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, 2016

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

For the transition period from to ______

Commission file number    001-35021

EVANS BANCORP, INC..                

(Exact name of registrant as specified in its charter)

New York16-1332767

(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 4,286,939 shares as of August 4, 2016

INDEX

EVANS BANCORP, INC. AND SUBSIDIARIES

PART 1.   FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets – June 30, 2016 and December 31, 2015	1
	Unaudited Consolidated Statements of Income – Three months ended June 30, 2016 and 2015	2
	Unaudited Consolidated Statements of Income – Six months ended June 30, 2016 and 2015	3
	Unaudited Statements of Consolidated Comprehensive Income – Three months ended June 30, 2016 and 2015	4
	Unaudited Statements of Consolidated Comprehensive Income – Six months ended June 30, 2016 and 2015	5
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity – Six months ended June 30, 2016 and 2015	6
	Unaudited Consolidated Statements of Cash Flows - Six months ended June 30, 2016 and 2015	7
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	49
	Signatures	50

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2016 AND DECEMBER 31, 2015
(in thousands, except share and per share amounts)
	June 30,		December 31,
	2016		2015
ASSETS
Cash and due from banks	$	10,807	$	11,813
Interest-bearing deposits at banks		723		10,808
Securities:
Available for sale, at fair value (amortized cost: $106,875 at June 30, 2016;		109,107		97,141
$96,374 at December 31, 2015)
Held to maturity, at amortized cost (fair value: $1,519 at June 30, 2016;		1,522		1,617
$1,584 at December 31, 2015)
Federal Home Loan Bank common stock, at cost		1,636		1,296
Federal Reserve Bank common stock, at cost		1,501		1,487
Loans, net of allowance for loan losses of $12,773 at June 30, 2016
and $12,883 at December 31, 2015		840,533		761,101
Properties and equipment, net of accumulated depreciation of $16,377 at June 30, 2016
and $15,799 at December 31, 2015		11,592		11,051
Goodwill		8,101		8,101
Bank-owned life insurance		21,254		20,978
Other assets		14,822		13,714
TOTAL ASSETS	$	1,021,598	$	939,107
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand	$	187,774	$	183,098
NOW		88,993		83,674
Regular savings		480,290		439,993
Time		112,828		96,217
Total deposits		869,885		802,982
Securities sold under agreement to repurchase		14,511		10,821
Other borrowings		16,000		10,000
Other liabilities		15,083		12,718
Junior subordinated debentures		11,330		11,330
Total liabilities		926,809		847,851
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,290,222
and 4,260,203 shares issued at June 30, 2016 and December 31, 2015,
respectively, and 4,286,939 and 4,257,179 outstanding at June 30, 2016
and December 31, 2015, respectively		2,147		2,132
Capital surplus		43,836		43,318
Treasury stock, at cost, 3,283 and 3,024 shares at June 30, 2016 and		(80)		-
December 31, 2015, respectively
Retained earnings		49,707		47,616
Accumulated other comprehensive loss, net of tax		(821)		(1,810)
Total stockholders' equity		94,789		91,256
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,021,598	$	939,107
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, 2016 AND 2015
(in thousands, except share and per share amounts)
	Three Months Ended June 30,
	2016		2015
INTEREST INCOME
Loans	$	8,878	$	7,934
Interest bearing deposits at banks		33		33
Securities:
Taxable		561		429
Non-taxable		222		240
Total interest income		9,694		8,636
INTEREST EXPENSE
Deposits		1,036		860
Other borrowings		51		46
Junior subordinated debentures		91		82
Total interest expense		1,178		988
NET INTEREST INCOME		8,516		7,648
PROVISION FOR LOAN LOSSES (CREDIT)		(376)		415
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		8,892		7,233
NON-INTEREST INCOME
Bank charges		403		411
Insurance service and fees		1,572		1,821
Gain on loans sold		29		58
Bank-owned life insurance		141		152
Loss on tax credit investment		(2,139)		-
Refundable state historic tax credit		1,508		-
Interchange fee income		340		324
Other		426		710
Total non-interest income		2,280		3,476
NON-INTEREST EXPENSE
Salaries and employee benefits		5,467		5,066
Occupancy		740		697
Repairs and maintenance		212		215
Advertising and public relations		190		231
Professional services		656		670
Technology and communications		339		262
FDIC insurance		182		148
Other		933		952
Total non-interest expense		8,719		8,241
INCOME BEFORE INCOME TAXES		2,453		2,468
INCOME TAX PROVISION		450		793
NET INCOME	$	2,003	$	1,675
Net income per common share-basic	$	0.47	$	0.40
Net income per common share-diluted	$	0.46	$	0.39
Cash dividends per common share	$	-	$	-
Weighted average number of common shares outstanding		4,284,180		4,234,334
Weighted average number of diluted shares outstanding		4,346,599		4,309,688
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, 2016 AND 2015
(in thousands, except share and per share amounts)
	Six Months Ended June 30,
	2016		2015
INTEREST INCOME
Loans	$	17,608	$	15,746
Interest bearing deposits at banks		44		34
Securities:
Taxable		938		835
Non-taxable		460		477
Total interest income		19,050		17,092
INTEREST EXPENSE
Deposits		1,995		1,643
Other borrowings		101		60
Junior subordinated debentures		178		160
Total interest expense		2,274		1,863
NET INTEREST INCOME		16,776		15,229
PROVISION FOR LOAN LOSSES (CREDIT)		(168)		616
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		16,944		14,613
NON-INTEREST INCOME
Bank charges		846		820
Insurance service and fees		3,320		3,650
Gain on loans sold		44		81
Bank-owned life insurance		277		289
Loss on tax credit investment		(2,139)		-
Refundable state historic tax credit		1,508		-
Interchange fee income		658		618
Other		760		1,084
Total non-interest income		5,274		6,542
NON-INTEREST EXPENSE
Salaries and employee benefits		10,981		9,860
Occupancy		1,439		1,392
Repairs and maintenance		388		388
Advertising and public relations		475		442
Professional services		1,236		1,180
Technology and communications		761		522
FDIC insurance		341		295
Other		1,626		1,674
Total non-interest expense		17,247		15,753
INCOME BEFORE INCOME TAXES		4,971		5,402
INCOME TAX PROVISION		1,254		1,822
NET INCOME	$	3,717	$	3,580
Net income per common share-basic	$	0.87	$	0.85
Net income per common share-diluted	$	0.86	$	0.83
Cash dividends per common share	$	0.38	$	0.36
Weighted average number of common shares outstanding		4,273,645		4,233,196
Weighted average number of diluted shares outstanding		4,337,299		4,309,423
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, 2016 AND 2015
(in thousands, except share and per share amounts)
	Three Months Ended June 30,
	2016			2015
NET INCOME		$	2,003		$	1,675
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on available-for-sale securities			260			(637)
Defined benefit pension plans:
Amortization of prior service cost	5			5
Amortization of actuarial assumptions	35			37
Total			40			42
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX			300			(595)
COMPREHENSIVE INCOME		$	2,303		$	1,080
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, 2016 AND 2015
(in thousands, except share and per share amounts)
	Six Months Ended June 30,
	2016			2015
NET INCOME		$	3,717		$	3,580
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on available-for-sale securities			909			(306)
Defined benefit pension plans:
Amortization of prior service cost	10			10
Amortization of actuarial assumptions	70			61
Total			80			71
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX			989			(235)
COMPREHENSIVE INCOME		$	4,706		$	3,345
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, 2016 AND 2015
(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, 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
Balance, December 31, 2015	$	2,132	$	43,318	$	47,616	$	(1,810)	$	-	$	91,256
Net Income						3,717						3,717
Other comprehensive income								989				989
Cash dividends ($0.38 per common share)						(1,626)						(1,626)
Stock compensation expense				270								270
Excess tax benefit from stock-based compensation				15								15
Repurchased 3,280 shares in treasury stock										(80)		(80)
Issued 19,093 restricted shares		10		(10)								-
Issued 5,270 shares under Dividend Reinvestment Plan		3		129								132
Issued 5,166 shares in Employee Stock Purchase Plan		2		106								108
Issued 490 shares in stock option exercises				8								8
Reissued 3,021 restricted shares, net of forfeitures												-
Balance, June 30, 2016	$	2,147	$	43,836	$	49,707	$	(821)	$	(80)	$	94,789
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, 2016 AND 2015
(in thousands)
	Six Months Ended June 30,
		2016		2015
OPERATING ACTIVITIES:
Interest received	$	18,778	$	16,916
Fees received		5,554		5,795
Interest paid		(2,249)		(1,939)
Cash paid to employees and vendors		(16,429)		(15,932)
Cash contributed to pension plan		(140)		(165)
Income taxes paid		(279)		(601)
Proceeds from sale of loans held for resale		3,514		9,772
Originations of loans held for resale		(3,477)		(10,295)
Net cash provided by operating activities		5,272		3,551
INVESTING ACTIVITIES:
Available for sales securities:
Purchases		(25,953)		(24,370)
Proceeds from maturities, calls, and payments		15,005		14,299
Held to maturity securities:
Purchases		-		(50)
Proceeds from maturities, calls, and payments		95		184
Proceeds from property insurance		-		927
Additions to properties and equipment		(1,119)		(499)
Purchase of tax credit investment		(703)		(831)
Net increase in loans		(78,823)		(14,360)
Net cash used in investing activities		(91,498)		(24,700)
FINANCING ACTIVITIES:
Proceeds from (repayments of) borrowings, net		9,690		(6,469)
Net increase in deposits		66,903		66,531
Dividends paid		(1,626)		(1,517)
Repurchase of treasury stock		(80)		(83)
Issuance of common stock		248		117
Reissuance of treasury stock		-		237
Net cash provided by financing activities		75,135		58,816
Net (decrease) increase in cash and cash equivalents		(11,091)		37,667
CASH AND CASH EQUIVALENTS:
Beginning of period		22,621		10,898
End of period	$	11,530	$	48,565

(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, 2016 AND 2015
(in thousands)
	Six Months Ended June 30,
		2016		2015
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income	$	3,717	$	3,580
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		647		745
Deferred tax expense		125		191
Provision for loan losses (credit)		(168)		616
Loss on tax credit investment		2,139		-
Refundable state historic tax credit		(1,508)		-
Gain on loans sold		(44)		(81)
Stock options and restricted stock expense		270		263
Proceeds from sale of loans held for resale		3,514		9,772
Originations of loans held for resale		(3,477)		(10,295)
Changes in assets and liabilities affecting cash flow:
Other assets		(1,001)		(1,112)
Other liabilities		1,058		(128)
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	5,272	$	3,551
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, 2016 AND 2015

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 results of operations for the three and six month periods ended June  30, 2016 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, 2015 (“10-K”).  The Company’s significant accounting policies are disclosed in Note 1 to the 10-K.

An accounting policy not discussed in Note 1 to the 10-K is the accounting for rehabilitation of historic properties tax credit investments.  In the typical structure of these transactions, the Bank will invest in a partnership that is incurring expenses related to the rehabilitation of a certified historic structure located in New York State.  At the time the historic structure is placed in service, the Bank is eligible for a federal and New York State tax credit.  At the same time, the Bank evaluates its investment, which is valued at the present value of the expected cash flows from its partnership interest.  If the investment is determined to be impaired, the Bank will record that impairment loss on its income statement in non-interest income.  The federal tax credit impact is included in the Company’s estimated effective tax rate calculation and recorded in income tax expense.  For New York State, any new credit earned from rehabilitated historic properties placed in service on or after January 1, 2015, not used in the current tax year will be treated as a refund or overpayment of tax to be credited to the next year’s tax.  Since the realization of the tax credit does not depend on the Bank’s generation of future taxable income or the Bank’s ongoing tax status or tax position, the credit is not considered an element of income tax accounting under ASC 740.In such cases, theBank would not recordthe credit as a reduction of income tax expense; rather, the Bank includes the refundable New York State tax credit in non-interest income.

9

2. SECURITIES

The amortized cost of securities and their approximate fair value at June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	17,185	$	285	$	(2)	$	17,468
States and political subdivisions		36,389		1,204		(10)		37,583
Total debt securities	$	53,574	$	1,489	$	(12)	$	55,051
Mortgage-backed securities:
FNMA	$	16,369	$	347	$	-	$	16,716
FHLMC		4,136		96		(19)		4,213
GNMA		2,862		52		(4)		2,910
CMO		29,934		330		(47)		30,217
Total mortgage-backed securities	$	53,301	$	825	$	(70)	$	54,056
Total securities designated as available for sale	$	106,875	$	2,314	$	(82)	$	109,107
Held to Maturity:
Debt securities
States and political subdivisions	$	1,522	$	14	$	(17)	$	1,519
Total securities designated as held to maturity	$	1,522	$	14	$	(17)	$	1,519

	December 31, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	21,914	$	166	$	(234)	$	21,846
States and political subdivisions		36,838		874		(29)		37,683
Total debt securities	$	58,752	$	1,040	$	(263)	$	59,529
Mortgage-backed securities:
FNMA	$	10,314	$	160	$	(25)	$	10,449
FHLMC		4,629		61		(56)		4,634
GNMA		3,215		48		(27)		3,236
CMO		19,464		66		(237)		19,293
Total mortgage-backed securities	$	37,622	$	335	$	(345)	$	37,612
Total securities designated as available for sale	$	96,374	$	1,375	$	(608)	$	97,141
Held to Maturity:
Debt securities
States and political subdivisions	$	1,617	$	6	$	(39)	$	1,584
Total securities designated as held to maturity	$	1,617	$	6	$	(39)	$	1,584

Available for sale securities with a total fair value of $94 million and $86 million at June 30, 2016 and December 31, 2015, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

10

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 $16 million and $10 million in borrowed funds at FHLBNY at June 30, 2016and December 31, 2015, respectively.  The Company has pledged sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meets 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 $2 million and $1 million in FHLBNY stock atJune 30, 2016 and December 31, 2015,respectively.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  As of June 30, 2016, the Bank’s investment in FHLBNY stock was not impaired.

The Bank, as a member of the Federal Reserve Bank (“FRB”) system, is currently required to purchase and hold shares of capital stock in the FRB in an amount equal to 6% of its capital and surplus. The Bank’s investment in FRBcapital stock totaled $1.5 millionat each of June 30, 2016 and December 31, 2015.  Based on the current capital adequacy and liquidity position of the FRB, management believes there is no impairment in the Company’s investment at June 30, 2016 and the cost of the investment approximates fair value.

The scheduled maturities of debt and mortgage-backed securities at June 30, 2016 and December 31, 2015 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, 2016				December 31, 2015
	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	$	5,115	$	5,149	$	4,082	$	4,142
Due after one year through five years		31,980		32,736		29,113		29,448
Due after five years through ten years		13,511		14,003		19,356		19,615
Due after ten years		2,968		3,163		6,201		6,324
		53,574		55,051		58,752		59,529
Mortgage-backed securities
available for sale		53,301		54,056		37,622		37,612
Total available for sale securities	$	106,875	$	109,107	$	96,374	$	97,141
Debt securities held to maturity:
Due in one year or less	$	265	$	264	$	309	$	308
Due after one year through five years		358		354		374		365
Due after five years through ten years		793		798		828		815
Due after ten years		106		103		106		96
		1,522		1,519		1,617		1,584
Total held to maturity securities	$	1,522	$	1,519	$	1,617	$	1,584

While the contractual maturities of our mortgage-backed securities generally exceed ten years, the Company expects the effective lives to be significantly shorter due to prepayments of the underlying loans and the nature of these securities. The duration of the  investment securities portfolio decreased from 4.0 years at December 31, 2015to 3.7 years at June 30, 2016.

Information regarding unrealized losses within the Company’s available for sale securities at June 30, 2016 and December 31, 2015 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, 2016
		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	$	-	$	-	$	1,998	$	(2)	$	1,998	$	(2)
States and political subdivisions		-		-		744		(10)		744		(10)
Total debt securities	$	-	$	-	$	2,742	$	(12)	$	2,742	$	(12)
Mortgage-backed securities:
FNMA	$	-	$	-	$	-	$	-	$	-	$	-
FHLMC		-		-		1,175		(19)		1,175		(19)
GNMA		-		-		347		(4)		347		(4)
CMO		3,270		(43)		1,400		(4)		4,670		(47)
Total mortgage-backed securities	$	3,270	$	(43)	$	2,922	$	(27)	$	6,192	$	(70)
Held To Maturity:
Debt securities:
States and political subdivisions	$	582	$	(5)	$	430	$	(12)	$	1,012	$	(17)
Total temporarily impaired
securities	$	3,852	$	(48)	$	6,094	$	(51)	$	9,946	$	(99)

	December 31, 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	$	4,531	$	(89)	$	5,855	$	(145)	$	10,386	$	(234)
States and political subdivisions		3,133		(6)		1,117		(23)		4,250		(29)
Total debt securities	$	7,664	$	(95)	$	6,972	$	(168)	$	14,636	$	(263)
Mortgage-backed securities:
FNMA	$	3,856	$	(25)	$	-	$	-	$	3,856	$	(25)
FHLMC		-		-		1,234		(56)		1,234		(56)
GNMA		1,161		(21)		471		(6)		1,632		(27)
CMO		8,996		(123)		3,661		(114)		12,657		(237)
Total mortgage-backed securities	$	14,013	$	(169)	$	5,366	$	(176)	$	19,379	$	(345)
Held To Maturity:
Debt securities:
States and political subdivisions	$	626	$	(11)	$	495	$	(28)	$	1,121	$	(39)
Total temporarily impaired
securities	$	22,303	$	(275)	$	12,833	$	(372)	$	35,136	$	(647)

12

Management has assessed the securities available for sale in an unrealized loss position at June 30, 2016 and December 31, 2015 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, 2016 and did not record any OTTI charges during 2015.  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.”  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 as of June 30, 2016 and December 31, 2015, respectively:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
June 30, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	17,468	$	-	$	17,468
States and political subdivisions		-		37,583		-		37,583
Mortgage-backed securities		-		54,056		-		54,056
Mortgage servicing rights		-		-		466		466
December 31, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	21,846	$	-	$	21,846
States and political subdivisions		-		37,683		-		37,683
Mortgage-backed securities		-		37,612		-		37,612
Mortgage servicing rights		-		-		557		557

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 not have 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, during the Company’s review or when 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.

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 sixmonth periods ended June 30, 2016 and 2015, respectively:

	Three months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - April 1	$	496	$	497
Gains (losses) included in earnings		(56)		4
Additions from loan sales		26		64
Mortgage servicing rights - June 30	$	466	$	565

14

	Six months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - January 1	$	557	$	518
Losses included in earnings		(125)		(41)
Additions from loan sales		34		88
Mortgage servicing rights - June 30	$	466	$	565

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

	June 30, 2016		December 31, 2015
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	10.24	%	8.55	%

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, 2016 and December 31, 2015:

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2016
Collateral dependent impaired loans	$	-	-	16,848	$	16,848
December 31, 2015
Collateral dependent impaired loans	$	-	-	17,758	$	17,758

Collateral dependent 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 $18.4 million, with a allowance for loan loss of $1.5 million, at June 30, 2016 compared with $19.5 million and $1.7 million, respectively, at December 31, 2015.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At each of June 30, 2016 and December 31, 2015, 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, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	11,530	$	11,530	$	22,621	$	22,621
Level 2:
Available for sale securities		109,107		109,107		97,141		97,141
FHLB and FRB stock		3,137		3,137		2,783		2,783
Level 3:
Held to maturity securities		1,522		1,519		1,617		1,584
Loans, net		840,533		859,300		761,101		772,472
Mortgage servicing rights		466		466		557		557
Financial liabilities:
Level 1:
Demand deposits	$	187,774	$	187,774	$	183,098	$	183,098
NOW deposits		88,993		88,993		83,674		83,674
Regular savings deposits		480,290		480,290		439,993		439,993
Level 2:
Securities sold under agreement to
repurchase		14,511		14,511		10,821		10,821
Other borrowed funds		16,000		16,120		10,000		9,874
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		112,828		114,117		96,217		96,975

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, which are non-marketable equity investments, 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 and there have been no issuances of similar instruments in recent years.  The Company looked at a market bond index to estimate a discount margin to value the debentures.  The discount margin was very similar to the spread to LIBOR established at the issuance of the debentures.  As a result, the Company determined that the fair value of the adjustable-rate debentures approximates their face amount.

