10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

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

For the quarterly period ended September 30, 2019

OR

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

For the transition period from _______ to _______

(Exact Name of Company as Specified in its Charter)

Maryland (State of Other Jurisdiction of Incorporation) 001-36695 (Commission File No.) 38-3941859 (I.R.S. Employer Identification No.)  

214 West First Street, Oswego, NY 13126

(Address of Principal Executive Office) (Zip Code)

(315) 343-0057

(Issuer's Telephone Number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	PBHC	The NASDAQ Stock Market LLC

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

YES ☒        NO ☐

Indicate by check mark whether the registrant has submitted electronically Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒        NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See 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 ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☐

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

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

As of November 11, 2019, there were 4,707,875 shares outstanding of the registrant’s common stock.

PATHFINDER BANCORP, INC.

INDEX

PART I - FINANCIAL INFORMATION		PAGE NO.
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Statements of Condition	3
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders' Equity	6
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)	46
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	67
Item 4.	Controls and Procedures	67
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other information	68
Item 6.	Exhibits	68
SIGNATURES		69

PART I - FINANCIAL INFORMATION

Item 1 – Consolidated Financial Statements

Pathfinder Bancorp, Inc.

Consolidated Statements of Condition

(Unaudited)

	September 30,			December 31,
(In thousands, except share and per share data)	2019			2018
ASSETS:
Cash and due from banks	$	19,849		$	9,610
Interest-earning deposits (including restricted balances of $0 and $3,993, respectively)		19,924			16,706
Total cash and cash equivalents		39,773			26,316
Available-for-sale securities, at fair value		120,002			177,664
Held-to-maturity securities, at amortized cost (fair value of $116,187 and $53,769, respectively)		114,349			53,908
Marketable equity securities, at fair value		514			453
Federal Home Loan Bank stock, at cost		4,210			5,937
Loans		725,900			620,270
Less: Allowance for loan losses		8,330			7,306
Loans receivable, net		717,570			612,964
Premises and equipment, net		22,411			20,623
Operating lease right-of-use assets		2,422			-
Accrued interest receivable		3,313			3,068
Foreclosed real estate		148			1,173
Intangible assets, net		153			165
Goodwill		4,536			4,536
Bank owned life insurance		17,296			16,941
Other assets		9,423			9,367
Total assets	$	1,056,120		$	933,115
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits:
Interest-bearing	$	748,384		$	623,936
Noninterest-bearing		111,225			103,124
Total deposits		859,609			727,060
Short-term borrowings		18,238			39,000
Long-term borrowings		61,014			79,534
Subordinated loans		15,119			15,094
Accrued interest payable		468			304
Operating lease liabilities		2,681			-
Other liabilities		9,800			7,664
Total liabilities		966,929			868,656
Shareholders' equity:
Preferred stock, par value $0.01 per share; no liquidation preference; 10,000,000 and 0 shares    authorized, respectively; 1,155,283 and 0 shares issued and outstanding, respectively		12			-
Common stock, par value $0.01; 25,000,000 authorized shares; 4,707,657 and 4,362,328    shares issued and outstanding, respectively		47			44
Additional paid in capital		49,236			29,139
Retained earnings		43,332			42,114
Accumulated other comprehensive loss		(2,766	)		(6,042	)
Unearned ESOP		(899	)		(1,034	)
Total Pathfinder Bancorp, Inc. shareholders' equity		88,962			64,221
Noncontrolling interest		229			238
Total equity		89,191			64,459
Total liabilities and shareholders' equity	$	1,056,120		$	933,115

The accompanying notes are an integral part of the consolidated financial statements.

- 3 -

Pathfinder Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

	For the three months ended						For the nine months ended
(In thousands, except per share data)	September 30, 2019			September 30, 2018			September 30, 2019		September 30, 2018
Interest and dividend income:
Loans, including fees	$	8,817		$	7,213		$	24,614	$	20,949
Debt securities:
Taxable		1,770			1,348			5,224		3,647
Tax-exempt		11			143			170		608
Dividends		63			61			214		190
Federal funds sold and interest earning deposits		72			65			288		161
Total interest and dividend income		10,733			8,830			30,510		25,555
Interest expense:
Interest on deposits		2,845			1,839			7,930		4,750
Interest on short-term borrowings		89			41			314		204
Interest on long-term borrowings		378			338			1,158		716
Interest on subordinated loans		216			216			650		629
Total interest expense		3,528			2,434			10,052		6,299
Net interest income		7,205			6,396			20,458		19,256
Provision for loan losses		600			291			1,354		1,201
Net interest income after provision for loan losses		6,605			6,105			19,104		18,055
Noninterest income:
Service charges on deposit accounts		399			291			1,029		838
Earnings and gain on bank owned life insurance		133			138			355		319
Loan servicing fees		57			25			144		108
Net gains (losses) on sales and redemptions of investment securities		121			(60	)		232		(189	)
Gains on marketable equity securities		4			-			61		26
Net gains on sales of loans and foreclosed real estate		38			8			43		24
Debit card interchange fees		166			141			497		432
Insurance agency revenue		170			174			631		639
Other charges, commissions & fees		198			223			606		662
Total noninterest income		1,286			940			3,598		2,859
Noninterest expense:
Salaries and employee benefits		3,275			3,191			10,379		9,381
Building and occupancy		699			601			1,986		1,689
Data processing		587			492			1,749		1,404
Professional and other services		352			359			1,068		1,095
Advertising		238			158			719		626
FDIC assessments		130			152			371		407
Audits and exams		104			104			304		314
Insurance agency expense		190			190			618		679
Community service activities		110			142			392		370
Foreclosed real estate expenses		28			19			324		93
Other expenses		569			504			1,622		1,440
Total noninterest expense		6,282			5,912			19,532		17,498
Income before income taxes		1,609			1,133			3,170		3,416
Provision for income taxes		324			157			750		505
Net income attributable to noncontrolling interest and    Pathfinder Bancorp, Inc.		1,285			976			2,420		2,911
Net (loss) income attributable to noncontrolling interest		(10	)		(9	)		4		(23	)
Net income attributable to Pathfinder Bancorp Inc.	$	1,295		$	985		$	2,416	$	2,934
Convertible preferred stock dividends		70			-			139		-
Warrant dividends		7			-			15		-
Undistributed earnings allocated to participating securities		206			-			195		-
Net income available to common shareholders	$	1,012		$	985		$	2,067	$	2,934
Earnings per common share - basic	$	0.22		$	0.23		$	0.47	$	0.71
Earnings per common share - diluted	$	0.22		$	0.23		$	0.47	$	0.69
Dividends per common share	$	0.06		$	0.06		$	0.18	$	0.18

The accompanying notes are an integral part of the consolidated financial statements.

- 4 -

Pathfinder Bancorp, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

	For the three months ended						For the nine months ended
(In thousands)	September 30, 2019			September 30, 2018			September 30, 2019			September 30, 2018
Net Income	$	1,285		$	976		$	2,420		$	2,911
Other Comprehensive Income (Loss)
Retirement Plans:
Retirement plan net losses recognized in plan expenses		84			43			252			129
Unrealized holding gains (losses) on available-for-sale securities
Unrealized holding gains (losses) arising during the period		357			(618	)		4,105			(3,120	)
Reclassification adjustment for net (gains) losses included in net    income		(121	)		60			(232	)		189
Net unrealized gains (losses) on available-for-sale securities		236			(558	)		3,873			(2,931	)
Accretion of net unrealized loss on securities transferred to held-to-    maturity(1)		6			5			22			168
Other comprehensive income (loss), before tax		326			(510	)		4,147			(2,634	)
Tax effect		(68	)		133			(871	)		688
Other comprehensive income (loss), net of tax		258			(377	)		3,276			(1,946	)
Comprehensive income	$	1,543		$	599		$	5,696		$	965
Comprehensive (loss) income, attributable to noncontrolling interest	$	(10	)	$	(9	)	$	4		$	(23	)
Comprehensive income attributable to Pathfinder Bancorp, Inc.	$	1,553		$	608		$	5,692		$	988
Tax Effect Allocated to Each Component of Other Comprehensive    Income (Loss)
Retirement plan net losses recognized in plan expenses	$	(17	)	$	(12	)	$	(54	)	$	(34	)
Unrealized holding gains (losses) arising during the period		(75	)		162			(861	)		815
Reclassification adjustment for net (gains) losses included in net    income		25			(16	)		49			(49	)
Accretion of net unrealized loss on securities transferred to held-to-    maturity(1)		(1	)		(1	)		(5	)		(44	)
Income tax effect related to other comprehensive income (loss)	$	(68	)	$	133		$	(871	)	$	688

(1) The accretion of the unrealized holding losses in accumulated other comprehensive loss at the date of transfer at September 30, 2013 partially offsets the amortization of the difference between the par value and the fair value of the investment securities at the date of transfer, and is an adjustment of yield.

The accompanying notes are an integral part of the consolidated financial statements.

- 5 -

Pathfinder Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

Three months ended September 30, 2019 and September 30, 2018

(Unaudited)

										Accumulated
					Additional					Other Com-						Non-
	Preferred		Common		Paid in		Retained			prehensive			Unearned			controlling
(In thousands, except share and per share data)	Stock		Stock		Capital		Earnings			Loss			ESOP			Interest			Total
Balance, June 30, 2019	$	12	$	47	$	49,125	$	42,389		$	(3,024	)	$	(944	)	$	239		$	87,844
Net income		-		-		-		1,295			-			-			(10	)		1,285
Other comprehensive income, net of tax		-		-		-		-			258			-			-			258
ESOP shares earned (6,110 shares)		-		-		37		-			-			45			-			82
Stock based compensation		-		-		74		-			-			-			-			74
Common stock dividends declared ($0.06 per share)		-		-		-		(275	)		-			-			-			(275	)
Preferred stock dividends declared ($0.06 per share)		-		-		-		(70	)		-			-			-			(70	)
Warrant dividends declared ($0.06 per share)		-		-		-		(7	)		-			-			-			(7	)
Balance, September 30, 2019	$	12	$	47	$	49,236	$	43,332		$	(2,766	)	$	(899	)	$	229		$	89,191
Balance, June 30, 2018	$	-	$	43	$	28,629	$	40,540		$	(5,471	)	$	(1,124	)	$	252		$	62,869
Net income		-		-		-		985			-			-			(9	)		976
Other comprehensive loss, net of tax		-		-		-		-			(377	)		-			-			(377	)
ESOP shares earned (6,110 shares)		-		-		49		-			-			45			-			94
Stock based compensation		-		-		97		-			-			-			-			97
Stock options exercised		-		1		158		-			-			-			-			159
Common stock dividends declared ($0.06 per share)		-		-		-		(255	)		-			-			-			(255	)
Balance, September 30, 2018	$	-	$	44	$	28,933	$	41,270		$	(5,848	)	$	(1,079	)	$	243		$	63,563

The accompanying notes are an integral part of the consolidated financial statements.

- 6 -

Pathfinder Bancorp, Inc.

Consolidated Statements of Changes in Shareholders’ Equity

Nine months ended September 30, 2019 and September 30, 2018

(Unaudited)

											Accumulated
					Additional						Other Com-						Non-
	Preferred		Common		Paid in			Retained			prehensive			Unearned			controlling
(In thousands, except share and per share data)	Stock		Stock		Capital			Earnings			Loss			ESOP			Interest			Total
Balance, January 1, 2019	$	-	$	44	$	29,139		$	42,114		$	(6,042	)	$	(1,034	)	$	238		$	64,459
Net income		-		-		-			2,416			-			-			4			2,420
Other comprehensive income, net of tax		-		-		-			-			3,276			-			-			3,276
Proceeds of common stock private placement,    net of expenses (1)		-		3		3,823			-			-			-			-			3,826
Proceeds of preferred stock private placement,    net of expenses (1)		12		-		15,358			-			-			-			-			15,370
Effect of warrant issued from private placement (1)		-		-		373			-			-			-			-			373
ESOP shares earned (18,332 shares)		-		-		123			-			-			135			-			258
Restricted stock units (13,436 shares)		-		-		-			-			-			-			-			-
Stock based compensation		-		-		220			-			-			-			-			220
Stock options exercised		-		-		200			-			-			-			-			200
Cumulative effect of change in measurement of    operating leases (2)		-		-		-			(239	)		-			-			-			(239	)
Common stock dividends declared ($0.18 per share)		-		-		-			(805	)		-			-			-			(805	)
Preferred stock dividends declared ($0.12 per share)		-		-		-			(139	)		-			-			-			(139	)
Warrant dividends declared ($0.12 per share)		-		-		-			(15	)		-			-			-			(15	)
Distributions from affiliates		-		-		-			-			-			-			(13	)		(13	)
Balance, September 30, 2019	$	12	$	47	$	49,236		$	43,332		$	(2,766	)	$	(899	)	$	229		$	89,191
Balance, January 1, 2018	$	-	$	43	$	28,170		$	39,020		$	(4,208	)	$	(1,214	)	$	333		$	62,144
Net income (loss)		-		-		-			2,934			-			-			(23	)		2,911
Other comprehensive loss, net of tax		-		-		-			-			(1,946	)		-			-			(1,946	)
ESOP shares earned (18,332 shares)		-		-		150			-			-			135			-			285
Restricted stock units (14,490 shares)		-		-		-			-			-			-			-			-
Stock based compensation		-		-		259			-			-			-			-			259
Stock options exercised		-		1		362			-			-			-			-			363
Cumulative effect of change in measurement of equity    securities (3)		-		-		-			53			(53	)		-			-			-
Cumulative effect of change in investment securities    transfer (4)		-		-		-			-			359			-			-			359
Common stock dividends declared ($0.18 per share)		-		-		-			(752	)		-			-			-			(752	)
Cumulative effect of affiliate capital allocation		-		-		(8	)		15			-			-			(7	)		-
Distributions from affiliates		-		-		-			-			-			-			(60	)		(60	)
Balance, September 30, 2018	$	-	$	44	$	28,933		$	41,270		$	(5,848	)	$	(1,079	)	$	243		$	63,563

(1) On May 8, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor, in which it sold: (i) 37,700 shares of the Company’s common stock, (ii) 1,155,283 shares of a new series of preferred stock, Series B convertible perpetual preferred stock; and (iii) a warrant to purchase 125,000 shares of common stock in a private placement transaction.  The Company also entered into Subscription Agreements with certain directors and executive officers of the Company as well as other accredited investors. Pursuant to the Subscription Agreements, the investors purchased an aggregate of 269,277 shares of common stock.

(2) Cumulative effect of the adoption of ASU 2016-02, Leases (Topic 842), based on the difference in the right-of-use asset and lease liability as of January 1, 2019.

(3) Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 - Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

(4) Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

The accompanying notes are an integral part of the consolidated financial statements.

- 7 -

Pathfinder Bancorp, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the nine months ended September 30,
(In thousands)	2019			2018
OPERATING ACTIVITIES
Net income attributable to Pathfinder Bancorp, Inc.	$	2,416		$	2,934
Adjustments to reconcile net income to net cash flows from operating activities:
Provision for loan losses		1,354			1,201
Amortization of operating leases		21			-
Proceeds from sales of loans		912			216
Originations of loans held-for-sale		(903	)		(212	)
Realized (gains) losses on sales, redemptions and calls of:
Real estate acquired through foreclosure		(24	)		(22	)
Loans		(19	)		(2	)
Available-for-sale investment securities		(246	)		177
Held-to-maturity investment securities		14			12
Premises and equipment		-			(8	)
Marketable equity securities		(61	)		(26	)
Depreciation		1,133			869
Amortization of mortgage servicing rights		(2	)		3
Amortization of deferred loan costs		194			240
Amortization of deferred financing from subordinated debt		25			26
Earnings and gain on bank owned life insurance		(355	)		(319	)
Net amortization of premiums and discounts on investment securities		861			1,339
Amortization of intangible assets		12			13
Stock based compensation and ESOP expense		478			544
Net change in accrued interest receivable		(245	)		132
Pension plan contribution		-			(825	)
Net change in other assets and liabilities		990			(309	)
Net cash flows from operating activities		6,555			5,983
INVESTING ACTIVITIES
Purchase of investment securities available-for-sale		(50,479	)		(55,284	)
Purchase of investment securities held-to-maturity		(72,346	)		-
Purchase of Federal Home Loan Bank stock		(6,125	)		(6,439	)
Proceeds from redemption of Federal Home Loan Bank stock		7,852			6,107
Proceeds from maturities and principal reductions of investment securities    available-for-sale		24,935			33,650
Proceeds from maturities and principal reductions of investment securities    held-to-maturity		11,273			5,238
Proceeds from sales, redemptions and calls of:
Available-for-sale investment securities		86,555			33,421
Held-to-maturity investment securities		549			953
Real estate acquired through foreclosure		1,552			542
Premise and equipment		-			14
Purchase of bank owned life insurance		-			(5,000	)
Proceeds from bank owned life insurance		-			228
Net change in loans		(106,657	)		(41,111	)
Purchase of premises and equipment		(2,921	)		(2,176	)
Net cash flows from investing activities		(105,812	)		(29,857	)

- 8 -

FINANCING ACTIVITIES
Net change in demand deposits, NOW accounts, savings accounts, money management    deposit accounts, MMDA accounts and escrow deposits		17,133			(19,633	)
Net change in time deposits		49,401			43,260
Net change in brokered deposits		66,015			8,974
Net change in short-term borrowings		(20,762	)		(28,600	)
Payments on long-term borrowings		(26,200	)		(2,000	)
Proceeds from long-term borrowings		7,680			36,348
Proceeds from exercise of stock options		200			362
Cash dividends paid to common shareholders		(808	)		(764	)
Cash dividends paid to preferred shareholders		(69	)		-
Cash dividends paid on warrants		(8	)		-
Net proceeds from common stock private placement		4,199			-
Net proceeds from preferred stock private placement		15,370			-
Proceeds from finance lease transaction		572			-
Change in noncontrolling interest, net		(9	)		(90	)
Net cash flows from financing activities		112,714			37,857
Change in cash and cash equivalents		13,457			13,983
Cash and cash equivalents at beginning of period		26,316			21,991
Cash and cash equivalents at end of period	$	39,773		$	35,974
CASH PAID DURING THE PERIOD FOR:
Interest	$	9,888		$	6,159
Income taxes		300			662
NON-CASH INVESTING ACTIVITY
Real estate acquired in exchange for loans		503			320
RESTRICTED CASH
Federal Reserve Bank Reserve Requirements included in interest earning deposits		-			4,478

The accompanying notes are an integral part of the consolidated financial statements.

- 9 -

Notes to Consolidated Financial Statements (Unaudited)

Note 1:   Basis of Presentation

The accompanying unaudited consolidated financial statements of Pathfinder Bancorp, Inc., (the “Company”), Pathfinder Bank (the “Bank”) and its other wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions for Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes necessary for a complete presentation of consolidated financial condition, results of operations and cash flows in conformity with generally accepted accounting principles.  In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included.  Certain amounts in the 2018 consolidated financial statements may have been reclassified to conform to the current period presentation.  These reclassifications had no effect on net income or comprehensive income as previously reported.  Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019 or any other interim period.  

The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by unaffiliated third-party sources, when available.  When third party information is not available, valuation adjustments are estimated in good faith by management.

Although the Company owns, through its subsidiary Pathfinder Risk Management Company, Inc., 51% of the membership interest in FitzGibbons Agency, LLC (“Agency”), the Company is required to consolidate 100% of the Agency within the consolidated financial statements.  The 49% of which the Company does not own is accounted for separately as noncontrolling interests within the consolidated financial statements.

Note 2:   New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) and, to a lesser extent, other authoritative rulemaking bodies promulgate generally accepted accounting principles (“GAAP”) to regulate the standards of accounting in the United States.  From time to time, the FASB issues new GAAP standards, known as Accounting Standards Updates (“ASUs”) some of which, upon adoption, may have the potential to change the way in which the Company recognizes or reports within its consolidated financial statements.  The following presentation provides a description of the accountingstandards that are not currently effective, but could have an impact on the Company's consolidated financial statements upon adoption.

Standards Not Yet Adopted as of September 30, 2019

Standard:  Measurement of Credit Losses on Financial Instruments (ASU 2016-13: Financial Instruments—Credit Losses [Topic 326]: Measurement of Credit Losses on Financial Instruments)

Description: The amended guidance replaces the current incurred loss model for determining the allowance for credit losses. The guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected.  The allowance for credit losses will represent a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income

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statement will reflect the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) will be estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.  The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination.  The initial allowance for these assets will be added to the purchase price at acquisition rather than being reported as an expense.  Subsequent changes in the allowance will be recorded through the income statement as an expense adjustment.  In addition, the amended guidance requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The calculation of credit losses for available-for-sale securities will be similar to how it is determined under existing guidance.

Required Date of Implementation:  January 1, 2023 (early adoption permitted as of January 1, 2019).  

Effect on Consolidated Financial Statements:  The Company is assessing the new guidance to determine what modifications to existing credit estimation processes may be required.  The Company expects that the new guidance will result in an increase in its allowance for credit losses as a result of considering credit losses over the expected life of its loan and debt securities portfolios.  Increases in the level of allowances will also reflect new requirements to include estimated credit losses on investment securities classified as held-to-maturity, if any.  The Company has formed an Implementation Committee, whose membership includes representatives of senior management, to develop plans that will encompass: (1) internal methodology changes (2) data collection and management activities, (3) internal communication requirements, and (4) estimation of the projected impact of this guidance.  The amount of any change in the allowance for credit losses resulting from the new guidance will ultimately be impacted by the provisions of this guidance as well as by the loan and debt security portfolios composition and asset quality at the adoption date, and economic conditions and forecasts at the time of adoption.  

                                                                                            _____

Standard:  Transition Relief for the Implementation of ASU-2016-13 (ASU 2019-5: Financial Instruments—Credit Losses [Topic 326]: Targeted Transition Relief)

Description: The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments—Credit Losses— Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments—Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326.  The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall, and 825-10.

General guidance for the use of the fair value option is contained in Subtopic 825-10. The irrevocable election of the fair value option must be applied on an instrument-by-instrument basis for eligible instruments, whose characteristics are within the scope of Subtopic 326-20.  Upon adoption of Topic 326, for items measured at fair value in accordance with paragraph 326-10-65-1(i), the difference between the carrying amount and the fair value shall be recorded by means of a cumulative-effect adjustment to the opening retained earnings balance as of the beginning of the first reporting period that an entity has adopted ASU 2016-13. Those differences may include, but are not limited to: (1) unamortized deferred costs, fees, premiums, and discounts (2) valuation allowances (for example, allowance for loan losses), or (3) accrued interest.

Required Date of Implementation:  See comments above related to ASU 2016-13.

Effect on Consolidated Financial Statements:  See comments above related to ASU 2016-13.

_____

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Standard:  Simplifying the Test for Goodwill Impairment (ASU 2017-04: Intangibles—Goodwill and Other [Topic 350]: Simplifying the Test for Goodwill Impairment)

Description:  Current guidance requires a two-step approach to determining if recorded goodwill is impaired.  In Step 1, reporting entities must first evaluate whether or not the carrying value of a reporting unit is greater than its fair value. In Step 2, if a reporting unit’s carrying value is greater than its fair value, then the entity should calculate the implied fair value of goodwill. If the carrying value of goodwill is more than the implied fair value, an impairment charge for the difference must be recorded.  The amended guidance eliminates Step 2 from the goodwill impairment test.  Therefore, under the new guidance, if the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of the recorded goodwill).

Required Date of Implementation: January 1, 2020 (early adoption permitted).

Effect on Consolidated Financial Statements: The amendments should be applied using a prospective transition method. The Company does not expect the guidance will have a material impact on its consolidated financial statements, unless at some point in the future one of its reporting units were to fail Step 1 of the goodwill impairment test.

____

Standard: Fair Value Measurement (ASU 2018-13: Fair Value Measurement [Topic 820]: Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement

Description:  The FASB is issuing the amendments in this ASU as part of the disclosure framework project. The disclosure framework project’s objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by GAAP that is most important to users of each entity’s financial statements. The amendments in this ASU modify the disclosure requirements for entities such as the Company on fair value measurements in Topic 820, Fair Value Measurement.

The following disclosure requirements were removed from Topic 820:

1. The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.

2. The policy for timing of transfers between levels.

3. The valuation processes for Level 3 fair value measurements.

The following disclosure requirements were modified in Topic 820:

1. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly.

2. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

The following disclosure requirements were added to Topic 820:

1. The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.

2. The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

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Required Date of Implementation:  The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date.

Effect on Consolidated Financial Statements:  The Company does not expect the new guidance will have a material impact to its consolidated statements of condition or income.

____

Standard:  Compensation (ASU 2018-14: Compensation - Retirement Benefits - Defined Benefit Plans - General [Subtopic 715 – 20]: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans)

Description:  The FASB is issuing the amendments in this ASU as part of the disclosure framework project. The amendments in this ASU modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The following disclosure requirements are removed from Subtopic 715-20:

1. The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year.

2. The amount and timing of plan assets expected to be returned to the employer.

3. Related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan.

4. The effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits.

The following disclosure requirements are added to Subtopic 715-20:

1. The weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates.

2. An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

The amendments in this ASU also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed:

1. The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets.

2. The accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets.

Required Date of Implementation:  The amendments in this ASU are effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities.

Effect on Consolidated Financial Statements:  The Company does not expect the new guidance will have a material impact to its consolidated statements of condition or income.

____

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Standard: Leases(ASU 2019-01: Leases [Topic 842] Codification Improvements)

Description:  On February 25, 2016, the FASB issued Accounting Standards ASU No. 2016-02, Leases [Topic 842], to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. ASU 2019-01 addresses three Issues: (1) Determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; (2) Presentation on the statement of cash flows for sales-type and direct financing leases; and (3) Transition disclosures related to Topic 250, Accounting Changes and Error Corrections.  

The amendments in this ASU address Issue 1, described above, and reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers (generally financial institutions and captive finance companies).  Specifically, those lessors will use their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if significant time lapses between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the definition of fair value (exit price) in Topic 820.

Topic 840 does not provide guidance on how cash received from leases by lessors from sales-type and direct financing leases should be presented in the cash flow statement.  The amendments in this ASU address Issue 2, described above, as to the concerns of lessors within the scope of Topic 942 about where “principal payments received under leases” should be presented. Specifically, lessors that are depository and lending institutions within the scope of Topic 942 will present all “principal payments received under leases” within investing activities in the Statement of Cash Flows.

Required Date of Implementation:  The amendments in this ASU amend Topic 842. The effective date of those amendments for public business entities, such as the Company, is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

Effect on Consolidated Financial Statements:  The Company does not expect that the new guidance will have a material impact to its consolidated statements of condition or income.

____

Standard: Various Codification Improvements (ASU 2019-04:Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments)

Description:  Since 2016, the FASB has issued the following Updates related to financial instruments:

1. Accounting Standards Update No. 2016-01, Financial Instruments— Overall [Subtopic 825-10]: Recognition and Measurement of Financial Assets and Financial Liabilities;

2. Accounting Standards Update No. 2016-13, Financial Instruments— Credit Losses [Topic 326]: Measurement of Credit Losses on Financial Instruments; and

3. Accounting Standards Update No. 2017-12, Derivatives and Hedging [Topic 815]: Targeted Improvements to Accounting for Hedging Activities.

The FASB has an ongoing project on its agenda for improving the Codification or correcting its unintended application. The items addressed in that project generally are not expected to have a significant effect on current accounting practice or to create a significant administrative cost for most entities. The amendments in this ASU are similar to those items and are summarized below.

For Codification Improvements specific to ASU 2016-01, the following topics were covered within ASU 2019-04:

• Scope Clarifications

• Held-to-Maturity Debt Securities Fair Value Disclosures

• Applicability of Topic 820 to the Measurement Alternative

• Remeasurement of Equity Securities at Historical Exchange Rates

The amendments to Topic 326 and other Topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses Transition Resource Group (“TRG”) meetings.

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The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  

• Accrued Interest

• Transfers between Classifications or Categories for Loans and Debt Securities

• Recoveries

• Consideration of Prepayments in Determining the Effective Interest Rate

• Consideration of Estimated Costs to Sell When Foreclosure Is Probable

• Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans

• Contractual Extensions and Renewals

The ASU also covered a number of issues that related to hedge accounting (ASU-2017-12) including:

• Partial-Term Fair Value Hedges of Interest Rate Risk

• Amortization of Fair Value Hedge Basis Adjustments

• Disclosure of Fair Value Hedge Basis Adjustments

• Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method

• Scoping for Not-for-Profit Entities

• Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for- Profit Entities

• Application of a First- Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments

• Transition Guidance

Required Dates of Implementation:  This ASU 2019-04 has various implementation dates dependent on a number of factors as it pertains to the above items.  The Company has adopted ASU 2016-01.

Effect on Consolidated Financial Statements:  The Company does not expect that the new guidance will have a material impact to its consolidated statements of condition or income.

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Note 3:   Earnings per Common Share

The Company entered into a securities purchase agreement with Castle Creek Capital Partners VII, L.P. on May 8, 2019, pursuant to which the Company sold: (i) 37,700 shares of the Company’s common stock, par value $0.01 per share, at a purchase price of $14.25 per share; (ii) 1,155,283 shares of a new series of preferred stock, Series B convertible perpetual preferred stock, par value $0.01 per share, at a purchase price of $14.25 per share; and (iii) a warrant, with an approximate fair value of $373,000, to purchase 125,000 shares of common stock at an exercise price equal to $14.25 per share, in a private placement transaction (the “Private Placement”) for gross proceeds of approximately $17.0 million.  As a result of the securities purchase agreement, the Company has common stock, preferred stock and a warrant that are all eligible to participate in dividends equal to the common stock dividends on a per share basis. Securities that participate in dividends, such as the Company’s preferred stock and warrant, are considered “participating securities.”  The Company calculates net income available to common shareholders using the two-class method required for capital structures that include participating securities.    

In applying the two-class method for the three and nine months ended September 30, 2019, basic net income per share was calculated by dividing net income (less any dividends on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period. Diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying either the two-class method or the Treasury Stock method to the assumed exercise or vesting of potentially dilutive common shares.  The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options and restricted stock units. Unallocated common shares held by the ESOP are not included in the weighted average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.

Basic earnings per share for the three and nine months ended September 30, 2018 were calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.  Net income available to common shareholders is net income to Pathfinder Bancorp, Inc. less the total of preferred dividends declared, if any. Diluted earnings per share include the potential dilutive effect that could occur upon the assumed exercise of issued stock options using the Treasury Stock method.  Unallocated common shares held by the ESOP are not included in the weighted average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.

Anti-dilutive shares are common stock equivalents with average exercise prices in excess of the weighted average market price for the period presented.  Anti-dilutive stock options, not included in the computation below, were -0- for the three and nine months ended September 30, 2019 and were -0- for the three and nine months ended September 30, 2018.

The following table sets forth the calculation of basic and diluted earnings per share.  

	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income attributable to Pathfinder Bancorp, Inc.	$	1,295	$	985	$	2,416	$	2,934
Convertible preferred stock dividends		70		-		139		-
Warrant dividends		7		-		15		-
Undistributed earnings allocated to participating securities		206		-		195		-
Net income available to common shareholders	$	1,012	$	985	$	2,067	$	2,934
Basic weighted average common shares outstanding		4,579		4,195		4,423		4,157
Effect of assumed exercise of stock options and    unvested restricted stock units		-		84		-		100
Diluted weighted average common shares outstanding		4,579		4,279		4,423		4,257
Basic earnings per common share	$	0.22	$	0.23	$	0.47	$	0.71
Diluted earnings per common share	$	0.22	$	0.23	$	0.47	$	0.69

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Note 4:   Investment Securities

The amortized cost and estimated fair value of investment securities are summarized as follows:

	September 30, 2019
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	7,016	$	-	$	(30	)	$	6,986
State and political subdivisions		4,805		2		-			4,807
Corporate		12,380		301		(16	)		12,665
Asset backed securities		14,364		57		(43	)		14,378
Residential mortgage-backed - US agency		20,952		82		(40	)		20,994
Collateralized mortgage obligations - US agency		42,073		116		(464	)		41,725
Collateralized mortgage obligations - Private label		18,166		130		(55	)		18,241
Total		119,756		688		(648	)		119,796
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	119,962	$	688	$	(648	)	$	120,002
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	1,996	$	1	$	(2	)	$	1,995
State and political subdivisions		8,523		186		(2	)		8,707
Corporate		24,021		600		-			24,621
Asset backed securities		17,461		117		(71	)		17,507
Residential mortgage-backed - US agency		16,935		617		(1	)		17,551
Collateralized mortgage obligations - US agency		20,415		406		(7	)		20,814
Collateralized mortgage obligations - Private label		24,998		59		(65	)		24,992
Total held-to-maturity	$	114,349	$	1,986	$	(148	)	$	116,187

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	December 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	17,171	$	18	$	(158	)	$	17,031
State and political subdivisions		23,661		6		(602	)		23,065
Corporate		17,389		220		(409	)		17,200
Asset backed securities		18,243		13		(137	)		18,119
Residential mortgage-backed - US agency		32,409		34		(777	)		31,666
Collateralized mortgage obligations - US agency		48,101		31		(1,691	)		46,441
Collateralized mortgage obligations - Private label		24,317		17		(398	)		23,936
Total		181,291		339		(4,172	)		177,458
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	181,497	$	339	$	(4,172	)	$	177,664
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	3,987	$	-	$	(35	)	$	3,952
State and political subdivisions		5,089		22		(84	)		5,027
Corporate		9,924		4		(182	)		9,746
Asset backed securities		1,509		-		(13	)		1,496
Residential mortgage-backed - US agency		11,601		124		(47	)		11,678
Collateralized mortgage obligations - US agency		13,972		93		(13	)		14,052
Collateralized mortgage obligations - Private label		7,826		17		(25	)		7,818
Total held-to-maturity	$	53,908	$	260	$	(399	)	$	53,769

The amortized cost and estimated fair value of debt investments at September 30, 2019 by contractual maturity are shown below.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	3,318	$	3,319	$	2,099	$	2,102
Due after one year through five years		12,814		13,080		18,518		18,762
Due after five years through ten years		17,380		17,392		16,093		16,610
Due after ten years		5,053		5,045		15,291		15,356
Sub-total		38,565		38,836		52,001		52,830
Residential mortgage-backed - US agency		20,952		20,994		16,935		17,551
Collateralized mortgage obligations - US agency		42,073		41,725		20,415		20,814
Collateralized mortgage obligations - Private label		18,166		18,241		24,998		24,992
Totals	$	119,756	$	119,796	$	114,349	$	116,187

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The Company’s debt investment securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	September 30, 2019
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		2	$	(30	)	$	6,966		-	$	-		$	-		2	$	(30	)	$	6,966
Corporate		2		(4	)		1,566		4		(12	)		2,269		6		(16	)		3,835
Asset backed securities		4		(21	)		7,266		1		(22	)		895		5		(43	)		8,161
Residential mortgage-backed - US agency		6		(29	)		6,734		4		(11	)		2,651		10		(40	)		9,385
Collateralized mortgage obligations - US agency		6		(36	)		10,468		15		(428	)		16,212		21		(464	)		26,680
Collateralized mortgage obligations - Private label		3		(22	)		5,251		4		(33	)		3,433		7		(55	)		8,684
Totals		23	$	(142	)	$	38,251		28	$	(506	)	$	25,460		51	$	(648	)	$	63,711
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(2	)	$	998		-	$	-		$	-		1	$	(2	)	$	998
State and political subdivisions		1		(2	)		2,013		-		-			-		1		(2	)		2,013
Asset backed securities		1		(71	)		2,722		-		-			-		1		(71	)		2,722
Residential mortgage-backed - US agency		-		-			-		1		(1	)		221		1		(1	)		221
Collateralized mortgage obligations - US agency		1		(7	)		1,693		-		-			-		1		(7	)		1,693
Collateralized mortgage obligations - Private label		5		(60	)		8,318		2		(5	)		1,345		7		(65	)		9,663
Totals		9	$	(142	)	$	15,744		3	$	(6	)	$	1,566		12	$	(148	)	$	17,310

	December 31, 2018
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		1	$	(22	)	$	977		2	$	(136	)	$	12,017		3	$	(158	)	$	12,994
State and political subdivisions		5		(76	)		5,213		26		(526	)		14,206		31		(602	)		19,419
Corporate		10		(137	)		8,266		4		(272	)		3,374		14		(409	)		11,640
Asset backed securities		7		(91	)		10,470		2		(46	)		3,059		9		(137	)		13,529
Residential mortgage-backed - US agency		6		(83	)		3,519		21		(694	)		24,154		27		(777	)		27,673
Collateralized mortgage obligations - US agency		3		(98	)		2,792		28		(1,593	)		35,765		31		(1,691	)		38,557
Collateralized mortgage obligations - Private label		7		(275	)		14,011		5		(123	)		5,907		12		(398	)		19,918
Totals		39	$	(782	)	$	45,248		88	$	(3,390	)	$	98,482		127	$	(4,172	)	$	143,730
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(8	)	$	982		3	$	(27	)	$	2,970		4	$	(35	)	$	3,952
State and political subdivisions		-		-			-		6		(84	)		2,310		6		(84	)		2,310
Corporate		4		(41	)		3,214		2		(141	)		2,507		6		(182	)		5,721
Asset backed securities		1		(13	)		1,496		-		-			-		1		(13	)		1,496
Residential mortgage-backed - US agency		3		(8	)		1,447		2		(39	)		1,769		5		(47	)		3,216
Collateralized mortgage obligations - US agency		4		(13	)		3,972		-		-			-		4		(13	)		3,972
Collateralized mortgage obligations - Private label		-		-			-		2		(25	)		1,874		2		(25	)		1,874
Totals		13	$	(83	)	$	11,111		15	$	(316	)	$	11,430		28	$	(399	)	$	22,541

Excluding the effects of changes in the characteristics of individual debt securities that potentially give rise to other-than-temporary impairment (“OTTI”), as described below, the fair market value of a debt security as of a particular measurement date is highly dependent upon prevailing market and economic environmental factors at the measurement date relative to the prevailing market and economic environmental factors present at the time the debt security was acquired.  The most significant market and environmental factors include, but are not limited to (1) the general level of interest rates, (2) the relationship between shorter-term interest rates and longer-term interest rates (referred to as the “slope” of the interest rate yield curve), (3) general bond market liquidity, (4) the recent and expected near-term volume of new issuances of similar debt securities, and (5) changes in the market values of individual loan collateral underlying mortgage-backed debt securities.  Changes in interest rates affect the fair market values of debt securities by influencing the discount rate applied to the securities’ future expected cash flows.  The higher the discount rate, the lower the resultant security price.  Conversely, the lower the discount rate, the higher the resultant security price.  In addition, the cumulative amount and timing of undiscounted cash flows of debt securities may be also affected by changes in interest rates.  For any given level of movement in the general market and economic environmental factors described above, the magnitude

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of any particular debt security’s price changes will also depend heavily upon security-specific factors such as (1) the duration of the security, (2) imbedded optionality contractually granted to the issuer of the security with respect to principal prepayments, and (3) changes in the level of market premiums demanded by investors for securities with imbedded credit risk (where applicable).

The Company conducts a formal review of investment securities on a quarterly basis for the presence of OTTI.  The Company assesses whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the statement of condition date.  Under these circumstances, OTTI is considered to have occurred (1) if we intend to sell the security; (2) if it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not anticipated to be sufficient to recover the entire amortized cost basis.  The guidance requires that credit-related OTTI is recognized in earnings while non-credit-related OTTI on securities not expected to be sold is recognized in other comprehensive income (“OCI”).  Non-credit-related OTTI is based on other factors, including illiquidity and changes in the general interest rate environment.  Presentation of OTTI is made in the consolidated statement of income on a gross basis, including both the portion recognized in earnings as well as the portion recorded in OCI.  The gross OTTI would then be offset by the amount of non-credit-related OTTI, showing the net as the impact on earnings.

Management does not believe any individual unrealized loss in securities within the portfolio as of September 30, 2019 represents OTTI.  At September 30, 2019, the Bank had the following securities, in a loss position for 12 months or more relative to their amortized historical cost, which were deemed to have no credit impairment, thus, the disclosed unrealized losses relate directly to changes in interest rates subsequent to the acquisition of the individual securities.  The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell these securities prior to the recovery of the amortized cost.

• Four corporate securities, categorized as available-for-sale, with an aggregate amortized historical cost of $2.3 million and an aggregate market value of $2.3 million (unrealized aggregate loss of $12,000, or 0.53%).  Each of these securities maintains a credit rating established by one or more NRSRO above the minimum level required to be considered investment grade and, therefore, no credit-related OTTI is deemed to be present.

• One privately-issued asset-backed securities, categorized as available-for-sale, with an amortized historical cost of $917,000 and an aggregate market value of $895,000 (unrealized loss of $22,000 or 2.44%).  This security maintains a credit rating established by one or more NRSRO above the minimum level required to be considered as investment grade and therefore, no credit-related OTTI is deemed to be present.   

• Four privately-issued collateralized mortgage obligation securities, categorized as available-for-sale, with an aggregate amortized historical cost of $3.5 million and an aggregate market value of $3.4 million (unrealized aggregate loss of $33,000, or 0.96%).  These securities were not rated at the time of their issuance by any NRSRO but each security remains significantly collateralized through subordination. Therefore, no credit-related OTTI is deemed to be present.   

• Two privately-issued collateralized mortgage obligation securities, categorized as held-to-maturity, with an aggregate amortized historical cost of $1.4 million and an aggregate market value of $1.3 million (aggregate unrealized loss of $5,000, or 0.39%).  These securities were not rated at the time of their issuance by any NRSRO but each security remains significantly collateralized through subordination. Therefore, no credit-related OTTI is deemed to be present.    

All other securities with market values less than their amortized historical costs for twelve or more months are issued by United States agencies or government sponsored enterprises and consist of mortgage-backed securities, collateralized mortgage obligations and direct agency financings.  These positions in US government agency and government-sponsored enterprises are deemed to have no credit impairment, thus, the disclosed unrealized losses relate directly to changes in interest rates subsequent to the acquisition of the individual securities.  The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell these securities prior to the recovery of the amortized cost.

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In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the length of time the equity security’s fair value has been below the carrying amount. The Company had no equity investment securities that were impaired at September 30, 2019 or December 31, 2018.

Gross realized gains (losses) on sales of securities for the indicated periods are detailed below:

	For the three months						For the nine months
	ended September 30,						ended September 30,
(In thousands)	2019			2018			2019			2018
Realized gains on investments	$	143		$	76		$	544		$	236
Realized losses on investments		(22	)		(136	)		(312	)		(425	)
	$	121		$	(60	)	$	232		$	(189	)

As of September 30, 2019 and December 31, 2018, securities with a fair value of $104.1 million and $69.8 million, respectively, were pledged to collateralize certain municipal deposit relationships.  As of the same dates, securities with a fair value of $22.2 million and $19.5 million were pledged against the Company’s established borrowing arrangements.  

Management has reviewed its loan and mortgage-backed securities portfolios and determined that, to the best of its knowledge, only minimal exposure exists to sub-prime or other high-risk residential mortgages.  With limited exceptions in the Company’s investment portfolio involving the most senior tranches of securitized bonds, the Company is not in the practice of investing in, or originating, these types of investments or loans.

