6

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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 24 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, life insurance and annuities 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, the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission 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, 2017 and for the three and nine months ended September 30, 2017 and 2016 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes for the year ended December 31, 2016 contained in the Company’s Annual Report on 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, 2017 are not necessarily indicative of the operating results for the year ending December 31, 2017 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 such as goodwill and other intangibles.

Reclassifications

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

7

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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 due to the borrower's financial condition. When a loan is modified and concessions have been made to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as reductions of interest rates, 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. However, 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.

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

8

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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 amount 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. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, when necessary.

• 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 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 and underwriting 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 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 to acquire, develop, improve or refinance 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 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

9

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

development projects. Upon the completion of construction, the loan generally converts to a permanent mortgage loan. Credit risk is affected by cost overruns, whether estimates of the sale price of the property are correct, 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 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. Additionally, the Bank purchases loans primarily out of our market area from a company specializing in medical loan originations, which are secured by medical equipment.

• 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.

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 with concentrations in Massachusetts and New Hampshire. 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, 2017 AND 2016 AND DECEMBER 31, 2016

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 related 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 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 is allocated to common stock, additional paid-in capital and retained earnings balances.

Recent Accounting Pronouncements

Revenue from Contracts with Customers (Topic 606): In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance that improves the revenue recognition requirements for contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, a company should apply a five step approach to revenue recognition. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or entered into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Accordingly, the guidance does not apply to, among other things, the following: receivables (i.e. loans), debt and equity investments, equity method investments, joint ventures, derivatives and hedging, financial instruments and transfers and servicing. As significantly all of the Company's revenues are excluded from the scope of the guidance, adoption is not expected to have a material impact on the Company's consolidated financial statements. In August 2015, the FASB delayed the effective date for this guidance for one year to fiscal years beginning after December 15, 2017.

Financial Instruments (Subtopic 825-10): In January 2016, the FASB issued guidance addressing certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Targeted improvements to GAAP include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Leases (Topic 842): In February 2016, the FASB issued amended guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects

11

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, based on the current level of long-term leases in place, this is not expected to be material to the Company's consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In March 2016, the FASB issued guidance to simplify the accounting for share-based payment transactions, including the income tax consequences of such transactions. Under the provisions of the update, the income tax consequences of excess tax benefits and deficiencies should be recognized in income tax expense in the reporting period in which the awards vest. Currently, excess tax benefits or deficiencies impact shareholders' equity directly to the extent there is a cumulative excess tax benefit. In the event that a tax deficiency has occurred during the reporting period and a cumulative tax benefit does not exist, the tax deficiency is recognized in income tax expense under current GAAP. The update also provides entities may continue to estimate forfeitures in accounting for stock based compensation or recognize them as they occur. The provisions of this update became effective for interim and annual periods beginning after December 15, 2016. The adoption of this guidance on January 1, 2017 did not have a material impact on Company's consolidated financial statements.

Financial Instruments - Credit Losses (Topic 326): In June 2016, the FASB issued guidance that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The update will replace today's "incurred loss" approach with an "expected loss" model. The new model, referred to as the current expected credit loss ("CECL") model, will apply to (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. The CECL model does not apply to available for sale ("AFS") debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to current accounting guidance, except that losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The update also simplifies the accounting model for purchased credit-impaired debt securities and loans. Disclosure requirements under the update have been expanded to include the entity's assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by year of origination. The update is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual periods beginning after December 15, 2018. The update requires a modified retrospective transition under which a cumulative effect to equity will be recognized in the period of adoption. Management has developed a focus team that is reviewing and monitoring additional developments and accounting guidance to determine the impact to the Company's consolidated financial statements. Management is evaluating the models and related requirements and is developing an implementation plan.

Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230): In August 2016, the FASB issued guidance to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update provides guidance on eight specific cash flow issues. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

12

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

Business Combinations - Clarifying the Definition of a Business (Topic 805): In January 2017, the FASB issued guidance to clarify the definition of a business. The amendments in this update provide a screen to determine when an integrated set of assets and activities (collectively referred to as a "set") is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350): In January, 2017, the FASB issued guidance aimed at simplifying the subsequent measurement of goodwill. Under these amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from tax deductible goodwill on the carrying amount of a reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this update should be applied on a prospective basis and are effective for annual and goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): In March 2017, the FASB issued guidance shortening the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In May 2017, the FASB issued guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all of the following are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; 2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this update should be applied prospectively to an award modified on or after the adoption date.

13

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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 130,000 for the three and nine months ended September 30, 2017 and 157,391 and 153,391 for the three and nine months ended September 30, 2016, respectively.

The computation of earnings per share is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	2,244	$	1,556	$	6,805	$	4,825
Weighted average common shares outstanding:
Basic	11,874,142		11,815,313		11,850,229		11,802,574
Effect of dilutive stock options	88,683		53,334		89,490		57,369
Diluted	11,962,825		11,868,647		11,939,719		11,859,943
Earnings per share:
Basic	$	0.19	$	0.13	$	0.57	$	0.41
Diluted	$	0.19	$	0.13	$	0.57	$	0.41

14

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2017 and December 31, 2016 are as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	71,227	$	60	$	(618	)	$	70,669
Government-sponsored enterprises	9,222		63		(2		)	9,283
Mortgage-backed securities:(1)
Agency - residential	83,529		430		(730		)	83,229
Non-agency - residential	77		—		(5		)	72
Collateralized debt obligation	1,094		20		—			1,114
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,122		57		(1		)	3,178
Total available for sale securities	$	169,271	$	630	$	(1,356	)	$	168,545

⁽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, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	64,894	$	132	$	(730	)	$	64,296
Government-sponsored enterprises	11,267		97		—			11,364
Mortgage-backed securities:(1)
Agency - residential	78,843		475		(1,016		)	78,302
Non-agency - residential	93		—		(6		)	87
Collateralized debt obligation	1,157		—		—			1,157
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,145		22		(6		)	3,161
Total available for sale securities	$	160,399	$	726	$	(1,758	)	$	159,367

⁽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.

15

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

The amortized cost and fair value of debt securities by contractual maturities at September 30, 2017 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 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	$	18,071	$	18,077
After 1 but within 5 years	20,362		20,410
After 5 but within 10 years	3,814		3,682
After 10 years	43,418		43,075
	85,665		85,244
Mortgage-backed securities	83,606		83,301
Total debt securities	$	169,271	$	168,545

There were no sales of available for sale securities for the three and nine months ended September 30, 2017. Proceeds from the sale of available for sale securities were $8.0 million for both the three and nine months ended September 30, 2016.

The following is a summary of realized gains and losses on the sales of securities for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Gross gains on sales	$	—	$	55	$	—	$	55
Gross losses on sales	—		—		—		—
Net gain on sales of securities	$	—	$	55	$	—	$	55

The following tables present information pertaining to securities with gross unrealized losses at September 30, 2017 and December 31, 2016, 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, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	18,418	$	115	$	25,693	$	503	$	44,111	$	618
Government sponsored enterprises	278		2		—		—		278		2
Mortgage-backed securities:
Agency - residential	25,343		169		28,213		561		53,556		730
Non-agency - residential	—		—		72		5		72		5
Tax-exempt securities	574		1		—		—		574		1
Total	$	44,613	$	287	$	53,978	$	1,069	$	98,591	$	1,356

16

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

	Less Than 12 Months				12 Months or More				Total
December 31, 2016	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	21,531	$	227	$	19,272	$	503	$	40,803	$	730
Mortgage-backed securities:
Agency - residential	49,961		756		9,585		260		59,546		1,016
Non-agency - residential	—		—		87		6		87		6
Tax-exempt securities	1,121		6		—		—		1,121		6
Total	$	72,613	$	989	$	28,944	$	769	$	101,557	$	1,758

At September 30, 2017, 55 debt securities with gross unrealized losses had an aggregate depreciation of 1.36% of the Company’s amortized cost basis. The unrealized losses are primarily related to the Company’s U.S. Government and agency obligations and agency mortgage-backed securities. There were no investments deemed other-than-temporarily impaired for the three and nine months ended September 30, 2017 and 2016. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements of whether the applicable investments within the Company’s securities portfolio were not other-than-temporarily impaired at September 30, 2017.

U.S. Government and Agency Obligations and Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s U.S. Government and agency obligations and mortgage-backed agency-residential securities related primarily to a widening of the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the par value of the securities.

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 loss was identified.

17

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

NOTE 4.  LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

Loan Portfolio

The composition of the Company’s loan portfolio at September 30, 2017 and December 31, 2016 is as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	405,751		$	417,064
Multi-family and commercial	461,992			421,668
Construction	27,587			36,026
Total real estate loans	895,330			874,758
Commercial business loans:
SBA and USDA guaranteed	96,534			116,383
Time share	46,159			51,083
Condominium association	26,795			23,531
Medical loans	26,202			27,180
Other	90,451			79,524
Total commercial business loans	286,141			297,701
Consumer loans:
Home equity	53,975			55,228
Indirect automobile	107			501
Other	1,676			1,687
Total consumer loans	55,758			57,416
Total loans	1,237,229			1,229,875
Deferred loan origination costs, net of fees	2,448			2,268
Allowance for loan losses	(12,217		)	(11,820		)
Loans receivable, net	$	1,227,460		$	1,220,323

The Company purchased commercial loans totaling $22.3 million during the nine months ended September 30, 2017. For the twelve months ended December 31, 2016, the Company purchased commercial loans totaling $37.7 million.

18

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

Allowance for Loan Losses

Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 are as follows:

Three Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,181		$	6,230	$	562		$	3,439		$	735		$	12,147
Provision (credit) for loan losses	(48		)	241		37			(56		)	(3		)	171
Loans charged-off	(21		)	—		—			(32		)	(57		)	(110		)
Recoveries of loans previously charged-off	—			—		—			7			2			9
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217
Nine Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,149		$	5,724	$	952		$	3,266		$	729		$	11,820
Provision (credit) for loan losses	3			747		(353		)	106			(2		)	501
Loans charged-off	(43		)	—		—			(46		)	(58		)	(147		)
Recoveries of loans previously charged-off	3			—		—			32			8			43
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217

Three Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,026		$	5,420		$	798	$	2,693		$	706		$	10,643
Provision for loan losses	106			183			141		442			8			880
Loans charged-off	(38		)	(22		)	—		—			(4		)	(64		)
Recoveries of loans previously charged-off	—			1			—		10			1			12
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471
Nine Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,036		$	5,033		$	516	$	2,625		$	653		$	9,863
Provision for loan losses	150			485			423		534			181			1,773
Loans charged-off	(120		)	(46		)	—		(68		)	(124		)	(358		)
Recoveries of loans previously charged-off	28			110			—		54			1			193
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471

19

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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

September 30, 2017	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	$	236	$	248	$	—	$	—	$	1	$	485
Allowance for loans individually or collectively evaluated and not deemed to be impaired	876		6,223		599		3,358		676		11,732
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,112	$	6,471	$	599	$	3,358	$	677	$	12,217
Loans individually evaluated and deemed to be impaired	$	4,745	$	6,928	$	—	$	798	$	203	$	12,674
Loans individually or collectively evaluated and not deemed to be impaired	400,611		452,751		27,587		285,343		55,555		1,221,847
Amount of loans acquired with deteriorated credit quality	395		2,313		—		—		—		2,708
Total loans	$	405,751	$	461,992	$	27,587	$	286,141	$	55,758	$	1,237,229

December 31, 2016	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	$	306	$	240	$	—	$	95	$	52	$	693
Allowance for loans individually or collectively evaluated and not deemed to be impaired	843		5,484		952		3,171		677		11,127
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,149	$	5,724	$	952	$	3,266	$	729	$	11,820
Loans individually evaluated and deemed to be impaired	$	6,450	$	7,257	$	—	$	607	$	453	$	14,767
Loans individually or collectively evaluated and not deemed to be impaired	410,221		411,637		36,026		297,094		56,963		1,211,941
Amount of loans acquired with deteriorated credit quality	393		2,774		—		—		—		3,167
Total loans	$	417,064	$	421,668	$	36,026	$	297,701	$	57,416	$	1,229,875

20

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

Past Due Loans

The following represents an aging of loans at September 30, 2017 and December 31, 2016:

September 30, 2017	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	$	3	$	558		$	741	$	1,302	$	404,449	$	405,751
Multi-family and commercial	3,225		—			27		3,252		458,740		461,992
Construction	—		—			—		—		27,587		27,587
Commercial Business:
SBA and USDA guaranteed	—		—			—		—		96,534		96,534
Time share	—		—			—		—		46,159		46,159
Condominium association	—		—			—		—		26,795		26,795
Medical loans	50		—			33		83		26,119		26,202
Other	—		316		—	303		619		89,832		90,451
Consumer:
Home equity	153		115			20		288		53,687		53,975
Indirect automobile	3		—			—		3		104		107
Other	—		—			—		—		1,676		1,676
Total	$	3,434	$	989		$	1,124	$	5,547	$	1,231,682	$	1,237,229

December 31, 2016	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	$	4,781	$	1,128	$	1,547	$	7,456	$	409,608	$	417,064
Multi-family and commercial	2,752		250		351		3,353		418,315		421,668
Construction	—		—		—		—		36,026		36,026
Commercial Business:
SBA and USDA guaranteed	1,628		—		—		1,628		114,755		116,383
Time share	—		—		—		—		51,083		51,083
Condominium association	—		—		—		—		23,531		23,531
Medical loans	—		—		—		—		27,180		27,180
Other	431		—		593		1,024		78,500		79,524
Consumer:
Home equity	182		—		179		361		54,867		55,228
Indirect automobile	9		—		—		9		492		501
Other	4		2		5		11		1,676		1,687
Total	$	9,787	$	1,380	$	2,675	$	13,842	$	1,216,033	$	1,229,875

The Company did not have any loans that were past due 90 days or more and still accruing interest at September 30, 2017 or December 31, 2016.

21

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

Impaired and Nonaccrual Loans

The following is a summary of impaired loans and nonaccrual loans at September 30, 2017 and December 31, 2016:

	Impaired Loans(1)
September 30, 2017	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	2,719	$	2,719	$	—	$	1,923
Multi-family and commercial	4,986		4,986		—		637
Commercial Business:
Medical loans	33		66		—		33
Other	738		738		—		726
Consumer:
Home equity	183		183		—		102
Other	—		—		—		4
Total impaired loans without valuation allowance	8,659		8,692		—		3,425
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,026		2,026		236		101
Multi-family and commercial	3,834		3,834		248		93
Commercial business - Other	27		27		—		27
Consumer - Home equity	20		20		1		—
Total impaired loans with valuation allowance	5,907		5,907		485		221
Total impaired loans	$	14,566	$	14,599	$	485	$	3,646

⁽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. These loans amounted to $816,000 at September 30, 2017.

22

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

	Impaired Loans(1)
December 31, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,960	$	4,013	$	—	$	2,753
Multi-family and commercial	5,807		5,807		—		885
Commercial business - Other	512		512		—		498
Consumer - Home equity	174		174		—		174
Consumer - Indirect automobile	—		—		—		6
Total impaired loans without valuation allowance	10,453		10,506		—		4,316
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,489		2,489		306		672
Multi-family and commercial	3,789		3,789		240		171
Commercial business - Other	95		95		95		95
Consumer - Home equity	280		378		52		179
Total impaired loans with valuation allowance	6,653		6,751		693		1,117
Total impaired loans	$	17,106	$	17,257	$	693	$	5,433

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Newport merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance. These loans amounted to $828,000 at December 31, 2016.

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, 2017 and December 31, 2016, the Company concluded that certain impaired loans required no valuation allowance as a result of management’s measurement of impairment. No additional funds are advanced to those borrowers whose loans are deemed impaired without prior approval of the Loan Committee or the Board of Directors.

23

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	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	$	5,328	$	32	$	1	$	5,834	$	102	$	10
Multi-family and commercial	8,010		98		—		8,401		324		11
Commercial business:
Medical loans	23		—		—		12		—		—
Other	1,449		8		—		1,218		52		27
Consumer:
Home equity	284		1		—		354		4		1
Other	4		—		—		3		—		—
Total	$	15,098	$	139	$	1	$	15,822	$	482	$	49

	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	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	$	6,042	$	32	$	—	$	6,039	$	83	$	—
Multi-family and commercial	9,866		116		13		8,555		264		13
Commercial business - Other	1,023		6		4		688		6		4
Consumer - Home equity	444		1		—		321		3		1
Total	$	17,375	$	155	$	17	$	15,603	$	356	$	18

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.

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SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2017 and December 31, 2016:

September 30, 2017	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	398,093	$	1,605	$	6,053	$	—	$	—	$	405,751
Multi-family and commercial	—		438,787		13,521		9,684		—		—		461,992
Construction	—		27,587		—		—		—		—		27,587
Total real estate loans	—		864,467		15,126		15,737		—		—		895,330
Commercial Business:
SBA and USDA guaranteed	96,534		—		—		—		—		—		96,534
Time share	—		46,159		—		—		—		—		46,159
Condominium association	—		26,795		—		—		—		—		26,795
Medical loans	—		26,169		—		33		—		—		26,202
Other	—		84,944		3,221		2,286		—		—		90,451
Total commercial business loans	96,534		184,067		3,221		2,319		—		—		286,141
Consumer:
Home equity	—		53,551		142		282		—		—		53,975
Indirect automobile	—		107		—		—		—		—		107
Other	—		1,673		—		3		—		—		1,676
Total consumer loans	—		55,331		142		285		—		—		55,758
Total loans	$	96,534	$	1,103,865	$	18,489	$	18,341	$	—	$	—	$	1,237,229

25

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

December 31, 2016	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	408,237	$	1,174	$	7,653	$	—	$	—	$	417,064
Multi-family and commercial	—		393,225		14,018		14,425		—		—		421,668
Construction	—		36,026		—		—		—		—		36,026
Total real estate loans	—		837,488		15,192		22,078		—		—		874,758
Commercial Business:
SBA and USDA guaranteed	116,383		—		—		—		—		—		116,383
Time share	—		51,083		—		—		—		—		51,083
Condominium association	—		23,531		—		—		—		—		23,531
Medical loans	—		27,180		—		—		—		—		27,180
Other	—		73,474		3,741		2,309		—		—		79,524
Total commercial business loans	116,383		175,268		3,741		2,309		—		—		297,701
Consumer:
Home equity	—		54,683		46		499		—		—		55,228
Indirect automobile	—		501		—		—		—		—		501
Other	—		1,681		—		6		—		—		1,687
Total consumer loans	—		56,865		46		505		—		—		57,416
Total loans	$	116,383	$	1,069,621	$	18,979	$	24,892	$	—	$	—	$	1,229,875

26

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

The following tables provide information on loans modified as TDRs during the three and nine months ended September 30, 2017 and 2016. 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,
	2017					2016
				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	1	$	214	$	4	2	$	379	$	21
Multi-family and commercial	—	—		53		—	—		235
Commercial business - other	—	—		—		1	95		—
Total	1	$	214	$	57	3	$	474	$	256
	Nine Months Ended September 30,
	2017					2016
				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	2	$	505	$	4	4	$	764	$	21
Multi-family and commercial	2	234		53		4	4,127		235
Commercial business - other	—	—		—		3	777		—
Total	4	$	739	$	57	11	$	5,668	$	256

The following table provides the recorded investment, by type of modification, during the three and nine months ended September 30, 2017 and 2016 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Interest rate adjustments	$	—	$	275	$	—	$	275
Principal deferrals	—		104		—		190
Combination of rate and payment (1)	214		—		214		—
Combination of rate and maturity (2)	—		—		234		3,201
Maturity only	—		95		291		2,002
Total	$	214	$	474	$	739	$	5,668

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

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

During the three and nine months ended September 30, 2017, there were no TDRs in payment default (defined as 90 days or more past due) within twelve months of restructure. There were two commercial loans totaling $682,000 that were modified as TDRs that were in payment default within twelve months of restructure for the three and nine months ended September 30, 2016.

