10-Q

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

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

For quarterly period ended    June 30, 2015

☐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    001-35021                                  

                    EVANS BANCORP, INC.            .

(Exact name of registrant as specified in its charter)

        New York         16-1332767

(State or other jurisdiction of         (I.R.S. Employer

incorporation or organization)       Identification No.)

One Grimsby Drive, Hamburg, NY 14075

(Address of principal executive offices)  (Zip Code)

                      (716) 926-2000                  .

(Registrant's telephone number, including area code)

                                            Not Applicable                                                                   

 (Former name, former address and former fiscal year, if changed

 since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒ No ☐

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

Large accelerated filer ☐Accelerated filer ☐

Non-accelerated filer ☐ (Do not check if smaller reporting company)Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes  ☐  No  ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Common Stock, $.50 par value 4,243,149 shares as of July 31, 2015

INDEX

EVANS BANCORP, INC. AND SUBSIDIARIES

PART 1.   FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets – June 30, 2015 and December 31, 2014	1
	Unaudited Consolidated Statements of Income – Three months ended June 30, 2015 and 2014	2
	Unaudited Consolidated Statements of Income – Six months ended June 30, 2015 and 2014	3
	Unaudited Statements of Consolidated Comprehensive Income – Three months ended June 30, 2015 and 2014	4
	Unaudited Statements of Consolidated Comprehensive Income – Six months ended June 30, 2015 and 2014	5
	Unaudited Consolidated Statements of Changes in Stockholder’s Equity – Six months ended June 30, 2015 and 2014	6
	Unaudited Consolidated Statements of Cash Flows - Six months ended June 30, 2015 and 2014	7
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	50
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6.	Exhibits	53
	Signatures	54

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2015 AND DECEMBER 31, 2014
(in thousands, except share and per share amounts)
	June 30,		December 31,
	2015		2014
ASSETS
Cash and due from banks	$	14,407	$	8,784
Interest-bearing deposits at banks		34,158		2,114
Securities:
Available for sale, at fair value (amortized cost: $104,284 at June 30, 2015;		105,269		95,533
$94,048 at December 31, 2014)
Held to maturity, at amortized cost (fair value: $1,440 at June 30, 2015;		1,465		1,599
$1,574 at December 31, 2014)
Federal Home Loan Bank common stock, at amortized cost		1,296		1,439
Federal Reserve Bank common stock, at amortized cost		1,478		1,486
Loans, net of allowance for loan losses of $13,110 at June 30, 2015
and $12,533 at December 31, 2014		697,722		683,131
Properties and equipment, net of accumulated depreciation of $15,651 at June 30, 2015
and $15,129 at December 31, 2014		10,200		10,224
Goodwill		8,101		8,101
Bank-owned life insurance		20,704		20,415
Other assets		13,747		13,983
TOTAL ASSETS	$	908,547	$	846,809
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand	$	163,862	$	158,631
NOW		79,266		72,670
Regular savings		431,555		363,542
Time		99,482		112,792
Total deposits		774,165		707,635
Securities sold under agreement to repurchase		11,009		13,778
Other short term borrowings		10,000		13,700
Other liabilities		13,848		14,578
Junior subordinated debentures		11,330		11,330
Total liabilities		820,352		761,021
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized;
4,247,469 and 4,241,797 shares issued at June 30, 2015 and December 31, 2014,
respectively, and 4,239,929 and 4,203,684 outstanding at June 30, 2015
and December 31, 2014, respectively		2,126		2,123
Capital surplus		42,969		43,102
Treasury stock, at cost, 7,540 shares and 38,113 at June 30, 2015 and
December 31, 2014, respectively		(42)		(751)
Retained earnings		44,885		42,822
Accumulated other comprehensive loss, net of tax		(1,743)		(1,508)
Total stockholders' equity		88,195		85,788
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	908,547	$	846,809
See Notes to Unaudited Consolidated Financial Statements

1

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except share and per share amounts)
	Three Months Ended June 30,
	2015		2014
INTEREST INCOME
Loans	$	7,934	$	7,879
Interest bearing deposits at banks		33		15
Securities:
Taxable		429		455
Non-taxable		240		243
Total interest income		8,636		8,592
INTEREST EXPENSE
Deposits		860		756
Other borrowings		46		75
Junior subordinated debentures		82		79
Total interest expense		988		910
NET INTEREST INCOME		7,648		7,682
PROVISION (CREDIT) FOR LOAN LOSSES		415		176
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		7,233		7,506
NON-INTEREST INCOME
Bank charges		411		464
Insurance service and fees		1,821		1,586
Data center income		69		101
Gain on loans sold		58		40
Bank-owned life insurance		152		151
Other		965		713
Total non-interest income		3,476		3,055
NON-INTEREST EXPENSE
Salaries and employee benefits		5,066		4,564
Litigation expense		-		1,000
Occupancy		697		685
Repairs and maintenance		215		180
Advertising and public relations		231		281
Professional services		670		418
Technology and communications		262		278
Amortization of intangibles		-		40
FDIC insurance		148		112
Other		952		774
Total non-interest expense		8,241		8,332
INCOME BEFORE INCOME TAXES		2,468		2,229
INCOME TAX PROVISION		793		650
NET INCOME	$	1,675	$	1,579
Net income per common share-basic	$	0.40	$	0.38
Net income per common share-diluted	$	0.39	$	0.37
Cash dividends per common share	$	-	$	-
Weighted average number of common shares outstanding		4,234,334		4,166,497
Weighted average number of diluted shares outstanding		4,309,688		4,248,249
See Notes to Unaudited Consolidated Financial Statements

2

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except share and per share amounts)
	Six Months Ended June 30,
	2015		2014
INTEREST INCOME
Loans	$	15,746	$	15,389
Interest bearing deposits at banks		34		31
Securities:
Taxable		835		904
Non-taxable		477		488
Total interest income		17,092		16,812
INTEREST EXPENSE
Deposits		1,643		1,512
Other borrowings		60		160
Junior subordinated debentures		160		159
Total interest expense		1,863		1,831
NET INTEREST INCOME		15,229		14,981
PROVISION (CREDIT) FOR LOAN LOSSES		616		328
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		14,613		14,653
NON-INTEREST INCOME
Bank charges		820		925
Insurance service and fees		3,650		3,718
Data center income		92		207
Gain on loans sold		81		40
Bank-owned life insurance		289		296
Other		1,610		1,263
Total non-interest income		6,542		6,449
NON-INTEREST EXPENSE
Salaries and employee benefits		9,860		9,260
Litigation expense		-		1,000
Occupancy		1,392		1,428
Repairs and maintenance		388		356
Advertising and public relations		442		503
Professional services		1,180		936
Technology and communications		522		578
Amortization of intangibles		-		81
FDIC insurance		295		274
Other		1,674		1,535
Total non-interest expense		15,753		15,951
INCOME BEFORE INCOME TAXES		5,402		5,151
INCOME TAX PROVISION		1,822		1,559
NET INCOME	$	3,580	$	3,592
Net income per common share-basic	$	0.85	$	0.86
Net income per common share-diluted	$	0.83	$	0.84
Cash dividends per common share	$	0.36	$	0.31
Weighted average number of common shares outstanding		4,233,196		4,183,414
Weighted average number of diluted shares outstanding		4,309,423		4,264,889
See Notes to Unaudited Consolidated Financial Statements

3

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
THREE MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except share and per share amounts)
	Three Months Ended June 30,
	2015			2014
NET INCOME		$	1,675		$	1,579
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized (loss) gain on available-for-sale securities:
Unrealized (loss) gain on available-for-sale securities	(637)			428
Less: Reclassification of gain on sale of securities	-			-
			(637)			428
Defined benefit pension plans:
Amortization of prior service cost	5			4
Amortization of actuarial assumptions	37			15
Total			42			19
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX			(595)			447
COMPREHENSIVE INCOME		$	1,080		$	2,026
See Notes to Unaudited Consolidated Financial Statements

4

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED STATEMENTS OF CONSOLIDATED COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except share and per share amounts)
	Six Months Ended June 30,
	2015			2014
NET INCOME		$	3,580		$	3,592
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized (loss) gain on available-for-sale securities:
Unrealized (loss) gain on available-for-sale securities	(306)			789
Less: Reclassification of gain on sale of securities	-			-
			(306)			789
Defined benefit pension plans:
Amortization of prior service cost	10			9
Amortization of actuarial assumptions	61			31
Total			71			40
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX			(235)			829
COMPREHENSIVE INCOME		$	3,345		$	4,421
See Notes to Unaudited Consolidated Financial Statements

5

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands, except share and per share amounts)
							Accumulated
							Other
	Common		Capital		Retained		Comprehensive		Treasury
	Stock		Surplus		Earnings		Income (Loss)		Stock		Total
Balance, December 31, 2013	$	2,106	$	42,619	$	37,370	$	(1,263)	$	(120)	$	80,712
Net Income						3,592						3,592
Other comprehensive income								829				829
Cash dividends ($0.31 per common share)						(1,305)						(1,305)
Stock options and restricted stock expense				220								220
Excess tax expense from stock-based compensation				31								31
Issued 20,517 restricted shares		11		(11)								-
Repurchased 59,800 shares										(1,436)		(1,436)
Reissued 5,093 shares in stock option exercise				(51)						106		55
Reissued 5,400 shares under dividend
reinvestment plan				9						115		124
Issued 7,186 shares through Employee Stock
Purchase Plan		3		124								127
Balance, June 30, 2014	$	2,120	$	42,941	$	39,657	$	(434)	$	(1,335)	$	82,949
Balance, December 31, 2014	$	2,123	$	43,102	$	42,822	$	(1,508)	$	(751)	$	85,788
Net Income						3,580						3,580
Other comprehensive loss								(235)				(235)
Cash dividends ($0.36 per common share)						(1,517)						(1,517)
Stock options and restricted stock expense				263								263
Excess tax expense from stock-based compensation				44								44
Reissued 20,592 restricted shares,
net of 588 forfeitures				(503)						503		-
Repurchased 3,397 shares in Treasury stock										(83)		(83)
Reissued 8,034 shares in stock option exercise				(55)						155		100
Reissued 5,582 shares under dividend
reinvestment plan				4						134		138
Issued 5,672 shares in Employee Stock
Purchase Plan		3		114								117
Balance, June 30, 2015	$	2,126	$	42,969	$	44,885	$	(1,743)	$	(42)	$	88,195
See Notes to Unaudited Consolidated Financial Statements

6

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands)
	Six Months Ended June 30,
		2015		2014
OPERATING ACTIVITIES:
Interest received	$	16,916	$	16,934
Fees received		5,795		6,141
Interest paid		(1,939)		(1,842)
Cash paid to employees and vendors		(15,932)		(15,317)
Cash contributed to pension plan		(165)		-
Income taxes paid		(601)		(2,785)
Proceeds from sale of loans held for resale		9,772		3,439
Originations of loans held for resale		(10,295)		(3,636)
Net cash provided by operating activities		3,551		2,934
INVESTING ACTIVITIES:
Available for sales securities:
Purchases		(24,370)		(8,900)
Proceeds from maturities, calls, and payments		14,299		7,144
Held to maturity securities:
Purchases		(50)		(330)
Proceeds from maturities, calls, and payments		184		781
Proceeds from property insurance		927		-
Additions to properties and equipment		(499)		(275)
Purchase of tax credit investment		(831)		(1,467)
Net increase in loans		(14,360)		(16,304)
Net cash used in investing activities		(24,700)		(19,351)
FINANCING ACTIVITIES:
Proceeds from (repayments of) borrowings, net		(6,469)		(3,231)
Net increase in deposits		66,531		558
Dividends paid		(1,517)		(1,305)
Repurchase of treasury stock		(83)		(1,501)
Issuance of common stock		117		183
Reissuance of treasury stock		237		188
Net cash provided by (used in) financing activities		58,816		(5,108)
Net increase (decrease) in cash and equivalents		37,667		(21,525)
CASH AND CASH EQUIVALENTS:
Beginning of period		10,898		41,954
End of period	$	48,565	$	20,429

(continued)

7

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(in thousands)
	Six Months Ended June 30,
		2015		2014
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income	$	3,580	$	3,592
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		745		827
Deferred tax expense (benefit)		191		(241)
Provision for loan losses		616		328
Gain on loans sold		(81)		(40)
Stock options and restricted stock expense		263		221
Proceeds from sale of loans held for resale		9,772		3,439
Originations of loans held for resale		(10,295)		(3,636)
Cash contributed to pension plan		(165)		-
Changes in assets and liabilities affecting cash flow:
Other assets		(1,112)		344
Other liabilities		37		(1,900)
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	3,551	$	2,934
See Notes to Unaudited Consolidated Financial Statements

8

PART 1 – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

EVANS BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2015 AND 2014

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by Evans Bancorp, Inc. (the “Company”), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the “Bank”), and the Bank’s subsidiaries, Evans National Leasing, Inc. (“ENL”), Evans National Holding Corp. (“ENHC”) and Suchak Data Systems, LLC (“SDS”); and (ii) Evans National Financial Services, LLC (“ENFS”), and ENFS’s subsidiary, The Evans Agency, LLC (“TEA”), and TEA’s subsidiaries, Frontier Claims Services, Inc. (“FCS”) and ENB Associates Inc. (“ENBA”), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles (“GAAP”) and with general practice within the industries in which it operates.  Except as the context otherwise requires, the Company and its direct and indirect subsidiaries are collectively referred to in this report as the “Company.”

The accompanying consolidated financial statements are unaudited.  In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods have been made.  During the six month period ended June 30, 2015, the Company revised the unaudited Consolidated Statement of Cash Flows for the six month period ended June 30, 2014 to correct errors involving a $347 thousand increase within “Net cash provided by operating activities”, a $347 thousand increase in “Net cash used in investing activities”, a $80 thousand increase within “Depreciation and amortization”, $483 thousand increase within “Change in other assets affecting cash flow”, and a $216 thousand increase within “Change in other liabilities affecting cash flow” line items.  The Company has assessed the materiality of this correction and concluded, based on qualitative and quantitative considerations, in accordance with Staff Accounting Bulletin No. 99, that the adjustments were not material to our previously reported financial statements.

The results of operations for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.   

9

2. SECURITIES

The amortized cost of securities and their approximate fair value at June 30, 2015 and December 31, 2014 were as follows:

	June 30, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	24,120	$	261	$	(301)	$	24,080
States and political subdivisions		38,621		801		(118)		39,304
Total debt securities	$	62,741	$	1,062	$	(419)	$	63,384
Mortgage-backed securities:
FNMA	$	13,957	$	434	$	(19)	$	14,372
FHLMC		5,275		94		(66)		5,303
GNMA		7,867		98		(67)		7,898
CMO		14,444		58		(190)		14,312
Total mortgage-backed securities	$	41,543	$	684	$	(342)	$	41,885
Total securities designated as available for sale	$	104,284	$	1,746	$	(761)	$	105,269
Held to Maturity:
Debt securities
States and political subdivisions	$	1,465	$	6	$	(31)	$	1,440
Total securities designated as held to maturity	$	1,465	$	6	$	(31)	$	1,440

	December 31, 2014
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	26,687	$	305	$	(275)	$	26,717
States and political subdivisions		30,182		927		(49)		31,060
Total debt securities	$	56,869	$	1,232	$	(324)	$	57,777
Mortgage-backed securities:
FNMA	$	14,653	$	516	$	(15)	$	15,154
FHLMC		5,901		121		(64)		5,958
GNMA		6,014		143		(27)		6,130
CMO		10,611		42		(139)		10,514
Total mortgage-backed securities	$	37,179	$	822	$	(245)	$	37,756
Total securities designated as available for sale	$	94,048	$	2,054	$	(569)	$	95,533
Held to Maturity:
Debt securities
States and political subdivisions	$	1,599	$	7	$	(32)	$	1,574
Total securities designated as held to maturity	$	1,599	$	7	$	(32)	$	1,574

10

Available for sale securities with a total fair value of $68.6 million and $68.8 million at June 30, 2015 and December 31, 2014, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The Company uses the Federal Home Loan Bank of New York (“FHLBNY”) as its primary source of overnight funds and also has several long-term advances with FHLBNY.  The Company had no borrowed funds as of June 30, 2015, and had a total of $13.7 million in borrowed funds with FHLBNY at December 31, 2014.  The Company has placed sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meet FHLB collateral requirements.  As a member of the Federal Home Loan Bank (“FHLB”) System, the Bank is required to hold stock in FHLBNY.  The Bank held $1.3 million and $1.4 million in FHLBNY stock as of June 30, 2015 and December 31, 2014, respectively, at amortized cost.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  At this time, the Company does not believe any impairment in FHLBNY stock is warranted.

The scheduled maturities of debt and mortgage-backed securities at June 30, 2015 and December 31, 2014 are summarized below.  All maturity amounts are contractual maturities.  Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
		(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,641	$	2,659	$	8,172	$	8,256
Due after one year through five years		28,639		29,150		22,118		22,597
Due after five years through ten years		22,094		22,172		20,517		20,589
Due after ten years		9,367		9,403		6,062		6,335
		62,741		63,384		56,869		57,777
Mortgage-backed securities
available for sale		41,543		41,885		37,179		37,756
Total available for sale securities	$	104,284	$	105,269	$	94,048	$	95,533
Debt securities held to maturity:
Due in one year or less	$	388	$	388	$	478	$	477
Due after one year through five years		66		67		77		78
Due after five years through ten years		898		881		932		914
Due after ten years		113		104		112		105
		1,465		1,440		1,599		1,574
Total held to maturity securities	$	1,465	$	1,440	$	1,599	$	1,574

Information regarding unrealized losses within the Company’s available for sale securities at June 30, 2015 and December 31, 2014 is summarized below.  The securities are primarily U.S. government-guaranteed agency securities or municipal securities.  All unrealized losses are considered temporary and related to market interest rate fluctuations.

11

	June 30, 2015
		Less than 12 months				12 months or longer					Total
		Fair		Unrealized		Fair			Unrealized		Fair		Unrealized
		Value		Losses		Value			Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	8,411	$	(155)	$	5,854		$	(146)	$	14,265	$	(301)
States and political subdivisions		9,083		(94)		1,187			(24)		10,270		(118)
Total debt securities	$	17,494	$	(249)	$	7,041		$	(170)	$	24,535	$	(419)
Mortgage-backed securities:
FNMA	$	4,155	$	(19)	$	-	-	$	-	$	4,155	$	(19)
FHLMC		-		-		1,362			(66)		1,362		(66)
GNMA		3,684		(60)		674			(7)		4,358		(67)
CMO'S		5,153		(92)		4,012			(98)		9,165		(190)
Total mortgage-backed securities	$	12,992	$	(171)	$	6,048		$	(171)	$	19,040	$	(342)
Held To Maturity:
Debt securities:
States and political subdivisions	$	799	$	(30)	$	89		$	(1)	$	888	$	(31)
Total temporarily impaired
securities	$	31,285	$	(450)	$	13,178		$	(342)	$	44,463	$	(792)

	December 31, 2014
		Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Losses		Value		Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	3,906	$	(26)	$	7,751	$	(249)	$	11,657	$	(275)
States and political subdivisions		4,752		(9)		1,902		(40)		6,654		(49)
Total debt securities	$	8,658	$	(35)	$	9,653	$	(289)	$	18,311	$	(324)
Mortgage-backed securities:
FNMA	$	1,498	$	(10)	$	1,731	$	(5)	$	3,229	$	(15)
FHLMC		-		-		1,482		(64)		1,482		(64)
GNMA		-		-		2,079		(27)		2,079		(27)
CMO'S		1,722		(11)		4,290		(128)		6,012		(139)
Total mortgage-backed securities	$	3,220	$	(21)	$	9,582	$	(224)	$	12,802	$	(245)
Held To Maturity:
Debt securities:
States and political subdivisions	$	371	$	(1)	$	556	$	(31)	$	927	$	(32)
Total temporarily impaired
securities	$	12,249	$	(57)	$	19,791	$	(544)	$	32,040	$	(601)

12

Management has assessed the securities available for sale in an unrealized loss position at June 30, 2015 and December 31, 2014 and determined the decline in fair value below amortized cost to be temporary.  In making this determination, management considered the period of time the securities were in a loss position, the percentage decline in comparison to the securities’ amortized cost, and the financial condition of the issuer (primarily government or government-sponsored enterprises).  In addition, management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost.  Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers.

The Company had not recorded any other-than-temporary impairment (“OTTI”) charges as of June 30, 2015 and did not record any OTTI charges during 2014.  Nevertheless, it remains possible that there could be deterioration in the asset quality of the securities portfolio in the future.  The credit worthiness of the Company’s portfolio is largely reliant on the ability of U.S. government sponsored agencies such as FHLB, Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”), and municipalities throughout New York State to meet their obligations.  In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio.  The relatively stable past performance is not a guarantee for similar performance of the Company’s securities portfolio going forward.

3.  FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures.”  Those provisions relate to financial assets and liabilities carried at fair value and fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

There are three levels of inputs to fair value measurements:

· Level 1, meaning the use of quoted prices for identical instruments in active markets;

· Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; and

· Level 3, meaning the use of unobservable inputs.

Observable market data should be used when available.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a recurring basis at June 30, 2015 and December 31, 2014:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
June 30, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	24,080	$	-	$	24,080
States and political subdivisions		-		39,304		-		39,304
Mortgage-backed securities		-		41,885		-		41,885
Mortgage servicing rights		-		-		565		565
December 31, 2014
Securities available-for-sale:
U.S. government agencies	$	-	$	26,717	$	-	$	26,717
States and political subdivisions		-		31,060		-		31,060
Mortgage-backed securities		-		37,756		-		37,756
Mortgage servicing rights		-		-		518		518

13

Securities available for sale

Fair values for securities are determined using independent pricing services and market-participating brokers.  The Company’s independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data.  Because many fixed income securities do not trade on a daily basis, the evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations.  In addition, model processes, such as the Option Adjusted Spread model, are used to assess interest rate impact and develop prepayment scenarios.  The models and the process take into account market convention.  For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models.  The company’s service provider may occasionally determine that it does have not sufficient verifiable information to value a particular security.  In these cases the Company will utilize valuations from another pricing service.

Management believes that it has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of securities to enable management to maintain an appropriate system of internal control.  On a quarterly basis, the Company reviews changes in the market value of its security portfolio.  Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities.  Additionally, on an annual basis, the Company has its entire security portfolio priced by a second pricing service to determine consistency with another market evaluator.  If, on the Company’s review or in comparing with another servicer, a material difference between pricing evaluations were to exist, the Company would submit an inquiry to the service provider regarding the data used to value a particular security.   If the Company determines it has market information that would support a different valuation than the initial evaluation it can submit a challenge for a change to that security’s valuation. There were no material differences in valuations noted in the first and second quarters of 2015 or during fiscal year 2014.

Securities available for sale are classified as Level 2 in the fair value hierarchy as the valuation provided by the third-party provider uses observable market data.

Mortgage servicing rights

Mortgage servicing rights (“MSRs”) do not trade in an active, open market with readily observable prices. Accordingly, the Company obtains the fair value of the MSRs using a third-party pricing provider. The provider determines the fair value by discounting projected net servicing cash flows of the remaining servicing portfolio.  The valuation model used by the provider considers market loan prepayment predictions and other economic factors which management considers to be significant unobservable inputs.  The fair value of MSRs is mostly affected by changes in mortgage interest rates since rate changes cause the loan prepayment acceleration factors to increase or decrease.  Management has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of MSRs to enable management to maintain an appropriate system of internal control.  Mortgage servicing rights are classified within Level 3 of the fair value hierarchy as the valuation is model driven and primarily based on unobservable inputs.

The following table summarizes the changes in fair value for mortgage servicing rights during the three and six month periods ended June 30, 2015 and 2014, respectively:

	Three months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - April 1	$	497	$	471
Gains (losses) included in earnings		4		(31)
Additions from loan sales		64		31
Mortgage servicing rights - June 30	$	565	$	471

14

	Six months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - January 1	$	518	$	509
Gains (losses) included in earnings		(41)		(69)
Additions from loan sales		88		31
Mortgage servicing rights - June 30	$	565	$	471

Quantitative information about the significant unobservable inputs used in the fair value measurement of MSRs at the respective dates is as follows:

	6/30/2015		12/31/2014
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.10	%	9.28	%

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements.  The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a nonrecurring basis at June 30, 2015 and December 31, 2014:

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2015
Impaired loans	$	-	-	13,882	$	13,882
December 31, 2014
Impaired loans	$	-	-	13,716	$	13,716

Impaired loans

The Company evaluatesand values impaired loans at the time the loan is identified as impaired, and the fair values of such loans are estimated using Level 3 inputs in the fair value hierarchy.  Each loan’s collateral has a unique appraisal and management’s discount of the value is based on factors unique to each impaired loan.  The significant unobservable input in determining the fair value is management’s subjective discount on appraisals of the collateral securing the loan, which ranges from 10%-50%.  Collateral may consist of real estate and/or business assets including equipment, inventory and/or accounts receivable and the value of these assets is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, estimated costs to sell, and/or management’s expertise and knowledge of the client and the client’s business.

