10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended: March 31, 2020

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

For the transition period from                    to

Commission File Number: 001-13349

BAR HARBOR BANKSHARES

(Exact name of registrant as specified in its charter)

Maine	01-0393663
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
PO Box 400
82 Main Street, Bar Harbor, ME	04609-0400
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (207) 288-3314

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $2.00 per share	BHB	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ⌧  No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧  No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definition of "large accelerated filer," "accelerated filer", "smaller reporting company", or "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ◻        Accelerated Filer ⌧       Non-Accelerated Filer       Smaller Reporting Company ☐        Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐  No ⌧

The Registrant had 15,533,659 shares of common stock, par value $2.00 per share, outstanding as of April 30, 2020.

BAR HARBOR BANKSHARES AND SUBSIDIARIES

FORM 10-Q

INDEX

				Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019			4
	Consolidated Statements of Income for the Three Months Ended March 31, 2020 and 2019			6
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2020 and 2019			7
	Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2020 and 2019			8
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019			9
	Notes to Unaudited Consolidated Interim Financial Statements
		Note 1	Basis of Presentation	11
		Note 2	Securities Available for Sale	15
		Note 3	Loans	18
		Note 4	Allowance for Loan Losses	31
		Note 5	Borrowed Funds	36
		Note 6	Deposits	38
		Note 7	Capital Ratios and Shareholders' Equity	39
		Note 8	Earnings per Share	42
		Note 9	Derivative Financial Instruments and Hedging Activities	43
		Note 10	Fair Value Measurements	48
		Note 11	Revenue from Contracts with Customers	54
		Note 12	Leases	56
		Note 13	Subsequent Events	58
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			59
		Selected Financial Data		60
		Consolidated Loan and Deposit Analysis		61
		Average Balances and Average Yields/Rates		62
		Non-GAAP Financial Measures		63
		Reconciliation of Non-GAAP Financial Measures		64
		Financial Summary		66
Item 3.	Quantitative and Qualitative Disclosures about Market Risk			71
Item 4.	Controls and Procedures			73
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings			73
Item 1A.	Risk Factors			73
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			74
Item 6.	Exhibits			75
Signatures				76

Bar Harbor Bankshares conducts business operations principally through Bar Harbor Bank & Trust, which may be referred to as the Bank and which is a subsidiary of Bar Harbor Bankshares. Unless the context requires otherwise, references in this report to “the Company” "our company, "our," "us," "we" and similar terms refer to Bar Harbor Bankshares and its subsidiaries, including the Bank, collectively.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document that are not historical facts may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q the words "may," "will," "should," "could," "would," "plan," "potential," "estimate," "project," "believe," "intend," "anticipate," "expect," "target" and similar expressions are intended to identify forward-looking statements, but these terms are not the exclusive means of identifying forward-looking statements. These forward-looking statements are subject to significant risks, assumptions and uncertainties, including among other things, changes in general economic and business conditions, increased competitive pressures, changes in the interest rate environment, legislative and regulatory change, changes in the financial markets, and other risks and uncertainties disclosed from time to time in documents that the Company files with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019. Because of these and other uncertainties, the Company’s actual results, performance or achievements, or industry results, may be materially different from the results indicated by these forward-looking statements. In addition, the Company’s past results of operations do not necessarily indicate future results. You should not place undue reliance on any of the forward-looking statements, which speak only as of the dates on which they were made. The Company is not undertaking an obligation to update forward-looking statements, even though its situation may change in the future, except as required under federal securities law. The Company qualifies all of its forward-looking statements by these cautionary statements.

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PART I.          FINANCIAL INFORMATION

ITEM 1.          CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)	March 31, 2020		December 31, 2019
Assets
Cash and due from banks	$	68,481	$	37,261
Interest-bearing deposit with the Federal Reserve Bank		17,174		19,649
Total cash and cash equivalents		85,655		56,910
Securities:
Securities available for sale, at fair value		626,341		663,230
Federal Home Loan Bank stock		19,897		20,679
Total securities		646,238		683,909
Loans:
Commercial real estate		948,178		930,661
Commercial and industrial		426,357		423,291
Residential real estate		1,132,328		1,151,857
Consumer		128,120		135,283
Total loans		2,634,983		2,641,092
Less: Allowance for loan losses		(15,297)		(15,353)
Net loans		2,619,686		2,625,739
Premises and equipment, net		49,978		51,205
Other real estate owned		2,205		2,236
Goodwill		119,477		118,649
Other intangible assets		8,398		8,641
Cash surrender value of bank-owned life insurance		76,400		75,863
Deferred tax assets, net		3,166		3,865
Other assets		66,139		42,111
Total assets	$	3,677,342	$	3,669,128
Liabilities
Deposits:
Demand	$	400,410	$	414,534
NOW		578,320		575,809
Savings		423,345		388,683
Money market		404,385		384,090
Time		844,097		932,635
Total deposits		2,650,557		2,695,751
Borrowings:
Senior		497,580		471,396
Subordinated		59,849		59,920
Total borrowings		557,429		531,316
Other liabilities		65,601		45,654
Total liabilities		3,273,587		3,272,721

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

(in thousands, except share data)	March 31, 2020		December 31, 2019
Shareholders’ equity
Capital stock, par value $2.00; authorized 20,000,000 shares; issued 16,428,388 shares at March 31, 2020 and December 31, 2019		32,857		32,857
Additional paid-in capital		189,314		188,536
Retained earnings		180,072		175,780
Accumulated other comprehensive income		6,190		3,911
Less: 841,029 and 870,257 shares of treasury stock at March 31, 2020 and December 31, 2019, respectively		(4,678)		(4,677)
Total shareholders’ equity		403,755		396,407
Total liabilities and shareholders’ equity	$	3,677,342	$	3,669,128

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended
	March 31,
(in thousands, except earnings per share data)	2020		2019
Interest and dividend income
Loans	$	27,987	$	26,864
Securities and other		5,507		6,363
Total interest and dividend income		33,494		33,227
Interest expense
Deposits		6,020		6,307
Borrowings		2,911		5,155
Total interest expense		8,931		11,462
Net interest income		24,563		21,765
Provision for loan losses		1,111		324
Net interest income after provision for loan losses		23,452		21,441
Non-interest income
Trust and investment management fee income		3,369		2,757
Customer service fees		3,112		2,165
Gain on sales of securities, net		135		—
Bank-owned life insurance income		537		542
Customer derivative income		588		—
Other income		680		703
Total non-interest income		8,421		6,167
Non-interest expense
Salaries and employee benefits		11,884		10,519
Occupancy and equipment		4,420		3,386
Loss on premises and equipment, net		92		—
Outside services		534		411
Professional services		672		544
Communication		289		235
Marketing		388		295
Amortization of intangible assets		256		207
Acquisition, restructuring and other expenses		103		—
Other expenses		3,721		3,027
Total non-interest expense		22,359		18,624
Income before income taxes		9,514		8,984
Income tax expense		1,793		1,703
Net income	$	7,721	$	7,281
Earnings per share:
Basic	$	0.50	$	0.47
Diluted	$	0.50	$	0.47
Weighted average common shares outstanding:
Basic		15,558		15,523
Diluted		15,593		15,587

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Net income	$	7,721	$	7,281
Other comprehensive income, before tax:
Changes in unrealized gain on securities available-for-sale		5,357		8,900
Changes in unrealized loss on hedging derivatives		(2,382)		(845)
Changes in unrealized loss on pension		—		—
Income taxes related to other comprehensive income:
Changes in unrealized gain on securities available-for-sale		(1,346)		(2,079)
Changes in unrealized loss on hedging derivatives		650		198
Changes in unrealized loss on pension		—		—
Total other comprehensive income		2,279		6,174
Total comprehensive income	$	10,000	$	13,455

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

							Accumulated
	Common		Additional				other
	stock		paid-in		Retained		comprehensive		Treasury
(in thousands, except per share data)	amount		capital		earnings		income (loss)		stock		Total
Balance at December 31, 2018	$	32,857	$	187,653	$	166,526	$	(11,802)	$	(4,655)	$	370,579
Net income		—		—		7,281		—		—		7,281
Other comprehensive income		—		—		—		6,174		—		6,174
Cash dividends declared ($0.20 per share)		—		—		(3,105)		—		—		(3,105)
Net issuance (441 shares) to employee stock plans, including related tax effects		—		(173)		—		—		4		(169)
Recognition of stock based compensation		—		263		—		—		—		263
Balance at March 31, 2019		32,857		187,743		170,702		(5,628)		(4,651)		381,023
Balance at December 31, 2019	$	32,857	$	188,536	$	175,780	$	3,911	$	(4,677)	$	396,407
Net income		—		—		7,721		—		—		7,721
Other comprehensive income		—		—		—		2,279		—		2,279
Cash dividends declared ($0.22 per share)		—		—		(3,429)		—		—		(3,429)
Treasury stock purchased (5,586 shares)		—		—		—		—		(130)		(130)
Net issuance (23,010 shares) to employee stock plans, including related tax effects		—		660		—		—		129		789
Recognition of stock based compensation		—		118		—		—		—		118
Balance at March 31, 2020	$	32,857	$	189,314	$	180,072	$	6,190	$	(4,678)	$	403,755

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended March 31,
(in thousands)	2020		2019
Cash flows from operating activities:
Net income	$	7,721	$	7,281
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		1,111		324
Net amortization of securities		686		693
Change in unamortized net loan costs and premiums		(132)		(85)
Premises and equipment depreciation		1,182		952
Stock-based compensation expense		118		90
Accretion of purchase accounting entries, net		(1,489)		(886)
Amortization of other intangibles		256		207
Income from cash surrender value of bank-owned life insurance policies		(537)		(542)
Gain on sales of securities, net		(135)		—
Loss on other real estate owned		31		—
Loss on premises and equipment, net		92		—
Net change in other assets and liabilities		(5,900)		(3,757)
Net cash provided by operating activities		3,004		4,277
Cash flows from investing activities:
Proceeds from sales of securities available for sale		32,017		—
Proceeds from maturities, calls and prepayments of securities available for sale		24,899		21,709
Purchases of securities available for sale		(15,739)		(35,290)
Net change in loans		6,300		(36,209)
Purchase of FHLB stock		(3,161)		(5,567)
Proceeds from sale of FHLB stock		3,943		6,119
Purchase of premises and equipment, net		(628)		(1,809)
Acquisitions, net of cash acquired		(340)		—
Proceeds from sale of other real estate owned		51		—
Net cash provided by (used in) investing activities		47,342		(51,047)
Cash flows from financing activities:
Net decrease in deposits		(44,959)		(17,260)
Net change in short-term FHLB borrowings		(160,970)		59,716
Net change in short-term FRB borrowings		62,000		—
Proceeds from long-term borrowings from the FHLB		139,000		—
Repayments of long-term borrowings from the FHLB		—		(35,705)
Net change in short-term other borrowings		(13,831)		(1,531)
Repayments of subordinated debt		(32)		—
Payment of subordinated debt issuance costs		(39)		—
Net issuance to employee stock plans		789		4
Purchase of treasury stock		(130)		—
Cash dividends paid on common stock		(3,429)		(3,105)
Net cash (used in) provided by financing activities		(21,601)		2,119
Net change in cash and cash equivalents		28,745		(44,651)
Cash and cash equivalents at beginning of year		56,910		98,754
Cash and cash equivalents at end of year	$	85,655	$	54,103

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

	Three Months Ended March 31,
(in thousands)	2020		2019
Supplemental cash flow information:
Interest paid	$	8,455	$	11,490
Income taxes paid, net		1,205		1,506
Acquisition of non-cash assets and liabilities:
Assets acquired		1,171		—
Liabilities acquired		(343)		—

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

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BAR HARBOR BANKSHARES AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

NOTE 1.          BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for the Company's Annual Report on Form 10-K for the year ended December 31, 2019 previously filed with the Securities and Exchange Commission (the "SEC").  In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation. The reclassifications had no impact on net income in the Company’s consolidated income statement.

Summary of Significant Accounting Policies

The disclosures below supplement the accounting policies in previously disclosed in NOTE 1 – Summary of Significant Accounting Policies of the Company’s 2019 Annual Report on Form 10-K.

Operating, Accounting and Reporting Considerations related to COVID-19:

The COVID-19 pandemic has negatively impacted the global economy. In response to this crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the Company include, but are not limited to:

• Accounting for Loan Modifications - The CARES Act provides that a financial institution may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes.

• Paycheck Protection Program - The CARES Act established the Paycheck Protection Program (“PPP”), an expansion of the Small Business Administration’s 7(a) loan program and the Economic Injury Disaster Loan Program (“EIDL”), administered directly by the SBA. 

• Mortgage Forbearance - Under the CARES Act, through the earlier of December 31, 2020, or the termination date of the COVID-19 national emergency, a borrower with a federally backed mortgage loan that is experiencing financial hardship due to COVID-19 may request a forbearance. A multifamily borrower with a federally backed multifamily mortgage loan that was current as of February 1, 2020, and is experiencing financial hardship due to COVID-19 may request forbearance on the loan for up to 30 days, with up to two additional 30-day periods at the borrower’s request.

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Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the Consumer Financial Protection Bureau (“CFPB”), in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to:

• Accounting for Loan Modifications - Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with FASB staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment.

• Past Due Reporting - With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due during the period of the deferral.

• Nonaccrual Status and Risk Rating - During short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as having a classified risk rating.

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Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2020
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test. The Company still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary	January 1, 2020	The Company has adopted ASU 2017-04 effective January 1, 2020, as required, and the ASU did not have a material impact on its financial statements. Goodwill testing is normally scheduled to be completed during the fourth quarter, but was evaluated in the first quarter in light of the economic impacts of COVID-19. The Company recognized no impairments to goodwill in the first quarter of 2020. See management’s discussion and analysis for further details.
		Early adoption is permitted
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	The Company has adopted ASU 2018-13, as of January 1, 2020, as required, and the ASU did not have a material impact to the disclosures as a result of the adoption.
		Early adoption is permitted.
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments ASU 2018-19, Codification Improvements to ASU 2016-13	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption. While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time. The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses with the application of the expected credit loss model. The Company will apply the standard's provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company's CECL implementation efforts in the first quarter focused on model validation, developing new disclosures, establishing formal policies and procedures and other governance and control documentation. Certain elements of the calculation were finalized in the first quarter, including refinement of the model assumptions, the qualitative framework, internal control design, model validation, and the operational control framework to support the new process. Furthermore, changes to the economic forecasts within the model could positively or negatively impact the actual results. The ASU was effective for the Company beginning in the first quarter of 2020; however, the CARES Act, issued in 2020, provided temporary relief related to the implementation of this accounting guidance until the earlier of the date on which the national emergency concerning the COVID-19 virus terminates or December 31, 2020. The Company has elected to utilize this relief and has calculated the allowance for loan losses and the resulting provision for loan losses using the prior incurred loss method at March 31, 2020.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

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Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2020-04 Facilitation of the Effects of Reference Rate Reform, Topic 848	This ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. For instance, companies can (1) elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. A company that makes this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Companies, can also (2) elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Finally, companies can (3) make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.	May be elected between March 12, 2020 through December 31, 2022.	The Company is currently evaluating all of its contracts, hedging relationships and other transactions that will be effected by reference rates that are being discontinued and determining which elections that need to be made.

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NOTE 2.           SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	284,925	$	11,349	$	(617)	$	295,657
US Government agency		98,059		3,801		(191)		101,669
Private label		20,209		62		(1,772)		18,499
Obligations of states and political subdivisions thereof		134,258		3,636		(315)		137,579
Corporate bonds		76,191		1,497		(4,751)		72,937
Total securities available for sale	$	613,642	$	20,345	$	(7,646)	$	626,341

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	319,064	$	4,985	$	(2,080)	$	321,969
US Government agency		98,568		1,640		(547)		99,661
Private label		20,212		68		(747)		19,533
Obligations of states and political subdivisions thereof		139,240		3,034		(268)		142,006
Corporate bonds		78,804		1,478		(221)		80,061
Total securities available for sale	$	655,888	$	11,205	$	(3,863)	$	663,230

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at March 31, 2020 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	—	$	—
Over 1 year to 5 years		30,554		31,547
Over 5 years to 10 years		56,401		52,656
Over 10 years		123,494		126,313
Total bonds and obligations		210,449		210,516
Mortgage-backed securities		403,193		415,825
Total securities available for sale	$	613,642	$	626,341

15

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	165	$	9,548	$	452	$	6,608	$	617	$	16,156
US Government agency		180		11,899		11		4,122		191		16,021
Private label		10		124		1,762		18,234		1,772		18,358
Obligations of states and political subdivisions thereof		315		17,862		—		—		315		17,862
Corporate bonds		3,831		29,977		920		5,330		4,751		35,307
Total securities available for sale	$	4,501	$	69,410	$	3,145	$	34,294	$	7,646	$	103,704

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	1,074	$	43,429	$	1,006	$	49,712	$	2,080	$	93,141
US Government agency		432		19,717		115		9,120		547		28,837
Private label		380		9,843		367		9,411		747		19,254
Obligations of states and political subdivisions thereof		137		29,355		131		1,682		268		31,037
Corporate bonds		142		9,888		79		12,276		221		22,164
Total securities available for sale	$	2,165	$	112,232	$	1,698	$	82,201	$	3,863	$	194,433

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For the three months ended March 31, 2020 and 2019 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

The following table presents the changes in estimated credit losses recognized by the Company for the periods presented:

	Three Months Ended
	March 31,
	2020		2019
Estimated credit losses as of prior year-end	$	1,697	$	1,697
Reductions for securities paid off during the period		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2020, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

16

The following summarizes, by investment security type, the basis for the conclusion that securities in an unrealized loss position were not other-than-temporarily impaired at March 31, 2020:

US Government-sponsored enterprises

43 out of the total 675 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 3.83% of the amortized cost of securities in unrealized loss positions. The FNMA and FHLMC guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

22 out of the total 179 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 1.18% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

12 of the total 19 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 8.80% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

10 of the total 210 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.91% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

12 out of the total 27 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 12.13% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

17

NOTE 3.           LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	49,157	$	2,422	$	51,579	$	31,387	$	2,903	$	34,290
Other commercial real estate		680,578		216,021		896,599		666,051		230,320		896,371
Total commercial real estate		729,735		218,443		948,178		697,438		233,223		930,661
Commercial and industrial:
Commercial		288,082		52,713		340,795		239,692		59,072		298,764
Agricultural		18,597		200		18,797		20,018		206		20,224
Tax exempt		55,694		11,071		66,765		66,860		37,443		104,303
Total commercial and industrial		362,373		63,984		426,357		326,570		96,721		423,291
Total commercial loans		1,092,108		282,427		1,374,535		1,024,008		329,944		1,353,952
Residential real estate:
Residential mortgages		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Total residential real estate		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Consumer:
Home equity		64,514		53,030		117,544		59,368		63,033		122,401
Other consumer		9,226		1,350		10,576		11,167		1,715		12,882
Total consumer		73,740		54,380		128,120		70,535		64,748		135,283
Total loans	$	1,908,558	$	726,425	$	2,634,983	$	1,835,230	$	805,862	$	2,641,092

The carrying amount of the acquired loans at March 31, 2020 totaled $726.4 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. These purchased credit-impaired loans presently maintain a carrying value of $15.2 million (and total note balances of $19.3 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $711.2 million as of March 31, 2020.

18

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended March 31,
(in thousands)	2020		2019
Balance at beginning of period	$	7,367	$	3,509
Reclassification from nonaccretable difference for loans with improved cash flows		—		2,031
Accretion		(528)		(1,063)
Balance at end of period	$	6,839	$	4,477

The following is a summary of past due loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	142	$	—	$	276	$	418	$	48,739	$	49,157	$	—
Other commercial real estate		1,521		533		1,010		3,064		677,514		680,578		—
Total commercial real estate		1,663		533		1,286		3,482		726,253		729,735		—
Commercial and industrial:
Commercial		1,108		1,515		1,251		3,874		284,208		288,082		381
Agricultural		38		—		169		207		18,390		18,597		51
Tax exempt		—		—		—		—		55,694		55,694		—
Total commercial and industrial		1,146		1,515		1,420		4,081		358,292		362,373		432
Total commercial loans		2,809		2,048		2,706		7,563		1,084,545		1,092,108		432
Residential real estate:
Residential mortgages		8,824		69		1,207		10,100		732,610		742,710		293
Total residential real estate		8,824		69		1,207		10,100		732,610		742,710		293
Consumer:
Home equity		471		20		412		903		63,611		64,514		221
Other consumer		19		5		2		26		9,200		9,226		—
Total consumer		490		25		414		929		72,811		73,740		221
Total loans	$	12,123	$	2,142	$	4,327	$	18,592	$	1,889,966	$	1,908,558	$	946

19

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	245	$	2,422	$	—
Other commercial real estate		1,843		256		1,024		3,123		7,275		216,021		737
Total commercial real estate		1,843		256		1,024		3,123		7,520		218,443		737
Commercial and industrial:
Commercial		97		—		—		97		1,752		52,713		—
Agricultural		—		—		—		—		200		200		—
Tax exempt		—		—		—		—		—		11,071		—
Total commercial and industrial		97		—		—		97		1,952		63,984		—
Total commercial loans		1,940		256		1,024		3,220		9,472		282,427		737
Residential real estate:
Residential mortgages		5,043		99		834		5,976		4,856		389,618		401
Total residential real estate		5,043		99		834		5,976		4,856		389,618		401
Consumer:
Home equity		626		—		199		825		789		53,030		43
Other consumer		1		—		—		1		58		1,350		—
Total consumer		627		—		199		826		847		54,380		43
Total loans	$	7,610	$	355	$	2,057	$	10,022	$	15,175	$	726,425	$	1,181

20

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	205	$	53	$	—	$	258	$	31,129	$	31,387	$	—
Other commercial real estate		40		1,534		1,810		3,384		662,667		666,051		—
Total commercial real estate		245		1,587		1,810		3,642		693,796		697,438		—
Commercial and industrial:
Commercial		452		50		894		1,396		238,296		239,692		—
Agricultural		62		34		96		192		19,826		20,018		—
Tax exempt		—		—		—		—		66,860		66,860		—
Total commercial and industrial		514		84		990		1,588		324,982		326,570		—
Total commercial loans		759		1,671		2,800		5,230		1,018,778		1,024,008		—
Residential real estate:
Residential mortgages		7,293		1,243		668		9,204		731,483		740,687		—
Total residential real estate		7,293		1,243		668		9,204		731,483		740,687		—
Consumer:
Home equity		597		43		429		1,069		58,299		59,368		50
Other consumer		36		12		—		48		11,119		11,167		—
Total consumer		633		55		429		1,117		69,418		70,535		50
Total loans	$	8,685	$	2,969	$	3,897	$	15,551	$	1,819,679	$	1,835,230	$	50

21

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	—	$	12	$	—	$	12	$	384	$	2,903	$	—
Other commercial real estate		2,029		245		231		2,505		8,289		230,320		—
Total commercial real estate		2,029		257		231		2,517		8,673		233,223		—
Commercial and industrial:
Commercial		440		335		140		915		2,723		59,072		—
Agricultural		—		—		—		—		173		206		—
Tax exempt		—		—		—		—		36		37,443		—
Total commercial and industrial		440		335		140		915		2,932		96,721		—
Total commercial loans		2,469		592		371		3,432		11,605		329,944		—
Residential real estate:
Residential mortgages		3,185		864		1,015		5,064		5,591		411,170		—
Total residential real estate		3,185		864		1,015		5,064		5,591		411,170		—
Consumer:
Home equity		208		548		217		973		1,291		63,033		217
Other consumer		2		9		—		11		66		1,715		—
Total consumer		210		557		217		984		1,357		64,748		217
Total loans	$	5,864	$	2,013	$	1,603	$	9,480	$	18,553	$	805,862	$	217

22

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at March 31, 2020 and December 31, 2019:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	276	$	—	$	276	$	258	$	—	$	258
Other commercial real estate		1,664		287		1,951		2,888		343		3,231
Total commercial real estate		1,940		287		2,227		3,146		343		3,489
Commercial and industrial:
Commercial		1,282		89		1,371		932		626		1,558
Agricultural		625		—		625		278		—		278
Tax exempt		—		—		—		—		—		—
Total commercial and industrial		1,907		89		1,996		1,210		626		1,836
Total commercial loans		3,847		376		4,223		4,356		969		5,325
Residential real estate:
Residential mortgages		4,077		1,012		5,089		3,362		1,973		5,335
Total residential real estate		4,077		1,012		5,089		3,362		1,973		5,335
Consumer:
Home equity		440		284		724		615		254		869
Other consumer		20		—		20		21		—		21
Total consumer		460		284		744		636		254		890
Total loans	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550

Loans evaluated for impairment as of March 31, 2020 and December 31, 2019 are, as follows:

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	2,638	$	1,733	$	3,586	$	13	$	7,970
Collectively evaluated		727,097		360,640		739,124		73,727		1,900,588
Total	$	729,735	$	362,373	$	742,710	$	73,740	$	1,908,558

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	70	$	—	$	296	$	—	$	366
Purchased credit impaired		7,520		1,952		4,856		847		15,175
Collectively evaluated		210,853		62,032		384,466		53,533		710,884
Total	$	218,443	$	63,984	$	389,618	$	54,380	$	726,425

23

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	3,964	$	1,353	$	2,620	$	13	$	7,950
Collectively evaluated		693,474		325,217		738,067		70,522		1,827,280
Total	$	697,438	$	326,570	$	740,687	$	70,535	$	1,835,230

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	258	$	385	$	1,032	$	—	$	1,675
Purchased credit impaired		8,673		2,932		5,591		1,357		18,553
Collectively evaluated		224,292		93,404		404,547		63,391		785,634
Total	$	233,223	$	96,721	$	411,170	$	64,748	$	805,862

The following is a summary of impaired loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,341		2,060		—
Commercial		1,075		1,242		—
Agricultural		67		68		—
Tax exempt loans		—		—		—
Residential real estate		2,603		2,794		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		265		266		213
Other commercial real estate		1,032		1,082		462
Commercial		230		236		47
Agricultural		361		361		91
Tax exempt loans		—		—		—
Residential real estate		983		1,111		126
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		2,638		3,408		675
Commercial and industrial		1,733		1,907		138
Residential real estate		3,586		3,905		126
Consumer		13		13		—
Total impaired loans	$	7,970	$	9,233	$	939

24

Acquired Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		—		—		—
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		134		308		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		70		71		13
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		162		185		14
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		70		71		13
Commercial and industrial		—		—		—
Residential real estate		296		493		14
Consumer		—		—		—
Total impaired loans	$	366	$	564	$	27

25

Business Activities Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,911		1,957		—
Commercial		710		773		—
Agricultural		361		261		—
Tax exempt loans		—		—		—
Residential real estate		2,067		2,227		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		258		258		205
Other commercial real estate		1,795		1,940		1,026
Commercial		282		289		164
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		553		590		57
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		3,964		4,155		1,231
Commercial and industrial		1,353		1,423		164
Residential real estate		2,620		2,817		57
Consumer		13		13		—
Total impaired loans	$	7,950	$	8,408	$	1,452

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Acquired Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		90		90		—
Commercial		385		481		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		678		938		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		168		168		12
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		354		376		49
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		258		258		12
Commercial and industrial		385		481		—
Residential real estate		1,032		1,314		49
Consumer		—		—		—
Total impaired loans	$	1,675	$	2,053	$	61

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The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2020 and 2019:

Business Activities Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,728		3		7,773		26
Commercial		1,071		1		527		2
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		2,589		17		1,965		15
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		261		1		5		—
Other commercial real estate		1,021		—		1,203		—
Commercial		233		—		890		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		979		2		652		2
Home equity		12		—		13		—
Other consumer		—		—		—		—
Total
Commercial real estate		3,010		4		8,981		26
Commercial and industrial		1,304		1		1,417		2
Residential real estate		3,568		19		2,617		17
Consumer		12		—		13		—
Total impaired loans	$	7,894	$	24	$	13,028	$	45

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Acquired Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		—		—		90		—
Commercial		—		—		479		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		195		—		436		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		70		—		36		—
Commercial		—		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		163		—		367		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
Total
Commercial real estate		70		—		126		—
Commercial and industrial		—		—		479		—
Residential real estate		358		—		803		—
Consumer		—		—		—		—
Total impaired loans	$	428	$	—	$	1,408	$	—

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three months ended March 31, 2020 and 2019, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

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	Three Months Ended March 31, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	54	$	259
Other commercial	3		41		208
Home equity	1		26		25
Other consumer	1		9		9
Total	6	$	130	$	501

	Three Months Ended March 31, 2019
		Pre-Modification			Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	3	$	113	$	113
Other commercial	2		31		31
Residential mortgages	6		530		527
Total	11	$	674	$	671

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended March 31,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest rate and maturity concession	—	$	—	2	$	12
Interest rate, forbearance and maturity concession	4		467	—		—
Amortization and maturity concession	—		—	5		314
Amortization concession	—		—	1		156
Amortization, interest rate and maturity concession	—		—	1		77
Forbearance and interest only payments	1		25	2		112
Maturity concession	1		9	—		—
Total	6	$	501	11	$	671

For the three months ended March 31, 2020, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Modifications in response to COVID-19

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 - Basis of Presentation for more information.

Foreclosure

As of March 31, 2020 and December 31, 2019, the Company maintained bank-owned residential real estate with a fair value of $2.2 million. Additionally, residential mortgage loans collateralized by real estate that are in the process of foreclosure as of March 31, 2020 and December 31, 2019 totaled $931 thousand and $810 thousand, respectively.

Mortgage Banking

Total residential loans included held for sale loans of $11.7 million and $6.5 million at March 31, 2020 and December 31, 2019, respectively.

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NOTE 4.               ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level considered adequate to provide for an estimate of probable credit losses inherent in the loan portfolio. The allowance is increased by the provision charged to operating expense and reduced by net charge-offs. Loans are charged against the allowance for loan losses when the Company believes collectability has declined to a point where there is a distinct possibility of some loss of principal and interest. While the Company uses the best information available to make the evaluation, future adjustments may be necessary if there are significant changes in conditions.

The allowance is comprised of four distinct reserve components: (1) specific reserves related to loans individually evaluated; (2) quantitative reserves related to loans collectively evaluated; (3) qualitative reserves related to loans collectively evaluated; and (4) a temporal estimate is made for incurred loss emergence period for each loan category within the collectively evaluated pools.

A summary of the methodology employed on a quarterly basis with respect to each of these components in order to evaluate the overall adequacy of the Company's allowance for loan losses is as follows:

Specific Reserve for Loans Individually Evaluated

First, the Company identifies loan relationships having aggregate balances in excess of $150 thousand with potential credit weaknesses. Such loan relationships are identified primarily through the Company's analysis of internal loan evaluations, past due loan reports, TDRs and loans adversely classified. Each loan so identified is then individually evaluated for impairment. Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement. Substantially all impaired loans have historically been collateral dependent, meaning repayment of the loan is expected or is considered to be provided solely from the sale of the loan's underlying collateral. For such loans, the Company measures impairment based on the fair value of the loan's collateral, which is generally determined utilizing current appraisals. A specific reserve is established in an amount equal to the excess, if any, of the recorded investment in each impaired loan over the fair value of its underlying collateral, less estimated costs to sell. The Company's policy is to re-evaluate the fair value of collateral dependent loans at least every twelve months unless there is a known deterioration in the collateral's value, in which case a new appraisal is obtained.

Purchase credit impaired (“PCI”) loans are collectively evaluated, but are not included in the general reserve as described below. The evaluation of the PCI loans requires continued quarterly assessment of key assumptions and estimates similar to the initial fair value estimate, including changes in the severity of loss, timing and speed of payments, collateral value changes, expected cash flows and other relevant factors. The quarterly assessment is compared to the initial fair value estimate and a determination is made if an adjustment to the allowance for loan loss is deemed necessary.

Quantitative Reserve for Loans Collectively Evaluated

Second, the Company stratifies the loan portfolio into two general business loan pools: substandard (7 risk-rated) and pass-rated (0 to 6 risk-rated) by loan type. Substandard rated loans are subject to higher credit loss rates in the allowance for loan loss calculation. The Company utilizes historical loss rates for commercial real estate and commercial and industrial loans assessed by internal risk rating. Historical loss rates on residential real estate and consumer loans are not risk graded. Residential real estate and consumer loans are considered as part of the pass-rated portfolio unless removed due to specific reserve evaluation based on past due status and/or other indications of credit deterioration. Quantitative reserves relative to each loan pool are established as follows: for all loan segments an allocation equaling 100% of the respective pool's average 3-year historical net loan charge-off rate (determined based upon the most recent 12 quarters) is applied to the aggregate recorded investment in the pool of loans. Purchased performing loans are collectively evaluated as their own separate category within each loan pool.

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Qualitative Reserve for Loans Collectively Evaluated

Third, the Company considers the necessity to adjust the average historical net loan charge-off rates relative to each of the above two loan pools for potential risks factors that could result in actual losses deviating from prior loss experience. Such qualitative risk factors considered are: (1) lending policies and procedures, (2) business conditions, (3) volume and nature of the loan portfolio, (4) experience, ability and depth of lending management, (5) problem loan trends, (6) quality of the Company’s loan review system, (7) concentrations in the loan portfolio, (8) competition, legal, and regulatory environment and (9) collateral coverage and loan-to-value.

Loss Emergence Period for Loans Collectively Evaluated

Fourth, the general allowance related to loans collectively evaluated includes an estimate of incurred losses over an estimated loss emergence period ("LEP"). The LEP is generated utilizing a charge-off look-back analysis, which evaluates the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology establishes the approximate number of months of LEP that represents incurred losses for each loan portfolio within each portfolio segment in addition to the qualitative reserves.

Activity in the allowance for loan losses for the three months ended March 31, 2020 and 2019 are, as follows:

Business Activities Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	7,668	$	3,608	$	3,402	$	379	$	15,057
Charged-off loans		(770)		(150)		—		(148)		(1,068)
Recoveries on charged-off loans		25		1		—		3		29
Provision for loan losses		738		84		111		150		1,083
Balance at end of period	$	7,661	$	3,543	$	3,513	$	384	$	15,101
Individually evaluated for impairment		675		138		126		—		939
Collectively evaluated		6,986		3,405		3,387		384		14,162
Total	$	7,661	$	3,543	$	3,513	$	384	$	15,101

Acquired Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	147	$	6	$	143	$	—	$	296
Charged-off loans		(101)		(29)		(8)		(5)		(143)
Recoveries on charged-off loans		—		9		6		—		15
(Releases) provision for loan losses		18		17		(12)		5		28
Balance at end of period	$	64	$	3	$	129	$	—	$	196
Individually evaluated for impairment		13		—		14		—		27
Collectively evaluated		51		3		115		—		169
Total	$	64	$	3	$	129	$	—	$	196

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Business Activities Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	6,811	$	2,380	$	3,982	$	408	$	13,581
Charged-off loans		(57)		—		—		(53)		(110)
Recoveries on charged-off loans		16		1		18		3		38
(Releases) provision for loan losses		(195)		397		(47)		38		193
Balance at end of period	$	6,575	$	2,778	$	3,953	$	396	$	13,702
Individually evaluated for impairment		396		53		83		1		533
Collectively evaluated		6,179		2,725		3,870		395		13,169
Total	$	6,575	$	2,778	$	3,953	$	396	$	13,702

Acquired Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	173	$	35	$	77	$	—	$	285
Charged-off loans		—		(16)		(104)		(1)		(121)
Recoveries on charged-off loans		—		—		—		—		—
Provision (releases) for loan losses		(12)		10		132		1		131
Balance at end of period	$	161	$	29	$	105	$	—	$	295
Individually evaluated for impairment		16		—		22		—		38
Collectively evaluated		145		29		83		—		257
Total	$	161	$	29	$	105	$	—	$	295

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Company’s Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Company's Board of Directors with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies, non-performing loans and potential problem loans. The Company seeks to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator and uses an internal risk rating system to categorize commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Consistent with regulatory guidelines, the Company provides for the classification of loans which are considered to be of lesser quality as special mention, substandard, doubtful, or loss (i.e. risk-rated 6, 7, 8 and 9, respectively).

The following are the definitions of the Company’s credit quality indicators:

Pass: Loans the Company considers in the commercial portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes there is a low risk of loss related to these loans considered pass-rated.

Special Mention: Loans the Company considers having some potential weaknesses, but are deemed to not carry levels of risk inherent in one of the subsequent categories, are designated as special mention. A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. This might include loans which may require a higher level of supervision or internal reporting because of: (i) declining industry trends; (ii) increasing reliance on secondary sources of repayment; (iii) the poor condition of or lack of control over collateral; or (iv) failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point

33

where the liquidation is jeopardized may be included in this classification. Special mention loans are not adversely classified and do not expose the Company to sufficient risks to warrant classification.

Substandard: Loans the Company considers as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Doubtful: Loans the Company considers as doubtful have all of the weaknesses inherent in those loans that are classified as substandard. These loans have the added characteristic of a well-defined weakness which is inadequately protected by the current sound worth and paying capacity of borrower or of the collateral pledged, if any, and calls into question the collectability of the full balance of the loan. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status is determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loss: Loans the Company considers as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged-off. This classification does not mean the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they are determined to be uncollectible.

The following tables present the Company’s loans by risk rating at March 31, 2020 and December 31, 2019:

Business Activities Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	48,881	$	31,057	$	659,494	$	646,886	$	708,375	$	677,943
Special mention		—		—		8,133		5,483		8,133		5,483
Substandard		11		330		11,824		11,974		11,835		12,304
Doubtful		265		—		1,127		1,708		1,392		1,708
Total	$	49,157	$	31,387	$	680,578	$	666,051	$	729,735	$	697,438

Acquired Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	2,083	$	2,412	$	205,309	$	218,491	$	207,392	$	220,903
Special mention		—		12		1,742		2,261		1,742		2,273
Substandard		339		479		8,900		9,400		9,239		9,879
Doubtful		—		—		70		168		70		168
Total	$	2,422	$	2,903	$	216,021	$	230,320	$	218,443	$	233,223

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Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	268,287	$	221,329	$	17,559	$	18,940	$	55,694	$	66,860	$	341,540	$	307,129
Special mention		3,641		2,744		221		298		—		—		3,862		3,042
Substandard		15,195		14,866		456		780		—		—		15,651		15,646
Doubtful		959		753		361		—		—		—		1,320		753
Total	$	288,082	$	239,692	$	18,597	$	20,018	$	55,694	$	66,860	$	362,373	$	326,570

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	50,663	$	51,184	$	200	$	58	$	11,071	$	37,407	$	61,934	$	88,649
Special mention		882		5,432		—		—		—		—		882		5,432
Substandard		944		2,115		—		148		—		36		944		2,299
Doubtful		224		341		—		—		—		—		224		341
Total	$	52,713	$	59,072	$	200	$	206	$	11,071	$	37,443	$	63,984	$	96,721

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	738,633	$	737,325	$	64,074	$	58,753	$	9,206	$	11,146	$	811,913	$	807,224
Nonperforming		4,077		3,362		440		615		20		21		4,537		3,998
Total	$	742,710	$	740,687	$	64,514	$	59,368	$	9,226	$	11,167	$	816,450	$	811,222

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	387,304	$	407,811	$	52,619	$	62,504	$	1,343	$	1,707	$	441,266	$	472,022
Nonperforming		2,314		3,359		411		529		7		8		2,732		3,896
Total	$	389,618	$	411,170	$	53,030	$	63,033	$	1,350	$	1,715	$	443,998	$	475,918

The following table summarizes total classified and criticized loans as of March 31, 2020 and December 31, 2019:

	March 31, 2020						December 31, 2019
	Business						Business
(in thousands)	Activities Loans		Acquired  Loans		Total		Activities Loans		Acquired  Loans		Total
Non-accrual	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550
Substandard accruing		26,351		11,537		37,888		26,055		13,387		39,442
Total classified		34,735		13,209		47,944		34,409		16,583		50,992
Special mention		11,995		2,624		14,619		8,525		7,705		16,230
Total Criticized	$	46,730	$	15,833	$	62,563	$	42,934	$	24,288	$	67,222

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NOTE 5.               BORROWED FUNDS

Borrowed funds at March 31, 2020 and December 31, 2019 are summarized, as follows:

	March 31, 2020				December 31, 2019
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	172,643	1.27	%	$	303,286	1.83	%
Advances from the FRB		62,000	0.25			—	—
Other borrowings		31,001	1.21			44,832	0.99
Total short-term borrowings		265,644	1.03			348,118	1.73
Long-term borrowings
Advances from the FHLB		231,936	1.80			123,278	1.93
Subordinated borrowings		59,849	4.97			59,920	5.53
Total long-term borrowings		291,785	2.45			183,198	2.87
Total	$	557,429	1.77	%	$	531,316	2.11	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLB”) advances with a maturity of less than one year. The Company also maintains a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended March 31, 2020 and December 31, 2019.