27

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

As of September 30, 2017, the Company held $520,000 in consumer mortgage loans collateralized by residential real estate properties 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 from Newport with evidence of credit deterioration as of September 30, 2017 and December 31, 2016.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2016	$	3,522		$	3,167		$	355		$	154		$	3,013
Additions	—			77			(77		)	77			—
Collections	296			296			—			(18		)	314
Dispositions	(888		)	(832		)	(55		)	—			(832		)
Balance at September 30, 2017	$	2,930		$	2,708		$	223		$	213		$	2,495

NOTE 5.  PREMISES AND EQUIPMENT

Premises and equipment at September 30, 2017 and December 31, 2016 are summarized as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,673			13,623
Leasehold improvements	11,770			10,731
Furniture and equipment	12,168			12,405
Construction in process	38			580
	42,395			42,085
Accumulated depreciation and amortization	(22,771		)	(22,201		)
Premises and equipment, net	$	19,624		$	19,884

At September 30, 2017, construction in process related to the construction, design and site costs associated with a new ATM location. At December 31, 2016, construction in process related to the construction, 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.

28

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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

	Nine Months Ended September 30, 2017
	Before Tax Amount		Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	306	$	(104	)	$	202
Other comprehensive income	$	306	$	(104	)	$	202

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

	September 30, 2017
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(726	)	$	247	$	(479	)
Accumulated other comprehensive loss	$	(726	)	$	247	$	(479	)

	December 31, 2016
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(1,032	)	$	351	$	(681	)
Accumulated other comprehensive loss	$	(1,032	)	$	351	$	(681	)

NOTE 7.  REGULATORY CAPITAL

The Company and the Bank are subject to regulatory capital 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. Under Basel III 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 the regulators about components, risk weightings and other factors.

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, common equity tier 1 capital to risk-weighted assets, tier 1 capital to risk-weighted assets and total risk-based capital to risk-weighted assets. At September 30, 2017, the Company and the Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory requirements. Management believes no conditions or events have occurred since September 30, 2017 that would materially adversely change the Company’s and the Bank’s capital classifications.

Effective January 1, 2016, Basel III implemented a requirement for all banking organizations to maintain a capital conservation buffer exclusively composed of common equity Tier 1 capital in an amount greater than 2.5% of total risk-weighted assets to avoid being subject to limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer increases the three risk-based capital ratios and will be phased in over a multi-year schedule with full compliance in 2019. Management believes

29

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

the Company and the Bank's capital level will remain characterized as "well-capitalized" under the new rules. The Company and Bank's regulatory capital amounts and ratios at September 30, 2017 and December 31, 2016, compared to the FDIC's requirements for classification as a well capitalized institution and for minimum capital adequacy, were as follows:

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2017	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	156,252	15.15	%	$	46,401	4.50	%	$	67,024	6.50	%
Bank	148,516		14.42		46,345		4.50		66,943		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	164,252		15.93		61,868		6.00		82,491		8.00
Bank	148,516		14.42		61,794		6.00		82,392		8.00
Total Capital to Risk Weighted Assets:
Company	176,923		17.16		82,491		8.00		103,113		10.00
Bank	161,187		15.65		82,391		8.00		102,989		10.00
Tier 1 Capital to Average Assets:
Company	164,252		10.46		62,839		4.00		78,549		5.00
Bank	148,516		9.52		62,408		4.00		78,009		5.00

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
December 31, 2016	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	150,915	15.08	%	$	45,028	4.50	%	$	65,041	6.50	%
Bank	141,673		14.17		44,978		4.50		64,968		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	158,915		15.88		60,037		6.00		80,050		8.00
Bank	141,673		14.17		59,970		6.00		79,960		8.00
Total Capital to Risk Weighted Assets:
Company	171,187		17.11		80,050		8.00		100,062		10.00
Bank	153,945		15.40		79,960		8.00		99,950		10.00
Tier 1 Capital to Average Assets:
Company	158,915		10.50		60,562		4.00		75,702		5.00
Bank	141,673		9.41		60,248		4.00		75,310		5.00

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.

30

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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 asets or liabilities whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as assets or liabilities 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 assets and liabilities 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 assets and liabilities. 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 assets and liabilities.

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 was backed by a trust preferred security issued by banks and insurance companies. Management determined that an orderly and active market for this security and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels. The Company estimates 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.

31

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

• 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 agreement.The fair value of the Company’s interest rate swap is obtained from a third-party pricing service and is 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.

32

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2017 and December 31, 2016.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2017.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	24,502	$	46,167	$	—	$	70,669
Government-sponsored enterprises	—		9,283		—		9,283
Mortgage-backed securities	—		83,301		—		83,301
Collateralized debt obligation	—		—		1,114		1,114
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,178		—		3,178
Forward loan sale commitments and derivative loan commitments	—		—		121		121
Total assets	$	24,502	$	142,929	$	1,235	$	168,666
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	2	$	2
Total liabilities	$	—	$	—	$	2	$	2

	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,087	$	43,209	$	—	$	64,296
Government-sponsored enterprises	—		11,364		—		11,364
Mortgage-backed securities	—		78,389		—		78,389
Collateralized debt obligation	—		—		1,157		1,157
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,161		—		3,161
Forward loan sale commitments and derivative loan commitments	—		—		136		136
Total assets	$	21,087	$	137,123	$	1,293	$	159,503
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	15	$	15
Interest rate swap agreement	—		2		—		2
Total liabilities	$	—	$	2	$	15	$	17

33

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2016	$	1,157		$	121
Total realized losses included in net income	—			(2		)
Total unrealized losses included in other comprehensive income	(43		)	—
Balance at September 30, 2017	$	1,114		$	119

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, 2017 and December 31, 2016. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016.

	At September 30, 2017						At December 31, 2016
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	192	$	—	$	—	$	696
Other real estate owned	—		—		1,679		—		—		1,466
Total assets	$	—	$	—	$	1,871	$	—	$	—	$	2,162

The following table summarizes losses 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,
	2017		2016		2017		2016
	(In Thousands)
Impaired loans	$	34	$	21	$	88	$	239
Other real estate owned	—		—		197		8
Total losses	$	34	$	21	$	285	$	247

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, and are recorded through the provision for loan losses.

34

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2017 and December 31, 2016. The estimated fair value amounts at September 30, 2017 and December 31, 2016 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. 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, 2017 and December 31, 2016, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2017
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	91,732	$	91,732	$	—	$	—	$	91,732
Available for sale securities	168,545		24,502		142,929		1,114		168,545
Loans held for sale	1,856		—		—		1,890		1,890
Loans receivable, net	1,227,460		—		—		1,221,275		1,221,275
Federal Home Loan Bank stock	10,017		—		—		10,017		10,017
Federal Reserve Bank stock	3,631		—		—		3,631		3,631
Accrued interest receivable	4,735		—		—		4,735		4,735
Financial Liabilities:
Deposits	1,214,089		—		—		1,216,200		1,216,200
Mortgagors' and investors' escrow accounts	2,926		—		—		2,926		2,926
Federal Home Loan Bank advances	166,815		—		166,674		—		166,674
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,175		—		6,175
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	45		—		—		45		45
Forward loan sale commitments	76		—		—		76		76
Liabilities:
Derivative loan commitments	2		—		—		2		2

35

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

	December 31, 2016
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	73,186	$	73,186	$	—	$	—	$	73,186
Available for sale securities	159,367		21,087		137,123		1,157		159,367
Loans held for sale	1,393		—		—		1,584		1,584
Loans receivable, net	1,220,323		—		—		1,218,918		1,218,918
Federal Home Loan Bank stock	12,162		—		—		12,162		12,162
Federal Reserve Bank stock	3,624		—		—		3,624		3,624
Accrued interest receivable	4,435		—		—		4,435		4,435
Financial Liabilities:
Deposits	1,130,685		—		—		1,134,378		1,134,378
Mortgagors' and investors' escrow accounts	4,388		—		—		4,388		4,388
Federal Home Loan Bank advances	217,759		—		217,120		—		217,120
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,043		—		6,043
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	72		—		—		72		72
Forward loan sale commitments	64		—		—		64		64
Liabilities:
Derivative loan commitments	15		—		—		15		15
Interest rate swap agreement	2		—		2		—		2

NOTE 9.  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Financial Instruments

The Company had a stand-alone derivative financial instrument in the form of an interest rate swap agreement, which derives its value from underlying interest rates. This transaction involved both credit and market risk. The notional amount was an amount on which calculations, payments and the value of the derivative was based. The notional amount does 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 instrument, was reflected on the Company’s balance sheets as other assets and other liabilities. The Company was exposed to credit-related losses in the event of nonperformance by the counterparty to this agreement. The Company controls the credit risk of its financial contract through credit approvals, limits and monitoring procedures and does not expect any counterparty to fail its 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 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 hedge accounting requirements of FASB's "Derivatives and Hedging" standard to manage the Company's exposure to interest rate movements and other identified risks. This agreement terminated on January 11, 2017.

36

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

At December 31, 2016, information pertaining to the Company's interest rate swap agreement not designated as a hedge was as follows:

	December 31, 2016
	(Dollars in Thousands)
Notional amount	$	15,000
Weighted average fixed pay rate	1.26		%
Weighted average variable receive rate	0.88		%
Weighted average maturity in years	0.0
Unrealized loss relating to interest rate swap	$	2

The Company reported a gain in fair value on the interest rate swap not designated as a hedge in noninterest income of $33,000 and $48,000 for the three and nine months ended September 30, 2016, 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.

Forward Loan Sale Commitments -To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and "best efforts" 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.

With a "best efforts" contract, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower).

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.

37

SI FINANCIAL GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2017 AND 2016 AND DECEMBER 31, 2016

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, 2017 and December 31, 2016.

		September 30, 2017				December 31, 2016
	Balance Sheet Location	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
		(In Thousands)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	$	—	$	—	$	15,000	$	(2	)
Derivative loan commitments	Other Assets	5,144		43		12,607		57
Forward loan sale commitments	Other Assets	5,501		76		4,049		64

38

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, 2017 and December 31, 2016 and the results of operations for the three and nine months ended September 30, 2017 and 2016. 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 the consolidated financial statements included in the Company’s 2016 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, such as goodwill and other intangibles, 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 2016 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, 2017 and December 31, 2016

Assets:

Summary. Assets increased $34.1 million, or 2.2%, to $1.59 billion at September 30, 2017, compared to $1.55 billion at December 31, 2016, principally due to increases of $18.5 millionin cash and cash equivalents, $9.2 million in available for sale securities and $7.1 million in net loans receivable, offset by a decrease in Federal Home

39

Loan Bank stock of $2.1 million. Funds from excess deposits contributed to the increase in cash and cash equivalents and available for sale securities.

Loans Receivable, Net. Net loans increased $7.1 million primarily due to increases of $40.3 millionin multi-family and commercial real estate loans and$10.9 million in other commercial business loans, offset by decreases of $19.8 million in SBA and USDA guaranteed loans, $11.3 million in residential mortgage loans, $8.4 millionin construction loans and $4.9 million in time share loans. Changes in the loan portfolio consisted of the following:

• Residential Real Estate. Residential mortgage loans comprised 32.8% of the total loan portfolio at September 30, 2017 and decreased $11.3 million to $405.8 million as compared to $417.1 million at December 31, 2016. Residential mortgage loan originations increased $2.8 million, or 3.5%, during the nine months ended September 30, 2017 over the comparable period in 2016 as a result of increased activity in the housing market. Loans sold for the nine months ended September 30, 2017 were $38.5 million compared to $35.1 million for the nine months ended September 30, 2016.

• Multi-family and Commercial Real Estate. Multi-family and commercial real estate loans represented 37.3% of total loans at September 30, 2017 and increased$40.3 million, or 9.6%, during the nine months ended September 30, 2017, partially due to the conversion of a $15.3 million commercial construction loan to a permanent commercial real estate loan. Originations for multi-family and commercial real estate loans were $48.9 million during the nine months ended September 30, 2017, representing a decrease of $15.7 million, compared to the same period in 2016.

• Construction. Construction loans, which include both residential and commercial construction loans, decreased$8.4 million to $27.6 million for the nine months ended September 30, 2017 primarily due to the conversion of a $15.3 million commercial construction loan to a permanent commercial real estate loan.

• Commercial Business. Commercial business loans represented 23.1% of total loans at September 30, 2017. Commercial business loans decreased$11.6 million, or 3.9%, for the nine months ended September 30, 2017, primarily due to decreases of $19.8 millionin SBA and USDA guaranteed loans and $4.9 million in time share loans, offset by increases of $10.9 million in other commercial business loans and $3.3 million in condominium association loans. Commercial business loan originations increased $2.1 million as compared to the same period in 2016. At September 30, 2017, unfunded lines of credit related to time share lending totaled $38.7 million as a result of focused efforts within the time share industry.

• Consumer. Consumer loans represented 4.5% of the Company’s total loan portfolio at September 30, 2017. Consumer loans decreased$1.7 million during the nine months ended September 30, 2017 primarily as a result of decreases of $1.3 millionin home equity loans and $394,000 in indirect automobile loans. Loan originations for consumer loans totaled $17.7 million, representing a decrease of $1.7 million, for the nine months ended September 30, 2017 over the comparable period in 2016.

The allowance for loan losses totaled $12.2 million at September 30, 2017 compared to $11.8 million at December 31, 2016. The ratio of the allowance for loan losses to total loans increased to 0.99% at September 30, 2017 from 0.96% at December 31, 2016, primarily due to a higher provision incurred in the period from the increase in the commercial real estate loan portfolio, which carries a higher degree of risk (excluding guaranteed SBA and USDA loans) than other loans held in the portfolio, a decrease in SBA and USDA loans, which because of the government guarantee on these loans, does not require a corresponding allowance for loan losses, and $104,000 of net loan charge-offs for the period.

40

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

	September 30, 2017			December 31, 2016
Nonaccrual loans:	(Dollars in Thousands)
Real estate loans:
Residential - 1 to 4 family	$	2,024		$	3,425
Multi-family and commercial	730			1,056
Total real estate loans	2,754			4,481
Commercial business loans:
Medical Loans	33			—
Other	753			593
Total commercial business loans	786			593
Consumer loans:
Home equity	102			353
Other	4			6
Total consumer loans	106			359
Total nonaccrual loans	3,646			5,433
Accruing loans past due 90 days or more	—			—
Total nonperforming loans (1)	3,646			5,433
Other real estate owned, net (2)	1,679			1,466
Total nonperforming assets	5,325			6,899
Accruing troubled debt restructurings	9,869			9,982
Total nonperforming assets and troubled debt restructurings	$	15,194		$	16,881
Allowance for loan losses as a percent of nonperforming loans	335.08		%	217.56		%
Total nonperforming loans to total loans	0.29		%	0.44		%
Total nonperforming loans to total assets	0.23		%	0.35		%
Total nonperforming assets and troubled debt restructurings to total assets	0.96		%	1.09		%

⁽¹⁾ Includes nonperforming TDRs totaling $513,000 and $906,000 at September 30, 2017 and December 31, 2016, respectively.

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

The decrease in nonperforming loans was primarily due to decreases in nonperforming residential - 1 to 4 family loans of $1.4 million, nonperforming multi-family and commercial real estate loans of $326,000 and nonperforming home equity loans of $251,000. Nonperforming commercial business loans increased $193,000 during the nine months ended September 30, 2017.

Other real estate owned increased $213,000 to $1.7 million at September 30, 2017, primarily due to the addition of six properties with a total book value of $894,000, partially offset by net sale proceeds of $456,000. At September 30, 2017, other real estate owned consisted of five residential properties, two commercial properties and one home equity loan.

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, maturity extensions, or a combination of these items. TDRs decreased to $10.4 million at September 30, 2017, compared to $10.9 million at December 31, 2016. Of the TDRs, $9.9 million and $10.0 million were performing in accordance with their restructured terms at September 30, 2017 and December 31, 2016, respectively. The Company anticipates these borrowers will repay all contractual principal and interest in accordance with the terms of their restructured loan agreements.

41

Liabilities:

Summary. Liabilities increased$27.8 million, or 2.0%, to $1.41 billion at September 30, 2017 compared to $1.39 billion at December 31, 2016. Deposits increased$83.4 million, or 7.4%, which included increases in NOW and money market accounts of $50.0 million, certificates of deposit of $23.8 million and noninterest-bearing deposits of $12.1 million, offset by a decrease in savings accounts of $2.8 million. Deposit growth remained strong due to marketing and promotional initiatives and competitively-priced deposit products. Borrowings decreased $50.9 million from $226.0 million at December 31, 2016 to $175.1 million atSeptember 30, 2017, resulting from repayments of FHLB advances with funds from excess deposits.

Equity:

Summary. Shareholders’ equity increased$6.3 million from $164.7 million at December 31, 2016 to $171.0 million at September 30, 2017. The increase in shareholders' equity was primarily attributable to net income of $6.8 million, partially offset by dividends paid of $1.8 million.

Accumulated Other Comprehensive Loss. Accumulated other comprehensive loss is comprised of the unrealized gains and losses on available for sale securities. The net unrealized losses on available for sale securities, net of taxes, totaled $479,000 at September 30, 2017 and $681,000 at December 31, 2016.

Results of Operations for the Three and Nine Months Ended September 30, 2017 and 2016

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 fees earned from mortgage banking activities, fees from deposits 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 $2.2 million for the three months ended September 30, 2017 compared to $1.6 million for the three months ended September 30, 2016 and net income of $6.8 million for the nine months ended September 30, 2017 compared to $4.8 million for the nine months ended September 30, 2016.

Interest and Dividend Income. Total interest and dividend income increased $946,000, or 7.4%, to $13.6 million for the quarter ended September 30, 2017, compared to $12.7 million for the same period in 2016. The increase in interest and dividend income was primarily a result of increases in the average balance of loans and the average yield earned on loans and other interest-earning assets. Interest income on loans and securities reflect net accretion of $31,000 and net amortization of $162,000 for the quarters ended September 30, 2017 and 2016, 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 quarter ended September 30, 2017 increased ten basis points to 3.63% compared to 3.53% for the quarter ended September 30, 2016, primarily due to a 71 basis point increase in the average yield earned on other interest-earning assets and a 24 basis point increase in the average yield earned on securities. The average balance of interest-earning assets increased $65.6 million to $1.50 billion at September 30, 2017 due to increases of $68.7 million in the average balance of loans and $10.2 million in the average balance of other interest-earning assets, offset by a decrease of $13.3 million in the average balance of securities, compared to September 30, 2016.

Total interest and dividend income increased $2.3 million, or 6.1%, to $40.3 million for the nine months ended September 30, 2017, compared to $38.0 million for the same period in 2016. The increase in interest and dividend income was primarily due to the higher average balance of loans and the average balance and yield earned on other interest-earning assets versus the same period in 2016. Interest income on loans and securities reflect net

42

accretion of $30,000 and net amortization of $184,000 for the nine months ended September 30, 2017 and 2016, 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 nine months ended September 30, 2017 increased four basis points to 3.62% compared to 3.58% for the nine months ended September 30, 2016, primarily due to a 50 basis point increase in the yield on other interest-earning assets. The average balance of interest-earning assets increased $74.6 million to $1.50 billion during the nine months of 2017, due to increases of $72.5 million in the average balance of loans and $15.5 million in the average balance of other interest-earning assets, offset by a decrease of $13.4 million in the average balance of securities, as compared to the same period in 2016.

Interest Expense. For the quarter ended September 30, 2017, interest expense increased $243,000, or 9.6%, primarily resulting from a higher average balance and higher average rate paid on deposits compared to the same quarter in 2016. Higher interest expense on interest-bearing liabilities reflect net accretion of $66,000 and $119,000 for the three months ended September 30, 2017 and 2016, respectively, related to fair value adjustments of deposits and borrowings resulting from the Newport acquisition. The average balance of interest-bearing deposits increased $37.4 million to $991.9 million for the quarter ended September 30, 2017 and the average rate paid increased six basis points to 0.77%, compared to the same period in 2016, primarily due to increases in the average balance of NOW and money market accounts of $22.3 million and certificates of deposit of $15.2 million. The average balance of FHLB advances decreased $25.4 million for the three months ended September 30, 2017, and the average rate paid increased 24 basis points to 1.79%. The average rate paid on subordinated debt increased 57 basis points to 2.89%, compared to the same period in 2016, due to increases in the three-month LIBOR rate.

