10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2016

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

For the transition period from _______________ to ______________________

Commission File No. 001-37504

Provident Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	45-3231576
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)

5 Market Street, Amesbury, Massachusetts	01913
(Address of Principal Executive Offices)	Zip Code

(978) 834-8555

(Registrant’s telephone number)

N/A

 (Former name or former address, if changed since last report)

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

YES x NO¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES x NO ¨.

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

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company x
	(Do not check if a smaller reporting company)

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

As of November 14, 2016, there were 9,498,722 shares of the Registrant’s common stock, no par value per share, issued and outstanding.

Provident Bancorp, Inc.

Form 10-Q

		Page
Part I.	Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2016 (unaudited) and December 31, 2015	2
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2016 and 2015 (unaudited)	4
	Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended September 30, 2016 and 2015 (unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2016 and 2015 (unaudited)	6-7
	Notes to Consolidated Financial Statements (unaudited)	8-27
Item 2.	Managements Discussion and Analysis of Financial Condition and Results of Operation	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4.	Controls and Procedures	43
Part II.	Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
Signatures		45
Exhibit Index

1

Part I. Financial Information

Item 1. Financial Statements

PROVIDENT BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	At			At
	September 30,			December 31,
(In thousands)	2016			2015
	(unaudited)
Assets
Cash and due from banks	$	9,528		$	7,302
Interest-bearing demand deposits with other banks		12,581			12,865
Money market mutual funds		681			297
Cash and cash equivalents		22,790			20,464
Investments in available-for-sale securities (at fair value)		115,462			80,984
Investments in held-to-maturity securities (fair value of $46,474 as of December 31, 2015)		-			44,623
Federal Home Loan Bank stock, at cost		2,467			3,310
Loans, net		589,364			554,929
Bank owned life insurance		19,252			18,793
Premises and equipment, net		11,682			11,606
Accrued interest receivable		2,018			2,251
Deferred tax asset, net		3,786			5,056
Other assets		1,381			1,381
Total assets	$	768,202		$	743,397
Liabilities and Equity
Deposits:
Noninterest-bearing	$	160,851		$	153,093
Interest-bearing		449,480			424,142
Total deposits		610,331			577,235
Federal Home Loan Bank advances		41,458			57,423
Other liabilities		8,070			7,333
Total liabilities		659,859			641,991
Shareholders' equity:
Preferred stock; authorized 50,000 shares: 0 shares issued and outstanding		-			-
Common stock, no par value: 30,000,000 shares authorized; 9,498,722 shares issued and outstanding		-			-
Additional paid-in capital		43,237			43,159
Retained earnings		64,501			59,890
Accumulated other comprehensive income		3,759			1,690
Unearned compensation - ESOP		(3,154	)		(3,333	)
Total shareholders' equity		108,343			101,406
Total liabilities and shareholders' equity	$	768,202		$	743,397

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

2

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In thousands, except per share data)	2016		2015			2016		2015
	(unaudited)
Interest and dividend income:
Interest and fees on loans	$	6,611	$	5,634		$	18,861	$	16,294
Interest and dividends on securities		807		798			2,549		2,453
Interest on interest-bearing deposits		8		16			22		27
Total interest and dividend income		7,426		6,448			21,432		18,774
Interest expense:
Interest on deposits		539		410			1,623		1,227
Interest on Federal Home Loan Bank advances		174		157			468		437
Total interest expense		713		567			2,091		1,664
Net interest and dividend income		6,713		5,881			19,341		17,110
Provision for loan losses		163		174			484		645
Net interest and dividend income after provision for loan losses		6,550		5,707			18,857		16,465
Noninterest income:
Customer service fees on deposit accounts		339		343			936		876
Service charges and fees – other		427		468			1,293		1,289
Gain on sale of securities, net		438		215			475		317
Other income		159		134			561		361
Total noninterest income		1,363		1,160			3,265		2,843
Noninterest expense:
Salaries and employee benefits		3,219		3,016			9,500		8,681
Occupancy expense		412		383			1,194		1,170
Equipment expense		162		132			471		400
FDIC assessment		103		93			293		283
Data processing		163		142			491		415
Marketing expense		70		18			178		144
Professional fees		299		217			876		662
Charitable Foundation expense		-		2,150			-		2,150
Other		784		720			2,213		2,314
Total noninterest expense		5,212		6,871			15,216		16,219
Income (loss) before income tax expense (benefit)		2,701		(4	)		6,906		3,089
Income tax expense (benefit)		940		(134	)		2,295		717
Net income	$	1,761	$	130		$	4,611	$	2,372
Net Income attributable to common shareholders	$	1,761	$	86		$	4,611	$	2,243
Income per share:
Basic	$	0.19		N/A		$	0.50		N/A
Diluted	$	0.19		N/A		$	0.50		N/A
Weighted Average Shares:
Basic		9,179,269		N/A			9,173,331		N/A
Diluted		9,179,269		N/A			9,173,331		N/A

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

3

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands)	2016			2015			2016			2015
Net income	$	1,761		$	130		$	4,611		$	2,372
Other comprehensive income:
Change in net unrealized holding (losses) gains		(296	)		(265	)		1,575			(800	)
Reclassification adjustment for realized gains in net income		(438	)		(215	)		(475	)		(317	)
Net change in unrealized (loss) gain		(734	)		(480	)		1,100			(1,117	)
Income tax effect		290			169			(376	)		421
Net of tax amount		(444	)		(311	)		724			(696	)
Change in net unrealized holding gains on securities transferred from held-to-maturity to available-for-sale		-			-			2,239			-
Income tax effect		-			-			(894	)		-
Net of tax amount		-			-			1,345			-
Other comprehensive income (loss)		(444	)		(311	)		2,069			(696	)
Total comprehensive income (loss)	$	1,317		$	(181	)	$	6,680		$	1,676

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

4

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

												Accumulated
	Shares of					Additional						Other			Unearned
	Common			Preferred		Paid-in			Retained			Comprehensive			Compensation
(In  thousands, except share data)	Stock			Stock		Capital			Earnings			Income			ESOP			Total
Balance, December 31, 2015		9,498,722		$	-	$	43,159		$	59,890		$	1,690		$	(3,333	)	$	101,406
Net income		-			-		-			4,611			-			-			4,611
Net change in other comprehensive income		-			-		-			-			2,069			-			2,069
ESOP shares earned		-			-		78			-			-			179			257
Balance, September 30, 2016		9,498,722		$	-	$	43,237		$	64,501		$	3,759		$	(3,154	)	$	108,343
Balance, December 31, 2014		275,000		$	17,145	$	275		$	55,959		$	2,412		$	-		$	75,791
Net income		-			-		-			2,372			-			-			2,372
Net change in other comprehensive income		-			-		-			-			(696	)		-			(696	)
Preferred stock dividends		-			-		-			(129	)		-			-			(129	)
Issuance of 5,034,323 shares to the mutual holding company		5,034,323			-		-			-			-			-			-
Transfer due to stock offering		(275,000	)		-		(275	)		275			-			-			-
Issuance of 4,274,425 shares in the initial public offering, net of expenses of $1,547		4,274,425			-		41,197			-			-			-			41,197
Issuance and contribution of 189,974 shares to the Provident Community Charitable Organization		189,974			-		1,900			-			-			-			1,900
Purchase of 357,152 shares of common stock by the ESOP		-			-		-			-			-			(3,572	)		(3,572	)
ESOP shares earned		-			-		31			-			-			120			151
Balance, September 30, 2015		9,498,722		$	17,145	$	43,128		$	58,477		$	1,716		$	(3,452	)	$	117,014

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

5

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30,
(In thousands)	2016			2015
Cash flows from operating activities:
Net income	$	4,611		$	2,372
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of securities premiums, net of accretion		627			660
ESOP expense		257			151
Contribution of stock to charitable foundation		-			1,900
Gain on sales, calls and donations of securities, net		(475	)		(317	)
Change in deferred loan fees, net		(76	)		(93	)
Provision for loan losses		484			645
Depreciation and amortization		628			549
Decrease in accrued interest receivable		233			55
Increase in taxes receivable		(67	)		(879	)
Increase in cash surrender value of life insurance		(459	)		(288	)
Decrease (increase) in other assets		67			(779	)
Increase (decrease) in other liabilities		737			(57	)
Net cash provided by operating activities		6,567			3,919
Cash flows from investing activities:
Purchases of available-for-sale securities		(1,386	)		(1,415	)
Proceeds from sales of available-for-sale securities		2,912			739
Proceeds from pay downs, maturities and calls of available-for-sale securities		11,586			8,570
Proceeds from pay downs, maturities and calls of held-to-maturity securities		220			-
Redemption of Federal Home Loan Bank Stock		843			-
Loan originations and principal collections, net		(34,601	)		(28,174	)
Recoveries of loans previously charged off		26			20
Loans purchased		(268	)		-
Additions to premises and equipment		(704	)		(249	)
Purchase of bank owned life insurance		-			(3,447	)
Net cash used in investing activities		(21,372	)		(23,956	)

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

6

PROVIDENT BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(Unaudited)

	Nine Months Ended
	September 30,
(In thousands)	2016			2015
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts		60,202			28,927
Net decrease in time deposits		(27,106	)		(7,762	)
Proceeds from sale of common stock, net		-			41,197
Common stock purchased by ESOP		-			(3,572	)
Proceeds from advances from the Federal Home Loan Bank		11,500			-
Net change in Federal Home Loan Bank short-term advances		(27,465	)		(21,825	)
Preferred stock dividends		-			(129	)
Net cash provided by financing activities		17,131			36,836
Net increase in cash and cash equivalents		2,326			16,799
Cash and cash equivalents at beginning of period		20,464			9,558
Cash and cash equivalents at end of period	$	22,790		$	26,357
Supplemental disclosures:
Interest paid	$	2,095		$	1,658
Income taxes paid		2,362			1,600
Held-to-maturity securities transferred to available-for-sale		44,240			-

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

7

PROVIDENT BANCORP, INC.

Notes to Consolidated Financial Statements

(Unaudited)

(1) Basis of Presentation

The accompanying unaudited financial statements of Provident Bancorp, Inc., a Massachusetts corporation (the “Company”), were prepared in accordance with the instructions for Form 10-Q and with Regulation S-X and do not include information or footnotes necessary for a complete presentation of the financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles (“GAAP”). However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for future periods, including the entire fiscal year. These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the annual report on Form 10-K the Company filed with the Securities and Exchange Commission on March 30, 2016.

The consolidated financial statements include the accounts of Provident Bancorp, Inc., its wholly owned subsidiary, The Provident Bank (the “Bank”), and the Bank’s wholly owned subsidiaries, Provident Security Corporation and 5 Market Street Security Corporation. Provident Security Corporation and 5 Market Street Security Corporation were established to buy, sell, and hold investments for their own account. All significant inter-company balances and transactions have been eliminated in consolidation.

(2) Corporate Structure

On March 10, 2015, the Board of Directors of the Company adopted a plan of stock issuance (the “Plan”) pursuant to which the Company sold shares of common stock, representing a minority ownership of the estimated pro forma market value of the Company. On July 15, 2015, the Company issued 4,274,425 shares of common stock to the public at $10.00 per share, including 357,152 shares purchased by The Provident Bank Employee Stock Ownership Plan. In addition, the Company issued 5,034,323 shares to Provident Bancorp, the Company’s mutual holding company (the “MHC”), and 189,974 shares to The Provident Community Charitable Organization, Inc., a charitable foundation that was formed in connection with the stock offering and is dedicated to supporting charitable organizations operating in the Bank’s local community. A total of 9,498,722 shares of common stock were outstanding following the completion of the stock offering.

Expenses incurred related to the offering were $1.5 million, and were recorded against offering proceeds.

Upon the completion of the stock offering, a special “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to the percentage ownership interest in the equity of the Company to be held by persons other than the MHC as of the date of the latest balance sheet contained in the prospectus utilized in connection with the offering. The Company is not permitted to pay dividends on its capital stock if the Company’s shareholders’ equity would be reduced below the amount of the liquidation account. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account.

8

(3) Recent Accounting Pronouncements

ASU (Accounting Standards Update) No. 2014-09 – Revenue from Contracts with Customers (Topic 606). The ASU establishes a single comprehensive model for an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, and will supersede nearly all existing revenue recognition guidance, to clarify and converge revenue recognition principles under US GAAP and Internationl Financial Reporting Standards (IFRS). The update outlines five steps to recognizing revenue: (i) identify the contracts with the customer; (ii) identify the separate performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the separate performance obligations; (v) recognize revenue when each performance obligation is satisfied. The update requires more comprehensive disclosures, relating to quantitative and qualitative information for amounts, timing, the nature and uncertainty of revenue, and cash flows arising from contracts with customers, which will mainly impact construction and high-tech industries. The most significant potential impact to banking entities relates to less prescriptive derecognition requirements on the sale of other real estate owned (OREO) property. In August 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Accordingly, the amendments are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted for annual and interim reporting periods beginning after December 15, 2016. An entity may elect either a full retrospective or a modified retrospective application. The Company does not expect the application of this guidance will have a material impact on the Company's financial statements.

ASU No. 2014-14, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40) - "Classification of Certain Government-Guaranteed Residential Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)”. The ASU has been issued to reduce diversity in practice in the classification of foreclosed residential mortgage loans held by creditors that are fully guaranteed under certain government programs, including the Federal Housing Administration guarantees. A residential mortgage loan would be derecognized and a separate other receivable would be recognized upon foreclosure if the loan has both of the following characteristics: (i) the loan has a government guarantee that is not separable from the loan before foreclosure entitling the creditor to the full unpaid principal balance of the loan; and (ii) at the time of foreclosure, the creditor has the intent to make a claim on the guarantee and the ability to recover the full unpaid principal balance of the loan through the guarantee. Notably, upon foreclosure, the separate other receivable would be measured based on the current amount of the loan balance expected to be recovered under the guarantee. The amendments were effective for the Company as of January 1, 2016. This amendment did not impact the Company’s financial statements and the Company does not expect the application of this guidance will have a material impact on the Company’s financial statements in the future.

ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU has been issued to improve the recognition and measurement of financial instruments by requiring 1) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; 3) the use of the exit price notion when measuring fair value of financial instruments for disclosure purposes; and 4) separate presentation by the reporting organization in other comprehensive income for the portion of the total change in the fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The standard is effective for the Company beginning on January 1, 2018. The Company holds a portfolio of marketable equity securities; depending on the size and composition of the portfolio at the adoption date, the impact of the ASU could be material to the Company’s consolidated financial statements.  

9

ASU 2016-02, Leases (Topic 842). The amendments in this update require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. The guidance will be effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. Adoption will require a modified retrospective transition where the lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented. The Company does not expect the application of this guidance will have a material impact on the Company’s financial statements.

ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. The amendments in this update will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact of its pending adoption of this guidance on the Company’s financial statements.

10

(4) Investment Securities

In May 2016, the Company reclassified its $44.2 million held-to-maturity investment portfolio to available-for-sale. Due to its strong outlook for loan growth and falling interest rates, the Company decided to proceed with the reclassification to provide liquidity. The reclassification increased total shareholders’ equity by $1.3 million associated with the recording of the net security gains on the portfolio, net of tax effect, to accumulated other comprehensive income. In accordance with regulatory and accounting requirements, the Company is prohibited from classifying security purchases as held-to-maturity for a period of two years.

The following summarizes the amortized cost of investment securities classified as available-for-sale and their approximate fair values at September 30, 2016 and December 31, 2015:

	Amortized			Gross		Gross
	Cost			Unrealized		Unrealized		Fair
(In thousands)	Basis			Gains		Losses		Value
September 30, 2016
State and municipal	$	45,057		$	2,197	$	1	$	47,253
Corporate debt		1,000			45		-		1,045
Asset-backed securities		9,035			198		4		9,229
Government mortgage-backed securities		43,698			942		57		44,583
Trust preferred securities		1,368			39		396		1,011
Marketable equity securities		9,911			3,305		194		13,022
		110,069			6,726		652		116,143
Money market mutual funds included in cash and cash equivalents		(681	)		-		-		(681	)
Total available-for-sale securities	$	109,388		$	6,726	$	652	$	115,462
December 31, 2015
U.S. Government and federal agency	$	1,996		$	37	$	-	$	2,033
State and municipal		3,373			309		-		3,682
Corporate debt		1,000			71		-		1,071
Asset-backed securities		9,656			9		41		9,624
Government mortgage-backed securities		52,515			622		325		52,812
Trust preferred securities		1,368			55		307		1,116
Marketable equity securities		8,638			2,653		348		10,943
		78,546			3,756		1,021		81,281
Money market mutual funds included in cash and cash equivalents		(297	)		-		-		(297	)
Total available-for-sale securities	$	78,249		$	3,756	$	1,021	$	80,984

11

The following summarizes the amortized cost of investment securities classified as held-to-maturity and their approximate fair values at December 31, 2015:

	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(In thousands)	Basis		Gains		Losses		Value
December 31, 2015
State and municipal	$	44,623	$	1,905	$	54	$	46,474

The scheduled maturities of debt securities were as follows at September 30, 2016:

	Available-for- Sale
	Fair
(In thousands)	Value
Due within one year	$	1,831
Due after one year through five years		2,359
Due after five years through ten years		7,362
Due after ten years		37,756
Government mortgage-backed securities		44,583
Asset-backed securities		9,229
	$	103,120

12

The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, are as follows at September 30, 2016 and December 31, 2015:

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2016
Temporarily impaired securities:
State and municipal	$	-	$	-	$	166	$	1	$	166	$	1
Asset-backed securities		-		-		581		4		581		4
Government mortgage-backed securities		1,176		1		3,095		56		4,271		57
Trust preferred securities		-		-		928		396		928		396
Marketable equity securities		1,193		63		752		131		1,945		194
Total temporarily impaired securities	$	2,369	$	64	$	5,522	$	588	$	7,891	$	652
December 31, 2015
Temporarily impaired securities:
State and municipal	$	3,195	$	28	$	729	$	26	$	3,924	$	54
Asset-backed securities		5,062		7		2,005		34		7,067		41
Government mortgage-backed securities		21,108		88		9,156		237		30,264		325
Trust preferred securities		-		-		1,017		307		1,017		307
Marketable equity securities		1,591		166		529		182		2,120		348
Total temporarily impaired securities	$	30,956	$	289	$	13,436	$	786	$	44,392	$	1,075

Government mortgage-backed securities, state and municipal securities and asset-backed securities: Because the decline in fair value of the government mortgage-backed securities, asset-backed securities and state and municipal securities is primarily attributable to changes in interest rates and not credit quality, and because the Company has the intent and ability to hold these investments until market price recovery or maturity, these investments are not considered other-than-temporarily impaired.