Note 5:   Pension and Postretirement Benefits

The Company has a noncontributory defined benefit pension plan covering most employees. The plan provides defined benefits based on years of service and final average salary. On May 14, 2012, the Company informed its employees of its decision to freeze participation and benefit accruals under the plan, primarily to reduce some of the volatility in earnings that can accompany the maintenance of a defined benefit plan.  The plan was frozen on June 30, 2012.  Compensation earned by employees up to June 30, 2012 is used for purposes of calculating benefits under the plan but there are no future benefit accruals after this date.  Participants as of June 30, 2012 will continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work. In addition, the Company provides certain health and life insurance benefits for a limited number of eligible retired employees.  The healthcare plan is contributory with participants’ contributions adjusted annually; the life insurance plan is noncontributory.  Employees with less than 14 years of service as of January 1, 1995, are not eligible for the health and life insurance retirement benefits.

The composition of net periodic pension plan and postretirement plan costs for the indicated periods is as follows:

	Pension Benefits						Postretirement Benefits						Pension Benefits						Postretirement Benefits
	For the three months ended September 30,												For the nine months ended September 30,
(In thousands)	2019			2018			2019			2018			2019			2018			2019			2018
Service cost	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Interest cost		124			119			6			5			371			355			16			16
Expected return on plan assets		(234	)		(260	)		-			-			(701	)		(778	)		-			-
Amortization of prior service credits		-			-			(1	)		(1	)		-			-			(3	)		(3	)
Amortization of net losses		82			41			3			3			246			123			9			9
Net periodic benefit plan (benefit) cost	$	(28	)	$	(100	)	$	8		$	7		$	(84	)	$	(300	)	$	22		$	22

The Company will evaluate the need for further contributions to the defined benefit pension plan during 2019.  The prepaid pension asset is recorded in other assets on the statement of condition as of September 30, 2019 and December 31, 2018.

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Note 6:   Loans

Major classifications of loans at the indicated dates are as follows:

	September 30,			December 31,
(In thousands)	2019			2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	241,817		$	232,523
Construction		4,241			7,121
Total residential mortgage loans		246,058			239,644
Commercial loans:
Real estate		235,364			212,314
Lines of credit		58,408			44,235
Other commercial and industrial		80,829			63,359
Tax exempt loans		8,183			9,320
Total commercial loans		382,784			329,228
Consumer loans:
Home equity and junior liens		47,512			26,109
Other consumer		49,486			25,424
Total consumer loans		96,998			51,533
Total loans		725,840			620,405
Net deferred loan fees		60			(135	)
Less allowance for loan losses		(8,330	)		(7,306	)
Loans receivable, net	$	717,570		$	612,964

Although the Bank may occasionally purchase or fund loan participation interests outside of its primary market areas, the Bank generally originates residential mortgage, commercial, and consumer loans largely to customers throughout Oswego and Onondaga counties. Although the Bank has a diversified loan portfolio, a substantial portion of its borrowers’ abilities to honor their loan contracts is dependent upon the counties’ employment and economic conditions.

The Bank acquired $15.6 million, $10.2 million, and $24.6 million of loans originated by an unrelated financial institution, located outside of the Bank’s market area, in January 2017, April 2017, and March 2019, respectively.   The acquired loan pools represented a 90% participating interest in a total of 2,283 loans secured by liens on automobiles with maturities ranging primarily from two to six years. These loans will be serviced through their respective maturities by the originating financial institution.  At September 30, 2019 and December 31, 2018, there were 1,731 loans outstanding with a remaining outstanding carrying value of $30.0 million and 909 loans outstanding with a remaining outstanding carrying value of $13.3 million, respectively.  Since the acquisition of these loan pools, a total of 25 loans had cumulative net charge-offs totaling $187,000 with $67,000 in net charge-offs for the nine months ended September 30, 2019.

The Bank acquired a $5.0 million pool of consumer loans and a $5.0 million pool of commercial and industrial loans originated by an unrelated financial institution, located outside of the Bank’s market area, in June 2019.   The acquired loan pools represent a 100% interest in a total of 86 unsecured consumer loans and 35 commercial and industrial loans.  These loans have maturities ranging primarily from four to ten years.  At September 30, 2019, there were 85 unsecured consumer loans outstanding with a remaining outstanding carrying value of $4.8 million and 35 commercial and industrial loans outstanding with a remaining outstanding carrying value of $4.9 million.  No charge-offs have occurred since the acquisition of these loan pools.

The Bank acquired a $21.9 million pool of home equity lines of credit originated by an unrelated financial institution, located outside of the Bank’s market area, in August 2019.   The acquired loan pools represent a 100% interest in a total of 395 secured home equity lines of credit.  These lines of credit have maturities ranging primarily from four to thirty years. These lines of credit will be serviced through their respective maturities by the originating financial institution.  At

- 22 -

September 30, 2019, there were 383 secured home equity lines of credit outstanding with a remaining outstanding carrying value of $21.3 million.  No charge-offs have occurred since the acquisition of these loan pools.

As of September 30, 2019 and December 31, 2018, residential mortgage loans with a carrying value of $136.6 million and $154.9 million, respectively, have been pledged by the Company to the Federal Home Loan Bank of New York (“FHLBNY”) under a blanket collateral agreement to secure the Company’s line of credit and term borrowings.  

Loan Origination / Risk Management

The Company’s lending policies and procedures are presented in Note 5 to the audited consolidated financial statements included in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2019 and have not changed.  As part of the execution of the Company’s overall balance sheet management strategies, the Bank will acquire participating interests in loans originated by unrelated third parties on a sporadic basis.  The purchase of participations in loans that are originated by third parties only occurs after the completion of thorough pre-acquisition due diligence.  Loans in which the Company acquires a participating interest are determined to meet, in all material respects, the Company’s internal underwriting policies, including credit and collateral suitability thresholds, prior to acquisition.  In addition, the financial condition of the originating financial institutions, which are generally retained as the ongoing loan servicing provider for participations acquired by the Bank, are analyzed prior to the acquisition of the participating interests and monitored on a regular basis thereafter for the life of those interests.

To develop and document a systematic methodology for determining the allowance for loan losses, the Company has divided the loan portfolio into three portfolio segments, each with different risk characteristics but with similar methodologies for assessing risk.  Each portfolio segment is broken down into loan classes where appropriate.  Loan classes contain unique measurement attributes, risk characteristics, and methods for monitoring and assessing risk that are necessary to develop the allowance for loan losses.  Unique characteristics such as borrower type, loan type, collateral type, and risk characteristics define each class.  

The following table illustrates the portfolio segments and classes for the Company’s loan portfolio:

Portfolio Segment	Class
Residential Mortgage Loans	1-4 family first-lien residential mortgages
	Construction
Commercial Loans	Real estate
	Lines of credit
	Other commercial and industrial
	Tax exempt loans
Consumer Loans	Home equity and junior liens
	Other consumer

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The following tables present the classes of the loan portfolio, not including net deferred loan costs, summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of the dates indicated:

	As of September 30, 2019
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	238,192	$	1,297	$	1,069	$	1,259	$	241,817
Construction		4,241		-		-		-		4,241
Total residential mortgage loans		242,433		1,297		1,069		1,259		246,058
Commercial loans:
Real estate		224,314		7,367		2,787		896		235,364
Lines of credit		56,687		1,339		382		-		58,408
Other commercial and industrial		75,863		3,867		1,050		49		80,829
Tax exempt loans		8,183		-		-		-		8,183
Total commercial loans		365,047		12,573		4,219		945		382,784
Consumer loans:
Home equity and junior liens		46,840		129		234		309		47,512
Other consumer		49,146		206		134		-		49,486
Total consumer loans		95,986		335		368		309		96,998
Total loans	$	703,466	$	14,205	$	5,656	$	2,513	$	725,840
	As of December 31, 2018
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	228,563	$	999	$	1,190	$	1,771	$	232,523
Construction		7,121		-		-		-		7,121
Total residential mortgage loans		235,684		999		1,190		1,771		239,644
Commercial loans:
Real estate		201,997		8,299		1,947		71		212,314
Lines of credit		42,489		1,491		233		22		44,235
Other commercial and industrial		59,344		3,268		612		135		63,359
Tax exempt loans		9,320		-		-		-		9,320
Total commercial loans		313,150		13,058		2,792		228		329,228
Consumer loans:
Home equity and junior liens		25,706		144		173		86		26,109
Other consumer		25,294		95		35		-		25,424
Total consumer loans		51,000		239		208		86		51,533
Total loans	$	599,834	$	14,296	$	4,190	$	2,085	$	620,405

Management has reviewed its loan portfolio and determined that, to the best of its knowledge, no material exposure exists to sub-prime or other high-risk residential mortgages.  The Company is not in the practice of originating these types of loans.

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Nonaccrual and Past Due Loans

Loans are placed on nonaccrual when the contractual payment of principal and interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing.  

Loans are considered past due if the required principal and interest payments have not been received within thirty days of the payment due date.  

An age analysis of past due loans, not including net deferred loan costs, segregated by portfolio segment and class of loans, as of September 30, 2019 and December 31, 2018, are detailed in the following tables:

	As of  September 30, 2019
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,591	$	775	$	777	$	3,143	$	238,674	$	241,817
Construction		-		-		-		-		4,241		4,241
Total residential mortgage loans		1,591		775		777		3,143		242,915		246,058
Commercial loans:
Real estate		16		151		2,845		3,012		232,352		235,364
Lines of credit		15		248		392		655		57,753		58,408
Other commercial and industrial		526		415		891		1,832		78,997		80,829
Tax exempt loans		-		-		-		-		8,183		8,183
Total commercial loans		557		814		4,128		5,499		377,285		382,784
Consumer loans:
Home equity and junior liens		391		107		276		774		46,738		47,512
Other consumer		294		115		66		475		49,011		49,486
Total consumer loans		685		222		342		1,249		95,749		96,998
Total loans	$	2,833	$	1,811	$	5,247	$	9,891	$	715,949	$	725,840
	As of  December 31, 2018
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,507	$	505	$	1,176	$	3,188	$	229,335	$	232,523
Construction		-		-		-		-		7,121		7,121
Total residential mortgage loans		1,507		505		1,176		3,188		236,456		239,644
Commercial loans:
Real estate		4,261		364		323		4,948		207,366		212,314
Lines of credit		1,033		111		22		1,166		43,069		44,235
Other commercial and industrial		814		44		387		1,245		62,114		63,359
Tax exempt loans		-		-		-		-		9,320		9,320
Total commercial loans		6,108		519		732		7,359		321,869		329,228
Consumer loans:
Home equity and junior liens		247		6		35		288		25,821		26,109
Other consumer		226		65		107		398		25,026		25,424
Total consumer loans		473		71		142		686		50,847		51,533
Total loans	$	8,088	$	1,095	$	2,050	$	11,233	$	609,172	$	620,405

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Nonaccrual loans, segregated by class of loan, were as follows:

	September 30,		December 31,
(In thousands)	2019		2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	777	$	1,176
		777		1,176
Commercial loans:
Real estate		2,923		415
Lines of credit		392		28
Other commercial and industrial		891		387
		4,206		830
Consumer loans:
Home equity and junior liens		276		35
Other consumer		66		107
		342		142
Total nonaccrual loans	$	5,325	$	2,148

The Company is required to disclose certain activities related to Troubled Debt Restructurings (“TDR”) in accordance with accounting guidance. Certain loans have been modified in a TDR where economic concessions have been granted to a borrower who is experiencing, or expected to experience, financial difficulties. These economic concessions could include a reduction in the loan interest rate, extension of payment terms, reduction of principal amortization, or other actions that it would not otherwise consider for a new loan with similar risk characteristics.

The Company is required to disclose new TDRs for each reporting period for which an income statement is being presented.  The pre-modification outstanding recorded investment is the principal loan balance less the provision for loan losses before the loan was modified as a TDR.  The post-modification outstanding recorded investment is the principal balance less the provision for loan losses after the loan was modified as a TDR.  Additional provision for loan losses is the change in the allowance for loan losses between the pre-modification outstanding recorded investment and post-modification outstanding recorded investment.

The Company had no loans that were modified as TDRs for the three months ended September 30, 2019.

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2019.

	For the nine months ended September 30, 2019
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Residential real estate loans	1	$	205	$	250	$	-

The TDR evaluated for impairment, for the nine months ended September 30, 2019, has been classified as a TDR due to economic concessions granted, which consisted of additional funds advanced without associated increases in collateral and an extended maturity date that will result in a delay in payment from the original contractual maturity.  

The Company had no loans that were modified as TDRs for the three months ended September 30, 2018.

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2018.

	For the nine months ended September 30, 2018
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Other commercial and industrial loans	1	$	300	$	300	$	-

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The TDR evaluated for impairment, for the nine months ended September 30, 2018, has been classified as a TDR due to economic concessions granted, which included an extended maturity date that will result in a delay in payment from the original contractual maturity.

The Company is required to disclose loans that have been modified as TDRs within the previous 12 months in which there was payment default after the restructuring.  The Company defines payment default as any loans 90 days past due on contractual payments.

The Company had no loans that were modified as TDRs during the twelve months prior to September 30, 2019, which had subsequently defaulted during the nine months ended September 30, 2019.

The Company had no loans that were modified as TDRs during the twelve months prior to September 30, 2018, which had subsequently defaulted during the nine months ended September 30, 2018.

When the Company modifies a loan within a portfolio segment that is individually evaluated for impairment, a potential impairment is analyzed either based on the present value of the expected future cash flows discounted at the interest rate of the original loan terms or the fair value of the collateral less costs to sell. If it is determined that the value of the loan is less than its recorded investment, then impairment is recognized as a component of the provision for loan losses, an associated increase to the allowance for loan losses or as a charge-off to the allowance for loan losses in the current period.

Impaired Loans

The following table summarizes impaired loan information by portfolio class at the indicated dates:

	September 30, 2019						December 31, 2018
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(In thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
1-4 family first-lien residential mortgages	$	1,029	$	1,029	$	-	$	1,221	$	1,226	$	-
Commercial real estate		4,244		4,313		-		2,387		2,448		-
Commercial lines of credit		238		238		-		228		228		-
Other commercial and industrial		584		592		-		451		452		-
Home equity and junior liens		41		41		-		-		-		-
Other consumer		56		56		-		-		-		-
With an allowance recorded:
1-4 family first-lien residential mortgages		587		587		98		606		606		108
Commercial real estate		451		451		77		486		486		100
Commercial lines of credit		110		110		110		28		28		28
Other commercial and industrial		531		531		339		373		373		255
Home equity and junior liens		179		179		152		207		207		140
Other consumer		37		37		3		-		-		-
Total:
1-4 family first-lien residential mortgages		1,616		1,616		98		1,827		1,832		108
Commercial real estate		4,695		4,764		77		2,873		2,934		100
Commercial lines of credit		348		348		110		256		256		28
Other commercial and industrial		1,115		1,123		339		824		825		255
Home equity and junior liens		220		220		152		207		207		140
Other consumer		93		93		3		-		-		-
Totals	$	8,087	$	8,164	$	779	$	5,987	$	6,054	$	631

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The following table presents the average recorded investment in impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	1,625	$	1,840	$	1,625	$	1,846
Commercial real estate		4,578		4,497		3,723		4,976
Commercial lines of credit		359		186		323		365
Other commercial and industrial		1,131		947		1,035		1,001
Home equity and junior liens		234		207		220		228
Other consumer		95		-		73		-
Total	$	8,022	$	7,677	$	6,999	$	8,416

The following table presents the cash basis interest income recognized on impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	19	$	16	$	54	$	48
Commercial real estate		73		62		158		128
Commercial lines of credit		2		4		20		25
Other commercial and industrial		12		5		50		24
Home equity and junior liens		2		3		8		9
Other consumer		2		-		5		-
Total	$	110	$	90	$	295	$	234

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Note 7:   Allowance for Loan Losses

Summarized in the tables below are changes in the allowance for loan losses for the indicated periods and information pertaining to the allocation of the allowance for loan losses, balances of the allowance for loan losses, loans receivable based on individual, and collective impairment evaluation by loan portfolio class.  An allocation of a portion of the allowance to a given portfolio class does not limit the Company’s ability to absorb losses in another portfolio class.

	For the three months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	724		$	-		$	3,452		$	1,145		$	1,702
Charge-offs		-			-			-			(5	)		(4	)
Recoveries		-			-			-			-			1
Provisions (credits)		(77	)		-			388			(84	)		89
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
Ending balance: related to loans    individually evaluated for impairment	$	98		$	-		$	77		$	110		$	339
Ending balance: related to loans    collectively evaluated for impairment	$	549		$	-		$	3,763		$	946		$	1,449
Loans receivables:
Ending balance	$	241,817		$	4,241		$	235,364		$	58,408		$	80,829
Ending balance: individually    evaluated for impairment	$	1,616		$	-		$	4,695		$	348		$	1,115
Ending balance: collectively    evaluated for impairment	$	240,201		$	4,241		$	230,669		$	58,060		$	79,714
				Homeequity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	386		$	415		$	-		$	7,825
Charge-offs		-			(7	)		(107	)		-			(123	)
Recoveries		-			-			27			-			28
Provisions		-			95			93			96			600
Ending balance	$	1		$	474		$	428		$	96		$	8,330
Ending balance: related to loans    individually evaluated for impairment	$	-		$	152		$	3		$	-		$	779
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	322		$	425		$	96		$	7,551
Loans receivables:
Ending balance	$	8,183		$	47,512		$	49,486					$	725,840
Ending balance: individually    evaluated for impairment	$	-		$	220		$	93					$	8,087
Ending balance: collectively    evaluated for impairment	$	8,183		$	47,292		$	49,393					$	717,753

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	For the nine months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	766		$	-		$	3,578		$	730		$	1,285
Charge-offs		(11	)		-			-			(136	)		(6	)
Recoveries		1			-			-			-			1
Provisions (credits)		(109	)		-			262			462			508
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	409		$	385		$	152		$	7,306
Charge-offs		-			(7	)		(214	)		-			(374	)
Recoveries		-			-			42			-			44
Provisions (credits)		-			72			215			(56	)		1,354
Ending balance	$	1		$	474		$	428		$	96		$	8,330

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	For the three months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	722		$	-		$	4,141		$	731		$	1,271
Charge-offs		(27	)		-			(31	)		(12	)		(1	)
Recoveries		1			-			-			-			-
Provisions (credits)		65			-			(170	)		66			(82	)
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
Ending balance: related to loans    individually evaluated for impairment	$	109		$	-		$	593		$	46		$	276
Ending balance: related to loans    collectively evaluated for impairment	$	652		$	-		$	3,347		$	739		$	912
Loans receivables:
Ending balance	$	231,830		$	3,888		$	213,303		$	48,496		$	60,984
Ending balance: individually    evaluated for impairment	$	1,835		$	-		$	4,463		$	162		$	856
Ending balance: collectively    evaluated for impairment	$	229,995		$	3,888		$	208,840		$	48,334		$	60,128
				Home equity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	434		$	291		$	14		$	7,605
Charge-offs		-			-			(33	)		-			(104	)
Recoveries		-			5			6			-			12
Provisions (credits)		-			(18	)		166			264			291
Ending balance	$	1		$	421		$	430		$	278		$	7,804
Ending balance: related to loans    individually evaluated for impairment	$	-		$	140		$	-		$	-		$	1,164
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	281		$	430		$	278		$	6,640
Loans receivables:
Ending balance	$	10,163		$	25,985		$	26,410					$	621,059
Ending balance: individually    evaluated for impairment	$	-		$	206		$	-					$	7,522
Ending balance: collectively    evaluated for impairment	$	10,163		$	25,779		$	26,410					$	613,537

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	For the nine months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	865		$	-		$	3,589		$	735		$	1,214
Charge-offs		(219	)		-			(31	)		(62	)		(172	)
Recoveries		21			-			-			66			-
Provisions (credits)		94			-			382			46			146
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	514		$	208		$	-		$	7,126
Charge-offs		-			(17	)		(144	)		-			(645	)
Recoveries		-			6			29			-			122
Provisions (credits)		-			(82	)		337			278			1,201
Ending balance	$	1		$	421		$	430		$	278		$	7,804

The Company’s methodology for determining its allowance for loan losses includes an analysis of qualitative factors that are added to the historical loss rates in arriving at the total allowance for loan losses needed for this general pool of loans.  The qualitative factors include:

• Changes in national and local economic trends;

• The rate of growth in the portfolio;

• Trends of delinquencies and nonaccrual balances;

• Changes in loan policy; and

• Changes in lending management experience and related staffing.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.  These qualitative factors, applied to each product class, make the evaluation inherently subjective, as it requires material estimates that may be susceptible to significant revision as more information becomes available.  Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan losses analysis and calculation.

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The allocation of the allowance for loan losses summarized on the basis of the Company’s calculation methodology was as follows:

	September 30, 2019
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	98	$	-	$	77	$	110	$	339
Historical loss rate		36		-		93		37		29
Qualitative factors		513		-		3,670		909		1,420
Total	$	647	$	-	$	3,840	$	1,056	$	1,788
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	152	$	3	$	-	$	779
Historical loss rate		-		4		155		-		354
Qualitative factors		1		318		270		-		7,101
Other		-		-		-		96		96
Total	$	1	$	474	$	428	$	96	$	8,330

	September 30, 2018
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	109	$	-	$	593	$	46	$	276
Historical loss rate		114		-		87		18		24
Qualitative factors		538		-		3,260		721		888
Total	$	761	$	-	$	3,940	$	785	$	1,188
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	140	$	-	$	-	$	1,164
Historical loss rate		-		21		218		-		482
Qualitative factors		1		260		212		-		5,880
Other		-		-		-		278		278
Total	$	1	$	421	$	430	$	278	$	7,804

Note 8:   Foreclosed Real Estate

The Company is required to disclose the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession of the property at each reporting period.

(Dollars in thousands)	Number of properties		September 30, 2019		Number of properties		December 31, 2018
Foreclosed residential real estate		1	$	60		2	$	73

At September 30, 2019 and December 31, 2018, the Company reported $302,000 and $951,000, respectively, in residential real estate loans in the process of foreclosure.

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Note 9:   Guarantees

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit.  Generally, all letters of credit, when issued have expiration dates within one year.  The credit risks involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers.  The Company generally holds collateral and/or personal guarantees supporting these commitments.  The Company had $2.2 million of standby letters of credit as of September 30, 2019.  Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.   The fair value of standby letters of credit was not significant to the Company’s consolidated financial statements.

Note 10:   Fair Value Measurements

Accounting guidance related to fair value measurements and disclosures specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 – Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs, minimize the use of unobservable inputs, to the extent possible, and considers counterparty credit risk in its assessment of fair value.

The Company used the following methods and significant assumptions to estimate fair value:

Investment securities:  The fair values of available-for-sale and marketable equity securities are obtained from an independent third party and are based on quoted prices on nationally recognized securities exchanges where available (Level 1).  If quoted prices are not available, fair values are measured by utilizing matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).  Management made no adjustment to the fair value quotes that were received from the independent third party pricing service.Level 3 securities are assets whose fair value cannot be determined by using observable measures, such as market prices or pricing models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges. Management applies known factors, such as currently applicable discount rates, to the valuation of those investments in order to determine fair value at the reporting date.

The Company holds two corporate investment securities with an aggregate amortized historical cost of $4.8 million and an aggregate fair market value of $5.0 million as of September 30, 2019. These securities have valuations that are determined using published net asset values (NAV) derived by analyses of the securities’ underlying assets. These securities are comprised primarily of broadly-diversified real estate and adjustable-rate senior secured business loans and are traded in secondary markets on an infrequent basis. While these securities are redeemable at least annually through tender offers made by their respective issuers, the liquidation value of the securities may be below their stated NAVs and also subject to restrictions as to the amount of securities that can be redeemed at any single scheduled redemption. The

- 34 -

Company anticipates that these securities will be redeemed by their respective issuers on indeterminate future dates as a consequence of the ultimate liquidation strategies employed by the management of these investments.

Interest rate swap derivative:  The fair value of the interest rate swap derivative is calculated based on a discounted cash flow model. All future floating cash flows are projected and both floating and fixed cash flows are discounted to the valuation date.  The curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes for various swap maturity terms.

Impaired loans: Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’s collateral or the discounted value of expected future cash flows.  Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds.  These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach.  Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition.  Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets.  These measurements are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment.  A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.

Foreclosed real estate:  Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”).  Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses.  Values are derived from appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis.  Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis.  In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition.  Either change could result in adjustment to lower the property value estimates indicated in the appraisals.  These measurements are classified as Level 3 within the fair value hierarchy.

The following tables summarize 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, 2019
								Total Fair
(In thousands)	Level 1		Level 2			Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	6,986		$	-	$	6,986
State and political subdivisions		-		4,807			-		4,807
Corporate		-		7,621			-		7,621
Asset backed securities		-		14,378			-		14,378
Residential mortgage-backed - US agency		-		20,994			-		20,994
Collateralized mortgage obligations - US agency		-		41,725			-		41,725
Collateralized mortgage obligations - Private label		-		18,241			-		18,241
Total				114,752					114,752
Corporate measured at NAV		-		-			-		5,044
Total available-for-sale securities	$	-	$	114,752		$	-	$	119,796
Marketable equity securities	$	-	$	514		$	-	$	514
Interest rate swap derivative	$	-	$	(115	)	$	-	$	(115	)

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	December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	17,031	$	-	$	17,031
State and political subdivisions		-		23,065		-		23,065
Corporate		-		12,141		-		12,141
Asset backed securities		-		18,119		-		18,119
Residential mortgage-backed - US agency		-		31,666		-		31,666
Collateralized mortgage obligations - US agency		-		46,441		-		46,441
Collateralized mortgage obligations - Private label		-		23,936		-		23,936
Total				172,399				172,399
Corporate measured at NAV		-		-		-		5,059
Total available-for-sale securities	$	-	$	172,399	$	-	$	177,458
Marketable equity securities	$	-	$	453	$	-	$	453

Pathfinder Bank had the following assets measured at fair value on a nonrecurring basis as of September 30, 2019 and December 31, 2018: 

			September 30, 2019
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	3,055	$	3,055
Foreclosed real estate	$	-	$	-	$	60	$	60

			December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	1,098	$	1,098
Foreclosed real estate	$	-	$	-	$	1,173	$	1,173

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, 2019
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 20% (9%)
	(Sales Approach)	Costs to Sell	7% - 13% (10%)
	Discounted Cash Flow
Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 9% (8%)

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		Quantitative Information about Level 3 Fair Value Measurements
	Valuation	Unobservable	Range
	Techniques	Input	(Weighted Avg.)
At December 31, 2018
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 15% (6%)
	(Sales Approach)	Costs to Sell	5% - 13% (11%)
	Discounted Cash Flow
Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 8% (7%)

There have been no transfers of assets into or out of any fair value measurement during the three and nine months ended September 30, 2019.

Required disclosures include fair value information of financial instruments, whether or not recognized in the consolidated statement of condition, for which it is practicable to estimate that value.  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. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

The Company has various processes and controls in place to ensure that fair value is reasonably estimated. The Company performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. 

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

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 herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period-ends, and have not been re-evaluated or updated for purposes of these 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.

FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the financial assets and liabilities were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.  

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:

Cash and cash equivalents – The carrying amounts of these assets approximate their fair value and are classified as Level 1.

Investment securities – The fair values of available-for-sale, held-to-maturity and marketable equity securities are obtained from an independent third party and are based on quoted prices on nationally recognized exchange where available (Level 1).  If quoted prices are not available, fair values are measured by utilizing matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).  Management made no adjustment to the fair value quotes that were received from the independent third party pricing service.  Level 3 securities are assets whose fair value cannot be determined by using observable measures, such as market

- 37 -

prices or pricing models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges. Management applies known factors, such as currently applicable discount rates, to the valuation of those investments in order to determine fair value at the reporting date.

The Company holds two corporate investment securities with an aggregate amortized historical cost of $4.8 million and an aggregate fair market value of $5.0 million as of September 30, 2019. These securities have valuations that are determined using published NAV derived by analyses of the securities’ underlying assets. These securities are comprised primarily of broadly-diversified real estate and adjustable-rate senior secured business loans and are traded in secondary markets on an infrequent basis. While these securities are redeemable at least annually through tender offers made by their respective issuers, the liquidation value of the securities may be below their stated NAVs and also subject to restrictions as to the amount of securities that can be redeemed at any single scheduled redemption. The Company anticipates that these securities will be redeemed by their respective issuers on indeterminate future dates as a consequence of the ultimate liquidation strategies employed by the management of these investments.

Federal Home Loan Bank stock – The carrying amount of these assets approximates their fair value and are classified as Level 2.

Net loans – For variable-rate loans that re-price frequently, fair value is based on carrying amounts.  The fair value of other loans (for example, fixed-rate commercial real estate loans, mortgage loans, and commercial and industrial loans) is estimated using discounted cash flow analysis, based on interest rates currently being offered in the market for loans with similar terms to borrowers of similar credit quality.  Loan value estimates include judgments based on expected prepayment rates.  The measurement of the fair value of loans, including impaired loans, is classified within Level 3 of the fair value hierarchy.

Accrued interest receivable and payable – The carrying amount of these assets approximates their fair value and are classified as Level 1.

Deposits – The fair values disclosed for demand deposits (e.g., interest-bearing and noninterest-bearing checking, passbook savings and certain types of money management accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) and are classified within Level 1 of the fair value hierarchy.  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates of deposits to a schedule of aggregated expected monthly maturities on time deposits.  Measurements of the fair value of time deposits are classified within Level 2 of the fair value hierarchy.

Borrowings – Fixed/variable term “bullet” structures are valued using a replacement cost of funds approach.  These borrowings are discounted to the FHLBNY advance curve.  Option structured borrowings’ fair values are determined by the FHLB for borrowings that include a call or conversion option.  If market pricing is not available from this source, current market indications from the FHLBNY are obtained and the borrowings are discounted to the FHLBNY advance curve less an appropriate spread to adjust for the option. These measurements are classified as Level 2 within the fair value hierarchy.

Subordinated loans – The Company secures quotes from its pricing service based on a discounted cash flow methodology or utilizes observations of recent highly-similar transactions which result in a Level 2 classification.

Interest rate swap derivative – The fair value of the interest rate swap derivative is obtained from a third party pricing agent and is calculated based on a discounted cash flow model. All future floating cash flows are projected and both floating and fixed cash flows are discounted to the valuation date.  The curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes for various swap maturity terms, and therefore is classified within Level 2 of the fair value hierarchy.

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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, 2019				December 31, 2018
	Fair Value	Carrying		Estimated		Carrying		Estimated
(In thousands)	Hierarchy	Amounts		Fair Values		Amounts		Fair Values
Financial assets:
Cash and cash equivalents	1	$	39,773	$	39,773	$	26,316	$	26,316
Investment securities - available-for-sale	2		114,752		114,752		172,399		172,399
Investment securities - available-for-sale	NAV		5,044		5,044		5,059		5,059
Investment securities - marketable equity	2		514		514		453		453
Investment securities - held-to-maturity	2		114,349		116,187		53,908		53,769
Federal Home Loan Bank stock	2		4,210		4,210		5,937		5,937
Net loans	3		717,570		717,687		612,964		601,789
Accrued interest receivable	1		3,313		3,313		3,068		3,068
Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	1	$	467,391	$	467,391	$	450,267	$	450,267
Time Deposits	2		392,218		393,320		276,793		275,727
Borrowings	2		79,252		79,742		118,534		118,379
Subordinated loans	2		15,119		14,766		15,094		14,485
Accrued interest payable	1		468		468		304		304
Interest rate swap derivative	2		115		115		-		-

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Note 11:   Interest Rate Derivatives

The Company is exposed to certain risks from both its business operations and economic conditions.  The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities.  As part of the Company’s overall risk management processes, the Company manages its economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments as an additional risk management tool.  Financial derivatives are recorded at fair value as other assets.  

The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. There are two primary types of interest rate derivatives that may be employed by the Company:

• Fair Value Hedge - As a result of interest rate fluctuations, fixed-rate assets and liabilities will appreciate or depreciate in fair value. When effectively hedged, this appreciation or depreciation will generally be offset by fluctuations in the fair value of derivative instruments that are linked to the hedged assets and liabilities. This strategy is referred to as a fair value hedge. For a fair value hedge, changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability are recognized currently in earnings.

• Cash Flow Hedge - Cash flows related to floating rate assets and liabilities will fluctuate with changes in the underlying rate index.  When effectively hedged, the increases or decreases in cash flows related to the floating-rate asset or liability will generally be offset by changes in cash flows of the derivative instrumnets designated as a hedge.  This strategy is referred to as a cash flow hedge. For a cash flow hedge, changes in the fair value of the derivative instrument, to the extent that it is effective, are recorded in other comprehensive income and subsequently reclassified to earnings as the hedged transaction impacts net income. Any ineffective portion of a cash flow hedge is recognized currently in earnings. 

Among the array of interest rate derivative transactions potentially available to the Company are interest rate swaps.  The Company uses interest rate swaps as part of its interest rate risk management strategy.  Interest rate swaps, designated as fair value hedges, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments over the life of the agreements without the exchange of the underlying notional amount.  The gain or loss on the derivative as well as the offsetting gain of loss on the hedged item attributable to the hedged risk are recognized in earnings.  The Company entered into a pay-fixed/receive variable interest rate swap with a notional amount of $9.2 million in April 2019, which was designated as a fair value hedge associated with specific pools within the Company’s fixed-rate consumer loan portfolio.

As of September 30, 2019, the following amounts were recorded on the balance sheet related to the cumulative basis adjustments for fair value hedges:

(In thousands)	Carrying Amount of the Hedged Assets at September 30, 2019		Cumulative Amount of Fair Value Hedging Adjustment Included in The Carrying Amount of the Hedged Assets at September 30, 2019
Line item on the balance sheet in which the hedged item is included:
Loans receivable (1)	$	20,952	$	92

(1) These amounts include the amortized cost basis of the closed portfolio used to designate the hedging relationship in which the hedged item is the remaining amortized cost of the last layer expected to be remaining at the end of the hedging relationship.  At September 30, 2019, the amortized cost of the basis of the closed portfolio used in the hedging relationship was $21.0 million, the cumulative basis adjustment associated with the hedging relationship was $92,000, and the amount of the designated hedged item was $9.2 million.

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At September 30, 2019, the fair value of the derivative resulted in a net liability position of $115,000 under the agreement, recorded by the Company in other liabilities. The Company had no derivative agreements in place at December 31, 2018.

The Company manages its potential credit exposure on interest rate swap transactions by entering into a bilateral credit support agreements with each counterparty.  These agreements require collateralization of credit exposures beyond specified minimum threshold amounts.  The Company’s agreement with its interest rate swap counterparty contains a provision whereby if either party defaults on any of its indebtedness, then that party could also be declared in default on its derivative obligations. The agreement with the Company’s derivative counterparty also includes certain other provisions that if not met, could result in the Company or the counterparty being declared in default.  If either the Company or the counterparty were to be declared in default, the other party to the agreement can terminate the derivative position and require settlement of all obligations as specifically outlined within the terms of the agreement.  

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Note 12:   Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income (loss) (“AOCI”), net of tax, for the periods indicated are summarized in the table below.

	For the three months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,021	)	$	43		$	(46	)	$	(3,024	)
Other comprehensive income before reclassifications		-			282			5			287
Amounts reclassified from AOCI		67			(96	)		-			(29	)
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the three months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(2,156	)	$	(3,248	)	$	(67	)	$	(5,471	)
Other comprehensive income before reclassifications		-			(456	)		4			(452	)
Amounts reclassified from AOCI		31			44			-			75
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

	For the nine months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,152	)	$	(2,832	)	$	(58	)	$	(6,042	)
Other comprehensive income before reclassifications		-			3,244			17			3,261
Amounts reclassified from AOCI		198			(183	)		-			15
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the nine months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Securities reclassified from AFS to HTM			Total
Beginning balance	$	(2,220	)	$	(1,558	)	$	(430	)	$	(4,208	)
Other comprehensive income before reclassifications		-			(2,305	)		124			(2,181	)
Amounts reclassified from AOCI		95			140			-			235
Cumulative effect of change in measurement of equity    securities (1)		-			(53	)		-			(53	)
Cumulative effect of change in investment securities transfer (2)		-			116			243			359
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

(1) Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

(2) Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

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The following table presents the amounts reclassified out of each component of AOCI for the indicated period:

	Amount Reclassified							Amount Reclassified
	from AOCI (1)							from AOCI (1)
	(Unaudited)							(Unaudited)
(In thousands)	For the three months ended							For the nine months ended
Details about AOCI (1) components	September 30, 2019			September 30, 2018			Affected Line Item in the Statement of Income	September 30, 2019			September 30, 2018
Retirement plan items
Retirement plan net losses    recognized in plan expenses (2)	$	(84	)	$	(43	)	Salaries and employee benefits	$	(252	)	$	(129	)
Tax effect		17			12		Provision for income taxes		54			34
	$	(67	)	$	(31	)	Net Income	$	(198	)	$	(95	)
Available-for-sale securities
Realized gain (loss) on sale of securities	$	121		$	(60	)	Net gains (losses) on sales and redemptions    of investment securities	$	232		$	(189	)
Tax effect		(25	)		16		Provision for income taxes		(49	)		49
	$	96		$	(44	)	Net Income	$	183		$	(140	)

(1) Amounts in parentheses indicates debits in net income.

(2) These items are included in net periodic pension cost.

See Note 5 for additional information.

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Note 13: Noninterest Income

The Company has included the following table regarding the Company’s noninterest income for the periods presented.

	For the three months					For the nine months
	ended September 30,					ended September 30,
(In thousands)	2019		2018			2019		2018
Service fees
Insufficient funds fees	$	347	$	218		$	827	$	618
Deposit related fees		28		49			133		148
ATM fees		24		24			69		72
Total service fees		399		291			1,029		838
Fee Income
Insurance commissions		168		172			620		632
Investment services revenue		58		70			203		218
ATM fees surcharge		68		71			173		178
Banking house rents collected		32		34			100		100
Total fee income		326		347			1,096		1,128
Card income
Debit card interchange fees		166		141			497		432
Merchant card fees		21		21			58		54
Total card income		187		162			555		486
Mortgage fee income and realized gain on sale of loans   and foreclosed real estate
Loan servicing fees		57		25			144		108
Net gains on sales of loans and foreclosed real estate		38		8			43		24
Total mortgage fee income and realized gain on sale of    loans and foreclosed real estate		95		33			187		132
Total		1,007		833			2,867		2,584
Earnings and gain on bank owned life insurance		133		138			355		319
Net gains (losses) on sales and redemptions of investment    securities		121		(60	)		232		(189	)
Gains on marketable equity securities		4		-			61		26
Other miscellaneous income		21		29			83		119
Total noninterest income	$	1,286	$	940		$	3,598	$	2,859

The following is a discussion of key revenues within the scope of the new revenue guidance:

• Service fees – Revenue is earned through insufficient funds fees, customer initiated activities or passage of time for deposit related fees, and ATM service fees. Transaction-based fees are recognized at the time the transaction is executed, which is the same time the Company’s performance obligation is satisfied.  Account maintenance fees are earned over the course of the month as the monthly maintenance performance obligation to the customer is satisfied.

• Fee income – Revenue is earned through commissions on insurance and securities sales, ATM surcharge fees, and banking house rents collected.  The Company earns investment advisory fee income by providing investment management services to customers under investment management contracts.  As the direction of investment management accounts is provided over time, the performance obligation to investment management customers is satisfied over time, and therefore, revenue is recognized over time.    

• Card income – Card income consists of interchange fees from consumer debit card networks and other related services.  Interchange rates are set by the card networks.  Interchange fees are based on purchase volumes and other factors and are recognized as transactions occur.

• Mortgage fee income and realized gain on sale of loans and foreclosed real estate – Revenue from mortgage fee income and realized gain on sale of loans and foreclosed real estate is earned through the origination of residential

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and commercial mortgage loans, sales of one-to-four family residential mortgage loans, sales of government guarantees portions of SBA loans, and sales of foreclosed real estate, and is earned as the transaction occurs.

Note 14: Leases

The Company has operating and finance leases for certain banking offices and land under noncancelable agreements.  Our leases have remaining lease terms that vary from less than one year up to 31 years, some of which include options to extend the leases for various renewal periods.  All options to renew are included in the current lease term when we believe it is reasonably certain that the renewal options will be exercised.

The Company elected to adopt the transition relief under Topic 842, Leases, using the modified retrospective transition method.  The periods presented prior to January 1, 2019 continue to be in accordance with ASC 840.

The components of the lease expense are as follows:

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Operating lease cost	$	61	$	180
Finance lease cost		20		32

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Cash paid for amount included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	55	$	159
Operating cash flows from finance leases		20		32
Financing cash flows from finance leases		17		28

Supplemental balance sheet information related to leases was as follows:

	September 30,
(In thousands, except lease term and discount rate)	2019
Operating Leases:
Operating lease right-of-use assets	$	2,422
Operating lease liabilities	$	2,681
Finance Leases:
Financial Liability	$	576
Weighted Average Remaining Lease Term:
Operating Leases	19.71 years
Finance Leases	29.67 years
Weighted Average Discount Rate:
Operating Leases		3.71	%
Finance Leases		13.75	%

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Maturities of lease liabilities were as follows:

Years Ending September 30,
(In thousands)
2020	$	117
2021		104
2022		97
2023		107
2024		116
Thereafter		2,716
Total minimum lease payments	$	3,257

The Company owns certain properties that it leases to unaffiliated third parties at market rates.  Lease rental income was $32,000 and $34,000 for the three months ended September 30, 2019 and 2018, respectively.  Lease rental income was $100,000 for both the nine months ended September 30, 2019 and 2018.  All lease agreements, in which the Company is the lessor, are accounted for as operating leases.  The Company has no unamortized initial direct costs related to the establishment of these lease agreements at January 1, 2019.

Note 15: Subsequent Events

On November 7, 2019, the Bank acquired $25.1 million of loans originated by an unrelated financial technology company, located outside of the Bank’s market area.  The acquired loan pool represents a 55.9% participating interest in a total of 2,787 unsecured consumer loans with maturities ranging primarily from three to five years. These loans will be serviced through their respective maturities by the originating financial technology company.  

The Company’s management routinely evaluates the overall characteristics of its loan portfolio.  Such evaluations may include analyses of certain loans for potential sales to unaffiliated third parties.  Loan sales may be made in response to a variety of factors such as changes in market conditions or changes in the level of certain loan-type concentrations.  Such sales, if executed, would typically be made in order to improve certain characteristics within the overall loan portfolio, viewed individually or in combination, related to factors such as cash flow, liquidity, duration or potential interest rate risk.  As of the date of the issuance of this filing, the Company was in the process of evaluating the sale of certain conforming 30-year loans that have been held in portfolio for the past two-to-five years.  The sale of loans of this type would typically reduce the overall duration of the loan portfolio and would, therefore, generally reduce the Company’s exposure to the effects of rising interest rates. As of the date of this filing, no decision has been made to sell the loans currently being evaluated.  The amount of any potential sale, the expected gain or loss on such a sale, or the potential effects on future earnings of such a sale has not been determined.