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

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, 2016		December 31, 2015
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	108,405	$	103,941
Commercial and multi-family		426,418		399,819
Construction-Residential		532		1,546
Construction-Commercial		72,981		60,892
Home equities		63,542		61,042
Total real estate loans		671,878		627,240
Commercial and industrial loans		179,210		144,330
Consumer and other loans		1,447		1,735
Net deferred loan origination costs		771		679
Total gross loans		853,306		773,984
Allowance for loan losses		(12,773)		(12,883)
Loans, net	$	840,533	$	761,101

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, 2016, the Bank sold mortgages to FNMA totaling $2.6 million, as compared with $7.1 million in mortgages sold to FNMA in the three month period ended June 30, 2015.  During the six month periods ended June 30, 2016 and 2015, the Bank sold $3.5 million and $9.7 million, respectively, to FNMA.  At June 30, 2016, the Bank had a loan servicing portfolio principal balance of $76million upon which it earns servicing fees, as compared with $77 million at December 31, 2015.  The value of the mortgage servicing rights for that portfolio was $0.5 million at June 30, 2016 and $0.6 million at December 31, 2015.  At each of June 30, 2016 and December 31, 2015, there were $0.5 million in residential mortgage loans held-for-sale.  The Company had no commercial loans held-for-sale at June 30, 2016 or December 31, 2015.  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, 2015.  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, 2015.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2015 are consistent with those utilized by the Company in the three and six month periods ended June 30, 2016.

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 losses:

· 1-3.2-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 are commercial customers.  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 primary credit quality indicator for consumer loans.However, once a consumer loan is identified as impaired, it is individually evaluated for impairment.

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

June 30, 2016
(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	$	62,822	$	342,539	$	405,361	$	112,730
4		5,640		68,289		73,929		51,658
5		339		8,802		9,141		7,967
6		4,180		6,788		10,968		6,855
7		-		-		-		-
Total	$	72,981	$	426,418	$	499,399	$	179,210

December 31, 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	$	42,383	$	340,837	$	383,220	$	80,379
4		13,098		40,019		53,117		47,509
5		1,224		11,772		12,996		8,973
6		4,187		7,191		11,378		7,350
7		-		-		-		119
Total	$	60,892	$	399,819	$	460,711	$	144,330

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, 2016
(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	$	4,513	$	71	$	658	$	5,242	$	173,968	$	179,210	$	338	$	4,936
Residential real estate:
Residential		-		143		636		779		107,626		108,405		159		725
Construction		-		-		-		-		532		532		-		-
Commercial real estate:
Commercial		-		2,624		2,644		5,268		421,150		426,418		1,212		3,465
Construction		5,000		239		4,181		9,420		63,561		72,981		-		4,181
Home equities		245		272		780		1,297		62,245		63,542		3		1,037
Consumer and other		18		14		7		39		1,408		1,447		7		13
Total Loans	$	9,776	$	3,363	$	8,906	$	22,045	$	830,490	$	852,535	$	1,719	$	14,357

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

20

December 31, 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	$	160	$	224	$	66	$	450	$	143,880	$	144,330	$	40	$	5,312
Residential real estate:
Residential		822		402		569		1,793		102,148		103,941		-		1,400
Construction		-		-		-		-		1,546		1,546		-		-
Commercial real estate:
Commercial		1,919		963		457		3,339		396,480		399,819		457		3,574
Construction		-		-		-		-		60,892		60,892		-		4,187
Home equities		253		236		267		756		60,286		61,042		-		1,058
Consumer and other		8		-		-		8		1,727		1,735		-		14
Total Loans	$	3,162	$	1,825	$	1,359	$	6,346	$	766,959	$	773,305	$	497	$	15,545

NOTE: Loan balances do not include $679 thousand in net deferred loan origination costs as of December 31, 2015.

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 30, 2016 and 2015:

June 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	-	$	12,883
Charge-offs		(33)		-		(23)		-		-		-		(56)
Recoveries		55		51		7		-		1		-		114
Provision (Credit)		(210)		122		32		(146)		34		-		(168)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	324	$	1,128	$	40	$	3	$	18	$	-	$	1,513
Collectively evaluated
for impairment		3,871		6,180		61		760		388		-		11,260
Total	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Loans:
Ending balance:
Individually evaluated
for impairment	$	4,985	$	9,261	$	40	$	2,461	$	1,614	$	-	$	18,361
Collectively evaluated
for impairment		174,225		490,138		1,407		106,476		61,928		-		834,174
Total	$	179,210	$	499,399	$	1,447	$	108,937	$	63,542	$	-	$	852,535

* Includes construction loans

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

22

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 (Credit)		(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

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

23

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2016 and 2015:

June 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,580	$	7,442	$	93	$	696	$	308	$	-	$	13,119
Charge-offs		(20)		-		(16)		-		-		-		(36)
Recoveries		48		13		4		-		1		-		66
Provision		(413)		(147)		20		67		97		-		(376)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773

June 30, 2015
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,989	$	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

24

Impaired Loans

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

		At June 30, 2016
		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	$	4,266	$	4,654	$	-	$	4,664	$	119	$	3
Residential real estate:
Residential		2,406		2,610		-		2,440		19		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,754		3,817		-		3,836		50		36
Construction		262		262		-		691		1		21
Home equities		1,398		1,459		-		1,420		22		13
Consumer		-		-		-		-		-		-
Total impaired loans	$	12,086	$	12,802	$	-	$	13,051	$	211	$	111

		At June 30, 2016
		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	$	719	$	759	$	324	$	746	$	22	$	1
Residential real estate:
Residential		55		55		3		55		1		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,065		1,083		229		1,074		25		-
Construction		4,180		4,201		899		4,184		96		-
Home equities		216		223		18		218		6		-
Consumer		40		65		40		42		1		1
Total impaired loans	$	6,275	$	6,386	$	1,513	$	6,319	$	151	$	2

25

		At June 30, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	4,985	$	5,413	$	324	$	5,410	$	141	$	4
Residential real estate:
Residential		2,461		2,665		3		2,495		20		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,819		4,900		229		4,910		75		36
Construction		4,442		4,463		899		4,875		97		21
Home equities		1,614		1,682		18		1,638		28		13
Consumer		40		65		40		42		1		1
Total impaired loans	$	18,361	$	19,188	$	1,513	$	19,370	$	362	$	113

		At December 31, 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	$	1,750	$	1,811	$	-	$	1,945	$	58	$	47
Residential real estate:
Residential		2,444		2,555		-		2,474		90		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,888		3,908		-		3,930		27		179
Construction		834		834		-		834		-		31
Home equities		1,644		1,711		-		1,661		40		52
Consumer		-		-		-		-		-		-
Total impaired loans	$	10,560	$	10,819	$	-	$	10,844	$	215	$	372

26

		At December 31, 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	$	3,572	$	3,835	$	552	$	3,966	$	255	$	9
Residential real estate:
Residential		55		55		2		55		1		2
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,083		1,083		235		1,083		4		42
Construction		4,188		4,201		911		4,188		29		166
Home equities		-		-		-		-		-		-
Consumer		42		57		42		45		2		6
Total impaired loans	$	8,940	$	9,231	$	1,742	$	9,337	$	291	$	225

		At December 31, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,322	$	5,646	$	552	$	5,911	$	313	$	56
Residential real estate:
Residential		2,499		2,610		2		2,529		91		65
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,971		4,991		235		5,013		31		221
Construction		5,022		5,035		911		5,022		29		197
Home equities		1,644		1,711		-		1,661		40		52
Consumer		42		57		42		45		2		6
Total impaired loans	$	19,500	$	20,050	$	1,742	$	20,181	$	506	$	597

27

Non-performing loans

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

	June 30, 2016			December 31, 2015
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	4,936		$	5,312
Residential real estate:
Residential		725			1,400
Construction		-			-
Commercial real estate:
Commercial and multi-family		3,465			3,574
Construction		4,181			4,187
Home equities		1,037			1,058
Consumer loans		13			14
Total non-accruing loans	$	14,357		$	15,545
Accruing loans 90+ days past due		1,719			497
Total non-performing loans	$	16,076		$	16,042
Total non-performing loans
to total assets		1.57	%		1.71	%
Total non-performing loans
to total loans		1.88	%		2.07	%

28

Troubled debt restructurings

The Company had $5.1 millionand $5.8 million in loans that were restructured in a troubled debt restructuring (“TDR”) at June 30, 2016 and December 31, 2015, respectively.  Of those balances, $1.1 million and $1.8 million were in non-accrual status at June 30, 2016 and December 31, 2015, 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 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, 2016, 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, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	516	$	467	$	49	$	166
Residential real estate:
Residential		1,860		124		1,736		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,676		323		1,353		-
Construction		262		-		262		-
Home equities		755		178		577		-
Consumer loans		27		-		27		27
Total troubled restructured loans	$	5,096	$	1,092	$	4,004	$	193

29

		December 31, 2015
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	517	$	508	$	9	$	165
Residential real estate:
Residential		1,789		689		1,100		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,732		334		1,398		-
Construction		834		-		834		-
Home equities		867		281		586		-
Consumer loans		28		-		28		28
Total troubled restructured loans	$	5,767	$	1,812	$	3,955	$	193

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.

There was no TDR activity for the three-month periods ended June 30, 2016 and 2015.

The following table shows the data for TDR activity by type of concession granted to the borrower for the six month periods ended June 30, 2016 and 2015:

	Six months ended June 30, 2016					Six months ended June 30, 2015
	(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
Extension of maturity	1		24		24	-		-		-
Term-out line of credit	1		20		20	-		-		-
Residential Real Estate & Construction:
Extension of maturity	1		95		95	-		-		-
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities
Consumer loans	-		-		-	-		-		-

30

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, 2016 and 2015:

	Three months ended June 30, 2016			Three months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	-		-
Consumer loans	-		-	-		-

	Six months ended June 30, 2016			Six months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	1		19
Consumer loans	-		-	-		-

31

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, 2016, the Company had an average of 62,419 and63,654dilutive shares outstanding, respectively.  The Company had an average of 75,354 and 76,227 dilutive shares outstanding for the three and six months periods ended June 30, 2015, 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 both the three and six month periods ended June 30, 2016, there was an average of 83,960 anti-dilutive shares outstanding, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  For the three and sixth month periods ended June 30, 2015, there were 37,800 and 38,215 potentiallyanti-dilutive shares outstanding, respectively.

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, 2016 and 2015:

	Balance at March 31, 2016		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	1,124	$	260	$	1,384
Net defined benefit pension plan adjustments		(2,245)		40		(2,205)
Total	$	(1,121)	$	300	$	(821)
	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plan adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)

	Balance at December 31, 2015		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	475	$	909	$	1,384
Net defined benefit pension plan adjustments		(2,285)		80		(2,205)
Total	$	(1,810)	$	989	$	(821)
	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plan adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)

32

	Three months ended June 30, 2016						Three months ended June 30, 2015
	(in thousands)						(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 gain on investment securities:
Unrealized gain on investment securities	$	419	$	(159)	$	260	$	(1,041)	$	404	$	(637)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		419		(159)		260		(1,041)		404		(637)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		8		(3)		5		9		(4)		5
Amortization of actuarial loss (a)		56		(21)		35		52		(15)		37
Net change		64		(24)		40		61		(19)		42
Other Comprehensive Income (Loss)	$	483	$	(183)	$	300	$	(980)	$	385	$	(595)

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

	Six months ended June 30, 2016						Six months ended June 30, 2015
	(in thousands)						(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 gain (loss) on investment securities:
Unrealized gain (loss) on investment securities	$	1,465	$	(556)	$	909	$	(500)	$	194	$	(306)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		1,465		(556)		909		(500)		194		(306)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		16		(6)		10
Amortization of actuarial loss (a)		112		(42)		70		100		(39)		61
Net change		128		(48)		80		116		(45)		71
Other Comprehensive Income (Loss)	$	1,593	$	(604)	$	989	$	(384)	$	149	$	(235)

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

33

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, 2016 and 2015.

	Three months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	8,549	$	(33)	$	8,516
Provision for loan losses (credit)		(376)		-		(376)
Net interest income (expense) after
provision for loan losses		8,925		(33)		8,892
Non-interest income		708		-		708
Insurance service and fees		116		1,456		1,572
Non-interest expense		7,551		1,168		8,719
Income before income taxes		2,198		255		2,453
Income tax provision		352		98		450
Net income	$	1,846	$	157	$	2,003

	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 losses		415		-		415
Net interest income (expense) after
provision for loan losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
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

34

	Six months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	16,840	$	(64)	$	16,776
Provision for loan losses (credit)		(168)		-		(168)
Net interest income (expense) after
provision for loan losses		17,008		(64)		16,944
Non-interest income		1,954		-		1,954
Insurance service and fees		232		3,088		3,320
Non-interest expense		14,878		2,369		17,247
Income before income taxes		4,316		655		4,971
Income tax provision		1,002		252		1,254
Net income	$	3,314	$	403	$	3,717

	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 losses		616		-		616
Net interest income (expense) after
provision for loan losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
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

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,
	2016		2015
	(in thousands)
Commitments to extend credit	$	214,211	$	206,346
Standby letters of credit		3,566		3,794
Total	$	217,777	$	210,140

35

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 2016 or during 2015.

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 to be material.

9. NET PERIODIC BENEFIT COSTS

On January 31, 2008, the Bank froze its defined benefit pension plan.  The plan covered substantially all Bank 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 $140 thousand to the defined benefit pension plan in the six months of 2016.

36

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, 2016 and 2015:

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	47	$	49
Interest cost		55		52		36		37
Expected return on plan assets		(66)		(77)		-		-
Amortization of prior service cost		-		-		8		9
Amortization of the net loss		22		18		34		34
Net periodic cost (benefit)	$	11	$	(7)	$	125	$	129

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	94	$	97
Interest cost		110		103		72		74
Expected return on plan assets		(131)		(154)		-		-
Amortization of prior service cost		-		-		16		16
Amortization of the net loss		44		35		68		65
Net periodic cost (benefit)	$	23	$	(16)	$	250	$	252

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10.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers.  The objective of this 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.  The Company does not expect the standard to have a material impact on its ongoing financial reporting.

ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.  The main objective of this ASU is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years.  The ASU will not impact results of operations or the financial position of the Company, but will impact its fair value disclosures in the notes to the financial statements.

ASU 2016-02, Leases.  The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective.  The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term.  The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  Information about the Company’s operating lease obligations is disclosed in Note 16 to the Company’s Financial Statements on Form 10-K for the year ended December 31, 2015.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is currently evaluating the impact of the standard on its financial reporting.

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.  This ASU is part of the FASB’s Simplification Initiative.  The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Some of the areas of simplification apply only to nonpublic entities.  Although the impact on the Company’s financial statements is not expected to be material, the area of this ASU that will impact the Company is the elimination of the concept of a tax windfall pool.  Currently, an entity must determine for each award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess benefit or a tax deficiency.  Excess tax benefits are recognized in additional paid-in-capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement.  Excess tax benefits are not recognized until the deduction reduces taxes payable.  Under the new standard, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement.  The amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  Current generally accepted accounting principles (GAAP) require an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. Both financial institutions and users of their financial statements expressed concern that current GAAP restricts the ability to record credit losses that are expected, but do not yet meet the “probable” threshold.  The main objective of this ASU (commonly known as the Current Expected Credit Loss Impairment Model, or CECL, in the industry) is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  To achieve this objective, the amendments in CECL replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  The amendments in CECL are effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Board expects that an entity will be able to leverage its current systems and methodsfor recording the allowance for credit losses.  However, many financial institutions, particularly community banks similar in size to the Company and industry groups like the American Bankers Association, have expressed concern about the impact of CECL.  The life of loan loss concept presents complexities that can decrease capital, and add both volatility to ALLL estimates and additional costs.  CECL may increase the ALLL, though many factors will determine the impact for each bank.  Changes in expectations of future economic conditions play a large role in CECL and can significantly affect the credit loss estimate.  While OCC estimates made in 2012 indicated 30% to 50% increase, more recent bank analyst projections were far lower.  A challenge for the Company could be the operational impact.  Costly new systems and process to track loan performance may need to be purchased or developed.  Significant procedural challenges may be faced both in implementation and on an ongoing basis.  The total impact of CECL to the Company’s financial statements is unknown but may be material.  Implementation of CECL will be a significant project for the Company through the projected implementation of January 1, 2020.

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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 tax policies, rates and regulations of federal, state and local tax authorities; 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, 2015.  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, 2015.  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.

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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.

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, 2015 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, 2016 that resulted in an interim impairment test.

ANALYSIS OF FINANCIAL CONDITION

Loan Activity

Total loans grew to $853 million at June 30, 2016, a $56 million or 7% increase from total loans of $797 million at March 31, 2016 and a  $79 million or 10% increase from $774 million at December 31, 2015.

Loans secured by real estate were $672 million at June 30, 2016, reflecting a $29 million or 5% increase from $643 million at March 31, 2016 and a $45 million or 7% increase from $627 million at December 31, 2015.  Commercial and multi-family real estate loans were $426 million at June 30, 2016, $20 million higher than $406 million at March 31, 2016.  The portfolio was $400 million at the previous year-end.  Commercial construction loans also experienced strong growth, and were up 20% or $12 million during the first six months of 2016 to $73 million at June 30, 2016, including $4 million of growth in the second quarter of 2016.  The Company’s footprint in Western New York has continued to experience strong commercial real estate and commercial construction loan demand. 

In the second quarter of 2016, residential mortgage originations of $10 million were higher than the previous quarter’s originations of $5 million and equal to the $10 million in last year’s second quarter.  This trend reflects the typical seasonal increase in residential mortgage originations in the second quarter when compared with the first quarter.  Residential mortgages sold in the second quarter of 2016 equated to approximately 25% of the residential mortgages originated by the Company during this quarter, as compared with 19% of residential mortgages originated during the first quarter of 2016 and 68% in the second quarter of 2015.  The Company originated $15 million in residential mortgages in the first six months of 2016 and sold 23% of those loans, compared with $17 million and 57%, respectively, in the first six months of 2015.  The Company retained more of the mortgages it originated during the first half of 2016 compared with the prior year period as a way to diversify its assets.

The Company has also focused on growth opportunities in commercial and industrial (“C&I”) lending as a way to diversify its overall loan portfolio.  The C&I portfolio grew to $179 million at June 30, 2016, representing a $28 million or 19% increase from $151 million at March 31, 2016 and $35 million or 24% higher than the $144 million balance at December 31, 2015.

Credit Quality of Loan Portfolio

Total non-performing loans, defined as accruing loans greater than 90 days past due and non-accrual loans, totaled $16 million, or 1.88% of total loans outstanding at June 30, 2016, compared with $18 million, or 2.25% of total loans outstanding, as of March 31, 2016 and $16 million, or 2.07% of total loans outstanding, as of December 31, 2015.  The $2 million decrease in non-performing loans as compared tothe previous quarter-end was due to a single commercial real estate loan moving from 90 days past due and accruing to performing status.  Loans 90 days past due and still accruing are considered well secured and in the process of collection and are, therefore, not impaired and in nonaccrual status.