Marketable equity securities: Management continuously monitors equity securities for impairment by reviewing the financial condition of the issuer, company-specific events, industry developments, and general economic conditions. Management reviews corporate financial reports, credit agency reports and other publicly available information. Based on these reviews, these securities are not considered to be other-than-temporarily impaired.

Trust preferred securities: Management monitors its pooled-trust preferred securities for possible other-than-temporary impairment on a quarterly basis. This review includes an analysis of collateral reports, cash flows, stress default levels and financial ratios of the underlying issuers. Management utilizes a third party to compile this data and perform other-than-temporary impairment cash flow testing. Critical assumptions that go into the other-than-temporary impairment cash flow testing are prepayment speeds, default rates of the underlying issuers and discount margins. The result of the third-party other-than-temporary impairment cash flow testing indicated no other-than-temporary impairment as of September 30, 2016.

13

(5) Loans

A summary of loans is as follows:

	At						At
	September 30,						December 31,
(In thousands)	2016						2015
	Amount			Percent			Amount			Percent
Commercial real estate	$	319,760			53.47	%	$	285,356			50.67	%
Commercial		137,042			22.92	%		112,073			19.90	%
Residential real estate		81,411			13.61	%		92,392			16.40	%
Construction and land development		58,435			9.77	%		71,535			12.70	%
Consumer		1,403			0.23	%		1,855			0.33	%
		598,051			100.00	%		563,211			100.00	%
Allowance for loan losses		(8,386	)					(7,905	)
Deferred loan fees, net		(301	)					(377	)
Net loans	$	589,364					$	554,929

14

The following tables set forth information regarding the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2016 and 2015:

	For the three months ended September 30,
(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate			Construction and Land Development			Consumer			Unallocated		Total
Allowance for loan losses:
Balance at June 30, 2016	$	4,001	$	2,297	$	364		$	1,286		$	102		$	181	$	8,231
Charge-offs		-		-		-			-			(11	)		-		(11	)
Recoveries		-		-		-			-			3			-		3
Provision (benefit)		168		101		(12	)		(189	)		6			89		163
Balance at September 30, 2016	$	4,169	$	2,398	$	352		$	1,097		$	100		$	270	$	8,386
Balance at June 30, 2015	$	3,510	$	2,108	$	541		$	921		$	159		$	330	$	7,569
Charge-offs		-		8		-			-			(16	)		-		(8	)
Recoveries		-		8		-			-			1			-		9
Provision (benefit)		83		18		(106	)		175			(4	)		8		174
Balance at September 30, 2015	$	3,593	$	2,142	$	435		$	1,096		$	140		$	338	$	7,744

	For the nine months ended September 30,
(In thousands)	Commercial Real Estate		Commercial			Residential Real Estate			Construction and Land Development			Consumer			Unallocated			Total
Allowance for loan losses:
Balance at December 31, 2015	$	3,827	$	2,138		$	412		$	1,236		$	119		$	173		$	7,905
Charge-offs		-		-			-			-			(29	)		-			(29	)
Recoveries		-		1			12			-			13			-			26
Provision (benefit)		342		259			(72	)		(139	)		(3	)		97			484
Balance at September 30, 2016	$	4,169	$	2,398		$	352		$	1,097		$	100		$	270		$	8,386
Balance at December 31, 2014	$	3,500	$	1,751		$	560		$	872		$	184		$	357		$	7,224
Charge-offs		-		(96	)		-			-			(49	)		-			(145	)
Recoveries		-		9			6			-			5			-			20
Provision (benefit)		93		478			(131	)		224			-			(19	)		645
Balance at September 30, 2015	$	3,593	$	2,142		$	435		$	1,096		$	140		$	338		$	7,744

15

The following table sets forth information regarding the allowance for loan losses and related loan balances by segment at September 30, 2016 and December 31, 2015:

(In thousands)	Commercial Real Estate			Commercial		Residential Real Estate		Construction and Land Development		Consumer		Unallocated		Total
September 30, 2016
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	437	$	-	$	-	$	-	$	-	$	437
Ending balance:
Collectively evaluated for impairment		4,169			1,961		352		1,097		100		270		7,949
Total allowance for loan losses ending balance	$	4,169		$	2,398	$	352	$	1,097	$	100	$	270	$	8,386
Loans:
Ending balance:
Individually evaluated for impairment	$	1,987		$	1,697	$	426	$	-	$	-	$	-	$	4,110
Ending balance:
Collectively evaluated for impairment		317,773	#		135,345		80,985		58,435		1,403		-		593,941
Total loans ending balance	$	319,760		$	137,042	$	81,411	$	58,435	$	1,403	$	-	$	598,051
December 31, 2015
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	488	$	-	$	-	$	-	$	-	$	488
Ending balance:
Collectively evaluated for impairment		3,827			1,650		412		1,236		119		173		7,417
Total allowance for loan losses ending balance	$	3,827		$	2,138	$	412	$	1,236	$	119	$	173	$	7,905
Loans:
Ending balance:
Individually evaluated for impairment	$	3,272		$	1,755	$	437	$	-	$	-	$	-	$	5,464
Ending balance:
Collectively evaluated for impairment		282,084			110,318		91,955		71,535		1,855		-		557,747
Total loans ending balance	$	285,356		$	112,073	$	92,392	$	71,535	$	1,855	$	-	$	563,211

16

The following tables set forth information regarding non-accrual loans and loan delinquencies by portfolio segment at September 30, 2016 and December 31, 2015:

													90 Days
					90 Days		Total						or More
	30 - 59		60 - 89		or More		Past		Total		Total		Past Due		Non-accrual
(In thousands)	Days		Days		Past Due		Due		Current		Loans		and Accruing		Loans
September 30, 2016
Commercial real estate	$	405	$	-	$	-	$	405	$	319,355	$	319,760	$	-	$	-
Commercial		58		-		-		58		136,984		137,042		-		952
Residential real estate		-		75		-		75		81,336		81,411		-		468
Construction and land development		-		-		-		-		58,435		58,435		-		-
Consumer		-		-		-		-		1,403		1,403		-		-
Total	$	463	$	75	$	-	$	538	$	597,513	$	598,051	$	-	$	1,420
December 31, 2015
Commercial real estate	$	-	$	-	$	-	$	-	$	285,356	$	285,356	$	-	$	106
Commercial		-		-		-		-		112,073		112,073		-		1,147
Residential real estate		130		173		365		668		91,724		92,392				1,031
Construction and land development		-		-		-		-		71,535		71,535		-		-
Consumer		1		1		-		2		1,853		1,855		-		-
Total	$	131	$	174	$	365	$	670	$	562,541	$	563,211	$	-	$	2,284

17

Information about the Company’s impaired loans by portfolio segment was as follows at and for the period ended September 30, 2016 and at and for the year ended December 31, 2015:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized
September 30, 2016
With no related allowance recorded:
Commercial real estate	$	1,987	$	1,987	$	-	$	2,941	$	158
Commercial		823		823		-		793		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		3,236		3,236		-		4,165		204
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		874		874		437		892		-
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		874		874		437		892		-
Total
Commercial real estate		1,987		1,987		-		2,941		158
Commercial		1,697		1,697		437		1,685		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	4,110	$	4,110	$	437	$	5,057	$	204
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,272	$	3,272	$	-	$	3,788	$	149
Commercial		661		661		-		611		20
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		4,370		4,370		-		4,722		186
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		1,094		1,094		488		901		2
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		1,094		1,094		488		901		2
Total
Commercial real estate		3,272		3,272		-		3,788		149
Commercial		1,755		1,755		488		1,512		22
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	5,464	$	5,464	$	488	$	5,623	$	188

18

The following summarizes troubled debt restructurings entered into during the nine months ended September 30, 2016:

(Dollars in thousands)	Number  of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded  Investment
September 30, 2016
Troubled debt restructurings:
Commercial		1	$	58	$	58
		1	$	58	$	58

In 2016, we approved one troubled debt restructure totaling $58 thousand, with no specific reserve required based on an analysis of the borrower’s repayment ability and/or collateral coverage. This commercial loan was placed on an extended 13-month interest only period with re-amortization to follow based on a five-year term.

The following tables present the Company’s loans by risk rating and portfolio segment at September 30, 2016 and December 31, 2015:

(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate		Construction and Land Development		Consumer		Total
September 30, 2016
Grade:
Pass	$	301,352	$	131,813	$	-	$	58,435	$	-	$	491,600
Special mention		14,908		1,258		-		-		-		16,166
Substandard		3,500		3,097		941		-		-		7,538
Doubtful		-		874		-		-		-		874
Not formally rated		-		-		80,470		-		1,403		81,873
Total	$	319,760	$	137,042	$	81,411	$	58,435	$	1,403	$	598,051
December 31, 2015
Grade:
Pass	$	265,325	$	106,677	$	-	$	71,535	$	-	$	443,537
Special mention		15,700		1,403		-		-		-		17,103
Substandard		4,331		3,083		1,329		-		-		8,743
Doubtful		-		910		-		-		-		910
Not formally rated		-		-		91,063		-		1,855		92,918
Total	$	285,356	$	112,073	$	92,392	$	71,535	$	1,855	$	563,211

19

Credit Quality Information

The Company utilizes a seven grade internal loan risk rating system for commercial real estate, construction and land development, and commercial loans as follows:

Loans rated 1-3: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7: Loans in this category are considered uncollectible loss and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and land development, and commercial loans.

For residential real estate and consumer loans, the Company initially assesses credit quality based upon the borrower’s ability to pay and rates such loans as pass. Subsequent risk rating downgrades are based upon the borrower’s payment activity. All other residential and consumer loans are not formally rated.

(6) Federal Home Loan Bank Advances

Borrowings from the Federal Home Loan Bank (FHLB) are secured by a blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one to four family properties, certain commercial loans and other qualified assets.

Maturities of advances from the FHLB ending after September 30, 2016 are summarized as follows:

(In thousands)
2016	$	21,612
2017		5,000
2018		5,000
2020		6,346
Thereafter		3,500
Total	$	41,458

20

(7) Fair Value Measurements

The Company reports certain assets at fair value in accordance with GAAP, which defines fair value and establishes a framework for measuring fair value in accordance with generally accepted accounting principles. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes six levels of inputs that may be used to measure fair values:

Basis of Fair Value Measurements

· Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

· Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;

· Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Fair Values of Financial Instruments Measured on a Recurring Basis

The Company’s investments in U.S. Government and federal agency, state and municipal, corporate debt, asset-backed and government mortgage-backed securities available-for-sale are generally classified within Level 2 of the fair value hierarchy. For these investments, we obtain fair value measurements from independent pricing services. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

The Company classifies its investments in trust preferred securities as Level 3 securities. Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

The Company classified its investments in marketable equity securities as Level 1 securities. Such securities are classified as Level 1 securities because fair values are obtained through quoted market prices for identical securities in active exchange markets.

21

The following summarizes financial instruments measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
State and municipal		47,253		-		47,253		-
Corporate debt		1,045		-		1,045		-
Asset-backed securities		9,229		-		9,229		-
Mortgage-backed securities		44,583		-		44,583		-
Trust preferred securities		1,011		-		-		1,011
Marketable equity securities		12,341		12,341		-		-
Totals	$	115,462	$	12,341	$	102,110	$	1,011
December 31, 2015
U.S. Government and federal agency	$	2,033	$	-	$	2,033	$	-
State and municipal		3,682		-		3,682		-
Corporate debt		1,071		-		1,071		-
Asset-backed securities		9,624		-		9,624		-
Mortgage-backed securities		52,812		-		52,812		-
Trust preferred securities		1,116		-		-		1,116
Marketable equity securities		10,646		10,646		-		-
Totals	$	80,984	$	10,646	$	69,222	$	1,116

The following is a summary of activity for Level 3 financial instruments measured at fair value on a recurring basis for the nine months periods ended September 30, 2016 and 2015.

(In thousands)	Available-for- Sale Securities
Balance beginning January 1, 2016	$	1,116
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		(105	)
Paydowns		-
Ending balance, September 30, 2016	$	1,011
Balance beginning January 1, 2015	$	1,122
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		262
Paydowns		(134	)
Ending balance, September 30, 2015	$	1,250

22

Fair Values of Financial Instruments Measured on a Nonrecurring Basis

The Company’s impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 inputs based upon appraisals of similar properties obtained from a third party. However, the Company generally discounts appraisals to arrive at fair value, therefore classifies such loans as Level 3 because the discounts are a significant input that is not observable.

The following summarizes financial instruments measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at Reporting Date Using:
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
Impaired loans	$	437	$	-	$	-	$	437
December 31, 2015
Impaired loans	$	606	$	-	$	-	$	606

The following is a summary of the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015:

(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
September 30, 2016
Impaired loans	$	437	Real estate appraisals	Discount for dated appraisals	6-10%
December 31, 2015
Impaired loans	$	606	Real estate appraisals	Discount for dated appraisals	6-10%

23

(8) Fair Value of Financial Instruments

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Certain financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The carrying amounts and estimated fair values of the Company's financial instruments, all of which are held or issued for purposes other than trading, are as follows at September 30, 2016 and December 31, 2015:

	Carrying		Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
September 30, 2016
Financial assets:
Cash and cash equivalents	$	22,790	$	22,790	$	-	$	-	$	22,790
Available-for-sale securities		115,462		12,341		102,110		1,011		115,462
Federal Home Loan Bank of Boston stock		2,467		2,467		-		-		2,467
Loans, net		589,364		-		-		599,931		599,931
Accrued interest receivable		2,018		-		2,018		-		2,018
Financial liabilities:
Deposits		610,331		-		-		610,543		610,543
Federal Home Loan Bank advances		41,458		-		41,897		-		41,897
December 31, 2015
Financial assets:
Cash and cash equivalents	$	20,464	$	20,464	$	-	$	-	$	20,464
Available-for-sale securities		80,984		10,646		69,222		1,116		80,984
Held-to-maturity securities		44,623		-		46,474		-		46,474
Federal Home Loan Bank of Boston stock		3,310		3,310		-		-		3,310
Loans, net		554,929		-		-		561,937		561,937
Accrued interest receivable		2,251		-		2,251		-		2,251
Financial liabilities:
Deposits		577,235		-		-		577,316		577,316
Federal Home Loan Bank advances		57,423		-		57,774		-		57,774

24

(9) Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Effective January 1, 2015 (with a phase-in period of two to four years for certain components), the Bank became subject to capital regulations adopted by the FDIC, which implement the Basel III regulatory capital reforms and the changes required by the Dodd-Frank Act. The new regulations require a new Common Equity Tier 1 (“CET1”) capital ratio of 4.5%, a minimum Tier 1 capital to risk-weighted assets ratio of 6.0%, a minimum total capital to risk-weighted assets ratio of 8.0% and a minimum Tier 1 leverage ratio of 4.0%. CET1 generally consists of common stock and retained earnings, subject to applicable adjustments and deductions. Under new prompt corrective action regulations, in order to be considered “well capitalized,” the Bank must maintain a CET1 capital ratio of 6.5% and a Tier 1 ratio of 8.0%, a total risk based capital ratio of 10% and a Tier 1 leverage ratio of 5.0%. In addition, the regulations establish a capital conservation buffer above the required capital ratios that started phasing in on January 1, 2016 at 0.625% of risk-weighted assets and increases each year by 0.625% until it is fully phased in at 2.5% effective January 1, 2019. Beginning January 1, 2016, failure to maintain the capital conservation buffer will limit the ability of the Bank and the Company to pay dividends, repurchases shares or pay discretionary bonuses.

The new regulations implemented changes to what constitutes regulatory capital. Certain instruments no longer constitute qualifying capital, subject to phase-out periods. In addition, Tier 2 capital is no longer limited to the amount of Tier 1 capital included in total capital. Mortgage servicing rights, certain deferred tax assets and investments in unconsolidated subsidiaries over designated percentages of CET1 must be deducted from capital. The Bank has elected to permanently opt-out of the inclusion of accumulated other comprehensive income in capital calculations, as permitted by the regulations. This opt-out will reduce the impact of market volatility on the Bank’s regulatory capital ratios.

The new regulations also changed the risk weights of certain assets, including an increase in the risk weight of certain high volatility commercial real estate acquisition, development and construction loans and non-residential mortgage loans that are 90 days past due or on non-accrual status to 150% from 100%, a credit conversion factor for the unused portion of commitments with maturities of less than one year that are not cancellable to 20% from 0%, an increase in the risk weight for mortgage servicing rights and deferred tax assets that are not deducted from capital to 250% from 100%, and an increase in the risk weight for equity exposures to 600% from 0%.

As of September 30, 2016 and December 31, 2015, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. The completion of the stock offering has significantly enhanced the Bank’s Regulatory Capital.

25

The Bank’s actual capital amounts and ratios are presented in the following table.

												To Be Well
												Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes						Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
September 30, 2016
Total Capital (to Risk Weighted Assets)	$	109,589		17.2	%	$	50,867	>		8.0	%	$	63,584	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			38,150	>		6.0			50,867	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			28,613	>		4.5			41,329	>		6.5
Tier 1 Capital (to Average Assets)		100,235		13.2			30,408	>		4.0			38,010	>		5.0
December 31, 2015
Total Capital (to Risk Weighted Assets)	$	104,032		17.1	%	$	48,780	>		8.0	%	$	60,975	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			36,585	>		6.0			48,780	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			27,439	>		4.5			39,634	>		6.5
Tier 1 Capital (to Average Assets)		95,370		13.4			28,435	>		4.0			35,544	>		5.0

(10) Employee Stock Ownership Plan

The Bank maintains an Employee Stock Ownership Plan (“ESOP”) to provide eligible employees the opportunity to own Company stock. This plan is a tax-qualified retirement plan for the benefit of Bank employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares committed to be released per year through 2029 is 23,810.

The Company contributed funds to a subsidiary to enable it to grant a loan to the ESOP for the purchase of 357,152 shares of the Company’s common stock at a price of $10.00 per share. The loan obtained by the ESOP from the Company’s subsidiary to purchase Company common stock is payable annually over 15 years at a rate per annum equal to the Prime Rate (3.50% at September 30, 2016). Loan payments are principally funded by cash contributions from the Bank.

	September 30, 2016
Shares held by the ESOP include the following:
Allocated		23,810
Committed to be allocated		17,858
Unallocated		315,484
Total		357,152

The fair value of unallocated shares was approximately $4.9 million at September 30, 2016.

Total compensation expense recognized in connection with the ESOP for the nine months ended September 30, 2016 was $257,000.