The Company has the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program and the Discount Window at the Federal Reserve Bank of Boston (the “FRB”). At March 31, 2020, the Company’s available secured line of credit at the FRB was $142.1 million. The Company has pledged certain loans and securities to the FRB to support this arrangement. There were $62.0 million of outstanding advances with the FRB for the period ended March 31, 2020 and no borrowings with the FRB as of December 31, 2019.

The Company maintains, with a correspondent bank, an unused unsecured federal funds line of credit that has an aggregate overnight borrowing capacity of $50.0 million as of March 31, 2020 and December 31, 2019. There was no outstanding balance on the line of credit as of March 31, 2020 and December 31, 2019.

Long-term FHLB advances consist of advances with a maturity of more than one year. The advances outstanding at March 31, 2020 and December 31, 2019 include no callable advances and $314 thousand of amortizing advances. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of March 31, 2020 is, as follows:

	March 31, 2020
			Weighted Average
(in thousands, except rates)	Carrying Value		Rate
Fixed rate advances maturing:
2020	$	142,300	1.19	%
2021		50,665	1.77
2022		104,000	1.97
2023		80,000	1.77
2024		7,300	1.16
2025 and thereafter		20,314	1.22
Total FHLB advances	$	404,579	1.58	%

36

On November 26, 2019, the Company executed a Subordinated Note Purchase Agreement with an aggregate of $40.0 million of subordinated notes (the "Notes") to accredited investors. The Notes have a maturity date of December 1, 2029 and bear a fixed interest rate of 4.625% through December 1, 2024 payable semi-annually in arrears. From December 1, 2024 and thereafter the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 3.27%. The Company has the option beginning with the interest payment date of December 1, 2024, and on any scheduled payment date thereafter, to redeem the Notes, in whole or in part upon prior approval of the Federal Reserve. Netted with subordinated borrowings is amortized subordinated debt issuance costs of $739 thousand.

The Company also has $20.6 million in floating Junior Subordinated Deferrable Interest Debentures ("Debentures") issued by NHTB Capital Trust II ("Trust II") and NHTB Capital Trust III ("Trust III"), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2004, carry a variable interest rate of 3-month LIBOR plus 2.79%, and mature in 2034. The debt is callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which the Company is not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into the Company’s financial statements.

37

NOTE 6.               DEPOSITS

A summary of time deposits is, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Time less than $100,000	$	559,255	$	600,747
Time $100,000 through $250,000		173,305		225,505
Time $250,000 or more		111,537		106,383
Total time deposits	$	844,097	$	932,635

At March 31, 2020 and December 31, 2019, the scheduled maturities by year for time deposits are, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Within 1 year	$	479,983	$	555,074
Over 1 year to 2 years		295,939		287,934
Over 2 years to 3 years		31,909		51,444
Over 3 years to 4 years		27,811		31,262
Over 4 years to 5 years		8,438		6,883
Over 5 years		17		38
Total	$	844,097	$	932,635

Included in time deposits are brokered deposits of $378.7 million and $526.9 million at March 31, 2020 and December 31, 2019, respectively. Also included in time deposits are reciprocal deposits of $79.3 million and $64.1 million at March 31, 2020 and December 31, 2019, respectively.

38

NOTE 7.           CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:

			Regulatory				Regulatory
	March 31,		Minimum to be		December 31,		Minimum to be
	2020		"Well Capitalized"		2019		"Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	13.61	%	10.50	%	13.61	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	10.61		7.00		10.57		7.00
Tier 1 capital to risk-weighted assets	11.42		8.50		11.39		8.50
Tier 1 capital to average assets	8.25		5.00		8.13		5.00
Bank
Total capital to risk-weighted assets	12.58	%	10.50	%	12.42	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	11.96		7.00		11.79		7.00
Tier 1 capital to risk-weighted assets	11.96		8.50		11.79		8.50
Tier 1 capital to average assets	8.64		5.00		8.39		5.00

At each date shown, the Company and the Bank met the conditions to be classified as “well-capitalized” under the relevant regulatory framework. To be categorized as "well-capitalized," an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

The Company and the Bank are subject to the Basel III rule that requires the Company and the Bank to assess their Common equity tier 1 capital to risk-weighted assets and the Company and the Bank each exceed the minimum to be "well-capitalized." Effective January 1, 2019 all banking organizations must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5%.

At March 31, 2020, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered "well-capitalized" for regulatory purposes.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income is, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Other accumulated comprehensive income, before tax:
Net unrealized gain on AFS securities	$	12,699	$	7,342
Net unrealized loss on hedging derivatives		(3,099)		(718)
Net unrealized loss on post-retirement plans		(1,512)		(1,512)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized gain on AFS securities		(3,139)		(1,793)
Net unrealized loss on hedging derivatives		886		237
Net unrealized loss on post-retirement plans		355		355
Accumulated other comprehensive income	$	6,190	$	3,911

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The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2020 and 2019:

(in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2020
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	5,492	$	(1,378)	$	4,114
Less: reclassification adjustment for gains (losses) realized in net income		135		(32)		103
Net unrealized gain on AFS securities		5,357		(1,346)		4,011
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period		(2,382)		650		(1,732)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized loss on derivative hedges		(2,382)		650		(1,732)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	2,975	$	(696)	$	2,279
Three Months Ended March 31, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	8,900	$	(2,079)	$	6,821
Less: reclassification adjustment for gains realized in net income		—		—		—
Net unrealized gain on AFS securities		8,900		(2,079)		6,821
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period		(845)		198		(647)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on cash flow hedging derivatives		(845)		198		(647)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	8,055	$	(1,881)	$	6,174

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The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax impacts, for the three months ended March 31, 2020 and 2019:

	Net unrealized		Net loss on		Net unrealized
	gain (loss)		effective cash		loss
	on AFS		flow hedging		on pension
(in thousands)	Securities		derivatives		plans		Total
Three Months Ended March 31, 2020
Balance at beginning of period	$	5,549	$	(481)	$	(1,157)	$	3,911
Other comprehensive gain (loss) before reclassifications		4,114		(1,732)		—		2,382
Less: amounts reclassified from accumulated other comprehensive income		103		—		—		103
Total other comprehensive income (loss)		4,011		(1,732)		—		2,279
Balance at end of period	$	9,560	$	(2,213)	$	(1,157)	$	6,190
Three Months Ended March 31, 2019
Balance at beginning of period	$	(8,665)	$	(2,249)	$	(888)	$	(11,802)
Other comprehensive gain (loss) before reclassifications		6,821		(647)		—		6,174
Less: amounts reclassified from accumulated other comprehensive income		—		—		—		—
Total other comprehensive income (loss)		6,821		(647)		—		6,174
Balance at end of period	$	(1,844)	$	(2,896)	$	(888)	$	(5,628)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,				Affected Line Item where
(in thousands)	2020		2019		Net Income is Presented
Net realized gains on AFS securities:
Before tax(1)	$	135	$	—	Non-interest income
Tax effect		(32)		—	Tax expense
Total reclassifications for the period	$	103	$	—	Net of tax

(1) Net realized gains before tax include gross realized gains $146 thousand and realized losses of $11 thousand.

..

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NOTE 8.           EARNINGS PER SHARE

The following table presents the calculation of earnings per share:

	Three Months Ended
	March 31,
(in thousands, except per share and share data)	2020		2019
Net income	$	7,721	$	7,281
Average number of basic common shares outstanding		15,558,132		15,523,423
Plus: dilutive effect of stock options and awards outstanding (1)		34,463		63,226
Average number of diluted common shares outstanding (1)		15,592,595		15,586,649
Anti-dilutive options excluded from earnings calculation		—		—
Earnings per share:
Basic	$	0.50	$	0.47
Diluted	$	0.50	$	0.47

(1) Average diluted shares outstanding are computed using the treasury stock method.

..

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NOTE 9.           DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As part of its overall asset and liability management strategy, the Company uses derivative instruments to minimize fluctuations in earnings and cash flows caused by interest rate volatility. The Company’s interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so the changes in interest rates do not have a significant effect on net interest income. Thus, all of the Company's derivative contracts are considered to be interest rate contracts.

The Company recognizes its derivative instruments on the consolidated balance sheet at fair value. On the date the derivative instrument is entered into, the Company designates whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). The Company formally documents relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of hedged items. Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in other comprehensive income or loss.

The Company offers derivative products in the form of interest rate swaps, to commercial loan customers to facilitate their risk management strategies. These instruments are executed through Master Netting Arrangements ("MNA") with financial institution counterparties or Risk Participation Agreements ("RPA") with commercial bank counterparties, for which the Company assumes a pro rata share of the credit exposure associated with a borrower's performance related to the derivative contract with the counterparty.

The following tables present information about derivative assets and liabilities at March 31, 2020 and December 31, 2019:

	March 31, 2020
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.3	$	(6,467)	Other liabilities
Total cash flow hedges		100,000		4.3		(6,467)
Fair value hedges:
Interest rate swap on securities		37,190		9.3		3,368	Other liabilities
Total fair value hedges		37,190				3,368
Economic hedges:
Forward sale commitments		53,751		0.2		(73)	Other liabilities
Customer Loan Swaps-MNA Counterparty		150,490		7.8		(15,463)	Other liabilities (1)
Customer Loan Swaps-RPA Counterparty		78,505		8.7		(9,470)	Other liabilities (1)
Customer Loan Swaps-Customer		228,995		8.1		24,933	Other liabilities (1)
Total economic hedges		511,741				(73)
Non-hedging derivatives:
Interest rate lock commitments		23,146		0.1		93	Other assets
Total non-hedging derivatives		23,146				93
Total	$	672,077			$	(3,079)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties.

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	December 31, 2019
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.6	$	(1,311)	Other liabilities
Total cash flow hedges		100,000				(1,311)
Fair value hedges:
Interest rate swap on securities		37,190		9.6		593	Other liabilities
Total fair value hedges		37,190				593
Economic hedges:
Forward sale commitments		11,228		0.1		(84)	Other liabilities
Customer Loan Swaps-MNA Counterparty		135,598		7.5		(4,669)	(1)
Customer Loan Swaps-RPA Counterparty		69,505		8.8		(3,377)	(1)
Customer Loan Swaps-Customer		205,103		8.1		8,046	(1)
Total economic hedges		421,434				(84)
Non-hedging derivatives:
Interest rate lock commitments		21,748		0.1		59	Other assets
Total non-hedging derivatives		21,748				59
Total	$	580,372			$	(743)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties, thus assets and liabilities with the counterparty are netted for financial statement presentation.

As of March 31, 2020 and December 31, 2019, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

				Cumulative Amount of Fair
	Location of Hedged Item on	Carrying Amount of Hedged		Value Hedging Adjustment in
	Balance Sheet	Assets (Liabilities)		Carrying Amount
March 31, 2020
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	38,710	$	207
December 31, 2019
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	39,026	$	523

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Information about derivative assets and liabilities for March 31, 2020 and December 31, 2019, follows:

	Three Months Ended March 31, 2020
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)
	Recognized in			Reclassified		Location of	Amount of
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Gain (Loss)
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	4,949	Other income	$	—	Interest expense	$	1
Total cash flow hedges		4,949			—			1
Fair value hedges:
Interest rate swap on securities		(2,736)	Interest income		—	Interest income		13
Total fair value hedges		(2,736)			—			13
Economic hedges:
Forward commitments		—	Other income		—	Other income		11
Total economic hedges		—			—			11
Non-hedging derivatives:
Interest rate lock commitments		—	Other Income		—	Other Income		34
Total non-hedging derivatives		—			—			34
Total	$	2,213		$	—		$	59

(1) As of March 31, 2020 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

	Three Months Ended March 31, 2019
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)			Amount of
	Recognized in			Reclassified		Location of	Gain (Loss)
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Recognized
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	402	Other income	$	—	Interest expense	$	—
Interest rate cap agreements		2,494	Acquisition, restructuring, and other expenses			Interest expense		163
Total cash flow hedges		2,896			—			—
Economic hedges:
Forward commitments		—	Other income		—	Other income		(65)
Total economic hedges		—			—			—
Non-hedging derivatives:
Interest rate lock commitments		—	Other income		—	Other Income		6
Total non-hedging derivatives		—			—			6
Total	$	2,896		$	—		$	6

(1) As of March 31, 2019 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

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Cash flow hedges

Interest rate cap agreements

In 2014, interest rate cap agreements were purchased to limit the Company’s exposure to rising interest rates on four rolling, three-month borrowings indexed to three-month LIBOR. Under the terms of the agreements, the Company paid total premiums of $4.6 million for the right to receive cash flow payments if three-month LIBOR rises above the caps of 3.00%, thus effectively ensuring interest expense on the borrowings at maximum rates of 3.00% for the duration of the agreements. The interest rate cap agreements were designated as cash flow hedges, however the caps were terminated in the fourth quarter of 2019, with $3.2 million recognized in acquisition, restructuring and other expenses. The caps were terminated because it was probable that the original forecasted transaction would not occur by the end of the original specified period.

Interest rate swap on deposits

In March and November 2019, the Company entered into interest rate swaps on brokered deposits (the "SWAPS") to limit its exposure to rising interest rates over a five year term.  Under the terms of the agreement, the Company has two swaps each with a $50.0 million notional amount and pays a fixed interest rate of 2.46% and 1.55% respectively, and the financial institution counterparty pays the Company interest on the three-month LIBOR rate. The Company designated the swap as a cash flow hedge.

Economic hedges

Forward sale commitments

The Company utilizes forward sale commitments on residential mortgage loans to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives. The Company typically uses a combination of best efforts and mandatory delivery contracts. The contracts are loan sale agreements where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into contracts just prior to the loan closing with a customer.

Customer loan derivatives

The Company enters into customer loan derivatives to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting loan swap agreements with highly rated third-party financial institutions. The loan swap agreements are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company is party to master netting arrangements with its financial institutional counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes.

The master netting arrangements provide for a single net settlement of all loan swap agreements, as well as collateral or cash funds, in the event of default on, or termination of, any one contract. Collateral is provided by cash or securities received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds. Currently, the Company has posted cash of $26.2 million with counterparties.

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of March 31, 2020
Customer Loan Derivatives:
MNA counterparty	$	(15,463)	$	15,463	$	26,200	$	—
RPA counterparty		(9,470)		9,470		—		—
Total	$	(24,933)	$	24,933	$	26,200	$	—

46

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of December 31, 2019
Customer Loan Derivatives:
MNA counterparty	$	(4,669)	$	4,669	$	10,700	$	—
RPA counterparty		(3,377)		3,377		—		—
Total	$	(8,046)	$	8,046	$	10,700	$	—

Non-hedging derivatives

Interest rate lock commitments

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs relate to the origination of residential mortgage loans that are held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s Consolidated Statements of Income. Changes in the fair value of IRLCs subsequent to inception are based on; (i) changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and (ii) changes in the probability when the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

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NOTE 10.           FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	March 31, 2020
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	295,657	$	—	$	295,657
US Government agency		—		101,669		—		101,669
Private label		—		18,499		—		18,499
Obligations of states and political subdivisions thereof		—		137,579		—		137,579
Corporate bonds		—		72,937		—		72,937
Derivative assets		—		24,933		93		25,026
Derivative liabilities		—		(28,032)		(73)		(28,105)

	December 31, 2019
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	321,969	$	—	$	321,969
US Government agency		—		99,661		—		99,661
Private label		—		19,533		—		19,533
Obligations of states and political subdivisions thereof		—		142,006		—		142,006
Corporate bonds		—		80,061		—		80,061
Derivative assets		—		6,791		59		6,850
Derivative liabilities		—		(8,102)		(84)		(8,186)

Securities Available for Sale: All securities and major categories of securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities’ terms and conditions, among other things.

Derivative Assets and Liabilities

Cash Flow and Fair Value Hedges. The valuation of the Company's cash flow hedges are obtained from a third party. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The inputs used to value the Company's cash flow hedges are all classified as Level 2 measurements.

Interest Rate Lock Commitments. The Company enters into IRLCs for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. The estimated

48

fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood of a loan in a lock position will ultimately close. The closing ratio is derived from the Company’s internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the IRLCs and loans originated for sale. The fair values of the Company’s mandatory delivery loan sale commitments are determined similarly to the IRLCs using quoted prices in the market place that are observable. However, closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are not considered observable factors. As such, mandatory delivery forward commitments are classified as Level 3 measurements.

Customer Loan Derivatives. The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its customer loan derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2020, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three months ended March 31, 2020:

	Assets (Liabilities)
	Interest Rate Lock		Forward
(in thousands)	Commitments		Commitments
Three Months Ended March 31, 2020
Balance at beginning of period	$	59	$	(84)
Realized gain recognized in non-interest income		34		11
Balance at end of period	$	93	$	(73)
Three Months Ended March 31, 2019
Balance at beginning of period	$	8	$	—
Realized gain recognized in non-interest income		6		(65)
Balance at end of period	$	14	$	(65)

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Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:

	Fair Value		Fair Value
	March 31,		December 31,		Valuation	Unobservable	Unobservable
(in thousands, except ratios)	2020		2019		Techniques	Inputs	Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	93	$	59	Historical trend	Closing Ratio		90	%
					Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments		(73)		(84)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system		Pair-off contract price
Total	$	20	$	(25)

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements:

							Fair Value
					Three Months Ended		Measurement Date as of
	March 31, 2020		December 31, 2019		March 31, 2020		March 31, 2020
	Level 3		Level 3		Total		Level 3
(in thousands)	Inputs		Inputs		Gains (Losses)		Inputs
Assets
Impaired loans	$	8,335	$	9,625	$	1,290	March 2020
Capitalized servicing rights		3,897		4,301		—	March 2020
Other real estate owned		2,205		2,236		(31)	August 2019
Premises held for sale		1,764		1,764		—	September 2019
Total	$	16,201	$	17,926	$	1,259

There are no liabilities measured at fair value on a non-recurring basis in 2020 and 2019.

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is, as follows:

	Fair Value				Range
(in thousands, except ratios)	March 31, 2020		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	4,947	Fair value of collateral -appraised value	Loss severity		0% to 70%
				Appraised value		$0 to $975
Impaired loans		3,388	Discount cash flow	Discount rate		3.50% to 9.50%
				Cash flows		$21 to $1,002
Capitalized servicing rights		3,897	Discounted cash flow	Constant prepayment rate (CPR)		11.91	%
				Discount rate		11.33	%
Other real estate owned		2,205	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		6% to 10%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value		$136 to $527
				Selling Costs		6	%
Total	$	16,201

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

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(b) The carrying value of premises held for sale was $1.8 million as of March 31, 2020.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	6,137	Fair value of collateral -appraised value	Loss severity		0% to 55.00%
				Appraised value		$0 to $6,915
Impaired loans		3,488	Discount cash flow	Discount rate		2.88% to 9.50%
				Cash flows		$22 to $1,002
Capitalized servicing rights		4,301	Discounted cash flow	Constant prepayment rate (CPR)		9.95	%
				Discount rate		10.07	%
Other real estate owned		2,236	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		10% to 20%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value	$	$136 to $527
				Selling Costs		6.00	%
Total	$	17,926

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

(b) The carrying value of premises held for sale was $1.8 million as of December 31, 2019.

There were no Level 1 or Level 2 non-recurring fair value measurements for the periods ended March 31, 2020 and December 31, 2019.

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, non-recurring fair value measurement adjustments relating to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral supporting commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Company. Upon assuming the real estate, the Company records the property at the fair value of the asset less the

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estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Premises held for sale. Assets held for sale, identified as part of the Company’s strategic review and branch optimization exercise, were transferred from premises and equipment at the lower of amortized cost or fair value less the estimated sales costs. Assets held for sale fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Summary of Estimated Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are included in the table below. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

	March 31, 2020
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	85,655	$	85,655	$	85,655	$	—	$	—
Securities available for sale		626,341		626,341		—		626,341		—
FHLB stock		19,897		19,897		—		19,897		—
Net loans		2,619,686		2,604,406		—		—		2,604,406
Accrued interest receivable		3,268		3,268		—		3,268		—
Cash surrender value of bank-owned life insurance policies		76,400		76,400		—		76,400		—
Derivative assets		25,026		25,026		—		24,933		93
Financial Liabilities
Non-maturity deposits	$	1,806,460	$	1,861,960	$	—	$	1,861,960	$	—
Time deposits		844,097		852,346		—		852,346		—
Short-term other borrowings		31,001		31,000		—		31,000		—
FHLB advances		404,579		410,065		—		410,065		—
FRB advances		62,000		62,000		—		62,000		—
Subordinated borrowings		59,849		59,849		—		59,849		—
Derivative liabilities		28,105		28,105		—		28,032		73

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	December 31, 2019
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	56,910	$	56,910	$	56,910	$	—	$	—
Securities available for sale		663,230		663,230		—		663,230		—
FHLB stock		20,679		20,679		—		20,679		—
Net loans		2,625,739		2,634,147		—		—		2,634,147
Accrued interest receivable		3,294		3,294		—		3,294		—
Cash surrender value of bank-owned life insurance policies		75,863		75,863		—		75,863		—
Derivative assets		6,850		6,850		—		6,791		59
Financial Liabilities
Non-maturity deposits	$	1,763,116	$	1,751,481	$	—	$	1,751,481	$	—
Time deposits		932,635		932,886		—		932,886		—
Short-term other borrowings		44,832		44,831		—		44,831		—
FHLB advances		426,564		425,989		—		425,989		—
Subordinated borrowings		59,920		59,920		—		59,920		—
Derivative liabilities		8,186		8,186		—		8,102		84

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which the estimate of fair value goes beyond the carrying value approximating fair value.

Loans, net. The fair value of loans are calculated on an individual basis with consideration given to the loans' underlying characteristics, including account types, remaining terms, annual interest rates or coupons, interest types, timing of principal and interest payments, current market rates, risk ratings, credit ratings and remaining balances. A discounted cash flow model is used to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, liquidity premiums, projected default probabilities, loss given defaults, and estimates of prevailing discount rates.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings. Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every 90 days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments including standby letters of credit and other financial guarantees and commitments are considered immaterial to the Company’s financial statements.

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NOTE 11.           REVENUE FROM CONTRACTS WITH CUSTOMER

The Company has accounted for the various non-interest revenue streams and related contracts under ASC 606.

Disaggregation of Revenue

The following tables present disaggregation of the Company’s non-interest revenue by major business line and timing of revenue recognition for the transfer of products or services:

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Major Products/Service Lines
Trust management fees	$	3,046	$	2,525
Financial services fees		323		233
Interchange fees		1,738		1,031
Customer deposit fees		1,110		907
Other customer service fees		264		226
Total	$	6,481	$	4,922

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Timing of Revenue Recognition
Products and services transferred at a point in time	$	3,273	$	2,267
Products and services transferred over time		3,208		2,655
Total	$	6,481	$	4,922

Trust Management Fees.

The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of service. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees.

Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of service requirements.

Interchange Fees.

The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees.

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to

54

customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service.

Other Customer Service Fees.

The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:

	Balance at		Balance at
(in thousands)	March 31, 2020		December 31, 2019
Balances from contracts with customers only:
Other Assets	$	1,336	$	1,703
Other Liabilities		3,014		3,114

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

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NOTE 12.           LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” and all subsequent ASUs modifying ASC 842. Substantially all of the leases pursuant to which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2040. All leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of ASC 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability using the modified retrospective approach.

The Company elected the following practical expedients in conjunction with implementation of ASC 842 as follows:

● Package of practical expedients:

o Lease classification as an operating lease under the prior standards is grandfathered.

o Re-evaluation of embedded leases evaluated under the prior standards is not required.

o No re-assessment of previously recorded initial direct lease costs.

● Election to exclude short-term leases (i.e., leases with initial terms of twelve months or less), from capitalization on the consolidated balance sheets.

The following table presents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities as of March 31, 2020:

(in thousands)		March 31, 2020		December 31, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	10,129	$	9,623
Lease Liabilities
Operating lease liabilities	Other liabilities		10,205		9,651

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. If there are multiple renewals typically only the next lease renewal is considered. Regarding the discount rate, ASC 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

The following table presents the weighted average lease term and discount rate of the Company’s leases:

	March 31, 2020		December 31, 2019
Weighted-average remaining lease term (in years)
Operating leases	9.52		8.96
Weighted-average discount rate
Operating leases	3.30	%	3.27	%

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The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.

	Three Months Ended		Three Months Ended
(in thousands)	March 31, 2020		March 31, 2019
Lease Costs
Operating lease cost	$	234	$	231
Variable lease cost		144		124
Total lease cost	$	378	$	355

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2020 are, as follows:

(in thousands)	Operating Leases
Twelve Months Ended:
March 31, 2021	$	1,285
March 31, 2022		1,300
March 31, 2023		1,319
March 31, 2024		1,323
March 31, 2025		1,240
Thereafter		6,495
Total future minimum lease payments		12,962
Amounts representing interest		(2,757)
Present value of net future minimum lease payments	$	10,205

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NOTE 13.           SUBSEQUENT EVENTS

There were no significant subsequent events between March 31, 2020 and through the date the financial statements are available to be issued.

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ITEM 2.           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Management’s discussion and analysis of financial condition and results of operations is intended to assist in understanding the financial condition and results of operations of the Company. The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this document and with the Company’s consolidated financial statements and the notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. In the following discussion, income statement comparisons are against the same period of the previous year and balance sheet comparisons are against the previous fiscal year-end, unless otherwise noted. Operating results discussed herein are not necessarily indicative of the results for the full year 2020 or any future period. In management’s discussion and analysis of financial condition and results of operations, certain reclassifications have been made to make prior periods comparable.

Bar Harbor Bankshares (the “Company”) is the parent of Bar Harbor Bank & Trust (the “Bank”), which is the only community bank headquartered in Northern New England with branches in Maine, New Hampshire and Vermont. The Bank is a true community bank providing exceptional commercial, retail, and wealth management banking services from over 50 locations. The Company’s corporate goal is to be among the most profitable banks in New England, and its business model is centered on the following:

● Employee and customer experience is the foundation of superior performance, which leads to significant financial benefit to shareholders

● Geography, heritage and performance are key while remaining true to a community culture

● Strong commitment to risk management while balancing growth and earnings

● Service and sales driven culture with a focus on core business growth

● Fee income is fundamental to the Company's profitability through trust and treasury management services, customer derivatives and secondary market mortgage banking

● Investment in processes, products, technology, training, leadership and infrastructure

● Expansion of the Company’s brand and business to deepen market presence

● Opportunity and growth for existing employees while adding catalyst recruits across all levels of the Company

Shown below is a profile of the Company as of March 31, 2020:

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SELECTED FINANCIAL DATA

The following summary data is based in part on the consolidated financial statements and accompanying notes and other information appearing elsewhere in this or prior Forms 10-Q.

	Three Months Ended
	March 31,
	2020			2019
PER SHARE DATA
Net earnings, diluted	$	0.50		$	0.47
Adjusted earnings, diluted(1)		0.50			0.47
Total book value		25.90			24.54
Tangible book value(1)		17.70			17.63
Market price at period end		17.28			25.87
Dividends		0.22			0.20
PERFORMANCE RATIOS(2)
Return on assets		0.85	%		0.83	%
Adjusted return on assets(1)		0.86			0.83
Return on equity		7.64			7.83
Adjusted return on equity(1)		7.71			7.83
Adjusted return on tangible equity(1)		11.54			11.19
Net interest margin, fully taxable equivalent (FTE)(1) (3)		3.06			2.77
Net interest margin (FTE), excluding purchased loan accretion(3)		2.99			2.67
Efficiency ratio(1)		64.82			63.94
GROWTH (Year-to-date)(1)
Total commercial loans		6.4	%		(3.3)	%
Total loans		(0.9)			5.9
Total deposits		(6.7)			(2.8)
FINANCIAL DATA (In millions)
Total assets	$	3,677		$	3,629
Total earning assets(4)		3,269			3,312
Total investments		646			782
Total loans		2,635			2,527
Allowance for loan losses		15			14
Total goodwill and intangible assets		129			107
Total deposits		2,651			2,466
Total shareholders' equity		404			381
Net income		8			7
Adjusted income(1)		8			7
ASSET QUALITY AND CONDITION RATIOS
Net charge-offs (current quarter annualized)/average loans		0.18	%		0.03	%
Allowance for loan losses/total loans		0.58			0.55
Loans/deposits		99			102
Shareholders' equity to total assets		10.98			10.50
Tangible shareholders' equity to tangible assets(1)		7.77			7.77

(1) Non-GAAP financial measure. Refer to the Reconciliation of Non-GAAP Financial Measures section of Management's Discussion and Analysis for additional information.

(2) All performance ratios are annualized and are based on average balance sheet amounts, where applicable.

(3) Fully taxable equivalent considers the impact of tax-advantaged investment securities and loans.

(4) Earning assets includes non-accruing loans and securities are valued at amortized cost.

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CONSOLIDATED LOAN AND DEPOSIT ANALYSIS

The following tables present the quarterly trend in loan and deposit data and accompanying quarterly growth rates as of March 31, 2020 on an annualized basis:

LOAN ANALYSIS

											Annualized
											Growth %
	March 31,		December 31,		September 30,		June 30,		March 31,		March 31,
(in thousands, except ratios)	2020		2019		2019		2019		2019		2020
Commercial real estate	$	948,178	$	930,661	$	923,773	$	881,479	$	821,567	7.5	%
Commercial and industrial		321,605		318,988		301,590		312,029		305,185	3.3
Total commercial loans		1,269,783		1,249,649		1,225,363		1,193,508		1,126,752	6.4
Residential real estate		1,132,328		1,151,857		1,143,452		1,167,759		1,184,053	(6.8)
Consumer		128,120		135,283		107,375		112,275		111,402	(21.2)
Tax exempt and other		104,752		104,303		101,116		104,696		104,752	1.7
Total loans	$	2,634,983	$	2,641,092	$	2,577,306	$	2,578,238	$	2,526,959	(0.9)	%

DEPOSIT ANALYSIS

											Annualized
											Growth %
	March 31,		December 31,		September 30,		June 30,		March 31,		March 31,
(in thousands, except ratios)	2020		2019		2019		2019		2019		2020
Demand	$	400,410	$	414,534	$	380,707	$	354,125	$	342,030	(13.6)	%
NOW		578,320		575,809		490,315		472,576		470,277	1.7
Savings		423,345		388,683		360,570		352,657		346,813	35.7
Money market		404,385		384,090		359,328		305,506		349,833	21.1
Total non-maturity deposits		1,806,460		1,763,116		1,590,920		1,484,864		1,508,953	9.8
Total time deposits		844,097		932,635		902,665		996,512		956,818	(38.0)
Total deposits	$	2,650,557	$	2,695,751	$	2,493,585	$	2,481,376	$	2,465,771	(6.7)	%

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AVERAGE BALANCES AND AVERAGE YIELDS/RATES

The following tables present average balances and average yields and rates on an annualized fully taxable equivalent basis for the periods included:

	Three Months Ended March 31,
	2020						2019
	Average						Average
(in thousands, except ratios)	Balance		Interest(3)		Yield/Rate(3)		Balance		Interest(3)		Yield/Rate(3)
Assets
Commercial real estate	$	945,851	$	10,484	4.46	%	$	825,596	$	9,721	4.78	%
Commercial and industrial		423,393		5,151	4.89			405,107		4,786	4.79
Residential		1,141,908		10,909	3.84			1,143,862		11,126	3.94
Consumer		130,471		1,688	5.20			113,060		1,464	5.25
Total loans (1)		2,641,623		28,232	4.30			2,487,625		27,097	4.42
Securities and other (2)		661,848		5,813	3.53			777,458		6,645	3.47
Total earning assets		3,303,471		34,045	4.14	%		3,265,083		33,742	4.19	%
Other assets		358,288						295,957
Total assets	$	3,661,759					$	3,561,040
Liabilities
NOW	$	570,127	$	565	0.40	%	$	468,392	$	583	0.51	%
Savings		410,931		258	0.25			346,707		163	0.19
Money market		373,650		934	1.01			335,882		1,141	1.38
Time deposits		892,654		4,263	1.92			894,160		4,416	2.00
Total interest bearing deposits		2,247,362		6,020	1.08			2,045,141		6,303	1.25
Borrowings		556,824		2,911	2.10			761,885		5,155	2.74
Total interest bearing liabilities		2,804,186		8,931	1.28	%		2,807,026		11,458	1.66	%
Non-interest bearing demand deposits		406,951						351,362
Other liabilities		44,343						25,520
Total liabilities		3,255,480						3,183,908
Total shareholders' equity		406,279						377,132
Total liabilities and shareholders' equity	$	3,661,759					$	3,561,040
Net interest spread					2.86	%					2.53	%
Net interest margin					3.06						2.77

(1) The average balances of loans include non-accrual loans and unamortized deferred fees and costs.

(2) The average balance for securities available for sale is based on amortized cost.

(3) Fully taxable equivalent considers the impact of tax-advantaged securities and loans.

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NON-GAAP FINANCIAL MEASURES

This document contains certain non-GAAP financial measures in addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These non-GAAP measures are intended to provide the reader with additional supplemental perspectives on operating results, performance trends, and financial condition. Non-GAAP financial measures are not a substitute for GAAP measures; they should be read and used in conjunction with the Company's GAAP financial information. A reconciliation of non-GAAP financial measures to GAAP measures is provided below. In all cases, it should be understood that non-GAAP measures do not depict amounts that accrue directly to the benefit of shareholders. An item that management excludes when computing non-GAAP adjusted earnings can be of substantial importance to the Company's results for any particular quarter or year. The Company's non-GAAP adjusted earnings information set forth is not necessarily comparable to non- GAAP information that may be presented by other companies. Each non-GAAP measure used by the Company in this report as supplemental financial data should be considered in conjunction with the Company's GAAP financial information.

The Company utilizes the non-GAAP measure of adjusted earnings in evaluating operating trends, including components for adjusted revenue and expense. These measures exclude amounts that the Company views as unrelated to its normalized operations, including gains/losses on securities, premises, equipment and other real estate owned, acquisition costs, restructuring costs, legal settlements, and systems conversion costs. Non-GAAP adjustments are presented net of an adjustment for income tax expense.

The Company also calculates adjusted earnings per share based on its measure of adjusted earnings. The Company views these amounts as important to understanding its operating trends, particularly due to the impact of accounting standards related to acquisition activity. Analysts also rely on these measures in estimating and evaluating the Company's performance. Management also believes that the computation of non-GAAP adjusted earnings and adjusted earnings per share may facilitate the comparison of the Company to other companies in the financial services industry. The Company also adjusts certain equity related measures to exclude intangible assets due to the importance of these measures to the investment community.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

The following table summarizes the reconciliation of non-GAAP items for the time periods presented:

		Three Months Ended March 31,
(in thousands)			2020		2019
GAAP net income		$	7,721	$	7,281
Plus (less):
Gain on sale of securities, net			(135)		—
Loss on sale of premises and equipment, net			92		—
Loss on other real estate owned			31		—
Acquisition, restructuring and other expenses			103		—
Income tax expense(1)			(22)		—
Total adjusted income(2)	(A)	$	7,790	$	7,281
GAAP net interest income	(B)	$	24,563	$	21,765
Plus: Non-interest income			8,421		6,167
Total Revenue			32,984		27,932
Less: Gain on sale of securities, net			(135)		—
Total adjusted revenue(2)	(C)	$	32,849	$	27,932
GAAP total non-interest expense		$	22,359	$	18,624
Less: Loss on sale of premises and equipment, net			(92)		—
Less: Loss on other real estate owned			(31)		—
Less: Acquisition, restructuring and other expenses			(103)		—
Adjusted non-interest expense(2)	(D)	$	22,133	$	18,624
(in millions)
Total average earning assets	(E)	$	3,306	$	3,265
Total average assets	(F)		3,662		3,561
Total average shareholders' equity	(G)		406		377
Total average tangible shareholders' equity(2)(3)	(H)		278		270
Total tangible shareholders' equity, period-end(2)(3)	(I)		276		274
Total tangible assets, period-end(2)(3)	(J)		3,549		3,522
(in thousands)
Total common shares outstanding, period-end	(K)		15,587		15,524
Average diluted shares outstanding	(L)		15,593		15,587
Adjusted earnings per share, diluted	(A/L)	$	0.50	$	0.47
Tangible book value per share, period-end(2)	(I/K)		17.70		17.63
Securities adjustment, net of tax(1)(4)	(M)		9,560		(1,842)
Tangible book value per share, excluding securities adjustment(2)(4)	(I+M)/K		17.09		17.75
Total tangible shareholders' equity/total tangible assets(2)	(I/J)		7.77		7.77

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			Three Months Ended March 31,
Performance ratios(5)				2020			2019
Return on assets		%		0.85	%		0.83	%
Adjusted return on assets(2)	(A/F)			0.86			0.83
Return on equity				7.64			7.83
Adjusted return on equity(2)	(A/G)			7.71			7.83
Adjusted return on tangible equity(2)(6)	(A+Q)/H			11.54			11.19
Efficiency ratio(2)(7)	(D-O-Q)/(C+N)			64.82			63.94
Net interest margin(2)	(B+P)/E			3.06			2.77
Supplementary data (in thousands)
Taxable equivalent adjustment for efficiency ratio	(N)		$	719		$	684
Franchise taxes included in non-interest expense	(O)			119			120
Tax equivalent adjustment for net interest margin	(P)			551			515
Intangible amortization	(Q)			256			207

(1) Assumes a marginal tax rate of 23.87% in 2020. A marginal tax rate of 23.78% was used in 2019.

(2) Non-GAAP financial measure.

(3) Tangible shareholders' equity is computed by taking total shareholders' equity less the intangible assets at period-end. Tangible assets is computed by taking total assets less the intangible assets at period-end.

(4) Securities adjustment, net of tax represents the total unrealized loss on available-for-sale securities recorded on the Company's consolidated balance sheets within total common shareholders' equity.

(5) All performance ratios are based on average balance sheet amounts, where applicable.

(6) Adjusted return on tangible equity is computed by taking adjusted earnings divided by shareholders’ equity less the tax-effected amortization of intangible assets, assuming a marginal rate of 23.87% for the first quarter of 2020 and the fourth quarter of 2019, and 23.78% in the first three quarters of 2019.

