FAIR VALUE (Tables)

3 Months Ended

Mar. 31, 2017

Summary of assets and liabilities measured at fair value on a recurring basis

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):



			Fair Value Measurement at March 31, 2017 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	17,440	$	—	$	17,440	$	—
Mortgage-backed securities, residential	239,678		—		239,678		—
Obligations of states and political subdivisions	44,155		—		44,155		—
Corporate bonds and notes	251		—		—		251
SBA loan pools	550		—		550		—
Corporate stocks	507		175		332		—
Total available for sale securities	$	302,581	$	175	$	302,155	$	251

Trading assets	$	826	$	826	$	—	$	—
Derivative assets	747		—		747		—

Financial Liabilities:
Derivative liabilities	$	812	$	—	$	747	$	65



			Fair Value Measurement at December 31, 2016 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	17,455	$	—	$	17,455	$	—
Mortgage-backed securities, residential	245,866		—		245,866		—
Obligations of states and political subdivisions	38,740		—		38,740		—
Corporate bonds and notes	250		—		—		250
SBA loan pools	570		—		570		—
Corporate stocks	521		170		351		—
Total available for sale securities	$	303,402	$	170	$	302,982	$	250

Trading assets	$	774	$	774	$	—	$	—
Derivative assets	693		—		693		—

Financial Liabilities:
Derivative liabilities	$	761	$	—	$	693	$	68

Reconciliation of all assets measured at fair value

The table below presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three-month periods ended March 31, 2017 and March 31, 2016 (in thousands):



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	March 31, 2017		March 31, 2016		March 31, 2017			March 31, 2016
Balance of recurring Level 3 assets at January 1	$	250	$	248	$	(68	)	$	(48	)
Derivative instruments entered into	—		—		—			(2		)
Total gains or losses for the period:
Included in earnings - other non-interest income	—		—		3			(34		)
Included in other comprehensive income	1		4		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at March 31	$	251	$	252	$	(65	)	$	(84	)

Reconciliation of liabilities measured at fair value



	Assets (Liabilities)
	Corporate Bonds and Notes				Derivative Liabilities
	March 31, 2017		March 31, 2016		March 31, 2017			March 31, 2016
Balance of recurring Level 3 assets at January 1	$	250	$	248	$	(68	)	$	(48	)
Derivative instruments entered into	—		—		—			(2		)
Total gains or losses for the period:
Included in earnings - other non-interest income	—		—		3			(34		)
Included in other comprehensive income	1		4		—			—
Transfers into Level 3	—		—		—			—
Balance of recurring Level 3 assets at March 31	$	251	$	252	$	(65	)	$	(84	)

Summary of assets and liabilities measured at fair value on a non-recurring basis

Assets and liabilities measured at fair value on a non-recurring basis are summarized below (in thousands):



			Fair Value Measurement at March 31, 2017 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	3,344	$	—	$	—	$	3,344
Total impaired loans	$	3,344	$	—	$	—	$	3,344
Other real estate owned:
Residential mortgages	$	255	$	—	$	—	$	255
Total other real estate owned, net	$	255	$	—	$	—	$	255



			Fair Value Measurement at December 31, 2016 Using
Financial Assets:	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Impaired Loans:
Commercial mortgages:
Commercial mortgages	$	2,631	$	—	$	—	$	2,631
Consumer loans:
Home equity lines and loans	219		—		—		219
Total impaired loans	$	2,850	$	—	$	—	$	2,850
Other real estate owned:
Residential mortgages	$	344	$	—	$	—	$	344
Total other real estate owned, net	$	344	$	—	$	—	$	344

Nonrecurring fair value measurement, valuation techniques

The following tables presents information related to Level 3 non-recurring fair value measurement at March 31, 2017 and December 31, 2016 (in thousands):



Description	Fair Value at March 31, 2017		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at March 31, 2017
Impaired loans:
Commercial mortgages, other	$	745	Sales comparison	Discount to appraised value	10.00% - 40.04% [17.05%]
	2,599		Income approach	Capitalization Rate	9.00% - 10.00% [9.52%]
	$	3,344