26

(11) Earnings Per Common Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculation. There were no potentially dilutive common stock equivalents as of September 30, 2016. Earnings per share is not applicable for the period ended September 30, 2015.

	Three Months Ended			Nine Months Ended
(Dollars in thousands)	September 30, 2016			September 30, 2016
Net Income attributable to common shareholders	$	1,761		$	4,611
Average number of common shares outstanding		9,498,722			9,498,722
Less: unallocated ESOP shares		(319,453	)		(325,391	)
Average number of common shares outstanding		9,179,269			9,173,331

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

Management’s discussion and analysis of financial condition and results of operations at September 30, 2016 and December 31, 2015 and for the three and nine months ended September 30, 2016 and 2015 is intended to assist in understanding our financial condition and results of operations. Operating results for the three and nine month periods ended September 30, 2016 may not be indicative of results for all of 2016 or any other period. The information contained in this section should be read in conjunction with the Unaudited Consolidated Financial Statements and the notes thereto, appearing in Part 1, Item 1 of this report.

Forward-Looking Statements

This document may contain certain forward-looking statements, such as statements of the Company’s or the Bank’s plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified by the use of words such as “expects,” “subject,” and “believes,” “will,” “intends,” “will be,” “would” or similar expressions. These statements are subject to change based on various important factors (some of which are beyond the Company’s or the Bank’s control) and actual results may differ materially. Readers should not place undue reliance on any forward-looking statements, which reflect management’s analysis of factors only as of the date of which they are given. These factors include general economic conditions, including its trends and levels of interest rates, the ability of our borrowers to repay their loans, the ability of the Company or the Bank to effectively manage its growth, real estate values in the market area, loan demand, competition, and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive. Readers should carefully review the factors described in other documents the Company files from time to time with the Securities and Exchange Commission, including Current Reports on Form 8-K.

Except as required by applicable law and regulation, the Company does not undertake — and specifically disclaims any obligation — to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes that the most critical accounting policies, which involve the most complex or subjective decisions or assessments, are as follows:

27

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the un-collectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the size and composition of 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.

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

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, we do not separately identify individual consumer and residential loans for impairment disclosures.

The general component of the allowance for loan losses is based on historical loss experience adjusted for qualitative factors stratified by the following loan segments: residential real estate, commercial real estate, construction and land development, commercial and consumer. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment. This historical loss factor is adjusted for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no changes in our policies or methodology pertaining to the general component of the allowance for loan losses during the nine months ended September 30, 2016 or during the twelve months ended December 31, 2015.

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

Residential real estate: We generally do not originate loans with a loan-to-value ratio greater than 80% and do not grant subprime loans. Loans with loan to value ratios greater than 80% require the purchase of private mortgage insurance. All loans in this segment are collateralized by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this segment.

Commercial real estate: Loans in this segment are primarily income-producing properties throughout Massachusetts and New Hampshire. The underlying cash flows generated by the properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on the credit quality in this segment. Management periodically obtains rent rolls and continually monitors the cash flows of these loans.

28

Construction and land development: Loans in this segment primarily include speculative and pre sold real estate development loans for which payment is derived from sale of the property and construction to permanent loans for which payment is derived from cash flows of the property. Credit risk is affected by cost overruns, time to sell at an adequate price, and market conditions.

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

Consumer: Loans in this segment are generally unsecured and repayment is dependent on the credit quality of the individual borrower.

The allocated component relates to loans that are classified as impaired. Impairment is measured on a loan by loan basis for commercial, commercial real estate and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows (or collateral value) of the impaired loan is lower than the carrying value of that loan.

We periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a troubled debt restructuring. All troubled debt restructurings are initially classified as impaired.

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

Income Taxes. The Company recognizes income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are established for the temporary differences between the accounting basis and the tax basis of our assets and liabilities at enacted tax rates expected to be in effect when the amounts related to such temporary differences are realized or settled. A tax valuation allowance is established, as needed, to reduce net deferred tax assets to the amount expected to be realized.

The Company examines its significant income tax positions quarterly to determine whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

Balance Sheet Analysis

Assets. Total assets were $768.2 million at September 30, 2016, an increase of $24.8 million, or 3.3%, from $743.4 million at December 31, 2015. The increase resulted primarily from an increase in net loans of $34.4 million, which was partially offset by a net decrease in investments of $10.1 million.

Cash and Cash Equivalents. Cash and cash equivalents increased $2.3 million, or 11.4%, to $22.8 million at September 30, 2016 from $20.5 million at December 31, 2015. The increase in cash and cash equivalents resulted from an increase in deposits and excess cash flows from the securities portfolio.

Loans. At September 30, 2016, net loans were $589.4 million, or 76.7% of total assets, compared to $554.9 million, or 74.6% of total assets, at December 31, 2015. An increase in commercial real estate loans of $34.4 million, or 12.1%, and an increase in commercial loans of $25.0 million, or 22.3%, were partially offset by a decrease in construction and land development loans of $13.1 million, or 18.3%, and a decrease in residential real estate loans of $11.0 million, or 11.9%. Our focus in 2014 on commercial lending is represented in the increase in commercial and commercial real estate loans. The decrease in construction and land development loans and part of the increase in commercial real estate loans were related to loans moving from the construction phase to permanent funding.

29

The following table sets forth the composition of our loan portfolio by type of loan at the dates indicated.

	At						At
	September 30,						December 31,
(In thousands)	2016						2015
	Amount			Percent			Amount			Percent
Commercial real estate	$	319,760			53.47	%	$	285,356			50.67	%
Commercial		137,042			22.92	%		112,073			19.90	%
Residential real estate		81,411			13.61	%		92,392			16.40	%
Construction and land development		58,435			9.77	%		71,535			12.70	%
Consumer		1,403			0.23	%		1,855			0.33	%
		598,051			100.00	%		563,211			100.00	%
Allowance for loan losses		(8,386	)					(7,905	)
Deferred loan fees, net		(301	)					(377	)
Net loans	$	589,364					$	554,929

Securities. Our available-for-sale securities portfolio increased $34.5 million, or 42.6%, to $115.5 million at September 30, 2016 from $81.0 million at December 31, 2015, while our held-to-maturity securities portfolio decreased $44.6 million to $0 at September 30, 2016 from $44.6 million at December 31, 2015. On May 31, 2016, the Company transferred all of its held-to-maturity securities to available-for-sale to provide additional liquidity to support loan growth. The cost basis transferred was $44.2 million with an unrealized net gain of $2.2 million. Our securities portfolio in total decreased as we have set aside excess cash flows from securities to fund potential loan growth instead of re-investing the proceeds in investment securities.

Deposits. Total deposits increased $33.1 million, or 5.7%, to $610.3 million at September 30, 2016 from $577.2 million at December 31, 2015. The increase was primarily due to an increase in NOW accounts of $26.2 million, an increase in money market accounts of $17.0 million, and an increase in savings accounts of $9.2 million. The increases were offset by a decrease in time deposits of $27.1 million. The increase was attributed to our continued strategy of obtaining our customers’ entire deposit relationship, while the decreases relate to the maturity of brokered deposits.

Borrowings. Borrowings at September 30, 2016 consisted entirely of Federal Home Loan Bank advances. Borrowings decreased $16.0 million, or 27.8%, to $41.4 million at September 30, 2016 from $57.4 million at December 31, 2015.

Shareholders’ Equity. Total shareholders’ equity increased $6.9 million, or 6.8%, to $108.3 million at September 30, 2016, from $101.4 million at December 31, 2015. The increases are primarily due to year-to-date net income of $4.6 million and an increase in other comprehensive income of $2.1 million, which includes the $1.3 million net of tax unrealized gain from transferring securities from held-to-maturity to available-for-sale.

30

Asset Quality.

The following table sets forth information regarding our non-performing assets at the dates indicated.

	At			At
	September 30,			December 31,
(In thousands)	2016			2015
Non-accrual loans:
Real estate:
Commercial	$	-		$	106
Residential		468			1,031
Construction and land development		-			-
Commercial		952			1,147
Consumer		-			-
Total non-accrual loans		1,420			2,284
Accruing loans past due 90 days or more		-			-
Real estate owned		-			-
Total non-performing assets	$	1,420		$	2,284
Total loans (1)	$	597,750		$	562,834
Total assets	$	768,202		$	743,397
Total non-performing loans to total loans (1)		0.24	%		0.41	%
Total non-performing assets to total assets		0.18	%		0.31	%

(1) Loans are presented before the allowance for loan losses but include deferred fees/costs

The decrease in non-performing assets at September 30, 2016 compared to December 31, 2015 was primarily due to loans being upgraded to accrual status having proven the ability to repay the loan for the required period of time.

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Allowance for Loan Losses. The allowance for loan losses is maintained at levels considered adequate by management to provide for probable loan losses inherent in the loan portfolio as of the consolidated balance sheet reporting dates. The allowance for loan losses is based on management’s assessment of various factors affecting the loan portfolio, including portfolio size and composition, amount of and trend regarding delinquent and non-accrual loans, national and local business conditions and loss experience and an overall evaluation of the quality of the underlying collateral.

The following table sets forth activity in our allowance for loan losses for the periods indicated:

	Nine Months Ended September 30,
(In thousands)	2016			2015
Allowance at beginning of period	$	7,905		$	7,224
Provision for loan losses		484			645
Charge offs:
Real estate:
Commercial		-			-
Residential		-			-
Construction and land development		-			-
Commercial		-			96
Consumer		29			49
Total charge-offs		29			145
Recoveries:
Real estate:
Commercial		-			-
Residential		12			6
Construction and land development		-			-
Commercial		1			9
Consumer		13			5
Total recoveries		26			20
Net charge-offs (recoveries)		3			125
Allowance at end of period	$	8,386		$	7,744
Non-performing loans at end of period	$	1,420		$	3,098
Total loans outstanding at end of period (1)	$	597,750		$	529,529
Average loans outstanding during the period (1)	$	574,655		$	507,642
Allowance to non-performing loans		590.56	%		249.97	%
Allowance to total loans outstanding at end of period		1.40	%		1.46	%
Net charge-offs to average loans outstanding during the period (annualized)		0.00	%		0.03	%

(1) Loans are presented before the allowance for loan losses but include deferred fees/costs

32

Results of Operations for the Three Months Ended September 30, 2016 and 2015

General. Net income attributable to common shareholders increased $1.7 million to $1.8 million for the three months ended September 30, 2016 from $86,000 for the three months ended September 30, 2015. The increase was related to the $832,000 increase in net interest and dividend income, and a decrease in noninterest expense of $1.7 million, which is mainly related to the $2.2 million funding of the Bank’s charitable foundation in the third quarter of 2015. These were partially offset by an increase in salaries and employee benefits of $203,000, and an increase in income tax expense of $1.1 million.

Interest and Dividend Income. Interest and dividend income, which includes Federal Home Loan Bank stock, increased $978,000, or 15.2%, to $7.4 million for the three months ended September 30, 2016 from $6.4 million for the three months ended September 30, 2015. This was primarily attributable to an increase in interest and fees on loans, which increased $977,000, or 17.3%, to $6.6 million for the three months ended September 30, 2016 from $5.6 million for the three months ended September 30, 2015.

The increase in interest income on loans was due to an increase in the average balance of loans of $66.9 million, or 12.8%, to $589.3 million for the three months ended September 30, 2016 from $522.4 million for the three months ended September 30, 2015. Yield on loans also increased 18 basis points to 4.4% for the quarter ended September 30, 2016 due to our continued focus on higher-yielding commercial lending.

Interest Expense. Interest expense increased $146,000, or 25.7%, to $713,000 for the three months ended September 30, 2016 from $567,000 for the three months ended September 30, 2015, primarily caused by an increase in interest expense on deposits. Interest expense on deposits increased $129,000, or 31.5%, to $539,000 for the three months ended September 30, 2016 from $410,000 for the three months ended September 30, 2015, due to the average rate paid on interest-bearing deposits increasing eight basis points to 0.48% for the three months ended September 30, 2016 from 0.40% for the three months ended September 30, 2015. The increase in the average rate was primarily the result of increases in the average rate paid on NOW accounts.

Net Interest and Dividend Income. Net interest and dividend income increased $832,000, or 14.1%, to $6.7 million for the three months ended September 30, 2016 from $5.9 million for the three months ended September 30, 2015. The increase was due to both higher balances of earning assets and expanding margins. Our net interest rate spread increased 19 basis points to 3.53% for the three months ended September 30, 2016 from 3.34% for the three months ended September 30, 2015. Our net interest margin increased 19 basis points to 3.72% for the three months ended September 30, 2016 from 3.53% for the three months ended September 30, 2015. The average yield we earned on interest-earning assets increased 25 basis points to 4.12% while the average rate paid on interest-bearing liabilities increased six basis points to 0.59%.

Provision for Loan Losses. The provision for loan losses was $163,000 for the three months ended September 30, 2016 compared to $174,000 for the three months ended September 30, 2015. The provisions recorded resulted in an allowance for loan losses of $8.4 million, or 1.40% of total loans at September 30, 2016, compared to $7.9 million, or 1.40% of total loans, at December 31, 2015 and $7.7 million, or 1.46% of total loans, at September 30, 2015. The provision for the quarter ended September 30, 2016 resulted primarily from an increase in the loan portfolio as we apply historical loss ratios to newly originated loans, which, absent other factors, results in an increase in the allowance for loan losses as the loan portfolio increases.

33

Noninterest Income. Noninterest income increased $203,000, or 17.5%, to $1.4 million for the three months ended September 30, 2016 from $1.2 million for the three months ended September 30, 2015. The increase was primarily caused by an increase in the gain on sales of securities of $223,000, or 103.7%, to $438,000 for the three months ended September 30, 2016 from $215,000 for the three months ended September 30, 2015.

Noninterest Expense. Noninterest expense decreased $1.7 million, or 24.1%, to $5.2 million for the three months ended September 30, 2016 from $6.9 million for the three months ended September 30, 2015. The largest decrease was related to the $2.2 million funding of the Bank’s charitable foundation during the three months ended September 30, 2015 compared to no such expense recorded during the three months ended September 30, 2016. The decrease was partially offset by an increase in salaries and employee benefits expense, which increased $203,000, or 6.7%, to $3.2 million for the three months ended September 30, 2016 from $3.0 million for the three months ended September 30, 2015. The increase in salaries and employee benefits was due primarily to our hiring additional employees to support our loan growth and the opening of a new branch. Professional services expenses increased $82,000, or 37.8%, to $299 ,000 for the three months ended September 30, 2016 from $217,000 for the three months ended September 30, 2015 due to increased management training and legal and accounting fees.

Income Tax Provision. We recorded a provision for income taxes of $940,000 for the three months ended September 30, 2016, reflecting an effective tax rate of 34.8%, compared to a benefit of $134,000 for the three months ended September 30, 2015. The changes in the income tax provision were primarily due to an increase in pre-tax income. Our effective tax rates are below statutory federal and states rates due primarily to tax-exempt income related to investments in BOLI and municipal securities.

34

Average Balance sheet and Related Yields and Rates

The following tables set forth the average balance sheets, annualized average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the amount of tax free interest-earning assets is immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

	For the Three Months Ended September 30,
	2016								2015
				Interest								Interest
	Average			Earned/		Yield/			Average			Earned/		Yield/
	Balance			Paid		Rate			Balance			Paid		Rate
(dollars in thousands)
Assets:
Interest-earning assets:
Loans	$	589,335		$	6,611		4.49	%	$	522,404		$	5,634		4.31	%
Interest-earning deposits		7,864			8		0.41	%		25,828			16		0.25	%
Investment securities		121,596			785		2.58	%		114,450			769		2.69	%
Federal Home Loan Bank stock		2,369			22		3.71	%		3,642			29		3.19	%
Total interest-earning assets		721,164			7,426		4.12	%		666,324			6,448		3.87	%
Non-interest earning assets		38,970								36,377
Total assets	$	760,134							$	702,701
Interest-bearing liabilities:
Savings accounts	$	116,685			55		0.19	%	$	95,218			35		0.15	%
Money market accounts		118,439			88		0.30	%		112,993			76		0.27	%
NOW accounts		112,446			171		0.61	%		83,418			32		0.15	%
Certificates of deposit		101,426			225		0.89	%		119,457			267		0.89	%
Total interest-bearing deposits		448,996			539		0.48	%		411,086			410		0.40	%
Federal Home Loan Bank advances		35,512			174		1.96	%		17,560			157		3.58	%
Total interest-bearing liabilities		484,508			713		0.59	%		428,646			567		0.53	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		159,571								151,094
Other noninterest-bearing liabilities		8,003								18,003
Total liabilities		652,082								597,743
Total equity		108,052								104,958
Total liabilities and equity	$	760,134							$	702,701
Net interest income				$	6,713							$	5,881
Interest rate spread (1)							3.53	%							3.34	%
Net interest-earning assets (2)	$	236,656							$	237,678
Net interest margin (3)							3.72	%							3.53	%
Average interest-earning assets to  interest-bearing liabilities		148.84	%							155.45	%

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

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets

35

Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effect attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

	For the Three Months Ended September 30, 2016
	Compared to the Three Months Ended September 30, 2015
	Increase (Decrease) Due to						Total
	Rate			Volume			Increase (Decrease)
(in thousands)
Interest-earning assets:
Loans	$	233		$	744		$	977
Interest-earning deposits		7			(15	)		(8	)
Investment securities		(31	)		47			16
Federal Home Loan Bank Stock		4			(11	)		(7	)
Total interest-earning assets		213			765			978
Interest-bearing liabilities:
Savings accounts		11			9			20
Money Market Accounts		8			4			12
Now Accounts		124			15			139
Certificates of deposit		(2	)		(40	)		(42	)
Total interest-bearing deposits		141			(12	)		129
Federal Home Loan Bank advances		(93	)		110			17
Total interest-bearing liabilities		48			98			146
Change in net interest income	$	166		$	666		$	832

36

Results of Operations for the Nine Months Ended September 30, 2016 and 2015

General. Net income attributable to common shareholders increased $2.4 million, or 105.6%, to $4.6 million for the nine months ended September 30, 2016 from $2.2 million for the nine months ended September 30, 2015. The increase was related to a $2.2 million increase in net interest and dividend income, and a decrease in noninterest expense of $1.0 million, which is related to the $2.2 million funding of the Bank’s charitable foundation in the third quarter of 2015. These were partially offset by an increase in salaries and employee benefits of $819,000, and an increase in income tax expense of $1.6 million.