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)

General

The Company is a Maryland corporation headquartered in Oswego, New York.  The Company is 100% owned by public shareholders.  The primary business of the Company is its investment in Pathfinder Bank (the "Bank"), a New York State chartered commercial bank, which is 100% owned by the Company.  The Bank has two wholly owned operating subsidiaries, Pathfinder Risk Management Company, Inc. (“PRMC”) and Whispering Oaks Development Corp. All significant inter-company accounts and activity have been eliminated in consolidation.  Although the Company owns, through its subsidiary PRMC, 51% of the membership interest in FitzGibbons Agency, LLC (“Agency”), the Company is required to consolidate 100% of FitzGibbons within the consolidated financial statements.  The 49% of which the Company does not own is accounted for separately as a noncontrolling interest within the consolidated financial statements.  At September 30, 2019, the Company and subsidiaries had total consolidated assets of $1.1 billion, total consolidated liabilities of $966.9 million and shareholders' equity of $89.0 million plus noncontrolling interest of $229,000, which represents the 49% of FitzGibbons not owned by the Company.

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The following discussion reviews the Company's financial condition at September 30, 2019 and the results of operations for the three and nine month periods ended September 30, 2019 and 2018.Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or any other period.

The following material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" is written with the presumption that the users of the interim financial statements have read, or have access to, the Company's latest audited financial statements and notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results of Operations included in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2019 (“the consolidated annual financial statements”) as of December 31, 2018 and 2017 and for the two years then ended.  Therefore, only material changes in financial condition and results of operations are discussed in the remainder of Item 2.

Statement Regarding Forward-Looking Statements

This report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to:

• Credit quality and the effect of credit quality on the adequacy of our allowance for loan losses;

• Deterioration in financial markets that may result in impairment charges relating to our securities portfolio;

• Competition in our primary market areas;

• Changes in interest rates and national or regional economic conditions;

• Changes in monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board;

• Significant government regulations, legislation and potential changes thereto;

• A reduction in our ability to generate or originate revenue-producing assets as a result of compliance with heightened capital standards;

• Increased cost of operations due to greater regulatory oversight, supervision and examination of banks and bank holding companies, and higher deposit insurance premiums;

• Cyberattacks, computer viruses and other technological threats that may breach the security of our websites or other systems;

• Technological changes that may be more difficult or expensive than expected;

• Limitations on our ability to expand consumer product and service offerings due to anticipated stricter consumer protection laws and regulations; and

• Other risks described herein and in the other reports and statements we file with the SEC.

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.

Application of Critical Accounting Policies

The Company's consolidated annual financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated annual financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and, as such, have a greater possibility of producing results that could be

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materially different than originally reported.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by unaffiliated third-party sources, when available.  When third party information is not available, valuation adjustments are estimated in good faith by management.

The most significant accounting policies followed by the Company are presented in Note 1 to the annual audited consolidated financial statements.  These policies, along with the disclosures presented in the other financial statement notes and in this discussion, provide information on how significant assets and liabilities are valued in the consolidated annual financial statements and how those values are determined.  Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the allowance for loan losses, deferred income taxes, pension obligations, the evaluation of investment securities for other than temporary impairment, the estimation of fair values for accounting and disclosure purposes, and the evaluation of goodwill for impairment to be the accounting areas that require the most subjective and complex judgments.  These areas could be the most subject to revision as new information becomes available.

The allowance for loan losses represents management's estimate of probable loan losses inherent in the loan portfolio.  Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment on the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change.

Our Allowance for Loan and Lease Losses policy establishes criteria for selecting loans to be measured for impairment based on the following:

Residential and Consumer Loans:

• All loans rated substandard or worse, on nonaccrual, and above our total related credit (“TRC”) threshold balance of $300,000.

• All Troubled Debt Restructured Loans

Commercial Lines and Loans, Commercial Real Estate and Tax-exempt loans:

• All loans rated substandard or worse, on nonaccrual, and above our TRC threshold balance of $100,000.

• All Troubled Debt Restructured Loans  

Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses as compared to the loan carrying value.  For all other loans and leases, the Company uses the general allocation methodology that establishes an allowance to estimate the probable incurred loss for each risk-rating category.  

Deferred income tax assets and liabilities are determined using the liability method.  Under this method, the net deferred tax asset or liability is recognized for the future tax consequences.  This is attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases as well as net operating and capital loss carry forwards.  Deferred tax assets and liabilities are measured using enacted tax rates applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income tax expense in the period that includes the enactment date.  If current available evidence about the future raises doubt about the likelihood of a deferred tax asset being realized, a valuation allowance is established.  The judgment about the level of future taxable income, including that which is considered capital, is inherently subjective and is reviewed on a continual basis as regulatory and business factors change.  In the quarter ended March 31, 2019, the Company established, through a charge to earnings, a valuation allowance in the amount of $136,000 in order to reserve against deferred tax assets related to New York State income taxes.  Effective in January 2018, the Company adopted a modification methodology, made available following changes

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to the New York State tax code, effecting how the Company’s state income tax liability is computed.  Under this adopted methodology, it is unlikely that the Company will pay income taxes to New York in future periods and it is therefore probable that the Company’s deferred tax assets related to New York State income taxes are unlikely to further reduce the Company’s state income tax rate in the future.  Accordingly, a valuation allowance against the value of those deferred tax assets was established to reduce the net deferred tax asset related to New York income taxes to $-0-.  At September 30, 2019, the Company had a valuation allowance of $77,000 established against the future projected benefits of deferred tax assets related to New York State income tax obligations. There were no valuation allowances against deferred tax assets at December 31, 2018.  The Company’s effective tax rate typically differs from the 21% federal statutory tax rate due primarily to tax-exempt income from specific types of investment securities and loans, bank owned life insurance, and, to a much lesser degree, the utilization of low income housing tax credits. These factors, which typically lower the effective tax rate for the Company, were offset by the establishment of the valuation allowance described above resulting in an effective tax rate of 23.7% for the nine months ended September 30, 2019.

We maintain a noncontributory defined benefit pension plan covering most employees. The plan provides defined benefits based on years of service and final average salary. On May 14, 2012, we informed our employees of our decision to freeze participation and benefit accruals under the plan, primarily to reduce some of the volatility in earnings that can accompany the maintenance of a defined benefit plan.  Pension and post-retirement benefit plan liabilities and expenses are based upon actuarial assumptions of future events; including fair value of plan assets, interest rates, and the length of time the Company will have to provide those benefits.  The assumptions used by management are discussed in Note 14 to the consolidated annual financial statements.  

The Company carries all of its available-for-sale investments at fair value with any unrealized gains or losses reported, net of tax, as an adjustment to shareholders' equity and included in accumulated other comprehensive income (loss), except for the credit-related portion of debt securities impairment losses and OTTI of equity securities which are charged to earnings.  The Company's ability to fully realize the value of its investments in various securities, including corporate debt securities, is dependent on the underlying creditworthiness of the issuing organization.  In evaluating the debt securities (both available-for-sale and held-to-maturity) portfolio for other-than-temporary impairment losses, management considers (1) if we intend to sell the security; (2) if it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) if the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. When the fair value of a held-to-maturity or available-for-sale security is less than its amortized cost basis, an assessment is made as to whether OTTI is present.  The Company considers numerous factors when determining whether a potential OTTI exists and the period over which the debt security is expected to recover.  The principal factors considered are (1) the length of time and the extent to which the fair value has been less than the amortized cost basis, (2) the financial condition of the issue and (guarantor, if any) and adverse conditions specifically related to the security, industry or geographic area, (3) failure of the issuer of the security to make scheduled interest or principal payments, (4) any changes to the rating of the security by a NRSRO, and (5) the presence of credit enhancements, if any, including the guarantee of the federal government or any of its agencies.

The estimation of fair value is significant to several of our assets; including loans, available-for-sale and marketable equity investment securities, intangible assets, foreclosed real estate, and the value of loan collateral when valuing impaired loans.  These are all recorded at either fair value, or the lower of cost or fair value. Fair values are determined based on third party sources, when available.  Furthermore, accounting principles generally accepted in the United States require disclosure of the fair value of financial instruments as a part of the notes to the annual audited consolidated financial statements.  Fair values on our available-for-sale securities may be influenced by a number of factors; including market interest rates, prepayment speeds, discount rates, and the shape of yield curves.

Fair values for securities available-for-sale are obtained from unaffiliated third party pricing services.  Where available, fair values are based on quoted prices on a nationally recognized securities exchange.  If quoted prices are not available, fair values are measured using quoted market prices for similar benchmark securities. Management made no adjustments to the fair value quotes that were provided by the pricing sources.  Fair values for marketable equity securities are based on quoted prices on a nationally recognized securities exchange for similar benchmark securities.  The fair values of foreclosed real estate and the underlying collateral value of impaired loans are typically determined based on evaluations by third parties, less estimated costs to sell.  When necessary, appraisals are updated to reflect changes in market conditions.

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Management performs an annual evaluation of our goodwill for possible impairment at each of our reporting units. Based on the results of the December 31, 2018 evaluation, management has determined that the carrying value of goodwill was not impaired as of that date. The evaluation approach is described in Note 10 of the consolidated annual financial statements. Further information on the estimation of fair values can be found in Note 22 to the consolidated annual financial statements.

Recent Events

On September 23, 2019, the Company announced that its Board of Directors had declared a cash dividend of $0.06 per common and preferred share, payable to shareholders of record as of October 18, 2019 on November 8, 2019.  

Overview and Results of Operations

The following represents the significant highlights of the Company’s operating results between the third quarter of 2019 and the third quarter of 2018.

• Total net income increased $310,000, or 31.5%, to $1.3 million.

• Basic and diluted earnings per share both decreased $0.01 to $0.22.

• Return on average assets increased by seven basis points to 0.51% as the increase in the Company’s net income slightly outpaced the increase in average assets.

• Net interest income, after provision for loan losses, increased $500,000, or 8.2%, to $6.6 million.  Excluding the provision, net interest income increased $809,000, or 12.7%, to $7.2 million. This increase in net interest income was primarily due to the increase in average balances of interest earning assets, accompanied by an increase in the average yield earned on interest-earning assets.  

• Net interest margin decreased by one basis point to 3.01%, primarily as a result of a $112.0 million increase in the average balance of time deposits, coupled with a 58 basis point increase in the average rate paid on time deposits. The increases in the average rates paid on time deposits reflected the competitive environment for such deposits within the Company’s marketplace as well as a general increase in short-term interest rates nationally.  

• The effective income tax rate increased 6.3% to 19.9% for the three months ended September 30, 2019 as compared to 13.6% for the same three month period in 2018.  The increase was primarily related to the tax benefit recognized related to the cashless exercise of incentive stock options in the prior year quarter.

The following represents significant highlights of the Company’s operating results between the first nine months of 2019 and the first nine months of 2018.

•Net income decreased $518,000, or 17.7%, to $2.4 million.

• Basic and diluted earnings per share were both $0.47 per share and decreased $0.24 per share and $0.22 per share, respectively.

• Return on average assets decreased 11 basis points to 0.33% between the year-over-year nine month periods as net income (the numerator of the ratio) decreased by $518,000, or 17.7%, resulting in a seven basis point decrease in the return on average assets between the year-over-year nine month periods.  Further, average assets (the denominator of the ratio) grew $95.8 million, or 10.8%, resulting in a four basis point decrease in the return on average assets between the year-over-year nine month periods.  

• Net interest income, after provision for loan losses, increased by $1.0 million, or 5.8%, to $19.1 million.  This increase in earnings was primarily due to the increase in average balances of interest earning assets, accompanied by an increase in the average yield earned on interest-earning assets.

• Net interest margin decreased by nine basis points to 2.94%, primarily as a result of a $117.5 million increase in the average balance of time deposits, coupled with a 76 basis point increase in the average rate paid on time deposits.  The increases in the average rates paid on time deposits reflected the competitive environment for such deposits within the Company’s marketplace as well as a general increase in short-term interest rates nationally.    

• The effective income tax rate increased 9.1% to 23.7% for the nine months ended September 30, 2019 as compared to 14.6% for the same nine month period in 2018.  This increase was primarily related to the nonrecurring establishment, through a charge to earnings, of a $136,000 valuation allowance to reserve against deferred tax assets related to New York State income taxes.  Excluding the nonrecurring charge, the increase in

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income tax expense and the effective tax rate in the first nine months of 2019, as compared to the previous period, was primarily attributable to the recognition of tax benefits of $115,000 in the first nine months of 2018 that resulted from the cashless exercise of incentive stock options by certain executives of the Company.  

The following reflects the significant changes in financial condition between the periods of December 31, 2018 and September 30, 2019.  In addition, the following reflects significant changes in asset quality metrics between September 30, 2018 and September 30, 2019.

• Total assets increased $123.0 million, or 13.2% to $1.1 billion at September 30, 2019, as compared to December 31, 2018, primarily due to increases in loans, cash and cash equivalents, and investment securities.  These increases were funded largely by increases in deposits, including brokered deposits, as well as the cash flow from the sale and maturity of investment securities.

• Asset quality metrics remained stable in comparison to recent reporting periods. The Company’s consistent asset quality metrics are reflective of its disciplined risk management process, along with the relative economic stability of its Central New York State market area.  The annualized net loan charge-offs to average loans ratio was 0.07% for the third quarter of 2019, compared to 0.12% for the third quarter of 2018, and 0.22% for the fourth quarter of 2018.  Nonperforming loans to total loans decreased two basis points to 0.73% at September 30, 2019, compared to 0.75% at September 30, 2018. Nonperforming loans to total loans increased 38 basis points to 0.73% at September 30, 2019, compared to 0.35% at December 31, 2018. Correspondingly, the ratio of the allowance for loan losses to nonperforming loans at September 30, 2019 was 156.43%, as compared to 167.72% at September 30, 2018, and 340.13% at December 31, 2018.

The Company had net income of $1.3 million for the three months ended September 30, 2019 compared to net income of $985,000 for the three months ended September 30, 2018. The $310,000 increase in net income was due primarily to a $1.9 million increase in interest and dividend income and a $346,000 increase in noninterest income.  The increase in net income was partially offset by a $1.1 million increase in interest expense, a $370,000 increase in noninterest expenses, and a $309,000 increase in the provisions for loans losses.  

Net interest income before the provision for loan losses increased $809,000, or 12.7%, to $7.2 million for the three months ended September 30, 2019 as compared to $6.4 million for the same three month period in 2018.  The increase was primarily the result of the increase in average interest-earning asset balances due to increases in average loans and average taxable investment securities.  The positive effects of increased average interest-earning assets for the three months ended September 30, 2019, as compared to the same three month period in 2018, were also enhanced by an increase in the average yield of interest-earning assets of 31 basis points to 4.47% for the three months ended September 30, 2019 from 4.16% for the same three month period of the previous year. These positive factors on net interest income were partially offset by an increase in the average balance of interest-bearing liabilities of $91.5 million, or 12.6%, and an increase of 39 basis points on the average interest rate paid on those liabilities.

The $346,000, or 36.8%, increase in noninterest income in the quarter ended September 30, 2019, as compared to the same quarterly period in 2018, was primarily the result of a $181,000 net increase in the net gains on the sales and redemptions of investment securities, from a loss of $60,000 for the three months ended September 30, 2018 to a net gain of $121,000 for the same quarter in 2019.  The investment securities sales were part of the Company’s portfolio optimization and liquidity management strategies. It is the intention of management to reinvest the proceeds of these investment securities sales into potentially higher yielding interest-earning assets in future periods.   Further contributing to the increase in noninterest income was a $108,000 increase on service charges on deposit accounts and a $32,000 increase in loan servicing fees. All other noninterest income categories increased by an aggregate $25,000, or 3.7% in the quarter ended September 30, 2019 as compared to the prior year quarter.

The $370,000, or 6.3%, increase in noninterest expense in the quarter ended September 30, 2019, as compared to the same quarterly period in 2018, was primarily a result of a $98,000 increase in building and occupancy costs, a $95,000 increase in data processing charges, an $84,000 increase in salaries and employee benefits expense, and an $80,000 increase in advertising expense.   The increase in building and occupancy costs and data processing charges were partially due to expenses related to our new banking location in Onondaga County.  These increases are consistent with branch and operational growth.    The increase in salaries and employee benefits expense reflected an increase in staffing levels intended to meet increased loan demand and to better serve customers and potential customers as the Bank’s operations

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continue to expand primarily into Onondaga County, New York. Advertising expense increasedprimarily as the result of increases in the level of brand awareness advertising expenditures primarily focused on the Onondaga County market.  All other noninterest expense categories increased $13,000, or 1.1%, in aggregate during the quarter ended September 30, 2019, as compared to the same three month period in 2018.

In comparing the year-over-year third quarter periods, the return on average assets increased seven basis points to 0.51% due to the effects of the increase in net income (the numerator in the ratio), partially offset by the increase in average assets (the denominator in the ratio).  Average assets increased due to increases in average loans and average taxable investment securities of $93.4 million and $40.2 million, respectively, in the third quarter of 2019 as compared to the same quarter of 2018.  Average interest-bearing deposits increased $89.9 million in the third quarter of 2019, as compared with the same quarter in 2018.  The increase in deposits was the result of organic growth within our existing marketplace coupled with targeted promotions for our time deposit products.

The Company had net income of $2.4 million for the nine months ended September 30, 2019 compared to net income of $2.9 million for the nine months ended September 30, 2018.  The $518,000 decrease in net income was due primarily to a $3.8 million increase in interest expense, a $2.0 million increase in noninterest expense, a $245,000 increase in income tax expense, and a $153,000 increase in the provision for loan losses. The increase expenses were partially offset by an increase of $5.0 million in interest and dividend income and a $739,000 increase in noninterest income.

Net interest income before the provision for loan losses increased $1.2 million, or 6.2%, to $20.5 million for the nine months ended September 30, 2019 as compared to the same nine month period in the previous year.  The increase was a result of the increase in average balances on loans and taxable investment securities and an increase in the average yield earned on those balances, partially offset by an increase in the average balance and average cost of interest-bearing liabilities between the year-over-year nine month periods.

The $739,000, or 25.8%, increase in noninterest income in the nine months ended September 30, 2019, as compared to the same nine month period in 2018, was primarily the result of a net increase of $421,000 in the net gains on the sales and redemptions of investment securities from a loss of $189,000 for the nine months ended September 30, 2018 to a net gain of $232,000 for the same nine month period in 2019. The investment securities sales were part of the Company’s portfolio optimization and liquidity management strategies. It is the intention of management to reinvest the proceeds of these investment securities sales into potentially higher yielding interest-earning assets in future periods.  Also contributing to the increase in noninterest income was service charges on deposit accounts, debit interchange fees, earnings and gain on bank owned life insurance, and loan servicing fees, which increased $191,000, $65,000, $36,000, and $36,000, respectively. All other noninterest income categories decreased by $10,000, or 0.7%, in the nine months ended September 30, 2019 as compared to the prior year period.

The $2.0 million, or 11.6%, increase in noninterest expense was due primarily to an increase of $998,000, or 10.6%, in salary and employee benefits expense that reflected, in part, approximately $170,000 in one-time employee severance payments and $217,000 in reduced accrued earnings from the Company’s defined benefit pension plan (due primarily to market value declines in the Company’s pension assets at December 31, 2018).  The remainder of the year-over-year increase in salary and employee benefits expense of $611,000 was primarily due to increases in staffing levels intended to meet increased loan demand and to better serve customers and potential customers as the Bank’s operations continue to expand into Onondaga County. In addition, data processing costs, building and occupancy costs, and foreclosed real estate expenses increased $345,000, $297,000, and $231,000, respectively. The increase in data processing and building and occupancy costs were partially due to expenses related to our new banking location in Onondaga County.  Foreclosed real estate expenses increased due to expenses related to the final disposition of a single foreclosed commercial property. All other noninterest expense categories increased $163,000, or 3.3%, in aggregate for the nine month period ended September 30, 2019, as compared to the same nine month period in 2018.

Return on average assets decreased 11 basis points to 0.33% between the year-over-year nine month periods as net income (the numerator of the ratio) decreased by $518,000, or 17.7%, resulting in a seven basis point decrease in the return on average assets between the year-over-year nine month periods.  Further, average assets (the denominator of the ratio) grew $95.8 million, or 10.8%, resulting in a four basis point decrease in the return on average assets between the year-over-year nine month periods.

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For the three months ended September 30, 2019, we recorded $600,000 in provision for loan losses as compared to $291,000 in the same prior year three month period.  This $309,000 increase in the provision for the three month period is reflective of continued significant growth in the Bank’s commercial and consumer lending portfolios, as well as changes to both quantitative and environmental factors deemed appropriate for the Bank’s loan portfolio. Average loan balances increased $93.4 million, or 15.2%, in the third quarter of 2019 as compared with the same quarter of 2018.

For the first nine months of 2019, we recorded $1.4 million in provision for loan losses as compared to $1.2 million in the same prior year nine month period.  This $153,000 increase in the provision for loan losses was reflective of continued significant growth in the Bank’s commercial and consumer lending portfolios. Average loan balances increased $64.5 million, or 10.7%, from September 30, 2019 as compared with the same prior year period.

Net Interest Income

Net interest income is the Company's primary source of operating income for payment of operating expenses and providing for loan losses.  It is the amount by which interest earned on loans, interest-earning deposits, and investment securities, exceeds the interest paid on deposits and other interest-bearing liabilities.  Changes in net interest income and net interest margin result from the interaction between the volume and composition of interest-earning assets, interest-bearing liabilities, related yields, and associated funding costs.

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The following tables set forth information concerning average interest-earning assets and interest-bearing liabilities and the average yields and rates thereon for the periods indicated.  Interest income and resultant yield information in the tables has not been adjusted for tax equivalency.  Averages are computed on the daily average balance for each month in the period divided by the number of days in the period. Yields and amounts earned include loan fees. Nonaccrual loans have been included in interest-earning assets for purposes of these calculations.

	For the three months ended September 30,
	2019								2018
						Average								Average
	Average					Yield /			Average					Yield /
(Dollars in thousands)	Balance			Interest		Cost			Balance			Interest		Cost
Interest-earning assets:
Loans	$	707,250		$	8,817		4.99	%	$	613,889		$	7,213		4.70	%
Taxable investment securities		235,095			1,833		3.12	%		194,925			1,409		2.89	%
Tax-exempt investment securities		1,710			11		2.57	%		23,568			143		2.43	%
Fed funds sold and interest-earning deposits		17,039			72		1.69	%		16,921			65		1.54	%
Total interest-earning assets		961,094			10,733		4.47	%		849,303			8,830		4.16	%
Noninterest-earning assets:
Other assets		68,095								59,232
Allowance for loan losses		(7,980	)							(7,721	)
Net unrealized losses    on available-for-sale securities		(9	)							(4,273	)
Total assets	$	1,021,200							$	896,541
Interest-bearing liabilities:
NOW accounts	$	66,189		$	34		0.21	%	$	67,203		$	30		0.18	%
Money management accounts		13,538			5		0.15	%		13,117			5		0.15	%
MMDA accounts		197,309			521		1.06	%		218,866			583		1.07	%
Savings and club accounts		83,696			25		0.12	%		83,620			21		0.10	%
Time deposits		367,271			2,260		2.46	%		255,267			1,200		1.88	%
Subordinated loans		15,114			216		5.72	%		15,079			216		5.73	%
Borrowings		73,350			467		2.55	%		71,807			379		2.11	%
Total interest-bearing liabilities		816,467			3,528		1.73	%		724,959			2,434		1.34	%
Noninterest-bearing liabilities:
Demand deposits		103,698								100,932
Other liabilities		11,762								6,570
Total liabilities		931,927								832,461
Shareholders' equity		89,273								64,080
Total liabilities & shareholders' equity	$	1,021,200							$	896,541
Net interest income				$	7,205							$	6,396
Net interest rate spread							2.74	%							2.82	%
Net interest margin							3.00	%							3.01	%
Ratio of average interest-earning assets    to average interest-bearing liabilities							117.71	%							117.15	%

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	For the nine months ended September 30,
	2019								2018
						Average								Average
	Average					Yield /			Average					Yield /
(Dollars in thousands)	Balance			Interest		Cost			Balance			Interest		Cost
Interest-earning assets:
Loans	$	669,457		$	24,614		4.90	%	$	604,987		$	20,949		4.62	%
Taxable investment securities		229,455			5,438		3.16	%		194,133			3,837		2.64	%
Tax-exempt investment securities		9,793			170		2.31	%		31,521			608		2.57	%
Fed funds sold and interest-earning deposits		19,924			288		1.93	%		15,345			161		1.40	%
Total interest-earning assets		928,629			30,510		4.38	%		845,986			25,555		4.03	%
Noninterest-earning assets:
Other assets		67,237								56,033
Allowance for loan losses		(7,545	)							(7,458	)
Net unrealized (losses)    on available for sale securities		(1,640	)							(3,666	)
Total assets	$	986,681							$	890,895
Interest-bearing liabilities:
NOW accounts	$	67,984		$	90		0.18	%	$	67,741		$	83		0.16	%
Money management accounts		13,725			15		0.15	%		13,865			16		0.15	%
MMDA accounts		186,434			1,350		0.97	%		241,363			1,654		0.91	%
Savings and club accounts		84,423			75		0.12	%		83,806			64		0.10	%
Time deposits		352,827			6,400		2.42	%		235,347			2,933		1.66	%
Subordinated loans		15,103			650		5.74	%		15,071			629		5.56	%
Borrowings		77,228			1,472		2.54	%		68,608			920		1.79	%
Total interest-bearing liabilities		797,724			10,052		1.68	%		725,801			6,299		1.16	%
Noninterest-bearing liabilities:
Demand deposits		102,228								95,542
Other liabilities		10,135								6,166
Total liabilities		910,087								827,509
Shareholders' equity		76,594								63,386
Total liabilities & shareholders' equity	$	986,681							$	890,895
Net interest income				$	20,458							$	19,256
Net interest rate spread							2.70	%							2.87	%
Net interest margin							2.94	%							3.03	%
Ratio of average interest-earning assets    to average interest-bearing liabilities							116.41	%							116.56	%

As indicated in the above tables, net interest income, before provision for loan losses, increased $809,000, or 12.7%, to $7.2 million for the three months ended September 30, 2019 as compared to $6.4 million for the same prior year period.  This increase was due principally to the $111.8 million, or 13.2%, increase in the average balance of interest-earning assets, and an increase of 31 basis points on the average yield earned on those assets.  These positive factors on net interest income were partially offset by an increase in the average balance of interest-bearing liabilities of $91.5 million, or 12.6%, and an increase of 39 basis points on the average interest rate paid on those liabilities.   In total, net interest margin decreased one basis point to 3.00% due largely to the increase in rates paid on average interest-bearing liabilities, as noted above.  The following analysis should also be viewed in conjunction with the table below which reports the changes in net interest income attributable to rate and volume.

Interest and dividend income increased $1.9 million, or 21.6%, to $10.7 million for the three months ended September 30, 2019 compared to $8.8 million for the same three month period in 2018.  The increase in interest and dividend income was due principally to the increase in average interest-earning assets (primarily loans and taxable investment securities), which increased between the year-over-year third quarter periods by $133.5 million, or 16.5%.  The increase in the average balance of loans reflected the Company’s continued success in its expansion within the greater Syracuse, New York market. Further supporting the quarter-over-quarter increase in interest income, the average yield on the loans and taxable investment portfolio improved 29 basis points to 4.99% and 23 basis points to 3.12%, respectively.  This increase

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in the average yield on loans was the result of new loan production being added to the loan portfolio at rates slightly higher than the average yields of the previously existing portfolio.  The increase in the average yield on taxable investment securities was the result of an increase in book yields on adjustable-rate securities and the purchase of new securities, often with longer durations or more credit risk exposure, at rates higher than the average yields of securities within the previously-existing portfolio whose balances continue to be reduced by amortization and maturities.  

Interest expense for the three months ended September 30, 2019 increased $1.1 million, or 45.0%, to $3.5 million when compared to the same prior year period.  Deposit interest expense increased $1.0 million, or 54.7%, to $2.8 million due to an $89.9 million increase in the average balance of interest-bearing deposits accompanied by a 41 basis point increase in the average annualized rate paid on these deposits to 1.56% for the three months ended September 30, 2019, as compared with the same three month period in 2018. This increase in the average rate was primarily due to a 58 basis point increase in the average rate paid on time deposits, during the three months ended September 30, 2019 as compared to the same three month period in 2018.  The increase in the average rate paid on time deposits reflected the competitive environment for such deposits within the Company’s marketplace. Further contributing to the increase in interest expense was an $88,000 increase in borrowings expense, which increased due to a $1.5 million increase in the average balance of borrowings.  

For the nine month period ended September 30, 2019, net interest income, before the provision for loan losses, increased $1.2 million, or 6.2%, to $20.5 million compared to $19.3 million for the nine months ended September 30, 2018.  This increase was due principally to the $82.6 million, or 9.8%, increase in the average balance of interest-earning assets, and an increase of 35 basis points on the average yield earned on those assets.  These positive factors on net interest income were partially offset by an increase in the average balance of interest-bearing liabilities of $71.9 million, or 9.9%, and an increase of 52 basis points on the average interest rate paid on those liabilities.  Interest and dividend income increased $5.0 million, or 19.4%, to $30.5 million for the nine months ended September 30, 2019 from $25.6 million for the same nine month period in 2018.  The increase in interest and dividend income was due principally to the increase in average balances of loan and taxable investment securities, which increased 10.7% and 18.2%, respectively, between the year-over-year nine month periods.  The increase in the average balance of loans reflected the Company’s continued success in its expansion within the greater Syracuse market.  These increases were also positively affected by the increase in the average yield on loans and taxable investment securities of 28 basis points to 4.90% and 52 basis points to 3.16%, respectively.  This increase in the average yield on loans was the result of new loan production being added to the loan portfolio at rates slightly higher than the average rates of the previously existing portfolio.  The increase in the average yield on taxable investment securities was the result of an increase in book yields on adjustable-rate securities and the purchase of new securities, often with longer durations or more credit risk exposure, at rates higher than the average rates of securities within the previously-existing portfolio whose balances continue to be reduced by amortization, maturities and sales.  

Interest expense for the nine months ended September 30, 2019 increased $3.8 million, or 59.6%, to $10.1 million as compared to $6.3 million for the nine months ended September 30, 2018.  The increase in interest expense was due principally to the increase in average interest-bearing liabilities of $71.9 million, along with a 52 basis point increase in the average rate paid on these liabilities to 1.68%.  Deposit expense increased $3.2 million, or 66.9%. The average balance of interest-bearing deposits, which included brokered deposits, increased $63.3 million between the year-over-year nine month periods.  Deposit interest expense increased 51 basis points to 1.50% for the nine months ended September 30, 2019 as compared with the same nine month period in 2018.  This increase was primarily due to a 76 basis point increase in the average rate paid on time deposits, during the nine months ended September 30, 2019 as compared to the same time period in 2018.  The increase in rates paid on those deposits reflected the competitive environment for such deposits within the Company’s marketplace. Further contributing to the increase in interest expense was a $552,000 increase in borrowings expense, which increased due to an $8.6 million increase in the average balance of borrowings.    

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Rate/Volume Analysis

Net interest income can also be analyzed in terms of the impact of changing interest rates on interest-earning assets and interest-bearing liabilities and changes in the volume or amount of these assets and liabilities. The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volume (change in volume multiplied by prior rate); (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) total increase or decrease.  Changes attributable to both rate and volume have been allocated ratably.

	Three months ended September 30,									Nine months ended September 30,
	2019 vs. 2018									2019 vs. 2018
	Increase/(Decrease) Due to									Increase/(Decrease) Due to
							Total									Total
							Increase									Increase
(In thousands)	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
Interest Income:
Loans	$	1,145		$	459		$	1,604		$	2,320		$	1,345		$	3,665
Taxable investment securities		307			117			424			765			836			1,601
Tax-exempt investment securities		(189	)		57			(132	)		(382	)		(56	)		(438	)
Interest-earning deposits		-			7			7			56			71			127
Total interest income		1,263			640			1,903			2,759			2,196			4,955
Interest Expense:
NOW accounts		(3	)		7			4			-			7			7
Money management accounts		1			(1	)		-			-			(1	)		(1	)
MMDA accounts		(57	)		(5	)		(62	)		(444	)		140			(304	)
Savings and club accounts		-			4			4			-			11			11
Time deposits		622			438			1,060			1,813			1,654			3,467
Subordinated loans		2			(2	)		-			1			20			21
Borrowings		8			80			88			127			425			552
Total interest expense		573			521			1,094			1,497			2,256			3,753
Net change in net interest income	$	690		$	119		$	809		$	1,262		$	(60	)	$	1,202

Provision for Loan Losses

We establish a provision for loan losses, which is charged to operations, at a level management believes is appropriate to absorb probable incurred credit losses in the loan portfolio.  In evaluating the level of the allowance for loan losses, management considers historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. The provision for loan losses represents management’s estimate of the amount necessary to maintain the allowance for loan losses at an adequate level.  

Management extensively reviews recent trends in historical losses, qualitative factors and specific reserve needs on loans individually evaluated for impairment in its determination of the adequacy of the allowance for loan losses. We recorded $600,000 in provision for loan losses for the three month period ended September 30, 2019, as compared to $291,000 for the three month period ended September 30, 2018.  The $309,000 increase in the provision for the three month period is reflective of continued significant growth in the Bank’s commercial and consumer lending portfolios, as well as changes to both quantitative and environmental factors deemed appropriate for the Bank’s loan portfolio. Average loan balances increased $93.4 million, or 15.2%, in the third quarter of 2019 as compared with the same quarter of 2018.  

For the first nine months of 2019, we recorded $1.4 million in provision for loan losses as compared to $1.2 million in the same prior year nine month period.  The $153,000 increase in the provision for loan losses was reflective of continued significant growth in the Bank’s commercial and consumer lending portfolio. Average loan balances increased $64.5 million, or 10.7%, in the first nine months of 2019 as compared with the same prior year period.  

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The Company measures delinquency based on the amount of past due loans as a percentage of total loans.  The ratio of delinquent loans to total loans decreased to 1.36% at September 30, 2019 as compared to 1.81% at December 31, 2018.  Delinquent loans (numerator) decreased $1.3 million while total loan balances (denominator) increased $105.4 million at September 30, 2019, as compared to December 31, 2018.  The decrease in past due loans was primarily driven by a decrease of $5.3 million in loans delinquent 30-59 days.  This was partially offset by an increase of $3.2 million in loans delinquent more than 90 days and a $716,000 increase in loans delinquent 60-89 days.  The decrease in loans 30-59 days past due at September 30, 2019 as compared to December 31, 2018 was primarily due to eight commercial real estate loans totaling $4.2 million and six commercial lines of credit totaling $1.0 million, which were no longer 30-59 days delinquent at September 30, 2019.   The increase in loans delinquent 90 days or more at September 30, 2019 as compared to December 31, 2018 was primarily due to the addition of seven commercial real estate loans totaling $2.5 million and six other commercial and industrial loans totaling $590,000.  The increase in loans 60-89 days past due at September 30, 2019 as compared to December 31, 2018 was primarily due to the addition of four other commercial and industrial loans totaling $384,000 and a $270,000 increase in residential loans 60-89 days past due.  

At September 30, 2019, there were $9.8 million in loans past due including $2.8 million in loans 30-59 days past due, $1.8 million in loans 60-89 days past due and $5.2 million in loans 90 or more days past due.  At December 31, 2018, there were $11.2 million in loans past due, including $8.1 million in loans 30-59 days past due, $1.1 million in loans 60-89 days past due and $2.0 million in loans 90 or more days past due.  

Noninterest Income

The Company's noninterest income is primarily comprised of fees on deposit account balances and transactions, loan servicing, commissions, including insurance agency commissions, and net gains on sales of securities, loans, and foreclosed real estate.  

The following table sets forth certain information on noninterest income for the periods indicated:

	Three months ended September 30,										Nine months ended September 30,
(Dollars in thousands)	2019		2018			Change					2019		2018			Change
Service charges on deposit accounts	$	399	$	291		$	108		37.1	%	$	1,029	$	838		$	191		22.8	%
Earnings and gain on bank owned life insurance		133		138			(5	)	-3.6	%		355		319			36		11.3	%
Loan servicing fees		57		25			32		128.0	%		144		108			36		33.3	%
Debit card interchange fees		166		141			25		17.7	%		497		432			65		15.0	%
Insurance agency revenue		170		174			(4	)	-2.3	%		631		639			(8	)	-1.3	%
Other charges, commissions and fees		198		223			(25	)	-11.2	%		606		662			(56	)	-8.5	%
Noninterest income before gains (losses)		1,123		992			131		13.2	%		3,262		2,998			264		8.8	%
Net gains (losses) on sales and redemptions of    investment securities		121		(60	)		181		301.7	%		232		(189	)		421		222.8	%
Gains on marketable equity securities		4		-			4		-			61		26			35		134.6	%
Net gains on sales of loans and foreclosed    real estate		38		8			30		375.0	%		43		24			19		79.2	%
Total noninterest income	$	1,286	$	940		$	346		36.8	%	$	3,598	$	2,859		$	739		25.8	%

The $346,000 or 36.8%, increase in noninterest income in the quarter ended September 30, 2019, as compared to the same quarterly period in 2018, was partially due to the net increase of $181,000 in the net gains on the sales and redemptions of investment securities from a loss of $60,000 for the three months ended September 30, 2018 to a net gain of $121,000 for the same quarter in 2019.  The investment securities sales were part of the Company’s portfolio optimization and liquidity management strategies. It is the intention of management to reinvest the proceeds of these investment securities sales into potentially higher yielding interest-earning assets in future periods.

Excluding the effects of the quarter over quarter increase in gains on the sale of investment securities, all other noninterest income categories increased in aggregate by $165,000, or 16.5% to $1.2 million in the quarter ended September 30, 2019 as compared with $1.0 million in the same quarter of 2018.  This $165,000 quarter over quarter increase in noninterest income, excluding the effects of gains on the sales and redemptions of investment securities, was due primarily to

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increases of $108,000 in service charges on deposit accountsand $32,000 in loan servicing fees. All other noninterest income categories increased by $25,000, or 3.7% in the quarter ended September 30, 2019 as compared to the prior year quarter.

The $739,000, or 25.8%, increase in noninterest income in the nine months ended September 30, 2019, as compared to the same nine month period in 2018, was primarily the result of a net increase of $421,000 in the net gains on the sales and redemptions of investment securities from a loss of $189,000 for the nine months ended September 30, 2018 to a net gain of $232,000 for the same nine month period in 2019. The investment securities sales were part of the Company’s portfolio optimization and liquidity management strategies. It is the intention of management to reinvest the proceeds of these investment securities sales into potentially higher yielding interest-earning assets in future periods.

Excluding the effects of the period over period increase in gains on the sale of investment securities, all other noninterest income categories increased in aggregate by $318,000, or 10.4%, to $3.4 million in the nine months ended September 30, 2019 as compared with $3.0 million in the same nine month period of 2018.  This $318,000 period over period increase in noninterest income, excluding the effects of gains on the sales and redemptions of investment securities, was due primarily to increases in service charges on deposit accounts, debit interchange fees, earnings and gain on bank owned life insurance, and loan servicing fees, which increased $191,000, $65,000, $36,000, and $36,000, respectively.  All other noninterest income categories decreased by $10,000, or 0.7%, in the nine months ended September 30, 2019 as compared to the prior year period.

Noninterest Expense

The following table sets forth certain information on noninterest expense for the periods indicated:

	Three months ended September 30,									Nine months ended September 30,
(Dollars in thousands)	2019		2018		Change					2019		2018		Change
Salaries and employee benefits	$	3,275	$	3,191	$	84		2.6	%	$	10,379	$	9,381	$	998		10.6	%
Building and occupancy		699		601		98		16.3	%		1,986		1,689		297		17.6	%
Data processing		587		492		95		19.3	%		1,749		1,404		345		24.6	%
Professional and other services		352		359		(7	)	-1.9	%		1,068		1,095		(27	)	-2.5	%
Advertising		238		158		80		50.6	%		719		626		93		14.9	%
FDIC assessments		130		152		(22	)	-14.5	%		371		407		(36	)	-8.8	%
Audits and exams		104		104		-		0.0	%		304		314		(10	)	-3.2	%
Insurance agency expense		190		190		-		0.0	%		618		679		(61	)	-9.0	%
Community service activities		110		142		(32	)	-22.5	%		392		370		22		5.9	%
Foreclosed real estate expenses		28		19		9		47.4	%		324		93		231		248.4	%
Other expenses		569		504		65		12.9	%		1,622		1,440		182		12.6	%
Total noninterest expenses	$	6,282	$	5,912	$	370		6.3	%	$	19,532	$	17,498	$	2,034		11.6	%

The $370,000, or 6.3%, increase in noninterest expense between the year-over-year third quarter periods was principally due to increases in building and occupancy costs, data processing costs, salaries and employee benefits expense, and advertising expenses. The detail of the components of the overall increase in noninterest expense is as follows:

• The increase in building and occupancy costs was primarily due to $30,000 in additional depreciation expense related to recently completed building modernization and refurbishment projects, a $21,000 increase in property taxes, a $16,000 increase in utilities and communications, a $10,000 increase in building and land lease expense, and a $10,000 increase in building and machine maintenance.  These increases are consistent with branch and operational growth.  

• The $95,000 increase in data processing costs was primarily due to $67,000 in additional depreciation related to recently completed projects and a $32,000 increase in internet banking services. These increases are consistent with branch and operational growth.  

• The $84,000 increase in salaries and employee benefits expense in the third quarter of 2019, as compared to the same three month period in 2018, was primarily due to increases of $142,000 in salary expense and increases of $117,000 in employee benefits expense, including employee payroll tax expenses. Offsetting these increases was an $186,000 decrease in commission expense. Commission expense decreased primarily due to additional

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accruals in the second quarter of 2018 that related to the timing of commissions payments, primarily to the senior management team of the Agency under a revised compensation formula established at the end of 2017.  Salaries expense increased primarily as the result of additional staff members supporting current and planned asset growth and risk management activities as well as increased customer service and other operating costs reflecting the ramp-up period for our two new banking locations in Oneida and Onondaga counties. The year-over-year increases in employee benefit expenses were consistent with the salary increases discussed above.

• Advertising expense increased $80,000 primarily as the result of increases in the level of brand awareness advertising expenditures primarily focused on the Onondaga County market.

• All other noninterest expense categories increased $13,000, or 1.1%, in aggregate during the quarter ended September 30, 2019, as compared to the same three month period in 2018.

The $2.0 million, or 11.6%, increase in noninterest expenses between the nine month period ended September 30, 2019 and the same nine month period in the prior year was principally due to an increase in salaries and employee benefits expense, data processing expense, building and occupancy costs, and foreclosed real estate expense.  The detail of the components of the overall increase in noninterest expense is as follows:

• The $998,000 increase in salaries and employee benefits expense in the first nine months of 2019, as compared to the same nine month period in 2018, was primarily due to increases of $906,000 in salary expense and increases of $554,000 in employee benefits expense, including employee payroll tax expenses. Offsetting these increases was a $466,000 decrease in commission expenses. Commission expense decreased primarily due to additional accruals in the prior year in the second quarter of 2018 that related to the timing of commissions payments, primarily to the senior management team of the Agency under a revised compensation formula established at the end of 2017.  Salaries expense increased primarily as the result of additional staff members supporting current and planned asset growth and risk management activities as well as increased customer service and other operating costs reflecting the ramp-up period for our two new banking locations in Oneida and Onondaga counties. The year-over-year increases in employee benefit expenses were consistent with the salary increases discussed above.

• The $345,000 increase in data processing costs was primarily due to $195,000 in additional depreciation related to recently completed projects, a $78,000 increase in processing fees paid by the Bank that were based on increased levels of customer activity primarily transacted through its electronic delivery channels, a $29,000 increase in maintenance costs, and a $27,000 increase in supplies.  These increases are consistent with branch and operational growth.    