15

The Company has an appraisal policy in which appraisals are obtained upon a commercial loan being downgraded on the Company internal loan rating scale to a 5 (special mention) or a 6 (substandard) depending on the amount of the loan, the type of loan and the type of collateral.  All impaired commercial loans are either graded a 6 or 7 on the internal loan rating scale.  For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be impaired, whichever occurs first.  Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and impaired for at least one year more, management may require another follow-up appraisal.  Between receipts of updated appraisals, if necessary, management may perform an internal valuation based on any known changing conditions in the marketplace such as sales of similar properties, a change in the condition of the collateral, or feedback from local appraisers.  Impaired loans had a gross value of $14.8 million, with a valuation allowance of $0.9 million, at June 30, 2015, compared to a gross value for impaired loans of $15.0 million, with a valuation allowance of $1.3 million, at December 31, 2014.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At June 30, 2015 and December 31, 2014, the estimated fair values of the Company’s financial instruments, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows:

	June 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	48,565	$	48,565	$	10,898	$	10,898
Level 2:
Available for sale securities		105,269		105,269		95,533		95,533
FHLB and FRB stock		2,774		2,774		2,925		2,925
Level 3:
Held to maturity securities		1,465		1,440		1,599		1,574
Loans and leases, net		697,722		709,025		683,131		685,148
Mortgage servicing rights		565		565		518		518
Financial liabilities:
Level 1:
Demand deposits	$	163,862	$	163,862	$	158,631	$	158,631
NOW deposits		79,266		79,266		72,670		72,670
Regular savings deposits		431,555		431,555		363,542		363,542
Commitments to extend credit		249		249		245		245
Securities sold under agreement to
repurchase		11,009		11,009		13,778		13,778
Level 2:
Other borrowed funds		10,000		10,000		13,700		13,700
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		99,482		100,370		112,792		113,854

16

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value.

Cash and Cash Equivalents.  For these short-term instruments, the carrying amount is a reasonable estimate of fair value.  “Cash and Cash Equivalents” includes interest-bearing deposits at other banks.

FHLB and FRB stock.  The carrying value of FHLB and FRB stock approximate fair value.

Securities held to maturity.  The Company holds certain municipal bonds as held-to-maturity.  These bonds are generally small in dollar amount and are issued only by certain local municipalities within the Company’s market area.  The original terms are negotiated directly and on an individual basis consistent with our loan and credit guidelines.  These bonds are not traded on the open market and management intends to hold the bonds to maturity.  The fair value of held-to-maturity securities is estimated by discounting the future cash flows using the current rates at which similar agreements would be made with municipalities with similar credit ratings and for the same remaining maturities.

Loans and Leases, net.  The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, net of the appropriate portion of the allowance for loan losses.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  This fair value calculation is not necessarily indicative of the exit price, as defined in ASC 820.

Deposits.  The fair value of demand deposits, NOW accounts, muni-vest accounts and regular savings accounts is the amount payable on demand at the reporting date.  The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.

Junior Subordinated Debentures.  There is no active market for the Company’s debentures.  The fair value of the junior subordinated debentures is determined using an expected prevent value technique.  The fair value of the adjustable-rate debentures approximates their face amount.

Commitments to extend credit and standby letters of credit.  As described in Note 8 - “Contingent Liabilities and Commitments” to these Unaudited Consolidated Financial Statements, the Company was a party to financial instruments with off-balance sheet risk at June 30, 2015 and December 31, 2014.  Such financial instruments consist of commitments to extend permanent financing and letters of credit.  If the options are exercised by the prospective borrowers, these financial instruments will become interest-earning assets of the Company.  If the options expire, the Company retains any fees paid by the counterparty in order to obtain the commitment or guarantee.  The fees collected for these commitments are recorded as “unearned commitment fees” in Other Liabilities.  The carrying value approximates the fair value.

Securities Sold Under Agreement to Repurchase.  The fair value of the securities sold under agreement to repurchase approximates its carrying value.

Other Borrowed Funds.  The fair value of the short-term portion of other borrowed funds approximates its carrying value.  The fair value of the long-term portion of other borrowed funds is estimated using a discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

17

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Loan Portfolio Composition

The following table presents selected information on the composition of the Company’s loan portfolio as of the dates indicated:

	June 30, 2015		December 31, 2014
Mortgage loans on real estate:		(in thousands)
Residential Mortgages	$	98,269	$	98,374
Commercial and multi-family		373,891		363,252
Construction-Residential		709		721
Construction-Commercial		45,232		40,986
Home equities		59,381		59,948
Total real estate loans		577,482		563,281
Commercial and industrial loans		129,812		129,456
Consumer loans		1,699		1,764
Other		1,165		404
Net deferred loan origination costs		674		759
Total gross loans		710,832		695,664
Allowance for loan losses		(13,110)		(12,533)
Loans, net	$	697,722	$	683,131

The Bank sells certain fixed rate residential mortgages to FNMA while maintaining the servicing rights for those mortgages.  In the three month period ended June 30, 2015, the Bank sold mortgages to FNMA totaling $7.1 million, as compared with $3.4 million in mortgages sold to FNMA in the three month period ended June 30, 2014.  During the six month period ended June 30, 2015 and 2014, the Bank sold $9.7 million and $3.4 million in mortgages, respectively, to FNMA.  At June 30, 2015, the Bank had a loan servicing portfolio principal balance of $77.3 million upon which it earns servicing fees, as compared with $71.6 million at December 31, 2014.  The value of the mortgage servicing rights for that portfolio was $0.6 and $0.5 million at June 30, 2015 and December 31, 2014, respectively.  At June 30, 2015, there were $1.0 million in residential mortgage loans held-for-sale, compared with $0.4 million in residential mortgages held-for-sale at December 31, 2014.  The Company had no commercial loans held-for-sale at June 30, 2015 or December 31, 2014.  The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.

As noted in Note 1, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.  Disclosures related to the basis for accounting for loans, the method for recognizing interest income on loans, the policy for placing loans on nonaccrual status and the subsequent recording of payments and resuming accrual of interest, the policy for determining past due status, a description of the Company’s accounting policies and methodology used to estimate the allowance for loan losses, the policy for charging off loans, the accounting policies for impaired loans, and more descriptive information on the Company’s credit risk ratings are all contained in the Notes to the Audited Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2014 are consistent with those utilized by the Company in the three and six months ended June 30, 2015.

18

Credit Quality Indicators

The Bank monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators (“CQI”).  The primary CQI for its commercial mortgage and commercial and industrial (“C&I”) portfolios is the individual loan’s credit risk rating.  The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for loan and lease losses:

· 1-3-Pass

· 4-Watch

· 5-O.A.E.M. (Other Assets Especially Mentioned) or Special Mention

· 6-Substandard

· 7-Doubtful

· 8-Loss

The Company’s consumer loans, including residential mortgages and home equities, are not individually risk rated or reviewed in the Company’s loan review process.  Consumers are not required to provide the Company with updated financial information as is a commercial customer.  Consumer loans also carry smaller balances.  Given the lack of updated information after the initial underwriting of the loan and small size of individual loans, the Company uses delinquency status as the credit quality indicator for consumer loans.

The following tables provide data, at the class level, of credit quality indicators of certain loans and leases for the dates specified:

June 30, 2015
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	37,357	$	311,618	$	348,975	$	77,168
4		2,669		40,588		43,257		33,611
5		5,206		15,720		20,926		11,464
6		-		5,965		5,965		7,465
7		-		-		-		104
Total	$	45,232	$	373,891	$	419,123	$	129,812

December 31, 2014
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	29,421	$	299,798	$	329,219	$	83,789
4		10,492		50,691		61,183		30,223
5		1,073		7,853		8,926		8,662
6		-		4,757		4,757		6,613
7		-		153		153		169
Total	$	40,986	$	363,252	$	404,238	$	129,456

19

Past Due Loans

The following tables provide an analysis of the age of the recorded investment in loans that are past due as of the dates indicated:

June 30, 2015
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	463	$	223	$	148	$	834	$	128,978	$	129,812	$	103	$	5,620
Residential real estate:
Residential		237		243		650		1,130		97,139		98,269		125		1,265
Construction		-		-		-		-		709		709		-		-
Commercial real estate:
Commercial		-		-		2,525		2,525		371,366		373,891		238		2,812
Construction		-		-		267		267		44,965		45,232		267		-
Home equities		254		518		326		1,098		58,283		59,381		72		475
Consumer		23		1		17		41		1,658		1,699		-		17
Other		-		-		-		-		1,165		1,165		-		-
Total Loans	$	977	$	985	$	3,933	$	5,895	$	704,263	$	710,158	$	805	$	10,189

NOTE: Loan and lease balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

20

December 31, 2014
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	153	$	60	$	274	$	487	$	128,969	$	129,456	$	-	$	5,500
Residential real estate:
Residential		848		158		682		1,688		96,686		98,374		-		1,296
Construction		-		-		-		-		721		721		-		-
Commercial real estate:
Commercial		4,201		3,115		513		7,829		355,423		363,252		-		3,162
Construction		8		-		201		209		40,777		40,986		201		-
Home equities		594		120		192		906		59,042		59,948		-		415
Consumer		13		1		-		14		1,750		1,764		-		17
Other		-		-		-		-		404		404		-		-
Total Loans	$	5,817	$	3,454	$	1,862	$	11,133	$	683,772	$	694,905	$	201	$	10,390

NOTE: Loan and lease balances do not include $759 thousand in net deferred loan origination costs as of December 31, 2014.

21

Allowance for loan losses

The following tables present the activity in the allowance for loan losses according to portfolio segment, for the six month periods ended June, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,896	$	5,650	$	78	$	941	$	819	$	149	$	12,533
Charge-offs		(80)		(35)		(11)		-		-		-		(126)
Recoveries		57		23		6		1		-		-		87
Provision		(228)		856		(2)		6		(16)		-		616
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	730	$	59	$	46	$	40	$	-	$	-	$	875
Collectively evaluated
for impairment		3,915		6,435		25		908		803		149		12,235
Total	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Loans:
Ending balance:
Individually evaluated
for impairment	$	5,795	$	5,455	$	46	$	2,500	$	961	$	-	$	14,757
Collectively evaluated
for impairment		124,017		413,668		2,818		96,478		58,420		-		695,401
Total	$	129,812	$	419,123	$	2,864	$	98,978	$	59,381	$	-	$	710,158

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

22

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,489	$	4,912	$	37	$	1,038	$	878	$	-	$	149	$	11,503
Charge-offs		(474)		(57)		(12)		-		(1)		-		-		(544)
Recoveries		59		39		4		2		-		131		-		235
Provision		(171)		651		17		6		(44)		(131)		-		328
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	191	$	358	$	18	$	-	$	-	$	-	$	-	$	567
Collectively evaluated
for impairment		3,712		5,187		28		1,046		833		-		149		10,955
Total	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Loans:
Ending balance:
Individually evaluated
for impairment	$	1,125	$	13,642	$	18	$	1,958	$	544	$	-	$	-	$	17,287
Collectively evaluated
for impairment		110,358		377,657		3,753		96,736		56,937		-		-		645,441
Total	$	111,483	$	391,299	$	3,771	$	98,694	$	57,481	$	-	$	-	$	662,728

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $671 thousand in net deferred loan origination costs as of June 30, 2014.

23

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,989	$	5,830	$	70	$	924	$	815	$	149	$	12,777
Charge-offs		(80)		(35)		(5)		-		-		-		(120)
Recoveries		19		13		5		1		-		-		38
Provision		(283)		686		1		23		(12)		-		415
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,523	$	5,108	$	36	$	1,037	$	881	$	-	$	149	$	11,734
Charge-offs		(417)		(57)		(6)		-		-		-		-		(480)
Recoveries		31		10		2		2		-		47		-		92
Provision		(234)		484		14		7		(48)		(47)		-		176
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522

24

Impaired Loans

The following tables provide data, at the class level, of impaired loans as of the dates indicated:

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	2,162	$	2,240	$	-	$	2,439	$	64	$	9
Residential real estate:
Residential		2,229		2,408		-		2,244		22		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,891		1,991		-		1,927		13		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	8,344	$	8,752	$	-	$	8,678	$	114	$	103

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	3,633	$	3,746	$	730	$	3,726	$	112	$	12
Residential real estate:
Residential		271		285		40		271		10		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,463		2,642		59		2,514		87		-
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	6,413	$	6,741	$	875	$	6,558	$	211	$	14

25

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,795	$	5,986	$	730	$	6,165	$	176	$	21
Residential real estate:
Residential		2,500		2,693		40		2,515		32		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,354		4,633		59		4,441		100		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	14,757	$	15,493	$	875	$	15,236	$	325	$	117

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	1,017	$	1,022	$	-	$	1,096	$	9	$	66
Residential real estate:
Residential		2,264		2,435		-		2,271		37		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,103		2,208		-		2,139		33		91
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	7,369	$	7,689	$	-	$	7,592	$	96	$	291

26

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	4,701	$	4,734	$	988	$	4,701	$	64	$	234
Residential real estate:
Residential		271		285		3		271		20		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,640		2,785		274		2,708		96		50
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	7,660	$	7,864	$	1,313	$	7,729	$	185	$	290

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,718	$	5,756	$	988	$	5,797	$	73	$	300
Residential real estate:
Residential		2,535		2,720		3		2,542		57		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,743		4,993		274		4,847		129		141
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	15,029	$	15,553	$	1,313	$	15,321	$	281	$	581

27

Non-performing loans

The following table sets forth information regarding non-performing loans as of the dates specified:

	June 30, 2015			December 31, 2014
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	5,620		$	5,500
Residential real estate:
Residential		1,265			1,296
Construction		-			-
Commercial real estate:
Commercial and multi-family		2,812			3,162
Construction		-			-
Home equities		475			415
Consumer loans		17			17
Other		-			-
Total non-accruing loans	$	10,189		$	10,390
Accruing loans 90+ days past due		805			201
Total non-performing loans	$	10,994		$	10,591
Total non-performing loans
to total assets		1.21	%		1.25	%
Total non-performing loans
to total loans		1.55	%		1.52	%

28

Troubled debt restructurings

The Company had $6.7 million in loans that were restructured in a troubled debt restructuring (“TDR”) at June 30, 2015, compared with $6.6 million at December 31, 2014.  $2.1 million and $1.9 million of those balances were in non-accrual status at June 30, 2015 and December 31, 2014, respectively.  Any TDR that is placed on non-accrual is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months and future collection under the revised terms is probable.  All of the Company’s restructurings were allowed in an effort to maximize its ability to collect on loans where borrowers were experiencing financial difficulty.  The Company did not engage in any re-modifications during the three and six month periods ended June 30, 2015 and 2014.

The reserve for a TDR is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent.  This reserve methodology is used because all TDR loans are considered impaired.  As of June 30, 2015, there were no commitments to lend additional funds to debtors owing on loans whose terms have been modified in TDRs.

The following tables summarize the loans that were classified as troubled debt restructurings as of the dates indicated:

		June 30, 2015
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	816	$	641	$	175	$	196
Residential real estate:
Residential		1,815		580		1,235		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,208		667		1,541		33
Construction		1,101		-		1,101		-
Home equities		707		221		486		-
Consumer loans		30		-		30		30
Other		-		-		-		-
Total troubled restructured loans	$	6,677	$	2,109	$	4,568	$	259

29

		December 31, 2014
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	492	$	274	$	218	$	173
Residential real estate:
Residential		1,833		594		1,239		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,428		847		1,581		33
Construction		1,074		-		1,074		-
Home equities		728		233		495		-
Consumer loans		31		-		31		31
Other		-		-		-		-
Total troubled restructured loans	$	6,586	$	1,948	$	4,638	$	237

The Company’s TDRs have various agreements that involve deferral of principal payments, or interest-only payments, for a period (usually 12 months or less) to allow the customer time to improve cash flow or sell the property.  Other common types of concessions leading to the designation of a TDR are lines of credit that are termed out and extensions of maturities at rates that are less than market given the risk profile of the borrower.

30

The following table shows the data for TDR activity by type of concession granted to the borrower for the three and six month periods ended June 30, 2015 and 2014:

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial	-	-	-	-		-		-
Residential Real Estate & Construction:
Extension of maturity	-	-	-	2	$	632	$	632
Commercial Real Estate & Construction	-	-	-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-	-	-	1		20		20
Extension of maturity	-	-	-	2		65		65
Consumer loans	-	-	-	-		-		-
Other	-	-	-	-		-		-

	Six months ended June 30, 2015					Six months ended June 30, 2014
	($ in thousands)					($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial:
Deferral of principal	3	$	541	$	541	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	-		-		-	2		632		632
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-		-		-	1		20		20
Extension of maturity	-		-		-	2		65		65
Consumer loans	-		-		-	-		-		-
Other	-		-		-	-		-		-

31

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan in full.  If a borrower continues to be delinquent or cannot meet the terms of a TDR and the loan is determined to be uncollectible, the loan will be charged-off.  The following table presents loans which were classified as TDRs during the previous 12 months which defaulted during the three and six month periods ended June 30, 2015 and 2014:

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	-		-	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

	Six months ended June 30, 2015			Six months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	1		19	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

32

5. PER SHARE DATA

The common stock per share information is based upon the weighted average number of shares outstanding during each period.  For the three and six month periods ended June 30, 2015, the Company had an average of 75,354 and 76,227 dilutive shares outstanding, respectively.  The Company had an average of 81,752 and 81,475 dilutive shares outstanding for the three and six month periods ended June 30, 2014, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share.  For the three and six month periods ended June 30, 2015, there was an average of 37,800 and 38,215 anti-dilutive shares outstanding, respectively, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  There were 40,060 potentially anti-dilutive shares outstanding for the three and six month periods ended June 30, 2014.  

6. OTHER COMPREHENSIVE INCOME

The following tables summarize the changes in the components of accumulated other comprehensive income (loss) during the three and six month periods ended June 30, 2015 and 2014:

	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plans adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)
	Balance at March 31, 2014		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	552	$	428	$	980
Net defined benefit pension plans adjustments		(1,433)		19		(1,414)
Total	$	(881)	$	447	$	(434)

	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plans adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)
	Balance at December 31, 2013		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	191	$	789	$	980
Net defined benefit pension plans adjustments		(1,454)		40		(1,414)
Total	$	(1,263)	$	829	$	(434)

33

	Three months ended June 30, 2015 (in thousands)						Three months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(1,041)	$	404	$	(637)	$	699	$	(271)	$	428
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(1,041)		404		(637)		699		(271)		428
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		9		(4)		5		7		(3)		4
Amortization of actuarial loss (a)		52		(15)		37		25		(10)		15
Net change		61		(19)		42		32		(13)		19
Other Comprehensive Income (Loss)	$	(980)	$	385	$	(595)	$	731	$	(284)	$	447

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

	Six months ended June 30, 2015 (in thousands)						Six months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(500)	$	194	$	(306)	$	1,287	$	(498)	$	789
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(500)		194		(306)		1,287		(498)		789
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		15		(6)		9
Amortization of actuarial loss (a)		100		(39)		61		52		(21)		31
Net change		116		(45)		71		67		(27)		40
Other Comprehensive Income (Loss)	$	(384)	$	149	$	(235)	$	1,354	$	(525)	$	829

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

34

7. SEGMENT INFORMATION

The Company is comprised of two primary business segments, banking and insurance agency activities. The following tables set forth information regarding these segments for the three and six month periods ended June 30, 2015 and 2014.

	Three months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,677	$	(29)	$	7,648
Provision for loan and lease losses		415		-		415
Net interest income (expense) after
provision for loan and lease losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
Amortization expense		-		-		-
Non-interest expense		7,089		1,152		8,241
Income before income taxes		2,019		449		2,468
Income tax provision		616		177		793
Net income	$	1,403	$	272	$	1,675

	Three months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,711	$	(29)	$	7,682
Provision for loan and lease losses		176		-		176
Net interest income (expense) after
provision for loan and lease losses		7,535		(29)		7,506
Non-interest income		1,469		-		1,469
Insurance service and fees		146		1,440		1,586
Amortization expense		-		40		40
Non-interest expense		7,294		998		8,292
Income before income taxes		1,856		373		2,229
Income tax provision		508		142		650
Net income	$	1,348	$	231	$	1,579

35

	Six months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,286	$	(57)	$	15,229
Provision for loan and lease losses		616		-		616
Net interest income (expense) after
provision for loan and lease losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
Amortization expense		-		-		-
Non-interest expense		13,570		2,183		15,753
Income before income taxes		4,345		1,057		5,402
Income tax provision		1,410		412		1,822
Net income	$	2,935	$	645	$	3,580

	Six months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,038	$	(57)	$	14,981
Provision for loan and lease losses		328		-		328
Net interest income (expense) after
provision for loan and lease losses		14,710		(57)		14,653
Non-interest income		2,731		-		2,731
Insurance service and fees		298		3,420		3,718
Amortization expense		-		81		81
Non-interest expense		13,772		2,098		15,870
Income before income taxes		3,967		1,184		5,151
Income tax provision		1,104		455		1,559
Net income	$	2,863	$	729	$	3,592

8. CONTINGENT LIABILITIES AND COMMITMENTS

The unaudited consolidated financial statements do not reflect various commitments and contingent liabilities, which arise in the normal course of business, and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities consist of commitments to extend credit and standby letters of credit. A summary of the Bank’s commitments and contingent liabilities is as follows:

	June 30,		December 31,
	2015		2014
	(in thousands)
Commitments to extend credit	$	204,233	$	212,193
Standby letters of credit		3,749		2,430
Total	$	207,982	$	214,623

36

Commitments to extend credit and standby letters of credit include some exposure to credit loss in the event of nonperformance by the customer. The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the Company’s unaudited consolidated balance sheets. Because these instruments have fixed maturity dates, and because they may expire without being drawn upon, they do not necessarily represent cash requirements of the Bank. The Bank did not incur any losses on its commitments and did not record a reserve for its commitments during the first six months of 2015 or during 2014.

Certain lending commitments for construction residential mortgage loans are considered derivative instruments under the guidelines of GAAP.  The changes in the fair value of these commitments, due to interest rate risk, are not recorded on the consolidated balance sheets as the fair value of these derivatives is not considered material.

The Company is subject to possible litigation proceedings in the normal course of business.  On September 2, 2014 the Office of the Attorney General for the State of New York (“NYAG”) filed a formal complaint against the Company and the Bank regarding residential lending practices.  The Company accrued an estimated liability relating to the NYAG investigation totaling $1.0 million during 2014.  At June 30, 2015, a range of loss could not be determined, and management believes the $1.0 million accrual is the best estimate of probable loss.  

9. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan.  The plan covered substantially all Company employees.  The plan provides benefits that are based on the employees’ compensation and years of service.  Under the freeze, eligible employees will receive, at retirement, the benefits already earned through January 31, 2008, but have not accrued any additional benefits since then.  As a result, service cost is no longer incurred. 

The Bank uses an actuarial method of amortizing prior service cost and unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank used recognized the prior service cost and net gains or losses over the average remaining service period of active employees.

The Bank also maintains a nonqualified supplemental executive retirement plan covering certain members of the Company’s senior management. The Bank uses an actuarial method of amortizing unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank uses recognizes the net gains or losses over the average remaining service period of active employees.

The Bank contributed $165 thousand to the defined benefit pension plan in the first six months of 2015.

The following table presents the net periodic cost for the Bank’s defined benefit pension plan and supplemental executive retirement plan for the three and six month periods ended June 30, 2015 and 2014:

37

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	49	$	42
Interest cost		52		52		37		40
Expected return on plan assets		(77)		(76)		-		-
Amortization of prior service cost		-		-		9		7
Amortization of the net loss		18		4		34		21
Net periodic cost (benefit)	$	(7)	$	(20)	$	129	$	110

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	97	$	84
Interest cost		103		103		74		80
Expected return on plan assets		(154)		(153)		-		-
Amortization of prior service cost		-		-		16		15
Amortization of the net loss		35		10		65		42
Net periodic cost (benefit)	$	(16)	$	(40)	$	252	$	221

38

10.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2014-04, Reclassification of Collateralized Mortgage Loans upon a Troubled Debt Restructuring.  The objective of this proposed ASU is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, such that all or a portion of the loan should be derecognized and the real estate property recognized.  The main provisions would also require additional disclosures regarding the amount of foreclosed residential real estate property held by the creditor and the recorded investments of consumer mortgage loans that are in the process of foreclosure at each interim and annual reporting period.  This ASU became effective for the Company in fiscal years and interim periods within those years, beginning after December 15, 2014.  The Company has adopted this guidance for the reporting periods after December 15, 2014.  The adoption did not have a material impact on its financial statements.