Interest and Dividend Income. Interest and dividend income, which includes Federal Home Loan Bank stock, increased $2.7 million, or 14.2%, to $21.4 million for the nine months ended September 30, 2016 from $18.8 million for the nine months ended September 30, 2015. This was primarily attributable to an increase in interest and fees on loans, which increased $2.6 million, or 15.8%, to $18.9 million for the nine months ended September 30, 2016 from $16.3 million for the nine months ended September 30, 2015, and an increase in interest and dividends on securities of $96,000, or 3.9%.

The increase in interest income on loans was due to an increase in the average balance of loans of $67.0 million, or 13.2%, to $574.6 million for the nine months ended September 30, 2016 from $507.6 million for the nine months ended September 30, 2015. Yield on loans increased 10 basis points to 4.38% for the nine months ended September 30, 2016 due to our continued focus on higher-yielding commercial lending.

The increase in interest income on investment securities was primarily due to an increase in average balance of $5.6 million, or 4.8%, to $123.2 million during the nine months ended September 30, 2016 from $117.6 million for the nine months ended September 30, 2015. The average balance increased due to investment purchases made in the last quarter of 2015.

Interest Expense. Interest expense increased $427,000, or 25.7%, to $2.1 million for the nine months ended September 30, 2016 from $1.7 million for the nine months ended September 30, 2015, primarily caused by an increase in interest expense on deposits. Interest expense on deposits increased $396,000, or 32.3%, to $1.6 million for the nine months ended September 30, 2016 from $1.2 million for the nine months ended September 30, 2015, as the average rate paid on interest-bearing deposits increased nine basis points to 0.49% for the nine months ended September 30, 2016 from 0.40% for the nine months ended September 30, 2015. The increase in the average rate was primarily the result of increases in the average rates paid on the NOW accounts.

Net Interest and Dividend Income. Net interest and dividend income increased $2.2 million, or 13.0%, to $19.3 million for the nine months ended September 30, 2016 from $17.1 million for the nine months ended September 30, 2015. The increase was due to both higher balances of earning assets and expanding margins. Our net interest rate spread increased seven basis points to 3.46% for the nine months ended September 30, 2016 from 3.39% for the nine months ended September 30, 2015, while our net interest margin increased nine basis points to 3.64% for the nine months ended September 30, 2016 from 3.55% for the nine months ended September 30, 2015. The average yield we earned on interest-earning assets increased 14 basis points to 4.04% while the average rate paid on interest-bearing liabilities increased seven basis points to 0.58%.

Provision for Loan Losses. The provision for loan losses was $484,000 for the nine months ended September 30, 2016 compared to $645,000 for the nine months ended September 30, 2015. The provisions recorded resulted in an allowance for loan losses of $8.4 million, or 1.40% of total loans, at September 30, 2016, compared to $7.9 million, or 1.40% of total loans, at December 31, 2015 and $7.7 million, or 1.46% of total loans, at September 30, 2015. The provision for the nine months ended September 30, 2016 resulted primarily from an increase in the loan portfolio as we apply historical loss ratios to newly originated loans, which, absent other factors, results in an increase in the allowance for loan losses as the loan portfolio increases.

37

Noninterest Income. Noninterest income increased $422,000, or 14.8%, to $3.3 million for the nine months ended September 30, 2016 from $2.8 million for the nine months ended September 30, 2015. The increase was primarily caused by the increase in gains on sales of securities of $158,000, or 49.8%, to $475,000 at September 30, 2016 compared to $317,000 at September 30, 2015, and an increase in other income of $200,000, or 55.4%, to $561,000 for the nine months ended September 30, 2016 compared to $361,000 at September 30, 2015. The increase in other income represents an increase in BOLI income. Additional BOLI of $6.2 million was purchased in the fourth quarter of 2015.

Noninterest Expense. Noninterest expense decreased $1.0 million, or 6.2%, to $15.2 million for the nine months ended September 30, 2016 from $16.2 million for the nine months ended September 30, 2015. The decrease was primarily related to the $2.2 million funding of the Bank’s charitable foundation during the nine months ended September 30, 2015 compared to no such expense recorded during the nine months ended September 30, 2016. Other expense also decreased $101,000, or 4.4%, to $2.2 million for the nine months ended September 30, 2016, due primarily to the lower trustee expenses. The 2016 decrease in trustee expenses was due to the non-replacement of retiring members of the board of directors. The decrease in noninterest expense was partially offset by an increase in salaries and employee benefits expense, which increased $819,000, or 9.4%, to $9.5 million for the nine months ended September 30, 2016 from $8.7 million for the nine months ended September 30, 2015. The increase in salaries and employee benefits was due primarily to our hiring additional employees to support our loan growth and the opening of a new branch. Professional services expenses increased $214,000, or 32.3%, to $876,000 for the nine months ended September 30, 2016 from $662,000 for the nine months ended September 30, 2015 due to increased management training and legal fees.

Income Tax Provision. We recorded a provision for income taxes of $2.3 million for the nine months ended September 30, 2016, reflecting an effective tax rate of 33.2%, compared to a provision of $717,000, reflecting an effective tax rate of 23.2% for the nine months ended September 30, 2015. The changes in the income tax provision were primarily due to an increase in pre-tax income. The increase in the effective tax rate was primarily due to a decrease in our tax-exempt investments and an increase in taxable income. Our effective tax rates are below statutory federal and states rates due primarily to tax-exempt income related to investments in BOLI and municipal securities.

38

Average Balance sheet and Related Yields and Rates

The following tables set forth the average balance sheets, annualized average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments have been made, as the amount of tax free interest-earning assets is immaterial. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.

	For the Nine Months Ended September 30,
	2016								2015
				Interest								Interest
	Average			Earned/		Yield/			Average			Earned/		Yield/
	Balance			Paid		Rate			Balance			Paid		Rate
(dollars in thousands)
Assets:
Interest-earning assets:
Loans	$	574,655		$	18,861		4.38	%	$	507,642		$	16,294		4.28	%
Interest-earning deposits		7,260			22		0.40	%		13,386			27		0.27	%
Investment securities		123,230			2,481		2.68	%		117,635			2,408		2.73	%
Federal Home Loan Bank stock		2,607			68		3.48	%		3,642			45		1.65	%
Total interest-earning assets		707,752			21,432		4.04	%		642,305			18,774		3.90	%
Non-interest earning assets		39,368								33,780
Total assets	$	747,120							$	676,085
Interest-bearing liabilities:
Savings accounts	$	109,936			140		0.17	%	$	94,086			103		0.15	%
Money market accounts		111,912			229		0.27	%		111,679			222		0.27	%
NOW accounts		110,492			490		0.59	%		79,369			92		0.15	%
Certificates of deposit		113,134			764		0.90	%		122,738			810		0.88	%
Total interest-bearing deposits		445,474			1,623		0.49	%		407,872			1,227		0.40	%
Federal Home Loan Bank advances		35,082			468		1.78	%		31,085			437		1.87	%
Total interest-bearing liabilities		480,556			2,091		0.58	%		438,957			1,664		0.51	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits		153,990								138,675
Other noninterest-bearing liabilities		7,452								11,941
Total liabilities		641,998								589,573
Total equity		105,122								86,512
Total liabilities and  equity	$	747,120							$	676,085
Net interest income				$	19,341							$	17,110
Interest rate spread (1)							3.46	%							3.39	%
Net interest-earning assets (2)	$	227,196							$	203,348
Net interest margin (3)							3.64	%							3.55	%
Average interest-earning assets to  interest-bearing liabilities		147.28	%							146.33	%

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

(2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(3) Net interest margin represents net interest income divided by average total interest-earning assets

39

Rate/Volume Analysis

The following table sets forth the effects of changing rates and volumes on our net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effect attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionately based on the changes due to rate and the changes due to volume.

	For the Nine Months Ended September 30, 2016
	Compared to the Nine Months Ended September 30, 2015
	Increase (Decrease) Due to						Total
	Rate			Volume			Increase (Decrease)
(in thousands)
Interest-earning assets:
Loans	$	375		$	2,192		$	2,567
Interest-earning deposits		10			(15	)		(5	)
Investment securities		(40	)		113			73
Federal Home Loan Bank Stock		39			(16	)		23
Total interest-earning assets		384			2,275			2,658
Interest-bearing liabilities:
Savings accounts		18			19			37
Money Market Accounts		7			0			7
Now Accounts		350			48			398
Certificates of deposit		19			(65	)		(46	)
Total interest-bearing deposits		393			3			396
Federal Home Loan Bank advances		(23	)		54			31
Total interest-bearing liabilities		370			57			427
Change in net interest income	$	14		$	2,217		$	2,231

40

Liquidity and Capital Resources

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

We regularly review the need to adjust our investments in liquid assets based upon our assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning deposits and short- and intermediate-term securities.

Our most liquid assets are cash and cash equivalents. The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. At September 30, 2016, cash and cash equivalents totaled $22.8 million. Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $115.5 million at September 30, 2016.

At September 30, 2016, we had the ability to borrow a total of $194.1 million from the Federal Home Loan Bank of Boston. On that date, we had $41.4 million in advances outstanding. At September 30, 2016, we also had an available line of credit with the Federal Reserve Bank of Boston’s borrower-in-custody program of $127.9 million, none of which was outstanding as of that date.

We have no material commitments or demands that are likely to affect our liquidity other than set forth below. In the event loan demand were to increase faster than expected, or any unforeseen demand or commitment were to occur, we could access our borrowing capacity with the Federal Home Loan Bank of Boston or obtain additional funds through brokered certificates of deposit.

At September 30, 2016 and December 31, 2015 we had $22.0 million and $15.6 million in loan commitments outstanding, respectively. In addition to commitments to originate loans, at September 30, 2016 and December 31, 2015, we had $195.1 million and $191.6 million in un-advanced funds to borrowers, respectively. We also had $5.1 million and $5.5 million in outstanding letters of credit at September 30, 2016 and December 31, 2015, respectively.

Certificates of deposit due within one year of September 30, 2016 totaled $69.2 million, or 11.3% of total deposits. If these deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and Federal Home Loan Bank of Boston advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit at September 30, 2016. We believe, however, based on past experience that a significant portion of our certificates of deposit will remain with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activities are the origination of loans and the purchase of securities. During the nine months ended September 30, 2016, we originated $141.4 million of loans, all of which were intended to be held in our portfolio. We also purchased $1.4 million in securities. During the nine months ended September 30, 2015, we originated $138.5 million of loans, all of which were intended to be held in our portfolio, and we purchased $1.4 million in securities.

Financing activities consist primarily of activity in deposit accounts and Federal Home Loan Bank advances. We experienced net increases in total deposits of $33.1 million and $21.2 million for the nine months ended September 30, 2016 and 2015, respectively. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive. Federal Home Loan Bank advances decreased $16.0 million and $21.8 million during the nine months ended September 30, 2016 and 2015, respectively.

41

The Provident Bank is subject to various regulatory capital requirements administered by the Massachusetts Commissioner of Banks and the Federal Deposit Insurance Corporation. At September 30, 2016, The Provident Bank exceeded all applicable regulatory capital requirements, and was considered “well capitalized” under regulatory guidelines. See Note 9 of the Notes to the Unaudited Consolidated Financial Statements for additional information.

42

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable, as the Company is a smaller reporting company.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of September 30, 2016. Based on that evaluation, the Company’s management, including the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective.

During the quarter ended September 30, 2016, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings

The Company is subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s financial condition or results of operations.

Item 1A. Risk Factors

Not applicable, as the Company is a smaller reporting company.

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

(a) Not applicable.

(b) Not applicable.

(c) There were no issuer repurchases of securities during the period covered by this Report and the Company does not have any authorized stock repurchase programs.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

43

Item 6. Exhibits

3.1 Amended and Restated Articles of Organization of Provident Bancorp, Inc. (1)

3.2 By-Laws of Provident Bancorp, Inc. (1)

10.1 Provident Bancorp, Inc. 2016 Equity Incentive Plan (2)

31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101 The following financial statements from the Provident Bancorp, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Comprehensive Income; (iv) Consolidated Statements of Changes in Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Unaudited Consolidated Financial Statements.

(1) Incorporated by reference to the Company’s Registration Statement on Form S-1 (file no. 333-202716), initially filed with the Securities and Exchange Commission on March 13, 2015.

(2) Incorporated by reference to Appendix A to the proxy statement for the Special Meeting of Shareholders filed with the Securities and Exchange Commission on August 9, 2016 (file no. 001-37504)

44

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.

	PROVIDENT BANCORP, INC.
Date:      November 14, 2016	/s/ David P. Mansfield
	David P. Mansfield
	President and Chief Executive Officer

Date:      November 14, 2016	/s/ Carol L. Houle
	Carol L. Houle
	Executive Vice President and Chief Financial Officer

45

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David P. Mansfield, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Provident 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)) 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) 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

(c) 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 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.

Date:     November 14, 2016	/s/ David P. Mansfield
	David P. Mansfield
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Carol L. Houle, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Provident 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)) 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) 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

(c) 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 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.

Date:     November 14, 2016	/s/ Carol L. Houle
	Carol L. Houle
	Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

David P. Mansfield, President and Chief Executive Officer of Provident Bancorp, Inc. (the “Company”), and Carol L. Houle, Executive Vice President and Chief Financial Officer of the Company, each certify in his or her capacity as an officer of the Company that they have reviewed the quarterly report on Form 10-Q for the quarter ended September 30, 2016 (the “Report”) and that to the best of their knowledge:

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.

Date:   November 14, 2016	/s/ David P. Mansfield
	David P. Mansfield
	President and Chief Executive Officer

Date:   November 14, 2016	/s/ Carol L. Houle
	Carol L. Houle
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 14, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	Provident Bancorp, Inc.
Entity Central Index Key	0001635840
Trading Symbol	pvbc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		9,498,722
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 9,528	$ 7,302
Interest-bearing demand deposits with other banks	12,581	12,865
Money market mutual funds	681	297
Cash and cash equivalents	22,790	20,464
Investments in available-for-sale securities (at fair value)	115,462	80,984
Investments in held-to-maturity securities (fair value of $46,474 as of December 31, 2015)		44,623
Federal Home Loan Bank stock, at cost	2,467	3,310
Loans, net	589,364	554,929
Bank owned life insurance	19,252	18,793
Premises and equipment, net	11,682	11,606
Accrued interest receivable	2,018	2,251
Deferred tax asset, net	3,786	5,056
Other assets	1,381	1,381
Total assets	768,202	743,397
Deposits:
Noninterest-bearing	160,851	153,093
Interest-bearing	449,480	424,142
Total deposits	610,331	577,235
Federal Home Loan Bank advances	41,458	57,423
Other liabilities	8,070	7,333
Total liabilities	659,859	641,991
Shareholders' equity:
Preferred stock; authorized 50,000 shares: 0 shares issued and outstanding
Common stock, no par value: 30,000,000 shares authorized; 9,498,722 shares issued and outstanding
Additional paid-in capital	43,237	43,159
Retained earnings	64,501	59,890
Accumulated other comprehensive income	3,759	1,690
Unearned compensation - ESOP	(3,154)	(3,333)
Total shareholders' equity	108,343	101,406
Total liabilities and shareholders' equity	$ 768,202	$ 743,397

XML

CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Investments in held-to-maturity securities, fair value (in dollars)		$ 46,474
Preferred stock, shares authorized	50,000	50,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	9,498,722	9,498,722
Common stock, shares outstanding	9,498,722	9,498,722

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Interest and dividend income:
Interest and fees on loans	$ 6,611	$ 5,634	$ 18,861	$ 16,294
Interest and dividends on securities	807	798	2,549	2,453
Interest on interest-bearing deposits	8	16	22	27
Total interest and dividend income	7,426	6,448	21,432	18,774
Interest expense:
Interest on deposits	539	410	1,623	1,227
Interest on Federal Home Loan Bank advances	174	157	468	437
Total interest expense	713	567	2,091	1,664
Net interest and dividend income	6,713	5,881	19,341	17,110
Provision for loan losses	163	174	484	645
Net interest and dividend income after provision for loan losses	6,550	5,707	18,857	16,465
Noninterest income:
Customer service fees on deposit accounts	339	343	936	876
Service charges and fees - other	427	468	1,293	1,289
Gain on sale of securities, net	438	215	475	317
Other income	159	134	561	361
Total noninterest income	1,363	1,160	3,265	2,843
Noninterest expense:
Salaries and employee benefits	3,219	3,016	9,500	8,681
Occupancy expense	412	383	1,194	1,170
Equipment expense	162	132	471	400
FDIC assessment	103	93	293	283
Data processing	163	142	491	415
Marketing expense	70	18	178	144
Professional fees	299	217	876	662
Charitable Foundation expense		2,150		2,150
Other	784	720	2,213	2,314
Total noninterest expense	5,212	6,871	15,216	16,219
Income (loss) before income tax expense (benefit)	2,701	(4)	6,906	3,089
Income tax expense (benefit)	940	(134)	2,295	717
Net income	1,761	130	4,611	2,372
Net Income attributable to common shareholders	$ 1,761	$ 86	$ 4,611	$ 2,243
Income per share:
Basic (in dollars per share)	$ 0.19		$ 0.50
Diluted (in dollars per share)	$ 0.19		$ 0.50
Weighted Average Shares:
Basic (in shares)	9,179,269		9,173,331
Diluted (in shares)	9,179,269		9,173,331

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
Net income	$ 1,761	$ 130	$ 4,611	$ 2,372
Other comprehensive income:
Change in net unrealized holding (losses) gains	(296)	(265)	1,575	(800)
Reclassification adjustment for realized gains in net income	(438)	(215)	(475)	(317)
Net change in unrealized (loss) gain	(734)	(480)	1,100	(1,117)
Income tax effect	290	169	(376)	421
Net of tax amount	(444)	(311)	724	(696)
Change in net unrealized holding gains on securities transferred from held-to-maturity to available-for-sale			2,239
Income tax effect			(894)
Net of tax amount			1,345
Other comprehensive income (loss)	(444)	(311)	2,069	(696)
Total comprehensive income (loss)	$ 1,317	$ (181)	$ 6,680	$ 1,676