• The increase in building and occupancy costs was primarily due to $70,000 in additional depreciation expense related to recently completed building modernization and refurbishment projects, a $58,000 increase in utilities and communications, a $42,000 increase in property taxes, a $36,000 increase in building and machine maintenance, and a $29,000 increase in building and land lease expense.  These increases are consistent with branch and operational growth.  

• Foreclosed real estate expenses increased $231,000 as a result of property taxes paid on a foreclosed property.  This foreclosed property was sold in February 2019 and is no longer in foreclosed real estate at September 30, 2019.

• All other noninterest expense categories increased $163,000, or 3.3%, in aggregate for the nine month period ended September 30, 2019, as compared to the same nine month period in 2018.

At September 30, 2019, the Bank serviced 193 residential mortgage loans in the aggregate amount of $11.5 million that have been sold on a non-recourse basis to FNMA.  FNMA is the only unrelated third-party that has acquired loans originated by the Bank. On an infrequent basis, loans previously sold to FNMA that subsequently default may be found to have underwriting defects that place the loans out of compliance with the representations and warranties made by the Bank.  This can occur at any time while the loan is outstanding.  In such cases, the Bank is required to repurchase the defaulted loans from FNMA.  Repurchase losses sustained by the Bank include all costs incurred by FNMA as part of the foreclosure process, including items such as delinquent property taxes and legal fees.  Management continues to monitor the underwriting standards applied to all residential mortgage loan originations and subsequent sales through its quality control processes and considers these occurrences and their related expenses to be isolated instances.

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Income Tax Expense

Income tax expense increased $167,000 to $324,000, with an effective tax rate of 19.9%, for the quarter ended September 30, 2019, as compared to $157,000, with an effective tax rate of 13.6%,for the same three-month period in 2018.  The increase in income tax expense in the current quarter, as compared to the same quarter in 2018, was primarily due to the $476,000 increase in pretax income.  Further contributing to the increase in income tax expense in the current quarter, as compared to the same quarter in 2018, was the recognition of tax benefits of $41,000 in the third quarter of 2018 that resulted from the cashless exercise of incentive stock options by certain executives of the Company.  There were no tax benefits derived from the exercise of these options in the third quarter of 2019.  

Income tax expense increased $245,000 to $750,000, with an effective tax rate of 23.7% for the nine months ended September 30, 2019 as compared to $505,000, with an effective tax rate of 14.6% for the same nine month period in 2018. In the first quarter of 2019, the Company established, through a charge to earnings, a valuation allowance in the amount of $136,000, increasing the Company’s effective tax rate by 4.3%, in order to establish a reserve against deferred tax assets related to New York State income taxes. Effective in January 2018, the Company adopted a modification methodology, made available following changes to the New York State tax code, effecting how the Company’s state income tax liability is computed. Under this adopted methodology, it is unlikely that the Company will pay income taxes to New York in future periods and it is therefore probable that the Company’s deferred tax assets related to New York State income taxes are unlikely to further reduce the Company’s State tax rate in the future. Accordingly, a valuation allowance against the recorded value of those deferred tax assets was established in order to reduce the net deferred tax asset related to New York income taxes to $-0- at September 30, 2019. There were no valuation allowances against deferred tax assets at December 31, 2018.

The Company’s effective tax rate differs from the statutory federal tax rate of 21% due primarily to tax-exempt income from specific types of investment securities and loans, bank owned life insurance, and, to a much lesser degree, the utilization of low income housing credits. In addition, the tax effects of certain incentive stock option activity may also reduce the Company’s effective tax rate on a sporadic basis. During the nine months ended September 30, 2019 these effects reduced the Company’s effective tax rate by 0.6%. Excluding the nonrecurring charge related to the deferred tax asset valuation allowance, income tax expense in the first nine months of 2019 would have been $109,000 more than the prior period, and the effective tax rate would have been 19.4%. Excluding the nonrecurring charge, the increase in income tax expense and the effective tax rate in the first nine months of 2019, as compared to the previous period, was primarily attributable to the recognition of tax benefits of $115,000 in the first nine months of 2018 that resulted from the cashless exercise of incentive stock options by certain executives of the Company.  

Earnings per Share

Basic and diluted earnings per share were $0.22 per share for the third quarter of 2019, as compared to $0.23 per basic and diluted share for the same quarter of 2018.

Basic and diluted earnings per share were $0.47 for the nine month period ended September 30, 2019, as compared to $0.71 and $0.69, respectively, for the same prior year period.  The decrease in earnings per share between these two periods was due to the decrease in net income between these two time periods.  Further information on earnings per share can be found in Note 3 of this Form 10-Q.

Changes in Financial Condition

Assets

Total assets increased $123.0 million, or 13.2%, to $1.1 billion at September 30, 2019 as compared to $933.1 million at December 31, 2018.  This increase was due primarily to increases in loans, cash and cash equivalents, and in investment securities.

Total loans receivable increased $104.6 million, or 17.1%, to $717.6 million at September 30, 2019 from $613.0 million at December 31, 2018. Commercial loans, consumer loans, and residential loans recorded increases between these two dates, with increases of $53.6 million, $45.5 million, and $6.4 million, respectively.

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Investment securities increased $2.8 million, or 1.2%, to $234.9million at September 30, 2019, as compared to $232.0 million at December 31, 2018 and is consistent with the Company’s portfolio optimization and liquidity management strategies.

Cash and cash equivalents increased $13.5 million, or 51.1%, to $39.8 million at September 30, 2019, as compared to $26.3 million at December 31, 2018.  The $13.5 million increase in cash and cash equivalents was primarily due to a strategic increase in short-term liquidity in anticipation of continued high levels of demand for loan fundings during the fourth quarter of 2019.  The Bank considers its statutorily required cash reserve balances held at the Federal Reserve Bank to be restricted cash.  Total restricted cash was -$0- and $4.0 million at September 30, 2019 and December 31, 2018, respectively.

Liabilities

Total liabilities increased $98.3 million, or 11.3%, to $966.9 million at September 30, 2019 compared to $868.7 million at December 31, 2018.  Deposits increased $132.5 million, or 18.2%, to $859.6 million at September 30, 2019, compared to $727.1 million at December 31, 2018.  This increase was the result of an increase in retail deposits of $40.6 million, primarily due to increases in time deposits. This increase was further enhanced by the seasonally-normal strong deposit inflows related to the Bank’s municipal depositor relationships, which increased $34.4 million. The increase in these customer deposits during the nine months ended September 30, 2019 was partially offset by a decrease in business deposits of $8.5 million. Brokered deposits increased $66.1 million primarily as a result of additional brokered time deposits the Bank took on in March 2019 and September 2019. In March 2019, the Bank took on additional brokered time deposits through an unrelated financial institution in the amount of $24.0 million, of which $8.0 million matured.  In September 2019, the Bank took on an additional $10.0 million of brokered time deposits from the same unrelated financial institution.   The Bank utilizes the Certificates of Deposit Account Registry Service (“CDARS”) provided by Promontory Interfinancial Network and other deposits acquired through unaffiliated financial institutions as forms of brokered deposits. At September 30, 2019, deposits obtained through the use of these services increased $39.1 million to $80.5 million as compared to $41.4 million at December 31, 2018. Borrowed funds balances from the FHLB-NY decreased $39.3 million, or 33.1%, to $79.3 million at September 30, 2019 from $118.5 million at December 31, 2018 as the borrowing needs of the Bank decreased due to the growth in deposits.

Shareholders’ Equity

The Company’s shareholders’ equity, exclusive of the noncontrolling interest, increased $24.7 million, or 38.5%, to $89.0 million at September 30, 2019 from $64.2 million at December 31, 2018. This increase was principally due to the $20.1 million increase in additional paid in capital, a $3.3 million increase in comprehensive income, a $1.2 million increase in retained earnings, and a $135,000 increase in ESOP shares earned. Additional paid in capital increased as a result of the proceeds received from the Private Placement of common and preferred shares that took place in May 2019. Comprehensive income increased primarily as the result of the appreciation in the fair market value of our available-for-sale investment securities during the nine months ended September 30, 2019.  The slight increase in retained earnings resulted from $2.4 million in net income recorded in the first nine months of 2019.  Partially offsetting the increase in retained earnings was $805,000 in cash dividends declared on our common stock, $139,000 in cash dividends declared on our preferred stock, and $15,000 in cash dividends declared on our issued warrant.   In addition, retained earnings was further reduced by a $239,000 one-time adjustment, at January 1, 2019, related to the cumulative effect of the capitalization of the operating lease right-of-use-assets based on the adoption of ASU 2016-02 - Leases (Topic 842).

Capital

Capital adequacy is evaluated primarily by the use of ratios which measure capital against total assets, as well as against total assets that are weighted based on defined risk characteristics.  The Company’s goal is to maintain a strong capital position, consistent with the risk profile of its banking operations.  This strong capital position serves to support growth and expansion activities while at the same time exceeding regulatory standards.  At September 30, 2019, the Bank met the regulatory definition of a “well-capitalized” institution, i.e. a leverage capital ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 8%, Tier 1 common equity exceeding 6.5%, and a total risk-based capital ratio exceeding 10%.

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In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.  The buffer is separate from the capital ratios required under the Prompt Corrective Actions (“PCA”) standards. In order to avoid these restrictions, the capital conservation buffer effectively increases the minimum levels of the following capital to risk-weighted assets ratios: (1) Core Capital, (2) Total Capital and (3) Common Equity.  The capital conservation buffer requirement is now fully implemented at 2.5% of risk-weighted assets as of January 1, 2019.  At September 30, 2019, the Bank exceeded all regulatory required minimum capital ratios, including the capital buffer requirements.

On May 24, 2018, The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (the “EGRRCPA”) was enacted, which repeals or modifies certain provisions of the Dodd-Frank Act and eases regulations on all but the largest banks. The EGRRCPA’s provisions include, among other things: (i) exempting banks with less than $10 billion in assets from the ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) not requiring appraisals for certain transactions valued at less than $400,000 in rural areas; (iii) exempting banks that originate fewer than 500 open-end and 500 closed-end mortgages from HMDA’s expanded data disclosures; (iv) clarifying that, subject to various conditions, reciprocal deposits of another depository institution obtained using a deposit broker through a deposit placement network for purposes of obtaining maximum deposit insurance would not be considered brokered deposits subject to the FDIC’s brokered-deposit regulations; (v) raising eligibility for the 18-month exam cycle from $1 billion to banks with $3 billion in assets; and (vi) simplifying capital calculations by requiring regulators to establish for institutions under $10 billion in assets a community bank leverage ratio (tier 1 capital to average consolidated assets) at a percentage not less than 8% and not greater than 10% that such institutions may elect to replace the general applicable risk-based capital requirements for determining well-capitalized status. The federal banking agencies have set the community bank leverage ratio at 9.0%.  The new rule is effective on January 1, 2020.  In addition, the law required the Federal Reserve Board to raise the asset threshold under its Small Bank Holding Company Policy Statement from $1 billion to $3 billion for bank or savings and loan holding companies that are exempt from consolidated capital requirements, provided that such companies meet certain other conditions such as not engaging in significant nonbanking activities.

Pathfinder Bank’s capital amounts and ratios as of the indicated dates are presented in the following tables:

	Actual					Minimum For Capital Adequacy Purposes					Minimum To Be "Well-Capitalized" Under Prompt Corrective Provisions					Minimum For Capital Adequacy with Buffer
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of  September 30, 2019:
Total Core Capital (to Risk-Weighted Assets)	$	87,031		12.10	%	$	57,559		8.00	%	$	71,948		10.00	%	$	75,546		10.50	%
Tier 1 Capital (to Risk-Weighted Assets)	$	78,701		10.94	%	$	43,169		6.00	%	$	57,559		8.00	%	$	61,156		8.50	%
Tier 1 Common Equity (to Risk-Weighted Assets)	$	78,701		10.94	%	$	32,377		4.50	%	$	46,766		6.50	%	$	50,364		7.00	%
Tier 1 Capital (to Assets)	$	78,701		7.78	%	$	40,484		4.00	%	$	50,605		5.00	%	$	50,605		5.00	%
As of  December 31, 2018:
Total Core Capital (to Risk-Weighted Assets)	$	83,177		13.69	%	$	48,593		8.00	%	$	60,741		10.00	%	$	63,778		10.50	%
Tier 1 Capital (to Risk-Weighted Assets)	$	75,871		12.49	%	$	36,445		6.00	%	$	48,593		8.00	%	$	51,630		8.50	%
Tier 1 Common Equity (to Risk-Weighted Assets)	$	75,871		12.49	%	$	27,334		4.50	%	$	39,482		6.50	%	$	42,519		7.00	%
Tier 1 Capital (to Assets)	$	75,871		8.31	%	$	36,522		4.00	%	$	45,652		5.00	%	$	45,652		5.00	%

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Non-GAAP Financial Measures

Regulation G, a rule adopted by the Securities and Exchange Commission (SEC), applies to certain SEC filings, including earnings releases, made by registered companies that contain “non-GAAP financial measures.”  GAAP is generally accepted accounting principles in the United States of America.  Under Regulation G, companies making public disclosures containing non-GAAP financial measures must also disclose, along with each non-GAAP financial measure, certain additional information, including a reconciliation of the non-GAAP financial measure to the closest comparable GAAP financial measure (if a comparable GAAP measure exists) and a statement of the Company’s reasons for utilizing the non-GAAP financial measure as part of its financial disclosures.  The SEC has exempted from the definition of “non-GAAP financial measures” certain commonly used financial measures that are not based on GAAP.  When these exempted measures are included in public disclosures, supplemental information is not required. Financial institutions like the Company and its subsidiary bank are subject to an array of bank regulatory capital measures that are financial in nature but are not based on GAAP. The Company follows industry practice in disclosing its financial condition under these various regulatory capital measures, including period-end regulatory capital ratios for its subsidiary bank, in its periodic reports filed with the SEC. The Company provides, below, an explanation of the calculations, as supplemental information, for non-GAAP measures included in the consolidated annual financial statements.  In addition, the Company provides a reconciliation of its subsidiary bank’s disclosed regulatory capital measures, below.

	September 30,				December 31,
(Dollars in thousands)	2019				2018
Regulatory Capital Ratios (Bank Only)
Total capital (to risk-weighted assets)
Total equity (GAAP)	$	86,156			$	86,614
Goodwill		(4,536	)			(4,536	)
Intangible assets		(153	)			(165	)
Addback: Accumulated other comprehensive income		(2,766	)			(6,042	)
Total Tier 1 Capital	$	78,701			$	75,871
Allowance for loan and lease losses		8,330				7,306
Total Tier 2 Capital	$	8,330			$	7,306
Total Tier 1 plus Tier 2 Capital (numerator)	$	87,031			$	83,177
Risk-weighted assets (denominator)		719,483				607,414
Total core capital to risk-weighted assets		12.10		%		13.69		%
Tier 1 capital (to risk-weighted assets)
Total Tier 1 capital (numerator)	$	78,701			$	75,871
Risk-weighted assets (denominator)		719,483				607,414
Total capital to risk-weighted assets		10.94		%		12.49		%
Tier 1 capital (to adjusted assets)
Total Tier 1 capital (numerator)	$	78,701			$	75,871
Total average assets		1,016,794				917,740
Goodwill		(4,536	)			(4,536	)
Intangible assets		(153	)			(165	)
Adjusted assets (denominator)	$	1,012,105			$	913,039
Total capital to adjusted assets		7.78		%		8.31		%
Tier 1 Common Equity (to risk-weighted assets)
Total Tier 1 capital (numerator)	$	78,701			$	75,871
Risk-weighted assets (denominator)		719,483				607,414
Total Tier 1 Common Equity to risk-weighted assets		10.94		%		12.49		%

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Loan and Asset Quality and Allowance for Loan Losses

The following table represents information concerning the aggregate amount of non-performing assets at the indicated dates:

	September 30,			December 31,			September 30,
(Dollars In thousands)	2019			2018			2018
Nonaccrual loans:
Commercial and commercial real estate loans	$	4,206		$	830		$	2,565
Consumer		342			142			255
Residential mortgage loans		777			1,176			1,858
Total nonaccrual loans		5,325			2,148			4,678
Total nonperforming loans		5,325			2,148			4,678
Foreclosed real estate		148			1,173			268
Total nonperforming assets	$	5,473		$	3,321		$	4,946
Accruing troubled debt restructurings	$	2,540		$	2,574		$	2,711
Nonperforming loans to total loans		0.73	%		0.35	%		0.75	%
Nonperforming assets to total assets		0.52	%		0.36	%		0.54	%

Nonperforming assets include nonaccrual loans, nonaccrual troubled debt restructurings (“TDR”), and foreclosed real estate (‘‘FRE”). The Company generally places a loan on nonaccrual status and ceases accruing interest when loan payment performance is deemed unsatisfactory and the loan is past due 90 days or more.  There are no loans that are past due 90 days or more and still accruing interest.  Loans are considered modified in a TDR when, due to a borrower’s financial difficulties, the Company makes a concession(s) to the borrower that it would not otherwise consider. These modifications may include, among others, an extension of the term of the loan, and granting a period when interest-only payments can be made, with the principal payments made over the remaining term of the loan or at maturity.  TDRs are included in the above table within the categories of nonaccrual loans or accruing TDRs.  There was one nonaccruing TDR loan, with an aggregate carrying value of $74,000 included among the nonaccrual loans detailed in the table above at September 30, 2019. 

As indicated in the table above, nonperforming assets at September 30, 2019 were $5.5 million and were $2.2 million higher than the $3.3 million reported at December 31, 2018, due primarily to an increase of $3.4 million in nonperforming commercial and commercial real estate loans and a $200,000 increase in nonperforming consumer loans, partially offset by decreases of $1.0 million in FRE and $399,000 in nonperforming residential real estate loans.   

As indicated in the nonperforming asset table above, FRE balances decreased $1.0 million to $148,000 at September 30, 2019 from $1.2 million at December 31, 2018, following six sales from the portfolio and three additions to the portfolio during the nine month period ended September 30, 2019.  More information regarding foreclosed real estate can be found in Note 8 of this Form 10-Q.

Fair values for commercial FRE are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”).  On a prospective basis, residential FRE assets will be initially recorded at the lower of the net amount of loan receivable or the real estate’s fair value less costs to sell.   Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to FRE are charged to the allowance for loan losses.  Values are derived from appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis.  Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis for the FRE property.  

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The allowance for loan losses represents management’s estimate of the probable losses inherent in the loan portfolio as of the date of the statement of condition.  The allowance for loan losses was $8.3 million and $7.3 million at September 30, 2019 and December 31, 2018, respectively.  The ratio of the allowance for loan losses to total loans decreased three basis pointsto 1.15% at September 30, 2019from 1.18% at December 31, 2018.  Management performs a quarterly evaluation of the allowance for loan losses based on quantitative and qualitative factors and has determined that the current level of the allowance for loan losses is adequate to absorb the losses in the loan portfolio as of September 30, 2019.

The Company considers a loan impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan.   The measurement of impaired loans is generally based upon the fair value of the collateral, with a portion of the impaired loans measured based upon the present value of future cash flows discounted at the historical effective interest rate.  A specific reserve is established for an impaired loan if its carrying value exceeds its estimated fair value.  The estimated fair values of the majority of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral.  For loans secured by real estate, estimated fair values are determined primarily through third-party appraisals or broker price opinions.  When a loan is determined to be impaired, the Bank will reevaluate the collateral which secures the loan. For real estate, the Company will obtain a new appraisal or broker’s opinion whichever is considered to provide the most accurate value in the event of sale. An evaluation of equipment held as collateral will be obtained from a firm able to provide such an evaluation. Collateral will be inspected not less than annually for all impaired loans and will be reevaluated not less than every two years. Appraised values and broker opinion values are discounted due to the market’s perception of a reduced price of Bank-owned property and the Bank’s desire to sell the property more quickly to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value.  The discounts also include estimated costs to sell the property.

At September 30, 2019 and December 31, 2018, the Company had $8.1 million and $6.0 million in loans, respectively, which were deemed to be impaired, having established specific reserves of $779,000 and $631,000, respectively, on these loans.  The increase in impaired loans between these two dates was primarily driven by increases of $1.8 million, $291,000, and $93,000, in impaired commercial real estate, other commercial and industrial loans, and other consumer loans.   The $148,000 increase in specific reserves for impaired loans at September 30, 2019, as compared to December 31, 2018 was primarily due to an $84,000 increase in specific reserves for other commercial and industrial loans and an $82,000 increase in specific reserve for commercial lines of credit.  

Management has identified potential credit problems which may result in the borrowers not being able to comply with the current loan repayment terms and which may result in those loans being included in future impaired loan reporting.  Potential problem loans totaled $14.3 million as of September 30, 2019, a decrease of $297,000, or 2.0%, as compared to $14.6 million at December 31, 2018.  These loans have been internally classified as special mention, substandard, or doubtful, yet are not currently considered impaired.  

Appraisals are obtained at the time a real estate secured loan is originated.   For commercial real estate held as collateral, the property is inspected every two years.  

In the normal course of business, the Bank has infrequently sold residential mortgage loans and participation interests in commercial loans. As is typical in the industry, the Bank makes certain representations and warranties to the buyer.  The Bank maintains a quality control program for closed loans and considers the risks and uncertainties associated with potential repurchase requirements to be minimal.  

Liquidity

Liquidity management involves the Company’s ability to generate cash or otherwise obtain funds at reasonable rates to support asset growth, meet deposit withdrawals, maintain reserve requirements, and otherwise operate the Company on an ongoing basis.  The Company's primary sources of funds are deposits, borrowed funds, amortization and prepayment of loans and maturities of investment securities and other short-term investments, and earnings and funds provided from operations.  While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition.  The Company manages the pricing of deposits to maintain a desired deposit composition and balance.  In addition, the Company invests excess funds in short-term interest-earning and other assets, which provide liquidity to meet lending requirements.  

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The Company's liquidity has been enhanced by its ability to borrow from the Federal Home Loan Bank of New York (“FHLBNY”), whose competitive advance programs and lines of credit provide the Company with a safe, reliable, and convenient source of funds.  A significant decrease in deposits in the future could result in the Company having to seek other sources of funds for liquidity purposes.  Such sources could include, but are not limited to, additional borrowings, brokered deposits, negotiated time deposits, the sale of "available-for-sale" investment securities, the sale of securitized loans, or the sale of whole loans.  Such actions could result in higher interest expense and/or losses on the sale of securities or loans.  

Through the first nine months of 2019, as indicated in the consolidated statement of cash flows, the Company reported net cash flows from operating activities of $6.6 million and net cash outflows of $105.8 million related to investing activities.  The net cash outflows from investing activities primarily was due to a net $106.7 million increase in loan balances, partially offset by a $845,000 decrease in all other investing activities in aggregate.  The Company reported net cash flows from financing activities of $112.7 million generated principally by increased deposit balances of $66.5 million, increased brokered deposits balances of $66.0 million, and by net proceeds from the Private Placement offering totaling $19.6 million.  This was partially offset by an aggregate decrease in net cash of $39.4 million from all other financing sources, including dividends paid to common and preferred shareholders of $885,000.

The Company has a number of existing credit facilities available to it. At September 30, 2019, total credit available to the Company under the existing lines of credit was approximately $173.9 million at FHLBNY, the Federal Reserve Bank, and two other correspondent banks. As of September 30, 2019, the Company had $79.3 million of the available lines of credit utilized, including encumbrances supporting outstanding letters of credit, described above, on its existing lines of credit with $94.6 million available.

The Asset Liability Management Committee of the Company is responsible for implementing the policies and guidelines for the maintenance of prudent levels of liquidity.  As of September 30, 2019, management reported to the Board of Directors that the Company is in compliance with its liquidity policy guidelines.

Off-Balance Sheet Arrangements

The Company is also a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit and standby letters of credit.  At September 30, 2019, the Company had $132.0million in outstanding commitments to extend credit and standby letters of credit. 

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information relating to this item.

Item 4 – Controls and Procedures

Under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report.  Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.  There has been no change in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1 – Legal Proceedings

At September 30, 2019, the Company is not currently a named party in a legal proceeding, the outcome of which would have a material and adverse effect on the financial condition or results of operations of the Company.

Item 1A – Risk Factors

A smaller reporting company is not required to provide the information relating to this item.

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

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, 2019 through July 31, 2019		-	$	-		-		74,292
August 1, 2019 through August 31, 2019		-	$	-		-		74,292
September 1, 2019 through September 30, 2019		-	$	-		-		74,292

(1) On August 29, 2016, our Board of Directors authorized the repurchase of up to 217,692 shares of our common stock, or 5% of the Company’s shares outstanding as of that date.

Item 3 – Defaults Upon Senior Securities

None

Item 4 – Mine Safety Disclosures

Not applicable

Item 5 – Other Information

None

Item 6 – Exhibits

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of the Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
32	Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer
101	Interactive data files pursuant to Rule 405 of Regulation S-T formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to the Consolidated Financial Statements tagged as blocks of text.

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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.

PATHFINDER BANCORP, INC.

(registrant)

November 12, 2019	/s/ Thomas W. Schneider
	Thomas W. Schneider
	President and Chief Executive Officer
November 12, 2019	/s/ Walter F. Rusnak
	Walter F. Rusnak
	Senior Vice President, Chief Financial Officer

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EX-31.1

EXHIBIT 31.1: Rule 13a-14(a) / 15d-14(a) Certification of the Chief Executive Officer

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Thomas W. Schneider, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Pathfinder Bancorp, Inc.;

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

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

(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.

November 12, 2019 /s/ Thomas W. Schneider Thomas W. Schneider President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2: Rule 13a-14(a) / 15d-14(a) Certification of the Chief Financial Officer

Certification of Chief Financial Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Walter F. Rusnak, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Pathfinder Bancorp, Inc.;

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

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors:

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.

November 12, 2019 /s/ Walter F. Rusnak Walter F. Rusnak Senior Vice President, Chief Financial Officer  

EX-32

EXHIBIT 32 Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer

Certification pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Pathfinder Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2019 as filed with the Securities and Exchange Commission (the “Report”), the undersigned hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

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

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

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.

November 12, 2019	/s/ Thomas W. Schneider Thomas W. Schneider President and Chief Executive Officer
November 12, 2019	/s/ Walter F. Rusnak Walter F. Rusnak Senior Vice President, Chief Financial Officer

XML

Noninterest Income

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Noninterest Income

Note 13: Noninterest Income

The Company has included the following table regarding the Company’s noninterest income for the periods presented.

	For the three months					For the nine months
	ended September 30,					ended September 30,
(In thousands)	2019		2018			2019		2018
Service fees
Insufficient funds fees	$	347	$	218		$	827	$	618
Deposit related fees		28		49			133		148
ATM fees		24		24			69		72
Total service fees		399		291			1,029		838
Fee Income
Insurance commissions		168		172			620		632
Investment services revenue		58		70			203		218
ATM fees surcharge		68		71			173		178
Banking house rents collected		32		34			100		100
Total fee income		326		347			1,096		1,128
Card income
Debit card interchange fees		166		141			497		432
Merchant card fees		21		21			58		54
Total card income		187		162			555		486
Mortgage fee income and realized gain on sale of loans   and foreclosed real estate
Loan servicing fees		57		25			144		108
Net gains on sales of loans and foreclosed real estate		38		8			43		24
Total mortgage fee income and realized gain on sale of    loans and foreclosed real estate		95		33			187		132
Total		1,007		833			2,867		2,584
Earnings and gain on bank owned life insurance		133		138			355		319
Net gains (losses) on sales and redemptions of investment    securities		121		(60	)		232		(189	)
Gains on marketable equity securities		4		-			61		26
Other miscellaneous income		21		29			83		119
Total noninterest income	$	1,286	$	940		$	3,598	$	2,859

The following is a discussion of key revenues within the scope of the new revenue guidance:

• Service fees – Revenue is earned through insufficient funds fees, customer initiated activities or passage of time for deposit related fees, and ATM service fees. Transaction-based fees are recognized at the time the transaction is executed, which is the same time the Company’s performance obligation is satisfied.  Account maintenance fees are earned over the course of the month as the monthly maintenance performance obligation to the customer is satisfied.

• Fee income – Revenue is earned through commissions on insurance and securities sales, ATM surcharge fees, and banking house rents collected.  The Company earns investment advisory fee income by providing investment management services to customers under investment management contracts.  As the direction of investment management accounts is provided over time, the performance obligation to investment management customers is satisfied over time, and therefore, revenue is recognized over time.    

• Card income – Card income consists of interchange fees from consumer debit card networks and other related services.  Interchange rates are set by the card networks.  Interchange fees are based on purchase volumes and other factors and are recognized as transactions occur.

• Mortgage fee income and realized gain on sale of loans and foreclosed real estate – Revenue from mortgage fee income and realized gain on sale of loans and foreclosed real estate is earned through the origination of residential and commercial mortgage loans, sales of one-to-four family residential mortgage loans, sales of government guarantees portions of SBA loans, and sales of foreclosed real estate, and is earned as the transaction occurs.

XML

Investment Securities (Tables)

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Amortized Cost and Estimated Fair Value of Investment Securities

The amortized cost and estimated fair value of investment securities are summarized as follows:

	September 30, 2019
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	7,016	$	-	$	(30	)	$	6,986
State and political subdivisions		4,805		2		-			4,807
Corporate		12,380		301		(16	)		12,665
Asset backed securities		14,364		57		(43	)		14,378
Residential mortgage-backed - US agency		20,952		82		(40	)		20,994
Collateralized mortgage obligations - US agency		42,073		116		(464	)		41,725
Collateralized mortgage obligations - Private label		18,166		130		(55	)		18,241
Total		119,756		688		(648	)		119,796
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	119,962	$	688	$	(648	)	$	120,002
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	1,996	$	1	$	(2	)	$	1,995
State and political subdivisions		8,523		186		(2	)		8,707
Corporate		24,021		600		-			24,621
Asset backed securities		17,461		117		(71	)		17,507
Residential mortgage-backed - US agency		16,935		617		(1	)		17,551
Collateralized mortgage obligations - US agency		20,415		406		(7	)		20,814
Collateralized mortgage obligations - Private label		24,998		59		(65	)		24,992
Total held-to-maturity	$	114,349	$	1,986	$	(148	)	$	116,187

	December 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	17,171	$	18	$	(158	)	$	17,031
State and political subdivisions		23,661		6		(602	)		23,065
Corporate		17,389		220		(409	)		17,200
Asset backed securities		18,243		13		(137	)		18,119
Residential mortgage-backed - US agency		32,409		34		(777	)		31,666
Collateralized mortgage obligations - US agency		48,101		31		(1,691	)		46,441
Collateralized mortgage obligations - Private label		24,317		17		(398	)		23,936
Total		181,291		339		(4,172	)		177,458
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	181,497	$	339	$	(4,172	)	$	177,664
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	3,987	$	-	$	(35	)	$	3,952
State and political subdivisions		5,089		22		(84	)		5,027
Corporate		9,924		4		(182	)		9,746
Asset backed securities		1,509		-		(13	)		1,496
Residential mortgage-backed - US agency		11,601		124		(47	)		11,678
Collateralized mortgage obligations - US agency		13,972		93		(13	)		14,052
Collateralized mortgage obligations - Private label		7,826		17		(25	)		7,818
Total held-to-maturity	$	53,908	$	260	$	(399	)	$	53,769

Amortized Cost and Estimated Fair Value of Debt Investments by Contractual Maturity

The amortized cost and estimated fair value of debt investments at September 30, 2019 by contractual maturity are shown below.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	3,318	$	3,319	$	2,099	$	2,102
Due after one year through five years		12,814		13,080		18,518		18,762
Due after five years through ten years		17,380		17,392		16,093		16,610
Due after ten years		5,053		5,045		15,291		15,356
Sub-total		38,565		38,836		52,001		52,830
Residential mortgage-backed - US agency		20,952		20,994		16,935		17,551
Collateralized mortgage obligations - US agency		42,073		41,725		20,415		20,814
Collateralized mortgage obligations - Private label		18,166		18,241		24,998		24,992
Totals	$	119,756	$	119,796	$	114,349	$	116,187

Debt Investment Securities' Gross Unrealized Losses and Fair Value by Investment Category and Length of Time that Individual Securities Have Continuous Unrealized Loss Position

The Company’s debt investment securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	September 30, 2019
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		2	$	(30	)	$	6,966		-	$	-		$	-		2	$	(30	)	$	6,966
Corporate		2		(4	)		1,566		4		(12	)		2,269		6		(16	)		3,835
Asset backed securities		4		(21	)		7,266		1		(22	)		895		5		(43	)		8,161
Residential mortgage-backed - US agency		6		(29	)		6,734		4		(11	)		2,651		10		(40	)		9,385
Collateralized mortgage obligations - US agency		6		(36	)		10,468		15		(428	)		16,212		21		(464	)		26,680
Collateralized mortgage obligations - Private label		3		(22	)		5,251		4		(33	)		3,433		7		(55	)		8,684
Totals		23	$	(142	)	$	38,251		28	$	(506	)	$	25,460		51	$	(648	)	$	63,711
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(2	)	$	998		-	$	-		$	-		1	$	(2	)	$	998
State and political subdivisions		1		(2	)		2,013		-		-			-		1		(2	)		2,013
Asset backed securities		1		(71	)		2,722		-		-			-		1		(71	)		2,722
Residential mortgage-backed - US agency		-		-			-		1		(1	)		221		1		(1	)		221
Collateralized mortgage obligations - US agency		1		(7	)		1,693		-		-			-		1		(7	)		1,693
Collateralized mortgage obligations - Private label		5		(60	)		8,318		2		(5	)		1,345		7		(65	)		9,663
Totals		9	$	(142	)	$	15,744		3	$	(6	)	$	1,566		12	$	(148	)	$	17,310

	December 31, 2018
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		1	$	(22	)	$	977		2	$	(136	)	$	12,017		3	$	(158	)	$	12,994
State and political subdivisions		5		(76	)		5,213		26		(526	)		14,206		31		(602	)		19,419
Corporate		10		(137	)		8,266		4		(272	)		3,374		14		(409	)		11,640
Asset backed securities		7		(91	)		10,470		2		(46	)		3,059		9		(137	)		13,529
Residential mortgage-backed - US agency		6		(83	)		3,519		21		(694	)		24,154		27		(777	)		27,673
Collateralized mortgage obligations - US agency		3		(98	)		2,792		28		(1,593	)		35,765		31		(1,691	)		38,557
Collateralized mortgage obligations - Private label		7		(275	)		14,011		5		(123	)		5,907		12		(398	)		19,918
Totals		39	$	(782	)	$	45,248		88	$	(3,390	)	$	98,482		127	$	(4,172	)	$	143,730
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(8	)	$	982		3	$	(27	)	$	2,970		4	$	(35	)	$	3,952
State and political subdivisions		-		-			-		6		(84	)		2,310		6		(84	)		2,310
Corporate		4		(41	)		3,214		2		(141	)		2,507		6		(182	)		5,721
Asset backed securities		1		(13	)		1,496		-		-			-		1		(13	)		1,496
Residential mortgage-backed - US agency		3		(8	)		1,447		2		(39	)		1,769		5		(47	)		3,216
Collateralized mortgage obligations - US agency		4		(13	)		3,972		-		-			-		4		(13	)		3,972
Collateralized mortgage obligations - Private label		-		-			-		2		(25	)		1,874		2		(25	)		1,874
Totals		13	$	(83	)	$	11,111		15	$	(316	)	$	11,430		28	$	(399	)	$	22,541

Gross Realized Gains (Losses) on Sale of Securities

Gross realized gains (losses) on sales of securities for the indicated periods are detailed below:

	For the three months						For the nine months
	ended September 30,						ended September 30,
(In thousands)	2019			2018			2019			2018
Realized gains on investments	$	143		$	76		$	544		$	236
Realized losses on investments		(22	)		(136	)		(312	)		(425	)
	$	121		$	(60	)	$	232		$	(189	)

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Foreclosed Real Estate (Tables)

9 Months Ended

Sep. 30, 2019

Real Estate Owned Disclosure Of Detailed Components [Abstract]

Carrying Amount Of Foreclosed Residential Real Estate Properties Held

The Company is required to disclose the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession of the property at each reporting period.

(Dollars in thousands)	Number of properties		September 30, 2019		Number of properties		December 31, 2018
Foreclosed residential real estate		1	$	60		2	$	73

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Fair Value Measurements - Carrying Amounts and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Financial assets:
Investment securities - available-for-sale	$ 120,002	$ 177,664
Investment securities - marketable equity	206	206
Investment securities - held-to-maturity	116,187	53,769
Level 1 [Member] | Carrying Amounts [Member]
Financial assets:
Cash and cash equivalents	39,773	26,316
Accrued interest receivable	3,313	3,068
Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	467,391	450,267
Accrued interest payable	468	304
Level 1 [Member] | Estimated Fair Values [Member]
Financial assets:
Cash and cash equivalents	39,773	26,316
Accrued interest receivable	3,313	3,068
Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	467,391	450,267
Accrued interest payable	468	304
Level 2 [Member] | Carrying Amounts [Member]
Financial assets:
Investment securities - available-for-sale	114,752	172,399
Investment securities - marketable equity	514	453
Investment securities - held-to-maturity	114,349	53,908
Federal Home Loan Bank stock	4,210	5,937
Financial liabilities:
Time Deposits	392,218	276,793
Borrowings	79,252	118,534
Subordinated loans	15,119	15,094
Interest rate swap derivative	115	0
Level 2 [Member] | Estimated Fair Values [Member]
Financial assets:
Investment securities - available-for-sale	114,752	172,399
Investment securities - marketable equity	514	453
Investment securities - held-to-maturity	116,187	53,769
Federal Home Loan Bank stock	4,210	5,937
Financial liabilities:
Time Deposits	393,320	275,727
Borrowings	79,742	118,379
Subordinated loans	14,766	14,485
Interest rate swap derivative	115	0
Net Asset Value [Member] | Carrying Amounts [Member]
Financial assets:
Investment securities - available-for-sale	5,044	5,059
Net Asset Value [Member] | Estimated Fair Values [Member]
Financial assets:
Investment securities - available-for-sale	5,044	5,059
Level 3 [Member] | Carrying Amounts [Member]
Financial assets:
Net loans	717,570	612,964
Level 3 [Member] | Estimated Fair Values [Member]
Financial assets:
Net loans	$ 717,687	$ 601,789

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Accumulated Other Comprehensive Income (Loss) - Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Balance		$ 87,844	$ 62,869	$ 64,459	$ 62,144
Other comprehensive income before reclassifications		287	(452)	3,261	(2,181)
Amounts reclassified from AOCI		(29)	75	15	235
Balance		89,191	63,563	89,191	63,563
ASU 2016-01 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[1]				(53)
ASU 2017-12 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[2]				359
Retirement Plans [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Balance		(3,021)	(2,156)	(3,152)	(2,220)
Other comprehensive income before reclassifications		0	0	0	0
Amounts reclassified from AOCI		67	31	198	95
Balance		(2,954)	(2,125)	(2,954)	(2,125)
Retirement Plans [Member] | ASU 2016-01 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[1]				0
Retirement Plans [Member] | ASU 2017-12 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[2]				0
Unrealized Gains and Losses on Available-for-Sale Securities [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Balance		43	(3,248)	(2,832)	(1,558)
Other comprehensive income before reclassifications		282	(456)	3,244	(2,305)
Amounts reclassified from AOCI		(96)	44	(183)	140
Balance		229	(3,660)	229	(3,660)
Unrealized Gains and Losses on Available-for-Sale Securities [Member] | ASU 2016-01 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[1]				(53)
Unrealized Gains and Losses on Available-for-Sale Securities [Member] | ASU 2017-12 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[2]				116
Unrealized Loss on Securities Transferred to Held-to-Maturity [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Balance		(46)	(67)	(58)	(430)
Other comprehensive income before reclassifications		5	4	17	124
Amounts reclassified from AOCI		0	0	0	0
Balance		(41)	(63)	(41)	(63)
Unrealized Loss on Securities Transferred to Held-to-Maturity [Member] | ASU 2016-01 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[1]				0
Unrealized Loss on Securities Transferred to Held-to-Maturity [Member] | ASU 2017-12 [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Cumulative effect of change in measurement	[2]				243
AOCI Attributable to Parent [Member]
Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Balance		(3,024)	(5,471)	(6,042)	(4,208)
Balance		$ (2,766)	$ (5,848)	$ (2,766)	$ (5,848)

[1] Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

[2] Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

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Loans - Age Analysis of Past Due Loans Segregated by Portfolio Segment and Class of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Recorded Investment, Past Due [Line Items]
Total Past Due	$ 9,891	$ 11,233
Current	715,949	609,172
Total Loans Receivable	725,840	620,405	$ 621,059
30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	2,833	8,088
60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	1,811	1,095
90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	5,247	2,050
Residential Mortgage Loans [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	3,143	3,188
Current	242,915	236,456
Total Loans Receivable	246,058	239,644
Residential Mortgage Loans [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	1,591	1,507
Residential Mortgage Loans [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	775	505
Residential Mortgage Loans [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	777	1,176
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	3,143	3,188
Current	238,674	229,335
Total Loans Receivable	241,817	232,523	231,830
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	1,591	1,507
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	775	505
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	777	1,176
Residential Mortgage Loans [Member] | Construction [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	4,241	7,121
Total Loans Receivable	4,241	7,121
Residential Mortgage Loans [Member] | Construction [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Residential Mortgage Loans [Member] | Construction [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Residential Mortgage Loans [Member] | Construction [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Commercial Loans [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	5,499	7,359
Current	377,285	321,869
Total Loans Receivable	382,784	329,228
Commercial Loans [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	557	6,108
Commercial Loans [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	814	519
Commercial Loans [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	4,128	732
Commercial Loans [Member] | Real Estate [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	3,012	4,948
Current	232,352	207,366
Total Loans Receivable	235,364	212,314	213,303
Commercial Loans [Member] | Real Estate [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	16	4,261
Commercial Loans [Member] | Real Estate [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	151	364
Commercial Loans [Member] | Real Estate [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	2,845	323
Commercial Loans [Member] | Lines of Credit [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	655	1,166
Current	57,753	43,069
Total Loans Receivable	58,408	44,235	48,496
Commercial Loans [Member] | Lines of Credit [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	15	1,033
Commercial Loans [Member] | Lines of Credit [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	248	111
Commercial Loans [Member] | Lines of Credit [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	392	22
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	1,832	1,245
Current	78,997	62,114
Total Loans Receivable	80,829	63,359	60,984
Commercial Loans [Member] | Other Commercial and Industrial [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	526	814
Commercial Loans [Member] | Other Commercial and Industrial [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	415	44
Commercial Loans [Member] | Other Commercial and Industrial [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	891	387
Commercial Loans [Member] | Tax Exempt Loans [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Current	8,183	9,320
Total Loans Receivable	8,183	9,320	10,163
Commercial Loans [Member] | Tax Exempt Loans [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Commercial Loans [Member] | Tax Exempt Loans [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Commercial Loans [Member] | Tax Exempt Loans [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	0	0
Consumer Loans [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	1,249	686
Current	95,749	50,847
Total Loans Receivable	96,998	51,533
Consumer Loans [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	685	473
Consumer Loans [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	222	71
Consumer Loans [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	342	142
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	774	288
Current	46,738	25,821
Total Loans Receivable	47,512	26,109	25,985
Consumer Loans [Member] | Home Equity and Junior Liens [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	391	247
Consumer Loans [Member] | Home Equity and Junior Liens [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	107	6
Consumer Loans [Member] | Home Equity and Junior Liens [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	276	35
Consumer Loans [Member] | Other Consumer [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	475	398
Current	49,011	25,026
Total Loans Receivable	49,486	25,424	$ 26,410
Consumer Loans [Member] | Other Consumer [Member] | 30-59 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	294	226
Consumer Loans [Member] | Other Consumer [Member] | 60-89 Days Past Due [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	115	65
Consumer Loans [Member] | Other Consumer [Member] | 90 Days and Over [Member]
Recorded Investment, Past Due [Line Items]
Total Past Due	$ 66	$ 107