ASU 2014-09, Revenue from Contracts with Customers.  The objective of this proposed ASU is to require entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  This ASU will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  Early application is not permitted.  The standard allows an entity to apply the amendments in the ASU using either the retrospective or cumulative effect transition method.  The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties.  When used in this report, or in the documents incorporated by reference herein, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” and similar expressions identify such forward-looking statements.  These forward-looking statements include statements regarding the Company’s business plans, prospects, growth and operating strategies, statements regarding the asset quality of the Company’s loan and investment portfolios, and estimates of the Company’s risks and future costs and benefits.

These forward-looking statements are based largely on the expectations of the Company’s management and are subject to a number of risks and uncertainties, including but not limited to: general economic conditions, either nationally or in the Company’s market areas, that are worse than expected; increased competition among depository or other financial institutions; inflation and changes in the interest rate environment that reduce the Company’s margins or reduce the fair value of financial instruments; changes in laws or government regulations affecting financial institutions, including changes in regulatory fees, monetary policy, and capital requirements; the Company’s ability to enter new markets successfully and capitalize on growth opportunities; the Company’s ability to successfully integrate acquired entities; changes in accounting pronouncements and practices, as adopted by financial institution regulatory agencies, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board; changes in consumer spending, borrowing and saving habits; changes in the Company’s organization, compensation and benefit plans; and other factors discussed elsewhere in this Quarterly Report on Form 10-Q, as well as in the Company’s periodic reports filed with the SEC, in particular the “Risk Factors” discussed in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.  Many of these factors are beyond the Company’s control and are difficult to predict.

Because of these and other uncertainties, the Company’s actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein.  Forward-looking statements speak only as of the date they are made.  The Company undertakes no obligation to publicly update or revise forward-looking information, whether as a result of new, updated information, future events or otherwise.

APPLICATION OF CRITICAL ACCOUNTING ESTIMATES

The Company’s Unaudited Consolidated Financial Statements included in this Quarterly Report on Form 10-Q are prepared in accordance with U.S. GAAP and follow general practices within the industries in which it operates.  Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the Company’s Unaudited Consolidated Financial Statements and Notes.  These estimates, assumptions, and judgments are based on information available as of the date of the Unaudited Consolidated Financial Statements.  Accordingly, as this information changes, the Unaudited Consolidated Financial Statements could reflect different estimates, assumptions, and judgments.  Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments, and as such, have a greater possibility of producing results that could be materially different than originally reported.  Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event.  Carrying assets and liabilities at fair value inherently results in more financial statement volatility.  The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available.  When third-party information is not available, valuation adjustments are estimated in good faith by management primarily through the use of internal cash flow modeling techniques.  Refer to Note 3 – “Fair Value Measurements” to the Company’s Unaudited Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for further detail on fair value measurement.

Significant accounting policies followed by the Company are presented in Note 1 – “Organization and Summary of Significant Accounting Policies” to the Audited Consolidated Financial Statements included in Item 8 in its Annual Report on Form 10-K for the year ended December 31, 2014.  These policies, along with the disclosures presented in the other Notes to the Company's Audited Consolidated Financial Statements contained in its Annual Report on Form 10-K and in this financial review, provide information on how significant assets and liabilities are presented in the Company’s Unaudited Consolidated Financial Statements and how those values are determined.

Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan losses and valuation of goodwill to be the accounting areas that require the most subjective or complex judgments, and, as such, could be most subject to revision as new information becomes available.

40

Allowance for Loan Losses

The allowance for loan losses represents management’s estimate of probable losses in the Company’s loan portfolio.  Determining the amount of the allowance for loan losses is considered a critical accounting estimate because it requires significant judgment on the part of management and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of current economic trends and conditions, all of which may be susceptible to significant change.  The loan portfolio also represents the largest asset type on the Company’s Unaudited Consolidated Balance Sheets.  Note 1 to the Audited Consolidated Financial Statements included in Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 describes the methodology used to determine the allowance for loan losses.

Goodwill

The amount of goodwill reflected in the Company’s Unaudited Consolidated Financial Statements is required to be tested by management for impairment on at least an annual basis.  The test for impairment of goodwill on the identified reporting unit is considered a critical accounting estimate because it requires judgment on the part of management and the use of estimates related to the growth assumptions and market multiples used in the valuation model.  The goodwill impairment testing is performed annually as of December 31st.  No impairment charges were incurred in the most recent test and the fair value of the tested reporting unit substantially exceeded its fair value.  There were no triggering events in the six month period ended June 30, 2015 that resulted in an interim impairment test.

ANALYSIS OF FINANCIAL CONDITION

Loan Activity

Total loans grew to $710.8 million at June 30, 2015, a $9.1 million, or 1.3%, increase from total loans of $701.7 million at March 31, 2015, and a $15.2 million, or 2.2%, increase from total loans of $695.7 million at December 31, 2014.

Loans secured by real estate were $577.5 million at June 30, 2015, reflecting a $10.6 million, or 1.9%, increase from $566.9 million at March 31, 2015, and a $14.2 million, or 2.5%, increase from $563.2 million at December 31, 2014.  The Company’s commercial real estate portfolio, which has historically been the fastest growing part of the real estate portfolio, grew to $373.9 million, a $7.2 million, or 2.0%, increase from $366.7 million at March 31, 2015, while the Company’s residential real estate loan portfolio decreased $2.3 million, or 2.3%, to $98.3 million from $100.5 million over that same period.  Commercial construction loans grew to $45.2 million at June 30, 2015, a $5.5 million, or 13.9%, increase from $39.7 million at March 31, 2015.  The balances of the home equity and residential construction loan portfolios of $59.4 million and $0.7 million, respectively, remained relatively flat when compared to the prior quarter.

The Bank sells certain fixed rate residential mortgages to FNMA, while maintaining the servicing rights for those mortgages.  In the three month period ended June 30, 2015, the Bank sold mortgages to FNMA totaling $7.1 million, compared with $2.6 million in residential mortgages sold during the first three months of 2015.  At June 30, 2015, the Bank had a loan servicing portfolio principal balance of $77.3 million upon which it earns servicing fees, compared with $72.2 at March 31, 2015 and $71.6 million at December 31, 2014.  The value of the mortgage servicing rights for that portfolio was $0.6 million at June 30, 2015 and $0.5 million at both March 31, 2015 and December 31, 2014.  At June 30, 2015, there were $1.0 million in residential mortgage loans held-for-sale, compared with $2.8 million and $0.4 million in residential mortgage loans held-for-sale at March 31, 2015 and December 31, 2014, respectively.  The Company had no commercial loans held-for-sale at June 30, 2015, March 31, 2015, or December 31, 2014.  The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.  Additionally, in the second quarter of 2015, residential mortgage originations of $10.4 million were $3.9 million, or 60.1%, higher than the first quarter of 2015.  Residential mortgages sold in the second quarter of 2015 equated to approximately 68.3% of the residential mortgages originated by the Company during this quarter, as compared with 40.5% and 43.5% of residential mortgages originated during the first quarter of 2015 and the second quarter of 2014, respectively.

The Company’s commercial and industrial (“C&I”) lending has been a focus for growth opportunities, as a way to diversify its overall loan portfolio.  In the second quarter of 2015, C&I balances decreased $2.6 million, or 2.0%, from $132.4 million at March 31, 2015, but increased slightly by  $0.3 million, or 0.3%, from $129.5 million at December 31, 2014.

41

Credit Quality of Loan Portfolio

Total non-performing loans, defined as accruing loans greater than 90 days past due and non-accrual loans, totaled $11.0 million, or 1.55% of total loans outstanding, as of June 30, 2015, compared with $11.8 million, or 1.68% of total loans outstanding, as of March 31, 2015, and $10.6 million, or 1.52% of total loans outstanding at December 31, 2014.  The $0.4 million increase in non-performing loans as compared toDecember 31, 2014 was due to an increase inthe balance of accruing loans 90 days past due, while the decrease from the prior quarter-end was driven by significant commercial loan pay-downs and smaller balances charged off.

Commercial credits graded as “special mention” and “substandard” were $45.8 million at June 30, 2015, an increase of  $8.9 million, or 24.2%, from $36.9 million at March 31, 2015 and $16.9 million, or 58.2%, from $29.0 million at December 31, 2014 as a result of credit downgrades during the first six months of 2015.  As noted in Note 4 to the Company’s Unaudited Financial Statements included in Part I of this Quarterly Report on Form 10-Q, internal risk ratings are the credit quality indicators used by the Company’s management to determine the appropriate allowance for loan losses for commercial credits.  “Special mention” and “substandard” loans are weaker credits with a higher risk of loss categorized as “criticized” credits rather than “pass” or “watch” credits.

The allowance for loan losses totaled $13.1 million, or 1.84% of total loans outstanding as of June 30, 2015, compared with $12.8 million, or 1.82% of total loans outstanding at March 31, 2015 and $12.5 million, or 1.80% of total loans outstanding as of December 31, 2014.  The $0.3 million increase in the allowance during the second quarter of 2015 compared with the second quarter of 2014 was driven primarily by a $14.7 million increase in commercial credits graded as “special mention” and “substandard” during the quarter.  The net charge-off ratio in the second quarter of 2015was0.05% of average net loans, compared with a ratio of 0% in the fourth quarter of 2014 and 0.24% in the second quarter of 2014.

The coverage ratio of the allowance for loan losses to non-performing loans was 119.2% at June 30, 2015, compared with 108.3% at March 31, 2015 and 118.3% at December 31, 2014.  The second quarter coverage ratio increased from the prior quarter due to a $0.9 million, or 8.1%, decrease in total non-accrual loans.

Investing Activities

Total securities were $106.7 million at June 30, 2015, compared with $100.0 million at March 31, 2015 and $97.1 million at December 31, 2014.  Interest-bearing deposits at other banks of $34.2 million, which consist of overnight funds kept at correspondent banks and the Federal Reserve, decreased from $46.0 million at March 31, 2015 but increased from $2.1 million at December 31, 2014.  Interest-bearing deposits at other banks had increased during the first quarter of 2015 due to an  increase in the Company’s total deposits, driven primarily by increases in regular savings, demand deposits, and NOW accounts. The decrease in interest-bearing deposits at other banks in the second quarter of 2015 was due to purchases of investment securities, which increased 6.7% during the second quarter of 2015.  Securities and interest-bearing deposits at correspondent banks made up 18.3% of the Bank’s total average interest earning assets in the second quarter of 2015, compared with 13.6% in the first quarter of 2015 and 13.3% in the fourth quarter of 2014.

The Company’s highest concentration in its securities portfolio was in available for sale U.S. government sponsored mortgage-backed securities at 39.2% of the total investment securities at June 30, 2015, compared with 39.6% at March 31, 2015 and 38.9% at December 31, 2014.  The concentration in tax-advantaged debt securities issued by state and political subdivisions and U.S. government-sponsored agency bonds was 36.8% and 22.6%, respectively, of the total securities portfolio at June 30, 2015, compared with 31.9% and 26.9% at March 31, 2015 and 27.5% and 32.0% at December 31, 2014.

Management believes that the credit quality of the securities portfolio as a whole is strong, as the portfolio has no individual securities in a significant unrealized loss position.  Although interest rates have remained low, rates have increased since the end ofthe first quarter of 2015, resulting in a decrease in the in the net unrealized gain position of the available-for-sale investment portfolio to $1.0 million at June 30, 2015 from $2.0 million at March 31, 2015 and $1.5 million at December 31, 2014.

The Company monitors extension and prepayment risk in the securities portfolio to limit potential exposures.  Available-for-sale securities with a total fair value of $68.6 million at June 30, 2015, compared with $85.6 million at March 31, 2015 and $68.8 million at December 31, 2014, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.  The Company has no direct exposure to subprime mortgages, nor does the Company hold private mortgage-backed securities, credit default swaps, or FNMA or FHLMC preferred stock investments in its investment portfolio.

42

Funding Activities

Total deposits at June 30, 2015 were $774.2 million, a $6.2 million, or 0.8%, decrease from $780.4 million at March 30, 2015,  but an increase of $66.5 million, or 9.4%, when compared with total deposits of $707.6 million at December 31, 2014.  The growth in the Company’s total deposits from December 31, 2014 was due mainly to increases in savings deposits,NOW accounts,and demand deposits.In the first quarter the Bank introduced a new money market account that has been successful in acquiring new customer deposit relationships and providing cross sell opportunities. This product continued to have success in the second quarter of 2015, as it contributed to the $15.2 million growth in regular savings deposits compared with March 31, 2015. However, the decrease in total deposits, in the second quarter of 2015, was primarily a result of the decrease in time deposits of $11.6 million, or 10.4%, from $111.1 million at March 31, 2015, and $13.3 million, or 9.4%, from $112.8 million at December 31, 2014. The decrease in time deposits, during the second quarter of 2015, was mostly the result of roll off from a  3.0 % five year certificate of depositpromotion originated in 2010.  The roll off of the time deposits was partly responsible in reducing the cost of funds on time deposits during the second quarter to 1.42% compared to first quarter 2015 of 1.55%.

As of June 30, 2015, the Company had $10.0 million other borrowings, which include the Bank’s overnight line of credit and other advances with the FHLBNY, compared with no other borrowings at March 31, 2015 and $13.7 million at December 31, 2014.  The Company took advantage of a drop in longer term interest rates during the second quarter of 2015 and borrowed $10 million at a five year term.  

43

ANALYSIS OF RESULTS OF OPERATIONS

Average Balance Sheet

The following tables present the significant categories of the assets and liabilities of the Company, interest income and interest expense, and the corresponding yields earned and rates paid for the periods indicated.  The assets and liabilities are presented as daily averages.  The average loan balances include both performing and non-performing loans. Investments are included at amortized cost. Yields are presented on a non-tax-equivalent basis.

	Three months ended June 30, 2015						Three months ended June 30, 2014
	Average		Interest				Average		Interest
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate
	(dollars in thousands)						(dollars in thousands)
ASSETS
Interest-earning assets:
Loans, net	$	691,608	$	7,934	4.59	%	$	647,169	$	7,879	4.87	%
Taxable securities		68,568		429	2.50	%		72,330		455	2.52	%
Tax-exempt securities		35,073		240	2.74	%		33,050		243	2.94	%
Interest bearing deposits at banks		51,094		33	0.26	%		18,625		15	0.32	%
Total interest-earning assets		846,343	$	8,636	4.08	%		771,174	$	8,592	4.46	%
Non interest-earning assets:
Cash and due from banks		12,365						14,192
Premises and equipment, net		10,146						11,047
Other assets		41,885						39,705
Total Assets	$	910,739					$	836,118
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	78,979	$	84	0.43	%	$	73,873	$	82	0.44	%
Regular savings		430,930		404	0.38	%		383,875		253	0.26	%
Time deposits		105,051		372	1.42	%		108,699		422	1.55	%
Other borrowed funds		9,444		41	1.74	%		7,645		68	3.56	%
Junior subordinated debentures		11,330		82	2.89	%		11,330		79	2.79	%
Securities sold U/A to repurchase		10,759		5	0.19	%		13,435		6	0.18	%
Total interest-bearing liabilities		646,493	$	988	0.61	%		598,857	$	910	0.61	%
Noninterest-bearing liabilities:
Demand deposits		162,632						145,018
Other		13,665						10,101
Total liabilities	$	822,790					$	753,976
Stockholders' equity		87,949						82,142
Total Liabilities and Equity	$	910,739					$	836,118
Net interest earnings			$	7,648					$	7,682
Net interest margin					3.61	%					3.98	%
Interest rate spread					3.47	%					3.85	%

44

	Six months ended June 30, 2015						Six months ended June 30, 2014
	Average		Interest				Average		Interest
	Outstanding		Earned/		Yield/		Outstanding		Earned/		Yield/
	Balance		Paid		Rate		Balance		Paid		Rate
	(dollars in thousands)						(dollars in thousands)
ASSETS
Interest-earning assets:
Loans, net	$	687,139	$	15,746	4.58	%	$	644,229	$	15,389	4.78	%
Taxable securities		68,468		835	2.44	%		71,176		904	2.54	%
Tax-exempt securities		33,799		477	2.82	%		33,273		488	2.93	%
Interest bearing deposits at banks		28,998		34	0.23	%		22,400		31	0.28	%
Total interest-earning assets		818,404	$	17,092	4.18	%		771,078	$	16,812	4.36	%
Non interest-earning assets:
Cash and due from banks		11,924						14,555
Premises and equipment, net		10,155						11,128
Other assets		42,304						39,747
Total Assets	$	882,787					$	836,508
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	78,026	$	163	0.42	%	$	72,532	$	157	0.43	%
Regular savings		400,648		673	0.34	%		386,373		518	0.27	%
Time deposits		108,615		807	1.49	%		109,122		837	1.53	%
Other borrowed funds		9,304		49	1.05	%		8,320		147	3.53	%
Junior subordinated debentures		11,330		160	2.82	%		11,330		159	2.81	%
Securities sold U/A to repurchase		12,053		11	0.18	%		14,154		13	0.18	%
Total interest-bearing liabilities		619,976	$	1,863	0.60	%		601,831	$	1,831	0.61	%
Noninterest-bearing liabilities:
Demand deposits		161,013						142,274
Other		14,222						11,090
Total liabilities	$	795,211					$	755,195
Stockholders' equity		87,576						81,313
Total Liabilities and Equity	$	882,787					$	836,508
Net interest earnings			$	15,229					$	14,981
Net interest margin					3.72	%					3.89	%
Interest rate spread					3.58	%					3.75	%

45

Net Income

Net income was $1.7 million, or $0.39 per diluted share, in the second quarter of 2015 compared with  $1.6 million, or $0.37 per diluted share, in the second quarter of 2014.  The Company’s results are flat compared with the second quarter of 2014, when $1.0 million in litigation expense was incurred, due to planned investments in people and systems that support the Company’s growth strategy.  These strategic investments have resulted in an increase in loans from the prior year period and trailing quarter, which had a positive impact in offsetting margin compression in the challenging interest rate environment.

For the six months ended June 30, 2015, the Company recorded net income of $3.6 million, or $0.83 per diluted share, flat when compared to net income of $3.6 million, or $0.84 per diluted share, in the same period in 2014, which included the litigation expense referred to above.

Other Results of Operations – Quarterly Comparison

Net interest income was $7.6 million in the second quarter, consistent with the prior-year period and the trailing first quarter.  Strong commercial loan growth helped offset the impact of the declining net interest margin.

Net interest margin of 3.61% decreased 37 basis points from the 2014 second quarter rate of 3.98%, and was impacted by two major items. The current competitive and interest rate environments have negatively impacted pricing on the Company’s loans which is evident in a 28 basis points decline in yield compared with the prior year second quarter. Additionally, as a result of a successful introduction of a new money market account, the bank gathered the funds into lower yielding interest bearing deposit at banks, which the Bank intends to deploy into loans in future quarters.   When compared with the trailing first quarter rate of 3.84%, second quarter net interest margin was down 23 basis points, mostly due to the increased level of interest bearing deposits at banks.

The provision for loan losses was $415 thousand in the 2015 second quarter, up from $176 thousand in the prior-year period and up from $201 thousand in the trailing first quarter of 2015.  The provision increases from bothperiods in comparison to the second quarter 2015 was due to an increase in commercial loans classified as criticized assets.

Non-interest incomewas $3.5 million, or 31.2% of total revenue, in the quarter, up $0.4 million, or 13.8%, from the prior-year period.  Insurance agency revenue of $1.8 million was up $0.2 million, or 14.8%, from the 2014 second quarter, due mostly to a high level of claims adjustor fees earned for services provided to assess damages of local properties impacted by the severe winter. Compared with the trailing first quarter of 2015, total non-interest income increased by $0.4 million due mainly to increases in commercial loan fees, mortgage servicing rights income, and data center income.

Total non-interest expense was $8.2 million in the second quarter, a decrease of 1.1% from the prior-year period.  The prior-year period included a $1.0 million litigation expense related to the NYS Attorney General's allegations regarding the Bank’s residential mortgage fair lending practices. Personnel expenses, the largest expense category for the Company, were up $0.5 million, or 11.0%, from last year’s second quarter, and reflect annual merit increases and personnel hires to support the Company’s growth strategy. 

Compared with the trailing first quarter of 2015, total non-interest expense was up $0.7 million, or 9.7%. The increase was a result of increases in salaries, professional services, and other expenses.  Salaries increased as a result of hiring to support the continued growth of the Company. The professional services increase is related to both continued dialogue with the NYS Attorney General and consulting fees associated with the Company’s core banking system conversion. The Company incurred expenses related to the successful loan growth in second quarter, which was reflected in an increase in other expenses.

Income tax expense for the quarter was $0.8 million, representing an effective tax rate of 32.1% compared with an effective tax rate of 29.2% in the second quarter of 2014.  The increase was due to a lower expected percentage of tax exempt income to total income for 2015, compared with the expectation in last year’s second quarter for the full year 2014 period.

Other Results of Operations – Year-to-Date Comparison

Net interest income was $15.2 million for the first six months of 2015, up $0.2 million or 1.7% from the first six months of 2014.  The increase in net interest income from prior year-to-date net interest income is attributed to a 2.3% increase in interest income on loans, driven by the growth in average loans of 6.7% or $42.9 million.

46

The Company’s net interest margin decreased by 17 basis points to 3.72% in the first six months of 2015, compared with 3.89% in the first six months of 2014.  The Company’s average interest-earning assets increased by 6.1% when compared to the same period in the prior year, however yields on those assets decreased 18 basis points when compared with the prior year period.  As described above, the Company’s declining yield on interest-earning assets has been negatively impacted by the current competitive and interest rate environments.  

Provision for loan losses of $0.6 million increased $0.3 million in the first six months of 2015 when compared with the first six months of 2014.  The year-over-year increase is attributed to a $14.7 million, or 47.1%, increase in criticized commercial loans since June 30, 2014. 

Non-interest income for the first six months of 2015 increased $0.1 million or 1.4% from the prior year period to $6.5 million, representing 30.0% of total revenue for the first six months of 2015 compared with 30.1% of total revenue for the first six months of 2014.  Other non-interest income increased $0.3 million, or 27.5%, in the first six months of 2015 when compared with the first six months of 2014 driven by an increase loan fees and revenue related to the Company’s mortgage servicing rights.  Revenue recognized for the Company’s premiums on loans to FNMA increased 102.5% in the first six months of 2015 compared to the first six months of 2014, as a result of the Company selling more loans to FNMA in 2015 as compared with the prior year period.  Data center income and bank charges decreased 55.6% and 11.4%, respectively, in the first six months of 2015, compared with the prior year period.  Insurance service and fees decreased 1.8% in the first six months of 2015 compared with the first six months of 2014, driven by a $0.2 million decrease in profit-sharing income when compared with the prior year period. 

Total non-interest expense decreased $0.2 million, or 1.2%, in the first six months of 2015 from the first six months of 2014, mostly due to a $1.0 million litigation expense recorded in the second quarter of 2014.  The litigation expense recognized in 2014 was mostly offset by a $0.6 million increase in salaries and employee benefits expense and a $0.2 million increase professional services expense during the first six months of 2015.  The year-over-year increase in salary and benefits expense reflects annual merit increases and personnel hires to support the Company’s growth strategy. 

The Company’s efficiency ratio for the first six months of 2015 improved to 72.36% compared with 74.06% compared with during the prior-year period, which was mostly due to the $1.0 million litigation expense incurred in 2014. 

Income tax expense for the first six months ended June 30, 2015, was $1.8 million, representing an effective tax rate of 33.7%, compared with an effective tax rate of 30.3% in the prior year period.  The effective tax rate increased a lower expected percentage of tax exempt income to total income in the first six months of 2015, as compared with the first six months of 2014.

CAPITAL

The Company consistently maintains regulatory capital ratios significantly above the federal “well capitalized” standard, including a Tier 1 leverage ratio of 10.23% and10.84% at June 30, 2015 and December 31, 2014, respectively.  New minimum capital ratios, known as “Basel III”, became effective for the Company and the Bank on January 1, 2015 and will be fullyphased-in on January 1, 2019.  As of June 30, 2015, the Company and the Bank met all applicable capital adequacy requirements under the Basel III capital rules.

Book value per share of the Company’s common stock was $20.80 at June 30, 2015, compared with $20.41 at December 31, 2014.  Tangible book value per share (a non-GAAP measure) at June 30, 2015 was $18.89, compared with $18.48 at December 31, 2014.