Interest expense increased $777,000, or 10.3%, for the nine months ended September 30, 2017, resulting from higher average balances and higher average rates paid on deposits and higher rates paid on FHLB advances compared to the same period in 2016. Higher interest expense on interest-bearing liabilities reflect net accretion of $289,000 and $398,000 for the nine months ended September 30, 2017 and 2016, respectively, related to fair value adjustments of deposits and borrowings resulting from the Newport acquisition. The average balance of interest-bearing deposits increased $38.0 million to $977.6 million for nine months ended September 30, 2017 and the average rate paid increased six basis points to 0.76%, compared to the same period in 2016. Increases in the average balance of certificates of deposit and NOW and money market deposits totaled $25.0 million and $13.2 million, respectively, while the average balance of savings accounts decreased $441,000 compared to the nine months of 2016. The average balance of FHLB advances decreased $16.0 million for the nine months ended September 30, 2017, while the average rate paid increased 20 basis points to 1.74%. The average rate paid on subordinated debt increased 52 basis points to 2.80%, compared to the same period in 2016, due to increases in the three-month LIBOR rate.

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.

43

	At or For the Three Months Ended September 30,
	2017							2016
	Average Balance		Interest & Dividends			Average Yield/ Rate (8)		Average Balance		Interest & Dividends			Average Yield/ Rate (8)
	(Dollars in Thousands)
Interest-earning assets:
Loans (1) (2) (3)	$	1,237,878	$	12,430		3.98	%	$	1,169,190	$	11,638		3.96	%
Securities (3)	190,045		1,094			2.28		203,354		1,045			2.04
Other interest-earning assets	75,921		234			1.22		65,678		84			0.51
Total interest-earning assets	1,503,844		13,758			3.63		1,438,222		12,767			3.53
Noninterest-earning assets	82,364							84,374
Total assets	$	1,586,208						$	1,522,596
Interest-bearing liabilities:
Deposits:
Business checking	$	1,094	—			—		$	856	—			—
NOW and money market	497,059		229			0.18		474,736		129			0.11
Savings (4)	35,539		39			0.44		35,890		24			0.27
Certificates of deposit (5)	458,190		1,654			1.43		442,977		1,550			1.39
Total interest-bearing deposits	991,882		1,922			0.77		954,459		1,703			0.71
Federal Home Loan Bank advances	177,439		802			1.79		202,856		790			1.55
Subordinated debt	8,248		60			2.89		8,248		48			2.32
Total interest-bearing liabilities	1,177,569		2,784			0.94		1,165,563		2,541			0.87
Noninterest-bearing liabilities	237,475							196,305
Total liabilities	1,415,044							1,361,868
Total shareholders' equity	171,164							160,728
Total liabilities and shareholders' equity	$	1,586,208						$	1,522,596
Net interest-earning assets	$	326,275						$	272,659
Tax equivalent net interest income (3)			10,974							10,226
Tax equivalent interest rate spread (6)						2.69	%						2.66	%
Tax equivalent net interest margin as a percentage of interest-earning assets (7)						2.90	%						2.83	%
Average of interest-earning assets to average interest-bearing liabilities						127.71	%						123.39	%
Less tax equivalent adjustment (3)			(109		)					(64		)
Net interest income			$	10,865						$	10,162

⁽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, tax-exempt loan 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.

⁽⁸⁾ Annualized.

44

	At or For the Nine Months Ended September 30,
	2017							2016
	Average Balance		Interest & Dividends			Average Yield/ Rate (8)		Average Balance		Interest & Dividends			Average Yield/ Rate (8)
	(Dollars in Thousands)
Interest-earning assets:
Loans (1) (2) (3)	$	1,240,956	$	37,039		3.99	%	$	1,168,433	$	34,826		3.98	%
Securities (3)	186,776		3,060			2.19		200,204		3,162			2.11
Other interest-earning assets	71,666		546			1.02		56,124		217			0.52
Total interest-earning assets	1,499,398		40,645			3.62		1,424,761		38,205			3.58
Noninterest-earning assets	82,427							85,270
Total assets	$	1,581,825						$	1,510,031
Interest-bearing liabilities:
Deposits:
Business checking	$	1,050	—			—		$	770	—			—
NOW and money market	486,478		597			0.16		473,319		381			0.11
Savings (4)	35,899		102			0.38		36,340		72			0.26
Certificates of deposit (5)	454,150		4,856			1.43		429,140		4,454			1.39
Total interest-bearing deposits	977,577		5,555			0.76		939,569		4,907			0.70
Federal Home Loan Bank advances	198,428		2,577			1.74		214,423		2,480			1.54
Subordinated debt	8,248		173			2.80		8,248		141			2.28
Total interest-bearing liabilities	1,184,253		8,305			0.94		1,162,240		7,528			0.87
Noninterest-bearing liabilities	228,683							189,018
Total liabilities	1,412,936							1,351,258
Total shareholders' equity	168,889							158,773
Total liabilities and shareholders' equity	$	1,581,825						$	1,510,031
Net interest-earning assets	$	315,145						$	262,521
Tax equivalent net interest income (3)			32,340							30,677
Tax equivalent interest rate spread (6)						2.68	%						2.71	%
Tax equivalent net interest margin as a percentage of interest-earning assets (7)						2.88	%						2.88	%
Average of interest-earning assets to average interest-bearing liabilities						126.61	%						122.59	%
Less tax equivalent adjustment (3)			(296		)					(185		)
Net interest income			$	32,044						$	30,492

⁽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, tax-exempt loan 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.

⁽⁸⁾ Annualized.

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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, 2017 and 2016							Nine Months Ended September 30, 2017 and 2016
	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)(3)	$	142	$	650		$	792	$	80		$	2,133		$	2,213
Securities (3)	115		(66		)	49		103			(205		)	(102		)
Other interest-earning assets	139		11			150		282			47			329
Total interest-earning assets	396		595			991		465			1,975			2,440
Interest-bearing liabilities:
Interest expense:
Deposits (4)	163		56			219		380			268			648
Federal Home Loan Bank advances	105		(93		)	12		273			(176		)	97
Subordinated debt	12		12			24		32			—			32
Total interest-bearing liabilities	280		(25		)	255		685			92			777
Change in net interest income	$	116	$	620		$	736	$	(220	)	$	1,883		$	1,663

⁽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, tax-exempt loan 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 decreased $709,000 and $1.3 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016, primarily due to reductions in nonperforming loans. At September 30, 2017, nonperforming loans decreased to $3.6 million compared to $6.3 million at September 30, 2016, resulting from decreases in nonperforming residential, multi-family and commercial real estate and home equity loans of $1.3 million, $1.0 million and $271,000, respectively. Net loan charge-offs were $101,000 and $104,000 for the three and nine months ended September 30, 2017, respectively, consisting primarily of commercial business, home equity and residential real estate loan charge-offs, compared to $52,000 and $165,000 for the three and nine months ended September 30, 2016, 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
	2017			2016			Dollars			Percent		2017			2016			Dollars			Percent
	(Dollars in Thousands)
Service fees	$	1,723		$	1,585		$	138		8.7	%	$	5,165		$	4,798		$	367		7.6	%
Wealth management fees	20			296			(276		)	(93.2	)	539			897			(358		)	(39.9	)
Increase in cash surrender value of bank-owned life insurance	133			136			(3		)	(2.2	)	395			413			(18		)	(4.4	)
Net gain on sales of securities	—			55			(55		)	(100.0	)	—			55			(55		)	(100.0	)
Mortgage banking	519			503			16			3.2		1,140			1,172			(32		)	(2.7	)
Net loss on disposal of equipment	(4		)	(56		)	52			(92.9	)	(4		)	(92		)	88			(95.7	)
Net gain on fair value of derivatives	—			33			(33		)	(100.0	)	—			48			(48		)	(100.0	)
Other	124			101			23			22.8		1,428			650			778			119.7
Total noninterest income	$	2,515		$	2,653		$	(138	)	(5.2	)%	$	8,663		$	7,941		$	722		9.1	%

Noninterest income decreased $138,000 to $2.5 million and increased $722,000 to $8.7 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in the prior year. Contributing to the higher noninterest income for the nine months ended September 30, 2017 was a pre-tax gain of $795,000 on the sale of the Company's trust and asset management business in May 2017 included in other noninterest income. Service fees increased $138,000 and $367,000 for the three and nine months ended September 30, 2017, respectively, due to higher overdraft charges. Wealth management fees decreased $276,000 and $358,000 for the three and nine months ended September 30, 2017, respectively, versus the comparable periods in the prior year as a result of the sale of the Company's trust and asset management business. Fees earned from mortgage banking activities increased $16,000 for the three months ended September 30, 2017 due to a higher volume of loan sales as well as an increase in the gains on loans sold and decreased $32,000 for the nine months ended September 30, 2017 primarily as a result of decreases in derivative loan commitments versus the comparable periods in 2016.

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
	2017		2016		Dollars			Percent		2017		2016		Dollars			Percent
	(Dollars in Thousands)
Salaries and employee benefits	$	5,052	$	4,992	$	60		1.2	%	$	15,485	$	14,813	$	672		4.5	%
Occupancy and equipment	1,662		1,670		(8		)	(0.5	)	5,138		5,116		22			0.4
Computer and electronic banking services	1,345		1,367		(22		)	(1.6	)	4,015		4,311		(296		)	(6.9	)
Outside professional services	379		403		(24		)	(6.0	)	1,172		1,417		(245		)	(17.3	)
Marketing and advertising	173		92		81			88.0		580		543		37			6.8
Supplies	121		130		(9		)	(6.9	)	383		419		(36		)	(8.6	)
FDIC deposit insurance and regulatory assessments	178		263		(85		)	(32.3	)	590		788		(198		)	(25.1	)
Core deposit intangible amortization	150		151		(1		)	(0.7	)	451		452		(1		)	(0.2	)
Other real estate operations	117		54		63			116.7		484		179		305			170.4
Other	481		490		(9		)	(1.8	)	1,725		1,420		305			21.5
Total noninterest expenses	$	9,658	$	9,612	$	46		0.5	%	$	30,023	$	29,458	$	565		1.9	%

47

Noninterest expenses increased $46,000 and $565,000 for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. Salaries and benefits increased $60,000 and $672,000 for the three and nine months ended September 30, 2017, respectively. The large increase in salaries and benefits for the nine months months ended September 30, 2017 was due to lower deferred compensation resulting from a post-retirement benefit payout in June 2016. Other real estate operations increased $63,000 and $305,000 for the three and nine months ended September 30, 2017, respectively, primarily due to the addition of six properties with a total book value of $894,000, partially offset by net sale proceeds of $456,000. Other noninterest expense increased $305,000 for the nine months months ended September 30, 2017 primarily due to fraudulent debit card transactions of $373,000, but decreased $9,000 for the quarter ended September 30, 2017 compared to the same periods in 2016. Computer and electronic banking expenses decreased $22,000 and $296,000 for the three and nine months ended September 30, 2017, respectively, versus the comparable periods in 2016 as a result of reconfiguration of the telecommunication infrastructure and contract renegotiations with a third party provider. Outside professional services decreased $24,000 and $245,000 for the nine months ended September 30, 2017, respectively, versus the same periods in 2016 due to decreases in legal and audit fees and consulting expenses related to the noncompete agreements from the merger with Newport Federal. Regulatory assessments decreased $85,000 and $198,000 for the three and nine months ended September 30, 2017, respectively, due to a lower FDIC assessment rate.

Income Tax Provision. The provision for income taxes increased $540,000 and $1.0 million for the three and nine months ended September 30, 2017, respectively, compared to the same periods in 2016. The effective tax rate for the three months ended September 30, 2017 and 2016 was 36.8% and 33.0%, respectively. The effective tax rate for the first nine months of 2017 and 2016 was 33.2% and 33.0%, 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, 2017, cash and cash equivalents totaled $91.7 million. Securities classified as available for sale, which provide additional sources of liquidity, totaled $168.5 million at September 30, 2017. In addition, at September 30, 2017, the Bank had the ability to borrow an additional $137.6 million from the FHLB, which included overnight lines of credit of $10.0 million. On that date, the Bank had FHLB advances outstanding of $166.8 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 $25.0 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, 2017, the Bank originated $178.6 million of loans and purchased $32.0 million of securities and $22.3 million of loans. For the year ended December 31, 2016, the Bank originated $256.8 million of loans and purchased $37.7 million of loans and $29.5 million of securities.

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 $81.9 million for the first nine months ended September 30, 2017. FHLB advances decreased $50.9 million for the nine months ended September 30, 2017 and $16.8 million for the year ended December 31, 2016. The decrease in borrowings for the nine months of 2017 resulted from the net repayments of FHLB advances with excess deposits. Certificates of deposit due within one year of September 30, 2017 totaled $252.1 million, or 21.0% of total deposits. Management believes the

48

amount of deposits in shorter-term certificates of deposit reflects customers’ hesitancy to invest their funds in longer-term certificates of deposit due 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 24,586 shares of the Company's common stock at a cost of $368,000 during the first nine months of 2017 and 13,806 shares of the Company’s common stock at a cost of $178,000 during the year ended December 31, 2016. Additional discussion about the Company’s liquidity and capital resources is contained in Item 7 in the Company’s 2016 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, the Company is responsible for paying any dividends declared to its shareholders and making payments on its subordinated debentures. The Company may repurchase shares of its common stock in the future. The Company’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 the Company in any calendar year, without prior regulatory approval, cannot exceed net income for that year to date plus retained net income (as defined) for the preceding two calendar years. The Company believes such restriction will not have an impact on the Company's ability to meet its ongoing cash obligations. At September 30, 2017, on an unconsolidated basis, the Company had cash and cash equivalents of $2.3 million and available for sale securities of $9.0 million.

Payments Due Under Contractual Obligations

Information relating to payments due under contractual obligations is presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. There were no material changes in the Company’s payments due under contractual obligations between December 31, 2016 and September 30, 2017.

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.

49

Financial instruments whose contract amounts represent credit risk at September 30, 2017 and December 31, 2016 are as follows:

	September 30, 2017		December 31, 2016
	(In Thousands)
Commitments to extend credit:
Commitments to originate loans	$	23,468	$	31,702
Undisbursed construction loans	9,662		8,426
Undisbursed home equity lines of credit	54,456		52,131
Undisbursed commercial lines of credit	66,579		54,023
Overdraft protection lines	1,324		1,306
Standby letters of credit	134		133
Total commitments	$	155,623	$	147,721

Future loan commitments at September 30, 2017 and December 31, 2016 included fixed-rate loan commitments of $7.0 million and $16.4 million, respectively, at interest rates ranging from 3.13% to 5.75% and 2.75% to 8.00%, respectively.

The Bank is a limited partner in three small business investment corporations ("SBICs"). At September 30, 2017, the Bank’s remaining off-balance sheet commitment for the capital investment in the SBICs was $787,000.

For the nine months ended September 30, 2017, 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 2016 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 may occasionally purchase 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.

50

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 terminated 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

The interest income simulations provide an estimate of the impact of changes in interest rates on net interest income under a range of assumptions and are completed quarterly. Interest income simulations and the numerous assumptions used in the simulation process are presented and 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, 2017 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, 2017.

	Percentage Change in Estimated Net Interest Income Over
	12 Months		24 Months
100 basis point decrease in rates	(5.23	)%	(5.33	)%
200 basis point increase in rates	0.13		(1.16	)
300 basis point increase in rates	(0.36	)	(2.70	)

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, increased 200 basis points in the 24-month period or increased 300 basis points in the 12- and 24-month periods. Conversely, net interest income would be positively impacted in the 12-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 that will reprice in a rising rate environment, selling longer-term and lower fixed-rate residential mortgage loans in

51

the secondary market, extending the duration of FHLB advances and utilizing certain derivative instruments such as forward loan sale commitments to manage the risk of loss associated with its mortgage banking activities.

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 (the "SEC") (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, 2017 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 that any potential liability that may result from 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, 2016.  However, 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.

52

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, 2017 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, 2017	—	$	—	—	—
August 1 - 31, 2017	—	—		—	—
September 1 - 30, 2017	4,483	15.05		—	—
Total	4,483	$	15.05	—

⁽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.

53

Item 6.  Exhibits.

3.1	Articles of Incorporation of SI Financial Group, Inc. (1)
3.2	Amended and Restated Bylaws of SI Financial Group, Inc. (2)
4	Specimen Stock Certificate of SI Financial Group, Inc. (1)
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
32.0	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, 2017, 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.

⁽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 August 23, 2017.

54

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 8, 2017	/s/ Rheo A. Brouillard
		Rheo A. Brouillard
		President and Chief Executive Officer
		(principal executive officer)

Date:	November 8, 2017	/s/ Lauren L. Murphy
		Lauren L. Murphy
		Senior Vice President and Chief Financial Officer
		(principal accounting and financial officer)

55

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 8, 2017

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 8, 2017

EX-32.0

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, 2017, 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 8, 2017

By:/s/ Lauren L. Murphy

Lauren L. Murphy

Senior Vice President and Chief Financial Officer

November 8, 2017

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 02, 2017
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, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		12,231,434

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Cash and due from banks:
Noninterest-bearing	$ 15,011	$ 18,225
Interest-bearing	76,721	54,961
Total cash and cash equivalents	91,732	73,186
Available for sale securities, at fair value	168,545	159,367
Loans held for sale	1,856	1,393
Loans receivable (net of allowance for loan losses of $12,217 at September 30, 2017 and $11,820 at December 31, 2016)	1,227,460	1,220,323
Federal Home Loan Bank stock, at cost	10,017	12,162
Federal Reserve Bank stock, at cost	3,631	3,624
Bank-owned life insurance	21,688	21,293
Premises and equipment, net	19,624	19,884
Goodwill and other intangibles	17,043	17,494
Accrued interest receivable	4,735	4,435
Deferred tax asset, net	9,449	9,658
Other real estate owned, net	1,679	1,466
Other assets	7,541	6,605
Total assets	1,585,000	1,550,890
Deposits:
Noninterest-bearing	213,732	201,598
Interest-bearing	1,000,357	929,087
Total deposits	1,214,089	1,130,685
Mortgagors' and investors' escrow accounts	2,926	4,388
Federal Home Loan Bank advances	166,815	217,759
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Accrued expenses and other liabilities	21,920	25,083
Total liabilities	1,413,998	1,386,163
Shareholders' Equity:
Preferred stock ($.01 par value; 1,000,000 shares authorized; none issued)	0	0
Common stock ($.01 par value; 35,000,000 shares authorized; 12,230,680 and 12,212,904 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively)	122	122
Additional paid-in-capital	126,309	125,628
Unallocated common shares held by ESOP	(2,808)	(3,168)
Unearned restricted shares	(238)	(341)
Retained earnings	48,096	43,167
Accumulated other comprehensive loss	(479)	(681)
Total shareholders' equity	171,002	164,727
Total liabilities and shareholders' equity	$ 1,585,000	$ 1,550,890

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS:
Loans receivable, allowance for loan losses	$ 12,217	$ 11,820
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	12,230,680	12,212,904
Common stock, outstanding (in shares)	12,230,680	12,212,904
Treasury stock (in shares)	0	0

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest and dividend income:
Loans, including fees	$ 12,326	$ 11,579	$ 36,758	$ 34,656
Securities:
Taxable interest	891	855	2,465	2,601
Tax-exempt interest	14	14	42	42
Dividends	184	171	538	504
Other	234	84	546	217
Total interest and dividend income	13,649	12,703	40,349	38,020
Interest expense:
Deposits	1,922	1,703	5,555	4,907
Federal Home Loan Bank advances	802	790	2,577	2,480
Subordinated debt and other borrowings	60	48	173	141
Total interest expense	2,784	2,541	8,305	7,528
Net interest income	10,865	10,162	32,044	30,492
Provision for loan losses	171	880	501	1,773
Net interest income after provision for loan losses	10,694	9,282	31,543	28,719
Noninterest income:
Service fees	1,723	1,585	5,165	4,798
Wealth management fees	20	296	539	897
Increase in cash surrender value of bank-owned life insurance	133	136	395	413
Net gain on sales of securities	0	55	0	55
Mortgage banking	519	503	1,140	1,172
Net gain on fair value of derivatives	0	33	0	48
Net loss on disposal of equipment	(4)	(56)	(4)	(92)
Other	124	101	1,428	650
Total noninterest income	2,515	2,653	8,663	7,941
Noninterest expenses:
Salaries and employee benefits	5,052	4,992	15,485	14,813
Occupancy and equipment	1,662	1,670	5,138	5,116
Computer and electronic banking services	1,345	1,367	4,015	4,311
Outside professional services	379	403	1,172	1,417
Marketing and advertising	173	92	580	543
Supplies	121	130	383	419
FDIC deposit insurance and regulatory assessments	178	263	590	788
Core deposit intangible amortization	150	151	451	452
Other real estate owned operations	117	54	484	179
Other	481	490	1,725	1,420
Total noninterest expenses	9,658	9,612	30,023	29,458
Income before income tax provision	3,551	2,323	10,183	7,202
Income tax provision	1,307	767	3,378	2,377
Net income	$ 2,244	$ 1,556	$ 6,805	$ 4,825
Earnings per share:
Basic	$ 0.19	$ 0.13	$ 0.57	$ 0.41
Diluted	$ 0.19	$ 0.13	$ 0.57	$ 0.41

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Net income		$ 2,244	$ 1,556	$ 6,805	$ 4,825
Available for sale securities:
Net unrealized holding gains (losses)		47	(371)	202	985
Reclassification adjustment for gains recognized in net income (1)	[1]	0	(36)	0	(36)
Net unrealized holding gains (losses) on available for sale securities		47	(407)	202	949
Other comprehensive income (loss)		47	(407)	202	949
Comprehensive income		$ 2,291	1,149	$ 7,007	5,774
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax			$ 19		$ 19

[1] (1) Amounts are included in net gain on sales of securities in noninterest income on the consolidated statements of income. The income tax provision associated with the reclassification adjustment for both the three and nine months ended September 30, 2016 was $19,000, respectively.