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Commercial credits graded as “special mention” and “substandard,” or the criticized loan portfolio, was $35 million at June 30, 2016, a $6 million decline from $41 million at each of March 31, 2016 and December 31, 2015.  Two commercial loan relationships for a total of $4 million were upgraded during the second quarter of 2016, accounting for most of the decrease in criticized loans.  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 million or 1.50% of total loans outstanding at June 30, 2016, compared with $13 million or 1.65% of total loans outstanding as of March 31, 2016 and $13 million or 1.66% of total loans outstanding at December 31, 2015.  The decrease in the allowance to loan ratio reflected strong loan growth and a decrease in the allowance.  In the second quarter, the Company released $0.4 million in allowance due to several factors, including an improved collateral position on an impaired loan, a sustained period of low charge-offs, and the decrease inthe criticized loan portfolio.The net charge-off (recovery) ratio for the second quarter of 2016 was (0.01)% of average net loans, compared with a ratio of (0.02)% and 0.05% in the first quarter of 2016 and second quarter of 2015, respectively.

Investing Activities

Total securities were $111 million at June 30, 2016, compared with $116 million at March 31, 2016 and $99 million at December 31, 2015.  Interest-bearing deposits at other banks, which consist of overnight funds kept at correspondent banks and the Federal Reserve, decreased to $1 million at June 30, 2016 from $22 million at March 31, 2016 and $11 million at December 31, 2015.  The Company experienced strong loan growth in the second quarter.  This resulted in the sharp decrease in short-term interest-bearing deposits at banks.  In addition, there was slight run-off in the investment securities portfolio as management decided not to leverage the balance sheet given the uncertain rate environment at the end of the second quarter.  Securities and interest-bearing deposits at correspondent banks made up 14% of the Bank’s total average interest earning assets in the second quarter of 2016, consistent with the ratio in the first quarter of 2016, but lower than 18% in last year’s second quarter.

The Company’s highest concentration in its securities portfolio was in available for sale U.S. government sponsored mortgage-backed securities at 49% of total investment securities at June 30, 2016, compared with 44% at March 31, 2016 and 38% at December 31, 2015.  The concentration in tax-advantaged debt securities issued by state and political subdivisions and U.S. government-sponsored agency bonds was 35% and 16%, respectively, of the total securities portfolio at June 30, 2016, compared with 34% and 22% at March 31, 2016 and 40% and 22% at December 31, 2015.

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.  Interest rates decreased in each of the first two quarters of 2016,  resulting in an increase in the net unrealized gain position of the available-for-sale investment portfolio to $2.2 million at June 30, 2016 from $1.8 million at March 31, 2016 and $0.8 million at December 31, 2015.

The Company monitors extension and prepayment risk in the securities portfolio to limit potential exposures.  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.

Funding Activities

Total deposits at June 30, 2016 were $870 million, a $21 million or 2% increase from $849 million at March 31, 2016 and a $67 million or 8% increase from $803 million at December 31, 2015.  The growth in the current quarter was in savings deposits of $17 million and demand deposits of $13 million, offset by declines in NOW deposits of $7 million and time deposits of $2 million.  With impending market disruption in the Western New York market due to a significant publicly-announced merger between two of the Company’s competitors, the Company has maintained promotional savings deposit rates in an effort to attract new customers.  The decline in NOW deposits reflects the seasonality of deposits by the Company’s municipal customers.  The time deposit portfolio had slight run-off as promotional rates expired and inflows slowed during the quarter.  Due to the transactional nature of demand deposits, average balances are a useful metric to meaningfully measure sustained growth rates.  Average demand deposits were $178 million in the current quarter, a 1% increase from $176 million in the first quarter of 2016 and 10% higher than the $163 million average balance in the second quarter of 2015.  Most of the Company’s demand deposit growth has been with commercial customers. 

The $67 million deposit growth since the previous year-end reflects growth across all product categories including savings deposits of $40 million, time deposits of $17 million, NOW deposits of $5 million, and demand deposits of $5 million.  In addition to the promotional savings rates sustained through the year to date, the Company also ran promotional time deposit rates in the first quarter resulting in 20% growth in that portfolio during that quarter.  The increase in core transactional NOW and demand deposit accounts reflects an increase in commercial deposits.

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The Company had $16 million other borrowings at June 30, 2016, which consisted of $10 million in a long-term advance with the FHLBNY scheduled to mature in 2020, and $6 million in overnight borrowings.  Other borrowings were $10 millionat each of March 31, 2016 and December 31, 2015.  The Company drew on its overnight line of credit during the second quarter as a funding source for its loan growth.

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, 2016						Three months ended June 30, 2015
	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	$	801,115	$	8,878	4.43	%	$	691,608	$	7,934	4.59	%
Taxable securities		76,817		561	2.92	%		68,568		429	2.50	%
Tax-exempt securities		38,793		222	2.29	%		35,073		240	2.74	%
Interest bearing deposits at banks		15,916		33	0.83	%		51,094		33	0.26	%
Total interest-earning assets		932,641	$	9,694	4.16	%		846,343	$	8,636	4.08	%
Non interest-earning assets:
Cash and due from banks		12,001						12,365
Premises and equipment, net		11,310						10,146
Other assets		42,228						41,885
Total Assets	$	998,180					$	910,739
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	88,966	$	78	0.35	%	$	78,979	$	84	0.43	%
Regular savings		473,791		606	0.51	%		430,930		404	0.38	%
Time deposits		114,545		352	1.23	%		105,051		372	1.42	%
Other borrowed funds		10,854		44	1.62	%		9,444		41	1.74	%
Junior subordinated debentures		11,330		91	3.21	%		11,330		82	2.89	%
Securities sold U/A to repurchase		13,847		7	0.20	%		10,759		5	0.19	%
Total interest-bearing liabilities		713,333	$	1,178	0.66	%		646,493	$	988	0.61	%
Noninterest-bearing liabilities:
Demand deposits		178,106						162,632
Other		13,142						13,665
Total liabilities	$	904,581					$	822,790
Stockholders' equity		93,599						87,949
Total Liabilities and Equity	$	998,180					$	910,739
Net interest earnings			$	8,516					$	7,648
Net interest margin					3.65	%					3.61	%
Interest rate spread					3.50	%					3.47	%

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	Six months ended June 30, 2016						Six months ended June 30, 2015
	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	$	786,862	$	17,608	4.48	%	$	687,139	$	15,746	4.58	%
Taxable securities		70,809		938	2.65	%		68,468		835	2.44	%
Tax-exempt securities		38,547		460	2.39	%		33,799		477	2.82	%
Interest bearing deposits at banks		17,400		44	0.51	%		28,998		34	0.23	%
Total interest-earning assets		913,618	$	19,050	4.17	%		818,404	$	17,092	4.18	%
Non interest-earning assets:
Cash and due from banks		12,368						11,924
Premises and equipment, net		11,201						10,155
Other assets		42,388						42,304
Total Assets	$	979,575					$	882,787
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	88,583	$	163	0.37	%	$	78,026	$	163	0.42	%
Regular savings		460,551		1,137	0.49	%		400,648		673	0.34	%
Time deposits		111,751		695	1.24	%		108,615		807	1.49	%
Other borrowed funds		10,636		88	1.65	%		9,304		49	1.05	%
Junior subordinated debentures		11,330		178	3.14	%		11,330		160	2.82	%
Securities sold U/A to repurchase		13,169		13	0.20	%		12,053		11	0.18	%
Total interest-bearing liabilities		696,020	$	2,274	0.65	%		619,976	$	1,863	0.60	%
Noninterest-bearing liabilities:
Demand deposits		177,091						161,013
Other		13,511						14,222
Total liabilities	$	886,622					$	795,211
Stockholders' equity		92,953						87,576
Total Liabilities and Equity	$	979,575					$	882,787
Net interest earnings			$	16,776					$	15,229
Net interest margin					3.67	%					3.72	%
Interest rate spread					3.52	%					3.58	%

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Net Income

Net income was $2.0 million, or $0.46 per diluted share, in the second quarter of 2016, compared with $1.7 million, or $0.40 per diluted share, in the first quarter of 2016 and $1.7 million, or $0.39 per diluted share, in last year’s second quarter.  The increase reflects a decrease in the Company’s allowance for loan losses and improved net interest income, offset by lower non-interest income and higher non-interest expenses.  Return on average equity was 8.56% for the second quarter of 2016 compared with 7.43% in the previous quarter and 7.62% in the second quarter of 2015.

The Company had net income of $3.7 million, or $0.86 per diluted share, in the first six months of 2016, a 4% increase from $3.6 million, or $0.83 per diluted share, in the comparable period of 2015.

Other Results of Operations – Quarterly Comparison

Net interest income was $8.5 million in the second quarter of 2016, an increase of $0.3 million or 3% from the first quarter of 2016 and $0.9 million or 11% from the prior-year second quarter, reflecting strong loan and demand deposit growth.  The Company’s commercial loan portfolio continues to grow at significant rates as average commercial loans (including both commercial and industrial and commercial real estate loans) were $642 million in the second quarter, up 4% from $616 million in the first quarter of 2016 and 18% from $543 million in the second quarter of 2015.

Net interest margin of 3.65% declined 4 basis points from the 2016 first quarter, but improved 4 basis points from the second quarter of last year.   The decline in margin from the first quarter of 2016 reflects a continued decrease in loan yields as market rates remained historically low in a highly competitive market.  The improvement in net interest margin in the current quarter compared with last year’s second quarter is due to a shift in interest-earning assets mix as average loans grew 16% and comprised 86% of average interest-earning assets in the second quarter of 2016, compared with 82% in the second quarter of 2015.

The Company released $0.4 million in allowance for loan losses, compared with a provision for loan losses of $0.2 million in the first quarter of 2016 and a provision of $0.4 million in last year’s second quarter.  There were several factors that resulted in the Company releasing reserves this quarter, including an improved collateral position on an impaired loan, a sustained period of low charge-offs, and the upgrade of several large criticized loan relationships.

Non-interest income was $2.3 million in the second quarter, down from $3.0 million in the first quarter of 2016 and $3.5 million in the prior year second quarter.  The primary reason for the decrease was a $2.1 million loss on a tax credit investment in a community-based project.  The loss on the investment was offset by a $1.5 million refundable state tax credit in non-interest income and $0.6 million in tax benefits realized in income tax expense during the second quarter.  The Company expects to recognize additional tax benefits of $0.5 million during the third and fourth quarters of 2016.  Additionally, insurance agency revenue of $1.6 million was down $0.2 million from the 2016 first quarter due to a seasonal decrease in profit sharing revenue.  Insurance agency revenue was also down $0.2 million from last year’s second quarter, primarily due to last year’s high level of claims adjustment fees earned for services provided to assess damages of local properties impacted by the previous year’s severe winter. This decrease over the second quarter of 2015 was somewhat offset by increases in the core insurance revenue lines of personal and commercial property and casualty insurance.  Other non-interest income was $0.8 million, compared with $0.7 million in the first quarter of 2016 and $1.1 million in last year’s second quarter.  The decline from the prior year period is predominantly due to a decline in the Company’s mortgage servicing rights asset and the run-off of data center income.

Total non-interest expense was $8.7 million in the second quarter of 2016, an increase of $0.2 million or 2% from the first quarter of 2016 and $0.5 million or 6% from the prior-year period.  Salaries and benefits costs, the largest expense category for the Company, were $5.5 million in the current quarter.  This was flat when compared with the first quarter of 2016, but $0.4 million or 8% higher than the second quarter in the previous year.  The lack of increase in salaries and benefits costs from the previous quarter reflects stabilization in the number of employees at the Company.  The increase from last year’s second quarter reflects annual merit increases and strategic hires to support the Company’s continued growth, including new commercial loan officers, business development officers and related support staff.

The efficiency ratio for the current quarter was 76.3%, compared with 75.8% in the first quarter of 2016 and 74.1% in last year’s second quarter.  The calculation of the efficiency ratio excludes the net impact of the tax credit investment.The increase in the ratio reflects increased non-interest expenses and decreases in non-interest income.  The impact of those trends is somewhat offset by the increases in net interest income.

Income tax expense of $0.5 million was recognized for the second quarter of 2016, compared with an income tax expense of $0.8 million in each of the first quarter of 2016 and the second quarter of 2015.  The effective tax rate for the quarter was 18.3%, compared with 31.9% in the first quarter of 2016 and 32.1% in the second quarter of 2015.   The decrease in the effective tax rate reflects the impact of the historic tax credit transaction referred to above.  The Company expects the effective tax rate for the remainder of 2016 to more closely reflect the year-to-date effective tax rate of 25.2%.

44

Other Results of Operations – Year-to-Date Comparison

Net interest income was $16.8 million for the first six months of 2016, a $1.5 million or 10% increase from the first six months of 2015.  The increase in net interest income is attributable to a $95 million or 12% increase in average interest-earning assets, somewhat offset by a decrease in net interest margin as described below.  The increase in average interest-earning assets reflects average loan growth of $100 million or 15% to $787 million during the first half of 2016.  Most of the growth was in commercial loans, including $67 million in average commercial real estate loans and $23 million in commercial and industrial loans.

The Company’s net interest margin decreased 5 basis points from 3.72% in the first six months of 2015 to 3.67% in the first six months of 2016.  The yield on average interest-earning assets decreased 1 basis point from 4.18% to 4.17%.  Average loan yields decreased 10 basis points from 4.58% to 4.48%.  The decline in the yield on interest-earning assets was less than the decrease in average loan yields due to a shift in the mix of interest-earning assets.  Average loans were 86% of total average interest-earnings assets in the first six months of 2016, compared with 84% in the first six months of the prior year.  Loans have earned higher yields than investment securities and short-term interest-earning cash over the past two years.  The cost of interest-bearing liabilities was 0.65% for the first half of 2016, 5 basis points higher than the 0.60% rate for the first six months of 2015. The increased rate reflected a higher average savings rate of 0.49% in the year to date period ended June 30, 2016, compared with 0.34% in the comparable period in 2015.  Average savings deposit rates have increased as the product with the highest growth rate in the savings deposit portfolio has been at a promotional rate in 2016 in an effort to attract new customers at a time of disruption in the Company’s footprint due to bank merger activity.

The Company released $0.2 million in allowance for loan losses in the six-month period ended June 30, 2016, compared with a provision for loan losses of $0.6 million in the first six months of 2015.  The year-over-year decrease is attributable to an improved collateral position on an impaired loan, a sustained period of low charge-offs, and the upgrade of several large criticized loan relationships.

Non-interest income for the first six months of 2016 decreased $1.3 million from the prior year period to $5.3 million.  The decrease was predominantly a result of the $2.1 million loss on thehistoric tax credit referred to above, offset by a $1.5 million refundable state tax credit in non-interest income and $0.6 million in tax benefits realized in income tax expense during the second quarter.  Additionally, insurance service and fee revenue, the largest component of non-interest income, was $3.3 million for the six-month period ended June 30, 2016, down from $3.7 million in the comparable period of the prior year.  The decline was primarily due to last year’s high level of claims adjustment fees earned for services provided to assess damages of local properties impacted by the previous year’s severe winter.  This decrease was somewhat offset by increases in the core insurance revenue lines of personal and commercial property and casualtyinsurance.  Other non-interest income was $0.8 million for the first half of 2016, compared with $1.1 million in the first six months of 2015.  The decline from the prior year period is predominantly due to a decline in the Company’s mortgage servicing rights asset and the run-off of data center income.

Total non-interest expense increased to $17.2 million in the first six months of 2016, 9% higher than the six-month period ended June 30, 2015.  The increase was mostly attributable to an increase in salaries and employee benefits costs.  Salaries and employee benefits costs were $11.0 million for the first six months of 2016, a $1.1 million or 11% increase from $9.9 million in the prior year period.  The year-over-year increase in salary and benefits expense reflects annual merit increases and personnel hires to support the Company’s growth strategy.  Technology and communications expenses increased $0.2 million to $0.8 million, reflecting additional expense related to the Company’s conversion to a new core banking system in 2016.

The Company’s efficiency ratio for the first six months of 2016 was 76.0%, compared with 72.4% during the prior-year period.  The increase reflects the increase in non-interest expenses and decrease in non-interest income, somewhat offset by the increase in net interest income.

An income tax expense of $1.3 million was recognized for the six-month period ended June 30, 2016, compared with $1.8 million in the first six months of 2015.  The difference reflected a $0.6 million tax credit benefit realized in the current quarter relating to the historic tax credit investment in a community project discussed previously.  The effective tax rate for the first six months of 2016 was 25.2%, compared with 33.7% in the comparable 2015 period.  Excluding the impact of the historic tax credit and the write-off of the tax credit investment recognized in non-interest income, the current year-to-date effective tax rate was 32.4%.

45

CAPITAL

The Company consistently maintains regulatory capital ratios significantly above the federal “well capitalized” standard, including a  Tier 1 leverage ratio of 10.06% at June 30, 2016, compared with 10.18% and 10.45%at March 31, 2016 and December 31, 2015, respectively.  New minimum capital ratios, known as “Basel III”, became effective for the Company and the Bank on January 1, 2015 and will be fully phased-in on January 1, 2019.  As of June 30, 2016, 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 $22.11 at June 30, 2016, compared with $21.44 at December 31, 2015.  Tangible book value per share (a non-GAAP measure) at June 30, 2016 was $20.22, compared with $19.53 at December 31, 2015.

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, 2016		December 31, 2015
Stockholders' equity ("book value")	$	94,789	$	91,256
Goodwill (related to insurance agency reporting unit)		(8,101)		(8,101)
Tangible book value (non-GAAP)	$	86,688	$	83,155
Number of common shares outstanding		4,286,939		4,257,179
Tangible book value per share	$	20.22	$	19.53

On February 16, 2016, the Company declared a cash dividend of $0.38 per share on the Company’s outstanding common stock. The dividend was paid on April 5, 2016 to shareholders of record as of March 15, 2016.

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 $212.4 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.

46

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, 2016, approximately 5% of the Bank’s securities had contractual maturity dates of one year or less and approximately 35% had maturity dates of five years or less.

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, 2016, in the Company’s internal stress test, the Company had net short-term liquidity of $218 million as compared with $282.0 million at December 31, 2015, due to the usage of cash for loan growth.  Available assets of $115 million, divided by public and purchased funds of $140 million, resulted in a long-term liquidity ratio of 82% at June 30, 2016, compared with 102% at December 31, 2015.

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.

47

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, 2016		December 31, 2015
Changes in interest rates
+200 basis points	$	1,504	$	1,034
+100 basis points		2,293		1,856
-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 each of the 100 and 200 basis point rate reduction scenarios, the applicable rate changes are limited to lesser amounts such that interest rates are not 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, 2016 (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, 2016 the Company’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

During the second quarter of 2016, the Company implemented changes that materially affected its internal controls over financial reporting. The Company converted its core banking system, which records all loan and deposit activity, to a different system provided by a third-party vendor. The conversion to a new core system was made in the ordinary course of business to enhance the technology capabilities of the Company and not in response to an identified significant deficiency or material weakness. Other than changes relating to the core conversion, there has been no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f)) under the Securities Exchange Act of 1934) during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. 

48

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 proceedings pending 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.

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 2016, the Company purchased shares of its common stock as follows:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
April 2016:
April 1, 2016 - April 30, 2016		-	$	-	-	18,492
May 2016:
May 1, 2016 - May 31, 2016		-	$	-	-	18,492
June 2016:
June 1, 2016 - June 30, 2016		3,280	$	24.45	3,280	15,212
Total:		3,280	$	24.45	3,280	15,212

(1) 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, 2016 was 15,212.

(2) The shares purchased in the second quarter of 2016 represent a privately negotiated transaction based on the average closing price of a share of the Company’s common stock on the NYSE MKT for the twenty trading days immediately preceding June 17, 2016.

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.