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Shares of Common Stock	Preferred Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income	Unearned Compensation ESOP	Total
Balance at Dec. 31, 2014		$ 17,145	$ 275	$ 55,959	$ 2,412		$ 75,791
Balance (in shares) at Dec. 31, 2014	275,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income				2,372			2,372
Net change in other comprehensive income					(696)		(696)
Preferred stock dividends				(129)			$ (129)
Issuance of 5,034,323 shares to the mutual holding company	5,034,323						5,034,323
Transfer due to stock offering			(275)	275
Transfer due to stock offering (in shares)	(275,000)
Issuance of 4,274,425 shares in the initial public offering, net of expenses of $1,547			41,197				$ 41,197
Issuance of 4,274,425 shares in the initial public offering, net of expenses of $1,547 (in shares)	4,274,425						4,274,425
Issuance and contribution of 189,974 shares to the Provident Community Charitable Organization			1,900				$ 1,900
Issuance and contribution of 189,974 shares to the Provident Community Charitable Organization (in shares)	189,974						189,974
Purchase of 357,152 shares of common stock by the ESOP						$ (3,572)	$ (3,572)
ESOP shares earned			31			120	151
Balance at Sep. 30, 2015		17,145	43,128	58,477	1,716	(3,452)	117,014
Balance (in shares) at Sep. 30, 2015	9,498,722
Balance at Dec. 31, 2015			43,159	59,890	1,690	(3,333)	101,406
Balance (in shares) at Dec. 31, 2015	9,498,722
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income				4,611			4,611
Net change in other comprehensive income					2,069		2,069
ESOP shares earned			78			179	257
Balance at Sep. 30, 2016			$ 43,237	$ 64,501	$ 3,759	$ (3,154)	$ 108,343
Balance (in shares) at Sep. 30, 2016	9,498,722

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (Parentheticals) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) shares
Statement of Stockholders' Equity [Abstract]
Issuance of shares to the mutual holding company	5,034,323
Number of shares issued	4,274,425
Issuance of shares in the initial public offering, expenses | $	$ 1,547
Issuance and contribution of shares to the Provident Community Charitable Organization	189,974
Purchase of shares of common stock by the ESOP	357,152

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 4,611	$ 2,372
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of securities premiums, net of accretion	627	660
ESOP expense	257	151
Contribution of stock to charitable foundation		1,900
Gain on sales, calls and donations of securities, net	(475)	(317)
Change in deferred loan fees, net	(76)	(93)
Provision for loan losses	484	645
Depreciation and amortization	628	549
Decrease in accrued interest receivable	233	55
Increase in taxes receivable	(67)	(879)
Increase in cash surrender value of life insurance	(459)	(288)
Decrease (increase) in other assets	67	(779)
Increase (decrease) in other liabilities	737	(57)
Net cash provided by operating activities	6,567	3,919
Cash flows from investing activities:
Purchases of available-for-sale securities	(1,386)	(1,415)
Proceeds from sales of available-for-sale securities	2,912	739
Proceeds from pay downs, maturities and calls of available-for-sale securities	11,586	8,570
Proceeds from pay downs, maturities and calls of held-to-maturity securities	220
Redemption of Federal Home Loan Bank Stock	843
Loan originations and principal collections, net	(34,601)	(28,174)
Recoveries of loans previously charged off	26	20
Loans purchased	(268)
Additions to premises and equipment	(704)	(249)
Purchase of bank owned life insurance		(3,447)
Net cash used in investing activities	(21,372)	(23,956)
Cash flows from financing activities:
Net increase in demand deposits, NOW and savings accounts	60,202	28,927
Net decrease in time deposits	(27,106)	(7,762)
Proceeds from sale of common stock, net		41,197
Common stock purchased by ESOP		(3,572)
Proceeds from advances from the Federal Home Loan Bank	11,500
Net change in Federal Home Loan Bank short-term advances	(27,465)	(21,825)
Preferred stock dividends		(129)
Net cash provided by financing activities	17,131	36,836
Net increase in cash and cash equivalents	2,326	16,799
Cash and cash equivalents at beginning of period	20,464	9,558
Cash and cash equivalents at end of period	22,790	26,357
Supplemental disclosures:
Interest paid	2,095	1,658
Income taxes paid	2,362	$ 1,600
Held-to-maturity securities transferred to available-for-sale	$ 44,240

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Basis of Presentation

9 Months Ended

Sep. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

(1) Basis of Presentation

The accompanying unaudited financial statements of Provident Bancorp, Inc., a Massachusetts corporation (the “Company”), were prepared in accordance with the instructions for Form 10-Q and with Regulation S-X and do not include information or footnotes necessary for a complete presentation of the financial condition, results of operations, and cash flows in conformity with generally accepted accounting principles (“GAAP”). However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three and nine-month periods ended September 30, 2016 are not necessarily indicative of the results that may be expected for future periods, including the entire fiscal year. These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the annual report on Form 10-K the Company filed with the Securities and Exchange Commission on March 30, 2016.

The consolidated financial statements include the accounts of Provident Bancorp, Inc., its wholly owned subsidiary, The Provident Bank (the “Bank”), and the Bank’s wholly owned subsidiaries, Provident Security Corporation and 5 Market Street Security Corporation. Provident Security Corporation and 5 Market Street Security Corporation were established to buy, sell, and hold investments for their own account. All significant inter-company balances and transactions have been eliminated in consolidation.

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Corporate Structure

9 Months Ended

Sep. 30, 2016

Corporate Structure [Abstract]

Corporate Structure

(2) Corporate Structure

On March 10, 2015, the Board of Directors of the Company adopted a plan of stock issuance (the “Plan”) pursuant to which the Company sold shares of common stock, representing a minority ownership of the estimated pro forma market value of the Company. On July 15, 2015, the Company issued 4,274,425 shares of common stock to the public at $10.00 per share, including 357,152 shares purchased by The Provident Bank Employee Stock Ownership Plan. In addition, the Company issued 5,034,323 shares to Provident Bancorp, the Company’s mutual holding company (the “MHC”), and 189,974 shares to The Provident Community Charitable Organization, Inc., a charitable foundation that was formed in connection with the stock offering and is dedicated to supporting charitable organizations operating in the Bank’s local community. A total of 9,498,722 shares of common stock were outstanding following the completion of the stock offering.

Expenses incurred related to the offering were $1.5 million, and were recorded against offering proceeds.

Upon the completion of the stock offering, a special “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to the percentage ownership interest in the equity of the Company to be held by persons other than the MHC as of the date of the latest balance sheet contained in the prospectus utilized in connection with the offering. The Company is not permitted to pay dividends on its capital stock if the Company’s shareholders’ equity would be reduced below the amount of the liquidation account. The liquidation account will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation account.

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

(3) Recent Accounting Pronouncements

ASU (Accounting Standards Update) No. 2014-09 – Revenue from Contracts with Customers (Topic 606). The ASU establishes a single comprehensive model for an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled, and will supersede nearly all existing revenue recognition guidance, to clarify and converge revenue recognition principles under US GAAP and Internationl Financial Reporting Standards (IFRS). The update outlines five steps to recognizing revenue: (i) identify the contracts with the customer; (ii) identify the separate performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the separate performance obligations; (v) recognize revenue when each performance obligation is satisfied. The update requires more comprehensive disclosures, relating to quantitative and qualitative information for amounts, timing, the nature and uncertainty of revenue, and cash flows arising from contracts with customers, which will mainly impact construction and high-tech industries. The most significant potential impact to banking entities relates to less prescriptive derecognition requirements on the sale of other real estate owned (OREO) property. In August 2015, the Financial Accounting Standards Board (FASB) issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendments in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Accordingly, the amendments are effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted for annual and interim reporting periods beginning after December 15, 2016. An entity may elect either a full retrospective or a modified retrospective application. The Company does not expect the application of this guidance will have a material impact on the Company's financial statements.

ASU No. 2014-14, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40) - "Classification of Certain Government-Guaranteed Residential Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force)”. The ASU has been issued to reduce diversity in practice in the classification of foreclosed residential mortgage loans held by creditors that are fully guaranteed under certain government programs, including the Federal Housing Administration guarantees. A residential mortgage loan would be derecognized and a separate other receivable would be recognized upon foreclosure if the loan has both of the following characteristics: (i) the loan has a government guarantee that is not separable from the loan before foreclosure entitling the creditor to the full unpaid principal balance of the loan; and (ii) at the time of foreclosure, the creditor has the intent to make a claim on the guarantee and the ability to recover the full unpaid principal balance of the loan through the guarantee. Notably, upon foreclosure, the separate other receivable would be measured based on the current amount of the loan balance expected to be recovered under the guarantee. The amendments were effective for the Company as of January 1, 2016. This amendment did not impact the Company’s financial statements and the Company does not expect the application of this guidance will have a material impact on the Company’s financial statements in the future.

ASU No. 2016-01, Financial Instruments – Overall (Subtopic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” The ASU has been issued to improve the recognition and measurement of financial instruments by requiring 1) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; 2) separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; 3) the use of the exit price notion when measuring fair value of financial instruments for disclosure purposes; and 4) separate presentation by the reporting organization in other comprehensive income for the portion of the total change in the fair value of a liability resulting from the change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The standard is effective for the Company beginning on January 1, 2018. The Company holds a portfolio of marketable equity securities; depending on the size and composition of the portfolio at the adoption date, the impact of the ASU could be material to the Company’s consolidated financial statements.  

ASU 2016-02, Leases (Topic 842). The amendments in this update require lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Accounting by lessors will remain largely unchanged. The guidance will be effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. Adoption will require a modified retrospective transition where the lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented. The Company does not expect the application of this guidance will have a material impact on the Company’s financial statements.

ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments.” The ASU changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and can result in the earlier recognition of credit losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. The amendments in this update will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is currently evaluating the impact of its pending adoption of this guidance on the Company’s financial statements.

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Investment Securities

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities

(4) Investment Securities

In May 2016, the Company reclassified its $44.2 million held-to-maturity investment portfolio to available-for-sale. Due to its strong outlook for loan growth and falling interest rates, the Company decided to proceed with the reclassification to provide liquidity. The reclassification increased total shareholders’ equity by $1.3 million associated with the recording of the net security gains on the portfolio, net of tax effect, to accumulated other comprehensive income. In accordance with regulatory and accounting requirements, the Company is prohibited from classifying security purchases as held-to-maturity for a period of two years.

The following summarizes the amortized cost of investment securities classified as available-for-sale and their approximate fair values at September 30, 2016 and December 31, 2015:

	Amortized			Gross		Gross
	Cost			Unrealized		Unrealized		Fair
(In thousands)	Basis			Gains		Losses		Value
September 30, 2016
State and municipal	$	45,057		$	2,197	$	1	$	47,253
Corporate debt		1,000			45		-		1,045
Asset-backed securities		9,035			198		4		9,229
Government mortgage-backed securities		43,698			942		57		44,583
Trust preferred securities		1,368			39		396		1,011
Marketable equity securities		9,911			3,305		194		13,022
		110,069			6,726		652		116,143
Money market mutual funds included in cash and cash equivalents		(681	)		-		-		(681	)
Total available-for-sale securities	$	109,388		$	6,726	$	652	$	115,462
December 31, 2015
U.S. Government and federal agency	$	1,996		$	37	$	-	$	2,033
State and municipal		3,373			309		-		3,682
Corporate debt		1,000			71		-		1,071
Asset-backed securities		9,656			9		41		9,624
Government mortgage-backed securities		52,515			622		325		52,812
Trust preferred securities		1,368			55		307		1,116
Marketable equity securities		8,638			2,653		348		10,943
		78,546			3,756		1,021		81,281
Money market mutual funds included in cash and cash equivalents		(297	)		-		-		(297	)
Total available-for-sale securities	$	78,249		$	3,756	$	1,021	$	80,984

The following summarizes the amortized cost of investment securities classified as held-to-maturity and their approximate fair values at December 31, 2015:

	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(In thousands)	Basis		Gains		Losses		Value
December 31, 2015
State and municipal	$	44,623	$	1,905	$	54	$	46,474

The scheduled maturities of debt securities were as follows at September 30, 2016:

	Available-for-  Sale
	Fair
(In thousands)	Value
Due within one year	$	1,831
Due after one year through five years		2,359
Due after five years through ten years		7,362
Due after ten years		37,756
Government mortgage-backed securities		44,583
Asset-backed securities		9,229
	$	103,120

The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or more, are as follows at September 30, 2016 and December 31, 2015:

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2016
Temporarily impaired securities:
State and municipal	$	-	$	-	$	166	$	1	$	166	$	1
Asset-backed securities		-		-		581		4		581		4
Government mortgage-backed securities		1,176		1		3,095		56		4,271		57
Trust preferred securities		-		-		928		396		928		396
Marketable equity securities		1,193		63		752		131		1,945		194
Total temporarily impaired securities	$	2,369	$	64	$	5,522	$	588	$	7,891	$	652
December 31, 2015
Temporarily impaired securities:
State and municipal	$	3,195	$	28	$	729	$	26	$	3,924	$	54
Asset-backed securities		5,062		7		2,005		34		7,067		41
Government mortgage-backed securities		21,108		88		9,156		237		30,264		325
Trust preferred securities		-		-		1,017		307		1,017		307
Marketable equity securities		1,591		166		529		182		2,120		348
Total temporarily impaired securities	$	30,956	$	289	$	13,436	$	786	$	44,392	$	1,075

Government mortgage-backed securities, state and municipal securities and asset-backed securities: Because the decline in fair value of the government mortgage-backed securities, asset-backed securities and state and municipal securities is primarily attributable to changes in interest rates and not credit quality, and because the Company has the intent and ability to hold these investments until market price recovery or maturity, these investments are not considered other-than-temporarily impaired.

Marketable equity securities: Management continuously monitors equity securities for impairment by reviewing the financial condition of the issuer, company-specific events, industry developments, and general economic conditions. Management reviews corporate financial reports, credit agency reports and other publicly available information. Based on these reviews, these securities are not considered to be other-than-temporarily impaired.

Trust preferred securities: Management monitors its pooled-trust preferred securities for possible other-than-temporary impairment on a quarterly basis. This review includes an analysis of collateral reports, cash flows, stress default levels and financial ratios of the underlying issuers. Management utilizes a third party to compile this data and perform other-than-temporary impairment cash flow testing. Critical assumptions that go into the other-than-temporary impairment cash flow testing are prepayment speeds, default rates of the underlying issuers and discount margins. The result of the third-party other-than-temporary impairment cash flow testing indicated no other-than-temporary impairment as of September 30, 2016.

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Loans

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Loans

(5) Loans

A summary of loans is as follows:

	At						At
	September 30,						December 31,
(In thousands)	2016						2015
	Amount			Percent			Amount			Percent
Commercial real estate	$	319,760			53.47	%	$	285,356			50.67	%
Commercial		137,042			22.92	%		112,073			19.90	%
Residential real estate		81,411			13.61	%		92,392			16.40	%
Construction and land development		58,435			9.77	%		71,535			12.70	%
Consumer		1,403			0.23	%		1,855			0.33	%
		598,051			100.00	%		563,211			100.00	%
Allowance for loan losses		(8,386	)					(7,905	)
Deferred loan fees, net		(301	)					(377	)
Net loans	$	589,364					$	554,929

The following tables set forth information regarding the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2016 and 2015:

	For the three months ended September 30,
(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate			Construction and Land Development			Consumer			Unallocated		Total
Allowance for loan losses:
Balance at June 30, 2016	$	4,001	$	2,297	$	364		$	1,286		$	102		$	181	$	8,231
Charge-offs		-		-		-			-			(11	)		-		(11	)
Recoveries		-		-		-			-			3			-		3
Provision (benefit)		168		101		(12	)		(189	)		6			89		163
Balance at September 30, 2016	$	4,169	$	2,398	$	352		$	1,097		$	100		$	270	$	8,386
Balance at June 30, 2015	$	3,510	$	2,108	$	541		$	921		$	159		$	330	$	7,569
Charge-offs		-		8		-			-			(16	)		-		(8	)
Recoveries		-		8		-			-			1			-		9
Provision (benefit)		83		18		(106	)		175			(4	)		8		174
Balance at September 30, 2015	$	3,593	$	2,142	$	435		$	1,096		$	140		$	338	$	7,744

	For the nine months ended September 30,
(In thousands)	Commercial Real Estate		Commercial			Residential Real Estate			Construction and Land Development			Consumer			Unallocated			Total
Allowance for loan losses:
Balance at December 31, 2015	$	3,827	$	2,138		$	412		$	1,236		$	119		$	173		$	7,905
Charge-offs		-		-			-			-			(29	)		-			(29	)
Recoveries		-		1			12			-			13			-			26
Provision (benefit)		342		259			(72	)		(139	)		(3	)		97			484
Balance at September 30, 2016	$	4,169	$	2,398		$	352		$	1,097		$	100		$	270		$	8,386
Balance at December 31, 2014	$	3,500	$	1,751		$	560		$	872		$	184		$	357		$	7,224
Charge-offs		-		(96	)		-			-			(49	)		-			(145	)
Recoveries		-		9			6			-			5			-			20
Provision (benefit)		93		478			(131	)		224			-			(19	)		645
Balance at September 30, 2015	$	3,593	$	2,142		$	435		$	1,096		$	140		$	338		$	7,744

The following table sets forth information regarding the allowance for loan losses and related loan balances by segment at September 30, 2016 and December 31, 2015:

(In thousands)	Commercial Real Estate			Commercial		Residential Real Estate		Construction and Land Development		Consumer		Unallocated		Total
September 30, 2016
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	437	$	-	$	-	$	-	$	-	$	437
Ending balance:
Collectively evaluated for impairment		4,169			1,961		352		1,097		100		270		7,949
Total allowance for loan losses ending balance	$	4,169		$	2,398	$	352	$	1,097	$	100	$	270	$	8,386
Loans:
Ending balance:
Individually evaluated for impairment	$	1,987		$	1,697	$	426	$	-	$	-	$	-	$	4,110
Ending balance:
Collectively evaluated for impairment		317,773	#		135,345		80,985		58,435		1,403		-		593,941
Total loans ending balance	$	319,760		$	137,042	$	81,411	$	58,435	$	1,403	$	-	$	598,051
December 31, 2015
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	488	$	-	$	-	$	-	$	-	$	488
Ending balance:
Collectively evaluated for impairment		3,827			1,650		412		1,236		119		173		7,417
Total allowance for loan losses ending balance	$	3,827		$	2,138	$	412	$	1,236	$	119	$	173	$	7,905
Loans:
Ending balance:
Individually evaluated for impairment	$	3,272		$	1,755	$	437	$	-	$	-	$	-	$	5,464
Ending balance:
Collectively evaluated for impairment		282,084			110,318		91,955		71,535		1,855		-		557,747
Total loans ending balance	$	285,356		$	112,073	$	92,392	$	71,535	$	1,855	$	-	$	563,211

The following tables set forth information regarding non-accrual loans and loan delinquencies by portfolio segment at September 30, 2016 and December 31, 2015:

													90 Days
					90 Days		Total						or More
	30 - 59		60 - 89		or More		Past		Total		Total		Past Due		Non-accrual
(In thousands)	Days		Days		Past Due		Due		Current		Loans		and Accruing		Loans
September 30, 2016
Commercial real estate	$	405	$	-	$	-	$	405	$	319,355	$	319,760	$	-	$	-
Commercial		58		-		-		58		136,984		137,042		-		952
Residential real estate		-		75		-		75		81,336		81,411		-		468
Construction and land development		-		-		-		-		58,435		58,435		-		-
Consumer		-		-		-		-		1,403		1,403		-		-
Total	$	463	$	75	$	-	$	538	$	597,513	$	598,051	$	-	$	1,420
December 31, 2015
Commercial real estate	$	-	$	-	$	-	$	-	$	285,356	$	285,356	$	-	$	106
Commercial		-		-		-		-		112,073		112,073		-		1,147
Residential real estate		130		173		365		668		91,724		92,392				1,031
Construction and land development		-		-		-		-		71,535		71,535		-		-
Consumer		1		1		-		2		1,853		1,855		-		-
Total	$	131	$	174	$	365	$	670	$	562,541	$	563,211	$	-	$	2,284

Information about the Company’s impaired loans by portfolio segment was as follows at and for the period ended September 30, 2016 and at and for the year ended December 31, 2015:

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized
September 30, 2016
With no related allowance recorded:
Commercial real estate	$	1,987	$	1,987	$	-	$	2,941	$	158
Commercial		823		823		-		793		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		3,236		3,236		-		4,165		204
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		874		874		437		892		-
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		874		874		437		892		-
Total
Commercial real estate		1,987		1,987		-		2,941		158
Commercial		1,697		1,697		437		1,685		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	4,110	$	4,110	$	437	$	5,057	$	204
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,272	$	3,272	$	-	$	3,788	$	149
Commercial		661		661		-		611		20
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		4,370		4,370		-		4,722		186
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		1,094		1,094		488		901		2
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		1,094		1,094		488		901		2
Total
Commercial real estate		3,272		3,272		-		3,788		149
Commercial		1,755		1,755		488		1,512		22
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	5,464	$	5,464	$	488	$	5,623	$	188

The following summarizes troubled debt restructurings entered into during the nine months ended September 30, 2016:

(Dollars in thousands)	Number  of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded  Investment
September 30, 2016
Troubled debt restructurings:
Commercial		1	$	58	$	58
		1	$	58	$	58

In 2016, we approved one troubled debt restructure totaling $58 thousand, with no specific reserve required based on an analysis of the borrower’s repayment ability and/or collateral coverage. This commercial loan was placed on an extended 13-month interest only period with re-amortization to follow based on a five-year term.