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2017 - 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, 2016	$ 164,727	$ 122	$ 125,628	$ (3,168)	$ (341)	$ 43,167	$ (681)
Balance (in shares) at Dec. 31, 2016		12,212,904
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Comprehensive income	7,007					6,805	202
Cash dividends declared ($0.15 per share)	(1,778)					(1,778)
Equity incentive plans compensation	346		243		103
Allocation of 36,477 ESOP shares	544		184	360
Stock options exercised		42,362
Stock options exercised, Value	524	$ 0	524
Common shares repurchased		(24,586)
Common shares repurchased, Value	(368)	$ 0	(270)			(98)
Balance at Sep. 30, 2017	$ 171,002	$ 122	$ 126,309	$ (2,808)	$ (238)	$ 48,096	$ (479)
Balance (in shares) at Sep. 30, 2017		12,230,680

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Cash dividends declared per share | $ / shares	$ 0.15
Allocation of ESOP shares | shares	36,477

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Cash flows from operating activities:
Net income	$ 2,244	$ 1,556	$ 6,805	$ 4,825
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	171	880	501	1,773
Employee stock ownership plan expense			544	498
Equity incentive plan expense			346	688
Excess tax benefit from share-based compensation			0	(14)
Amortization of investment premiums and discounts, net			745	614
Amortization of loan premiums and discounts, net			881	1,041
Depreciation and amortization of premises and equipment			1,666	1,814
Amortization of core deposit intangible	150	151	451	452
Net gain on sales of securities	0	55	0	55
Net gain on fair value of derivatives	0	(33)	0	(48)
Deferred income tax provision (benefit)			105	(82)
Loans originated for sale			(38,379)	(33,512)
Proceeds from sale of loans held for sale			38,506	35,144
Net gain on sales of loans held for sale			(896)	(958)
Net loss on disposal of equipment			0	92
Net loss (gain) on sales or write-downs of other real estate owned			393	(1)
Increase in cash surrender value of bank-owned life insurance	(133)	(136)	(395)	(413)
Change in operating assets and liabilities:
Accrued interest receivable			(300)	174
Other assets			(630)	(410)
Accrued expenses and other liabilities			(3,163)	(781)
Net cash provided by operating activities			7,180	10,841
Cash flows from investing activities:
Purchases of available for sale securities			(32,008)	(29,493)
Proceeds from sales of available for sale securities	0	8,014	0	8,014
Proceeds from maturities of and principal repayments on available for sale securities			22,391	26,799
Purchases of Federal Home Loan Bank stock			(69)	0
Purchases of Federal Reserve Bank stock			(7)	(3)
Redemption of Federal Home Loan Bank stock			2,214	504
Loan principal originations, net			12,867	(11,155)
Purchases of loans			(22,280)	(33,660)	$ (37,702)
Proceeds from sales of other real estate owned			288	533
Purchases of premises and equipment			(1,406)	(1,127)
Proceeds from bank-owned life insurance			0	1,201
Net cash used in investing activities			(18,010)	(38,387)
Cash flows from financing activities:
Net increase in deposits			83,404	78,927
Net decrease in mortgagors' and investors' escrow accounts			(1,462)	(1,330)
Proceeds from Federal Home Loan Bank advances			14,500	24,000
Repayments of Federal Home Loan Bank advances			(65,444)	(50,007)
Excess tax benefit from share-based compensation			0	14
Cash dividends on common stock			(1,778)	(1,417)
Stock options exercised			361	37
Common shares repurchased			(205)	(99)
Net cash provided by financing activities			29,376	50,125
Net change in cash and cash equivalents			18,546	22,579
Cash and cash equivalents at beginning of period			73,186	40,778	40,778
Cash and cash equivalents at end of period	$ 91,732	$ 63,357	91,732	63,357	$ 73,186
Supplemental cash flow information:
Interest paid			8,356	7,559
Income taxes paid, net			5,670	2,284
Transfer of loans to other real estate owned			894	841
Stock options exercised by net-share settlement			$ 163	$ 0

XML

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

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 24 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, life insurance and annuities 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, the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission 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, 2017 and for the three and nine months ended September 30, 2017 and 2016 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes for the year ended December 31, 2016 contained in the Company’s Annual Report on 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, 2017 are not necessarily indicative of the operating results for the year ending December 31, 2017 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 such as goodwill and other intangibles.

Reclassifications

Amounts in the Company’s prior year consolidated financial statements are reclassified to conform to the current year presentation.  Such reclassifications had 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 due to the borrower's financial condition. When a loan is modified and concessions have been made to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as reductions of interest rates, 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. However, 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.

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 amount 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. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, when necessary.

• 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 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 and underwriting 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 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 to acquire, develop, improve or refinance 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 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, whether estimates of the sale price of the property are correct, 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 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. Additionally, the Bank purchases loans primarily out of our market area from a company specializing in medical loan originations, which are secured by medical equipment.

• 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.

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 with concentrations in Massachusetts and New Hampshire. 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 related 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 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 is allocated to common stock, additional paid-in capital and retained earnings balances.

Recent Accounting Pronouncements

Revenue from Contracts with Customers (Topic 606): In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance that improves the revenue recognition requirements for contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, a company should apply a five step approach to revenue recognition. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or entered into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Accordingly, the guidance does not apply to, among other things, the following: receivables (i.e. loans), debt and equity investments, equity method investments, joint ventures, derivatives and hedging, financial instruments and transfers and servicing. As significantly all of the Company's revenues are excluded from the scope of the guidance, adoption is not expected to have a material impact on the Company's consolidated financial statements. In August 2015, the FASB delayed the effective date for this guidance for one year to fiscal years beginning after December 15, 2017.

Financial Instruments (Subtopic 825-10): In January 2016, the FASB issued guidance addressing certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Targeted improvements to GAAP include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Leases (Topic 842): In February 2016, the FASB issued amended guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, based on the current level of long-term leases in place, this is not expected to be material to the Company's consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In March 2016, the FASB issued guidance to simplify the accounting for share-based payment transactions, including the income tax consequences of such transactions. Under the provisions of the update, the income tax consequences of excess tax benefits and deficiencies should be recognized in income tax expense in the reporting period in which the awards vest. Currently, excess tax benefits or deficiencies impact shareholders' equity directly to the extent there is a cumulative excess tax benefit. In the event that a tax deficiency has occurred during the reporting period and a cumulative tax benefit does not exist, the tax deficiency is recognized in income tax expense under current GAAP. The update also provides entities may continue to estimate forfeitures in accounting for stock based compensation or recognize them as they occur. The provisions of this update became effective for interim and annual periods beginning after December 15, 2016. The adoption of this guidance on January 1, 2017 did not have a material impact on Company's consolidated financial statements.

Financial Instruments - Credit Losses (Topic 326): In June 2016, the FASB issued guidance that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The update will replace today's "incurred loss" approach with an "expected loss" model. The new model, referred to as the current expected credit loss ("CECL") model, will apply to (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. The CECL model does not apply to available for sale ("AFS") debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to current accounting guidance, except that losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The update also simplifies the accounting model for purchased credit-impaired debt securities and loans. Disclosure requirements under the update have been expanded to include the entity's assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by year of origination. The update is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual periods beginning after December 15, 2018. The update requires a modified retrospective transition under which a cumulative effect to equity will be recognized in the period of adoption. Management has developed a focus team that is reviewing and monitoring additional developments and accounting guidance to determine the impact to the Company's consolidated financial statements. Management is evaluating the models and related requirements and is developing an implementation plan.

Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230): In August 2016, the FASB issued guidance to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update provides guidance on eight specific cash flow issues. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Business Combinations - Clarifying the Definition of a Business (Topic 805): In January 2017, the FASB issued guidance to clarify the definition of a business. The amendments in this update provide a screen to determine when an integrated set of assets and activities (collectively referred to as a "set") is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350): In January, 2017, the FASB issued guidance aimed at simplifying the subsequent measurement of goodwill. Under these amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from tax deductible goodwill on the carrying amount of a reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this update should be applied on a prospective basis and are effective for annual and goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): In March 2017, the FASB issued guidance shortening the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In May 2017, the FASB issued guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all of the following are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; 2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2017

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 130,000 for the three and nine months ended September 30, 2017 and 157,391 and 153,391 for the three and nine months ended September 30, 2016, respectively.

The computation of earnings per share is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	2,244	$	1,556	$	6,805	$	4,825
Weighted average common shares outstanding:
Basic	11,874,142		11,815,313		11,850,229		11,802,574
Effect of dilutive stock options	88,683		53,334		89,490		57,369
Diluted	11,962,825		11,868,647		11,939,719		11,859,943
Earnings per share:
Basic	$	0.19	$	0.13	$	0.57	$	0.41
Diluted	$	0.19	$	0.13	$	0.57	$	0.41

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SECURITIES

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 are as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	71,227	$	60	$	(618	)	$	70,669
Government-sponsored enterprises	9,222		63		(2		)	9,283
Mortgage-backed securities:(1)
Agency - residential	83,529		430		(730		)	83,229
Non-agency - residential	77		—		(5		)	72
Collateralized debt obligation	1,094		20		—			1,114
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,122		57		(1		)	3,178
Total available for sale securities	$	169,271	$	630	$	(1,356	)	$	168,545

⁽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, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	64,894	$	132	$	(730	)	$	64,296
Government-sponsored enterprises	11,267		97		—			11,364
Mortgage-backed securities:(1)
Agency - residential	78,843		475		(1,016		)	78,302
Non-agency - residential	93		—		(6		)	87
Collateralized debt obligation	1,157		—		—			1,157
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,145		22		(6		)	3,161
Total available for sale securities	$	160,399	$	726	$	(1,758	)	$	159,367

⁽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, 2017 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 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	$	18,071	$	18,077
After 1 but within 5 years	20,362		20,410
After 5 but within 10 years	3,814		3,682
After 10 years	43,418		43,075
	85,665		85,244
Mortgage-backed securities	83,606		83,301
Total debt securities	$	169,271	$	168,545

There were no sales of available for sale securities for the three and nine months ended September 30, 2017. Proceeds from the sale of available for sale securities were $8.0 million for both the three and nine months ended September 30, 2016.

The following is a summary of realized gains and losses on the sales of securities for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Gross gains on sales	$	—	$	55	$	—	$	55
Gross losses on sales	—		—		—		—
Net gain on sales of securities	$	—	$	55	$	—	$	55

The following tables present information pertaining to securities with gross unrealized losses at September 30, 2017 and December 31, 2016, 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, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	18,418	$	115	$	25,693	$	503	$	44,111	$	618
Government sponsored enterprises	278		2		—		—		278		2
Mortgage-backed securities:
Agency - residential	25,343		169		28,213		561		53,556		730
Non-agency - residential	—		—		72		5		72		5
Tax-exempt securities	574		1		—		—		574		1
Total	$	44,613	$	287	$	53,978	$	1,069	$	98,591	$	1,356

	Less Than 12 Months				12 Months or More				Total
December 31, 2016	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	21,531	$	227	$	19,272	$	503	$	40,803	$	730
Mortgage-backed securities:
Agency - residential	49,961		756		9,585		260		59,546		1,016
Non-agency - residential	—		—		87		6		87		6
Tax-exempt securities	1,121		6		—		—		1,121		6
Total	$	72,613	$	989	$	28,944	$	769	$	101,557	$	1,758

At September 30, 2017, 55 debt securities with gross unrealized losses had an aggregate depreciation of 1.36% of the Company’s amortized cost basis. The unrealized losses are primarily related to the Company’s U.S. Government and agency obligations and agency mortgage-backed securities. There were no investments deemed other-than-temporarily impaired for the three and nine months ended September 30, 2017 and 2016. The following summarizes, by security type, the basis for management’s determination during the preparation of the financial statements of whether the applicable investments within the Company’s securities portfolio were not other-than-temporarily impaired at September 30, 2017.

U.S. Government and Agency Obligations and Mortgage-backed Securities - Agency - Residential. The unrealized losses on the Company’s U.S. Government and agency obligations and mortgage-backed agency-residential securities related primarily to a widening of the rate spread to comparable treasury securities. The Company does not expect these securities to settle at a price less than the par value of the securities.

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 loss was identified.

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 is as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	405,751		$	417,064
Multi-family and commercial	461,992			421,668
Construction	27,587			36,026
Total real estate loans	895,330			874,758
Commercial business loans:
SBA and USDA guaranteed	96,534			116,383
Time share	46,159			51,083
Condominium association	26,795			23,531
Medical loans	26,202			27,180
Other	90,451			79,524
Total commercial business loans	286,141			297,701
Consumer loans:
Home equity	53,975			55,228
Indirect automobile	107			501
Other	1,676			1,687
Total consumer loans	55,758			57,416
Total loans	1,237,229			1,229,875
Deferred loan origination costs, net of fees	2,448			2,268
Allowance for loan losses	(12,217		)	(11,820		)
Loans receivable, net	$	1,227,460		$	1,220,323

The Company purchased commercial loans totaling $22.3 million during the nine months ended September 30, 2017. For the twelve months ended December 31, 2016, the Company purchased commercial loans totaling $37.7 million.

Allowance for Loan Losses

Changes in the allowance for loan losses for the three and nine months ended September 30, 2017 and 2016 are as follows:

Three Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,181		$	6,230	$	562		$	3,439		$	735		$	12,147
Provision (credit) for loan losses	(48		)	241		37			(56		)	(3		)	171
Loans charged-off	(21		)	—		—			(32		)	(57		)	(110		)
Recoveries of loans previously charged-off	—			—		—			7			2			9
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217
Nine Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,149		$	5,724	$	952		$	3,266		$	729		$	11,820
Provision (credit) for loan losses	3			747		(353		)	106			(2		)	501
Loans charged-off	(43		)	—		—			(46		)	(58		)	(147		)
Recoveries of loans previously charged-off	3			—		—			32			8			43
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217

Three Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,026		$	5,420		$	798	$	2,693		$	706		$	10,643
Provision for loan losses	106			183			141		442			8			880
Loans charged-off	(38		)	(22		)	—		—			(4		)	(64		)
Recoveries of loans previously charged-off	—			1			—		10			1			12
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471
Nine Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,036		$	5,033		$	516	$	2,625		$	653		$	9,863
Provision for loan losses	150			485			423		534			181			1,773
Loans charged-off	(120		)	(46		)	—		(68		)	(124		)	(358		)
Recoveries of loans previously charged-off	28			110			—		54			1			193
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471

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

September 30, 2017	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	$	236	$	248	$	—	$	—	$	1	$	485
Allowance for loans individually or collectively evaluated and not deemed to be impaired	876		6,223		599		3,358		676		11,732
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,112	$	6,471	$	599	$	3,358	$	677	$	12,217
Loans individually evaluated and deemed to be impaired	$	4,745	$	6,928	$	—	$	798	$	203	$	12,674
Loans individually or collectively evaluated and not deemed to be impaired	400,611		452,751		27,587		285,343		55,555		1,221,847
Amount of loans acquired with deteriorated credit quality	395		2,313		—		—		—		2,708
Total loans	$	405,751	$	461,992	$	27,587	$	286,141	$	55,758	$	1,237,229

December 31, 2016	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	$	306	$	240	$	—	$	95	$	52	$	693
Allowance for loans individually or collectively evaluated and not deemed to be impaired	843		5,484		952		3,171		677		11,127
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,149	$	5,724	$	952	$	3,266	$	729	$	11,820
Loans individually evaluated and deemed to be impaired	$	6,450	$	7,257	$	—	$	607	$	453	$	14,767
Loans individually or collectively evaluated and not deemed to be impaired	410,221		411,637		36,026		297,094		56,963		1,211,941
Amount of loans acquired with deteriorated credit quality	393		2,774		—		—		—		3,167
Total loans	$	417,064	$	421,668	$	36,026	$	297,701	$	57,416	$	1,229,875

Past Due Loans

The following represents an aging of loans at September 30, 2017 and December 31, 2016:

September 30, 2017	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	$	3	$	558		$	741	$	1,302	$	404,449	$	405,751
Multi-family and commercial	3,225		—			27		3,252		458,740		461,992
Construction	—		—			—		—		27,587		27,587
Commercial Business:
SBA and USDA guaranteed	—		—			—		—		96,534		96,534
Time share	—		—			—		—		46,159		46,159
Condominium association	—		—			—		—		26,795		26,795
Medical loans	50		—			33		83		26,119		26,202
Other	—		316		—	303		619		89,832		90,451
Consumer:
Home equity	153		115			20		288		53,687		53,975
Indirect automobile	3		—			—		3		104		107
Other	—		—			—		—		1,676		1,676
Total	$	3,434	$	989		$	1,124	$	5,547	$	1,231,682	$	1,237,229

December 31, 2016	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	$	4,781	$	1,128	$	1,547	$	7,456	$	409,608	$	417,064
Multi-family and commercial	2,752		250		351		3,353		418,315		421,668
Construction	—		—		—		—		36,026		36,026
Commercial Business:
SBA and USDA guaranteed	1,628		—		—		1,628		114,755		116,383
Time share	—		—		—		—		51,083		51,083
Condominium association	—		—		—		—		23,531		23,531
Medical loans	—		—		—		—		27,180		27,180
Other	431		—		593		1,024		78,500		79,524
Consumer:
Home equity	182		—		179		361		54,867		55,228
Indirect automobile	9		—		—		9		492		501
Other	4		2		5		11		1,676		1,687
Total	$	9,787	$	1,380	$	2,675	$	13,842	$	1,216,033	$	1,229,875

The Company did not have any loans that were past due 90 days or more and still accruing interest at September 30, 2017 or December 31, 2016.

Impaired and Nonaccrual Loans

The following is a summary of impaired loans and nonaccrual loans at September 30, 2017 and December 31, 2016:

	Impaired Loans(1)
September 30, 2017	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	2,719	$	2,719	$	—	$	1,923
Multi-family and commercial	4,986		4,986		—		637
Commercial Business:
Medical loans	33		66		—		33
Other	738		738		—		726
Consumer:
Home equity	183		183		—		102
Other	—		—		—		4
Total impaired loans without valuation allowance	8,659		8,692		—		3,425
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,026		2,026		236		101
Multi-family and commercial	3,834		3,834		248		93
Commercial business - Other	27		27		—		27
Consumer - Home equity	20		20		1		—
Total impaired loans with valuation allowance	5,907		5,907		485		221
Total impaired loans	$	14,566	$	14,599	$	485	$	3,646

⁽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. These loans amounted to $816,000 at September 30, 2017.