49

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 4, 2016

/s/ David J. Nasca

David J. Nasca

President and CEO

(Principal Executive Officer)

DATE

August 4, 2016

/s/ John B. Connerton

John B.  Connerton

Treasurer

(Principal Financial Officer)

50

EXHIBIT INDEX

Exhibit No.	Name
10.1	Evans Bancorp, Inc. Executive Severance Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on July 29, 2016).
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, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets – June 30, 2016 and December 31, 2015; (ii) Unaudited Consolidated Statements of Income – Three months ended June 30, 2016 and 2015; (iii) Unaudited Consolidated Statements of Income – Six months ended June 30, 2016 and 2015; (iv) Unaudited Statements of Consolidated Comprehensive Income – Three months ended June 30, 2016 and 2015; (v) Unaudited Statements of Consolidated Comprehensive Income – Six months ended June 30, 2016 and 2015; (vi) Unaudited Consolidated Statements of Stockholders' Equity – Six months ended June 30, 2016 and 2015; (vii) Unaudited Consolidated Statements of Cash Flows – Six months ended June 30, 2016 and 2015; and (vii) Notes to Unaudited Consolidated Financial Statements.

51

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: August 4, 2016

/s/ David J. Nasca

David J. Nasca

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification

I, John B. Connerton, 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: August 4, 2016

/s/ John B. Connerton

John B. Connerton

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, 2016 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 4, 2016

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, John B. Connerton, 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, 2016 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 4, 2016

By:	/s/ John B. Connerton
Name:	John B. Connerton
Title:	Treasurer
	(Principal Financial Officer)

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 04, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	EVANS BANCORP INC
Entity Filer Category	Accelerated Filer
Entity Central Index Key	0000842518
Amendment Flag	false
Document Type	10-Q
Document Fiscal Period Focus	Q2
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		4,286,939

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and due from banks	$ 10,807	$ 11,813
Interest-bearing deposits at banks	723	10,808
Securities:
Available for sale, at fair value (amortized cost: $106,875 at June 30, 2016; $96,374 at December 31, 2015)	109,107	97,141
Held to maturity, at amortized cost (fair value: $1,519 at June 30, 2016; $1,584 at December 31, 2015)	1,522	1,617
Federal Home Loan Bank common stock, at cost	1,636	1,296
Federal Reserve Bank common stock, at cost	1,501	1,487
Loans, net of allowance for loan losses of $12,773 at June 30, 2016 and $12,883 at December 31, 2015	840,533	761,101
Properties and equipment, net of accumulated depreciation of $16,377 at June 30, 2016 and $15,799 at December 31, 2015	11,592	11,051
Goodwill	8,101	8,101
Bank-owned life insurance	21,254	20,978
Other assets	14,822	13,714
TOTAL ASSETS	1,021,598	939,107
Deposits:
Demand	187,774	183,098
NOW	88,993	83,674
Regular savings	480,290	439,993
Time	112,828	96,217
Total deposits	869,885	802,982
Securities sold under agreement to repurchase	14,511	10,821
Other borrowings	16,000	10,000
Other liabilities	15,083	12,718
Junior subordinated debentures	11,330	11,330
Total liabilities	926,809	847,851
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,290,222 and 4,260,203 shares issued at June 30, 2016 and December 31, 2015, respectively, and 4,286,939 and 4,257,179 outstanding at June 30, 2016 and December 31, 2015, respectively	2,147	2,132
Capital surplus	43,836	43,318
Treasury stock, at cost, 3,283 and 3,024 shares at June 30, 2016 and December 31, 2015, respectively	(80)
Retained earnings	49,707	47,616
Accumulated other comprehensive loss, net of tax	(821)	(1,810)
Total stockholders' equity	94,789	91,256
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,021,598	$ 939,107

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Securities:
Available for sale, amortized cost	$ 106,875	$ 96,374
Held to maturity, fair value	1,519	1,584
Loans, allowance for loan losses	12,773	12,883
Properties and equipment, accumulated depreciation	$ 16,377	$ 15,799
STOCKHOLDERS' EQUITY:
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,290,222	4,260,203
Common stock, shares outstanding	4,286,939	4,257,179
Treasury stock, shares	3,283	3,024

XML

Consolidated Statements Of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
INTEREST INCOME
Loans	$ 8,878	$ 7,934	$ 17,608	$ 15,746
Interest bearing deposits at banks	33	33	44	34
Securities:
Taxable	561	429	938	835
Non-taxable	222	240	460	477
Total interest income	9,694	8,636	19,050	17,092
INTEREST EXPENSE
Deposits	1,036	860	1,995	1,643
Other borrowings	51	46	101	60
Junior subordinated debentures	91	82	178	160
Total interest expense	1,178	988	2,274	1,863
NET INTEREST INCOME	8,516	7,648	16,776	15,229
PROVISION FOR LOAN LOSSES (CREDIT)	(376)	415	(168)	616
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	8,892	7,233	16,944	14,613
NON-INTEREST INCOME
Bank charges	403	411	846	820
Insurance service and fees	1,572	1,821	3,320	3,650
Gain on loans sold	29	58	44	81
Bank-owned life insurance	141	152	277	289
Loss on tax credit investment	(2,139)		(2,139)
Refundable state historic tax credit	1,508		1,508
Interchange fee income	340	324	658	618
Other	426	710	760	1,084
Total non-interest income	2,280	3,476	5,274	6,542
NON-INTEREST EXPENSE
Salaries and employee benefits	5,467	5,066	10,981	9,860
Occupancy	740	697	1,439	1,392
Repairs and maintenance	212	215	388	388
Advertising and public relations	190	231	475	442
Professional services	656	670	1,236	1,180
Technology and communications	339	262	761	522
FDIC insurance	182	148	341	295
Other	933	952	1,626	1,674
Total non-interest expense	8,719	8,241	17,247	15,753
INCOME BEFORE INCOME TAXES	2,453	2,468	4,971	5,402
INCOME TAX PROVISION	450	793	1,254	1,822
NET INCOME	$ 2,003	$ 1,675	$ 3,717	$ 3,580
Net income per common share-basic	$ 0.47	$ 0.40	$ 0.87	$ 0.85
Net income per common share-diluted	$ 0.46	$ 0.39	0.86	0.83
Cash dividends per common share			$ 0.38	$ 0.36
Weighted average number of common shares outstanding	4,284,180	4,234,334	4,273,645	4,233,196
Weighted average number of diluted shares outstanding	4,346,599	4,309,688	4,337,299	4,309,423

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Statements Of Consolidated Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statements Of Consolidated Comprehensive Income [Abstract]
NET INCOME		$ 2,003	$ 1,675	$ 3,717	$ 3,580
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gain (loss) on available-for-sale securities		260	(637)	909	(306)
Defined benefit pension plans:
Amortization of prior service cost	[1]	5	5	10	10
Amortization of actuarial assumptions	[1]	35	37	70	61
Net change, Net-of-Tax Amount		40	42	80	71
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		300	(595)	989	(235)
COMPREHENSIVE INCOME		$ 2,303	$ 1,080	$ 4,706	$ 3,345

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

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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, 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 compensation expense		263				263
Excess tax benefit (expense) from stock-based compensation		44				44
Reissued restricted shares, net of forfeitures		(503)			503
Repurchased shares in treasury stock					(83)	(83)
Issued/reissued shares in stock option exercises		(55)			155	100
Issued/reissued shares under Dividend Reinvestment Plan		4			134	138
Issued shares in Employee Stock Purchase Plan	3	114				117
Balance at Jun. 30, 2015	2,126	42,969	44,885	(1,743)	(42)	88,195
Balance at Dec. 31, 2015	2,132	43,318	47,616	(1,810)		91,256
Net Income			3,717			3,717
Other comprehensive (loss) income				989		989
Cash dividends			(1,626)			(1,626)
Stock compensation expense		270				270
Excess tax benefit (expense) from stock-based compensation		15				15
Issued restricted shares	10	(10)
Reissued restricted shares, net of forfeitures
Repurchased shares in treasury stock					(80)	(80)
Issued/reissued shares in stock option exercises		8				8
Issued/reissued shares under Dividend Reinvestment Plan	3	129				132
Issued shares in Employee Stock Purchase Plan	2	106				108
Balance at Jun. 30, 2016	$ 2,147	$ 43,836	$ 49,707	$ (821)	$ (80)	$ 94,789

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Consolidated Statements Of Changes In Stockholders’ Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Consolidated Statements Of Changes In Stockholders’ Equity [Abstract]
Cash dividends per common share	$ 0.38	$ 0.36
Restricted shares issued	19,093
Restricted shares reissued, net of forfeitures	3,021	20,592
Restricted shares reissued, forfeitures		588
Shares repurchased in treasury stock	3,280	3,397
Shares issued/reissued in stock option exercises	490	8,034
Shares issued/reissued under Dividend Reinvestment Plan	5,270	5,582
Shares issued in Employee Stock Purchase Plan	5,166	5,672

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES:
Interest received	$ 18,778	$ 16,916
Fees received	5,554	5,795
Interest paid	(2,249)	(1,939)
Cash paid to employees and vendors	(16,429)	(15,932)
Cash contributed to pension plan	(140)	(165)
Income taxes paid	(279)	(601)
Proceeds from sale of loans held for resale	3,514	9,772
Originations of loans held for resale	(3,477)	(10,295)
Net cash provided by operating activities	5,272	3,551
INVESTING ACTIVITIES:
Purchases of available for sale securities	(25,953)	(24,370)
Proceeds from maturities, calls, and payments of available for sale securities	15,005	14,299
Purchases of held to maturity securities		(50)
Proceeds from maturities, calls, and payments of held to maturity securities	95	184
Proceeds from property insurance		927
Additions to properties and equipment	(1,119)	(499)
Purchase of tax credit investment	(703)	(831)
Net increase in loans	(78,823)	(14,360)
Net cash used in investing activities	(91,498)	(24,700)
FINANCING ACTIVITIES:
Proceeds from (repayments of) borrowings, net	9,690	(6,469)
Net increase in deposits	66,903	66,531
Dividends paid	(1,626)	(1,517)
Repurchase of treasury stock	(80)	(83)
Issuance of common stock	248	117
Reissuance of treasury stock		237
Net cash provided by financing activities	75,135	58,816
Net (decrease) increase in cash and cash equivalents	(11,091)	37,667
CASH AND CASH EQUIVALENTS:
Beginning of period	22,621	10,898
End of period	11,530	48,565
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income	3,717	3,580
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	647	745
Deferred tax expense	125	191
Provision for loan losses (credit)	(168)	616
Loss on tax credit investment	2,139
Refundable state historic tax credit	(1,508)
Gain on loans sold	(44)	(81)
Stock options and restricted stock expense	270	263
Proceeds from sale of loans held for resale	3,514	9,772
Originations of loans held for resale	(3,477)	(10,295)
Changes in assets and liabilities affecting cash flow:
Other assets	(1,001)	(1,112)
Other liabilities	1,058	(128)
NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 5,272	$ 3,551

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Organization And Summary Of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

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 results of operations for the three and six month periods ended June  30, 2016 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, 2015 (“10-K”).  The Company’s significant accounting policies are disclosed in Note 1 to the 10-K.

An accounting policy not discussed in Note 1 to the 10-K is the accounting for rehabilitation of historic properties tax credit investments.  In the typical structure of these transactions, the Bank will invest in a partnership that is incurring expenses related to the rehabilitation of a certified historic structure located in New York State.  At the time the historic structure is placed in service, the Bank is eligible for a federal and New York State tax credit.  At the same time, the Bank evaluates its investment, which is valued at the present value of the expected cash flows from its partnership interest.  If the investment is determined to be impaired, the Bank will record that impairment loss on its income statement in non-interest income.  The federal tax credit impact is included in the Company’s estimated effective tax rate calculation and recorded in income tax expense.  For New York State, any new credit earned from rehabilitated historic properties placed in service on or after January 1, 2015, not used in the current tax year will be treated as a refund or overpayment of tax to be credited to the next year’s tax.  Since the realization of the tax credit does not depend on the Bank’s generation of future taxable income or the Bank’s ongoing tax status or tax position, the credit is not considered an element of income tax accounting under ASC 740.In such cases, theBank would not recordthe credit as a reduction of income tax expense; rather, the Bank includes the refundable New York State tax credit in non-interest income.

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Securities

6 Months Ended

Jun. 30, 2016

Securities [Abstract]

Securities

2. SECURITIES

The amortized cost of securities and their approximate fair value at June 30, 2016 and December 31, 2015 were as follows:

	June 30, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	17,185	$	285	$	(2)	$	17,468
States and political subdivisions		36,389		1,204		(10)		37,583
Total debt securities	$	53,574	$	1,489	$	(12)	$	55,051
Mortgage-backed securities:
FNMA	$	16,369	$	347	$	-	$	16,716
FHLMC		4,136		96		(19)		4,213
GNMA		2,862		52		(4)		2,910
CMO		29,934		330		(47)		30,217
Total mortgage-backed securities	$	53,301	$	825	$	(70)	$	54,056
Total securities designated as available for sale	$	106,875	$	2,314	$	(82)	$	109,107
Held to Maturity:
Debt securities
States and political subdivisions	$	1,522	$	14	$	(17)	$	1,519
Total securities designated as held to maturity	$	1,522	$	14	$	(17)	$	1,519

	December 31, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	21,914	$	166	$	(234)	$	21,846
States and political subdivisions		36,838		874		(29)		37,683
Total debt securities	$	58,752	$	1,040	$	(263)	$	59,529
Mortgage-backed securities:
FNMA	$	10,314	$	160	$	(25)	$	10,449
FHLMC		4,629		61		(56)		4,634
GNMA		3,215		48		(27)		3,236
CMO		19,464		66		(237)		19,293
Total mortgage-backed securities	$	37,622	$	335	$	(345)	$	37,612
Total securities designated as available for sale	$	96,374	$	1,375	$	(608)	$	97,141
Held to Maturity:
Debt securities
States and political subdivisions	$	1,617	$	6	$	(39)	$	1,584
Total securities designated as held to maturity	$	1,617	$	6	$	(39)	$	1,584

Available for sale securities with a total fair value of $94 million and $86 million at June 30, 2016 and December 31, 2015, 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 $16 million and $10 million in borrowed funds at FHLBNY at June 30, 2016and December 31, 2015, respectively.  The Company has pledged sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meets 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 $2 million and $1 million in FHLBNY stock atJune 30, 2016 and December 31, 2015,respectively.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  As of June 30, 2016, the Bank’s investment in FHLBNY stock was not impaired.

The Bank, as a member of the Federal Reserve Bank (“FRB”) system, is currently required to purchase and hold shares of capital stock in the FRB in an amount equal to 6% of its capital and surplus. The Bank’s investment in FRBcapital stock totaled $1.5 millionat each of June 30, 2016 and December 31, 2015.  Based on the current capital adequacy and liquidity position of the FRB, management believes there is no impairment in the Company’s investment at June 30, 2016 and the cost of the investment approximates fair value.

The scheduled maturities of debt and mortgage-backed securities at June 30, 2016 and December 31, 2015 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, 2016				December 31, 2015
	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	$	5,115	$	5,149	$	4,082	$	4,142
Due after one year through five years		31,980		32,736		29,113		29,448
Due after five years through ten years		13,511		14,003		19,356		19,615
Due after ten years		2,968		3,163		6,201		6,324
		53,574		55,051		58,752		59,529
Mortgage-backed securities
available for sale		53,301		54,056		37,622		37,612
Total available for sale securities	$	106,875	$	109,107	$	96,374	$	97,141
Debt securities held to maturity:
Due in one year or less	$	265	$	264	$	309	$	308
Due after one year through five years		358		354		374		365
Due after five years through ten years		793		798		828		815
Due after ten years		106		103		106		96
		1,522		1,519		1,617		1,584
Total held to maturity securities	$	1,522	$	1,519	$	1,617	$	1,584

While the contractual maturities of our mortgage-backed securities generally exceed ten years, the Company expects the effective lives to be significantly shorter due to prepayments of the underlying loans and the nature of these securities. The duration of the  investment securities portfolio decreased from 4.0 years at December 31, 2015to 3.7 years at June 30, 2016.

Information regarding unrealized losses within the Company’s available for sale securities at June 30, 2016 and December 31, 2015 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, 2016
		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	$	-	$	-	$	1,998	$	(2)	$	1,998	$	(2)
States and political subdivisions		-		-		744		(10)		744		(10)
Total debt securities	$	-	$	-	$	2,742	$	(12)	$	2,742	$	(12)
Mortgage-backed securities:
FNMA	$	-	$	-	$	-	$	-	$	-	$	-
FHLMC		-		-		1,175		(19)		1,175		(19)
GNMA		-		-		347		(4)		347		(4)
CMO		3,270		(43)		1,400		(4)		4,670		(47)
Total mortgage-backed securities	$	3,270	$	(43)	$	2,922	$	(27)	$	6,192	$	(70)
Held To Maturity:
Debt securities:
States and political subdivisions	$	582	$	(5)	$	430	$	(12)	$	1,012	$	(17)
Total temporarily impaired
securities	$	3,852	$	(48)	$	6,094	$	(51)	$	9,946	$	(99)

	December 31, 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	$	4,531	$	(89)	$	5,855	$	(145)	$	10,386	$	(234)
States and political subdivisions		3,133		(6)		1,117		(23)		4,250		(29)
Total debt securities	$	7,664	$	(95)	$	6,972	$	(168)	$	14,636	$	(263)
Mortgage-backed securities:
FNMA	$	3,856	$	(25)	$	-	$	-	$	3,856	$	(25)
FHLMC		-		-		1,234		(56)		1,234		(56)
GNMA		1,161		(21)		471		(6)		1,632		(27)
CMO		8,996		(123)		3,661		(114)		12,657		(237)
Total mortgage-backed securities	$	14,013	$	(169)	$	5,366	$	(176)	$	19,379	$	(345)
Held To Maturity:
Debt securities:
States and political subdivisions	$	626	$	(11)	$	495	$	(28)	$	1,121	$	(39)
Total temporarily impaired
securities	$	22,303	$	(275)	$	12,833	$	(372)	$	35,136	$	(647)

Management has assessed the securities available for sale in an unrealized loss position at June 30, 2016 and December 31, 2015 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, 2016 and did not record any OTTI charges during 2015.  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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Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Measurements [Abstract]

Fair Value Measurements

3.  FAIR VALUE MEASUREMENTS

The Company follows the provisions of ASC Topic 820, “Fair Value Measurements.”  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 as of June 30, 2016 and December 31, 2015, respectively:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
June 30, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	17,468	$	-	$	17,468
States and political subdivisions		-		37,583		-		37,583
Mortgage-backed securities		-		54,056		-		54,056
Mortgage servicing rights		-		-		466		466
December 31, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	21,846	$	-	$	21,846
States and political subdivisions		-		37,683		-		37,683
Mortgage-backed securities		-		37,612		-		37,612
Mortgage servicing rights		-		-		557		557

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 not have 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, during the Company’s review or when 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.

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 sixmonth periods ended June 30, 2016 and 2015, respectively:

	Three months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - April 1	$	496	$	497
Gains (losses) included in earnings		(56)		4
Additions from loan sales		26		64
Mortgage servicing rights - June 30	$	466	$	565

	Six months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - January 1	$	557	$	518
Losses included in earnings		(125)		(41)
Additions from loan sales		34		88
Mortgage servicing rights - June 30	$	466	$	565

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

	June 30, 2016		December 31, 2015
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	10.24	%	8.55	%

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, 2016 and December 31, 2015:

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2016
Collateral dependent impaired loans	$	-	-	16,848	$	16,848
December 31, 2015
Collateral dependent impaired loans	$	-	-	17,758	$	17,758

Collateral dependent 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 $18.4 million, with a allowance for loan loss of $1.5 million, at June 30, 2016 compared with $19.5 million and $1.7 million, respectively, at December 31, 2015.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At each of June 30, 2016 and December 31, 2015, 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, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	11,530	$	11,530	$	22,621	$	22,621
Level 2:
Available for sale securities		109,107		109,107		97,141		97,141
FHLB and FRB stock		3,137		3,137		2,783		2,783
Level 3:
Held to maturity securities		1,522		1,519		1,617		1,584
Loans, net		840,533		859,300		761,101		772,472
Mortgage servicing rights		466		466		557		557
Financial liabilities:
Level 1:
Demand deposits	$	187,774	$	187,774	$	183,098	$	183,098
NOW deposits		88,993		88,993		83,674		83,674
Regular savings deposits		480,290		480,290		439,993		439,993
Level 2:
Securities sold under agreement to
repurchase		14,511		14,511		10,821		10,821
Other borrowed funds		16,000		16,120		10,000		9,874
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		112,828		114,117		96,217		96,975

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, which are non-marketable equity investments, 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 and there have been no issuances of similar instruments in recent years.  The Company looked at a market bond index to estimate a discount margin to value the debentures.  The discount margin was very similar to the spread to LIBOR established at the issuance of the debentures.  As a result, the Company determined that the fair value of the adjustable-rate debentures approximates their face amount.