(7) Efficiency ratio is computed by dividing adjusted non-interest expense net of franchise taxes and intangible amortization divided by core revenue on a fully taxable equivalent basis.

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FINANCIAL SUMMARY

The Company reported first quarter 2020 net income of $7.7 million or $0.50 per share, a 6% increase in net income over the same quarter of 2019 of $7.3 million or $0.47 per share. Financial highlights for the first quarter 2020 include the following (compared to the first quarter of 2019, unless otherwise noted):

● 6% annualized growth in commercial loans

● 10% annualized growth in non-maturity deposits

● 99% loan to deposit ratio, improved from 102%

● 3.06% net interest margin compared to 2.77%

● 37% increase in non-interest income

● 0.38% non-accruing loans to total loans compared to 0.66%

The Company’s financial performance in the first quarter 2020 was strong while quickly shifting efforts to address COVID-19 developments.  The Company is fully dedicated to supporting customers and employees during these difficult times and is confident in the strength of its operating model.  

While focusing on the challenges posed by the health crisis in the first quarter, the Company remains committed to its cornerstone of business operations: Risk management, ranging from underwriting practices to what is now at the forefront, crisis management and business continuity planning.  From the onset of the crisis, the Company has maintained open communication with customers and employees alike, and transitioned to a mostly remote working environment.  This transition was smooth given the readiness of the Company’s information technology and operations departments.  The Company modified its branch model providing safety to customers and employees while balancing a personalized touch to meet the needs of its customers.  These modifications include transitioning to mostly drive-up and walk-up windows along with in person meetings by appointment when necessary.  The investments the Company has made in the past few years in online and mobile banking platforms have been essential with the current environment while helping to accelerate adoption rates.          

The Company recognizes the importance of liquidity, especially in the current economic environment.  Therefore, the Company has opportunistically and appropriately utilized many of the various federal programs in an effort to insulate from potential risk and uncertainty.  Further supporting capital levels and the balance sheet the Company recently refinanced and upsized its subordinated debt in the fourth quarter 2019.  Loan volumes were significant this quarter as originations offset elevated payoff levels as typically seen with the lower rate environment.  Growth in commercial loans offset the decrease in the residential portfolio as the Company strategically moved most of production to the secondary market.  The Company also successfully rolled out the Small Business Administration (SBA) Paycheck Protection Program (PPP) in an effort to help its business partners and communities.  As of April 30, 2020, the Company has over 1,500 PPP loans approved by the SBA with a total balance of $127 million.  In addition, the Company has modified close to 500 existing loans, representing $271 million in balances.  The loans modified under these deferment plans are still accruing interest and all contractual principal and interest is expected to be collected.    

The Company’s loan portfolio remains diverse with over 80 different industries and several geographies limiting concentration risk, which is further mitigated by the specific type and strength of the borrowers.  These credit relationships are proven successful operators in their industry and have weathered difficult economic times in the past.  The Company continues to carefully review opportunities with proven borrowers while also stress testing the portfolio regularly.  

Given the recently passed CARES Act, the Company has elected to defer the new accounting for the allowance for loan losses known as “CECL” to prioritize resources around customers and communities.  At the same time, the Company increased the allowance for loan losses during the quarter due to elevated qualitative economic factors at quarter end.  Overall, the Company’s liquidity, capital ratios and overall balance sheet position are strong.  Additionally, the Company’s reliance on wholesale borrowing is further declining and the ability to access such funding sources at fair pricing is significant.

The Company continues to execute strategies that will benefit long-term profitability while being mindful of the short-term challenges and operating environment.  Lower interest rates and the divergence in FHLB borrowings and brokered

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deposit spreads has provided the Company with an opportunity to lock into favorable rates with longer maturities.  The benefits of these activities, along with the balance sheet strategies executed last year, are unveiled as the Company’s net interest margin expanded nearly 30 basis points during the quarter.  Non-interest income has also improved for the quarter as the Company continues to provide hedging transactions to help meet customers’ needs.  While trust and investment management fee income is up significantly over prior year, it is also sensitive to market conditions and could vary as market dynamics persist with the pandemic.  In summary, the Company is focused on activities that create value for long-term shareholders as it continues to build tangible book value at a quarterly annualized rate of close to 10%.

COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2020 AND DECEMBER 31, 2019

Summary

Total assets were $3.7 billion at the end of the first quarter 2020 and at year-end 2019. Asset quality metrics remain strong with an allowance for credit losses to total loans ratio of 0.58% with a coverage ratio to non-accruing loans at 152%, up from 133% as of year-end 2019. The loan to deposit ratio was 99% compared to 98% at year-end 2019 due to lower deposits in the first quarter. The Company's tangible book value per share increased 9%, on annualized basis, in the first quarter 2020.

Securities

Securities totaled $646.2 million in the first quarter 2020 and $683.9 million at year-end 2019 representing 18% and 19% of total assets, respectively.  The decrease in the first quarter is consistent with the Company strategy to de-lever and remix the investment portfolio resulting in a higher year-over-year yield along with lower borrowing levels.  Securities purchased in the first quarter 2020 included $13.2 million of mortgage-backed securities guaranteed by US Government-sponsored enterprises, $2.5 million of corporate bonds, and a net $782 thousand decrease in FHLB stock. The purchases were offset by $58.0 million of sales, maturities, calls and pay-downs of amortizing securities.  Fair value adjustments increased the security portfolio by $12.7 million at the end of the first quarter 2020 and $7.3 million at year-end 2019.  The improvement in the fair value continues to be the result of lower long-term interest rates.  The weighted average yield on the Company's securities profile as of March 31, 2020 was 3.20% for the quarter compared to 3.42% at year-end 2019.  At the end of the first quarter 2020 securities held by the Company had an average life of 5.1 years and a duration of 2.7 years compared to 5.0 years and 3.6 years at the end of 2019, respectively.

Loans

Loan balances in the first quarter 2020 were $2.6 billion, flat with year-end 2019.  Total commercial loans grew at an annualized rate of 6% led by commercial real estate with an annualized growth rate of 8% as the Company executed on an expanded pipeline.  Residential real estate loans were relatively flat with the fourth quarter as originations maintained, but were offset by secondary market sales and payoff activity.  Payoff activity was experienced across all products lines as seasoned borrowers refinanced given the lower rate environment.  Although the commercial portfolio grows each quarter, the product mix of total commercial loans remains diversified among 80 industries throughout many geographic regions.  Average yields from loans were 4.30% in the first quarter 2020 as variable rate loans repriced compared with 4.33% in the fourth quarter 2019.          

Asset Quality

The allowance for loan losses totaled $15.3 million at the end of the first quarter 2020 and $14.4 at year-end 2019.  In the first quarter 2020, the Company elected to defer implementation of CECL as allowed under the CARES Act.  As result, the Company continues to operate its incurred loss model, which has been adjusted higher to reflect current economic conditions.  Increases to the allowance associated with those adjustments were offset by improvements in other credit quality factors including several specifically reserved loans that were settled at approximate book value.  Past due accounts between 30 to 89 days as a percentage of total loans was 0.84% for the first quarter compared to 0.74% at year-end 2019.  The majority of the customers in that range have a history of making payments on a cycle that is about 30 days overdue and is not likely an indication of deteriorated credit quality.

Goodwill

Given current events and the economic situation associated with COVID-19 along with the variation of the Company’s stock price, the fair value of the Company’s business and test for goodwill impairment is required under accounting standards.  The Company’s models suggest that the fair value of the business is greater than the book value or market

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capitalization based on the price at which the stock is currently trading.  While the Company concluded there is no goodwill impairment in the first quarter 2020, it will continue to evaluate its position as economic conditions change.  

Deposits and Borrowings

Total deposits were $2.7 billion at the end of the first quarter 2020 and year-end 2019.  Non-maturity deposits increased to $1.8 billion, 10% on annualized basis, during the first quarter 2020.  The Company's expanding branch model has helped to increase new accounts, which totaled 3,071 in the first quarter 2020 compared to 2,918 in the fourth quarter 2019 excluding acquired balances. Time deposits decreased $88.6 million, due to the Company's strategy to target lower rate and longer duration funding sources. The average cost of deposits decreased to 1.08% from 1.19% in the fourth quarter 2019 reflecting the Federal Reserve Bank short-term rate cuts in current and prior quarters.  Total borrowings increased by $26.1 million as the Company took advantage of lower FRB and FHLB rates opposed to other funding sources.  Borrowing costs improved to 2.10% from 2.30% in the fourth 2019 as a result of cuts in short-term interest rates.

Derivative Financial Instruments

The notional balance of derivative financial instruments increased to $672.1 million at the end of the first quarter 2020 from $580.4 million at year-end 2019.  The increase is principally due to a $47.8 million increase in customer loan derivatives sold on commercial loans with matching hedges using national bank counterparties and a $42.5 million in forward commitments to sell mortgages in the secondary market.  The net fair value of all derivatives was a liability of $3.1 at the end of the first quarter 2020 compared to $743 thousand at year-end 2019. The increase in the net derivative liability primarily reflects the valuation of the Company’s interest rate swaps on wholesale funding based on lower market rates at the end of the first quarter 2020.

Equity

Total equity was $403.8 million, compared with $396.4 million at year-end 2019. The Company's book value per share increased to $25.90 at the end of the first quarter 2020 from $25.48 at year-end 2019.  The increase includes a $4.0 million improvement in fair value of securities, net of tax, along with strong net income of $7.7 million offset by $3.4 million in dividends. The Company evaluates changes in tangible book value, a non-GAAP financial measure that is a commonly used valuation metric in the investment community, which parallels some regulatory capital measures. Tangible book value per share (non-GAAP measure) increased to $17.70 per share at year-end 2019 up from $17.30 per share at year-end 2019; an increase of 9% on annualized basis.

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019

Summary

Net income in the first quarter 2020 was $7.7 million, or $0.50 per diluted share, compared with $7.3 million, or $0.47 per diluted share, in the same quarter 2019.  Noteworthy improvements in net income include a lower cost of funds and increased non-interest income offset in part by higher operational expenses.  The Company's return on assets ratio was 0.85% during the first quarter of 2020 and 0.83% in the same quarter of 2019 and the return on equity ratio was 7.64% and 7.83% for the same respective periods.

Net Interest Income

Net interest income was $24.6 million compared with $21.8 million in the same quarter of 2019 and net interest margin was 3.06% and 2.77% for the same respective periods.  The increase is primarily driven by lower borrowing levels as the average balance decreased to $557 million in the first quarter 2020 from $762 million in the first quarter of 2019 due to deleveraging strategies executed in late 2019 and a lower cost of funds.  The balance sheet strategies executed during the second half of last year along with the rate cuts experienced in the first quarter reduced borrowing rates to 2.10% from 2.74% and interest-bearing deposits rates to 1.08% from 1.25% in the first quarter 2019.  The Company continues to optimize its funding sources to take advantage of this lower rate environment through a mixture of various debt and derivative instruments.  Yields from earning assets declined to 4.14% from 4.19% in the first quarter 2019 reflecting loan originations and repricing of variable rate products in a lower interest rate environment.  Purchase loan accretion contributed 0.08% to net interest margin in the first quarter 2020 compared to 0.10% in the first quarter 2019.  The loan to deposit ratio was 99% in the first quarter 2020 as the Company maintained its fourth quarter 2019 deposit levels, which is due to strong customer relationships within its branch model.

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Loan Loss Provision

The first quarter 2020 provision for loan losses increased to $1.1 million from $324 thousand in the same quarter 2019.  As noted above, the Company is maintaining its incurred loss model for calculating the allowance for loan losses.  The year-over-year increase in the provision for loan losses is due to qualitative adjustments made to reflect a downward economic trend in the first quarter 2020.  Those downward adjustments were offset in part by improvements in other credit quality factors such as charge-off history and underwriting practices.  While the impact of the health crisis is uncertain, we believe the existing allowance for loan losses is sufficient to absorb inherent losses based on a disciplined credit approach, experienced losses and methodology, and current review of the portfolio.        

Non-Interest Income

Non-interest income in the first quarter 2020 increased 37% to $8.4 million from $6.2 million in the same quarter in 2019.  Trust income was $3.4 million in the first quarter 2020, up 22% from the same quarter of 2019 based on higher assets under management within an expanded footprint given the branch acquisition which closed in October 2019.  Customer service fees also increased significantly to $3.1 million compared to $2.2 million from the same quarter of 2019 due to transaction growth from a higher customer base.  Customer loan derivative income also contributed $588 thousand to non-interest income in the first quarter 2020 as demand for these products remains strong within the commercial loan pipeline.

Non-Interest Expense

Non-interest expense was $22.4 million in the first quarter 2020 compared to $18.6 million in the same quarter of 2019.  The increase is primarily due to higher salary and benefit and occupancy and equipment costs to support the Company’s expanded branch model and wealth management business.

Income Tax Expense

The first quarter effective tax rate decreased to 18.8% in 2020 compared with 19.0% in the same quarter of 2019, reflecting a higher level of tax-advantaged income.

Liquidity and Cash Flows

Liquidity is measured by the Company's ability to meet short-term cash needs at a reasonable cost or minimal loss. The Company seeks to obtain favorable sources of liabilities and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Besides serving as a funding source for maturing obligations, liquidity provides flexibility in responding to customer-initiated needs. Many factors affect the Company's ability to meet liquidity needs, including variations in the markets served by its network of offices, its mix of assets and liabilities, reputation and credit standing in the marketplace, and general economic conditions.

The Bank actively manages its liquidity position through target ratios established under its Asset-Liability Management Policy. Continual monitoring of these ratios, by using historical data and through forecasts under multiple rate and stress scenarios, allows the Bank to employ strategies necessary to maintain adequate liquidity. The Bank's policy is to maintain a liquidity position of at least 4% of total assets. A portion of the Bank's deposit base has been historically seasonal in nature, with balances typically declining in the winter months through late spring, during which period the Bank's liquidity position tightens.

At March 31, 2020, same day available liquidity totaled approximately $1.2 billion, including cash, borrowing capacity at the Federal Home Loan Bank of Boston (“FHLB”) and the Federal Reserve Discount Window and various lines of credit. Additional sources of liquidity include cash flows from operations, wholesale deposits, cash flow from the Bank's amortizing securities and loan portfolios. At March 31, 2020, the Company had unused borrowing capacity at the FHLB of $539.0 million, unused borrowing capacity at the Federal Reserve of $27.0 million and unused lines of credit totaling $51.0 million.

The Bank maintains a liquidity contingency plan approved by the Bank's Board of Directors. This plan addresses the steps that would be taken in the event of a liquidity crisis, and identifies other sources of liquidity available to the Company. Company management believes the level of liquidity is sufficient to meet current and future funding requirements. However, changes in economic conditions, including consumer savings habits and availability or access to the brokered deposit market could potentially have a significant impact on the Company's liquidity position.

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Off-Balance Sheet Arrangements

The Company is, from time to time, a party to certain off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that may be material to investors.

The Company’s off-balance sheet arrangements are limited to standby letters of credit whereby the Bank guarantees the obligations or performance of certain customers. These letters of credit are sometimes issued in support of third-party debt. The risk involved in issuing standby letters of credit is essentially the same as the credit risk involved in extending loan facilities to customers, and they are subject to the same origination, portfolio maintenance and management procedures in effect to monitor other credit products. The amount of collateral obtained, if deemed necessary by the Bank upon issuance of a standby letter of credit, is based upon management's credit evaluation of the customer.

The Company’s off-balance sheet arrangements have not changed materially since previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

APPLICATION OF CRITICAL ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES, AND RECENT ACCOUNTING PRONOUNCEMENTS

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements in this Form 10-Q and in the most recent Form 10-K. Please see those policies in conjunction with this discussion. The accounting and reporting policies followed by the Company conform, in all material respects, to accounting principles generally accepted in the United States and to general practices within the financial services industry. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. While the Company bases estimates on historical experience, current information and other factors deemed to be relevant, actual results could differ from those estimates.

Management has identified the Company's most critical accounting policies as related to:

• Allowance for Loan Losses

• Acquired Loans

• Income Taxes

• Goodwill and Identifiable Intangible Assets

• Determination of Other-Than-Temporary Impairment of Securities

• Fair Value of Financial Instruments

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ITEM 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk is the risk of loss in a financial instrument arising from adverse changes in market rates/prices, such as interest rates, foreign currency exchange rates, commodity prices and equity prices. Interest rate risk is the most significant market risk affecting the Company. Other types of market risk do not arise in the normal course of the Company’s business activities.

The responsibility for interest rate risk management oversight is the function of the Bank’s Asset and Liability Committee (“ALCO”), chaired by the Chief Financial Officer and composed of various members of senior management. ALCO meets regularly to review balance sheet structure, formulate strategies in light of current and expected economic conditions, adjust product prices as necessary, implement policy, monitor liquidity, and review performance against guidelines established to control exposure to the various types of inherent risk.

Interest Rate Risk: Interest rate risk can be defined as an exposure to movement in interest rates that could have an adverse impact on the Bank's net interest income. Interest rate risk arises from the imbalance in the re-pricing, maturity and or cash flow characteristics of assets and liabilities. Management's objectives are to measure, monitor and develop strategies in response to the interest rate risk profile inherent in the Bank's balance sheet. The objectives in managing the Bank's balance sheet are to preserve the sensitivity of net interest income to actual or potential changes in interest rates, and to enhance profitability through strategies that promote sufficient reward for understood and controlled risk.

The Bank's interest rate risk measurement and management techniques incorporate the re-pricing and cash flow attributes of balance sheet and off-balance sheet instruments as each relate to current and potential changes in interest rates. The level of interest rate risk, measured in terms of the potential future effect on net interest income, is determined through the use of modeling and other techniques under multiple interest rate scenarios. Interest rate risk is evaluated in depth on a quarterly basis and reviewed by ALCO and the Company’s Board of Directors.

The Bank's Asset Liability Management Policy, approved annually by the Bank’s Board of Directors, establishes interest rate risk limits in terms of variability of net interest income under rising, flat, and decreasing rate scenarios. It is the role of the ALCO to evaluate the overall risk profile and to determine actions to maintain and achieve a posture consistent with policy guidelines.

Interest Rate Sensitivity Modeling: The Bank utilizes an interest rate risk model widely recognized in the financial industry to monitor and measure interest rate risk. The model simulates the behavior of interest income and expense for all balance sheet and off-balance sheet instruments, under different interest rate scenarios together with a dynamic future balance sheet. Interest rate risk is measured in terms of potential changes in net interest income based upon shifts in the yield curve.

The interest rate risk sensitivity model requires that assets and liabilities be broken down into components as to fixed, variable, and adjustable interest rates, as well as other homogeneous groupings, which are segregated as to maturity and type of instrument. The model includes assumptions about how the balance sheet is likely to evolve through time and in different interest rate environments. The model uses contractual re-pricing dates for variable products, contractual maturities for fixed rate products, and product-specific assumptions for deposit accounts, such as money market accounts, that are subject to re-pricing based on current market conditions. Re-pricing margins are also determined for adjustable rate assets and incorporated in the model. Investment securities and borrowings with call provisions are examined on an individual basis in each rate environment to estimate the likelihood of a call. Prepayment assumptions for mortgage loans and mortgage-backed securities are developed from industry median estimates of prepayment speeds, based upon similar coupon ranges and degree of seasoning. Cash flows and maturities are then determined, and for certain assets, prepayment assumptions are estimated under different interest rate scenarios. Interest income and interest expense are then simulated under several hypothetical interest rate conditions including:

● A flat interest rate scenario in which current prevailing rates are locked in and the only balance sheet fluctuations that occur are due to cash flows, maturities, new volumes, and re-pricing volumes consistent with this flat rate assumption;

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● A 200 basis point rise or decline in interest rates applied against a parallel shift in the yield curve over a twelve-month horizon together with a dynamic balance sheet anticipated to be consistent with such interest rate changes;

● Various non-parallel shifts in the yield curve, including changes in either short-term or long-term rates over a twelve-month horizon, together with a dynamic balance sheet anticipated to be consistent with such interest rate changes; and

● An extension of the foregoing simulations to each of two, three, four and five year horizons to determine the interest rate risk with the level of interest rates stabilizing in years two through five. Even though rates remain stable during this two to five year time period, re-pricing opportunities driven by maturities, cash flow, and adjustable rate products will continue to change the balance sheet profile for each of the interest rate conditions.

Changes in net interest income based upon the foregoing simulations are measured against the flat interest rate scenario and actions are taken to maintain the balance sheet interest rate risk within established policy guidelines.

As of March 31, 2020 interest rate sensitivity modeling results indicate that the Bank’s balance sheet in years 1 and 2 were slightly asset sensitive.

Assuming short-term and long-term interest rates decline 100 basis points from current levels (i.e., a parallel yield curve shift) and the Bank’s balance sheet structure and size remain at current levels, management believes net interest income will deteriorate over the one year horizon (-2.2% versus the base case) while deteriorating further from that level over the two-year horizon (-6.4% versus the base case).

Assuming the Bank’s balance sheet structure and size remain at current levels and the Federal Reserve increases short-term interest rates by 200 basis points with the balance of the yield curve shifting in parallel with these increases, management believes net interest income will improve slightly over the one and two-year horizons (1.2% and 3.6%, respectively).

As compared to December 31, 2019, the year-one sensitivity in the down 100 basis points scenario was down slightly for the three months ended March 31, 2020 (-1.0% prior, versus -2.2% current). The year-two sensitivities in the down 100 basis points scenario changed going from -3.7% to -6.4%. In the year-one up 200 basis points scenario, results improved going from .7% to 1.2%. Year-two, up 200 basis points was flat (3.3% prior, versus 3.6% current).

The preceding sensitivity analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions including: the nature and timing of interest rate levels and yield curve shape, prepayment speeds on loans and securities, deposit rates, pricing decisions on loans and deposits, reinvestment or replacement of asset and liability cash flows, and renegotiated loan terms with borrowers. While assumptions are developed based upon current economic and local market conditions, the Company cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences might change.

As market conditions vary from those assumed in the sensitivity analysis, actual results may also differ due to: prepayment and refinancing levels deviating from those assumed; the impact of interest rate changes, caps or floors on adjustable rate assets; the potential effect of changing debt service levels on customers with adjustable rate loans; depositor early withdrawals and product preference changes; and other such variables. The sensitivity analysis also does not reflect additional actions that the Bank’s Senior Executive Team and Board of Directors might take in responding to or anticipating changes in interest rates, and the anticipated impact on the Bank’s net interest income.

72

ITEM 4.           CONTROLS AND PROCEDURES

(a) Disclosure controls and procedures.

Under the supervision and with the participation of our senior management, consisting of the Company’s principal executive officer and our principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, the Company’s management, including its principal executive officer and principal financial officer, concluded that as of March 31, 2020 the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in its Exchange Act reports is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter 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 and its subsidiaries are parties to certain ordinary routine litigation incidental to the normal conduct of their respective businesses, which in the opinion of management based upon currently available information will have no material effect on the Company's consolidated financial statements.

ITEM 1A.          RISK FACTORS

The disclosures below supplement the risk factors previously disclosed under Item 1A. of the Company’s 2019 Annual Report on Form 10-K.

The COVID-19 pandemic may adversely impact our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic is creating extensive disruptions to the economy and to the lives of individuals.  Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, many of the risk factors identified in our Form 10-K could be exacerbated and such effects could have an adverse impact on us in a number of ways related to credit quality, collateral values, customer demand, funding, operations, interest rate risk, and human capital.

73

ITEM 2.           UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)The following table provides certain information with regard to shares repurchased by the Company in the first quarter of 2020:

				Total number of shares	Maximum number of
				purchased as a part of	shares that may yet be
	Total number of	Average price		publicly announced	purchased under
Period	shares purchased	paid per share		plans or programs	the plans or programs(1)
January 1-31, 2020	—	$	—	—	776,000
February 1-29, 2020	—		—	—	776,000
March 1-31, 2020	—		—	—	781,000
Total	—	$	—	—	781,000

(1) On March 12, 2019 and March 12, 2020 the Company's Board of Directors approved a twelve-month plan to repurchase up to 5% of its outstanding common stock, representing 776,000 and 781,000 shares, respectively. The current stock repurchase plan expires on March 20, 2021.

74

ITEM 6.           EXHIBITS

31.1	Certification of Chief Executive Officer under Rule 13a-14(a)/15d-14(a)	Filed herewith
31.2	Certification of Chief Financial Officer under Rule 13a-14(a)/15d-14(a)	Filed herewith
32.1	Certification of Chief Executive Officer under 18 U.S.C. Sec. 1350.	Furnished herewith
32.2	Certification of Chief Financial Officer under 18 U.S.C. Sec. 1350.	Furnished herewith
101	The following financial information from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 is formatted in Inline Extensible Business Reporting Language (iXBRL): (i) Consolidated Condensed Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Changes in Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to the Consolidated Condensed Financial Statements
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

75

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.

	BAR HARBOR BANKSHARES
Dated: May 8, 2020	By:	/s/ Curtis C. Simard
		Curtis C. Simard
		President & Chief Executive Officer
Dated: May 8, 2020	By:	/s/ Josephine Iannelli
		Josephine Iannelli
		Executive Vice President & Chief Financial Officer

76

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT

OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis C. Simard, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bar Harbor Bankshares (the “Registrant”);

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

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

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

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

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

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

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

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: May 8, 2020		/s/ Curtis C. Simard
	Name:	Curtis C. Simard
	Title:	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT

OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Josephine Iannelli, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bar Harbor Bankshares (the “Registrant”);

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

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

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

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

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

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

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

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors (or persons performing the equivalent functions):

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

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

Date: May 8, 2020		/s/ Josephine Iannelli
	Name:	Josephine Iannelli
	Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

The undersigned executive officer of Bar Harbor Bankshares (the “Registrant”) hereby certifies that the Registrant’s Form 10- Q for the period ended March 31, 2020, fully complies with the requirements of Section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (a) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and (b) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

Date:  May 8, 2020		/s/ Curtis C. Simard
	Name:	Curtis C. Simard
	Title:	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FIANANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)

The undersigned executive officer of Bar Harbor Bankshares (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the period ended March 31, 2020, fully complies with the requirements of Section 13(a) or 15(d), as applicable of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and Item 601(b)(32) of Regulation S-K (“Item 601(b)(32)”) promulgated under the Securities Act of 1933, as amended (the “Securities Act”) and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (a) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liability under that section, and (b) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

t
Date: May 8, 2020		/s/ Josephine Iannelli
	Name:	Josephine Iannelli
	Title:	Executive Vice President and Chief Financial Officer

XML

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Interest and dividend income
Loans	$ 27,987	$ 26,864
Securities and other	5,507	6,363
Total interest and dividend income	33,494	33,227
Interest expense
Deposits	6,020	6,307
Borrowings	2,911	5,155
Total interest expense	8,931	11,462
Net interest income	24,563	21,765
Provision for loan losses	1,111	324
Net interest income after provision for loan losses	23,452	21,441
Non-interest income
Trust and investment management fee income	3,369	2,757
Customer service fees	3,112	2,165
Gain on sales of securities, net	135	0
Bank-owned life insurance income	537	542
Customer derivative income	588	0
Other income	680	703
Total non-interest income	8,421	6,167
Non-interest expense
Salaries and employee benefits	11,884	10,519
Occupancy and equipment	4,420	3,386
Loss on premises and equipment, net	92	0
Outside services	534	411
Professional services	672	544
Communication	289	235
Marketing	388	295
Amortization of intangible assets	256	207
Acquisition, restructuring and other expenses	103	0
Other expenses	3,721	3,027
Total non-interest expense	22,359	18,624
Income before income taxes	9,514	8,984
Income tax expense	1,793	1,703
Net income	$ 7,721	$ 7,281
Earnings per share:
Basic (in dollars per share)	$ 0.50	$ 0.47
Diluted (in dollars per share)	$ 0.50	$ 0.47
Weighted average common shares outstanding:
Basic (in shares)	15,558,132	15,523,423
Diluted (in shares)	15,592,595	15,586,649

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income	$ 7,721	$ 7,281
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	1,111	324
Net amortization of securities	686	693
Change in unamortized net loan costs and premiums	(132)	(85)
Premises and equipment depreciation	1,182	952
Stock-based compensation expense	118	90
Accretion of purchase accounting entries, net	(1,489)	(886)
Amortization of other intangibles	256	207
Income from cash surrender value of bank-owned life insurance policies	(537)	(542)
Gain on sales of securities, net	(135)
Loss on other real estate owned	31
Loss on premises and equipment, net	92
Net change in other assets and liabilities	(5,900)	(3,757)
Net cash provided by operating activities	3,004	4,277
Cash flows from investing activities:
Proceeds from sales of securities available for sale	32,017
Proceeds from maturities, calls and prepayments of securities available for sale	24,899	21,709
Purchases of securities available for sale	(15,739)	(35,290)
Net change in loans	6,300	(36,209)
Purchase of FHLB stock	(3,161)	(5,567)
Proceeds from sale of FHLB stock	3,943	6,119
Purchase of premises and equipment, net	(628)	(1,809)
Acquisitions, net of cash acquired	(340)
Proceeds from sale of other real estate owned	51
Net cash provided by (used in) investing activities	47,342	(51,047)
Cash flows from financing activities:
Net increase (decrease) in deposits	(44,959)	(17,260)
Net change in short-term FHLB borrowings	(160,970)	59,716
Net change in short-term FRB borrowings	62,000
Proceeds from long-term borrowings from the FHLB	139,000
Repayments of long-term borrowings from the FHLB		(35,705)
Net change in short-term other borrowings	(13,831)	(1,531)
Repayments of subordinated debt	(32)
Payments of subordinated debt issuance costs	(39)
Exercise of stock options	789	4
Purchase of treasury stock	(130)
Cash dividends paid on common stock	(3,429)	(3,105)
Net cash (used in) provided by financing activities	(21,601)	2,119
Net change in cash and cash equivalents	28,745	(44,651)
Cash and cash equivalents at beginning of year	56,910	98,754
Cash and cash equivalents at end of year	85,655	54,103
Supplemental cash flow information:
Interest paid	8,455	11,490
Income taxes paid, net	1,205	$ 1,506
Other non-cash changes:
Assets acquired	1,171
Liabilities acquired	$ (343)

XML

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

EARNINGS PER SHARE

NOTE 8.           EARNINGS PER SHARE

The following table presents the calculation of earnings per share:

	Three Months Ended
	March 31,
(in thousands, except per share and share data)	2020		2019
Net income	$	7,721	$	7,281
Average number of basic common shares outstanding		15,558,132		15,523,423
Plus: dilutive effect of stock options and awards outstanding (1)		34,463		63,226
Average number of diluted common shares outstanding (1)		15,592,595		15,586,649
Anti-dilutive options excluded from earnings calculation		—		—
Earnings per share:
Basic	$	0.50	$	0.47
Diluted	$	0.50	$	0.47

(1) Average diluted shares outstanding are computed using the treasury stock method.

..

XML

ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

ALLOWANCE FOR LOAN LOSSES

NOTE 4.               ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level considered adequate to provide for an estimate of probable credit losses inherent in the loan portfolio. The allowance is increased by the provision charged to operating expense and reduced by net charge-offs. Loans are charged against the allowance for loan losses when the Company believes collectability has declined to a point where there is a distinct possibility of some loss of principal and interest. While the Company uses the best information available to make the evaluation, future adjustments may be necessary if there are significant changes in conditions.

The allowance is comprised of four distinct reserve components: (1) specific reserves related to loans individually evaluated; (2) quantitative reserves related to loans collectively evaluated; (3) qualitative reserves related to loans collectively evaluated; and (4) a temporal estimate is made for incurred loss emergence period for each loan category within the collectively evaluated pools.

A summary of the methodology employed on a quarterly basis with respect to each of these components in order to evaluate the overall adequacy of the Company's allowance for loan losses is as follows:

Specific Reserve for Loans Individually Evaluated

First, the Company identifies loan relationships having aggregate balances in excess of $150 thousand with potential credit weaknesses. Such loan relationships are identified primarily through the Company's analysis of internal loan evaluations, past due loan reports, TDRs and loans adversely classified. Each loan so identified is then individually evaluated for impairment. Loans are considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the original loan agreement. Substantially all impaired loans have historically been collateral dependent, meaning repayment of the loan is expected or is considered to be provided solely from the sale of the loan's underlying collateral. For such loans, the Company measures impairment based on the fair value of the loan's collateral, which is generally determined utilizing current appraisals. A specific reserve is established in an amount equal to the excess, if any, of the recorded investment in each impaired loan over the fair value of its underlying collateral, less estimated costs to sell. The Company's policy is to re-evaluate the fair value of collateral dependent loans at least every twelve months unless there is a known deterioration in the collateral's value, in which case a new appraisal is obtained.

Purchase credit impaired (“PCI”) loans are collectively evaluated, but are not included in the general reserve as described below. The evaluation of the PCI loans requires continued quarterly assessment of key assumptions and estimates similar to the initial fair value estimate, including changes in the severity of loss, timing and speed of payments, collateral value changes, expected cash flows and other relevant factors. The quarterly assessment is compared to the initial fair value estimate and a determination is made if an adjustment to the allowance for loan loss is deemed necessary.

Quantitative Reserve for Loans Collectively Evaluated

Second, the Company stratifies the loan portfolio into two general business loan pools: substandard (7 risk-rated) and pass-rated (0 to 6 risk-rated) by loan type. Substandard rated loans are subject to higher credit loss rates in the allowance for loan loss calculation. The Company utilizes historical loss rates for commercial real estate and commercial and industrial loans assessed by internal risk rating. Historical loss rates on residential real estate and consumer loans are not risk graded. Residential real estate and consumer loans are considered as part of the pass-rated portfolio unless removed due to specific reserve evaluation based on past due status and/or other indications of credit deterioration. Quantitative reserves relative to each loan pool are established as follows: for all loan segments an allocation equaling 100% of the respective pool's average 3-year historical net loan charge-off rate (determined based upon the most recent 12 quarters) is applied to the aggregate recorded investment in the pool of loans. Purchased performing loans are collectively evaluated as their own separate category within each loan pool.

Qualitative Reserve for Loans Collectively Evaluated

Third, the Company considers the necessity to adjust the average historical net loan charge-off rates relative to each of the above two loan pools for potential risks factors that could result in actual losses deviating from prior loss experience. Such qualitative risk factors considered are: (1) lending policies and procedures, (2) business conditions, (3) volume and nature of the loan portfolio, (4) experience, ability and depth of lending management, (5) problem loan trends, (6) quality of the Company’s loan review system, (7) concentrations in the loan portfolio, (8) competition, legal, and regulatory environment and (9) collateral coverage and loan-to-value.

Loss Emergence Period for Loans Collectively Evaluated

Fourth, the general allowance related to loans collectively evaluated includes an estimate of incurred losses over an estimated loss emergence period ("LEP"). The LEP is generated utilizing a charge-off look-back analysis, which evaluates the time from the first indication of elevated risk of repayment (or other early event indicating a problem) to eventual charge-off to support the LEP considered in the allowance calculation. This reserving methodology establishes the approximate number of months of LEP that represents incurred losses for each loan portfolio within each portfolio segment in addition to the qualitative reserves.

Activity in the allowance for loan losses for the three months ended March 31, 2020 and 2019 are, as follows:

Business Activities Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	7,668	$	3,608	$	3,402	$	379	$	15,057
Charged-off loans		(770)		(150)		—		(148)		(1,068)
Recoveries on charged-off loans		25		1		—		3		29
Provision for loan losses		738		84		111		150		1,083
Balance at end of period	$	7,661	$	3,543	$	3,513	$	384	$	15,101
Individually evaluated for impairment		675		138		126		—		939
Collectively evaluated		6,986		3,405		3,387		384		14,162
Total	$	7,661	$	3,543	$	3,513	$	384	$	15,101

Acquired Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	147	$	6	$	143	$	—	$	296
Charged-off loans		(101)		(29)		(8)		(5)		(143)
Recoveries on charged-off loans		—		9		6		—		15
(Releases) provision for loan losses		18		17		(12)		5		28
Balance at end of period	$	64	$	3	$	129	$	—	$	196
Individually evaluated for impairment		13		—		14		—		27
Collectively evaluated		51		3		115		—		169
Total	$	64	$	3	$	129	$	—	$	196

Business Activities Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	6,811	$	2,380	$	3,982	$	408	$	13,581
Charged-off loans		(57)		—		—		(53)		(110)
Recoveries on charged-off loans		16		1		18		3		38
(Releases) provision for loan losses		(195)		397		(47)		38		193
Balance at end of period	$	6,575	$	2,778	$	3,953	$	396	$	13,702
Individually evaluated for impairment		396		53		83		1		533
Collectively evaluated		6,179		2,725		3,870		395		13,169
Total	$	6,575	$	2,778	$	3,953	$	396	$	13,702

Acquired Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	173	$	35	$	77	$	—	$	285
Charged-off loans		—		(16)		(104)		(1)		(121)
Recoveries on charged-off loans		—		—		—		—		—
Provision (releases) for loan losses		(12)		10		132		1		131
Balance at end of period	$	161	$	29	$	105	$	—	$	295
Individually evaluated for impairment		16		—		22		—		38
Collectively evaluated		145		29		83		—		257
Total	$	161	$	29	$	105	$	—	$	295

Loan Origination/Risk Management: The Company has certain lending policies and procedures in place designed to maximize loan income within an acceptable level of risk. The Company’s Board of Directors reviews and approves these policies and procedures on a regular basis. A reporting system supplements the review process by providing management and the Company's Board of Directors with frequent reports related to loan production, loan quality, concentration of credit, loan delinquencies, non-performing loans and potential problem loans. The Company seeks to diversify the loan portfolio as a means of managing risk associated with fluctuations in economic conditions.

Credit Quality Indicators/Classified Loans: In monitoring the credit quality of the portfolio, management applies a credit quality indicator and uses an internal risk rating system to categorize commercial loans. These credit quality indicators range from one through nine, with a higher number correlating to increasing risk of loss. These ratings are used as inputs to the calculation of the allowance for loan losses. Consistent with regulatory guidelines, the Company provides for the classification of loans which are considered to be of lesser quality as special mention, substandard, doubtful, or loss (i.e. risk-rated 6, 7, 8 and 9, respectively).

The following are the definitions of the Company’s credit quality indicators:

Pass: Loans the Company considers in the commercial portfolio segments that are not adversely rated, are contractually current as to principal and interest, and are otherwise in compliance with the contractual terms of the loan agreement. Management believes there is a low risk of loss related to these loans considered pass-rated.

Special Mention: Loans the Company considers having some potential weaknesses, but are deemed to not carry levels of risk inherent in one of the subsequent categories, are designated as special mention. A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date. This might include loans which may require a higher level of supervision or internal reporting because of: (i) declining industry trends; (ii) increasing reliance on secondary sources of repayment; (iii) the poor condition of or lack of control over collateral; or (iv) failure to obtain proper documentation or any other deviations from prudent lending practices. Economic or market conditions which may, in the future, affect the obligor may warrant special mention of the asset. Loans for which an adverse trend in the borrower's operations or an imbalanced position in the balance sheet which has not reached a point

where the liquidation is jeopardized may be included in this classification. Special mention loans are not adversely classified and do not expose the Company to sufficient risks to warrant classification.

Substandard: Loans the Company considers as substandard are inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard loans have a well-defined weakness that jeopardizes liquidation of the debt. Substandard loans include those loans where there is the distinct possibility of some loss of principal, if the deficiencies are not corrected.