	Impaired Loans(1)
December 31, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,960	$	4,013	$	—	$	2,753
Multi-family and commercial	5,807		5,807		—		885
Commercial business - Other	512		512		—		498
Consumer - Home equity	174		174		—		174
Consumer - Indirect automobile	—		—		—		6
Total impaired loans without valuation allowance	10,453		10,506		—		4,316
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,489		2,489		306		672
Multi-family and commercial	3,789		3,789		240		171
Commercial business - Other	95		95		95		95
Consumer - Home equity	280		378		52		179
Total impaired loans with valuation allowance	6,653		6,751		693		1,117
Total impaired loans	$	17,106	$	17,257	$	693	$	5,433

⁽¹⁾ Includes loans acquired with deteriorated credit quality from the Newport merger and performing troubled debt restructurings. Some loans acquired with deteriorated credit quality have not been included as a result of sustained performance. These loans amounted to $828,000 at December 31, 2016.

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, 2017 and December 31, 2016, the Company concluded that certain impaired loans required no valuation allowance as a result of management’s measurement of impairment. No additional funds are advanced to those borrowers whose loans are deemed impaired without prior approval of the Loan Committee or the Board of Directors.

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	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	$	5,328	$	32	$	1	$	5,834	$	102	$	10
Multi-family and commercial	8,010		98		—		8,401		324		11
Commercial business:
Medical loans	23		—		—		12		—		—
Other	1,449		8		—		1,218		52		27
Consumer:
Home equity	284		1		—		354		4		1
Other	4		—		—		3		—		—
Total	$	15,098	$	139	$	1	$	15,822	$	482	$	49

	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	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	$	6,042	$	32	$	—	$	6,039	$	83	$	—
Multi-family and commercial	9,866		116		13		8,555		264		13
Commercial business - Other	1,023		6		4		688		6		4
Consumer - Home equity	444		1		—		321		3		1
Total	$	17,375	$	155	$	17	$	15,603	$	356	$	18

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, 2017 and December 31, 2016:

September 30, 2017	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	398,093	$	1,605	$	6,053	$	—	$	—	$	405,751
Multi-family and commercial	—		438,787		13,521		9,684		—		—		461,992
Construction	—		27,587		—		—		—		—		27,587
Total real estate loans	—		864,467		15,126		15,737		—		—		895,330
Commercial Business:
SBA and USDA guaranteed	96,534		—		—		—		—		—		96,534
Time share	—		46,159		—		—		—		—		46,159
Condominium association	—		26,795		—		—		—		—		26,795
Medical loans	—		26,169		—		33		—		—		26,202
Other	—		84,944		3,221		2,286		—		—		90,451
Total commercial business loans	96,534		184,067		3,221		2,319		—		—		286,141
Consumer:
Home equity	—		53,551		142		282		—		—		53,975
Indirect automobile	—		107		—		—		—		—		107
Other	—		1,673		—		3		—		—		1,676
Total consumer loans	—		55,331		142		285		—		—		55,758
Total loans	$	96,534	$	1,103,865	$	18,489	$	18,341	$	—	$	—	$	1,237,229

December 31, 2016	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	408,237	$	1,174	$	7,653	$	—	$	—	$	417,064
Multi-family and commercial	—		393,225		14,018		14,425		—		—		421,668
Construction	—		36,026		—		—		—		—		36,026
Total real estate loans	—		837,488		15,192		22,078		—		—		874,758
Commercial Business:
SBA and USDA guaranteed	116,383		—		—		—		—		—		116,383
Time share	—		51,083		—		—		—		—		51,083
Condominium association	—		23,531		—		—		—		—		23,531
Medical loans	—		27,180		—		—		—		—		27,180
Other	—		73,474		3,741		2,309		—		—		79,524
Total commercial business loans	116,383		175,268		3,741		2,309		—		—		297,701
Consumer:
Home equity	—		54,683		46		499		—		—		55,228
Indirect automobile	—		501		—		—		—		—		501
Other	—		1,681		—		6		—		—		1,687
Total consumer loans	—		56,865		46		505		—		—		57,416
Total loans	$	116,383	$	1,069,621	$	18,979	$	24,892	$	—	$	—	$	1,229,875

The following tables provide information on loans modified as TDRs during the three and nine months ended September 30, 2017 and 2016. 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,
	2017					2016
				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	1	$	214	$	4	2	$	379	$	21
Multi-family and commercial	—	—		53		—	—		235
Commercial business - other	—	—		—		1	95		—
Total	1	$	214	$	57	3	$	474	$	256
	Nine Months Ended September 30,
	2017					2016
				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	2	$	505	$	4	4	$	764	$	21
Multi-family and commercial	2	234		53		4	4,127		235
Commercial business - other	—	—		—		3	777		—
Total	4	$	739	$	57	11	$	5,668	$	256

The following table provides the recorded investment, by type of modification, during the three and nine months ended September 30, 2017 and 2016 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Interest rate adjustments	$	—	$	275	$	—	$	275
Principal deferrals	—		104		—		190
Combination of rate and payment (1)	214		—		214		—
Combination of rate and maturity (2)	—		—		234		3,201
Maturity only	—		95		291		2,002
Total	$	214	$	474	$	739	$	5,668

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

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

During the three and nine months ended September 30, 2017, there were no TDRs in payment default (defined as 90 days or more past due) within twelve months of restructure. There were two commercial loans totaling $682,000 that were modified as TDRs that were in payment default within twelve months of restructure for the three and nine months ended September 30, 2016.

As of September 30, 2017, the Company held $520,000 in consumer mortgage loans collateralized by residential real estate properties 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 from Newport with evidence of credit deterioration as of September 30, 2017 and December 31, 2016.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2016	$	3,522		$	3,167		$	355		$	154		$	3,013
Additions	—			77			(77		)	77			—
Collections	296			296			—			(18		)	314
Dispositions	(888		)	(832		)	(55		)	—			(832		)
Balance at September 30, 2017	$	2,930		$	2,708		$	223		$	213		$	2,495

XML

PREMISES AND EQUIPMENT

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Premises and Equipment Disclosure [Text Block]

PREMISES AND EQUIPMENT

Premises and equipment at September 30, 2017 and December 31, 2016 are summarized as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,673			13,623
Leasehold improvements	11,770			10,731
Furniture and equipment	12,168			12,405
Construction in process	38			580
	42,395			42,085
Accumulated depreciation and amortization	(22,771		)	(22,201		)
Premises and equipment, net	$	19,624		$	19,884

At September 30, 2017, construction in process related to the construction, design and site costs associated with a new ATM location. At December 31, 2016, construction in process related to the construction, design and site costs associated with a new branch location.

XML

OTHER COMPREHENSIVE (LOSS) INCOME

9 Months Ended

Sep. 30, 2017

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, 2017
	Before Tax Amount		Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	306	$	(104	)	$	202
Other comprehensive income	$	306	$	(104	)	$	202

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

	September 30, 2017
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(726	)	$	247	$	(479	)
Accumulated other comprehensive loss	$	(726	)	$	247	$	(479	)

	December 31, 2016
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(1,032	)	$	351	$	(681	)
Accumulated other comprehensive loss	$	(1,032	)	$	351	$	(681	)

XML

REGULATORY CAPITAL

9 Months Ended

Sep. 30, 2017

Banking and Thrift [Abstract]

REGULATORY CAPITAL

REGULATORY CAPITAL

The Company and the Bank are subject to regulatory capital 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. Under Basel III 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 the regulators about components, risk weightings and other factors.

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, common equity tier 1 capital to risk-weighted assets, tier 1 capital to risk-weighted assets and total risk-based capital to risk-weighted assets. At September 30, 2017, the Company and the Bank met all the capital adequacy requirements to which they were subject and were “well capitalized” under the regulatory requirements. Management believes no conditions or events have occurred since September 30, 2017 that would materially adversely change the Company’s and the Bank’s capital classifications.

Effective January 1, 2016, Basel III implemented a requirement for all banking organizations to maintain a capital conservation buffer exclusively composed of common equity Tier 1 capital in an amount greater than 2.5% of total risk-weighted assets to avoid being subject to limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer increases the three risk-based capital ratios and will be phased in over a multi-year schedule with full compliance in 2019. Management believes the Company and the Bank's capital level will remain characterized as "well-capitalized" under the new rules. The Company and Bank's regulatory capital amounts and ratios at September 30, 2017 and December 31, 2016, compared to the FDIC's requirements for classification as a well capitalized institution and for minimum capital adequacy, were as follows:

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2017	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	156,252	15.15	%	$	46,401	4.50	%	$	67,024	6.50	%
Bank	148,516		14.42		46,345		4.50		66,943		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	164,252		15.93		61,868		6.00		82,491		8.00
Bank	148,516		14.42		61,794		6.00		82,392		8.00
Total Capital to Risk Weighted Assets:
Company	176,923		17.16		82,491		8.00		103,113		10.00
Bank	161,187		15.65		82,391		8.00		102,989		10.00
Tier 1 Capital to Average Assets:
Company	164,252		10.46		62,839		4.00		78,549		5.00
Bank	148,516		9.52		62,408		4.00		78,009		5.00

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
December 31, 2016	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	150,915	15.08	%	$	45,028	4.50	%	$	65,041	6.50	%
Bank	141,673		14.17		44,978		4.50		64,968		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	158,915		15.88		60,037		6.00		80,050		8.00
Bank	141,673		14.17		59,970		6.00		79,960		8.00
Total Capital to Risk Weighted Assets:
Company	171,187		17.11		80,050		8.00		100,062		10.00
Bank	153,945		15.40		79,960		8.00		99,950		10.00
Tier 1 Capital to Average Assets:
Company	158,915		10.50		60,562		4.00		75,702		5.00
Bank	141,673		9.41		60,248		4.00		75,310		5.00

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FAIR VALUE OF ASSETS AND LIABILITIES

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE OF ASSETS AND LIABILITIES

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 asets or liabilities whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as assets or liabilities 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 assets and liabilities 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 assets and liabilities. 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 assets and liabilities.

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 was backed by a trust preferred security issued by banks and insurance companies. Management determined that an orderly and active market for this security and similar securities did not exist based on a significant reduction in trading volume and widening spreads relative to historical levels. The Company estimates 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 agreement.The fair value of the Company’s interest rate swap is obtained from a third-party pricing service and is 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, 2017 and December 31, 2016.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2017.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	24,502	$	46,167	$	—	$	70,669
Government-sponsored enterprises	—		9,283		—		9,283
Mortgage-backed securities	—		83,301		—		83,301
Collateralized debt obligation	—		—		1,114		1,114
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,178		—		3,178
Forward loan sale commitments and derivative loan commitments	—		—		121		121
Total assets	$	24,502	$	142,929	$	1,235	$	168,666
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	2	$	2
Total liabilities	$	—	$	—	$	2	$	2

	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,087	$	43,209	$	—	$	64,296
Government-sponsored enterprises	—		11,364		—		11,364
Mortgage-backed securities	—		78,389		—		78,389
Collateralized debt obligation	—		—		1,157		1,157
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,161		—		3,161
Forward loan sale commitments and derivative loan commitments	—		—		136		136
Total assets	$	21,087	$	137,123	$	1,293	$	159,503
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	15	$	15
Interest rate swap agreement	—		2		—		2
Total liabilities	$	—	$	2	$	15	$	17

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, 2016	$	1,157		$	121
Total realized losses included in net income	—			(2		)
Total unrealized losses included in other comprehensive income	(43		)	—
Balance at September 30, 2017	$	1,114		$	119

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, 2017 and December 31, 2016. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016.

	At September 30, 2017						At December 31, 2016
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	192	$	—	$	—	$	696
Other real estate owned	—		—		1,679		—		—		1,466
Total assets	$	—	$	—	$	1,871	$	—	$	—	$	2,162

The following table summarizes losses 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,
	2017		2016		2017		2016
	(In Thousands)
Impaired loans	$	34	$	21	$	88	$	239
Other real estate owned	—		—		197		8
Total losses	$	34	$	21	$	285	$	247

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, and are recorded through the provision for loan losses.

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, 2017 and December 31, 2016. The estimated fair value amounts at September 30, 2017 and December 31, 2016 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. 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, 2017 and December 31, 2016, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2017
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	91,732	$	91,732	$	—	$	—	$	91,732
Available for sale securities	168,545		24,502		142,929		1,114		168,545
Loans held for sale	1,856		—		—		1,890		1,890
Loans receivable, net	1,227,460		—		—		1,221,275		1,221,275
Federal Home Loan Bank stock	10,017		—		—		10,017		10,017
Federal Reserve Bank stock	3,631		—		—		3,631		3,631
Accrued interest receivable	4,735		—		—		4,735		4,735
Financial Liabilities:
Deposits	1,214,089		—		—		1,216,200		1,216,200
Mortgagors' and investors' escrow accounts	2,926		—		—		2,926		2,926
Federal Home Loan Bank advances	166,815		—		166,674		—		166,674
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,175		—		6,175
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	45		—		—		45		45
Forward loan sale commitments	76		—		—		76		76
Liabilities:
Derivative loan commitments	2		—		—		2		2

	December 31, 2016
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	73,186	$	73,186	$	—	$	—	$	73,186
Available for sale securities	159,367		21,087		137,123		1,157		159,367
Loans held for sale	1,393		—		—		1,584		1,584
Loans receivable, net	1,220,323		—		—		1,218,918		1,218,918
Federal Home Loan Bank stock	12,162		—		—		12,162		12,162
Federal Reserve Bank stock	3,624		—		—		3,624		3,624
Accrued interest receivable	4,435		—		—		4,435		4,435
Financial Liabilities:
Deposits	1,130,685		—		—		1,134,378		1,134,378
Mortgagors' and investors' escrow accounts	4,388		—		—		4,388		4,388
Federal Home Loan Bank advances	217,759		—		217,120		—		217,120
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,043		—		6,043
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	72		—		—		72		72
Forward loan sale commitments	64		—		—		64		64
Liabilities:
Derivative loan commitments	15		—		—		15		15
Interest rate swap agreement	2		—		2		—		2

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Derivative Financial Instruments

The Company had a stand-alone derivative financial instrument in the form of an interest rate swap agreement, which derives its value from underlying interest rates. This transaction involved both credit and market risk. The notional amount was an amount on which calculations, payments and the value of the derivative was based. The notional amount does 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 instrument, was reflected on the Company’s balance sheets as other assets and other liabilities. The Company was exposed to credit-related losses in the event of nonperformance by the counterparty to this agreement. The Company controls the credit risk of its financial contract through credit approvals, limits and monitoring procedures and does not expect any counterparty to fail its 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 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 hedge accounting requirements of FASB's "Derivatives and Hedging" standard to manage the Company's exposure to interest rate movements and other identified risks. This agreement terminated on January 11, 2017. At December 31, 2016, information pertaining to the Company's interest rate swap agreement not designated as a hedge was as follows:

	December 31, 2016
	(Dollars in Thousands)
Notional amount	$	15,000
Weighted average fixed pay rate	1.26		%
Weighted average variable receive rate	0.88		%
Weighted average maturity in years	0.0
Unrealized loss relating to interest rate swap	$	2

The Company reported a gain in fair value on the interest rate swap not designated as a hedge in noninterest income of $33,000 and $48,000 for the three and nine months ended September 30, 2016, 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.

Forward Loan Sale Commitments -To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and "best efforts" 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.

With a "best efforts" contract, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower).

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.

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, 2017 and December 31, 2016.

		September 30, 2017				December 31, 2016
	Balance Sheet Location	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
		(In Thousands)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	$	—	$	—	$	15,000	$	(2	)
Derivative loan commitments	Other Assets	5,144		43		12,607		57
Forward loan sale commitments	Other Assets	5,501		76		4,049		64

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

9 Months Ended

Sep. 30, 2017

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, the instructions to Form 10-Q and Rule 10.01 of Regulation S-X of the Securities and Exchange Commission 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, 2017 and for the three and nine months ended September 30, 2017 and 2016 is unaudited. These unaudited interim consolidated financial statements and related notes should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes for the year ended December 31, 2016 contained in the Company’s Annual Report on 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, 2017 are not necessarily indicative of the operating results for the year ending December 31, 2017 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 such as goodwill and other intangibles.

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 had 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 due to the borrower's financial condition. When a loan is modified and concessions have been made to the original contractual terms that would not otherwise be considered for a borrower with similar risk characteristics, such as reductions of interest rates, 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. However, 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.

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 amount 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. In the determination of the allowance for loan losses, management may obtain independent appraisals for significant properties, when necessary.

• 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 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 and underwriting 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 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 to acquire, develop, improve or refinance 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 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, whether estimates of the sale price of the property are correct, 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 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. Additionally, the Bank purchases loans primarily out of our market area from a company specializing in medical loan originations, which are secured by medical equipment.

• 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.

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 with concentrations in Massachusetts and New Hampshire. 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 related 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 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 is 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 asets or liabilities whose value is determined using unobservable inputs to pricing models, discounted cash flow methodologies, or similar techniques, as well as assets or liabilities for which the determination of fair value requires significant management judgment or estimation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

Revenue from Contracts with Customers (Topic 606): In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance that improves the revenue recognition requirements for contracts with customers. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, a company should apply a five step approach to revenue recognition. The guidance in this update affects any entity that either enters into contracts with customers to transfer goods or services or entered into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. Accordingly, the guidance does not apply to, among other things, the following: receivables (i.e. loans), debt and equity investments, equity method investments, joint ventures, derivatives and hedging, financial instruments and transfers and servicing. As significantly all of the Company's revenues are excluded from the scope of the guidance, adoption is not expected to have a material impact on the Company's consolidated financial statements. In August 2015, the FASB delayed the effective date for this guidance for one year to fiscal years beginning after December 15, 2017.

Financial Instruments (Subtopic 825-10): In January 2016, the FASB issued guidance addressing certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Targeted improvements to GAAP include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. The amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Leases (Topic 842): In February 2016, the FASB issued amended guidance to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Disclosures are required by lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. It is expected that assets and liabilities will increase based on the present value of remaining lease payments for leases in place at the adoption date; however, based on the current level of long-term leases in place, this is not expected to be material to the Company's consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In March 2016, the FASB issued guidance to simplify the accounting for share-based payment transactions, including the income tax consequences of such transactions. Under the provisions of the update, the income tax consequences of excess tax benefits and deficiencies should be recognized in income tax expense in the reporting period in which the awards vest. Currently, excess tax benefits or deficiencies impact shareholders' equity directly to the extent there is a cumulative excess tax benefit. In the event that a tax deficiency has occurred during the reporting period and a cumulative tax benefit does not exist, the tax deficiency is recognized in income tax expense under current GAAP. The update also provides entities may continue to estimate forfeitures in accounting for stock based compensation or recognize them as they occur. The provisions of this update became effective for interim and annual periods beginning after December 15, 2016. The adoption of this guidance on January 1, 2017 did not have a material impact on Company's consolidated financial statements.

Financial Instruments - Credit Losses (Topic 326): In June 2016, the FASB issued guidance that significantly changes how entities will measure credit losses for most financial assets and certain other instruments that aren't measured at fair value through net income. The update will replace today's "incurred loss" approach with an "expected loss" model. The new model, referred to as the current expected credit loss ("CECL") model, will apply to (1) financial assets subject to credit losses and measured at amortized cost and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. The CECL model does not apply to available for sale ("AFS") debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to current accounting guidance, except that losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The update also simplifies the accounting model for purchased credit-impaired debt securities and loans. Disclosure requirements under the update have been expanded to include the entity's assumptions, models and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by year of origination. The update is effective for interim and annual reporting periods beginning after December 15, 2019; early adoption is permitted for interim and annual periods beginning after December 15, 2018. The update requires a modified retrospective transition under which a cumulative effect to equity will be recognized in the period of adoption. Management has developed a focus team that is reviewing and monitoring additional developments and accounting guidance to determine the impact to the Company's consolidated financial statements. Management is evaluating the models and related requirements and is developing an implementation plan.

Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230): In August 2016, the FASB issued guidance to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update provides guidance on eight specific cash flow issues. The update is effective for fiscal years beginning after December 15, 2017, and for interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Business Combinations - Clarifying the Definition of a Business (Topic 805): In January 2017, the FASB issued guidance to clarify the definition of a business. The amendments in this update provide a screen to determine when an integrated set of assets and activities (collectively referred to as a "set") is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business. This screen reduces the number of transactions that need to be further evaluated. The amendments in this update are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this update should be applied prospectively on or after the effective date. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment (Topic 350): In January, 2017, the FASB issued guidance aimed at simplifying the subsequent measurement of goodwill. Under these amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from tax deductible goodwill on the carrying amount of a reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendments in this update should be applied on a prospective basis and are effective for annual and goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): In March 2017, the FASB issued guidance shortening the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. The amendments in this update should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Additionally, in the period of adoption, an entity should provide disclosures about a change in accounting principle. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

Compensation - Stock Compensation (Topic 718): In May 2017, the FASB issued guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all of the following are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified; 2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; and 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The amendments in this update should be applied prospectively to an award modified on or after the adoption date. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements.