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Pension and Postretirement Benefits - Composition of Net Periodic Pension Plan and Postretirement Plan Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 124	$ 119	$ 371	$ 355
Expected return on plan assets	(234)	(260)	(701)	(778)
Amortization of net losses	82	41	246	123
Net periodic benefit plan (benefit) cost	(28)	(100)	(84)	(300)
Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	6	5	16	16
Amortization of prior service credits	(1)	(1)	(3)	(3)
Amortization of net losses	3	3	9	9
Net periodic benefit plan (benefit) cost	$ 8	$ 7	$ 22	$ 22

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Investment Securities - Debt Investment Securities' Gross Unrealized Losses and Fair Value by Investment Category and Length of Time that Individual Securities Have Continuous Unrealized Loss Position (Details)	Sep. 30, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	9	13
Number of securities in unrealized loss positions, twelve months or more | Security	3	15
Number of securities in unrealized loss positions | Security	12	28
Less than twelve months Fair Value	$ 15,744,000	$ 11,111,000
Twelve months or more Fair Value	1,566,000	11,430,000
Total Fair Value	17,310,000	22,541,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(142,000)	(83,000)
Twelve months or more Unrealized Losses	(6,000)	(316,000)
Total Unrealized Losses	$ (148,000)	$ (399,000)
US Treasury, Agencies and GSEs [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	2	1
Number of securities in unrealized loss positions, twelve months or more | Security	0	2
Number of securities in unrealized loss positions | Security	2	3
Less than twelve months Fair Value	$ 6,966,000	$ 977,000
Twelve months or more Fair Value	0	12,017,000
Total Fair Value	6,966,000	12,994,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(30,000)	(22,000)
Twelve months or more Unrealized Losses	0	(136,000)
Total Unrealized Losses	$ (30,000)	$ (158,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	1	1
Number of securities in unrealized loss positions, twelve months or more | Security	0	3
Number of securities in unrealized loss positions | Security	1	4
Less than twelve months Fair Value	$ 998,000	$ 982,000
Twelve months or more Fair Value	0	2,970,000
Total Fair Value	998,000	3,952,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(2,000)	(8,000)
Twelve months or more Unrealized Losses	0	(27,000)
Total Unrealized Losses	$ (2,000)	$ (35,000)
State and Political Subdivisions [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security		5
Number of securities in unrealized loss positions, twelve months or more | Security		26
Number of securities in unrealized loss positions | Security		31
Less than twelve months Fair Value		$ 5,213,000
Twelve months or more Fair Value		14,206,000
Total Fair Value		19,419,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses		(76,000)
Twelve months or more Unrealized Losses		(526,000)
Total Unrealized Losses		$ (602,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	1	0
Number of securities in unrealized loss positions, twelve months or more | Security	0	6
Number of securities in unrealized loss positions | Security	1	6
Less than twelve months Fair Value	$ 2,013,000	$ 0
Twelve months or more Fair Value	0	2,310,000
Total Fair Value	2,013,000	2,310,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(2,000)	0
Twelve months or more Unrealized Losses	0	(84,000)
Total Unrealized Losses	$ (2,000)	$ (84,000)
Corporate [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	2	10
Number of securities in unrealized loss positions, twelve months or more | Security	4	4
Number of securities in unrealized loss positions | Security	6	14
Less than twelve months Fair Value	$ 1,566,000	$ 8,266,000
Twelve months or more Fair Value	2,269,000	3,374,000
Total Fair Value	3,835,000	11,640,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(4,000)	(137,000)
Twelve months or more Unrealized Losses	(12,000)	(272,000)
Total Unrealized Losses	$ (16,000)	$ (409,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security		4
Number of securities in unrealized loss positions, twelve months or more | Security		2
Number of securities in unrealized loss positions | Security		6
Less than twelve months Fair Value		$ 3,214,000
Twelve months or more Fair Value		2,507,000
Total Fair Value		5,721,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses		(41,000)
Twelve months or more Unrealized Losses		(141,000)
Total Unrealized Losses		$ (182,000)
Asset Backed Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	4	7
Number of securities in unrealized loss positions, twelve months or more | Security	1	2
Number of securities in unrealized loss positions | Security	5	9
Less than twelve months Fair Value	$ 7,266,000	$ 10,470,000
Twelve months or more Fair Value	895,000	3,059,000
Total Fair Value	8,161,000	13,529,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(21,000)	(91,000)
Twelve months or more Unrealized Losses	(22,000)	(46,000)
Total Unrealized Losses	$ (43,000)	$ (137,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	1	1
Number of securities in unrealized loss positions, twelve months or more | Security	0	0
Number of securities in unrealized loss positions | Security	1	1
Less than twelve months Fair Value	$ 2,722,000	$ 1,496,000
Twelve months or more Fair Value	0	0
Total Fair Value	2,722,000	1,496,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(71,000)	(13,000)
Twelve months or more Unrealized Losses	0	0
Total Unrealized Losses	$ (71,000)	$ (13,000)
Residential Mortgage-Backed - US Agency [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	6	6
Number of securities in unrealized loss positions, twelve months or more | Security	4	21
Number of securities in unrealized loss positions | Security	10	27
Less than twelve months Fair Value	$ 6,734,000	$ 3,519,000
Twelve months or more Fair Value	2,651,000	24,154,000
Total Fair Value	9,385,000	27,673,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(29,000)	(83,000)
Twelve months or more Unrealized Losses	(11,000)	(694,000)
Total Unrealized Losses	$ (40,000)	$ (777,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	0	3
Number of securities in unrealized loss positions, twelve months or more | Security	1	2
Number of securities in unrealized loss positions | Security	1	5
Less than twelve months Fair Value	$ 0	$ 1,447,000
Twelve months or more Fair Value	221,000	1,769,000
Total Fair Value	221,000	3,216,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	0	(8,000)
Twelve months or more Unrealized Losses	(1,000)	(39,000)
Total Unrealized Losses	$ (1,000)	$ (47,000)
Collateralized Mortgage Obligations - US Agency [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	6	3
Number of securities in unrealized loss positions, twelve months or more | Security	15	28
Number of securities in unrealized loss positions | Security	21	31
Less than twelve months Fair Value	$ 10,468,000	$ 2,792,000
Twelve months or more Fair Value	16,212,000	35,765,000
Total Fair Value	26,680,000	38,557,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(36,000)	(98,000)
Twelve months or more Unrealized Losses	(428,000)	(1,593,000)
Total Unrealized Losses	$ (464,000)	$ (1,691,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	1	4
Number of securities in unrealized loss positions, twelve months or more | Security	0	0
Number of securities in unrealized loss positions | Security	1	4
Less than twelve months Fair Value	$ 1,693,000	$ 3,972,000
Twelve months or more Fair Value	0	0
Total Fair Value	1,693,000	3,972,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(7,000)	(13,000)
Twelve months or more Unrealized Losses	0	0
Total Unrealized Losses	$ (7,000)	$ (13,000)
Collateralized Mortgage Obligations - Private Label [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	3	7
Number of securities in unrealized loss positions, twelve months or more | Security	4	5
Number of securities in unrealized loss positions | Security	7	12
Less than twelve months Fair Value	$ 5,251,000	$ 14,011,000
Twelve months or more Fair Value	3,433,000	5,907,000
Total Fair Value	8,684,000	19,918,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(22,000)	(275,000)
Twelve months or more Unrealized Losses	(33,000)	(123,000)
Total Unrealized Losses	$ (55,000)	$ (398,000)
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	5	0
Number of securities in unrealized loss positions, twelve months or more | Security	2	2
Number of securities in unrealized loss positions | Security	7	2
Less than twelve months Fair Value	$ 8,318,000	$ 0
Twelve months or more Fair Value	1,345,000	1,874,000
Total Fair Value	9,663,000	1,874,000
Held-to-maturity Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(60,000)	0
Twelve months or more Unrealized Losses	(5,000)	(25,000)
Total Unrealized Losses	$ (65,000)	$ (25,000)
Debt Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Number of securities in unrealized loss positions, less than twelve months | Security	23	39
Number of securities in unrealized loss positions, twelve months or more | Security	28	88
Number of securities in unrealized loss positions | Security	51	127
Less than twelve months Fair Value	$ 38,251,000	$ 45,248,000
Twelve months or more Fair Value	25,460,000	98,482,000
Total Fair Value	63,711,000	143,730,000
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss [Abstract]
Less than twelve months Unrealized Losses	(142,000)	(782,000)
Twelve months or more Unrealized Losses	(506,000)	(3,390,000)
Total Unrealized Losses	$ (648,000)	$ (4,172,000)

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Subsequent Events - Additional Information (Details) $ in Millions		9 Months Ended
	Nov. 07, 2019 USD ($) Loan	Sep. 30, 2019	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Apr. 30, 2017 USD ($)	Jan. 31, 2017 USD ($)
Subsequent Event [Line Items]
Loans acquired				$ 24.6	$ 10.2	$ 15.6
Participating interest of acquired loan percentage		90.00%
Evaluation in process sales loans confirmation period		30 years
Consumer Loans [Member]
Subsequent Event [Line Items]
Loans acquired			$ 5.0
Participating interest of acquired loan percentage		100.00%
Minimum [Member]
Subsequent Event [Line Items]
Evaluation in process confirmed sales loans held in portfolio past duration		2 years
Maximum [Member]
Subsequent Event [Line Items]
Evaluation in process confirmed sales loans held in portfolio past duration		5 years
Subsequent Event [Member] | Consumer Loans [Member]
Subsequent Event [Line Items]
Loans acquired	$ 25.1
Participating interest of acquired loan percentage	55.90%
Number of unsecured loans | Loan	2,787
Subsequent Event [Member] | Minimum [Member] | Consumer Loans [Member]
Subsequent Event [Line Items]
Maturity period of unsecured loans	3 years
Subsequent Event [Member] | Maximum [Member] | Consumer Loans [Member]
Subsequent Event [Line Items]
Maturity period of unsecured loans	5 years

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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Leases [Abstract]
Operating lease cost	$ 61	$ 180
Finance lease cost	$ 20	$ 32

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Loans - Summary of Impaired Loan Information by Portfolio Class (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
With an allowance recorded [Abstract]
Related Allowance	$ 779	$ 631
Total [Abstract]
Recorded Investment	8,087	5,987
Unpaid Principal Balance	8,164	6,054
Related Allowance	779	631
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
With no related allowance recorded [Abstract]
Recorded Investment	1,029	1,221
Unpaid Principal Balance	1,029	1,226
With an allowance recorded [Abstract]
Recorded Investment	587	606
Unpaid Principal Balance	587	606
Related Allowance	98	108
Total [Abstract]
Recorded Investment	1,616	1,827
Unpaid Principal Balance	1,616	1,832
Related Allowance	98	108
Commercial Loans [Member] | Real Estate [Member]
With no related allowance recorded [Abstract]
Recorded Investment	4,244	2,387
Unpaid Principal Balance	4,313	2,448
With an allowance recorded [Abstract]
Recorded Investment	451	486
Unpaid Principal Balance	451	486
Related Allowance	77	100
Total [Abstract]
Recorded Investment	4,695	2,873
Unpaid Principal Balance	4,764	2,934
Related Allowance	77	100
Commercial Loans [Member] | Lines of Credit [Member]
With no related allowance recorded [Abstract]
Recorded Investment	238	228
Unpaid Principal Balance	238	228
With an allowance recorded [Abstract]
Recorded Investment	110	28
Unpaid Principal Balance	110	28
Related Allowance	110	28
Total [Abstract]
Recorded Investment	348	256
Unpaid Principal Balance	348	256
Related Allowance	110	28
Commercial Loans [Member] | Other Commercial and Industrial [Member]
With no related allowance recorded [Abstract]
Recorded Investment	584	451
Unpaid Principal Balance	592	452
With an allowance recorded [Abstract]
Recorded Investment	531	373
Unpaid Principal Balance	531	373
Related Allowance	339	255
Total [Abstract]
Recorded Investment	1,115	824
Unpaid Principal Balance	1,123	825
Related Allowance	339	255
Commercial Loans [Member] | Other Consumer [Member]
With no related allowance recorded [Abstract]
Recorded Investment	56	0
Unpaid Principal Balance	56	0
With an allowance recorded [Abstract]
Recorded Investment	37	0
Unpaid Principal Balance	37	0
Related Allowance	3	0
Total [Abstract]
Recorded Investment	93	0
Unpaid Principal Balance	93	0
Related Allowance	3	0
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
With no related allowance recorded [Abstract]
Recorded Investment	41	0
Unpaid Principal Balance	41	0
With an allowance recorded [Abstract]
Recorded Investment	179	207
Unpaid Principal Balance	179	207
Related Allowance	152	140
Total [Abstract]
Recorded Investment	220	207
Unpaid Principal Balance	220	207
Related Allowance	$ 152	$ 140

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Allowance for Loan Losses - Schedule of Allowance for Loan Losses on Basis of Calculation Methodology (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	$ 779			$ 1,164
Historical loss rate	354			482
Qualitative factors	7,101			5,880
Other	96			278
Total	8,330	$ 7,825	$ 7,306	7,804	$ 7,605	$ 7,126
Unallocated [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	0			0
Historical loss rate	0			0
Qualitative factors	0			0
Other	96			278
Total	96	0	152	278	14	0
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	98			109
Historical loss rate	36			114
Qualitative factors	513			538
Total	647	724	766	761	722	865
Residential Mortgage Loans [Member] | Residential Construction Mortgage [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	0			0
Historical loss rate	0			0
Qualitative factors	0			0
Total	0	0	0	0	0	0
Commercial Loans [Member] | Real Estate [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	77			593
Historical loss rate	93			87
Qualitative factors	3,670			3,260
Total	3,840	3,452	3,578	3,940	4,141	3,589
Commercial Loans [Member] | Lines of Credit [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	110			46
Historical loss rate	37			18
Qualitative factors	909			721
Total	1,056	1,145	730	785	731	735
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	339			276
Historical loss rate	29			24
Qualitative factors	1,420			888
Total	1,788	1,702	1,285	1,188	1,271	1,214
Commercial Loans [Member] | Tax Exempt Loans [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	0			0
Historical loss rate	0			0
Qualitative factors	1			1
Other	0			0
Total	1	1	1	1	1	1
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	152			140
Historical loss rate	4			21
Qualitative factors	318			260
Other	0			0
Total	474	386	409	421	434	514
Consumer Loans [Member] | Other Consumer [Member]
Allowance For Loan Losses On Basis Of Calculation Methodology Abstract
Specifically reserved	3			0
Historical loss rate	155			218
Qualitative factors	270			212
Other	0			0
Total	$ 428	$ 415	$ 385	$ 430	$ 291	$ 208

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Fair Value Measurements - Additional Information (Details) - Corporate [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule Of Available For Sale Securities [Line Items]
Available for sale securities continuous unrealized loss position twelve months or more amortized historical cost basis	$ 2,300
Available for sale securities aggregate market value	2,269	$ 3,374
Level 2 [Member]
Schedule Of Available For Sale Securities [Line Items]
Available for sale securities continuous unrealized loss position twelve months or more amortized historical cost basis	4,800
Available for sale securities aggregate market value	$ 5,000

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
OPERATING ACTIVITIES
Net income attributable to Pathfinder Bancorp, Inc.	$ 2,416	$ 2,934
Adjustments to reconcile net income to net cash flows from operating activities:
Provision for loan losses	1,354	1,201
Amortization of operating leases	21	0
Proceeds from sales of loans	912	216
Originations of loans held-for-sale	(903)	(212)
Realized (gains) losses on sales, redemptions and calls of:
Real estate acquired through foreclosure	(24)	(22)
Loans	(19)	(2)
Available-for-sale investment securities	(246)	177
Held-to-maturity investment securities	14	12
Premises and equipment	0	(8)
Marketable equity securities	(61)	(26)
Depreciation	1,133	869
Amortization of mortgage servicing rights	(2)	3
Amortization of deferred loan costs	194	240
Amortization of deferred financing from subordinated debt	25	26
Earnings and gain on bank owned life insurance	(355)	(319)
Net amortization of premiums and discounts on investment securities	861	1,339
Amortization of intangible assets	12	13
Stock based compensation and ESOP expense	478	544
Net change in accrued interest receivable	(245)	132
Pension plan contribution	0	(825)
Net change in other assets and liabilities	990	(309)
Net cash flows from operating activities	6,555	5,983
INVESTING ACTIVITIES
Purchase of investment securities available-for-sale	(50,479)	(55,284)
Purchase of investment securities held-to-maturity	(72,346)	0
Purchase of Federal Home Loan Bank stock	(6,125)	(6,439)
Proceeds from redemption of Federal Home Loan Bank stock	7,852	6,107
Proceeds from maturities and principal reductions of investment securities available-for-sale	24,935	33,650
Proceeds from maturities and principal reductions of investment securities held-to-maturity	11,273	5,238
Proceeds from sales, redemptions and calls of:
Available-for-sale investment securities	86,555	33,421
Held-to-maturity investment securities	549	953
Real estate acquired through foreclosure	1,552	542
Premise and equipment	0	14
Purchase of bank owned life insurance	0	(5,000)
Proceeds from bank owned life insurance	0	228
Net change in loans	(106,657)	(41,111)
Purchase of premises and equipment	(2,921)	(2,176)
Net cash flows from investing activities	(105,812)	(29,857)
FINANCING ACTIVITIES
Net change in demand deposits, NOW accounts, savings accounts, money management deposit accounts, MMDA accounts and escrow deposits	17,133	(19,633)
Net change in time deposits	49,401	43,260
Net change in brokered deposits	66,015	8,974
Net change in short-term borrowings	(20,762)	(28,600)
Payments on long-term borrowings	(26,200)	(2,000)
Proceeds from long-term borrowings	7,680	36,348
Proceeds from exercise of stock options	200	362
Cash dividends paid to common shareholders	(808)	(764)
Cash dividends paid to preferred shareholders	(69)	0
Cash dividends paid on warrants	(8)	0
Proceeds from finance lease transaction	572	0
Change in noncontrolling interest, net	(9)	(90)
Net cash flows from financing activities	112,714	37,857
Change in cash and cash equivalents	13,457	13,983
Cash and cash equivalents at beginning of period	26,316	21,991
Cash and cash equivalents at end of period	39,773	35,974
CASH PAID DURING THE PERIOD FOR:
Interest	9,888	6,159
Income taxes	300	662
NON-CASH INVESTING ACTIVITY
Real estate acquired in exchange for loans	503	320
RESTRICTED CASH
Federal Reserve Bank Reserve Requirements included in interest earning deposits	0	4,478
Common Stock [Member]
FINANCING ACTIVITIES
Net proceeds from private placement	4,199	0
Preferred Stock [Member]
FINANCING ACTIVITIES
Net proceeds from private placement	$ 15,370	$ 0

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Investment Securities - Amortized Cost and Estimated Fair Value of Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	$ 119,756	$ 181,291
Gross Unrealized Gains, Debt investment securities	688	339
Gross Unrealized Losses, Debt investment securities	(648)	(4,172)
Available-for-sale Securities, Debt investment securities	119,796	177,458
Amortized cost, equity securities	206	206
Gross Unrealized Gains, Equity investment securities	0	0
Gross Unrealized Losses, Equity investment securities	0	0
Available-for-sale Securities, Equity investment securities	206	206
Total investment securities, amortized cost basis	119,962	181,497
Gross Unrealized Gains	688	339
Gross Unrealized Losses	(648)	(4,172)
Estimated Fair Value	120,002	177,664
Held-to-maturity securities, debt maturities, Amortized Cost	114,349	53,908
Held to maturity, gross unrealized gains	1,986	260
Held to maturity, gross unrealized losses	(148)	(399)
Held-to-maturity Securities, Debt Maturities, Fair Value	116,187	53,769
US Treasury, Agencies and GSEs [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	7,016	17,171
Gross Unrealized Gains, Debt investment securities	0	18
Gross Unrealized Losses, Debt investment securities	(30)	(158)
Available-for-sale Securities, Debt investment securities	6,986	17,031
Held-to-maturity securities, debt maturities, Amortized Cost	1,996	3,987
Held to maturity, gross unrealized gains	1	0
Held to maturity, gross unrealized losses	(2)	(35)
Held-to-maturity Securities, Debt Maturities, Fair Value	1,995	3,952
State and Political Subdivisions [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	4,805	23,661
Gross Unrealized Gains, Debt investment securities	2	6
Gross Unrealized Losses, Debt investment securities	0	(602)
Available-for-sale Securities, Debt investment securities	4,807	23,065
Held-to-maturity securities, debt maturities, Amortized Cost	8,523	5,089
Held to maturity, gross unrealized gains	186	22
Held to maturity, gross unrealized losses	(2)	(84)
Held-to-maturity Securities, Debt Maturities, Fair Value	8,707	5,027
Corporate [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	12,380	17,389
Gross Unrealized Gains, Debt investment securities	301	220
Gross Unrealized Losses, Debt investment securities	(16)	(409)
Available-for-sale Securities, Debt investment securities	12,665	17,200
Held-to-maturity securities, debt maturities, Amortized Cost	24,021	9,924
Held to maturity, gross unrealized gains	600	4
Held to maturity, gross unrealized losses	0	(182)
Held-to-maturity Securities, Debt Maturities, Fair Value	24,621	9,746
Asset Backed Securities [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	14,364	18,243
Gross Unrealized Gains, Debt investment securities	57	13
Gross Unrealized Losses, Debt investment securities	(43)	(137)
Available-for-sale Securities, Debt investment securities	14,378	18,119
Held-to-maturity securities, debt maturities, Amortized Cost	17,461	1,509
Held to maturity, gross unrealized gains	117	0
Held to maturity, gross unrealized losses	(71)	(13)
Held-to-maturity Securities, Debt Maturities, Fair Value	17,507	1,496
Residential Mortgage-Backed - US Agency [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	20,952	32,409
Gross Unrealized Gains, Debt investment securities	82	34
Gross Unrealized Losses, Debt investment securities	(40)	(777)
Available-for-sale Securities, Debt investment securities	20,994	31,666
Held-to-maturity securities, debt maturities, Amortized Cost	16,935	11,601
Held to maturity, gross unrealized gains	617	124
Held to maturity, gross unrealized losses	(1)	(47)
Held-to-maturity Securities, Debt Maturities, Fair Value	17,551	11,678
Collateralized Mortgage Obligations - US Agency [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	42,073	48,101
Gross Unrealized Gains, Debt investment securities	116	31
Gross Unrealized Losses, Debt investment securities	(464)	(1,691)
Available-for-sale Securities, Debt investment securities	41,725	46,441
Held-to-maturity securities, debt maturities, Amortized Cost	20,415	13,972
Held to maturity, gross unrealized gains	406	93
Held to maturity, gross unrealized losses	(7)	(13)
Held-to-maturity Securities, Debt Maturities, Fair Value	20,814	14,052
Collateralized Mortgage Obligations - Private Label [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Totals, amortized cost	18,166	24,317
Gross Unrealized Gains, Debt investment securities	130	17
Gross Unrealized Losses, Debt investment securities	(55)	(398)
Available-for-sale Securities, Debt investment securities	18,241	23,936
Held-to-maturity securities, debt maturities, Amortized Cost	24,998	7,826
Held to maturity, gross unrealized gains	59	17
Held to maturity, gross unrealized losses	(65)	(25)
Held-to-maturity Securities, Debt Maturities, Fair Value	24,992	7,818
Mutual funds Common Stock Financial Services Industry [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Amortized cost, equity securities	206	206
Gross Unrealized Gains, Equity investment securities	0	0
Gross Unrealized Losses, Equity investment securities	0	0
Available-for-sale Securities, Equity investment securities	$ 206	$ 206

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Leases (Tables)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Components of Lease Expense

The components of the lease expense are as follows:

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Operating lease cost	$	61	$	180
Finance lease cost		20		32

Supplemental Cash Flow Information Related To Leases

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Cash paid for amount included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	55	$	159
Operating cash flows from finance leases		20		32
Financing cash flows from finance leases		17		28

Supplemental Balance Sheet Information Related to Leases

Supplemental balance sheet information related to leases was as follows:

	September 30,
(In thousands, except lease term and discount rate)	2019
Operating Leases:
Operating lease right-of-use assets	$	2,422
Operating lease liabilities	$	2,681
Finance Leases:
Financial Liability	$	576
Weighted Average Remaining Lease Term:
Operating Leases	19.71 years
Finance Leases	29.67 years
Weighted Average Discount Rate:
Operating Leases		3.71	%
Finance Leases		13.75	%

Maturities of Lease Liabilities

Maturities of lease liabilities were as follows:

Years Ending September 30,
(In thousands)
2020	$	117
2021		104
2022		97
2023		107
2024		116
Thereafter		2,716
Total minimum lease payments	$	3,257

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Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Interest and dividend income:
Loans, including fees	$ 8,817	$ 7,213	$ 24,614	$ 20,949
Debt securities:
Taxable	1,770	1,348	5,224	3,647
Tax-exempt	11	143	170	608
Dividends	63	61	214	190
Federal funds sold and interest earning deposits	72	65	288	161
Total interest and dividend income	10,733	8,830	30,510	25,555
Interest expense:
Interest on deposits	2,845	1,839	7,930	4,750
Interest on short-term borrowings	89	41	314	204
Interest on long-term borrowings	378	338	1,158	716
Interest on subordinated loans	216	216	650	629
Total interest expense	3,528	2,434	10,052	6,299
Net interest income	7,205	6,396	20,458	19,256
Provision for loan losses	600	291	1,354	1,201
Net interest income after provision for loan losses	6,605	6,105	19,104	18,055
Noninterest income:
Earnings and gain on bank owned life insurance	133	138	355	319
Net gains (losses) on sales and redemptions of investment securities	121	(60)	232	(189)
Gains on marketable equity securities	4		61	26
Net gains on sales of loans and foreclosed real estate	38	8	43	24
Insurance agency revenue	170	174	631	639
Total noninterest income	1,286	940	3,598	2,859
Noninterest expense:
Salaries and employee benefits	3,275	3,191	10,379	9,381
Building and occupancy	699	601	1,986	1,689
Data processing	587	492	1,749	1,404
Professional and other services	352	359	1,068	1,095
Advertising	238	158	719	626
FDIC assessments	130	152	371	407
Audits and exams	104	104	304	314
Insurance agency expense	190	190	618	679
Community service activities	110	142	392	370
Foreclosed real estate expenses	28	19	324	93
Other expenses	569	504	1,622	1,440
Total noninterest expense	6,282	5,912	19,532	17,498
Income before income taxes	1,609	1,133	3,170	3,416
Provision for income taxes	324	157	750	505
Net income attributable to noncontrolling interest and Pathfinder Bancorp, Inc.	1,285	976	2,420	2,911
Net (loss) income attributable to noncontrolling interest	(10)	(9)	4	(23)
Net income attributable to Pathfinder Bancorp Inc.	1,295	985	2,416	2,934
Convertible preferred stock dividends	70		139
Warrant dividends	7		15
Undistributed earnings allocated to participating securities	206		195
Net income available to common shareholders	$ 1,012	$ 985	$ 2,067	$ 2,934
Earnings per common share - basic	$ 0.22	$ 0.23	$ 0.47	$ 0.71
Earnings per common share - diluted	0.22	0.23	0.47	0.69
Dividends per common share	$ 0.06	$ 0.06	$ 0.18	$ 0.18
Service Charges on Deposit Accounts [Member]
Noninterest income:
Noninterest income	$ 399	$ 291	$ 1,029	$ 838
Loan Servicing Fees [Member]
Noninterest income:
Noninterest income	57	25	144	108
Debit Card Interchange Fees [Member]
Noninterest income:
Noninterest income	166	141	497	432
Other Charges, Commissions & Fees [Member]
Noninterest income:
Noninterest income	$ 198	$ 223	$ 606	$ 662

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

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

The following tables summarize 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, 2019
								Total Fair
(In thousands)	Level 1		Level 2			Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	6,986		$	-	$	6,986
State and political subdivisions		-		4,807			-		4,807
Corporate		-		7,621			-		7,621
Asset backed securities		-		14,378			-		14,378
Residential mortgage-backed - US agency		-		20,994			-		20,994
Collateralized mortgage obligations - US agency		-		41,725			-		41,725
Collateralized mortgage obligations - Private label		-		18,241			-		18,241
Total				114,752					114,752
Corporate measured at NAV		-		-			-		5,044
Total available-for-sale securities	$	-	$	114,752		$	-	$	119,796
Marketable equity securities	$	-	$	514		$	-	$	514
Interest rate swap derivative	$	-	$	(115	)	$	-	$	(115	)

	December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	17,031	$	-	$	17,031
State and political subdivisions		-		23,065		-		23,065
Corporate		-		12,141		-		12,141
Asset backed securities		-		18,119		-		18,119
Residential mortgage-backed - US agency		-		31,666		-		31,666
Collateralized mortgage obligations - US agency		-		46,441		-		46,441
Collateralized mortgage obligations - Private label		-		23,936		-		23,936
Total				172,399				172,399
Corporate measured at NAV		-		-		-		5,059
Total available-for-sale securities	$	-	$	172,399	$	-	$	177,458
Marketable equity securities	$	-	$	453	$	-	$	453

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, 2019 and December 31, 2018: 

			September 30, 2019
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	3,055	$	3,055
Foreclosed real estate	$	-	$	-	$	60	$	60

			December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	1,098	$	1,098
Foreclosed real estate	$	-	$	-	$	1,173	$	1,173

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, 2019
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 20% (9%)
	(Sales Approach)	Costs to Sell	7% - 13% (10%)
	Discounted Cash Flow
Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 9% (8%)

		Quantitative Information about Level 3 Fair Value Measurements
	Valuation	Unobservable	Range
	Techniques	Input	(Weighted Avg.)
At December 31, 2018
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 15% (6%)
	(Sales Approach)	Costs to Sell	5% - 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, 2019				December 31, 2018
	Fair Value	Carrying		Estimated		Carrying		Estimated
(In thousands)	Hierarchy	Amounts		Fair Values		Amounts		Fair Values
Financial assets:
Cash and cash equivalents	1	$	39,773	$	39,773	$	26,316	$	26,316
Investment securities - available-for-sale	2		114,752		114,752		172,399		172,399
Investment securities - available-for-sale	NAV		5,044		5,044		5,059		5,059
Investment securities - marketable equity	2		514		514		453		453
Investment securities - held-to-maturity	2		114,349		116,187		53,908		53,769
Federal Home Loan Bank stock	2		4,210		4,210		5,937		5,937
Net loans	3		717,570		717,687		612,964		601,789
Accrued interest receivable	1		3,313		3,313		3,068		3,068
Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	1	$	467,391	$	467,391	$	450,267	$	450,267
Time Deposits	2		392,218		393,320		276,793		275,727
Borrowings	2		79,252		79,742		118,534		118,379
Subordinated loans	2		15,119		14,766		15,094		14,485
Accrued interest payable	1		468		468		304		304
Interest rate swap derivative	2		115		115		-		-

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Pension and Postretirement Benefits

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Pension and Postretirement Benefits

Note 5:   Pension and Postretirement Benefits

The Company has a noncontributory defined benefit pension plan covering most employees. The plan provides defined benefits based on years of service and final average salary. On May 14, 2012, the Company informed its employees of its decision to freeze participation and benefit accruals under the plan, primarily to reduce some of the volatility in earnings that can accompany the maintenance of a defined benefit plan.  The plan was frozen on June 30, 2012.  Compensation earned by employees up to June 30, 2012 is used for purposes of calculating benefits under the plan but there are no future benefit accruals after this date.  Participants as of June 30, 2012 will continue to earn vesting credit with respect to their frozen accrued benefits as they continue to work. In addition, the Company provides certain health and life insurance benefits for a limited number of eligible retired employees.  The healthcare plan is contributory with participants’ contributions adjusted annually; the life insurance plan is noncontributory.  Employees with less than 14 years of service as of January 1, 1995, are not eligible for the health and life insurance retirement benefits.

The composition of net periodic pension plan and postretirement plan costs for the indicated periods is as follows:

	Pension Benefits						Postretirement Benefits						Pension Benefits						Postretirement Benefits
	For the three months ended September 30,												For the nine months ended September 30,
(In thousands)	2019			2018			2019			2018			2019			2018			2019			2018
Service cost	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Interest cost		124			119			6			5			371			355			16			16
Expected return on plan assets		(234	)		(260	)		-			-			(701	)		(778	)		-			-
Amortization of prior service credits		-			-			(1	)		(1	)		-			-			(3	)		(3	)
Amortization of net losses		82			41			3			3			246			123			9			9
Net periodic benefit plan (benefit) cost	$	(28	)	$	(100	)	$	8		$	7		$	(84	)	$	(300	)	$	22		$	22

The Company will evaluate the need for further contributions to the defined benefit pension plan during 2019.  The prepaid pension asset is recorded in other assets on the statement of condition as of September 30, 2019 and December 31, 2018.

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Guarantees

9 Months Ended

Sep. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Guarantees

Note 9:   Guarantees

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit.  Generally, all letters of credit, when issued have expiration dates within one year.  The credit risks involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers.  The Company generally holds collateral and/or personal guarantees supporting these commitments.  The Company had $2.2 million of standby letters of credit as of September 30, 2019.  Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payments required under the corresponding guarantees.   The fair value of standby letters of credit was not significant to the Company’s consolidated financial statements.

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Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Cash paid for amount included in the measurement of lease liabilities:
Operating cash flows from operating leases	$ 55	$ 159
Operating cash flows from finance leases	20	32
Financing cash flows from finance leases	$ 17	$ 28

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Guarantees - Additional Information (Details) $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($)
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Maximum amount of loss due to credit risk	$ 2.2

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Loans - Troubled Debt Restructurings on Financing Receivables (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019 Loan	Sep. 30, 2018 Loan	Sep. 30, 2019 USD ($) Loan	Sep. 30, 2018 USD ($) Loan
Troubled Debt Restructuring, Modified [Abstract]
Number of loans | Loan	0	0	1	1
Residential Real Estate Loans [Member]
Troubled Debt Restructuring, Modified [Abstract]
Number of loans | Loan			1
Pre-modification outstanding recorded investment			$ 205
Post-modification outstanding recorded investment			250
Additional provision for loan losses			$ 0
Other Commercial and Industrial Loans [Member]
Troubled Debt Restructuring, Modified [Abstract]
Number of loans | Loan				1
Pre-modification outstanding recorded investment				$ 300
Post-modification outstanding recorded investment				300
Additional provision for loan losses				$ 0

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Allowance for Loan Losses - Changes in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Allowance for loan losses:
Beginning Balance	$ 7,825	$ 7,605	$ 7,306	$ 7,126
Charge-offs	(123)	(104)	(374)	(645)
Recoveries	28	12	44	122
Provisions (credits)	600	291	1,354	1,201
Ending balance	8,330	7,804	8,330	7,804
Ending balance: related to loans individually evaluated for impairment	779	1,164	779	1,164
Ending balance: related to loans collectively evaluated for impairment	7,551	6,640	7,551	6,640
Total Loans Receivable	725,840	621,059	725,840	621,059	$ 620,405
Ending balance: individually evaluated for impairment	8,087	7,522	8,087	7,522
Ending balance: collectively evaluated for impairment	717,753	613,537	717,753	613,537
Unallocated [Member]
Allowance for loan losses:
Beginning Balance	0	14	152	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	96	264	(56)	278
Ending balance	96	278	96	278
Ending balance: related to loans individually evaluated for impairment	0	0	0	0
Ending balance: related to loans collectively evaluated for impairment	96	278	96	278
Residential Mortgage Loans [Member]
Allowance for loan losses:
Total Loans Receivable	246,058		246,058		239,644
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Allowance for loan losses:
Beginning Balance	724	722	766	865
Charge-offs	0	(27)	(11)	(219)
Recoveries	0	1	1	21
Provisions (credits)	(77)	65	(109)	94
Ending balance	647	761	647	761
Ending balance: related to loans individually evaluated for impairment	98	109	98	109
Ending balance: related to loans collectively evaluated for impairment	549	652	549	652
Total Loans Receivable	241,817	231,830	241,817	231,830	232,523
Ending balance: individually evaluated for impairment	1,616	1,835	1,616	1,835
Ending balance: collectively evaluated for impairment	240,201	229,995	240,201	229,995
Residential Mortgage Loans [Member] | Residential Construction Mortgage [Member]
Allowance for loan losses:
Beginning Balance	0	0	0	0
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	0	0	0	0
Ending balance	0	0	0	0
Ending balance: related to loans individually evaluated for impairment	0	0	0	0
Ending balance: related to loans collectively evaluated for impairment	0	0	0	0
Total Loans Receivable	4,241	3,888	4,241	3,888
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	4,241	3,888	4,241	3,888
Commercial Loans [Member]
Allowance for loan losses:
Total Loans Receivable	382,784		382,784		329,228
Commercial Loans [Member] | Real Estate [Member]
Allowance for loan losses:
Beginning Balance	3,452	4,141	3,578	3,589
Charge-offs	0	(31)	0	(31)
Recoveries	0	0	0	0
Provisions (credits)	388	(170)	262	382
Ending balance	3,840	3,940	3,840	3,940
Ending balance: related to loans individually evaluated for impairment	77	593	77	593
Ending balance: related to loans collectively evaluated for impairment	3,763	3,347	3,763	3,347
Total Loans Receivable	235,364	213,303	235,364	213,303	212,314
Ending balance: individually evaluated for impairment	4,695	4,463	4,695	4,463
Ending balance: collectively evaluated for impairment	230,669	208,840	230,669	208,840
Commercial Loans [Member] | Lines of Credit [Member]
Allowance for loan losses:
Beginning Balance	1,145	731	730	735
Charge-offs	(5)	(12)	(136)	(62)
Recoveries	0	0	0	66
Provisions (credits)	(84)	66	462	46
Ending balance	1,056	785	1,056	785
Ending balance: related to loans individually evaluated for impairment	110	46	110	46
Ending balance: related to loans collectively evaluated for impairment	946	739	946	739
Total Loans Receivable	58,408	48,496	58,408	48,496	44,235
Ending balance: individually evaluated for impairment	348	162	348	162
Ending balance: collectively evaluated for impairment	58,060	48,334	58,060	48,334
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Allowance for loan losses:
Beginning Balance	1,702	1,271	1,285	1,214
Charge-offs	(4)	(1)	(6)	(172)
Recoveries	1	0	1	0
Provisions (credits)	89	(82)	508	146
Ending balance	1,788	1,188	1,788	1,188
Ending balance: related to loans individually evaluated for impairment	339	276	339	276
Ending balance: related to loans collectively evaluated for impairment	1,449	912	1,449	912
Total Loans Receivable	80,829	60,984	80,829	60,984	63,359
Ending balance: individually evaluated for impairment	1,115	856	1,115	856
Ending balance: collectively evaluated for impairment	79,714	60,128	79,714	60,128
Commercial Loans [Member] | Tax Exempt Loans [Member]
Allowance for loan losses:
Beginning Balance	1	1	1	1
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provisions (credits)	0	0	0	0
Ending balance	1	1	1	1
Ending balance: related to loans individually evaluated for impairment	0	0	0	0
Ending balance: related to loans collectively evaluated for impairment	1	1	1	1
Total Loans Receivable	8,183	10,163	8,183	10,163	9,320
Ending balance: individually evaluated for impairment	0	0	0	0
Ending balance: collectively evaluated for impairment	8,183	10,163	8,183	10,163
Consumer Loans [Member]
Allowance for loan losses:
Total Loans Receivable	96,998		96,998		51,533
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Allowance for loan losses:
Beginning Balance	386	434	409	514
Charge-offs	(7)	0	(7)	(17)
Recoveries	0	5	0	6
Provisions (credits)	95	(18)	72	(82)
Ending balance	474	421	474	421
Ending balance: related to loans individually evaluated for impairment	152	140	152	140
Ending balance: related to loans collectively evaluated for impairment	322	281	322	281
Total Loans Receivable	47,512	25,985	47,512	25,985	26,109
Ending balance: individually evaluated for impairment	220	206	220	206
Ending balance: collectively evaluated for impairment	47,292	25,779	47,292	25,779
Consumer Loans [Member] | Other Consumer [Member]
Allowance for loan losses:
Beginning Balance	415	291	385	208
Charge-offs	(107)	(33)	(214)	(144)
Recoveries	27	6	42	29
Provisions (credits)	93	166	215	337
Ending balance	428	430	428	430
Ending balance: related to loans individually evaluated for impairment	3	0	3	0
Ending balance: related to loans collectively evaluated for impairment	425	430	425	430
Total Loans Receivable	49,486	26,410	49,486	26,410	$ 25,424
Ending balance: individually evaluated for impairment	93	0	93	0
Ending balance: collectively evaluated for impairment	$ 49,393	$ 26,410	$ 49,393	$ 26,410

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Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Consolidated Statements of Comprehensive Income [Abstract]
Net Income		$ 1,285	$ 976	$ 2,420	$ 2,911
Retirement Plans:
Retirement plan net losses recognized in plan expenses		84	43	252	129
Unrealized holding gains (losses) on available-for-sale securities
Unrealized holding gains (losses) arising during the period		357	(618)	4,105	(3,120)
Reclassification adjustment for net (gains) losses included in net income		(121)	60	(232)	189
Net unrealized gains (losses) on available-for-sale securities		236	(558)	3,873	(2,931)
Accretion of net unrealized loss on securities transferred to held-to-maturity	[1]	6	5	22	168
Other comprehensive income (loss), before tax		326	(510)	4,147	(2,634)
Tax effect		(68)	133	(871)	688
Other comprehensive income (loss), net of tax		258	(377)	3,276	(1,946)
Comprehensive income		1,543	599	5,696	965
Comprehensive (loss) income, attributable to noncontrolling interest		(10)	(9)	4	(23)
Comprehensive income attributable to Pathfinder Bancorp, Inc.		1,553	608	5,692	988
Tax Effect Allocated to Each Component of Other Comprehensive Income (Loss)
Retirement plan net losses recognized in plan expenses		(17)	(12)	(54)	(34)
Unrealized holding gains (losses) arising during the period		(75)	162	(861)	815
Reclassification adjustment for net (gains) losses included in net income		25	(16)	49	(49)
Accretion of net unrealized loss on securities transferred to held-to-maturity	[1]	(1)	(1)	(5)	(44)
Income tax effect related to other comprehensive income (loss)		$ (68)	$ 133	$ (871)	$ 688

[1] The accretion of the unrealized holding losses in accumulated other comprehensive loss at the date of transfer at September 30, 2013 partially offsets the amortization of the difference between the par value and the fair value of the investment securities at the date of transfer, and is an adjustment of yield.