Doubtful: Loans the Company considers as doubtful have all of the weaknesses inherent in those loans that are classified as substandard. These loans have the added characteristic of a well-defined weakness which is inadequately protected by the current sound worth and paying capacity of borrower or of the collateral pledged, if any, and calls into question the collectability of the full balance of the loan. The possibility of loss is high but because of certain important and reasonably specific pending factors which may work to the advantage and strengthening of the loan, its classification as loss is deferred until its more exact status is determined. Pending factors include proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on additional collateral and refinancing plans. The entire amount of the loan might not be classified as doubtful when collection of a specific portion appears highly probable. Loans are generally not classified doubtful for an extended period of time (i.e., over a year).

Loss: Loans the Company considers as losses are those considered uncollectible and of such little value that their continuance as an asset is not warranted and the uncollectible amounts are charged-off. This classification does not mean the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this worthless asset even though partial recovery may be affected in the future. Losses are taken in the period in which they are determined to be uncollectible.

The following tables present the Company’s loans by risk rating at March 31, 2020 and December 31, 2019:

Business Activities Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	48,881	$	31,057	$	659,494	$	646,886	$	708,375	$	677,943
Special mention		—		—		8,133		5,483		8,133		5,483
Substandard		11		330		11,824		11,974		11,835		12,304
Doubtful		265		—		1,127		1,708		1,392		1,708
Total	$	49,157	$	31,387	$	680,578	$	666,051	$	729,735	$	697,438

Acquired Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	2,083	$	2,412	$	205,309	$	218,491	$	207,392	$	220,903
Special mention		—		12		1,742		2,261		1,742		2,273
Substandard		339		479		8,900		9,400		9,239		9,879
Doubtful		—		—		70		168		70		168
Total	$	2,422	$	2,903	$	216,021	$	230,320	$	218,443	$	233,223

Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	268,287	$	221,329	$	17,559	$	18,940	$	55,694	$	66,860	$	341,540	$	307,129
Special mention		3,641		2,744		221		298		—		—		3,862		3,042
Substandard		15,195		14,866		456		780		—		—		15,651		15,646
Doubtful		959		753		361		—		—		—		1,320		753
Total	$	288,082	$	239,692	$	18,597	$	20,018	$	55,694	$	66,860	$	362,373	$	326,570

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	50,663	$	51,184	$	200	$	58	$	11,071	$	37,407	$	61,934	$	88,649
Special mention		882		5,432		—		—		—		—		882		5,432
Substandard		944		2,115		—		148		—		36		944		2,299
Doubtful		224		341		—		—		—		—		224		341
Total	$	52,713	$	59,072	$	200	$	206	$	11,071	$	37,443	$	63,984	$	96,721

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	738,633	$	737,325	$	64,074	$	58,753	$	9,206	$	11,146	$	811,913	$	807,224
Nonperforming		4,077		3,362		440		615		20		21		4,537		3,998
Total	$	742,710	$	740,687	$	64,514	$	59,368	$	9,226	$	11,167	$	816,450	$	811,222

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	387,304	$	407,811	$	52,619	$	62,504	$	1,343	$	1,707	$	441,266	$	472,022
Nonperforming		2,314		3,359		411		529		7		8		2,732		3,896
Total	$	389,618	$	411,170	$	53,030	$	63,033	$	1,350	$	1,715	$	443,998	$	475,918

The following table summarizes total classified and criticized loans as of March 31, 2020 and December 31, 2019:

	March 31, 2020						December 31, 2019
	Business						Business
(in thousands)	Activities Loans		Acquired  Loans		Total		Activities Loans		Acquired  Loans		Total
Non-accrual	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550
Substandard accruing		26,351		11,537		37,888		26,055		13,387		39,442
Total classified		34,735		13,209		47,944		34,409		16,583		50,992
Special mention		11,995		2,624		14,619		8,525		7,705		16,230
Total Criticized	$	46,730	$	15,833	$	62,563	$	42,934	$	24,288	$	67,222

XML

SECURITIES AVAILABLE FOR SALE - Narrative (Details)	3 Months Ended
	Mar. 31, 2020 security
US Government-sponsored enterprises
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	43
Available for sale securities portfolio, number of securities (security)	675
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	3.83%
US Government agency
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	22
Available for sale securities portfolio, number of securities (security)	179
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	1.18%
Private label
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	12
Available for sale securities portfolio, number of securities (security)	19
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	8.80%
Obligations of states and political subdivisions thereof
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	10
Available for sale securities portfolio, number of securities (security)	210
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	0.91%
Corporate bonds
Investment Holdings [Line Items]
Available-for-sale, securities in unrealized loss positions (security)	12
Available for sale securities portfolio, number of securities (security)	27
Available for sale and held to maturity securities, continuous unrealized loss position, aggregate losses (percentage)	12.13%

XML

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Information About Derivative Assets and Liabilities

	March 31, 2020
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.3	$	(6,467)	Other liabilities
Total cash flow hedges		100,000		4.3		(6,467)
Fair value hedges:
Interest rate swap on securities		37,190		9.3		3,368	Other liabilities
Total fair value hedges		37,190				3,368
Economic hedges:
Forward sale commitments		53,751		0.2		(73)	Other liabilities
Customer Loan Swaps-MNA Counterparty		150,490		7.8		(15,463)	Other liabilities (1)
Customer Loan Swaps-RPA Counterparty		78,505		8.7		(9,470)	Other liabilities (1)
Customer Loan Swaps-Customer		228,995		8.1		24,933	Other liabilities (1)
Total economic hedges		511,741				(73)
Non-hedging derivatives:
Interest rate lock commitments		23,146		0.1		93	Other assets
Total non-hedging derivatives		23,146				93
Total	$	672,077			$	(3,079)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties.

	December 31, 2019
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.6	$	(1,311)	Other liabilities
Total cash flow hedges		100,000				(1,311)
Fair value hedges:
Interest rate swap on securities		37,190		9.6		593	Other liabilities
Total fair value hedges		37,190				593
Economic hedges:
Forward sale commitments		11,228		0.1		(84)	Other liabilities
Customer Loan Swaps-MNA Counterparty		135,598		7.5		(4,669)	(1)
Customer Loan Swaps-RPA Counterparty		69,505		8.8		(3,377)	(1)
Customer Loan Swaps-Customer		205,103		8.1		8,046	(1)
Total economic hedges		421,434				(84)
Non-hedging derivatives:
Interest rate lock commitments		21,748		0.1		59	Other assets
Total non-hedging derivatives		21,748				59
Total	$	580,372			$	(743)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties, thus assets and liabilities with the counterparty are netted for financial statement presentation.

Schedule of Amounts Recorded On The Balance Sheet

				Cumulative Amount of Fair
	Location of Hedged Item on	Carrying Amount of Hedged		Value Hedging Adjustment in
	Balance Sheet	Assets (Liabilities)		Carrying Amount
March 31, 2020
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	38,710	$	207
December 31, 2019
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	39,026	$	523

Schedule of Derivative Instruments Gain (Loss)

	Three Months Ended March 31, 2020
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)
	Recognized in			Reclassified		Location of	Amount of
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Gain (Loss)
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	4,949	Other income	$	—	Interest expense	$	1
Total cash flow hedges		4,949			—			1
Fair value hedges:
Interest rate swap on securities		(2,736)	Interest income		—	Interest income		13
Total fair value hedges		(2,736)			—			13
Economic hedges:
Forward commitments		—	Other income		—	Other income		11
Total economic hedges		—			—			11
Non-hedging derivatives:
Interest rate lock commitments		—	Other Income		—	Other Income		34
Total non-hedging derivatives		—			—			34
Total	$	2,213		$	—		$	59

(1) As of March 31, 2020 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

	Three Months Ended March 31, 2019
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)			Amount of
	Recognized in			Reclassified		Location of	Gain (Loss)
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Recognized
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	402	Other income	$	—	Interest expense	$	—
Interest rate cap agreements		2,494	Acquisition, restructuring, and other expenses			Interest expense		163
Total cash flow hedges		2,896			—			—
Economic hedges:
Forward commitments		—	Other income		—	Other income		(65)
Total economic hedges		—			—			—
Non-hedging derivatives:
Interest rate lock commitments		—	Other income		—	Other Income		6
Total non-hedging derivatives		—			—			6
Total	$	2,896		$	—		$	6

(1) As of March 31, 2019 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

Schedule of Offsetting Liabilities

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of March 31, 2020
Customer Loan Derivatives:
MNA counterparty	$	(15,463)	$	15,463	$	26,200	$	—
RPA counterparty		(9,470)		9,470		—		—
Total	$	(24,933)	$	24,933	$	26,200	$	—

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of December 31, 2019
Customer Loan Derivatives:
MNA counterparty	$	(4,669)	$	4,669	$	10,700	$	—
RPA counterparty		(3,377)		3,377		—		—
Total	$	(8,046)	$	8,046	$	10,700	$	—

XML

SECURITIES AVAILABLE FOR SALE - Summary of Securities Available for Sale (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Investment Holdings [Line Items]
Amortized Cost	$ 613,642	$ 655,888
Gross Unrealized Gains	20,345	11,205
Gross Unrealized Losses	(7,646)	(3,863)
Available for sale securities	626,341	663,230
US Government-sponsored enterprises
Investment Holdings [Line Items]
Amortized Cost	284,925	319,064
Gross Unrealized Gains	11,349	4,985
Gross Unrealized Losses	(617)	(2,080)
Available for sale securities	295,657	321,969
US Government agency
Investment Holdings [Line Items]
Amortized Cost	98,059	98,568
Gross Unrealized Gains	3,801	1,640
Gross Unrealized Losses	(191)	(547)
Available for sale securities	101,669	99,661
Private label
Investment Holdings [Line Items]
Amortized Cost	20,209	20,212
Gross Unrealized Gains	62	68
Gross Unrealized Losses	(1,772)	(747)
Available for sale securities	18,499	19,533
Obligations of states and political subdivisions thereof
Investment Holdings [Line Items]
Amortized Cost	134,258	139,240
Gross Unrealized Gains	3,636	3,034
Gross Unrealized Losses	(315)	(268)
Available for sale securities	137,579	142,006
Corporate bonds
Investment Holdings [Line Items]
Amortized Cost	76,191	78,804
Gross Unrealized Gains	1,497	1,478
Gross Unrealized Losses	(4,751)	(221)
Available for sale securities	$ 72,937	$ 80,061

XML

BORROWED FUNDS - Additional information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Nov. 26, 2019
Debt Instrument [Line Items]
Borrowings with the FRB	$ 265,644,000	$ 348,118,000
Callable advances	291,785,000	183,198,000
Financial Guarantee | NHTB Capital Trust II and NHTB Capital Trust III
Debt Instrument [Line Items]
Debentures issued by variable interest entities	$ 20,600,000
LIBOR | Financial Guarantee
Debt Instrument [Line Items]
Interest rate margin	2.79%
Advances from the FHLB
Debt Instrument [Line Items]
Secured line of credit maintained	$ 1,000,000.0
Outstanding balance on the FHLB line of credit	0	0
Borrowings with the FRB	172,643,000	303,286,000
Callable advances	231,936,000	123,278,000
Federal Reserve Bank Advances
Debt Instrument [Line Items]
Secured line of credit maintained	142,100,000
Borrowings with the FRB	62,000,000	0
Federal Reserve Bank Advances | Unsecured Debt
Debt Instrument [Line Items]
Secured line of credit maintained	50,000,000.0	50,000,000.0
Outstanding balance on unused unsecured federal funds line of credit	0	0
Federal Home Loan Bank Certificates and Obligations FHLB Callable Advances
Debt Instrument [Line Items]
Callable advances	0	0
Federal Home Loan Bank Certificates and Obligations FHLB Amortizing Advances
Debt Instrument [Line Items]
Callable advances	314,000	314,000
Subordinated borrowings
Debt Instrument [Line Items]
Callable advances	59,849,000	$ 59,920,000
Principal amount of debt issued			$ 40,000,000.0
Fixed interest rate			4.625%
Debt Issuance Costs, Net	$ 739,000
Subordinated borrowings | SOFR
Debt Instrument [Line Items]
Interest rate margin	3.27%

XML

ALLOWANCE FOR LOAN LOSSES - Loans by Credit Risk Rating (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Credit quality information
Loans	$ 2,634,983	$ 2,641,092
Total commercial real estate
Credit quality information
Loans	948,178	930,661
Total commercial real estate | Construction and land development
Credit quality information
Loans	51,579	34,290
Total commercial real estate | Other commercial real estate
Credit quality information
Loans	896,599	896,371
Commercial and industrial
Credit quality information
Loans	426,357	423,291
Commercial and industrial | Commercial
Credit quality information
Loans	340,795	298,764
Commercial and industrial | Agricultural
Credit quality information
Loans	18,797	20,224
Commercial and industrial | Tax exempt
Credit quality information
Loans	66,765	104,303
Special mention
Credit quality information
Loans	14,619	16,230
Substandard
Credit quality information
Loans	37,888	39,442
Non-accrual
Credit quality information
Loans	10,056	11,550
Total classified
Credit quality information
Loans	47,944	50,992
Total Criticized
Credit quality information
Loans	62,563	67,222
Business Activities Loans
Credit quality information
Loans	1,908,558	1,835,230
Business Activities Loans | Total commercial real estate
Credit quality information
Loans	729,735	697,438
Business Activities Loans | Total commercial real estate | Construction and land development
Credit quality information
Loans	49,157	31,387
Business Activities Loans | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	680,578	666,051
Business Activities Loans | Commercial and industrial
Credit quality information
Loans	362,373	326,570
Business Activities Loans | Commercial and industrial | Commercial
Credit quality information
Loans	288,082	239,692
Business Activities Loans | Commercial and industrial | Agricultural
Credit quality information
Loans	18,597	20,018
Business Activities Loans | Commercial and industrial | Tax exempt
Credit quality information
Loans	55,694	66,860
Business Activities Loans | Residential real estate and consumer
Credit quality information
Loans	816,450	811,222
Business Activities Loans | Residential real estate and consumer | Residential mortgages
Credit quality information
Loans	742,710	740,687
Business Activities Loans | Residential real estate and consumer | Home equity
Credit quality information
Loans	64,514	59,368
Business Activities Loans | Residential real estate and consumer | Other consumer
Credit quality information
Loans	9,226	11,167
Business Activities Loans | Performing | Residential real estate and consumer
Credit quality information
Loans	811,913	807,224
Business Activities Loans | Performing | Residential real estate and consumer | Residential mortgages
Credit quality information
Loans	738,633	737,325
Business Activities Loans | Performing | Residential real estate and consumer | Home equity
Credit quality information
Loans	64,074	58,753
Business Activities Loans | Performing | Residential real estate and consumer | Other consumer
Credit quality information
Loans	9,206	11,146
Business Activities Loans | Nonperforming | Residential real estate and consumer
Credit quality information
Loans	4,537	3,998
Business Activities Loans | Nonperforming | Residential real estate and consumer | Residential mortgages
Credit quality information
Loans	4,077	3,362
Business Activities Loans | Nonperforming | Residential real estate and consumer | Home equity
Credit quality information
Loans	440	615
Business Activities Loans | Nonperforming | Residential real estate and consumer | Other consumer
Credit quality information
Loans	20	21
Business Activities Loans | Pass | Total commercial real estate
Credit quality information
Loans	708,375	677,943
Business Activities Loans | Pass | Total commercial real estate | Construction and land development
Credit quality information
Loans	48,881	31,057
Business Activities Loans | Pass | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	659,494	646,886
Business Activities Loans | Pass | Commercial and industrial
Credit quality information
Loans	341,540	307,129
Business Activities Loans | Pass | Commercial and industrial | Commercial
Credit quality information
Loans	268,287	221,329
Business Activities Loans | Pass | Commercial and industrial | Agricultural
Credit quality information
Loans	17,559	18,940
Business Activities Loans | Pass | Commercial and industrial | Tax exempt
Credit quality information
Loans	55,694	66,860
Business Activities Loans | Special mention
Credit quality information
Loans	11,995	8,525
Business Activities Loans | Special mention | Total commercial real estate
Credit quality information
Loans	8,133	5,483
Business Activities Loans | Special mention | Total commercial real estate | Construction and land development
Credit quality information
Loans	0	0
Business Activities Loans | Special mention | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	8,133	5,483
Business Activities Loans | Special mention | Commercial and industrial
Credit quality information
Loans	3,862	3,042
Business Activities Loans | Special mention | Commercial and industrial | Commercial
Credit quality information
Loans	3,641	2,744
Business Activities Loans | Special mention | Commercial and industrial | Agricultural
Credit quality information
Loans	221	298
Business Activities Loans | Special mention | Commercial and industrial | Tax exempt
Credit quality information
Loans	0	0
Business Activities Loans | Substandard
Credit quality information
Loans	26,351	26,055
Business Activities Loans | Substandard | Total commercial real estate
Credit quality information
Loans	11,835	12,304
Business Activities Loans | Substandard | Total commercial real estate | Construction and land development
Credit quality information
Loans	11	330
Business Activities Loans | Substandard | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	11,824	11,974
Business Activities Loans | Substandard | Commercial and industrial
Credit quality information
Loans	15,651	15,646
Business Activities Loans | Substandard | Commercial and industrial | Commercial
Credit quality information
Loans	15,195	14,866
Business Activities Loans | Substandard | Commercial and industrial | Agricultural
Credit quality information
Loans	456	780
Business Activities Loans | Substandard | Commercial and industrial | Tax exempt
Credit quality information
Loans	0	0
Business Activities Loans | Doubtful | Total commercial real estate
Credit quality information
Loans	1,392	1,708
Business Activities Loans | Doubtful | Total commercial real estate | Construction and land development
Credit quality information
Loans	265	0
Business Activities Loans | Doubtful | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	1,127	1,708
Business Activities Loans | Doubtful | Commercial and industrial
Credit quality information
Loans	1,320	753
Business Activities Loans | Doubtful | Commercial and industrial | Commercial
Credit quality information
Loans	959	753
Business Activities Loans | Doubtful | Commercial and industrial | Agricultural
Credit quality information
Loans	361	0
Business Activities Loans | Doubtful | Commercial and industrial | Tax exempt
Credit quality information
Loans	0	0
Business Activities Loans | Non-accrual
Credit quality information
Loans	8,384	8,354
Business Activities Loans | Total classified
Credit quality information
Loans	34,735	34,409
Business Activities Loans | Total classified | Commercial and industrial
Credit quality information
Loans	362,373	326,570
Business Activities Loans | Total classified | Commercial and industrial | Commercial
Credit quality information
Loans	288,082	239,692
Business Activities Loans | Total classified | Commercial and industrial | Agricultural
Credit quality information
Loans	18,597	20,018
Business Activities Loans | Total classified | Commercial and industrial | Tax exempt
Credit quality information
Loans	55,694	66,860
Business Activities Loans | Total Criticized
Credit quality information
Loans	46,730	42,934
Business Activities Loans | Total Criticized | Total commercial real estate
Credit quality information
Loans	729,735	697,438
Business Activities Loans | Total Criticized | Total commercial real estate | Construction and land development
Credit quality information
Loans	49,157	31,387
Business Activities Loans | Total Criticized | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	680,578	666,051
Acquired Loans
Credit quality information
Loans	726,425	805,862
Acquired Loans | Total commercial real estate
Credit quality information
Loans	218,443	233,223
Acquired Loans | Total commercial real estate | Construction and land development
Credit quality information
Loans	2,422	2,903
Acquired Loans | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	216,021	230,320
Acquired Loans | Commercial and industrial
Credit quality information
Loans	63,984	96,721
Acquired Loans | Commercial and industrial | Commercial
Credit quality information
Loans	52,713	59,072
Acquired Loans | Commercial and industrial | Agricultural
Credit quality information
Loans	200	206
Acquired Loans | Commercial and industrial | Tax exempt
Credit quality information
Loans	11,071	37,443
Acquired Loans | Residential real estate and consumer
Credit quality information
Loans	443,998	475,918
Acquired Loans | Consumer | Home equity
Credit quality information
Loans	53,030	63,033
Acquired Loans | Consumer | Other consumer
Credit quality information
Loans	1,350	1,715
Acquired Loans | Residential real estate | Residential mortgages
Credit quality information
Loans	389,618	411,170
Acquired Loans | Performing | Residential real estate and consumer
Credit quality information
Loans	441,266	472,022
Acquired Loans | Performing | Consumer | Home equity
Credit quality information
Loans	52,619	62,504
Acquired Loans | Performing | Consumer | Other consumer
Credit quality information
Loans	1,343	1,707
Acquired Loans | Performing | Residential real estate | Residential mortgages
Credit quality information
Loans	387,304	407,811
Acquired Loans | Nonperforming | Residential real estate and consumer
Credit quality information
Loans	2,732	3,896
Acquired Loans | Nonperforming | Consumer | Home equity
Credit quality information
Loans	411	529
Acquired Loans | Nonperforming | Consumer | Other consumer
Credit quality information
Loans	7	8
Acquired Loans | Nonperforming | Residential real estate | Residential mortgages
Credit quality information
Loans	2,314	3,359
Acquired Loans | Pass | Total commercial real estate
Credit quality information
Loans	207,392	220,903
Acquired Loans | Pass | Total commercial real estate | Construction and land development
Credit quality information
Loans	2,083	2,412
Acquired Loans | Pass | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	205,309	218,491
Acquired Loans | Pass | Commercial and industrial
Credit quality information
Loans	61,934	88,649
Acquired Loans | Pass | Commercial and industrial | Commercial
Credit quality information
Loans	50,663	51,184
Acquired Loans | Pass | Commercial and industrial | Agricultural
Credit quality information
Loans	200	58
Acquired Loans | Pass | Commercial and industrial | Tax exempt
Credit quality information
Loans	11,071	37,407
Acquired Loans | Special mention
Credit quality information
Loans	2,624	7,705
Acquired Loans | Special mention | Total commercial real estate
Credit quality information
Loans	1,742	2,273
Acquired Loans | Special mention | Total commercial real estate | Construction and land development
Credit quality information
Loans		12
Acquired Loans | Special mention | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	1,742	2,261
Acquired Loans | Special mention | Commercial and industrial
Credit quality information
Loans	882	5,432
Acquired Loans | Special mention | Commercial and industrial | Commercial
Credit quality information
Loans	882	5,432
Acquired Loans | Substandard
Credit quality information
Loans	11,537	13,387
Acquired Loans | Substandard | Total commercial real estate
Credit quality information
Loans	9,239	9,879
Acquired Loans | Substandard | Total commercial real estate | Construction and land development
Credit quality information
Loans	339	479
Acquired Loans | Substandard | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	8,900	9,400
Acquired Loans | Substandard | Commercial and industrial
Credit quality information
Loans	944	2,299
Acquired Loans | Substandard | Commercial and industrial | Commercial
Credit quality information
Loans	944	2,115
Acquired Loans | Substandard | Commercial and industrial | Agricultural
Credit quality information
Loans		148
Acquired Loans | Substandard | Commercial and industrial | Tax exempt
Credit quality information
Loans		36
Acquired Loans | Doubtful | Total commercial real estate
Credit quality information
Loans	70	168
Acquired Loans | Doubtful | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	70	168
Acquired Loans | Doubtful | Commercial and industrial
Credit quality information
Loans	224	341
Acquired Loans | Doubtful | Commercial and industrial | Commercial
Credit quality information
Loans	224	341
Acquired Loans | Non-accrual
Credit quality information
Loans	1,672	3,196
Acquired Loans | Total classified
Credit quality information
Loans	13,209	16,583
Acquired Loans | Total classified | Total commercial real estate
Credit quality information
Loans	218,443	233,223
Acquired Loans | Total classified | Total commercial real estate | Construction and land development
Credit quality information
Loans	2,422	2,903
Acquired Loans | Total classified | Total commercial real estate | Other commercial real estate
Credit quality information
Loans	216,021	230,320
Acquired Loans | Total classified | Commercial and industrial
Credit quality information
Loans	63,984	96,721
Acquired Loans | Total classified | Commercial and industrial | Commercial
Credit quality information
Loans	52,713	59,072
Acquired Loans | Total classified | Commercial and industrial | Agricultural
Credit quality information
Loans	200	206
Acquired Loans | Total classified | Commercial and industrial | Tax exempt
Credit quality information
Loans	11,071	37,443
Acquired Loans | Total Criticized
Credit quality information
Loans	$ 15,833	$ 24,288

XML

CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Actual and Required Capital Ratios (Details)	Mar. 31, 2020	Dec. 31, 2019
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets	13.61%	13.61%
Common equity tier 1 capital to risk-weighted assets	10.61%	10.57%
Tier 1 capital to risk-weighted assets	11.42%	11.39%
Tier 1 capital to average assets	8.25%	8.13%
Regulatory minimum to be well capitalized, Total capital to risk-weighted assets	10.50%	10.50%
Regulatory minimum to be well capitalized, Common equity tier 1 capital to risk-weighted assets	7.00%	7.00%
Regulatory minimum to be well capitalized, Tier 1 capital to risk-weighted assets	8.50%	8.50%
Regulatory minimum to be well capitalized, Tier 1 capital to average assets	5.00%	5.00%
Bank
Tier 1 capital to risk-weighted assets
Total capital to risk-weighted assets	12.58%	12.42%
Common equity tier 1 capital to risk-weighted assets	11.96%	11.79%
Tier 1 capital to risk-weighted assets	11.96%	11.79%
Tier 1 capital to average assets	8.64%	8.39%
Regulatory minimum to be well capitalized, Total capital to risk-weighted assets	10.50%	10.50%
Regulatory minimum to be well capitalized, Common equity tier 1 capital to risk-weighted assets	7.00%	7.00%
Regulatory minimum to be well capitalized, Tier 1 capital to risk-weighted assets	8.50%	8.50%
Regulatory minimum to be well capitalized, Tier 1 capital to average assets	5.00%	5.00%

XML

FAIR VALUE MEASUREMENTS - Fair Values and Carrying Amounts (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financial Assets
Securities available for sale	$ 626,341	$ 663,230
Financial Liabilities
Borrowings with the FRB	265,644	348,118
Level 1
Financial Assets
Cash and cash equivalents	85,655	56,910
Securities available for sale	0
FHLB stock	0
Net loans	0
Accrued interest receivable	0
Cash surrender value of bank-owned life insurance policies	0
Derivative assets	0
Financial Liabilities
Short-term other borrowings	0
FHLB advances	0
Derivative liabilities	0
Level 1 | Bank Non-maturity Deposits [Member]
Financial Liabilities
Deposits	0
Level 1 | Bank Time Deposits [Member]
Financial Liabilities
Deposits	0
Level 1 | Federal Reserve Bank Advances
Financial Liabilities
Borrowings with the FRB	0
Level 1 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	0
Level 2
Financial Assets
Cash and cash equivalents	0
Securities available for sale	626,341	663,230
FHLB stock	19,897	20,679
Net loans	0
Accrued interest receivable	3,268	3,294
Cash surrender value of bank-owned life insurance policies	76,400	75,863
Derivative assets	24,933	6,791
Financial Liabilities
Short-term other borrowings	31,000	44,831
FHLB advances	410,065	425,989
Derivative liabilities	28,032	8,102
Level 2 | Bank Non-maturity Deposits [Member]
Financial Liabilities
Deposits	1,861,960	1,751,481
Level 2 | Bank Time Deposits [Member]
Financial Liabilities
Deposits	852,346	932,886
Level 2 | Federal Reserve Bank Advances
Financial Liabilities
Borrowings with the FRB	62,000
Level 2 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	59,849	59,920
Level 3
Financial Assets
Cash and cash equivalents	0
Securities available for sale	0
FHLB stock	0
Net loans	2,604,406	2,634,147
Accrued interest receivable	0
Cash surrender value of bank-owned life insurance policies	0
Derivative assets	93	59
Financial Liabilities
Short-term other borrowings	0
FHLB advances	0
Derivative liabilities	73	84
Level 3 | Bank Non-maturity Deposits [Member]
Financial Liabilities
Deposits	0
Level 3 | Bank Time Deposits [Member]
Financial Liabilities
Deposits	0
Level 3 | Federal Reserve Bank Advances
Financial Liabilities
Borrowings with the FRB	0
Level 3 | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	0
Carrying Amount
Financial Assets
Cash and cash equivalents	85,655	56,910
Securities available for sale	626,341	663,230
FHLB stock	19,897	20,679
Net loans	2,619,686	2,625,739
Accrued interest receivable	3,268	3,294
Cash surrender value of bank-owned life insurance policies	76,400	75,863
Derivative assets	25,026	6,850
Financial Liabilities
Short-term other borrowings	31,001	44,832
FHLB advances	404,579	426,564
Derivative liabilities	28,105	8,186
Carrying Amount | Bank Non-maturity Deposits [Member]
Financial Liabilities
Deposits	1,806,460	1,763,116
Carrying Amount | Bank Time Deposits [Member]
Financial Liabilities
Deposits	844,097	932,635
Carrying Amount | Federal Reserve Bank Advances
Financial Liabilities
Borrowings with the FRB	62,000
Carrying Amount | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	59,849	59,920
Fair Value
Financial Assets
Cash and cash equivalents	85,655	56,910
Securities available for sale	626,341	663,230
FHLB stock	19,897	20,679
Net loans	2,604,406	2,634,147
Accrued interest receivable	3,268	3,294
Cash surrender value of bank-owned life insurance policies	76,400	75,863
Derivative assets	25,026	6,850
Financial Liabilities
Short-term other borrowings	31,000	44,831
FHLB advances	410,065	425,989
Derivative liabilities	28,105	8,186
Fair Value | Bank Non-maturity Deposits [Member]
Financial Liabilities
Deposits	1,861,960	1,751,481
Fair Value | Bank Time Deposits [Member]
Financial Liabilities
Deposits	852,346	932,886
Fair Value | Federal Reserve Bank Advances
Financial Liabilities
Borrowings with the FRB	62,000
Fair Value | Subordinated borrowings
Financial Liabilities
Subordinated borrowings	$ 59,849	$ 59,920

XML

LEASES - Assets and liabilities (Details) - USD ($) $ in Thousands	Jan. 01, 2019	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Operating lease right-of-use assets		$ 10,129	$ 9,623
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]		Other Assets
Operating lease liabilities		$ 10,205	$ 9,651
Operating Lease, Liability, Statement of Financial Position [Extensible List]		Other Liabilities
Lease, Practical Expedients, Package [true false]	true

XML

ALLOWANCE FOR LOAN LOSSES - Allowance Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Activity in the allowance for loan losses
Balance at beginning of period	$ 15,353
Provision (releases) for loan losses	1,111	$ 324
Balance at end of period	15,297
Allowance For Loan Losses
Total	15,353		$ 15,297
Business Activities Loans
Activity in the allowance for loan losses
Balance at beginning of period	15,057	13,581
Charged-off loans	(1,068)	(110)
Recoveries on charged-off loans	29	38
Provision (releases) for loan losses	1,083	193
Balance at end of period	15,101	13,702
Allowance For Loan Losses
Individually evaluated for impairment			939	$ 533
Collectively evaluated			14,162	13,169
Total	15,101	13,702	15,101	13,702
Business Activities Loans | Total commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	7,668	6,811
Charged-off loans	(770)	(57)
Recoveries on charged-off loans	25	16
Provision (releases) for loan losses	738	(195)
Balance at end of period	7,661	6,575
Allowance For Loan Losses
Individually evaluated for impairment			675	396
Collectively evaluated			6,986	6,179
Total	7,661	6,575	7,661	6,575
Business Activities Loans | Commercial and industrial
Activity in the allowance for loan losses
Balance at beginning of period	3,608	2,380
Charged-off loans	(150)
Recoveries on charged-off loans	1	1
Provision (releases) for loan losses	84	397
Balance at end of period	3,543	2,778
Allowance For Loan Losses
Individually evaluated for impairment			138	53
Collectively evaluated			3,405	2,725
Total	3,543	2,778	3,543	2,778
Business Activities Loans | Residential real estate
Activity in the allowance for loan losses
Balance at beginning of period	3,402	3,982
Recoveries on charged-off loans		18
Provision (releases) for loan losses	111	(47)
Balance at end of period	3,513	3,953
Allowance For Loan Losses
Individually evaluated for impairment			126	83
Collectively evaluated			3,387	3,870
Total	3,513	3,953	3,513	3,953
Business Activities Loans | Consumer
Activity in the allowance for loan losses
Balance at beginning of period	379	408
Charged-off loans	(148)	(53)
Recoveries on charged-off loans	3	3
Provision (releases) for loan losses	150	38
Balance at end of period	384	396
Allowance For Loan Losses
Individually evaluated for impairment				1
Collectively evaluated			384	395
Total	384	396	384	396
Acquired Loans
Activity in the allowance for loan losses
Balance at beginning of period	296	285
Charged-off loans	(143)	(121)
Recoveries on charged-off loans	15
Provision (releases) for loan losses	28	131
Balance at end of period	196	295
Allowance For Loan Losses
Individually evaluated for impairment			27	38
Collectively evaluated			169	257
Total	196	295	196	295
Acquired Loans | Total commercial real estate
Activity in the allowance for loan losses
Balance at beginning of period	147	173
Charged-off loans	(101)
Provision (releases) for loan losses	18	(12)
Balance at end of period	64	161
Allowance For Loan Losses
Individually evaluated for impairment			13	16
Collectively evaluated			51	145
Total	64	161	64	161
Acquired Loans | Commercial and industrial
Activity in the allowance for loan losses
Balance at beginning of period	6	35
Charged-off loans	(29)	(16)
Recoveries on charged-off loans	9
Provision (releases) for loan losses	17	10
Balance at end of period	3	29
Allowance For Loan Losses
Collectively evaluated			3	29
Total	3	29	3	29
Acquired Loans | Residential real estate
Activity in the allowance for loan losses
Balance at beginning of period	143	77
Charged-off loans	(8)	(104)
Recoveries on charged-off loans	6
Provision (releases) for loan losses	(12)	132
Balance at end of period	129	105
Allowance For Loan Losses
Individually evaluated for impairment			14	22
Collectively evaluated			115	83
Total	129	105	$ 129	$ 105
Acquired Loans | Consumer
Activity in the allowance for loan losses
Charged-off loans	(5)	(1)
Provision (releases) for loan losses	$ 5	$ 1

XML

LOANS - Accretable Yield Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule
Balance at beginning of period	$ 7,367	$ 3,509
Reclassification from non-accretable difference for loans with (decreased) improved cash flows		2,031
Accretion	(528)	(1,063)
Balance at end of period	$ 6,839	$ 4,477

XML

LOANS - Impaired Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Construction and land development
Recorded Investment
With an allowance recorded	$ 265
Commercial
Recorded Investment
With no related allowance	1,075
With an allowance recorded	230
Agricultural
Recorded Investment
With no related allowance	67
With an allowance recorded	361
Tax exempt
Recorded Investment
With no related allowance	0
With an allowance recorded	0
Residential mortgages
Recorded Investment
With no related allowance	2,603
With an allowance recorded	983
Home equity
Recorded Investment
With no related allowance	0
With an allowance recorded	13
Other consumer
Recorded Investment
With no related allowance	0
With an allowance recorded	0
Total commercial real estate
Recorded Investment
Total	2,638
Total commercial real estate | Construction and land development
Recorded Investment
With no related allowance	0
Total commercial real estate | Other commercial real estate
Recorded Investment
With no related allowance	1,341
With an allowance recorded	1,032
Commercial and industrial
Recorded Investment
Total	1,733
Residential real estate
Recorded Investment
Total	3,586
Consumer
Recorded Investment
Total	13
Business Activities Loans
Recorded Investment
Total	7,970	$ 7,950
Unpaid Principal Balance
Total	9,233	8,408
Related Allowance
With an allowance recorded	939	1,452
Business Activities Loans | Construction and land development
Unpaid Principal Balance
With an allowance recorded	266
Related Allowance
With an allowance recorded	213
Business Activities Loans | Commercial
Unpaid Principal Balance
With no related allowance	1,242
With an allowance recorded	236
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	47
Business Activities Loans | Agricultural
Unpaid Principal Balance
With no related allowance	68
With an allowance recorded	361
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	91
Business Activities Loans | Tax exempt
Unpaid Principal Balance
With no related allowance	0
With an allowance recorded	0
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	0
Business Activities Loans | Residential mortgages
Unpaid Principal Balance
With no related allowance	2,794
With an allowance recorded	1,111
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	126
Business Activities Loans | Home equity
Unpaid Principal Balance
With no related allowance	0
With an allowance recorded	13
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	0
Business Activities Loans | Other consumer
Unpaid Principal Balance
With no related allowance	0
With an allowance recorded	0
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	0
Business Activities Loans | Total commercial real estate
Recorded Investment
Total		3,964
Unpaid Principal Balance
Total	3,408	4,155
Related Allowance
With an allowance recorded	675	1,231
Business Activities Loans | Total commercial real estate | Construction and land development
Unpaid Principal Balance
With no related allowance	0
Related Allowance
Impaired Financing Receivable No Allowance	0
Business Activities Loans | Total commercial real estate | Other commercial real estate
Recorded Investment
With no related allowance		1,911
Unpaid Principal Balance
With no related allowance	2,060	1,957
With an allowance recorded	1,082
Related Allowance
Impaired Financing Receivable No Allowance	0
With an allowance recorded	462
Business Activities Loans | Total commercial real estate | Commercial
Recorded Investment
With no related allowance		710
Unpaid Principal Balance
With no related allowance		773
Business Activities Loans | Total commercial real estate | Agricultural
Recorded Investment
With no related allowance		361
Unpaid Principal Balance
With no related allowance		261
Business Activities Loans | Total commercial real estate | Residential mortgages
Recorded Investment
With no related allowance		2,067
Unpaid Principal Balance
With no related allowance		2,227
Business Activities Loans | Commercial and industrial
Recorded Investment
Total		1,353
Unpaid Principal Balance
Total	1,907	1,423
Related Allowance
With an allowance recorded	138	164
Business Activities Loans | Commercial and industrial | Construction and land development
Recorded Investment
With an allowance recorded		258
Unpaid Principal Balance
With an allowance recorded		258
Related Allowance
With an allowance recorded		205
Business Activities Loans | Commercial and industrial | Other commercial real estate
Recorded Investment
With an allowance recorded		1,795
Unpaid Principal Balance
With an allowance recorded		1,940
Related Allowance
With an allowance recorded		1,026
Business Activities Loans | Commercial and industrial | Commercial
Recorded Investment
With an allowance recorded		282
Unpaid Principal Balance
With an allowance recorded		289
Related Allowance
With an allowance recorded		164
Business Activities Loans | Residential real estate
Recorded Investment
Total		2,620
Unpaid Principal Balance
Total	3,905	2,817
Related Allowance
With an allowance recorded	126	57
Business Activities Loans | Residential real estate | Residential mortgages
Recorded Investment
With an allowance recorded		553
Unpaid Principal Balance
With an allowance recorded		590
Related Allowance
With an allowance recorded		57
Business Activities Loans | Consumer
Recorded Investment
Total		13
Unpaid Principal Balance
Total	13	13
Related Allowance
With an allowance recorded	0
Business Activities Loans | Consumer | Home equity
Recorded Investment
With an allowance recorded		13
Unpaid Principal Balance
With an allowance recorded		13
Acquired Loans
Recorded Investment
Total	366	1,675
Unpaid Principal Balance
Total	564	2,053
Related Allowance
With an allowance recorded	27	61
Acquired Loans | Other commercial real estate
Recorded Investment
With an allowance recorded	70	168
Unpaid Principal Balance
With an allowance recorded	71	168
Related Allowance
With an allowance recorded	13	12
Acquired Loans | Residential mortgages
Recorded Investment
With an allowance recorded	162	354
Unpaid Principal Balance
With an allowance recorded	185	376
Related Allowance
With an allowance recorded	14	49
Acquired Loans | Total commercial real estate
Recorded Investment
Total	70	258
Unpaid Principal Balance
Total	71	258
Related Allowance
With an allowance recorded	13	12
Acquired Loans | Total commercial real estate | Other commercial real estate
Recorded Investment
With no related allowance		90
Unpaid Principal Balance
With no related allowance		90
Acquired Loans | Commercial and industrial
Recorded Investment
Total		385
Unpaid Principal Balance
Total		481
Acquired Loans | Commercial and industrial | Commercial
Recorded Investment
With no related allowance		385
Unpaid Principal Balance
With no related allowance		481
Acquired Loans | Residential real estate
Recorded Investment
Total	296	1,032
Unpaid Principal Balance
Total	493	1,314
Related Allowance
With an allowance recorded	14	49
Acquired Loans | Residential real estate | Residential mortgages
Recorded Investment
With no related allowance	134	678
Unpaid Principal Balance
With no related allowance	$ 308	$ 938

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Additional information (Details) $ in Thousands	3 Months Ended			12 Months Ended
	Mar. 31, 2020 USD ($)	Dec. 31, 2019 USD ($) item	Mar. 31, 2019 USD ($)	Dec. 31, 2019 USD ($) item	Nov. 30, 2019	Dec. 31, 2014 USD ($) item
Derivative [Line Items]
Acquisition, restructuring and other expenses	$ 103		$ 0
Notional amount of interest rate swap	672,077	$ 580,372		$ 580,372
Interest rate cap agreements
Derivative [Line Items]
Derivative, Number of Instruments Held | item						4
Premiums paid						$ 4,600
Cap interest rate						3.00%
Effective percentage interest rate, maximum						3.00%
Acquisition, restructuring and other expenses		$ 3,200
Interest rate swap
Derivative [Line Items]
Derivative, Number of Instruments Held | item		2		2
Term of interest rate swap				5 years
Fixed rate of interest rate swap			2.46%		1.55%
Notional amount of interest rate swap		$ 50,000		$ 50,000
Designated as hedging instrument | Cash flow hedges
Derivative [Line Items]
Notional amount of interest rate swap	100,000	100,000		100,000
Designated as hedging instrument | Cash flow hedges | Interest rate cap agreements
Derivative [Line Items]
Notional amount of interest rate swap	$ 100,000	$ 100,000		$ 100,000

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Reclassification out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Non-interest income	$ 8,421	$ 6,167
Tax expense	1,793	1,703
Net of tax	7,721	7,281
Available-for-sale Securities, Gross Realized Gains		146
Available-for-sale Securities, Gross Realized Losses		11
Reclassification out of AOCI
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Non-interest income	135	0
Tax expense	(32)	0
Net of tax	$ 103	$ 0

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SECURITIES AVAILABLE FOR SALE (Tables)

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

Summary of Securities Available for Sale

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	284,925	$	11,349	$	(617)	$	295,657
US Government agency		98,059		3,801		(191)		101,669
Private label		20,209		62		(1,772)		18,499
Obligations of states and political subdivisions thereof		134,258		3,636		(315)		137,579
Corporate bonds		76,191		1,497		(4,751)		72,937
Total securities available for sale	$	613,642	$	20,345	$	(7,646)	$	626,341

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	319,064	$	4,985	$	(2,080)	$	321,969
US Government agency		98,568		1,640		(547)		99,661
Private label		20,212		68		(747)		19,533
Obligations of states and political subdivisions thereof		139,240		3,034		(268)		142,006
Corporate bonds		78,804		1,478		(221)		80,061
Total securities available for sale	$	655,888	$	11,205	$	(3,863)	$	663,230

Schedule of Amortized Cost and Estimated Fair Value of Available for Sale (AFS) Securities, Segregated by Contractual Maturity

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	—	$	—
Over 1 year to 5 years		30,554		31,547
Over 5 years to 10 years		56,401		52,656
Over 10 years		123,494		126,313
Total bonds and obligations		210,449		210,516
Mortgage-backed securities		403,193		415,825
Total securities available for sale	$	613,642	$	626,341

Schedule of Securities with Unrealized Losses, Segregated by the Duration of Continuous Unrealized Loss Positions

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	165	$	9,548	$	452	$	6,608	$	617	$	16,156
US Government agency		180		11,899		11		4,122		191		16,021
Private label		10		124		1,762		18,234		1,772		18,358
Obligations of states and political subdivisions thereof		315		17,862		—		—		315		17,862
Corporate bonds		3,831		29,977		920		5,330		4,751		35,307
Total securities available for sale	$	4,501	$	69,410	$	3,145	$	34,294	$	7,646	$	103,704

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	1,074	$	43,429	$	1,006	$	49,712	$	2,080	$	93,141
US Government agency		432		19,717		115		9,120		547		28,837
Private label		380		9,843		367		9,411		747		19,254
Obligations of states and political subdivisions thereof		137		29,355		131		1,682		268		31,037
Corporate bonds		142		9,888		79		12,276		221		22,164
Total securities available for sale	$	2,165	$	112,232	$	1,698	$	82,201	$	3,863	$	194,433

Schedule of Other Than Temporary Impairment Losses

	Three Months Ended
	March 31,
	2020		2019
Estimated credit losses as of prior year-end	$	1,697	$	1,697
Reductions for securities paid off during the period		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697

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LEASES

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

LEASES

NOTE 12.           LEASES

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the Company adopted ASU No. 2016-02 “Leases” and all subsequent ASUs modifying ASC 842. Substantially all of the leases pursuant to which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2040. All leases are classified as operating leases, and therefore, were previously not recognized on the Company’s consolidated balance sheets. With the adoption of ASC 842, operating lease agreements are required to be recognized on the consolidated balance sheets as a right-of-use (“ROU”) asset with a corresponding lease liability using the modified retrospective approach.