47

Tangible book value per share is a non-GAAP financial measure.  The Company calculates tangible book value per share by dividing tangible book value by the number of common shares outstanding, as compared to GAAP book value per share, which the Company calculates by dividing GAAP book value by the number of common shares outstanding.  Management believes that this information is consistent with treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.  Accordingly, management believes that this non-GAAP financial measure provides information that is important to investors and that is useful in understanding the Company’s capital position and ratios.  Further, management believes that presentation of this measure, together with the accompanying reconciliation, provides a complete understanding of factors and trends affecting the Company’s business and allows investors to view the Company’s performance in a manner similar to management, the financial services industry, bank stock analysts and regulatory agencies.  However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP financial measures.  Note that other companies may use different calculations for this measure, and, therefore, the Company’s presentation of tangible book value per share may not be comparable to similarly titled measures reported by other companies.  Investors should review the Company’s consolidated financial statements in their entirety and should not rely on any single financial measure.

A reconciliation of this non-GAAP financial measure, tangible book value per share, to the most directly comparable GAAP financial measure, book value, is set forth in the following table:

($ in thousands, except per share data)	June 30, 2015		December 31, 2014
Stockholders' equity ("book value")	$	88,195	$	85,788
Goodwill (related to insurance agency reporting unit)		(8,101)		(8,101)
Intangible assets  (related to insurance agency reporting unit)		-		-
Tangible book value (non-GAAP)	$	80,094	$	77,687
Number of common shares outstanding		4,239,929		4,203,684
Tangible book value per share	$	18.89	$	18.48

On February 17, 2015, the Company declared a cash dividend of $0.36 per share on the Company’s outstanding common stock. The dividend was paid on April 7, 2015 to shareholders of record as of March 17, 2015.

LIQUIDITY

The Bank utilizes cash flows from the investment portfolio and federal funds sold balances to manage the liquidity requirements related to loan demand and deposit fluctuations.  The Bank also has many borrowing options. As a member of the FHLB, the Bank is able to borrow funds at competitive rates.  Advances of up to $186.5 million can be drawn on the FHLB via an Overnight Line of Credit Agreement between the Bank and the FHLB.  An amount equal to 25% of the Bank’s total assets could be borrowed through the advance programs under certain qualifying circumstances.  The Bank also has the ability to purchase up to $14.0 million in federal funds from its correspondent banks.  By placing sufficient collateral in safekeeping at the Federal Reserve Bank, the Bank could borrow at the discount window.  The Bank’s liquidity needs also can be met by more aggressively pursuing time deposits, or accessing the brokered time deposit market, including the Certificate of Deposit Account Registry Service (“CDARS”) network.  The Company’s primary source of liquidity is dividends from the Bank.  Additionally, the Company has access to capital markets as a funding source.

Cash flows from the Bank’s investment portfolio are laddered, so that securities mature at regular intervals, to provide funds from principal and interest payments at various times as liquidity needs may arise. Contractual maturities are also laddered, with consideration as to the volatility of market prices.  At June 30, 2015, approximately 2.9% of the Bank’s securities had contractual maturity dates of one year or less and approximately 30.2% had maturity dates of five years or less.

48

Management, on an ongoing basis, closely monitors the Company’s liquidity position for compliance with internal policies, and believes that available sources of liquidity are adequate to meet funding needs in the normal course of business.  As part of that monitoring process, management calculates the 90-day liquidity each month by analyzing the cash needs of the Bank.  Included in the calculation are liquid assets and potential liabilities.  Management stresses the potential liabilities calculation to ensure a strong liquidity position.  Included in the calculation are assumptions of some significant deposit run-off as well as funds needed for loan closings and investment purchases. At June 30, 2015, in the Company’s internal stress test, the Company had net short-term liquidity of $214.5 million as compared with $214.6 million at December 31, 2014, due to the usage of cash for loan growth.  Available assets of $147.7 million, divided by public and purchased funds of $119.8 million, resulted in a long-term liquidity ratio of 123% at June 30, 2015, compared with 88% at December 31, 2014.

Management does not anticipate engaging in any activities, either currently or in the long term, for which adequate funding would not be available and which would therefore result in significant pressure on liquidity.

The Company believes that the Bank maintains a sufficient level of U.S. government and government agency securities and New York State municipal bonds that can be pledged as collateral for municipal deposits.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Additional information responsive to this Item is contained in the Liquidity section of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which information is incorporated herein by reference.

Market risk is the risk of loss from adverse changes in market prices and/or interest rates of the Bank’s financial instruments. The primary market risk that the Company is exposed to is interest rate risk. The core banking activities of lending and deposit-taking expose the Bank to interest rate risk, which occurs when assets and liabilities reprice at different times and by different amounts as interest rates change. As a result, net interest income earned by the Bank is subject to the effects of changing interest rates. The Bank measures interest rate risk by calculating the variability of net interest income in future periods under various interest rate scenarios using projected balances for interest-earning assets and interest-bearing liabilities. Management’s philosophy toward interest rate risk management is to limit the variability of net interest income to changes in net interest rates. The balances of financial instruments used in the projections are based on expected growth from forecasted business opportunities, anticipated prepayments of loans, and expected maturities of investment securities, loans, and deposits. Management supplements the modeling technique described above with analysis of market values of the Bank’s financial instruments and changes to such market values given changes in the interest rates.

The Bank’s Asset-Liability Committee, which includes members of senior management, monitors the Bank’s interest rate sensitivity with the aid of a model that considers the impact of ongoing lending and deposit taking activities, as well as interrelationships in the magnitude and timing of the repricing of financial instruments, including the effect of changing interest rates on expected prepayments and maturities. When deemed prudent, management has taken actions, and intends to do so in the future, to mitigate exposure to interest rate risk through the use of on- or off-balance sheet financial instruments. Possible actions include, but are not limited to, changing the pricing of loan and deposit products, and modifying the composition of interest-earning assets and interest-bearing liabilities, and reliance on other financial instruments used for interest rate risk management purposes.

49

The following table demonstrates the possible impact of changes in interest rates on the Bank’s net interest income over a 12-month period of time:

SENSITIVITY OF NET INTEREST INCOME TO CHANGES IN INTEREST RATES

	Calculated increase
	in projected annual net interest income
	(in thousands)
		June 30, 2015		December 31, 2014
Changes in interest rates
+200 basis points	$	132	$	531
+100 basis points		662		1,149
-100 basis points		NM		NM
-200 basis points		NM		NM

Many assumptions were utilized by management to calculate the impact that changes in interest rates may have on the Bank’s net interest income. The more significant assumptions related to the rate of prepayments of mortgage-related assets, loan and deposit volumes and pricing, and deposit maturities. The Bank assumed immediate changes in rates including 200 basis point rate changes. In the event that the 200 basis point rate changes cannot be achieved, the applicable rate changes are limited to lesser amounts such that interest rates cannot be less than zero. These assumptions are inherently uncertain and, as a result, the Bank cannot precisely predict the impact of changes in interest rates on net interest income. Actual results may differ significantly due to the timing, magnitude, and frequency of interest rate changes in market conditions and interest rate differentials (spreads) between maturity/repricing categories, as well as any actions such as those previously described, which management may take to counter such changes. In light of the uncertainties and assumptions associated with the process, the amounts presented in the table and changes in such amounts are not considered significant to the Bank’s projected net interest income.

ITEM 4 - CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2015 (the end of the period covered by this Report).  Based on that evaluation, the Company’s principal executive and principal financial officers concluded that as of June 30, 2015 the Company’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in the Company’s internal control over financial reporting were identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the fiscal quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

50

PART II - OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

The nature of the Company’s business generates a certain amount of litigation involving matters arising in the ordinary course of business.

In the opinion of management, there are no other proceedings which have not been previously disclosed to which the Company is a party or to which its property is subject, which, if determined adversely, would have a material effect on the Company’s results of operations or financial condition.

51

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

In March 2013, the Company announced it had been authorized by its Board of Directors to purchase up to 100,000 shares of the Company’s outstanding common stock.  In the second quarter of 2015, the Company purchased shares of its common stock as follows:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
April 2015:
April 1, 2015 - April 30, 2015		3,979	$	24.50	-	25,771
May 2015:
May 1, 2015 - May 31, 2015		2,000	$	24.64	2,000	23,771
June 2015:
June 1, 2015 - June 30, 2015		2,379	$	24.64	-	23,771
Total:		8,358	$	24.57	-	23,771

(1) 6,358 of the total shares purchased in the period consist of shares constructively tendered to the Company by attestation in satisfaction of the exercise price due upon exercise of options issued pursuant to the Company’s 2009 Long-Term Incentive Plan.  The “average price paid per share” reported in the table above, with respect to such shares, reflects the cost basis of the Company’s treasury shares and the fair market value of the Company’s common stock on the purchase date, which was the cost paid by the Company upon acquisition of treasury shares and the closing sales price of the Company’s common stock as reported on the NYSE MKT on that date, respectively. 

(2) On March 25, 2013, the Board of Directors authorized the Company to repurchase up to 100,000 shares of the Company’s common stock.  The repurchase program has no fixed expiration date but may be suspended or discontinued at any time.  The maximum number of shares that may be purchased under this program as of June 30, 2015 was 23,771.

52

ITEM 6 – EXHIBITS

The information called for by this item is incorporated herein by reference to the Exhibit Index included immediately following the signature page to this Quarterly Report on Form 10-Q.

53

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.

Evans Bancorp, Inc.

DATE

August 3, 2015

/s/ David J. Nasca

David J. Nasca

President and CEO

(Principal Executive Officer)

DATE

August 3, 2015

/s/ Gary A. Kajtoch

Gary A. Kajtoch

Treasurer

(Principal Financial Officer)

54

EXHIBIT INDEX

Exhibit No.	Name
3.2	Evans Bancorp, Inc.'s Amended and Restated Bylaws, effective
	as of May 19, 2015 (incorporated by reference to Exhibit 3.2
	to the Company's Current Report on Form 8-K filed May 26, 2015)
31.1	Certification of Principal Executive Officer pursuant to
	Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Principal Financial Officer pursuant to
	Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18
	USC Section 1350 Chapter 63 of Title 18, United States Code,
	as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
	of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18
	USC Section 1350 Chapter 63 of Title 18, United States Code,
	as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
	of 2002.
101	The following materials from Evans Bancorp, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets – June 30, 2015 and December 31, 2014; (ii) Unaudited Consolidated Statements of Income – Three months ended June 30, 2015 and 2014; (iii) Unaudited Consolidated Statements of Income - Six months ended June 30, 2015 and 2014( iv) Unaudited Statements of Consolidated Comprehensive Income – Three months ended June 30, 2015 and 2014; (v) Unaudited Statements of Consolidated Comprehensive Income - Six months ended June 30, 2015 and 2014 (vi) Unaudited Consolidated Statements of Stockholder’s Equity – Six months ended June 30, 2015 and 2014; (vii) Unaudited Consolidated Statements of Cash Flows – Six months ended June 30, 2015 and 2014; and (viii) Notes to Unaudited Consolidated Financial Statements.

55

EX-31.1

Exhibit 31.1

Certification

I, David J. Nasca, certify that:

1. I have reviewed this report on Form 10-Q of Evans Bancorp, Inc.;

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

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

4.The registrant's other certifying officer(s) 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 bedesigned 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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: August3, 2015

/s/ David J. Nasca

David J. Nasca

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification

I, Gary A. Kajtoch, certify that:

1. I have reviewed this report on Form 10-Q of Evans Bancorp, Inc.;

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

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

4. The registrant's other certifying officer(s) 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (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: August3, 2015

/s/ Gary A. Kajtoch

Gary A. Kajtoch

Treasurer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICERS

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, David J. Nasca, the President and Chief Executive Officer of Evans Bancorp, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) the Quarterly Report of Evans Bancorp, Inc. on Form 10-Q for the fiscal quarter ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and (2) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans Bancorp, Inc. 

Date: August 3, 2015

By:	/s/ David J. Nasca
Name:	David J. Nasca
Title:	President and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE AND FINANCIAL OFFICERS

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary A. Kajtoch, the Treasurer of Evans Bancorp, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1) the Quarterly Report of Evans Bancorp, Inc. on Form 10-Q for the fiscal quarter ended June 30, 2015 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and (2) the information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Evans Bancorp, Inc. 

Date: August 3, 2015

By:	/s/ Gary A. Kajtoch
Name:	Gary A. Kajtoch
Title:	Treasurer
	(Principal Financial Officer)

XML

Loans And The Allowance For Loan Losses (Data, At The Class Level, Of Credit Quality Indicators Of Certain Loans And Leases) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	$ 710,158	$ 694,905
Commercial Real Estate: Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	45,232	40,986
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	37,357	29,421
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	2,669	10,492
Commercial Real Estate: Construction [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	5,206	1,073
Commercial Real Estate: Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	373,891	363,252
Commercial Real Estate: Commercial [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	311,618	299,798
Commercial Real Estate: Commercial [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	40,588	50,691
Commercial Real Estate: Commercial [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	15,720	7,853
Commercial Real Estate: Commercial [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	5,965	4,757
Commercial Real Estate: Commercial [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans		153
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	129,812	129,456
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	77,168	83,789
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	33,611	30,223
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	11,464	8,662
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	7,465	6,613
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	104	169
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	419,123	404,238
Commercial Real Estate [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	348,975	329,219
Commercial Real Estate [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	43,257	61,183
Commercial Real Estate [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	20,926	8,926
Commercial Real Estate [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	$ 5,965	4,757
Commercial Real Estate [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans		$ 153

XML

Other Comprehensive Income (Schedule Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (1,148)	$ (881)	$ (1,508)	$ (1,263)
Net Change	(595)	447	(235)	829
Ending Balance	(1,743)	(434)	(1,743)	(434)
Net Unrealized Gain (Loss) On Investment Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	1,242	552	911	191
Net Change	(637)	428	(306)	789
Ending Balance	605	980	605	980
Net Defined Benefit Pension Plans Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(2,390)	(1,433)	(2,419)	(1,454)
Net Change	42	19	71	40
Ending Balance	$ (2,348)	$ (1,414)	$ (2,348)	$ (1,414)

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Loans And The Allowance For Loan Losses (Loans Classified As TDRs Which Defaulted) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) contract	Jun. 30, 2014 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2014 USD ($) contract
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts		1		1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $		$ 71		$ 71
Commercial Real Estate: Commercial [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts	1		1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $	$ 245		$ 245
Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts		1	1	1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $		$ 54	$ 19	$ 54

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Fair Value Measurements (Changes In Fair Value For Mortgage Servicing Rights) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Fair Value Measurements [Abstract]
Mortgage servicing rights - Beginning balance	$ 497	$ 471	$ 518	$ 509
Gains (losses) included in earnings	4	(31)	(41)	(69)
Additions from loan sales	64	31	88	31
Mortgage servicing rights - Ending balance	$ 565	$ 471	$ 565	$ 471

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Net Periodic Benefit Costs (Tables)

6 Months Ended

Jun. 30, 2015

Net Periodic Benefit Costs [Abstract]

Schedule Of Net Periodic Cost

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	49	$	42
Interest cost		52		52		37		40
Expected return on plan assets		(77)		(76)		-		-
Amortization of prior service cost		-		-		9		7
Amortization of the net loss		18		4		34		21
Net periodic cost (benefit)	$	(7)	$	(20)	$	129	$	110

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	97	$	84
Interest cost		103		103		74		80
Expected return on plan assets		(154)		(153)		-		-
Amortization of prior service cost		-		-		16		15
Amortization of the net loss		35		10		65		42
Net periodic cost (benefit)	$	(16)	$	(40)	$	252	$	221

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Segment Information (Schedule Of Business Segments) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) segment	Jun. 30, 2014 USD ($)
Segment Reporting Information [Line Items]
Number of primary business segments | segment			2
Net interest income (expense)	$ 7,648	$ 7,682	$ 15,229	$ 14,981
Provision for loan and lease losses	415	176	616	328
Net interest income (expense) after provision for loan and lease losses	7,233	7,506	14,613	14,653
Non-interest income	1,655	1,469	2,892	2,731
Insurance service and fees	1,821	1,586	3,650	3,718
Amortization expense		40		81
Non-interest expense	8,241	8,292	15,753	15,870
Income before income taxes	2,468	2,229	5,402	5,151
Income tax provision	793	650	1,822	1,559
Net income	1,675	1,579	3,580	3,592
Banking Activities [Member]
Segment Reporting Information [Line Items]
Net interest income (expense)	7,677	7,711	15,286	15,038
Provision for loan and lease losses	415	176	616	328
Net interest income (expense) after provision for loan and lease losses	7,262	7,535	14,670	14,710
Non-interest income	1,655	1,469	2,892	2,731
Insurance service and fees	191	146	353	298
Non-interest expense	7,089	7,294	13,570	13,772
Income before income taxes	2,019	1,856	4,345	3,967
Income tax provision	616	508	1,410	1,104
Net income	1,403	1,348	2,935	2,863
Insurance Agency Activities [Member]
Segment Reporting Information [Line Items]
Net interest income (expense)	(29)	(29)	(57)	(57)
Net interest income (expense) after provision for loan and lease losses	(29)	(29)	(57)	(57)
Insurance service and fees	1,630	1,440	3,297	3,420
Amortization expense		40		81
Non-interest expense	1,152	998	2,183	2,098
Income before income taxes	449	373	1,057	1,184
Income tax provision	177	142	412	455
Net income	$ 272	$ 231	$ 645	$ 729

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Loans And The Allowance For Loan Losses (Data, At The Class Level, Of Impaired Loans) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	$ 8,344	$ 7,369
Impaired Loans, Recorded Investment, With a related allowance recorded	6,413	7,660
Impaired Loans, Recorded Investment, Total	14,757	15,029
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	8,752	7,689
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	6,741	7,864
Impaired Loans, Unpaid Principal Balance, Total	15,493	15,553
Impaired Financing Receivable Related Allowance
Impaired Loans, Related Allowance	875	1,313
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	8,678	7,592
Impaired Loans, Average Recorded Investment, With a related allowance recorded	6,558	7,729
Impaired Loans, Average Recorded Investment, Total	15,236	15,321
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	114	96
Impaired Loans, Interest Income Foregone, With a related allowance recorded	211	185
Impaired Loans, Interest Income Foregone, Total	325	281
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	103	291
Impaired Loans, Interest Income Recognized, With a related allowance recorded	14	290
Impaired Loans, Interest Income Recognized, Total	117	581
Commercial And Industrial [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	2,162	1,017
Impaired Loans, Recorded Investment, With a related allowance recorded	3,633	4,701
Impaired Loans, Recorded Investment, Total	5,795	5,718
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	2,240	1,022
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	3,746	4,734
Impaired Loans, Unpaid Principal Balance, Total	5,986	5,756
Impaired Financing Receivable Related Allowance
Impaired Loans, Related Allowance	730	988
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	2,439	1,096
Impaired Loans, Average Recorded Investment, With a related allowance recorded	3,726	4,701
Impaired Loans, Average Recorded Investment, Total	6,165	5,797
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	64	9
Impaired Loans, Interest Income Foregone, With a related allowance recorded	112	64
Impaired Loans, Interest Income Foregone, Total	176	73
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	9	66
Impaired Loans, Interest Income Recognized, With a related allowance recorded	12	234
Impaired Loans, Interest Income Recognized, Total	21	300
Residential Real Estate: Residential [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	2,229	2,264
Impaired Loans, Recorded Investment, With a related allowance recorded	271	271
Impaired Loans, Recorded Investment, Total	2,500	2,535
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	2,408	2,435
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	285	285
Impaired Loans, Unpaid Principal Balance, Total	2,693	2,720
Impaired Financing Receivable Related Allowance
Impaired Loans, Related Allowance	40	3
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	2,244	2,271
Impaired Loans, Average Recorded Investment, With a related allowance recorded	271	271
Impaired Loans, Average Recorded Investment, Total	2,515	2,542
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	22	37
Impaired Loans, Interest Income Foregone, With a related allowance recorded	10	20
Impaired Loans, Interest Income Foregone, Total	32	57
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	23	68
Impaired Loans, Interest Income Recognized, Total	23	68
Commercial Real Estate: Commercial [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	1,891	2,103
Impaired Loans, Recorded Investment, With a related allowance recorded	2,463	2,640
Impaired Loans, Recorded Investment, Total	4,354	4,743
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	1,991	2,208
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	2,642	2,785
Impaired Loans, Unpaid Principal Balance, Total	4,633	4,993
Impaired Financing Receivable Related Allowance
Impaired Loans, Related Allowance	59	274
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	1,927	2,139
Impaired Loans, Average Recorded Investment, With a related allowance recorded	2,514	2,708
Impaired Loans, Average Recorded Investment, Total	4,441	4,847
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	13	33
Impaired Loans, Interest Income Foregone, With a related allowance recorded	87	96
Impaired Loans, Interest Income Foregone, Total	100	129
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	41	91
Impaired Loans, Interest Income Recognized, With a related allowance recorded		50
Impaired Loans, Interest Income Recognized, Total	41	141
Commercial Real Estate: Construction [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	1,101	1,074
Impaired Loans, Recorded Investment, Total	1,101	1,074
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	1,101	1,074
Impaired Loans, Unpaid Principal Balance, Total	1,101	1,074
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	1,088	1,169
Impaired Loans, Average Recorded Investment, Total	1,088	1,169
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	21	44
Impaired Loans, Interest Income Recognized, Total	21	44
Home Equities [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With no related allowance recorded	961	911
Impaired Loans, Recorded Investment, Total	961	911
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	1,012	950
Impaired Loans, Unpaid Principal Balance, Total	1,012	950
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With no related allowance recorded	980	917
Impaired Loans, Average Recorded Investment, Total	980	917
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With no related allowance recorded	15	17
Impaired Loans, Interest Income Foregone, Total	15	17
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With no related allowance recorded	9	22
Impaired Loans, Interest Income Recognized, Total	9	22
Consumer Loans [Member]
Impaired Financing Receivable, Recorded Investment
Impaired Loans, Recorded Investment, With a related allowance recorded	46	48
Impaired Loans, Recorded Investment, Total	46	48
Impaired Financing Receivable, Unpaid Principal Balance
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	68	60
Impaired Loans, Unpaid Principal Balance, Total	68	60
Impaired Financing Receivable Related Allowance
Impaired Loans, Related Allowance	46	48
Impaired Financing Receivable, Average Recorded Investment
Impaired Loans, Average Recorded Investment, With a related allowance recorded	47	49
Impaired Loans, Average Recorded Investment, Total	47	49
Impaired Financing Receivable, Interest Income Foregone
Impaired Loans, Interest Income Foregone, With a related allowance recorded	2	5
Impaired Loans, Interest Income Foregone, Total	2	5
Impaired Financing Receivable, Interest Income Recognized
Impaired Loans, Interest Income Recognized, With a related allowance recorded	2	6
Impaired Loans, Interest Income Recognized, Total	$ 2	$ 6

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Loans And The Allowance For Loan Losses (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans restructured in a troubled debt restructuring ("TDR")	$ 6,677,000		$ 6,677,000		$ 6,586,000
Troubled restructured loans, Nonaccruing	2,109,000		$ 2,109,000		1,948,000
Period of timely payments before reversion to accruing status, months			6 months
Residential Real Estate: Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgages sold to FNMA	7,100,000	$ 3,400,000	$ 9,700,000	$ 3,400,000
Unpaid principal balance	77,300,000		77,300,000		71,600,000
Mortgage servicing rights	600,000		600,000		500,000
Mortgage loans held-for-sale	1,000,000		1,000,000		400,000
Loans restructured in a troubled debt restructuring ("TDR")	1,815,000		1,815,000		1,833,000
Troubled restructured loans, Nonaccruing	580,000		580,000		594,000
Commercial Real Estate: Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgage loans held-for-sale	0		0		0
Loans restructured in a troubled debt restructuring ("TDR")	2,208,000		2,208,000		2,428,000
Troubled restructured loans, Nonaccruing	$ 667,000		$ 667,000		$ 847,000

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Net Periodic Benefit Costs (Schedule Of Net Periodic Cost) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Defined Benefit Plan Disclosure [Line Items]
Contributions to the defined benefit pension plan			$ 165
Pension [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 52	$ 52	103	$ 103
Expected return on plan assets	(77)	(76)	(154)	(153)
Amortization of the net loss	18	4	35	10
Net periodic cost (benefit)	(7)	(20)	(16)	(40)
Contributions to the defined benefit pension plan			165
Supplemental Executive Retirement Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	49	42	97	84
Interest cost	37	40	74	80
Amortization of prior service cost	9	7	16	15
Amortization of the net loss	34	21	65	42
Net periodic cost (benefit)	$ 129	$ 110	$ 252	$ 221

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Per Share Data (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Per Share Data [Abstract]
Potentially dilutive shares of common stock included in calculating diluted earnings per share	75,354	81,752	76,227	81,475
Potential anti-dilutive shares	37,800	40,060	38,215	40,060

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Organization And Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies followed by Evans Bancorp, Inc. (the “Company”), a financial holding company, and its two direct, wholly-owned subsidiaries: (i) Evans Bank, National Association (the “Bank”), and the Bank’s subsidiaries, Evans National Leasing, Inc. (“ENL”), Evans National Holding Corp. (“ENHC”) and Suchak Data Systems, LLC (“SDS”); and (ii) Evans National Financial Services, LLC (“ENFS”), and ENFS’s subsidiary, The Evans Agency, LLC (“TEA”), and TEA’s subsidiaries, Frontier Claims Services, Inc. (“FCS”) and ENB Associates Inc. (“ENBA”), in the preparation of the accompanying interim unaudited consolidated financial statements conform with U.S. generally accepted accounting principles (“GAAP”) and with general practice within the industries in which it operates.  Except as the context otherwise requires, the Company and its direct and indirect subsidiaries are collectively referred to in this report as the “Company.”