The following tables present the Company’s loans by risk rating and portfolio segment at September 30, 2016 and December 31, 2015:

(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate		Construction and Land Development		Consumer		Total
September 30, 2016
Grade:
Pass	$	301,352	$	131,813	$	-	$	58,435	$	-	$	491,600
Special mention		14,908		1,258		-		-		-		16,166
Substandard		3,500		3,097		941		-		-		7,538
Doubtful		-		874		-		-		-		874
Not formally rated		-		-		80,470		-		1,403		81,873
Total	$	319,760	$	137,042	$	81,411	$	58,435	$	1,403	$	598,051
December 31, 2015
Grade:
Pass	$	265,325	$	106,677	$	-	$	71,535	$	-	$	443,537
Special mention		15,700		1,403		-		-		-		17,103
Substandard		4,331		3,083		1,329		-		-		8,743
Doubtful		-		910		-		-		-		910
Not formally rated		-		-		91,063		-		1,855		92,918
Total	$	285,356	$	112,073	$	92,392	$	71,535	$	1,855	$	563,211

Credit Quality Information

The Company utilizes a seven grade internal loan risk rating system for commercial real estate, construction and land development, and commercial loans as follows:

Loans rated 1-3: Loans in these categories are considered “pass” rated loans with low to average risk.

Loans rated 4: Loans in this category are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

Loans rated 7: Loans in this category are considered uncollectible loss and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and land development, and commercial loans.

For residential real estate and consumer loans, the Company initially assesses credit quality based upon the borrower’s ability to pay and rates such loans as pass. Subsequent risk rating downgrades are based upon the borrower’s payment activity. All other residential and consumer loans are not formally rated.

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Federal Home Loan Bank Advances

9 Months Ended

Sep. 30, 2016

Advances from Federal Home Loan Banks [Abstract]

Federal Home Loan Bank Advances

(6) Federal Home Loan Bank Advances

Borrowings from the Federal Home Loan Bank (FHLB) are secured by a blanket lien on qualified collateral, consisting primarily of loans with first mortgages secured by one to four family properties, certain commercial loans and other qualified assets.

Maturities of advances from the FHLB ending after September 30, 2016 are summarized as follows:

(In thousands)
2016	$	21,612
2017		5,000
2018		5,000
2020		6,346
Thereafter		3,500
Total	$	41,458

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Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

(7) Fair Value Measurements

The Company reports certain assets at fair value in accordance with GAAP, which defines fair value and establishes a framework for measuring fair value in accordance with generally accepted accounting principles. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes six levels of inputs that may be used to measure fair values:

Basis of Fair Value Measurements

· Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

· Level 2 - Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;

· Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

Fair Values of Financial Instruments Measured on a Recurring Basis

The Company’s investments in U.S. Government and federal agency, state and municipal, corporate debt, asset-backed and government mortgage-backed securities available-for-sale are generally classified within Level 2 of the fair value hierarchy. For these investments, we obtain fair value measurements from independent pricing services. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U.S. Treasury yield curve, trading levels, market consensus prepayment speeds, credit information and the instrument’s terms and conditions.

The Company classifies its investments in trust preferred securities as Level 3 securities. Level 3 is for positions that are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or non-transferability, and such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Subsequent to inception, management only changes Level 3 inputs and assumptions when corroborated by evidence such as transactions in similar instruments, completed or pending third-party transactions in the underlying investment or comparable entities, subsequent rounds of financing, recapitalization and other transactions across the capital structure, offerings in the equity or debt markets, and changes in financial ratios or cash flows.

The Company classified its investments in marketable equity securities as Level 1 securities. Such securities are classified as Level 1 securities because fair values are obtained through quoted market prices for identical securities in active exchange markets.

The following summarizes financial instruments measured at fair value on a recurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
State and municipal		47,253		-		47,253		-
Corporate debt		1,045		-		1,045		-
Asset-backed securities		9,229		-		9,229		-
Mortgage-backed securities		44,583		-		44,583		-
Trust preferred securities		1,011		-		-		1,011
Marketable equity securities		12,341		12,341		-		-
Totals	$	115,462	$	12,341	$	102,110	$	1,011
December 31, 2015
U.S. Government and federal agency	$	2,033	$	-	$	2,033	$	-
State and municipal		3,682		-		3,682		-
Corporate debt		1,071		-		1,071		-
Asset-backed securities		9,624		-		9,624		-
Mortgage-backed securities		52,812		-		52,812		-
Trust preferred securities		1,116		-		-		1,116
Marketable equity securities		10,646		10,646		-		-
Totals	$	80,984	$	10,646	$	69,222	$	1,116

The following is a summary of activity for Level 3 financial instruments measured at fair value on a recurring basis for the nine months periods ended September 30, 2016 and 2015.

(In thousands)	Available-for- Sale Securities
Balance beginning January 1, 2016	$	1,116
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		(105	)
Paydowns		-
Ending balance, September 30, 2016	$	1,011
Balance beginning January 1, 2015	$	1,122
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		262
Paydowns		(134	)
Ending balance, September 30, 2015	$	1,250

Fair Values of Financial Instruments Measured on a Nonrecurring Basis

The Company’s impaired loans are reported at the fair value of the underlying collateral if repayment is expected solely from the collateral. Collateral values are estimated using Level 2 inputs based upon appraisals of similar properties obtained from a third party. However, the Company generally discounts appraisals to arrive at fair value, therefore classifies such loans as Level 3 because the discounts are a significant input that is not observable.

The following summarizes financial instruments measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015:

	Fair Value Measurements at Reporting Date Using:
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
Impaired loans	$	437	$	-	$	-	$	437
December 31, 2015
Impaired loans	$	606	$	-	$	-	$	606

The following is a summary of the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis at September 30, 2016 and December 31, 2015:

(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
September 30, 2016
Impaired loans	$	437	Real estate appraisals	Discount for dated appraisals	6-10%
December 31, 2015
Impaired loans	$	606	Real estate appraisals	Discount for dated appraisals	6-10%

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instrument [Abstract]

Fair Value of Financial Instruments

(8) Fair Value of Financial Instruments

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value. Certain financial instruments and all nonfinancial instruments are excluded from the disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

The carrying amounts and estimated fair values of the Company's financial instruments, all of which are held or issued for purposes other than trading, are as follows at September 30, 2016 and December 31, 2015:

	Carrying		Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
September 30, 2016
Financial assets:
Cash and cash equivalents	$	22,790	$	22,790	$	-	$	-	$	22,790
Available-for-sale securities		115,462		12,341		102,110		1,011		115,462
Federal Home Loan Bank of Boston stock		2,467		2,467		-		-		2,467
Loans, net		589,364		-		-		599,931		599,931
Accrued interest receivable		2,018		-		2,018		-		2,018
Financial liabilities:
Deposits		610,331		-		-		610,543		610,543
Federal Home Loan Bank advances		41,458		-		41,897		-		41,897
December 31, 2015
Financial assets:
Cash and cash equivalents	$	20,464	$	20,464	$	-	$	-	$	20,464
Available-for-sale securities		80,984		10,646		69,222		1,116		80,984
Held-to-maturity securities		44,623		-		46,474		-		46,474
Federal Home Loan Bank of Boston stock		3,310		3,310		-		-		3,310
Loans, net		554,929		-		-		561,937		561,937
Accrued interest receivable		2,251		-		2,251		-		2,251
Financial liabilities:
Deposits		577,235		-		-		577,316		577,316
Federal Home Loan Bank advances		57,423		-		57,774		-		57,774

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Regulatory Capital

9 Months Ended

Sep. 30, 2016

Banking and Thrift [Abstract]

Regulatory Capital

(9) Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Effective January 1, 2015 (with a phase-in period of two to four years for certain components), the Bank became subject to capital regulations adopted by the FDIC, which implement the Basel III regulatory capital reforms and the changes required by the Dodd-Frank Act. The new regulations require a new Common Equity Tier 1 (“CET1”) capital ratio of 4.5%, a minimum Tier 1 capital to risk-weighted assets ratio of 6.0%, a minimum total capital to risk-weighted assets ratio of 8.0% and a minimum Tier 1 leverage ratio of 4.0%. CET1 generally consists of common stock and retained earnings, subject to applicable adjustments and deductions. Under new prompt corrective action regulations, in order to be considered “well capitalized,” the Bank must maintain a CET1 capital ratio of 6.5% and a Tier 1 ratio of 8.0%, a total risk based capital ratio of 10% and a Tier 1 leverage ratio of 5.0%. In addition, the regulations establish a capital conservation buffer above the required capital ratios that started phasing in on January 1, 2016 at 0.625% of risk-weighted assets and increases each year by 0.625% until it is fully phased in at 2.5% effective January 1, 2019. Beginning January 1, 2016, failure to maintain the capital conservation buffer will limit the ability of the Bank and the Company to pay dividends, repurchases shares or pay discretionary bonuses.

The new regulations implemented changes to what constitutes regulatory capital. Certain instruments no longer constitute qualifying capital, subject to phase-out periods. In addition, Tier 2 capital is no longer limited to the amount of Tier 1 capital included in total capital. Mortgage servicing rights, certain deferred tax assets and investments in unconsolidated subsidiaries over designated percentages of CET1 must be deducted from capital. The Bank has elected to permanently opt-out of the inclusion of accumulated other comprehensive income in capital calculations, as permitted by the regulations. This opt-out will reduce the impact of market volatility on the Bank’s regulatory capital ratios.

The new regulations also changed the risk weights of certain assets, including an increase in the risk weight of certain high volatility commercial real estate acquisition, development and construction loans and non-residential mortgage loans that are 90 days past due or on non-accrual status to 150% from 100%, a credit conversion factor for the unused portion of commitments with maturities of less than one year that are not cancellable to 20% from 0%, an increase in the risk weight for mortgage servicing rights and deferred tax assets that are not deducted from capital to 250% from 100%, and an increase in the risk weight for equity exposures to 600% from 0%.

As of September 30, 2016 and December 31, 2015, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the institution’s category. The completion of the stock offering has significantly enhanced the Bank’s Regulatory Capital.

The Bank’s actual capital amounts and ratios are presented in the following table.

												To Be Well
												Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes						Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
September 30, 2016
Total Capital (to Risk Weighted Assets)	$	109,589		17.2	%	$	50,867	>		8.0	%	$	63,584	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			38,150	>		6.0			50,867	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			28,613	>		4.5			41,329	>		6.5
Tier 1 Capital (to Average Assets)		100,235		13.2			30,408	>		4.0			38,010	>		5.0
December 31, 2015
Total Capital (to Risk Weighted Assets)	$	104,032		17.1	%	$	48,780	>		8.0	%	$	60,975	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			36,585	>		6.0			48,780	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			27,439	>		4.5			39,634	>		6.5
Tier 1 Capital (to Average Assets)		95,370		13.4			28,435	>		4.0			35,544	>		5.0

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Employee Stock Ownership Plan

9 Months Ended

Sep. 30, 2016

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

Employee Stock Ownership Plan

(10) Employee Stock Ownership Plan

The Bank maintains an Employee Stock Ownership Plan (“ESOP”) to provide eligible employees the opportunity to own Company stock. This plan is a tax-qualified retirement plan for the benefit of Bank employees. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares committed to be released per year through 2029 is 23,810.

The Company contributed funds to a subsidiary to enable it to grant a loan to the ESOP for the purchase of 357,152 shares of the Company’s common stock at a price of $10.00 per share. The loan obtained by the ESOP from the Company’s subsidiary to purchase Company common stock is payable annually over 15 years at a rate per annum equal to the Prime Rate (3.50% at September 30, 2016). Loan payments are principally funded by cash contributions from the Bank.

	September 30, 2016
Shares held by the ESOP include the following:
Allocated		23,810
Committed to be allocated		17,858
Unallocated		315,484
Total		357,152

The fair value of unallocated shares was approximately $4.9 million at September 30, 2016.

Total compensation expense recognized in connection with the ESOP for the nine months ended September 30, 2016 was $257,000.

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Common Share

(11) Earnings Per Common Share

Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculation. There were no potentially dilutive common stock equivalents as of September 30, 2016. Earnings per share is not applicable for the period ended September 30, 2015.

	Three Months Ended			Nine Months Ended
(Dollars in thousands)	September 30, 2016			September 30, 2016
Net Income attributable to common shareholders	$	1,761		$	4,611
Average number of common shares outstanding		9,498,722			9,498,722
Less: unallocated ESOP shares		(319,453	)		(325,391	)
Average number of common shares outstanding		9,179,269			9,173,331

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Investment Securities (Tables)

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost of investment securities classified as available-for-sale and their approximate fair values

	Amortized			Gross		Gross
	Cost			Unrealized		Unrealized		Fair
(In thousands)	Basis			Gains		Losses		Value
September 30, 2016
State and municipal	$	45,057		$	2,197	$	1	$	47,253
Corporate debt		1,000			45		-		1,045
Asset-backed securities		9,035			198		4		9,229
Government mortgage-backed securities		43,698			942		57		44,583
Trust preferred securities		1,368			39		396		1,011
Marketable equity securities		9,911			3,305		194		13,022
		110,069			6,726		652		116,143
Money market mutual funds included in cash and cash equivalents		(681	)		-		-		(681	)
Total available-for-sale securities	$	109,388		$	6,726	$	652	$	115,462
December 31, 2015
U.S. Government and federal agency	$	1,996		$	37	$	-	$	2,033
State and municipal		3,373			309		-		3,682
Corporate debt		1,000			71		-		1,071
Asset-backed securities		9,656			9		41		9,624
Government mortgage-backed securities		52,515			622		325		52,812
Trust preferred securities		1,368			55		307		1,116
Marketable equity securities		8,638			2,653		348		10,943
		78,546			3,756		1,021		81,281
Money market mutual funds included in cash and cash equivalents		(297	)		-		-		(297	)
Total available-for-sale securities	$	78,249		$	3,756	$	1,021	$	80,984

Schedule of amortized cost of investment securities classified as held-to-maturity and their approximate fair values

	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
(In thousands)	Basis		Gains		Losses		Value
December 31, 2015
State and municipal	$	44,623	$	1,905	$	54	$	46,474

Schedule of maturities of debt securities

	Available-for-  Sale
	Fair
(In thousands)	Value
Due within one year	$	1,831
Due after one year through five years		2,359
Due after five years through ten years		7,362
Due after ten years		37,756
Government mortgage-backed securities		44,583
Asset-backed securities		9,229
	$	103,120

Schedule of aggregate fair value and unrealized losses of securities that have been in a continuous unrealized-loss position

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2016
Temporarily impaired securities:
State and municipal	$	-	$	-	$	166	$	1	$	166	$	1
Asset-backed securities		-		-		581		4		581		4
Government mortgage-backed securities		1,176		1		3,095		56		4,271		57
Trust preferred securities		-		-		928		396		928		396
Marketable equity securities		1,193		63		752		131		1,945		194
Total temporarily impaired securities	$	2,369	$	64	$	5,522	$	588	$	7,891	$	652
December 31, 2015
Temporarily impaired securities:
State and municipal	$	3,195	$	28	$	729	$	26	$	3,924	$	54
Asset-backed securities		5,062		7		2,005		34		7,067		41
Government mortgage-backed securities		21,108		88		9,156		237		30,264		325
Trust preferred securities		-		-		1,017		307		1,017		307
Marketable equity securities		1,591		166		529		182		2,120		348
Total temporarily impaired securities	$	30,956	$	289	$	13,436	$	786	$	44,392	$	1,075

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Loans (Tables)

9 Months Ended

Sep. 30, 2016

Receivables [Abstract]

Schedule of summary of loans

	At						At
	September 30,						December 31,
(In thousands)	2016						2015
	Amount			Percent			Amount			Percent
Commercial real estate	$	319,760			53.47	%	$	285,356			50.67	%
Commercial		137,042			22.92	%		112,073			19.90	%
Residential real estate		81,411			13.61	%		92,392			16.40	%
Construction and land development		58,435			9.77	%		71,535			12.70	%
Consumer		1,403			0.23	%		1,855			0.33	%
		598,051			100.00	%		563,211			100.00	%
Allowance for loan losses		(8,386	)					(7,905	)
Deferred loan fees, net		(301	)					(377	)
Net loans	$	589,364					$	554,929