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Basis of Presentation - Additional Information (Details)	Sep. 30, 2019
Nature of Operations [Line Items]
Consolidation of membership interest in Fitzgibbons	100.00%
FitzGibbons Agency LLC [Member] | Pathfinder Risk Management Company Inc [Member]
Nature of Operations [Line Items]
Membership interest own in Fitzgibbons through subsidiary	51.00%
Noncontrolling interest by subsidiary	49.00%

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Interest Rate Derivatives (Tables)

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Cumulative Basis Adjustments for Fair Value Hedges

As of September 30, 2019, the following amounts were recorded on the balance sheet related to the cumulative basis adjustments for fair value hedges:

(In thousands)	Carrying Amount of the Hedged Assets at September 30, 2019		Cumulative Amount of Fair Value Hedging Adjustment Included in The Carrying Amount of the Hedged Assets at September 30, 2019
Line item on the balance sheet in which the hedged item is included:
Loans receivable (1)	$	20,952	$	92

(1) These amounts include the amortized cost basis of the closed portfolio used to designate the hedging relationship in which the hedged item is the remaining amortized cost of the last layer expected to be remaining at the end of the hedging relationship.  At September 30, 2019, the amortized cost of the basis of the closed portfolio used in the hedging relationship was $21.0 million, the cumulative basis adjustment associated with the hedging relationship was $92,000, and the amount of the designated hedged item was $9.2 million.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 11, 2019
Cover [Abstract]
Entity Registrant Name	PATHFINDER BANCORP, INC.
Entity Central Index Key	0001609065
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		4,707,875
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity File Number	001-36695
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	38-3941859
Entity Address, Address Line One	214 West First Street
Entity Address, City or Town	Oswego
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	13126
City Area Code	315
Local Phone Number	343-0057
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Title of each class	Common Stock, $0.01 par value
Trading Symbol	PBHC
Name of each exchange on which registered	NASDAQ

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Investment Securities - Amortized Cost and Estimated Fair Value of Debt Investments by Contractual Maturity (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Available-for-sale securities, debt maturities, amortized cost [Abstract]
Due in one year or less	$ 3,318
Due after one year through five years	12,814
Due after five years through ten years	17,380
Due after ten years	5,053
Sub-total	38,565
Amortized cost	119,756	$ 181,291
Available-for-sale securities, debt maturities, Estimated Fair Value [Abstract]
Due in one year or less	3,319
Due after one year through five years	13,080
Due after five years through ten years	17,392
Due after ten years	5,045
Sub-total	38,836
Available-for-sale securities, debt maturities, fair value, totals	119,796
Held-to-maturity Securities, debt maturities, amortized cost [Abstract]
Due in one year or less	2,099
Due after one year through five years	18,518
Due after five years through ten years	16,093
Due after ten years	15,291
Sub-total	52,001
Held-to-maturity securities, debt maturities, Amortized Cost	114,349	53,908
Held-to-maturity Securities, debt maturities, Estimated Fair Value [Abstract]
Due in one year or less	2,102
Due after one year through five years	18,762
Due after five years through ten years	16,610
Due after ten years	15,356
Sub-total	52,830
Held-to-maturity securities at fair value	116,187	53,769
Residential Mortgage-Backed - US Agency [Member]
Available-for-sale securities, debt maturities, amortized cost [Abstract]
Amortized cost	20,952	32,409
Available-for-sale securities, debt maturities, Estimated Fair Value [Abstract]
Available-for-sale securities, debt maturities, fair value, totals	20,994
Held-to-maturity Securities, debt maturities, amortized cost [Abstract]
Held-to-maturity securities, debt maturities, Amortized Cost	16,935	11,601
Held-to-maturity Securities, debt maturities, Estimated Fair Value [Abstract]
Held-to-maturity securities at fair value	17,551	11,678
Collateralized Mortgage Obligations - US Agency [Member]
Available-for-sale securities, debt maturities, amortized cost [Abstract]
Amortized cost	42,073	48,101
Available-for-sale securities, debt maturities, Estimated Fair Value [Abstract]
Available-for-sale securities, debt maturities, fair value, totals	41,725
Held-to-maturity Securities, debt maturities, amortized cost [Abstract]
Held-to-maturity securities, debt maturities, Amortized Cost	20,415	13,972
Held-to-maturity Securities, debt maturities, Estimated Fair Value [Abstract]
Held-to-maturity securities at fair value	20,814	14,052
Collateralized Mortgage Obligations - Private Label [Member]
Available-for-sale securities, debt maturities, amortized cost [Abstract]
Amortized cost	18,166	24,317
Available-for-sale securities, debt maturities, Estimated Fair Value [Abstract]
Available-for-sale securities, debt maturities, fair value, totals	18,241
Held-to-maturity Securities, debt maturities, amortized cost [Abstract]
Held-to-maturity securities, debt maturities, Amortized Cost	24,998	7,826
Held-to-maturity Securities, debt maturities, Estimated Fair Value [Abstract]
Held-to-maturity securities at fair value	$ 24,992	$ 7,818

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Basis of Presentation

9 Months Ended

Sep. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

Note 1:   Basis of Presentation

The accompanying unaudited consolidated financial statements of Pathfinder Bancorp, Inc., (the “Company”), Pathfinder Bank (the “Bank”) and its other wholly owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, the instructions for Form 10-Q and Article 8 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes necessary for a complete presentation of consolidated financial condition, results of operations and cash flows in conformity with generally accepted accounting principles.  In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included.  Certain amounts in the 2018 consolidated financial statements may have been reclassified to conform to the current period presentation.  These reclassifications had no effect on net income or comprehensive income as previously reported.  Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2019 or any other interim period.  

The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow practices within the banking industry.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes.  These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.  Certain accounting policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and information used to record valuation adjustments for certain assets and liabilities are based on quoted market prices or are provided by unaffiliated third-party sources, when available.  When third party information is not available, valuation adjustments are estimated in good faith by management.

Although the Company owns, through its subsidiary Pathfinder Risk Management Company, Inc., 51% of the membership interest in FitzGibbons Agency, LLC (“Agency”), the Company is required to consolidate 100% of the Agency within the consolidated financial statements.  The 49% of which the Company does not own is accounted for separately as noncontrolling interests within the consolidated financial statements.

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Investment Securities

9 Months Ended

Sep. 30, 2019

Investments Debt And Equity Securities [Abstract]

Investment Securities

Note 4:   Investment Securities

The amortized cost and estimated fair value of investment securities are summarized as follows:

	September 30, 2019
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	7,016	$	-	$	(30	)	$	6,986
State and political subdivisions		4,805		2		-			4,807
Corporate		12,380		301		(16	)		12,665
Asset backed securities		14,364		57		(43	)		14,378
Residential mortgage-backed - US agency		20,952		82		(40	)		20,994
Collateralized mortgage obligations - US agency		42,073		116		(464	)		41,725
Collateralized mortgage obligations - Private label		18,166		130		(55	)		18,241
Total		119,756		688		(648	)		119,796
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	119,962	$	688	$	(648	)	$	120,002
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	1,996	$	1	$	(2	)	$	1,995
State and political subdivisions		8,523		186		(2	)		8,707
Corporate		24,021		600		-			24,621
Asset backed securities		17,461		117		(71	)		17,507
Residential mortgage-backed - US agency		16,935		617		(1	)		17,551
Collateralized mortgage obligations - US agency		20,415		406		(7	)		20,814
Collateralized mortgage obligations - Private label		24,998		59		(65	)		24,992
Total held-to-maturity	$	114,349	$	1,986	$	(148	)	$	116,187

	December 31, 2018
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	17,171	$	18	$	(158	)	$	17,031
State and political subdivisions		23,661		6		(602	)		23,065
Corporate		17,389		220		(409	)		17,200
Asset backed securities		18,243		13		(137	)		18,119
Residential mortgage-backed - US agency		32,409		34		(777	)		31,666
Collateralized mortgage obligations - US agency		48,101		31		(1,691	)		46,441
Collateralized mortgage obligations - Private label		24,317		17		(398	)		23,936
Total		181,291		339		(4,172	)		177,458
Equity investment securities:
Common stock - financial services industry		206		-		-			206
Total		206		-		-			206
Total available-for-sale	$	181,497	$	339	$	(4,172	)	$	177,664
Held-to-Maturity Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	3,987	$	-	$	(35	)	$	3,952
State and political subdivisions		5,089		22		(84	)		5,027
Corporate		9,924		4		(182	)		9,746
Asset backed securities		1,509		-		(13	)		1,496
Residential mortgage-backed - US agency		11,601		124		(47	)		11,678
Collateralized mortgage obligations - US agency		13,972		93		(13	)		14,052
Collateralized mortgage obligations - Private label		7,826		17		(25	)		7,818
Total held-to-maturity	$	53,908	$	260	$	(399	)	$	53,769

The amortized cost and estimated fair value of debt investments at September 30, 2019 by contractual maturity are shown below.  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

	Available-for-Sale				Held-to-Maturity
	Amortized		Estimated		Amortized		Estimated
(In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	3,318	$	3,319	$	2,099	$	2,102
Due after one year through five years		12,814		13,080		18,518		18,762
Due after five years through ten years		17,380		17,392		16,093		16,610
Due after ten years		5,053		5,045		15,291		15,356
Sub-total		38,565		38,836		52,001		52,830
Residential mortgage-backed - US agency		20,952		20,994		16,935		17,551
Collateralized mortgage obligations - US agency		42,073		41,725		20,415		20,814
Collateralized mortgage obligations - Private label		18,166		18,241		24,998		24,992
Totals	$	119,756	$	119,796	$	114,349	$	116,187

The Company’s debt investment securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	September 30, 2019
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		2	$	(30	)	$	6,966		-	$	-		$	-		2	$	(30	)	$	6,966
Corporate		2		(4	)		1,566		4		(12	)		2,269		6		(16	)		3,835
Asset backed securities		4		(21	)		7,266		1		(22	)		895		5		(43	)		8,161
Residential mortgage-backed - US agency		6		(29	)		6,734		4		(11	)		2,651		10		(40	)		9,385
Collateralized mortgage obligations - US agency		6		(36	)		10,468		15		(428	)		16,212		21		(464	)		26,680
Collateralized mortgage obligations - Private label		3		(22	)		5,251		4		(33	)		3,433		7		(55	)		8,684
Totals		23	$	(142	)	$	38,251		28	$	(506	)	$	25,460		51	$	(648	)	$	63,711
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(2	)	$	998		-	$	-		$	-		1	$	(2	)	$	998
State and political subdivisions		1		(2	)		2,013		-		-			-		1		(2	)		2,013
Asset backed securities		1		(71	)		2,722		-		-			-		1		(71	)		2,722
Residential mortgage-backed - US agency		-		-			-		1		(1	)		221		1		(1	)		221
Collateralized mortgage obligations - US agency		1		(7	)		1,693		-		-			-		1		(7	)		1,693
Collateralized mortgage obligations - Private label		5		(60	)		8,318		2		(5	)		1,345		7		(65	)		9,663
Totals		9	$	(142	)	$	15,744		3	$	(6	)	$	1,566		12	$	(148	)	$	17,310

	December 31, 2018
	Less than Twelve Months							Twelve Months or More							Total
	Number of							Number of							Number of
	Individual		Unrealized			Fair		Individual		Unrealized			Fair		Individual		Unrealized			Fair
(Dollars in thousands)	Securities		Losses			Value		Securities		Losses			Value		Securities		Losses			Value
Available-for-Sale Portfolio
US Treasury, agencies and GSE's		1	$	(22	)	$	977		2	$	(136	)	$	12,017		3	$	(158	)	$	12,994
State and political subdivisions		5		(76	)		5,213		26		(526	)		14,206		31		(602	)		19,419
Corporate		10		(137	)		8,266		4		(272	)		3,374		14		(409	)		11,640
Asset backed securities		7		(91	)		10,470		2		(46	)		3,059		9		(137	)		13,529
Residential mortgage-backed - US agency		6		(83	)		3,519		21		(694	)		24,154		27		(777	)		27,673
Collateralized mortgage obligations - US agency		3		(98	)		2,792		28		(1,593	)		35,765		31		(1,691	)		38,557
Collateralized mortgage obligations - Private label		7		(275	)		14,011		5		(123	)		5,907		12		(398	)		19,918
Totals		39	$	(782	)	$	45,248		88	$	(3,390	)	$	98,482		127	$	(4,172	)	$	143,730
Held-to-Maturity Portfolio
US Treasury, agencies and GSE's		1	$	(8	)	$	982		3	$	(27	)	$	2,970		4	$	(35	)	$	3,952
State and political subdivisions		-		-			-		6		(84	)		2,310		6		(84	)		2,310
Corporate		4		(41	)		3,214		2		(141	)		2,507		6		(182	)		5,721
Asset backed securities		1		(13	)		1,496		-		-			-		1		(13	)		1,496
Residential mortgage-backed - US agency		3		(8	)		1,447		2		(39	)		1,769		5		(47	)		3,216
Collateralized mortgage obligations - US agency		4		(13	)		3,972		-		-			-		4		(13	)		3,972
Collateralized mortgage obligations - Private label		-		-			-		2		(25	)		1,874		2		(25	)		1,874
Totals		13	$	(83	)	$	11,111		15	$	(316	)	$	11,430		28	$	(399	)	$	22,541

Excluding the effects of changes in the characteristics of individual debt securities that potentially give rise to other-than-temporary impairment (“OTTI”), as described below, the fair market value of a debt security as of a particular measurement date is highly dependent upon prevailing market and economic environmental factors at the measurement date relative to the prevailing market and economic environmental factors present at the time the debt security was acquired.  The most significant market and environmental factors include, but are not limited to (1) the general level of interest rates, (2) the relationship between shorter-term interest rates and longer-term interest rates (referred to as the “slope” of the interest rate yield curve), (3) general bond market liquidity, (4) the recent and expected near-term volume of new issuances of similar debt securities, and (5) changes in the market values of individual loan collateral underlying mortgage-backed debt securities.  Changes in interest rates affect the fair market values of debt securities by influencing the discount rate applied to the securities’ future expected cash flows.  The higher the discount rate, the lower the resultant security price.  Conversely, the lower the discount rate, the higher the resultant security price.  In addition, the cumulative amount and timing of undiscounted cash flows of debt securities may be also affected by changes in interest rates.  For any given level of movement in the general market and economic environmental factors described above, the magnitude of any particular debt security’s price changes will also depend heavily upon security-specific factors such as (1) the duration of the security, (2) imbedded optionality contractually granted to the issuer of the security with respect to principal prepayments, and (3) changes in the level of market premiums demanded by investors for securities with imbedded credit risk (where applicable).

The Company conducts a formal review of investment securities on a quarterly basis for the presence of OTTI.  The Company assesses whether OTTI is present when the fair value of a debt security is less than its amortized cost basis at the statement of condition date.  Under these circumstances, OTTI is considered to have occurred (1) if we intend to sell the security; (2) if it is “more likely than not” we will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not anticipated to be sufficient to recover the entire amortized cost basis.  The guidance requires that credit-related OTTI is recognized in earnings while non-credit-related OTTI on securities not expected to be sold is recognized in other comprehensive income (“OCI”).  Non-credit-related OTTI is based on other factors, including illiquidity and changes in the general interest rate environment.  Presentation of OTTI is made in the consolidated statement of income on a gross basis, including both the portion recognized in earnings as well as the portion recorded in OCI.  The gross OTTI would then be offset by the amount of non-credit-related OTTI, showing the net as the impact on earnings.

Management does not believe any individual unrealized loss in securities within the portfolio as of September 30, 2019 represents OTTI.  At September 30, 2019, the Bank had the following securities, in a loss position for 12 months or more relative to their amortized historical cost, which were deemed to have no credit impairment, thus, the disclosed unrealized losses relate directly to changes in interest rates subsequent to the acquisition of the individual securities.  The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell these securities prior to the recovery of the amortized cost.

• Four corporate securities, categorized as available-for-sale, with an aggregate amortized historical cost of $2.3 million and an aggregate market value of $2.3 million (unrealized aggregate loss of $12,000, or 0.53%).  Each of these securities maintains a credit rating established by one or more NRSRO above the minimum level required to be considered investment grade and, therefore, no credit-related OTTI is deemed to be present.

• One privately-issued asset-backed securities, categorized as available-for-sale, with an amortized historical cost of $917,000 and an aggregate market value of $895,000 (unrealized loss of $22,000 or 2.44%).  This security maintains a credit rating established by one or more NRSRO above the minimum level required to be considered as investment grade and therefore, no credit-related OTTI is deemed to be present.   

• Four privately-issued collateralized mortgage obligation securities, categorized as available-for-sale, with an aggregate amortized historical cost of $3.5 million and an aggregate market value of $3.4 million (unrealized aggregate loss of $33,000, or 0.96%).  These securities were not rated at the time of their issuance by any NRSRO but each security remains significantly collateralized through subordination. Therefore, no credit-related OTTI is deemed to be present.   

• Two privately-issued collateralized mortgage obligation securities, categorized as held-to-maturity, with an aggregate amortized historical cost of $1.4 million and an aggregate market value of $1.3 million (aggregate unrealized loss of $5,000, or 0.39%).  These securities were not rated at the time of their issuance by any NRSRO but each security remains significantly collateralized through subordination. Therefore, no credit-related OTTI is deemed to be present.    

All other securities with market values less than their amortized historical costs for twelve or more months are issued by United States agencies or government sponsored enterprises and consist of mortgage-backed securities, collateralized mortgage obligations and direct agency financings.  These positions in US government agency and government-sponsored enterprises are deemed to have no credit impairment, thus, the disclosed unrealized losses relate directly to changes in interest rates subsequent to the acquisition of the individual securities.  The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell these securities prior to the recovery of the amortized cost.

In determining whether OTTI has occurred for equity securities, the Company considers the applicable factors described above and the length of time the equity security’s fair value has been below the carrying amount. The Company had no equity investment securities that were impaired at September 30, 2019 or December 31, 2018.

Gross realized gains (losses) on sales of securities for the indicated periods are detailed below:

	For the three months						For the nine months
	ended September 30,						ended September 30,
(In thousands)	2019			2018			2019			2018
Realized gains on investments	$	143		$	76		$	544		$	236
Realized losses on investments		(22	)		(136	)		(312	)		(425	)
	$	121		$	(60	)	$	232		$	(189	)

As of September 30, 2019 and December 31, 2018, securities with a fair value of $104.1 million and $69.8 million, respectively, were pledged to collateralize certain municipal deposit relationships.  As of the same dates, securities with a fair value of $22.2 million and $19.5 million were pledged against the Company’s established borrowing arrangements.  

Management has reviewed its loan and mortgage-backed securities portfolios and determined that, to the best of its knowledge, only minimal exposure exists to sub-prime or other high-risk residential mortgages.  With limited exceptions in the Company’s investment portfolio involving the most senior tranches of securitized bonds, the Company is not in the practice of investing in, or originating, these types of investments or loans.

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Foreclosed Real Estate

9 Months Ended

Sep. 30, 2019

Real Estate Owned Disclosure Of Detailed Components [Abstract]

Foreclosed Real Estate

Note 8:   Foreclosed Real Estate

The Company is required to disclose the carrying amount of foreclosed residential real estate properties held as a result of obtaining physical possession of the property at each reporting period.

(Dollars in thousands)	Number of properties		September 30, 2019		Number of properties		December 31, 2018
Foreclosed residential real estate		1	$	60		2	$	73

At September 30, 2019 and December 31, 2018, the Company reported $302,000 and $951,000, respectively, in residential real estate loans in the process of foreclosure.

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Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2019

Allowance For Loan Losses [Abstract]

Changes in the Allowance for Loan Losses

An allocation of a portion of the allowance to a given portfolio class does not limit the Company’s ability to absorb losses in another portfolio class.

	For the three months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	724		$	-		$	3,452		$	1,145		$	1,702
Charge-offs		-			-			-			(5	)		(4	)
Recoveries		-			-			-			-			1
Provisions (credits)		(77	)		-			388			(84	)		89
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
Ending balance: related to loans    individually evaluated for impairment	$	98		$	-		$	77		$	110		$	339
Ending balance: related to loans    collectively evaluated for impairment	$	549		$	-		$	3,763		$	946		$	1,449
Loans receivables:
Ending balance	$	241,817		$	4,241		$	235,364		$	58,408		$	80,829
Ending balance: individually    evaluated for impairment	$	1,616		$	-		$	4,695		$	348		$	1,115
Ending balance: collectively    evaluated for impairment	$	240,201		$	4,241		$	230,669		$	58,060		$	79,714
				Homeequity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	386		$	415		$	-		$	7,825
Charge-offs		-			(7	)		(107	)		-			(123	)
Recoveries		-			-			27			-			28
Provisions		-			95			93			96			600
Ending balance	$	1		$	474		$	428		$	96		$	8,330
Ending balance: related to loans    individually evaluated for impairment	$	-		$	152		$	3		$	-		$	779
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	322		$	425		$	96		$	7,551
Loans receivables:
Ending balance	$	8,183		$	47,512		$	49,486					$	725,840
Ending balance: individually    evaluated for impairment	$	-		$	220		$	93					$	8,087
Ending balance: collectively    evaluated for impairment	$	8,183		$	47,292		$	49,393					$	717,753

	For the nine months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	766		$	-		$	3,578		$	730		$	1,285
Charge-offs		(11	)		-			-			(136	)		(6	)
Recoveries		1			-			-			-			1
Provisions (credits)		(109	)		-			262			462			508
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	409		$	385		$	152		$	7,306
Charge-offs		-			(7	)		(214	)		-			(374	)
Recoveries		-			-			42			-			44
Provisions (credits)		-			72			215			(56	)		1,354
Ending balance	$	1		$	474		$	428		$	96		$	8,330

	For the three months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	722		$	-		$	4,141		$	731		$	1,271
Charge-offs		(27	)		-			(31	)		(12	)		(1	)
Recoveries		1			-			-			-			-
Provisions (credits)		65			-			(170	)		66			(82	)
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
Ending balance: related to loans    individually evaluated for impairment	$	109		$	-		$	593		$	46		$	276
Ending balance: related to loans    collectively evaluated for impairment	$	652		$	-		$	3,347		$	739		$	912
Loans receivables:
Ending balance	$	231,830		$	3,888		$	213,303		$	48,496		$	60,984
Ending balance: individually    evaluated for impairment	$	1,835		$	-		$	4,463		$	162		$	856
Ending balance: collectively    evaluated for impairment	$	229,995		$	3,888		$	208,840		$	48,334		$	60,128
				Home equity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	434		$	291		$	14		$	7,605
Charge-offs		-			-			(33	)		-			(104	)
Recoveries		-			5			6			-			12
Provisions (credits)		-			(18	)		166			264			291
Ending balance	$	1		$	421		$	430		$	278		$	7,804
Ending balance: related to loans    individually evaluated for impairment	$	-		$	140		$	-		$	-		$	1,164
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	281		$	430		$	278		$	6,640
Loans receivables:
Ending balance	$	10,163		$	25,985		$	26,410					$	621,059
Ending balance: individually    evaluated for impairment	$	-		$	206		$	-					$	7,522
Ending balance: collectively    evaluated for impairment	$	10,163		$	25,779		$	26,410					$	613,537

	For the nine months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	865		$	-		$	3,589		$	735		$	1,214
Charge-offs		(219	)		-			(31	)		(62	)		(172	)
Recoveries		21			-			-			66			-
Provisions (credits)		94			-			382			46			146
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	514		$	208		$	-		$	7,126
Charge-offs		-			(17	)		(144	)		-			(645	)
Recoveries		-			6			29			-			122
Provisions (credits)		-			(82	)		337			278			1,201
Ending balance	$	1		$	421		$	430		$	278		$	7,804

Schedule of Allowance for Loan Losses on Basis of Calculation Methodology

The allocation of the allowance for loan losses summarized on the basis of the Company’s calculation methodology was as follows:

	September 30, 2019
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	98	$	-	$	77	$	110	$	339
Historical loss rate		36		-		93		37		29
Qualitative factors		513		-		3,670		909		1,420
Total	$	647	$	-	$	3,840	$	1,056	$	1,788
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	152	$	3	$	-	$	779
Historical loss rate		-		4		155		-		354
Qualitative factors		1		318		270		-		7,101
Other		-		-		-		96		96
Total	$	1	$	474	$	428	$	96	$	8,330

	September 30, 2018
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	109	$	-	$	593	$	46	$	276
Historical loss rate		114		-		87		18		24
Qualitative factors		538		-		3,260		721		888
Total	$	761	$	-	$	3,940	$	785	$	1,188
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	140	$	-	$	-	$	1,164
Historical loss rate		-		21		218		-		482
Qualitative factors		1		260		212		-		5,880
Other		-		-		-		278		278
Total	$	1	$	421	$	430	$	278	$	7,804

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Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 12:   Accumulated Other Comprehensive Income (Loss)

Changes in the components of accumulated other comprehensive income (loss) (“AOCI”), net of tax, for the periods indicated are summarized in the table below.

	For the three months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,021	)	$	43		$	(46	)	$	(3,024	)
Other comprehensive income before reclassifications		-			282			5			287
Amounts reclassified from AOCI		67			(96	)		-			(29	)
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the three months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(2,156	)	$	(3,248	)	$	(67	)	$	(5,471	)
Other comprehensive income before reclassifications		-			(456	)		4			(452	)
Amounts reclassified from AOCI		31			44			-			75
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

	For the nine months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,152	)	$	(2,832	)	$	(58	)	$	(6,042	)
Other comprehensive income before reclassifications		-			3,244			17			3,261
Amounts reclassified from AOCI		198			(183	)		-			15
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the nine months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Securities reclassified from AFS to HTM			Total
Beginning balance	$	(2,220	)	$	(1,558	)	$	(430	)	$	(4,208	)
Other comprehensive income before reclassifications		-			(2,305	)		124			(2,181	)
Amounts reclassified from AOCI		95			140			-			235
Cumulative effect of change in measurement of equity    securities (1)		-			(53	)		-			(53	)
Cumulative effect of change in investment securities transfer (2)		-			116			243			359
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

(1) Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

(2) Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

The following table presents the amounts reclassified out of each component of AOCI for the indicated period:

	Amount Reclassified							Amount Reclassified
	from AOCI (1)							from AOCI (1)
	(Unaudited)							(Unaudited)
(In thousands)	For the three months ended							For the nine months ended
Details about AOCI (1) components	September 30, 2019			September 30, 2018			Affected Line Item in the Statement of Income	September 30, 2019			September 30, 2018
Retirement plan items
Retirement plan net losses    recognized in plan expenses (2)	$	(84	)	$	(43	)	Salaries and employee benefits	$	(252	)	$	(129	)
Tax effect		17			12		Provision for income taxes		54			34
	$	(67	)	$	(31	)	Net Income	$	(198	)	$	(95	)
Available-for-sale securities
Realized gain (loss) on sale of securities	$	121		$	(60	)	Net gains (losses) on sales and redemptions    of investment securities	$	232		$	(189	)
Tax effect		(25	)		16		Provision for income taxes		(49	)		49
	$	96		$	(44	)	Net Income	$	183		$	(140	)

(1) Amounts in parentheses indicates debits in net income.

(2) These items are included in net periodic pension cost.

See Note 5 for additional information.

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Earnings per Common Share (Tables)

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Calculations of Basic and Diluted Earnings per Share

The following table sets forth the calculation of basic and diluted earnings per share.  

	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income attributable to Pathfinder Bancorp, Inc.	$	1,295	$	985	$	2,416	$	2,934
Convertible preferred stock dividends		70		-		139		-
Warrant dividends		7		-		15		-
Undistributed earnings allocated to participating securities		206		-		195		-
Net income available to common shareholders	$	1,012	$	985	$	2,067	$	2,934
Basic weighted average common shares outstanding		4,579		4,195		4,423		4,157
Effect of assumed exercise of stock options and    unvested restricted stock units		-		84		-		100
Diluted weighted average common shares outstanding		4,579		4,279		4,423		4,257
Basic earnings per common share	$	0.22	$	0.23	$	0.47	$	0.71
Diluted earnings per common share	$	0.22	$	0.23	$	0.47	$	0.69

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Fair Value Measurements - Fair Value Inputs, Quantitative Information (Details) - Level 3 [Member] - Measurement Input, Discount Rate [Member]	Sep. 30, 2019	Dec. 31, 2018
Impaired Loans [Member] | Minimum [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	5	5
Impaired Loans [Member] | Minimum [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	7	5
Impaired Loans [Member] | Maximum [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	20	15
Impaired Loans [Member] | Maximum [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	13	13
Impaired Loans [Member] | Weighted Average [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	9	6
Impaired Loans [Member] | Weighted Average [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	10	11
Foreclosed Real Estate [Member] | Minimum [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	15	15
Foreclosed Real Estate [Member] | Minimum [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	6	6
Foreclosed Real Estate [Member] | Maximum [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	15	15
Foreclosed Real Estate [Member] | Maximum [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	9	8
Foreclosed Real Estate [Member] | Weighted Average [Member] | Appraisal of Collateral - Appraisal Adjustments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	15	15
Foreclosed Real Estate [Member] | Weighted Average [Member] | Appraisal of Collateral - Cost to Sell [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis Valuation Techniques [Line Items]
Fair value inputs, discount rate	8	7

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Interest Rate Derivative - Cumulative Basis Adjustments for Fair Value Hedges (Parenthetical) (Details) - Interest Rate Derivatives [Member] - Loans Receivable [Member]	Sep. 30, 2019 USD ($)
Derivative [Line Items]
Amortized cost of closed portfolio used in hedging relationship	$ 21,000,000
Cumulative basis adjustment associated with hedging relationship	92,000	[1]
Amount of designated hedging item	$ 9,200,000

[1] These amounts include the amortized cost basis of the closed portfolio used to designate the hedging relationship in which the hedged item is the remaining amortized cost of the last layer expected to be remaining at the end of the hedging relationship. At September 30, 2019, the amortized cost of the basis of the closed portfolio used in the hedging relationship was $21.0 million, the cumulative basis adjustment associated with the hedging relationship was $92,000, and the amount of the designated hedged item was $9.2 million.

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Loans - Major Classification of Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	$ 725,840	$ 620,405	$ 621,059
Net deferred loan fees	60	(135)
Less allowance for loan losses	(8,330)	(7,306)
Loans receivable, net	717,570	612,964
Residential Mortgage Loans [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	246,058	239,644
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	241,817	232,523	231,830
Residential Mortgage Loans [Member] | Construction [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	4,241	7,121
Commercial Loans [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	382,784	329,228
Commercial Loans [Member] | Real Estate [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	235,364	212,314	213,303
Commercial Loans [Member] | Lines of Credit [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	58,408	44,235	48,496
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	80,829	63,359	60,984
Commercial Loans [Member] | Tax Exempt Loans [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	8,183	9,320	10,163
Consumer Loans [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	96,998	51,533
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	47,512	26,109	25,985
Consumer Loans [Member] | Other Consumer [Member]
Notes, Loans and Financing Receivable, Net [Abstract]
Total loans	$ 49,486	$ 25,424	$ 26,410

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Investment Securities - Additional Information (Details)	9 Months Ended
	Sep. 30, 2019 USD ($) Security	Dec. 31, 2018 USD ($) Security
Held-to-maturity Securities [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security	3	15
Held to maturity sale securities aggregate market value	$ 1,566,000	$ 11,430,000
Held-to-maturity securities unrealized aggregate loss	6,000	316,000
Gain (Loss) on Sale of Investments [Abstract]
Securities pledged to collateralize deposit	104,100,000	69,800,000
Securities pledged to collateralize borrowing	$ 22,200,000	$ 19,500,000
Municipal Securities [Member]
Schedule of Available-for-sale Securities and Held-to-Maturity Securities [Line Items]
Months of unrealized loss positions	12 months
Corporate [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security	4	4
Available for sale securities continuous unrealized loss position twelve months or more amortized historical cost basis	$ 2,300,000
Available for sale securities aggregate market value	2,269,000	$ 3,374,000
Available for sale securities unrealized aggregate loss	$ 12,000	$ 272,000
Available for sale securities unrealized aggregate loss percentage	0.53%
Held-to-maturity Securities [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security		2
Held to maturity sale securities aggregate market value		$ 2,507,000
Held-to-maturity securities unrealized aggregate loss		$ 141,000
Fixed Rate, Private-label Asset-backed Security Rated [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security	1
Available for sale securities continuous unrealized loss position twelve months or more amortized historical cost basis	$ 917,000
Available for sale securities aggregate market value	895,000
Available for sale securities unrealized aggregate loss	$ 22,000
Available for sale securities unrealized aggregate loss percentage	2.44%
Fixed Rate, Private-label Mortgage-backed Security not Rated [Member]
Available-for-sale Securities, Amortized Cost Basis [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security	4
Available for sale securities continuous unrealized loss position twelve months or more amortized historical cost basis	$ 3,500,000
Available for sale securities aggregate market value	3,400,000
Available for sale securities unrealized aggregate loss	$ 33,000
Available for sale securities unrealized aggregate loss percentage	0.96%
Held-to-maturity Securities [Abstract]
Number of securities in unrealized loss positions, twelve months or more | Security	2
Held to maturity securities continuous unrealized loss position greater than twelve months amortized historical cost basis	$ 1,400,000
Held to maturity sale securities aggregate market value	1,300,000
Held-to-maturity securities unrealized aggregate loss	$ 5,000
Held-to-maturity securities unrealized aggregate loss percentage	0.39%

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Loans - Nonaccrual Loans Segregated by Class of Loan (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	$ 5,325	$ 2,148
Residential Mortgage Loans [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	777	1,176
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	777	1,176
Commercial Loans [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	4,206	830
Commercial Loans [Member] | Real Estate [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	2,923	415
Commercial Loans [Member] | Lines of Credit [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	392	28
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	891	387
Consumer Loans [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	342	142
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	276	35
Consumer Loans [Member] | Other Consumer [Member]
Nonaccrual loans, Segregated by class of loans [Abstract]
Nonaccrual status loans	$ 66	$ 107

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Loans - Summary of Average Recorded Investment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Average recorded investment [Abstract]
Average recorded investment in impaired loans	$ 8,022	$ 7,677	$ 6,999	$ 8,416
1-4 Family First Lien Residential Mortgages [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	1,625	1,840	1,625	1,846
Commercial Real Estate [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	4,578	4,497	3,723	4,976
Commercial Lines of Credit [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	359	186	323	365
Other Commercial and Industrial [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	1,131	947	1,035	1,001
Home Equity and Junior Liens [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	234	207	220	228
Other Consumer [Member]
Average recorded investment [Abstract]
Average recorded investment in impaired loans	$ 95	$ 0	$ 73	$ 0

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Foreclosed Real Estate - Summary of Carrying Amount of Foreclosed Residential Real Estate Properties Held (Details) $ in Thousands	Sep. 30, 2019 USD ($) Property	Dec. 31, 2018 USD ($) Property
Real Estate Properties [Line Items]
Foreclosed real estate	$ 148	$ 1,173
Foreclosed Residential Real Estate [Member]
Real Estate Properties [Line Items]
Number of properties | Property	1	2
Foreclosed real estate	$ 60	$ 73

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Leases - Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Lease Liabilities Payments Due Rolling Maturity [Abstract]
2020	$ 117
2021	104
2022	97
2023	107
2024	116
Thereafter	2,716
Total minimum lease payments	$ 3,257

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Leases - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Lessee Lease Description [Line Items]
Operating and finance lease, option to extend lease term, description			Our leases have remaining lease terms that vary from less than one year up to 31 years, some of which include options to extend the leases for various renewal periods
Operating and finance lease, option to extend lease term			true
ASU 2016-02 [Member]
Lessee Lease Description [Line Items]
Lease rental income	$ 32,000	$ 34,000	$ 100,000	$ 100,000
Unamortized initial direct costs			$ 0
Minimum [Member]
Lessee Lease Description [Line Items]
Operating and finance leases remaining lease term			1 year
Maximum [Member]
Lessee Lease Description [Line Items]
Operating and finance leases remaining lease term			31 years

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New Accounting Pronouncements

9 Months Ended

Sep. 30, 2019

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Pronouncements

Note 2:   New Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) and, to a lesser extent, other authoritative rulemaking bodies promulgate generally accepted accounting principles (“GAAP”) to regulate the standards of accounting in the United States.  From time to time, the FASB issues new GAAP standards, known as Accounting Standards Updates (“ASUs”) some of which, upon adoption, may have the potential to change the way in which the Company recognizes or reports within its consolidated financial statements.  The following presentation provides a description of the accountingstandards that are not currently effective, but could have an impact on the Company's consolidated financial statements upon adoption.

Standards Not Yet Adopted as of September 30, 2019

Standard:  Measurement of Credit Losses on Financial Instruments (ASU 2016-13: Financial Instruments—Credit Losses [Topic 326]: Measurement of Credit Losses on Financial Instruments)

Description: The amended guidance replaces the current incurred loss model for determining the allowance for credit losses. The guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected.  The allowance for credit losses will represent a valuation account that is deducted from the amortized cost basis of the financial assets to present their net carrying value at the amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as expected increases or decreases of expected credit losses that have taken place during the period. When determining the allowance, expected credit losses over the contractual term of the financial asset(s) (taking into account prepayments) will be estimated considering relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount.  The amended guidance also requires recording an allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination.  The initial allowance for these assets will be added to the purchase price at acquisition rather than being reported as an expense.  Subsequent changes in the allowance will be recorded through the income statement as an expense adjustment.  In addition, the amended guidance requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The calculation of credit losses for available-for-sale securities will be similar to how it is determined under existing guidance.

Required Date of Implementation:  January 1, 2023 (early adoption permitted as of January 1, 2019).  

Effect on Consolidated Financial Statements:  The Company is assessing the new guidance to determine what modifications to existing credit estimation processes may be required.  The Company expects that the new guidance will result in an increase in its allowance for credit losses as a result of considering credit losses over the expected life of its loan and debt securities portfolios.  Increases in the level of allowances will also reflect new requirements to include estimated credit losses on investment securities classified as held-to-maturity, if any.  The Company has formed an Implementation Committee, whose membership includes representatives of senior management, to develop plans that will encompass: (1) internal methodology changes (2) data collection and management activities, (3) internal communication requirements, and (4) estimation of the projected impact of this guidance.  The amount of any change in the allowance for credit losses resulting from the new guidance will ultimately be impacted by the provisions of this guidance as well as by the loan and debt security portfolios composition and asset quality at the adoption date, and economic conditions and forecasts at the time of adoption.  

                                                                                            _____

Standard:  Transition Relief for the Implementation of ASU-2016-13 (ASU 2019-5: Financial Instruments—Credit Losses [Topic 326]: Targeted Transition Relief)

Description: The amendments in this ASU provide entities that have certain instruments within the scope of Subtopic 326-20, Financial Instruments—Credit Losses— Measured at Amortized Cost, with an option to irrevocably elect the fair value option in Subtopic 825-10, Financial Instruments—Overall, applied on an instrument-by-instrument basis for eligible instruments, upon adoption of Topic 326.  The fair value option election does not apply to held-to-maturity debt securities. An entity that elects the fair value option should subsequently apply the guidance in Subtopics 820-10, Fair Value Measurement—Overall, and 825-10.

General guidance for the use of the fair value option is contained in Subtopic 825-10. The irrevocable election of the fair value option must be applied on an instrument-by-instrument basis for eligible instruments, whose characteristics are within the scope of Subtopic 326-20.  Upon adoption of Topic 326, for items measured at fair value in accordance with paragraph 326-10-65-1(i), the difference between the carrying amount and the fair value shall be recorded by means of a cumulative-effect adjustment to the opening retained earnings balance as of the beginning of the first reporting period that an entity has adopted ASU 2016-13. Those differences may include, but are not limited to: (1) unamortized deferred costs, fees, premiums, and discounts (2) valuation allowances (for example, allowance for loan losses), or (3) accrued interest.

Required Date of Implementation:  See comments above related to ASU 2016-13.

Effect on Consolidated Financial Statements:  See comments above related to ASU 2016-13.

_____

Standard:  Simplifying the Test for Goodwill Impairment (ASU 2017-04: Intangibles—Goodwill and Other [Topic 350]: Simplifying the Test for Goodwill Impairment)

Description:  Current guidance requires a two-step approach to determining if recorded goodwill is impaired.  In Step 1, reporting entities must first evaluate whether or not the carrying value of a reporting unit is greater than its fair value. In Step 2, if a reporting unit’s carrying value is greater than its fair value, then the entity should calculate the implied fair value of goodwill. If the carrying value of goodwill is more than the implied fair value, an impairment charge for the difference must be recorded.  The amended guidance eliminates Step 2 from the goodwill impairment test.  Therefore, under the new guidance, if the carrying value of a reporting unit is greater than its fair value, a goodwill impairment charge will be recorded for the difference (up to the carrying value of the recorded goodwill).

Required Date of Implementation: January 1, 2020 (early adoption permitted).

Effect on Consolidated Financial Statements: The amendments should be applied using a prospective transition method. The Company does not expect the guidance will have a material impact on its consolidated financial statements, unless at some point in the future one of its reporting units were to fail Step 1 of the goodwill impairment test.

____

Standard: Fair Value Measurement (ASU 2018-13: Fair Value Measurement [Topic 820]: Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement

Description:  The FASB is issuing the amendments in this ASU as part of the disclosure framework project. The disclosure framework project’s objective and primary focus are to improve the effectiveness of disclosures in the notes to financial statements by facilitating clear communication of the information required by GAAP that is most important to users of each entity’s financial statements. The amendments in this ASU modify the disclosure requirements for entities such as the Company on fair value measurements in Topic 820, Fair Value Measurement.

The following disclosure requirements were removed from Topic 820:

1. The amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy.

2. The policy for timing of transfers between levels.

3. The valuation processes for Level 3 fair value measurements.

The following disclosure requirements were modified in Topic 820:

1. For investments in certain entities that calculate net asset value, an entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption might lapse only if the investee has communicated the timing to the entity or announced the timing publicly.

2. The amendments clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the reporting date.

The following disclosure requirements were added to Topic 820:

1. The changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period.

2. The range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average) in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements.

Required Date of Implementation:  The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this Update. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date.

Effect on Consolidated Financial Statements:  The Company does not expect the new guidance will have a material impact to its consolidated statements of condition or income.

____

Standard:  Compensation (ASU 2018-14: Compensation - Retirement Benefits - Defined Benefit Plans - General [Subtopic 715 – 20]: Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans)

Description:  The FASB is issuing the amendments in this ASU as part of the disclosure framework project. The amendments in this ASU modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The following disclosure requirements are removed from Subtopic 715-20:

1. The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year.

2. The amount and timing of plan assets expected to be returned to the employer.

3. Related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan.

4. The effects of a one-percentage-point change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic benefit costs and (b) benefit obligation for postretirement health care benefits.

The following disclosure requirements are added to Subtopic 715-20:

1. The weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates.

2. An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

The amendments in this ASU also clarify the disclosure requirements in paragraph 715-20-50-3, which state that the following information for defined benefit pension plans should be disclosed:

1. The projected benefit obligation (PBO) and fair value of plan assets for plans with PBOs in excess of plan assets.

2. The accumulated benefit obligation (ABO) and fair value of plan assets for plans with ABOs in excess of plan assets.

Required Date of Implementation:  The amendments in this ASU are effective for fiscal years ending after December 15, 2020, for public business entities and for fiscal years ending after December 15, 2021, for all other entities. Early adoption is permitted for all entities.

Effect on Consolidated Financial Statements:  The Company does not expect the new guidance will have a material impact to its consolidated statements of condition or income.

____

Standard: Leases (ASU 2019-01: Leases [Topic 842] Codification Improvements)

Description:  On February 25, 2016, the FASB issued Accounting Standards ASU No. 2016-02, Leases [Topic 842], to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing essential information about leasing transactions. ASU 2019-01 addresses three Issues: (1) Determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; (2) Presentation on the statement of cash flows for sales-type and direct financing leases; and (3) Transition disclosures related to Topic 250, Accounting Changes and Error Corrections.  