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

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.

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Loans And The Allowance For Loan Losses

6 Months Ended

Jun. 30, 2016

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, 2016		December 31, 2015
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	108,405	$	103,941
Commercial and multi-family		426,418		399,819
Construction-Residential		532		1,546
Construction-Commercial		72,981		60,892
Home equities		63,542		61,042
Total real estate loans		671,878		627,240
Commercial and industrial loans		179,210		144,330
Consumer and other loans		1,447		1,735
Net deferred loan origination costs		771		679
Total gross loans		853,306		773,984
Allowance for loan losses		(12,773)		(12,883)
Loans, net	$	840,533	$	761,101

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, 2016, the Bank sold mortgages to FNMA totaling $2.6 million, as compared with $7.1 million in mortgages sold to FNMA in the three month period ended June 30, 2015.  During the six month periods ended June 30, 2016 and 2015, the Bank sold $3.5 million and $9.7 million, respectively, to FNMA.  At June 30, 2016, the Bank had a loan servicing portfolio principal balance of $76million upon which it earns servicing fees, as compared with $77 million at December 31, 2015.  The value of the mortgage servicing rights for that portfolio was $0.5 million at June 30, 2016 and $0.6 million at December 31, 2015.  At each of June 30, 2016 and December 31, 2015, there were $0.5 million in residential mortgage loans held-for-sale.  The Company had no commercial loans held-for-sale at June 30, 2016 or December 31, 2015.  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, 2015.  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, 2015.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2015 are consistent with those utilized by the Company in the three and six month periods ended June 30, 2016.

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 losses:

· 1-3.2-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 are commercial customers.  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 primary credit quality indicator for consumer loans.However, once a consumer loan is identified as impaired, it is individually evaluated for impairment.

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

June 30, 2016
(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	$	62,822	$	342,539	$	405,361	$	112,730
4		5,640		68,289		73,929		51,658
5		339		8,802		9,141		7,967
6		4,180		6,788		10,968		6,855
7		-		-		-		-
Total	$	72,981	$	426,418	$	499,399	$	179,210

December 31, 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	$	42,383	$	340,837	$	383,220	$	80,379
4		13,098		40,019		53,117		47,509
5		1,224		11,772		12,996		8,973
6		4,187		7,191		11,378		7,350
7		-		-		-		119
Total	$	60,892	$	399,819	$	460,711	$	144,330

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, 2016
(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	$	4,513	$	71	$	658	$	5,242	$	173,968	$	179,210	$	338	$	4,936
Residential real estate:
Residential		-		143		636		779		107,626		108,405		159		725
Construction		-		-		-		-		532		532		-		-
Commercial real estate:
Commercial		-		2,624		2,644		5,268		421,150		426,418		1,212		3,465
Construction		5,000		239		4,181		9,420		63,561		72,981		-		4,181
Home equities		245		272		780		1,297		62,245		63,542		3		1,037
Consumer and other		18		14		7		39		1,408		1,447		7		13
Total Loans	$	9,776	$	3,363	$	8,906	$	22,045	$	830,490	$	852,535	$	1,719	$	14,357

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

December 31, 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	$	160	$	224	$	66	$	450	$	143,880	$	144,330	$	40	$	5,312
Residential real estate:
Residential		822		402		569		1,793		102,148		103,941		-		1,400
Construction		-		-		-		-		1,546		1,546		-		-
Commercial real estate:
Commercial		1,919		963		457		3,339		396,480		399,819		457		3,574
Construction		-		-		-		-		60,892		60,892		-		4,187
Home equities		253		236		267		756		60,286		61,042		-		1,058
Consumer and other		8		-		-		8		1,727		1,735		-		14
Total Loans	$	3,162	$	1,825	$	1,359	$	6,346	$	766,959	$	773,305	$	497	$	15,545

NOTE: Loan balances do not include $679 thousand in net deferred loan origination costs as of December 31, 2015.

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 30, 2016 and 2015:

June 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	-	$	12,883
Charge-offs		(33)		-		(23)		-		-		-		(56)
Recoveries		55		51		7		-		1		-		114
Provision (Credit)		(210)		122		32		(146)		34		-		(168)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	324	$	1,128	$	40	$	3	$	18	$	-	$	1,513
Collectively evaluated
for impairment		3,871		6,180		61		760		388		-		11,260
Total	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Loans:
Ending balance:
Individually evaluated
for impairment	$	4,985	$	9,261	$	40	$	2,461	$	1,614	$	-	$	18,361
Collectively evaluated
for impairment		174,225		490,138		1,407		106,476		61,928		-		834,174
Total	$	179,210	$	499,399	$	1,447	$	108,937	$	63,542	$	-	$	852,535

* Includes construction loans

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

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 (Credit)		(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

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

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2016 and 2015:

June 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,580	$	7,442	$	93	$	696	$	308	$	-	$	13,119
Charge-offs		(20)		-		(16)		-		-		-		(36)
Recoveries		48		13		4		-		1		-		66
Provision		(413)		(147)		20		67		97		-		(376)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773

June 30, 2015
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,989	$	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

Impaired Loans

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

		At June 30, 2016
		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	$	4,266	$	4,654	$	-	$	4,664	$	119	$	3
Residential real estate:
Residential		2,406		2,610		-		2,440		19		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,754		3,817		-		3,836		50		36
Construction		262		262		-		691		1		21
Home equities		1,398		1,459		-		1,420		22		13
Consumer		-		-		-		-		-		-
Total impaired loans	$	12,086	$	12,802	$	-	$	13,051	$	211	$	111

		At June 30, 2016
		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	$	719	$	759	$	324	$	746	$	22	$	1
Residential real estate:
Residential		55		55		3		55		1		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,065		1,083		229		1,074		25		-
Construction		4,180		4,201		899		4,184		96		-
Home equities		216		223		18		218		6		-
Consumer		40		65		40		42		1		1
Total impaired loans	$	6,275	$	6,386	$	1,513	$	6,319	$	151	$	2

		At June 30, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	4,985	$	5,413	$	324	$	5,410	$	141	$	4
Residential real estate:
Residential		2,461		2,665		3		2,495		20		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,819		4,900		229		4,910		75		36
Construction		4,442		4,463		899		4,875		97		21
Home equities		1,614		1,682		18		1,638		28		13
Consumer		40		65		40		42		1		1
Total impaired loans	$	18,361	$	19,188	$	1,513	$	19,370	$	362	$	113

		At December 31, 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	$	1,750	$	1,811	$	-	$	1,945	$	58	$	47
Residential real estate:
Residential		2,444		2,555		-		2,474		90		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,888		3,908		-		3,930		27		179
Construction		834		834		-		834		-		31
Home equities		1,644		1,711		-		1,661		40		52
Consumer		-		-		-		-		-		-
Total impaired loans	$	10,560	$	10,819	$	-	$	10,844	$	215	$	372

		At December 31, 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	$	3,572	$	3,835	$	552	$	3,966	$	255	$	9
Residential real estate:
Residential		55		55		2		55		1		2
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,083		1,083		235		1,083		4		42
Construction		4,188		4,201		911		4,188		29		166
Home equities		-		-		-		-		-		-
Consumer		42		57		42		45		2		6
Total impaired loans	$	8,940	$	9,231	$	1,742	$	9,337	$	291	$	225

		At December 31, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,322	$	5,646	$	552	$	5,911	$	313	$	56
Residential real estate:
Residential		2,499		2,610		2		2,529		91		65
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,971		4,991		235		5,013		31		221
Construction		5,022		5,035		911		5,022		29		197
Home equities		1,644		1,711		-		1,661		40		52
Consumer		42		57		42		45		2		6
Total impaired loans	$	19,500	$	20,050	$	1,742	$	20,181	$	506	$	597

Non-performing loans

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

	June 30, 2016			December 31, 2015
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	4,936		$	5,312
Residential real estate:
Residential		725			1,400
Construction		-			-
Commercial real estate:
Commercial and multi-family		3,465			3,574
Construction		4,181			4,187
Home equities		1,037			1,058
Consumer loans		13			14
Total non-accruing loans	$	14,357		$	15,545
Accruing loans 90+ days past due		1,719			497
Total non-performing loans	$	16,076		$	16,042
Total non-performing loans
to total assets		1.57	%		1.71	%
Total non-performing loans
to total loans		1.88	%		2.07	%

Troubled debt restructurings

The Company had $5.1 millionand $5.8 million in loans that were restructured in a troubled debt restructuring (“TDR”) at June 30, 2016 and December 31, 2015, respectively.  Of those balances, $1.1 million and $1.8 million were in non-accrual status at June 30, 2016 and December 31, 2015, 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 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, 2016, 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, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	516	$	467	$	49	$	166
Residential real estate:
Residential		1,860		124		1,736		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,676		323		1,353		-
Construction		262		-		262		-
Home equities		755		178		577		-
Consumer loans		27		-		27		27
Total troubled restructured loans	$	5,096	$	1,092	$	4,004	$	193

		December 31, 2015
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	517	$	508	$	9	$	165
Residential real estate:
Residential		1,789		689		1,100		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,732		334		1,398		-
Construction		834		-		834		-
Home equities		867		281		586		-
Consumer loans		28		-		28		28
Total troubled restructured loans	$	5,767	$	1,812	$	3,955	$	193

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.

There was no TDR activity for the three-month periods ended June 30, 2016 and 2015.

The following table shows the data for TDR activity by type of concession granted to the borrower for the six month periods ended June 30, 2016 and 2015:

	Six months ended June 30, 2016					Six months ended June 30, 2015
	(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
Extension of maturity	1		24		24	-		-		-
Term-out line of credit	1		20		20	-		-		-
Residential Real Estate & Construction:
Extension of maturity	1		95		95	-		-		-
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities
Consumer loans	-		-		-	-		-		-

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, 2016 and 2015:

	Three months ended June 30, 2016			Three months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	-		-
Consumer loans	-		-	-		-

	Six months ended June 30, 2016			Six months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	1		19
Consumer loans	-		-	-		-

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Per Share Data

6 Months Ended

Jun. 30, 2016

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, 2016, the Company had an average of 62,419 and63,654dilutive shares outstanding, respectively.  The Company had an average of 75,354 and 76,227 dilutive shares outstanding for the three and six months periods ended June 30, 2015, 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 both the three and six month periods ended June 30, 2016, there was an average of 83,960 anti-dilutive shares outstanding, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  For the three and sixth month periods ended June 30, 2015, there were 37,800 and 38,215 potentiallyanti-dilutive shares outstanding, respectively.

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Other Comprehensive Income

6 Months Ended

Jun. 30, 2016

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, 2016 and 2015:

	Balance at March 31, 2016		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	1,124	$	260	$	1,384
Net defined benefit pension plan adjustments		(2,245)		40		(2,205)
Total	$	(1,121)	$	300	$	(821)
	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plan adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)

	Balance at December 31, 2015		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	475	$	909	$	1,384
Net defined benefit pension plan adjustments		(2,285)		80		(2,205)
Total	$	(1,810)	$	989	$	(821)
	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plan adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)

	Three months ended June 30, 2016						Three months ended June 30, 2015
	(in thousands)						(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 gain on investment securities:
Unrealized gain on investment securities	$	419	$	(159)	$	260	$	(1,041)	$	404	$	(637)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		419		(159)		260		(1,041)		404		(637)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		8		(3)		5		9		(4)		5
Amortization of actuarial loss (a)		56		(21)		35		52		(15)		37
Net change		64		(24)		40		61		(19)		42
Other Comprehensive Income (Loss)	$	483	$	(183)	$	300	$	(980)	$	385	$	(595)

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

	Six months ended June 30, 2016						Six months ended June 30, 2015
	(in thousands)						(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 gain (loss) on investment securities:
Unrealized gain (loss) on investment securities	$	1,465	$	(556)	$	909	$	(500)	$	194	$	(306)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		1,465		(556)		909		(500)		194		(306)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		16		(6)		10
Amortization of actuarial loss (a)		112		(42)		70		100		(39)		61
Net change		128		(48)		80		116		(45)		71
Other Comprehensive Income (Loss)	$	1,593	$	(604)	$	989	$	(384)	$	149	$	(235)

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

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Segment Information

6 Months Ended

Jun. 30, 2016

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, 2016 and 2015.

	Three months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	8,549	$	(33)	$	8,516
Provision for loan losses (credit)		(376)		-		(376)
Net interest income (expense) after
provision for loan losses		8,925		(33)		8,892
Non-interest income		708		-		708
Insurance service and fees		116		1,456		1,572
Non-interest expense		7,551		1,168		8,719
Income before income taxes		2,198		255		2,453
Income tax provision		352		98		450
Net income	$	1,846	$	157	$	2,003

	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 losses		415		-		415
Net interest income (expense) after
provision for loan losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
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

	Six months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	16,840	$	(64)	$	16,776
Provision for loan losses (credit)		(168)		-		(168)
Net interest income (expense) after
provision for loan losses		17,008		(64)		16,944
Non-interest income		1,954		-		1,954
Insurance service and fees		232		3,088		3,320
Non-interest expense		14,878		2,369		17,247
Income before income taxes		4,316		655		4,971
Income tax provision		1,002		252		1,254
Net income	$	3,314	$	403	$	3,717

	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 losses		616		-		616
Net interest income (expense) after
provision for loan losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
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

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Contingent Liabilities And Commitments

6 Months Ended

Jun. 30, 2016

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,
	2016		2015
	(in thousands)
Commitments to extend credit	$	214,211	$	206,346
Standby letters of credit		3,566		3,794
Total	$	217,777	$	210,140

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 2016 or during 2015.

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 to be material.

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Net Periodic Benefit Costs

6 Months Ended

Jun. 30, 2016

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 Bank 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 $140 thousand to the defined benefit pension plan in the six months of 2016.

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, 2016 and 2015:

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	47	$	49
Interest cost		55		52		36		37
Expected return on plan assets		(66)		(77)		-		-
Amortization of prior service cost		-		-		8		9
Amortization of the net loss		22		18		34		34
Net periodic cost (benefit)	$	11	$	(7)	$	125	$	129

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	94	$	97
Interest cost		110		103		72		74
Expected return on plan assets		(131)		(154)		-		-
Amortization of prior service cost		-		-		16		16
Amortization of the net loss		44		35		68		65
Net periodic cost (benefit)	$	23	$	(16)	$	250	$	252

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

10.  RECENT ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers.  The objective of this 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.  The Company does not expect the standard to have a material impact on its ongoing financial reporting.

ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities.  The main objective of this ASU is to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2017, including interim periods within those fiscal years.  The ASU will not impact results of operations or the financial position of the Company, but will impact its fair value disclosures in the notes to the financial statements.

ASU 2016-02, Leases.  The objective of this ASU is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements to meet that objective.  The main difference between previous GAAP and this ASU is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP.  Under this new guidance, a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term.  The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP.  Information about the Company’s operating lease obligations is disclosed in Note 16 to the Company’s Financial Statements on Form 10-K for the year ended December 31, 2015.  The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  The Company is currently evaluating the impact of the standard on its financial reporting.

ASU 2016-09, Improvements to Employee Share-Based Payment Accounting.  This ASU is part of the FASB’s Simplification Initiative.  The areas for simplification in this Update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Some of the areas of simplification apply only to nonpublic entities.  Although the impact on the Company’s financial statements is not expected to be material, the area of this ASU that will impact the Company is the elimination of the concept of a tax windfall pool.  Currently, an entity must determine for each award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes results in either an excess benefit or a tax deficiency.  Excess tax benefits are recognized in additional paid-in-capital; tax deficiencies are recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement.  Excess tax benefits are not recognized until the deduction reduces taxes payable.  Under the new standard, all excess tax benefits and tax deficiencies will be recognized as income tax expense or benefit in the income statement.  The amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  Current generally accepted accounting principles (GAAP) require an “incurred loss” methodology for recognizing credit losses that delays recognition until it is probable a loss has been incurred. Both financial institutions and users of their financial statements expressed concern that current GAAP restricts the ability to record credit losses that are expected, but do not yet meet the “probable” threshold.  The main objective of this ASU (commonly known as the Current Expected Credit Loss Impairment Model, or CECL, in the industry) is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.  To achieve this objective, the amendments in CECL replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  The amendments in CECL are effective for the Company for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.  The Board expects that an entity will be able to leverage its current systems and methodsfor recording the allowance for credit losses.  However, many financial institutions, particularly community banks similar in size to the Company and industry groups like the American Bankers Association, have expressed concern about the impact of CECL.  The life of loan loss concept presents complexities that can decrease capital, and add both volatility to ALLL estimates and additional costs.  CECL may increase the ALLL, though many factors will determine the impact for each bank.  Changes in expectations of future economic conditions play a large role in CECL and can significantly affect the credit loss estimate.  While OCC estimates made in 2012 indicated 30% to 50% increase, more recent bank analyst projections were far lower.  A challenge for the Company could be the operational impact.  Costly new systems and process to track loan performance may need to be purchased or developed.  Significant procedural challenges may be faced both in implementation and on an ongoing basis.  The total impact of CECL to the Company’s financial statements is unknown but may be material.  Implementation of CECL will be a significant project for the Company through the projected implementation of January 1, 2020.