The accompanying consolidated financial statements are unaudited.  In the opinion of management, all adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods have been made.  During the six month period ended June 30, 2015, the Company revised the unaudited Consolidated Statement of Cash Flows for the six month period ended June 30, 2014 to correct errors involving a $347 thousand increase within “Net cash provided by operating activities”, a $347 thousand increase in “Net cash used in investing activities”, a $80 thousand increase within “Depreciation and amortization”, $483 thousand increase within “Change in other assets affecting cash flow”, and a $216 thousand increase within “Change in other liabilities affecting cash flow” line items.  The Company has assessed the materiality of this correction and concluded, based on qualitative and quantitative considerations, in accordance with Staff Accounting Bulletin No. 99, that the adjustments were not material to our previously reported financial statements.

The results of operations for the three and six month periods ended June 30, 2015 are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.

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Loans And The Allowance For Loan Losses (Schedule Of Non-Performing Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	$ 10,189	$ 10,390
Accruing loans 90+ days past due	805	201
Total non-performing loans	$ 10,994	$ 10,591
Total non-performing loans to total assets	1.21%	1.25%
Total non-performing loans to total loans	1.55%	1.52%
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	$ 5,620	$ 5,500
Accruing loans 90+ days past due	103
Residential Real Estate: Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	1,265	1,296
Accruing loans 90+ days past due	125
Commercial Real Estate: Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	2,812	3,162
Accruing loans 90+ days past due	238
Commercial Real Estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Accruing loans 90+ days past due	267	201
Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	475	415
Accruing loans 90+ days past due	72
Consumer Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans	$ 17	$ 17

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Securities (Scheduled Maturities Of Debt And Mortgage-Backed Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Securities [Abstract]
Debt securities available for sale, Due in one year or less, Amortized cost	$ 2,641	$ 8,172
Debt securities available for sale, Due after one year through five years, Amortized cost	28,639	22,118
Debt securities available for sale, Due after five years through ten years, Amortized cost	22,094	20,517
Debt securities available for sale, Due after ten years, Amortized cost	9,367	6,062
Debt securities available for sale, Amortized cost	62,741	56,869
Mortgage-backed securities available for sale, Amortized cost	41,543	37,179
Available for Sale, Amortized Cost	104,284	94,048
Debt securities available for sale, Due in one year or less, Estimated fair value	2,659	8,256
Debt securities available for sale, Due after one year through five years, Estimated fair value	29,150	22,597
Debt securities available for sale, Due after five years through ten years, Estimated fair value	22,172	20,589
Debt securities available for sale, Due after ten years, Estimated fair value	9,403	6,335
Debt securities available for sale, Estimated fair value	63,384	57,777
Mortgage-backed securities available for sale, Estimated fair value	41,885	37,756
Debt securities available for sale, Estimated fair value	105,269	95,533
Debt securities held to maturity, Due in one year or less, Amortized cost	388	478
Debt securities held to maturity, Due after one year through five years, Amortized cost	66	77
Debt securities held to maturity, Due after five years through ten years, Amortized cost	898	932
Debt securities held to maturity, Due after ten years, Amortized cost	113	112
Held to Maturity, Amortized Cost	1,465	1,599
Debt securities held to maturity, Due in one year or less, Estimated fair value	388	477
Debt securites held to maturity, Due after one year through five years, Estimated fair value	67	78
Debt securites held to maturity, Due after five years through ten years, Estimated fair value	881	914
Debt securities held to maturity, Due after ten years, Estimated fair value	104	105
Debt securities held to maturity, Estimated fair value	$ 1,440	$ 1,574

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Securities (Schedule Of Amortized Cost And Approximate Fair Value Of Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	$ 104,284	$ 94,048
Available for Sale, Unrealized Gains	1,746	2,054
Available for Sale, Unrealized Losses	(761)	(569)
Available for Sale, Fair Value	105,269	95,533
Held to Maturity, Amortized Cost	1,465	1,599
Held to Maturity, Unrealized Gains	6	7
Held to Maturity, Unrealized Losses	(31)	(32)
Held to Maturity, Fair Value	1,440	1,574
FNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	13,957	14,653
Available for Sale, Unrealized Gains	434	516
Available for Sale, Unrealized Losses	(19)	(15)
Available for Sale, Fair Value	14,372	15,154
FHLMC [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	5,275	5,901
Available for Sale, Unrealized Gains	94	121
Available for Sale, Unrealized Losses	(66)	(64)
Available for Sale, Fair Value	5,303	5,958
GNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	7,867	6,014
Available for Sale, Unrealized Gains	98	143
Available for Sale, Unrealized Losses	(67)	(27)
Available for Sale, Fair Value	7,898	6,130
CMO [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	14,444	10,611
Available for Sale, Unrealized Gains	58	42
Available for Sale, Unrealized Losses	(190)	(139)
Available for Sale, Fair Value	14,312	10,514
U.S. Government Agencies [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	24,120	26,687
Available for Sale, Unrealized Gains	261	305
Available for Sale, Unrealized Losses	(301)	(275)
Available for Sale, Fair Value	24,080	26,717
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	38,621	30,182
Available for Sale, Unrealized Gains	801	927
Available for Sale, Unrealized Losses	(118)	(49)
Available for Sale, Fair Value	39,304	31,060
Held to Maturity, Amortized Cost	1,465	1,599
Held to Maturity, Unrealized Gains	6	7
Held to Maturity, Unrealized Losses	(31)	(32)
Held to Maturity, Fair Value	1,440	1,574
Total Debt Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	62,741	56,869
Available for Sale, Unrealized Gains	1,062	1,232
Available for Sale, Unrealized Losses	(419)	(324)
Available for Sale, Fair Value	63,384	57,777
Total Mortgage-Backed Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	41,543	37,179
Available for Sale, Unrealized Gains	684	822
Available for Sale, Unrealized Losses	(342)	(245)
Available for Sale, Fair Value	$ 41,885	$ 37,756

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Loans And The Allowance For Loan Losses (Loans Classified As Troubled Debt Restructurings) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	$ 6,677	$ 6,586
Troubled restructured loans, Nonaccruing	2,109	1,948
Troubled restructured loans, Accruing	4,568	4,638
Troubled restructured loans, Related Allowance	259	237
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	816	492
Troubled restructured loans, Nonaccruing	641	274
Troubled restructured loans, Accruing	175	218
Troubled restructured loans, Related Allowance	196	173
Residential Real Estate: Residential [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	1,815	1,833
Troubled restructured loans, Nonaccruing	580	594
Troubled restructured loans, Accruing	1,235	1,239
Commercial Real Estate: Commercial [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	2,208	2,428
Troubled restructured loans, Nonaccruing	667	847
Troubled restructured loans, Accruing	1,541	1,581
Troubled restructured loans, Related Allowance	33	33
Commercial Real Estate: Construction [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	1,101	1,074
Troubled restructured loans, Accruing	1,101	1,074
Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	707	728
Troubled restructured loans, Nonaccruing	221	233
Troubled restructured loans, Accruing	486	495
Consumer Loans [Member]
Financing Receivable, Modifications [Line Items]
Troubled restructured loans, Total	30	31
Troubled restructured loans, Accruing	30	31
Troubled restructured loans, Related Allowance	$ 30	$ 31

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Securities (Unrealized Losses On Available For Sale Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Investments In Debt And Marketable Equity Securities [Line Items]
Held To Maturity, Total, Unrealized Losses	$ (31)	$ (32)
Total temporarily impaired securities, Less than 12 months, Fair Value	31,285	12,249
Total temporarily impaired securities, 12 months or longer, Fair Value	13,178	19,791
Total temporarily impaired securities, Total, Fair Value	44,463	32,040
Total temporarily impaired securities, Less than 12 months, Unrealized Losses	(450)	(57)
Total temporarily impaired securities, 12 months or longer, Unrealized Losses	(342)	(544)
Total temporarily impaired securities, Total, Unrealized Losses	(792)	(601)
U.S. Government Agencies [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	8,411	3,906
Available for Sale, 12 months or longer, Fair Value	5,854	7,751
Available for Sale, Total, Fair Value	14,265	11,657
Available for Sale, Less than 12 months, Unrealized Losses	(155)	(26)
Available for Sale, 12 months or longer, Unrealized Losses	(146)	(249)
Available for Sale, Total, Unrealized Losses	(301)	(275)
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	9,083	4,752
Available for Sale, 12 months or longer, Fair Value	1,187	1,902
Available for Sale, Total, Fair Value	10,270	6,654
Available for Sale, Less than 12 months, Unrealized Losses	(94)	(9)
Available for Sale, 12 months or longer, Unrealized Losses	(24)	(40)
Available for Sale, Total, Unrealized Losses	(118)	(49)
Held To Maturity, Less than 12 months, Fair Value	799	371
Held To Maturity, 12 months or longer, Fair Value	89	556
Held To Maturity, Total, Fair Value	888	927
Held To Maturity, Less than 12 months, Unrealized Losses	(30)	(1)
Held To Maturity, 12 months or longer, Unrealized Losses	(1)	(31)
Held To Maturity, Total, Unrealized Losses	(31)	(32)
Total Debt Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	17,494	8,658
Available for Sale, 12 months or longer, Fair Value	7,041	9,653
Available for Sale, Total, Fair Value	24,535	18,311
Available for Sale, Less than 12 months, Unrealized Losses	(249)	(35)
Available for Sale, 12 months or longer, Unrealized Losses	(170)	(289)
Available for Sale, Total, Unrealized Losses	(419)	(324)
Total Mortgage-Backed Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	12,992	3,220
Available for Sale, 12 months or longer, Fair Value	6,048	9,582
Available for Sale, Total, Fair Value	19,040	12,802
Available for Sale, Less than 12 months, Unrealized Losses	(171)	(21)
Available for Sale, 12 months or longer, Unrealized Losses	(171)	(224)
Available for Sale, Total, Unrealized Losses	(342)	(245)
FNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	4,155	1,498
Available for Sale, 12 months or longer, Fair Value		1,731
Available for Sale, Total, Fair Value	4,155	3,229
Available for Sale, Less than 12 months, Unrealized Losses	(19)	(10)
Available for Sale, 12 months or longer, Unrealized Losses		(5)
Available for Sale, Total, Unrealized Losses	(19)	(15)
FHLMC [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, 12 months or longer, Fair Value	1,362	1,482
Available for Sale, Total, Fair Value	1,362	1,482
Available for Sale, 12 months or longer, Unrealized Losses	(66)	(64)
Available for Sale, Total, Unrealized Losses	(66)	(64)
GNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	3,684
Available for Sale, 12 months or longer, Fair Value	674	2,079
Available for Sale, Total, Fair Value	4,358	2,079
Available for Sale, Less than 12 months, Unrealized Losses	(60)
Available for Sale, 12 months or longer, Unrealized Losses	(7)	(27)
Available for Sale, Total, Unrealized Losses	(67)	(27)
CMO [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	5,153	1,722
Available for Sale, 12 months or longer, Fair Value	4,012	4,290
Available for Sale, Total, Fair Value	9,165	6,012
Available for Sale, Less than 12 months, Unrealized Losses	(92)	(11)
Available for Sale, 12 months or longer, Unrealized Losses	(98)	(128)
Available for Sale, Total, Unrealized Losses	$ (190)	$ (139)

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Impaired loans	$ 14,757	$ 15,029
Impaired loans, valuation allowance	$ 875	$ 1,313
Minimum [Member]
Discount on appraisals of the collateral securing the loan	10.00%
Maximum [Member]
Discount on appraisals of the collateral securing the loan	50.00%

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
OPERATING ACTIVITIES:
Interest received	$ 16,916	$ 16,934
Fees received	5,795	6,141
Interest paid	(1,939)	(1,842)
Cash paid to employees and vendors	(15,932)	(15,317)
Cash contributed to pension plan	(165)
Income taxes paid	(601)	(2,785)
Proceeds from sale of loans held for resale	9,772	3,439
Originations of loans held for resale	(10,295)	(3,636)
Net cash provided by operating activities	3,551	2,934
INVESTING ACTIVITIES:
Purchases of available for sale securities	(24,370)	(8,900)
Proceeds from maturities, calls, and payments of available for sale securities	14,299	7,144
Purchases of held to maturity securities	(50)	(330)
Proceeds from maturities, calls, and payments of held to maturity securities	184	781
Proceeds from property insurance	927
Additions to properties and equipment	(499)	(275)
Purchase of tax credit investment	(831)	(1,467)
Net increase in loans	(14,360)	(16,304)
Net cash used in investing activities	(24,700)	(19,351)
FINANCING ACTIVITIES:
Proceeds from (repayments of) borrowings, net	(6,469)	(3,231)
Net increase in deposits	66,531	558
Dividends paid	(1,517)	(1,305)
Repurchase of treasury stock	(83)	(1,501)
Issuance of common stock	117	183
Reissuance of treasury stock	237	188
Net cash provided by (used in) financing activities	58,816	(5,108)
Net increase (decrease) in cash and equivalents	37,667	(21,525)
CASH AND CASH EQUIVALENTS:
Beginning of period	10,898	41,954
End of period	48,565	20,429
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income	3,580	3,592
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	745	827
Deferred tax expense (benefit)	191	(241)
Provision for loan losses	616	328
Gain on loans sold	(81)	(40)
Stock options and restricted stock expense	263	221
Proceeds from sale of loans held for resale	9,772	3,439
Originations of loans held for resale	(10,295)	(3,636)
Cash contributed to pension plan	(165)
Changes in assets and liabilities affecting cash flow:
Other assets	(1,112)	344
Other liabilities	37	(1,900)
NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 3,551	$ 2,934

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 105,269	$ 95,533
Mortgage servicing rights	565	518
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	565	518
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	24,080	26,717
U.S. Government Agencies [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	24,080	26,717
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	39,304	31,060
States and Political Subdivisions [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	39,304	31,060
Total Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	41,885	37,756
Total Mortgage-Backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 41,885	$ 37,756

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Loans And The Allowance For Loan Losses (Recorded Investment In Loans Past Due) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	$ 5,895	$ 11,133
Current Balance	704,263	683,772
Total Gross Loans	710,158	694,905
90+ Days Accruing	805	201
Non-accruing Loans	10,189	10,390
Net deferred loan origination costs	674	759	$ 671
30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	977	5,817
60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	985	3,454
90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	3,933	1,862
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	834	487
Current Balance	128,978	128,969
Total Gross Loans	129,812	129,456
90+ Days Accruing	103
Non-accruing Loans	5,620	5,500
Commercial And Industrial [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	463	153
Commercial And Industrial [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	223	60
Commercial And Industrial [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	148	274
Residential Real Estate: Residential [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,130	1,688
Current Balance	97,139	96,686
Total Gross Loans	98,269	98,374
90+ Days Accruing	125
Non-accruing Loans	1,265	1,296
Residential Real Estate: Residential [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	237	848
Residential Real Estate: Residential [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	243	158
Residential Real Estate: Residential [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	650	682
Residential Real Estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current Balance	709	721
Total Gross Loans	709	721
Commercial Real Estate: Commercial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,525	7,829
Current Balance	371,366	355,423
Total Gross Loans	373,891	363,252
90+ Days Accruing	238
Non-accruing Loans	2,812	3,162
Commercial Real Estate: Commercial [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		4,201
Commercial Real Estate: Commercial [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,115
Commercial Real Estate: Commercial [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	2,525	513
Commercial Real Estate: Construction [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	267	209
Current Balance	44,965	40,777
Total Gross Loans	45,232	40,986
90+ Days Accruing	267	201
Commercial Real Estate: Construction [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		8
Commercial Real Estate: Construction [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	267	201
Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1,098	906
Current Balance	58,283	59,042
Total Gross Loans	59,381	59,948
90+ Days Accruing	72
Non-accruing Loans	475	415
Home Equities [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	254	594
Home Equities [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	518	120
Home Equities [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	326	192
Consumer Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	41	14
Current Balance	1,658	1,750
Total Gross Loans	1,699	1,764
Non-accruing Loans	17	17
Consumer Loans [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	23	13
Consumer Loans [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	1	1
Consumer Loans [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due	17
Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current Balance	1,165	404
Total Gross Loans	$ 1,165	$ 404

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
ASSETS
Cash and due from banks	$ 14,407	$ 8,784
Interest-bearing deposits at banks	34,158	2,114
Securities:
Available for sale, at fair value (amortized cost: $104,284 at June 30, 2015; $94,048 at December 31, 2014)	105,269	95,533
Held to maturity, at amortized cost (fair value: $1,440 at June 30, 2015; $1,574 at December 31, 2014)	1,465	1,599
Federal Home Loan Bank common stock, at amortized cost	1,296	1,439
Federal Reserve Bank common stock, at amortized cost	1,478	1,486
Loans, net of allowance for loan losses of $13,110 at June 30, 2015 and $12,533 at December 31, 2014	697,722	683,131
Properties and equipment, net of accumulated depreciation of $15,651 at June 30, 2015 and $15,129 at December 31, 2014	10,200	10,224
Goodwill	8,101	8,101
Bank-owned life insurance	20,704	20,415
Other assets	13,747	13,983
TOTAL ASSETS	908,547	846,809
LIABILITIES
Demand deposits	163,862	158,631
NOW deposits	79,266	72,670
Regular savings deposits	431,555	363,542
Time deposits	99,482	112,792
Total deposits	774,165	707,635
Securities sold under agreement to repurchase	11,009	13,778
Other short term borrowings	10,000	13,700
Other liabilities	13,848	14,578
Junior subordinated debentures	11,330	11,330
Total liabilities	$ 820,352	$ 761,021
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,247,469 and 4,241,797 shares issued at June 30, 2015 and December 31, 2014, respectively, and 4,239,929 and 4,203,684 outstanding at June 30, 2015 and December 31, 2014, respectively	$ 2,126	$ 2,123
Capital surplus	42,969	43,102
Treasury stock, at cost, 7,540 shares and 38,113 at June 30, 2015 and December 31, 2014, respectively	(42)	(751)
Retained earnings	44,885	42,822
Accumulated other comprehensive loss, net of tax	(1,743)	(1,508)
Total stockholders' equity	88,195	85,788
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 908,547	$ 846,809

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Loans And The Allowance For Loan Losses (TDR Activity By Type Of Concession Granted To Borrower) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2014 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2014 USD ($) contract
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		3
Pre-Modification Outstanding Recorded Investment		$ 541
Post-Modification Outstanding Recorded Investment		$ 541
Home Equities [Member] | Extension Of Maturity & Rate Reduction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1		1
Pre-Modification Outstanding Recorded Investment	$ 20		$ 20
Post-Modification Outstanding Recorded Investment	$ 20		$ 20
Home Equities [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	2		2
Pre-Modification Outstanding Recorded Investment	$ 65		$ 65
Post-Modification Outstanding Recorded Investment	$ 65		$ 65
Residential Mortgages [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	2		2
Pre-Modification Outstanding Recorded Investment	$ 632		$ 632
Post-Modification Outstanding Recorded Investment	$ 632		$ 632

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Consolidated Statements Of Changes In Stockholders’ Equity - USD ($) $ in Thousands	Common Stock [Member]	Capital Surplus [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2013	$ 2,106	$ 42,619	$ 37,370	$ (1,263)	$ (120)	$ 80,712
Net income			3,592			3,592
Other comprehensive (loss) income				829		829
Cash dividends			(1,305)			(1,305)
Stock options and restricted stock expense		220				220
Excess tax expense from stock-based compensation		31				31
Issued restricted shares	11	(11)
Repurchased shares in Treasury stock					(1,436)	(1,436)
Reissued shares in stock option exercise		(51)			106	55
Reissued shares under dividend reinvestment plan		9			115	124
Issued shares through Employee Stock Purchase Plan	3	124				127
Balance at Jun. 30, 2014	2,120	42,941	39,657	(434)	(1,335)	82,949
Balance at Dec. 31, 2014	2,123	43,102	42,822	(1,508)	(751)	85,788
Net income			3,580			3,580
Other comprehensive (loss) income				(235)		(235)
Cash dividends			(1,517)			(1,517)
Stock options and restricted stock expense		263				263
Excess tax expense from stock-based compensation		44				44
Reissued restricted shares, net of forfeitures		(503)			503
Repurchased shares in Treasury stock					(83)	(83)
Reissued shares in stock option exercise		(55)			155	100
Reissued shares under dividend reinvestment plan		4			134	138
Issued shares through Employee Stock Purchase Plan	3	114				117
Balance at Jun. 30, 2015	$ 2,126	$ 42,969	$ 44,885	$ (1,743)	$ (42)	$ 88,195

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Nonrecurring Basis) (Details) - Fair Value, Measurements, Nonrecurring Basis [Member] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 13,882	$ 13,716
Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 13,882	$ 13,716

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2015

Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plans adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)
	Balance at March 31, 2014		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	552	$	428	$	980
Net defined benefit pension plans adjustments		(1,433)		19		(1,414)
Total	$	(881)	$	447	$	(434)

	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plans adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)
	Balance at December 31, 2013		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	191	$	789	$	980
Net defined benefit pension plans adjustments		(1,454)		40		(1,414)
Total	$	(1,263)	$	829	$	(434)

Components Of Other Comprehensive Income (Loss)

	Three months ended June 30, 2015 (in thousands)						Three months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(1,041)	$	404	$	(637)	$	699	$	(271)	$	428
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(1,041)		404		(637)		699		(271)		428
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		9		(4)		5		7		(3)		4
Amortization of actuarial loss (a)		52		(15)		37		25		(10)		15
Net change		61		(19)		42		32		(13)		19
Other Comprehensive Income (Loss)	$	(980)	$	385	$	(595)	$	731	$	(284)	$	447

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

	Six months ended June 30, 2015 (in thousands)						Six months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(500)	$	194	$	(306)	$	1,287	$	(498)	$	789
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(500)		194		(306)		1,287		(498)		789
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		15		(6)		9
Amortization of actuarial loss (a)		100		(39)		61		52		(21)		31
Net change		116		(45)		71		67		(27)		40
Other Comprehensive Income (Loss)	$	(384)	$	149	$	(235)	$	1,354	$	(525)	$	829

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

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Fair Value Measurements (Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Level 2, Financial assets:
Available for sale securities	$ 105,269	$ 95,533
Level 3, Financial assets:
Held to maturity securities	1,440	1,574
Loans and leases, net	697,722	683,131
Mortgage servicing rights	565	518
Level 1, Financial Liabilities:
Demand deposits	163,862	158,631
NOW deposits	79,266	72,670
Regular savings deposits	431,555	363,542
Securities sold under agreement to repurchase	11,009	13,778
Level 3, Financial Liabilities:
Time deposits	99,482	112,792
Level 3 [Member]
Level 3, Financial assets:
Mortgage servicing rights	565	518
Carrying Amount [Member] | Level 1 [Member]
Level 1, Financial assets:
Cash and cash equivalents	48,565	10,898
Level 1, Financial Liabilities:
Demand deposits	163,862	158,631
NOW deposits	79,266	72,670
Regular savings deposits	431,555	363,542
Commitments to extend credit	249	245
Securities sold under agreement to repurchase	11,009	13,778
Carrying Amount [Member] | Level 2 [Member]
Level 2, Financial assets:
Available for sale securities	105,269	95,533
FHLB and FRB stock	2,774	2,925
Level 2, Financial Liabilities:
Other borrowed funds	10,000	13,700
Junior subordinated debentures	11,330	11,330
Carrying Amount [Member] | Level 3 [Member]
Level 3, Financial assets:
Held to maturity securities	1,465	1,599
Loans and leases, net	697,722	683,131
Mortgage servicing rights	565	518
Level 3, Financial Liabilities:
Time deposits	99,482	112,792
Fair Value [Member] | Level 1 [Member]
Level 1, Financial assets:
Cash and cash equivalents	48,565	10,898
Level 1, Financial Liabilities:
Demand deposits	163,862	158,631
NOW deposits	79,266	72,670
Regular savings deposits	431,555	363,542
Commitments to extend credit	249	245
Securities sold under agreement to repurchase	11,009	13,778
Fair Value [Member] | Level 2 [Member]
Level 2, Financial assets:
Available for sale securities	105,269	95,533
FHLB and FRB stock	2,774	2,925
Level 2, Financial Liabilities:
Other borrowed funds	10,000	13,700
Junior subordinated debentures	11,330	11,330
Fair Value [Member] | Level 3 [Member]
Level 3, Financial assets:
Held to maturity securities	1,440	1,574
Loans and leases, net	709,025	685,148
Mortgage servicing rights	565	518
Level 3, Financial Liabilities:
Time deposits	$ 100,370	$ 113,854

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Contingent Liabilities And Commitments (Tables)

6 Months Ended

Jun. 30, 2015

Contingent Liabilities And Commitments [Abstract]

Summary Of Commitments And Contingent Liabilities

	June 30,		December 31,
	2015		2014
	(in thousands)
Commitments to extend credit	$	204,233	$	212,193
Standby letters of credit		3,749		2,430
Total	$	207,982	$	214,623

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Consolidated Statements Of Changes In Stockholders’ Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Consolidated Statements Of Changes In Stockholders’ Equity [Abstract]
Cash dividends per common share	$ 0.36	$ 0.31
Restricted shares issued		20,517
Restricted shares reissued, net of forfeitures	20,592
Restricted shares forfeited	588
Shares repurchased in Treasury stock	3,397	59,800
Shares reissued in stock options exercise	8,034	5,093
Shares reissued under dividend reinvestment plan	5,582	5,400
Shares issued through Employee Stock Purchase Plan	5,672	7,186

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets [Abstract]
Available for sale, amortized cost	$ 104,284	$ 94,048
Held to maturity, fair value	1,440	1,574
Loans, allowance for loan losses	13,110	12,533
Properties and equipment, accumulated depreciation	$ 15,651	$ 15,129
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,247,469	4,241,797
Common stock, shares outstanding	4,239,929	4,203,684
Treasury stock, shares	7,540	38,113

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Net Periodic Benefit Costs

6 Months Ended

Jun. 30, 2015

Net Periodic Benefit Costs [Abstract]

Net Periodic Benefit Costs

9. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan.  The plan covered substantially all Company employees.  The plan provides benefits that are based on the employees’ compensation and years of service.  Under the freeze, eligible employees will receive, at retirement, the benefits already earned through January 31, 2008, but have not accrued any additional benefits since then.  As a result, service cost is no longer incurred. 