The Company elected the following practical expedients in conjunction with implementation of ASC 842 as follows:

● Package of practical expedients:

o Lease classification as an operating lease under the prior standards is grandfathered.

o Re-evaluation of embedded leases evaluated under the prior standards is not required.

o No re-assessment of previously recorded initial direct lease costs.

● Election to exclude short-term leases (i.e., leases with initial terms of twelve months or less), from capitalization on the consolidated balance sheets.

The following table presents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities as of March 31, 2020:

(in thousands)		March 31, 2020		December 31, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	10,129	$	9,623
Lease Liabilities
Operating lease liabilities	Other liabilities		10,205		9,651

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used for the present value of the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. If there are multiple renewals typically only the next lease renewal is considered. Regarding the discount rate, ASC 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

The following table presents the weighted average lease term and discount rate of the Company’s leases:

	March 31, 2020		December 31, 2019
Weighted-average remaining lease term (in years)
Operating leases	9.52		8.96
Weighted-average discount rate
Operating leases	3.30	%	3.27	%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as real estate taxes, common area maintenance and utilities.

	Three Months Ended		Three Months Ended
(in thousands)	March 31, 2020		March 31, 2019
Lease Costs
Operating lease cost	$	234	$	231
Variable lease cost		144		124
Total lease cost	$	378	$	355

Future minimum payments for operating leases with initial or remaining terms of one year or more as of March 31, 2020 are, as follows:

(in thousands)	Operating Leases
Twelve Months Ended:
March 31, 2021	$	1,285
March 31, 2022		1,300
March 31, 2023		1,319
March 31, 2024		1,323
March 31, 2025		1,240
Thereafter		6,495
Total future minimum lease payments		12,962
Amounts representing interest		(2,757)
Present value of net future minimum lease payments	$	10,205

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DEPOSITS (Tables)

3 Months Ended

Mar. 31, 2020

Deposits [Abstract]

Summary of Time Deposits

(in thousands)	March 31, 2020		December 31, 2019
Time less than $100,000	$	559,255	$	600,747
Time $100,000 through $250,000		173,305		225,505
Time $250,000 or more		111,537		106,383
Total time deposits	$	844,097	$	932,635

Time Deposit Maturities

(in thousands)	March 31, 2020		December 31, 2019
Within 1 year	$	479,983	$	555,074
Over 1 year to 2 years		295,939		287,934
Over 2 years to 3 years		31,909		51,444
Over 3 years to 4 years		27,811		31,262
Over 4 years to 5 years		8,438		6,883
Over 5 years		17		38
Total	$	844,097	$	932,635

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LOANS - Summary of Total Loans (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) item	Dec. 31, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 2,634,983	$ 2,641,092
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,908,558	1,835,230
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	726,425	805,862
Acquired Loans | Financial Asset Acquired with Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	15,200
Total note balance	19,300
Acquired Loans | Financial Asset Acquired and No Credit Deterioration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	711,200
Total commercial loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,374,535	1,353,952
Total commercial loans | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,092,108	1,024,008
Total commercial loans | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	282,427	329,944
Total commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	948,178	930,661
Total commercial real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	729,735	697,438
Total commercial real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	218,443	233,223
Total commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	51,579	34,290
Total commercial real estate | Construction and land development | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	49,157	31,387
Total commercial real estate | Construction and land development | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	2,422	2,903
Total commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	896,599	896,371
Total commercial real estate | Other commercial real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	680,578	666,051
Total commercial real estate | Other commercial real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	216,021	230,320
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	426,357	423,291
Commercial and industrial | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	362,373	326,570
Commercial and industrial | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	63,984	96,721
Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	340,795	298,764
Commercial and industrial | Commercial | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	288,082	239,692
Commercial and industrial | Commercial | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	52,713	59,072
Commercial and industrial | Agricultural
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	18,797	20,224
Commercial and industrial | Agricultural | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	18,597	20,018
Commercial and industrial | Agricultural | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	200	206
Commercial and industrial | Tax exempt
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	66,765	104,303
Commercial and industrial | Tax exempt | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	55,694	66,860
Commercial and industrial | Tax exempt | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	11,071	37,443
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,132,328	1,151,857
Residential real estate | Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of families | item	4
Residential real estate | Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of families | item	1
Residential real estate | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 742,710	740,687
Residential real estate | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	389,618	411,170
Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,132,328	1,151,857
Residential real estate | Residential mortgages | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	742,710	740,687
Residential real estate | Residential mortgages | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	389,618	411,170
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	128,120	135,283
Consumer | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	73,740	70,535
Consumer | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	54,380	64,748
Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	117,544	122,401
Consumer | Home equity | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	64,514	59,368
Consumer | Home equity | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	53,030	63,033
Consumer | Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	10,576	12,882
Consumer | Other consumer | Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	9,226	11,167
Consumer | Other consumer | Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 1,350	$ 1,715

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LOANS - Loans Evaluated for Impairment (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Allowance for loan losses
Total loans	$ 2,634,983	$ 2,641,092
Total commercial real estate
Allowance for loan losses
Total loans	948,178	930,661
Commercial and industrial
Allowance for loan losses
Total loans	426,357	423,291
Residential real estate
Allowance for loan losses
Total loans	1,132,328	1,151,857
Consumer
Allowance for loan losses
Total loans	128,120	135,283
Business Activities Loans
Allowance for loan losses
Individually evaluated for impairment	7,970	7,950
Collectively evaluated	1,900,588	1,827,280
Total loans	1,908,558	1,835,230
Business Activities Loans | Total commercial real estate
Allowance for loan losses
Individually evaluated for impairment	2,638	3,964
Collectively evaluated	727,097	693,474
Total loans	729,735	697,438
Business Activities Loans | Commercial and industrial
Allowance for loan losses
Individually evaluated for impairment	1,733	1,353
Collectively evaluated	360,640	325,217
Total loans	362,373	326,570
Business Activities Loans | Residential real estate
Allowance for loan losses
Individually evaluated for impairment	3,586	2,620
Collectively evaluated	739,124	738,067
Total loans	742,710	740,687
Business Activities Loans | Consumer
Allowance for loan losses
Individually evaluated for impairment	13	13
Collectively evaluated	73,727	70,522
Total loans	73,740	70,535
Acquired Loans
Allowance for loan losses
Individually evaluated for impairment	366	1,675
Purchased credit impaired	15,175	18,553
Collectively evaluated	710,884	785,634
Total loans	726,425	805,862
Acquired Loans | Total commercial real estate
Allowance for loan losses
Individually evaluated for impairment	70	258
Purchased credit impaired	7,520	8,673
Collectively evaluated	210,853	224,292
Total loans	218,443	233,223
Acquired Loans | Commercial and industrial
Allowance for loan losses
Individually evaluated for impairment		385
Purchased credit impaired	1,952	2,932
Collectively evaluated	62,032	93,404
Total loans	63,984	96,721
Acquired Loans | Residential real estate
Allowance for loan losses
Individually evaluated for impairment	296	1,032
Purchased credit impaired	4,856	5,591
Collectively evaluated	384,466	404,547
Total loans	389,618	411,170
Acquired Loans | Consumer
Allowance for loan losses
Purchased credit impaired	847	1,357
Collectively evaluated	53,533	63,391
Total loans	$ 54,380	$ 64,748

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ALLOWANCE FOR LOAN LOSSES - Narrative (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020 USD ($) item
Receivables [Abstract]
Number of reserve components	4
Specific reserve for loans individually evaluated, threshold | $	$ 150
Number of business pools	2
Quantitative reserve, percent of historical charge-off rate	100.00%

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Offsetting Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Derivative [Line Items]
Cash Collateral Pledged	$ 26,200	$ 10,700
MNA counterparty
Derivative [Line Items]
Cash Collateral Pledged	26,200	10,700
Customer loan derivative liability
Derivative [Line Items]
Derivative liabilities	(24,933)	(8,046)
Customer loan derivative liability | MNA counterparty
Derivative [Line Items]
Derivative liabilities	(15,463)	(4,669)
Customer loan derivative liability | RPA counterparty
Derivative [Line Items]
Derivative liabilities	(9,470)	(3,377)
Customer loan derivative asset
Derivative [Line Items]
Derivative Assets	24,933	8,046
Customer loan derivative asset | MNA counterparty
Derivative [Line Items]
Derivative Assets	15,463	4,669
Customer loan derivative asset | RPA counterparty
Derivative [Line Items]
Derivative Assets	$ 9,470	$ 3,377

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings Per Share [Abstract]
Net income	$ 7,721	$ 7,281
Average number of basic common shares outstanding (in shares)	15,558,132	15,523,423
Plus: dilutive effect of stock options and awards outstanding (in shares)	34,463	63,226
Average number of diluted common shares outstanding (in shares)	15,592,595	15,586,649
Anti-dilutive options excluded from earnings calculation (in shares)	0	0
Earnings per share:
Basic (in dollars per share)	$ 0.50	$ 0.47
Diluted (in dollars per share)	$ 0.50	$ 0.47

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY (Tables)

3 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

Schedule of Actual and Required Capital Ratios

			Regulatory				Regulatory
	March 31,		Minimum to be		December 31,		Minimum to be
	2020		"Well Capitalized"		2019		"Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	13.61	%	10.50	%	13.61	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	10.61		7.00		10.57		7.00
Tier 1 capital to risk-weighted assets	11.42		8.50		11.39		8.50
Tier 1 capital to average assets	8.25		5.00		8.13		5.00
Bank
Total capital to risk-weighted assets	12.58	%	10.50	%	12.42	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	11.96		7.00		11.79		7.00
Tier 1 capital to risk-weighted assets	11.96		8.50		11.79		8.50
Tier 1 capital to average assets	8.64		5.00		8.39		5.00

Schedule of Components of Accumulated Other Comprehensive Income

(in thousands)	March 31, 2020		December 31, 2019
Other accumulated comprehensive income, before tax:
Net unrealized gain on AFS securities	$	12,699	$	7,342
Net unrealized loss on hedging derivatives		(3,099)		(718)
Net unrealized loss on post-retirement plans		(1,512)		(1,512)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized gain on AFS securities		(3,139)		(1,793)
Net unrealized loss on hedging derivatives		886		237
Net unrealized loss on post-retirement plans		355		355
Accumulated other comprehensive income	$	6,190	$	3,911

Schedule of Components of Other Comprehensive Income (Loss)

(in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2020
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	5,492	$	(1,378)	$	4,114
Less: reclassification adjustment for gains (losses) realized in net income		135		(32)		103
Net unrealized gain on AFS securities		5,357		(1,346)		4,011
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period		(2,382)		650		(1,732)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized loss on derivative hedges		(2,382)		650		(1,732)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	2,975	$	(696)	$	2,279
Three Months Ended March 31, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	8,900	$	(2,079)	$	6,821
Less: reclassification adjustment for gains realized in net income		—		—		—
Net unrealized gain on AFS securities		8,900		(2,079)		6,821
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period		(845)		198		(647)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on cash flow hedging derivatives		(845)		198		(647)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	8,055	$	(1,881)	$	6,174

Schedule of Changes in Components of Accumulated Other Comprehensive Income

	Net unrealized		Net loss on		Net unrealized
	gain (loss)		effective cash		loss
	on AFS		flow hedging		on pension
(in thousands)	Securities		derivatives		plans		Total
Three Months Ended March 31, 2020
Balance at beginning of period	$	5,549	$	(481)	$	(1,157)	$	3,911
Other comprehensive gain (loss) before reclassifications		4,114		(1,732)		—		2,382
Less: amounts reclassified from accumulated other comprehensive income		103		—		—		103
Total other comprehensive income (loss)		4,011		(1,732)		—		2,279
Balance at end of period	$	9,560	$	(2,213)	$	(1,157)	$	6,190
Three Months Ended March 31, 2019
Balance at beginning of period	$	(8,665)	$	(2,249)	$	(888)	$	(11,802)
Other comprehensive gain (loss) before reclassifications		6,821		(647)		—		6,174
Less: amounts reclassified from accumulated other comprehensive income		—		—		—		—
Total other comprehensive income (loss)		6,821		(647)		—		6,174
Balance at end of period	$	(1,844)	$	(2,896)	$	(888)	$	(5,628)

Reclassification out of Accumulated Other Comprehensive Income

	Three Months Ended March 31,				Affected Line Item where
(in thousands)	2020		2019		Net Income is Presented
Net realized gains on AFS securities:
Before tax(1)	$	135	$	—	Non-interest income
Tax effect		(32)		—	Tax expense
Total reclassifications for the period	$	103	$	—	Net of tax

(1) Net realized gains before tax include gross realized gains $146 thousand and realized losses of $11 thousand.

XML

LOANS (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of Loans

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	49,157	$	2,422	$	51,579	$	31,387	$	2,903	$	34,290
Other commercial real estate		680,578		216,021		896,599		666,051		230,320		896,371
Total commercial real estate		729,735		218,443		948,178		697,438		233,223		930,661
Commercial and industrial:
Commercial		288,082		52,713		340,795		239,692		59,072		298,764
Agricultural		18,597		200		18,797		20,018		206		20,224
Tax exempt		55,694		11,071		66,765		66,860		37,443		104,303
Total commercial and industrial		362,373		63,984		426,357		326,570		96,721		423,291
Total commercial loans		1,092,108		282,427		1,374,535		1,024,008		329,944		1,353,952
Residential real estate:
Residential mortgages		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Total residential real estate		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Consumer:
Home equity		64,514		53,030		117,544		59,368		63,033		122,401
Other consumer		9,226		1,350		10,576		11,167		1,715		12,882
Total consumer		73,740		54,380		128,120		70,535		64,748		135,283
Total loans	$	1,908,558	$	726,425	$	2,634,983	$	1,835,230	$	805,862	$	2,641,092

Schedule of Activity in the Accretable Yield for the Acquired Loan Portfolio that Falls Under the Review of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer

	Three Months Ended March 31,
(in thousands)	2020		2019
Balance at beginning of period	$	7,367	$	3,509
Reclassification from nonaccretable difference for loans with improved cash flows		—		2,031
Accretion		(528)		(1,063)
Balance at end of period	$	6,839	$	4,477

Summary of Past Due Loans

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	142	$	—	$	276	$	418	$	48,739	$	49,157	$	—
Other commercial real estate		1,521		533		1,010		3,064		677,514		680,578		—
Total commercial real estate		1,663		533		1,286		3,482		726,253		729,735		—
Commercial and industrial:
Commercial		1,108		1,515		1,251		3,874		284,208		288,082		381
Agricultural		38		—		169		207		18,390		18,597		51
Tax exempt		—		—		—		—		55,694		55,694		—
Total commercial and industrial		1,146		1,515		1,420		4,081		358,292		362,373		432
Total commercial loans		2,809		2,048		2,706		7,563		1,084,545		1,092,108		432
Residential real estate:
Residential mortgages		8,824		69		1,207		10,100		732,610		742,710		293
Total residential real estate		8,824		69		1,207		10,100		732,610		742,710		293
Consumer:
Home equity		471		20		412		903		63,611		64,514		221
Other consumer		19		5		2		26		9,200		9,226		—
Total consumer		490		25		414		929		72,811		73,740		221
Total loans	$	12,123	$	2,142	$	4,327	$	18,592	$	1,889,966	$	1,908,558	$	946

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	245	$	2,422	$	—
Other commercial real estate		1,843		256		1,024		3,123		7,275		216,021		737
Total commercial real estate		1,843		256		1,024		3,123		7,520		218,443		737
Commercial and industrial:
Commercial		97		—		—		97		1,752		52,713		—
Agricultural		—		—		—		—		200		200		—
Tax exempt		—		—		—		—		—		11,071		—
Total commercial and industrial		97		—		—		97		1,952		63,984		—
Total commercial loans		1,940		256		1,024		3,220		9,472		282,427		737
Residential real estate:
Residential mortgages		5,043		99		834		5,976		4,856		389,618		401
Total residential real estate		5,043		99		834		5,976		4,856		389,618		401
Consumer:
Home equity		626		—		199		825		789		53,030		43
Other consumer		1		—		—		1		58		1,350		—
Total consumer		627		—		199		826		847		54,380		43
Total loans	$	7,610	$	355	$	2,057	$	10,022	$	15,175	$	726,425	$	1,181

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	205	$	53	$	—	$	258	$	31,129	$	31,387	$	—
Other commercial real estate		40		1,534		1,810		3,384		662,667		666,051		—
Total commercial real estate		245		1,587		1,810		3,642		693,796		697,438		—
Commercial and industrial:
Commercial		452		50		894		1,396		238,296		239,692		—
Agricultural		62		34		96		192		19,826		20,018		—
Tax exempt		—		—		—		—		66,860		66,860		—
Total commercial and industrial		514		84		990		1,588		324,982		326,570		—
Total commercial loans		759		1,671		2,800		5,230		1,018,778		1,024,008		—
Residential real estate:
Residential mortgages		7,293		1,243		668		9,204		731,483		740,687		—
Total residential real estate		7,293		1,243		668		9,204		731,483		740,687		—
Consumer:
Home equity		597		43		429		1,069		58,299		59,368		50
Other consumer		36		12		—		48		11,119		11,167		—
Total consumer		633		55		429		1,117		69,418		70,535		50
Total loans	$	8,685	$	2,969	$	3,897	$	15,551	$	1,819,679	$	1,835,230	$	50

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	—	$	12	$	—	$	12	$	384	$	2,903	$	—
Other commercial real estate		2,029		245		231		2,505		8,289		230,320		—
Total commercial real estate		2,029		257		231		2,517		8,673		233,223		—
Commercial and industrial:
Commercial		440		335		140		915		2,723		59,072		—
Agricultural		—		—		—		—		173		206		—
Tax exempt		—		—		—		—		36		37,443		—
Total commercial and industrial		440		335		140		915		2,932		96,721		—
Total commercial loans		2,469		592		371		3,432		11,605		329,944		—
Residential real estate:
Residential mortgages		3,185		864		1,015		5,064		5,591		411,170		—
Total residential real estate		3,185		864		1,015		5,064		5,591		411,170		—
Consumer:
Home equity		208		548		217		973		1,291		63,033		217
Other consumer		2		9		—		11		66		1,715		—
Total consumer		210		557		217		984		1,357		64,748		217
Total loans	$	5,864	$	2,013	$	1,603	$	9,480	$	18,553	$	805,862	$	217

Summary of Information Pertaining to Non-Accrual Loans

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	276	$	—	$	276	$	258	$	—	$	258
Other commercial real estate		1,664		287		1,951		2,888		343		3,231
Total commercial real estate		1,940		287		2,227		3,146		343		3,489
Commercial and industrial:
Commercial		1,282		89		1,371		932		626		1,558
Agricultural		625		—		625		278		—		278
Tax exempt		—		—		—		—		—		—
Total commercial and industrial		1,907		89		1,996		1,210		626		1,836
Total commercial loans		3,847		376		4,223		4,356		969		5,325
Residential real estate:
Residential mortgages		4,077		1,012		5,089		3,362		1,973		5,335
Total residential real estate		4,077		1,012		5,089		3,362		1,973		5,335
Consumer:
Home equity		440		284		724		615		254		869
Other consumer		20		—		20		21		—		21
Total consumer		460		284		744		636		254		890
Total loans	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550

Schedule of Loans Evaluated for Impairment

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	2,638	$	1,733	$	3,586	$	13	$	7,970
Collectively evaluated		727,097		360,640		739,124		73,727		1,900,588
Total	$	729,735	$	362,373	$	742,710	$	73,740	$	1,908,558

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	70	$	—	$	296	$	—	$	366
Purchased credit impaired		7,520		1,952		4,856		847		15,175
Collectively evaluated		210,853		62,032		384,466		53,533		710,884
Total	$	218,443	$	63,984	$	389,618	$	54,380	$	726,425

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	3,964	$	1,353	$	2,620	$	13	$	7,950
Collectively evaluated		693,474		325,217		738,067		70,522		1,827,280
Total	$	697,438	$	326,570	$	740,687	$	70,535	$	1,835,230

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	258	$	385	$	1,032	$	—	$	1,675
Purchased credit impaired		8,673		2,932		5,591		1,357		18,553
Collectively evaluated		224,292		93,404		404,547		63,391		785,634
Total	$	233,223	$	96,721	$	411,170	$	64,748	$	805,862

Summary of Impaired Loans

Business Activities Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,341		2,060		—
Commercial		1,075		1,242		—
Agricultural		67		68		—
Tax exempt loans		—		—		—
Residential real estate		2,603		2,794		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		265		266		213
Other commercial real estate		1,032		1,082		462
Commercial		230		236		47
Agricultural		361		361		91
Tax exempt loans		—		—		—
Residential real estate		983		1,111		126
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		2,638		3,408		675
Commercial and industrial		1,733		1,907		138
Residential real estate		3,586		3,905		126
Consumer		13		13		—
Total impaired loans	$	7,970	$	9,233	$	939

Acquired Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		—		—		—
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		134		308		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		70		71		13
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		162		185		14
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		70		71		13
Commercial and industrial		—		—		—
Residential real estate		296		493		14
Consumer		—		—		—
Total impaired loans	$	366	$	564	$	27

Business Activities Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,911		1,957		—
Commercial		710		773		—
Agricultural		361		261		—
Tax exempt loans		—		—		—
Residential real estate		2,067		2,227		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		258		258		205
Other commercial real estate		1,795		1,940		1,026
Commercial		282		289		164
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		553		590		57
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		3,964		4,155		1,231
Commercial and industrial		1,353		1,423		164
Residential real estate		2,620		2,817		57
Consumer		13		13		—
Total impaired loans	$	7,950	$	8,408	$	1,452

Acquired Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		90		90		—
Commercial		385		481		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		678		938		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		168		168		12
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		354		376		49
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		258		258		12
Commercial and industrial		385		481		—
Residential real estate		1,032		1,314		49
Consumer		—		—		—
Total impaired loans	$	1,675	$	2,053	$	61

Summary of the Average Recorded Investment and Interest Income Recognized on Impaired Loans

Business Activities Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,728		3		7,773		26
Commercial		1,071		1		527		2
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		2,589		17		1,965		15
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		261		1		5		—
Other commercial real estate		1,021		—		1,203		—
Commercial		233		—		890		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		979		2		652		2
Home equity		12		—		13		—
Other consumer		—		—		—		—
Total
Commercial real estate		3,010		4		8,981		26
Commercial and industrial		1,304		1		1,417		2
Residential real estate		3,568		19		2,617		17
Consumer		12		—		13		—
Total impaired loans	$	7,894	$	24	$	13,028	$	45

Acquired Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		—		—		90		—
Commercial		—		—		479		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		195		—		436		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		70		—		36		—
Commercial		—		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		163		—		367		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
Total
Commercial real estate		70		—		126		—
Commercial and industrial		—		—		479		—
Residential real estate		358		—		803		—
Consumer		—		—		—		—
Total impaired loans	$	428	$	—	$	1,408	$	—

Schedule of Recorded Investment and Number of Modifications for TDRs Identified During the Period

	Three Months Ended March 31, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	54	$	259
Other commercial	3		41		208
Home equity	1		26		25
Other consumer	1		9		9
Total	6	$	130	$	501

	Three Months Ended March 31, 2019
		Pre-Modification			Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	3	$	113	$	113
Other commercial	2		31		31
Residential mortgages	6		530		527
Total	11	$	674	$	671

	Three Months Ended March 31,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest rate and maturity concession	—	$	—	2	$	12
Interest rate, forbearance and maturity concession	4		467	—		—
Amortization and maturity concession	—		—	5		314
Amortization concession	—		—	1		156
Amortization, interest rate and maturity concession	—		—	1		77
Forbearance and interest only payments	1		25	2		112
Maturity concession	1		9	—		—
Total	6	$	501	11	$	671

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SUBSEQUENT EVENTS

3 Months Ended

Mar. 31, 2020

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13.           SUBSEQUENT EVENTS

There were no significant subsequent events between March 31, 2020 and through the date the financial statements are available to be issued.

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BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE 1.          BASIS OF PRESENTATION

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

In addition, these interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X, and accordingly, certain information and footnote disclosures normally included in financial statements prepared according to GAAP have been omitted.

The results for any interim period are not necessarily indicative of results for the full year. These consolidated financial statements should be read in conjunction with the audited financial statements and note disclosures for the Company's Annual Report on Form 10-K for the year ended December 31, 2019 previously filed with the Securities and Exchange Commission (the "SEC").  In management's opinion, all adjustments necessary for a fair statement are reflected in the interim periods presented.

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation. The reclassifications had no impact on net income in the Company’s consolidated income statement.

Summary of Significant Accounting Policies

The disclosures below supplement the accounting policies in previously disclosed in NOTE 1 – Summary of Significant Accounting Policies of the Company’s 2019 Annual Report on Form 10-K.

Operating, Accounting and Reporting Considerations related to COVID-19:

The COVID-19 pandemic has negatively impacted the global economy. In response to this crisis, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the Company include, but are not limited to:

• Accounting for Loan Modifications - The CARES Act provides that a financial institution may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes.

• Paycheck Protection Program - The CARES Act established the Paycheck Protection Program (“PPP”), an expansion of the Small Business Administration’s 7(a) loan program and the Economic Injury Disaster Loan Program (“EIDL”), administered directly by the SBA. 

• Mortgage Forbearance - Under the CARES Act, through the earlier of December 31, 2020, or the termination date of the COVID-19 national emergency, a borrower with a federally backed mortgage loan that is experiencing financial hardship due to COVID-19 may request a forbearance. A multifamily borrower with a federally backed multifamily mortgage loan that was current as of February 1, 2020, and is experiencing financial hardship due to COVID-19 may request forbearance on the loan for up to 30 days, with up to two additional 30-day periods at the borrower’s request.

Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration (“NCUA”), the Office of the Comptroller of the Currency (“OCC”), and the Consumer Financial Protection Bureau (“CFPB”), in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to:

• Accounting for Loan Modifications - Loan modifications that do not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with FASB staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment.

• Past Due Reporting - With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due during the period of the deferral.

• Nonaccrual Status and Risk Rating - During short-term COVID-19 modifications, these loans generally should not be reported as nonaccrual or as having a classified risk rating.

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2020
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test. The Company still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary	January 1, 2020	The Company has adopted ASU 2017-04 effective January 1, 2020, as required, and the ASU did not have a material impact on its financial statements. Goodwill testing is normally scheduled to be completed during the fourth quarter, but was evaluated in the first quarter in light of the economic impacts of COVID-19. The Company recognized no impairments to goodwill in the first quarter of 2020. See management’s discussion and analysis for further details.
		Early adoption is permitted
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	The Company has adopted ASU 2018-13, as of January 1, 2020, as required, and the ASU did not have a material impact to the disclosures as a result of the adoption.
		Early adoption is permitted.
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments ASU 2018-19, Codification Improvements to ASU 2016-13	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption. While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time. The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses with the application of the expected credit loss model. The Company will apply the standard's provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company's CECL implementation efforts in the first quarter focused on model validation, developing new disclosures, establishing formal policies and procedures and other governance and control documentation. Certain elements of the calculation were finalized in the first quarter, including refinement of the model assumptions, the qualitative framework, internal control design, model validation, and the operational control framework to support the new process. Furthermore, changes to the economic forecasts within the model could positively or negatively impact the actual results. The ASU was effective for the Company beginning in the first quarter of 2020; however, the CARES Act, issued in 2020, provided temporary relief related to the implementation of this accounting guidance until the earlier of the date on which the national emergency concerning the COVID-19 virus terminates or December 31, 2020. The Company has elected to utilize this relief and has calculated the allowance for loan losses and the resulting provision for loan losses using the prior incurred loss method at March 31, 2020.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2020-04 Facilitation of the Effects of Reference Rate Reform, Topic 848	This ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. For instance, companies can (1) elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. A company that makes this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Companies, can also (2) elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Finally, companies can (3) make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.	May be elected between March 12, 2020 through December 31, 2022.	The Company is currently evaluating all of its contracts, hedging relationships and other transactions that will be effected by reference rates that are being discontinued and determining which elections that need to be made.

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

3 Months Ended

Mar. 31, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

NOTE 9.           DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

As part of its overall asset and liability management strategy, the Company uses derivative instruments to minimize fluctuations in earnings and cash flows caused by interest rate volatility. The Company’s interest rate risk management strategy involves modifying the re-pricing characteristics of certain assets or liabilities so the changes in interest rates do not have a significant effect on net interest income. Thus, all of the Company's derivative contracts are considered to be interest rate contracts.

The Company recognizes its derivative instruments on the consolidated balance sheet at fair value. On the date the derivative instrument is entered into, the Company designates whether the derivative is part of a hedging relationship (i.e., cash flow or fair value hedge). The Company formally documents relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking hedge transactions. The Company also assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of hedged items. Changes in fair value of derivative instruments that are highly effective and qualify as cash flow hedges are recorded in other comprehensive income or loss.

The Company offers derivative products in the form of interest rate swaps, to commercial loan customers to facilitate their risk management strategies. These instruments are executed through Master Netting Arrangements ("MNA") with financial institution counterparties or Risk Participation Agreements ("RPA") with commercial bank counterparties, for which the Company assumes a pro rata share of the credit exposure associated with a borrower's performance related to the derivative contract with the counterparty.

The following tables present information about derivative assets and liabilities at March 31, 2020 and December 31, 2019:

	March 31, 2020
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.3	$	(6,467)	Other liabilities
Total cash flow hedges		100,000		4.3		(6,467)
Fair value hedges:
Interest rate swap on securities		37,190		9.3		3,368	Other liabilities
Total fair value hedges		37,190				3,368
Economic hedges:
Forward sale commitments		53,751		0.2		(73)	Other liabilities
Customer Loan Swaps-MNA Counterparty		150,490		7.8		(15,463)	Other liabilities (1)
Customer Loan Swaps-RPA Counterparty		78,505		8.7		(9,470)	Other liabilities (1)
Customer Loan Swaps-Customer		228,995		8.1		24,933	Other liabilities (1)
Total economic hedges		511,741				(73)
Non-hedging derivatives:
Interest rate lock commitments		23,146		0.1		93	Other assets
Total non-hedging derivatives		23,146				93
Total	$	672,077			$	(3,079)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties.

	December 31, 2019
			Weighted				Location Fair
	Notional		Average		Fair Value		Value Asset
	Amount		Maturity		Asset (Liability)		(Liability)
	(in thousands)		(in years)		(in thousands)
Cash flow hedges:
Interest rate swap on wholesale funding	$	100,000		4.6	$	(1,311)	Other liabilities
Total cash flow hedges		100,000				(1,311)
Fair value hedges:
Interest rate swap on securities		37,190		9.6		593	Other liabilities
Total fair value hedges		37,190				593
Economic hedges:
Forward sale commitments		11,228		0.1		(84)	Other liabilities
Customer Loan Swaps-MNA Counterparty		135,598		7.5		(4,669)	(1)
Customer Loan Swaps-RPA Counterparty		69,505		8.8		(3,377)	(1)
Customer Loan Swaps-Customer		205,103		8.1		8,046	(1)
Total economic hedges		421,434				(84)
Non-hedging derivatives:
Interest rate lock commitments		21,748		0.1		59	Other assets
Total non-hedging derivatives		21,748				59
Total	$	580,372			$	(743)

(1) Customer loan derivatives are subject to MNA or RPA arrangements with financial institution counterparties, thus assets and liabilities with the counterparty are netted for financial statement presentation.

As of March 31, 2020 and December 31, 2019, the following amounts were recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

				Cumulative Amount of Fair
	Location of Hedged Item on	Carrying Amount of Hedged		Value Hedging Adjustment in
	Balance Sheet	Assets (Liabilities)		Carrying Amount
March 31, 2020
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	38,710	$	207
December 31, 2019
Fair value hedges:
Interest rate swap on securities	Securities Available for Sale	$	39,026	$	523

Information about derivative assets and liabilities for March 31, 2020 and December 31, 2019, follows:

	Three Months Ended March 31, 2020
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)
	Recognized in			Reclassified		Location of	Amount of
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Gain (Loss)
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	4,949	Other income	$	—	Interest expense	$	1
Total cash flow hedges		4,949			—			1
Fair value hedges:
Interest rate swap on securities		(2,736)	Interest income		—	Interest income		13
Total fair value hedges		(2,736)			—			13
Economic hedges:
Forward commitments		—	Other income		—	Other income		11
Total economic hedges		—			—			11
Non-hedging derivatives:
Interest rate lock commitments		—	Other Income		—	Other Income		34
Total non-hedging derivatives		—			—			34
Total	$	2,213		$	—		$	59

(1) As of March 31, 2020 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

	Three Months Ended March 31, 2019
	Amount of			Amount of
	Gain (Loss)			Gain (Loss)			Amount of
	Recognized in			Reclassified		Location of	Gain (Loss)
	Other		Location of Gain (Loss)	from Other		Gain (Loss)	Recognized
	Comprehensive		Reclassified from Other	Comprehensive		Recognized in	Recognized
(in thousands)	Income		Comprehensive Income	Income(1)		Income	in Income
Cash flow hedges:
Interest rate swap on wholesale funding	$	402	Other income	$	—	Interest expense	$	—
Interest rate cap agreements		2,494	Acquisition, restructuring, and other expenses			Interest expense		163
Total cash flow hedges		2,896			—			—
Economic hedges:
Forward commitments		—	Other income		—	Other income		(65)
Total economic hedges		—			—			—
Non-hedging derivatives:
Interest rate lock commitments		—	Other income		—	Other Income		6
Total non-hedging derivatives		—			—			6
Total	$	2,896		$	—		$	6

(1) As of March 31, 2019 the Company does not expect any gains or losses from accumulated other comprehensive income into earnings within the next 12 months.

Cash flow hedges

Interest rate cap agreements

In 2014, interest rate cap agreements were purchased to limit the Company’s exposure to rising interest rates on four rolling, three-month borrowings indexed to three-month LIBOR. Under the terms of the agreements, the Company paid total premiums of $4.6 million for the right to receive cash flow payments if three-month LIBOR rises above the caps of 3.00%, thus effectively ensuring interest expense on the borrowings at maximum rates of 3.00% for the duration of the agreements. The interest rate cap agreements were designated as cash flow hedges, however the caps were terminated in the fourth quarter of 2019, with $3.2 million recognized in acquisition, restructuring and other expenses. The caps were terminated because it was probable that the original forecasted transaction would not occur by the end of the original specified period.