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Securities (Tables)

6 Months Ended

Jun. 30, 2016

Securities [Abstract]

Schedule Of Amortized Cost And Approximate Fair Value Of Securities

	June 30, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	17,185	$	285	$	(2)	$	17,468
States and political subdivisions		36,389		1,204		(10)		37,583
Total debt securities	$	53,574	$	1,489	$	(12)	$	55,051
Mortgage-backed securities:
FNMA	$	16,369	$	347	$	-	$	16,716
FHLMC		4,136		96		(19)		4,213
GNMA		2,862		52		(4)		2,910
CMO		29,934		330		(47)		30,217
Total mortgage-backed securities	$	53,301	$	825	$	(70)	$	54,056
Total securities designated as available for sale	$	106,875	$	2,314	$	(82)	$	109,107
Held to Maturity:
Debt securities
States and political subdivisions	$	1,522	$	14	$	(17)	$	1,519
Total securities designated as held to maturity	$	1,522	$	14	$	(17)	$	1,519

	December 31, 2015
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	21,914	$	166	$	(234)	$	21,846
States and political subdivisions		36,838		874		(29)		37,683
Total debt securities	$	58,752	$	1,040	$	(263)	$	59,529
Mortgage-backed securities:
FNMA	$	10,314	$	160	$	(25)	$	10,449
FHLMC		4,629		61		(56)		4,634
GNMA		3,215		48		(27)		3,236
CMO		19,464		66		(237)		19,293
Total mortgage-backed securities	$	37,622	$	335	$	(345)	$	37,612
Total securities designated as available for sale	$	96,374	$	1,375	$	(608)	$	97,141
Held to Maturity:
Debt securities
States and political subdivisions	$	1,617	$	6	$	(39)	$	1,584
Total securities designated as held to maturity	$	1,617	$	6	$	(39)	$	1,584

Scheduled Maturities Of Debt And Mortgage-Backed Securities

	June 30, 2016				December 31, 2015
	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	$	5,115	$	5,149	$	4,082	$	4,142
Due after one year through five years		31,980		32,736		29,113		29,448
Due after five years through ten years		13,511		14,003		19,356		19,615
Due after ten years		2,968		3,163		6,201		6,324
		53,574		55,051		58,752		59,529
Mortgage-backed securities
available for sale		53,301		54,056		37,622		37,612
Total available for sale securities	$	106,875	$	109,107	$	96,374	$	97,141
Debt securities held to maturity:
Due in one year or less	$	265	$	264	$	309	$	308
Due after one year through five years		358		354		374		365
Due after five years through ten years		793		798		828		815
Due after ten years		106		103		106		96
		1,522		1,519		1,617		1,584
Total held to maturity securities	$	1,522	$	1,519	$	1,617	$	1,584

Unrealized Losses On Securities

	June 30, 2016
		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	$	-	$	-	$	1,998	$	(2)	$	1,998	$	(2)
States and political subdivisions		-		-		744		(10)		744		(10)
Total debt securities	$	-	$	-	$	2,742	$	(12)	$	2,742	$	(12)
Mortgage-backed securities:
FNMA	$	-	$	-	$	-	$	-	$	-	$	-
FHLMC		-		-		1,175		(19)		1,175		(19)
GNMA		-		-		347		(4)		347		(4)
CMO		3,270		(43)		1,400		(4)		4,670		(47)
Total mortgage-backed securities	$	3,270	$	(43)	$	2,922	$	(27)	$	6,192	$	(70)
Held To Maturity:
Debt securities:
States and political subdivisions	$	582	$	(5)	$	430	$	(12)	$	1,012	$	(17)
Total temporarily impaired
securities	$	3,852	$	(48)	$	6,094	$	(51)	$	9,946	$	(99)

	December 31, 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	$	4,531	$	(89)	$	5,855	$	(145)	$	10,386	$	(234)
States and political subdivisions		3,133		(6)		1,117		(23)		4,250		(29)
Total debt securities	$	7,664	$	(95)	$	6,972	$	(168)	$	14,636	$	(263)
Mortgage-backed securities:
FNMA	$	3,856	$	(25)	$	-	$	-	$	3,856	$	(25)
FHLMC		-		-		1,234		(56)		1,234		(56)
GNMA		1,161		(21)		471		(6)		1,632		(27)
CMO		8,996		(123)		3,661		(114)		12,657		(237)
Total mortgage-backed securities	$	14,013	$	(169)	$	5,366	$	(176)	$	19,379	$	(345)
Held To Maturity:
Debt securities:
States and political subdivisions	$	626	$	(11)	$	495	$	(28)	$	1,121	$	(39)
Total temporarily impaired
securities	$	22,303	$	(275)	$	12,833	$	(372)	$	35,136	$	(647)

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

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, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	17,468	$	-	$	17,468
States and political subdivisions		-		37,583		-		37,583
Mortgage-backed securities		-		54,056		-		54,056
Mortgage servicing rights		-		-		466		466
December 31, 2015
Securities available-for-sale:
U.S. government agencies	$	-	$	21,846	$	-	$	21,846
States and political subdivisions		-		37,683		-		37,683
Mortgage-backed securities		-		37,612		-		37,612
Mortgage servicing rights		-		-		557		557

Changes In Fair Value For Mortgage Servicing Rights

	Three months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - April 1	$	496	$	497
Gains (losses) included in earnings		(56)		4
Additions from loan sales		26		64
Mortgage servicing rights - June 30	$	466	$	565

	Six months ended June 30,
(in thousands)	2016		2015
Mortgage servicing rights - January 1	$	557	$	518
Losses included in earnings		(125)		(41)
Additions from loan sales		34		88
Mortgage servicing rights - June 30	$	466	$	565

Quantitative Information About Significant Unobservable Inputs For MSRs

	June 30, 2016		December 31, 2015
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	10.24	%	8.55	%

Financial Instruments Measured At Fair Value On Nonrecurring Basis

(in thousands)		Level 1	Level 2	Level 3		Fair Value
June 30, 2016
Collateral dependent impaired loans	$	-	-	16,848	$	16,848
December 31, 2015
Collateral dependent impaired loans	$	-	-	17,758	$	17,758

Estimated Fair Values Of Financial Instruments

	June 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	11,530	$	11,530	$	22,621	$	22,621
Level 2:
Available for sale securities		109,107		109,107		97,141		97,141
FHLB and FRB stock		3,137		3,137		2,783		2,783
Level 3:
Held to maturity securities		1,522		1,519		1,617		1,584
Loans, net		840,533		859,300		761,101		772,472
Mortgage servicing rights		466		466		557		557
Financial liabilities:
Level 1:
Demand deposits	$	187,774	$	187,774	$	183,098	$	183,098
NOW deposits		88,993		88,993		83,674		83,674
Regular savings deposits		480,290		480,290		439,993		439,993
Level 2:
Securities sold under agreement to
repurchase		14,511		14,511		10,821		10,821
Other borrowed funds		16,000		16,120		10,000		9,874
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		112,828		114,117		96,217		96,975

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Loans And The Allowance For Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Loans And The Allowance For Loan Losses [Abstract]

Schedule Of Loan Portfolio Composition

	June 30, 2016		December 31, 2015
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	108,405	$	103,941
Commercial and multi-family		426,418		399,819
Construction-Residential		532		1,546
Construction-Commercial		72,981		60,892
Home equities		63,542		61,042
Total real estate loans		671,878		627,240
Commercial and industrial loans		179,210		144,330
Consumer and other loans		1,447		1,735
Net deferred loan origination costs		771		679
Total gross loans		853,306		773,984
Allowance for loan losses		(12,773)		(12,883)
Loans, net	$	840,533	$	761,101

Data, At Class Level, Of Credit Quality Indicators Of Certain Loans

June 30, 2016
(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	$	62,822	$	342,539	$	405,361	$	112,730
4		5,640		68,289		73,929		51,658
5		339		8,802		9,141		7,967
6		4,180		6,788		10,968		6,855
7		-		-		-		-
Total	$	72,981	$	426,418	$	499,399	$	179,210

December 31, 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	$	42,383	$	340,837	$	383,220	$	80,379
4		13,098		40,019		53,117		47,509
5		1,224		11,772		12,996		8,973
6		4,187		7,191		11,378		7,350
7		-		-		-		119
Total	$	60,892	$	399,819	$	460,711	$	144,330

Recorded Investment In Loans Past Due

June 30, 2016
(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	$	4,513	$	71	$	658	$	5,242	$	173,968	$	179,210	$	338	$	4,936
Residential real estate:
Residential		-		143		636		779		107,626		108,405		159		725
Construction		-		-		-		-		532		532		-		-
Commercial real estate:
Commercial		-		2,624		2,644		5,268		421,150		426,418		1,212		3,465
Construction		5,000		239		4,181		9,420		63,561		72,981		-		4,181
Home equities		245		272		780		1,297		62,245		63,542		3		1,037
Consumer and other		18		14		7		39		1,408		1,447		7		13
Total Loans	$	9,776	$	3,363	$	8,906	$	22,045	$	830,490	$	852,535	$	1,719	$	14,357

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

December 31, 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	$	160	$	224	$	66	$	450	$	143,880	$	144,330	$	40	$	5,312
Residential real estate:
Residential		822		402		569		1,793		102,148		103,941		-		1,400
Construction		-		-		-		-		1,546		1,546		-		-
Commercial real estate:
Commercial		1,919		963		457		3,339		396,480		399,819		457		3,574
Construction		-		-		-		-		60,892		60,892		-		4,187
Home equities		253		236		267		756		60,286		61,042		-		1,058
Consumer and other		8		-		-		8		1,727		1,735		-		14
Total Loans	$	3,162	$	1,825	$	1,359	$	6,346	$	766,959	$	773,305	$	497	$	15,545

NOTE: Loan balances do not include $679 thousand in net deferred loan origination costs as of December 31, 2015.

Schedule 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 30, 2016 and 2015:

June 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	-	$	12,883
Charge-offs		(33)		-		(23)		-		-		-		(56)
Recoveries		55		51		7		-		1		-		114
Provision (Credit)		(210)		122		32		(146)		34		-		(168)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	324	$	1,128	$	40	$	3	$	18	$	-	$	1,513
Collectively evaluated
for impairment		3,871		6,180		61		760		388		-		11,260
Total	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773
Loans:
Ending balance:
Individually evaluated
for impairment	$	4,985	$	9,261	$	40	$	2,461	$	1,614	$	-	$	18,361
Collectively evaluated
for impairment		174,225		490,138		1,407		106,476		61,928		-		834,174
Total	$	179,210	$	499,399	$	1,447	$	108,937	$	63,542	$	-	$	852,535

* Includes construction loans

NOTE: Loan balances do not include $771 thousand in net deferred loan origination costs as of June 30, 2016.

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 (Credit)		(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

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

The following tables present the activity in the allowance for loan losses by portfolio segment for the three month periods ended June 30, 2016 and 2015:

June 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,580	$	7,442	$	93	$	696	$	308	$	-	$	13,119
Charge-offs		(20)		-		(16)		-		-		-		(36)
Recoveries		48		13		4		-		1		-		66
Provision		(413)		(147)		20		67		97		-		(376)
Ending balance	$	4,195	$	7,308	$	101	$	763	$	406	$	-	$	12,773

June 30, 2015
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer		Residential Mortgages*		HELOC		Unallocated		Total
Allowance for loan
losses:
Beginning balance	$	4,989	$	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

Data, At Class Level, Of Impaired Loans

		At June 30, 2016
		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	$	4,266	$	4,654	$	-	$	4,664	$	119	$	3
Residential real estate:
Residential		2,406		2,610		-		2,440		19		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,754		3,817		-		3,836		50		36
Construction		262		262		-		691		1		21
Home equities		1,398		1,459		-		1,420		22		13
Consumer		-		-		-		-		-		-
Total impaired loans	$	12,086	$	12,802	$	-	$	13,051	$	211	$	111

		At June 30, 2016
		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	$	719	$	759	$	324	$	746	$	22	$	1
Residential real estate:
Residential		55		55		3		55		1		-
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,065		1,083		229		1,074		25		-
Construction		4,180		4,201		899		4,184		96		-
Home equities		216		223		18		218		6		-
Consumer		40		65		40		42		1		1
Total impaired loans	$	6,275	$	6,386	$	1,513	$	6,319	$	151	$	2

		At June 30, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	4,985	$	5,413	$	324	$	5,410	$	141	$	4
Residential real estate:
Residential		2,461		2,665		3		2,495		20		38
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,819		4,900		229		4,910		75		36
Construction		4,442		4,463		899		4,875		97		21
Home equities		1,614		1,682		18		1,638		28		13
Consumer		40		65		40		42		1		1
Total impaired loans	$	18,361	$	19,188	$	1,513	$	19,370	$	362	$	113

		At December 31, 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	$	1,750	$	1,811	$	-	$	1,945	$	58	$	47
Residential real estate:
Residential		2,444		2,555		-		2,474		90		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,888		3,908		-		3,930		27		179
Construction		834		834		-		834		-		31
Home equities		1,644		1,711		-		1,661		40		52
Consumer		-		-		-		-		-		-
Total impaired loans	$	10,560	$	10,819	$	-	$	10,844	$	215	$	372

		At December 31, 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	$	3,572	$	3,835	$	552	$	3,966	$	255	$	9
Residential real estate:
Residential		55		55		2		55		1		2
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,083		1,083		235		1,083		4		42
Construction		4,188		4,201		911		4,188		29		166
Home equities		-		-		-		-		-		-
Consumer		42		57		42		45		2		6
Total impaired loans	$	8,940	$	9,231	$	1,742	$	9,337	$	291	$	225

		At December 31, 2015
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	5,322	$	5,646	$	552	$	5,911	$	313	$	56
Residential real estate:
Residential		2,499		2,610		2		2,529		91		65
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		4,971		4,991		235		5,013		31		221
Construction		5,022		5,035		911		5,022		29		197
Home equities		1,644		1,711		-		1,661		40		52
Consumer		42		57		42		45		2		6
Total impaired loans	$	19,500	$	20,050	$	1,742	$	20,181	$	506	$	597

Schedule Of Non-Performing Loans

	June 30, 2016			December 31, 2015
		(in thousands)
Non-accruing loans:
Commercial and industrial loans	$	4,936		$	5,312
Residential real estate:
Residential		725			1,400
Construction		-			-
Commercial real estate:
Commercial and multi-family		3,465			3,574
Construction		4,181			4,187
Home equities		1,037			1,058
Consumer loans		13			14
Total non-accruing loans	$	14,357		$	15,545
Accruing loans 90+ days past due		1,719			497
Total non-performing loans	$	16,076		$	16,042
Total non-performing loans
to total assets		1.57	%		1.71	%
Total non-performing loans
to total loans		1.88	%		2.07	%

Troubled Debt Restructurings

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

		June 30, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	516	$	467	$	49	$	166
Residential real estate:
Residential		1,860		124		1,736		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,676		323		1,353		-
Construction		262		-		262		-
Home equities		755		178		577		-
Consumer loans		27		-		27		27
Total troubled restructured loans	$	5,096	$	1,092	$	4,004	$	193

		December 31, 2015
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	517	$	508	$	9	$	165
Residential real estate:
Residential		1,789		689		1,100		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,732		334		1,398		-
Construction		834		-		834		-
Home equities		867		281		586		-
Consumer loans		28		-		28		28
Total troubled restructured loans	$	5,767	$	1,812	$	3,955	$	193

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.

There was no TDR activity for the three-month periods ended June 30, 2016 and 2015.

The following table shows the data for TDR activity by type of concession granted to the borrower for the six month periods ended June 30, 2016 and 2015:

	Six months ended June 30, 2016					Six months ended June 30, 2015
	(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
Extension of maturity	1		24		24	-		-		-
Term-out line of credit	1		20		20	-		-		-
Residential Real Estate & Construction:
Extension of maturity	1		95		95	-		-		-
Commercial Real Estate & Construction	-		-		-	-		-		-
Home Equities
Consumer loans	-		-		-	-		-		-

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, 2016 and 2015:

	Three months ended June 30, 2016			Three months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	-		-
Consumer loans	-		-	-		-

	Six months ended June 30, 2016			Six months ended June 30, 2015
	(in thousands)			(in thousands)
Troubled Debt Restructurings	Number of	Recorded		Number of	Recorded
That Subsequently Defaulted	Contracts	Investment		Contracts	Investment
Commercial and Industrial	-	$	-	-	$	-
Residential Real Estate:
Residential	-		-	-		-
Construction	-		-	-		-
Commercial Real Estate:
Commercial and multi-family	-		-	1		245
Construction	-		-	-		-
Home Equities	-		-	1		19
Consumer loans	-		-	-		-

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Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

	Balance at March 31, 2016		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	1,124	$	260	$	1,384
Net defined benefit pension plan adjustments		(2,245)		40		(2,205)
Total	$	(1,121)	$	300	$	(821)
	Balance at March 31, 2015		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	1,242	$	(637)	$	605
Net defined benefit pension plan adjustments		(2,390)		42		(2,348)
Total	$	(1,148)	$	(595)	$	(1,743)

	Balance at December 31, 2015		Net Change		Balance at June 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	475	$	909	$	1,384
Net defined benefit pension plan adjustments		(2,285)		80		(2,205)
Total	$	(1,810)	$	989	$	(821)
	Balance at December 31, 2014		Net Change		Balance at June 30, 2015
	(in thousands)
Net unrealized gain on investment securities	$	911	$	(306)	$	605
Net defined benefit pension plan adjustments		(2,419)		71		(2,348)
Total	$	(1,508)	$	(235)	$	(1,743)

Components Of Other Comprehensive Income (Loss)

	Three months ended June 30, 2016						Three months ended June 30, 2015
	(in thousands)						(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 gain on investment securities:
Unrealized gain on investment securities	$	419	$	(159)	$	260	$	(1,041)	$	404	$	(637)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		419		(159)		260		(1,041)		404		(637)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		8		(3)		5		9		(4)		5
Amortization of actuarial loss (a)		56		(21)		35		52		(15)		37
Net change		64		(24)		40		61		(19)		42
Other Comprehensive Income (Loss)	$	483	$	(183)	$	300	$	(980)	$	385	$	(595)

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

	Six months ended June 30, 2016						Six months ended June 30, 2015
	(in thousands)						(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 gain (loss) on investment securities:
Unrealized gain (loss) on investment securities	$	1,465	$	(556)	$	909	$	(500)	$	194	$	(306)
Reclassification from accumulated other
comprehensive income for gains (losses)		-		-		-		-		-		-
Net change		1,465		(556)		909		(500)		194		(306)
Defined benefit pension plan adjustments:
Net actuarial gain (loss)	$	-	$	-	$	-	$	-	$	-	$	-
Reclassifications from accumulated other
comprehensive income for gains (losses)
Amortization of prior service cost (a)		16		(6)		10		16		(6)		10
Amortization of actuarial loss (a)		112		(42)		70		100		(39)		61
Net change		128		(48)		80		116		(45)		71
Other Comprehensive Income (Loss)	$	1,593	$	(604)	$	989	$	(384)	$	149	$	(235)

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

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Information [Abstract]

Schedule Of Business Segments

	Three months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	8,549	$	(33)	$	8,516
Provision for loan losses (credit)		(376)		-		(376)
Net interest income (expense) after
provision for loan losses		8,925		(33)		8,892
Non-interest income		708		-		708
Insurance service and fees		116		1,456		1,572
Non-interest expense		7,551		1,168		8,719
Income before income taxes		2,198		255		2,453
Income tax provision		352		98		450
Net income	$	1,846	$	157	$	2,003

	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 losses		415		-		415
Net interest income (expense) after
provision for loan losses		7,262		(29)		7,233
Non-interest income		1,655		-		1,655
Insurance service and fees		191		1,630		1,821
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

	Six months ended June 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	16,840	$	(64)	$	16,776
Provision for loan losses (credit)		(168)		-		(168)
Net interest income (expense) after
provision for loan losses		17,008		(64)		16,944
Non-interest income		1,954		-		1,954
Insurance service and fees		232		3,088		3,320
Non-interest expense		14,878		2,369		17,247
Income before income taxes		4,316		655		4,971
Income tax provision		1,002		252		1,254
Net income	$	3,314	$	403	$	3,717

	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 losses		616		-		616
Net interest income (expense) after
provision for loan losses		14,670		(57)		14,613
Non-interest income		2,892		-		2,892
Insurance service and fees		353		3,297		3,650
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

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Contingent Liabilities And Commitments (Tables)

6 Months Ended

Jun. 30, 2016

Contingent Liabilities And Commitments [Abstract]

Summary Of Commitments And Contingent Liabilities

	June 30,		December 31,
	2016		2015
	(in thousands)
Commitments to extend credit	$	214,211	$	206,346
Standby letters of credit		3,566		3,794
Total	$	217,777	$	210,140

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Net Periodic Benefit Costs (Tables)

6 Months Ended

Jun. 30, 2016

Net Periodic Benefit Costs [Abstract]

Schedule Of Net Periodic Cost

		Three months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	47	$	49
Interest cost		55		52		36		37
Expected return on plan assets		(66)		(77)		-		-
Amortization of prior service cost		-		-		8		9
Amortization of the net loss		22		18		34		34
Net periodic cost (benefit)	$	11	$	(7)	$	125	$	129

		Six months ended June 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2016		2015		2016		2015
Service cost	$	-	$	-	$	94	$	97
Interest cost		110		103		72		74
Expected return on plan assets		(131)		(154)		-		-
Amortization of prior service cost		-		-		16		16
Amortization of the net loss		44		35		68		65
Net periodic cost (benefit)	$	23	$	(16)	$	250	$	252

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Organization And Summary Of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2016 entity
Organization And Summary Of Significant Accounting Policies [Abstract]
Number of subsidiaries	2