The Bank uses an actuarial method of amortizing prior service cost and unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank used recognized the prior service cost and net gains or losses over the average remaining service period of active employees.

The Bank also maintains a nonqualified supplemental executive retirement plan covering certain members of the Company’s senior management. The Bank uses an actuarial method of amortizing unrecognized net gains or losses which result from actual expense and assumptions being different than those that are projected. The amortization method the Bank uses recognizes the net gains or losses over the average remaining service period of active employees.

The Bank contributed $165 thousand to the defined benefit pension plan in the first six months of 2015.

The following table presents the net periodic cost for the Bank’s defined benefit pension plan and supplemental executive retirement plan for the three and six month periods ended June 30, 2015 and 2014:

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	49	$	42
Interest cost		52		52		37		40
Expected return on plan assets		(77)		(76)		-		-
Amortization of prior service cost		-		-		9		7
Amortization of the net loss		18		4		34		21
Net periodic cost (benefit)	$	(7)	$	(20)	$	129	$	110

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2015		2014		2015		2014
Service cost	$	-	$	-	$	97	$	84
Interest cost		103		103		74		80
Expected return on plan assets		(154)		(153)		-		-
Amortization of prior service cost		-		-		16		15
Amortization of the net loss		35		10		65		42
Net periodic cost (benefit)	$	(16)	$	(40)	$	252	$	221

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Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Jul. 31, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015
Entity Registrant Name	EVANS BANCORP INC
Entity Central Index Key	0000842518
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		4,243,149

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2015

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

10.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2014-04, Reclassification of Collateralized Mortgage Loans upon a Troubled Debt Restructuring.  The objective of this proposed ASU is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, such that all or a portion of the loan should be derecognized and the real estate property recognized.  The main provisions would also require additional disclosures regarding the amount of foreclosed residential real estate property held by the creditor and the recorded investments of consumer mortgage loans that are in the process of foreclosure at each interim and annual reporting period.  This ASU became effective for the Company in fiscal years and interim periods within those years, beginning after December 15, 2014.  The Company has adopted this guidance for the reporting periods after December 15, 2014.  The adoption did not have a material impact on its financial statements.

ASU 2014-09, Revenue from Contracts with Customers.  The objective of this proposed ASU is to require entities to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  This ASU will replace most existing revenue recognition guidance under U.S. GAAP when it becomes effective.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period.  Early application is not permitted.  The standard allows an entity to apply the amendments in the ASU using either the retrospective or cumulative effect transition method.  The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting.

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Consolidated Statements Of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
INTEREST INCOME
Loans	$ 7,934	$ 7,879	$ 15,746	$ 15,389
Interest bearing deposits at banks	33	15	34	31
Securities:
Taxable	429	455	835	904
Non-taxable	240	243	477	488
Total interest income	8,636	8,592	17,092	16,812
INTEREST EXPENSE
Deposits	860	756	1,643	1,512
Other borrowings	46	75	60	160
Junior subordinated debentures	82	79	160	159
Total interest expense	988	910	1,863	1,831
NET INTEREST INCOME	7,648	7,682	15,229	14,981
PROVISION (CREDIT) FOR LOAN LOSSES	415	176	616	328
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	7,233	7,506	14,613	14,653
NON-INTEREST INCOME
Bank charges	411	464	820	925
Insurance service and fees	1,821	1,586	3,650	3,718
Data center income	69	101	92	207
Gain on loans sold	58	40	81	40
Bank-owned life insurance	152	151	289	296
Other	965	713	1,610	1,263
Total non-interest income	3,476	3,055	6,542	6,449
NON-INTEREST EXPENSE
Salaries and employee benefits	5,066	4,564	9,860	9,260
Litigation expense		1,000		1,000
Occupancy	697	685	1,392	1,428
Repairs and maintenance	215	180	388	356
Advertising and public relations	231	281	442	503
Professional services	670	418	1,180	936
Technology and communications	262	278	522	578
Amortization of intangibles		40		81
FDIC insurance	148	112	295	274
Other	952	774	1,674	1,535
Total non-interest expense	8,241	8,332	15,753	15,951
INCOME BEFORE INCOME TAXES	2,468	2,229	5,402	5,151
INCOME TAX PROVISION	793	650	1,822	1,559
NET INCOME	$ 1,675	$ 1,579	$ 3,580	$ 3,592
Net income per common share-basic	$ 0.40	$ 0.38	$ 0.85	$ 0.86
Net income per common share-diluted	$ 0.39	$ 0.37	0.83	0.84
Cash dividends per common share			$ 0.36	$ 0.31
Weighted average number of common shares outstanding	4,234,334	4,166,497	4,233,196	4,183,414
Weighted average number of diluted shares outstanding	4,309,688	4,248,249	4,309,423	4,264,889

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Loans And The Allowance For Loan Losses

6 Months Ended

Jun. 30, 2015

Loans And The Allowance For Loan Losses [Abstract]

Loans And The Allowance For Loan Losses

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Loan Portfolio Composition

The following table presents selected information on the composition of the Company’s loan portfolio as of the dates indicated:

	June 30, 2015		December 31, 2014
Mortgage loans on real estate:		(in thousands)
Residential Mortgages	$	98,269	$	98,374
Commercial and multi-family		373,891		363,252
Construction-Residential		709		721
Construction-Commercial		45,232		40,986
Home equities		59,381		59,948
Total real estate loans		577,482		563,281
Commercial and industrial loans		129,812		129,456
Consumer loans		1,699		1,764
Other		1,165		404
Net deferred loan origination costs		674		759
Total gross loans		710,832		695,664
Allowance for loan losses		(13,110)		(12,533)
Loans, net	$	697,722	$	683,131

The Bank sells certain fixed rate residential mortgages to FNMA while maintaining the servicing rights for those mortgages.  In the three month period ended June 30, 2015, the Bank sold mortgages to FNMA totaling $7.1 million, as compared with $3.4 million in mortgages sold to FNMA in the three month period ended June 30, 2014.  During the six month period ended June 30, 2015 and 2014, the Bank sold $9.7 million and $3.4 million in mortgages, respectively, to FNMA.  At June 30, 2015, the Bank had a loan servicing portfolio principal balance of $77.3 million upon which it earns servicing fees, as compared with $71.6 million at December 31, 2014.  The value of the mortgage servicing rights for that portfolio was $0.6 and $0.5 million at June 30, 2015 and December 31, 2014, respectively.  At June 30, 2015, there were $1.0 million in residential mortgage loans held-for-sale, compared with $0.4 million in residential mortgages held-for-sale at December 31, 2014.  The Company had no commercial loans held-for-sale at June 30, 2015 or December 31, 2014.  The Company has never been contacted by FNMA to repurchase any loans due to improper documentation or fraud.

As noted in Note 1, these financial statements should be read in conjunction with the Audited Consolidated Financial Statements and the Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014.  Disclosures related to the basis for accounting for loans, the method for recognizing interest income on loans, the policy for placing loans on nonaccrual status and the subsequent recording of payments and resuming accrual of interest, the policy for determining past due status, a description of the Company’s accounting policies and methodology used to estimate the allowance for loan losses, the policy for charging off loans, the accounting policies for impaired loans, and more descriptive information on the Company’s credit risk ratings are all contained in the Notes to the Audited Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2014 are consistent with those utilized by the Company in the three and six months ended June 30, 2015.

Credit Quality Indicators

The Bank monitors the credit risk in its loan portfolio by reviewing certain credit quality indicators (“CQI”).  The primary CQI for its commercial mortgage and commercial and industrial (“C&I”) portfolios is the individual loan’s credit risk rating.  The following list provides a description of the credit risk ratings that are used internally by the Bank when assessing the adequacy of its allowance for loan and lease losses:

· 1-3-Pass

· 4-Watch

· 5-O.A.E.M. (Other Assets Especially Mentioned) or Special Mention

· 6-Substandard

· 7-Doubtful

· 8-Loss

The Company’s consumer loans, including residential mortgages and home equities, are not individually risk rated or reviewed in the Company’s loan review process.  Consumers are not required to provide the Company with updated financial information as is a commercial customer.  Consumer loans also carry smaller balances.  Given the lack of updated information after the initial underwriting of the loan and small size of individual loans, the Company uses delinquency status as the credit quality indicator for consumer loans.

The following tables provide data, at the class level, of credit quality indicators of certain loans and leases for the dates specified:

June 30, 2015
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	37,357	$	311,618	$	348,975	$	77,168
4		2,669		40,588		43,257		33,611
5		5,206		15,720		20,926		11,464
6		-		5,965		5,965		7,465
7		-		-		-		104
Total	$	45,232	$	373,891	$	419,123	$	129,812

December 31, 2014
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	29,421	$	299,798	$	329,219	$	83,789
4		10,492		50,691		61,183		30,223
5		1,073		7,853		8,926		8,662
6		-		4,757		4,757		6,613
7		-		153		153		169
Total	$	40,986	$	363,252	$	404,238	$	129,456

Past Due Loans

The following tables provide an analysis of the age of the recorded investment in loans that are past due as of the dates indicated:

June 30, 2015
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	463	$	223	$	148	$	834	$	128,978	$	129,812	$	103	$	5,620
Residential real estate:
Residential		237		243		650		1,130		97,139		98,269		125		1,265
Construction		-		-		-		-		709		709		-		-
Commercial real estate:
Commercial		-		-		2,525		2,525		371,366		373,891		238		2,812
Construction		-		-		267		267		44,965		45,232		267		-
Home equities		254		518		326		1,098		58,283		59,381		72		475
Consumer		23		1		17		41		1,658		1,699		-		17
Other		-		-		-		-		1,165		1,165		-		-
Total Loans	$	977	$	985	$	3,933	$	5,895	$	704,263	$	710,158	$	805	$	10,189

NOTE: Loan and lease balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

December 31, 2014
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	153	$	60	$	274	$	487	$	128,969	$	129,456	$	-	$	5,500
Residential real estate:
Residential		848		158		682		1,688		96,686		98,374		-		1,296
Construction		-		-		-		-		721		721		-		-
Commercial real estate:
Commercial		4,201		3,115		513		7,829		355,423		363,252		-		3,162
Construction		8		-		201		209		40,777		40,986		201		-
Home equities		594		120		192		906		59,042		59,948		-		415
Consumer		13		1		-		14		1,750		1,764		-		17
Other		-		-		-		-		404		404		-		-
Total Loans	$	5,817	$	3,454	$	1,862	$	11,133	$	683,772	$	694,905	$	201	$	10,390

NOTE: Loan and lease balances do not include $759 thousand in net deferred loan origination costs as of December 31, 2014.

Allowance for loan losses

The following tables present the activity in the allowance for loan losses according to portfolio segment, for the six month periods ended June, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,896	$	5,650	$	78	$	941	$	819	$	149	$	12,533
Charge-offs		(80)		(35)		(11)		-		-		-		(126)
Recoveries		57		23		6		1		-		-		87
Provision		(228)		856		(2)		6		(16)		-		616
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	730	$	59	$	46	$	40	$	-	$	-	$	875
Collectively evaluated
for impairment		3,915		6,435		25		908		803		149		12,235
Total	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Loans:
Ending balance:
Individually evaluated
for impairment	$	5,795	$	5,455	$	46	$	2,500	$	961	$	-	$	14,757
Collectively evaluated
for impairment		124,017		413,668		2,818		96,478		58,420		-		695,401
Total	$	129,812	$	419,123	$	2,864	$	98,978	$	59,381	$	-	$	710,158

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,489	$	4,912	$	37	$	1,038	$	878	$	-	$	149	$	11,503
Charge-offs		(474)		(57)		(12)		-		(1)		-		-		(544)
Recoveries		59		39		4		2		-		131		-		235
Provision		(171)		651		17		6		(44)		(131)		-		328
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	191	$	358	$	18	$	-	$	-	$	-	$	-	$	567
Collectively evaluated
for impairment		3,712		5,187		28		1,046		833		-		149		10,955
Total	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Loans:
Ending balance:
Individually evaluated
for impairment	$	1,125	$	13,642	$	18	$	1,958	$	544	$	-	$	-	$	17,287
Collectively evaluated
for impairment		110,358		377,657		3,753		96,736		56,937		-		-		645,441
Total	$	111,483	$	391,299	$	3,771	$	98,694	$	57,481	$	-	$	-	$	662,728

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $671 thousand in net deferred loan origination costs as of June 30, 2014.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,989	$	5,830	$	70	$	924	$	815	$	149	$	12,777
Charge-offs		(80)		(35)		(5)		-		-		-		(120)
Recoveries		19		13		5		1		-		-		38
Provision		(283)		686		1		23		(12)		-		415
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,523	$	5,108	$	36	$	1,037	$	881	$	-	$	149	$	11,734
Charge-offs		(417)		(57)		(6)		-		-		-		-		(480)
Recoveries		31		10		2		2		-		47		-		92
Provision		(234)		484		14		7		(48)		(47)		-		176
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522

Impaired Loans

The following tables provide data, at the class level, of impaired loans as of the dates indicated:

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	2,162	$	2,240	$	-	$	2,439	$	64	$	9
Residential real estate:
Residential		2,229		2,408		-		2,244		22		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,891		1,991		-		1,927		13		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	8,344	$	8,752	$	-	$	8,678	$	114	$	103

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	3,633	$	3,746	$	730	$	3,726	$	112	$	12
Residential real estate:
Residential		271		285		40		271		10		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,463		2,642		59		2,514		87		-
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	6,413	$	6,741	$	875	$	6,558	$	211	$	14

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,795	$	5,986	$	730	$	6,165	$	176	$	21
Residential real estate:
Residential		2,500		2,693		40		2,515		32		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,354		4,633		59		4,441		100		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	14,757	$	15,493	$	875	$	15,236	$	325	$	117

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	1,017	$	1,022	$	-	$	1,096	$	9	$	66
Residential real estate:
Residential		2,264		2,435		-		2,271		37		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,103		2,208		-		2,139		33		91
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	7,369	$	7,689	$	-	$	7,592	$	96	$	291

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	4,701	$	4,734	$	988	$	4,701	$	64	$	234
Residential real estate:
Residential		271		285		3		271		20		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,640		2,785		274		2,708		96		50
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	7,660	$	7,864	$	1,313	$	7,729	$	185	$	290

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,718	$	5,756	$	988	$	5,797	$	73	$	300
Residential real estate:
Residential		2,535		2,720		3		2,542		57		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,743		4,993		274		4,847		129		141
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	15,029	$	15,553	$	1,313	$	15,321	$	281	$	581

Non-performing loans

The following table sets forth information regarding non-performing loans as of the dates specified:

	June 30, 2015			December 31, 2014
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	5,620		$	5,500
Residential real estate:
Residential		1,265			1,296
Construction		-			-
Commercial real estate:
Commercial and multi-family		2,812			3,162
Construction		-			-
Home equities		475			415
Consumer loans		17			17
Other		-			-
Total non-accruing loans	$	10,189		$	10,390
Accruing loans 90+ days past due		805			201
Total non-performing loans	$	10,994		$	10,591
Total non-performing loans
to total assets		1.21	%		1.25	%
Total non-performing loans
to total loans		1.55	%		1.52	%

Troubled debt restructurings

The Company had $6.7 million in loans that were restructured in a troubled debt restructuring (“TDR”) at June 30, 2015, compared with $6.6 million at December 31, 2014.  $2.1 million and $1.9 million of those balances were in non-accrual status at June 30, 2015 and December 31, 2014, respectively.  Any TDR that is placed on non-accrual is not reverted back to accruing status until the borrower makes timely payments as contracted for at least six months and future collection under the revised terms is probable.  All of the Company’s restructurings were allowed in an effort to maximize its ability to collect on loans where borrowers were experiencing financial difficulty.  The Company did not engage in any re-modifications during the three and six month periods ended June 30, 2015 and 2014.

The reserve for a TDR is based upon the present value of the future expected cash flows discounted at the loan’s original effective rate or upon the fair value of the collateral less costs to sell, if the loan is deemed collateral dependent.  This reserve methodology is used because all TDR loans are considered impaired.  As of June 30, 2015, there were no commitments to lend additional funds to debtors owing on loans whose terms have been modified in TDRs.

The following tables summarize the loans that were classified as troubled debt restructurings as of the dates indicated:

		June 30, 2015
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	816	$	641	$	175	$	196
Residential real estate:
Residential		1,815		580		1,235		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,208		667		1,541		33
Construction		1,101		-		1,101		-
Home equities		707		221		486		-
Consumer loans		30		-		30		30
Other		-		-		-		-
Total troubled restructured loans	$	6,677	$	2,109	$	4,568	$	259

		December 31, 2014
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	492	$	274	$	218	$	173
Residential real estate:
Residential		1,833		594		1,239		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,428		847		1,581		33
Construction		1,074		-		1,074		-
Home equities		728		233		495		-
Consumer loans		31		-		31		31
Other		-		-		-		-
Total troubled restructured loans	$	6,586	$	1,948	$	4,638	$	237

The Company’s TDRs have various agreements that involve deferral of principal payments, or interest-only payments, for a period (usually 12 months or less) to allow the customer time to improve cash flow or sell the property.  Other common types of concessions leading to the designation of a TDR are lines of credit that are termed out and extensions of maturities at rates that are less than market given the risk profile of the borrower.

The following table shows the data for TDR activity by type of concession granted to the borrower for the three and six month periods ended June 30, 2015 and 2014:

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial	-	-	-	-		-		-
Residential Real Estate & Construction:
Extension of maturity	-	-	-	2	$	632	$	632
Commercial Real Estate & Construction	-	-	-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-	-	-	1		20		20
Extension of maturity	-	-	-	2		65		65
Consumer loans	-	-	-	-		-		-
Other	-	-	-	-		-		-

	Six months ended June 30, 2015					Six months ended June 30, 2014
	($ in thousands)					($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial:
Deferral of principal	3	$	541	$	541	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	-		-		-	2		632		632
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-		-		-	1		20		20
Extension of maturity	-		-		-	2		65		65
Consumer loans	-		-		-	-		-		-
Other	-		-		-	-		-		-

The general practice of the Bank is to work with borrowers so that they are able to pay back their loan in full.  If a borrower continues to be delinquent or cannot meet the terms of a TDR and the loan is determined to be uncollectible, the loan will be charged-off.  The following table presents loans which were classified as TDRs during the previous 12 months which defaulted during the three and six month periods ended June 30, 2015 and 2014:

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	-		-	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

	Six months ended June 30, 2015			Six months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	1		19	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Measurements [Abstract]

Fair Value Measurements

3.  FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures.”  Those provisions relate to financial assets and liabilities carried at fair value and fair value disclosures related to financial assets and liabilities. ASC Topic 820 defines fair value and specifies a hierarchy of valuation techniques based on the nature of the inputs used to develop the fair value measures. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. 

There are three levels of inputs to fair value measurements:

· Level 1, meaning the use of quoted prices for identical instruments in active markets;

· Level 2, meaning the use of quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; and

· Level 3, meaning the use of unobservable inputs.

Observable market data should be used when available.

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A RECURRING BASIS

The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a recurring basis at June 30, 2015 and December 31, 2014:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
June 30, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	24,080	$	-	$	24,080
States and political subdivisions		-		39,304		-		39,304
Mortgage-backed securities		-		41,885		-		41,885
Mortgage servicing rights		-		-		565		565
December 31, 2014
Securities available-for-sale:
U.S. government agencies	$	-	$	26,717	$	-	$	26,717
States and political subdivisions		-		31,060		-		31,060
Mortgage-backed securities		-		37,756		-		37,756
Mortgage servicing rights		-		-		518		518

Securities available for sale

Fair values for securities are determined using independent pricing services and market-participating brokers.  The Company’s independent pricing service utilizes evaluated pricing models that vary by asset class and incorporate available trade, bid and other market information for structured securities, cash flow and, when available, loan performance data.  Because many fixed income securities do not trade on a daily basis, the evaluated pricing applications apply information as applicable through processes, such as benchmarking of like securities, sector groupings, and matrix pricing, to prepare evaluations.  In addition, model processes, such as the Option Adjusted Spread model, are used to assess interest rate impact and develop prepayment scenarios.  The models and the process take into account market convention.  For each asset class, a team of evaluators gathers information from market sources and integrates relevant credit information, perceived market movements and sector news into the evaluated pricing applications and models.  The company’s service provider may occasionally determine that it does have not sufficient verifiable information to value a particular security.  In these cases the Company will utilize valuations from another pricing service.

Management believes that it has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of securities to enable management to maintain an appropriate system of internal control.  On a quarterly basis, the Company reviews changes in the market value of its security portfolio.  Individual changes in valuations are reviewed for consistency with general interest rate movements and any known credit concerns for specific securities.  Additionally, on an annual basis, the Company has its entire security portfolio priced by a second pricing service to determine consistency with another market evaluator.  If, on the Company’s review or in comparing with another servicer, a material difference between pricing evaluations were to exist, the Company would submit an inquiry to the service provider regarding the data used to value a particular security.   If the Company determines it has market information that would support a different valuation than the initial evaluation it can submit a challenge for a change to that security’s valuation. There were no material differences in valuations noted in the first and second quarters of 2015 or during fiscal year 2014.

Securities available for sale are classified as Level 2 in the fair value hierarchy as the valuation provided by the third-party provider uses observable market data.

Mortgage servicing rights

Mortgage servicing rights (“MSRs”) do not trade in an active, open market with readily observable prices. Accordingly, the Company obtains the fair value of the MSRs using a third-party pricing provider. The provider determines the fair value by discounting projected net servicing cash flows of the remaining servicing portfolio.  The valuation model used by the provider considers market loan prepayment predictions and other economic factors which management considers to be significant unobservable inputs.  The fair value of MSRs is mostly affected by changes in mortgage interest rates since rate changes cause the loan prepayment acceleration factors to increase or decrease.  Management has a sufficient understanding of the third party service’s valuation models, assumptions and inputs used in determining the fair value of MSRs to enable management to maintain an appropriate system of internal control.  Mortgage servicing rights are classified within Level 3 of the fair value hierarchy as the valuation is model driven and primarily based on unobservable inputs.

