Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2018

Fair Value of Assets on Recurring Basis Segregated by Level of Valuation Inputs

The following tables summarizes assets measured at fair value on a recurring basis as of the indicated dates, segregated by the level of valuation inputs within the hierarchy utilized to measure fair value:

	September 30, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	21,988	$	-	$	21,988
State and political subdivisions		-		22,865		-		22,865
Corporate		-		17,288		-		17,288
Asset backed securities		-		20,873		-		20,873
Residential mortgage-backed - US agency		-		33,033		-		33,033
Collateralized mortgage obligations - US agency		-		49,205		-		49,205
Collateralized mortgage obligations - Private label		-		23,496		-		23,496
Total available-for-sale securities	$	-	$	188,748	$	-	$	188,748

Marketable equity securities	$	-	$	541	$	-	$	541

	December 31, 2017
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	41,336	$	-	$	41,336
State and political subdivisions		-		13,681		-		13,681
Corporate		-		8,600		-		8,600
Asset backed securities		-		6,644		-		6,644
Residential mortgage-backed - US agency		-		35,742		-		35,742
Collateralized mortgage obligations - US agency		-		53,348		-		53,348
Collateralized mortgage obligations - Private label		-		11,052		-		11,052
Equity investment securities:
Common stock - Financial services industry		-		-		515		515
Total available-for-sale securities	$	-	$	170,403	$	515	$	170,918

Summary of Changes in Level 3 Assets and Liabilities Measured at Estimated Fair Value on Recurring Basis

The changes in Level 3 assets and liabilities measured at estimated fair value on a recurring basis during the nine months ended September 30, 2018 were as follows:

(In thousands)	Common Stock - Financial Services Industry

Balance - December 31, 2017	$	515
Total gains realized/unrealized:
Included in earnings		-
Included in other comprehensive income		-
Settlements		-
Sales		-
Transfers to Level 2		(515	)
Balance - September 30, 2018	$	-
Changes in unrealized gains included in earnings related to assets still held at September 30, 2018	$	-

Summary of Valuation Techniques and Significant Unobservable Inputs Used for Investments are Categorized Within Level 3 Fair Value Hierarchy

The following table summarizes the valuation techniques and significant unobservable inputs used for the Company's investments that are categorized within Level 3 of the fair value hierarchy at the indicated dates:

(In thousands)

At December 31, 2017

Investment Type

Fair Value

Valuation Techniques

Unobservable Input

Weight

Common Stock - Financial

Services Industry

515

Inputs to comparables

Weight ascribed to comparable companies

100%

Summary of Fair Value Assets Measured on Nonrecurring Basis

Pathfinder Bank had the following assets measured at fair value on a nonrecurring basis as of September 30, 2018 and December 31, 2017:

			September 30, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	1,859	$	1,859
Foreclosed real estate	$	-	$	-	$	232	$	232

			December 31, 2017
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	4,887	$	4,887
Foreclosed real estate	$	-	$	-	$	434	$	434

Fair Value Inputs, Quantitative Information

The following table presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which Level 3 inputs were used to determine fair value at the indicated dates.

		Quantitative Information about Level 3 Fair Value Measurements
	Valuation	Unobservable	Range
	Techniques	Input	(Weighted Avg.)
At September 30, 2018
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 10% (5%)
	(Sales Approach)	Costs to Sell	7% - 13% (11%)
	Discounted Cash Flow

Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 8% (7%)

		Quantitative Information about Level 3 Fair Value Measurements
	Valuation	Unobservable	Range
	Techniques	Input	(Weighted Avg.)
At December 31, 2017
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 30% (9%)
	(Sales Approach)	Costs to Sell	7% - 13% (11%)
	Discounted Cash Flow

Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 8% (7%)

Carrying Amounts and Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s financial instruments as of the indicated dates are presented in the following table:

		September 30, 2018				December 31, 2017
	Fair Value	Carrying		Estimated		Carrying		Estimated
(In thousands)	Hierarchy	Amounts		Fair Values		Amounts		Fair Values
Financial assets:
Cash and cash equivalents	1	$	35,974	$	35,974	$	21,991	$	21,991
Investment securities - available-for-sale	2		188,953		188,953		170,623		170,623
Investment securities - available-for-sale	3		-		-		515		515
Investment securities - marketable equity	2		541		541		-		-
Investment securities - held-to-maturity	2		26,084		25,628		66,196		66,426
Federal Home Loan Bank stock	2		4,187		4,187		3,855		3,855
Net loans	3		613,055		598,372		573,705		570,439
Accrued interest receivable	1		2,915		2,915		3,047		3,047

Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	1	$	490,282	$	490,282	$	510,176	$	510,176
Time Deposits	2		265,922		264,215		213,427		212,453
Borrowings	2		79,636		79,160		73,888		73,575
Subordinated loans	2		15,085		14,899		15,059		14,953
Accrued interest payable	1		326		326		186		186