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Securities (Narrative) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities pledged as collateral	$ 94,000,000	$ 86,000,000
Other borrowed funds	16,000,000	10,000,000
FHLBNY stock	1,636,000	1,296,000
Impairment charges	$ 0	0
Percentage of required FRB stock to capital and surplus	6.00%
FRB capital stock, at cost	$ 1,501,000	$ 1,487,000
Investment Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities duration	3 years 8 months 12 days	4 years
Investment In FRB Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Impairment charges	$ 0
FHLBNY [Member] | Investment In FHLBNY Stock [Member]
Schedule of Available-for-sale Securities [Line Items]
Impairment charges	$ 0
Minimum [Member] | Total Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities duration	10 years

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Securities (Schedule Of Amortized Cost And Approximate Fair Value Of Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	$ 106,875	$ 96,374
Available for Sale, Unrealized Gains	2,314	1,375
Available for Sale, Unrealized Losses	(82)	(608)
Available for Sale, Fair Value	109,107	97,141
Held to Maturity, Amortized Cost	1,522	1,617
Held to Maturity, Unrealized Gains	14	6
Held to Maturity, Unrealized Losses	(17)	(39)
Held to Maturity, Fair Value	1,519	1,584
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Held to Maturity, Amortized Cost	1,522	1,617
Held to Maturity, Unrealized Gains	14	6
Held to Maturity, Unrealized Losses	(17)	(39)
Held to Maturity, Fair Value	1,519	1,584
U.S. Government Agencies [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	17,185	21,914
Available for Sale, Unrealized Gains	285	166
Available for Sale, Unrealized Losses	(2)	(234)
Available for Sale, Fair Value	17,468	21,846
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	36,389	36,838
Available for Sale, Unrealized Gains	1,204	874
Available for Sale, Unrealized Losses	(10)	(29)
Available for Sale, Fair Value	37,583	37,683
Total Debt Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	53,574	58,752
Available for Sale, Unrealized Gains	1,489	1,040
Available for Sale, Unrealized Losses	(12)	(263)
Available for Sale, Fair Value	55,051	59,529
FNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	16,369	10,314
Available for Sale, Unrealized Gains	347	160
Available for Sale, Unrealized Losses		(25)
Available for Sale, Fair Value	16,716	10,449
FHLMC [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	4,136	4,629
Available for Sale, Unrealized Gains	96	61
Available for Sale, Unrealized Losses	(19)	(56)
Available for Sale, Fair Value	4,213	4,634
GNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	2,862	3,215
Available for Sale, Unrealized Gains	52	48
Available for Sale, Unrealized Losses	(4)	(27)
Available for Sale, Fair Value	2,910	3,236
CMO [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	29,934	19,464
Available for Sale, Unrealized Gains	330	66
Available for Sale, Unrealized Losses	(47)	(237)
Available for Sale, Fair Value	30,217	19,293
Total Mortgage-Backed Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Amortized Cost	53,301	37,622
Available for Sale, Unrealized Gains	825	335
Available for Sale, Unrealized Losses	(70)	(345)
Available for Sale, Fair Value	$ 54,056	$ 37,612

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Securities (Scheduled Maturities Of Debt And Mortgage-Backed Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Securities [Abstract]
Debt securities available for sale, Due in one year or less, Amortized cost	$ 5,115	$ 4,082
Debt securities available for sale, Due after one year through five years, Amortized cost	31,980	29,113
Debt securities available for sale, Due after five years through ten years, Amortized cost	13,511	19,356
Debt securities available for sale, Due after ten years, Amortized cost	2,968	6,201
Debt securities available for sale, Amortized cost	53,574	58,752
Mortgage-backed securities available for sale, Amortized cost	53,301	37,622
Available for Sale, Amortized Cost	106,875	96,374
Debt securities available for sale, Due in one year or less, Estimated fair value	5,149	4,142
Debt securities available for sale, Due after one year through five years, Estimated fair value	32,736	29,448
Debt securities available for sale, Due after five years through ten years, Estimated fair value	14,003	19,615
Debt securities available for sale, Due after ten years, Estimated fair value	3,163	6,324
Debt securities available for sale, Estimated fair value	55,051	59,529
Mortgage-backed securities available for sale, Estimated fair value	54,056	37,612
Available for Sale, Estimated Fair Value	109,107	97,141
Debt securities held to maturity, Due in one year or less, Amortized cost	265	309
Debt securities held to maturity, Due after one year through five years, Amortized cost	358	374
Debt securities held to maturity, Due after five years through ten years, Amortized cost	793	828
Debt securities held to maturity, Due after ten years, Amortized cost	106	106
Held to Maturity, Amortized Cost	1,522	1,617
Debt securities held to maturity, Due in one year or less, Estimated fair value	264	308
Debt securites held to maturity, Due after one year through five years, Estimated fair value	354	365
Debt securites held to maturity, Due after five years through ten years, Estimated fair value	798	815
Debt securities held to maturity, Due after ten years, Estimated fair value	103	96
Held to Maturity, Estimated Fair Value	$ 1,519	$ 1,584

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Securities (Unrealized Losses On Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Investments In Debt And Marketable Equity Securities [Line Items]
Total temporarily impaired securities, Less than 12 months, Fair Value	$ 3,852	$ 22,303
Total temporarily impaired securities, 12 months or longer, Fair Value	6,094	12,833
Total temporarily impaired securities, Total, Fair Value	9,946	35,136
Total temporarily impaired securities, Less than 12 months, Unrealized Losses	(48)	(275)
Total temporarily impaired securities, 12 months or longer, Unrealized Losses	(51)	(372)
Total temporarily impaired securities, Total, Unrealized Losses	(99)	(647)
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Held To Maturity, Less than 12 months, Fair Value	582	626
Held To Maturity, 12 months or longer, Fair Value	430	495
Held To Maturity, Total, Fair Value	1,012	1,121
Held To Maturity, Less than 12 months, Unrealized Losses	(5)	(11)
Held To Maturity, 12 months or longer, Unrealized Losses	(12)	(28)
Held To Maturity, Total, Unrealized Losses	(17)	(39)
U.S. Government Agencies [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value		4,531
Available for Sale, 12 months or longer, Fair Value	1,998	5,855
Available for Sale, Total, Fair Value	1,998	10,386
Available for Sale, Less than 12 months, Unrealized Losses		(89)
Available for Sale, 12 months or longer, Unrealized Losses	(2)	(145)
Available for Sale, Total, Unrealized Losses	(2)	(234)
States and Political Subdivisions [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value		3,133
Available for Sale, 12 months or longer, Fair Value	744	1,117
Available for Sale, Total, Fair Value	744	4,250
Available for Sale, Less than 12 months, Unrealized Losses		(6)
Available for Sale, 12 months or longer, Unrealized Losses	(10)	(23)
Available for Sale, Total, Unrealized Losses	(10)	(29)
Total Debt Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value		7,664
Available for Sale, 12 months or longer, Fair Value	2,742	6,972
Available for Sale, Total, Fair Value	2,742	14,636
Available for Sale, Less than 12 months, Unrealized Losses		(95)
Available for Sale, 12 months or longer, Unrealized Losses	(12)	(168)
Available for Sale, Total, Unrealized Losses	(12)	(263)
FNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value		3,856
Available for Sale, 12 months or longer, Fair Value
Available for Sale, Total, Fair Value		3,856
Available for Sale, Less than 12 months, Unrealized Losses		(25)
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Unrealized Losses		(25)
FHLMC [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, 12 months or longer, Fair Value	1,175	1,234
Available for Sale, Total, Fair Value	1,175	1,234
Available for Sale, 12 months or longer, Unrealized Losses	(19)	(56)
Available for Sale, Total, Unrealized Losses	(19)	(56)
GNMA [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value		1,161
Available for Sale, 12 months or longer, Fair Value	347	471
Available for Sale, Total, Fair Value	347	1,632
Available for Sale, Less than 12 months, Unrealized Losses		(21)
Available for Sale, 12 months or longer, Unrealized Losses	(4)	(6)
Available for Sale, Total, Unrealized Losses	(4)	(27)
CMO [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	3,270	8,996
Available for Sale, 12 months or longer, Fair Value	1,400	3,661
Available for Sale, Total, Fair Value	4,670	12,657
Available for Sale, Less than 12 months, Unrealized Losses	(43)	(123)
Available for Sale, 12 months or longer, Unrealized Losses	(4)	(114)
Available for Sale, Total, Unrealized Losses	(47)	(237)
Total Mortgage-Backed Securities [Member]
Investments In Debt And Marketable Equity Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	3,270	14,013
Available for Sale, 12 months or longer, Fair Value	2,922	5,366
Available for Sale, Total, Fair Value	6,192	19,379
Available for Sale, Less than 12 months, Unrealized Losses	(43)	(169)
Available for Sale, 12 months or longer, Unrealized Losses	(27)	(176)
Available for Sale, Total, Unrealized Losses	$ (70)	$ (345)

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	$ 18,361	$ 19,500
Impaired loans, allowance for loan loss	$ 1,513	1,742
Consumer [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Period past due for loan appraisals	90 days
Impaired loans	$ 40	42
Impaired loans, allowance for loan loss	$ 40	$ 42
Minimum [Member] | Impaired Loans [Member] | Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	10.00%
Maximum [Member] | Impaired Loans [Member] | Level 3 [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Discount rate	50.00%

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 109,107	$ 97,141
Mortgage servicing rights	466	557
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	17,468	21,846
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	37,583	37,683
Total Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	54,056	37,612
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights
Recurring [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Mortgage servicing rights	466	557
Recurring [Member] | U.S. Government Agencies [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
Recurring [Member] | 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	17,468	21,846
Recurring [Member] | States and Political Subdivisions [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
Recurring [Member] | 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	37,583	37,683
Recurring [Member] | Total Mortgage-Backed Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale
Recurring [Member] | 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	$ 54,056	$ 37,612

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Fair Value Measurements (Changes In Fair Value For Mortgage Servicing Rights) (Details) - Mortgage Servicing Rights [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Mortgage servicing rights - Beginning balance	$ 496	$ 497	$ 557	$ 518
Gains (losses) included in earnings	(56)	4	(125)	(41)
Additions from loan sales	26	64	34	88
Mortgage servicing rights - Ending balance	$ 466	$ 565	$ 466	$ 565

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Fair Value Measurements (Quantitative Information About Significant Unobservable Inputs For MSRs) (Details) - Mortgage Servicing Rights [Member] - Level 3 [Member]	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Servicing fees	0.25%	0.25%
Discount rate	9.52%	9.52%
Prepayment rate (CPR)	10.24%	8.55%

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Fair Value Measurements (Financial Instruments Measured At Fair Value On Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 16,848	$ 17,758
Level 1 [Member] | Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans
Level 2 [Member] | Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans
Level 3 [Member] | Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 16,848	$ 17,758

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Fair Value Measurements (Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	$ 109,107	$ 97,141
Held to maturity securities	1,519	1,584
Mortgage servicing rights	466	557
Demand deposits	187,774	183,098
NOW deposits	88,993	83,674
Regular savings deposits	480,290	439,993
Time deposits	112,828	96,217
Carrying Amount [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	11,530	22,621
Demand deposits	187,774	183,098
NOW deposits	88,993	83,674
Regular savings deposits	480,290	439,993
Carrying Amount [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	109,107	97,141
FHLB and FRB stock	3,137	2,783
Securities sold under agreement to repurchase	14,511	10,821
Other borrowed funds	16,000	10,000
Junior subordinated debentures	11,330	11,330
Carrying Amount [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held to maturity securities	1,522	1,617
Loans, net	840,533	761,101
Mortgage servicing rights	466	557
Time deposits	112,828	96,217
Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	11,530	22,621
Demand deposits	187,774	183,098
NOW deposits	88,993	83,674
Regular savings deposits	480,290	439,993
Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	109,107	97,141
FHLB and FRB stock	3,137	2,783
Securities sold under agreement to repurchase	14,511	10,821
Other borrowed funds	16,120	9,874
Junior subordinated debentures	11,330	11,330
Fair Value [Member] | Level 3 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Held to maturity securities	1,519	1,584
Loans, net	859,300	772,472
Mortgage servicing rights	466	557
Time deposits	$ 114,117	$ 96,975

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Loans And The Allowance For Loan Losses (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans restructured in troubled debt restructurings	$ 5,096,000		$ 5,096,000		$ 5,767,000
Troubled debt restructurings in non-accrual status	1,092,000		$ 1,092,000		1,812,000
Period of timely payments before reversion to accruing status			6 months
Commitments to lend additional funds to debtors owing on loans whose terms have been modified in TDRs	0		$ 0
Total Real Estate Loans [Member] | Residential Real Estate [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid principal balance	76,000,000		76,000,000		77,000,000
Mortgage servicing rights	500,000		500,000		600,000
Mortgage loans held-for-sale	500,000		500,000		500,000
Loans restructured in troubled debt restructurings	1,860,000		1,860,000		1,789,000
Troubled debt restructurings in non-accrual status	124,000		124,000		689,000
Total Real Estate Loans [Member] | Residential Real Estate [Member] | FNMA Loans [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgages sold to FNMA	2,600,000	$ 7,100,000	3,500,000	$ 9,700,000
Total Real Estate Loans [Member] | Commercial Real Estate [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Commercial loans held-for-sale	0		0		0
Loans restructured in troubled debt restructurings	1,676,000		1,676,000		1,732,000
Troubled debt restructurings in non-accrual status	$ 323,000		$ 323,000		$ 334,000

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Loans And The Allowance For Loan Losses (Schedule Of Loan Portfolio Composition) (Details) - USD ($) $ in Thousands		Jun. 30, 2016		Dec. 31, 2015	Jun. 30, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		$ 852,535		$ 773,305	$ 710,158
Net deferred loan origination costs		771		679	674
Total gross loans		853,306		773,984
Allowance for loan losses		(12,773)		(12,883)
Loans, net		840,533		761,101
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		179,210		144,330	129,812
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		1,447		1,735	2,864
Total Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		671,878		627,240
Total Real Estate Loans [Member] | Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs	[1]	108,937			98,978
Total Real Estate Loans [Member] | Residential Real Estate [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		108,405		103,941
Total Real Estate Loans [Member] | Residential Real Estate [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		532		1,546
Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		499,399	[1]	460,711	419,123	[1]
Total Real Estate Loans [Member] | Commercial Real Estate [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		426,418		399,819
Total Real Estate Loans [Member] | Commercial Real Estate [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		72,981		60,892
Total Real Estate Loans [Member] | Home Equities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		$ 63,542		$ 61,042	$ 59,381

[1] Includes construction loans

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Loans And The Allowance For Loan Losses (Data, At Class Level, Of Credit Quality Indicators Of Certain Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2016		Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	$ 852,535		$ 773,305	$ 710,158
Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	671,878		627,240
Commercial Real Estate [Member] | Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	499,399	[1]	460,711	419,123	[1]
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	405,361		383,220
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	73,929		53,117
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	9,141		12,996
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	10,968		11,378
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	72,981		60,892
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	62,822		42,383
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	5,640		13,098
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	339		1,224
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	4,180		4,187
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	426,418		399,819
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	342,539		340,837
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	68,289		40,019
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	8,802		11,772
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	6,788		7,191
Commercial Real Estate [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	179,210		144,330	$ 129,812
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	112,730		80,379
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	51,658		47,509
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	7,967		8,973
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	6,855		7,350
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans			$ 119

[1] Includes construction loans

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Loans And The Allowance For Loan Losses (Recorded Investment In Loans Past Due) (Details) - USD ($) $ in Thousands		Jun. 30, 2016		Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 22,045		$ 6,346
Current Balance		830,490		766,959
Total Balance		852,535		773,305	$ 710,158
90+ Days Accruing		1,719		497
Non-accruing Loans		14,357		15,545
Net deferred loan origination costs		771		679	674
30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		9,776		3,162
60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,363		1,825
90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		8,906		1,359
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		5,242		450
Current Balance		173,968		143,880
Total Balance		179,210		144,330	129,812
90+ Days Accruing		338		40
Non-accruing Loans		4,936		5,312
Commercial And Industrial [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		4,513		160
Commercial And Industrial [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		71		224
Commercial And Industrial [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		658		66
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		39		8
Current Balance		1,408		1,727
Total Balance		1,447		1,735	2,864
90+ Days Accruing		7
Non-accruing Loans		13		14
Consumer [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		18		8
Consumer [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		14
Consumer [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		7
Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		671,878		627,240
Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance	[1]	108,937			98,978
Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		499,399	[1]	460,711	419,123	[1]
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,297		756
Current Balance		62,245		60,286
Total Balance		63,542		61,042	$ 59,381
90+ Days Accruing		3
Non-accruing Loans		1,037		1,058
Total Real Estate Loans [Member] | Home Equities [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		245		253
Total Real Estate Loans [Member] | Home Equities [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		272		236
Total Real Estate Loans [Member] | Home Equities [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		780		267
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		779		1,793
Current Balance		107,626		102,148
Total Balance		108,405		103,941
90+ Days Accruing		159
Non-accruing Loans		725		1,400
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due				822
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		143		402
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		636		569
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		5,268		3,339
Current Balance		421,150		396,480
Total Balance		426,418		399,819
90+ Days Accruing		1,212		457
Non-accruing Loans		3,465		3,574
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due				1,919
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,624		963
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,644		457
Construction [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current Balance		532		1,546
Total Balance		532		1,546
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		9,420
Current Balance		63,561		60,892
Total Balance		72,981		60,892
Non-accruing Loans		4,181		$ 4,187
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		5,000
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		239
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 4,181

[1] Includes construction loans

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Loans And The Allowance For Loan Losses (Schedule Of Allowance For Loan Losses According To Portfolio Segment) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016		Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		$ 13,119	$ 12,777	$ 12,883	$ 12,533
Allowance for loan losses: Charge-offs		(36)	(120)	(56)	(126)
Allowance for loan losses: Recoveries		66	38	114	87
Allowance for loan losses: Provision (Credit)		(376)	415	(168)	616
Allowance for loan losses: Ending balance		12,773	13,110	12,773	13,110
Allowance for loan losses: Individually evaluated for impairment						$ 1,513			$ 875
Allowance for loan losses: Collectively evaluated for impairment						11,260			12,235
Allowance for loan losses: Total		13,119	12,777	12,883	12,533	12,773		$ 12,883	13,110
Loans: Individually evaluated for impairment						18,361			14,757
Loans: Collectively evaluated for impairment						834,174			695,401
Total Balance						852,535		773,305	710,158
Net deferred loan origination costs						771		679	674
Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total Balance						671,878		627,240
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		4,580	4,989	4,383	4,896
Allowance for loan losses: Charge-offs		(20)	(80)	(33)	(80)
Allowance for loan losses: Recoveries		48	19	55	57
Allowance for loan losses: Provision (Credit)		(413)	(283)	(210)	(228)
Allowance for loan losses: Ending balance		4,195	4,645	4,195	4,645
Allowance for loan losses: Individually evaluated for impairment						324			730
Allowance for loan losses: Collectively evaluated for impairment						3,871			3,915
Allowance for loan losses: Total		4,580	4,989	4,383	4,896	4,195		4,383	4,645
Loans: Individually evaluated for impairment						4,985			5,795
Loans: Collectively evaluated for impairment						174,225			124,017
Total Balance						179,210		144,330	129,812
Commercial Real Estate [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance	[1]	7,442	5,830	7,135	5,650
Allowance for loan losses: Charge-offs	[1]		(35)		(35)
Allowance for loan losses: Recoveries	[1]	13	13	51	23
Allowance for loan losses: Provision (Credit)	[1]	(147)	686	122	856
Allowance for loan losses: Ending balance	[1]	7,308	6,494	7,308	6,494
Allowance for loan losses: Individually evaluated for impairment	[1]					1,128			59
Allowance for loan losses: Collectively evaluated for impairment	[1]					6,180			6,435
Allowance for loan losses: Total	[1]	7,442	5,830	7,135	5,650	7,308		7,135	6,494
Loans: Individually evaluated for impairment	[1]					9,261			5,455
Loans: Collectively evaluated for impairment	[1]					490,138			413,668
Total Balance						499,399	[1]	460,711	419,123	[1]
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		93	70	85	78
Allowance for loan losses: Charge-offs		(16)	(5)	(23)	(11)
Allowance for loan losses: Recoveries		4	5	7	6
Allowance for loan losses: Provision (Credit)		20	1	32	(2)
Allowance for loan losses: Ending balance		101	71	101	71
Allowance for loan losses: Individually evaluated for impairment						40			46
Allowance for loan losses: Collectively evaluated for impairment						61			25
Allowance for loan losses: Total		93	70	85	78	101		85	71
Loans: Individually evaluated for impairment						40			46
Loans: Collectively evaluated for impairment						1,407			2,818
Total Balance						1,447		1,735	2,864
Residential Real Estate [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance	[1]	696	924	909	941
Allowance for loan losses: Charge-offs	[1]
Allowance for loan losses: Recoveries	[1]		1		1
Allowance for loan losses: Provision (Credit)	[1]	67	23	(146)	6
Allowance for loan losses: Ending balance	[1]	763	948	763	948
Allowance for loan losses: Individually evaluated for impairment	[1]					3			40
Allowance for loan losses: Collectively evaluated for impairment	[1]					760			908
Allowance for loan losses: Total	[1]	696	924	909	941	763		909	948
Loans: Individually evaluated for impairment	[1]					2,461			2,500
Loans: Collectively evaluated for impairment	[1]					106,476			96,478
Total Balance	[1]					108,937			98,978
Home Equities [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		308	815	371	819
Allowance for loan losses: Charge-offs
Allowance for loan losses: Recoveries		1		1
Allowance for loan losses: Provision (Credit)		97	(12)	34	(16)
Allowance for loan losses: Ending balance		406	803	406	803
Allowance for loan losses: Individually evaluated for impairment						18
Allowance for loan losses: Collectively evaluated for impairment						388			803
Allowance for loan losses: Total		308	815	371	819	406		371	803
Loans: Individually evaluated for impairment						1,614			961
Loans: Collectively evaluated for impairment						61,928			58,420
Total Balance						63,542		61,042	59,381
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance			149		149
Allowance for loan losses: Charge-offs
Allowance for loan losses: Recoveries
Allowance for loan losses: Provision (Credit)
Allowance for loan losses: Ending balance			149		149
Allowance for loan losses: Individually evaluated for impairment
Allowance for loan losses: Collectively evaluated for impairment									149
Allowance for loan losses: Total			$ 149		$ 149				149
Loans: Individually evaluated for impairment
Loans: Collectively evaluated for impairment
Total Balance