Schedule of allowance for loan losses by portfolio segment

	For the three months ended September 30,
(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate			Construction and Land Development			Consumer			Unallocated		Total
Allowance for loan losses:
Balance at June 30, 2016	$	4,001	$	2,297	$	364		$	1,286		$	102		$	181	$	8,231
Charge-offs		-		-		-			-			(11	)		-		(11	)
Recoveries		-		-		-			-			3			-		3
Provision (benefit)		168		101		(12	)		(189	)		6			89		163
Balance at September 30, 2016	$	4,169	$	2,398	$	352		$	1,097		$	100		$	270	$	8,386
Balance at June 30, 2015	$	3,510	$	2,108	$	541		$	921		$	159		$	330	$	7,569
Charge-offs		-		8		-			-			(16	)		-		(8	)
Recoveries		-		8		-			-			1			-		9
Provision (benefit)		83		18		(106	)		175			(4	)		8		174
Balance at September 30, 2015	$	3,593	$	2,142	$	435		$	1,096		$	140		$	338	$	7,744

	For the nine months ended September 30,
(In thousands)	Commercial Real Estate		Commercial			Residential Real Estate			Construction and Land Development			Consumer			Unallocated			Total
Allowance for loan losses:
Balance at December 31, 2015	$	3,827	$	2,138		$	412		$	1,236		$	119		$	173		$	7,905
Charge-offs		-		-			-			-			(29	)		-			(29	)
Recoveries		-		1			12			-			13			-			26
Provision (benefit)		342		259			(72	)		(139	)		(3	)		97			484
Balance at September 30, 2016	$	4,169	$	2,398		$	352		$	1,097		$	100		$	270		$	8,386
Balance at December 31, 2014	$	3,500	$	1,751		$	560		$	872		$	184		$	357		$	7,224
Charge-offs		-		(96	)		-			-			(49	)		-			(145	)
Recoveries		-		9			6			-			5			-			20
Provision (benefit)		93		478			(131	)		224			-			(19	)		645
Balance at September 30, 2015	$	3,593	$	2,142		$	435		$	1,096		$	140		$	338		$	7,744

Schedule of loan balances by segment

(In thousands)	Commercial Real Estate			Commercial		Residential Real Estate		Construction and Land Development		Consumer		Unallocated		Total
September 30, 2016
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	437	$	-	$	-	$	-	$	-	$	437
Ending balance:
Collectively evaluated for impairment		4,169			1,961		352		1,097		100		270		7,949
Total allowance for loan losses ending balance	$	4,169		$	2,398	$	352	$	1,097	$	100	$	270	$	8,386
Loans:
Ending balance:
Individually evaluated for impairment	$	1,987		$	1,697	$	426	$	-	$	-	$	-	$	4,110
Ending balance:
Collectively evaluated for impairment		317,773	#		135,345		80,985		58,435		1,403		-		593,941
Total loans ending balance	$	319,760		$	137,042	$	81,411	$	58,435	$	1,403	$	-	$	598,051
December 31, 2015
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	-		$	488	$	-	$	-	$	-	$	-	$	488
Ending balance:
Collectively evaluated for impairment		3,827			1,650		412		1,236		119		173		7,417
Total allowance for loan losses ending balance	$	3,827		$	2,138	$	412	$	1,236	$	119	$	173	$	7,905
Loans:
Ending balance:
Individually evaluated for impairment	$	3,272		$	1,755	$	437	$	-	$	-	$	-	$	5,464
Ending balance:
Collectively evaluated for impairment		282,084			110,318		91,955		71,535		1,855		-		557,747
Total loans ending balance	$	285,356		$	112,073	$	92,392	$	71,535	$	1,855	$	-	$	563,211

Schedule of non accrual loans and past-due loans by portfolio segment

													90 Days
					90 Days		Total						or More
	30 - 59		60 - 89		or More		Past		Total		Total		Past Due		Non-accrual
(In thousands)	Days		Days		Past Due		Due		Current		Loans		and Accruing		Loans
September 30, 2016
Commercial real estate	$	405	$	-	$	-	$	405	$	319,355	$	319,760	$	-	$	-
Commercial		58		-		-		58		136,984		137,042		-		952
Residential real estate		-		75		-		75		81,336		81,411		-		468
Construction and land development		-		-		-		-		58,435		58,435		-		-
Consumer		-		-		-		-		1,403		1,403		-		-
Total	$	463	$	75	$	-	$	538	$	597,513	$	598,051	$	-	$	1,420
December 31, 2015
Commercial real estate	$	-	$	-	$	-	$	-	$	285,356	$	285,356	$	-	$	106
Commercial		-		-		-		-		112,073		112,073		-		1,147
Residential real estate		130		173		365		668		91,724		92,392				1,031
Construction and land development		-		-		-		-		71,535		71,535		-		-
Consumer		1		1		-		2		1,853		1,855		-		-
Total	$	131	$	174	$	365	$	670	$	562,541	$	563,211	$	-	$	2,284

Schedule of impaired loans by portfolio segment

			Unpaid				Average		Interest
	Recorded		Principal		Related		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized
September 30, 2016
With no related allowance recorded:
Commercial real estate	$	1,987	$	1,987	$	-	$	2,941	$	158
Commercial		823		823		-		793		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		3,236		3,236		-		4,165		204
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		874		874		437		892		-
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		874		874		437		892		-
Total
Commercial real estate		1,987		1,987		-		2,941		158
Commercial		1,697		1,697		437		1,685		31
Residential real estate		426		426		-		431		15
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	4,110	$	4,110	$	437	$	5,057	$	204
December 31, 2015
With no related allowance recorded:
Commercial real estate	$	3,272	$	3,272	$	-	$	3,788	$	149
Commercial		661		661		-		611		20
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with no related allowance		4,370		4,370		-		4,722		186
With an allowance recorded:
Commercial real estate		-		-		-		-		-
Commercial		1,094		1,094		488		901		2
Residential real estate		-		-		-		-		-
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired with an allowance recorded		1,094		1,094		488		901		2
Total
Commercial real estate		3,272		3,272		-		3,788		149
Commercial		1,755		1,755		488		1,512		22
Residential real estate		437		437		-		323		17
Construction and land development		-		-		-		-		-
Consumer		-		-		-		-		-
Total impaired loans	$	5,464	$	5,464	$	488	$	5,623	$	188

Schedule of troubled debt restructurings

(Dollars in thousands)	Number  of Contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded  Investment
September 30, 2016
Troubled debt restructurings:
Commercial		1	$	58	$	58
		1	$	58	$	58

Schedule of loans by risk rating and portfolio segment

(In thousands)	Commercial Real Estate		Commercial		Residential Real Estate		Construction and Land Development		Consumer		Total
September 30, 2016
Grade:
Pass	$	301,352	$	131,813	$	-	$	58,435	$	-	$	491,600
Special mention		14,908		1,258		-		-		-		16,166
Substandard		3,500		3,097		941		-		-		7,538
Doubtful		-		874		-		-		-		874
Not formally rated		-		-		80,470		-		1,403		81,873
Total	$	319,760	$	137,042	$	81,411	$	58,435	$	1,403	$	598,051
December 31, 2015
Grade:
Pass	$	265,325	$	106,677	$	-	$	71,535	$	-	$	443,537
Special mention		15,700		1,403		-		-		-		17,103
Substandard		4,331		3,083		1,329		-		-		8,743
Doubtful		-		910		-		-		-		910
Not formally rated		-		-		91,063		-		1,855		92,918
Total	$	285,356	$	112,073	$	92,392	$	71,535	$	1,855	$	563,211

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Federal Home Loan Bank Advances (Tables)

9 Months Ended

Sep. 30, 2016

Advances from Federal Home Loan Banks [Abstract]

Schedule of maturities of advances from the FHLB

(In thousands)
2016	$	21,612
2017		5,000
2018		5,000
2020		6,346
Thereafter		3,500
Total	$	41,458

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of financial instruments measured at fair value on a recurring basis

	Fair Value Measurements at Reporting Date Using
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
State and municipal		47,253		-		47,253		-
Corporate debt		1,045		-		1,045		-
Asset-backed securities		9,229		-		9,229		-
Mortgage-backed securities		44,583		-		44,583		-
Trust preferred securities		1,011		-		-		1,011
Marketable equity securities		12,341		12,341		-		-
Totals	$	115,462	$	12,341	$	102,110	$	1,011
December 31, 2015
U.S. Government and federal agency	$	2,033	$	-	$	2,033	$	-
State and municipal		3,682		-		3,682		-
Corporate debt		1,071		-		1,071		-
Asset-backed securities		9,624		-		9,624		-
Mortgage-backed securities		52,812		-		52,812		-
Trust preferred securities		1,116		-		-		1,116
Marketable equity securities		10,646		10,646		-		-
Totals	$	80,984	$	10,646	$	69,222	$	1,116

Schedule of summary of activity for Level 3 financial instruments measured at fair value on a recurring basis

(In thousands)	Available-for- Sale Securities
Balance beginning January 1, 2016	$	1,116
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		(105	)
Paydowns		-
Ending balance, September 30, 2016	$	1,011
Balance beginning January 1, 2015	$	1,122
Total gains or (losses) (realized/unrealized)
Included in earnings		-
Included in other comprehensive income		262
Paydowns		(134	)
Ending balance, September 30, 2015	$	1,250

Schedule of financial instruments measured at fair value on a nonrecurring basis

	Fair Value Measurements at Reporting Date Using:
			Quoted Prices in		Significant		Significant
			Active Markets for		Other Observable		Unobservable
			Identical Assets		Inputs		Inputs
(In thousands)	Total		Level 1		Level 2		Level 3
September 30, 2016
Impaired loans	$	437	$	-	$	-	$	437
December 31, 2015
Impaired loans	$	606	$	-	$	-	$	606

Schedule of summary of the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis

(In thousands)	Fair Value		Valuation Technique	Unobservable Input	Range
September 30, 2016
Impaired loans	$	437	Real estate appraisals	Discount for dated appraisals	6-10%
December 31, 2015
Impaired loans	$	606	Real estate appraisals	Discount for dated appraisals	6-10%

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Of Financial Instrument [Abstract]

Schedule of carrying amounts and estimated fair values of financial instruments, held or issued for purposes other than trading

	Carrying		Fair Value
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
September 30, 2016
Financial assets:
Cash and cash equivalents	$	22,790	$	22,790	$	-	$	-	$	22,790
Available-for-sale securities		115,462		12,341		102,110		1,011		115,462
Federal Home Loan Bank of Boston stock		2,467		2,467		-		-		2,467
Loans, net		589,364		-		-		599,931		599,931
Accrued interest receivable		2,018		-		2,018		-		2,018
Financial liabilities:
Deposits		610,331		-		-		610,543		610,543
Federal Home Loan Bank advances		41,458		-		41,897		-		41,897
December 31, 2015
Financial assets:
Cash and cash equivalents	$	20,464	$	20,464	$	-	$	-	$	20,464
Available-for-sale securities		80,984		10,646		69,222		1,116		80,984
Held-to-maturity securities		44,623		-		46,474		-		46,474
Federal Home Loan Bank of Boston stock		3,310		3,310		-		-		3,310
Loans, net		554,929		-		-		561,937		561,937
Accrued interest receivable		2,251		-		2,251		-		2,251
Financial liabilities:
Deposits		577,235		-		-		577,316		577,316
Federal Home Loan Bank advances		57,423		-		57,774		-		57,774

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Regulatory Capital (Table)

9 Months Ended

Sep. 30, 2016

Regulatory Capital [Abstract]

Schedule of actual capital amounts and ratios

												To Be Well
												Capitalized Under
						For Capital						Prompt Corrective
	Actual					Adequacy Purposes						Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
September 30, 2016
Total Capital (to Risk Weighted Assets)	$	109,589		17.2	%	$	50,867	>		8.0	%	$	63,584	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			38,150	>		6.0			50,867	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		100,235		15.8			28,613	>		4.5			41,329	>		6.5
Tier 1 Capital (to Average Assets)		100,235		13.2			30,408	>		4.0			38,010	>		5.0
December 31, 2015
Total Capital (to Risk Weighted Assets)	$	104,032		17.1	%	$	48,780	>		8.0	%	$	60,975	>		10.0	%
Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			36,585	>		6.0			48,780	>		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets)		95,370		15.6			27,439	>		4.5			39,634	>		6.5
Tier 1 Capital (to Average Assets)		95,370		13.4			28,435	>		4.0			35,544	>		5.0

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Employee Stock Ownership Plan (Tables)

9 Months Ended

Sep. 30, 2016

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

Schedule of Employee Stock Ownership Plan

	September 30, 2016
Shares held by the ESOP include the following:
Allocated		23,810
Committed to be allocated		17,858
Unallocated		315,484
Total		357,152

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Schedule of earning per share

	Three Months Ended			Nine Months Ended
(Dollars in thousands)	September 30, 2016			September 30, 2016
Net Income attributable to common shareholders	$	1,761		$	4,611
Average number of common shares outstanding		9,498,722			9,498,722
Less: unallocated ESOP shares		(319,453	)		(325,391	)
Average number of common shares outstanding		9,179,269			9,173,331

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Corporate Structure (Detail Textuals) - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended
	Jul. 15, 2015	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Number of shares issued	5,034,323	4,274,425
Common stock, shares outstanding	9,498,722		9,498,722	9,498,722
Offering expenses	$ 1,500	$ 1,547
Provident Community Charitable Organization, Inc.
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Number of shares issued	189,974
Provident Bank Employee Stock Ownership Plan
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Number of shares issued	4,274,425
Price per share	$ 10.00
Number of shares purchased	357,152

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Investment Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	$ 109,388	$ 78,249
Gross Unrealized Gains	6,726	3,756
Gross Unrealized Losses	652	1,021
Fair Value	115,462	80,984
U.S. Government and federal agency
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis		1,996
Gross Unrealized Gains		37
Gross Unrealized Losses
Fair Value		2,033
State and municipal
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	45,057	3,373
Gross Unrealized Gains	2,197	309
Gross Unrealized Losses	1
Fair Value	47,253	3,682
Corporate debt
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	1,000	1,000
Gross Unrealized Gains	45	71
Gross Unrealized Losses
Fair Value	1,045	1,071
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	9,035	9,656
Gross Unrealized Gains	198	9
Gross Unrealized Losses	4	41
Fair Value	9,229	9,624
Government mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	43,698	52,515
Gross Unrealized Gains	942	622
Gross Unrealized Losses	57	325
Fair Value	44,583	52,812
Trust preferred securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	1,368	1,368
Gross Unrealized Gains	39	55
Gross Unrealized Losses	396	307
Fair Value	1,011	1,116
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	9,911	8,638
Gross Unrealized Gains	3,305	2,653
Gross Unrealized Losses	194	348
Fair Value	13,022	10,943
Available for sale securities excluded Money market mutual funds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	110,069	78,546
Gross Unrealized Gains	6,726	3,756
Gross Unrealized Losses	652	1,021
Fair Value	116,143	81,281
Money market mutual funds included in cash and cash equivalents
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost Basis	(681)	(297)
Gross Unrealized Gains
Gross Unrealized Losses
Fair Value	$ (681)	$ (297)

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Investment Securities (Details 1) $ in Thousands	Dec. 31, 2015 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Fair Value	$ 46,474
State and municipal
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost Basis	44,623
Gross Unrealized Gains	1,905
Gross Unrealized Losses	54
Fair Value	$ 46,474

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Investment Securities (Details 2) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Available-for-Sale Fair Value
Fair Value	$ 115,462	$ 80,984
Available-for-Sale
Available-for-Sale Fair Value
Due within one year	1,831
Due after one year through five years	2,359
Due after five years through ten years	7,362
Due after ten years	37,756
Government mortgage-backed securities	44,583
Asset-backed securities	9,229
Fair Value	$ 103,120

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Investment Securities (Details 3) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 2,369	$ 30,956
Unrealized Losses, Less than 12 Months	64	289
Fair Value, 12 Months or Longer	5,522	13,436
Unrealized Losses, 12 Months or Longer	588	786
Fair Value, Total	7,891	44,392
Unrealized Losses, Total	652	1,075
State and municipal
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months		3,195
Unrealized Losses, Less than 12 Months		28
Fair Value, 12 Months or Longer	166	729
Unrealized Losses, 12 Months or Longer	1	26
Fair Value, Total	166	3,924
Unrealized Losses, Total	1	54
Asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months		5,062
Unrealized Losses, Less than 12 Months		7
Fair Value, 12 Months or Longer	581	2,005
Unrealized Losses, 12 Months or Longer	4	34
Fair Value, Total	581	7,067
Unrealized Losses, Total	4	41
Government mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,176	21,108
Unrealized Losses, Less than 12 Months	1	88
Fair Value, 12 Months or Longer	3,095	9,156
Unrealized Losses, 12 Months or Longer	56	237
Fair Value, Total	4,271	30,264
Unrealized Losses, Total	57	325
Trust preferred securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months
Unrealized Losses, Less than 12 Months
Fair Value, 12 Months or Longer	928	1,017
Unrealized Losses, 12 Months or Longer	396	307
Fair Value, Total	928	1,017
Unrealized Losses, Total	396	307
Marketable equity securities
Schedule of Available-for-sale Securities [Line Items]
Fair Value, Less than 12 Months	1,193	1,591
Unrealized Losses, Less than 12 Months	63	166
Fair Value, 12 Months or Longer	752	529
Unrealized Losses, 12 Months or Longer	131	182
Fair Value, Total	1,945	2,120
Unrealized Losses, Total	$ 194	$ 348

XML

Investment Securities (Detail Textuals) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Investments, Debt and Equity Securities [Abstract]
Held-to-maturity securities transferred to available-for-sale	$ 44,240
Net security gains on portfolio, net of tax	$ 1,345

XML

Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 598,051		$ 563,211
Gross loans, Percent	100.00%		100.00%
Allowance for loan losses	$ (8,386)	$ (8,231)	$ (7,905)	$ (7,744)	$ (7,569)	$ (7,224)
Deferred loan fees, net	(301)		(377)
Net loans	589,364		554,929
Commercial real estate
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 319,760		$ 285,356
Gross loans, Percent	53.47%		50.67%
Allowance for loan losses	$ (4,169)	(4,001)	$ (3,827)	(3,593)	(3,510)	(3,500)
Commercial
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 137,042		$ 112,073
Gross loans, Percent	22.92%		19.90%
Allowance for loan losses	$ (2,398)	(2,297)	$ (2,138)	(2,142)	(2,108)	(1,751)
Residential real estate
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 81,411		$ 92,392
Gross loans, Percent	13.61%		16.40%
Allowance for loan losses	$ (352)	(364)	$ (412)	(435)	(541)	(560)
Construction and land development
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 58,435		$ 71,535
Gross loans, Percent	9.77%		12.70%
Allowance for loan losses	$ (1,097)	(1,286)	$ (1,236)	(1,096)	(921)	(872)
Consumer
Loans and Leases Receivable Disclosure [Line Items]
Gross loans, Amount	$ 1,403		$ 1,855
Gross loans, Percent	0.23%		0.33%
Allowance for loan losses	$ (100)	$ (102)	$ (119)	$ (140)	$ (159)	$ (184)