Interest rate swap on deposits

In March and November 2019, the Company entered into interest rate swaps on brokered deposits (the "SWAPS") to limit its exposure to rising interest rates over a five year term.  Under the terms of the agreement, the Company has two swaps each with a $50.0 million notional amount and pays a fixed interest rate of 2.46% and 1.55% respectively, and the financial institution counterparty pays the Company interest on the three-month LIBOR rate. The Company designated the swap as a cash flow hedge.

Economic hedges

Forward sale commitments

The Company utilizes forward sale commitments on residential mortgage loans to hedge interest rate risk and the associated effects on the fair value of interest rate lock commitments and loans originated for sale. The forward sale commitments are accounted for as derivatives. The Company typically uses a combination of best efforts and mandatory delivery contracts. The contracts are loan sale agreements where the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. Generally, the Company may enter into contracts just prior to the loan closing with a customer.

Customer loan derivatives

The Company enters into customer loan derivatives to facilitate the risk management strategies for commercial banking customers. The Company mitigates this risk by entering into equal and offsetting loan swap agreements with highly rated third-party financial institutions. The loan swap agreements are free-standing derivatives and are recorded at fair value in the Company's consolidated balance sheet. The Company is party to master netting arrangements with its financial institutional counterparties; however, the Company does not offset assets and liabilities under these arrangements for financial statement presentation purposes.

The master netting arrangements provide for a single net settlement of all loan swap agreements, as well as collateral or cash funds, in the event of default on, or termination of, any one contract. Collateral is provided by cash or securities received or posted by the counterparty with net liability positions, respectively, in accordance with contract thresholds. Currently, the Company has posted cash of $26.2 million with counterparties.

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of March 31, 2020
Customer Loan Derivatives:
MNA counterparty	$	(15,463)	$	15,463	$	26,200	$	—
RPA counterparty		(9,470)		9,470		—		—
Total	$	(24,933)	$	24,933	$	26,200	$	—

	Gross Amounts Offset in the Consolidated Balance Sheet
	Derivative				Cash Collateral
(in thousands)	Liabilities		Derivative Assets		Pledged		Net Amount
As of December 31, 2019
Customer Loan Derivatives:
MNA counterparty	$	(4,669)	$	4,669	$	10,700	$	—
RPA counterparty		(3,377)		3,377		—		—
Total	$	(8,046)	$	8,046	$	10,700	$	—

Non-hedging derivatives

Interest rate lock commitments

The Company enters into interest rate lock commitments (“IRLCs”) for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. IRLCs relate to the origination of residential mortgage loans that are held for sale are considered derivative financial instruments under applicable accounting guidance. Outstanding IRLCs expose the Company to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan. The IRLCs are free-standing derivatives which are carried at fair value with changes recorded in non-interest income in the Company’s Consolidated Statements of Income. Changes in the fair value of IRLCs subsequent to inception are based on; (i) changes in the fair value of the underlying loan resulting from the fulfillment of the commitment and (ii) changes in the probability when the loan will fund within the terms of the commitment, which is affected primarily by changes in interest rates and the passage of time.

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BORROWED FUNDS

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

BORROWED FUNDS

NOTE 5.               BORROWED FUNDS

Borrowed funds at March 31, 2020 and December 31, 2019 are summarized, as follows:

	March 31, 2020				December 31, 2019
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	172,643	1.27	%	$	303,286	1.83	%
Advances from the FRB		62,000	0.25			—	—
Other borrowings		31,001	1.21			44,832	0.99
Total short-term borrowings		265,644	1.03			348,118	1.73
Long-term borrowings
Advances from the FHLB		231,936	1.80			123,278	1.93
Subordinated borrowings		59,849	4.97			59,920	5.53
Total long-term borrowings		291,785	2.45			183,198	2.87
Total	$	557,429	1.77	%	$	531,316	2.11	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLB”) advances with a maturity of less than one year. The Company also maintains a $1.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended March 31, 2020 and December 31, 2019.

The Company has the capacity to borrow funds on a secured basis utilizing the Borrower in Custody program and the Discount Window at the Federal Reserve Bank of Boston (the “FRB”). At March 31, 2020, the Company’s available secured line of credit at the FRB was $142.1 million. The Company has pledged certain loans and securities to the FRB to support this arrangement. There were $62.0 million of outstanding advances with the FRB for the period ended March 31, 2020 and no borrowings with the FRB as of December 31, 2019.

The Company maintains, with a correspondent bank, an unused unsecured federal funds line of credit that has an aggregate overnight borrowing capacity of $50.0 million as of March 31, 2020 and December 31, 2019. There was no outstanding balance on the line of credit as of March 31, 2020 and December 31, 2019.

Long-term FHLB advances consist of advances with a maturity of more than one year. The advances outstanding at March 31, 2020 and December 31, 2019 include no callable advances and $314 thousand of amortizing advances. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of March 31, 2020 is, as follows:

	March 31, 2020
			Weighted Average
(in thousands, except rates)	Carrying Value		Rate
Fixed rate advances maturing:
2020	$	142,300	1.19	%
2021		50,665	1.77
2022		104,000	1.97
2023		80,000	1.77
2024		7,300	1.16
2025 and thereafter		20,314	1.22
Total FHLB advances	$	404,579	1.58	%

On November 26, 2019, the Company executed a Subordinated Note Purchase Agreement with an aggregate of $40.0 million of subordinated notes (the "Notes") to accredited investors. The Notes have a maturity date of December 1, 2029 and bear a fixed interest rate of 4.625% through December 1, 2024 payable semi-annually in arrears. From December 1, 2024 and thereafter the interest rate shall be reset quarterly to an interest rate per annum equal to the then current three-month SOFR plus 3.27%. The Company has the option beginning with the interest payment date of December 1, 2024, and on any scheduled payment date thereafter, to redeem the Notes, in whole or in part upon prior approval of the Federal Reserve. Netted with subordinated borrowings is amortized subordinated debt issuance costs of $739 thousand.

The Company also has $20.6 million in floating Junior Subordinated Deferrable Interest Debentures ("Debentures") issued by NHTB Capital Trust II ("Trust II") and NHTB Capital Trust III ("Trust III"), which are both Connecticut statutory trusts. The Debentures were issued on March 30, 2004, carry a variable interest rate of 3-month LIBOR plus 2.79%, and mature in 2034. The debt is callable by the Company at the time when any interest payment is made. Trust II and Trust III are considered variable interest entities for which the Company is not the primary beneficiary. Accordingly, Trust II and Trust III are not consolidated into the Company’s financial statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income	$ 7,721	$ 7,281
Other comprehensive income, before tax:
Changes in unrealized gain on securities available-for-sale	5,357	8,900
Changes in unrealized loss on cash flow hedging derivatives	(2,382)	(845)
Changes in unrealized loss on pension	0	0
Income taxes related to other comprehensive income:
Changes in unrealized gain on securities available-for-sale	(1,346)	(2,079)
Changes in unrealized loss on cash flow hedging derivatives	650	198
Changes in unrealized loss on pension	0	0
Total other comprehensive income	2,279	6,174
Total comprehensive income	$ 10,000	$ 13,455

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	Apr. 30, 2020
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2020
Entity File Number	001-13349
Entity Registrant Name	BAR HARBOR BANKSHARES
Entity Incorporation, State or Country Code	ME
Entity Tax Identification Number	01-0393663
Entity Address, Address Line One	82 Main Street
Entity Address, City or Town	Bar Harbor
Entity Address, State or Province	ME
Entity Address, Postal Zip Code	04609-0400
City Area Code	207
Local Phone Number	288-3314
Title of 12(b) Security	Common Stock
Trading Symbol	BHB
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		15,533,659
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Entity Central Index Key	0000743367
Amendment Flag	false
Entity Address, Country	US

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Schedule of Earnings Per Share

	Three Months Ended
	March 31,
(in thousands, except per share and share data)	2020		2019
Net income	$	7,721	$	7,281
Average number of basic common shares outstanding		15,558,132		15,523,423
Plus: dilutive effect of stock options and awards outstanding (1)		34,463		63,226
Average number of diluted common shares outstanding (1)		15,592,595		15,586,649
Anti-dilutive options excluded from earnings calculation		—		—
Earnings per share:
Basic	$	0.50	$	0.47
Diluted	$	0.50	$	0.47

(1) Average diluted shares outstanding are computed using the treasury stock method.

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LEASES (Tables)

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

ROU Assets and Liabilities

(in thousands)		March 31, 2020		December 31, 2019
Lease Right-of-Use Assets	Classification
Operating lease right-of-use assets	Other assets	$	10,129	$	9,623
Lease Liabilities
Operating lease liabilities	Other liabilities		10,205		9,651

Additional Information Regarding Leases

	March 31, 2020		December 31, 2019
Weighted-average remaining lease term (in years)
Operating leases	9.52		8.96
Weighted-average discount rate
Operating leases	3.30	%	3.27	%

	Three Months Ended		Three Months Ended
(in thousands)	March 31, 2020		March 31, 2019
Lease Costs
Operating lease cost	$	234	$	231
Variable lease cost		144		124
Total lease cost	$	378	$	355

Future Minimum Payments for Leases

(in thousands)	Operating Leases
Twelve Months Ended:
March 31, 2021	$	1,285
March 31, 2022		1,300
March 31, 2023		1,319
March 31, 2024		1,323
March 31, 2025		1,240
Thereafter		6,495
Total future minimum lease payments		12,962
Amounts representing interest		(2,757)
Present value of net future minimum lease payments	$	10,205

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SECURITIES AVAILABLE FOR SALE - Securities Impairment (Details) - Available-for-sale Securities - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Other than Temporary Impairment, Credit Losses Recognized in Earnings
Estimated credit losses as of prior year-end	$ 1,697	$ 1,697
Reductions for securities paid off during the period	0	0
Estimated credit losses at end of the period	$ 1,697	$ 1,697

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of AOCI (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Accumulated Other Comprehensive Income (Loss) [Line Items]
Accumulated other comprehensive income (loss)	$ 6,190	$ 3,911
Net unrealized gain on AFS securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	12,699	7,342
Income taxes related to items of accumulated other comprehensive (income) loss:	(3,139)	(1,793)
Net unrealized loss on effective hedging derivatives
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	(3,099)	(718)
Income taxes related to items of accumulated other comprehensive (income) loss:	886	237
Net unrealized loss on post retirement
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other accumulated comprehensive income (loss), before tax:	(1,512)	(1,512)
Income taxes related to items of accumulated other comprehensive (income) loss:	$ 355	$ 355

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DEPOSITS - Schedule of Time Deposits (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Deposits [Abstract]
Time less than $100,000	$ 559,255	$ 600,747
Time $100,000 through $250,000	173,305	225,505
Time $250,000 or more	111,537	106,383
Total time deposits	$ 844,097	$ 932,635

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BORROWED FUNDS - Summary of Borrowed Funds (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Short-term borrowings
Carrying Value	$ 265,644	$ 348,118
Weighted Average Rate	1.03%	1.73%
Long-term borrowings
Carrying Value	$ 291,785	$ 183,198
Weighted Average Rate	2.45%	2.87%
Total borrowings	$ 557,429	$ 531,316
Weighted Average Rate	1.77%	2.11%
Advances from the FHLB
Short-term borrowings
Carrying Value	$ 172,643	$ 303,286
Weighted Average Rate	1.27%	1.83%
Long-term borrowings
Carrying Value	$ 231,936	$ 123,278
Weighted Average Rate	1.80%	1.93%
Federal Reserve Bank Advances
Short-term borrowings
Carrying Value	$ 62,000	$ 0
Weighted Average Rate	0.25%
Other borrowings
Short-term borrowings
Carrying Value	$ 31,001	$ 44,832
Weighted Average Rate	1.21%	0.99%
Subordinated borrowings
Long-term borrowings
Carrying Value	$ 59,849	$ 59,920
Weighted Average Rate	4.97%	5.53%

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FAIR VALUE MEASUREMENTS - Unobservable Inputs Non-recurring (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Other real estate owned	$ 2,205	$ 2,236
Non-recurring | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	8,335	9,625
Capitalized servicing rights	3,897	4,301
Other real estate owned	2,205	2,236
Carrying value of assets held for sale	1,764	1,764
Total	16,201	17,926
Non-recurring | Level 3 | Fair value of collateral -appraised value
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	4,947	6,137
Non-recurring | Level 3 | Discount cash flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Impaired loans	$ 3,388	$ 3,488
Non-recurring | Level 3 | Impaired loans | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Loss severity	0.00%	0.00%
Appraised value	$ 0	$ 0
Cash flows	$ 21	$ 22
Discount rate	3.50%	2.88%
Non-recurring | Level 3 | Impaired loans | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Loss severity	70.00%	55.00%
Appraised value	$ 975	$ 6,915
Cash flows	$ 1,002	$ 1,002
Discount rate	9.50%	9.50%
Non-recurring | Level 3 | Capitalized servicing rights
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Constant prepayment rate (CPR)	11.91%	9.95%
Discount rate	11.33%	10.07%
Non-recurring | Level 3 | Other real estate owned
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	$ 2,695	$ 2,695
Non-recurring | Level 3 | Other real estate owned | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Selling Costs	6.00%	10.00%
Non-recurring | Level 3 | Other real estate owned | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Selling Costs	10.00%	20.00%
Non-recurring | Level 3 | Assets held for sale
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Carrying value of assets held for sale	$ 1,764	$ 1,764
Selling Costs	6.00%	6.00%
Non-recurring | Level 3 | Assets held for sale | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	$ 136	$ 136
Non-recurring | Level 3 | Assets held for sale | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Appraised value	$ 527	$ 527

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REVENUE FROM CONTRACTS WITH CUSTOMERS - Contract Balances from Contracts with Customers (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Balances from contracts with customers only:
Other Assets	$ 1,336	$ 1,703
Other Liabilities	$ 3,014	$ 3,114
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true false]	true

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES - Amount of Gain (Loss) recognized in Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	$ 2,213	$ 2,896
Amount of Gain (Loss) Recognized in Income	59	6
Designated as hedging instrument | Cash flow hedges
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	4,949	2,896
Amount of Gain (Loss) Recognized in Income	1
Designated as hedging instrument | Cash flow hedges | Interest rate swap
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	4,949	402
Amount of Gain (Loss) Recognized in Income	1
Designated as hedging instrument | Cash flow hedges | Interest rate cap agreements
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income		2,494
Amount of Gain (Loss) Recognized in Income		163
Designated as hedging instrument | Fair value hedges
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	(2,736)
Amount of Gain (Loss) Recognized in Income	13
Designated as hedging instrument | Fair value hedges | Interest rate swap
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Other Comprehensive Income	(2,736)
Amount of Gain (Loss) Recognized in Income	13
Designated as hedging instrument | Economic hedges
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	11
Designated as hedging instrument | Economic hedges | Forward sale commitments
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	11	(65)
Not designated as hedging instrument
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	34	6
Not designated as hedging instrument | Interest rate lock commitments
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain (Loss) Recognized in Income	$ 34	$ 6

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Changes in AOCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	$ 396,407	$ 370,579
Other comprehensive gain (loss) before reclassifications	2,382	6,174
Less: amounts reclassified from accumulated other comprehensive income	103	0
Total other comprehensive income	2,279	6,174
Balance at end of period	403,755	381,023
Net unrealized gain on AFS securities
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	5,549	(8,665)
Other comprehensive gain (loss) before reclassifications	4,114	6,821
Less: amounts reclassified from accumulated other comprehensive income	103	0
Total other comprehensive income	4,011	6,821
Balance at end of period	9,560	(1,844)
Net unrealized loss on effective hedging derivatives
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	(481)	(2,249)
Other comprehensive gain (loss) before reclassifications	(1,732)	(647)
Less: amounts reclassified from accumulated other comprehensive income	0	0
Total other comprehensive income	(1,732)	(647)
Balance at end of period	(2,213)	(2,896)
Net unrealized loss on post retirement
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	(1,157)	(888)
Other comprehensive gain (loss) before reclassifications	0	0
Less: amounts reclassified from accumulated other comprehensive income	0	0
Total other comprehensive income	0	0
Balance at end of period	(1,157)	(888)
Accumulated other comprehensive income (loss)
Accumulated Other Comprehensive Income (Loss), Net of Tax
Balance at beginning of period	3,911	(11,802)
Total other comprehensive income	2,279	6,174
Balance at end of period	$ 6,190	$ (5,628)

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FAIR VALUE MEASUREMENTS - Changes in Level 3 (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
Fair Value, Recurring Basis, Unobservable Input Reconciliation, Net Derivative Asset (Liability), Gain (Loss), Statement of Income [Extensible List]	Noninterest Income	Noninterest Income
Interest rate lock commitments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	$ 59	$ 8
Realized gain recognized in non-interest income	34	6
Ending balance	93	14
Forward Commitments
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
Beginning balance	(84)	0
Realized gain recognized in non-interest income	11	(65)
Ending balance	$ (73)	$ (65)

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LOANS - Summary of Past Due Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Total loans	$ 2,634,983	$ 2,641,092
Total commercial loans
Financing Receivable, Past Due [Line Items]
Total loans	1,374,535	1,353,952
Total commercial real estate
Financing Receivable, Past Due [Line Items]
Total loans	948,178	930,661
Total commercial real estate | Construction and land development
Financing Receivable, Past Due [Line Items]
Total loans	51,579	34,290
Total commercial real estate | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total loans	896,599	896,371
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total loans	426,357	423,291
Commercial and industrial | Commercial
Financing Receivable, Past Due [Line Items]
Total loans	340,795	298,764
Commercial and industrial | Agricultural
Financing Receivable, Past Due [Line Items]
Total loans	18,797	20,224
Commercial and industrial | Tax exempt
Financing Receivable, Past Due [Line Items]
Total loans	66,765	104,303
Residential real estate
Financing Receivable, Past Due [Line Items]
Total loans	1,132,328	1,151,857
Residential real estate | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total loans	1,132,328	1,151,857
Consumer
Financing Receivable, Past Due [Line Items]
Total loans	128,120	135,283
Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total loans	117,544	122,401
Consumer | Other consumer
Financing Receivable, Past Due [Line Items]
Total loans	10,576	12,882
Business Activities Loans
Financing Receivable, Past Due [Line Items]
Total Past Due	18,592	15,551
Current	1,889,966	1,819,679
Total loans	1,908,558	1,835,230
Past Due More Than 90 days and Accruing	946	50
Business Activities Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	12,123	8,685
Business Activities Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,142	2,969
Business Activities Loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	4,327	3,897
Business Activities Loans | Total commercial loans
Financing Receivable, Past Due [Line Items]
Total Past Due	7,563	5,230
Current	1,084,545	1,018,778
Total loans	1,092,108	1,024,008
Past Due More Than 90 days and Accruing	432	0
Business Activities Loans | Total commercial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,809	759
Business Activities Loans | Total commercial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,048	1,671
Business Activities Loans | Total commercial loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,706	2,800
Business Activities Loans | Total commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	3,482	3,642
Current	726,253	693,796
Total loans	729,735	697,438
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial real estate | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	418	258
Current	48,739	31,129
Total loans	49,157	31,387
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial real estate | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	3,064	3,384
Current	677,514	662,667
Total loans	680,578	666,051
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,663	245
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	142	205
Business Activities Loans | Total commercial real estate | 30-59 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,521	40
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	533	1,587
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	0	53
Business Activities Loans | Total commercial real estate | 60-89 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	533	1,534
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,286	1,810
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due	276	0
Business Activities Loans | Total commercial real estate | 90 Days or Greater Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,010	1,810
Business Activities Loans | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	4,081	1,588
Current	358,292	324,982
Total loans	362,373	326,570
Past Due More Than 90 days and Accruing	432	0
Business Activities Loans | Commercial and industrial | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	3,874	1,396
Current	284,208	238,296
Total loans	288,082	239,692
Past Due More Than 90 days and Accruing	381	0
Business Activities Loans | Commercial and industrial | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	207	192
Current	18,390	19,826
Total loans	18,597	20,018
Past Due More Than 90 days and Accruing	51	0
Business Activities Loans | Commercial and industrial | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Current	55,694	66,860
Total loans	55,694	66,860
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Commercial and industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,146	514
Business Activities Loans | Commercial and industrial | 30-59 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	1,108	452
Business Activities Loans | Commercial and industrial | 30-59 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	38	62
Business Activities Loans | Commercial and industrial | 30-59 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Commercial and industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,515	84
Business Activities Loans | Commercial and industrial | 60-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	1,515	50
Business Activities Loans | Commercial and industrial | 60-89 Days Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	0	34
Business Activities Loans | Commercial and industrial | 60-89 Days Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Commercial and industrial | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,420	990
Business Activities Loans | Commercial and industrial | 90 Days or Greater Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	1,251	894
Business Activities Loans | Commercial and industrial | 90 Days or Greater Past Due | Agricultural
Financing Receivable, Past Due [Line Items]
Total Past Due	169	96
Business Activities Loans | Commercial and industrial | 90 Days or Greater Past Due | Tax exempt
Financing Receivable, Past Due [Line Items]
Total Past Due	0	0
Business Activities Loans | Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	10,100	9,204
Current	732,610	731,483
Total loans	742,710	740,687
Past Due More Than 90 days and Accruing	293	0
Business Activities Loans | Residential real estate | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	10,100	9,204
Current	732,610	731,483
Total loans	742,710	740,687
Past Due More Than 90 days and Accruing	293	0
Business Activities Loans | Residential real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	8,824	7,293
Business Activities Loans | Residential real estate | 30-59 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	8,824	7,293
Business Activities Loans | Residential real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	69	1,243
Business Activities Loans | Residential real estate | 60-89 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	69	1,243
Business Activities Loans | Residential real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,207	668
Business Activities Loans | Residential real estate | 90 Days or Greater Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	1,207	668
Business Activities Loans | Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	929	1,117
Current	72,811	69,418
Total loans	73,740	70,535
Past Due More Than 90 days and Accruing	221	50
Business Activities Loans | Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	903	1,069
Current	63,611	58,299
Total loans	64,514	59,368
Past Due More Than 90 days and Accruing	221	50
Business Activities Loans | Consumer | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	26	48
Current	9,200	11,119
Total loans	9,226	11,167
Past Due More Than 90 days and Accruing	0	0
Business Activities Loans | Consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	490	633
Business Activities Loans | Consumer | 30-59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	471	597
Business Activities Loans | Consumer | 30-59 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	19	36
Business Activities Loans | Consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	25	55
Business Activities Loans | Consumer | 60-89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	20	43
Business Activities Loans | Consumer | 60-89 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	5	12
Business Activities Loans | Consumer | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	414	429
Business Activities Loans | Consumer | 90 Days or Greater Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	412	429
Business Activities Loans | Consumer | 90 Days or Greater Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	2	0
Acquired Loans
Financing Receivable, Past Due [Line Items]
Total Past Due	10,022	9,480
Acquired Credit Impaired	15,175	18,553
Total loans	726,425	805,862
Past Due More Than 90 days and Accruing	1,181	217
Acquired Loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	7,610	5,864
Acquired Loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	355	2,013
Acquired Loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	2,057	1,603
Acquired Loans | Total commercial loans
Financing Receivable, Past Due [Line Items]
Total Past Due	3,220	3,432
Acquired Credit Impaired	9,472	11,605
Total loans	282,427	329,944
Past Due More Than 90 days and Accruing	737
Acquired Loans | Total commercial loans | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,940	2,469
Acquired Loans | Total commercial loans | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	256	592
Acquired Loans | Total commercial loans | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,024	371
Acquired Loans | Total commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	3,123	2,517
Acquired Credit Impaired	7,520	8,673
Total loans	218,443	233,223
Past Due More Than 90 days and Accruing	737
Acquired Loans | Total commercial real estate | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due		12
Acquired Credit Impaired	245	384
Total loans	2,422	2,903
Acquired Loans | Total commercial real estate | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	3,123	2,505
Acquired Credit Impaired	7,275	8,289
Total loans	216,021	230,320
Past Due More Than 90 days and Accruing	737
Acquired Loans | Total commercial real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,843	2,029
Acquired Loans | Total commercial real estate | 30-59 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,843	2,029
Acquired Loans | Total commercial real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	256	257
Acquired Loans | Total commercial real estate | 60-89 Days Past Due | Construction and land development
Financing Receivable, Past Due [Line Items]
Total Past Due		12
Acquired Loans | Total commercial real estate | 60-89 Days Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	256	245
Acquired Loans | Total commercial real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	1,024	231
Acquired Loans | Total commercial real estate | 90 Days or Greater Past Due | Other commercial real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	1,024	231
Acquired Loans | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Total Past Due	97	915
Acquired Credit Impaired	1,952	2,932
Total loans	63,984	96,721
Acquired Loans | Commercial and industrial | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	97	915
Acquired Credit Impaired	1,752	2,723
Total loans	52,713	59,072
Acquired Loans | Commercial and industrial | Agricultural
Financing Receivable, Past Due [Line Items]
Acquired Credit Impaired	200	173
Total loans	200	206
Acquired Loans | Commercial and industrial | Tax exempt
Financing Receivable, Past Due [Line Items]
Acquired Credit Impaired		36
Total loans	11,071	37,443
Acquired Loans | Commercial and industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	97	440
Acquired Loans | Commercial and industrial | 30-59 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due	97	440
Acquired Loans | Commercial and industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due		335
Acquired Loans | Commercial and industrial | 60-89 Days Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due		335
Acquired Loans | Commercial and industrial | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due		140
Acquired Loans | Commercial and industrial | 90 Days or Greater Past Due | Commercial
Financing Receivable, Past Due [Line Items]
Total Past Due		140
Acquired Loans | Residential real estate
Financing Receivable, Past Due [Line Items]
Total Past Due	5,976	5,064
Acquired Credit Impaired	4,856	5,591
Total loans	389,618	411,170
Past Due More Than 90 days and Accruing	401
Acquired Loans | Residential real estate | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	5,976	5,064
Acquired Credit Impaired	4,856	5,591
Total loans	389,618	411,170
Past Due More Than 90 days and Accruing	401
Acquired Loans | Residential real estate | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	5,043	3,185
Acquired Loans | Residential real estate | 30-59 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	5,043	3,185
Acquired Loans | Residential real estate | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	99	864
Acquired Loans | Residential real estate | 60-89 Days Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	99	864
Acquired Loans | Residential real estate | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	834	1,015
Acquired Loans | Residential real estate | 90 Days or Greater Past Due | Residential mortgages
Financing Receivable, Past Due [Line Items]
Total Past Due	834	1,015
Acquired Loans | Consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	826	984
Acquired Credit Impaired	847	1,357
Total loans	54,380	64,748
Past Due More Than 90 days and Accruing	43	217
Acquired Loans | Consumer | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	825	973
Acquired Credit Impaired	789	1,291
Total loans	53,030	63,033
Past Due More Than 90 days and Accruing	43	217
Acquired Loans | Consumer | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	1	11
Acquired Credit Impaired	58	66
Total loans	1,350	1,715
Acquired Loans | Consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	627	210
Acquired Loans | Consumer | 30-59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	626	208
Acquired Loans | Consumer | 30-59 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due	1	2
Acquired Loans | Consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due		557
Acquired Loans | Consumer | 60-89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due		548
Acquired Loans | Consumer | 60-89 Days Past Due | Other consumer
Financing Receivable, Past Due [Line Items]
Total Past Due		9
Acquired Loans | Consumer | 90 Days or Greater Past Due
Financing Receivable, Past Due [Line Items]
Total Past Due	199	217
Acquired Loans | Consumer | 90 Days or Greater Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Total Past Due	$ 199	$ 217

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LOANS - Average Recorded Investment and Interest Income Recognized on Impaired Loans (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Business Activities Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 7,894	$ 13,028
Interest Income Recognized	24	45
Business Activities Loans | Total commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	3,010	8,981
Interest Income Recognized	4	26
Business Activities Loans | Total commercial real estate | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with related allowance	261	5
Interest income recognized, with related allowance	1
Business Activities Loans | Total commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	1,728	7,773
Interest income recognized, with no related allowance	3	26
Average recorded investment, with related allowance	1,021	1,203
Business Activities Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	1,304	1,417
Interest Income Recognized	1	2
Business Activities Loans | Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	1,071	527
Interest income recognized, with no related allowance	1	2
Average recorded investment, with related allowance	233	890
Business Activities Loans | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	3,568	2,617
Interest Income Recognized	19	17
Business Activities Loans | Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	2,589	1,965
Interest income recognized, with no related allowance	17	15
Average recorded investment, with related allowance	979	652
Interest income recognized, with related allowance	2	2
Business Activities Loans | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	12	13
Business Activities Loans | Consumer | Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with related allowance	12	13
Acquired Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	428	1,408
Acquired Loans | Total commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	70	126
Acquired Loans | Total commercial real estate | Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance		90
Average recorded investment, with related allowance	70	36
Acquired Loans | Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment		479
Acquired Loans | Commercial and industrial | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance		479
Acquired Loans | Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	358	803
Acquired Loans | Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average recorded investment, with no related allowance	195	436
Average recorded investment, with related allowance	$ 163	$ 367

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BORROWED FUNDS (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Borrowed Funds

	March 31, 2020				December 31, 2019
(dollars in thousands)	Carrying Value		Weighted Average Rate		Carrying Value		Weighted Average Rate
Short-term borrowings
Advances from the FHLB	$	172,643	1.27	%	$	303,286	1.83	%
Advances from the FRB		62,000	0.25			—	—
Other borrowings		31,001	1.21			44,832	0.99
Total short-term borrowings		265,644	1.03			348,118	1.73
Long-term borrowings
Advances from the FHLB		231,936	1.80			123,278	1.93
Subordinated borrowings		59,849	4.97			59,920	5.53
Total long-term borrowings		291,785	2.45			183,198	2.87
Total	$	557,429	1.77	%	$	531,316	2.11	%

Summary of Maturities of FHLB Advances

	March 31, 2020
			Weighted Average
(in thousands, except rates)	Carrying Value		Rate
Fixed rate advances maturing:
2020	$	142,300	1.19	%
2021		50,665	1.77
2022		104,000	1.97
2023		80,000	1.77
2024		7,300	1.16
2025 and thereafter		20,314	1.22
Total FHLB advances	$	404,579	1.58	%

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BASIS OF PRESENTATION (Tables)

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2020
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test. The Company still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary	January 1, 2020	The Company has adopted ASU 2017-04 effective January 1, 2020, as required, and the ASU did not have a material impact on its financial statements. Goodwill testing is normally scheduled to be completed during the fourth quarter, but was evaluated in the first quarter in light of the economic impacts of COVID-19. The Company recognized no impairments to goodwill in the first quarter of 2020. See management’s discussion and analysis for further details.
		Early adoption is permitted
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	The Company has adopted ASU 2018-13, as of January 1, 2020, as required, and the ASU did not have a material impact to the disclosures as a result of the adoption.
		Early adoption is permitted.
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments ASU 2018-19, Codification Improvements to ASU 2016-13	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption. While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time. The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses with the application of the expected credit loss model. The Company will apply the standard's provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company's CECL implementation efforts in the first quarter focused on model validation, developing new disclosures, establishing formal policies and procedures and other governance and control documentation. Certain elements of the calculation were finalized in the first quarter, including refinement of the model assumptions, the qualitative framework, internal control design, model validation, and the operational control framework to support the new process. Furthermore, changes to the economic forecasts within the model could positively or negatively impact the actual results. The ASU was effective for the Company beginning in the first quarter of 2020; however, the CARES Act, issued in 2020, provided temporary relief related to the implementation of this accounting guidance until the earlier of the date on which the national emergency concerning the COVID-19 virus terminates or December 31, 2020. The Company has elected to utilize this relief and has calculated the allowance for loan losses and the resulting provision for loan losses using the prior incurred loss method at March 31, 2020.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2020-04 Facilitation of the Effects of Reference Rate Reform, Topic 848	This ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. For instance, companies can (1) elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. A company that makes this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Companies, can also (2) elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Finally, companies can (3) make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.	May be elected between March 12, 2020 through December 31, 2022.	The Company is currently evaluating all of its contracts, hedging relationships and other transactions that will be effected by reference rates that are being discontinued and determining which elections that need to be made.

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

	March 31, 2020
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	295,657	$	—	$	295,657
US Government agency		—		101,669		—		101,669
Private label		—		18,499		—		18,499
Obligations of states and political subdivisions thereof		—		137,579		—		137,579
Corporate bonds		—		72,937		—		72,937
Derivative assets		—		24,933		93		25,026
Derivative liabilities		—		(28,032)		(73)		(28,105)

	December 31, 2019
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	321,969	$	—	$	321,969
US Government agency		—		99,661		—		99,661
Private label		—		19,533		—		19,533
Obligations of states and political subdivisions thereof		—		142,006		—		142,006
Corporate bonds		—		80,061		—		80,061
Derivative assets		—		6,791		59		6,850
Derivative liabilities		—		(8,102)		(84)		(8,186)

Schedule of Changes in Level 3 Assets Measured on a Recurring Basis

	Assets (Liabilities)
	Interest Rate Lock		Forward
(in thousands)	Commitments		Commitments
Three Months Ended March 31, 2020
Balance at beginning of period	$	59	$	(84)
Realized gain recognized in non-interest income		34		11
Balance at end of period	$	93	$	(73)
Three Months Ended March 31, 2019
Balance at beginning of period	$	8	$	—
Realized gain recognized in non-interest income		6		(65)
Balance at end of period	$	14	$	(65)

Schedule of Changes in Level 3 Liabilities Measured on a Recurring Basis

	Assets (Liabilities)
	Interest Rate Lock		Forward
(in thousands)	Commitments		Commitments
Three Months Ended March 31, 2020
Balance at beginning of period	$	59	$	(84)
Realized gain recognized in non-interest income		34		11
Balance at end of period	$	93	$	(73)
Three Months Ended March 31, 2019
Balance at beginning of period	$	8	$	—
Realized gain recognized in non-interest income		6		(65)
Balance at end of period	$	14	$	(65)

Schedule of Quantitative Information, Valuation, Recurring

	Fair Value		Fair Value
	March 31,		December 31,		Valuation	Unobservable	Unobservable
(in thousands, except ratios)	2020		2019		Techniques	Inputs	Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	93	$	59	Historical trend	Closing Ratio		90	%
					Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments		(73)		(84)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system		Pair-off contract price
Total	$	20	$	(25)

Summary of Applicable Non-Recurring Fair Value Measurements

							Fair Value
					Three Months Ended		Measurement Date as of
	March 31, 2020		December 31, 2019		March 31, 2020		March 31, 2020
	Level 3		Level 3		Total		Level 3
(in thousands)	Inputs		Inputs		Gains (Losses)		Inputs
Assets
Impaired loans	$	8,335	$	9,625	$	1,290	March 2020
Capitalized servicing rights		3,897		4,301		—	March 2020
Other real estate owned		2,205		2,236		(31)	August 2019
Premises held for sale		1,764		1,764		—	September 2019
Total	$	16,201	$	17,926	$	1,259

Schedule of Quantitative Information, Valuation, Non-recurring

	Fair Value				Range
(in thousands, except ratios)	March 31, 2020		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	4,947	Fair value of collateral -appraised value	Loss severity		0% to 70%
				Appraised value		$0 to $975
Impaired loans		3,388	Discount cash flow	Discount rate		3.50% to 9.50%
				Cash flows		$21 to $1,002
Capitalized servicing rights		3,897	Discounted cash flow	Constant prepayment rate (CPR)		11.91	%
				Discount rate		11.33	%
Other real estate owned		2,205	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		6% to 10%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value		$136 to $527
				Selling Costs		6	%
Total	$	16,201

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

(b) The carrying value of premises held for sale was $1.8 million as of March 31, 2020.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	6,137	Fair value of collateral -appraised value	Loss severity		0% to 55.00%
				Appraised value		$0 to $6,915
Impaired loans		3,488	Discount cash flow	Discount rate		2.88% to 9.50%
				Cash flows		$22 to $1,002
Capitalized servicing rights		4,301	Discounted cash flow	Constant prepayment rate (CPR)		9.95	%
				Discount rate		10.07	%
Other real estate owned		2,236	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		10% to 20%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value	$	$136 to $527
				Selling Costs		6.00	%
Total	$	17,926

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

(b) The carrying value of premises held for sale was $1.8 million as of December 31, 2019.

Summary of Estimated Fair Values, and Related Carrying Amounts, of Financial Instruments

	March 31, 2020
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	85,655	$	85,655	$	85,655	$	—	$	—
Securities available for sale		626,341		626,341		—		626,341		—
FHLB stock		19,897		19,897		—		19,897		—
Net loans		2,619,686		2,604,406		—		—		2,604,406
Accrued interest receivable		3,268		3,268		—		3,268		—
Cash surrender value of bank-owned life insurance policies		76,400		76,400		—		76,400		—
Derivative assets		25,026		25,026		—		24,933		93
Financial Liabilities
Non-maturity deposits	$	1,806,460	$	1,861,960	$	—	$	1,861,960	$	—
Time deposits		844,097		852,346		—		852,346		—
Short-term other borrowings		31,001		31,000		—		31,000		—
FHLB advances		404,579		410,065		—		410,065		—
FRB advances		62,000		62,000		—		62,000		—
Subordinated borrowings		59,849		59,849		—		59,849		—
Derivative liabilities		28,105		28,105		—		28,032		73

	December 31, 2019
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	56,910	$	56,910	$	56,910	$	—	$	—
Securities available for sale		663,230		663,230		—		663,230		—
FHLB stock		20,679		20,679		—		20,679		—
Net loans		2,625,739		2,634,147		—		—		2,634,147
Accrued interest receivable		3,294		3,294		—		3,294		—
Cash surrender value of bank-owned life insurance policies		75,863		75,863		—		75,863		—
Derivative assets		6,850		6,850		—		6,791		59
Financial Liabilities
Non-maturity deposits	$	1,763,116	$	1,751,481	$	—	$	1,751,481	$	—
Time deposits		932,635		932,886		—		932,886		—
Short-term other borrowings		44,832		44,831		—		44,831		—
FHLB advances		426,564		425,989		—		425,989		—
Subordinated borrowings		59,920		59,920		—		59,920		—
Derivative liabilities		8,186		8,186		—		8,102		84

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SECURITIES AVAILABLE FOR SALE - Schedule of Maturity of Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Amortized Cost
Over 1 year to 5 years	$ 30,554
Over 5 years to 10 years	56,401
Over 10 years	123,494
Total bonds and obligations	210,449
Mortgage-backed securities	403,193
Amortized Cost	613,642	$ 655,888
Fair Value
Over 1 year to 5 years	31,547
Over 5 years to 10 years	52,656
Over 10 years	126,313
Total bonds and obligations	210,516
Mortgage-backed securities	415,825
Total securities available for sale	$ 626,341	$ 663,230

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2020

Stockholders' Equity Note [Abstract]

CAPITAL RATIOS AND SHAREHOLDERS' EQUITY

NOTE 7.           CAPITAL RATIOS AND SHAREHOLDERS’ EQUITY

The actual and required capital ratios are, as follows:

			Regulatory				Regulatory
	March 31,		Minimum to be		December 31,		Minimum to be
	2020		"Well Capitalized"		2019		"Well Capitalized"
Company (consolidated)
Total capital to risk-weighted assets	13.61	%	10.50	%	13.61	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	10.61		7.00		10.57		7.00
Tier 1 capital to risk-weighted assets	11.42		8.50		11.39		8.50
Tier 1 capital to average assets	8.25		5.00		8.13		5.00
Bank
Total capital to risk-weighted assets	12.58	%	10.50	%	12.42	%	10.50	%
Common equity tier 1 capital to risk-weighted assets	11.96		7.00		11.79		7.00
Tier 1 capital to risk-weighted assets	11.96		8.50		11.79		8.50
Tier 1 capital to average assets	8.64		5.00		8.39		5.00

At each date shown, the Company and the Bank met the conditions to be classified as “well-capitalized” under the relevant regulatory framework. To be categorized as "well-capitalized," an institution must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table above.