The amendments in this ASU address Issue 1, described above, and reinstate the exception in Topic 842 for lessors that are not manufacturers or dealers (generally financial institutions and captive finance companies).  Specifically, those lessors will use their cost, reflecting any volume or trade discounts that may apply, as the fair value of the underlying asset. However, if significant time lapses between the acquisition of the underlying asset and lease commencement, those lessors will be required to apply the definition of fair value (exit price) in Topic 820.

Topic 840 does not provide guidance on how cash received from leases by lessors from sales-type and direct financing leases should be presented in the cash flow statement.  The amendments in this ASU address Issue 2, described above, as to the concerns of lessors within the scope of Topic 942 about where “principal payments received under leases” should be presented. Specifically, lessors that are depository and lending institutions within the scope of Topic 942 will present all “principal payments received under leases” within investing activities in the Statement of Cash Flows.

Required Date of Implementation:  The amendments in this ASU amend Topic 842. The effective date of those amendments for public business entities, such as the Company, is for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

Effect on Consolidated Financial Statements:  The Company does not expect that the new guidance will have a material impact to its consolidated statements of condition or income.

____

Standard: Various Codification Improvements (ASU 2019-04:Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments)

Description:  Since 2016, the FASB has issued the following Updates related to financial instruments:

1. Accounting Standards Update No. 2016-01, Financial Instruments— Overall [Subtopic 825-10]: Recognition and Measurement of Financial Assets and Financial Liabilities;

2. Accounting Standards Update No. 2016-13, Financial Instruments— Credit Losses [Topic 326]: Measurement of Credit Losses on Financial Instruments; and

3. Accounting Standards Update No. 2017-12, Derivatives and Hedging [Topic 815]: Targeted Improvements to Accounting for Hedging Activities.

The FASB has an ongoing project on its agenda for improving the Codification or correcting its unintended application. The items addressed in that project generally are not expected to have a significant effect on current accounting practice or to create a significant administrative cost for most entities. The amendments in this ASU are similar to those items and are summarized below.

For Codification Improvements specific to ASU 2016-01, the following topics were covered within ASU 2019-04:

• Scope Clarifications

• Held-to-Maturity Debt Securities Fair Value Disclosures

• Applicability of Topic 820 to the Measurement Alternative

• Remeasurement of Equity Securities at Historical Exchange Rates

The amendments to Topic 326 and other Topics in this Update include items related to the amendments in Update 2016-13 discussed at the June 2018 and November 2018 Credit Losses Transition Resource Group (“TRG”) meetings. The amendments clarify or address stakeholders’ specific issues about certain aspects of the amendments in Update 2016-13 on a number of different topics, including the following:  

• Accrued Interest

• Transfers between Classifications or Categories for Loans and Debt Securities

• Recoveries

• Consideration of Prepayments in Determining the Effective Interest Rate

• Consideration of Estimated Costs to Sell When Foreclosure Is Probable

• Vintage Disclosures— Line-of-Credit Arrangements Converted to Term Loans

• Contractual Extensions and Renewals

The ASU also covered a number of issues that related to hedge accounting (ASU-2017-12) including:

• Partial-Term Fair Value Hedges of Interest Rate Risk

• Amortization of Fair Value Hedge Basis Adjustments

• Disclosure of Fair Value Hedge Basis Adjustments

• Consideration of the Hedged Contractually Specified Interest Rate under the Hypothetical Derivative Method

• Scoping for Not-for-Profit Entities

• Hedge Accounting Provisions Applicable to Certain Private Companies and Not-for- Profit Entities

• Application of a First- Payments-Received Cash Flow Hedging Technique to Overall Cash Flows on a Group of Variable Interest Payments

• Transition Guidance

Required Dates of Implementation:  This ASU 2019-04 has various implementation dates dependent on a number of factors as it pertains to the above items.  The Company has adopted ASU 2016-01.

Effect on Consolidated Financial Statements:  The Company does not expect that the new guidance will have a material impact to its consolidated statements of condition or income.

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Loans

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Loans

Note 6:   Loans

Major classifications of loans at the indicated dates are as follows:

	September 30,			December 31,
(In thousands)	2019			2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	241,817		$	232,523
Construction		4,241			7,121
Total residential mortgage loans		246,058			239,644
Commercial loans:
Real estate		235,364			212,314
Lines of credit		58,408			44,235
Other commercial and industrial		80,829			63,359
Tax exempt loans		8,183			9,320
Total commercial loans		382,784			329,228
Consumer loans:
Home equity and junior liens		47,512			26,109
Other consumer		49,486			25,424
Total consumer loans		96,998			51,533
Total loans		725,840			620,405
Net deferred loan fees		60			(135	)
Less allowance for loan losses		(8,330	)		(7,306	)
Loans receivable, net	$	717,570		$	612,964

Although the Bank may occasionally purchase or fund loan participation interests outside of its primary market areas, the Bank generally originates residential mortgage, commercial, and consumer loans largely to customers throughout Oswego and Onondaga counties. Although the Bank has a diversified loan portfolio, a substantial portion of its borrowers’ abilities to honor their loan contracts is dependent upon the counties’ employment and economic conditions.

The Bank acquired $15.6 million, $10.2 million, and $24.6 million of loans originated by an unrelated financial institution, located outside of the Bank’s market area, in January 2017, April 2017, and March 2019, respectively.   The acquired loan pools represented a 90% participating interest in a total of 2,283 loans secured by liens on automobiles with maturities ranging primarily from two to six years. These loans will be serviced through their respective maturities by the originating financial institution.  At September 30, 2019 and December 31, 2018, there were 1,731 loans outstanding with a remaining outstanding carrying value of $30.0 million and 909 loans outstanding with a remaining outstanding carrying value of $13.3 million, respectively.  Since the acquisition of these loan pools, a total of 25 loans had cumulative net charge-offs totaling $187,000 with $67,000 in net charge-offs for the nine months ended September 30, 2019.

The Bank acquired a $5.0 million pool of consumer loans and a $5.0 million pool of commercial and industrial loans originated by an unrelated financial institution, located outside of the Bank’s market area, in June 2019.   The acquired loan pools represent a 100% interest in a total of 86 unsecured consumer loans and 35 commercial and industrial loans.  These loans have maturities ranging primarily from four to ten years.  At September 30, 2019, there were 85 unsecured consumer loans outstanding with a remaining outstanding carrying value of $4.8 million and 35 commercial and industrial loans outstanding with a remaining outstanding carrying value of $4.9 million.  No charge-offs have occurred since the acquisition of these loan pools.

The Bank acquired a $21.9 million pool of home equity lines of credit originated by an unrelated financial institution, located outside of the Bank’s market area, in August 2019.   The acquired loan pools represent a 100% interest in a total of 395 secured home equity lines of credit.  These lines of credit have maturities ranging primarily from four to thirty years. These lines of credit will be serviced through their respective maturities by the originating financial institution.  At September 30, 2019, there were 383 secured home equity lines of credit outstanding with a remaining outstanding carrying value of $21.3 million.  No charge-offs have occurred since the acquisition of these loan pools.

As of September 30, 2019 and December 31, 2018, residential mortgage loans with a carrying value of $136.6 million and $154.9 million, respectively, have been pledged by the Company to the Federal Home Loan Bank of New York (“FHLBNY”) under a blanket collateral agreement to secure the Company’s line of credit and term borrowings.  

Loan Origination / Risk Management

The Company’s lending policies and procedures are presented in Note 5 to the audited consolidated financial statements included in the 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2019 and have not changed.  As part of the execution of the Company’s overall balance sheet management strategies, the Bank will acquire participating interests in loans originated by unrelated third parties on a sporadic basis.  The purchase of participations in loans that are originated by third parties only occurs after the completion of thorough pre-acquisition due diligence.  Loans in which the Company acquires a participating interest are determined to meet, in all material respects, the Company’s internal underwriting policies, including credit and collateral suitability thresholds, prior to acquisition.  In addition, the financial condition of the originating financial institutions, which are generally retained as the ongoing loan servicing provider for participations acquired by the Bank, are analyzed prior to the acquisition of the participating interests and monitored on a regular basis thereafter for the life of those interests.

To develop and document a systematic methodology for determining the allowance for loan losses, the Company has divided the loan portfolio into three portfolio segments, each with different risk characteristics but with similar methodologies for assessing risk.  Each portfolio segment is broken down into loan classes where appropriate.  Loan classes contain unique measurement attributes, risk characteristics, and methods for monitoring and assessing risk that are necessary to develop the allowance for loan losses.  Unique characteristics such as borrower type, loan type, collateral type, and risk characteristics define each class.  

The following table illustrates the portfolio segments and classes for the Company’s loan portfolio:

Portfolio Segment	Class
Residential Mortgage Loans	1-4 family first-lien residential mortgages
	Construction
Commercial Loans	Real estate
	Lines of credit
	Other commercial and industrial
	Tax exempt loans
Consumer Loans	Home equity and junior liens
	Other consumer

The following tables present the classes of the loan portfolio, not including net deferred loan costs, summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of the dates indicated:

	As of September 30, 2019
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	238,192	$	1,297	$	1,069	$	1,259	$	241,817
Construction		4,241		-		-		-		4,241
Total residential mortgage loans		242,433		1,297		1,069		1,259		246,058
Commercial loans:
Real estate		224,314		7,367		2,787		896		235,364
Lines of credit		56,687		1,339		382		-		58,408
Other commercial and industrial		75,863		3,867		1,050		49		80,829
Tax exempt loans		8,183		-		-		-		8,183
Total commercial loans		365,047		12,573		4,219		945		382,784
Consumer loans:
Home equity and junior liens		46,840		129		234		309		47,512
Other consumer		49,146		206		134		-		49,486
Total consumer loans		95,986		335		368		309		96,998
Total loans	$	703,466	$	14,205	$	5,656	$	2,513	$	725,840
	As of December 31, 2018
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	228,563	$	999	$	1,190	$	1,771	$	232,523
Construction		7,121		-		-		-		7,121
Total residential mortgage loans		235,684		999		1,190		1,771		239,644
Commercial loans:
Real estate		201,997		8,299		1,947		71		212,314
Lines of credit		42,489		1,491		233		22		44,235
Other commercial and industrial		59,344		3,268		612		135		63,359
Tax exempt loans		9,320		-		-		-		9,320
Total commercial loans		313,150		13,058		2,792		228		329,228
Consumer loans:
Home equity and junior liens		25,706		144		173		86		26,109
Other consumer		25,294		95		35		-		25,424
Total consumer loans		51,000		239		208		86		51,533
Total loans	$	599,834	$	14,296	$	4,190	$	2,085	$	620,405

Management has reviewed its loan portfolio and determined that, to the best of its knowledge, no material exposure exists to sub-prime or other high-risk residential mortgages.  The Company is not in the practice of originating these types of loans.

Nonaccrual and Past Due Loans

Loans are placed on nonaccrual when the contractual payment of principal and interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing.  

Loans are considered past due if the required principal and interest payments have not been received within thirty days of the payment due date.  

An age analysis of past due loans, not including net deferred loan costs, segregated by portfolio segment and class of loans, as of September 30, 2019 and December 31, 2018, are detailed in the following tables:

	As of  September 30, 2019
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,591	$	775	$	777	$	3,143	$	238,674	$	241,817
Construction		-		-		-		-		4,241		4,241
Total residential mortgage loans		1,591		775		777		3,143		242,915		246,058
Commercial loans:
Real estate		16		151		2,845		3,012		232,352		235,364
Lines of credit		15		248		392		655		57,753		58,408
Other commercial and industrial		526		415		891		1,832		78,997		80,829
Tax exempt loans		-		-		-		-		8,183		8,183
Total commercial loans		557		814		4,128		5,499		377,285		382,784
Consumer loans:
Home equity and junior liens		391		107		276		774		46,738		47,512
Other consumer		294		115		66		475		49,011		49,486
Total consumer loans		685		222		342		1,249		95,749		96,998
Total loans	$	2,833	$	1,811	$	5,247	$	9,891	$	715,949	$	725,840
	As of  December 31, 2018
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,507	$	505	$	1,176	$	3,188	$	229,335	$	232,523
Construction		-		-		-		-		7,121		7,121
Total residential mortgage loans		1,507		505		1,176		3,188		236,456		239,644
Commercial loans:
Real estate		4,261		364		323		4,948		207,366		212,314
Lines of credit		1,033		111		22		1,166		43,069		44,235
Other commercial and industrial		814		44		387		1,245		62,114		63,359
Tax exempt loans		-		-		-		-		9,320		9,320
Total commercial loans		6,108		519		732		7,359		321,869		329,228
Consumer loans:
Home equity and junior liens		247		6		35		288		25,821		26,109
Other consumer		226		65		107		398		25,026		25,424
Total consumer loans		473		71		142		686		50,847		51,533
Total loans	$	8,088	$	1,095	$	2,050	$	11,233	$	609,172	$	620,405

Nonaccrual loans, segregated by class of loan, were as follows:

	September 30,		December 31,
(In thousands)	2019		2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	777	$	1,176
		777		1,176
Commercial loans:
Real estate		2,923		415
Lines of credit		392		28
Other commercial and industrial		891		387
		4,206		830
Consumer loans:
Home equity and junior liens		276		35
Other consumer		66		107
		342		142
Total nonaccrual loans	$	5,325	$	2,148

The Company is required to disclose certain activities related to Troubled Debt Restructurings (“TDR”) in accordance with accounting guidance. Certain loans have been modified in a TDR where economic concessions have been granted to a borrower who is experiencing, or expected to experience, financial difficulties. These economic concessions could include a reduction in the loan interest rate, extension of payment terms, reduction of principal amortization, or other actions that it would not otherwise consider for a new loan with similar risk characteristics.

The Company is required to disclose new TDRs for each reporting period for which an income statement is being presented.  The pre-modification outstanding recorded investment is the principal loan balance less the provision for loan losses before the loan was modified as a TDR.  The post-modification outstanding recorded investment is the principal balance less the provision for loan losses after the loan was modified as a TDR.  Additional provision for loan losses is the change in the allowance for loan losses between the pre-modification outstanding recorded investment and post-modification outstanding recorded investment.

The Company had no loans that were modified as TDRs for the three months ended September 30, 2019.

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2019.

	For the nine months ended September 30, 2019
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Residential real estate loans	1	$	205	$	250	$	-

The TDR evaluated for impairment, for the nine months ended September 30, 2019, has been classified as a TDR due to economic concessions granted, which consisted of additional funds advanced without associated increases in collateral and an extended maturity date that will result in a delay in payment from the original contractual maturity.  

The Company had no loans that were modified as TDRs for the three months ended September 30, 2018.

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2018.

	For the nine months ended September 30, 2018
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Other commercial and industrial loans	1	$	300	$	300	$	-

The TDR evaluated for impairment, for the nine months ended September 30, 2018, has been classified as a TDR due to economic concessions granted, which included an extended maturity date that will result in a delay in payment from the original contractual maturity.

The Company is required to disclose loans that have been modified as TDRs within the previous 12 months in which there was payment default after the restructuring.  The Company defines payment default as any loans 90 days past due on contractual payments.

The Company had no loans that were modified as TDRs during the twelve months prior to September 30, 2019, which had subsequently defaulted during the nine months ended September 30, 2019.

The Company had no loans that were modified as TDRs during the twelve months prior to September 30, 2018, which had subsequently defaulted during the nine months ended September 30, 2018.

When the Company modifies a loan within a portfolio segment that is individually evaluated for impairment, a potential impairment is analyzed either based on the present value of the expected future cash flows discounted at the interest rate of the original loan terms or the fair value of the collateral less costs to sell. If it is determined that the value of the loan is less than its recorded investment, then impairment is recognized as a component of the provision for loan losses, an associated increase to the allowance for loan losses or as a charge-off to the allowance for loan losses in the current period.

Impaired Loans

The following table summarizes impaired loan information by portfolio class at the indicated dates:

	September 30, 2019						December 31, 2018
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(In thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
1-4 family first-lien residential mortgages	$	1,029	$	1,029	$	-	$	1,221	$	1,226	$	-
Commercial real estate		4,244		4,313		-		2,387		2,448		-
Commercial lines of credit		238		238		-		228		228		-
Other commercial and industrial		584		592		-		451		452		-
Home equity and junior liens		41		41		-		-		-		-
Other consumer		56		56		-		-		-		-
With an allowance recorded:
1-4 family first-lien residential mortgages		587		587		98		606		606		108
Commercial real estate		451		451		77		486		486		100
Commercial lines of credit		110		110		110		28		28		28
Other commercial and industrial		531		531		339		373		373		255
Home equity and junior liens		179		179		152		207		207		140
Other consumer		37		37		3		-		-		-
Total:
1-4 family first-lien residential mortgages		1,616		1,616		98		1,827		1,832		108
Commercial real estate		4,695		4,764		77		2,873		2,934		100
Commercial lines of credit		348		348		110		256		256		28
Other commercial and industrial		1,115		1,123		339		824		825		255
Home equity and junior liens		220		220		152		207		207		140
Other consumer		93		93		3		-		-		-
Totals	$	8,087	$	8,164	$	779	$	5,987	$	6,054	$	631

The following table presents the average recorded investment in impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	1,625	$	1,840	$	1,625	$	1,846
Commercial real estate		4,578		4,497		3,723		4,976
Commercial lines of credit		359		186		323		365
Other commercial and industrial		1,131		947		1,035		1,001
Home equity and junior liens		234		207		220		228
Other consumer		95		-		73		-
Total	$	8,022	$	7,677	$	6,999	$	8,416

The following table presents the cash basis interest income recognized on impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	19	$	16	$	54	$	48
Commercial real estate		73		62		158		128
Commercial lines of credit		2		4		20		25
Other commercial and industrial		12		5		50		24
Home equity and junior liens		2		3		8		9
Other consumer		2		-		5		-
Total	$	110	$	90	$	295	$	234

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Fair Value Measurements

9 Months Ended

Sep. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10:   Fair Value Measurements

Accounting guidance related to fair value measurements and disclosures specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair value hierarchy:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3 – Model-derived valuations in which one or more significant inputs or significant value drivers are unobservable.

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs, minimize the use of unobservable inputs, to the extent possible, and considers counterparty credit risk in its assessment of fair value.

The Company used the following methods and significant assumptions to estimate fair value:

Investment securities:  The fair values of available-for-sale and marketable equity securities are obtained from an independent third party and are based on quoted prices on nationally recognized securities exchanges where available (Level 1).  If quoted prices are not available, fair values are measured by utilizing matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).  Management made no adjustment to the fair value quotes that were received from the independent third party pricing service.Level 3 securities are assets whose fair value cannot be determined by using observable measures, such as market prices or pricing models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges. Management applies known factors, such as currently applicable discount rates, to the valuation of those investments in order to determine fair value at the reporting date.

The Company holds two corporate investment securities with an aggregate amortized historical cost of $4.8 million and an aggregate fair market value of $5.0 million as of September 30, 2019. These securities have valuations that are determined using published net asset values (NAV) derived by analyses of the securities’ underlying assets. These securities are comprised primarily of broadly-diversified real estate and adjustable-rate senior secured business loans and are traded in secondary markets on an infrequent basis. While these securities are redeemable at least annually through tender offers made by their respective issuers, the liquidation value of the securities may be below their stated NAVs and also subject to restrictions as to the amount of securities that can be redeemed at any single scheduled redemption. The Company anticipates that these securities will be redeemed by their respective issuers on indeterminate future dates as a consequence of the ultimate liquidation strategies employed by the management of these investments.

Interest rate swap derivative:  The fair value of the interest rate swap derivative is calculated based on a discounted cash flow model. All future floating cash flows are projected and both floating and fixed cash flows are discounted to the valuation date.  The curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes for various swap maturity terms.

Impaired loans: Impaired loans are those loans in which the Company has measured impairment based on the fair value of the loan’s collateral or the discounted value of expected future cash flows.  Fair value is generally determined based upon market value evaluations by third parties of the properties and/or estimates by management of working capital collateral or discounted cash flows based upon expected proceeds.  These appraisals may include up to three approaches to value: the sales comparison approach, the income approach (for income-producing property), and the cost approach.  Management modifies the appraised values, if needed, to take into account recent developments in the market or other factors, such as, changes in absorption rates or market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition.  Such modifications to the appraised values could result in lower valuations of such collateral. Estimated costs to sell are based on current amounts of disposal costs for similar assets.  These measurements are classified as Level 3 within the valuation hierarchy. Impaired loans are subject to nonrecurring fair value adjustment upon initial recognition or subsequent impairment.  A portion of the allowance for loan losses is allocated to impaired loans if the value of such loans is deemed to be less than the unpaid balance.

Foreclosed real estate:  Fair values for foreclosed real estate are initially recorded based on market value evaluations by third parties, less costs to sell (“initial cost basis”).  Any write-downs required when the related loan receivable is exchanged for the underlying real estate collateral at the time of transfer to foreclosed real estate are charged to the allowance for loan losses.  Values are derived from appraisals, similar to impaired loans, of underlying collateral or discounted cash flow analysis.  Subsequent to foreclosure, valuations are updated periodically and assets are marked to current fair value, not to exceed the initial cost basis.  In the determination of fair value subsequent to foreclosure, management also considers other factors or recent developments, such as, changes in absorption rates and market conditions from the time of valuation and anticipated sales values considering management’s plans for disposition.  Either change could result in adjustment to lower the property value estimates indicated in the appraisals.  These measurements are classified as Level 3 within the fair value hierarchy.

The following tables summarize 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, 2019
								Total Fair
(In thousands)	Level 1		Level 2			Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	6,986		$	-	$	6,986
State and political subdivisions		-		4,807			-		4,807
Corporate		-		7,621			-		7,621
Asset backed securities		-		14,378			-		14,378
Residential mortgage-backed - US agency		-		20,994			-		20,994
Collateralized mortgage obligations - US agency		-		41,725			-		41,725
Collateralized mortgage obligations - Private label		-		18,241			-		18,241
Total				114,752					114,752
Corporate measured at NAV		-		-			-		5,044
Total available-for-sale securities	$	-	$	114,752		$	-	$	119,796
Marketable equity securities	$	-	$	514		$	-	$	514
Interest rate swap derivative	$	-	$	(115	)	$	-	$	(115	)

	December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Available-for-Sale Portfolio
Debt investment securities:
US Treasury, agencies and GSEs	$	-	$	17,031	$	-	$	17,031
State and political subdivisions		-		23,065		-		23,065
Corporate		-		12,141		-		12,141
Asset backed securities		-		18,119		-		18,119
Residential mortgage-backed - US agency		-		31,666		-		31,666
Collateralized mortgage obligations - US agency		-		46,441		-		46,441
Collateralized mortgage obligations - Private label		-		23,936		-		23,936
Total				172,399				172,399
Corporate measured at NAV		-		-		-		5,059
Total available-for-sale securities	$	-	$	172,399	$	-	$	177,458
Marketable equity securities	$	-	$	453	$	-	$	453

Pathfinder Bank had the following assets measured at fair value on a nonrecurring basis as of September 30, 2019 and December 31, 2018: 

			September 30, 2019
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	3,055	$	3,055
Foreclosed real estate	$	-	$	-	$	60	$	60

			December 31, 2018
							Total Fair
(In thousands)	Level 1		Level 2		Level 3		Value
Impaired loans	$	-	$	-	$	1,098	$	1,098
Foreclosed real estate	$	-	$	-	$	1,173	$	1,173

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, 2019
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 20% (9%)
	(Sales Approach)	Costs to Sell	7% - 13% (10%)
	Discounted Cash Flow
Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 9% (8%)

		Quantitative Information about Level 3 Fair Value Measurements
	Valuation	Unobservable	Range
	Techniques	Input	(Weighted Avg.)
At December 31, 2018
Impaired loans	Appraisal of collateral	Appraisal Adjustments	5% - 15% (6%)
	(Sales Approach)	Costs to Sell	5% - 13% (11%)
	Discounted Cash Flow
Foreclosed real estate	Appraisal of collateral	Appraisal Adjustments	15% - 15% (15%)
	(Sales Approach)	Costs to Sell	6% - 8% (7%)

There have been no transfers of assets into or out of any fair value measurement during the three and nine months ended September 30, 2019.

Required disclosures include fair value information of financial instruments, whether or not recognized in the consolidated statement of condition, for which it is practicable to estimate that value.  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. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.

The Company has various processes and controls in place to ensure that fair value is reasonably estimated. The Company performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. 

While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

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 herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of their respective period-ends, and have not been re-evaluated or updated for purposes of these 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.

FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the financial assets and liabilities were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.  

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:

Cash and cash equivalents – The carrying amounts of these assets approximate their fair value and are classified as Level 1.

Investment securities – The fair values of available-for-sale, held-to-maturity and marketable equity securities are obtained from an independent third party and are based on quoted prices on nationally recognized exchange where available (Level 1).  If quoted prices are not available, fair values are measured by utilizing matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2).  Management made no adjustment to the fair value quotes that were received from the independent third party pricing service.  Level 3 securities are assets whose fair value cannot be determined by using observable measures, such as market prices or pricing models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges. Management applies known factors, such as currently applicable discount rates, to the valuation of those investments in order to determine fair value at the reporting date.

The Company holds two corporate investment securities with an aggregate amortized historical cost of $4.8 million and an aggregate fair market value of $5.0 million as of September 30, 2019. These securities have valuations that are determined using published NAV derived by analyses of the securities’ underlying assets. These securities are comprised primarily of broadly-diversified real estate and adjustable-rate senior secured business loans and are traded in secondary markets on an infrequent basis. While these securities are redeemable at least annually through tender offers made by their respective issuers, the liquidation value of the securities may be below their stated NAVs and also subject to restrictions as to the amount of securities that can be redeemed at any single scheduled redemption. The Company anticipates that these securities will be redeemed by their respective issuers on indeterminate future dates as a consequence of the ultimate liquidation strategies employed by the management of these investments.

Federal Home Loan Bank stock – The carrying amount of these assets approximates their fair value and are classified as Level 2.

Net loans – For variable-rate loans that re-price frequently, fair value is based on carrying amounts.  The fair value of other loans (for example, fixed-rate commercial real estate loans, mortgage loans, and commercial and industrial loans) is estimated using discounted cash flow analysis, based on interest rates currently being offered in the market for loans with similar terms to borrowers of similar credit quality.  Loan value estimates include judgments based on expected prepayment rates.  The measurement of the fair value of loans, including impaired loans, is classified within Level 3 of the fair value hierarchy.

Accrued interest receivable and payable – The carrying amount of these assets approximates their fair value and are classified as Level 1.

Deposits – The fair values disclosed for demand deposits (e.g., interest-bearing and noninterest-bearing checking, passbook savings and certain types of money management accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) and are classified within Level 1 of the fair value hierarchy.  Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates of deposits to a schedule of aggregated expected monthly maturities on time deposits.  Measurements of the fair value of time deposits are classified within Level 2 of the fair value hierarchy.

Borrowings – Fixed/variable term “bullet” structures are valued using a replacement cost of funds approach.  These borrowings are discounted to the FHLBNY advance curve.  Option structured borrowings’ fair values are determined by the FHLB for borrowings that include a call or conversion option.  If market pricing is not available from this source, current market indications from the FHLBNY are obtained and the borrowings are discounted to the FHLBNY advance curve less an appropriate spread to adjust for the option. These measurements are classified as Level 2 within the fair value hierarchy.

Subordinated loans – The Company secures quotes from its pricing service based on a discounted cash flow methodology or utilizes observations of recent highly-similar transactions which result in a Level 2 classification.

Interest rate swap derivative – The fair value of the interest rate swap derivative is obtained from a third party pricing agent and is calculated based on a discounted cash flow model. All future floating cash flows are projected and both floating and fixed cash flows are discounted to the valuation date.  The curve utilized for discounting and projecting is built by obtaining publicly available third party market quotes for various swap maturity terms, and therefore is classified within Level 2 of the fair value hierarchy.

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, 2019				December 31, 2018
	Fair Value	Carrying		Estimated		Carrying		Estimated
(In thousands)	Hierarchy	Amounts		Fair Values		Amounts		Fair Values
Financial assets:
Cash and cash equivalents	1	$	39,773	$	39,773	$	26,316	$	26,316
Investment securities - available-for-sale	2		114,752		114,752		172,399		172,399
Investment securities - available-for-sale	NAV		5,044		5,044		5,059		5,059
Investment securities - marketable equity	2		514		514		453		453
Investment securities - held-to-maturity	2		114,349		116,187		53,908		53,769
Federal Home Loan Bank stock	2		4,210		4,210		5,937		5,937
Net loans	3		717,570		717,687		612,964		601,789
Accrued interest receivable	1		3,313		3,313		3,068		3,068
Financial liabilities:
Demand Deposits, Savings, NOW and MMDA	1	$	467,391	$	467,391	$	450,267	$	450,267
Time Deposits	2		392,218		393,320		276,793		275,727
Borrowings	2		79,252		79,742		118,534		118,379
Subordinated loans	2		15,119		14,766		15,094		14,485
Accrued interest payable	1		468		468		304		304
Interest rate swap derivative	2		115		115		-		-

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parenthetical)		3 Months Ended		9 Months Ended
	May 08, 2019 shares	Sep. 30, 2019 $ / shares shares	Sep. 30, 2018 Security $ / shares shares	Sep. 30, 2019 $ / shares shares	Sep. 30, 2018 Security $ / shares shares
ESOP shares earned (in shares)		6,110	6,110	18,332	18,332
Restricted stock units (in shares)				13,436	14,490
Dividends per common share | $ / shares		$ 0.06	$ 0.06	$ 0.18	$ 0.18
Dividends per preferred share | $ / shares		0.06		0.12
Dividends per warrant | $ / shares		$ 0.06		$ 0.12
Private Placement [Member] | Securities Purchase Agreement [Member]
Warrant to purchase common stock	125,000
Private Placement [Member] | Securities Purchase Agreement [Member] | Series B Preferred Stock [Member]
Sale of stock	1,155,283
Private Placement [Member] | Securities Purchase Agreement [Member] | Common Stock [Member]
Sale of stock	37,700
Private Placement [Member] | Subscription Agreements [Member] | Common Stock [Member] | Directors and Executive Officers [Member]
Sale of stock	269,277
ASU 2017-12 [Member]
Number of investment securities classified from held-to-maturity to available-for-sale. | Security			52		52

XML

Earnings per Common Share - Calculations of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Earnings Per Share [Abstract]
Net income attributable to Pathfinder Bancorp, Inc.	$ 1,295	$ 985	$ 2,416	$ 2,934
Convertible preferred stock dividends	70		139
Warrant dividends	7		15
Undistributed earnings allocated to participating securities	206		195
Net income available to common shareholders	$ 1,012	$ 985	$ 2,067	$ 2,934
Basic weighted average common shares outstanding (in shares)	4,579	4,195	4,423	4,157
Effect of assumed exercise of stock options and unvested restricted stock units (in shares)		84		100
Diluted weighted average common shares outstanding (in shares)	4,579	4,279	4,423	4,257
Earnings per common share - basic	$ 0.22	$ 0.23	$ 0.47	$ 0.71
Earnings per common share - diluted	$ 0.22	$ 0.23	$ 0.47	$ 0.69

XML

Noninterest Income (Tables)

9 Months Ended

Sep. 30, 2019

Revenue From Contract With Customer [Abstract]

Summary of Noninterest Income

The Company has included the following table regarding the Company’s noninterest income for the periods presented.

	For the three months					For the nine months
	ended September 30,					ended September 30,
(In thousands)	2019		2018			2019		2018
Service fees
Insufficient funds fees	$	347	$	218		$	827	$	618
Deposit related fees		28		49			133		148
ATM fees		24		24			69		72
Total service fees		399		291			1,029		838
Fee Income
Insurance commissions		168		172			620		632
Investment services revenue		58		70			203		218
ATM fees surcharge		68		71			173		178
Banking house rents collected		32		34			100		100
Total fee income		326		347			1,096		1,128
Card income
Debit card interchange fees		166		141			497		432
Merchant card fees		21		21			58		54
Total card income		187		162			555		486
Mortgage fee income and realized gain on sale of loans   and foreclosed real estate
Loan servicing fees		57		25			144		108
Net gains on sales of loans and foreclosed real estate		38		8			43		24
Total mortgage fee income and realized gain on sale of    loans and foreclosed real estate		95		33			187		132
Total		1,007		833			2,867		2,584
Earnings and gain on bank owned life insurance		133		138			355		319
Net gains (losses) on sales and redemptions of investment    securities		121		(60	)		232		(189	)
Gains on marketable equity securities		4		-			61		26
Other miscellaneous income		21		29			83		119
Total noninterest income	$	1,286	$	940		$	3,598	$	2,859

XML

Consolidated Statements of Condition (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
ASSETS:
Restricted Cash	$ 0	$ 3,993,000
Held-to-maturity securities at fair value	$ 116,187,000	$ 53,769,000
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, liquidation preference	$ 0	$ 0
Preferred stock, shares authorized (in dollars per share)	10,000,000	0
Preferred stock, shares issued (in shares)	1,155,283	0
Preferred stock, shares outstanding (in shares)	1,155,283	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	4,707,657	4,362,328
Common stock, shares outstanding (in shares)	4,707,657	4,362,328

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Leases

9 Months Ended

Sep. 30, 2019

Text Block [Abstract]

Leases

Note 14: Leases

The Company has operating and finance leases for certain banking offices and land under noncancelable agreements.  Our leases have remaining lease terms that vary from less than one year up to 31 years, some of which include options to extend the leases for various renewal periods.  All options to renew are included in the current lease term when we believe it is reasonably certain that the renewal options will be exercised.

The Company elected to adopt the transition relief under Topic 842, Leases, using the modified retrospective transition method.  The periods presented prior to January 1, 2019 continue to be in accordance with ASC 840.

The components of the lease expense are as follows:

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Operating lease cost	$	61	$	180
Finance lease cost		20		32

	For the three months		For the nine months
	ended September 30,		ended September 30,
(In thousands)	2019		2019
Cash paid for amount included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	55	$	159
Operating cash flows from finance leases		20		32
Financing cash flows from finance leases		17		28

Supplemental balance sheet information related to leases was as follows:

	September 30,
(In thousands, except lease term and discount rate)	2019
Operating Leases:
Operating lease right-of-use assets	$	2,422
Operating lease liabilities	$	2,681
Finance Leases:
Financial Liability	$	576
Weighted Average Remaining Lease Term:
Operating Leases	19.71 years
Finance Leases	29.67 years
Weighted Average Discount Rate:
Operating Leases		3.71	%
Finance Leases		13.75	%

Maturities of lease liabilities were as follows:

Years Ending September 30,
(In thousands)
2020	$	117
2021		104
2022		97
2023		107
2024		116
Thereafter		2,716
Total minimum lease payments	$	3,257

The Company owns certain properties that it leases to unaffiliated third parties at market rates.  Lease rental income was $32,000 and $34,000 for the three months ended September 30, 2019 and 2018, respectively.  Lease rental income was $100,000 for both the nine months ended September 30, 2019 and 2018.  All lease agreements, in which the Company is the lessor, are accounted for as operating leases.  The Company has no unamortized initial direct costs related to the establishment of these lease agreements at January 1, 2019.

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Pension and Postretirement Benefits (Tables)

9 Months Ended

Sep. 30, 2019

Compensation And Retirement Disclosure [Abstract]

Composition of Net Periodic Pension and Postretirement Plan Costs

The composition of net periodic pension plan and postretirement plan costs for the indicated periods is as follows:

	Pension Benefits						Postretirement Benefits						Pension Benefits						Postretirement Benefits
	For the three months ended September 30,												For the nine months ended September 30,
(In thousands)	2019			2018			2019			2018			2019			2018			2019			2018
Service cost	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Interest cost		124			119			6			5			371			355			16			16
Expected return on plan assets		(234	)		(260	)		-			-			(701	)		(778	)		-			-
Amortization of prior service credits		-			-			(1	)		(1	)		-			-			(3	)		(3	)
Amortization of net losses		82			41			3			3			246			123			9			9
Net periodic benefit plan (benefit) cost	$	(28	)	$	(100	)	$	8		$	7		$	(84	)	$	(300	)	$	22		$	22

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Loans - Summary of Classes of Loan Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 725,840	$ 620,405	$ 621,059
Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	703,466	599,834
Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	14,205	14,296
Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	5,656	4,190
Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	2,513	2,085
Residential Mortgage Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	246,058	239,644
Residential Mortgage Loans [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	241,817	232,523	231,830
Residential Mortgage Loans [Member] | Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	4,241	7,121
Residential Mortgage Loans [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	242,433	235,684
Residential Mortgage Loans [Member] | Pass [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	238,192	228,563
Residential Mortgage Loans [Member] | Pass [Member] | Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	4,241	7,121
Residential Mortgage Loans [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,297	999
Residential Mortgage Loans [Member] | Special Mention [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,297	999
Residential Mortgage Loans [Member] | Special Mention [Member] | Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Residential Mortgage Loans [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,069	1,190
Residential Mortgage Loans [Member] | Substandard [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,069	1,190
Residential Mortgage Loans [Member] | Substandard [Member] | Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Residential Mortgage Loans [Member] | Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,259	1,771
Residential Mortgage Loans [Member] | Doubtful [Member] | 1-4 Family First Lien Residential Mortgages [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,259	1,771
Residential Mortgage Loans [Member] | Doubtful [Member] | Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	382,784	329,228
Commercial Loans [Member] | Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	235,364	212,314	213,303
Commercial Loans [Member] | Lines of Credit [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	58,408	44,235	48,496
Commercial Loans [Member] | Other Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	80,829	63,359	60,984
Commercial Loans [Member] | Tax Exempt Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	8,183	9,320	10,163
Commercial Loans [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	365,047	313,150
Commercial Loans [Member] | Pass [Member] | Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	224,314	201,997
Commercial Loans [Member] | Pass [Member] | Lines of Credit [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	56,687	42,489
Commercial Loans [Member] | Pass [Member] | Other Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	75,863	59,344
Commercial Loans [Member] | Pass [Member] | Tax Exempt Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	8,183	9,320
Commercial Loans [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	12,573	13,058
Commercial Loans [Member] | Special Mention [Member] | Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	7,367	8,299
Commercial Loans [Member] | Special Mention [Member] | Lines of Credit [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,339	1,491
Commercial Loans [Member] | Special Mention [Member] | Other Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	3,867	3,268
Commercial Loans [Member] | Special Mention [Member] | Tax Exempt Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Loans [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	4,219	2,792
Commercial Loans [Member] | Substandard [Member] | Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	2,787	1,947
Commercial Loans [Member] | Substandard [Member] | Lines of Credit [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	382	233
Commercial Loans [Member] | Substandard [Member] | Other Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	1,050	612
Commercial Loans [Member] | Substandard [Member] | Tax Exempt Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Commercial Loans [Member] | Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	945	228
Commercial Loans [Member] | Doubtful [Member] | Real Estate [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	896	71
Commercial Loans [Member] | Doubtful [Member] | Lines of Credit [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	22
Commercial Loans [Member] | Doubtful [Member] | Other Commercial and Industrial [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	49	135
Commercial Loans [Member] | Doubtful [Member] | Tax Exempt Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	0	0
Consumer Loans [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	96,998	51,533
Consumer Loans [Member] | Home Equity and Junior Liens [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	47,512	26,109	25,985
Consumer Loans [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	49,486	25,424	$ 26,410
Consumer Loans [Member] | Pass [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	95,986	51,000
Consumer Loans [Member] | Pass [Member] | Home Equity and Junior Liens [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	46,840	25,706
Consumer Loans [Member] | Pass [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	49,146	25,294
Consumer Loans [Member] | Special Mention [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	335	239
Consumer Loans [Member] | Special Mention [Member] | Home Equity and Junior Liens [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	129	144
Consumer Loans [Member] | Special Mention [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	206	95
Consumer Loans [Member] | Substandard [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	368	208
Consumer Loans [Member] | Substandard [Member] | Home Equity and Junior Liens [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	234	173
Consumer Loans [Member] | Substandard [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	134	35
Consumer Loans [Member] | Doubtful [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	309	86
Consumer Loans [Member] | Doubtful [Member] | Home Equity and Junior Liens [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	309	86
Consumer Loans [Member] | Doubtful [Member] | Other Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Total loans	$ 0	$ 0

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Pension and Postretirement Benefits - Additional Information (Details)	9 Months Ended
	Sep. 30, 2019
Compensation And Retirement Disclosure [Abstract]
Minimum years of service to participate in the health and life insurance benefits as of January 1, 1995	14 years

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Fair Value Measurements - Fair Value of Assets on Recurring Basis Segregated by Level of Valuation Inputs (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Debt investment securities:
Investment securities - available-for-sale	$ 120,002	$ 177,664
Equity investment securities:
Marketable equity securities	206	206
Level 2 [Member] | Total Fair Value [Member]
Debt investment securities:
Investment securities - available-for-sale	114,752	172,399
Equity investment securities:
Marketable equity securities	514	453
Net Asset Value [Member] | Total Fair Value [Member]
Debt investment securities:
Investment securities - available-for-sale	5,044	5,059
Recurring Basis [Member] | Total Fair Value [Member]
Debt investment securities:
Total available-for-sale securities	117,325	177,458
Equity investment securities:
Marketable equity securities	510	0
Interest rate derivatives, at fair value, net :
Interest rate swap derivative	(110)
Recurring Basis [Member] | Level 1 [Member]
Debt investment securities:
US Treasury, agencies and GSEs	0	0
State and political subdivisions	0	0
Corporate	0	0
Asset backed securities	0	0
Residential mortgage-backed - US agency	0	0
Collateralized mortgage obligations - US agency	0	0
Collateralized mortgage obligations - Private label	0	0
Investment securities - available-for-sale	0	0
Total available-for-sale securities	0	0
Equity investment securities:
Marketable equity securities	0	0
Interest rate derivatives, at fair value, net :
Interest rate swap derivative	0
Recurring Basis [Member] | Level 2 [Member]
Debt investment securities:
US Treasury, agencies and GSEs	6,986	17,031
State and political subdivisions	4,807	23,065
Corporate	7,621	12,141
Asset backed securities	14,378	18,119
Residential mortgage-backed - US agency	20,994	31,666
Collateralized mortgage obligations - US agency	41,725	46,441
Collateralized mortgage obligations - Private label	18,241	23,936
Investment securities - available-for-sale	114,752	172,399
Total available-for-sale securities	114,752	172,399
Equity investment securities:
Marketable equity securities	514	453
Interest rate derivatives, at fair value, net :
Interest rate swap derivative	(115)
Recurring Basis [Member] | Level 3 [Member]
Debt investment securities:
US Treasury, agencies and GSEs	0	0
State and political subdivisions	0	0
Corporate	0	0
Asset backed securities	0	0
Residential mortgage-backed - US agency	0	0
Collateralized mortgage obligations - US agency	0	0
Collateralized mortgage obligations - Private label	0	0
Investment securities - available-for-sale	0	0
Total available-for-sale securities	0	0
Equity investment securities:
Marketable equity securities	0	0
Interest rate derivatives, at fair value, net :
Interest rate swap derivative	0
Recurring Basis [Member] | Level 1, 2 and 3 [Member] | Total Fair Value [Member]
Debt investment securities:
US Treasury, agencies and GSEs	6,986	17,031
State and political subdivisions	4,807	23,065
Corporate	7,621	12,141
Asset backed securities	14,378	18,119
Residential mortgage-backed - US agency	20,994	31,666
Collateralized mortgage obligations - US agency	41,725	46,441
Collateralized mortgage obligations - Private label	18,241	23,936
Investment securities - available-for-sale	114,752	172,399
Recurring Basis [Member] | Net Asset Value [Member] | Total Fair Value [Member]
Debt investment securities:
Investment securities - available-for-sale	$ 5,040	$ 5,059

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Interest Rate Derivatives - Additional Information (Details)	Sep. 30, 2019 USD ($) Derivative	Apr. 30, 2019 USD ($)	Dec. 31, 2018 Derivative
Interest Rate Derivatives [Member]
Derivative [Line Items]
Number of interest rate derivatives | Derivative	2
Number of derivative agreements | Derivative			0
Interest Rate Derivatives [Member] | Other Liabilities [Member]
Derivative [Line Items]
Fair value of derivative resulted in net liability position | $	$ 115,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Fair Value Hedges [Member]
Derivative [Line Items]
Notional amount | $		$ 9,200,000

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Accumulated Other Comprehensive Income (Loss) - Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax (Parenthetical) (Details)	Sep. 30, 2018 Security
ASU 2017-12 [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Number of investment securities classified from held-to-maturity to available-for-sale.	52

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Subsequent Events

9 Months Ended

Sep. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Note 15: Subsequent Events

On November 7, 2019, the Bank acquired $25.1 million of loans originated by an unrelated financial technology company, located outside of the Bank’s market area.  The acquired loan pool represents a 55.9% participating interest in a total of 2,787 unsecured consumer loans with maturities ranging primarily from three to five years. These loans will be serviced through their respective maturities by the originating financial technology company.  