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2017

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,
	2017		2016		2017		2016
	(Dollars in Thousands, Except Per Share Amounts)
Net income	$	2,244	$	1,556	$	6,805	$	4,825
Weighted average common shares outstanding:
Basic	11,874,142		11,815,313		11,850,229		11,802,574
Effect of dilutive stock options	88,683		53,334		89,490		57,369
Diluted	11,962,825		11,868,647		11,939,719		11,859,943
Earnings per share:
Basic	$	0.19	$	0.13	$	0.57	$	0.41
Diluted	$	0.19	$	0.13	$	0.57	$	0.41

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016 are as follows:

	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	71,227	$	60	$	(618	)	$	70,669
Government-sponsored enterprises	9,222		63		(2		)	9,283
Mortgage-backed securities:(1)
Agency - residential	83,529		430		(730		)	83,229
Non-agency - residential	77		—		(5		)	72
Collateralized debt obligation	1,094		20		—			1,114
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,122		57		(1		)	3,178
Total available for sale securities	$	169,271	$	630	$	(1,356	)	$	168,545

⁽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, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Debt securities:
U.S. Government and agency obligations	$	64,894	$	132	$	(730	)	$	64,296
Government-sponsored enterprises	11,267		97		—			11,364
Mortgage-backed securities:(1)
Agency - residential	78,843		475		(1,016		)	78,302
Non-agency - residential	93		—		(6		)	87
Collateralized debt obligation	1,157		—		—			1,157
Obligations of state and political subdivisions	1,000		—		—			1,000
Tax-exempt securities	3,145		22		(6		)	3,161
Total available for sale securities	$	160,399	$	726	$	(1,758	)	$	159,367

⁽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, 2017 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 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	$	18,071	$	18,077
After 1 but within 5 years	20,362		20,410
After 5 but within 10 years	3,814		3,682
After 10 years	43,418		43,075
	85,665		85,244
Mortgage-backed securities	83,606		83,301
Total debt securities	$	169,271	$	168,545

There were no sales of available for sale securities for the three and nine months ended September 30, 2017. Proceeds from the sale of available for sale securities were $8.0 million for both the three and nine months ended September 30, 2016.

Realized Gain (Loss) on Investments [Table Text Block]

The following is a summary of realized gains and losses on the sales of securities for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Gross gains on sales	$	—	$	55	$	—	$	55
Gross losses on sales	—		—		—		—
Net gain on sales of securities	$	—	$	55	$	—	$	55

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, 2017 and December 31, 2016, 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, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	18,418	$	115	$	25,693	$	503	$	44,111	$	618
Government sponsored enterprises	278		2		—		—		278		2
Mortgage-backed securities:
Agency - residential	25,343		169		28,213		561		53,556		730
Non-agency - residential	—		—		72		5		72		5
Tax-exempt securities	574		1		—		—		574		1
Total	$	44,613	$	287	$	53,978	$	1,069	$	98,591	$	1,356

	Less Than 12 Months				12 Months or More				Total
December 31, 2016	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
U.S. Government and agency obligations	$	21,531	$	227	$	19,272	$	503	$	40,803	$	730
Mortgage-backed securities:
Agency - residential	49,961		756		9,585		260		59,546		1,016
Non-agency - residential	—		—		87		6		87		6
Tax-exempt securities	1,121		6		—		—		1,121		6
Total	$	72,613	$	989	$	28,944	$	769	$	101,557	$	1,758

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2017

Receivables [Abstract]

Composition of the Company's loan portfolio [Table Text Block]

The composition of the Company’s loan portfolio at September 30, 2017 and December 31, 2016 is as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Real estate loans:
Residential - 1 to 4 family	$	405,751		$	417,064
Multi-family and commercial	461,992			421,668
Construction	27,587			36,026
Total real estate loans	895,330			874,758
Commercial business loans:
SBA and USDA guaranteed	96,534			116,383
Time share	46,159			51,083
Condominium association	26,795			23,531
Medical loans	26,202			27,180
Other	90,451			79,524
Total commercial business loans	286,141			297,701
Consumer loans:
Home equity	53,975			55,228
Indirect automobile	107			501
Other	1,676			1,687
Total consumer loans	55,758			57,416
Total loans	1,237,229			1,229,875
Deferred loan origination costs, net of fees	2,448			2,268
Allowance for loan losses	(12,217		)	(11,820		)
Loans receivable, net	$	1,227,460		$	1,220,323

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, 2017 and 2016 are as follows:

Three Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,181		$	6,230	$	562		$	3,439		$	735		$	12,147
Provision (credit) for loan losses	(48		)	241		37			(56		)	(3		)	171
Loans charged-off	(21		)	—		—			(32		)	(57		)	(110		)
Recoveries of loans previously charged-off	—			—		—			7			2			9
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217
Nine Months Ended September 30, 2017	Residential - 1 to 4 Family			Multi-family and Commercial		Construction			Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,149		$	5,724	$	952		$	3,266		$	729		$	11,820
Provision (credit) for loan losses	3			747		(353		)	106			(2		)	501
Loans charged-off	(43		)	—		—			(46		)	(58		)	(147		)
Recoveries of loans previously charged-off	3			—		—			32			8			43
Balance at end of period	$	1,112		$	6,471	$	599		$	3,358		$	677		$	12,217

Three Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,026		$	5,420		$	798	$	2,693		$	706		$	10,643
Provision for loan losses	106			183			141		442			8			880
Loans charged-off	(38		)	(22		)	—		—			(4		)	(64		)
Recoveries of loans previously charged-off	—			1			—		10			1			12
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471
Nine Months Ended September 30, 2016	Residential - 1 to 4 Family			Multi-family and Commercial			Construction		Commercial Business			Consumer			Total
	(In Thousands)
Balance at beginning of period	$	1,036		$	5,033		$	516	$	2,625		$	653		$	9,863
Provision for loan losses	150			485			423		534			181			1,773
Loans charged-off	(120		)	(46		)	—		(68		)	(124		)	(358		)
Recoveries of loans previously charged-off	28			110			—		54			1			193
Balance at end of period	$	1,094		$	5,582		$	939	$	3,145		$	711		$	11,471

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, 2017 and December 31, 2016 is as follows:

September 30, 2017	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	$	236	$	248	$	—	$	—	$	1	$	485
Allowance for loans individually or collectively evaluated and not deemed to be impaired	876		6,223		599		3,358		676		11,732
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,112	$	6,471	$	599	$	3,358	$	677	$	12,217
Loans individually evaluated and deemed to be impaired	$	4,745	$	6,928	$	—	$	798	$	203	$	12,674
Loans individually or collectively evaluated and not deemed to be impaired	400,611		452,751		27,587		285,343		55,555		1,221,847
Amount of loans acquired with deteriorated credit quality	395		2,313		—		—		—		2,708
Total loans	$	405,751	$	461,992	$	27,587	$	286,141	$	55,758	$	1,237,229

December 31, 2016	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	$	306	$	240	$	—	$	95	$	52	$	693
Allowance for loans individually or collectively evaluated and not deemed to be impaired	843		5,484		952		3,171		677		11,127
Allowance for loans acquired with deteriorated credit quality	—		—		—		—		—		—
Total loan loss allowance	$	1,149	$	5,724	$	952	$	3,266	$	729	$	11,820
Loans individually evaluated and deemed to be impaired	$	6,450	$	7,257	$	—	$	607	$	453	$	14,767
Loans individually or collectively evaluated and not deemed to be impaired	410,221		411,637		36,026		297,094		56,963		1,211,941
Amount of loans acquired with deteriorated credit quality	393		2,774		—		—		—		3,167
Total loans	$	417,064	$	421,668	$	36,026	$	297,701	$	57,416	$	1,229,875

Past Due Loans Receivables [Table Text Block]

The following represents an aging of loans at September 30, 2017 and December 31, 2016:

September 30, 2017	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	$	3	$	558		$	741	$	1,302	$	404,449	$	405,751
Multi-family and commercial	3,225		—			27		3,252		458,740		461,992
Construction	—		—			—		—		27,587		27,587
Commercial Business:
SBA and USDA guaranteed	—		—			—		—		96,534		96,534
Time share	—		—			—		—		46,159		46,159
Condominium association	—		—			—		—		26,795		26,795
Medical loans	50		—			33		83		26,119		26,202
Other	—		316		—	303		619		89,832		90,451
Consumer:
Home equity	153		115			20		288		53,687		53,975
Indirect automobile	3		—			—		3		104		107
Other	—		—			—		—		1,676		1,676
Total	$	3,434	$	989		$	1,124	$	5,547	$	1,231,682	$	1,237,229

December 31, 2016	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	$	4,781	$	1,128	$	1,547	$	7,456	$	409,608	$	417,064
Multi-family and commercial	2,752		250		351		3,353		418,315		421,668
Construction	—		—		—		—		36,026		36,026
Commercial Business:
SBA and USDA guaranteed	1,628		—		—		1,628		114,755		116,383
Time share	—		—		—		—		51,083		51,083
Condominium association	—		—		—		—		23,531		23,531
Medical loans	—		—		—		—		27,180		27,180
Other	431		—		593		1,024		78,500		79,524
Consumer:
Home equity	182		—		179		361		54,867		55,228
Indirect automobile	9		—		—		9		492		501
Other	4		2		5		11		1,676		1,687
Total	$	9,787	$	1,380	$	2,675	$	13,842	$	1,216,033	$	1,229,875

The Company did not have any loans that were past due 90 days or more and still accruing interest at September 30, 2017 or December 31, 2016.

Impaired Financing Receivables [Table Text Block]

The following is a summary of impaired loans and nonaccrual loans at September 30, 2017 and December 31, 2016:

	Impaired Loans(1)
September 30, 2017	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	2,719	$	2,719	$	—	$	1,923
Multi-family and commercial	4,986		4,986		—		637
Commercial Business:
Medical loans	33		66		—		33
Other	738		738		—		726
Consumer:
Home equity	183		183		—		102
Other	—		—		—		4
Total impaired loans without valuation allowance	8,659		8,692		—		3,425
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,026		2,026		236		101
Multi-family and commercial	3,834		3,834		248		93
Commercial business - Other	27		27		—		27
Consumer - Home equity	20		20		1		—
Total impaired loans with valuation allowance	5,907		5,907		485		221
Total impaired loans	$	14,566	$	14,599	$	485	$	3,646

⁽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. These loans amounted to $816,000 at September 30, 2017.

	Impaired Loans(1)
December 31, 2016	Recorded Investment		Unpaid Principal Balance		Related Allowance		Nonaccrual Loans
	(In Thousands)
Impaired loans without valuation allowance:
Real Estate:
Residential - 1 to 4 family	$	3,960	$	4,013	$	—	$	2,753
Multi-family and commercial	5,807		5,807		—		885
Commercial business - Other	512		512		—		498
Consumer - Home equity	174		174		—		174
Consumer - Indirect automobile	—		—		—		6
Total impaired loans without valuation allowance	10,453		10,506		—		4,316
Impaired loans with valuation allowance:
Real Estate:
Residential - 1 to 4 family	2,489		2,489		306		672
Multi-family and commercial	3,789		3,789		240		171
Commercial business - Other	95		95		95		95
Consumer - Home equity	280		378		52		179
Total impaired loans with valuation allowance	6,653		6,751		693		1,117
Total impaired loans	$	17,106	$	17,257	$	693	$	5,433

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

Additional Information Related to Impaired Loans [Table Text Block]

Additional information related to impaired loans is as follows:

	Three Months Ended September 30, 2017						Nine Months Ended September 30, 2017
	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	$	5,328	$	32	$	1	$	5,834	$	102	$	10
Multi-family and commercial	8,010		98		—		8,401		324		11
Commercial business:
Medical loans	23		—		—		12		—		—
Other	1,449		8		—		1,218		52		27
Consumer:
Home equity	284		1		—		354		4		1
Other	4		—		—		3		—		—
Total	$	15,098	$	139	$	1	$	15,822	$	482	$	49

	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	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	$	6,042	$	32	$	—	$	6,039	$	83	$	—
Multi-family and commercial	9,866		116		13		8,555		264		13
Commercial business - Other	1,023		6		4		688		6		4
Consumer - Home equity	444		1		—		321		3		1
Total	$	17,375	$	155	$	17	$	15,603	$	356	$	18

Financing Receivable Credit Quality Indicators [Table Text Block]

The following tables present the Company’s loans by risk rating at September 30, 2017 and December 31, 2016:

September 30, 2017	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	398,093	$	1,605	$	6,053	$	—	$	—	$	405,751
Multi-family and commercial	—		438,787		13,521		9,684		—		—		461,992
Construction	—		27,587		—		—		—		—		27,587
Total real estate loans	—		864,467		15,126		15,737		—		—		895,330
Commercial Business:
SBA and USDA guaranteed	96,534		—		—		—		—		—		96,534
Time share	—		46,159		—		—		—		—		46,159
Condominium association	—		26,795		—		—		—		—		26,795
Medical loans	—		26,169		—		33		—		—		26,202
Other	—		84,944		3,221		2,286		—		—		90,451
Total commercial business loans	96,534		184,067		3,221		2,319		—		—		286,141
Consumer:
Home equity	—		53,551		142		282		—		—		53,975
Indirect automobile	—		107		—		—		—		—		107
Other	—		1,673		—		3		—		—		1,676
Total consumer loans	—		55,331		142		285		—		—		55,758
Total loans	$	96,534	$	1,103,865	$	18,489	$	18,341	$	—	$	—	$	1,237,229

December 31, 2016	Not Rated		Pass		Special Mention		Substandard		Doubtful		Loss		Total
	(In Thousands)
Real Estate:
Residential - 1 to 4 family	$	—	$	408,237	$	1,174	$	7,653	$	—	$	—	$	417,064
Multi-family and commercial	—		393,225		14,018		14,425		—		—		421,668
Construction	—		36,026		—		—		—		—		36,026
Total real estate loans	—		837,488		15,192		22,078		—		—		874,758
Commercial Business:
SBA and USDA guaranteed	116,383		—		—		—		—		—		116,383
Time share	—		51,083		—		—		—		—		51,083
Condominium association	—		23,531		—		—		—		—		23,531
Medical loans	—		27,180		—		—		—		—		27,180
Other	—		73,474		3,741		2,309		—		—		79,524
Total commercial business loans	116,383		175,268		3,741		2,309		—		—		297,701
Consumer:
Home equity	—		54,683		46		499		—		—		55,228
Indirect automobile	—		501		—		—		—		—		501
Other	—		1,681		—		6		—		—		1,687
Total consumer loans	—		56,865		46		505		—		—		57,416
Total loans	$	116,383	$	1,069,621	$	18,979	$	24,892	$	—	$	—	$	1,229,875

Loans Modified as Troubled Debt Restructurings [Table Text Block]

The following tables provide information on loans modified as TDRs during the three and nine months ended September 30, 2017 and 2016. 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,
	2017					2016
				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	1	$	214	$	4	2	$	379	$	21
Multi-family and commercial	—	—		53		—	—		235
Commercial business - other	—	—		—		1	95		—
Total	1	$	214	$	57	3	$	474	$	256
	Nine Months Ended September 30,
	2017					2016
				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	2	$	505	$	4	4	$	764	$	21
Multi-family and commercial	2	234		53		4	4,127		235
Commercial business - other	—	—		—		3	777		—
Total	4	$	739	$	57	11	$	5,668	$	256

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, 2017 and 2016 for modified loans identified as TDRs.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(In Thousands)
Interest rate adjustments	$	—	$	275	$	—	$	275
Principal deferrals	—		104		—		190
Combination of rate and payment (1)	214		—		214		—
Combination of rate and maturity (2)	—		—		234		3,201
Maturity only	—		95		291		2,002
Total	$	214	$	474	$	739	$	5,668

⁽¹⁾ Terms include combination of 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 from Newport with evidence of credit deterioration as of September 30, 2017 and December 31, 2016.

	Contractual Required Payments Receivable			Cash Expected To Be Collected			Non-Accretable Discount			Accretable Yield			Loans Receivable
	(In Thousands)
Balance at December 31, 2016	$	3,522		$	3,167		$	355		$	154		$	3,013
Additions	—			77			(77		)	77			—
Collections	296			296			—			(18		)	314
Dispositions	(888		)	(832		)	(55		)	—			(832		)
Balance at September 30, 2017	$	2,930		$	2,708		$	223		$	213		$	2,495

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PREMISES AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Premises and Equipment [Table Text Block]

Premises and equipment at September 30, 2017 and December 31, 2016 are summarized as follows:

	September 30, 2017			December 31, 2016
	(In Thousands)
Land	$	4,746		$	4,746
Buildings	13,673			13,623
Leasehold improvements	11,770			10,731
Furniture and equipment	12,168			12,405
Construction in process	38			580
	42,395			42,085
Accumulated depreciation and amortization	(22,771		)	(22,201		)
Premises and equipment, net	$	19,624		$	19,884

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OTHER COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017
	Before Tax Amount		Tax Effects			Net of Tax Amount
Securities:	(In Thousands)
Unrealized holding gains on available for sale securities	$	306	$	(104	)	$	202
Other comprehensive income	$	306	$	(104	)	$	202

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

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

	September 30, 2017
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(726	)	$	247	$	(479	)
Accumulated other comprehensive loss	$	(726	)	$	247	$	(479	)

	December 31, 2016
	Before Tax Amount			Tax Effects		Net of Tax Amount
	(In Thousands)
Net unrealized losses on available for sale securities	$	(1,032	)	$	351	$	(681	)
Accumulated other comprehensive loss	$	(1,032	)	$	351	$	(681	)

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REGULATORY CAPITAL (Tables)

9 Months Ended

Sep. 30, 2017

Banking and Thrift [Abstract]

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

The Company and Bank's regulatory capital amounts and ratios at September 30, 2017 and December 31, 2016, compared to the FDIC's requirements for classification as a well capitalized institution and for minimum capital adequacy, were as follows:

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
September 30, 2017	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	156,252	15.15	%	$	46,401	4.50	%	$	67,024	6.50	%
Bank	148,516		14.42		46,345		4.50		66,943		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	164,252		15.93		61,868		6.00		82,491		8.00
Bank	148,516		14.42		61,794		6.00		82,392		8.00
Total Capital to Risk Weighted Assets:
Company	176,923		17.16		82,491		8.00		103,113		10.00
Bank	161,187		15.65		82,391		8.00		102,989		10.00
Tier 1 Capital to Average Assets:
Company	164,252		10.46		62,839		4.00		78,549		5.00
Bank	148,516		9.52		62,408		4.00		78,009		5.00

	Actual				Minimum Capital Requirement				Minimum To Be Well Capitalized
December 31, 2016	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
Common Equity Tier 1 Capital:
Company	$	150,915	15.08	%	$	45,028	4.50	%	$	65,041	6.50	%
Bank	141,673		14.17		44,978		4.50		64,968		6.50
Tier 1 Capital to Risk Weighted Assets:
Company	158,915		15.88		60,037		6.00		80,050		8.00
Bank	141,673		14.17		59,970		6.00		79,960		8.00
Total Capital to Risk Weighted Assets:
Company	171,187		17.11		80,050		8.00		100,062		10.00
Bank	153,945		15.40		79,960		8.00		99,950		10.00
Tier 1 Capital to Average Assets:
Company	158,915		10.50		60,562		4.00		75,702		5.00
Bank	141,673		9.41		60,248		4.00		75,310		5.00

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FAIR VALUE OF ASSETS AND LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2017

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, 2017 and December 31, 2016.  The Company had no significant transfers into or out of Levels 1, 2 or 3 during the three and nine months ended September 30, 2017.