The Company and the Bank are subject to the Basel III rule that requires the Company and the Bank to assess their Common equity tier 1 capital to risk-weighted assets and the Company and the Bank each exceed the minimum to be "well-capitalized." Effective January 1, 2019 all banking organizations must maintain a minimum Common equity tier 1 risk-based capital ratio of 7.0%, a minimum Tier 1 risk-based capital ratio of 8.5% and a minimum Total risk-based capital ratio of 10.5%.

At March 31, 2020, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered "well-capitalized" for regulatory purposes.

Accumulated other comprehensive income (loss)

Components of accumulated other comprehensive income is, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Other accumulated comprehensive income, before tax:
Net unrealized gain on AFS securities	$	12,699	$	7,342
Net unrealized loss on hedging derivatives		(3,099)		(718)
Net unrealized loss on post-retirement plans		(1,512)		(1,512)
Income taxes related to items of accumulated other comprehensive income:
Net unrealized gain on AFS securities		(3,139)		(1,793)
Net unrealized loss on hedging derivatives		886		237
Net unrealized loss on post-retirement plans		355		355
Accumulated other comprehensive income	$	6,190	$	3,911

The following table presents the components of other comprehensive income (loss) for the three months ended March 31, 2020 and 2019:

(in thousands)	Before Tax		Tax Effect		Net of Tax
Three Months Ended March 31, 2020
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	5,492	$	(1,378)	$	4,114
Less: reclassification adjustment for gains (losses) realized in net income		135		(32)		103
Net unrealized gain on AFS securities		5,357		(1,346)		4,011
Net unrealized loss on derivative hedges:
Net unrealized loss arising during the period		(2,382)		650		(1,732)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized loss on derivative hedges		(2,382)		650		(1,732)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	2,975	$	(696)	$	2,279
Three Months Ended March 31, 2019
Net unrealized gain on AFS securities:
Net unrealized gain arising during the period	$	8,900	$	(2,079)	$	6,821
Less: reclassification adjustment for gains realized in net income		—		—		—
Net unrealized gain on AFS securities		8,900		(2,079)		6,821
Net unrealized loss on cash flow hedging derivatives:
Net unrealized loss arising during the period		(845)		198		(647)
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on cash flow hedging derivatives		(845)		198		(647)
Net unrealized gain on post-retirement plans:
Net unrealized gain arising during the period		—		—		—
Less: reclassification adjustment for gains (losses) realized in net income		—		—		—
Net unrealized gain on post-retirement plans		—		—		—
Other comprehensive income	$	8,055	$	(1,881)	$	6,174

The following table presents the changes in each component of accumulated other comprehensive income (loss), net of tax impacts, for the three months ended March 31, 2020 and 2019:

	Net unrealized		Net loss on		Net unrealized
	gain (loss)		effective cash		loss
	on AFS		flow hedging		on pension
(in thousands)	Securities		derivatives		plans		Total
Three Months Ended March 31, 2020
Balance at beginning of period	$	5,549	$	(481)	$	(1,157)	$	3,911
Other comprehensive gain (loss) before reclassifications		4,114		(1,732)		—		2,382
Less: amounts reclassified from accumulated other comprehensive income		103		—		—		103
Total other comprehensive income (loss)		4,011		(1,732)		—		2,279
Balance at end of period	$	9,560	$	(2,213)	$	(1,157)	$	6,190
Three Months Ended March 31, 2019
Balance at beginning of period	$	(8,665)	$	(2,249)	$	(888)	$	(11,802)
Other comprehensive gain (loss) before reclassifications		6,821		(647)		—		6,174
Less: amounts reclassified from accumulated other comprehensive income		—		—		—		—
Total other comprehensive income (loss)		6,821		(647)		—		6,174
Balance at end of period	$	(1,844)	$	(2,896)	$	(888)	$	(5,628)

The following tables presents the amounts reclassified out of each component of accumulated other comprehensive income for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,				Affected Line Item where
(in thousands)	2020		2019		Net Income is Presented
Net realized gains on AFS securities:
Before tax(1)	$	135	$	—	Non-interest income
Tax effect		(32)		—	Tax expense
Total reclassifications for the period	$	103	$	—	Net of tax

(1) Net realized gains before tax include gross realized gains $146 thousand and realized losses of $11 thousand.

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LOANS

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

LOANS

NOTE 3.           LOANS

The Company’s loan portfolio is comprised of the following segments: commercial real estate, commercial and industrial, residential real estate, and consumer loans. Commercial real estate loans include multi-family, commercial construction and land development, and other commercial real estate classes. Commercial and industrial loans include loans to commercial and agricultural businesses and tax exempt entities. Residential real estate loans consist of mortgages for 1-to-4 family housing. Consumer loans include home equity loans, auto and other installment loans.

The Company’s lending activities are principally conducted in Maine, New Hampshire, and Vermont.

Total loans include business activity loans and acquired loans. Acquired loans are those loans previously acquired from other institutions. The following is a summary of total loans:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	49,157	$	2,422	$	51,579	$	31,387	$	2,903	$	34,290
Other commercial real estate		680,578		216,021		896,599		666,051		230,320		896,371
Total commercial real estate		729,735		218,443		948,178		697,438		233,223		930,661
Commercial and industrial:
Commercial		288,082		52,713		340,795		239,692		59,072		298,764
Agricultural		18,597		200		18,797		20,018		206		20,224
Tax exempt		55,694		11,071		66,765		66,860		37,443		104,303
Total commercial and industrial		362,373		63,984		426,357		326,570		96,721		423,291
Total commercial loans		1,092,108		282,427		1,374,535		1,024,008		329,944		1,353,952
Residential real estate:
Residential mortgages		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Total residential real estate		742,710		389,618		1,132,328		740,687		411,170		1,151,857
Consumer:
Home equity		64,514		53,030		117,544		59,368		63,033		122,401
Other consumer		9,226		1,350		10,576		11,167		1,715		12,882
Total consumer		73,740		54,380		128,120		70,535		64,748		135,283
Total loans	$	1,908,558	$	726,425	$	2,634,983	$	1,835,230	$	805,862	$	2,641,092

The carrying amount of the acquired loans at March 31, 2020 totaled $726.4 million. A subset of these loans was determined to have evidence of credit deterioration at acquisition date, which is accounted for in accordance with ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer. These purchased credit-impaired loans presently maintain a carrying value of $15.2 million (and total note balances of $19.3 million). These loans are evaluated for impairment through the periodic reforecasting of expected cash flows. Acquired loans considered not impaired at the acquisition date had a carrying amount of $711.2 million as of March 31, 2020.

The following table summarizes activity in the accretable yield for the acquired loan portfolio that falls under the purview of ASC 310-30, Accounting for Certain Loans or Debt Securities Acquired in a Transfer:

	Three Months Ended March 31,
(in thousands)	2020		2019
Balance at beginning of period	$	7,367	$	3,509
Reclassification from nonaccretable difference for loans with improved cash flows		—		2,031
Accretion		(528)		(1,063)
Balance at end of period	$	6,839	$	4,477

The following is a summary of past due loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	142	$	—	$	276	$	418	$	48,739	$	49,157	$	—
Other commercial real estate		1,521		533		1,010		3,064		677,514		680,578		—
Total commercial real estate		1,663		533		1,286		3,482		726,253		729,735		—
Commercial and industrial:
Commercial		1,108		1,515		1,251		3,874		284,208		288,082		381
Agricultural		38		—		169		207		18,390		18,597		51
Tax exempt		—		—		—		—		55,694		55,694		—
Total commercial and industrial		1,146		1,515		1,420		4,081		358,292		362,373		432
Total commercial loans		2,809		2,048		2,706		7,563		1,084,545		1,092,108		432
Residential real estate:
Residential mortgages		8,824		69		1,207		10,100		732,610		742,710		293
Total residential real estate		8,824		69		1,207		10,100		732,610		742,710		293
Consumer:
Home equity		471		20		412		903		63,611		64,514		221
Other consumer		19		5		2		26		9,200		9,226		—
Total consumer		490		25		414		929		72,811		73,740		221
Total loans	$	12,123	$	2,142	$	4,327	$	18,592	$	1,889,966	$	1,908,558	$	946

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
March 31, 2020
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	245	$	2,422	$	—
Other commercial real estate		1,843		256		1,024		3,123		7,275		216,021		737
Total commercial real estate		1,843		256		1,024		3,123		7,520		218,443		737
Commercial and industrial:
Commercial		97		—		—		97		1,752		52,713		—
Agricultural		—		—		—		—		200		200		—
Tax exempt		—		—		—		—		—		11,071		—
Total commercial and industrial		97		—		—		97		1,952		63,984		—
Total commercial loans		1,940		256		1,024		3,220		9,472		282,427		737
Residential real estate:
Residential mortgages		5,043		99		834		5,976		4,856		389,618		401
Total residential real estate		5,043		99		834		5,976		4,856		389,618		401
Consumer:
Home equity		626		—		199		825		789		53,030		43
Other consumer		1		—		—		1		58		1,350		—
Total consumer		627		—		199		826		847		54,380		43
Total loans	$	7,610	$	355	$	2,057	$	10,022	$	15,175	$	726,425	$	1,181

Business Activities Loans

					90 Days or								Past Due >
	30-59 Days		60-89 Days		Greater		Total Past						90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Current		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	205	$	53	$	—	$	258	$	31,129	$	31,387	$	—
Other commercial real estate		40		1,534		1,810		3,384		662,667		666,051		—
Total commercial real estate		245		1,587		1,810		3,642		693,796		697,438		—
Commercial and industrial:
Commercial		452		50		894		1,396		238,296		239,692		—
Agricultural		62		34		96		192		19,826		20,018		—
Tax exempt		—		—		—		—		66,860		66,860		—
Total commercial and industrial		514		84		990		1,588		324,982		326,570		—
Total commercial loans		759		1,671		2,800		5,230		1,018,778		1,024,008		—
Residential real estate:
Residential mortgages		7,293		1,243		668		9,204		731,483		740,687		—
Total residential real estate		7,293		1,243		668		9,204		731,483		740,687		—
Consumer:
Home equity		597		43		429		1,069		58,299		59,368		50
Other consumer		36		12		—		48		11,119		11,167		—
Total consumer		633		55		429		1,117		69,418		70,535		50
Total loans	$	8,685	$	2,969	$	3,897	$	15,551	$	1,819,679	$	1,835,230	$	50

Acquired Loans

					90 Days or				Acquired				Past Due >
	30-59 Days		60-89 Days		Greater		Total Past		Credit				90 days and
(in thousands)	Past Due		Past Due		Past Due		Due		Impaired		Total Loans		Accruing
December 31, 2019
Commercial real estate:
Construction and land development	$	—	$	12	$	—	$	12	$	384	$	2,903	$	—
Other commercial real estate		2,029		245		231		2,505		8,289		230,320		—
Total commercial real estate		2,029		257		231		2,517		8,673		233,223		—
Commercial and industrial:
Commercial		440		335		140		915		2,723		59,072		—
Agricultural		—		—		—		—		173		206		—
Tax exempt		—		—		—		—		36		37,443		—
Total commercial and industrial		440		335		140		915		2,932		96,721		—
Total commercial loans		2,469		592		371		3,432		11,605		329,944		—
Residential real estate:
Residential mortgages		3,185		864		1,015		5,064		5,591		411,170		—
Total residential real estate		3,185		864		1,015		5,064		5,591		411,170		—
Consumer:
Home equity		208		548		217		973		1,291		63,033		217
Other consumer		2		9		—		11		66		1,715		—
Total consumer		210		557		217		984		1,357		64,748		217
Total loans	$	5,864	$	2,013	$	1,603	$	9,480	$	18,553	$	805,862	$	217

Non-Accrual Loans

The following is summary information pertaining to non-accrual loans at March 31, 2020 and December 31, 2019:

	March 31, 2020						December 31, 2019
	Business						Business
	Activities		Acquired				Activities		Acquired
(in thousands)	Loans		Loans		Total		Loans		Loans		Total
Commercial real estate:
Construction and land development	$	276	$	—	$	276	$	258	$	—	$	258
Other commercial real estate		1,664		287		1,951		2,888		343		3,231
Total commercial real estate		1,940		287		2,227		3,146		343		3,489
Commercial and industrial:
Commercial		1,282		89		1,371		932		626		1,558
Agricultural		625		—		625		278		—		278
Tax exempt		—		—		—		—		—		—
Total commercial and industrial		1,907		89		1,996		1,210		626		1,836
Total commercial loans		3,847		376		4,223		4,356		969		5,325
Residential real estate:
Residential mortgages		4,077		1,012		5,089		3,362		1,973		5,335
Total residential real estate		4,077		1,012		5,089		3,362		1,973		5,335
Consumer:
Home equity		440		284		724		615		254		869
Other consumer		20		—		20		21		—		21
Total consumer		460		284		744		636		254		890
Total loans	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550

Loans evaluated for impairment as of March 31, 2020 and December 31, 2019 are, as follows:

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	2,638	$	1,733	$	3,586	$	13	$	7,970
Collectively evaluated		727,097		360,640		739,124		73,727		1,900,588
Total	$	729,735	$	362,373	$	742,710	$	73,740	$	1,908,558

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
March 31, 2020
Balance at end of period
Individually evaluated for impairment	$	70	$	—	$	296	$	—	$	366
Purchased credit impaired		7,520		1,952		4,856		847		15,175
Collectively evaluated		210,853		62,032		384,466		53,533		710,884
Total	$	218,443	$	63,984	$	389,618	$	54,380	$	726,425

Business Activities Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	3,964	$	1,353	$	2,620	$	13	$	7,950
Collectively evaluated		693,474		325,217		738,067		70,522		1,827,280
Total	$	697,438	$	326,570	$	740,687	$	70,535	$	1,835,230

Acquired Loans

	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
December 31, 2019
Balance at end of period
Individually evaluated for impairment	$	258	$	385	$	1,032	$	—	$	1,675
Purchased credit impaired		8,673		2,932		5,591		1,357		18,553
Collectively evaluated		224,292		93,404		404,547		63,391		785,634
Total	$	233,223	$	96,721	$	411,170	$	64,748	$	805,862

The following is a summary of impaired loans at March 31, 2020 and December 31, 2019:

Business Activities Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,341		2,060		—
Commercial		1,075		1,242		—
Agricultural		67		68		—
Tax exempt loans		—		—		—
Residential real estate		2,603		2,794		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		265		266		213
Other commercial real estate		1,032		1,082		462
Commercial		230		236		47
Agricultural		361		361		91
Tax exempt loans		—		—		—
Residential real estate		983		1,111		126
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		2,638		3,408		675
Commercial and industrial		1,733		1,907		138
Residential real estate		3,586		3,905		126
Consumer		13		13		—
Total impaired loans	$	7,970	$	9,233	$	939

Acquired Loans

	March 31, 2020
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		—		—		—
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		134		308		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		70		71		13
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		162		185		14
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		70		71		13
Commercial and industrial		—		—		—
Residential real estate		296		493		14
Consumer		—		—		—
Total impaired loans	$	366	$	564	$	27

Business Activities Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		1,911		1,957		—
Commercial		710		773		—
Agricultural		361		261		—
Tax exempt loans		—		—		—
Residential real estate		2,067		2,227		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		258		258		205
Other commercial real estate		1,795		1,940		1,026
Commercial		282		289		164
Agricultural		—		—		—
Tax exempt loans		—		—		—
Residential real estate		553		590		57
Home equity		13		13		—
Other consumer		—		—		—
Total
Commercial real estate		3,964		4,155		1,231
Commercial and industrial		1,353		1,423		164
Residential real estate		2,620		2,817		57
Consumer		13		13		—
Total impaired loans	$	7,950	$	8,408	$	1,452

Acquired Loans

	December 31, 2019
	Recorded		Unpaid Principal		Related
(in thousands)	Investment		Balance		Allowance
With no related allowance:
Construction and land development	$	—	$	—	$	—
Other commercial real estate		90		90		—
Commercial		385		481		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		678		938		—
Home equity		—		—		—
Other consumer		—		—		—
With an allowance recorded:
Construction and land development		—		—		—
Other commercial real estate		168		168		12
Commercial		—		—		—
Agricultural		—		—		—
Tax exempt		—		—		—
Residential mortgages		354		376		49
Home equity		—		—		—
Other consumer		—		—		—
Total
Commercial real estate		258		258		12
Commercial and industrial		385		481		—
Residential real estate		1,032		1,314		49
Consumer		—		—		—
Total impaired loans	$	1,675	$	2,053	$	61

The following is a summary of the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2020 and 2019:

Business Activities Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		1,728		3		7,773		26
Commercial		1,071		1		527		2
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		2,589		17		1,965		15
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		261		1		5		—
Other commercial real estate		1,021		—		1,203		—
Commercial		233		—		890		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		979		2		652		2
Home equity		12		—		13		—
Other consumer		—		—		—		—
Total
Commercial real estate		3,010		4		8,981		26
Commercial and industrial		1,304		1		1,417		2
Residential real estate		3,568		19		2,617		17
Consumer		12		—		13		—
Total impaired loans	$	7,894	$	24	$	13,028	$	45

Acquired Loans

	Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Average Recorded		Interest		Average Recorded		Interest
(in thousands)	Investment		Income Recognized		Investment		Income Recognized
With no related allowance:
Construction and land development	$	—	$	—	$	—	$	—
Other commercial real estate		—		—		90		—
Commercial		—		—		479		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		195		—		436		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
With an allowance recorded:
Construction and land development		—		—		—		—
Other commercial real estate		70		—		36		—
Commercial		—		—		—		—
Agricultural		—		—		—		—
Tax exempt loans		—		—		—		—
Residential real estate		163		—		367		—
Home equity		—		—		—		—
Other consumer		—		—		—		—
Total
Commercial real estate		70		—		126		—
Commercial and industrial		—		—		479		—
Residential real estate		358		—		803		—
Consumer		—		—		—		—
Total impaired loans	$	428	$	—	$	1,408	$	—

Troubled Debt Restructuring Loans

The Company’s loan portfolio also includes certain loans that have been modified in a Troubled Debt Restructuring ("TDR"), where economic concessions have been granted to borrowers who have experienced or are expected to experience financial difficulties. These concessions typically result from the Company’s loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance, or other actions. Certain TDRs are classified as non-performing at the time of restructure and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. TDRs are evaluated individually for impairment and may result in a specific allowance amount allocated to an individual loan.

The following tables include the recorded investment and number of modifications identified during the three months ended March 31, 2020 and 2019, respectively. The table includes the recorded investment in the loans prior to a modification and also the recorded investment in the loans after the loans were restructured. Modifications may include adjustments to interest rates, payment amounts, extensions of maturity, court ordered concessions or other actions intended to minimize economic loss and avoid foreclosure or repossession of collateral.

	Three Months Ended March 31, 2020
		Pre-Modification		Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	1	$	54	$	259
Other commercial	3		41		208
Home equity	1		26		25
Other consumer	1		9		9
Total	6	$	130	$	501

	Three Months Ended March 31, 2019
		Pre-Modification			Post-Modification
	Number of	Outstanding Recorded		Outstanding Recorded
(in thousands)	Modifications	Investment		Investment
Troubled Debt Restructurings
Other commercial real estate	3	$	113	$	113
Other commercial	2		31		31
Residential mortgages	6		530		527
Total	11	$	674	$	671

The following tables summarize the types of loan concessions made for the periods presented:

	Three Months Ended March 31,
	2020			2019
		Post-Modification			Post-Modification
		Outstanding			outstanding
	Number of	Recorded		Number of	Recorded
(in thousands, except modifications)	Modifications	Investment		Modifications	Investment
Troubled Debt Restructurings
Interest rate and maturity concession	—	$	—	2	$	12
Interest rate, forbearance and maturity concession	4		467	—		—
Amortization and maturity concession	—		—	5		314
Amortization concession	—		—	1		156
Amortization, interest rate and maturity concession	—		—	1		77
Forbearance and interest only payments	1		25	2		112
Maturity concession	1		9	—		—
Total	6	$	501	11	$	671

For the three months ended March 31, 2020, there were no loans that were restructured that had subsequently defaulted during the period. The evaluation of certain loans individually for specific impairment includes loans that were previously classified as TDRs or continue to be classified as TDRs.

Modifications in response to COVID-19

The Company began offering short-term loan modifications to assist borrowers during the COVID-19 national emergency. The CARES Act along with a joint agency statement issued by banking agencies, provides that short-term modifications made in response to COVID-19 do not need to be accounted for as a TDR. Accordingly, the Company does not account for such loan modifications as TDRs. See Note 1 - Basis of Presentation for more information.

Foreclosure

As of March 31, 2020 and December 31, 2019, the Company maintained bank-owned residential real estate with a fair value of $2.2 million. Additionally, residential mortgage loans collateralized by real estate that are in the process of foreclosure as of March 31, 2020 and December 31, 2019 totaled $931 thousand and $810 thousand, respectively.

Mortgage Banking

Total residential loans included held for sale loans of $11.7 million and $6.5 million at March 31, 2020 and December 31, 2019, respectively.

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REVENUE FROM CONTRACTS WITH CUSTOMERS

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

NOTE 11.           REVENUE FROM CONTRACTS WITH CUSTOMER

The Company has accounted for the various non-interest revenue streams and related contracts under ASC 606.

Disaggregation of Revenue

The following tables present disaggregation of the Company’s non-interest revenue by major business line and timing of revenue recognition for the transfer of products or services:

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Major Products/Service Lines
Trust management fees	$	3,046	$	2,525
Financial services fees		323		233
Interchange fees		1,738		1,031
Customer deposit fees		1,110		907
Other customer service fees		264		226
Total	$	6,481	$	4,922

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Timing of Revenue Recognition
Products and services transferred at a point in time	$	3,273	$	2,267
Products and services transferred over time		3,208		2,655
Total	$	6,481	$	4,922

Trust Management Fees.

The trust management business generates revenue through a range of fiduciary services including trust and estate administration, wealth advisory, and investment management to individuals, businesses, not-for-profit organizations, and municipalities. Revenue from these services are generally recognized over time and is typically based on a time elapsed measure of service. Certain fees, such as bill paying fees, distribution fees, real estate sale fees, and supplemental tax service fees, are recorded as revenue at a point in time upon the completion of the service.

Financial Services Fees.

Bar Harbor Financial Services is a branch office of Infinex, an independent registered broker dealer offering securities and insurance products not affiliated with the Company or its subsidiaries. The Company has a revenue sharing agreement with Infinex for any financial service fee income generated. Financial services fees are recognized at a point in time upon the completion of service requirements.

Interchange Fees.

The Company earns interchange fees from transaction fees that merchants pay whenever a customer uses a debit card to make a purchase from their store. The fees are paid to the card-issuing bank to cover handling costs, fraud, bad debt costs and the risk involved in approving the payment. Interchange fees are generally recognized as revenue at a point in time upon the completion of a debit card transaction.

Customer Deposit Fees.

The Customer Deposit business offers a variety of deposit accounts with a range of interest rates, fee schedules and other terms, which are designed to meet the customer's financial needs. Additional depositor-related services provided to

customers include ATM, bank-by-phone, internet banking, internet bill pay, mobile banking, and other cash management services which include remote deposit capture, ACH origination, and wire transfers. These customer deposit fees are generally recognized by the Company at a point in time upon the completion of the service.

Other Customer Service Fees.

The Company has certain incentive and referral fee arrangements with independent third parties in which fees are earned for new account activity, product sales, or transaction volume generated for the respective third parties. The Company also earns a percentage of the fees generated from third-party credit card plans promoted through the Bank. Revenue from these incentive and referral fee arrangements are recognized over time using the right to invoice measure of progress.

Contract Balances from Contracts with Customers

The following table provides information about contract assets or receivables and contract liabilities or deferred revenues from contracts with customers:

	Balance at		Balance at
(in thousands)	March 31, 2020		December 31, 2019
Balances from contracts with customers only:
Other Assets	$	1,336	$	1,703
Other Liabilities		3,014		3,114

The timing of revenue recognition, billings and cash collections results in contract assets or receivables and contract liabilities or deferred revenue on the consolidated balance sheets. For most customer contracts, fees are deducted directly from customer accounts and, therefore, there is no associated impact on the accounts receivable balance. For certain types of service contracts, the Company has an unconditional right to consideration under the service contract and an accounts receivable balance is recorded for services completed. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue after control of the products or services is transferred to the customer and all revenue recognition criteria have been met.

Costs to Obtain and Fulfill a Contract

The Company currently expenses contract costs for processing and administrative fees for debit card transactions. The Company also expenses custody fees and transactional costs associated with securities transactions as well as third party tax preparation fees. The Company has elected the practical expedient in ASC 340-40-25-4, whereby the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets the Company otherwise would have recognized is one year or less.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares shares in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.22	$ 0.20
Treasury stock purchased (in shares)	5,586
Net issuance (in shares)	(23,010)	(441)

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 2.00	$ 2.00
Common stock, shares authorized (in shares)	20,000,000	20,000,000
Common stock, shares issued (in shares)	16,428,388	16,428,388
Treasury stock (in shares)	841,029	870,257

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LEASES - Additional Lease Information (Details)	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
Weighted-average remaining lease term (in years)	9 years 6 months 7 days	8 years 11 months 15 days
Weighted-average discount rate	3.30%	3.27%

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FAIR VALUE MEASUREMENTS - Unobservable Inputs Recurring (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ (3,079,000)	$ (743,000)
Recurring | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Total	20,000	(25,000)
Recurring | Level 3 | Interest rate lock commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ 93,000	59,000
Closing Ratio	90.00%
Origination Costs, per loan	$ 1,700
Recurring | Level 3 | Forward Commitments
Fair Value Measurement Inputs and Valuation Techniques [Line Items}
Derivative asset (liability), fair value	$ (73,000)	$ (84,000)

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LEASES - Future Minimum Payments for Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
March 31, 2021	$ 1,285
March 31, 2022	1,300
March 31, 2023	1,319
March 31, 2024	1,323
March 31, 2025	1,240
Thereafter	6,495
Total future minimum lease payments	12,962
Amounts representing interest	(2,757)
Present value of net future minimum lease payments	$ 10,205	$ 9,651

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REVENUE FROM CONTRACTS WITH CUSTOMERS - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenue	$ 6,481	$ 4,922
Trust management fees
Disaggregation of Revenue [Line Items]
Revenue	3,046	2,525
Financial services fees
Disaggregation of Revenue [Line Items]
Revenue	323	233
Interchange fees
Disaggregation of Revenue [Line Items]
Revenue	1,738	1,031
Customer deposit fees
Disaggregation of Revenue [Line Items]
Revenue	1,110	907
Other customer service fees
Disaggregation of Revenue [Line Items]
Revenue	$ 264	$ 226

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DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Mar. 31, 2020	Dec. 31, 2019
Deposits [Abstract]
Brokered deposits	$ 378.7	$ 526.9
Reciprocal deposits	$ 79.3	$ 64.1

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BORROWED FUNDS - Summary of Maturities of FHLB (Details) - Fixed rate advances $ in Thousands	Mar. 31, 2020 USD ($)
Carrying Value
2020	$ 142,300
2021	50,665
2022	104,000
2023	80,000
2024	7,300
2025 and thereafter	20,314
Total FHLB advances	$ 404,579
Weighted Average Rate
2020	1.19%
2021	1.77%
2022	1.97%
2023	1.77%
2024	1.16%
2025 and thereafter	1.22%
Total FHLB advances	1.58%

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REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

3 Months Ended

Mar. 31, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Major Products/Service Lines
Trust management fees	$	3,046	$	2,525
Financial services fees		323		233
Interchange fees		1,738		1,031
Customer deposit fees		1,110		907
Other customer service fees		264		226
Total	$	6,481	$	4,922

	Three Months Ended
	March 31,
(in thousands)	2020		2019
Timing of Revenue Recognition
Products and services transferred at a point in time	$	3,273	$	2,267
Products and services transferred over time		3,208		2,655
Total	$	6,481	$	4,922

Contract Balances from Contracts with Customers

	Balance at		Balance at
(in thousands)	March 31, 2020		December 31, 2019
Balances from contracts with customers only:
Other Assets	$	1,336	$	1,703
Other Liabilities		3,014		3,114

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SECURITIES AVAILABLE FOR SALE - Summary of Securities with Unrealized Losses (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Gross Unrealized Losses
Less Than Twelve Months	$ 4,501	$ 2,165
Over Twelve Months	3,145	1,698
Total	7,646	3,863
Fair Value
Less Than Twelve Months	69,410	112,232
Over Twelve Months	34,294	82,201
Total	103,704	194,433
US Government-sponsored enterprises
Gross Unrealized Losses
Less Than Twelve Months	165	1,074
Over Twelve Months	452	1,006
Total	617	2,080
Fair Value
Less Than Twelve Months	9,548	43,429
Over Twelve Months	6,608	49,712
Total	16,156	93,141
US Government agency
Gross Unrealized Losses
Less Than Twelve Months	180	432
Over Twelve Months	11	115
Total	191	547
Fair Value
Less Than Twelve Months	11,899	19,717
Over Twelve Months	4,122	9,120
Total	16,021	28,837
Private label
Gross Unrealized Losses
Less Than Twelve Months	10	380
Over Twelve Months	1,762	367
Total	1,772	747
Fair Value
Less Than Twelve Months	124	9,843
Over Twelve Months	18,234	9,411
Total	18,358	19,254
Obligations of states and political subdivisions thereof
Gross Unrealized Losses
Less Than Twelve Months	315	137
Over Twelve Months		131
Total	315	268
Fair Value
Less Than Twelve Months	17,862	29,355
Over Twelve Months		1,682
Total	17,862	31,037
Corporate bonds
Gross Unrealized Losses
Less Than Twelve Months	3,831	142
Over Twelve Months	920	79
Total	4,751	221
Fair Value
Less Than Twelve Months	29,977	9,888
Over Twelve Months	5,330	12,276
Total	$ 35,307	$ 22,164

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 10.           FAIR VALUE MEASUREMENTS

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. These valuation methodologies were applied to all of the Company’s financial assets and financial liabilities that are carried at fair value.

Recurring Fair Value Measurements

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	March 31, 2020
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	295,657	$	—	$	295,657
US Government agency		—		101,669		—		101,669
Private label		—		18,499		—		18,499
Obligations of states and political subdivisions thereof		—		137,579		—		137,579
Corporate bonds		—		72,937		—		72,937
Derivative assets		—		24,933		93		25,026
Derivative liabilities		—		(28,032)		(73)		(28,105)

	December 31, 2019
	Level 1		Level 2		Level 3		Total
(in thousands)	Inputs		Inputs		Inputs		Fair Value
Available for sale securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	—	$	321,969	$	—	$	321,969
US Government agency		—		99,661		—		99,661
Private label		—		19,533		—		19,533
Obligations of states and political subdivisions thereof		—		142,006		—		142,006
Corporate bonds		—		80,061		—		80,061
Derivative assets		—		6,791		59		6,850
Derivative liabilities		—		(8,102)		(84)		(8,186)

Securities Available for Sale: All securities and major categories of securities classified as available for sale are reported at fair value utilizing Level 2 inputs. For these securities, the Company obtains fair value measurements from independent pricing providers. The fair value measurements used by the pricing providers consider observable data that may include dealer quotes, market maker quotes and live trading systems. If quoted prices are not readily available, fair values are determined using matrix pricing models, or other model-based valuation techniques requiring observable inputs other than quoted prices such as market pricing spreads, credit information, callable features, cash flows, the U.S. Treasury yield curve, trade execution data, market consensus prepayment speeds, default rates, and the securities’ terms and conditions, among other things.

Derivative Assets and Liabilities

Cash Flow and Fair Value Hedges. The valuation of the Company's cash flow hedges are obtained from a third party. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The inputs used to value the Company's cash flow hedges are all classified as Level 2 measurements.

Interest Rate Lock Commitments. The Company enters into IRLCs for residential mortgage loans, which commit the Company to lend funds to a potential borrower at a specific interest rate and within a specified period of time. The estimated

fair value of commitments to originate residential mortgage loans for sale is based on quoted prices for similar loans in active markets. However, this value is adjusted by a factor which considers the likelihood of a loan in a lock position will ultimately close. The closing ratio is derived from the Company’s internal data and is adjusted using significant management judgment. As such, IRLCs are classified as Level 3 measurements.

Forward Sale Commitments. The Company utilizes forward sale commitments as economic hedges against potential changes in the values of the IRLCs and loans originated for sale. The fair values of the Company’s mandatory delivery loan sale commitments are determined similarly to the IRLCs using quoted prices in the market place that are observable. However, closing ratios included in the calculation are internally generated and are based on management’s judgment and prior experience, which are not considered observable factors. As such, mandatory delivery forward commitments are classified as Level 3 measurements.

Customer Loan Derivatives. The valuation of the Company’s customer loan derivatives is obtained from a third-party pricing service and is determined using a discounted cash flow analysis on the expected cash flows of each derivative. The pricing analysis is based on observable inputs for the contractual terms of the derivatives, including the period to maturity and interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of master netting arrangements and any applicable credit enhancements, such as collateral postings.

Although the Company has determined that the majority of the inputs used to value its customer loan derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2020, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The table below presents the changes in Level 3 assets and liabilities that were measured at fair value on a recurring basis for the three months ended March 31, 2020:

	Assets (Liabilities)
	Interest Rate Lock		Forward
(in thousands)	Commitments		Commitments
Three Months Ended March 31, 2020
Balance at beginning of period	$	59	$	(84)
Realized gain recognized in non-interest income		34		11
Balance at end of period	$	93	$	(73)
Three Months Ended March 31, 2019
Balance at beginning of period	$	8	$	—
Realized gain recognized in non-interest income		6		(65)
Balance at end of period	$	14	$	(65)

Quantitative information about the significant unobservable inputs within Level 3 recurring assets and liabilities is, as follows:

	Fair Value		Fair Value
	March 31,		December 31,		Valuation	Unobservable	Unobservable
(in thousands, except ratios)	2020		2019		Techniques	Inputs	Input Value
Assets (Liabilities)
Interest Rate Lock Commitment	$	93	$	59	Historical trend	Closing Ratio		90	%
					Pricing Model	Origination Costs, per loan	$	1.7
Forward Commitments		(73)		(84)	Quoted prices for similar loans in active markets.	Freddie Mac pricing system		Pair-off contract price
Total	$	20	$	(25)

Non-Recurring Fair Value Measurements

The Company is required, on a non-recurring basis, to adjust the carrying value or provide valuation allowances for certain assets using fair value measurements in accordance with GAAP. The following is a summary of applicable non-recurring fair value measurements:

							Fair Value
					Three Months Ended		Measurement Date as of
	March 31, 2020		December 31, 2019		March 31, 2020		March 31, 2020
	Level 3		Level 3		Total		Level 3
(in thousands)	Inputs		Inputs		Gains (Losses)		Inputs
Assets
Impaired loans	$	8,335	$	9,625	$	1,290	March 2020
Capitalized servicing rights		3,897		4,301		—	March 2020
Other real estate owned		2,205		2,236		(31)	August 2019
Premises held for sale		1,764		1,764		—	September 2019
Total	$	16,201	$	17,926	$	1,259

There are no liabilities measured at fair value on a non-recurring basis in 2020 and 2019.

Quantitative information about the significant unobservable inputs within Level 3 non-recurring assets is, as follows:

	Fair Value				Range
(in thousands, except ratios)	March 31, 2020		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	4,947	Fair value of collateral -appraised value	Loss severity		0% to 70%
				Appraised value		$0 to $975
Impaired loans		3,388	Discount cash flow	Discount rate		3.50% to 9.50%
				Cash flows		$21 to $1,002
Capitalized servicing rights		3,897	Discounted cash flow	Constant prepayment rate (CPR)		11.91	%
				Discount rate		11.33	%
Other real estate owned		2,205	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		6% to 10%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value		$136 to $527
				Selling Costs		6	%
Total	$	16,201

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

(b) The carrying value of premises held for sale was $1.8 million as of March 31, 2020.

	Fair Value				Range
(in thousands, except ratios)	December 31, 2019		Valuation Techniques	Unobservable Inputs	(Weighted Average)(a)
Assets
Impaired loans	$	6,137	Fair value of collateral -appraised value	Loss severity		0% to 55.00%
				Appraised value		$0 to $6,915
Impaired loans		3,488	Discount cash flow	Discount rate		2.88% to 9.50%
				Cash flows		$22 to $1,002
Capitalized servicing rights		4,301	Discounted cash flow	Constant prepayment rate (CPR)		9.95	%
				Discount rate		10.07	%
Other real estate owned		2,236	Fair value of collateral less selling costs	Appraised value	$	2,695
				Selling Costs		10% to 20%
Premises held for sale(b)		1,764	Fair value of asset less selling costs	Appraised value	$	$136 to $527
				Selling Costs		6.00	%
Total	$	17,926

(a) Where dollar amounts are disclosed, the amounts represent the lowest and highest fair value of the respective assets in the population except for adjustments for market/property conditions, which represents the range of adjustments to individual properties.

(b) The carrying value of premises held for sale was $1.8 million as of December 31, 2019.

There were no Level 1 or Level 2 non-recurring fair value measurements for the periods ended March 31, 2020 and December 31, 2019.

Impaired loans. Loans are generally not recorded at fair value on a recurring basis. Periodically, the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans. Non-recurring adjustments can also include certain impairment amounts for collateral-dependent loans calculated when establishing the allowance for credit losses. Such amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated valuation amount does not necessarily represent the fair value of the loan. Real estate collateral is typically valued using appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable in the marketplace. However, the choice of observable data is subject to significant judgment, and there are often adjustments based on judgment in order to make observable data comparable and to consider the impact of time, the condition of properties, interest rates, and other market factors on current values. Additionally, commercial real estate appraisals frequently involve discounting of projected cash flows, which relies inherently on unobservable data. Therefore, non-recurring fair value measurement adjustments relating to real estate collateral have generally been classified as Level 3. Estimates of fair value for other collateral supporting commercial loans are generally based on assumptions not observable in the marketplace and therefore such valuations have been classified as Level 3.

Capitalized loan servicing rights. A loan servicing right asset represents the amount by which the present value of the estimated future net cash flows to be received from servicing loans exceed adequate compensation for performing the servicing. The fair value of loan servicing rights is estimated using a present value cash flow model. The most important assumptions used in the valuation model are the anticipated rate of the loan prepayments and discount rates. Adjustments are only recorded when the discounted cash flows derived from the valuation model are less than the carrying value of the asset. Although some assumptions in determining fair value are based on standards used by market participants, some are based on unobservable inputs and therefore are classified in Level 3 of the valuation hierarchy.

Other real estate owned (“OREO”). OREO results from the foreclosure process on residential or commercial loans issued by the Company. Upon assuming the real estate, the Company records the property at the fair value of the asset less the

estimated sales costs. Thereafter, OREO properties are recorded at the lower of cost or fair value less the estimated sales costs. OREO fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Premises held for sale. Assets held for sale, identified as part of the Company’s strategic review and branch optimization exercise, were transferred from premises and equipment at the lower of amortized cost or fair value less the estimated sales costs. Assets held for sale fair values are primarily determined based on Level 3 data including sales comparables and appraisals.