The following table summarizes the changes in fair value for mortgage servicing rights during the three and six month periods ended June 30, 2015 and 2014, respectively:

	Three months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - April 1	$	497	$	471
Gains (losses) included in earnings		4		(31)
Additions from loan sales		64		31
Mortgage servicing rights - June 30	$	565	$	471

	Six months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - January 1	$	518	$	509
Gains (losses) included in earnings		(41)		(69)
Additions from loan sales		88		31
Mortgage servicing rights - June 30	$	565	$	471

Quantitative information about the significant unobservable inputs used in the fair value measurement of MSRs at the respective dates is as follows:

	6/30/2015		12/31/2014
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.10	%	9.28	%

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE ON A NONRECURRING BASIS

The Company is required, on a nonrecurring basis, to adjust the carrying value of certain assets or provide valuation allowances related to certain assets using fair value measurements.  The following table presents for each of the fair-value hierarchy levels as defined in this footnote, those financial instruments which are measured at fair value on a nonrecurring basis at June 30, 2015 and December 31, 2014:

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2015
Impaired loans	$	-	-	13,882	$	13,882
December 31, 2014
Impaired loans	$	-	-	13,716	$	13,716

Impaired loans

The Company evaluatesand values impaired loans at the time the loan is identified as impaired, and the fair values of such loans are estimated using Level 3 inputs in the fair value hierarchy.  Each loan’s collateral has a unique appraisal and management’s discount of the value is based on factors unique to each impaired loan.  The significant unobservable input in determining the fair value is management’s subjective discount on appraisals of the collateral securing the loan, which ranges from 10%-50%.  Collateral may consist of real estate and/or business assets including equipment, inventory and/or accounts receivable and the value of these assets is determined based on appraisals by qualified licensed appraisers hired by the Company.  Appraised and reported values may be discounted based on management’s historical knowledge, changes in market conditions from the time of valuation, estimated costs to sell, and/or management’s expertise and knowledge of the client and the client’s business.

The Company has an appraisal policy in which appraisals are obtained upon a commercial loan being downgraded on the Company internal loan rating scale to a 5 (special mention) or a 6 (substandard) depending on the amount of the loan, the type of loan and the type of collateral.  All impaired commercial loans are either graded a 6 or 7 on the internal loan rating scale.  For consumer loans, the Company obtains appraisals when a loan becomes 90 days past due or is determined to be impaired, whichever occurs first.  Subsequent to the downgrade or reaching 90 days past due, if the loan remains outstanding and impaired for at least one year more, management may require another follow-up appraisal.  Between receipts of updated appraisals, if necessary, management may perform an internal valuation based on any known changing conditions in the marketplace such as sales of similar properties, a change in the condition of the collateral, or feedback from local appraisers.  Impaired loans had a gross value of $14.8 million, with a valuation allowance of $0.9 million, at June 30, 2015, compared to a gross value for impaired loans of $15.0 million, with a valuation allowance of $1.3 million, at December 31, 2014.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At June 30, 2015 and December 31, 2014, the estimated fair values of the Company’s financial instruments, including those that are not measured and reported at fair value on a recurring basis or nonrecurring basis, were as follows:

	June 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	48,565	$	48,565	$	10,898	$	10,898
Level 2:
Available for sale securities		105,269		105,269		95,533		95,533
FHLB and FRB stock		2,774		2,774		2,925		2,925
Level 3:
Held to maturity securities		1,465		1,440		1,599		1,574
Loans and leases, net		697,722		709,025		683,131		685,148
Mortgage servicing rights		565		565		518		518
Financial liabilities:
Level 1:
Demand deposits	$	163,862	$	163,862	$	158,631	$	158,631
NOW deposits		79,266		79,266		72,670		72,670
Regular savings deposits		431,555		431,555		363,542		363,542
Commitments to extend credit		249		249		245		245
Securities sold under agreement to
repurchase		11,009		11,009		13,778		13,778
Level 2:
Other borrowed funds		10,000		10,000		13,700		13,700
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		99,482		100,370		112,792		113,854

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practical to estimate that value.

Cash and Cash Equivalents.  For these short-term instruments, the carrying amount is a reasonable estimate of fair value.  “Cash and Cash Equivalents” includes interest-bearing deposits at other banks.

FHLB and FRB stock.  The carrying value of FHLB and FRB stock approximate fair value.

Securities held to maturity.  The Company holds certain municipal bonds as held-to-maturity.  These bonds are generally small in dollar amount and are issued only by certain local municipalities within the Company’s market area.  The original terms are negotiated directly and on an individual basis consistent with our loan and credit guidelines.  These bonds are not traded on the open market and management intends to hold the bonds to maturity.  The fair value of held-to-maturity securities is estimated by discounting the future cash flows using the current rates at which similar agreements would be made with municipalities with similar credit ratings and for the same remaining maturities.

Loans and Leases, net.  The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, net of the appropriate portion of the allowance for loan losses.  For variable rate loans, the carrying amount is a reasonable estimate of fair value.  This fair value calculation is not necessarily indicative of the exit price, as defined in ASC 820.

Deposits.  The fair value of demand deposits, NOW accounts, muni-vest accounts and regular savings accounts is the amount payable on demand at the reporting date.  The fair value of time deposits is estimated using the rates currently offered for deposits of similar remaining maturities.

Junior Subordinated Debentures.  There is no active market for the Company’s debentures.  The fair value of the junior subordinated debentures is determined using an expected prevent value technique.  The fair value of the adjustable-rate debentures approximates their face amount.

Commitments to extend credit and standby letters of credit.  As described in Note 8 - “Contingent Liabilities and Commitments” to these Unaudited Consolidated Financial Statements, the Company was a party to financial instruments with off-balance sheet risk at June 30, 2015 and December 31, 2014.  Such financial instruments consist of commitments to extend permanent financing and letters of credit.  If the options are exercised by the prospective borrowers, these financial instruments will become interest-earning assets of the Company.  If the options expire, the Company retains any fees paid by the counterparty in order to obtain the commitment or guarantee.  The fees collected for these commitments are recorded as “unearned commitment fees” in Other Liabilities.  The carrying value approximates the fair value.

Securities Sold Under Agreement to Repurchase.  The fair value of the securities sold under agreement to repurchase approximates its carrying value.

Other Borrowed Funds.  The fair value of the short-term portion of other borrowed funds approximates its carrying value.  The fair value of the long-term portion of other borrowed funds is estimated using a discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2015

Segment Information [Abstract]

Schedule Of Business Segments

	Three months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,677	$	(29)	$	7,648
Provision for loan and lease losses		415		-		415
Net interest income (expense) after
provision for loan and lease losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
Amortization expense		-		-		-
Non-interest expense		7,089		1,152		8,241
Income before income taxes		2,019		449		2,468
Income tax provision		616		177		793
Net income	$	1,403	$	272	$	1,675

	Three months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,711	$	(29)	$	7,682
Provision for loan and lease losses		176		-		176
Net interest income (expense) after
provision for loan and lease losses		7,535		(29)		7,506
Non-interest income		1,469		-		1,469
Insurance service and fees		146		1,440		1,586
Amortization expense		-		40		40
Non-interest expense		7,294		998		8,292
Income before income taxes		1,856		373		2,229
Income tax provision		508		142		650
Net income	$	1,348	$	231	$	1,579

	Six months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,286	$	(57)	$	15,229
Provision for loan and lease losses		616		-		616
Net interest income (expense) after
provision for loan and lease losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
Amortization expense		-		-		-
Non-interest expense		13,570		2,183		15,753
Income before income taxes		4,345		1,057		5,402
Income tax provision		1,410		412		1,822
Net income	$	2,935	$	645	$	3,580

	Six months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,038	$	(57)	$	14,981
Provision for loan and lease losses		328		-		328
Net interest income (expense) after
provision for loan and lease losses		14,710		(57)		14,653
Non-interest income		2,731		-		2,731
Insurance service and fees		298		3,420		3,718
Amortization expense		-		81		81
Non-interest expense		13,772		2,098		15,870
Income before income taxes		3,967		1,184		5,151
Income tax provision		1,104		455		1,559
Net income	$	2,863	$	729	$	3,592

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Securities (Tables)

6 Months Ended

Jun. 30, 2015

Securities [Abstract]

Schedule Of Amortized Cost And Approximate Fair Value Of Securities

	June 30, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	24,120	$	261	$	(301)	$	24,080
States and political subdivisions		38,621		801		(118)		39,304
Total debt securities	$	62,741	$	1,062	$	(419)	$	63,384
Mortgage-backed securities:
FNMA	$	13,957	$	434	$	(19)	$	14,372
FHLMC		5,275		94		(66)		5,303
GNMA		7,867		98		(67)		7,898
CMO		14,444		58		(190)		14,312
Total mortgage-backed securities	$	41,543	$	684	$	(342)	$	41,885
Total securities designated as available for sale	$	104,284	$	1,746	$	(761)	$	105,269
Held to Maturity:
Debt securities
States and political subdivisions	$	1,465	$	6	$	(31)	$	1,440
Total securities designated as held to maturity	$	1,465	$	6	$	(31)	$	1,440

	December 31, 2014
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	26,687	$	305	$	(275)	$	26,717
States and political subdivisions		30,182		927		(49)		31,060
Total debt securities	$	56,869	$	1,232	$	(324)	$	57,777
Mortgage-backed securities:
FNMA	$	14,653	$	516	$	(15)	$	15,154
FHLMC		5,901		121		(64)		5,958
GNMA		6,014		143		(27)		6,130
CMO		10,611		42		(139)		10,514
Total mortgage-backed securities	$	37,179	$	822	$	(245)	$	37,756
Total securities designated as available for sale	$	94,048	$	2,054	$	(569)	$	95,533
Held to Maturity:
Debt securities
States and political subdivisions	$	1,599	$	7	$	(32)	$	1,574
Total securities designated as held to maturity	$	1,599	$	7	$	(32)	$	1,574

Scheduled Maturities Of Debt And Mortgage-Backed Securities

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
		(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,641	$	2,659	$	8,172	$	8,256
Due after one year through five years		28,639		29,150		22,118		22,597
Due after five years through ten years		22,094		22,172		20,517		20,589
Due after ten years		9,367		9,403		6,062		6,335
		62,741		63,384		56,869		57,777
Mortgage-backed securities
available for sale		41,543		41,885		37,179		37,756
Total available for sale securities	$	104,284	$	105,269	$	94,048	$	95,533
Debt securities held to maturity:
Due in one year or less	$	388	$	388	$	478	$	477
Due after one year through five years		66		67		77		78
Due after five years through ten years		898		881		932		914
Due after ten years		113		104		112		105
		1,465		1,440		1,599		1,574
Total held to maturity securities	$	1,465	$	1,440	$	1,599	$	1,574

Unrealized Losses On Available For Sale Securities

	June 30, 2015
		Less than 12 months				12 months or longer					Total
		Fair		Unrealized		Fair			Unrealized		Fair		Unrealized
		Value		Losses		Value			Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	8,411	$	(155)	$	5,854		$	(146)	$	14,265	$	(301)
States and political subdivisions		9,083		(94)		1,187			(24)		10,270		(118)
Total debt securities	$	17,494	$	(249)	$	7,041		$	(170)	$	24,535	$	(419)
Mortgage-backed securities:
FNMA	$	4,155	$	(19)	$	-	-	$	-	$	4,155	$	(19)
FHLMC		-		-		1,362			(66)		1,362		(66)
GNMA		3,684		(60)		674			(7)		4,358		(67)
CMO'S		5,153		(92)		4,012			(98)		9,165		(190)
Total mortgage-backed securities	$	12,992	$	(171)	$	6,048		$	(171)	$	19,040	$	(342)
Held To Maturity:
Debt securities:
States and political subdivisions	$	799	$	(30)	$	89		$	(1)	$	888	$	(31)
Total temporarily impaired
securities	$	31,285	$	(450)	$	13,178		$	(342)	$	44,463	$	(792)

	December 31, 2014
		Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Losses		Value		Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	3,906	$	(26)	$	7,751	$	(249)	$	11,657	$	(275)
States and political subdivisions		4,752		(9)		1,902		(40)		6,654		(49)
Total debt securities	$	8,658	$	(35)	$	9,653	$	(289)	$	18,311	$	(324)
Mortgage-backed securities:
FNMA	$	1,498	$	(10)	$	1,731	$	(5)	$	3,229	$	(15)
FHLMC		-		-		1,482		(64)		1,482		(64)
GNMA		-		-		2,079		(27)		2,079		(27)
CMO'S		1,722		(11)		4,290		(128)		6,012		(139)
Total mortgage-backed securities	$	3,220	$	(21)	$	9,582	$	(224)	$	12,802	$	(245)
Held To Maturity:
Debt securities:
States and political subdivisions	$	371	$	(1)	$	556	$	(31)	$	927	$	(32)
Total temporarily impaired
securities	$	12,249	$	(57)	$	19,791	$	(544)	$	32,040	$	(601)

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Segment Information

6 Months Ended

Jun. 30, 2015

Segment Information [Abstract]

Segment Information

7. SEGMENT INFORMATION

The Company is comprised of two primary business segments, banking and insurance agency activities. The following tables set forth information regarding these segments for the three and six month periods ended June 30, 2015 and 2014.

	Three months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,677	$	(29)	$	7,648
Provision for loan and lease losses		415		-		415
Net interest income (expense) after
provision for loan and lease losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
Amortization expense		-		-		-
Non-interest expense		7,089		1,152		8,241
Income before income taxes		2,019		449		2,468
Income tax provision		616		177		793
Net income	$	1,403	$	272	$	1,675

	Three months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	7,711	$	(29)	$	7,682
Provision for loan and lease losses		176		-		176
Net interest income (expense) after
provision for loan and lease losses		7,535		(29)		7,506
Non-interest income		1,469		-		1,469
Insurance service and fees		146		1,440		1,586
Amortization expense		-		40		40
Non-interest expense		7,294		998		8,292
Income before income taxes		1,856		373		2,229
Income tax provision		508		142		650
Net income	$	1,348	$	231	$	1,579

	Six months ended June 30, 2015
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,286	$	(57)	$	15,229
Provision for loan and lease losses		616		-		616
Net interest income (expense) after
provision for loan and lease losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
Amortization expense		-		-		-
Non-interest expense		13,570		2,183		15,753
Income before income taxes		4,345		1,057		5,402
Income tax provision		1,410		412		1,822
Net income	$	2,935	$	645	$	3,580

	Six months ended June 30, 2014
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	15,038	$	(57)	$	14,981
Provision for loan and lease losses		328		-		328
Net interest income (expense) after
provision for loan and lease losses		14,710		(57)		14,653
Non-interest income		2,731		-		2,731
Insurance service and fees		298		3,420		3,718
Amortization expense		-		81		81
Non-interest expense		13,772		2,098		15,870
Income before income taxes		3,967		1,184		5,151
Income tax provision		1,104		455		1,559
Net income	$	2,863	$	729	$	3,592

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Per Share Data

6 Months Ended

Jun. 30, 2015

Per Share Data [Abstract]

Per Share Data

5. PER SHARE DATA

The common stock per share information is based upon the weighted average number of shares outstanding during each period.  For the three and six month periods ended June 30, 2015, the Company had an average of 75,354 and 76,227 dilutive shares outstanding, respectively.  The Company had an average of 81,752 and 81,475 dilutive shares outstanding for the three and six month periods ended June 30, 2014, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share.  For the three and six month periods ended June 30, 2015, there was an average of 37,800 and 38,215 anti-dilutive shares outstanding, respectively, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  There were 40,060 potentially anti-dilutive shares outstanding for the three and six month periods ended June 30, 2014.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2015

Other Comprehensive Income [Abstract]

Other Comprehensive Income

6. OTHER COMPREHENSIVE INCOME

The following tables summarize the changes in the components of accumulated other comprehensive income (loss) during the three and six month periods ended June 30, 2015 and 2014:

	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plans adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)
	Balance at March 31, 2014		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	552	$	428	$	980
Net defined benefit pension plans adjustments		(1,433)		19		(1,414)
Total	$	(881)	$	447	$	(434)

	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain (loss) on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plans adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)
	Balance at December 31, 2013		Net Change		Balance at June 30, 2014
	(in thousands)
Net unrealized gain (loss) on investment securities	$	191	$	789	$	980
Net defined benefit pension plans adjustments		(1,454)		40		(1,414)
Total	$	(1,263)	$	829	$	(434)

	Three months ended June 30, 2015 (in thousands)						Three months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(1,041)	$	404	$	(637)	$	699	$	(271)	$	428
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(1,041)		404		(637)		699		(271)		428
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		9		(4)		5		7		(3)		4
Amortization of actuarial loss (a)		52		(15)		37		25		(10)		15
Net change		61		(19)		42		32		(13)		19
Other Comprehensive Income (Loss)	$	(980)	$	385	$	(595)	$	731	$	(284)	$	447

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

	Six months ended June 30, 2015 (in thousands)						Six months ended June 30, 2014 (in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount		Before-Tax Amount		Income Tax (Provision) Benefit		Net-of-Tax Amount
Unrealized loss on investment securities:
Unrealized gain (loss) on investment securities	$	(500)	$	194	$	(306)	$	1,287	$	(498)	$	789
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		(500)		194		(306)		1,287		(498)		789
Defined benefit pension plans adjustments:
Net actuarial (loss) gain	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		15		(6)		9
Amortization of actuarial loss (a)		100		(39)		61		52		(21)		31
Net change		116		(45)		71		67		(27)		40
Other Comprehensive Income (Loss)	$	(384)	$	149	$	(235)	$	1,354	$	(525)	$	829

(a)   Included in net periodic pension cost, as described in Note 9 – “Net Periodic Benefit Costs”

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Contingent Liabilities And Commitments

6 Months Ended

Jun. 30, 2015

Contingent Liabilities And Commitments [Abstract]

Contingent Liabilities And Commitments

8. CONTINGENT LIABILITIES AND COMMITMENTS

The unaudited consolidated financial statements do not reflect various commitments and contingent liabilities, which arise in the normal course of business, and which involve elements of credit risk, interest rate risk and liquidity risk. These commitments and contingent liabilities consist of commitments to extend credit and standby letters of credit. A summary of the Bank’s commitments and contingent liabilities is as follows:

	June 30,		December 31,
	2015		2014
	(in thousands)
Commitments to extend credit	$	204,233	$	212,193
Standby letters of credit		3,749		2,430
Total	$	207,982	$	214,623

Commitments to extend credit and standby letters of credit include some exposure to credit loss in the event of nonperformance by the customer. The Bank’s credit policies and procedures for credit commitments and financial guarantees are the same as those for extensions of credit that are recorded on the Company’s unaudited consolidated balance sheets. Because these instruments have fixed maturity dates, and because they may expire without being drawn upon, they do not necessarily represent cash requirements of the Bank. The Bank did not incur any losses on its commitments and did not record a reserve for its commitments during the first six months of 2015 or during 2014.

Certain lending commitments for construction residential mortgage loans are considered derivative instruments under the guidelines of GAAP.  The changes in the fair value of these commitments, due to interest rate risk, are not recorded on the consolidated balance sheets as the fair value of these derivatives is not considered material.

The Company is subject to possible litigation proceedings in the normal course of business.  On September 2, 2014 the Office of the Attorney General for the State of New York (“NYAG”) filed a formal complaint against the Company and the Bank regarding residential lending practices.  The Company accrued an estimated liability relating to the NYAG investigation totaling $1.0 million during 2014.  At June 30, 2015, a range of loss could not be determined, and management believes the $1.0 million accrual is the best estimate of probable loss.  

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Fair Value Measurements (Quantitative Information About Significant Unobservable Inputs Used In The Fair Value Measurement Of MSRs) (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Fair Value Measurements [Abstract]
Servicing fees	0.25%	0.25%
Discount rate	9.52%	9.52%
Prepayment rate (CPR)	8.10%	9.28%

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Contingent Liabilities And Commitments (Summary Of Commitments And Contingent Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 207,982	$ 214,623
Estimated liability related to NYAG investigation		1,000
Estimated probable loss	1,000
Commitments To Extend Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	204,233	212,193
Standby Letters Of Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 3,749	$ 2,430

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Loans And The Allowance For Loan Losses (Tables)

6 Months Ended

Jun. 30, 2015

Loans And The Allowance For Loan Losses [Abstract]

Schedule Of Composition Of Loan Portfolio

	June 30, 2015		December 31, 2014
Mortgage loans on real estate:		(in thousands)
Residential Mortgages	$	98,269	$	98,374
Commercial and multi-family		373,891		363,252
Construction-Residential		709		721
Construction-Commercial		45,232		40,986
Home equities		59,381		59,948
Total real estate loans		577,482		563,281
Commercial and industrial loans		129,812		129,456
Consumer loans		1,699		1,764
Other		1,165		404
Net deferred loan origination costs		674		759
Total gross loans		710,832		695,664
Allowance for loan losses		(13,110)		(12,533)
Loans, net	$	697,722	$	683,131

Data, At The Class Level, Of Credit Quality Indicators Of Certain Loans And Leases

June 30, 2015
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	37,357	$	311,618	$	348,975	$	77,168
4		2,669		40,588		43,257		33,611
5		5,206		15,720		20,926		11,464
6		-		5,965		5,965		7,465
7		-		-		-		104
Total	$	45,232	$	373,891	$	419,123	$	129,812

December 31, 2014
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
3	$	29,421	$	299,798	$	329,219	$	83,789
4		10,492		50,691		61,183		30,223
5		1,073		7,853		8,926		8,662
6		-		4,757		4,757		6,613
7		-		153		153		169
Total	$	40,986	$	363,252	$	404,238	$	129,456

Recorded Investment In Loans Past Due

June 30, 2015
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	463	$	223	$	148	$	834	$	128,978	$	129,812	$	103	$	5,620
Residential real estate:
Residential		237		243		650		1,130		97,139		98,269		125		1,265
Construction		-		-		-		-		709		709		-		-
Commercial real estate:
Commercial		-		-		2,525		2,525		371,366		373,891		238		2,812
Construction		-		-		267		267		44,965		45,232		267		-
Home equities		254		518		326		1,098		58,283		59,381		72		475
Consumer		23		1		17		41		1,658		1,699		-		17
Other		-		-		-		-		1,165		1,165		-		-
Total Loans	$	977	$	985	$	3,933	$	5,895	$	704,263	$	710,158	$	805	$	10,189

NOTE: Loan and lease balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

December 31, 2014
(in thousands)
							Total Past		Current		Total		90+ Days		Non-accruing
	30-59 days		60-89 days		90+ days		Due		Balance		Balance		Accruing		Loans
Commercial and
industrial	$	153	$	60	$	274	$	487	$	128,969	$	129,456	$	-	$	5,500
Residential real estate:
Residential		848		158		682		1,688		96,686		98,374		-		1,296
Construction		-		-		-		-		721		721		-		-
Commercial real estate:
Commercial		4,201		3,115		513		7,829		355,423		363,252		-		3,162
Construction		8		-		201		209		40,777		40,986		201		-
Home equities		594		120		192		906		59,042		59,948		-		415
Consumer		13		1		-		14		1,750		1,764		-		17
Other		-		-		-		-		404		404		-		-
Total Loans	$	5,817	$	3,454	$	1,862	$	11,133	$	683,772	$	694,905	$	201	$	10,390

NOTE: Loan and lease balances do not include $759 thousand in net deferred loan origination costs as of December 31, 2014.

Summary Of Allowance For Loan Losses According To Portfolio Segment

The following tables present the activity in the allowance for loan losses according to portfolio segment, for the six month periods ended June, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,896	$	5,650	$	78	$	941	$	819	$	149	$	12,533
Charge-offs		(80)		(35)		(11)		-		-		-		(126)
Recoveries		57		23		6		1		-		-		87
Provision		(228)		856		(2)		6		(16)		-		616
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	730	$	59	$	46	$	40	$	-	$	-	$	875
Collectively evaluated
for impairment		3,915		6,435		25		908		803		149		12,235
Total	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110
Loans:
Ending balance:
Individually evaluated
for impairment	$	5,795	$	5,455	$	46	$	2,500	$	961	$	-	$	14,757
Collectively evaluated
for impairment		124,017		413,668		2,818		96,478		58,420		-		695,401
Total	$	129,812	$	419,123	$	2,864	$	98,978	$	59,381	$	-	$	710,158

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $674 thousand in net deferred loan origination costs as of June 30, 2015.

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,489	$	4,912	$	37	$	1,038	$	878	$	-	$	149	$	11,503
Charge-offs		(474)		(57)		(12)		-		(1)		-		-		(544)
Recoveries		59		39		4		2		-		131		-		235
Provision		(171)		651		17		6		(44)		(131)		-		328
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	191	$	358	$	18	$	-	$	-	$	-	$	-	$	567
Collectively evaluated
for impairment		3,712		5,187		28		1,046		833		-		149		10,955
Total	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522
Loans:
Ending balance:
Individually evaluated
for impairment	$	1,125	$	13,642	$	18	$	1,958	$	544	$	-	$	-	$	17,287
Collectively evaluated
for impairment		110,358		377,657		3,753		96,736		56,937		-		-		645,441
Total	$	111,483	$	391,299	$	3,771	$	98,694	$	57,481	$	-	$	-	$	662,728

* Includes construction loans

** Includes all other consumer loans

NOTE: Loan balances do not include $671 thousand in net deferred loan origination costs as of June 30, 2014.