	September 30, 2017
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	24,502	$	46,167	$	—	$	70,669
Government-sponsored enterprises	—		9,283		—		9,283
Mortgage-backed securities	—		83,301		—		83,301
Collateralized debt obligation	—		—		1,114		1,114
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,178		—		3,178
Forward loan sale commitments and derivative loan commitments	—		—		121		121
Total assets	$	24,502	$	142,929	$	1,235	$	168,666
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	2	$	2
Total liabilities	$	—	$	—	$	2	$	2

	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In Thousands)
Assets:
U.S. Government and agency obligations	$	21,087	$	43,209	$	—	$	64,296
Government-sponsored enterprises	—		11,364		—		11,364
Mortgage-backed securities	—		78,389		—		78,389
Collateralized debt obligation	—		—		1,157		1,157
Obligations of state and political subdivisions	—		1,000		—		1,000
Tax-exempt securities	—		3,161		—		3,161
Forward loan sale commitments and derivative loan commitments	—		—		136		136
Total assets	$	21,087	$	137,123	$	1,293	$	159,503
Liabilities:
Forward loan sale commitments and derivative loan commitments	$	—	$	—	$	15	$	15
Interest rate swap agreement	—		2		—		2
Total liabilities	$	—	$	2	$	15	$	17

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, 2016	$	1,157		$	121
Total realized losses included in net income	—			(2		)
Total unrealized losses included in other comprehensive income	(43		)	—
Balance at September 30, 2017	$	1,114		$	119

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, 2017 and December 31, 2016. There were no liabilities measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016.

	At September 30, 2017						At December 31, 2016
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
	(In Thousands)
Impaired loans	$	—	$	—	$	192	$	—	$	—	$	696
Other real estate owned	—		—		1,679		—		—		1,466
Total assets	$	—	$	—	$	1,871	$	—	$	—	$	2,162

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

The following table summarizes losses 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,
	2017		2016		2017		2016
	(In Thousands)
Impaired loans	$	34	$	21	$	88	$	239
Other real estate owned	—		—		197		8
Total losses	$	34	$	21	$	285	$	247

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

As of September 30, 2017 and December 31, 2016, the recorded carrying amounts and estimated fair values of the Company's financial instruments are as follows:

	September 30, 2017
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	91,732	$	91,732	$	—	$	—	$	91,732
Available for sale securities	168,545		24,502		142,929		1,114		168,545
Loans held for sale	1,856		—		—		1,890		1,890
Loans receivable, net	1,227,460		—		—		1,221,275		1,221,275
Federal Home Loan Bank stock	10,017		—		—		10,017		10,017
Federal Reserve Bank stock	3,631		—		—		3,631		3,631
Accrued interest receivable	4,735		—		—		4,735		4,735
Financial Liabilities:
Deposits	1,214,089		—		—		1,216,200		1,216,200
Mortgagors' and investors' escrow accounts	2,926		—		—		2,926		2,926
Federal Home Loan Bank advances	166,815		—		166,674		—		166,674
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,175		—		6,175
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	45		—		—		45		45
Forward loan sale commitments	76		—		—		76		76
Liabilities:
Derivative loan commitments	2		—		—		2		2

	December 31, 2016
	Carrying Amount		Fair Value
			Level 1		Level 2		Level 3		Total
Financial Assets:	(In Thousands)
Cash and cash equivalents	$	73,186	$	73,186	$	—	$	—	$	73,186
Available for sale securities	159,367		21,087		137,123		1,157		159,367
Loans held for sale	1,393		—		—		1,584		1,584
Loans receivable, net	1,220,323		—		—		1,218,918		1,218,918
Federal Home Loan Bank stock	12,162		—		—		12,162		12,162
Federal Reserve Bank stock	3,624		—		—		3,624		3,624
Accrued interest receivable	4,435		—		—		4,435		4,435
Financial Liabilities:
Deposits	1,130,685		—		—		1,134,378		1,134,378
Mortgagors' and investors' escrow accounts	4,388		—		—		4,388		4,388
Federal Home Loan Bank advances	217,759		—		217,120		—		217,120
Junior subordinated debt owed to unconsolidated trust	8,248		—		6,043		—		6,043
On-balance Sheet Derivative Financial Instruments:
Assets:
Derivative loan commitments	72		—		—		72		72
Forward loan sale commitments	64		—		—		64		64
Liabilities:
Derivative loan commitments	15		—		—		15		15
Interest rate swap agreement	2		—		2		—		2

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments [Table Text Block]

At December 31, 2016, information pertaining to the Company's interest rate swap agreement not designated as a hedge was as follows:

	December 31, 2016
	(Dollars in Thousands)
Notional amount	$	15,000
Weighted average fixed pay rate	1.26		%
Weighted average variable receive rate	0.88		%
Weighted average maturity in years	0.0
Unrealized loss relating to interest rate swap	$	2

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, 2017 and December 31, 2016.

		September 30, 2017				December 31, 2016
	Balance Sheet Location	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
		(In Thousands)
Derivatives not designated as hedging instruments:
Interest rate swap	Other Liabilities	$	—	$	—	$	15,000	$	(2	)
Derivative loan commitments	Other Assets	5,144		43		12,607		57
Forward loan sale commitments	Other Assets	5,501		76		4,049		64

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NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Narrative (Details)	9 Months Ended
	Sep. 30, 2017
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Year Founded	1842
Number of Branch Offices	24

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EARNINGS PER SHARE (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share, Amount	130,000	157,391	130,000	153,391

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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, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share, Basic and Diluted [Line Items]
Net income	$ 2,244	$ 1,556	$ 6,805	$ 4,825
Weighted average common shares outstanding:
Basic	11,874,142	11,815,313	11,850,229	11,802,574
Effect of dilutive stock options	88,683	53,334	89,490	57,369
Diluted	11,962,825	11,868,647	11,939,719	11,859,943
Earnings per share:
Basic	$ 0.19	$ 0.13	$ 0.57	$ 0.41
Diluted	$ 0.19	$ 0.13	$ 0.57	$ 0.41

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SECURITIES Securities (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Investments, Debt and Equity Securities [Abstract]
Proceeds from Sale of Available-for-sale Securities	$ 0	$ 8,014	$ 0	$ 8,014
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions	55		55
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Other			0.01356719061

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SECURITIES Summary of Available for Sale Securities (Details) - USD ($) $ in Thousands		Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		$ 169,271	$ 160,399
Gross Unrealized Gains		630	726
Gross Unrealized Losses		(1,356)	(1,758)
Available for sale securities, at fair value		168,545	159,367
U.S. Government and agency obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		71,227	64,894
Gross Unrealized Gains		60	132
Gross Unrealized Losses		(618)	(730)
Available for sale securities, at fair value		70,669	64,296
Government-sponsored enterprises
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		9,222	11,267
Gross Unrealized Gains		63	97
Gross Unrealized Losses		(2)	0
Available for sale securities, at fair value		9,283	11,364
Agency - residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	[1]	83,529	78,843
Gross Unrealized Gains	[1]	430	475
Gross Unrealized Losses	[1]	(730)	(1,016)
Available for sale securities, at fair value	[1]	83,229	78,302
Non-agency - residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	[1]	77	93
Gross Unrealized Gains	[1]	0	0
Gross Unrealized Losses	[1]	(5)	(6)
Available for sale securities, at fair value	[1]	72	87
Collateralized debt obligation
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		1,094	1,157
Gross Unrealized Gains		20	0
Gross Unrealized Losses		0	0
Available for sale securities, at fair value		1,114	1,157
Obligations of state and political subdivisions
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
Tax-exempt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		3,122	3,145
Gross Unrealized Gains		57	22
Gross Unrealized Losses		(1)	(6)
Available for sale securities, at fair value		$ 3,178	$ 3,161

[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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SECURITIES Debt Securities by Contractual Maturities (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Investments, Debt and Equity Securities [Abstract]
Within 1 year, Amortized Cost	$ 18,071
Within 1 year, Fair Value	18,077
After 1 but within 5 years, Amortized Cost	20,362
After 1 but within 5 years, Fair Value	20,410
After 5 but within 10 years, Amortized Cost	3,814
After 5 but within 10 years, Fair Value	3,682
After 10 years, Amortized Cost	43,418
After 10 years, Fair Value	43,075
Available-for-Sale Securities, Debt Maturities, excluding Mortgage-Backed Securities, Amortized Cost	85,665
Available-for-Sale, Debt Securities, Excluding Mortgage-Backed Securities	85,244
Mortgage-backed securities, Amortized Cost	83,606
Mortgage-backed securities, Fair Value	83,301
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	169,271
Available-for-sale Securities, Debt Securities	$ 168,545

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SECURITIES Summary of Realized Gain/Loss (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]
Available-for-sale Securities, Gross Realized Gains	$ 0	$ 55	$ 0	$ 55
Available-for-sale Securities, Gross Realized Losses	0	0	0	0
Gain (Loss) on Sale of Securities, Net	$ 0	$ 55	$ 0	$ 55

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SECURITIES Securities in Continuous Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 44,613	$ 72,613
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	287	989
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	53,978	28,944
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	1,069	769
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	98,591	101,557
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	1,356	1,758
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	18,418	21,531
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	115	227
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	25,693	19,272
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	503	503
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	44,111	40,803
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	618	730
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	278
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	2
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	278
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	2
Agency - residential
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	25,343	49,961
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	169	756
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	28,213	9,585
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	561	260
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	53,556	59,546
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	730	1,016
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	72	87
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	5	6
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	72	87
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	5	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	574	1,121
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Accumulated Loss	1	6
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Accumulated Loss	0	0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	574	1,121
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 1	$ 6

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	$ 1,237,229		$ 1,229,875
Allowance for loan losses	(12,217)		(11,820)
Loans receivable, net	1,227,460		1,220,323
Total real estate loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	895,330		874,758
Real estate: Residential - 1 to 4 family [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	405,751		417,064
Allowance for loan losses	(1,112)	$ (1,181)	(1,149)	$ (1,094)	$ (1,026)	$ (1,036)
Real estate: Multi-family and commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	461,992		421,668
Allowance for loan losses	(6,471)	(6,230)	(5,724)	(5,582)	(5,420)	(5,033)
Real estate: Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	27,587		36,026
Allowance for loan losses	(599)	(562)	(952)	(939)	(798)	(516)
Total commercial business loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	286,141		297,701
Allowance for loan losses	(3,358)	(3,439)	(3,266)	(3,145)	(2,693)	(2,625)
Commercial business: SBA and USDA guaranteed [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	96,534		116,383
Commercial business: Time share [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	46,159		51,083
Commercial business: Condominium association [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	26,795		23,531
Commercial Business: Medical loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	26,202		27,180
Commercial business: Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	90,451		79,524
Total consumer loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	55,758		57,416
Allowance for loan losses	(677)	(735)	(729)	(711)	(706)	(653)
Consumer: Home equity [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	53,975		55,228
Consumer: Indirect automobile [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	107		501
Consumer: Other [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans	1,676		1,687
Deferred loan origination costs, net of fees [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Deferred loan origination costs, net of fees	2,448		2,268
Allowance for loan losses [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ (12,217)	$ (12,147)	$ (11,820)	$ (11,471)	$ (10,643)	$ (9,863)

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Narrative - (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Significant Purchases			$ (22,280,000)	$ (33,660,000)	$ (37,702,000)
Financing Receivable, Modifications, Subsequent Default, Number of Contracts	0	2	0	2
Financing Receivable, Modifications, Subsequent Default, Recorded Investment	$ 0	$ 682,000	$ 0	$ 682,000
Mortgage Loans in Process of Foreclosure, Amount	$ 520,000		$ 520,000

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period			$ 11,820
Provision for loan losses	$ 171	$ 880	501	$ 1,773
Balance at end of period	12,217		12,217
Allowance for loan losses [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	12,147	10,643	11,820	9,863
Provision for loan losses	171	880	501	1,773
Loans charged-off	(110)	(64)	(147)	(358)
Recoveries of loans previously charged-off	9	12	43	193
Balance at end of period	12,217	11,471	12,217	11,471
Real estate: Residential - 1 to 4 family [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	1,181	1,026	1,149	1,036
Provision for loan losses	(48)	106	3	150
Loans charged-off	(21)	(38)	(43)	(120)
Recoveries of loans previously charged-off	0	0	3	28
Balance at end of period	1,112	1,094	1,112	1,094
Real estate: Multi-family and commercial [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	6,230	5,420	5,724	5,033
Provision for loan losses	241	183	747	485
Loans charged-off	0	(22)	0	(46)
Recoveries of loans previously charged-off	0	1	0	110
Balance at end of period	6,471	5,582	6,471	5,582
Real estate: Construction [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	562	798	952	516
Provision for loan losses	37	141	(353)	423
Loans charged-off	0	0	0	0
Recoveries of loans previously charged-off	0	0	0	0
Balance at end of period	599	939	599	939
Commercial Business [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	3,439	2,693	3,266	2,625
Provision for loan losses	(56)	442	106	534
Loans charged-off	(32)	0	(46)	(68)
Recoveries of loans previously charged-off	7	10	32	54
Balance at end of period	3,358	3,145	3,358	3,145
Consumer [Member]
Allowance for Loan and Lease Losses [Roll Forward]
Balance at beginning of period	735	706	729	653
Provision for loan losses	(3)	8	(2)	181
Loans charged-off	(57)	(4)	(58)	(124)
Recoveries of loans previously charged-off	2	1	8	1
Balance at end of period	$ 677	$ 711	$ 677	$ 711

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Allowance for Loan Losses, Futher Information (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Jun. 30, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	$ 485		$ 693
Allowance for loans individually or collectively evaluated and not deemed to be impaired	11,732		11,127
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	12,217		11,820
Loans individually evaluated and deemed to be impaired	12,674		14,767
Loans individually or collectively evaluated and not deemed to be impaired	1,221,847		1,211,941
Amount of loans acquired with deteriorated credit quality	2,708		3,167
Total loans	1,237,229		1,229,875
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	236		306
Allowance for loans individually or collectively evaluated and not deemed to be impaired	876		843
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	1,112	$ 1,181	1,149	$ 1,094	$ 1,026	$ 1,036
Loans individually evaluated and deemed to be impaired	4,745		6,450
Loans individually or collectively evaluated and not deemed to be impaired	400,611		410,221
Amount of loans acquired with deteriorated credit quality	395		393
Total loans	405,751		417,064
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	248		240
Allowance for loans individually or collectively evaluated and not deemed to be impaired	6,223		5,484
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	6,471	6,230	5,724	5,582	5,420	5,033
Loans individually evaluated and deemed to be impaired	6,928		7,257
Loans individually or collectively evaluated and not deemed to be impaired	452,751		411,637
Amount of loans acquired with deteriorated credit quality	2,313		2,774
Total loans	461,992		421,668
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	599		952
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	599	562	952	939	798	516
Loans individually evaluated and deemed to be impaired	0		0
Loans individually or collectively evaluated and not deemed to be impaired	27,587		36,026
Amount of loans acquired with deteriorated credit quality	0		0
Total loans	27,587		36,026
Commercial Business [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	0		95
Allowance for loans individually or collectively evaluated and not deemed to be impaired	3,358		3,171
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	3,358	3,439	3,266	3,145	2,693	2,625
Loans individually evaluated and deemed to be impaired	798		607
Loans individually or collectively evaluated and not deemed to be impaired	285,343		297,094
Amount of loans acquired with deteriorated credit quality	0		0
Total loans	286,141		297,701
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Allowance for loans individually evaluated and deemed to be impaired	1		52
Allowance for loans individually or collectively evaluated and not deemed to be impaired	676		677
Allowance for loans acquired with deteriorated credit quality	0		0
Total loan loss allowance	677	$ 735	729	$ 711	$ 706	$ 653
Loans individually evaluated and deemed to be impaired	203		453
Loans individually or collectively evaluated and not deemed to be impaired	55,555		56,963
Amount of loans acquired with deteriorated credit quality	0		0
Total loans	$ 55,758		$ 57,416

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LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Past Due Loans Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 5,547	$ 13,842
Loans Receivable Current and Not Past Due	1,231,682	1,216,033
Total loans	1,237,229	1,229,875
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,434	9,787
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	989	1,380
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	1,124	2,675
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,302	7,456
Loans Receivable Current and Not Past Due	404,449	409,608
Total loans	405,751	417,064
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	3	4,781
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	558	1,128
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	741	1,547
Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,252	3,353
Loans Receivable Current and Not Past Due	458,740	418,315
Total loans	461,992	421,668
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	3,225	2,752
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	0	250
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	27	351
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	27,587	36,026
Total loans	27,587	36,026
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	1,628
Loans Receivable Current and Not Past Due	96,534	114,755
Total loans	96,534	116,383
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	1,628
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	0
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	46,159	51,083
Total loans	46,159	51,083
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	26,795	23,531
Total loans	26,795	23,531
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: Medical loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	83	0
Loans Receivable Current and Not Past Due	26,119	27,180
Total loans	26,202	27,180
Commercial Business: Medical loans [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	50	0
Commercial Business: Medical loans [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: Medical loans [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	33	0
Commercial business: Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	619	1,024
Loans Receivable Current and Not Past Due	89,832	78,500
Total loans	90,451	79,524
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	431
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	316	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	303	593
Consumer: Home equity [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	288	361
Loans Receivable Current and Not Past Due	53,687	54,867
Total loans	53,975	55,228
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	153	182
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	115	0
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	20	179
Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3	9
Loans Receivable Current and Not Past Due	104	492
Total loans	107	501
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	3	9
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	0	0
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	0	0
Consumer: Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	11
Loans Receivable Current and Not Past Due	1,676	1,676
Total loans	1,676	1,687
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	4
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	0	2
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	$ 5

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Impaired Loans and Non Accrual Loans by Class (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		$ 15,098	$ 17,375	$ 15,822	$ 15,603
Certain Loans and Debt Securities Acquired in Transfer, No Allowance Recorded and No Subsequent Impairment		816		816		$ 828
Impaired Financing Receivable, Related Allowance	[1]	485		485		693
Impaired Financing Receivable, Recorded Investment	[1]	14,566		14,566		17,106
Impaired Financing Receivable, Unpaid Principal Balance	[1]	14,599		14,599		17,257
Financing Receivable, Recorded Investment, Nonaccrual Status		3,646		3,646		5,433
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	2,026		2,026		2,489
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	2,026		2,026		2,489
Impaired Financing Receivable, Related Allowance	[1]	236		236		306
Nonaccrual Loans, with Related Allowance		101		101		672
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	3,834		3,834		3,789
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	3,834		3,834		3,789
Impaired Financing Receivable, Related Allowance	[1]	248		248		240
Nonaccrual Loans, with Related Allowance		93		93		171
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	27		27		95
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	27		27		95
Impaired Financing Receivable, Related Allowance	[1]	0		0		95
Nonaccrual Loans, with Related Allowance		27		27		95
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	20		20		280
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	20		20		378
Impaired Financing Receivable, Related Allowance	[1]	1		1		52
Nonaccrual Loans, with Related Allowance		0		0		179
Total impaired loans with valuation allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with Related Allowance, Recorded Investment	[1]	5,907		5,907		6,653
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	[1]	5,907		5,907		6,751
Impaired Financing Receivable, Related Allowance	[1]	485		485		693
Nonaccrual Loans, with Related Allowance		221		221		1,117
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	2,719		2,719		3,960
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	2,719		2,719		4,013
Nonaccrual Loans, with No Related Allowance		1,923		1,923		2,753
Impaired Financing Receivable, Related Allowance	[1]	0		0		0
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	4,986		4,986		5,807
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	4,986		4,986		5,807
Nonaccrual Loans, with No Related Allowance		637		637		885
Impaired Financing Receivable, Related Allowance	[1]	0		0		0
Commercial Business: Medical loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	33		33
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	66		66
Nonaccrual Loans, with No Related Allowance		33		33
Impaired Financing Receivable, Related Allowance	[1]	0		0
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	738		738		512
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	738		738		512
Nonaccrual Loans, with No Related Allowance		726		726		498
Impaired Financing Receivable, Related Allowance	[1]	0		0		0
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	183		183		174
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	183		183		174
Nonaccrual Loans, with No Related Allowance		102		102		174
Impaired Financing Receivable, Related Allowance	[1]	0		0		0
Consumer: Indirect automobile [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]					0
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]					0
Nonaccrual Loans, with No Related Allowance						6
Impaired Financing Receivable, Related Allowance	[1]					0
Consumer: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	0		0
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	0		0
Nonaccrual Loans, with No Related Allowance		4		4
Impaired Financing Receivable, Related Allowance	[1]	0		0
Total impaired loans without valuation allowance [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	[1]	8,659		8,659		10,453
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	[1]	8,692		8,692		10,506
Nonaccrual Loans, with No Related Allowance		3,425		3,425		4,316
Impaired Financing Receivable, Related Allowance	[1]	0		0		$ 0
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		5,328	6,042	5,834	6,039
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		8,010	9,866	8,401	8,555
Commercial Business: Medical loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		23		12
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		1,449	1,023	1,218	688
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		284	$ 444	354	$ 321
Consumer: Other [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, Average Recorded Investment		$ 4		$ 3

[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. These loans amounted to $816,000 at September 30, 2017.