The Company’s management routinely evaluates the overall characteristics of its loan portfolio.  Such evaluations may include analyses of certain loans for potential sales to unaffiliated third parties.  Loan sales may be made in response to a variety of factors such as changes in market conditions or changes in the level of certain loan-type concentrations.  Such sales, if executed, would typically be made in order to improve certain characteristics within the overall loan portfolio, viewed individually or in combination, related to factors such as cash flow, liquidity, duration or potential interest rate risk.  As of the date of the issuance of this filing, the Company was in the process of evaluating the sale of certain conforming 30-year loans that have been held in portfolio for the past two-to-five years.  The sale of loans of this type would typically reduce the overall duration of the loan portfolio and would, therefore, generally reduce the Company’s exposure to the effects of rising interest rates.  As of the date of this filing, no decision has been made to sell the loans currently being evaluated.  The amount of any potential sale, the expected gain or loss on such a sale, or the potential effects on future earnings of such a sale has not been determined.

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Loans (Tables)

9 Months Ended

Sep. 30, 2019

Receivables [Abstract]

Major Classification of Loans

Major classifications of loans at the indicated dates are as follows:

	September 30,			December 31,
(In thousands)	2019			2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	241,817		$	232,523
Construction		4,241			7,121
Total residential mortgage loans		246,058			239,644
Commercial loans:
Real estate		235,364			212,314
Lines of credit		58,408			44,235
Other commercial and industrial		80,829			63,359
Tax exempt loans		8,183			9,320
Total commercial loans		382,784			329,228
Consumer loans:
Home equity and junior liens		47,512			26,109
Other consumer		49,486			25,424
Total consumer loans		96,998			51,533
Total loans		725,840			620,405
Net deferred loan fees		60			(135	)
Less allowance for loan losses		(8,330	)		(7,306	)
Loans receivable, net	$	717,570		$	612,964

Summary of Classes of Loan Portfolio

The following tables present the classes of the loan portfolio, not including net deferred loan costs, summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of the dates indicated:

	As of September 30, 2019
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	238,192	$	1,297	$	1,069	$	1,259	$	241,817
Construction		4,241		-		-		-		4,241
Total residential mortgage loans		242,433		1,297		1,069		1,259		246,058
Commercial loans:
Real estate		224,314		7,367		2,787		896		235,364
Lines of credit		56,687		1,339		382		-		58,408
Other commercial and industrial		75,863		3,867		1,050		49		80,829
Tax exempt loans		8,183		-		-		-		8,183
Total commercial loans		365,047		12,573		4,219		945		382,784
Consumer loans:
Home equity and junior liens		46,840		129		234		309		47,512
Other consumer		49,146		206		134		-		49,486
Total consumer loans		95,986		335		368		309		96,998
Total loans	$	703,466	$	14,205	$	5,656	$	2,513	$	725,840
	As of December 31, 2018
			Special
(In thousands)	Pass		Mention		Substandard		Doubtful		Total
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	228,563	$	999	$	1,190	$	1,771	$	232,523
Construction		7,121		-		-		-		7,121
Total residential mortgage loans		235,684		999		1,190		1,771		239,644
Commercial loans:
Real estate		201,997		8,299		1,947		71		212,314
Lines of credit		42,489		1,491		233		22		44,235
Other commercial and industrial		59,344		3,268		612		135		63,359
Tax exempt loans		9,320		-		-		-		9,320
Total commercial loans		313,150		13,058		2,792		228		329,228
Consumer loans:
Home equity and junior liens		25,706		144		173		86		26,109
Other consumer		25,294		95		35		-		25,424
Total consumer loans		51,000		239		208		86		51,533
Total loans	$	599,834	$	14,296	$	4,190	$	2,085	$	620,405

Age Analysis of Past Due Loans Segregated by Portfolio Segment and Class of Loans

An age analysis of past due loans, not including net deferred loan costs, segregated by portfolio segment and class of loans, as of September 30, 2019 and December 31, 2018, are detailed in the following tables:

	As of  September 30, 2019
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,591	$	775	$	777	$	3,143	$	238,674	$	241,817
Construction		-		-		-		-		4,241		4,241
Total residential mortgage loans		1,591		775		777		3,143		242,915		246,058
Commercial loans:
Real estate		16		151		2,845		3,012		232,352		235,364
Lines of credit		15		248		392		655		57,753		58,408
Other commercial and industrial		526		415		891		1,832		78,997		80,829
Tax exempt loans		-		-		-		-		8,183		8,183
Total commercial loans		557		814		4,128		5,499		377,285		382,784
Consumer loans:
Home equity and junior liens		391		107		276		774		46,738		47,512
Other consumer		294		115		66		475		49,011		49,486
Total consumer loans		685		222		342		1,249		95,749		96,998
Total loans	$	2,833	$	1,811	$	5,247	$	9,891	$	715,949	$	725,840
	As of  December 31, 2018
	30-59 Days		60-89 Days		90 Days		Total				Total Loans
(In thousands)	Past Due		Past Due		and Over		Past Due		Current		Receivable
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	1,507	$	505	$	1,176	$	3,188	$	229,335	$	232,523
Construction		-		-		-		-		7,121		7,121
Total residential mortgage loans		1,507		505		1,176		3,188		236,456		239,644
Commercial loans:
Real estate		4,261		364		323		4,948		207,366		212,314
Lines of credit		1,033		111		22		1,166		43,069		44,235
Other commercial and industrial		814		44		387		1,245		62,114		63,359
Tax exempt loans		-		-		-		-		9,320		9,320
Total commercial loans		6,108		519		732		7,359		321,869		329,228
Consumer loans:
Home equity and junior liens		247		6		35		288		25,821		26,109
Other consumer		226		65		107		398		25,026		25,424
Total consumer loans		473		71		142		686		50,847		51,533
Total loans	$	8,088	$	1,095	$	2,050	$	11,233	$	609,172	$	620,405

Nonaccrual Loans Segregated by Class of Loan

Nonaccrual loans, segregated by class of loan, were as follows:

	September 30,		December 31,
(In thousands)	2019		2018
Residential mortgage loans:
1-4 family first-lien residential mortgages	$	777	$	1,176
		777		1,176
Commercial loans:
Real estate		2,923		415
Lines of credit		392		28
Other commercial and industrial		891		387
		4,206		830
Consumer loans:
Home equity and junior liens		276		35
Other consumer		66		107
		342		142
Total nonaccrual loans	$	5,325	$	2,148

Troubled Debt Restructurings on Financing Receivables

The Company had no loans that were modified as TDRs for the three months ended September 30, 2019.

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2019.

	For the nine months ended September 30, 2019
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Residential real estate loans	1	$	205	$	250	$	-

The table below details one loan that was modified as a TDR for the nine months ended September 30, 2018.

	For the nine months ended September 30, 2018
(In thousands)	Number of loans	Pre-modification outstanding recorded investment		Post-modification outstanding recorded investment		Additional provision for loan losses
Other commercial and industrial loans	1	$	300	$	300	$	-

Summary of Impaired Loan Information by Portfolio Class

The following table summarizes impaired loan information by portfolio class at the indicated dates:

	September 30, 2019						December 31, 2018
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
(In thousands)	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
1-4 family first-lien residential mortgages	$	1,029	$	1,029	$	-	$	1,221	$	1,226	$	-
Commercial real estate		4,244		4,313		-		2,387		2,448		-
Commercial lines of credit		238		238		-		228		228		-
Other commercial and industrial		584		592		-		451		452		-
Home equity and junior liens		41		41		-		-		-		-
Other consumer		56		56		-		-		-		-
With an allowance recorded:
1-4 family first-lien residential mortgages		587		587		98		606		606		108
Commercial real estate		451		451		77		486		486		100
Commercial lines of credit		110		110		110		28		28		28
Other commercial and industrial		531		531		339		373		373		255
Home equity and junior liens		179		179		152		207		207		140
Other consumer		37		37		3		-		-		-
Total:
1-4 family first-lien residential mortgages		1,616		1,616		98		1,827		1,832		108
Commercial real estate		4,695		4,764		77		2,873		2,934		100
Commercial lines of credit		348		348		110		256		256		28
Other commercial and industrial		1,115		1,123		339		824		825		255
Home equity and junior liens		220		220		152		207		207		140
Other consumer		93		93		3		-		-		-
Totals	$	8,087	$	8,164	$	779	$	5,987	$	6,054	$	631

Average Recorded Investment In Impaired Loans

The following table presents the average recorded investment in impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	1,625	$	1,840	$	1,625	$	1,846
Commercial real estate		4,578		4,497		3,723		4,976
Commercial lines of credit		359		186		323		365
Other commercial and industrial		1,131		947		1,035		1,001
Home equity and junior liens		234		207		220		228
Other consumer		95		-		73		-
Total	$	8,022	$	7,677	$	6,999	$	8,416

Cash Basis Interest Income Recognized On Impaired Loans

The following table presents the cash basis interest income recognized on impaired loans for the periods indicated:

	For the three months ended				For the nine months ended
	September 30,				September 30,
(In thousands)	2019		2018		2019		2018
1-4 family first-lien residential mortgages	$	19	$	16	$	54	$	48
Commercial real estate		73		62		158		128
Commercial lines of credit		2		4		20		25
Other commercial and industrial		12		5		50		24
Home equity and junior liens		2		3		8		9
Other consumer		2		-		5		-
Total	$	110	$	90	$	295	$	234

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Loans - Additional Information (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2019 USD ($) Loan	Sep. 30, 2018 Loan	Sep. 30, 2019 USD ($) Loan Segment	Sep. 30, 2018 Loan	Aug. 31, 2019 USD ($)	Jun. 30, 2019 USD ($)	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($) Loan	Apr. 30, 2017 USD ($)	Jan. 31, 2017 USD ($)
Accounts Notes And Loans Receivable [Line Items]
Loans acquired							$ 24,600,000		$ 10,200,000	$ 15,600,000
Participating interest of acquired loan percentage			90.00%
Number of loans secured by liens on automobiles | Loan			2,283
Number of loans outstanding | Loan	1,731		1,731					909
Loans acquired carrying amount	$ 30,000,000		$ 30,000,000					$ 13,300,000
Number of acquired loan charged-off as uncollectible | Loan			25
Acquired loans cumulative net charge-offs			$ 187,000
Acquired loans net charge-offs			$ 67,000
Number of portfolio segment | Segment			3
Number of loans | Loan	0	0	1	1
Number of loans subsequently defaulted | Loan			0	0
Consumer Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans acquired						$ 5,000,000
Participating interest of acquired loan percentage			100.00%
Number of loans secured by liens on automobiles | Loan			86
Number of loans outstanding | Loan	85		85
Loans acquired carrying amount	$ 4,800,000		$ 4,800,000
Acquired loans net charge-offs			$ 0
Commercial and Industrial Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans acquired						$ 5,000,000
Participating interest of acquired loan percentage			100.00%
Number of loans secured by liens on automobiles | Loan			35
Number of loans outstanding | Loan	35		35
Loans acquired carrying amount	$ 4,900,000		$ 4,900,000
Acquired loans net charge-offs			$ 0
Home Equity Lines of Credit [Member]
Accounts Notes And Loans Receivable [Line Items]
Loans acquired					$ 21,900,000
Participating interest of acquired loan percentage			100.00%
Number of loans outstanding | Loan	383		383
Loans acquired carrying amount	$ 21,300,000		$ 21,300,000
Acquired loans net charge-offs			$ 0
Number of loans secured home equity lines of credit | Loan			395
Residential Mortgage Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Residential mortgage loans pledged to FHLBNY as blanket collateral	$ 136,600,000		$ 136,600,000					$ 154,900,000
Minimum [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			2 years
Minimum [Member] | Consumer Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			4 years
Minimum [Member] | Commercial and Industrial Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			4 years
Minimum [Member] | Home Equity Lines of Credit [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			4 years
Maximum [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			6 years
Maximum [Member] | Consumer Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			10 years
Maximum [Member] | Commercial and Industrial Loans [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			10 years
Maximum [Member] | Home Equity Lines of Credit [Member]
Accounts Notes And Loans Receivable [Line Items]
Maturity period of acquired loans			30 years

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Investment Securities - Gross Realized Gains (Losses) on Sale of Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Gain Loss On Sale Of Investments [Abstract]
Realized gains on investments	$ 143	$ 76	$ 544	$ 236
Realized losses on investments	(22)	(136)	(312)	(425)
Total	$ 121	$ (60)	$ 232	$ (189)

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Accumulated Other Comprehensive Income (Loss) - Summary of Amounts Reclassified Out of Each Component of AOCI (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits		$ (3,275)	$ (3,191)	$ (10,379)	$ (9,381)
Provision for income taxes		(324)	(157)	(750)	(505)
Net income attributable to Pathfinder Bancorp Inc.		1,295	985	2,416	2,934
Reclassification out of Accumulated Other Comprehensive Income [Member] | Available-for-Sale Securities [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Net gains (losses) on sales and redemptions of investment securities	[1]	121	(60)	232	(189)
Provision for income taxes	[1]	(25)	16	(49)	49
Net income attributable to Pathfinder Bancorp Inc.	[1]	96	(44)	183	(140)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Retirement Plans [Member]
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items]
Salaries and employee benefits	[1],[2]	(84)	(43)	(252)	(129)
Provision for income taxes	[1]	17	12	54	34
Net income attributable to Pathfinder Bancorp Inc.	[1]	$ (67)	$ (31)	$ (198)	$ (95)

[1] Amounts in parentheses indicates debits in net income.

[2] These items are included in net periodic pension cost.

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Fair Value Measurements - Summary of Fair Value Assets Measured on Nonrecurring Basis (Details) - Nonrecurring Basis [Member] - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
Total Fair Value [Member]
Nonrecurring basis [Abstract]
Impaired loans	$ 3,055	$ 1,098
Foreclosed real estate	60	1,173
Level 1 [Member]
Nonrecurring basis [Abstract]
Impaired loans	0	0
Foreclosed real estate	0	0
Level 2 [Member]
Nonrecurring basis [Abstract]
Impaired loans	0	0
Foreclosed real estate	0	0
Level 3 [Member]
Nonrecurring basis [Abstract]
Impaired loans	3,055	1,098
Foreclosed real estate	$ 60	$ 1,173

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Interest Rate Derivative - Cumulative Basis Adjustments for Fair Value Hedges (Details) - Interest Rate Derivatives [Member] - Loans Receivable [Member]	Sep. 30, 2019 USD ($)	[1]
Derivative [Line Items]
Carrying Amount of the Hedged Assets	$ 20,952,000
Cumulative Amount of Fair Value Hedging Adjustment Included in The Carrying Amount of the Hedged Assets	$ 92,000

[1] These amounts include the amortized cost basis of the closed portfolio used to designate the hedging relationship in which the hedged item is the remaining amortized cost of the last layer expected to be remaining at the end of the hedging relationship. At September 30, 2019, the amortized cost of the basis of the closed portfolio used in the hedging relationship was $21.0 million, the cumulative basis adjustment associated with the hedging relationship was $92,000, and the amount of the designated hedged item was $9.2 million.

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Loans - Schedule of Cash Basis Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	$ 110	$ 90	$ 295	$ 234
1-4 Family First Lien Residential Mortgages [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	19	16	54	48
Commercial Real Estate [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	73	62	158	128
Commercial Lines of Credit [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	2	4	20	25
Other Commercial and Industrial [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	12	5	50	24
Home Equity and Junior Liens [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	2	3	8	9
Other Consumer [Member]
Cash Basis Interest Recognized on Impaired Loans [Abstract]
Cash basis interest income recognized on impaired loans	$ 2	$ 0	$ 5	$ 0

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Foreclosed Real Estate - Additional Information (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Real Estate Owned Disclosure Of Detailed Components [Abstract]
Residential real estate loans in the process of foreclosure	$ 302,000	$ 951,000

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Leases - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Operating Leases:
Operating lease right-of-use assets	$ 2,422
Operating lease liabilities	2,681
Finance Leases:
Financial Liability	$ 576
Weighted Average Remaining Lease Term:
Operating Leases	19 years 8 months 15 days
Finance Leases	29 years 8 months 1 day
Weighted Average Discount Rate:
Operating Leases	3.71%
Finance Leases	13.75%

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Noninterest Income - Summary of Noninterest Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Disaggregation Of Revenue [Line Items]
Earnings and gain on bank owned life insurance	$ 133	$ 138	$ 355	$ 319
Net gains (losses) on sales and redemptions of investment securities	121	(60)	232	(189)
Gains on marketable equity securities	4		61	26
Other miscellaneous income	21	29	83	119
Total noninterest income	1,286	940	3,598	2,859
Insufficient Funds Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	347	218	827	618
Deposit Related Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	28	49	133	148
ATM Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	24	24	69	72
Service Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	399	291	1,029	838
Insurance Commissions [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	168	172	620	632
Investment Services Revenue [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	58	70	203	218
ATM Fees Surcharge [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	68	71	173	178
Banking House Rents Collected [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	32	34	100	100
Fee Income [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	326	347	1,096	1,128
Debit Card Interchange Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	166	141	497	432
Merchant Card Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	21	21	58	54
Card Income [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	187	162	555	486
Loan Servicing Fees [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	57	25	144	108
Net Gains on Sale of Loans and Foreclosed Real Estate [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	38	8	43	24
Total Mortgage Fee Income and Realized Gain on Sale of Loans and Foreclosed Real Estate [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	95	33	187	132
Service Fees, Fee Income, Card Income and Mortgage Fee Income and Realized Gain on Sale of Loans and Foreclosed Real Estate [Member]
Disaggregation Of Revenue [Line Items]
Noninterest income	$ 1,007	$ 833	$ 2,867	$ 2,584

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Interest Rate Derivatives

9 Months Ended

Sep. 30, 2019

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Interest Rate Derivatives

Note 11:   Interest Rate Derivatives

The Company is exposed to certain risks from both its business operations and economic conditions.  The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities.  As part of the Company’s overall risk management processes, the Company manages its economic risks, including interest rate, liquidity and credit risk, primarily by managing the amount, sources and duration of certain balance sheet assets and liabilities. In the normal course of business, the Company also uses derivative financial instruments as an additional risk management tool.  Financial derivatives are recorded at fair value as other assets.  

The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. There are two primary types of interest rate derivatives that may be employed by the Company:

• Fair Value Hedge - As a result of interest rate fluctuations, fixed-rate assets and liabilities will appreciate or depreciate in fair value. When effectively hedged, this appreciation or depreciation will generally be offset by fluctuations in the fair value of derivative instruments that are linked to the hedged assets and liabilities. This strategy is referred to as a fair value hedge. For a fair value hedge, changes in the fair value of the derivative instrument and changes in the fair value of the hedged asset or liability are recognized currently in earnings.

• Cash Flow Hedge - Cash flows related to floating rate assets and liabilities will fluctuate with changes in the underlying rate index.  When effectively hedged, the increases or decreases in cash flows related to the floating-rate asset or liability will generally be offset by changes in cash flows of the derivative instrumnets designated as a hedge.  This strategy is referred to as a cash flow hedge. For a cash flow hedge, changes in the fair value of the derivative instrument, to the extent that it is effective, are recorded in other comprehensive income and subsequently reclassified to earnings as the hedged transaction impacts net income. Any ineffective portion of a cash flow hedge is recognized currently in earnings. 

Among the array of interest rate derivative transactions potentially available to the Company are interest rate swaps.  The Company uses interest rate swaps as part of its interest rate risk management strategy.  Interest rate swaps, designated as fair value hedges, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed payments over the life of the agreements without the exchange of the underlying notional amount.  The gain or loss on the derivative as well as the offsetting gain of loss on the hedged item attributable to the hedged risk are recognized in earnings.  The Company entered into a pay-fixed/receive variable interest rate swap with a notional amount of $9.2 million in April 2019, which was designated as a fair value hedge associated with specific pools within the Company’s fixed-rate consumer loan portfolio.

As of September 30, 2019, the following amounts were recorded on the balance sheet related to the cumulative basis adjustments for fair value hedges:

(In thousands)	Carrying Amount of the Hedged Assets at September 30, 2019		Cumulative Amount of Fair Value Hedging Adjustment Included in The Carrying Amount of the Hedged Assets at September 30, 2019
Line item on the balance sheet in which the hedged item is included:
Loans receivable (1)	$	20,952	$	92

(1) These amounts include the amortized cost basis of the closed portfolio used to designate the hedging relationship in which the hedged item is the remaining amortized cost of the last layer expected to be remaining at the end of the hedging relationship.  At September 30, 2019, the amortized cost of the basis of the closed portfolio used in the hedging relationship was $21.0 million, the cumulative basis adjustment associated with the hedging relationship was $92,000, and the amount of the designated hedged item was $9.2 million.

At September 30, 2019, the fair value of the derivative resulted in a net liability position of $115,000 under the agreement, recorded by the Company in other liabilities. The Company had no derivative agreements in place at December 31, 2018.

The Company manages its potential credit exposure on interest rate swap transactions by entering into a bilateral credit support agreements with each counterparty.  These agreements require collateralization of credit exposures beyond specified minimum threshold amounts.  The Company’s agreement with its interest rate swap counterparty contains a provision whereby if either party defaults on any of its indebtedness, then that party could also be declared in default on its derivative obligations. The agreement with the Company’s derivative counterparty also includes certain other provisions that if not met, could result in the Company or the counterparty being declared in default.  If either the Company or the counterparty were to be declared in default, the other party to the agreement can terminate the derivative position and require settlement of all obligations as specifically outlined within the terms of the agreement.  

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Earnings per Common Share

9 Months Ended

Sep. 30, 2019

Earnings Per Share [Abstract]

Earnings per Common Share

Note 3:   Earnings per Common Share

The Company entered into a securities purchase agreement with Castle Creek Capital Partners VII, L.P. on May 8, 2019, pursuant to which the Company sold: (i) 37,700 shares of the Company’s common stock, par value $0.01 per share, at a purchase price of $14.25 per share; (ii) 1,155,283 shares of a new series of preferred stock, Series B convertible perpetual preferred stock, par value $0.01 per share, at a purchase price of $14.25 per share; and (iii) a warrant, with an approximate fair value of $373,000, to purchase 125,000 shares of common stock at an exercise price equal to $14.25 per share, in a private placement transaction (the “Private Placement”) for gross proceeds of approximately $17.0 million.  As a result of the securities purchase agreement, the Company has common stock, preferred stock and a warrant that are all eligible to participate in dividends equal to the common stock dividends on a per share basis. Securities that participate in dividends, such as the Company’s preferred stock and warrant, are considered “participating securities.”  The Company calculates net income available to common shareholders using the two-class method required for capital structures that include participating securities.    

In applying the two-class method for the three and nine months ended September 30, 2019, basic net income per share was calculated by dividing net income (less any dividends on participating securities) by the weighted average number of shares of common stock and participating securities outstanding for the period. Diluted earnings per share may include the additional effect of other securities, if dilutive, in which case the dilutive effect of such securities is calculated by applying either the two-class method or the Treasury Stock method to the assumed exercise or vesting of potentially dilutive common shares.  The method yielding the more dilutive result is ultimately reported for the applicable period. Potentially dilutive common stock equivalents primarily consist of employee stock options and restricted stock units. Unallocated common shares held by the ESOP are not included in the weighted average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.

Basic earnings per share for the three and nine months ended September 30, 2018 were calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period.  Net income available to common shareholders is net income to Pathfinder Bancorp, Inc. less the total of preferred dividends declared, if any. Diluted earnings per share include the potential dilutive effect that could occur upon the assumed exercise of issued stock options using the Treasury Stock method.  Unallocated common shares held by the ESOP are not included in the weighted average number of common shares outstanding for purposes of calculating earnings per common share until they are committed to be released to plan participants.

Anti-dilutive shares are common stock equivalents with average exercise prices in excess of the weighted average market price for the period presented.  Anti-dilutive stock options, not included in the computation below, were -0- for the three and nine months ended September 30, 2019 and were -0- for the three and nine months ended September 30, 2018.

The following table sets forth the calculation of basic and diluted earnings per share.  

	Three months ended				Nine months ended
	September 30,				September 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income attributable to Pathfinder Bancorp, Inc.	$	1,295	$	985	$	2,416	$	2,934
Convertible preferred stock dividends		70		-		139		-
Warrant dividends		7		-		15		-
Undistributed earnings allocated to participating securities		206		-		195		-
Net income available to common shareholders	$	1,012	$	985	$	2,067	$	2,934
Basic weighted average common shares outstanding		4,579		4,195		4,423		4,157
Effect of assumed exercise of stock options and    unvested restricted stock units		-		84		-		100
Diluted weighted average common shares outstanding		4,579		4,279		4,423		4,257
Basic earnings per common share	$	0.22	$	0.23	$	0.47	$	0.71
Diluted earnings per common share	$	0.22	$	0.23	$	0.47	$	0.69

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Allowance for Loan Losses

9 Months Ended

Sep. 30, 2019

Allowance For Loan Losses [Abstract]

Allowance for Loan Losses

Note 7:   Allowance for Loan Losses

Summarized in the tables below are changes in the allowance for loan losses for the indicated periods and information pertaining to the allocation of the allowance for loan losses, balances of the allowance for loan losses, loans receivable based on individual, and collective impairment evaluation by loan portfolio class.  An allocation of a portion of the allowance to a given portfolio class does not limit the Company’s ability to absorb losses in another portfolio class.

	For the three months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	724		$	-		$	3,452		$	1,145		$	1,702
Charge-offs		-			-			-			(5	)		(4	)
Recoveries		-			-			-			-			1
Provisions (credits)		(77	)		-			388			(84	)		89
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
Ending balance: related to loans    individually evaluated for impairment	$	98		$	-		$	77		$	110		$	339
Ending balance: related to loans    collectively evaluated for impairment	$	549		$	-		$	3,763		$	946		$	1,449
Loans receivables:
Ending balance	$	241,817		$	4,241		$	235,364		$	58,408		$	80,829
Ending balance: individually    evaluated for impairment	$	1,616		$	-		$	4,695		$	348		$	1,115
Ending balance: collectively    evaluated for impairment	$	240,201		$	4,241		$	230,669		$	58,060		$	79,714
				Homeequity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	386		$	415		$	-		$	7,825
Charge-offs		-			(7	)		(107	)		-			(123	)
Recoveries		-			-			27			-			28
Provisions		-			95			93			96			600
Ending balance	$	1		$	474		$	428		$	96		$	8,330
Ending balance: related to loans    individually evaluated for impairment	$	-		$	152		$	3		$	-		$	779
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	322		$	425		$	96		$	7,551
Loans receivables:
Ending balance	$	8,183		$	47,512		$	49,486					$	725,840
Ending balance: individually    evaluated for impairment	$	-		$	220		$	93					$	8,087
Ending balance: collectively    evaluated for impairment	$	8,183		$	47,292		$	49,393					$	717,753

	For the nine months ended September 30, 2019
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	766		$	-		$	3,578		$	730		$	1,285
Charge-offs		(11	)		-			-			(136	)		(6	)
Recoveries		1			-			-			-			1
Provisions (credits)		(109	)		-			262			462			508
Ending balance	$	647		$	-		$	3,840		$	1,056		$	1,788
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	409		$	385		$	152		$	7,306
Charge-offs		-			(7	)		(214	)		-			(374	)
Recoveries		-			-			42			-			44
Provisions (credits)		-			72			215			(56	)		1,354
Ending balance	$	1		$	474		$	428		$	96		$	8,330

	For the three months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	722		$	-		$	4,141		$	731		$	1,271
Charge-offs		(27	)		-			(31	)		(12	)		(1	)
Recoveries		1			-			-			-			-
Provisions (credits)		65			-			(170	)		66			(82	)
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
Ending balance: related to loans    individually evaluated for impairment	$	109		$	-		$	593		$	46		$	276
Ending balance: related to loans    collectively evaluated for impairment	$	652		$	-		$	3,347		$	739		$	912
Loans receivables:
Ending balance	$	231,830		$	3,888		$	213,303		$	48,496		$	60,984
Ending balance: individually    evaluated for impairment	$	1,835		$	-		$	4,463		$	162		$	856
Ending balance: collectively    evaluated for impairment	$	229,995		$	3,888		$	208,840		$	48,334		$	60,128
				Home equity			Other
	Tax exempt			and junior liens			Consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	434		$	291		$	14		$	7,605
Charge-offs		-			-			(33	)		-			(104	)
Recoveries		-			5			6			-			12
Provisions (credits)		-			(18	)		166			264			291
Ending balance	$	1		$	421		$	430		$	278		$	7,804
Ending balance: related to loans    individually evaluated for impairment	$	-		$	140		$	-		$	-		$	1,164
Ending balance: related to loans    collectively evaluated for impairment	$	1		$	281		$	430		$	278		$	6,640
Loans receivables:
Ending balance	$	10,163		$	25,985		$	26,410					$	621,059
Ending balance: individually    evaluated for impairment	$	-		$	206		$	-					$	7,522
Ending balance: collectively    evaluated for impairment	$	10,163		$	25,779		$	26,410					$	613,537

	For the nine months ended September 30, 2018
	1-4 family
	first-lien			Residential									Other
	residential			construction			Commercial			Commercial			commercial
(In thousands)	mortgage			mortgage			real estate			lines of credit			and industrial
Allowance for loan losses:
Beginning Balance	$	865		$	-		$	3,589		$	735		$	1,214
Charge-offs		(219	)		-			(31	)		(62	)		(172	)
Recoveries		21			-			-			66			-
Provisions (credits)		94			-			382			46			146
Ending balance	$	761		$	-		$	3,940		$	785		$	1,188
				Home equity			Other
	Tax exempt			and junior liens			consumer			Unallocated			Total
Allowance for loan losses:
Beginning Balance	$	1		$	514		$	208		$	-		$	7,126
Charge-offs		-			(17	)		(144	)		-			(645	)
Recoveries		-			6			29			-			122
Provisions (credits)		-			(82	)		337			278			1,201
Ending balance	$	1		$	421		$	430		$	278		$	7,804

The Company’s methodology for determining its allowance for loan losses includes an analysis of qualitative factors that are added to the historical loss rates in arriving at the total allowance for loan losses needed for this general pool of loans.  The qualitative factors include:

• Changes in national and local economic trends;

• The rate of growth in the portfolio;

• Trends of delinquencies and nonaccrual balances;

• Changes in loan policy; and

• Changes in lending management experience and related staffing.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation.  These qualitative factors, applied to each product class, make the evaluation inherently subjective, as it requires material estimates that may be susceptible to significant revision as more information becomes available.  Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan losses analysis and calculation.

The allocation of the allowance for loan losses summarized on the basis of the Company’s calculation methodology was as follows:

	September 30, 2019
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	98	$	-	$	77	$	110	$	339
Historical loss rate		36		-		93		37		29
Qualitative factors		513		-		3,670		909		1,420
Total	$	647	$	-	$	3,840	$	1,056	$	1,788
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	152	$	3	$	-	$	779
Historical loss rate		-		4		155		-		354
Qualitative factors		1		318		270		-		7,101
Other		-		-		-		96		96
Total	$	1	$	474	$	428	$	96	$	8,330

	September 30, 2018
	1-4 family
	first-lien		Residential						Other
	residential		construction		Commercial		Commercial		commercial
(In thousands)	mortgage		mortgage		real estate		lines of credit		and industrial
Specifically reserved	$	109	$	-	$	593	$	46	$	276
Historical loss rate		114		-		87		18		24
Qualitative factors		538		-		3,260		721		888
Total	$	761	$	-	$	3,940	$	785	$	1,188
			Home equity		Other
	Tax exempt		and junior liens		consumer		Unallocated		Total
Specifically reserved	$	-	$	140	$	-	$	-	$	1,164
Historical loss rate		-		21		218		-		482
Qualitative factors		1		260		212		-		5,880
Other		-		-		-		278		278
Total	$	1	$	421	$	430	$	278	$	7,804

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Earnings per Common Share - Additional Information (Details) - USD ($)		3 Months Ended		9 Months Ended
	May 08, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Dec. 31, 2018
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Common stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01
Preferred stock, par value (in dollars per share)		$ 0.01		$ 0.01		$ 0.01
Stock Option [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive stock options (in shares)		0	0	0	0
Securities Purchase Agreement [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Net proceeds from private placement	$ 17,000,000
Securities Purchase Agreement [Member] | Private Placement [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Warrant to purchase common stock	125,000
Fair value of warrants	$ 373,000
Exercise price of warrant	$ 14.25
Securities Purchase Agreement [Member] | Series B Preferred Stock [Member] | Private Placement [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Sale of stock	1,155,283
Purchase price	$ 14.25
Preferred stock, par value (in dollars per share)	$ 0.01
Common Stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Net proceeds from private placement				$ 4,199,000	$ 0
Common Stock [Member] | Securities Purchase Agreement [Member] | Private Placement [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Sale of stock	37,700
Common stock, par value (in dollars per share)	$ 0.01
Purchase price	$ 14.25

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands		Total		Preferred Stock [Member]	Common Stock [Member]	Additional Paid in Capital [Member]	Retained Earnings [Member]		Accumulated Other Comprehensive Loss [Member]		Unearned ESOP [Member]	Non-controlling Interest [Member]
Balance at Dec. 31, 2017		$ 62,144			$ 43	$ 28,170	$ 39,020		$ (4,208)		$ (1,214)	$ 333
Net income		2,911					2,934					(23)
Other comprehensive income (loss), net of tax		(1,946)							(1,946)
ESOP shares earned		285				150					135
Stock based compensation		259				259
Stock options exercised		363			1	362
Cumulative effect of change in measurement | Accounting Standards Update 2016-01		(53)	[1]				53	[2]	(53)	[2]
Cumulative effect of change in measurement | ASU 2017-12 [Member]	[3]	359							359
Common stock dividends declared		(752)					(752)
Cumulative effect of affiliate capital allocation						(8)	15					(7)
Distributions From Affiliates		(60)										(60)
Balance at Sep. 30, 2018		63,563			44	28,933	41,270		(5,848)		(1,079)	243
Balance at Jun. 30, 2018		62,869			43	28,629	40,540		(5,471)		(1,124)	252
Net income		976					985					(9)
Other comprehensive income (loss), net of tax		(377)							(377)
ESOP shares earned		94				49					45
Stock based compensation		97				97
Stock options exercised		159			1	158
Common stock dividends declared		(255)					(255)
Balance at Sep. 30, 2018		63,563			44	28,933	41,270		(5,848)		(1,079)	243
Balance at Dec. 31, 2018		64,459			44	29,139	42,114		(6,042)		(1,034)	238
Net income		2,420					2,416					4
Other comprehensive income (loss), net of tax		3,276							3,276
Proceeds of common stock private placement, net of expenses	[4]	3,826			3	3,823
Proceeds of preferred stock private placement, net of expenses	[4]	15,370		$ 12		15,358
Effect of warrant issued from private placement	[4]	373				373
ESOP shares earned		258				123					135
Stock based compensation		220				220
Stock options exercised		200				200
Cumulative effect of change in measurement | ASU 2016-02 [Member]	[5]	(239)					(239)
Common stock dividends declared		(805)					(805)
Preferred stock dividends declared		(139)					(139)
Warrant dividends declared		(15)					(15)
Distributions From Affiliates		(13)										(13)
Balance at Sep. 30, 2019		89,191		12	47	49,236	43,332		(2,766)		(899)	229
Balance at Jun. 30, 2019		87,844		12	47	49,125	42,389		(3,024)		(944)	239
Net income		1,285					1,295					(10)
Other comprehensive income (loss), net of tax		258							258
ESOP shares earned		82				37					45
Stock based compensation		74				74
Common stock dividends declared		(275)					(275)
Preferred stock dividends declared		(70)					(70)
Warrant dividends declared		(7)					(7)
Balance at Sep. 30, 2019		$ 89,191		$ 12	$ 47	$ 49,236	$ 43,332		$ (2,766)		$ (899)	$ 229

[1] Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

[2] Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 - Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

[3] Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

[4] On May 8, 2019, the Company entered into a Securities Purchase Agreement with an institutional investor, in which it sold: (i) 37,700 shares of the Company’s common stock, (ii) 1,155,283 shares of a new series of preferred stock, Series B convertible perpetual preferred stock; and (iii) a warrant to purchase 125,000 shares of common stock in a private placement transaction. The Company also entered into Subscription Agreements with certain directors and executive officers of the Company as well as other accredited investors. Pursuant to the Subscription Agreements, the investors purchased an aggregate of 269,277 shares of common stock.

[5] Cumulative effect of the adoption of ASU 2016-02, Leases (Topic 842), based on the difference in the right-of-use asset and lease liability as of January 1, 2019.

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Consolidated Statements of Condition (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
ASSETS:
Cash and due from banks	$ 19,849	$ 9,610
Interest-earning deposits (including restricted balances of $0 and $3,993, respectively)	19,924	16,706
Total cash and cash equivalents	39,773	26,316
Available-for-sale securities, at fair value	120,002	177,664
Held-to-maturity securities, at amortized cost (fair value of $116,187 and $53,769, respectively)	114,349	53,908
Marketable equity securities, at fair value	514	453
Federal Home Loan Bank stock, at cost	4,210	5,937
Loans	725,900	620,270
Less: Allowance for loan losses	8,330	7,306
Loans receivable, net	717,570	612,964
Premises and equipment, net	22,411	20,623
Operating lease right-of-use assets	2,422
Accrued interest receivable	3,313	3,068
Foreclosed real estate	148	1,173
Intangible assets, net	153	165
Goodwill	4,536	4,536
Bank owned life insurance	17,296	16,941
Other assets	9,423	9,367
Total assets	1,056,120	933,115
Deposits:
Interest-bearing	748,384	623,936
Noninterest-bearing	111,225	103,124
Total deposits	859,609	727,060
Short-term borrowings	18,238	39,000
Long-term borrowings	61,014	79,534
Subordinated loans	15,119	15,094
Accrued interest payable	468	304
Operating lease liabilities	2,681
Other liabilities	9,800	7,664
Total liabilities	966,929	868,656
Shareholders' equity:
Preferred stock, par value $0.01 per share; no liquidation preference; 10,000,000 and 0 shares authorized, respectively; 1,155,283 and 0 shares issued and outstanding, respectively	12
Common stock, par value $0.01; 25,000,000 authorized shares; 4,707,657 and 4,362,328 shares issued and outstanding, respectively	47	44
Additional paid in capital	49,236	29,139
Retained earnings	43,332	42,114
Accumulated other comprehensive loss	(2,766)	(6,042)
Unearned ESOP	(899)	(1,034)
Total Pathfinder Bancorp, Inc. shareholders' equity	88,962	64,221
Noncontrolling interest	229	238
Total equity	89,191	64,459
Total liabilities and shareholders' equity	$ 1,056,120	$ 933,115

XML

Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2019

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Changes in the Components of Accumulated Other Comprehensive Income (Loss), Net of Tax

Changes in the components of accumulated other comprehensive income (loss) (“AOCI”), net of tax, for the periods indicated are summarized in the table below.

	For the three months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,021	)	$	43		$	(46	)	$	(3,024	)
Other comprehensive income before reclassifications		-			282			5			287
Amounts reclassified from AOCI		67			(96	)		-			(29	)
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the three months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(2,156	)	$	(3,248	)	$	(67	)	$	(5,471	)
Other comprehensive income before reclassifications		-			(456	)		4			(452	)
Amounts reclassified from AOCI		31			44			-			75
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

	For the nine months ended September 30, 2019
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Unrealized Loss on Securities Transferred to Held-to-Maturity			Total
Beginning balance	$	(3,152	)	$	(2,832	)	$	(58	)	$	(6,042	)
Other comprehensive income before reclassifications		-			3,244			17			3,261
Amounts reclassified from AOCI		198			(183	)		-			15
Ending balance	$	(2,954	)	$	229		$	(41	)	$	(2,766	)

	For the nine months ended September 30, 2018
(In thousands)	Retirement Plans			Unrealized Gains and Losses on Available- for-Sale Securities			Securities reclassified from AFS to HTM			Total
Beginning balance	$	(2,220	)	$	(1,558	)	$	(430	)	$	(4,208	)
Other comprehensive income before reclassifications		-			(2,305	)		124			(2,181	)
Amounts reclassified from AOCI		95			140			-			235
Cumulative effect of change in measurement of equity    securities (1)		-			(53	)		-			(53	)
Cumulative effect of change in investment securities transfer (2)		-			116			243			359
Ending balance	$	(2,125	)	$	(3,660	)	$	(63	)	$	(5,848	)

(1) Cumulative effect of unrealized gain on marketable equity securities based on the adoption of ASU 2016-01 – Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Liabilities.

(2) Cumulative effect of unrealized gains on the transfer of 52 investment securities from held-to-maturity classification to available-for-sale classification based on the adoption of ASU 2017-12: Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.

Schedule of Amounts Reclassified Out of Each Component of AOCI

The following table presents the amounts reclassified out of each component of AOCI for the indicated period:

	Amount Reclassified							Amount Reclassified
	from AOCI (1)							from AOCI (1)
	(Unaudited)							(Unaudited)
(In thousands)	For the three months ended							For the nine months ended
Details about AOCI (1) components	September 30, 2019			September 30, 2018			Affected Line Item in the Statement of Income	September 30, 2019			September 30, 2018
Retirement plan items
Retirement plan net losses    recognized in plan expenses (2)	$	(84	)	$	(43	)	Salaries and employee benefits	$	(252	)	$	(129	)
Tax effect		17			12		Provision for income taxes		54			34
	$	(67	)	$	(31	)	Net Income	$	(198	)	$	(95	)
Available-for-sale securities
Realized gain (loss) on sale of securities	$	121		$	(60	)	Net gains (losses) on sales and redemptions    of investment securities	$	232		$	(189	)
Tax effect		(25	)		16		Provision for income taxes		(49	)		49
	$	96		$	(44	)	Net Income	$	183		$	(140	)

(1) Amounts in parentheses indicates debits in net income.

(2) These items are included in net periodic pension cost.

See Note 5 for additional information.