Summary of Estimated Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are included in the table below. Certain financial instruments and all non-financial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company.

	March 31, 2020
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	85,655	$	85,655	$	85,655	$	—	$	—
Securities available for sale		626,341		626,341		—		626,341		—
FHLB stock		19,897		19,897		—		19,897		—
Net loans		2,619,686		2,604,406		—		—		2,604,406
Accrued interest receivable		3,268		3,268		—		3,268		—
Cash surrender value of bank-owned life insurance policies		76,400		76,400		—		76,400		—
Derivative assets		25,026		25,026		—		24,933		93
Financial Liabilities
Non-maturity deposits	$	1,806,460	$	1,861,960	$	—	$	1,861,960	$	—
Time deposits		844,097		852,346		—		852,346		—
Short-term other borrowings		31,001		31,000		—		31,000		—
FHLB advances		404,579		410,065		—		410,065		—
FRB advances		62,000		62,000		—		62,000		—
Subordinated borrowings		59,849		59,849		—		59,849		—
Derivative liabilities		28,105		28,105		—		28,032		73

	December 31, 2019
	Carrying		Fair
(in thousands)	Amount		Value		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	56,910	$	56,910	$	56,910	$	—	$	—
Securities available for sale		663,230		663,230		—		663,230		—
FHLB stock		20,679		20,679		—		20,679		—
Net loans		2,625,739		2,634,147		—		—		2,634,147
Accrued interest receivable		3,294		3,294		—		3,294		—
Cash surrender value of bank-owned life insurance policies		75,863		75,863		—		75,863		—
Derivative assets		6,850		6,850		—		6,791		59
Financial Liabilities
Non-maturity deposits	$	1,763,116	$	1,751,481	$	—	$	1,751,481	$	—
Time deposits		932,635		932,886		—		932,886		—
Short-term other borrowings		44,832		44,831		—		44,831		—
FHLB advances		426,564		425,989		—		425,989		—
Subordinated borrowings		59,920		59,920		—		59,920		—
Derivative liabilities		8,186		8,186		—		8,102		84

Other than as discussed above, the following methods and assumptions were used by management to estimate the fair value of significant classes of financial instruments for which the estimate of fair value goes beyond the carrying value approximating fair value.

Loans, net. The fair value of loans are calculated on an individual basis with consideration given to the loans' underlying characteristics, including account types, remaining terms, annual interest rates or coupons, interest types, timing of principal and interest payments, current market rates, risk ratings, credit ratings and remaining balances. A discounted cash flow model is used to estimate the fair value of the loans using assumptions for the coupon rates, remaining maturities, prepayment speeds, liquidity premiums, projected default probabilities, loss given defaults, and estimates of prevailing discount rates.

Deposits. The fair value of demand, non-interest bearing checking, savings and money market deposits is determined as the amount payable on demand at the reporting date. The fair value of time deposits is estimated by discounting the estimated future cash flows using market rates offered for deposits of similar remaining maturities.

Borrowed funds. The fair value of borrowed funds is estimated by discounting the future cash flows using market rates for similar borrowings. Such funds include all categories of debt and debentures in the table above.

Subordinated borrowings. The Company utilizes a pricing service along with internal models to estimate the valuation of its junior subordinated debentures. The junior subordinated debentures re-price every 90 days.

Off-balance-sheet financial instruments. Off-balance-sheet financial instruments including standby letters of credit and other financial guarantees and commitments are considered immaterial to the Company’s financial statements.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common stock amount	Additional paid-in capital	Retained earnings	Accumulated other comprehensive income (loss)	Treasury stock	Total
Balance at beginning of period at Dec. 31, 2018	$ 32,857	$ 187,653	$ 166,526	$ (11,802)	$ (4,655)	$ 370,579
Increase (Decrease) in Stockholders' Equity
Net income	0	0	7,281	0	0	7,281
Other comprehensive income (loss)	0	0	0	6,174	0	6,174
Cash dividends declared	0	0	(3,105)	0	0	(3,105)
Net issuance to employee stock plans, including related tax effects	0	(173)	0	0	4	(169)
Recognition of stock based compensation	0	263	0	0	0	263
Balance at end of period at Mar. 31, 2019	32,857	187,743	170,702	(5,628)	(4,651)	381,023
Balance at beginning of period at Dec. 31, 2019	32,857	188,536	175,780	3,911	(4,677)	396,407
Increase (Decrease) in Stockholders' Equity
Net income	0	0	7,721	0	0	7,721
Other comprehensive income (loss)	0	0	0	2,279	0	2,279
Cash dividends declared	0	0	(3,429)	0	0	(3,429)
Treasury stock purchased	0	0	0	0	(130)	(130)
Net issuance to employee stock plans, including related tax effects	0	660	0	0	129	789
Recognition of stock based compensation	0	118	0	0	0	118
Balance at end of period at Mar. 31, 2020	$ 32,857	$ 189,314	$ 180,072	$ 6,190	$ (4,678)	$ 403,755

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Assets
Cash and due from banks	$ 68,481	$ 37,261
Interest-bearing deposit with the Federal Reserve Bank	17,174	19,649
Total cash and cash equivalents	85,655	56,910
Securities:
Securities available for sale, at fair value	626,341	663,230
Federal Home Loan Bank stock	19,897	20,679
Total securities	646,238	683,909
Loans:
Loans	2,634,983	2,641,092
Less: Allowance for loan losses	(15,297)	(15,353)
Net loans	2,619,686	2,625,739
Premises and equipment, net	49,978	51,205
Other real estate owned	2,205	2,236
Goodwill	119,477	118,649
Other intangible assets	8,398	8,641
Cash surrender value of bank-owned life insurance	76,400	75,863
Deferred tax assets, net	3,166	3,865
Other assets	66,139	42,111
Total assets	3,677,342	3,669,128
Deposits:
Demand	400,410	414,534
NOW	578,320	575,809
Savings	423,345	388,683
Money market	404,385	384,090
Time	844,097	932,635
Total deposits	2,650,557	2,695,751
Borrowings:
Senior	497,580	471,396
Subordinated	59,849	59,920
Total borrowings	557,429	531,316
Other liabilities	65,601	45,654
Total liabilities	3,273,587	3,272,721
Shareholders' equity
Capital stock, par value $2.00; authorized 20,000,000 shares; issued 16,428,388 shares at March 31, 2020 and December 31, 2019	32,857	32,857
Additional paid-in capital	189,314	188,536
Retained earnings	180,072	175,780
Accumulated other comprehensive income (loss)	6,190	3,911
Less: 841,029 and 870,257 shares of treasury stock at March 31, 2020 and December 31, 2019, respectively	(4,678)	(4,677)
Total shareholders' equity	403,755	396,407
Total liabilities and shareholders' equity	3,677,342	3,669,128
Commercial real estate
Loans:
Loans	948,178	930,661
Commercial and industrial
Loans:
Loans	426,357	423,291
Residential real estate
Loans:
Loans	1,132,328	1,151,857
Consumer
Loans:
Loans	$ 128,120	$ 135,283

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DEPOSITS

3 Months Ended

Mar. 31, 2020

Deposits [Abstract]

DEPOSITS

NOTE 6.               DEPOSITS

A summary of time deposits is, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Time less than $100,000	$	559,255	$	600,747
Time $100,000 through $250,000		173,305		225,505
Time $250,000 or more		111,537		106,383
Total time deposits	$	844,097	$	932,635

At March 31, 2020 and December 31, 2019, the scheduled maturities by year for time deposits are, as follows:

(in thousands)	March 31, 2020		December 31, 2019
Within 1 year	$	479,983	$	555,074
Over 1 year to 2 years		295,939		287,934
Over 2 years to 3 years		31,909		51,444
Over 3 years to 4 years		27,811		31,262
Over 4 years to 5 years		8,438		6,883
Over 5 years		17		38
Total	$	844,097	$	932,635

Included in time deposits are brokered deposits of $378.7 million and $526.9 million at March 31, 2020 and December 31, 2019, respectively. Also included in time deposits are reciprocal deposits of $79.3 million and $64.1 million at March 31, 2020 and December 31, 2019, respectively.

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SECURITIES AVAILABLE FOR SALE

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

SECURITIES AVAILABLE FOR SALE

NOTE 2.           SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	284,925	$	11,349	$	(617)	$	295,657
US Government agency		98,059		3,801		(191)		101,669
Private label		20,209		62		(1,772)		18,499
Obligations of states and political subdivisions thereof		134,258		3,636		(315)		137,579
Corporate bonds		76,191		1,497		(4,751)		72,937
Total securities available for sale	$	613,642	$	20,345	$	(7,646)	$	626,341

			Gross		Gross
			Unrealized		Unrealized
(in thousands)	Amortized Cost		Gains		Losses		Fair Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	319,064	$	4,985	$	(2,080)	$	321,969
US Government agency		98,568		1,640		(547)		99,661
Private label		20,212		68		(747)		19,533
Obligations of states and political subdivisions thereof		139,240		3,034		(268)		142,006
Corporate bonds		78,804		1,478		(221)		80,061
Total securities available for sale	$	655,888	$	11,205	$	(3,863)	$	663,230

The amortized cost and estimated fair value of available for sale (“AFS”) securities segregated by contractual maturity at March 31, 2020 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.

	Available for sale
(in thousands)	Amortized Cost		Fair Value
Within 1 year	$	—	$	—
Over 1 year to 5 years		30,554		31,547
Over 5 years to 10 years		56,401		52,656
Over 10 years		123,494		126,313
Total bonds and obligations		210,449		210,516
Mortgage-backed securities		403,193		415,825
Total securities available for sale	$	613,642	$	626,341

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
March 31, 2020
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	165	$	9,548	$	452	$	6,608	$	617	$	16,156
US Government agency		180		11,899		11		4,122		191		16,021
Private label		10		124		1,762		18,234		1,772		18,358
Obligations of states and political subdivisions thereof		315		17,862		—		—		315		17,862
Corporate bonds		3,831		29,977		920		5,330		4,751		35,307
Total securities available for sale	$	4,501	$	69,410	$	3,145	$	34,294	$	7,646	$	103,704

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
December 31, 2019
Debt securities:
Mortgage-backed securities:
US Government-sponsored enterprises	$	1,074	$	43,429	$	1,006	$	49,712	$	2,080	$	93,141
US Government agency		432		19,717		115		9,120		547		28,837
Private label		380		9,843		367		9,411		747		19,254
Obligations of states and political subdivisions thereof		137		29,355		131		1,682		268		31,037
Corporate bonds		142		9,888		79		12,276		221		22,164
Total securities available for sale	$	2,165	$	112,232	$	1,698	$	82,201	$	3,863	$	194,433

Securities Impairment: As a part of the Company’s ongoing security monitoring process, the Company identifies securities in an unrealized loss position that could potentially be other-than-temporarily impaired. For the three months ended March 31, 2020 and 2019 the Company did not record any other-than-temporary impairment (“OTTI”) losses.

The following table presents the changes in estimated credit losses recognized by the Company for the periods presented:

	Three Months Ended
	March 31,
	2020		2019
Estimated credit losses as of prior year-end	$	1,697	$	1,697
Reductions for securities paid off during the period		—		—
Estimated credit losses at end of the period	$	1,697	$	1,697

The Company expects to recover its amortized cost basis on all securities in its AFS portfolio. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2020, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover.

The following summarizes, by investment security type, the basis for the conclusion that securities in an unrealized loss position were not other-than-temporarily impaired at March 31, 2020:

US Government-sponsored enterprises

43 out of the total 675 securities in the Company’s portfolios of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 3.83% of the amortized cost of securities in unrealized loss positions. The FNMA and FHLMC guarantee the contractual cash flows of all of the Company’s US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

US Government agency

22 out of the total 179 securities in the Company’s portfolios of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 1.18% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association (“GNMA”) guarantees the contractual cash flows of all of the Company’s US Government agency securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing.

Private label

12 of the total 19 securities in the Company’s portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 8.80% of the amortized cost of securities in unrealized loss positions. Based upon the expectation that the Company will receive all of the future contractual cash flows related to the amortized cost on these securities, the Company does not consider there to be any additional other-than-temporary impairment with respect to these securities.

Obligations of states and political subdivisions thereof

10 of the total 210 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.91% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for the risk. There were no material underlying credit downgrades during the quarter. All securities are performing.

Corporate bonds

12 out of the total 27 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 12.13% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities.

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FAIR VALUE MEASUREMENTS - Measured on Non-recurring Basis (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Assets
Other real estate owned	$ 2,205	$ 2,236
Non-recurring | Level 1
Assets
Total	0	0
Non-recurring | Level 2
Assets
Total	0	0
Non-recurring | Level 3
Assets
Impaired loans	8,335	9,625
Capitalized servicing rights	3,897	4,301
Other real estate owned	2,205	2,236
Premises held for sale	1,764	1,764
Total	16,201	17,926
Total Gains (Losses)	1,259
Non-recurring | Level 3 | Impaired loans
Assets
Total Gains (Losses)	1,290
Non-recurring | Level 3 | Capitalized servicing rights
Assets
Total Gains (Losses)	0
Non-recurring | Level 3 | Other real estate owned
Assets
Total Gains (Losses)	(31)
Non-recurring | Level 3 | Assets held for sale
Assets
Premises held for sale	1,764	$ 1,764
Total Gains (Losses)	$ 0

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REVENUE FROM CONTRACTS WITH CUSTOMERS - Timing of Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation of Revenue [Line Items]
Revenue	$ 6,481	$ 4,922
Products and services transferred at a point in time
Disaggregation of Revenue [Line Items]
Revenue	3,273	2,267
Products and services transferred over time
Disaggregation of Revenue [Line Items]
Revenue	$ 3,208	$ 2,655

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LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Operating lease cost	$ 234	$ 231
Variable lease cost	144	124
Total lease cost	$ 378	$ 355

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DEPOSITS - Maturities by Year (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Deposits [Abstract]
Within 1 year	$ 479,983	$ 555,074
Over 1 year to 2 years	295,939	287,934
Over 2 years to 3 years	31,909	51,444
Over 3 years to 4 years	27,811	31,262
Over 4 years to 5 years	8,438	6,883
Over 5 years	17	38
Total time deposits	$ 844,097	$ 932,635

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BORROWED FUNDS - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019	Nov. 26, 2019
Debt Instrument [Line Items]
Borrowings with the FRB	$ 265,644,000	$ 348,118,000
Callable advances	291,785,000	183,198,000
Financial Guarantee | NHTB Capital Trust II and NHTB Capital Trust III
Debt Instrument [Line Items]
Debentures issued by variable interest entities	$ 20,600,000
LIBOR | Financial Guarantee
Debt Instrument [Line Items]
Interest rate margin	2.79%
Advances from the FHLB
Debt Instrument [Line Items]
Secured line of credit maintained	$ 1,000,000.0
Outstanding balance on the FHLB line of credit	0	0
Borrowings with the FRB	172,643,000	303,286,000
Callable advances	231,936,000	123,278,000
Federal Reserve Bank Advances
Debt Instrument [Line Items]
Secured line of credit maintained	142,100,000
Borrowings with the FRB	62,000,000	0
Federal Reserve Bank Advances | Unsecured Debt
Debt Instrument [Line Items]
Secured line of credit maintained	50,000,000.0	50,000,000.0
Outstanding balance on unused unsecured federal funds line of credit	0	0
Federal Home Loan Bank Certificates and Obligations FHLB Callable Advances
Debt Instrument [Line Items]
Callable advances	0	0
Federal Home Loan Bank Certificates and Obligations FHLB Amortizing Advances
Debt Instrument [Line Items]
Callable advances	314,000	314,000
Subordinated borrowings
Debt Instrument [Line Items]
Callable advances	$ 59,849,000	$ 59,920,000
Principal amount of debt issued			$ 40,000,000.0
Fixed interest rate			4.625%

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FAIR VALUE MEASUREMENTS - Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 626,341	$ 663,230
US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	295,657	321,969
US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	101,669	99,661
Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	18,499	19,533
Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	137,579	142,006
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	72,937	80,061
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0
Derivative assets	0
Derivative liabilities	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	626,341	663,230
Derivative assets	24,933	6,791
Derivative liabilities	(28,032)	(8,102)
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0
Derivative assets	93	59
Derivative liabilities	(73)	(84)
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	25,026	6,850
Derivative liabilities	(28,105)	(8,186)
Recurring | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	295,657	321,969
Recurring | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	101,669	99,661
Recurring | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	18,499	19,533
Recurring | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	137,579	142,006
Recurring | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	72,937	80,061
Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	0
Derivative liabilities	0
Recurring | Level 1 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 1 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 1 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 1 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0
Recurring | Level 1 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0
Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	24,933	6,791
Derivative liabilities	(28,032)	(8,102)
Recurring | Level 2 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	295,657	321,969
Recurring | Level 2 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	101,669	99,661
Recurring | Level 2 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	18,499	19,533
Recurring | Level 2 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	137,579	142,006
Recurring | Level 2 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	72,937	80,061
Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets	93	59
Derivative liabilities	(73)	$ (84)
Recurring | Level 3 | US Government-sponsored enterprises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 3 | US Government agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 3 | Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage-backed securities available for sale	0
Recurring | Level 3 | Obligations of states and political subdivisions thereof
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	0
Recurring | Level 3 | Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for sale securities	$ 0

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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Derivative [Line Items]
Notional Amount	$ 672,077	$ 580,372
Estimated Fair Value Asset (Liability)	(3,079)	(743)
Interest rate swap
Derivative [Line Items]
Notional Amount		50,000
Designated as hedging instrument | Cash flow hedges
Derivative [Line Items]
Notional Amount	$ 100,000	100,000
Weighted Average Maturity (in years)	4 years 3 months 18 days
Estimated Fair Value Asset (Liability)	$ (6,467)	(1,311)
Designated as hedging instrument | Cash flow hedges | Interest rate cap agreements
Derivative [Line Items]
Notional Amount	$ 100,000	$ 100,000
Weighted Average Maturity (in years)	4 years 3 months 18 days	4 years 7 months 6 days
Estimated Fair Value Asset (Liability)	$ (6,467)	$ (1,311)
Designated as hedging instrument | Fair value hedges
Derivative [Line Items]
Notional Amount	37,190	37,190
Estimated Fair Value Asset (Liability)	3,368	593
Designated as hedging instrument | Fair value hedges | Interest rate swap
Derivative [Line Items]
Notional Amount	$ 37,190	$ 37,190
Weighted Average Maturity (in years)	9 years 3 months 18 days	9 years 7 months 6 days
Estimated Fair Value Asset (Liability)	$ 3,368	$ 593
Hedged Asset, Fair Value Hedge	38,710	39,026
Cumulative amount of fair value hedging adjustment in carrying amount	207	523
Designated as hedging instrument | Economic hedges
Derivative [Line Items]
Notional Amount	$ 511,741	421,434
Weighted Average Maturity (in years)
Estimated Fair Value Asset (Liability)	$ (73)	(84)
Designated as hedging instrument | Economic hedges | Forward sale commitments
Derivative [Line Items]
Notional Amount	$ 53,751	$ 11,228
Weighted Average Maturity (in years)	2 months 12 days	1 month 6 days
Estimated Fair Value Asset (Liability)	$ (73)	$ (84)
Designated as hedging instrument | Economic hedges | Customer loan derivative liability | MNA counterparty
Derivative [Line Items]
Notional Amount	$ 150,490	$ 135,598
Weighted Average Maturity (in years)	7 years 9 months 18 days	7 years 6 months
Estimated Fair Value Asset (Liability)	$ (15,463)	$ (4,669)
Designated as hedging instrument | Economic hedges | Customer loan derivative liability | RPA counterparty
Derivative [Line Items]
Notional Amount	$ 78,505	$ 69,505
Weighted Average Maturity (in years)	8 years 8 months 12 days	8 years 9 months 18 days
Estimated Fair Value Asset (Liability)	$ (9,470)	$ (3,377)
Designated as hedging instrument | Economic hedges | Customer loan derivative liability | Customer
Derivative [Line Items]
Notional Amount	$ 228,995	$ 205,103
Weighted Average Maturity (in years)	8 years 1 month 6 days	8 years 1 month 6 days
Estimated Fair Value Asset (Liability)	$ 24,933	$ 8,046
Not designated as hedging instrument
Derivative [Line Items]
Notional Amount	23,146	21,748
Estimated Fair Value Asset (Liability)	93	59
Not designated as hedging instrument | Interest rate lock commitments
Derivative [Line Items]
Notional Amount	$ 23,146	$ 21,748
Weighted Average Maturity (in years)	1 month 6 days	1 month 6 days
Estimated Fair Value Asset (Liability)	$ 93	$ 59

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CAPITAL RATIOS AND SHAREHOLDERS' EQUITY - Components of OCI (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Net unrealized gain (loss) arising during the period
Before Tax	$ 2,213	$ 2,896
Net of Tax	2,382	6,174
Less: reclassification adjustment for gains (losses) realized in net income
Net of Tax	103	0
Other comprehensive income (loss)
Before Tax	2,975	8,055
Tax Effect	(696)	(1,881)
Total other comprehensive income	2,279	6,174
Net unrealized gain on AFS securities
Net unrealized gain (loss) arising during the period
Before Tax	5,492	8,900
Tax Effect	(1,378)	(2,079)
Net of Tax	4,114	6,821
Less: reclassification adjustment for gains (losses) realized in net income
Before Tax	135
Tax Effect	(32)
Net of Tax	103	0
Other comprehensive income (loss)
Before Tax	5,357	8,900
Tax Effect	(1,346)	(2,079)
Total other comprehensive income	4,011	6,821
Net unrealized loss on effective hedging derivatives
Net unrealized gain (loss) arising during the period
Before Tax	(2,382)	(845)
Tax Effect	650	198
Net of Tax	(1,732)	(647)
Less: reclassification adjustment for gains (losses) realized in net income
Net of Tax	0	0
Other comprehensive income (loss)
Before Tax	(2,382)	(845)
Tax Effect	650	198
Total other comprehensive income	(1,732)	(647)
Net unrealized loss on post retirement
Net unrealized gain (loss) arising during the period
Net of Tax	0	0
Less: reclassification adjustment for gains (losses) realized in net income
Net of Tax	0	0
Other comprehensive income (loss)
Total other comprehensive income	$ 0	$ 0

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LOANS - Non-accrual Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Non-accrual loans
Total loans	$ 10,056	$ 11,550
Business Activities Loans
Non-accrual loans
Total loans	8,384	8,354
Acquired Loans
Non-accrual loans
Total loans	1,672	3,196
Total commercial loans
Non-accrual loans
Total loans	4,223	5,325
Total commercial loans | Business Activities Loans
Non-accrual loans
Total loans	3,847	4,356
Total commercial loans | Acquired Loans
Non-accrual loans
Total loans	376	969
Total commercial real estate
Non-accrual loans
Total loans	2,227	3,489
Total commercial real estate | Business Activities Loans
Non-accrual loans
Total loans	1,940	3,146
Total commercial real estate | Acquired Loans
Non-accrual loans
Total loans	287	343
Total commercial real estate | Construction and land development
Non-accrual loans
Total loans	276	258
Total commercial real estate | Construction and land development | Business Activities Loans
Non-accrual loans
Total loans	276	258
Total commercial real estate | Construction and land development | Acquired Loans
Non-accrual loans
Total loans	0	0
Total commercial real estate | Other commercial real estate
Non-accrual loans
Total loans	1,951	3,231
Total commercial real estate | Other commercial real estate | Business Activities Loans
Non-accrual loans
Total loans	1,664	2,888
Total commercial real estate | Other commercial real estate | Acquired Loans
Non-accrual loans
Total loans	287	343
Commercial and industrial
Non-accrual loans
Total loans	1,996	1,836
Commercial and industrial | Business Activities Loans
Non-accrual loans
Total loans	1,907	1,210
Commercial and industrial | Acquired Loans
Non-accrual loans
Total loans	89	626
Commercial and industrial | Commercial
Non-accrual loans
Total loans	1,371	1,558
Commercial and industrial | Commercial | Business Activities Loans
Non-accrual loans
Total loans	1,282	932
Commercial and industrial | Commercial | Acquired Loans
Non-accrual loans
Total loans	89	626
Commercial and industrial | Agricultural
Non-accrual loans
Total loans	625	278
Commercial and industrial | Agricultural | Business Activities Loans
Non-accrual loans
Total loans	625	278
Commercial and industrial | Agricultural | Acquired Loans
Non-accrual loans
Total loans	0	0
Commercial and industrial | Tax exempt
Non-accrual loans
Total loans	0	0
Commercial and industrial | Tax exempt | Business Activities Loans
Non-accrual loans
Total loans	0	0
Commercial and industrial | Tax exempt | Acquired Loans
Non-accrual loans
Total loans	0	0
Residential real estate
Non-accrual loans
Total loans	5,089	5,335
Residential real estate | Business Activities Loans
Non-accrual loans
Total loans	4,077	3,362
Residential real estate | Acquired Loans
Non-accrual loans
Total loans	1,012	1,973
Residential real estate | Residential mortgages
Non-accrual loans
Total loans	5,089	5,335
Residential real estate | Residential mortgages | Business Activities Loans
Non-accrual loans
Total loans	4,077	3,362
Residential real estate | Residential mortgages | Acquired Loans
Non-accrual loans
Total loans	1,012	1,973
Consumer
Non-accrual loans
Total loans	744	890
Consumer | Business Activities Loans
Non-accrual loans
Total loans	460	636
Consumer | Acquired Loans
Non-accrual loans
Total loans	284	254
Consumer | Home equity
Non-accrual loans
Total loans	724	869
Consumer | Home equity | Business Activities Loans
Non-accrual loans
Total loans	440	615
Consumer | Home equity | Acquired Loans
Non-accrual loans
Total loans	284	254
Consumer | Other consumer
Non-accrual loans
Total loans	20	21
Consumer | Other consumer | Business Activities Loans
Non-accrual loans
Total loans	20	21
Consumer | Other consumer | Acquired Loans
Non-accrual loans
Total loans	$ 0	$ 0

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LOANS - TDR, Recorded Investment and Number of Modifications (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2020 USD ($) item	Mar. 31, 2019 USD ($) item	Dec. 31, 2019 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Borrower's sustained repayment performance period			6 months
Number of Modifications (modification)	6	11
Pre-Modification Outstanding Recorded Investment	$ 130	$ 674
Post-Modification Outstanding Recorded Investment	$ 501	$ 671
Number of modifications which subsequently defaulted | item	0
Interest rate and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	0	2
Post-Modification Outstanding Recorded Investment	$ 0	$ 12
Interest Rate, Forbearance And Maturity Concession [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	4	0
Post-Modification Outstanding Recorded Investment	$ 467	$ 0
Amortization and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	0	5
Post-Modification Outstanding Recorded Investment	$ 0	$ 314
Amortization Concession [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	0	1
Post-Modification Outstanding Recorded Investment	$ 0	$ 156
Amortization, interest rate and maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	0	1
Post-Modification Outstanding Recorded Investment	$ 0	$ 77
Forbearance and interest only payments
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	1	2
Post-Modification Outstanding Recorded Investment	$ 25	$ 112
Maturity concession
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification)	1	0
Post-Modification Outstanding Recorded Investment	$ 9	$ 0
Other commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | item	1	3
Pre-Modification Outstanding Recorded Investment	$ 54	$ 113
Post-Modification Outstanding Recorded Investment	$ 259	$ 113
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | item	3	2
Pre-Modification Outstanding Recorded Investment	$ 41	$ 31
Post-Modification Outstanding Recorded Investment	$ 208	$ 31
Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | item		6
Pre-Modification Outstanding Recorded Investment		$ 530
Post-Modification Outstanding Recorded Investment		$ 527
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | item	1
Pre-Modification Outstanding Recorded Investment	$ 26
Post-Modification Outstanding Recorded Investment	$ 25
Other consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Modifications (modification) | item	1
Pre-Modification Outstanding Recorded Investment	$ 9
Post-Modification Outstanding Recorded Investment	9
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Fair value of bank-owned residential real estate property	2,200		$ 2,200
Total residential loans included in held for sale loans	11,700		6,500
Residential real estate | Residential mortgages
Accounts, Notes, Loans and Financing Receivable [Line Items]
Residential mortgage loans collateralized by real estate property in the process of foreclosure	$ 931		$ 810

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ALLOWANCE FOR LOAN LOSSES (Tables)

3 Months Ended

Mar. 31, 2020

Receivables [Abstract]

Schedule of Activity in the Allowance for Loan Losses

Business Activities Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	7,668	$	3,608	$	3,402	$	379	$	15,057
Charged-off loans		(770)		(150)		—		(148)		(1,068)
Recoveries on charged-off loans		25		1		—		3		29
Provision for loan losses		738		84		111		150		1,083
Balance at end of period	$	7,661	$	3,543	$	3,513	$	384	$	15,101
Individually evaluated for impairment		675		138		126		—		939
Collectively evaluated		6,986		3,405		3,387		384		14,162
Total	$	7,661	$	3,543	$	3,513	$	384	$	15,101

Acquired Loans	At or for the Three Months Ended March 31, 2020
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	147	$	6	$	143	$	—	$	296
Charged-off loans		(101)		(29)		(8)		(5)		(143)
Recoveries on charged-off loans		—		9		6		—		15
(Releases) provision for loan losses		18		17		(12)		5		28
Balance at end of period	$	64	$	3	$	129	$	—	$	196
Individually evaluated for impairment		13		—		14		—		27
Collectively evaluated		51		3		115		—		169
Total	$	64	$	3	$	129	$	—	$	196

Business Activities Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	6,811	$	2,380	$	3,982	$	408	$	13,581
Charged-off loans		(57)		—		—		(53)		(110)
Recoveries on charged-off loans		16		1		18		3		38
(Releases) provision for loan losses		(195)		397		(47)		38		193
Balance at end of period	$	6,575	$	2,778	$	3,953	$	396	$	13,702
Individually evaluated for impairment		396		53		83		1		533
Collectively evaluated		6,179		2,725		3,870		395		13,169
Total	$	6,575	$	2,778	$	3,953	$	396	$	13,702

Acquired Loans	At or for the Three Months Ended March 31, 2019
	Commercial		Commercial		Residential
(in thousands)	real estate		and industrial		real estate		Consumer		Total
Balance at beginning of period	$	173	$	35	$	77	$	—	$	285
Charged-off loans		—		(16)		(104)		(1)		(121)
Recoveries on charged-off loans		—		—		—		—		—
Provision (releases) for loan losses		(12)		10		132		1		131
Balance at end of period	$	161	$	29	$	105	$	—	$	295
Individually evaluated for impairment		16		—		22		—		38
Collectively evaluated		145		29		83		—		257
Total	$	161	$	29	$	105	$	—	$	295

Schedule of Loans by Risk Rating

Business Activities Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	48,881	$	31,057	$	659,494	$	646,886	$	708,375	$	677,943
Special mention		—		—		8,133		5,483		8,133		5,483
Substandard		11		330		11,824		11,974		11,835		12,304
Doubtful		265		—		1,127		1,708		1,392		1,708
Total	$	49,157	$	31,387	$	680,578	$	666,051	$	729,735	$	697,438

Acquired Loans

Commercial Real Estate

	Commercial construction
	and land development				Commercial real estate other				Total commercial real estate
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	2,083	$	2,412	$	205,309	$	218,491	$	207,392	$	220,903
Special mention		—		12		1,742		2,261		1,742		2,273
Substandard		339		479		8,900		9,400		9,239		9,879
Doubtful		—		—		70		168		70		168
Total	$	2,422	$	2,903	$	216,021	$	230,320	$	218,443	$	233,223

Business Activities Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	268,287	$	221,329	$	17,559	$	18,940	$	55,694	$	66,860	$	341,540	$	307,129
Special mention		3,641		2,744		221		298		—		—		3,862		3,042
Substandard		15,195		14,866		456		780		—		—		15,651		15,646
Doubtful		959		753		361		—		—		—		1,320		753
Total	$	288,082	$	239,692	$	18,597	$	20,018	$	55,694	$	66,860	$	362,373	$	326,570

Acquired Loans

Commercial and Industrial

	Commercial				Agricultural				Tax exempt loans				Total commercial and industrial
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Grade:
Pass	$	50,663	$	51,184	$	200	$	58	$	11,071	$	37,407	$	61,934	$	88,649
Special mention		882		5,432		—		—		—		—		882		5,432
Substandard		944		2,115		—		148		—		36		944		2,299
Doubtful		224		341		—		—		—		—		224		341
Total	$	52,713	$	59,072	$	200	$	206	$	11,071	$	37,443	$	63,984	$	96,721

Business Activities Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	738,633	$	737,325	$	64,074	$	58,753	$	9,206	$	11,146	$	811,913	$	807,224
Nonperforming		4,077		3,362		440		615		20		21		4,537		3,998
Total	$	742,710	$	740,687	$	64,514	$	59,368	$	9,226	$	11,167	$	816,450	$	811,222

Acquired Loans

Residential Real Estate and Consumer Loans

	Residential real estate				Home equity				Other consumer				Total residential real estate and consumer
(in thousands)	Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019		Mar 31, 2020		Dec 31, 2019
Performing	$	387,304	$	407,811	$	52,619	$	62,504	$	1,343	$	1,707	$	441,266	$	472,022
Nonperforming		2,314		3,359		411		529		7		8		2,732		3,896
Total	$	389,618	$	411,170	$	53,030	$	63,033	$	1,350	$	1,715	$	443,998	$	475,918

Summary of Information About Total Loans Rated Special Mention or Lower

	March 31, 2020						December 31, 2019
	Business						Business
(in thousands)	Activities Loans		Acquired  Loans		Total		Activities Loans		Acquired  Loans		Total
Non-accrual	$	8,384	$	1,672	$	10,056	$	8,354	$	3,196	$	11,550
Substandard accruing		26,351		11,537		37,888		26,055		13,387		39,442
Total classified		34,735		13,209		47,944		34,409		16,583		50,992
Special mention		11,995		2,624		14,619		8,525		7,705		16,230
Total Criticized	$	46,730	$	15,833	$	62,563	$	42,934	$	24,288	$	67,222

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BASIS OF PRESENTATION (Policies)

3 Months Ended

Mar. 31, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

The consolidated financial statements (the “financial statements”) of Bar Harbor Bankshares and its subsidiaries (the “Company” or “Bar Harbor”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Bar Harbor Bankshares is a Maine Financial Institution Holding Company for the purposes of the laws of the state of Maine, and as such is subject to the jurisdiction of the Superintendent of the Maine Bureau of Financial Institutions. These financial statements include the accounts of the Company, its wholly owned subsidiary Bar Harbor Bank & Trust (the "Bank") and the Bank’s consolidated subsidiaries. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly owned and majority owned subsidiaries are consolidated unless GAAP requires otherwise.

Reclassifications

Reclassifications: Whenever necessary, amounts in the prior years’ financial statements are reclassified to conform to current presentation. The reclassifications had no impact on net income in the Company’s consolidated income statement.

Recent Accounting Pronouncements

The following table provides a brief description of recent accounting standards updates ("ASU") that could have a material impact to the Company’s consolidated financial statements upon adoption:

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Adopted in 2020
ASU 2017-04, Simplifying the Test for Goodwill Impairment	This ASU amends Topic 350, Intangibles-Goodwill and Other, and eliminates Step 2 from the goodwill impairment test. The Company still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary	January 1, 2020	The Company has adopted ASU 2017-04 effective January 1, 2020, as required, and the ASU did not have a material impact on its financial statements. Goodwill testing is normally scheduled to be completed during the fourth quarter, but was evaluated in the first quarter in light of the economic impacts of COVID-19. The Company recognized no impairments to goodwill in the first quarter of 2020. See management’s discussion and analysis for further details.
		Early adoption is permitted
ASU 2018-13 Changes to Disclosure Requirements Fair Value Measurement, Topic 820	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.	January 1, 2020	The Company has adopted ASU 2018-13, as of January 1, 2020, as required, and the ASU did not have a material impact to the disclosures as a result of the adoption.
		Early adoption is permitted.
Standards Not Yet Adopted
ASU 2016-13, Measurement of Credit Losses on Financial Instruments ASU 2018-19, Codification Improvements to ASU 2016-13	This ASU amends Topic 326, Financial Instruments- Credit Losses to replace the current incurred loss accounting model with a current expected credit loss approach (CECL) for financial instruments measured at amortized cost and other commitments to extend credit. The amendments require entities to consider all available relevant information when estimating current expected credit losses, including details about past events, current conditions, and reasonable and supportable forecasts. The resulting allowance for credit losses is to reflect the portion of the amortized cost basis that the entity does not expect to collect. The amendments also eliminate the current accounting model for purchased credit impaired loans and certain off-balance sheet exposures. Additional quantitative and qualitative disclosures are required upon adoption. While the CECL model does not apply to available for sale debt securities, the ASU does require entities to record an allowance when recognizing credit losses for available for sale securities with unrealized losses, rather than reduce the amortized cost of the securities by direct write-offs. The guidance will require companies to recognize improvements to estimated credit losses immediately in earnings rather than interest income over time. The ASU should be adopted on a modified retrospective basis. Entities that have loans accounted for under ASC 310-30 at the time of adoption should prospectively apply the guidance in this amendment for purchase credit deteriorated assets.	January 1, 2020	Adoption of this ASU is expected to primarily change how the Company estimates credit losses with the application of the expected credit loss model. The Company will apply the standard's provisions as a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (i.e., modified retrospective approach). The Company's CECL implementation efforts in the first quarter focused on model validation, developing new disclosures, establishing formal policies and procedures and other governance and control documentation. Certain elements of the calculation were finalized in the first quarter, including refinement of the model assumptions, the qualitative framework, internal control design, model validation, and the operational control framework to support the new process. Furthermore, changes to the economic forecasts within the model could positively or negatively impact the actual results. The ASU was effective for the Company beginning in the first quarter of 2020; however, the CARES Act, issued in 2020, provided temporary relief related to the implementation of this accounting guidance until the earlier of the date on which the national emergency concerning the COVID-19 virus terminates or December 31, 2020. The Company has elected to utilize this relief and has calculated the allowance for loan losses and the resulting provision for loan losses using the prior incurred loss method at March 31, 2020.
		Early adoption is permitted.
ASU 2018-14 Compensation- Disclosure Requirements for Defined Pension Plans Topic 715-20	This ASU makes minor changes to the disclosure requirements for employers that sponsor defined benefit pension and/or other post-retirement benefit plans.	January 1, 2021	Adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements.
		Early adoption is permitted.

Standard	Description	Required Date of Adoption	Effect on financial statements
Standards Not Yet Adopted
ASU 2020-04 Facilitation of the Effects of Reference Rate Reform, Topic 848	This ASU provides temporary optional expedients and exceptions to GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, such as SOFR. For instance, companies can (1) elect not to apply certain modification accounting requirements to contracts affected by reference rate reform, if certain criteria are met. A company that makes this election would not have to re-measure the contracts at the modification date or reassess a previous accounting determination. Companies, can also (2) elect various optional expedients that would allow them to continue applying hedge accounting for hedging relationships affected by reference rate reform, if certain criteria are met. Finally, companies can (3) make a one-time election to sell and/or reclassify held-to-maturity debt securities that reference an interest rate affected by reference rate reform.	May be elected between March 12, 2020 through December 31, 2022.	The Company is currently evaluating all of its contracts, hedging relationships and other transactions that will be effected by reference rates that are being discontinued and determining which elections that need to be made.