XML

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, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	$ 15,098	$ 17,375	$ 15,822	$ 15,603
Interest Income Recognized	139	155	482	356
Interest Income Recognized on Cash Basis	1	17	49	18
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	5,328	6,042	5,834	6,039
Interest Income Recognized	32	32	102	83
Interest Income Recognized on Cash Basis	1	0	10	0
Real estate: Multi-family and commercial [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	8,010	9,866	8,401	8,555
Interest Income Recognized	98	116	324	264
Interest Income Recognized on Cash Basis	0	13	11	13
Commercial Business: Medical loans [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	23		12
Interest Income Recognized	0		0
Interest Income Recognized on Cash Basis	0		0
Commercial business: Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	1,449	1,023	1,218	688
Interest Income Recognized	8	6	52	6
Interest Income Recognized on Cash Basis	0	4	27	4
Consumer: Home equity [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	284	444	354	321
Interest Income Recognized	1	1	4	3
Interest Income Recognized on Cash Basis	0	$ 0	1	$ 1
Consumer: Other [Member]
Financing Receivable, Impaired [Line Items]
Average Recorded Investment	4		3
Interest Income Recognized	0		0
Interest Income Recognized on Cash Basis	$ 0		$ 0

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Credit Quality Information (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	$ 1,237,229	$ 1,229,875
Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	895,330	874,758
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	405,751	417,064
Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	461,992	421,668
Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	27,587	36,026
Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	286,141	297,701
Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	96,534	116,383
Commercial business: Time share [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	46,159	51,083
Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,795	23,531
Commercial Business: Medical loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,202	27,180
Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	90,451	79,524
Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	55,758	57,416
Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	53,975	55,228
Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	107	501
Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,676	1,687
Not Rated [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	96,534	116,383
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	96,534	116,383
Not Rated [Member] | Commercial business: SBA and USDA guaranteed [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	96,534	116,383
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: Medical loans [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	1,103,865	1,069,621
Pass [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	864,467	837,488
Pass [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	398,093	408,237
Pass [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	438,787	393,225
Pass [Member] | Real estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	27,587	36,026
Pass [Member] | Total commercial business loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	184,067	175,268
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	46,159	51,083
Pass [Member] | Commercial business: Condominium association [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,795	23,531
Pass [Member] | Commercial Business: Medical loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	26,169	27,180
Pass [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	84,944	73,474
Pass [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	55,331	56,865
Pass [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	53,551	54,683
Pass [Member] | Consumer: Indirect automobile [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	107	501
Pass [Member] | Consumer: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,673	1,681
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	18,489	18,979
Special Mention [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	15,126	15,192
Special Mention [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	1,605	1,174
Special Mention [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	13,521	14,018
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	3,221	3,741
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: Medical loans [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	3,221	3,741
Special Mention [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	142	46
Special Mention [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	142	46
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	18,341	24,892
Substandard [Member] | Total real estate loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	15,737	22,078
Substandard [Member] | Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	6,053	7,653
Substandard [Member] | Real estate: Multi-family and commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	9,684	14,425
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	2,319	2,309
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: Medical loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	33	0
Substandard [Member] | Commercial business: Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	2,286	2,309
Substandard [Member] | Total consumer loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	285	505
Substandard [Member] | Consumer: Home equity [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans and Leases Receivable, Gross	282	499
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	3	6
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: Medical loans [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: Medical loans [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 Loans Modified as TDRs (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	1	3	4	11
Financing Receivable Modifications Investment Recorded	$ 214	$ 474	$ 739	$ 5,668
Financing Receivable, Modifications, Allowance for Loan Losses	$ 57	$ 256	$ 57	$ 256
Real estate: Residential - 1 to 4 family [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	1	2	2	4
Financing Receivable Modifications Investment Recorded	$ 214	$ 379	$ 505	$ 764
Financing Receivable, Modifications, Allowance for Loan Losses	$ 4	$ 21	$ 4	$ 21
Real estate: Multi-family and commercial [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	0	0	2	4
Financing Receivable Modifications Investment Recorded	$ 0	$ 0	$ 234	$ 4,127
Financing Receivable, Modifications, Allowance for Loan Losses	$ 53	$ 235	$ 53	$ 235
Commercial business: Other [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Modifications Contracts Number	0	1	0	3
Financing Receivable Modifications Investment Recorded	$ 0	$ 95	$ 0	$ 777
Financing Receivable, Modifications, Allowance for Loan Losses	$ 0	$ 0	$ 0	$ 0

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES TDR - By Type of Modification (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	$ 214	$ 474	$ 739	$ 5,668
Adjusted Interest Rate [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	0	275	0	275
Principal Deferrals [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	0	104	0	190
Combination of Rate and Payment [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	214	0	214	0
Combination Of Rate And Maturity [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	0	0	234	3,201
Extension of Maturity Date [Member]
Financing Receivable, Modifications [Line Items]
Loans Modified As Troubled Debt Restructurings During Period	$ 0	$ 95	$ 291	$ 2,002

XML

LOANS RECEIVABLE AND ALLOWANCE FOR LOAN LOSSES Loans Acquired with Evidence of Credit Deteroration (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2017 USD ($)
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	$ 3,522
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	296
Disposition of loans acquired with deteriorated credit quality	(888)
Loans Acquired with Deteriorated Credit, Carrying Amount	2,930
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	3,167
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	(77)
Collections of principal repayments on loans acquired with deteriorated credit	296
Disposition of loans acquired with deteriorated credit quality	(832)
Loans Acquired with Deteriorated Credit, Carrying Amount	2,708
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	355
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	(77)
Collections of principal repayments on loans acquired with deteriorated credit	0
Disposition of loans acquired with deteriorated credit quality	(55)
Loans Acquired with Deteriorated Credit, Carrying Amount	223
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	154
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications from Nonaccretable Difference	(77)
Collections of principal repayments on loans acquired with deteriorated credit	18
Disposition of loans acquired with deteriorated credit quality	0
Loans Acquired with Deteriorated Credit, Carrying Amount	213
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	3,013
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	314
Disposition of loans acquired with deteriorated credit quality	(832)
Loans Acquired with Deteriorated Credit, Carrying Amount	$ 2,495

XML

PREMISES AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Property, Plant and Equipment [Abstract]
Land	$ 4,746	$ 4,746
Buildings	13,673	13,623
Leasehold Improvements	11,770	10,731
Furniture and Equipment	12,168	12,405
Construction in Process	38	580
Total	42,395	42,085
Accumulated depreciation and amortization	(22,771)	(22,201)
Premises and equipment, net	$ 19,624	$ 19,884

XML

OTHER COMPREHENSIVE INCOME Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Securities: [Abstract]
Unrealized holding gains on available for sale securities, Before Tax Amount			$ 306
Unrealized holding gains on available for sale securities, Tax Effects			(104)
Unrealized holding gains on available for sale securities, Net of Tax Amount	$ 47	$ (371)	202	$ 985
Other comprehensive income, Before Tax Amount			306
Other comprehensive income, Tax Effects			(104)
Other comprehensive income	$ 47	$ (407)	$ 202	$ 949

XML

OTHER COMPREHENSIVE INCOME Components of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Before Tax Amount	$ (726)	$ (1,032)
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Tax Effects	247	351
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax	(479)	(681)
Accumulated Other Comprehensive Income (Loss), Before Tax Amount	(726)	(1,032)
Accumulated Other Comprehensive Income (Loss), Tax Effects	247	351
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (479)	$ (681)

XML

REGULATORY CAPITAL (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
SI Financial Group, Inc. [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Common Equity	$ 156,252	$ 150,915
Tier One Common Equity to Risk Weighted Assets	15.15%	15.08%
Tier One Common Equity Required for Capital Adequacy	$ 46,401	$ 45,028
Tier One Common Equity Required for Capital Adequacy to Risk Weighted Assets	4.50%	4.50%
Tier One Common Equity Required to be Well Capitalized	$ 67,024	$ 65,041
Tier One Common Equity Required to be Well Capitalized to Risk Weighted Assets	6.50%	6.50%
Tier One Risk Based Capital	$ 164,252	$ 158,915
Tier One Risk Based Capital to Risk Weighted Assets	15.93%	15.88%
Tier One Risk Based Capital Required for Capital Adequacy	$ 61,868	$ 60,037
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%	6.00%
Tier One Risk Based Capital Required to be Well Capitalized	$ 82,491	$ 80,050
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%	8.00%
Capital	$ 176,923	$ 171,187
Capital to Risk Weighted Assets	17.16%	17.11%
Capital Required for Capital Adequacy	$ 82,491	$ 80,050
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Capital Required to be Well Capitalized	$ 103,113	$ 100,062
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Leverage Capital	$ 164,252	$ 158,915
Tier One Leverage Capital to Average Assets	10.46%	10.50%
Tier One Leverage Capital Required for Capital Adequacy	$ 62,839	$ 60,562
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Tier One Leverage Capital Required to be Well Capitalized	$ 78,549	$ 75,702
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%
Savings Institute Bank and Trust Company [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier One Common Equity	$ 148,516	$ 141,673
Tier One Common Equity to Risk Weighted Assets	14.42%	14.17%
Tier One Common Equity Required for Capital Adequacy	$ 46,345	$ 44,978
Tier One Common Equity Required for Capital Adequacy to Risk Weighted Assets	4.50%	4.50%
Tier One Common Equity Required to be Well Capitalized	$ 66,943	$ 64,968
Tier One Common Equity Required to be Well Capitalized to Risk Weighted Assets	6.50%	6.50%
Tier One Risk Based Capital	$ 148,516	$ 141,673
Tier One Risk Based Capital to Risk Weighted Assets	14.42%	14.17%
Tier One Risk Based Capital Required for Capital Adequacy	$ 61,794	$ 59,970
Tier One Risk Based Capital Required for Capital Adequacy to Risk Weighted Assets	6.00%	6.00%
Tier One Risk Based Capital Required to be Well Capitalized	$ 82,392	$ 79,960
Tier One Risk Based Capital Required to be Well Capitalized to Risk Weighted Assets	8.00%	8.00%
Capital	$ 161,187	$ 153,945
Capital to Risk Weighted Assets	15.65%	15.40%
Capital Required for Capital Adequacy	$ 82,391	$ 79,960
Capital Required for Capital Adequacy to Risk Weighted Assets	8.00%	8.00%
Capital Required to be Well Capitalized	$ 102,989	$ 99,950
Capital Required to be Well Capitalized to Risk Weighted Assets	10.00%	10.00%
Tier One Leverage Capital	$ 148,516	$ 141,673
Tier One Leverage Capital to Average Assets	9.52%	9.41%
Tier One Leverage Capital Required for Capital Adequacy	$ 62,408	$ 60,248
Tier One Leverage Capital Required for Capital Adequacy to Average Assets	4.00%	4.00%
Tier One Leverage Capital Required to be Well Capitalized	$ 78,009	$ 75,310
Tier One Leverage Capital Required to be Well Capitalized to Average Assets	5.00%	5.00%

XML

FAIR VALUE OF ASSETS AND LIABILITIES Fair Value Measurements - Recurring (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	$ 168,666	$ 159,503
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	2	17
U.S. Government and agency obligations
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	70,669	64,296
Government-sponsored enterprises
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	9,283	11,364
Mortgage-backed securities:(1)
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	83,301	78,389
Collateralized debt obligation
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,114	1,157
Obligations of state and political subdivisions
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,000	1,000
Tax-exempt securities
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	3,178	3,161
Fair Value, Inputs, Level 1 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	24,502	21,087
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | U.S. Government and agency obligations
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	24,502	21,087
Fair Value, Inputs, Level 1 [Member] | Government-sponsored enterprises
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Mortgage-backed securities:(1)
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Collateralized debt obligation
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Obligations of state and political subdivisions
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 1 [Member] | Tax-exempt securities
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 2 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	142,929	137,123
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	0	2
Fair Value, Inputs, Level 2 [Member] | U.S. Government and agency obligations
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	46,167	43,209
Fair Value, Inputs, Level 2 [Member] | Government-sponsored enterprises
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	9,283	11,364
Fair Value, Inputs, Level 2 [Member] | Mortgage-backed securities:(1)
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	83,301	78,389
Fair Value, Inputs, Level 2 [Member] | Collateralized debt obligation
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 2 [Member] | Obligations of state and political subdivisions
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,000	1,000
Fair Value, Inputs, Level 2 [Member] | Tax-exempt securities
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	3,178	3,161
Fair Value, Inputs, Level 3 [Member]
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,235	1,293
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	2	15
Fair Value, Inputs, Level 3 [Member] | U.S. Government and agency obligations
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Government-sponsored enterprises
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Mortgage-backed securities:(1)
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Collateralized debt obligation
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	1,114	1,157
Fair Value, Inputs, Level 3 [Member] | Obligations of state and political subdivisions
Assets, Fair Value Disclosure [Abstract]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Inputs, Level 3 [Member] | Tax-exempt securities
Assets, Fair Value Disclosure [Abstract]
Assets, 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	121	136
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	2	15
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
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, 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
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, 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	121	136
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring	$ 2	15
Interest rate swap agreement [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring		2
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 1 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring		0
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 2 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring		2
Interest rate swap agreement [Member] | Fair Value, Inputs, Level 3 [Member]
Liabilities, Fair Value Disclosure [Abstract]
Liabilities, Fair Value Disclosure, Recurring		$ 0

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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, 2017 USD ($)
Collateralized Debt Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Beginning balance	$ 1,157
Total realized losses included in net income	0
Total unrealized losses included in other comprehensive income	(43)
Ending balance	1,114
Derivative Loan and Forward Loan Sale Commitments, Net [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]
Beginning balance	121
Total realized losses included in net income	(2)
Total unrealized losses included in other comprehensive income	0
Ending balance	$ 119

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FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Nonrecurring Hierarchy (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, Fair Value Disclosure	$ 1,679	$ 1,466
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	192	696
Other real estate owned, Fair Value Disclosure	1,679	1,466
Assets, Fair Value Disclosure, Nonrecurring	$ 1,871	$ 2,162

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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, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired Loans	$ 34	$ 21	$ 88	$ 239
Other real estate owned	0	0	197	8
Total Adjustments to Fair Value, Assets Measured on a Nonrecurring Basis	$ 34	$ 21	$ 285	$ 247

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FAIR VALUE OF ASSETS AND LIABILITIES Fair Value - Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial Assets [Abstract]
Cash, Cash Equivalents, and Federal Funds Sold	$ 91,732	$ 73,186
Available-for-sale Securities	168,545	159,367
Loans held for sale	1,856	1,393
Loans Receivable, Net Amount	1,227,460	1,220,323
Federal Home Loan Bank Stock	10,017	12,162
Federal Reserve Bank Stock	3,631	3,624
Accrued interest receivable	4,735	4,435
Financial Liabilities [Abstract]
Deposits	1,214,089	1,130,685
Mortgagors' and investors' escrow accounts	2,926	4,388
Federal Home Loan Bank Advances	166,815	217,759
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Financial Assets [Abstract]
Cash, Cash Equivalents, and Federal Funds Sold	91,732	73,186
Available-for-sale Securities	168,545	159,367
Loans held for sale	1,856	1,393
Loans Receivable, Net Amount	1,227,460	1,220,323
Federal Home Loan Bank Stock	10,017	12,162
Federal Reserve Bank Stock	3,631	3,624
Accrued interest receivable	4,735	4,435
Financial Liabilities [Abstract]
Deposits	1,214,089	1,130,685
Mortgagors' and investors' escrow accounts	2,926	4,388
Federal Home Loan Bank Advances	166,815	217,759
Junior subordinated debt owed to unconsolidated trust	8,248	8,248
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	45	72
Forward Sale Loan Commitments, Asset	76	64
Derivative Liabilities [Abstract]
Derivative Loan Commitments, Liability	2	15
Interest Rate Derivative Liabilities, at Fair Value		2
Estimate of Fair Value, Fair Value Disclosure [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	91,732	73,186
Available-for-sale securities, Fair Value Disclosure	168,545	159,367
Loans Held-for-sale, Fair Value Disclosure	1,890	1,584
Loans Receivable, Fair Value Disclosure	1,221,275	1,218,918
Federal Home Loan Bank Stock, Fair Value Disclosure	10,017	12,162
Federal Reserve Bank stock, Fair Value Disclosure	3,631	3,624
Accrued interest receivable, Fair Value Disclosure	4,735	4,435
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	1,216,200	1,134,378
Mortgagors' and investors' escrow accounts	2,926	4,388
Federal Home Loan Bank Advances, Fair Value Disclosure	166,674	217,120
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	6,175	6,043
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	45	72
Forward Sale Loan Commitments, Asset	76	64
Derivative Liabilities [Abstract]
Derivative Loan Commitments, Liability	2	15
Interest Rate Derivative Liabilities, at Fair Value		2
Fair Value, Inputs, Level 1 [Member]
Financial Assets [Abstract]
Cash and Cash Equivalents, Fair Value Disclosure	91,732	73,186
Available-for-sale securities, Fair Value Disclosure	24,502	21,087
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	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
Forward Sale Loan Commitments, Asset	0	0
Derivative Liabilities [Abstract]
Derivative Loan Commitments, Liability	0	0
Interest Rate Derivative Liabilities, at Fair Value		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	142,929	137,123
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	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	166,674	217,120
Junior subordinated debt owed to uncolsolidated trust, Fair Value Disclosure	6,175	6,043
Derivative Assets [Abstract]
Derivative Loan Commitments, Asset	0	0
Forward Sale Loan Commitments, Asset	0	0
Derivative Liabilities [Abstract]
Derivative Loan Commitments, Liability	0	0
Interest Rate Derivative Liabilities, at Fair Value		2
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	1,114	1,157
Loans Held-for-sale, Fair Value Disclosure	1,890	1,584
Loans Receivable, Fair Value Disclosure	1,221,275	1,218,918
Federal Home Loan Bank Stock, Fair Value Disclosure	10,017	12,162
Federal Reserve Bank stock, Fair Value Disclosure	3,631	3,624
Accrued interest receivable, Fair Value Disclosure	4,735	4,435
Financial Liabilities [Abstract]
Deposits, Fair Value Disclosure	1,216,200	1,134,378
Mortgagors' and investors' escrow accounts	2,926	4,388
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	45	72
Forward Sale Loan Commitments, Asset	76	64
Derivative Liabilities [Abstract]
Derivative Loan Commitments, Liability	$ 2	15
Interest Rate Derivative Liabilities, at Fair Value		$ 0

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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, 2016	Sep. 30, 2016	Dec. 31, 2016	Sep. 30, 2017
Derivative [Line Items]
Notional Amount			$ 15,000	$ 0
Weighted average fixed pay rate			1.26%
Weighted average variable receive rate			0.88%
Weighted average maturity in years			11 days
Interest Rate Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value			$ 2	$ 0
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	$ 33	$ 48

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DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Derivative Fair Value and Balance Sheet Classification (Details) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Derivatives, Fair Value [Line Items]
Description of Location of Interest Rate Derivative Instruments Not Designated as Hedging Instruments on Balance Sheet	Other Liabilities
Interest Rate Swap, Notional Amount	$ 0	$ 15,000
Interest Rate Derivative Instruments Not Designated as Hedging Instruments, Liability at Fair Value	$ 0	(2)
Description of Location of Derivative Loan Commitments Not Designated as Hedging Instruments on Balance Sheet	Other Assets
Derivative Loan Commitments, Notional Amount, Net	$ 5,144	12,607
Derivative Loan Commitments, Fair Value, Net	$ 43	57
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	$ 5,501	4,049
Forward Loan Sale Commitments, Fair Value, Net	$ 76	$ 64