OREO:
Residential mortgages	$	255	Sales comparison	Discount to appraised value	20.80% - 36.37% [29.88%]
	$	255



Description	Fair Value at December 31, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at December 31, 2016
Impaired loans:
Commercial mortgages:
Commercial mortgages, other	$	2,631	Income approach	Capitalization Rate	9.00% - 10.00% [9.52%]
Consumer loans:
Home equity lines and loans	219		Sales comparison	Discount to appraised value	22.98% - 22.98% [22.98%]
	$	2,850

OREO:
Residential mortgages	$	344	Sales comparison	Discount to appraised value	20.80% - 48.17% [30.50%]
	$	344

The following table presents information related to Level 3 recurring fair value measurements at March 31, 2017 and December 31, 2016 (in thousands):



Description	Fair Value at March 31, 2017		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at March 31, 2017
Corporate bonds and notes	$	251	Discounted cash flow	Credit spread	1.73% - 1.73% [1.73%]

Derivative liabilities	$	65	Historical trend	Credit default rate	4.92% - 4.92% [4.92%]



Description	Fair Value at December 31, 2016		Valuation Technique	Unobservable Inputs	Range [Weighted Average] at December 31, 2016
Corporate bonds and notes	$	250	Discounted cash flow	Credit spread	1.73% - 1.73% [1.73%]

Derivative liabilities	$	68	Historical trend	Credit default rate	4.92% - 4.92% [4.92%]

Carrying value and estimated fair value of financial instruments

The carrying amounts and estimated fair values of other financial instruments, at March 31, 2017 and December 31, 2016, are as follows (in thousands):



	March 31, 2017
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value (1)
Cash and due from financial institutions	$	26,275	$	26,275	$	—	$	—	$	26,275
Interest-bearing deposits in other financial institutions	99,410		99,410		—		—		99,410
Trading assets	826		826		—		—		826
Securities available for sale	302,581		175		302,155		251		302,581
Securities held to maturity	3,721		—		977		2,935		3,912
FHLBNY and FRBNY stock	3,597		—		—		—		N/A
Loans, net	1,219,291		—		—		1,229,871		1,229,871
Loans held for sale	20		—		20		—		20
Accrued interest receivable	4,066		4		909		3,153		4,066
Derivative assets	747		—		747		—		747

Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,403,637	$	1,403,637	$	—	$	—	$	1,403,637
Time deposits	140,614		—		140,934		—		140,934
Securities sold under agreements to repurchase	15,215		—		15,398		—		15,398
FHLBNY term advances	9,065		—		9,138		—		9,138
Accrued interest payable	172		23		149		—		172
Derivative liabilities	812		—		747		65		812

(1) Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.



	December 31, 2016
Financial assets:	Carrying Amount		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Estimated Fair Value (1)
Cash and due from financial institutions	$	28,205	$	28,205	$	—	$	—	$	28,205
Interest-bearing deposits in other financial institutions	45,957		45,957		—		—		45,957
Trading assets	774		774		—		—		774
Securities available for sale	303,402		170		302,982		250		303,402
Securities held to maturity	4,705		—		981		3,931		4,912
FHLBNY and FRBNY stock	4,041		—		—		—		N/A
Loans, net	1,186,037		—		—		1,205,814		1,205,814
Loans held for sale	412		—		412		—		412
Accrued interest receivable	4,000		9		784		3,207		4,000
Derivative assets	693		—		693		—		693

Financial liabilities:
Deposits:
Demand, savings, and insured money market accounts	$	1,312,237	$	1,312,237	$	—	$	—	$	1,312,237
Time deposits	144,106		—		144,460		—		144,460
Securities sold under agreements to repurchase	27,606		—		27,880		—		27,880
FHLBNY term advances	9,093		—		9,189		—		9,189
Accrued interest payable	210		25		185		—		210
Derivative liabilities	761		—		693		68		761