XML

Loans (Details 1) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Dec. 31, 2015
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	$ 8,231	$ 7,569	$ 7,905	$ 7,224
Charge-offs	(11)	(8)	(29)	(145)
Recoveries	3	9	26	20
Provision (benefit)	163	174	484	645
Ending balance	8,386	7,744	8,386	7,744
Allowance for loan losses:
Ending balance: Individually evaluated for impairment					$ 437	$ 488
Ending balance: Collectively evaluated for impairment					7,949	7,417
Total allowance for loan losses ending balance	8,386	7,569	7,905	7,744	8,386	7,905
Loans:
Ending balance: Individually evaluated for impairment					4,110	5,464
Ending balance: Collectively evaluated for impairment					593,941	557,747
Total loans ending balance					598,051	563,211
Commercial Real Estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	4,001	3,510	3,827	3,500
Charge-offs
Recoveries
Provision (benefit)	168	83	342	93
Ending balance	4,169	3,593	4,169	3,593
Allowance for loan losses:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					4,169	3,827
Total allowance for loan losses ending balance	4,169	3,510	3,827	3,593	4,169	3,827
Loans:
Ending balance: Individually evaluated for impairment					1,987	3,272
Ending balance: Collectively evaluated for impairment					317,773	282,084
Total loans ending balance					319,760	285,356
Commercial
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	2,297	2,108	2,138	1,751
Charge-offs		8		(96)
Recoveries		8	1	9
Provision (benefit)	101	18	259	478
Ending balance	2,398	2,142	2,398	2,142
Allowance for loan losses:
Ending balance: Individually evaluated for impairment					437	488
Ending balance: Collectively evaluated for impairment					1,961	1,650
Total allowance for loan losses ending balance	2,398	2,108	2,138	2,142	2,398	2,138
Loans:
Ending balance: Individually evaluated for impairment					1,697	1,755
Ending balance: Collectively evaluated for impairment					135,345	110,318
Total loans ending balance					137,042	112,073
Residential Real Estate
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	364	541	412	560
Charge-offs
Recoveries			12	6
Provision (benefit)	(12)	(106)	(72)	(131)
Ending balance	352	435	352	435
Allowance for loan losses:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					352	412
Total allowance for loan losses ending balance	352	541	412	435	352	412
Loans:
Ending balance: Individually evaluated for impairment					426	437
Ending balance: Collectively evaluated for impairment					80,985	91,955
Total loans ending balance					81,411	92,392
Construction and Land Development
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	1,286	921	1,236	872
Charge-offs
Recoveries
Provision (benefit)	(189)	175	(139)	224
Ending balance	1,097	1,096	1,097	1,096
Allowance for loan losses:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					1,097	1,236
Total allowance for loan losses ending balance	1,097	921	1,236	1,096	1,097	1,236
Loans:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					58,435	71,535
Total loans ending balance					58,435	71,535
Consumer
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	102	159	119	184
Charge-offs	(11)	(16)	(29)	(49)
Recoveries	3	1	13	5
Provision (benefit)	6	(4)	(3)
Ending balance	100	140	100	140
Allowance for loan losses:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					100	119
Total allowance for loan losses ending balance	100	159	119	140	100	119
Loans:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					1,403	1,855
Total loans ending balance					1,403	1,855
Unallocated
Allowance for Loan and Lease Losses [Roll Forward]
Beginning balance	181	330	173	357
Charge-offs
Recoveries
Provision (benefit)	89	8	97	(19)
Ending balance	270	338	270	338
Allowance for loan losses:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment					270	173
Total allowance for loan losses ending balance	$ 270	$ 330	$ 173	$ 338	270	173
Loans:
Ending balance: Individually evaluated for impairment
Ending balance: Collectively evaluated for impairment
Total loans ending balance

XML

Loans (Details 2) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 538	$ 670
Total Current	597,513	562,541
Total Loans	598,051	563,211
90 Days or More Past Due and Accruing
Nonaccrual Loans	1,420	2,284
30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	463	131
60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	75	174
90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		365
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	405
Total Current	319,355	285,356
Total Loans	319,760	285,356
90 Days or More Past Due and Accruing
Nonaccrual Loans		106
Commercial real estate | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	405
Commercial real estate | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Commercial real estate | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Commercial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	58
Total Current	136,984	112,073
Total Loans	137,042	112,073
90 Days or More Past Due and Accruing
Nonaccrual Loans	952	1,147
Commercial | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	58
Commercial | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Commercial | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Residential real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	75	668
Total Current	81,336	91,724
Total Loans	81,411	92,392
90 Days or More Past Due and Accruing
Nonaccrual Loans	468	1,031
Residential real estate | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		130
Residential real estate | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	75	173
Residential real estate | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		365
Construction and land development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Total Current	58,435	71,535
Total Loans	58,435	71,535
90 Days or More Past Due and Accruing
Nonaccrual Loans
Construction and land development | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Construction and land development | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Construction and land development | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2
Total Current	1,403	1,853
Total Loans	1,403	1,855
90 Days or More Past Due and Accruing
Nonaccrual Loans
Consumer | 30 - 59 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1
Consumer | 60 - 89 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1
Consumer | 90 Days or More Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due

XML

Loans (Details 3) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
With no related allowance recorded:
Recorded Investment	$ 3,236	$ 4,370
Unpaid Principal Balance	3,236	4,370
Average Recorded Investment	4,165	4,722
Interest Income Recognized	204	186
With an allowance recorded:
Recorded Investment	874	1,094
Unpaid Principal Balance	874	1,094
Related Allowance	437	488
Average Recorded Investment	892	901
Interest Income Recognized		2
Total
Recorded Investment	4,110	5,464
Unpaid Principal Balance	4,110	5,464
Related Allowance	437	488
Average Recorded Investment	5,057	5,623
Interest Income Recognized	204	188
Commercial real estate
With no related allowance recorded:
Recorded Investment	1,987	3,272
Unpaid Principal Balance	1,987	3,272
Average Recorded Investment	2,941	3,788
Interest Income Recognized	158	149
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized
Total
Recorded Investment	1,987	3,272
Unpaid Principal Balance	1,987	3,272
Related Allowance
Average Recorded Investment	2,941	3,788
Interest Income Recognized	158	149
Commercial
With no related allowance recorded:
Recorded Investment	823	661
Unpaid Principal Balance	823	661
Average Recorded Investment	793	611
Interest Income Recognized	31	20
With an allowance recorded:
Recorded Investment	874	1,094
Unpaid Principal Balance	874	1,094
Related Allowance	437	488
Average Recorded Investment	892	901
Interest Income Recognized		2
Total
Recorded Investment	1,697	1,755
Unpaid Principal Balance	1,697	1,755
Related Allowance	437	488
Average Recorded Investment	1,685	1,512
Interest Income Recognized	31	22
Residential real estate
With no related allowance recorded:
Recorded Investment	426	437
Unpaid Principal Balance	426	437
Average Recorded Investment	431	323
Interest Income Recognized	15	17
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized
Total
Recorded Investment	426	437
Unpaid Principal Balance	426	437
Related Allowance
Average Recorded Investment	431	323
Interest Income Recognized	15	17
Construction and land development
With no related allowance recorded:
Recorded Investment
Unpaid Principal Balance
Average Recorded Investment
Interest Income Recognized
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized
Total
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized
Consumer
With no related allowance recorded:
Recorded Investment
Unpaid Principal Balance
Average Recorded Investment
Interest Income Recognized
With an allowance recorded:
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized
Total
Recorded Investment
Unpaid Principal Balance
Related Allowance
Average Recorded Investment
Interest Income Recognized

XML

Loans (Details 4) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) Contract
Troubled debt restructurings:
Number of Contracts | Contract	1
Pre- Modification Outstanding Recorded Investment	$ 58
Post-Modification Outstanding Recorded Investment	$ 58
Commercial
Troubled debt restructurings:
Number of Contracts | Contract	1
Pre- Modification Outstanding Recorded Investment	$ 58
Post-Modification Outstanding Recorded Investment	$ 58

XML

Loans (Details 5) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 598,051	$ 563,211
Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	491,600	443,537
Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,166	17,103
Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,538	8,743
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	874	910
Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans	81,873	92,918
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	319,760	285,356
Commercial real estate | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	301,352	265,325
Commercial real estate | Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	14,908	15,700
Commercial real estate | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,500	4,331
Commercial real estate | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Commercial real estate | Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Commercial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	137,042	112,073
Commercial | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	131,813	106,677
Commercial | Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,258	1,403
Commercial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,097	3,083
Commercial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	874	910
Commercial | Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Residential real estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	81,411	92,392
Residential real estate | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Residential real estate | Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Residential real estate | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	941	1,329
Residential real estate | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Residential real estate | Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans	80,470	91,063
Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	58,435	71,535
Construction and land development | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	58,435	71,535
Construction and land development | Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Construction and land development | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Construction and land development | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Construction and land development | Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,403	1,855
Consumer | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Consumer | Special mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Consumer | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Consumer | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans
Consumer | Not formally rated
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 1,403	$ 1,855

XML

Loans (Detail Textuals) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($)
Receivables [Abstract]
Troubled debt restructuring, total	$ 58
Re-amortization term of commercial loan	5 years

XML

Federal Home Loan Bank Advances (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Advances from Federal Home Loan Banks [Abstract]
2016	$ 21,612
2017	5,000
2018	5,000
2020	6,346
Thereafter	3,500
Total	$ 41,458

XML

Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	$ 115,462	$ 80,984
U.S. Government and federal agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals		2,033
State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	47,253	3,682
Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,045	1,071
Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	9,229	9,624
Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	44,583	52,812
Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,011	1,116
Recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	115,462	80,984
Recurring basis | U.S. Government and federal agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals		2,033
Recurring basis | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	47,253	3,682
Recurring basis | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,045	1,071
Recurring basis | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	9,229	9,624
Recurring basis | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	44,583	52,812
Recurring basis | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,011	1,116
Recurring basis | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	12,341	10,646
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	12,341	10,646
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | U.S. Government and federal agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Quoted Prices in Active Markets for Identical Assets Level 1 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	12,341	10,646
Recurring basis | Significant Other Observable Inputs Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	102,110	69,222
Recurring basis | Significant Other Observable Inputs Level 2 | U.S. Government and federal agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals		2,033
Recurring basis | Significant Other Observable Inputs Level 2 | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	47,253	3,682
Recurring basis | Significant Other Observable Inputs Level 2 | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,045	1,071
Recurring basis | Significant Other Observable Inputs Level 2 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	9,229	9,624
Recurring basis | Significant Other Observable Inputs Level 2 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	44,583	52,812
Recurring basis | Significant Other Observable Inputs Level 2 | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Other Observable Inputs Level 2 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,011	1,116
Recurring basis | Significant Unobservable Inputs Level 3 | U.S. Government and federal agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3 | State and municipal
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3 | Corporate debt
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3 | Asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals
Recurring basis | Significant Unobservable Inputs Level 3 | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals	1,011	1,116
Recurring basis | Significant Unobservable Inputs Level 3 | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Totals

XML

Fair Value Measurements (Details 1) - Recurring basis - Level 3 - Available-for-Sale Securities - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance beginning	$ 1,116	$ 1,122
Total gains or (losses) (realized/unrealized)
Included in earnings
Included in other comprehensive income	(105)	262
Paydowns		(134)
Ending balance	$ 1,011	$ 1,250

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Fair Value Measurements (Details 2) - Nonrecurring basis - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 437	$ 606
Quoted Prices in Active Markets for Identical Assets Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Significant Other Observable Inputs Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Significant Unobservable Inputs Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 437	$ 606

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Fair Value Measurements (Details 3) - Nonrecurring basis - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans Fair Value	$ 437	$ 606
Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Impaired loans Fair Value	$ 437	$ 606
Valuation Technique	Real estate appraisals	Real estate appraisals
Unobservable Input	Discount for dated appraisals	Discount for dated appraisals
Minimum | Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Range (Weighted Average)	6.00%	6.00%
Maximum | Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Range (Weighted Average)	10.00%	10.00%

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
Financial assets:
Cash and cash equivalents	$ 22,790	$ 20,464	$ 26,357	$ 9,558
Available-for-sale securities	115,462	80,984
Held-to-maturity securities		44,623
Federal Home Loan Bank of Boston stock	2,467	3,310
Loans, net	589,364	554,929
Accrued interest receivable	2,018	2,251
Carrying Amount
Financial assets:
Cash and cash equivalents	22,790	20,464
Available-for-sale securities	115,462	80,984
Held-to-maturity securities		44,623
Federal Home Loan Bank of Boston stock	2,467	3,310
Loans, net	589,364	554,929
Accrued interest receivable	2,018	2,251
Financial liabilities:
Deposits	610,331	577,235
Federal Home Loan Bank advances	41,458	57,423
Fair Value
Financial assets:
Cash and cash equivalents	22,790	20,464
Available-for-sale securities	115,462	80,984
Held-to-maturity securities		46,474
Federal Home Loan Bank of Boston stock	2,467	3,310
Loans, net	599,931	561,937
Accrued interest receivable	2,018	2,251
Financial liabilities:
Deposits	610,543	577,316
Federal Home Loan Bank advances	41,897	57,774
Level 1 | Fair Value
Financial assets:
Cash and cash equivalents	22,790	20,464
Available-for-sale securities	12,341	10,646
Held-to-maturity securities
Federal Home Loan Bank of Boston stock	2,467	3,310
Loans, net
Accrued interest receivable
Financial liabilities:
Deposits
Federal Home Loan Bank advances
Level 2 | Fair Value
Financial assets:
Cash and cash equivalents
Available-for-sale securities	102,110	69,222
Held-to-maturity securities		46,474
Federal Home Loan Bank of Boston stock
Loans, net
Accrued interest receivable	2,018	2,251
Financial liabilities:
Deposits
Federal Home Loan Bank advances	41,897	57,774
Level 3 | Fair Value
Financial assets:
Cash and cash equivalents
Available-for-sale securities	1,011	1,116
Held-to-maturity securities
Federal Home Loan Bank of Boston stock
Loans, net	599,931	561,937
Accrued interest receivable
Financial liabilities:
Deposits	610,543	577,316
Federal Home Loan Bank advances

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Regulatory Capital (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Total Capital (to Risk Weighted Assets), Actual Capital, Amount	$ 109,589	$ 104,032
Total Capital (to Risk Weighted Assets), Actual Capital, Ratio	17.20%	17.10%
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Amount	$ 50,867	$ 48,780
Total Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Ratio	8.00%	8.00%
Total Capital (to Risk Weighted Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 63,584	$ 60,975
Total Capital (to Risk Weighted Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Tier 1 Capital (to Risk Weighted Assets), Actual Capital, Amount	$ 100,235	$ 95,370
Tier 1 Capital (to Risk Weighted Assets), Actual Capital, Ratio	15.80%	15.60%
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Amount	$ 38,150	$ 36,585
Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Ratio	6.00%	6.00%
Tier 1 Capital (to Risk Weighted Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 50,867	$ 48,780
Tier 1 Capital (to Risk Weighted Assets),To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%	8.00%
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Capital, Amount	$ 100,235	$ 95,370
Common Equity Tier 1 Capital (to Risk Weighted Assets), Actual Capital, Ratio	15.80%	15.60%
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Amount	$ 28,613	$ 27,439
Common Equity Tier 1 Capital (to Risk Weighted Assets), For Capital Adequacy Purposes, Ratio	4.50%	4.50%
Common Equity Tier 1 Capital (to Risk Weighted Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 41,329	$ 39,634
Common Equity Tier 1 Capital (to Risk Weighted Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	6.50%	6.50%
Tier 1 Capital (to Average Assets), Actual Capital, Amount	$ 100,235	$ 95,370
Tier 1 Capital (to Average Assets), Actual Capital, Ratio	13.20%	13.40%
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes, Amount	$ 30,408	$ 28,435
Tier 1 Capital (to Average Assets), For Capital Adequacy Purposes, Ratio	4.00%	4.00%
Tier 1 Capital (to Average Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 38,010	$ 35,544
Tier 1 Capital (to Average Assets), To be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

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Regulatory Capital (Detail Textuals)	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Banking and Thrift [Abstract]
Common equity Tier 1 ("CETI") capital ratio	4.50%	4.50%
Minimum Tier 1 capital to risk-weighted assets ratio	6.00%	6.00%
Minimum total capital to risk-weighted assets ratio	8.00%	8.00%
Minimum Tier 1 leverage ratio	4.00%	4.00%
CETI capital ratio	6.50%	6.50%
Tier 1 ratio	8.00%	8.00%
Total risk based capital ratio	10.00%	10.00%
Tier 1 leverage ratio	5.00%
Capital conservation buffer above required capital ratios in beginning January 1, 2016	0.625%
Capital conservation buffer fully phased	2.50%
90 days past due or on non-accrual status	150.00%	100.00%
Non cancellable credit conversion factor for unused portion of commitments	20.00%	0.00%
Risk weight for mortgage servicing rights and deferred tax assets	250.00%	100.00%
Risk weight for equity exposures	600.00%	0.00%

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Employee Stock Ownership Plan (Details)	Sep. 30, 2016 shares
Shares held by the ESOP include the following:
Allocated	23,810
Committed to be allocated	17,858
Unallocated	315,484
Total	357,152

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Employee Stock Ownership Plan (Detail Textuals)	9 Months Ended
	Sep. 30, 2016 USD ($) $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of shares committed to be released per year through 2029 | shares	23,810
ESOP shares | shares	357,152
Share price | $ / shares	$ 10.00
ESOP payable term	15 years
ESOP prime rate percentage	3.50%
Fair value of unallocated shares | $	$ 4,900,000
Compensation expense | $	$ 257,000

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Earnings Per Common Share (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Earnings Per Share [Abstract]
Net Income attributable to common shareholders	$ 1,761	$ 86	$ 4,611	$ 2,243
Average number of common shares outstanding	9,498,722		9,498,722
Less: unallocated ESOP shares	(319,453)		(325,391)
Average number of common shares outstanding	9,179,269		9,173,331