[1] Includes construction loans

XML

Loans And The Allowance For Loan Losses (Data, At Class Level, Of Impaired Loans) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	$ 12,086	$ 10,560
Impaired Loans, Recorded Investment, With a related allowance recorded	6,275	8,940
Impaired Loans, Recorded Investment, Total	18,361	19,500
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	12,802	10,819
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	6,386	9,231
Impaired Loans, Unpaid Principal Balance, Total	19,188	20,050
Impaired Loans, Related Allowance	1,513	1,742
Impaired Loans, Average Recorded Investment, With no related allowance recorded	13,051	10,844
Impaired Loans, Average Recorded Investment, With a related allowance recorded	6,319	9,337
Impaired Loans, Average Recorded Investment, Total	19,370	20,181
Impaired Loans, Interest Income Foregone, With no related allowance recorded	211	215
Impaired Loans, Interest Income Foregone, With a related allowance recorded	151	291
Impaired Loans, Interest Income Foregone, Total	362	506
Impaired Loans, Interest Income Recognized, With no related allowance recorded	111	372
Impaired Loans, Interest Income Recognized, With a related allowance recorded	2	225
Impaired Loans, Interest Income Recognized, Total	113	597
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	4,266	1,750
Impaired Loans, Recorded Investment, With a related allowance recorded	719	3,572
Impaired Loans, Recorded Investment, Total	4,985	5,322
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	4,654	1,811
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	759	3,835
Impaired Loans, Unpaid Principal Balance, Total	5,413	5,646
Impaired Loans, Related Allowance	324	552
Impaired Loans, Average Recorded Investment, With no related allowance recorded	4,664	1,945
Impaired Loans, Average Recorded Investment, With a related allowance recorded	746	3,966
Impaired Loans, Average Recorded Investment, Total	5,410	5,911
Impaired Loans, Interest Income Foregone, With no related allowance recorded	119	58
Impaired Loans, Interest Income Foregone, With a related allowance recorded	22	255
Impaired Loans, Interest Income Foregone, Total	141	313
Impaired Loans, Interest Income Recognized, With no related allowance recorded	3	47
Impaired Loans, Interest Income Recognized, With a related allowance recorded	1	9
Impaired Loans, Interest Income Recognized, Total	4	56
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded
Impaired Loans, Recorded Investment, With a related allowance recorded	40	42
Impaired Loans, Recorded Investment, Total	40	42
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	65	57
Impaired Loans, Unpaid Principal Balance, Total	65	57
Impaired Loans, Related Allowance	40	42
Impaired Loans, Average Recorded Investment, With no related allowance recorded
Impaired Loans, Average Recorded Investment, With a related allowance recorded	42	45
Impaired Loans, Average Recorded Investment, Total	42	45
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded	1	2
Impaired Loans, Interest Income Foregone, Total	1	2
Impaired Loans, Interest Income Recognized, With no related allowance recorded
Impaired Loans, Interest Income Recognized, With a related allowance recorded	1	6
Impaired Loans, Interest Income Recognized, Total	1	6
Total Real Estate Loans [Member] | Residential Real Estate [Member] | Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	2,406	2,444
Impaired Loans, Recorded Investment, With a related allowance recorded	55	55
Impaired Loans, Recorded Investment, Total	2,461	2,499
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	2,610	2,555
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	55	55
Impaired Loans, Unpaid Principal Balance, Total	2,665	2,610
Impaired Loans, Related Allowance	3	2
Impaired Loans, Average Recorded Investment, With no related allowance recorded	2,440	2,474
Impaired Loans, Average Recorded Investment, With a related allowance recorded	55	55
Impaired Loans, Average Recorded Investment, Total	2,495	2,529
Impaired Loans, Interest Income Foregone, With no related allowance recorded	19	90
Impaired Loans, Interest Income Foregone, With a related allowance recorded	1	1
Impaired Loans, Interest Income Foregone, Total	20	91
Impaired Loans, Interest Income Recognized, With no related allowance recorded	38	63
Impaired Loans, Interest Income Recognized, With a related allowance recorded		2
Impaired Loans, Interest Income Recognized, Total	38	65
Total Real Estate Loans [Member] | Residential Real Estate [Member] | Construction [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded
Impaired Loans, Recorded Investment, With a related allowance recorded
Impaired Loans, Recorded Investment, Total
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded
Impaired Loans, Unpaid Principal Balance, Total
Impaired Loans, Related Allowance
Impaired Loans, Average Recorded Investment, With no related allowance recorded
Impaired Loans, Average Recorded Investment, With a related allowance recorded
Impaired Loans, Average Recorded Investment, Total
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded
Impaired Loans, Interest Income Foregone, Total
Impaired Loans, Interest Income Recognized, With no related allowance recorded
Impaired Loans, Interest Income Recognized, With a related allowance recorded
Impaired Loans, Interest Income Recognized, Total
Total Real Estate Loans [Member] | Commercial Real Estate [Member] | Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	3,754	3,888
Impaired Loans, Recorded Investment, With a related allowance recorded	1,065	1,083
Impaired Loans, Recorded Investment, Total	4,819	4,971
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	3,817	3,908
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	1,083	1,083
Impaired Loans, Unpaid Principal Balance, Total	4,900	4,991
Impaired Loans, Related Allowance	229	235
Impaired Loans, Average Recorded Investment, With no related allowance recorded	3,836	3,930
Impaired Loans, Average Recorded Investment, With a related allowance recorded	1,074	1,083
Impaired Loans, Average Recorded Investment, Total	4,910	5,013
Impaired Loans, Interest Income Foregone, With no related allowance recorded	50	27
Impaired Loans, Interest Income Foregone, With a related allowance recorded	25	4
Impaired Loans, Interest Income Foregone, Total	75	31
Impaired Loans, Interest Income Recognized, With no related allowance recorded	36	179
Impaired Loans, Interest Income Recognized, With a related allowance recorded		42
Impaired Loans, Interest Income Recognized, Total	36	221
Total Real Estate Loans [Member] | Commercial Real Estate [Member] | Construction [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	262	834
Impaired Loans, Recorded Investment, With a related allowance recorded	4,180	4,188
Impaired Loans, Recorded Investment, Total	4,442	5,022
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	262	834
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	4,201	4,201
Impaired Loans, Unpaid Principal Balance, Total	4,463	5,035
Impaired Loans, Related Allowance	899	911
Impaired Loans, Average Recorded Investment, With no related allowance recorded	691	834
Impaired Loans, Average Recorded Investment, With a related allowance recorded	4,184	4,188
Impaired Loans, Average Recorded Investment, Total	4,875	5,022
Impaired Loans, Interest Income Foregone, With no related allowance recorded	1
Impaired Loans, Interest Income Foregone, With a related allowance recorded	96	29
Impaired Loans, Interest Income Foregone, Total	97	29
Impaired Loans, Interest Income Recognized, With no related allowance recorded	21	31
Impaired Loans, Interest Income Recognized, With a related allowance recorded		166
Impaired Loans, Interest Income Recognized, Total	21	197
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	1,398	1,644
Impaired Loans, Recorded Investment, With a related allowance recorded	216
Impaired Loans, Recorded Investment, Total	1,614	1,644
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	1,459	1,711
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	223
Impaired Loans, Unpaid Principal Balance, Total	1,682	1,711
Impaired Loans, Related Allowance	18
Impaired Loans, Average Recorded Investment, With no related allowance recorded	1,420	1,661
Impaired Loans, Average Recorded Investment, With a related allowance recorded	218
Impaired Loans, Average Recorded Investment, Total	1,638	1,661
Impaired Loans, Interest Income Foregone, With no related allowance recorded	22	40
Impaired Loans, Interest Income Foregone, With a related allowance recorded	6
Impaired Loans, Interest Income Foregone, Total	28	40
Impaired Loans, Interest Income Recognized, With no related allowance recorded	13	52
Impaired Loans, Interest Income Recognized, With a related allowance recorded
Impaired Loans, Interest Income Recognized, Total	$ 13	$ 52

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Loans And The Allowance For Loan Losses (Schedule Of Non-Performing Loans) (Details) - USD ($) $ in Thousands		Jun. 30, 2016		Dec. 31, 2015	Jun. 30, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		$ 852,535		$ 773,305	$ 710,158
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		179,210		144,330	129,812
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		1,447		1,735	2,864
Non-Performing Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		14,357		15,545
Accruing loans 90+ days past due		1,719		497
Total Balance		$ 16,076		$ 16,042
Total non-performing loans to total assets		1.57%		1.71%
Total non-performing loans to total loans		1.88%		2.07%
Non-Performing Loans [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		$ 4,936		$ 5,312
Non-Performing Loans [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		13		14
Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		671,878		627,240
Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance	[1]	108,937			98,978
Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		499,399	[1]	460,711	419,123	[1]
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		63,542		61,042	$ 59,381
Total Real Estate Loans [Member] | Non-Performing Loans [Member] | Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		1,037		1,058
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		108,405		103,941
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		426,418		399,819
Mortgages [Member] | Total Real Estate Loans [Member] | Non-Performing Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		725		1,400
Mortgages [Member] | Total Real Estate Loans [Member] | Non-Performing Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		3,465		3,574
Construction [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		532		1,546
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Balance		72,981		60,892
Construction [Member] | Total Real Estate Loans [Member] | Non-Performing Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans
Construction [Member] | Total Real Estate Loans [Member] | Non-Performing Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total non-accruing loans		$ 4,181		$ 4,187

[1] Includes construction loans

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Loans And The Allowance For Loan Losses (Loans Classified As Troubled Debt Restructurings) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Modifications [Line Items]
Total	$ 5,096	$ 5,767
Nonaccruing	1,092	1,812
Accruing	4,004	3,955
Related Allowance	193	193
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total	516	517
Nonaccruing	467	508
Accruing	49	9
Related Allowance	166	165
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Total	27	28
Accruing	27	28
Related Allowance	27	28
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Total	755	867
Nonaccruing	178	281
Accruing	577	586
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	1,860	1,789
Nonaccruing	124	689
Accruing	1,736	1,100
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	1,676	1,732
Nonaccruing	323	334
Accruing	1,353	1,398
Construction [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total
Nonaccruing
Accruing
Related Allowance
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Total	262	834
Accruing	$ 262	$ 834

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Loans And The Allowance For Loan Losses (TDR Activity By Type Of Concession Granted To Borrower) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract
Commercial And Industrial [Member] | Deferral Of Principal [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		3
Pre-Modification Outstanding Recorded Investment		$ 541
Post-Modification Outstanding Recorded Investment		$ 541
Commercial And Industrial [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1
Pre-Modification Outstanding Recorded Investment	$ 24
Post-Modification Outstanding Recorded Investment	$ 24
Commercial And Industrial [Member] | Term-Out Line Of Credit [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1
Pre-Modification Outstanding Recorded Investment	$ 20
Post-Modification Outstanding Recorded Investment	$ 20
Residential Real Estate [Member] | Total Real Estate Loans [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1
Pre-Modification Outstanding Recorded Investment	$ 95
Post-Modification Outstanding Recorded Investment	$ 95
Commercial Real Estate [Member] | Total Real Estate Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Home Equities [Member] | Total Real Estate Loans [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract
Pre-Modification Outstanding Recorded Investment
Post-Modification Outstanding Recorded Investment

XML

Loans And The Allowance For Loan Losses (Loans Classified As TDRs Which Defaulted) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $
Consumer [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract				1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $				$ 19
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract		1		1
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $		$ 245		$ 245
Construction [Member] | Total Real Estate Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Troubled Debt Restructurings That Subsequently Defaulted, Number of Contracts | contract
Troubled Debt Restructurings That Subsequently Defaulted, Recorded Investment | $

XML

Per Share Data (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Per Share Data [Abstract]
Potentially dilutive shares of common stock	62,419	75,354	63,654	76,227
Anti-dilutive shares	83,960	37,800	83,960	38,215

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Other Comprehensive Income (Schedule Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (1,121)	$ (1,148)	$ (1,810)	$ (1,508)
Net Change	300	(595)	989	(235)
Ending Balance	(821)	(1,743)	(821)	(1,743)
Net Unrealized Gain (Loss) On Investment Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	1,124	1,242	475	911
Net Change	260	(637)	909	(306)
Ending Balance	1,384	605	1,384	605
Net Defined Benefit Pension Plan Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(2,245)	(2,390)	(2,285)	(2,419)
Net Change	40	42	80	71
Ending Balance	$ (2,205)	$ (2,348)	$ (2,205)	$ (2,348)

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Other Comprehensive Income (Components Of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Other Comprehensive Income [Abstract]
Unrealized gain (loss) on investment securities, Before-Tax Amount		$ 419	$ (1,041)	$ 1,465	$ (500)
Reclassification from accumulated other comprehensive income for gains (losses), Before-Tax Amount
Net change, Before-Tax Amount		419	(1,041)	1,465	(500)
Net actuarial gain (loss), Before-Tax Amount
Amortization of prior service cost, Before-Tax Amount	[1]	8	9	16	16
Amortization of actuarial loss, Before-Tax Amount	[1]	56	52	112	100
Net change, Before-Tax Amount		64	61	128	116
Other Comprehensive Income (Loss), Before-Tax Amount		483	(980)	1,593	(384)
Unrealized gain (loss) on investment securities, Income Tax (Provision) Benefit		(159)	404	(556)	194
Reclassification from other comprehensive income from gains (losses), Income Tax (Provision) Benefit
Net change, Income Tax (Provision) Benefit		(159)	404	(556)	194
Net actuarial gain (loss), Income Tax (Provision) Benefit
Amortization of prior service cost, Income Tax (Provision) Benefit	[1]	(3)	(4)	(6)	(6)
Amortization of actuarial loss, Income Tax (Provision) Benefit	[1]	(21)	(15)	(42)	(39)
Net change, Income Tax (Provision) Benefit		(24)	(19)	(48)	(45)
Other Comprehensive Income (Loss), Income Tax (Provision) Benefit		(183)	385	(604)	149
Unrealized gain (loss) on investment securities, Net-of-Tax Amount		260	(637)	909	(306)
Reclassification from accumulated other comprehensive income for gains (losses), Net-of-Tax Amount
Net change, Net-of-Tax Amount		260	(637)	909	(306)
Net actuarial gain (loss), Net-of-Tax Amount
Amortization of prior service cost, Net-of-Tax Amount	[1]	5	5	10	10
Amortization of actuarial loss, Net-of-Tax Amount	[1]	35	37	70	61
Net change, Net-of-Tax Amount		40	42	80	71
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX		$ 300	$ (595)	$ 989	$ (235)

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

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Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment	Jun. 30, 2015 USD ($)
Number of primary business segments | segment			2
Net interest income (expense)	$ 8,516	$ 7,648	$ 16,776	$ 15,229
Provision for loan losses (credit)	(376)	415	(168)	616
Net interest income (expense) after provision for loan losses	8,892	7,233	16,944	14,613
Non-interest income	2,280	3,476	5,274	6,542
Insurance service and fees	1,572	1,821	3,320	3,650
Non-interest expense	8,719	8,241	17,247	15,753
Income before income taxes	2,453	2,468	4,971	5,402
Income tax provision	450	793	1,254	1,822
Net income	2,003	1,675	3,717	3,580
Operating Segments [Member]
Net interest income (expense)	8,516	7,648	16,776	15,229
Provision for loan losses (credit)	(376)	415	(168)	616
Net interest income (expense) after provision for loan losses	8,892	7,233	16,944	14,613
Non-interest income	708	1,655	1,954	2,892
Insurance service and fees	1,572	1,821	3,320	3,650
Non-interest expense	8,719	8,241	17,247	15,753
Income before income taxes	2,453	2,468	4,971	5,402
Income tax provision	450	793	1,254	1,822
Net income	2,003	1,675	3,717	3,580
Banking Activities [Member] | Operating Segments [Member]
Net interest income (expense)	8,549	7,677	16,840	15,286
Provision for loan losses (credit)	(376)	415	(168)	616
Net interest income (expense) after provision for loan losses	8,925	7,262	17,008	14,670
Non-interest income	708	1,655	1,954	2,892
Insurance service and fees	116	191	232	353
Non-interest expense	7,551	7,089	14,878	13,570
Income before income taxes	2,198	2,019	4,316	4,345
Income tax provision	352	616	1,002	1,410
Net income	1,846	1,403	3,314	2,935
Insurance Agency Activities [Member] | Operating Segments [Member]
Net interest income (expense)	(33)	(29)	(64)	(57)
Net interest income (expense) after provision for loan losses	(33)	(29)	(64)	(57)
Insurance service and fees	1,456	1,630	3,088	3,297
Non-interest expense	1,168	1,152	2,369	2,183
Income before income taxes	255	449	655	1,057
Income tax provision	98	177	252	412
Net income	$ 157	$ 272	$ 403	$ 645

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Contingent Liabilities And Commitments (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 217,777,000		$ 210,140,000
Losses on commitments	0	$ 0
Commitments To Extend Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	214,211,000		206,346,000
Standby Letters Of Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 3,566,000		$ 3,794,000

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Net Periodic Benefit Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 55	$ 52	$ 110	$ 103
Expected return on plan assets	(66)	(77)	(131)	(154)
Amortization of the net loss	22	18	44	35
Net periodic cost (benefit)	11	(7)	23	(16)
Contributions to defined benefit pension plan			140
Supplemental Executive Retirement Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	47	49	94	97
Interest cost	36	37	72	74
Amortization of prior service cost	8	9	16	16
Amortization of the net loss	34	34	68	65
Net periodic cost (benefit)	$ 125	$ 129	$ 250	$ 252