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2015 and 2014:

June 30, 2015
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,989	$	5,830	$	70	$	924	$	815	$	149	$	12,777
Charge-offs		(80)		(35)		(5)		-		-		-		(120)
Recoveries		19		13		5		1		-		-		38
Provision		(283)		686		1		23		(12)		-		415
Ending balance	$	4,645	$	6,494	$	71	$	948	$	803	$	149	$	13,110

June 30, 2014
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer **		Residential Mortgages*		HELOC		Direct Financing Leases		Unallocated		Total
Allowance for loan
and lease losses:
Beginning balance	$	4,523	$	5,108	$	36	$	1,037	$	881	$	-	$	149	$	11,734
Charge-offs		(417)		(57)		(6)		-		-		-		-		(480)
Recoveries		31		10		2		2		-		47		-		92
Provision		(234)		484		14		7		(48)		(47)		-		176
Ending balance	$	3,903	$	5,545	$	46	$	1,046	$	833	$	-	$	149	$	11,522

Data, At The Class Level, Of Impaired Loans

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	2,162	$	2,240	$	-	$	2,439	$	64	$	9
Residential real estate:
Residential		2,229		2,408		-		2,244		22		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,891		1,991		-		1,927		13		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	8,344	$	8,752	$	-	$	8,678	$	114	$	103

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	3,633	$	3,746	$	730	$	3,726	$	112	$	12
Residential real estate:
Residential		271		285		40		271		10		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,463		2,642		59		2,514		87		-
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	6,413	$	6,741	$	875	$	6,558	$	211	$	14

		At June 30, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,795	$	5,986	$	730	$	6,165	$	176	$	21
Residential real estate:
Residential		2,500		2,693		40		2,515		32		23
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,354		4,633		59		4,441		100		41
Construction		1,101		1,101		-		1,088		-		21
Home equities		961		1,012		-		980		15		9
Consumer		46		68		46		47		2		2
Other		-		-		-		-		-		-
Total impaired loans	$	14,757	$	15,493	$	875	$	15,236	$	325	$	117

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With no related allowance recorded:		(in thousands)
Commercial and industrial	$	1,017	$	1,022	$	-	$	1,096	$	9	$	66
Residential real estate:
Residential		2,264		2,435		-		2,271		37		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,103		2,208		-		2,139		33		91
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		-		-		-		-		-		-
Other		-		-		-		-		-		-
Total impaired loans	$	7,369	$	7,689	$	-	$	7,592	$	96	$	291

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
With a related allowance recorded:		(in thousands)
Commercial and industrial	$	4,701	$	4,734	$	988	$	4,701	$	64	$	234
Residential real estate:
Residential		271		285		3		271		20		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,640		2,785		274		2,708		96		50
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	7,660	$	7,864	$	1,313	$	7,729	$	185	$	290

		At December 31, 2014
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,718	$	5,756	$	988	$	5,797	$	73	$	300
Residential real estate:
Residential		2,535		2,720		3		2,542		57		68
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,743		4,993		274		4,847		129		141
Construction		1,074		1,074		-		1,169		-		44
Home equities		911		950		-		917		17		22
Consumer		48		60		48		49		5		6
Other		-		-		-		-		-		-
Total impaired loans	$	15,029	$	15,553	$	1,313	$	15,321	$	281	$	581

Schedule Of Non-Performing Loans

	June 30, 2015			December 31, 2014
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	5,620		$	5,500
Residential real estate:
Residential		1,265			1,296
Construction		-			-
Commercial real estate:
Commercial and multi-family		2,812			3,162
Construction		-			-
Home equities		475			415
Consumer loans		17			17
Other		-			-
Total non-accruing loans	$	10,189		$	10,390
Accruing loans 90+ days past due		805			201
Total non-performing loans	$	10,994		$	10,591
Total non-performing loans
to total assets		1.21	%		1.25	%
Total non-performing loans
to total loans		1.55	%		1.52	%

Loans Classified As Troubled Debt Restructurings

		June 30, 2015
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	816	$	641	$	175	$	196
Residential real estate:
Residential		1,815		580		1,235		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,208		667		1,541		33
Construction		1,101		-		1,101		-
Home equities		707		221		486		-
Consumer loans		30		-		30		30
Other		-		-		-		-
Total troubled restructured loans	$	6,677	$	2,109	$	4,568	$	259

		December 31, 2014
		($ in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	492	$	274	$	218	$	173
Residential real estate:
Residential		1,833		594		1,239		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi family		2,428		847		1,581		33
Construction		1,074		-		1,074		-
Home equities		728		233		495		-
Consumer loans		31		-		31		31
Other		-		-		-		-
Total troubled restructured loans	$	6,586	$	1,948	$	4,638	$	237

TDR Activity By Type Of Concession Granted To Borrower

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts	Pre-Modification Outstanding Recorded Investment	Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial	-	-	-	-		-		-
Residential Real Estate & Construction:
Extension of maturity	-	-	-	2	$	632	$	632
Commercial Real Estate & Construction	-	-	-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-	-	-	1		20		20
Extension of maturity	-	-	-	2		65		65
Consumer loans	-	-	-	-		-		-
Other	-	-	-	-		-		-

	Six months ended June 30, 2015					Six months ended June 30, 2014
	($ in thousands)					($ in thousands)
Troubled Debt Restructurings by Type of Concession	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Commercial and Industrial:
Deferral of principal	3	$	541	$	541	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	-		-		-	2		632		632
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities:
Extension of maturity & rate reduction	-		-		-	1		20		20
Extension of maturity	-		-		-	2		65		65
Consumer loans	-		-		-	-		-		-
Other	-		-		-	-		-		-

Loans Classified As TDRs Which Defaulted

	Three months ended June 30, 2015			Three months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	-		-	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

	Six months ended June 30, 2015			Six months ended June 30, 2014
	($ in thousands)			($ in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	1	$	71
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and Multi-Family	1		245	-		-
Construction	-		-	-		-
Home Equities	1		19	1		54
Consumer loans	-		-	-		-
Other	-		-	-		-

XML

Organization And Summary Of Significant Accounting Policies (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) entity	Jun. 30, 2014 USD ($)
Number of subsidiaries | entity	2
Net cash provided by operating activities	$ 3,551	$ 2,934
Net cash used in investing activities	(24,700)	(19,351)
Depreciation and amortization	745	827
Change in other assets affecting cash flow	1,112	(344)
Change in other liabilities affecting cash flow	37	$ (1,900)
Scenario, Adjustment [Member]
Net cash provided by operating activities	347
Net cash used in investing activities	347
Depreciation and amortization	80
Change in other assets affecting cash flow	483
Change in other liabilities affecting cash flow	$ 216

XML

Other Comprehensive Income (Components Of Other Comprehensive Income(Loss)) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Unrealized loss on investment securities, Before-Tax Amount:
Unrealized gain (loss) on investment securities, Before-Tax Amount		$ (1,041)	$ 699	$ (500)	$ 1,287
Net change, Before-Tax Amount		(1,041)	699	(500)	1,287
Defined benefit pension plans adjustments, Before-Tax Amount:
Amortization of prior service cost, Before-Tax Amount	[1]	9	7	16	15
Amortization of actuarial loss, Before-Tax Amount	[1]	52	25	100	52
Net change, Before-Tax Amount		61	32	116	67
Other Comprehensive Loss, Before-Tax Amount		(980)	731	(384)	1,354
Unrealized loss on investment securities, Income Tax (Provision) Benefit:
Unrealized gain (loss) on investment securities, Income Tax (Provision) Benefit		404	(271)	194	(498)
Net change, Income Tax (Provision) Benefit		404	(271)	194	(498)
Defined benefit pension plans adjustments, Income Tax (Provision) Benefit:
Amortization of prior service cost, Income Tax (Provision) Benefit	[1]	(4)	(3)	(6)	(6)
Amortization of actuarial loss, Income Tax (Provision) Benefit	[1]	(15)	(10)	(39)	(21)
Net change, Income Tax (Provision) Benefit		(19)	(13)	(45)	(27)
Other Comprehensive Loss, Income Tax (Provision) Benefit		385	(284)	149	(525)
Unrealized loss on investment securities, Net-of-Tax Amount:
Unrealized gain (loss) on investment securities, Net-of-Tax Amount		(637)	428	(306)	789
Net change, Net-of-Tax Amount		(637)	428	(306)	789
Defined benefit pension plans adjustments, Net-of-Tax Amount:
Amortization of prior service cost, Net-of-Tax Amount	[1]	5	4	10	9
Amortization of actuarial loss, Net-of-Tax Amount	[1]	37	15	61	31
Net change, Net-of-Tax Amount		42	19	71	40
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX		$ (595)	$ 447	$ (235)	$ 829

[1] Included in net periodic pension cost, as described in Note 9 - "Net Periodic Benefit Costs"

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Loans And The Allowance For Loan Losses (Summary Of Allowance For Loan Losses According To Portfolio Segment) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Allowance for loan losses:
Beginning balance		$ 12,777	$ 11,734	$ 12,533	$ 11,503
Charge-offs		(120)	(480)	(126)	(544)
Recoveries		38	92	87	235
Provision for loan losses		415	176	616	328
Ending balance		13,110	11,522	13,110	11,522
Individually evaluated for impairment						$ 875		$ 567
Collectively evaluated for impairment						12,235		10,955
Allowance for loan losses, Total		12,777	11,734	12,533	11,503	13,110	$ 12,533	11,522
Loans:
Individually evaluated for impairment						14,757		17,287
Collectively evaluated for impairment						695,401		645,441
Loans, Total						710,158		662,728
Net deferred loan origination costs						674	759	671
Commercial And Industrial [Member]
Allowance for loan losses:
Beginning balance		4,989	4,523	4,896	4,489
Charge-offs		(80)	(417)	(80)	(474)
Recoveries		19	31	57	59
Provision for loan losses		(283)	(234)	(228)	(171)
Ending balance		4,645	3,903	4,645	3,903
Individually evaluated for impairment						730		191
Collectively evaluated for impairment						3,915		3,712
Allowance for loan losses, Total		4,989	4,523	4,896	4,489	4,645	4,896	3,903
Loans:
Individually evaluated for impairment						5,795		1,125
Collectively evaluated for impairment						124,017		110,358
Loans, Total						129,812		111,483
Home Equities [Member]
Allowance for loan losses:
Beginning balance		815	881	819	878
Charge-offs					(1)
Provision for loan losses		(12)	(48)	(16)	(44)
Ending balance		803	833	803	833
Collectively evaluated for impairment						803		833
Allowance for loan losses, Total		815	881	819	878	803	819	833
Loans:
Individually evaluated for impairment						961		544
Collectively evaluated for impairment						58,420		56,937
Loans, Total						59,381		57,481
Commercial Real Estate [Member]
Allowance for loan losses:
Beginning balance	[1]	5,830	5,108	5,650	4,912
Charge-offs	[1]	(35)	(57)	(35)	(57)
Recoveries	[1]	13	10	23	39
Provision for loan losses	[1]	686	484	856	651
Ending balance	[1]	6,494	5,545	6,494	5,545
Individually evaluated for impairment	[1]					59		358
Collectively evaluated for impairment	[1]					6,435		5,187
Allowance for loan losses, Total	[1]	5,830	5,108	5,650	4,912	6,494	5,650	5,545
Loans:
Individually evaluated for impairment	[1]					5,455		13,642
Collectively evaluated for impairment	[1]					413,668		377,657
Loans, Total	[1]					419,123		391,299
Consumer [Member]
Allowance for loan losses:
Beginning balance	[2]	70	36	78	37
Charge-offs	[2]	(5)	(6)	(11)	(12)
Recoveries	[2]	5	2	6	4
Provision for loan losses	[2]	1	14	(2)	17
Ending balance	[2]	71	46	71	46
Individually evaluated for impairment	[2]					46		18
Collectively evaluated for impairment	[2]					25		28
Allowance for loan losses, Total	[2]	70	36	78	37	71	78	46
Loans:
Individually evaluated for impairment	[2]					46		18
Collectively evaluated for impairment	[2]					2,818		3,753
Loans, Total	[2]					2,864		3,771
Residential Mortgages [Member]
Allowance for loan losses:
Beginning balance	[1]	924	1,037	941	1,038
Recoveries	[1]	1	2	1	2
Provision for loan losses	[1]	23	7	6	6
Ending balance	[1]	948	1,046	948	1,046
Individually evaluated for impairment	[1]					40
Collectively evaluated for impairment	[1]					908		1,046
Allowance for loan losses, Total	[1]	924	1,037	941	1,038	948	941	1,046
Loans:
Individually evaluated for impairment	[1]					2,500		1,958
Collectively evaluated for impairment	[1]					96,478		96,736
Loans, Total	[1]					98,978		98,694
Direct Financing Leases [Member]
Allowance for loan losses:
Recoveries			47		131
Provision for loan losses			(47)		(131)
Unallocated [Member]
Allowance for loan losses:
Beginning balance		149	149	149	149
Ending balance		149	149	149	149
Collectively evaluated for impairment						149		149
Allowance for loan losses, Total		$ 149	$ 149	$ 149	$ 149	$ 149	$ 149	$ 149

[1] Includes construction loans

[2] Includes all other consumer loans

XML

Statements Of Consolidated Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statements Of Consolidated Comprehensive Income [Abstract]
NET INCOME		$ 1,675	$ 1,579	$ 3,580	$ 3,592
Unrealized (loss) gain on available-for-sale securities:
Unrealized (loss) gain on available-for-sale securities		$ (637)	$ 428	(306)	789
Less: Reclassification of gain on sale of securities
Net change, Net-of-Tax Amount		$ (637)	$ 428	(306)	789
Defined benefit pension plans:
Amortization of prior service cost	[1]	5	4	10	9
Amortization of actuarial assumptions	[1]	37	15	61	31
Total		42	19	71	40
OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX		(595)	447	(235)	829
COMPREHENSIVE INCOME		$ 1,080	$ 2,026	$ 3,345	$ 4,421

[1] Included in net periodic pension cost, as described in Note 9 - "Net Periodic Benefit Costs"

XML

Securities

6 Months Ended

Jun. 30, 2015

Securities [Abstract]

Securities

2. SECURITIES

The amortized cost of securities and their approximate fair value at June 30, 2015 and December 31, 2014 were as follows:

	June 30, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	24,120	$	261	$	(301)	$	24,080
States and political subdivisions		38,621		801		(118)		39,304
Total debt securities	$	62,741	$	1,062	$	(419)	$	63,384
Mortgage-backed securities:
FNMA	$	13,957	$	434	$	(19)	$	14,372
FHLMC		5,275		94		(66)		5,303
GNMA		7,867		98		(67)		7,898
CMO		14,444		58		(190)		14,312
Total mortgage-backed securities	$	41,543	$	684	$	(342)	$	41,885
Total securities designated as available for sale	$	104,284	$	1,746	$	(761)	$	105,269
Held to Maturity:
Debt securities
States and political subdivisions	$	1,465	$	6	$	(31)	$	1,440
Total securities designated as held to maturity	$	1,465	$	6	$	(31)	$	1,440

	December 31, 2014
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	26,687	$	305	$	(275)	$	26,717
States and political subdivisions		30,182		927		(49)		31,060
Total debt securities	$	56,869	$	1,232	$	(324)	$	57,777
Mortgage-backed securities:
FNMA	$	14,653	$	516	$	(15)	$	15,154
FHLMC		5,901		121		(64)		5,958
GNMA		6,014		143		(27)		6,130
CMO		10,611		42		(139)		10,514
Total mortgage-backed securities	$	37,179	$	822	$	(245)	$	37,756
Total securities designated as available for sale	$	94,048	$	2,054	$	(569)	$	95,533
Held to Maturity:
Debt securities
States and political subdivisions	$	1,599	$	7	$	(32)	$	1,574
Total securities designated as held to maturity	$	1,599	$	7	$	(32)	$	1,574

Available for sale securities with a total fair value of $68.6 million and $68.8 million at June 30, 2015 and December 31, 2014, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The Company uses the Federal Home Loan Bank of New York (“FHLBNY”) as its primary source of overnight funds and also has several long-term advances with FHLBNY.  The Company had no borrowed funds as of June 30, 2015, and had a total of $13.7 million in borrowed funds with FHLBNY at December 31, 2014.  The Company has placed sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meet FHLB collateral requirements.  As a member of the Federal Home Loan Bank (“FHLB”) System, the Bank is required to hold stock in FHLBNY.  The Bank held $1.3 million and $1.4 million in FHLBNY stock as of June 30, 2015 and December 31, 2014, respectively, at amortized cost.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  At this time, the Company does not believe any impairment in FHLBNY stock is warranted.

The scheduled maturities of debt and mortgage-backed securities at June 30, 2015 and December 31, 2014 are summarized below.  All maturity amounts are contractual maturities.  Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.

	June 30, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	cost		fair value		cost		fair value
		(in thousands)				(in thousands)
Debt securities available for sale:
Due in one year or less	$	2,641	$	2,659	$	8,172	$	8,256
Due after one year through five years		28,639		29,150		22,118		22,597
Due after five years through ten years		22,094		22,172		20,517		20,589
Due after ten years		9,367		9,403		6,062		6,335
		62,741		63,384		56,869		57,777
Mortgage-backed securities
available for sale		41,543		41,885		37,179		37,756
Total available for sale securities	$	104,284	$	105,269	$	94,048	$	95,533
Debt securities held to maturity:
Due in one year or less	$	388	$	388	$	478	$	477
Due after one year through five years		66		67		77		78
Due after five years through ten years		898		881		932		914
Due after ten years		113		104		112		105
		1,465		1,440		1,599		1,574
Total held to maturity securities	$	1,465	$	1,440	$	1,599	$	1,574

Information regarding unrealized losses within the Company’s available for sale securities at June 30, 2015 and December 31, 2014 is summarized below.  The securities are primarily U.S. government-guaranteed agency securities or municipal securities.  All unrealized losses are considered temporary and related to market interest rate fluctuations.

	June 30, 2015
		Less than 12 months				12 months or longer					Total
		Fair		Unrealized		Fair			Unrealized		Fair		Unrealized
		Value		Losses		Value			Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	8,411	$	(155)	$	5,854		$	(146)	$	14,265	$	(301)
States and political subdivisions		9,083		(94)		1,187			(24)		10,270		(118)
Total debt securities	$	17,494	$	(249)	$	7,041		$	(170)	$	24,535	$	(419)
Mortgage-backed securities:
FNMA	$	4,155	$	(19)	$	-	-	$	-	$	4,155	$	(19)
FHLMC		-		-		1,362			(66)		1,362		(66)
GNMA		3,684		(60)		674			(7)		4,358		(67)
CMO'S		5,153		(92)		4,012			(98)		9,165		(190)
Total mortgage-backed securities	$	12,992	$	(171)	$	6,048		$	(171)	$	19,040	$	(342)
Held To Maturity:
Debt securities:
States and political subdivisions	$	799	$	(30)	$	89		$	(1)	$	888	$	(31)
Total temporarily impaired
securities	$	31,285	$	(450)	$	13,178		$	(342)	$	44,463	$	(792)

	December 31, 2014
		Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Losses		Value		Losses		Value		Losses
		(in thousands)
Available for Sale:
Debt securities:
U.S. government agencies	$	3,906	$	(26)	$	7,751	$	(249)	$	11,657	$	(275)
States and political subdivisions		4,752		(9)		1,902		(40)		6,654		(49)
Total debt securities	$	8,658	$	(35)	$	9,653	$	(289)	$	18,311	$	(324)
Mortgage-backed securities:
FNMA	$	1,498	$	(10)	$	1,731	$	(5)	$	3,229	$	(15)
FHLMC		-		-		1,482		(64)		1,482		(64)
GNMA		-		-		2,079		(27)		2,079		(27)
CMO'S		1,722		(11)		4,290		(128)		6,012		(139)
Total mortgage-backed securities	$	3,220	$	(21)	$	9,582	$	(224)	$	12,802	$	(245)
Held To Maturity:
Debt securities:
States and political subdivisions	$	371	$	(1)	$	556	$	(31)	$	927	$	(32)
Total temporarily impaired
securities	$	12,249	$	(57)	$	19,791	$	(544)	$	32,040	$	(601)

Management has assessed the securities available for sale in an unrealized loss position at June 30, 2015 and December 31, 2014 and determined the decline in fair value below amortized cost to be temporary.  In making this determination, management considered the period of time the securities were in a loss position, the percentage decline in comparison to the securities’ amortized cost, and the financial condition of the issuer (primarily government or government-sponsored enterprises).  In addition, management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost.  Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers.

The Company had not recorded any other-than-temporary impairment (“OTTI”) charges as of June 30, 2015 and did not record any OTTI charges during 2014.  Nevertheless, it remains possible that there could be deterioration in the asset quality of the securities portfolio in the future.  The credit worthiness of the Company’s portfolio is largely reliant on the ability of U.S. government sponsored agencies such as FHLB, Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”), and municipalities throughout New York State to meet their obligations.  In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio.  The relatively stable past performance is not a guarantee for similar performance of the Company’s securities portfolio going forward.

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Securities (Narrative) (Details) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
Securities [Abstract]
Available for sale securities pledged as collateral	$ 68,600,000	$ 68,800,000
Borrowed funds with FHLBNY	0	13,700,000
FHLBNY stock	$ 1,296,000	$ 1,439,000

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Loans And The Allowance For Loan Losses (Schedule Of Composition Of Loan Portfolio) (Details) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	$ 577,482	$ 563,281
Commercial and industrial loans	129,812	129,456
Consumer loans	1,699	1,764
Other	1,165	404
Net deferred loan origination costs	674	759	$ 671
Total gross loans	710,832	695,664
Allowance for loan losses	(13,110)	(12,533)
Loans, net	697,722	683,131
Residential Real Estate: Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	98,269	98,374
Commercial Real Estate: Commercial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	373,891	363,252
Residential Real Estate: Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	709	721
Commercial Real Estate: Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	45,232	40,986
Home Equities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total real estate loans	$ 59,381	$ 59,948

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Measurements [Abstract]

Financial Instruments Measured At Fair Value On Recurring Basis

(in thousands)		Level 1		Level 2		Level 3		Fair Value
June 30, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	24,080	$	-	$	24,080
States and political subdivisions		-		39,304		-		39,304
Mortgage-backed securities		-		41,885		-		41,885
Mortgage servicing rights		-		-		565		565
December 31, 2014
Securities available-for-sale:
U.S. government agencies	$	-	$	26,717	$	-	$	26,717
States and political subdivisions		-		31,060		-		31,060
Mortgage-backed securities		-		37,756		-		37,756
Mortgage servicing rights		-		-		518		518

Changes In Fair Value For Mortgage Servicing Rights

	Three months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - April 1	$	497	$	471
Gains (losses) included in earnings		4		(31)
Additions from loan sales		64		31
Mortgage servicing rights - June 30	$	565	$	471

	Six months ended June 30,
(in thousands)	2015		2014
Mortgage servicing rights - January 1	$	518	$	509
Gains (losses) included in earnings		(41)		(69)
Additions from loan sales		88		31
Mortgage servicing rights - June 30	$	565	$	471

Quantitative Information About Significant Unobservable Inputs Used In The Fair Value Measurement Of MSRs

	6/30/2015		12/31/2014
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.10	%	9.28	%

Financial Instruments Measured At Fair Value On Nonrecurring Basis

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2015
Impaired loans	$	-	-	13,882	$	13,882
December 31, 2014
Impaired loans	$	-	-	13,716	$	13,716

Estimated Fair Values Of Financial Instruments

	June 30, 2015				December 31, 2014
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	48,565	$	48,565	$	10,898	$	10,898
Level 2:
Available for sale securities		105,269		105,269		95,533		95,533
FHLB and FRB stock		2,774		2,774		2,925		2,925
Level 3:
Held to maturity securities		1,465		1,440		1,599		1,574
Loans and leases, net		697,722		709,025		683,131		685,148
Mortgage servicing rights		565		565		518		518
Financial liabilities:
Level 1:
Demand deposits	$	163,862	$	163,862	$	158,631	$	158,631
NOW deposits		79,266		79,266		72,670		72,670
Regular savings deposits		431,555		431,555		363,542		363,542
Commitments to extend credit		249		249		245		245
Securities sold under agreement to
repurchase		11,009		11,009		13,778		13,778
Level 2:
Other borrowed funds		10,000		10,000		13,700		13,700
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		99,482		100,370		112,792		113,854